As African governments ponder effective post-coronavirus recovery strategies, Tax Justice Network Africa is of the view that the continent’s wealth in resources could be a major driver of growth and socio-economic transformation to counter the consequences of the pandemic if managed well.
In a statement on Monday, the pan-African research and advocacy organization said there is pressure for the continent to raise revenue locally.
This is because the resources needed to fund essential services like education and health have been overstretched by the coronavirus, in addition to the increased continental debt burden and limited inflows of aid and foreign development investment.
The organization said the continent should be able to raise the needed funds if the pipeline allowing capital flight and illicit financial flows could be closed.
“In view of the pressure on governments to mobilize financial resources to mitigate the adverse impact of coronavirus, the extractive sector presents strategic potential to raise the required resources,” said Alvin Mosioma, executive director of Tax Justice Network Africa.
The 2020 United Nations Conference on Trade and Development Report on Economic Development in Africa, published in September, indicated that illicit financial flows related to export of extractive commodities are the largest component of illicit capital flight from Africa.
The UN Conference on Trade and Development said stopping illicit capital flight could be almost cut in half, the annual financing gap of $200 billion that Africa faces to achieve sustainable development goals.
Tax Justice Network Africa said multinational corporations in the extractive sector do not pay their fair share, and Africa’s development based on its natural resources remains an unattainable dream.
The organization calls on African governments to improve transparency and accountability of multinational corporations, and to end secretive jurisdiction and tax havens, as well as promote the automatic exchange of information and citizen participation in extractive revenue management.
It also urges countries to review policies that allow overly generous tax incentives and publicly report the revenue forgone to subsidize multinational corporations.
According to the UN Environment Program, Africa is home to 30 percent of the world’s mineral reserves, 8 percent of the world’s natural gas and 12 percent of the world’s oil reserves.
Additionally, the continent has 40 percent of the world’s gold and up to 90 percent of its chromium and platinum. It also hosts the largest reserves of cobalt, diamonds and uranium in the world.
Africa holds 65 percent of the world’s arable land and 10 percent of internal renewable fresh water sources.
Unfortunately, despite being rich in natural resources, Africa remains one of the poorest continents globally, with 40 percent of its population living on less than $1.90 per day, according to the Institute for Security Studies, an African organization that enhances human security by providing authoritative research, expert policy advice and capacity building.