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Fighting BEPS in Africa: a review of Country-By-Country Reporting

Mon, 06/19/2017 - 05:24

Following the Panama Papers leak and numerous press reports of aggressive tax planning by Multinational enterprises (MNEs) around the world, there has been a concerted effort, notably in developed countries, to combat MNE tax avoidance and increase international cooperation in tax matters. As MNEs operate across borders they can use multi-jurisdictional tax planning, in combination with transfer pricing, to limit their tax obligations. Unfortunately, some MNEs aggressively plan an operation around these tax structures to avoid paying their fair share of tax. This is mostly legal, as MNEs generally do not breach any single tax jurisdiction’s laws. However, such practices have a negative impact on the countries in which they are operating, regardless of whether they are legal or not.

A key responsive measure to address aggressive MNE tax planning has been the OECD/G20 Base Erosion and Profit Shifting (BEPS) Package. Its aim is to close loopholes between various national tax authorities that allow MNEs to unjustifiably shift profits across borders. Within this, a key component, and part of the minimum BEPS action requirements, is Action 13: Transfer Pricing Documentation and Country by Country Reporting (CbCR).

Policy recommendations made by this brief:

  • by the time of the 2020 review MNEs will be more aware of this process, and it is possible that the idea of lowering the EUR 750 million revenue threshold will find a more receptive audience
  • given the trust barriers to lowering exchange of information requirements it is not clear that this issue can be resolved in favour of those African states currently not able to comply. Consequently, African countries need to upgrade their institutional capacities and legal frameworks. Official development assistance could be targeted at this area
  • as Action 13 reports are submitted over the next two years a much more informed assessment of the strengths and limitations of CbCR should emerge. This should enable the refinement, and possibly the extension, of the system
  • the application of CbCR to include other taxes paid by MNEs, beyond corporate income tax, could also be considered
  • the transparency of CbC reports will, no doubt, feature in the 2020 review and African revenue authorities will need to engage with the issue, as it could bridge a lot of their constraints

 

Africa’s youth employment challenge: new perspectives | IDS Bulletin Vol 48, No 3

Fri, 06/16/2017 - 05:12

Youth and employment concepts are not new to development discourse in sub-Saharan Africa but over the last decade interest has increased dramatically, becoming a much more important focus for policy, intervention and research throughout the continent (and globally).

This IDS Bulletin reflects challenges in Africa and demonstrates how political context shapes youth-related policy.The articles in the Bulletin consider the evidence on youth employment policy and interventions, the politics of youth policy, the changing nature of young people’s work, and the promotion of entrepreneurship. They are authored by the ten members of the first cohort of the Matasa Fellows Network (a joint initiative by the MasterCard Foundation and IDS), which has a particular focus on the youth employment challenge in Africa.

Articles:

  • Introduction: New Perspectives on Africa’s Youth Employment Challenge: Seife Ayele, Samir Khan and James Sumberg
  • Youth Employment in Developing Economies: Evidence on Policies and Interventions: Nicholas Kilimani
  • The Politics of Youth Employment and Policy Processes in Ethiopia: Eyob Balcha Gebremariam
  • The Side-Hustle: Diversified Livelihoods of Kenyan Educated Young Farmers: Grace Muthoni Mwaura
  • Gambling, Dancing, Sex Work: Notions of Youth Employment in Uganda: Victoria Flavia Namuggala
  • Navigating Precarious Employment: Social Networks Among Migrant Youth in Ghana: Thomas Yeboah
  • Youth Participation in Smallholder Livestock Production and Marketing: Edna Mutua, Salome Bukachi, Bernard Bett, Benson Estambale and Isaac Nyamongo
  • Non-Farm Enterprises and the Rural Youth Employment Challenge in Ghana: Monica Lambon-Quayefio
  • Does Kenya’s Youth Enterprise Development Fund Serve Young People?: Maurice Sikenyi
  • Promoting Youth Entrepreneurship: The Role of Mentoring: Ayodele Ibrahim Shittu
  • Programme-Induced Entrepreneurship and Young People’s Aspirations: Jacqueline Halima Mgumia

 

 

Why isn’t tech for accountability working in Africa?

Thu, 05/18/2017 - 03:22
Expanding mobile networks and falling costs could transform communication between African citizens and governments. So far, however, attempts to harness new technologies to improve transparency and accountability in Africa and elsewhere have had disappointing results. What is going wrong? Research suggests that an important reason for this failure is a poor understanding of technologies and limited skills in developing and using them. It seems that civil society organisations (CSOs) and governments often ‘re-invent the flat tyre’: experimenting with new tools without finding out what has been tried (often unsuccessfully) before. They also do not follow best practices in how to source, develop and test technologies to ensure these are ‘fit for purpose’. Decision makers should focus on building an effective innovation ecosystem with better links between technologists and accountability actors in both government and civil society to enable learning from successes – and mistakes. Recommendations:
  • those with responsibilities in creating the innovation ecosystem, including funders, should focus on building a supportive innovation ecosystem
  • funders should shift their focus from supporting short-term pilots to building institutions capable of success over time, and invest in strengthening links between initiatives and disseminating learning resources across the continent
  • those who are leading and managing innovation initiatives – in government and CSOs – should focus on getting better and smarter at managing the innovation cycle
  • research suggests the following ‘rules of thumb’ will lead to better outcomes: acknowledge what you do not know, think twice before building a new tool, get a second opinion, test technologies in the field, plan for failure, budget to iterate, and share what you learn

Community-level perceptions of drivers of change in nutrition: evidence from South Asia and sub-Saharan Africa

Tue, 05/16/2017 - 04:37

Changes in the immediate, underlying and basic determinants of nutritional status at the community- and household-level are a logical and empirical prerequisite to reducing high levels of undernutrition in high burden countries.

This paper considers these factors directly from the perspective of community members and frontline workers interviewed in six countries in South Asia and sub-Saharan Africa. In each country, in-depth interviews were conducted with mothers, other community members and health workers to understand changes in health and nutrition practices, nutrition-specific interventions, underlying drivers and nutrition-sensitive interventions, and life conditions.

Overall, the need for basic improvements in livelihood opportunities and infrastructure are solidly underscored. Nutrition-specific and -sensitive changes represented in most cases by deliberate government or NGO supported community interventions are rolling out at a mixed and uneven pace, but are having some significant impacts where solidly implemented. The synthesis presented here provides an invaluable source of information for understanding how community-level change occurred against a wider backdrop of national level progress.

Highlights:

  • the community is a critical nexus for the interventions and wider socio-economic changes that drive nutritional change

  • there is a paucity of community level studies of such broad drivers of nutritional change
  • this six country community level synthesis supports wider data (this issue) on changes in underlying and basic determinants.

  • the performance of “nutrition-specific” community interventions is mixed and uneven

 

Rethinking infrastructure in Africa: a governance approach

Fri, 04/21/2017 - 02:57

Infrastructure deficits have long been recognised as being central to Africa’s developmental malaise. This paper looks at the state of the continent’s infrastructure, with a focus on the actions that governments can take to spur its development. In other words, it attempts this analysis from the perspective of governance. By any measure, Africa is on average less well provisioned with infrastructural assets (roads, railways, power grids, communication networks, water and sanitation systems) than any other part of the world. Much of what does exist has been degraded by unsatisfactory maintenance. The most comprehensive estimate is that an amount of some $93 billion annually will be needed until 2020 to achieve the necessary development. Funding continues to fall short of this, although the sums available are growing. Africa’s governments, bilateral and multilateral donors and the private sector are all investing large amounts in infrastructure. Funding is no longer the defining problem in relation to Africa’s infrastructure development, and questions of governance need to be accorded greater recognition.

 

Studies demonstrate that gains are to be had through better project preparation, greater efficiencies and so on. Adequate maintenance is particularly important. These actions would help secure better infrastructure without significantly greater outlays. Achieving them would, however, require sometimes tough and politically unpopular decisions – making appropriate governance choices are therefore critical. Managing infrastructure construction and maintenance across borders is central to Africa’s infrastructure needs. With so many countries landlocked, cross-border links are imperative for their economic fortunes. This is a complex issue, and resolving it demands that governments and regional institutions cooperate with one another, imposing another set of governance choices. The paper concludes by noting the need to shift debate around Africa’s infrastructure to the governance obstacles it needs to confront. It suggests that governance action could be taken in seven areas to help achieve this: finance; policy, planning and project preparation; efficiency; the regulatory environment; private sector involvement; engagement of Africa’s people; and a focus on regional integration.

Economic integration and development partnerships: Southern perspectives

Tue, 03/28/2017 - 05:16
As part of its work programme on capacity-building among developing countries on global and regional economic issues RIS has been conducting its flaghship Capacity-Building Programme on International Economic Issues and Development Policy (IEIDP) under the ITEC/SCAAP programme of the Ministry of External Affairs. The programme is aimed to inculcate in participants enhanced understanding on challenges and opportunities associated with the processes of globalization and development. It is also designed to expose the participants to the growing complexities of global economic issues and negotiations and to build their analytical skills to deal with them. In this year’s programme, conducted from 13 February-10 March 2017, 33 participants from 25 countries took part. The participants enthusiastically engaged in technical sessions and group discussions. They identified critical areas to deliberate upon and eventually come up with status papers highlighting regional and global contexts and country experiences. Based on individual areas of expertise and inclination, they formed five thematic groups. This report comprises of contributions from each group:
  • Drivers and Experience of Regional Integration in Asia and Africa
  • South-South Cooperation: Select Country Experiences
  • Financing for Development: Developing Countries’ Perspectives
  • Economic Growth of Developing Countries in the Globalization Context:  Lessons from some Developing Countries
  • SDGs in Post-Truth: Do SDGs Matter for Developing Countries?
 

Older people in situations of migration In Africa: the untold migration story

Mon, 03/27/2017 - 20:18

Older people in Africa are involved in all aspects of the migration chain: they are voluntary or forced migrants themselves, they shape the migration experience of others by funding youth migration and being involved in the decision-making process, they also benefit from remittances. Yet, they remain invisible in migration policy, as well as aid and development planning.

This briefing tells the untold story of older people in the migration ecosystem in Africa. It highlights the importance of including older people in migration policies and practice – whether they are left behind, on the move, or returning to their country of origin. It identifies the key challenges facing this generation, explores policy options and calls for more thorough research to improve understanding of the capabilities and needs of older people in situations of migration in Africa.

Mineral governance barometer - Southern Africa

Thu, 03/23/2017 - 03:35

Southern Africa is endowed with lucrative mineral resources such as diamonds, gold, copper, coal, platinum, and uranium.  This rich endowment can be a major asset in the quest for inclusive and sustainable development, yet mining in Southern Africa has often been criticised as an enclave sector that at best contributes little to economic development and at worst does substantial social and environmental harm.  To avoid such pitfalls emerging international consensus emphasises the importance of good mineral governance. This involves the adoption and implementation of regulatory frameworks that promote deeper linkages between the mining sector and the broader economy, and that protect people and the environment from the potentially harmful consequences of mineral extraction.

This pilot study provides a barometer of mineral governance in ten Southern African countries: Botswana, Democratic Republic of the Congo (DRC), Lesotho, Madagascar, Malawi, Namibia, South  Africa,  Swaziland, Zambia, and Zimbabwe. The barometer takes stock of mining regulations in place at the end of 2015, the extent to which they are implemented, and features of supporting institutions.  It is based on the observation that while regulations impose obligations on mining companies, in doing so they directly impose obligations on the state to monitor and enforce compliance, and they also indirectly impose obligations for citizens and civil society to hold the state and mining companies accountable.  The barometer includes indicators of mineral governance  across  four  main  issue-areas:  national  economic  and  fiscal  linkages;  community  impact; labour, and the environment, with artisanal and small-scale mining (ASM) treated as a special topic.  The barometer also includes indicators of state capacity and state accountability with respect to mineral governance.

A practical agenda to reducing technical barriers to trade in SADC

Mon, 03/13/2017 - 19:19

Technical regulations refer to product and process specifications, whether voluntary (standards) or legally required (compulsory specifications).

This policy brief provides context for technical regulation in the Southern African Development Community (SADC) region. It then offers some cross-cutting solutions for developing monitoring mechanisms that can allow policymakers to identify problem areas, and some specific interventions for the Standards, Accreditation and Metrology functions that can build capacity at low cost. It provides some recommendations for a practical agenda on reducing Technical Barriers to Trade (TBTs) in the SADC – ones that can be executed with minimal cost, and that improve the institutional capacity of regional organisations to grapple with the complexity inherent to the field. Above all, these regulations will need to be carefully attuned to assure that they provide the maximum protection for the region from dangerous substandard imports, while still allowing for a dynamic, mutually beneficial trading relationship.

Technical regulation cannot create jobs, but it is a vital underpinning for the type of policies that drive regional integration and create industrial jobs. As it stands, Southern Africa’s technical regulation is developing too fast, with too few controls to ensure that it is directed towards developmental purposes. Capacity expansion that simply results in ever more standards being churned out increases complexity,
but not quality. Practical interventions that create supporting mechanisms – such as monitoring systems, or assistance for firms seeking accreditation – are essential to creating a development-focused regional technical infrastructure.