London, April 11

The World Bank’s investments in sub-Saharan Africa came under attack today by global charity Oxfam which said the vast majority of loans made by bank’s private lending unit in the region went to firms using tax havens.

The charity said 84 per cent of the bank’s International Finance Corporation (IFC)’s investments in the region in 2015 went to companies whose use of tax havens had no apparent link to their core business and with a low level of transparency.

Responding to the report, IFC said Oxfam’s analysis was flawed and that in all cases it required its project companies to comply with applicable law, including tax law.

As per Oxfam’s report, IFC invested over $3.4 billion in sub-Saharan Africa in 2015 and three quarters of 68 firms that it lent the money to were using tax havens. “By allowing investments in tax havens the World Bank’s lending arm is ultimately depriving poor countries of much-needed revenues to fight poverty and inequality,” Nick Bryer, Oxfam’s head of inequality, said.

But the IFC said Oxfam was working on the wrong assumption that offshore jurisdictions were inevitably used to evade tax.

“The report implies that all offshore jurisdictions or offshore financial centres (OFCs) are tax havens simply by virtue of being offshore and that investment in multinational enterprises necessarily leads to tax evasion,” Frederick Jones, IFC spokesman, said. “There are legitimate uses for offshore structures. Appropriate use of OFCs can result in increased mobilisation of private capital for investment that helps the poor.”

As per Oxfam, the most popular tax haven for the IFC’s corporate clients was Mauritius, known for allowing firms to shift money offshore before returning it as foreign direct investment.