Swaziland minister calls for better taxes on Africa’s natural resources

7 Oct 15

Countries in sub-Saharan Africa must respond to demands for better living standards by taxing natural resources more effectively, an international conference heard this week.

Opening the annual combined forum of MEFMI (Macroeconomic and Financial Management Institute of Eastern and Southern Africa), Martin Dlamini, minister of finance in Swaziland, said real progress was being made by countries in the region.

“In general, there is improved human and institutional capacity in macro-economic financial management,” he told delegates meeting in Lima, Peru. “This has contributed to significant growth.”

But with the call for change from their own populations growing ever stronger, he added, political leaders face a major challenge attaining shared goals such as reduced poverty and better infrastructure.

MEFMI’s forum was held ahead of the IMF/World Bank annual meeting, also taking place in Lima this week, and was attended by finance and planning ministers, permanent secretaries and central bank governors from 14 countries.

The forum focused on the need to improve contract negotiation with investors and taxation of natural resources, as well as establish and manage sovereign wealth funds.

A report published by the World Bank on 4 October highlighted that, while poverty in sub-Saharan Africa has fallen significantly since 1990, the region now accounts for half of all global poverty compared with 15% a quarter of a century ago.

One of the biggest problems is low tax revenues. An analysis for MEFMI by EY shows that, by 2020, government spending in the region will account for 22% of GDP while government revenue will be worth just 19.7%

While many countries have discovered further natural resources in the past five years, such as oil, gas and diamonds, Dlamini told delegates it was also true that resource-rich countries were often marked by inequality, poverty, war insurgence and illiteracy.

He called on institutional investors to set aside pre-conceived perceptions of the region and give countries with sovereign credit ratings the opportunity to borrow on the international bond markets. “We live in an environment where the alternative to economic growth is debt,” he added.

Arunma Oteh, treasurer and vice president at the World Bank, called on politicians to show more courageous leadership and focus on ‘second generation reforms’ such as education, health and infrastructure.

“At no point in time is it more important to focus on management of natural resources,” she told the MEFMI forum.

“Our citizens are demanding. We have set the bar high. It’s important that we reach the bar.”

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