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.

Africa risks losing out on natural resource boom, Kofi Annan warns

Africa and its partners could lose out on the enormous opportunities that natural resources offer. This was said by Mr. Kofi Annan in his speech delivered at the Graduate Institute of International and Development Studies (IHEID) on September 26, 2013 to mark the opening of the 2013-2014 academic year in Geneva. “Africa and its partners will miss the opportunity to transform the lives of future as well as present generations, however, if they carry on with business as usual”, Mr. Annan warned.

Kofi Annan recounted the challenges that confront Africa’s extractive sector. He stressed that though natural resource wealth rightly belongs to the continent’s citizens, the “citizens are being robbed of its benefits by revenue diversion, corruption, jobless growth, and rising inequality.”

Africa’s impressive economic growth in the past decade has largely been driven by natural resource boom. However, this growth has done little to reduce poverty and improve the living standards of the people particularly those in resource-rich countries.

Mr. Annan urged governments in Africa to adopt transformational measures that will harness the potentials of the natural resource sector. He advised that natural resources should be processed to bring extra value before export. He again charged African leaders to adopt effective transparency and accountability measures. “African governments must put transparency and accountability at the heart of their natural resource policies. They must manage their citizens’ natural resources efficiently and share the revenues fairly”.

Some African countries have made strides in ensuring transparency by publishing oil, gas and mining contracts online. These include Ghana, Guinea and Liberia. More to this, several resource-rich countries have subscribed to the Extractive Industries Transparency Initiative (EITI). “Some 12 African countries are now compliant with the Extractive Industries Transparency Initiative, which recently announced more rigorous standards”, said Mr. Annan.

Mr. Annan indicated that multinationals have a role to play. Though there is growing commitments to transparency, he charged multinationals to “improve their behaviour” adding that “they also play a critical social role and that doing good is ultimately good for business”. He further advised multinationals that “transparent corporate governance builds reputations, reduces political risk, and may ultimately win more extractive contracts, too.”

Multinational companies into oil and gas and mining extraction in Africa have often been cited to engage in illicit practices including tax evasion and trade mispricing. The cost of these illicit practices is staggering. The Global Financial Integrity indicates that developing countries lost an estimated $98 billion to $106 billion annually to corporate tax dodging during the years 2002 through 2006. Africa is hard hit in these practices. Mr. Annan also added that “trade mispricing, a technique to lower tax payments, costs Africa an estimated US$38 billion per year, more than the US$33 billion in foreign direct investment or US$30 billion in official development assistance”.

He called for equitable tax justice system that will “bring benefits for Africa and for the international community more generally.”

BY: Stephen Yeboah, Geneva.

Read full speech of Mr. Kofi Annan here: http://bit.ly/18LS8VA

Africa’s governments must manage natural resource rents wisely – Kofi Annan

Mr. Kofi Annan, former UN Secretary General and Chair of the Africa Progress Panel, has challenged governments in Africa to wisely manage revenues that come from the continent’s natural resources. In managing these resource rents, he urged African “leaders to invest more upfront to relieve the pressing human needs that constrain Africa’s development.”

Mr. Annan was speaking at the Graduate Institute of International and Development Studies (IHEID) on September 26, 2013 to mark the opening of the 2013-2014 academic year in Geneva. The lecture was as well to celebrate the move of the Graduate Institute to its new campus, ‘Maison de la Paix’. Speaking on the theme “Is Africa’s mining boom helping or harming its people?” Kofi Annan bemoaned the increasing paradox that has taken over the continent’s extractive sector. He stressed that though natural resource wealth rightly belongs to the continent’s citizens, the “citizens are being robbed of its benefits by revenue diversion, corruption, jobless growth, and rising inequality.”

Africa is endowed with vast natural resource deposits like gold, diamond, cobalt, oil and gas, and bauxite. However, there is evidence of the ‘resource curse’ syndrome where natural resource wealth has been found to be negatively correlated with living standards. Countries like Nigeria, Democratic Republic of Congo, Equatorial Guinea, Gabon, Liberia, and Sierra Leone have often been cited to have suffered from the resource curse.

Mr. Annan called for a transformation of extractive sector. “Africa and its partners will miss the opportunity to transform the lives of future as well as present generations if they carry on with business as usual”.

Africa has recorded impressive economic growth over the decade driven by natural resource wealth but this growth has not translated into improved standard of living of the people. Though GDP per capita in Equatorial Guinea is higher than in Poland, “yet three-quarters of the population still live in poverty, and child death rates are among the highest in the world”, Mr. Annan said.

He put forward strategies that could help governments harness the potentials of their natural resource wealth. He indicated that “African governments should adopt national strategies that set the terms on which their natural resources will be developed, and link these strategies to plans for poverty reduction and inclusive growth”. He again urged governments to build on the Africa Mining Vision by adopting “legislation that requires companies bidding for concessions and licences to disclose fully their beneficial ownership”, adding that “tender and concession granting processes must be open and transparent”.

Mr. Annan challenged leaders to make transparency and accountability a high priority in the natural resource sector. “African governments must put transparency and accountability at the heart of their natural resource policies. They must manage their citizens’ natural resources efficiently and share the revenues fairly”.

The Africa Progress Panel, chaired Mr. Kofi Annan, released a report “Equity in Extractives: stewarding Africa’s natural resources for all” this year revealing the plunder in Africa’s extractive sector through practices like tax evasion and transfer mispricing by multinational companies. The report has, inter alia, called for improvement in taxation system and the need for transparency reforms in all deals in Africa.

STORY BY: Stephen Yeboah, Geneva [profstephenyeboah@gmail.com]

Breaking the affinity with secrecy in Africa’s extractive sector: G20 Summit and expectant reforms

“The G20 cannot afford to miss another opportunity to end illicit practices like tax evasion, transfer mispricing and capital flights that multinational companies engage in. These practices are stifling the ability of developing countries especially in Africa to finance development that trickles down to the poor.”

The subject on transparency in the extractive industry has extensively been discussed. The campaign drive for transparency in the past decade to make contracts and revenue flows in the oil, gas and mining industry open has been intense. Global transparency campaign has succeeded in prompting and facilitating historic reforms that seek to fade out secret deals especially in the extractive industry. The G8 in its recent meeting joined the fight but with not too impressive outcome. The G8 put forward measures to clamp down on tax evasion and illegal capital flights which thrive in ‘darkness’. David Cameron indicated in June that the time had come to insist on greater transparency from resource-extracting companies, in order to “lift the veil of secrecy that too often lets corrupt corporations and officials in some countries run rings around the law”.

But the results have still been modest. That there are still billions of dollars being lost through tax avoidance and evasion must be the concern now. On September 5 and 6, leaders of the G20 are expected to agree on, inter alia, a reform to fight evasion by multinational companies. Of course, there could be no right time than this particular moment. The issue at hand is staggering. This is no politics. It is about denying both developed and developing countries the opportunity to finance development. In this discussion, developing countries and those in Africa in particular receive the most attention. Why? The Global Financial Integrity indicates that developing countries between lose an estimated $100 billion to $160 billion annually to corporate tax dodging.

Africa is known to suffer the most from tax evasion and transfer mispricing. Africa is hard hit. The Africa Progress Panel, chaired by Mr. Kofi Annan, in its report “Equity in Extractives: stewarding Africa’s natural resources for all” this year gives worrying details. Africa between 2008 and 2010 lost US$38.4 billion through transfer mispricing and illegal capital flights. This together with corruption and mismanagement makes the situation grievous. Governments are increasingly worried. There is growing public discontent regarding these illicit practices that deny people from deserved benefits of development. The G20 Summit in St. Petersburg, Russia ought to deal with the challenge. And there are economic reasons for this.

The extractive industry in Africa is mired in very disturbing paradox. Extensively rich in all kinds of natural resources, Africa still struggles to improve the lives of people. Livelihoods of people have even worsened in these resource-rich countries. Even scandalous is that the right amount of revenues from oil, gas and mining do not reach these governments. Tax evasion, transfer mispricing and other illicit financial practices by multinational extractive companies to evade taxes are to blame.

Transparency, to begin with, must precede all reforms aimed at stopping tax evasion and transfer mispricing commonplace in the oil, gas and mining sectors. These illicit practices by multinational companies only survive in opaque environments. In this sense, there is no denying that global reforms to leverage transparency have been groundbreaking. What are these reforms? In the United States, there is the 2010 Dodd-Frank Act. Though this act is being challenged in court by the American Petroleum Institute (API), the largest U.S trade association for the oil and natural gas industry, the Dodd-Frank Act has succeeded in driving other reforms elsewhere. The European parliament this year passed a legislation compelling oil, gas and mining companies to publish payments they make to governments. The parliament issued new transparency rules in the EU Transparency and Accounting Directives. Under this directive, European companies are mandated to publish payments of more than €100,000 made to the government in the country in which they operate, including taxes, royalty payments, and licence fees.

In Switzerland, the Federal Councilor announced in June this year transparency draft law for the entire Swiss commodities sector. Berne Declaration, a Swiss-based NGO, indicates that the extractive activities of all major Swiss commodity companies will most likely be covered by EU and/or U.S. regulations. Aside from these, the Extractive Industry Transparency Initiative (EITI) has encouraged countries especially in Africa to sign up to standards in reporting revenues from oil, gas and mining industries. These reforms have direct bearing on practices in Africa’s extractive industry.

But more needs to be done. Here leaders of the G20 have to take the challenge. Reforms that have happened so far need to be built upon. It is in this transparent environment that broad tax reforms can be instituted. Further reforms to stop tax havens that support activities of companies are needed. The automatic exchange of information set out by the G20 must take into account the conditions in Africa. Critical today is bringing together large partners that will undertake a standardised model that tracks activities of multinational companies. Of course, isolated reform will achieve modest results. This underscore why Africa, which hosts major operations of these companies, must be brought in.  

For far too long, transparent and efficient global tax system has not been given the needed attention it deserves. The G20 cannot afford to miss another painstaking opportunity to end illicit practices like tax evasion, transfer mispricing and capital flights that multinational companies engage in. These practices are stifling the ability of developing countries especially in Africa to finance development that trickles down to the poor. Developed countries as well are affected. Little or no reform to combat tax evasion and transfer mispricing will not only be disappointing but akin to the G20 condoning these practices that exploit developing countries. Stricter reforms with broad implementation strategies must be envisioned.

These reforms promote the good governance that Africa needs. But it must be acknowledged that transparency and tax reforms cannot provide the quick-fix to the menace in extractive industry in Africa. Governments must take the huge responsibility. The Revenue Watch Institute’s 2013 Global Governance Index which measures transparency and accountability in oil, gas and mining sector of 58 countries worldwide reveals that vast majority of countries surveyed fail to meet satisfactory standards in how natural resources are governed. Of the countries categorised as ‘failing’, majority (8 out of 15) is from Africa. They include among others, DR Congo, Mozambique, Cameroon, Libya, and Equatorial Guinea. These standards are exactly what promote good governance of the extractive industry. Governments must strive to improve these governance structures.

Thus internal governance and institutional structures must be given the boost. Taxing systems in Africa must understand the way international tax jurisdictions operate. The capacity of tax authorities must be enhanced for better appreciation of the global tax system. An extractive industry that contributes to equitable and sustainable development and that fights poverty for both today and future generations is what is ideal for Africa. For their part, leaders of the G20 must break this affinity with secrecy that emboldens multinational companies to avoid their simple obligation of paying the right taxes to governments. Essentially, all stakeholders must be held into account.

BY: Stephen Yeboah. He is an academic researcher with experience in agriculture and natural resource governance in Africa. He currently studies at the Graduate Institute of International and Development Studies in Geneva. [Email: profstephenyeboah@gmail.com]

Food insecurity and undernutrition in Africa: Political and economic will needed

It is apparent that major development policies in developing countries pay little or no attention to food insecurity and undernutrition. Food insecurity and undernutrition are low on priority list of most countries particularly in Africa. But the costs of food insecurity and undernutrition are staggering. Food insecurity and undernutrition threaten human survival. The 2012 Food and Agriculture Organisation (FAO) report ‘The State of Food Insecurity in the World’ reveals that about 870 million people in the world (12.5%) are undernourished. The Lancet publication series of child and maternal malnutrition this year on malnutrition as well makes shocking revelations. According to the Lancet, undernutrition causes 3.1 million deaths annually or 45% of all child deaths in 2011. The magnitude of these problems is either not known or it is being underestimated by governments. But it is obviously risky to underestimate the impacts of food insecurity and undernutrition on socio-economic development of countries.

The causes of food security and undernutrition are very clear. Africa has millions of hectares of uncultivated arable land. Even of those lands under cultivation, only less than 1% is irrigated. This explains why food production is so low and incapable of meeting human needs. Also, donor assistance to agriculture falls short to what is given to other sectors. In 2011, aid made available for nutrition was $418 million (an increase from US$259 million in 2008) constituting only 0.4% of total official development assistance (Di Ciommo 2013).

The political will of governments in Africa is also severely lacking. The 2012 Hunger and Nutrition Commitment Index (HANCI) corroborates this. HANCI measures the political commitment to reduce hunger and undernutrition in 45 developing countries using 22 indicators and 3 basic areas of government action: policies and programmes, legal framework and public expenditure. Of the last 10 poor-performing countries, 7 countries are from Africa. They include Lesotho, Mauritania, Sudan, Burundi, Angola, Democratic Republic of Congo and Guinea Bissau.

Food insecurity and undernutrition perpetuate poverty and hinder significant economic growth. Undernutrition imposes substantial health burden on children. It as well impairs both short term and long term educational opportunities of children. In the midst of these problems, it is much a worry that investment in agriculture and targeted actions to tackle undernutrition is low in Africa. In this, the sad reality seems to be happening. Progress towards achieving the Millennium Development Goals (MDGs) is under threat. These include MDG 1 (eradicate extreme poverty and hunger), MDG 2 (achieve universal primary education), and MDG 4 (reduce child mortality).

Today, we have found ourselves in a situation that both economic and political will ought to be the only options. It is refreshing though that a lot has been done in the past few years to scale up food production and improve nutrition. The G8 members, through the L’Aquila Food Security Initiative at the 2009 G8 Summit, have committed more than 50% of funds they pledged to tackle food insecurity and undernutrition.

Some countries have shown that with strong economic and political will it is possible to reduce or eradicate malnutrition and food insecurity. Brazil through its nutrition policy has been an incredible success story. Today, Brazil’s school feeding programme is being implemented in most African countries including among others, Ghana, Senegal, Kenya, Nigeria, and Malawi.

Nevertheless, much more needs to be done. Africa countries ought to absolutely commit to total eradication of hunger and undernutrition, the worst forms of food insecurity. We must aim towards a global society where no traces of hunger and undernutrition can be found. By this, a global concerted effort is needed to rekindle the fight. And beyond economic commitment, it’s important for African governments to demonstrate the political will to end hunger and undernutrition. How do we get this done?

Let’s consider improving agriculture. Smallholder farmers feed more than 70% people in Africa and the world at large. Investment must be directed at enhancing the capacity of these farmers to produce at low cost and with ready market. Women constitute more than 60 percent of global food producers. Women need resources like land, inputs, and seeds to enable them produce quality food.

It is also imperative to bring the private sector on board. Some steps have already been taken. The Amsterdam Initiative against Malnutrition (AIM), a Dutch partnership model bringing together public and private actors, is important to show the way. AIM launched in May 2009 aims is to eliminate malnutrition for 100 million people in Africa by 2015. Similar initiatives must be encouraged to boost funding for targeted nutrition programmes.

The approach to fulfilling commitments to agricultural investments in Africa has to change. Crucially, the African Union in a summit in Addis Ababa in July 2013 adopted unified and focused measures that will end hunger and malnutrition by 2025. In the Addis Declaration, African Heads of State and Government have agreed to dedicate funding and support to help drive agriculture. This is very positive in fight against food insecurity and undernutrition. What’s more, the AU has declared 2014 as the Year of Agriculture and Food Security. I think these represent a decisive step towards addressing the challenges at hand.

But there is a cause to worry. It is a different thing to make a commitment and to fulfill those commitments. Thus whether or not these commitments will be adhered to by member countries remains an issue. The implementation commitments made to boost agricultural development in the region have been poor. A case in point was the AU Declaration in Maputo in 2003. The Maputo Declaration enjoined African countries to increase investment in agricultural sector to at least 10% of their budget by 2008. At the end of the 2008, only 4 of the 19 countries met the 10% spending target. African governments must translate the talk into action. The Addis Declaration is another unique opportunity to accelerate and sustain the momentum in addressing hunger, food insecurity, and undernutrition.

Of course, there is no other option. Human and economic development will be a mocking mirage if hunger, food insecurity and undernutrition are not eradicated, at best and reduced drastically, at worst. It is true that efforts in the past decade to reduce poverty, hunger, and undernutrition have been impressive. But they are not enough. Governments cannot afford to relent. We ought to come to terms with the fact that nutrition especially is an essential sustainable development goal that African governments ought to embrace.

The G8 last year launched the landmark New Alliance for Food Security and Nutrition to achieve sustained agricultural growth and lift 50 million people out of poverty over the next ten years. This year’s summit G8 Summit marked another opportunity for G8 members to bolster their commitments to invest in food security and nutrition in developing countries. The promise must be kept.

With the above elaborated strategies, there is every reason to be hopeful of progress. 

For God and Ghana: Alarming water pollution levels in Wassa communiti...

For God and Ghana: Alarming water pollution levels in Wassa communiti...: ...Tripartite project reveals In the Wassa Amenfi East District of the Western Region of Ghana, only one per cent (or one in hundred) ...

The Africa optimism is neither false nor unwarranted

A critique of Professor Havnevik's article

I read with interest the arguments put forward by Professor Kjell Havnevik in his article on the  so-called Africa optimism. He argues that the current growth in Africa is largely based on exports of natural resources. Projecting this trend forward, he was somewhat right to conclude that this growth optimism is unwarranted.

However, I think there are issues the author fails to take into account in his analysis. I will endeavour to highlight some of these issues. The truth is that for about a decade now, African economies have recorded robust growth. In per capita terms, GDP has expanded at 2.4 per cent per year, good for an average increase in GDP per capita of 50 per cent since 1996. Significantly, this growth momentum has been maintained.

Arguing from this, the assertion that this optimism is unwarranted even in the forward-looking perspective is contestable. Why have countries been able to hold on to this growth momentum for a decade now? And can it be said that this prevailing optimism is false? Absolutely not.

The paradox of economic growth and incidence of poverty and unemployment in Africa is structural. That is, economic structure has been built to largely survive on natural resource revenues making it vulnerable to commodity price volatilities. This structure has not been supportive of inclusive growth and improved welfare.

Though the current economic growth is driven by high commodity prices, the author fails to acknowledge that natural resource wealth alone does not explain the improved performance of the continent.

If this had been acknowledged, I think the debate would have been spiced up. Fast growth has been recorded in resource-poor countries like Rwanda, Ethiopia and Mozambique (before it became resource-rich). This demonstrates a common reality that Africa has the capacity to sustain growth without depending on natural resources.

As the author strongly argues, this growth indeed presents a conundrum. It masks the reality that poverty, unemployment and inequality still persist. The World Bank estimates that the $1.25 a day poverty headcount declined from about 65 per cent during 1995-2000 to an estimated 49 percent during 2008-2011 in resource-poor countries in Africa. Has poverty not been reduced in recent decades? Why then must The Economist’s sharp reversal of description of “Hopeless Africa” to that of “Hopeful Africa” be a surprise?

There is no denying that these positives are insufficient. The incidence of poverty has fallen but is still high. The continent is still riddled with youth unemployment aside from armed violence wreaking havoc on the lives of children and adults. Even with this, it is not wholly true that African economic development will in the future be characterised more by social exclusion and conflict than being inclusive and poverty reducing.

Why? From the natural resource perspective, governments, international organisations and most importantly the people have come to understand the negatives of loss of windfalls through corruption, transfer pricing and illegal capital flights. This has compelled governments to pursue reforms with the aim to derive the maximum benefits. Mining and oil and gas contracts have been reviewed in Guinea and Zambia among other countries.

The author catalogues the problems that confront the natural resource sector including among others, low or non-existent tax revenues from corporations, transfer pricing and illegal capital flight. I cannot agree with you more.

The Africa Progress Panel, chaired by Kofi Annan, highlights worrying details in its report Equity in Extractives: stewarding Africa’s natural resources for allpublished this year. Africa loses US$34 billion annually through transfer pricing and illicit capital flights. Multinational companies cannot absolve themselves of these practices, which are worrying also developed economies.

The G8 in its recent meeting called for purposive measures to tackle this menace, and the EU has issued Transparency and Accounting Directives. The global revolution on transparency in the extractive industry we are witnessing means the world is ready to clamp down on these losses. Africa has been involved in this development. Several countries have opted for the transparent way with online publications of revenues and contracts. These are positive signs. I think these are reforms that will drive sustainable change in the continent.

Flowing from the above, the argument that “African economic development will in the future be characterized by social exclusion and conflict rather than being inclusive and poverty-reducing” is very weak. There are grounds for optimism contrary to the author’s pessimism.

On agriculture, indeed there are issues. Though agriculture has contributed substantially to the growth of Rwanda and Ethiopia, the existing paradox is a cause for worry. Rural smallholder farmers who produce more than 70 per cent of food crops are among the core poor. The author is right to cite “weak water and land rights” as major issues that prevent efforts at harnessing the potentials of agriculture. But the argument ought to go beyond that.

Inaccessible local and international markets wreck the fortunes of these poor farmers. And of course, this stems from ‘unfair’ trade. African farmers do not have the capacity to compete with farmers in the EU and United States who benefit from huge subsidies.

I am not externalising the challenges that confront African farmers. Far from it. But there ought to be trade regime that gives equal leverage to all farmers in the world. Without this, one must not be surprised if some farmers, despite high food prices, struggle to survive. The issue of land rights depends largely on the political will of various governments to reform their institutions. What form should these reforms take?

Gender mainstreaming in agriculture is significant. Though women produce about 70 percent of food crops in Africa, the veritable constrains to enable them have access to productive inputs are still high. When this and other issues are considered, it is easy to predict that sustainable transformation of African economies requires re-structuring of smallholder agriculture.

Regarding the continent’s high population growth, I am a bit surprised that the author sees this mainly as a challenge in the long term. It is true that youth unemployment is high. Of course arguing from this perspective, it could be said that population growth will pose a challenge to the long term development of Africa. However, we  must not lose sight of one issue: Africa’s ‘youth bulge’ is a demographic dividend. Countries are able to grow with a potential human resource base equipped with education, skills and opportunities.

The reality of this has not happened in Africa. The enabling condition to help harness the potentials of the youth is constrained. The problem is not necessarily the predicted upsurge of population. Africa could make the growing youthful population a force for change by giving youth the needed skills and absorbing them in productive jobs. This has started in some countries.

In conclusion, let me add that Africa’s marginal capacity to reduce poverty can be reversed. It is possible with the right type of political leadership and enlightened people. Though there are still some miles to travel, good governance – a precondition for change – is progressively being applied in the continent. There is optimism. The Africa optimism is neither unwarranted nor does it depict a false picture. 

Article was originally published on Nordic African Institute forum: http://naiforum.org/2013/07/the-africa-optimism-is-neither-false-nor-unwarranted/