Friday, 1 November 2013

EU multinationals scamming Africa out of billions, Tanzanian MP says

By Nikolaj Nielsen

BRUSSELS - Tax avoidance loopholes for EU-based multinationals introduced by the World Bank and the International Monetary Fund (IMF) are said to be costing African countries double the amount they receive in foreign aid.

“It is killing us, you cannot now explain poverty in Africa without this and this is the story that has been supressed for so long,” Zitto Kabwe, an MP who is also chairman of the public accounts committee in Tanzania, told this website on Wednesday (30 October)

He said Tanzania was forced in the late 1990s by the World Bank and the IMF to sign tax rules and tax laws which are favourable to investors, while depriving it of much needed revenue that would help wean it off foreign aid.

Kabwe said EU and other Western multinationals, including a Tanzanian state owned company, use tax havens and other illicit schemes to scam the countries of the continent out of around $50 billion every year.

By comparison, they receive $30 billion in foreign direct aid.

“Almost twice the amount of foreign aid that Africa receives is getting out of Africa through illicit financial transfer, through tax avoidance and the likes,” he said.
A 2011 IMF report on Tanzania, he noted, noted the country is unable to collect taxes due by foreign companies.

“They forgot that they [the IMF] are the ones who provided consultants for us to enact laws that are favourable to investments,” he said.

He noted that the IMF and the World Bank advised African states to design policies and laws which multinational corporations “are abusing to avoid paying taxes in our countries.”

Both institutions, he said, in a twist of events, are now offering advice to stop the abuse.
The IMF, contacted for this story, did not respond to the allegations. But a possible solution, said Kabwe, is putting an end to double taxation arrangements used by multinationals who funnel their profits into tax havens like the Isle of Man or the British Virgin Islands.

Mining and telecommunications are the two largest sectors in Tanzania where EU-based companies exploit the loopholes for their own benefit. “Almost all the mining operations in Tanzania are from Europe,” he said. He noted that African Barrick Gold, which is registered in London, operates the most mines. Another, AngloGold Ashanti, is registered in South Africa but with subsidiaries registered in offshore tax havens, he added.

Three major mobile companies operate in Tanzania. One is based in Dubai, itself a tax haven, and one each registered in the Netherlands and in the UK, he noted.He said big oil and gas companies like Statoil, Ophir, Shell, and Exxon Mobil are also in Tanzania, but no evidence has surfaced that they are using tax havens, except for the UK-owned PanAfrica Energy and British Gas.

“PanAfrica Energy operate from the Cayman Islands and Mauritius and this is a British government-owned company using tax havens to bring their FDI [foreign direct investments] to Tanzania,” he said. He noted that the problem is manifold because a Tanzanian state-owned company was itself using a tax haven in Mauritius to avoid filling its own national coffers. Chinese companies working in Africa, by comparison he said, are more transparent on taxes and pay their dues though they tend to scam on public procurement.

Kabwe, along with a handful of other delegates from Africa organised through the Brussels-based development NGO Eurodad, is set to discuss the issue with the European Commission on Thursday (31 October).

Savoir Mwambwa, from the Nairobi-based Tax Justice Network, said ending the scams orchestrated by EU-based companies would make Africa less dependent on aid.

He said Zambia Sugar, a subsidiary of the British Associated Foods company, would inflate their wage bills by making payments to a ghost branch in Mauritius.

“One common thing about all these companies, if you look at all the instruments they use, they all have businesses in one form or another in tax havens,” said Mwambwa

The EU, for its part, has proposed reforms on accountancy and transparency directives.
The reforms, backed by the European Parliament in June, would require companies in the extractive and logging sector to publish an annual report disclosing the details of tax, bonuses and other payments made to governments for every project they operate over a $100,000 threshold.
The move drew praise from Oxfam, which said it would help fight tax dodging by EU companies in the developing world.
The reformed EU law is set for launch in 2015.

Saturday, 26 October 2013

Woman with HIV reveals has slept with 80 men

 By Henry Lubulwa,The Citizen

Kalangala. Sarah Kabanda (not real name), is a fish monger at Kiruggu Island in Kalangala District. She is quite attractive, cheerful and appears to make friends easily. So I found it easy to engage her in a conversation. What was shocking, however, was the revelation she made about her HIV status and how she has had unprot...ected sex with many men.

“I believe I have had unprotected sex with about 80 men since I was diagnosed with HIV,” she says. Asked if she was aware that she was spreading the virus, Kabanda says that was none of her business. “I have nothing to worry about since I am HIV positive. If a man wants to sleep with me, why not,” she says.

Kabanda is not sure when and how she acquired the virus: “It could be a man I met in 2006 because I discovered in the morning that he had the type of tablets I take to sustain my CD count.” Her experience when she was younger, is probably what led her to live the life she does. When she was still in school in Buggala Island, Kabanda got pregnant.

“That is where I made the mistake of my life - falling in love with a classmate. When my parents learnt about it, they were furious and could not accept me back in the family. A friend suggested I take up a job at Kachanga Landing Site where I went and got employed as a barmaid. The bar owner was kind because he provided food and accommodation.”

However, Kabanda says, the pay was quite little and many of her friends earned extra money by sleeping with the men who came to the bar. She was lured into doing the same and only stopped when she got pregnant and finally gave birth.

Tuesday, 22 October 2013

Are we being targeted? If so, someone’s got very poor aim...

 By Jenerali Ulimwengu

One feels like shouting at the top of one’s voice, hoping the noise will make some unhearing people hear a little. Maybe we should dispense with civility in this uncivil backwater of a continent.

For I cannot, for the love of me, fathom the reasons that impels our rulers to persist in being illogical in matters where they are given generous opportunities to be logical, opportunities they so carelessly pass up.

If we revisit the debate about the International Criminal Court and its decision to indict some African leaders in situations where it is clear to all that atrocities of one sort or another were committed, a number of questions raise themselves voluntarily.

It is disturbing that our leaders/rulers can muster enough cheek to summon each other to Addis Ababa with the sole purpose of finding ways to avoid accountability when they go astray. It is even more disgusting that they can think of a mass walkout on an organisation they joined with such aplomb not so long ago, the reason for walking out being that some of them have been required to come clean on their activities.

The court at the Hague is a court of law in the tradition where presumption of innocence is guaranteed, unlike in so many of our rulers’ kangaroo courts where one is guilty as soon as one is charged, and where magistrates and judges are either articles for sale to the highest bidder, or where they are so subservient to the executive that anyone who rouses the ire of the ruler is dead meat.

One question we should be asking ourselves is, if you know you are not guilty, what makes you so scared to go and plead your innocence? From what the Kenyan leaders have been saying, they do not seem to be that terrified of appearing.

One of them has repeatedly insisted he wants no disruption of the trial as he is confident of being vindicated.

There also seems to be some understanding that the two will not be made to be absent from the country they are supposed to run at the same time, that their appearances will be staggered. So where is the problem?

The problem is not with the Kenyan accused; it is with the other African rulers who cannot be too sure that in their countries they will not commit the types of crimes their colleagues are accused of. If the Kenyans play ball with the ICC, these others will have been exposed, for a precedent will have been set.

So they are hiding behind all manner of smokescreens, including sovereignty and the claim that Africa is being targeted. What they are seeking is pro forma insurance cover.

No, I repeat, it is not Africa that is before the ICC; it is African individuals, and for specified reasons. But I understand the arrogance that informs that claim: For these gentlemen — and a couple of ladies these days — Africa is them.

What happens to them happens to Africa. Just like someone who has lost out on a deal in Nairobi, Dar or Kampala will tell folks back home that they got a raw deal because they are from this or that tribe, or this or that faith. In this way, whole ethnicities or religions are shanghaied into wars they know nothing about.

Talk of Africa being targeted! Not enough African rulers are summoned to The Hague, if we go by the crimes they have committed against their own peoples.

I personally know at least seven who should be packing their bags to answer for hideous crimes, including murder and armed robbery. Yes, armed robbery. One who steals money and other properties that belong to other people (the citizens) commits the crime of theft. If the people protest and he uses armed police or soldiers to shoot unarmed citizens in order to suppress the protest and to help him to effect his theft, that is armed robbery.

It may not be on the statute books, but it would be if the law were not such an ass.

Jenerali Ulimwengu is chairman of the board of the Raia Mwema newspaper and an advocate of the High Court in Dar es Salaam. E-mail:


Monday, 21 October 2013

Multinationals should be made transparent

At the current exchange rate of about Sh1,600 to the dollar, that amounts to nearly Sh2 trillion. That is the revenue loss that Tanzania incurs every year through corporate malpractices by mostly multinational companies operating in the country.

In a poor country like Tanzania where most people can hardly afford two decent meals a day and the government has difficulties in funding its budget, $1.25 billion is quite a lot of money.

At the current exchange rate of about Sh1,600 to the dollar, that amounts to nearly Sh2 trillion. That is the revenue loss that Tanzania incurs every year through corporate malpractices by mostly multinational companies operating in the country.

The money, which is lost through corporate tax avoidance, evasion and corruption, is equivalent to five per cent of the country’s gross domestic product (GDP). For a government whose annual budget is yet to reach Sh20 trillion, a loss of between 10-11 per cent of revenues is quite huge.

The financing of the budget still depends heavily on foreign handouts that are not only unpredictable but also cost dearly in terms of the conditionalities to get the aid. If the money could be tapped, it could greatly ease the funding of many key ministries whose budgets in the current financial year have been less than a trillion shillings.

Most importantly, Tanzania could use the money to improve the currently wanting provision of basic services and construct key social and economic infrastructure such as roads, schools and health facilities.


Sunday, 20 October 2013

JK in Makete Again

Presidents of the United republic of Tanzania today has visited Makete in his official tour to the new Njombe region. While in Makete the president has opened the Vocational Training Centre (VETA), the new classroom for Form V in Lupalilo Secodary School, and dispensary in Ivalalila Village. He was expected to have a public meeting in Makete town, no much is known to this time if the president was told the lack of staff in the health facilities in the district.