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Kofi Annan: Africa
plundered by secret mining deals
deprives Africa of much-needed
money, the report says
Tax avoidance, secret mining deals and financial transfers are
depriving Africa of the benefits of
its resources boom, ex-UN chief Kofi Annan has said.
Firms that shift profits to lower tax jurisdictions cost
Africa $38bn (£25bn) a year, says a report produced by a
panel he heads.
loses twice as much money through these loopholes as it gets from
donors," Mr Annan told the BBC.
It was like taking food off the tables of the poor, he said.
The Africa Progress Report is released every May - produced by a
panel of 10 prominent figures, including former Nigerian President
Olusegun Obasanjo and Graca Machel, the wife of South African
ex-President Nelson Mandela.
African countries needed to improve governance and the world's
richest nations should help introduce global rules on transparency
and taxation, Mr Annan said.
The report gave the Democratic Republic of Congo as an example,
where between 2010 and 2012 five under-priced mining concessions
were sold in "highly opaque and secretive deals".
This cost the country, which the charity Save the Children said
earlier this week was the world's worst place to be a mother, $1.3bn
This figure was equivalent to double DR Congo's health and education
budgets combined, the report said.
DR Congo's mining minister disputed the findings, saying the country
had "lost nothing".
"These assets were ceded in total transparency," Martin Kabwelulu
told Reuters news agency.
The report added that many mineral-rich countries needed "urgently
to review the design of their tax regimes", which were designed to
attract foreign investment when commodity prices were low.
It quotes a review in Zambia which
found that between 2005 and 2009, 500,000 copper mine workers were
paying a higher rate of tax than major multinational mining firms.
loses more through what it calls "illicit outflows" than it gets in
aid and foreign direct investment, it explains.
"We are not getting the revenues we deserve often because of either
corrupt practices, transfer pricing, tax evasion and all sorts of
activities that deprive us of our due," Mr Annan told the BBC's
"Transparency is a powerful tool," he said, adding that the report
was urging African leaders to put "accountability centre stage".
Mr Annan said African governments needed to insist that local
companies became involved in mining deals and manage them in "such a
way that it also creates employment".
cannot do alone. The tax evasion, avoidance, secret bank accounts
are problems for the world… so we all need to work together
particularly the G8, as they meet next month, to work to ensure we
have a multilateral solution to this crisis," he said.
For richer nations "if a company avoids tax or transfers the money
to offshore account what they lose is revenues", Mr Annan said.
"Here on our continent, it affects the life of women and children -
in effect in some situations it is lik
e taking food off the table for the poor."