Policy Forum this week held a special half-day discussion on illicit financial flows from Africa with two international experts on the topic. Raymond Baker, the founder and CEO of the Global Financial Integrity, the leading global institute on illicit financial flow studies was joined by Alvin Mosioma, Coordinator of the Tax Justice Network for Africa, an institution which aims to promote socially just, democratic and progressive taxation systems in Africa.

Baker, who is also the Director of the Global Task Force on Financial Integrity which deals with tax havens and illicit financial flows, and author of several books on the topic, talked about how foreign aid inflows dwarfed illicit financial outflows and how the latter were fundamentally damaging to economic development, promoting corruption and undermining democracy. He described the global shadow financial system that was impacting negatively on poor countries which included tax havens, offshore secrecy jurisdictions, disguised corporations, anonymous trusts, fake foundations, falsified pricing, money laundering and loopholes left in laws of Western countries.

On his part, Alvin Mosioma, said taxation is the most sustainable source of development finance, but African tax systems still do not raise enough revenue to meaningfully reduce poverty. He said for poor countries, tax matters not only for raising revenue to fund service delivery that citizens need, but it was a means of redistribution to address inequality and a means of representation by way of building accountability of governments.

Mosioma also highlighted a Tax Justice Network-Africa study that showed that $2.8 billion is lost each year due to tax incentives in the four East Africa Community (EAC) members Kenya, Uganda, Tanzania and Rwanda. He attributed this to harmful tax competition between these countries and recommended policies that would enhance transparency through country-by-country reporting and international cooperation on tax matters through "Automatic Exchange of Tax information" as well as a developing a Code of Conduct against harmful tax competition. 

Attended by civil society representatives, the discussion helped shed light on what needs to be done to further raise the profile of the  capital flight problem in Tanzania. The session was held at the British Council Auditorium in Dar es Salaam.