Corporate anonymity poses significant risks to domestic resource mobilisation in Africa. Research by the UN Conference on Trade and Development (UNCTAD) suggests that African countries can retain an estimated USD 89 billion per year if illicit capital flight can be addressed. Accelerating beneficial ownership transparency (BOT) implementation remains fundamental to tackling illicit financial flows and meeting global and continental development goals – a priority of the African Union Convention on Preventing and Combating Corruption (AUCPCC).
This year’s African Anti-Corruption Day is on July 11, and will focus on critical actors who can help implement the AUCPCC. This offers a unique opportunity to reflect on the work that has been done by government officials, civil society, and the private sector to tackle these issues. Here are three key lessons from BOT practitioners across the continent address corruption associated with corporate secrecy.
Advancing the AUCPCC will require countries to work together to mobilise and sustain political will to institute beneficial ownership reforms. Whilst countries such as Ghana, Kenya, Nigeria, Senegal, South Africa, and Zambia have made commendable commitments on BOT through the Open Government Partnership (OGP) and the Extractive Industries Transparency Initiative (EITI), it is important that these are matched by action. Governments that have made commitments should, at a minimum, pass enabling legislation, which include robust definitions and low thresholds for disclosures and dissuasive sanctions and enforcement for noncompliance. Governments, multilateral institutions, and donors should also invest in implementing BOT reforms. This includes:
Given that illicit financial transactions are facilitated by webs of legal vehicles that cut across sectors and borders, governments should move towards instituting central registers. Where sectoral ones already exist, integrating them into a central register is critical. To leverage the benefits of registers, the usability and use of data is crucial.
An African proverb says that “a single broomstick is easy to break, but not a bunch”. To implement impactful BOT reforms, it is vital to engage a wide range of stakeholders and to have robust consultations through groups like the OGP and the EITI multi-stakeholder fora. These multi-stakeholder platforms are being used to mobilise implementers and provide the technical expertise necessary to implement reforms, shape frameworks, and sustain systems that best meet the needs of various data users. The Beneficial Ownership Leadership Group, convened by the OGP and Open Ownership (OO), provides opportunities for ambitious reforms, sharing best practice and mutual accountability. Ghana and Nigeria’s journeys are important examples of collective action in this area. In Ghana, the Registrar General has worked closely with civil society and other partners for stakeholder sensitisation and technical assistance which have been vital in instituting the beneficial ownership register.
Evidence from early implementers suggests that whilst government and civil society have often been active in BOT reforms, the private sector is not always at the table. The private sector must not see itself as the “target” of BOT but as part of the solution: a key cog in the wheel towards a holistic open society approach that delivers on sustainable economic growth. Through the OGP, the private sector (under the umbrella of the Nigeria Economic Summit Group (NESG)) has worked closely with the Nigerian government and civil society to facilitate the passage of the Companies and Allied Matters Act and the institutionalisation of an open publicly accessible BOT register.
Collecting high quality data is crucial for the success of BOT processes and outcomes. Equally important is developing different methods of submitting BOT data – both paper-based and online. In several contexts in the region, having easy-to-use forms ensures that all user groups are accommodated, making it more likely that quality data will be collected. The EITI and OO have designed a model declaration form as a practical guide for implementers.
BOT data should be collated in a standardised format and disclosed in a central register to allow citizens and authorities to access information more effectively. In Nigeria, the Corporate Affairs Commission (CAC) is prioritising data quality and taking steps to integrate Nigeria’s Persons of Significant Control (PSC) register with other government databases to validate BOT data. The data on beneficial owners is freely and publicly available, with work underway to implement the Beneficial Ownership Data Standard (BODS) to improve usability of the data.
In collecting and publishing beneficial ownership data, there are concerns about risks, including privacy and competitiveness. Evidence shows that the benefits of public beneficial ownership registries far outweigh the potential harm, and disclosures can be structured in a manner which mitigates risks. Publicly accessible BOT data brings economic benefits, including higher investments and ease of doing business. Practical tools such as the Open Ownership Principles for Effective Beneficial Ownership Disclosure (OO Principles) present a solid starting point for effective BOT implementation.
In 2021, OGP members will co-create a record 100+ action plans. The OGP has called on its members to showcase ambitious commitments on BOT with the aim of tackling corruption. The EITI and OO have also recently launched a new five year programme – Opening Extractives – to unlock the benefits of ownership data. These present immediate opportunities for reformers in African countries to address issues of opacity, illicit capital flows, and corruption through concrete national commitments, localised reforms, and practical actions on BOT. Achieving the AUCPCC would depend largely on how regional communities and national governments tap into the global momentum and resources to accelerate the implementation of BOT.