Majority of World Bank’s private investments go to companies that have a presence in tax havens, says Oxfam
Majority of World Bank’s private investments go to companies that have a presence in tax havens, says Oxfam
Fifty-one of the 68 companies that were lent money by the World Bank’s private lending arm in 2015 to finance investments in sub-Saharan Africa use tax havens, Oxfam revealed today.
Oxfam’s analysis focused on International Finance Corporations (IFC) investments in Sub-Saharan Africa. It shows that together these 51 companies, whose use of tax havens has no apparent link with their core business, received 84 percent of IFC investments in that region in 2015. It also reveals that the IFC has more than doubled its investments in companies that use tax havens in just 5 years – from $1.20 billion in 2010 to $ 2.87 billion in 2015.
The findings come ahead of the IMF-World Bank Spring meetings in Washington DC on 13-15 April and in the wake of the Panama Papers scandal which revealed how powerful individuals and companies are using tax havens to hide wealth and dodge taxes.
Sub-Saharan Africa, the poorest region in the world, desperately needs corporate tax revenues to invest in public services and infrastructure. The region lacks money to provide enough skilled birth attendants, clean water or mosquito nets, for example, resulting in high rates of child mortality; one child in 12 dies before their fifth birthday.
“The world’s poorest – especially women, children and the most vulnerable – are hit hardest when individuals and companies don’t pay their fair share of taxes,” said Brittany Lambert, senior policy advisor for Oxfam Canada.
Because of gender discrimination, women are often the first to miss out when essential services like health and education are not free at point of use. Women are also are more responsible for caring for the sick or the elderly when public services are not available.
The IFC invested more than $86 billion of public money in developing countries between 2010 and 2015; 18.6% of it spent in Sub-Saharan Africa. The IFC has a significant focus on financial markets, infrastructure, agribusiness and forestry, among other sectors.
“It makes no 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.”
While the IFC arguably leads the private sector with its disclosure, environmental and social standards, the public still has no access to information about where over half of the institution’s financing ends up, because it is done through opaque financial intermediaries. It also continues to face major challenges in measuring its overall development impact, and ensuring that the projects it funds do not harm local communities. This latest Oxfam research shows that the organisation has a long way to go in ensuring that its clients are responsible tax payers, too.
Oxfam is calling for the IFC to develop new standards to ensure it only invests in companies that have responsible corporate tax practices. For example companies should be transparent about their economic activities so it’s clear if they are paying their fair share of tax where they do business.
Speaking to the Canadian context, Lambert added: “We applaud Prime Minister Trudeau’s call for greater global tax co-operation in the wake of the Panama Papers scandal.
“Canada – and all Governments – must work with the World Bank and the IMF to further reform the international tax system to help stop tax dodging by wealthy individuals and corporations. This should include action to end the era of tax havens and rising inequality.”
Contact
Melanie Gallant, Canada: +1 (613) 240-3047 /
Simon Hernandez-Arthur, US: Mobile: +1 (585) 503 4568 /
Anna Ratcliff, UK: +44 (0) 7796993288 /
Notes to editors
A copy of the report, ‘The IFC and tax havens,’ is available here. Oxfam’s analysis covers IFC investments in Sub-Saharan Africa between January 2010 and October 2015 (the latest data available).
The International Finance Corporation, a member of the World Bank Group, is “the largest global development institution focused exclusively on the private sector in developing countries”.
Tax dodging using tax havens is an increasingly common business practice that is denying poor countries an estimated $100 billion in tax revenues every year.