New GVG Payment and Mobile Money Handling Service Will Lead to More Stealth Taxes on Ordinary Africans

Global Voice Group (GVG) has announced the launch of TransFin, a ‘seamless payments interoperability solution’ aimed at African governments and central banks. The solution is meant to integrate with mobile money services and other methods of collecting and making payments.

If you read Commsrisk on a regular basis then you already know what is wrong with any government that would contemplate allowing GVG to enter this market. For many years GVG has sold systems that monitor telco transactions. These systems were never sold directly to telcos; the only customers that GVG wants are governments and regulators. GVG has waged a crude propaganda campaign that smeared all telcos as routinely cheating on their taxes. Governments and regulators were told they would receive enormous windfalls if GVG is allowed to monitor transactions and hence identify the supposed underpayment of taxes, although no court has ever been shown any GVG data as part of a tax prosecution. GVG’s original focus was on auditing voice services – the clue is in the name of the Global Voice Group – and this has more recently been extended to the audit of mobile money transactions too. But if it is vital that governments pay GVG for the independent audit of transactions handled by the private sector, then how can they justify GVG continuing to audit transactions that GVG would also be paid to process?

It is not clear if GVG did any actual development work ahead of marketing TransFin. They may be playing their usual game of hunting for dodgy government officials to sign a lucrative long-term contract, without any other company being allowed to bid for the tender. If they developed an actual solution then so could many other businesses. However, real competition would be a disaster for GVG because the technology that underlies their overpriced services is so basic and cheap. The logic that governments should buy from a supplier that only sells to governments ignores the commercial reality that a technology business which is scaled to serve many customers can deliver lower rates than a technology business that refuses to sell to the majority of possible customers.

GVG has to change its business model because their bullshit is finally catching up with them. They have spent many years telling African governments that heavy taxation of inbound international voice calls is a perfect source of revenue, even though it punishes residents of neighboring countries, discourages cross-border trade, and leads to the fraud that inevitably occurs whenever ordinary law-abiding people are forced to pay artificially inflated prices. The African experience comprehensively proves that international phone calls are much cheaper if the flow of traffic is not restricted by law to gateways whose main purpose is to serve as government toll booths for the collection of stealth taxes. GVG continued to win government contracts based on the audit and taxation of international voice services even as that market entered permanent decline because consumers had begun switching to over-the-top (OTT) voice services.

Ordinary Africans have grown tired of paying insane prices for international phone calls, so it is no surprise that they are especially motivated to adopt OTT voice as soon as they have a decent internet connection. GVG can no longer promise a huge bounty by auditing the revenues generated by traditional voice services because the use of those services is declining so dramatically. That is the key reason why a business that has ‘voice’ in its name is now so determined to position themselves to collect stealth taxes on financial services instead. GVG’s parasitic behavior has accelerated the death of the voice services they tell governments to exploit. They will not hesitate to do the same to mobile money and the new breed of financial services enabled by the internet.

GVG has long complained about foreigners stealing from African countries by overcharging for services and underpaying taxes. GVG did this whilst remaining vague about where they are really based and who benefits from the profits they generate. Just last month Laurent Lamothe, the former Prime Minister of Haiti, issued a clarification concerning his shareholding in GVG Holdings Group II Limited, a company in the notorious tax haven of the British Virgin Islands. Lamothe was seeking to deflect revelations from the Pandora Papers about tax avoidance by rich and powerful people. It is notable that Lamothe was explicit in stating he resigned from GVG’s Board of Directors in 2011 but did not claim to have sold his shares.

The GVG plan to exploit ordinary Africans through stealth taxes is not even a secret. Here is what Angela Collings, a fake journalist who has spent the last five years working as GVG’s leading propagandist, wrote about the subject in a 2016 article published by The Botswana Gazette:

Laurent Lamothe, the former Prime Minister of Haiti is strong advocate [sic] of Innovative Financing for Development… Innovative Financing for Development consists of examining the different private sector industries: travel and tourism, energy, mining and minerals, mobile telecommunications and other economic activities and levying a micro-contribution on transactions related to these globalised sectors.

The new GVG marketing strategy will see them pretend to be champions of financial inclusion, even though they are again seeking to do monopolistic deals with governments in order to levy fees on top of existing telco services. African telcos have taken the lead with financial inclusion. Mobile money has improved the lives of many. They have done this whilst watching their blood being sucked by GVG and its government stooges. If Africans want financial freedom they need to reject the disinformation circulated by hackneyed journalists paid by GVG. The audit that Africans really need would determine:

  • where and how GVG gets its money;
  • why governments who use GVG’s services never consider tenders from other businesses;
  • the profit margins for every government contract that GVG receives;
  • who ultimately receives the profits passed through GVG’s complicated and obscure arrangement of holding companies; and
  • how much tax they pay.

This is a pivotal moment for financial freedom in Africa. If GVG gets control of payments systems used by the majority of Africans then GVG will become capable of unleashing tremendous harm against anyone who opposes them. The award of government contracts to GVG is central to corruption accusations involving death threats and sexual harassment. GVG claim to be auditors, but nobody is auditing them. That has to change now.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.