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THE Covid-19 pandemic has exposed the urgency for African countries to optimise public revenues from their vast natural resources.
Given the adverse impact of Covid-19 on economies, and the resultant squeeze in public revenues due to slowdown in business operations, there are fears that Africa might not meet the Sustainable Development Goals (SDGs) target of eliminating extreme poverty by 2030.
The Tax Justice Network Africa (TJNA) says, if well managed, the continent’s natural resource wealth could be a major driver of growth and social-economic transformation to counter Covid-19 consequences.
“This slow progress derives from resource leakages and increasing poverty rates, as 64,3 percent of sub-Saharan Africa is still living in multi-dimensional poverty,” says TJNA.
“While other regions of the world are experiencing rapid poverty reduction, the decline is much slower for sub-Saharan Africa.”
The TJNA said Covid-19 has overstretched the resources needed to fund essential services like education and health in Africa hence the increased continental debt burden and limited inflows of aid and foreign development investment.
“There is pressure, more than ever to raise revenue locally. Africa should be able to raise the needed funds if the duct allowing capital flight and illicit financial flows (IFFs) could be closed,” it said.
“The lost funds mainly come from Africa’s extractive sector while Africa remains the poorest continent in the world.”
According to the 2020 UNCTAD report on Economic Development in Africa, the extractive sectors lose about $50 billion annually.
“The extractive sector presented the largest source of IFF from Africa. In view of the pressure on governments to mobilise financial resources to mitigate the adverse impact of Covid-19, the extractive sector presents strategic potential to generate the required resources,” said Alvin Mosioma, executive director at TJNA.
The tax organisation has stressed the need to reimagine public policy and deploying strategies that address Africa’s vulnerabilities, which were made more visible by Covid-19.
“Oil, gas and minerals are finite resources. The more they get extracted, the lost the opportunity to develop based on them,” it said.
“The Multinational Corporations (MNCs) in the extractive sector unfortunately, do not pay their fair share, and Africa’s development based on its natural resources remains an unattainable dream.”
In this regard, the Africa Mining Vision (AMV), and the report of the High-Level Panel (HLP) on IFFs have provided recommendations to optimise domestic resource mobilisation and leverage on the extractive sector to drive inclusive and sustainable growth.
TJNA has also called on African governments to improve transparency and accountability of MNCs, to end secretive jurisdiction and tax havens, and to promote the automatic exchange of information as well as citizen participation in extractive revenue management.
Additionally, TJNA urged countries to review policies that allow overly generous tax incentives and publicly report the revenue forgone to subsidise the MNCs.
Online Reporter