Poor policies stifle growth in Africa

By Stephen Makabila

The African continent has never suffered from a “resource curse”, but ails from poor policies, weak governance and failure to transform its massive resource wealth into social and economic progress.

This is according to the latest report by the Geneva based Africa Progress Panel  (APP) headed by former UN Secretary General Kofi Annan.

The APP on Friday released its annual report for 2013, titled Equity in Extractives at the World Economic Forum (WEF) meeting in Cape Town, South Africa.

The WEF is an independent international organisation committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.

Under the theme “Delivering on Africa’s Promise”, the 23rd WEF on Africa in Cape Town provides an important platform for regional and global leaders.

Among leaders from around the world attending the WEF include President Uhuru Kenyatta.

The latest APP report assesses Africa’s extractive potential, with particular focus on the losses to the continent of transfer pricing, currently costing Africa $34 billion annually – more than the region receives in bilateral aid. Put differently, you could double aid by cutting this version of tax evasion alone.

Natural resources

The report examines how Africa governments can and should manage their natural resources in light of the “second wave” of the exploration explosion that the continent is facing at the moment.

Further, it says while natural resources may have fuelled a decade of rapid economic growth, most Africans have not seen the benefits.

According to the report, favourable market conditions created by global resource constraints do not guarantee that growth of extractive industries will lead to improvement in the lives of the people, but if governments seize the opportunity and put in place the right policies, Africa’s resource wealth could permanently transform the continent’s prospects.

The APP consists of ten distinguished individuals from the private and public sector, who advocate on global issues of importance to Africa and the world.

The Panel’s unique convening power allows it to focus on complex and high-impact issues such as global governance, sustainable economic development, peace and security, food security, financing for development, climate change and the Millennium Development Goals.

This year’s Progress Report is the sixth annual report produced by the Panel, in charting progress in Africa.

Policy agenda

APP has nine other members, former Managing Director of International Monetary Fund Michel Camdessus and former Nigerian President Olesegun Obasanjo.

The report sets out a new comprehensive policy agenda for governments, regional organisations and initiatives, and the wider international community, civil society and companies. It calls upon the G8 in particular to demonstrate leadership.

The G8 Summit should serve as a launch pad for the development of a rules-based global system on transparency and taxation.

Every tax jurisdiction should be required to publicly disclose the full beneficial ownership structure of registered companies. The United States, United Kingdom and Switzerland are all major conduits for offshore finance, which should clamp down on illicit financial flows.

Annan states that “it is unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximise their profits, while millions of Africans go without adequate nutrition, health and education”.

Among recommendations for immediate action presented to African countries by the APP include adopting the African Mining Vision’s framework for transparent, equitable and optimal exploitation of mineral resources to underpin broad based sustainable growth and socio-economic development as the guiding principle for policy design.