The African Development Week 2016 as celebrated by the African Development Bank is being highlighted this week, with the start of the 9th Joint Annual Meetings of the African Union Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and the ECA Conference of African Ministers of Finance, Planning and Economic Development; best captioned as the “Conference of Ministers”.
This year, the theme is “Towards an Integrated and Coherent Approach to Implementation, Monitoring and Evaluation of Agenda 2063 and the 2030 SDGs.” The event will entertain a pose of thirty side meetings and fora. At the heart of the meetings and discussions, will be the topics of infrastructural development, aid funding, conflict, agriculture, climate change, customs and excise, trade and commerce, health and education as well as migration, unemployment, youth bulge, tax, gender and inequality, mining, security and terrorism, etc.
While it is common to have a large delegation of development sector organizations at this now, annual event – cajoling, lobbying and convincing Ministers of Finance & Budget as well as other high level members of governments to commit more to development – last year’s edition was characterized with the inability of governments to reach a consensus on increased funding both internally and externally for aid work and development programmes across the continent amidst a global recession mode triggered by falling oil prices. While Civil Society Organizations and International Aid Organizations look forward to a more positive outcome this year, perhaps there is a need for a collective call for governments to do even better with what is currently obtainable.
Countries in the global North which might have made spending cuts in their budgets for development aid, do so in light of concerns to cater more for the welfare of their citizenry. But for too long, aid money have lined the pockets of public office holders, and even key staff of development organizations working with the poor, marginalized and disadvantaged, with less than 20% of total aid money eventually reaching those who need it – whether through the betterment of livelihoods, or for the provision of relevant amenities and infrastructures which better their quality of life – as a bulk of the funds go in to stupendous travels, lavish meetings, office furniture, etc.
For developing countries – most of which surprisingly have rich deposits of natural resources – alternative sources for funding development projects are hard to come by in the face of development aid cuts, and recession is making it harder to attract investors with foreign direct investment. However, for an entire continent with lax taxation systems across borders, now seem the right time to look at those archaic tax policies and laws, which have for centuries allowed big corporations and multinationals to avoid, evade and dodge their fair share of taxes. Transfer pricing, trade misinvoicing, Double Irish, Dutch Sandwich syndrome and the repatriation of profits before tax and holidays are a few of many means in a highly secretive sector, where the gulf of inequality is influenced.
For example, Nigeria loses $2.9bn annually through tax holidays and waivers granted to these multinationals and big corporations doing business in Nigeria, a country where it is estimated that 6,000MW of power is self-generated via diesel and petrol powered generators, as a decrepit national grid produces a fluctuating 3,200 – 4,500 MW but can only transmit about 4,000MW at a time. And in its true sense, $2.9bn or N585bn (approx.. N201 ~ $1) can build 3,000km of new roads and rehabilitate them at least once. For the giant African crude oil exporter, N175bn (just 30% of $2.9bn or N585bn) will repair all existing refineries to bring them to a maximum capacity of 28m litres of petrol per day, barring other petro-chemical products and the teeming jobs which could kick-start the economy upwards and lift many households above the poverty line.
We live in a food and water insecure world, and while 63.2 million people are said to be without access to safe water options and millions more defecating in the open, N585bn can build 207,000 water pumps that can provide portable water to 60+ million people and improve the national index of people with access to water, sanitation and hygiene options.
Unfortunately, corruption amongst government officials especially agencies which should enforce stringent taxation policies on multinationals and companies, continue to allow for illicit financial flows of funds out of Africa, robbing the continent’s teeming poor and unemployed of state welfare and the provision of human security. This price which corporate entities profiteering in Africa must pay, is now transferred as a burden on citizens through increased tax rates.
Already, the commercial state of Lagos in Nigeria, is considering legislation to begin to tax artisans, domestic staff and street hawkers – a large informal sector, characterized by stigma from lack of opportunities in the formal sector – about 1% of their income. While this strategy is viewed as an innovative idea to increased internally generated revenue, the question remains “what justification there is, for the government to tax the informal sector”. Most domestic staff already pay taxes at toll gates, while commuting to work for the elite and rich living in plush districts of the city of Lagos. Artisans continue to spend at least 33% of operational cost on power (a vital need for production) as erratic and non-existent supply means that they have to settle for alternatives. Street hawkers pay daily rates which allows them to hawk wares, products and services as they can’t afford to pay for stalls at the various markets, and in some instances, there are no provisions.
Across the country, the informal sector doesn’t enjoy health insurance, there is no welfare in place, and there is no retirement provision as well. These injustices coupled with the existing burden of multiple taxation across the three tiers of government continue to exacerbate the inequality gap between the rich and poor. Duty bearers need to do much more for right holders, and the civil society coalition is saddled with this task of bridging the communication divide. As much as citizen-journalism and factivism are encouraged, there is that need to hold governments at all tiers accountable for the taxes that help run government; and for them to make it count for development. Gender responsive public services must begin to cater for the needs of women, as well as other people with special needs.
Above all, governments must do more to ensure that in the global South and global North, concerted efforts are put in to reviewing the global tax system. The opacity of deals and operations must be replaced by a reporting system which is open and transparent; and deals or treaties which continue to encourage the flight of profits to havens at the detriment of citizenry which need it for development must be discouraged. Multinationals and big corporations must pay their fair tax price and not transfer the burden to citizens. We must ensure tax justice for everyone, anywhere. The need for a fairer negotiating table had never been more urgent.
