A fair uranium deal could lift millions of Niger’s people out of poverty

Picture: A uranium mine in Niger.
Yann Arthus-Bertrand/ Yann Arthus-Bertrand/CORBIS

Niger’s uranium powers one in three light bulbs in France, but delivers little to the Nigerien people. A major uranium producer with a population of just 17 million, Niger is one of the world’s poorest countries. Some 90 percent of its people have no electricity at all.

Niger is clearly not getting a fair deal for the uranium it sells. For the first time in 10 years, however, Niger’s uranium contract with the French nuclear energy company AREVA is up for renewal.

A fair deal could help lift millions out of poverty. But for that to happen, the secrecy surrounding contract renegotiations must end.

“How can we lift ourselves out of poverty when we get such a poor deal for our resources?” asks Ali Idrissa, coordinator of the Publish What You Pay (PWYP) coalition in Niger. The network that campaigns for transparency in Niger’s mining sector.

For years, PWYP activities were subject to arrests and intimidations for their work. With a new government since 2011, however, Niger has gradually improved its natural resource transparency. The current Minister of Justice, Marou Amadou, had been active in the PWYP coalition.

The coalition is determined that Niger should have a fair deal for its uranium.

In 2010, for example, two mines produced uranium worth more than €3.5 billion. But Niger received just €459 million, or 13% of this amount, according to a report by PWYP Niger and Oxfam France.

 AREVA received tax exemptions worth €320 million in 2012, the report says.

Already the world’s fourth-largest producer of uranium, Niger will become the second largest when it begins extraction at its Imouraren mine. But 75% of its people live on less than $2 a day. The country ranked last of the 186 countries in the 2012 UN Human Development Index.

Although mining constituted 70.8% of Niger’s exports in 2010, it contributed only 5.8% of the country’s gross domestic product.

In its 2013 report, the Africa Progress Panel recommends that new agreements be subject to parliamentary debate and scrutiny. Governments should use auctions and competitive bidding to sell mining concessions and licences, EITI standards should be strengthened to bring full transparency to the whole extractive industry value chain, the 2013 Africa Progress Report further says.

BY: Stephen Yeboah, Research and Communications Assistant, Africa Progress Panel

Published on: http://www.africaprogresspanel.org/a-fair-uranium-deal-could-lift-nigers-people-out-of-poverty/

Tackling inequality to combat poverty

BY: Caroline Kende-Robb, Executive Director, Africa Progress Panel.

Already enjoying increased macroeconomic stability and more democratic politics, Africa has also been touched by the so-called global commodities super-cycle. Strong demand for the continent’s oil, gas, and minerals have combined with high prices to fuel economic growth in many of its resource-rich countries, including Equatorial Guinea and Angola. Across the continent, progress has accelerated on education, child survival, and on the fights against killer diseases such as HIV/AIDS and malaria.

Unfortunately, much of this progress remains too slow and uneven. Inequality has become a pressing issue for the continent, slowing both economic growth and poverty reduction. In the long-term, this inequality will also fuel dangerous social and political pressures. Oil-rich Equatorial Guinea saw its GDP grow by an average 16.9% every year in the first decade of this century. Its average income is now higher than that of Poland. But three-quarters of Equatorial Guinea’s population still live in poverty and child mortality rates are among the highest in the world.

So how can African governments and the international community pursue growth in Africa that is more equitable and inclusive? Chaired by former UN Secretary-General, Kofi Annan, the Africa Progress Panel released a report in May on precisely this theme. The report Equity in Extractives – Stewarding Africa’s natural resources for all found that few Africans have benefitted from their countries’ natural resources and inequality has increased. This rising inequality is slowing the rate at which growth reduces poverty and in many countries, the poor have seen their share of income shrink. Equity in Extractives recommends a series of policies which, if implemented, will help ensure that Africa’s natural resource wealth brings more inclusive and equitable growth.

As a starting point, African governments must link extraction of their natural resources with plans to reduce inequality and boost inclusive growth. They must identify extractive projects that can generate more jobs, through linkages with the local economy. By processing natural resources before export, they can also bring extra value to the national economy. But public spending is the key mechanism that connects government revenues with the wider population. And African governments must spend their revenue more fairly. Too often, public spending is heavily skewed against the poor.

Nigeria spends around 6% of its GDP on education. That is a relatively high share by international standards, but unequal allocations across states, a strong emphasis on grants for tertiary students, and the bypassing of urban slums leaves millions of the country’s poorest children without schooling. Nigeria has an estimated 10 million children out of school.

Misguided priorities can also distort public spending on basic services. Nigeria’s fuel subsidies reached US$9 billion in 2011, or 4% of its GDP. But the benefits often go to the richest households, which consume the most fuel. And they reduce the amount of cash available for urgently needed public spending on infrastructure such as power, ports, and roads. This limits growth and critical job creation, too.

Crucially, African governments must put transparency and accountability at the heart of their natural resource policies. Transparency is so critical, because it reduces the opportunities for corruption. This corruption is facilitated, of course, by the behaviours, norms, and laws of others within the international community. G8 and G20 governments in particular must do more to ensure transparency and accountability, especially in the extractives industries. Some extractive companies generate healthy profits that do not translate into commensurate government revenues. They benefit unfairly from excessive tax concessions, tax evasion and the undervaluation of assets.

By itself, trade mispricing, the misrepresentation of export and import values to lower tax payments, now costs Africa an estimated US$38 billion per year, more than the continent receives in either international aid or foreign direct investment. Too many trusts and companies are owned by anonymous individuals, effectively hiding the illegal payments between corrupt business people and government officials.

Equity in Extractives described five deals in the Democratic Republic of the Congo (DRC), involving the sale of national mining assets to anonymous individuals. Together these five deals cost the DRC an estimated US$1.4 billion, equal to twice the combined annual budgets for health and education – a tragedy in a country where seven million children are out of school.

But momentum is accelerating towards greater transparency. The United States and Europe have introduced legislation to require greater financial disclosure from extractive companies. African governments, such as Guinea, Liberia, and Ghana, are now publishing their contracts. Currently reviewing its money laundering rules, with a fourth anti-money laundering directive expected later this year, the European Union has a major role to play in tackling the non-transparent ownership of companies and trusts.

Tax evasion, illicit transfers of wealth and unfair pricing practices are sustained by global trading and financial systems. But international action can create an enabling environment for strengthened governance in Africa. And global problems need multilateral solutions. With the right political will and building on the continent’s many successes, African societies will become more prosperous, fair and equal. This is a prize which we will all share, wherever we live.

Originally published in: http://thebrokeronline.eu/Blogs/Spurring-economic-transition/Tackling-inequality-to-combat-poverty

*******************

Chaired by Kofi Annan, former Secretary-General of the United Nations, the ten-member Africa Progress Panel advocates at the highest levels for equitable and sustainable development in Africa. The Panel releases its flagship publication, the Africa Progress Report, every year in May.

www.africaprogresspanel.org

http://www.facebook.com/africaprogresspanel

@africaprogress 

Africa has world's highest rate of adolescent pregnancies, UNFPA says

Africa has the world’s highest rates of adolescent pregnancy, a factor that affects the health, education, and earning potential of millions of African girls, according to a report released last month by the United Nations Population Fund (UNFPA).

Niger tops the list with 51 percent of women between 20 and 24 reporting a birth before the age of 18. And of 20 countries with the highest rates of adolescent pregnancy, 18 are African, the report, “Motherhood in Childhood: Facing the challenge of adolescent pregnancy”, says.

When a girl becomes pregnant or has a child, her health, education, earning potential and her entire future may be in jeopardy, trapping her in a lifetime of poverty, exclusion and powerlessness, the report says.

“Adolescent pregnancy is intertwined with issues of human rights. A pregnant girl who is pressured or forced to leave school, for example, is denied her right to education”, UNFPA’s Executive Director, Babatunde Osotimehin, explains in the report foreword.

“There are 580 million adolescent girls in the world. Four out of five of them live in developing countries. Investing in them today will unleash their full potential to shape humanity’s future,” he adds.

Africa’s women and girls offer enormous untapped potentials to drive African development. Women account for two thirds of our smallholder farmers, for example. So this report shines light on a critical issue.

The distorted transitioning of girls into womanhood as a result of early pregnancy ought to be seen as a significant economic loss.

In its 2012 report “Jobs, Justice and Equity: Seizing opportunities in times of global change”, the Africa Progress Panel challenges African leaders to scale up efforts to achieving the MDGs while keeping the post-2015 development agenda in mind. 

African governments must pursue policies that bridge the gender disparity between boys and girls in access to health care, education and other basic social services. Leaders must also accelerate efforts towards universal primary education that gives particular focus to girls.

Blog is originally published at : http://www.africaprogresspanel.org/africa-has-worlds-highest-rate-of-adolescent-pregnancies-unfpa-says/

African Extractives on the Frontline of Global Struggle for Tax and Commodities

Guest post by: Edward Harris, Head of Communications, Africa Progress Panel

Smart politicians talk about reform but they understand the value of promise without delivery, one academic told participants at a conference in Oxford last week. Organised by Oxfam and Oxford University, the one-day conference discussed how extractive industries can work for African people.

Reinforcing the conclusions in this year’s Africa Progress Report, the conference also highlighted the wider, global struggles for control of commodities and tax revenue.

Both struggles are better understood by examination of Africa’s oil, gas, and mining sectors, where tax avoidance is a major issue. One participant noted that extractive industries account for some 60 percent of illicit financial flows from Africa.

In the struggle for commodities, the big question is – and always has been – how government and business divide the mineral revenues. The private sector must focus on profit, of course, but multinationals have often negotiated grossly unfair deals with African governments, who are more confident now than ever before. Contract renegotiations by African governments have become a major threat to multinational profit.

Keen to head off this major risk, business displays both increased transparency and good intentions – “talking the talk”, at least. But have their incentives really changed? It’s still about the profit.

The struggle for tax payments is more nuanced. Tax justice has become a hot issue, and future regulation will likely require the multinationals to pay fair amounts of tax. The struggle is for control of those future tax revenues.

Assuming they are eventually restricted from using tax havens and offshore shell companies, should multinationals pay tax based on their headquarter location, for example?  Or based on the location of the minerals that they extract? It’s revealing that rich world clubs – the G20 and OECD – are setting the agenda for global tax reform. This can only work to their advantage.

The UK received a major PR boost with this year’s G8 agenda on tax and transparency, but a British official raised doubts in Oxford when he said that implementation of these promises could take a decade.

Business and government may be making the right noises, but actions speak louder than words.

****************

Chaired by Kofi Annan, former Secretary-General of the United Nations, the ten-member Africa Progress Panel advocates at the highest levels for equitable and sustainable development in Africa. The Panel releases its flagship publication, the Africa Progress Report, every year in May. 

Tackle tax and transparency issues to give Africa a fair chance

Guest post by: Caroline Kende Robb, Executive Director, Africa Progress Panel.

With the commodity supercycle still rumbling on, Africa’s natural resources should be transforming the lives of millions across the continent. After all, Africa has an estimated 30 percent of global mineral reserves and less than 15 percent of its population.

But jobless growth, corruption, and rising inequality are still robbing African citizens of the benefits of their natural resources, as we showed in this year’s Africa Progress Report, Equity in Extractives – Stewarding Africa’s natural resources for all.

Tax and transparency issues merit special attention. And we, the global community, must tackle these issues if Africa is to have a fair chance of profiting from its natural resources.

Transparency can be a deceptively complex concept, referring variously in this context to beneficial ownership of companies and trusts, contracts between governments and multinationals, or even the use of public revenues.

But we all understand the basic principle that transparency prevents corruption and improves accountability.

Our report details five shadowy mineral deals which cost the Democratic Republic of the Congo good opportunities for a fair price on mineral concessions. As a result, one of the poorest countries in the world effectively lost$1.4bn, roughly twice its combined annual budgets of health and education.

The good news is that the transparency train has left the station. More and more African governments are publishing contracts online, the Extractive Industries Transparency Initiative is rolling out tougher standards, and western governments are implementing tough new legislation.

The journey will not be without its delays, of course. China has not yet implemented such legislation, state-owned enterprises often remain out of reach, and the American Petroleum Institute continues to fight against the tide of history.

Ultimately, however, the transparency train can only go in one direction, driven on by the increasing accessibility of data and growing demands for fairness in Africa and across the world.

The same is true for tax justice. But why tax? And why is it such an issue for the extractives industries?

Answers can be found in the combination of weak capacity in many African tax administrations, the nature of the extractives industries, and a global tax system that has failed to keep pace with the realities of globalisation.

The practical complexities of extracting oil, gas, and minerals in hard-to-reach locations produces high barriers to market entry and strong economic advantages for companies that are vertically integrated and present in several different countries.

With a focus on profit, these companies use a variety of practices to shift their profit and revenues to low tax jurisdictions. The scale of these practices has led our Panel Chair, former UN Secretary-General Kofi Annan, to describe them repeatedly as “legal but morally unacceptable”.

By misrepresenting the values of their imports and exports, for example, a practice known as trade mispricing, companies can lower their tax obligations considerably. This practice alone costs the continent an estimated $38.4bn every year, more than it receives in either international aid or foreign direct investment.

This year’s G8 Summit gave hope that the international community can tackle these issues effectively. Indeed, African governments, the international community, and many multinational corporations all seem to be aligning around the need for fair and transparent relationships.

After all, transparent corporate governance builds reputations, reduces political risk, and may ultimately win more extractive contracts too. And we all benefit from an Africa that is prosperous, stable, and fair.

Original source: This is Africa

Chaired by Kofi Annan, the former Secretary-General of the United Nations, the Africa Progress Panel (the Panel) includes distinguished individuals from the private and public sectors, who advocate on global issues of importance to Africa and the world.