By Juvenal Habiyambere
African Supreme Audit Institutions (SAIs) are currently assessing the performance of their countries’ legislative, regulatory, and institutional frameworks for tax revenue mobilization for their robustness and capacity to deal with IFFs in a coordinated audit organized by the African Organization of the Supreme Audit Institutions (AFROSAI). The review reveals that countries are making progress in developing and instituting legislation to deal with IFFs in their various forms. However, the audit also uncovers that more remains to be done. Some regulations lack or remain silent on key aspects necessary for the fight against IFFs, e.g. Beneficial Ownership and Banking Secrecy. The coordinated audit also revealed some crosscutting issues such as a lack of tax transparency in sectors such as mining, extractive industries, and construction as well as a misalignment of provisions in legislation and stability clauses impeding effective enforcement of laws in these sectors.
The coordinated audit was launched in Nairobi, in April 2023, and focuses on assessing the design and effectiveness of the legislative, regulatory, and institutional frameworks for tax revenue mobilization in the following 13 African countries: Botswana, Burkina Faso, Cameroon, Comoros, Djibouti, Gabon, Gambia, Guinea, Kenya, Senegal, Tanzania, Uganda and Zambia. The audit is supported by the GIZ Good Financial Governance in Africa Programme, which is commissioned by the German Federal Ministry of Economic Cooperation and Development, Co-funded by the European Union and Ministry for Foreign Affairs of Finland to implement the Multi-Donor Action “Fighting Tax Related Illicit Financial Flows in Africa”.
Key Proceedings:
The workshop, that took place in Gaborone, Botswana from 28th to –30th August 2024, aimed at assessing progress since the audit’s launch and to review the draft regional audit report. The event included discussions on audit methodology, results, and recommendations to enhance countries’ systems in combating IFFs. Ms. Keneilwe Senyarelo, Acting Auditor General of Botswana and Mrs. Nancy Gathungu, Chair of ITCBC, emphasized the importance of producing a coherent and impactful report that can contribute to reducing the effects of IFFs on Africa’s economic, social and political stability. The audit tested the robustness of countries’ frameworks for tax revenue mobilization and uncovered progress in developing legislation to combat IFFs. Despite this, gaps remain, such as outdated or incomplete regulations, lack of transparency, and insufficient coordination among national institutions.
Key Findings from the Audit:
In line with the audit objective, the audit tested countries’ legislative, regulatory, and institutional frameworks for tax revenue mobilization. The audit highlighted several challenges:
- Unclear definition and delimitation of roles and responsibilities of anti-IFFs institutions,
- Insufficient organisational capacities of the national structures responsible for the fight against illicit financial flows
- Collaboration concerns in several countries, amongst government agencies and beyond countries’ borders for effective tracking of IFFs,
- Lack of or weak coordination among national structured dealing with IFFs
- Non-integrated information systems of existing structures, etc.
Consequently, the SAIs are formulating recommendations for governments and the African Union Commission (AUC) to address these gaps. These include revisiting national frameworks and improving coordination and transparency.
Way forward
For the audit to achieve the expected impact, the recommendations issued must be implemented to ensure countries’ systems are revisited, made more robust and resilient. To alert participating SAIs about the importance of an effective follow-up and to plan the follow-up process as an integral part of the ongoing audit, the meeting also featured experience sharing from Tanzania’s SAI on implementing recommendations from the previous regional audit on corruption. Building on this experience, participants derived best practices regarding the effective follow-up on audit recommendations, which will be incorporated into the audit process going forward.
Through the second coordinated audit on IFFs, SAIs contribute directly to the realization of the AUC agenda 2063 and SDGs commitments. In addition, the audit has provided SAIs with learning opportunities through expert step by step guidance, peer to peer learning and experience sharing on a such a complex and topical issue. The report on this coordinated audit is expected to undergo quality assurance and be published by the end of 2024.
