COVID-19 threatens African countries’ IGR, others
The Coronavirus (COVID-19) pandemic has threatened African countries’ internally generated revenues (IGR) to fund essential services in the education, health, and infrastructure sectors of the economy.
According to the 2019 Human Development Report, Africa will not meet the Sustainable Development Goals (SDGs) of the UN target to eliminate poverty by 2030.
The report also said: “The pandemic has exposed the urgency for African countries to harness and optimise IGR from their natural resources. “If managed well, natural resources wealth could be a major driver of growth and socio-economic transformation to counter COVID-19 consequences.”
Executive Director of Tax Justice Network Africa (TJNA), Alvin Mosioma, raised the alarm in a statement in Maiduguri, the Borno State capital.
He said the slow progress derives from resource leakages and increasing poverty rates fueled by the ongoing global COVID-19 pandemic.
“About 64.3% of sub-Saharan Africa is still living in multidimensional poverty,” he lamented, noting that while other regions of the world; are experiencing rapid poverty reduction.
According to the Human Development Report, “the decline is much slower for sub-Saharan African countries, including Nigeria, Libya, Niger, Mali, Burkina Faso, and Chad.”
On dwindling IGRs, Mosioma said: “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 have put more pressures, more than ever, to raise revenue locally.”
He said Africa should be able to raise needed funds if the duct allowing capital flight and illicit financial flows (IFFs) could be closed.
He added that the lost funds mainly come from Africa’s extractive sector, while Africa remains the poorest continent in the world.
Citing UNCTAD 2020 report on Economic Development in Africa, he said: “The extractive sectors lose about $ 50 billion (N19 trillion) yearly,” thereby presenting the largest of IFF from Africa.
He continued: “Due to pressures on governments to mobilise financial resources to mitigate the adverse impact of COVID-19, the extractive sector presents the strategic potential to generate and raise the required resources.”
He said there is a need to reimagine public policy and deploy strategies that address Africa’s vulnerabilities, which were made more visible by COVID-19.
He also noted that oil, gas, and minerals are finite resources, warning: “The more they get extracted, they lost the opportunity to develop based on them.”
Mosioma, therefore, called on African governments to improve transparency and accountability of multinational corporations and end secretive jurisdiction and tax havens.
According to him, transparency and accountability will promote the exchange of information, and citizen participation in extractive revenue management.