12:12 pm
28 October 2016

Rich East Africans Are Stashing Cash in Swiss Banks

New leaks from the International Consortium of Investigative Journalists (ICIJ) reveal that wealthy East Africans collectively stored up $795.4 million in Swiss banks sometime between 2006 and 2007.

These reports claimed that four East African countries including Uganda, Kenya, Tanzania, Burundi, and Rwanda all had more than $2 million in HSBC Switzerland, a subsidiary of the London-headquartered HSBC. It is a similar tale down in West and Southern Africa, where billionaire political figures and businessmen find safe haven for their wealth in Switzerland.

The report, titled “Swiss Leaks”, further alleged that Some 912 clients from East Africa, excluding Rwanda, held the accounts in HSBC in 2006 with Kenya leading the gang in the region by ranking at the fifty-eight position globally as it had more than $559.8 million held in the banks during the period. Overall, the document ranked some 203 countries vis-a-vis how much money their citizens or companies operating within their borders held in Swiss banks.

Other high ranking East African countries include Tanzania which ranked 100th with, reportedly, $114 million. Uganda came in next at 105th with $89.3 million. Rwanda trailed the rest in the region, ranking at 171st with just $2.1 million in the Swiss banks. The reports neither stated the details of the account holders nor classify it as “dirty money.”

This could add more flesh to the common notion that public officials in Africa stash illicit cash in tax havens such as Switzerland. Banks in such areas have been known to promise high levels of secrecy, thereby attracting huge funds from individuals and companies seeking to evade taxes. Because of this, in 2012, the Swiss National Bank (SNB), which is the central bank of Switzerland, reported that Burundi, Rwanda, Uganda, Tanzania and Kenya had at least $1.3 billion in undeclared amount. Recently such banks have raised rates and associated costs of such international deposits in a bid to reduce them.

By far, this capital flight drives the huge figures representing illicit outflows from Africa that are reported  every year. Many analysts believe these funds leave the region to countries that are already rich thus denying the very nations that need it most. These claims are substantiated, in part, by the leaked reports which also reveal that at least 57 of such clients, which held 212 bank accounts, are associated with Uganda. 83 of these accounts were opened between 1972 and 2006 and, in 2011, bank accounts linked to Uganda were reported to be worth at least $159 million, while Rwanda’s had grown to $29.7 million, information from the leaks further suggested.

The UK Guardian quoted HSBC as agreeing to “wrongdoing”, and the World Bank has estimated that Uganda loses more than Shs 500 billion ($174.5 million) in corruption annually.

By Emmanuel Iruobe