By Maureen Kariuki, Karabo Rajuili and and Edwin Wuadom Warden
First published on Open Government Partnership
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 US$89-billion per year if illicit capital flight can be addressed. Accelerating beneficial ownership transparency (BOT) implementation remains fundamental to tackle illicit financial flows and meet 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 on 11 July focused 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 to rapidly move the needle on addressing corruption associated with corporate secrecy.
1. Political will: from commitment to action
Advancing the AUCPCC will require countries to work together to mobilise and sustain political will to institute beneficial ownership reforms. While countries such as Ghana, Kenya, Nigeria, Senegal, South Africa and Zambia have made commendable commitments and progress on BOT through OGP and EITI, it is important that these are matched by action. Governments that have made commitments should, at a minimum, pass enabling legislation, which includes robust definitions and low thresholds for disclosures, and dissuasive sanctions and enforcement for non-compliance. Governments, multilateral institutions, and donors should also invest in implementing BOT reforms. This includes:
- Providing financial resources for the establishment of registers, and technical assistance to support implementation
- Facilitating inter-agency cooperation
- Fostering peer-learning exchanges and capacity building for corporate registries, tax authorities, parliaments and anti-money laundering agencies.
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.
At least 30 EITI countries including Cameroun, DRC, Ghana, Nigeria, Senegal, Togo and Zambia have publicly disclosed some beneficial ownership information through EITI reporting.
2. Collective action: strengthen collective capacities and coalition to drive progress
An African proverb suggests 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 have robust consultations, through groups like the OGP and EITI multi-stakeholder fora. These multi-stakeholder platforms are being used to mobilise implementers and provide 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 OGP and Open Ownership 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 suggest that while 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 beneficial ownership transparency 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 OGP, the private sector (under the umbrella of the Nigeria Economic Summit Group has worked closely with the Nigerian government and civil society to facilitate the passage of the Companies and Allied Matters Act and institutionalise an open publicly accessible BOT register.
3. Impact driven: focus on high quality data to maximise impact
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 ensure all user groups are accommodated, making collecting quality data more likely. Open Ownership and EITI 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 is prioritising data quality and is taking steps to integrate Nigeria’s Persons of Significant Control 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 to improve usability of the data.
In collecting and publishing BO 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 BOT present a solid starting point for effective BOT implementation.
In 2021, OGP members will co-create a record 100+ action plans. OGP has called on its members to showcase ambitious commitments including on BOT with the aim to tackle corruption. The EITI and Open Ownership have also recently launched a new five-year programme – the Opening Extractives Programme – 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 will depend largely on how regional communities and national governments tap into the global momentum and resources to accelerate the implementation of BOT.