AfDB President applauds G8 for emphasis on greater transparency in taxation

BY EDMUND SMITH-ASANTE

AfDB President Donald Kaberuka

African Development Bank (AfDB) President, Donald Kaberuka, today June 17, 2013, applauded the G8 for its emphasis on the issues around resource mobilisation through greater transparency in taxation of Africa’s natural resources.

Speaking as G8 leaders began meeting in the United Kingdom, Kaberuka urged the international community to promote transparency, curb tax evasion and ensure more balanced contracts in the natural resources sector, saying transactions in the sector were very opaque.

“It is only in this way that our countries will be able to find the financial resources they need to fund infrastructure and trade corridors, which until now have been very dependent on donor funding,” Kaberuka said.

“The African Development Bank is very much fully behind this agenda. That is why we put in place the African Legal Support Facility, a legal technical assistance facility to help low income countries address a growing problem of litigation by vulture funds as well as a technical advisory facility to help regional member countries negotiate extractive resource contracts and create an appropriate, enabling environment with modern legal and regulatory frameworks for the extractive resource sector,” he added.

According to the AfDB head, “The African Legal Support Facility has been instrumental in assisting a number of countries negotiate complex contracts, unbundle others, with the aim of ensuring that the countries get what they deserve, that investors get the return they look for, and that everyone is a winner.”

He acknowledged that internal governance of the natural resources sector in Africa also needed to be improved and also spoke on the importance of trade as a driver against poverty.

Donald Kaberuka said Africa wanted to trade its way out of poverty, and a paradigm shift in its relationship with the G8 was necessary at a time when donor funding for the continent had dropped 20 per cent – the first decline in a decade.

“Nations throughout the world, throughout history have prospered through trade and investment. This applies, even to those rich in natural endowments,” Kaberuka said.

“Africa, too, seeks to trade her way out of poverty through trade. But Africa must deal with the issue of the cost of doing business, the risks of doing business, and the challenges of small fragmented markets – all of which are extremely high. Some nations are better endowed in natural resources. That does help if carefully managed and invested in creating real wealth,” he added.

Kaberuka divulged the AfDB currently commits almost US $2 billion annually on economic integration, focused on support to the Regional Economic Communities in planning and strategy; focusing investments on trade related infrastructure, transport and optic fibres; trade facilitation and soft infrastructure; electricity power pools; the development of transport corridors; and the management of shared waterways.

Meanwhile, trade among African countries stood at US $47 billion a decade ago – 11% of total African trade and is now closer to 16%. That excludes informal trade, which some sources say might bring the figure closer to 20%.  However, trade levels stood at levels of around US $108 billion in 2011.

The major challenges to trade among countries on the African continent include the fact that there are more than 40 currencies, while it has the world’s largest number of landlocked countries. But expert believe regional cooperation would not only add US $45 billion a year – equivalent to half of all Overseas Development Aid (ODA) – but it would also improve the diversity of the continent’s supply chains.