Tag Archives: debt

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

12 Aug

illicit2WESTERN 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/



Set up commission to undertake debt audit

6 Aug

Flag-map-of-ZimbabwePARLIAMENT should set up a commission to conduct an audit before debt relief mechanisms can be considered as part of a roadmap to resolve the country’s
$9,9 billion external debt, a social and economic justice coalition has recommended.

Last month, Finance and Economic Development minister Patrick Chinamasa announced the setting-up of a Zimbabwe Debt Management Office (ZADMO) to maintain a comprehensive and credible computerised database of all public and publicly guaranteed external debt.

Chinamasa said the sweeping reforms would also see the Ministry of Finance as the final signatory in all loan contractions by parastatals and local authorities.

In an analysis of the reforms to curtail loan contraction, the Zimbabwe Coalition on Debt and Development (Zimcodd) said to find a lasting solution, national public debt audit would bring to the surface the “origins, structure and legitimacy, how much is owed to who, growth and impact of loans on social and economic development”.

“Zimcodd therefore calls for the Zimbabwe Parliament to immediately set up a Public Debt Commission to conduct an official audit before any debt relief mechanism can be considered,” it said.

“The commission should utilise the doctrine of odious debt, and recommend the repudiation of any previous loans which fall under this category.”

Zimcodd said the government should focus on domestic resource mobilisation and plugging “of illicit outflows through high levels of corruption, tax evasion and tax dodging in the extractive industry, particularly the mining sector”.

Zimbabwe’s huge debt has militated against the country’s capacity to attract lines of credit needed to reboot the economy.

The country has no capacity to repay the loans.

Zimcodd said it was concerned by Chinamasa’s proposals to promote the principle of vesting the power to borrow in a single authority as the move was unconstitutional since it violated section 298 (Principles of Public Accountability) and section 299 (Parliamentary Oversight of State Revenues and Expenditure) of the Constitution.

“The executive must ensure that Parliament must at every opportunity be afforded space to exercise its oversight role in all State revenues and expenditure as stated in section 299 of the Constitution,” it said.

It said the composition of the proposed External Loans and Domestic Debt Management Committee (ELDDC) was not adequate as it marginalises the public by only including the central bank governor, Treasury permanent secretary and the Attorney-General.

Zimcodd said Parliament, through portfolio committees, and civil society organisations that are working on debt and economic justice should be included in ELDDC.

SOURCE: https://www.newsday.co.zw/2014/08/06/set-commission-undertake-debt-audit/

Most African nations ‘will not achieve Millennium Development Goals

12 Nov

MDG_monitorAddis Ababa, Ethiopia: Most African countries will not achieve Millennium Development Goals (MDG) by the 2015 deadline, women leaders have said.

The women raised the red flag in Addis Ababa Ethiopia during a meeting that brought together leaders from across the continent.

They observed that among MDGs that will not be achieved are those focusing on gender issues and affirmative action. “MDGs have contributed significantly in advancing development, but they have failed to fully address issues to do with gender. Most African countries will not achieve the goals because they did not own them,” said Judith Ameso of UNECA.

She noted the MDG that focused on social development, for instance, has not addressed the root cause of poverty, but only symptoms.

“What we should now focus on is post-MDGs because African countries are lagging behind. Africa should articulate what it wants in 2015 based on its experiences and the level of development arising from MDGs,” said Ameso at the three day strategy meeting, which brought together over 30 African women’s organisations and networks from all five sub regions of the continent.

Through the meeting, the women hoped to influence Africa’s position in shaping the post-MDG agenda.

“We want to build a strong corps of women to lobby governments and also articulate issues of women’s rights, gender equality, sustainable development and sexual and reproductive health in Agenda 2063,” said Femnet Executive Director Dinah Musindarorwezo.

Musindarorwezo said it was time women participated equally in decision-making and more focus put on gender issues to accelerate progress made from MDGs.

“We need to be cognisant that even though we are an emerging power, we are not provided with equal opportunities. We are portrayed as weak, vulnerable yet we have great potential to steer development,” explained Zenebewerke Tadesse from Ethiopia.

During the discussions, MDGs were heavily criticised as being narrow since they reduced broader development concerns to targets.

SOURCE: http://www.standardmedia.co.ke/?articleID=2000097494&story_title=most-african-nations-will-not-achieve-mdgs

IMF welcomes Namibia’s 2014 active tax-reform agenda

10 Nov

Flag-map_of_NamibiaThe International Monetary Fund (IMF) has welcomed Namibia’s fiscal year 2013/14 budget, which lays the groundwork for an active reform agenda in the area of reduced income taxation and improved public financial management and tax administration.

IMF mission chief Lamin Leigh said on the last day of a 15-day IMF mission to the country that the fund welcomed plans by the government to undertake a comprehensive review that aimed to improve the investment climate and the ease of doing business, support small- to medium-sized enterprises and pursue deeper economic integration.

This approach would require increasing the quality of public spending by reforming public financial management, improving the efficiency and effectiveness of the tax system, reducing the cost of doing business and diversifying the economy.

“The authorities’ increasing emphasis on efficiency and innovation-driven growth, underpinned by greater private-sector development to boost economy-wide productivity, is a step in the right direction.

“While the budget is fairly expansionary, total tax revenue collections, to date, have proven resilient and should help consolidate on the large gains made in the fiscal year 2012/13,” he commented.

With an uncertain external environment, the mission urged the Namibian government to begin rebuilding policy buffers, which should be pursued through a “growth-friendly” fiscal consolidation strategy, focusing on reining in current spending, such as current transfers and subsidies to State-owned enterprises (SOE), while preserving growth-promoting capital and infrastructure spending.

The fiscal consolidation process also needed to be balanced with a combination of expenditure-cutting measures and domestic revenue-mobilisation efforts.

“Thus, the mission welcomes the government’s commitment to a simplified income-tax system to achieve higher compliance and lower cost of administration. The mission supports the authorities’ ongoing work on broadening the tax base through rationalisation of existing tax incentives in some sectors,” Leigh commented.

He added that delivering good outcomes from the government’s diversification policies would require supportive measures to liberalise the service sectors, reduce the domestic regulatory burden on firms and address the skills mismatch in the labour market.

Citing further deductions of the IMF mission, Leigh said Namibia’s real gross domestic product had grown by a healthy 5% in 2012, while preliminary data for the first half of 2013 suggested that growth had moderated somewhat.

The slowdown reflected weak global demand for exports, which more than offset the solid growth in the nonmineral sector, most notably in retail trade.

At the end of August, inflation stood at 6%, broadly in line with inflation in South Africa.

“The fiscal outturn in the fiscal year 2012/13 was significantly better than targeted, with the budget almost balanced at the end of the fiscal year. The strong performance reflects both revenue over performance and some under-execution in capital spending,” Leigh held.

Looking ahead, the mission forecast that output growth would further moderate to about 4% in 2013.

Mineral exports would likely remain subdued in the second half of 2013 on account of weak external demand, with growth slowing in Namibia’s major trading-partner economies.

The impact of the drought this year would also likely weaken economic activity.

“These factors would be partly offset by strong domestic-demand growth emanating from the recent income-tax reform, along with the fiscal expansion targeted in the fiscal year 2013/14 budget,” he said.

The nonmineral sector, in particular construction, was also expected to further rebound in the second half of 2013, mainly on account of the development of the Husab uranium mine, in Namibia’s Erongo region, which was expected to become the second-largest uranium mine in the world.

Source: http://www.engineeringnews.co.za/article/imf-welcomes-namibias-2014-active-tax-reform-agenda-2013-11-08

Africa: Investment in Infrastructure Can Boost Trade in Africa, Finance Ministers Assert

6 Nov

Speaking to reporters during the IMF-World Bank Annual meetings in Washington, D.C., African finance ministers stressed that Africa needs to strengthen the implementation of structural reforms in order to maintain the annual average growth of around 5 percent over the past few years and significantly reduce poverty.

Ministers also emphasized that current developments in the world economy affected Africa’s growth. “We are concerned that the increased downside risks to the global economy will impact negatively on Africa’s trade flows and financing opportunities. We are also worried about the uncertainty regarding the unwinding of unconventional monetary policies, and the threat of potentially devastating budgetary challenges in the United States, which, if left unaddressed, could derail the fragile recovery we experienced last year across the world,” said Amara Konneh, Minister of Finance, Liberia.

Looking at the medium-term, ministers also noted the significant efforts African countries have made to improve human capital through education and training with the aim of reducing poverty. However, they also acknowledge much more needed to be done. “We have noted the weaknesses of our education system. Professional education is not up to par. Our education system needs to be reformed in order to meet the requirements of our economy and the requirements and demands of our society”, said Luc Oyoubi, Finance Minister of Gabon

Armando Manuel, Finance Minister of Angola, told reporters that as part of its national development agenda, Angola has implemented a training plan for its civil servants. “There is a new strategy in place because Angola has understood that the wealth of a country cannot only be measured by its natural resources, but also by its human capital. And this is a challenge the country is taking on–to form the skilled workers to achieve the objectives of economic development,” said Manuel.

Luc Oyoubi, Minister of Economy of Gabon and Daniel Kablan Duncan, Prime Minister and Finance Minister of Cote d’Ivoire, also said they intended for their countries to become emerging markets by 2015 and 2020, respectively

Reforming the Infrastructure Deficit

In addition, ministers stressed the importance of addressing Africa’s infrastructure deficit. Konneh said the continent needed aggressive infrastructure projects to unleash its growth potential. “It is worth repeating here that the ability to travel from one side of our country to another side, and from one country to another, is almost a fundamental right; that the ability to travel between countries is necessary for trade, for business, and for sharing of knowledge and innovation,” said Konneh, the Liberian minister.

RETRIEVED: http://allafrica.com/stories/201311050389.html

IMF concludes seventh ECF review in Burkina Faso

6 Nov

The International Monetary Fund (IMF) says it has concluded the seventh review of programmes supported by the Extended Credit Facility (EFC) arrangement in Burkina Faso.

The IMF mission was in Ouagadougou between Oct. 17 and 30 during which it met with critical stakeholders in the economy. Leader of the team, Laura Redifer said in a report at the end of the mission that Burkina Faso’s economic performance remained strong.

“For 2014 and the medium term, projections for GDP growth remain around seventh per cent while inflation should remain subdued at about two per cent. She said that acceleration of public investment, good weather, and more favourable export conditions would result in higher growth.

Redifer said that projections for economic activity in 2013 had been slightly lowered to 6.8 per cent. “The Factors behind the reduction include lower international gold and cotton prices, fall in public investment projection and global economic developments.

“The reduction in growth projections would have been higher but the government took measures to improve resilience and productivity in agriculture,’’ she said.

According to her, inflation in Burkina Faso has declined sharply in 2013 due to lower food prices compared to most part of 2012. “It is expected to average 2.0 per cent for the year. External balances are expected to deteriorate somewhat in 2013 as a result of unfavourable terms of trade.

“Revenue collection in the first half of 2013 was broadly in line with expectations, despite lower revenues from gold production,’’ she said. The IMF official said that new measures taken by the government to address spending bottlenecks were expected to accelerate investment spending in 2014 and beyond.

“For the medium term, the overall budget deficit is projected to be about three per cent of GDP. Regarding the external sector, the current account deficit is likely to worsen.

“This is as a result of a slow recovery in the terms of trade and imports needed to support the government’s ambitious investment programme,’’ Redifer said.

She said that the quantitative targets for the seventh review of the current IMF-supported programme were mostly met by Burkina Faso.

RETRIEVED: http://businessdayonline.com/2013/11/imf-concludes-seventh-ecf-review-in-burkina-faso/


Zimbabwe should…

30 Oct

Zimbabwe should engage China, with about US$36 billion for investment in special economic zones, to attracting foreign investment to resuscitate critical sectors of the economy-Comesa secretary-general Dr Sindiso Ngwenya

Should African countries look for Foreign Direct Investment (FDI) or mobilise local resources?

Send your comments to: info@afrodad.co.zw

Look East for FDI, Comesa boss tells Zimbabwe

30 Oct

Zimbabwe should engage China, with about US$36 billion for investment in special economic zones, to attracting foreign investment to resuscitate critical sectors of the economy, a senior Common Market for Eastern and Southern Africa official said.
Presenting a paper on value chains and their roles in economic development at this year’s edition of the Zimtrade Exporters Conference in Harare last week, Comesa secretary-general Dr Sindiso Ngwenya said this country could court successful economies such as China for investment.

The first step would be the consolidation of special economic zones, which are areas designed to export goods and provide employment while they are exempted from certain taxes and quota laws meant to make goods manufactured in those zones fetch competitive global prices.
“In China, Shenzhen is a success story of a special economic zone which was established in the 80s and by 1994 the city was accounting for 35 percent of total Chinese exports, Zimbabwe should therefore go the SEZ route in order to revive critical sectors.
“Zimbabwe, therefore, needs to engage China to get that investment which can be channelled towards establishment and rehabilitation of power plants and revival of the manufacturing sector,” he said.

Mr Ngwenya said value addition was an effective strategy that would help Zimbabwe capture its fair share of the global market.
“Even the country’s vast minerals are not fetching enough revenue on the global market because they are exported in their raw state,” he added.

Mr Ngwenya added that in order to realise meaningful economic development there is also need to issue Diaspora bonds so that locals living abroad can participate in rebuilding the economy.

Funds mobilised can then be channelled towards infrastructural rehabilitation such as road dualisation among other critical infrastructural needs.

Retrieved from: http://www.herald.co.zw/look-east-for-fdi-comesa-boss-tells-zimbabwe/

Zim in Busan implementation hitch

24 Oct

ZIMBABWE, a highly aid dependent country has made little steps in implementing measures meant to bail it out of donor dependency, a move likely to shut it out of developmental support from the international community.Zimbabwe was among developing countries that signed a treaty in South Korea in 2011 committing it to implement a raft of measures under a so-called Busan agreement that called for developed countries and donors to start channeling developmental funding to signatory States and move away from humanitarian funding.

Reports submitted at a regional multi-stakeholder forum for East and Southern Africa on development effectiveness last week indicate that Zimbabwe is one of few countries that have failed to implement the Busan agreement.

Collin Magalasi, an executive director with AFRODAD, said Zimbabwe’s situation was different from that of other countries when it signed to Busan. “Busan took place when Zimbabwe had no donors, which was very different from other countries,” Magalasi said on the sidelines of the forum. “I think they are trying to put some systems in place but they are too far away. The fact that Zimbabwe does not have many donors as yet should not be an excuse for them not to put systems in place. They better put their house in order because donors will follow the systems,” said Magalasi.
A director responsible for Domestic and International finance in the Ministry of Finance, Margireta Makuwaza, told the delegates that Zimbabwe was not fully funded and that has contributed to delays in the implementation of the Busan principles.

She however underlined the need for government to review the Aid Coordination Architecture (ACA) policy document administered by the finance ministry to improve its implementation with the aim of aligning the policy document with the new constitution.
ACA was crafted in 2009 under the Government of National Unity (GNU) and its principles are premised on the aid Declarations signed in Paris (2005) Accra (2008) and Busan (2011) with a view of ultimately reducing Zimbabwe’s dependency on donors.

It contains guidelines, principles, structures and objectives for coherent interactions between government and the co-operating partners.
“We are not moving at the desired pace in term of implementing the Busan principles but it is essential to bring in the necessary changes to the ACA policy to align it with the new constitution,” Makuwaza said.
The three day regional consultation forum held in Rustenburg, South Africa from 16-18 October 2013, under the auspices of African Union Commission in collaboration with NEPAD Agency, African Forum and Network on Debt and Development (AFRODAD), United Nations Development Programme and the department of National Treasury of the Republic of South Africa, brought together more than 80 participants, mainly government officials, parliamentarians, civil society organisations and journalists from 17 countries.

The forum was held under the theme: “Leveraging Global Partnership to optimize Africa’s Resources – from Busan to Reality”.
The Busan principles aim at reframing the global aid reform agenda from aid effectiveness to development effectiveness which should result in poverty eradication, reducing inequality, sustainable development and enhanced capacities for developing countries.

It also promises engagement with business towards improved regulatory and policy environments for private investment, and business participation in the design and implementation of development policies.
It also calls for openness, trust, mutual accountability and transparent practices as the basis for accountability.

The 2011 forum on aid effectiveness held in the South Korean coast city, Busan, and attended by over 2500 State and non state delegates from developed and developing countries, including more than 300 civil society representatives, holds all the parties to account with an annual monitoring exercise for the aid industry. It put in place systems for countries to focus on the quality of development assistance given by donors.
Under the Busan principles, States are expected to develop a monitoring framework consisting of 10 indicators that measure progress in improving the effectiveness of development cooperation in areas such as the transparency and predictability of aid, gender equality, participation of civic society and the contribution of the private sector.

Busan, which produced an agenda for aid reform was built on the previous aid effectiveness commitments made in Rome (2003), Paris (2005) and Accra (2008) on the principles on aid ownership, inclusive development, transparency, results and accountability.

Busan also brought on board new players in the aid landscape such as China, Brazil and India. These countries agreed, on a voluntary basis to abide by Busan principles.
But two years on, the global partnership which sounds very grand is at risk of fading away in Zimbabwe because of lack of systems as agreed under Busan.

Source: http://www.financialgazette.co.zw/zim-in-busan-implementation-hitch/


IFC aid sub-Saharan African economy with $5.3b investments in 2013 fiscal year

18 Sep

IFCAccording to Ghanabusinessnews.com investment commitments by the International Finance Corporation (IFC) reached $5.3 billion in sub-Saharan Africa, with projects targeting key sectors in the region’s economy. In a detailed factsheet released early September 2013, the IFC’s activities in sub-Saharan Africa showed strong development impact through record volumes of investment and advisory services for the year ending June 2013.

In addition to its committed record of $5.3 billion new investments, the IFC also carried out advisory services projects worth $65 million in the region in its most recent fiscal year.

According to the IFC it supported infrastructure, health, agribusiness and a range of activities in conflict affected states and helped Africa’s entrepreneurs gain access to finance.

“IFC invested $3.5 billion from its own account, and mobilized $1.8 billion from other investors,” it said in a statement adding “in FY 2013, IFC’s supported projects that provided loans for 54,000 small and medium businesses, encouraged 13.7 million microfinance clients; and improved health and education for 360,000 people.”

Yolande Duhem, IFC Director for West and Central Africa, said, “By focusing on developing Africa’s private sector in key areas such as power generation, transport or agribusiness, we are playing an active role in stimulating sustainable economic growth and job creation in the region.”

According to Duhem, the IFC also believes in boosting regional markets in Africa and many of its investments aim to allow companies to grow beyond national boundaries.

– See more at: http://www.ghanabusinessnews.com/2013/09/14/ifc-aid-sub-saharan-african-economy-with-5-3b-investments-in-2013-fiscal-year/#sthash.kmJFss9X.dpuf