New revelations from the Panama Papers indicate that offshore shell companies had been established to own, hold, or do business with oil, natural gas, and mining operations in 44 of Africa’s 54 countries.
The shell companies provide anonymity, facilitating tax evasion and the unchecked movement of bribe money used to secure lucrative extractive industry contracts.
The result for Africa? In the words of Nigeria’s president Muhammadu Buhari, “Every dollar siphoned through dirty deals and corruption to offshore tax havens makes the livelihood and survival of the average African more precarious”.
The research group Global Financial Integrity estimated an annual loss of $1.5 billion in Algeria between 2004 and 2013 due to tax avoidance, bribery, criminality, and corruption. The United Nations estimates that at least $50 billion is lost to the African continent in illicit money flows.
Mossack Fonseca, the Panama-based law firm whose leaked internal files comprise what is referred to as the Panama Papers, is a major provider of secrecy to companies involved in the extractive industries and has been under scrutiny since April this year. More than 1400 companies whose names refer to minerals, mining, petrol, oil, or gas have been identified in Mossack Fonseca’s internal documents. Thirty-seven of these are associated with natural resources in Africa and have been named in court actions or government investigations. More information can be accessed here.