G7-based companies and investors cheated Africa out of an estimated six billion dollars in a year through just one form of tax dodging, according to a new Oxfam report ‘Money talks: Africa at the G7’, released Jun. 2.

This is equivalent to three times the amount needed to plug the healthcare funding gap in the Ebola-affected countries of Sierra Leone, Liberia, Guinea and at-risk Guinea Bissau.

According to an Oxfam briefing paper release in April this year, an estimated 1.7 billion dollars is required to close the healthcare funding gap to improve dangerously inadequate health systems in these countries. This figure is based on raising spending to the recommendation of the World Health Organisation (WHO) that 86 dollars per capita is required to achieve the minimum package of essential services.“Multinational companies, many with headquarters in the United Kingdom and other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare and send their children to school” – Nick Brye, Oxfam’s Head of U.K. Campaigns

The new Oxfam report comes as G7 leaders prepare to meet their African counterparts at the annual summit in Bavaria, Germany from Jun. 8 to 9. African leaders from Ethiopia (Prime Minister Hailemariam Desalegn), Liberia (President Ellen Johnson Sirleaf), Nigeria (President Muhammadu Buhari) and Senegal (President Macky Sall) are scheduled to join an outreach session on Jun. 8.

Oxfam is calling for the leaders of the G7 countries – Canada, France, Germany, Italy, Japan, United Kingdom and United States – to include action for ambitious tax reform in discussions about how the group can support economic growth and sustainable development on the continent.

In the United Kingdom, Oxfam is part of a coalition that has been calling on the recently elected new British government to show leadership by introducing a Tax Dodging Bill, which would make it harder for U.K. companies to avoid paying tax in the countries in which they operate – practices which currently cost some of the world’s poorest countries billions each year.

The coalition, which includes ActionAid and Christian Aid in addition to Oxfam, is currently running a Tax Dodging Bill campaign.

According to Oxfam, a well-crafted Tax Dodging Bill would also make it harder for big companies to avoid paying tax in the United Kingdom, and could bring in at least 3.6 billion pounds (5.4 billion dollars) a year to the U.K. Treasury, the equivalent of 600 pounds (910 dollars) for every household living below the poverty line.

“Multinational companies, many with headquarters in the United Kingdom and other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare and send their children to school,” said Nick Brye, Oxfam’s Head of U.K. Campaigns.

“To fund the fight against poverty and to tackle worsening extreme inequality, we need action to ensure big companies pay their fair share, here and in the world’s poorest nations.”

Oxfam also notes that existing international efforts to tackle corporate tax dodging, such as the BEPS (Base Erosion and Profit Shifting) process, led by the Organisation for Economic Cooperation (OECD) for the G20 group of the world’s major economies, will leave gaping tax loopholes.

It warns that these loopholes can continue to be exploited by multinational companies across the developing world and that many African nations have been shut out of discussions on BEPS reform and will not benefit from them as a result.

Oxfam is also calling for British Chancellor of the Exchequer George Osbourne to attend July’s Financing for Development Conference in Ethiopia which will play host to heads of states and finance ministers from around the world.

The talks, which will focus on how the international community will fund development over the next two decades, are an opportunity for governments to work together to start shaping a more democratic and fairer global tax system.

In 2010, the last year for which data are available, Oxfam says that companies and investors based in G7 countries avoided paying tax on 20 billion dollars of income through a practice called trade mispricing – where a company artificially sets the prices for goods or services sold among its subsidiaries to avoid taxation.

With corporate tax rates in Africa averaging 28 percent, this equates to nearly six billion dollars in lost revenues. In addition, developing countries as a whole lose around 100 billion dollars a year through tax avoidance schemes involving tax havens, according to the U.N. Conference on Trade and Development (UNCTAD).

“Reforming global corporate tax rules so that African governments can claim the money owed to them is vital to tackle extreme poverty and inequality and boost economic growth, said Brye. “That’s why Oxfam has been calling for a U.K. Tax Dodging Bill that would ensure U.K. companies do their bit to help poor families at home and in developing countries.”

Edited by Phil Harris   

Street vendors in Africa reflect the income inequality that pervades the continent, much of it due to corruption. Credit: Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Feb 21 2015 (IPS)

Reports this year of illicit moneys from African countries stashed in a Swiss bank – indicating that corruption lies behind much of the income inequality that affects the continent – have grabbed international news headlines.

Secret bank accounts in the HSBC’s Swiss private banking arm unearthed this year by the International Consortium of Investigative Journalists (ICIJ) were said to hold over 100 billion dollars, some of which came from Africa, including some of the poorest nations on the continent.

When these funds leave the region, they deny the very nations that need them most.

For example, at least 57 clients of the Swiss HSBC bank associated with Uganda were reported to be worth at least 159 million dollars. The World Bank has estimated that Uganda loses more than 174.5 million dollars in corruption annually.“Income inequality begins with our political leaders and corrupt wealthy business people who, more often than not, illicitly own the resources of the [African] continent” – Claris Madhuku, Platform for Youth Development, Zimbabwe

It is not a crime for Africans to have a Swiss bank account. But questions are now being raised by local tax offices as to whether the proper taxes were paid on the stashed amounts.

In South Africa, the head of the Revenue Service, Vlok Symington, said his office was analysing the information. “Early indications are that some of these account holders may have utilised their HSBC accounts to evade local and/or international tax obligations,” Symington was reported as saying by the South Africa Sunday Times.

“Income inequality begins with our political leaders and corrupt wealthy business people who, more often than not, illicitly own the resources of the continent,” Claris Madhuku, director of the Platform for Youth Development, a democracy lobby group in Zimbabwe, told IPS.

Diamonds, for example, which have made many traders wealthy, are often mined by the poorest of the poor, treated almost as slaves in war-torn African countries, despite the Kimberley Process Certification Scheme, which was established in 2003 to prevent the flow of these diamonds.

“It’s a case of greed and corruption,” thundered Zimbabwean independent political analyst, Ernst Mudzengi. “Africa has parasitic politicians who are primarily concerned with self-centred political power and economic gain as ordinary Africans remain at the periphery in poverty,” Mudzengi told IPS.

Development experts here attribute income inequalities to the continent’s lax anti-corruptions laws.

“African countries do not have sound anti-corruption laws and politicians and the rich amass too much power exceeding even the powers of the police here, leaving them with the liberty to accumulate wealth overnight by whatever means without being questioned,” Nadege Kabuga, an independent development expert in Kigali, Rwanda’s capital, told IPS

“It’s shocking how huge banks such as HSBC have created a system for enormously profiteering at the expense of impoverished ordinary people, worse by assisting numerous millionaires from Africa in particular to evade tax payment, disadvantaging the already poor,” Zenzele Manzini, an independent economist based in Mbabane, the capital of Swaziland, told IPS .

“Very often, government directors, ministers and their secretaries are the ones globetrotting on government businesses, awarding themselves huge allowances and the lower government workers remain stuck at the periphery with no extra benefits besides the meagre salaries they get monthly,” a top Zimbabwean government official in the Ministry of Labour, told IPS on the condition of anonymity, afraid of victimisation.

Writing for Financial Transparency Coalition, a global alliance of civil society organisations and governments working to address inequalities in the financial system, Koen Roovers, the coalition’s European Union (EU) Lead Advocate, asked the deeper question: “How do we prevent this in the first place?”

To catch fraud sooner rather than later, capacity in developing countries must be increased, Roovers said. “The scale of the challenge is significant: the UK-based charity Christian Aid has estimated that sub-Saharan Africa would need around 650,000 more tax officials to reach the world average.”

Rich states have promised help to poor countries to build the capacity they need, but these commitments have yet to be honoured.

Researchers at the U.S.-based Global Financial Integrity, a non-profit organisation working to curtail illicit financial flows, said developing nations have lost almost one trillion dollars through illicit channels.

Without clearly defined measures to curb income inequalities, economists say the African continent may be headed for the worst levels of poverty set to hit even harder at the already poor.

“Africa may keep facing perpetual poverty amid rising income inequalities because governments here have no institutions and expertise to identify and halt money laundering by corrupt wealthy individuals and politicians evading tax,” Zimbabwean independent economist, Kingston Nyakurukwa, told IPS.

According to Roovers, “criminals and their enablers are creative, so the only way to prevent future scandals is to shed light on what criminals and tax dodgers are trying to hide. This is why online registers of assets for all legal persons and arrangements are necessary and should be publicly available.

“If we turn a blind eye to these loopholes,” he added, “economic development for all will continue to be undermined by illicit actors looking to exploit them.”

Edited by Lisa Vives/Phil Harris    

Melting glaciers are wreaking havoc in the Himalayan state of Uttarakhand. Credit: Malini Shankar/IPS

By Malini Shankar
UTTARKASHI, India, Jul 27 2013 (IPS)

Over a month after flash floods in the Himalayan state of Uttarakhand in north India left 1,000 dead and 6,000 missing, the government has yet to release a full agricultural impact assessment, sparking fears about the extent of damage to the region’s farmland.

Questions remain as to how soon soil restoration efforts will fructify and when the farm economy, which accounted for just under 11 percent of the state’s 160-billion-dollar gross domestic product (GDP) in 2012-2013 will be restored to functionality.

Heavy flooding on Jun. 15-16, the result of torrential rains and glacial leaks in the Himalayas, wreaked havoc on Uttarakhand, as the headstreams of the holy River Ganga swelled and swept away roads, homes, scores of pilgrims, cattle and buildings.

With the government focusing its efforts almost entirely on an emergency rescue and relief operation coordinated by the armed forces (with over 42,000 rescues under its belt to date), the plight of farmers has been largely ignored.

Experts from the region say the summer crops have been washed out and the farms are in no shape to yield a winter harvest this year; the sowing season for rice, which coincides with the height of the monsoon (June to September) has been delayed as a result of heavy inundation of paddy fields caused by downpours and landslides.

Though agricultural fields are routinely inundated with the clay that runs down surrounding mountains during summer glacial melts and the annual monsoon, this latest calamity has created a disaster zone in what is frequently referred to as the “land of the gods”.

“It is possible that the top soil may have been altered for a considerably longer duration of time than expected,” Ram Kishan, regional emergency manager of South Asia for the UK-based NGO Christian Aid, told IPS.

This Himalayan state, irrigated naturally by perennial glacier-fed rivers, boasts a high degree of agricultural diversity. Rajma, or red kidney beans, and potatoes comprise the staple diet of the majority of Uttarakhand’s native population of 10 million people, according to the 2011 census.

Crops like rice, wheat, barley, millets, lentils, pulses, potatoes, fruits, vegetables, flowers, spices, herbs and mushrooms have been drowned by the floods, while debris from landslides has also compromised the grazing pastures of the state’s roughly 11.9 million heads of livestock, including cows, bullocks, buffaloes, sheep, goats, horses, pigs, hens, chickens and other birds like geese.

“Initial estimates suggest that 25 to 30 percent of cultivation has been affected,” said Kishan; this represents a huge chunk of the state’s average annual production of 8.2 million tonnes.

NGOs like Christian Aid fear that the resulting price rise in all essential commodities, like vegetables, fruits, milk, dairy products, cereals, lentils and pulses, in the near term will adversely affect the average farming family.

Over 65 percent of Uttarakhand’s residents, most of them subsistence farmers with small landholdings of less than a single hectare per family, are dependent on agriculture, according to Aide et Action.

Farmers and tourism

Farmers dependent on seasonal tourism to supplement their incomes during the monsoon months are particularly affected.

Uttarakhand is a popular destination for foreign tourists and local pilgrims alike: “Forty-seven million domestic tourists and (half a) million foreign tourists were expected in the current fiscal year”, according to Shekhar Ambati at Aide et Action. But the flash floods, he said, eroded this economic base.

The tourism industry is one of the largest employers in the region, hiring locals as porters, guides, drivers, naturalists and translators. Others rent out their mules, offering tourists rides on rocky terrain in order to earn their daily bread.

The tourist economy also supports local artisans and makers of traditional handicrafts, opens up jobs as caterers and cooks through the hospitality sector and enables families to establish small businesses like tea stalls, souvenir shops or grocery stores.

Ambati fears that the destruction of the “lifeline of religious tourism” will snowball, affecting the number of tourists arriving in the region and further endangering farmers’ incomes.

Quoting small business owners and vegetable sellers at the main market in the town of Rudraprayag, Eila Jafar of Care India told IPS that farmers are already starting to feel the crunch of scant agricultural yields.

“The number of daily wage labourers coming to the main market has reduced to a great extent,” Jafar told IPS.

Road conditions have deteriorated significantly since the floods: some roads were washed away altogether and others have been made impassable by debris, which is having an extremely “negative impact on the market and economy,” Jafar added.

Farmers who relied on the tourist infrastructure to sell their produce are among the worst affected.

“The state’s chamber of commerce and industry estimates that Uttarakhand has lost revenue earnings of over 20 billion dollars from its tourism sector alone in the current fiscal year on account of torrential rains that devastated the state,” says Ambati.

With tourism unlikely to recover for two to three years at least, the situation calls for “intervention” from the government to ensure that farmers have food and livelihood security in the short term.

(END)

Kenyan farmer Geoffrey Ndung’u adapted to a prolonged drought and now earns a living growing watermelon. Credit: Isaiah Esipisu/IPS

By Thalif Deen
ROME, Jun 15 2013 (IPS)

The U.N. Food and Agriculture Organisation (FAO) has long warned that a quarter of the world’s farmland is “highly degraded”.

The main culprits are natural disasters, including droughts, floods and desertification. These pressures have now reached critical levels, with climate change expected to worsen the situation, according to the FAO’s annual report The State of Food and Agriculture, released here."Farmers urgently need support to increase the diversity of seed varieties that they can save and grow." -- Teresa Anderson of the Gaia Foundation

At the 38th session of FAO’s biannual conference, currently underway in Rome, three major issues on the table are the high level of undernourishment, volatile food prices and sustainable agricultural productivity.

The United Nations said up to 12 percent of Africa’s agricultural gross domestic product (GDP) is being lost due to environmental degradation, with comparable figures for countries in Latin America varying from six percent in Paraguay to about 24 percent in Guatemala.

According to the U.N. Convention to Combat Desertification (UNCCD), food yields in Uzbekistan have declined by 20 to 30 percent, while in East Africa nearly 3.7 million people still require food aid following the 2011 drought.

“Business as usual is no longer an option,” said UNCCD Executive Secretary Luc Gnacadja.

“Desertification, land degradation and drought are key constraints to building social and environmental resilience, achieving global food security and delivering meaningful poverty reduction,” he added.

Mohamed Adow, global advisor on climate change at the UK-based Christian Aid, which promotes sustainable development and battles hunger and global poverty, told IPS, “Climate change remains the significant challenge facing food security.”

Extreme and less predictable weather patterns are having the first and hardest impacts on food production, which in turn affects those who are least able to protect themselves, he added.

Adow said that with just the current 0.8 C rise in global temperatures, the world is suffering from increased hunger, disease, floods and sea level rise.

“And this is predicted to worsen given the abysmally weak climate pollution targets in developed countries,” he noted.

This means that year after year, the numbers of people needing food aid and adaptation support are increasing as the effects of climate change exceed the coping limits of the poor, and as more people go hungry.

Developed countries have a responsibility and obligation to take decisive action to support adaptation and increase opportunities to develop sustainable climate-resilient livelihoods all over the world, Adow declared.

Teresa Anderson of the London-based Gaia Foundation, which advocates secure land, seed, food and water sovereignty, told IPS one of the key reasons for the existence of the U.N. climate convention is to address the inevitable impacts that climate change and increasingly erratic weather will have on food production.

Less rain, more rain, rain coming at unpredictable times – all this affects the germination and growth of crops, she pointed out.

Changing temperatures that are too high or too low can also reduce growth and pollination. And different pests and diseases are likely to emerge in different climatic conditions.

“To deal with these multiple challenges, farmers urgently need support to increase the diversity of seed varieties that they can save and grow, while improving soil health,” said Anderson.

Unfortunately, the growth of agribusiness focused on selling fertilisers and just a few types of seed, is making farming even more vulnerable to climate change, she added.

In addition, communities reliant on fishing and livestock grazing may find the ecosystems on which they rely producing less fish or grass.

Anderson said many communities will also face extreme weather events such as floods, hurricanes and droughts, as well as slow-onset impacts such as rising sea levels and salination that will make food production impossible.

Meanwhile, a report released at the climate change talks in Bonn last week by the Consultative Group on International Agricultural Research (CGIAR) said the cloudy aspects of climate forecasts are no excuse for a paralysis in agriculture adaptation policies.

“Climate projections will always have a degree of uncertainty, but we need to stop using uncertainty as a rationale for inaction,” said Sonja Vermeulen, head of research at CGIAR’s research programme on climate change, agriculture and food security (CCAFS) and lead author of the study.

“Even when our knowledge is incomplete, we often have robust grounds for choosing best-bet adaptation actions and pathways, by building pragmatically on current capacities in agriculture and environmental management, and using projections to add detail and to test promising options against a range of scenarios,” she said.

The CCAFS analysis shows how decision-makers can sift through the different gradients of scientific uncertainty to understand where there is, in fact, a general degree of consensus and then move to take action.

Moreover, she said, it encourages a broader approach to agriculture adaptation that looks beyond climate models to consider the socioeconomic conditions on the ground. These conditions, such as a particular farmer’s or community’s capacity to make the necessary changes, will determine whether a particular adaptation strategy is likely to succeed.