Where is Africa's share of the spoils?

The continent sees little of the vast profits made from its natural resources

 wealth of natural resources can be a blessing or a curse. It has helped to create prosperity in countries such as Norway, Canada, Malaysia, the Gulf states and Scotland. Much of the developing world has unfortunately seen the ugly side: enclaves of wealth amid poverty, waste and corruption and the undermining of productive agriculture and industry with an overvalued exchange rate.

Moreover, windfalls of wealth have created a rent-seeking culture in which living standards are not earned and there is a neglect of entrepreneurial endeavour, technological innovation and hard work.

Each year, international oil, gas, forestry and mining companies make large payments to the governments of resource-rich developing countries, though their citizens see very little of it. Charities have estimated that in Africa this income is six times greater than the aid the continent receives. Where does all this money go?

Too much of it is siphoned away from those who need it most and lodged into foreign bank accounts and offshore tax havens. These vast sums of money that disappear into the coffers of bent politicians and bureaucrats are part of a culture of corruption that is fuelled by a lack of transparency. Instead of being used to fight poverty, boost economic growth and improve social conditions, this money often funds wars and personal vanity projects.

For those companies that do want to operate ethically, this behaviour poses a real problem. They may pay their taxes in perfectly legal manner, but there is no accountability.

In the UK, working with my team of Ed Davey, Norman Lamb and Jo Swinson, as well as other colleagues in the coalition, we have been striving to achieve a balance between promoting transparency without encroaching on commercial confidentiality. The ability to track payments and make a comparison of revenues earned and investment made will combat corruption and ensure that the sale of natural resources benefits the many, not the few.

The standard is set by the US.http://www.independent.co.uk/voices/comment/where-is-africas-share-of-the-spoils-8348306.html Thanks to that country's passage of the Dodd-Frank Act, companies are forced to disclose the money they pay to governments above a threshold of $100,000. They must also provide details on each individual project, which contributes to these payments, though there are genuinely tricky problems around the definition of a project. We in the UK are taking the lead within the European Union in promoting the creation of a new global standard for transparency that will cover the majority of the industry's companies.

It's time to put politics aside. Those involved need to get behind this initiative and ensure the EU, ahead of the G8, leads the world in a transparency agenda.

We're confident we can take this first historic step in lifting the lid on the financial dealings between extractive companies and developing countries. These proposals are an important step in reducing corruption and increasing accountability in resource-rich countries.

Dr Vince Cable is Secretary of State for Business, Innovation and Skills

How To Rob Africa; Why does the Western world feed Africa with one hand while taking from it with the other?

How To Rob Africa; Why does the Western world feed Africa with one hand while taking from it with the other?

Africa and the rest of the developing world are often criticized for failing to effectively combat corruption. While many of these countries have a lot to do to get their domestic house in order, not enough attention is paid to the systemic global problems that make it very difficult for even a well-meaning, responsible African government to put a serious dent in illicit financial flows. Western financial secrecy and lax regulations make it very easy for elites in developing countries to squirrel away illicit money, far away from any tax authority.

In a great new documentary, Al Jazeera looks at how this is happening and how it prevents the continent from escaping widespread poverty despite immense natural resource wealth and an industrious, hard-working, young population. A great quote:

“When these diamonds came, they came as a God-given gift. So we thought now we are going to benefit from jobs, infrastructure, we thought maybe our roads were going to improve, so that generations and generations will benefit from this, not one individual. But what is happening, honestly, honestly it’s a shame!”

Watch the documentary here:  http://www.aljazeera.com/programmes/peopleandpower/2012/11/201211714649852604.html

Review By EJ Fagan

EJ Fagan is the New Media / Advocacy Coordinator for the Task Force on Financial Integrity & Economic Development in Washington, DC. He holds the same position with Global Financial Integrity.

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Ghana gets $2.5b in mining investments in three years

Ghana gets $2.5b in mining investments in three years – Report

Within three years an amount of $2.5 billion has been invested in mining in Ghana.

Mr Mike Hammah, the Minister of Lands and Natural Resources says between 2009 and 2011 the  investment inflow for Ghana’s mining sector was $2.5 billion.

He also said gold production increased consistently; 3.1 million ounces in 2009, 3.4 million ounces in 2010 and 3.6 million ounces in 2011 which is the highest gold production ever in Ghana, according to a report by the Ghana News Agency.

The report cited him as saying tax on gold contributed GH¢1 billion, representing 27.61 per cent of total collection of the Ghana Revenue Authority in 2011.

It also contributed 42 per cent of total merchandise export within the same period, he said.

According to the Bank of Ghana exports of gold amounted to $1.5 billion in the first three months of 2012.

The report indicated that about 28,000 people were employed in the mining sector, while mineral royalties returned to the mining communities in the Western, Ashanti and Brong Ahafo Regions from 2009 to 2011 stood at GH¢41 million.

The corporate social responsibility programme of the mining companies stood at GH¢43 million within the same period, the report said.

Mr Hammah, according to the report, said six mining regulations have been passed by Parliament to operationalise the Minerals and Mining Act 2006 (Act 703).

The Ministry is facilitating the passage of the Mineral Development Fund Bill to help to address developmental issues in mining communities, he said.

The report noted that corporate income tax increased from 25 per cent to 35 per cent while effective mineral royalty rate also increased from three per cent to five per cent.

A proposal for a Windfall Tax is under consideration, it added.

Meanwhile, Ghana is the seventh highest gold producer in the world.

The country moved from the eighth place in 2010 to seventh in 2011 globally in terms of gold output, according to figures compiled and released April 5, 2012 by the London-based metals-consulting company CRU.

Ghana’s output of gold in 2011 was 102 metric tonnes, up from 92 metric tonnes in 2010, the figures show.

Mining has been going on in Ghana for over 100 years.

Gold, diamond, bauxite and manganese are mined in the country. Recently, large deposits of iron ore have also been discovered.

By Emmanuel K. Dogbevihttp://www.ghanabusinessnews.com/2012/11/11/ghana-gets-2-5b-in-mining-investments-in-three-years-report/

Invitation to the screening of the movie ‘’We’re Not Broke” and thereafter a discussion on the state of tax justice in Kenya

                                                                                                                             Invitation to the screening of the movie ‘’We’re Not Broke” and thereafter a discussion on the state of tax justice in Kenya

Where: Arfa Lounge Bar, 20 Century Plaza, Mama Ngina Street

When: 31^st October 2012

Time: 5.00pm

Host: Tax Justice Network -Africa

Free Entry

WE’RE NOT BROKE tells the story of U.S. corporations dodging billions in income tax and how seven fed-up Americans take their frustration to the streets … and vow to make the corporations pay their fair share.

Watch the Preview here: http://werenotbrokemovie.com/the-film/

“Stand up for tax justice in Kenya. Demand fairness in revenue collection”

RSVP to Ann Njeru at communications@taxjustice.net

1st global training under the Capacity for Research and Advocacy for Fair Taxation (CRAFT)

1st global training under the Capacity for Research and Advocacy for Fair Taxation (CRAFT),30th October to 2nd November 2012, Nairobi, Kenya.

The CRAFT project seeks to enhance the technical and advocacy capacity of targeted civil society organizations in order to enable them to bring about an agenda for change and mobilize public pressure for tax justice.

The specific objectives of the 1^st training  

ü  To provide basic insights on how taxation works;

ü  To enable participants to analyze the tax system of a selected country, propose change and stage action.

The training will be based on CRAFT training modules 1 and 2 and will cover the following topics:

From module 1:

ü  A definition of the concept of taxation and how it relates to State development;

ü  An analysis of  the role of taxation in developing economies;

ü  An explanation of the different types of taxes;

ü  Definition of key terms used in taxation.

From module 2:

ü  A thorough discussion of key concepts in the tax justice campaign such as tax avoidance, tax evasion, illicit financial flows, secrecy jurisdictions/tax havens, corruption tax competition and tax expenditure;

ü  A discussion on the national tax architecture (using a specific country as example e.g. Uganda) and an analysis of the former with regard to the global financial architecture;

ü  An introduction to power analysis tools and institutional change methods with regard to the specific national context;

ü  Concrete case studies of the issues mentioned above will be shared and discussed.

Trainers will be drawn from various institutions working on taxation and specifically involved in the tax justice campaign such as: TJN-A, other regional or national chapters of TJN, the Tax Justice International secretariat, Action Aid and Afrodad.

Trainees will be representatives of the country lead partners for the CRAFT project and any other relevant civil society organization involved in the tax justice campaign.

Note: The film ‘We are not broke’ will be screened during one of the evenings to the training (e.g. day 2) for participants to the training. WE’RE NOT BROKE tells the story of U.S. corporations dodging billions in income tax and how seven fed-up Americans take their frustration to the streets … and vow to make the corporations pay their fair share.

Capacity for Research and Advocacy for Fair Taxation (CRAFT) is a project of Oxfam Novib and TJN-A. In this project, Oxfam Novib (ON), Tax Justice Network-Africa (TJN-A) and its partners mobilize civil society forces in several countries in Africa, Middle East and Asia (Uganda, Mali,       Senegal, Nigeria,  Egypt and Bangladesh) on tax justice, with a view to achieve accountable, fair and pro-poor tax systems. This is supported by Third World Network Africa (TWN-A), which gives expertise in the area of mining and taxation. The International Budget Partnership (IBP) and Tax Justice Network-International Secretariat (TJN-IS) are also associated with CRAFT. 

Africa's mineral wealth hardly denting poverty levels, says World Bank

Report finds discovery of oil and mineral resources doing little to improve prospects for poor people, whose lot may even worsen

Strong economic growth in the past decade among African countries rich in oil and minerals has failed to make a significant dent on their poverty levels, according to a World Bank report.

Africa's Pulse, a twice-yearly analysis of Africa's economic prospects, noted that the decline in poverty rates in resource-rich countries has generally lagged behind that of countries without riches in the ground. Some countries, such as Angola, Congo-Brazzaville and Gabon, have witnessed an increase in the percentage of the population living in extreme poverty.

The report confirms the common perception that, to a large extent, the benefits of growth have not reached the poorest segments of society. It raises questions for aid donors and African governments on how to deal with the "resource curse", with strikes in South African mines providing a stark illustration of what is at stake.

"Resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs, and less poverty for their people, because it will not happen automatically when countries strike it rich," said Shantayanan Devarajan, the World Bank's chief economist forAfrica, and lead author of Africa's Pulse. "Gabon, for example, with a per-capita income of $10,000 (£6,200) has one of the lowest child immunisation rates in Africa."

How to ensure that natural resources benefit the general population, not just the elite, is a question likely to grow more acute as discoveries of oil, gas and other minerals in African countries are expected to generate considerable wealth in the future.

The region's established oil producers represent less than 10% of the share of both global reserves and annual production. Nigeria, Africa's biggest oil producer, can keep supplying at 2011 levels for another 41 years, while Angola, the second largest producer in the region, has about 21 years remaining at current production levels before its known reserves are depleted.

With such sizeable reserves, it is likely the dependence on oil resources in these countries will continue. Production in new mineral countries such as Ghana, Mozambique, Sierra Leone and Uganda could last for a substantial number of years.

Others have considerable mineral resources. In 2010, Guinea represented more than 8% of total world bauxite production; Zambia and the Democratic Republic of the Congo have a combined share of 6.7% of the total world copper production; and Ghana and Mali together account for 5.8% of total world gold production.

Africa's Pulse underlines the continent's heavy dependence oncommodities for its recent growth, although domestic demand has played its part. Sub-Saharan Africa is expected to grow at 4.8% in 2012, broadly unchanged from 4.9% growth in 2011, and is largely on track despite setbacks in the global economy. Excluding South Africa, the continent's largest economy, growth in sub-Saharan Africa is forecast to rise to 6%.

While African economies have not been immune to the crisis in the eurozone, the World Bank said consistently high commodity prices and strong export growth in countries with mineral discoveries in recent years have fuelled economic activity and are expected to underpin economic growth for the rest of the year.

A measure of the continent's economic success is strong investor interest. "An important indicator of how Africa is on the move is that investor interest in the region remains strong, with $31bn in foreign direct investment flows expected this year, despite difficult global conditions," said Makhtar Diop, World Bank vice-president for Africa.

The report noted that, after 10 years of high growth, an increasing number of countries are moving into "middle-income" status, defined as those countries reaching more than $1,000 per-capita income. Of 48 countries, 22 with a combined population of 400 million have officially achieved middle-income status.

But there are risks, with a fragile global economic recovery posing the greatest threat. A "hard landing" for the Chinese economy would adversely affect growth prospects. Over the past decade, sub-Saharan exports to China have risen from 5% to around 19.3% in 2010, with producers of oil (Sudan, Congo) and metal and mineral exporters (Zambia, Mauritania, the Democratic Republic of the Congo) among countries heavily dependent on Chinese appetite for commodities.

The report noted that oil-rich countries systematically perform worse than any other country groups in terms of voice and accountability, political stability, rule of law and the control of corruption. Chad and Sudan are the worst performers, according to the World Bank, and their governanceindicators improved little between 2000-2010.

Anti-poverty campaigners have been pressing for more transparency and accountability in the natural resource sector as a way of putting pressure on governments. A focus of such efforts is the Extractive Industries Transparency Initiative, which provides an internationally-recognised framework for public disclosure by mining companies and governments of what they pay and earn respectively. However, the initiative is voluntary, leaving implementation to those who sign up.

A European parliamentary committee last month approved a measure requiring EU oil, gas, mining and timber companies to publish their payments to foreign governments. The vote puts the world on track to create strong global transparency standards with equivalent rules in the EU and the US.

The Nairobi Declaration on Taxation and Development

The Nairobi Declaration on Taxation and Development

The Nairobi Declaration on Taxation and Development is a policy document signed by individuals organisations and networks around the world following extensive research on the problems facing sub-Saharan countries at the Pan-African Conference on Taxation and Development held in Nairobi on the 25th - 26th March 2010.

The Nairobi Declaration on Taxation and Development makes demands on African governments, revenue authorities, Multinational Corporations, civil society organisations, research institutes, aid donors as well as African regional bodies to make reforms in the following areas.

i) Domestic Taxation
ii) Revenues from natural resource extraction
iii) International taxation


http://www.taxjusticeafrica.net/sites/default/files/The%20Nairobi%20Declaration%20on%20Taxation%20and%20Development%20final.pdf