How multinational tobacco companies aid Illicit financial flows in Nigeria, others – Report

Tobacco multinationals in Nigeria and other African Countries are contributing significantly to illicit financial flows in the continent mainly through tax avoidance and evasion, a new report said.

The report titled ‘Tobacco Industry and Illicit Financial Flows in Africa” was conducted by the Civil Society Legislative Advocacy Centre (CISLAC) in collaboration with Tax Justice Network Africa (TJNA) with a focus on documenting the extent of the tobacco industry’s involvement in tax avoidance and evasion in Africa.

The report profiles leading tobacco companies, their subsidiaries, domicile and revenue trends between 2010-2021 in South Africa, Malawi, Tanzania, Kenya, Nigeria, Cote’s Ivoire, Ghana, Egypt and Morocco.

Speaking at the presentation of the report to journalists in Abuja on Wednesday, the executive director of CISLAC, Auwal Rafsanjani, lamented that many Nigerians die yearly from tobacco-related diseases, adding that the tobacco industry has also added money laundering and corruption in the country.

Quoting a 2020 data from the United Nations Conference on Trade and Development’s Economic Development that Africa is now losing over $88.6 billion to IFFs, Rafsanjani said the illegal acts is mainly perpetrated by multinational companies.

He said: “We have to show the world the negative effects and manner in which tobacco companies are destroying the health of Africans, and at same time, promote corruption in the continent. Over the years, tobacco have done a lot of harm to the health and wellbeing of Nigerians and Africans. In abroad, especially in the Western world, the tobacco consumption is reducing but in Africa the consumption rate is increasing. When we look at the major diseases that are killing people across the globe, particularly in Africa, tobacco is at the forefront.

“Another issue is some of the multinationals have a funny way of going to African parliaments to bribe them so that they can have a soft landing legal framework. Some of them are also working with some unpatriotic government officials across Africa to get tax relief”.

Rafsanjani called on the federal government to increase tax on tobacco to reduce the health hazards and the corresponding deaths associated with cigarettes smoking.

He said the Civil Society Organisations are working with ECOWAS to highlight and show the danger and the risks for the continuation of allowing the tobacco companies to have their way.

“So we suggest to governments in Africa that they need to increase the taxes for tobacco consumption, and tobacco multinational corporation. Because what they are doing in their country is not what they’re doing here Africa. In their country, they follow the rules and regulations but in Africa, those rules or regulations that guarantee the safety of the people are not even there”

A lecturer with the University of Nairobi, Prof. Waithaka Iraki, in his presentation wondered how tobacco firms’ revenues were surprisingly steady even during the covid-19 pandemic, adding that laws should be tightened to reduce advertising and promotions which keep demand of the product high.

Noting that the incentives offered to tobacco firms by African government were not commensurate with their contribution to the economy, the don warned government of host countries to be wary of higher taxes even as it is beneficial.

“Tobacco money is made in Africa, money goes elsewhere to shareholders outside the continent. That is more reason higher taxes would benefit the host countries. We however risk having smokers spend more money on smoking than say education or food as price of cigarettes and other tobacco products go up”, he stated.

On his part, Tax advisor, ECOWAS, Lucien Ametchowou, expressed the commission’s commitment to the regional harmonisation of tobacco taxation in consultation with the West African Health Organisation (WAHO) and the Consortium for Economic and Social Research (CESR).

Disclosing that tobacco abuse is responsible for more than six million deaths per year, he said the menace had become one of the major challenges for all countries in the world.

He said: “Reducing tobacco consumption is the most effective way to meet this challenge. Significant progress has been made in this area by governments around the world, including high levels of taxation. The situation in West African countries shows the lack of use of taxation and the lack of synergy between research, advocacy and policy making in tobacco control. As a result of this, the Commission adopted a directive harmonizing excise duties on Tobacco products that set out a minimum excise duty rate of 50 per cent.

He noted that the 50 per cent rate applies whether the products are imported or manufactured.

“In addition, the Commission acknowledges the fact that not only does the tobacco industry represent a major health hazard but also is a subject to a lot of manipulative practice for enhanced profit by the players at the detriments of most African countries including the ECOWAS mission.

“Therefore the launch of this study report is a major source of interest to the Commission and | can assure you that, we will take this study seriously and it will shape our future initiatives to combat illicit financial flows.”