Evangelical Association of Malawi (EAM) claims that multinational corporations “drain” more revenue from Malawi than corruption, calling for a shift in focus from graft to alleged corporate tax evasion. EAM Fighting Inequalities Project coordinator Lusungu Kumwenda Mangochi, speaking in Lilongwe yesterday during a tax justice meeting to mobilise faith leaders to advocate for a fairer tax system and equitable government spending, said Malawi loses about 65 percent of potential tax revenues to profit shifting and corporate evasion, compared to about five percent lost to corruption. “Corruption is money we have already collected.
The bigger problem is that our money disappears before it reaches the Treasury through commercial tax evasion,” she said. Kumwenda Mangochi estimated that illicit financial flows, mainly through alleged corporate tax avoidance, cost Malawi about $33 million (over K60 billion) annually compared to between K18 billion and K30 billion lost per year to fraud and corruption as per audit reports. She also faulted donors’ singular focus on anti-corruption efforts, saying they have “made us believe we are the thieves”.
Said Kumwenda Mangochi: “Do you see any European funding to fight corporate tax evasion? They only help us tackle corruption… because the evaded tax money goes back to Europe.” EAM deputy board chairperson the Reverend Davidson Chifungo said inequality stems from international systems favouring corporations. Nyika Institute executive director Moses Mkandawire backed the call for the shift in focus, noting that corruption narratives individualise blame while corporate tax abuse is a systemic issue.
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“The tax justice approach exposes policy loopholes, weak regulatory frameworks and harmful tax incentives. Focusing on this can drive structural reform, accountability and long-term fiscal sustainability,” he said. Mkandawire, who represents the think-tank on governance, peace, extractives and human rights, referenced international studies, including the Mbeki Panel report, which found Malawi was heavily affected by commercial illicit financial flows relative to the size of its economy.
Anti-money laundering law expert Jai Banda said Malawi faces a global challenge where developing countries lose up to $160 billion yearly to profit shifting. “Both tax avoidance and corruption impact Malawi’s revenue mobilisation. Lack of transparency makes exact losses hard to quantify,” he said, adding that common evasion mechanisms include transfer pricing manipulation, internal loans and holding intellectual property in tax havens. The alleged weak detection is said to be compounded by Malawi Revenue Authority funding and staffing constraints, complex schemes, inadequate laws and limited international cooperation.
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