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Multilateral corporations in Africa are reported to be using the informal sector to evade tax, leading to loss of revenue by governments, the third African Conference on Debt and Development (AfCoDD III) taking place in Senegal has learnt.
This came to light on Thursday during a panel discussion dubbed “An Overview of emerging schools of thought and dynamics in Debt Discourse in recent time and significance of research” on the side line of the AfCoDD III.
Chenai Makumba, Tax Justice Network Africa Executive Director, said the multilateral companies were using the informal sector to evade tax, a situation she pointed out to be one of the reasons African countries were having challenges to raise domestic resources.
As one of the panellists, Makumba regretted that this situation had hampered efforts by governments in Africa to raise domestic resources.
She, therefore, suggested the need for governments to put in place mechanisms that would prevent abuse of legislation by multilateral corporations.
“Need to look at the structure of our economies, many of them have informal services and governments are struggling how to capture these informal services sector.
“Certain companies use the informal sector to evade taxes, these are corporates hiding behind the informal sector that we need to target. Africa is losing about US$90 billion on annual basis due to revenue loss,” Makumba said.
Read more: Senegal conference reveals more African countries at risk of defaulting on debts
She also emphasised on the need for governments to enhance efforts in taxing the informal sector in growing the tax base.
Makumba pointed out the inability of African countries to raise domestic resources as one of the reasons the continent had found itself in debt situation.
“We need to figure out as African countries is the way in which we are raising our resources, and to prevent loss of these resources. We need to stop the bleeding of the resources and curb the loss of the resources and this includes addressing the debt issues,” she said.
During the same discussions, Briggs Bomba from Trust Africa said the moment had come for Africa to think about big ideas that would transform the continent.
Bomba stated the need to find solutions to deal with challenges being faced by the continent by thinking about big ideas.
“This is a moment for Africa to manage our way and ideas and think big and outside the limitations of the ideas and out forwards ideas to help us. We should not be shy as activists in terms of these big ideas,” he said.
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