Donations from West mask ‘US$60bn looting’ of Africa

WESTERN countries are using aid to Africa as a smokescreen to hide the “sustained looting” of the continent as it loses nearly US$60 billion a year through tax evasion, climate change mitigation, and the flight of profits earned by foreign multinational companies, a group of NGOs has claimed.Although sub-Saharan Africa receives US$134 billion each year in loans, foreign investment and development aid, research released last week by a group of UK and Africa-based NGOs suggests that US$192 billion leaves the region, leaving a US$58 billion shortfall.

The report says that while Western countries send about US$30 billion in development aid to Africa every year, more than six times that amount leaves the continent, “mainly to the same countries providing that aid”.

The perception that such aid is helping African countries “has facilitated a perverse reality in which the UK and other wealthy governments celebrate their generosity whilst simultaneously assisting their companies to drain Africa’s resources”, the report claims.

It points out that foreign multinational companies siphon US$46 billion out of sub-Saharan Africa each year, while US$35 billion is moved from Africa into tax havens around the world annually.

The study, which also notes that African governments spend US$21 billion a year on debt repayments, calls for the aid system to be overhauled and made more open.

It says aid sent in the form of loans serves only to contribute to the continent’s debt crisis, and recommends that donors should use transparent contracts to ensure development assistance grants can be properly scrutinised by the recipient country’s parliament.

“The common understanding is that the UK ‘helps’ Africa through aid, but in reality this serves as a smokescreen for the billions taken out,” said Martin Drewry, director of Health Poverty Action, one of the NGOs behind the report.

“Let’s use more accurate language. It’s sustained looting – the opposite of generous giving – and we should recognise that the City of London is at the heart of the global financial system that facilitates this.”

Research by Global Financial Integrity shows Africa’s illicit outflows were nearly 50 percent higher than the average for the global south from 2002-11. The UK-based NGO ActionAid issued a report last year that claimed half of large corporate investment in the global south transited through a tax haven.

Supporting regulatory reforms would empower African governments “to control the operations of investing foreign companies”, the report says, adding: “Countries must support efforts under way in the United Nations to draw up a binding international agreement on transnational corporations to protect human rights.”

But NGOs must also change, according to Drewry: “We need to move beyond our focus on aid levels and communicate the bigger truth – exposing the real relationship between rich and poor, and holding leaders to account.”

The report was authored by 13 UK and Africa-based NGOs, including: Health Poverty Action, Jubilee Debt Campaign, World Development Movement, African Forum and Network on Debt and Development, Friends of the Earth Africa, Tax Justice Network, War on Want, Medact, Friends of the Earth South Africa, JA!Justiça Ambiental/Friends of the Earth Mozambique.

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said: “Tackling inequality between Africa and the rest of the world means tackling the root causes of its debt dependency, its loss of government revenue by tax dodging, and the other ways the continent is being plundered.

“Here in the UK we can start with our role as a major global financial centre and network of tax havens, complicit in siphoning money out of Africa.”

A UK government spokesman said: “The UK put tax and transparency at the heart of our G8 presidency last year and we are actively working with the Organisation for Economic Co-operation and Development to ensure companies are paying the tax they should and helping developing countries collect the tax they are owed.” – The Guardian.

SOURCES: http://www.herald.co.zw/donations-from-west-mask-us60bn-looting-of-africa/

http://www.theguardian.com/global-development/2014/jul/15/aid-africa-west-looting-continent

 

Zimbabwean government urged to improve taxation systems

The Zimbabwe Coalition on Debt and Development (ZIMCODD) on Wednesday held a workshop at the Jameson hotel, Harare aimed at sensitizing media on issues to do with Debt, extractives and illicit outflows.

Speaking at the workshop ZIMCODD director Ms Patricia Kasiamhuru spoke on the need to provide capacity information to enable effective reporting. Illicit outflows generally refers to, illegally earned, transferred or spent money, in the extractive sector it involves tax evasions, corruption and illegal exploitation.

Tafadzwa Chikumbu of the African Forum and Network on Debt and Development (AFRODAD) highlighted effects of illegal illicit outflows on a country’s economy, stating that Africa loses about $50 billion in illicit financial outflows while Zimbabwe lost $12 billion over the last 3 decades.

Illicit financial flows stifle socio-economic progress examples can be pointed on the failure by some African countries to finance Millenium Development Goals leading to unsuccessful implementation of these vital causes in societies. Illicit financial flows also promotes corruption and bribery thereby increasing gain for a few and distorting funds which would have been used for poverty alleviation at the expense of ordinary Citizens, it also aggravates foreign debt leading to stagnation in progress as an economy fails to flourish.

Mr Chikumbu spoke on the need for government to ensure fiscal transparency, push for the criminalisation of tax evasions which is rampant in the informal sector, however he pointed out that “untouchable multinational cooperations “, as well as complicity of government position at times make it difficult to fully curb illicit financial flows.

Gilbert Makore of the Zimbabwe Environmental Lawyers association (ZELA ) spoke on challenges and effectiveness of the current resource mobilisation in Zimbabwe’s taxation system citing need to broaden existing tax base, increase diamond resource mobilisation and improve on transparency and accountability as a means to monitor revenue.

Media was urged to play its role in exposing issues of corruption and mishandling of taxes in order to bring justice.

Media was called upon to be factual urging research of all angles so as to be true to the public with dogmatism attributed as the greatest challenge in media.

Zimbabwe Network against illicit outflows (ZINAIF ) called upon journalists to append their signatures as a way of supporting their cause.

SOURCE: http://newsofthesouth.com/finance-mishandling-a-cause-for-concern-for-zim/

Optimism and worry as Seychelles readies for WTO

The Indian Ocean archipelago of the Seychelles is pinning its hopes of economic recovery on its expected membership of the World Trade Organisation, but the impending move is also causing jitters for local businesses.

After 18 years of negotiations, the tourist destination — famed for its white sandy beaches and luxury hotels — is set to join the global trade body by the end of April 2014, said Cillia Mangroo, head of the finance ministry’s trade division.

For the authorities of the island nation, membership equals commercial security.

“Being a member of the WTO, for a small country like Seychelles, provides the opportunity to have a body that can defend their rights in case of a trade dispute with another country,” said Charles Morin, the islands’ chief negotiator.

Aside from pulling in tourists and honeymooners, the main export is canned tuna to the European Union. The EU is also the country’s main trading partner, taking 61 percent of exports and the source of 30 percent of imports.

The Seychelles also exports copra — coconut kernels that are ground down to extract oil — and furniture to Asia and Africa.

Ahead of joining the 159 member bloc, officials in Victoria has been busy signing bilateral agreements with Canada, Mauritius, Oman, Switzerland, and, more recently, the EU and Thailand. According to the WTO, the country has been particularly committed to cutting export subsidies to zero.

Worries for local businesses
But not everyone in the small nation of just 90,000 inhabitants is convinced of the benefits of casting off trade barriers.

“Architects, engineers and lawyers are worried about the opening up of the market, because once the Seychelles becomes a member of the WTO, any business can come and invest in the country,” said Marco Francis, president of the country’s chamber of commerce. There are fears too for the country’s poultry and pig farmers, already badly struggling since the authorities began to open the market, including allowing meat imports from Brazil.

“I fear that the country’s entry into the WTO will result in the end of such farming… and that could put the country’s food security at risk,” Francis added. He said many livestock breeders have also closed shop because the Seychelles does not have the means to make “mass rearing such as Brazil and China.”

Francis hopes that a list of “protected” products will be reserved for key Seychelles companies, arguing Victoria should retain a monopoly on traditional fishing.

But the government will not budge, arguing that WTO accession is key to putting the economy back on track after skirting close to bankruptcy during the peak of the financial crisis.

Becoming a member “will help us attract the right direct investment,” Mangroo added.

In a statement issued at the conclusion of bilateral negotiations in late October, the European Commission said it believed accession “would be the last step on the process of economic reform and development of the Seychelles”.

The International Monetary Fund (IMF) ends in December its five-year programme of assistance to Seychelles, an austerity plan that has resulted in a major restructuring of the debt, privatisation and slashing the government staff.

At the end of 2008, the Seychelles faced a balance of payments crisis and liquidity problems. Its public debt reached 130 percent of gross domestic product (GDP), inflation stood at 37 percent and GDP grew by just 0.1 percent.

The following year, prices soared by over a third while GDP tumbled by 9.6 percent.

For 2013, the IMF now expects the Seychelles to post growth of 3.3 percent and inflation of 4.9 percent.

Victoria should also have cut public debt to 70 percent of GDP, and hopes to see this ratio fall to 50 percent by 2018.

SOURCE:
http://www.globalpost.com/dispatch/news/afp/131123/optimism-and-worry-seychelles-readies-wto

Regional Consultation for East and Southern Africa on Development Effectiveness

Leveraging Global Partnership to Optimize Africa’s Resources – From Busan to Reality

The African Forum and Network on Debt and Development (AFRODAD), African Union Commission (AUC), NEPAD Planning and Coordinating Agency, Government of South Africa, Southern African Development Community (SADC) and the East African Community (EAC) member states, and the United Nations Development Programme (UNDP) are hosting an East and Southern Africa Regional Post-Busan Implementation Engagement workshop. The workshop is aimed at creating a platform to promote mutual learning and knowledge sharing on best practices and experiences in the implementation of a Global Partnership within the AU context. The workshop is taking place at Hunters Rest Mountain Resort, Rustenburg, South Africa from the 16th to 18th of October 2013.

The Regional Consultation under the auspices of the Africa Platform for Development Effectiveness (APDev) follows two similar engagements held in West and Central Africa. The Global Partnership for Effective Development Cooperation (GPEDC) at the 4th High Level Forum in Busan in 2011 represented the international community’s commitment towards a fundamental transformation of the aid architecture. This meeting has drawn experts from; Governments, CSOs, Parliaments, Regional Economic Bodies, Development Partners, the Private Sector among others.

You can follow the events on AFRODAD blog, Facebook, APDev, UNDP

Media enquiries should be directed to:

Munyaradzi T. Nkomo, Information and Communications, AFRODAD
Tel: +263 777 782 651 or + 2779 7269401
Email: munyaradzi@afrodad.co.zw