The International FinanceCorporation (IFC) and the Swiss government have jointly launched a business transparency initiative in East Africa that will address the issue of illicit financial flows (IFFs) through misinvoicing.

The overarching aim of the initiative is to promote corporate leadership inEast Africa with the aim ofhelping firms attract foreign investment.

Cooperative effort

The Swiss State Secretariat for Economic Affairs(SECO) and the IFC, are cooperating in the implementation of the EastAfrican Chapter of the African Corporate Governance Programme.

Theprogramme aims to improve the performance of businesses in four countries by ensuring that businesses follow good management practicesand regional priorities.

It should help firms and business leaders inKenya, Uganda, Rwanda and Tanzania to accept and implement goodcorporate leadership practices to make their businesses attractive toforeign investors who might be interested in injectingcapital into theregion.

Kenyan misinvoicing

But the spotlight has recently fallen on Kenya in particular following recent reports indicating the EastAfrican nation has been losing billions of US dollars through taxevasion by multinational firms.

Local tax officials are reported as saying that some local subsidiaries of multinational firms have declared losses but in reality they were under-invoicing exports to the parent company or another of its subsidiaries.