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Africa being ripped off by resource seeking companies – African Development Bank
(Reuters) – Developed world mining and energy companies operating in Africa should pay more taxes to help parts the continent climb out of poverty much faster, the president of the African Development Bank said on Sunday.
“The reality is, Africa is being ripped off big time,” African Development Bank president Donald Kaberuka told reporters, a day after attending a meeting in London with other African representatives ahead of the G8 summit of rich countries on the “triple-T” agenda of trade, transparency and tax.
“Africa wants to grow itself out of poverty through trade and investment – part of doing so is to ensure there is transparency and sound governance in the natural resources sector.”
Britain hosts this year’s G8 summit, which takes place in Northern Ireland on Monday and Tuesday.
Britain has turned up the pressure on the other countries to clamp down on secretive money flows by pressing its overseas tax havens into a transparency deal and announcing new disclosure rules for British firms.
Kaberuka attended a lunch on Saturday to discuss the issues with British Deputy Prime Minister Nick Clegg, the presidents of Ghana, Guinea, Senegal, Somalia and Tanzania and the finance minister of Nigeria, all of which have energy or mining resources.
“It’s seen as a collective agenda, not just a G8 agenda, that we make sure everybody pays what is due,” Kaberuka said.
The Democratic Republic of Congo, for example, lost at least US$1.36 billion in potential revenues between 2010 and 2012 due to cut-price sales of mining assets to offshore companies, according to a report from the Africa Progress Panel, led by former U.N. Secretary-General Kofi Annan.
Africa, and in particular sub-Saharan Africa, has been growing strongly in the past few years, a trend which Kaberuka said has steadily gained momentum in many countries on the continent.
The African Development Bank forecasts growth in Africa at 4.8 percent this year, with sub-Saharan Africa – excluding South Africa – the fastest-growing region at 6.6 percent.
Aid to Africa from the developed world had been cut for the first time in 10 years and the continent needs to look for ways to make that money go further. “It’s important we begin to use aid smartly,” Kaberuka said. He pointed to projects such as the African Development Bank’s planned infrastructure fund, designed to use donor funding along with African savings as a base for debt issuance to finance regional infrastructure projects.
The financial institution is looking for up to US$50 billion to be issued using the financing vehicle, which Kaberuka hoped would gain a single-A credit rating. Kaberuka also welcomed plans by the BRICS countries – Brazil, Russia, India, China and South Africa – to set up a BRICS development bank in South Africa. – This he said could be a good partner for Africa in terms of building infrastructure, and would provide countries in Asia, Africa and possibly the Caribbean with an alternative to the Breton Woods institutions – namely the International Monetary Fund (IMF) and the World Bank.