International Monetary Fund and World Bank announced on April 19, 2016, they have partnered with Organization for Economic Cooperation and Development (OECD) and United Nations (UN) to develop efficient tax systems to fight tax optimization by multinational companies in developing countries, those in Africa included.

Details regarding the collaboration are not really clear given that each of the institutions involved often proposed different solutions to how to handle illicit financial flows. UN often opted for a more inclusive approach involving its state-members. OECD for its part has developed a program to combat tax optimization (BEPS), but was criticized as it did not include developing countries.

Regarding the platform that was just launched, the institutions, which will meet three times a year, will provide by March 2018, tools to help developing countries fight tax evasion. Two of these tools are already ready, it thus remains seven. OECD highlighted that one of these tools, concerning information sharing, would be included in the platform. 

World Bank’s participation in the platform will also require some compromises. According to a report published by Ngo Oxfam, on April 11, 2016, 51 out of the 68 firms that borrowed in 2015 from International Finance Corporation (IFC), to fund investments in Sub Saharan Africa, use tax havens. It should be recalled that IFC is World Bank’s arm specializing in loans to private sector. “It doesn’t make sense for the World Bank Group to spend money encouraging companies to invest in ‘development’ while turning a blind eye to the fact that these companies could be cheating poor countries out of tax revenues that are needed to fight poverty and inequality,” said Oxfam’s tax policy advisor Susana Ruiz said. The World Bank has of course denied all these accusations.

Idriss Linge