Nigeria, others should optimise public revenues from natural resources
Africa will not meet the Sustainable Development Goals (SDGs) target of eliminating extreme poverty by 2030 if natural resource wealth is not managed well.
Slow progress derives from resource leakages and increasing poverty rates, as 64.3% of sub-Saharan Africa is still living in multidimensional poverty. While other regions of the world are experiencing rapid poverty reduction, the Human Development Report of 2019 notes that the decline is much slower for sub-Saharan Africa.
Because COVID-19 has overstretched the resources needed to fund essential services like education and health in Africa, 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. The lost funds mainly come from Africa’s extractive sector, while Africa remains the poorest continent in the world.
The 2020 UNCTAD report on Economic Development in Africa shows that 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 mobilize financial resources to mitigate the adverse impact of COVID-19, the extractive sector presents strategic potential to generate the required resources,” says Alvin Mosioma, the Executive Director, Tax Justice Network Africa (TJNA).
There is a need to reimagine public policy and deploy 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.
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 the extractive sector to drive inclusive and sustainable growth.
TJNA calls for African governments to improve transparency and accountability of MNCs, to end secretive jurisdiction and tax havens, and to promote the automatic exchange of information, citizen participation in extractive revenue management. Additionally, countries should review policies that allow overly generous tax incentives and publicly report the revenue forgone to subsidise the MNCs.