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Involving African Think Tanks in the African Tax Dialogue, by Chofor Che, 6 December 2016


Africa is still plagued with robust taxation laws as well as state practice on taxation. The constitutions of African countries especially the 1996 Constitution of Cameroon do not create an adequate tax friendly environment that encourages favourable investment opportunities especially for local investors. International investors have to go through vigorous lobbying procedures to benefit from investment opportunities in the country. Trade and taxation bottle necks are a major reason for the country’s poor doing business ranking as evidenced in the World Bank’s Doing Business report of 2016 and other reports like the Fraser Institute’s Economic Freedom of the World : 2016 Annual report.

The Central African Centre for Libertarian Thought and Action (CACLiTA), Cameroon, amongst other African based think tanks, was invited to the International Tax and Investment Center’s (ITIC) 8th Africa Tax Dialogue that took place in Cape Town on the 15th and the 18th of November 2016. The meeting was aimed at bringing together African and international taxation experts, academics, think tank experts as well as industry tax and finance officers to reflect upon salient issues on taxation and investment with Ministry of Finance and Tax Administration officials from across Africa. CACLiTA was represented at this very important meeting by its President Mr. Asanji Burnley Nguh. Other high profile participants included the Commonwealth Association of Tax Administrators. Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTD) delivered the opening speech of the meeting.

The agenda included a mix of Africa-specific taxation challenges, as well as how global tax reform initiatives such as base erosion and profit sharing (BEPS) should be considered in an African context. Discussions also centered on Africa’s Regional Economic Outlook. Concerning Africa’s Regional Economic Outlook, the continent’s medium-term prospects for economic growth remains favourable but the sharp decline in commodity prices, tighter financing conditions, conflict in the Central African Republic, terrorist attacks by the Boko Haram in North Cameroon and a severe drought in Southern and Eastern Africa imply that many countries need to reset their policies. There was therefore need to engage in discussions on the adjustments in fiscal and monetary policies that are needed and the contours of economic diversification that should be pursued. Other sessions included discussions on retirement savings, taxation of mining, oil and gas, as well as discussions on tax consumption. A special workshop was also held on ‘Combatting the illicit Trade of Excisable Products’.

In addition to attending the African Tax Dialogue, the ITIC also invited six African based think tanks present to attend the launch of a new initiative-the Africa Tax and Investment Network. This initiative includes the Cameroon based CACLiTA, the Namibian based Chevauchee, the Tanzanian based Uhuru Initiative for Policy and Education (UIPE), the Kenyan based East African Policy Centre (EAPC), the Malawian based Center for Free Market Enterprise (CFME) and the Mozambican based Center for Mozambican and International Studies. The aim of this initiative was to engage the invited think tanks to investigate on the tax and investment climate in Africa, as well as reflect and propose solutions to the ongoing challenges. It was also an opportunity to involve the concerned African think tanks in monthly and bi-monthly conference calls, information sharing sessions, ITIC Africa programs as well as the upcoming Spring 2017 International Monetary Fund (IMF) and World Bank meetings.

It is believed that it is important to have pro-growth, taxpayer organizations like CACLiTA participate in such encounters, not only to share own country experiences, but to equally propose solutions to the robust tax atmosphere witnessed in countries in the Central African region especially Cameroon. It is hoped that participating in such meetings will advance CACLiTA’s pro-growth reform agendas in Cameroon and in the Central African region.

Chofor Che is contributor to Africanliberty.org and co-founder and Chair at the Central African Centre for Libertarian Thought and Action, (CACLiTA), Cameroon. He is also contributor and consultant with other initiatives like the Moroccan based LibreAfrique.org and the South African based, In On Africa. He has over 10 years of working experience with the government of Cameroon.

 
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Posted by on December 6, 2016 in Uncategorized

 

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Will the Central African bloc grow by up to 5.5 percent in 2014 as predicted by the International Monetary Fund? By Chofor Che, 7 June 2014


On the 5 of June 2014, the International Monetary Fund (IMF) predicted that economic growth in the six-nation Central African CEMAC bloc is set to double to between 5 and 5.5 percent in 2014. According to an article by Reuters dated the 6 of June 2014, this growth is supposed to be pivoted on the back of increased oil production.
The CEMAC zone is composed of Central African Republic, Gabon, Cameroon, Chad, Congo-Brazzaville and Equatorial Guinea. Reuters reports that five of these states produce oil, which accounts for 36 percent of the region’s Gross Domestic Product (GDP) and 87 percent of total exports. Growth reduced to around 2.5 percent in 2013 because of a substantial drop in oil output. The CEMAC zone’s central bank forecast 2014 GDP growth at 6.7 percent in March.
In an IMF statement at the end of a two-week evaluation mission, the team said “The outlook for the remainder of 2014 points to a pick-up in economic growth. Regional real GDP growth is projected at 5 to 5.5 percent, as oil production will increase. The team added that inflation is expected to remain below 3 percent.

The medium-term outlook seemed solid because of strong growth in non-oil sectors, but a projected decline in oil production was expected to bring overall growth down, observed Reuters. It is sad how states in the CEMAC zone depend on oil production to boast their GDP whereas there are sectors which can fire GDP up if harnessed such as the agricultural sector which remains under-exploited. The IMF confirmed that the deteriorating security situation due to conflict in Central African Republic and attacks by the Boko Haram Islamist group in Nigeria could also cut into growth.

The Central African region especially the CEMAC zone needs to get serious about other sectors of the economy rather than just relying on oil production. This zone has great potential in revamping the agricultural sector but has instead open room for land grabbing. Instead of ensuring that the populace in this zone benefits from vast arable farm land, governments in the CEMAC zone are giving away the land while their people languish in poverty.
Countries in the CEMAC zone still have a long way to go with respect to South-South cooperation. Rather than depending heavily on oil production to attain a 5.5 percent growth, which is not so evident, this zone needs to encourage trade amongst states in the zone and beyond. In recent weeks there have been tensions along the Gabonese and Cameroonian boarders. Both countries have accused each other of illegal poaching and trade which have led to arrests and repatriation of citizens from both states. There is need to encourage free trade among members states of this zone. Tensions amongst member states, such as that between Gabon and Cameroon will instead shrink growth in 2014 instead of boasting it.

Corruption also remains a serious reason why I remain pessimistic about the IMF’s predicted 5.5 percent growth in 2014. A recap on the Doing Business Report of 2013 and 2014 shows that states in the CEMAC zone are tailing the list when it comes to doing business. For instance, according to the AtlasFreeTrade.org initiative, Cameroon’s trade freedom ranks 128 out of 158 states and both the cost of doing business and tariffs remain extremely high. This picture mirrors itself with other states in the zone.

There is indeed high potential for states in the CEMAC zone to attain the 5.5 percent growth as predicted by the IMF. The zone is not only blessed with oil production, but has other sectors which need to be exploited. If the CEMAC zone is really serious about attaining the predicted 5.5 percent growth and more, then it is time for a policy rethink and shift. Government leaders need to also concentrate more in encouraging trade between member states as well as revamping their various agricultural systems. Government leaders need to be serious about true privatization and free trade. There is also need for the corruption canker worm to be curbed. Only such measures may project the CEMAC zone to the 5.5 percent target .

 
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Posted by on June 7, 2014 in Africa Development

 

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Embracing territorial coaching for effective decentralisation and local economic development in Africa, by Chofor Che, 1 November 2013


Decentralisation has progressively gained importance in Africa since the 1990s. Whether by own choice or as a result of external pressures especially from the World Bank and the International Monetary Fund (IMF), a great majority of third world countries including the Republic of Cameroon are currently involved in some form of decentralisation, with varying degrees of commitment and success. Despite the commitment by states to the decentralisation process, several states have not yet embraced territorial coaching as part of the decentralisation drive. The much talked about principle of subsidiarity which warrants that a lower tier of government is allowed to carry out services at the grassroots autonomously, still remains an illusion in several African states. With a multitude of actors working to hasten the decentralisation process and improve local economic development like the World Bank, the African Development Bank, the African Union, United Cities and Local Governments of Africa (UCLG Africa), the All Ministerial Conference on Decentralisation and Local Development, the decentralisation process remains slow in Africa. Central governments and international actors seem to be focusing more on signing conventions and creating institutions rather than ensuring that the decentralisation process attains effective realisation. All the same, some African states especially states like Morocco are now ensuring that rural and/or urban actors work together to improve the living conditions of populations and provide solutions through development projects supported by the central government, associations, cooperatives, municipalities, agencies and non governmental organisations (NGOs).

Ownership and empowerment of regional and local government actors in the realisation of development projects has an impact on the development and performance of any territory. To meet this challenge, an innovative approach to intervention at regional and local government is essential through a process called territorial coaching. Apart from countries like Morocco and South Africa that have embraced the territorial coaching approach to local economic development, there is still a concern if other states in Africa are ready for territorial coaching.

Territorial coaching is an intervention process for the identification, support and enhancement of human potential of local actors by giving them ownership of local economic projects and empowering them so that they play an important role in local economic development. UCLG Africa initiated a program of coaching and support to the local authorities and their associations in the implementation of the decentralisation process in Morocco. This initiative has created collaborative ties among local authorities, representatives of the central government, civil society organisations, and private sector actors. The regional and local government areas in Morocco involved in this initiative are the city of Salé, the Commune of Beni Meskine (Settat), the Municipality of Wazzan, the Region of Meknes -Tafilalet Oasis and the South East (Bouanane). The Ministry of Interior of Morocco works with UCLG and some local associations by giving assistance and support to these communities via training, capacity building, skills development and the promotion of networking.

Judging from other country experiences in Africa, territorial coaching has not yet gained grounds. The decentralisation process in states like Cameroon, Congo, Central African Republic and Chad is still very top down driven. Central government actors still impose decisions on regional and local government actors rather than embracing the territorial coaching approach. Local and regional government actors in these states are not sufficiently empowered and they do not have true ownership of their projects.

It is thus vital for the UCLG in partnership with other regional organisations like the World Bank and the African Union to ensure that territorial coaching is embraced by more states in Africa. Although much still has to be done, the experience in Morocco is producing some good local economic development results. Other African states need to emulate the example of Morocco by ensuring that they embrace territorial coaching as an option in accelerating the decentralisation process in Africa. Local and regional actors need to be empowered so that they have true ownership of their development priorities. It is thus suggested that territorial coaching should be incorporated in management modules in training institutions which focus on training both elected and appointed municipal staff. It is also important that regions create a pool of territorial coaches which should include experts in public and local governance. These experts should be able to reach out and train municipal staff in time of need. These territorial coaches as well as elected and appointed staff of municipalities should equally be trained especially by centres of excellence like the envisaged African Academy for Local Authorities in Rabat Morocco which should begin operating in 2014. Empowerment also means ensuring that municipalities and regions have adequate finances to carry out their development projects. In ensuring that the decentralisation process in Africa is hastened, bringing out the best managerial potentials in local actors via territorial coaching, is germane, than signing declarations and agreements.

 
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Posted by on November 1, 2013 in Africa Development

 

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Africa: The poor showing on the World Economic Freedom ranking – by Chofor Che, Published at Africanliberty.org, 2 October 2013


Chofor CheThe World Economic Freedom report was released on Wednesday, the 18 of September 2013. According to Mark Allix in a publication in BusinessDay Live, the report collects data from the World Bank, International Monetary Fund (IMF) and the World Economic Forum (WEF), among other institutions, to come out with country rankings. The WEF report measured variables across five areas: the legal structure and security of property rights in the state; the freedom to trade globally, the size of a nation’s government; the regulation of credit, labour and business and the states access to “sound” money.

According to a report by the South African based, Free Market Foundation, South Africa is ranked 88th out of 152 nations and territories in the latest WEF report. Hong Kong again topped the rankings of 151 countries and territories, followed by Singapore, New Zealand, and Switzerland in the Fraser Institute’s annual Economic Freedom of the World report. The United States, once regarded as a bastion of economic freedom, now ranks 17th in the world. Zambia, Rwanda, Botswana, Kenya, Tunisia and Uganda are ranked above South Africa, while not one of the other BRICs (Brazil, Russia, India and China) states was ranked in the top 100 states with a good economic freedom record in the world.

South Africa, which had not long ago been praised for its stock exchange regulation and auditing and reporting standards, performed poorly with respect to the top quartile of economic freedom indicators in all five categories. The weakest category was connected to the size of South Africa’s government, especially the sub-categories of state consumption and state enterprises and investment.

This means that the South African government consumed a higher proportion of national economic output than the world standard, and had “relatively heavy involvement” in the production of, and investment in, some of that output. Most disturbingly, the report adds that South Africa has been deteriorating according to these ratings since 2000, as government “drains” resources from the more productive private sector.

Mark Allix of BusinessDay Live opines that it is a pity that South Africa was found to be below the global average score. The WEF in collaboration with other organisations had earlier on warned South Africa of its education and labour market inefficiencies. WEF had therefore predicted the country’s poor ranking. According to WEF, coupled with the state’s remaining capital controls, centralised collective bargaining and business regulation, South Africa is plagued by the threat of fixed pricing, the compounded effects of infrastructure deficits and poor policy implementation.

According to Azar Jammine a South African Chief economist and Director of Econometrix (Pty) Ltd, is of the view that the South African economy had long suffered from apartheid. There were some hopes after the apartheid era, but now these hopes seem to be dashing away, especially with the crisis that recently hit the mining sector.

Despite the doubts portrayed by many pessimists about the methods utilised by the WEF in coming up with such rankings, there remain some truism in reports like the WEF report. Most African states, including South Africa have not given the private sector the chance to excel in economic freedom. A critical analysis of the economic atmosphere of most African states show that the legal structure and security of property rights in the states remains poorly developed. There is equally a porous promotion of the freedom to global trade. Most of the sizes of the central governments in Africa are humongous necessitating the use of a great chunk of tax payer’s money to cover unwarranted expenses. The gross regulation of credit, labour and business also adds to Africa’s poor economic ranking in the WEF report.

It is obvious that people living in states with high levels of economic freedom have greater prosperity, more political and civil liberties, better health and longer lifespans. This is based on personal choice, voluntary exchange, freedom to compete, and the security of private property. If African states want to turn things around, then it is imperative that they rethink various policy strategies with respect to economic freedom and liberty.

 
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Posted by on October 4, 2013 in Africa Development

 

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Post-Khartoum Meeting of the African Ministers of Finance and Governors of the African Central Banks, By Chofor Che, 03 September 2013


A meeting of African Ministers of Finance and Governors of the African Central Banks was held in August 2013, which ended with the signing of the Khartoum Declaration (the Declaration). Representatives of the World Bank and the International Monetary Fund (IMF) also attended this meeting. Such meetings have always made one to ponder on the true intentions of such lofty declarations by technocrats especially those from the African governments.

According to Sudan Daily, issue no 3028 of 24 August 2013, the Declaration called on the World Bank group to create partnerships with other donor bodies, especially the African Development Bank (ADB) towards facilitating preparations for implementation of projects in Africa. This declaration also stressed on the need for the World Bank to provide assistance and mobilisation of sufficient resources for boosting the capital markets and extending finance for existing projects in Africa. There was also stress on the need to increase the loans provided by the World Bank to states that qualified for such loans so that they can establish large-scale regional projects. The Declaration also called on the World Bank group to provide the demanded guarantees for the private sector and to increase resources of the international funding institution within the framework of its initiatives designed for infrastructural projects in Africa, besides providing resources and attracting more contributions for enhancing water supply and agricultural development in Africa. There was equally a call for continuing efforts to urge other countries to abide by their pledges that relate to the distribution of the increased profits from gold sales toward increasing the IMF resources that are extended on soft terms. Finally, the Declaration called for more flexibility within the limit of the loans given to low-income countries in the context of the programmes, which are subsidized by the IMF. The goal of this is to support Africa’s voice and representation at IMF’s Executive Council, adding a third seat for the African sub-Sahara region and boosting the industrial development in Africa via encouragement to the optimum use of Africa’s abundant resources via investment in industry and manufacturing of raw materials.

Africa has indeed had numerous Declarations such as the Khartoum Declaration of August 2013. Many of these Declarations have not materialised to envisaged expectations. Instead, these Declarations have made government officials more corrupt. The concerns of the private sector especially those involved in infrastructural enhancement and development have not been given the importance they deserve. Infrastructural projects in Africa remain under the banner of governmental control and most of these projects are not realized due to corruption and poor governance.

In future it would be necessary not to only bring together technocrats but representatives of Africa’s private sector. The voices of African business owners as well as foreign business owners are germane. The voices of women and the youth involved in small and medium size enterprises especially in the energy and agricultural sectors are equally vital.

Having Declarations such as the Khartoum Declaration without easing regional trade is of no use. Maintaining humongous taxes in signatory states especially for small businesses defeats the purpose of the Declaration. African leaders therefore need to have a holistic approach in resolving the developmental concerns of the continent. It does not only suffice to waste tax payers’ moneys in organizing such meetings like the one in Khartoum. Declarations are good but concerted action especially with the government and private sector partnership is vital for economic growth and development. Words must marry action for sustainable development in Africa.

 
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Posted by on September 5, 2013 in Africa Development

 

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Challenges in revamping Africa’s Small and Medium Size Enterprises, By Chofor Che, 5 August 2013


Small and medium-sized enterprises (SMEs) happen to be companies whose personnel numbers fall below certain limits. The acronym ‘SME’ is utilised by African states, as well as international organisations like the United Nations, the World Bank and the World Trade Organization (WTO). SMEs outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors. According to Wikipedia, The Central Bank of Nigeria defines SMEs according to asset base and number of staff employed. The criteria are an asset base between N5 million and N500 million, and a staff strength between 11 and 300 employees. In Kenya SMEs employ a maximum of 1000 people.

SMEs in Africa have long been plagued by poor management and funding challenges. Despite numerous programmes instituted by governments and international organisations like the World Bank and the International Monetary Fund to revamp this sector, SMEs seem to be lost in the much talked about African renaissance.

In July 2013, the African Development Bank (ADB) promised to assist SMEs in supply chains across Africa with funding worth more than $125 million. This ADB four-year programme, which includes $125 million in direct funding and an additional $3.98 million in the form of a technical assistance package, is supposed to allow banks to furnish standardised lines of credit to SMEs, with a special attention to youth and female-owned businesses.

According to an article dated the 28 July 2013 by Adam Leach of Supply Management Daily, the amount of about $3.98 million will be furnished by the Fund for African Private Sector Assistance (FAPA) and will be utilised to build the capacity and capabilities of 25 lenders to support SMEs. The contribution marks the highest amount ever donated by FAPA and is intended to broaden support for businesses into more rural areas of Africa, where there are higher numbers of youth and women-owned businesses.

An official from the ADB adds that, “In response to these challenges the ADB, through this SME programme, will provide the necessary longer-term finance and a technical assistance package to address a number of the constraints faced by around 25 target financial institutions and their SME clients across Africa.”

The ADB initiative in a laudable initiative and would be instrumental in economic growth, development and the alleviation of poverty in Africa. The only concern is that similar initiatives in the past have not yielded any fruit. SMEs in Africa continue to be poorly financed and managed. Some of the past initiatives have either been crippled by corrupt government officials and the finances misappropriated or siphoned without any traces. Poor SMEs owners, especially women and the youth, who are supposed to benefit from such programmes have not benefitted much. Many SMEs owners are left disgruntled, while corrupt officials embezzle these finances destined for them.

It is imperative for the ADB to ensure that the SMEs initiative does not remain entirely under central government control. It is imperative to make sure that the private sector as well as other independent partners also has a say especially in the financial management of this initiative. Evidently the financing from the ADB is humongous and if care is not taken, this money will be siphoned as before by corrupt African government officials. If African governments are serious about revamping SMEs in Africa and achieving some of the Millennium Development Goals (MDGs), if not all, by 2015, then it is important to allow for a holistic approach to development. The private sector should be brought on board not like a subordinate to government, but as an equal partner. Without such a modus operandi which is of utmost importance to economic growth and development in Africa, then the SMEs in will remain crippled.

 
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Posted by on August 5, 2013 in Africa Development

 

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Africa Cotton and Textile Industries Federation (ACTIF) strives to ensure fabric is fully produced in Africa, July 18, 2013, sourced from http://www.fibre2fashion.com (Kenya)


The International Monetary Fund (IMF) maintains that, the African region is on track to grow by five percent before the end of 2013. This is, no doubt, a reflection of the competing involvement of Asian powers in the continent, which is raising concerns from the west in terms of trade, exports and imports, cooperation and sponsorship.

According to the World Bank statistics, over the last 10 years, Africa has experienced an increase in export of more than two hundred percent, and an increase in import of two hundred and fifty percent from 2001 to 2011. This has sparked the interest and attention of the west to rethink their position in terms of trade policies towards Africa. For instance, as detailed in Senator Coons’ Embracing Africa’s Economic Potential, March 2013, the Obama administration has recognized the need to accelerate and deepen economic engagement in Sub-Saharan Africa.

Some of the policies in the June 2012 policy document (US Strategy Toward Sub-Saharan Africa) in lure of this objective by the administration include: 1) working with African partners to promote an enabling environment; 2) improving economic governance and transparency while reducing corruption; promoting regional integration; 3) expanding African capacity to access global markets; 4) encouraging US companies to trade with and invest in Africa. In line with the above objective, it is inextricably fundamental for the US to review and authorize the extension of the African Growth and Opportunity Act (AGOA) beyond 2015, since AGOA has been the back bone for economic growth and development for several African countries.

However, while some countries in Africa remain unaware of the opportunities AGOA offers, many African countries still lack the much needed industrial base and competitive productive capacity to fully maximize the opportunities of AGOA. It is against this back drop that ACTIF continually lobbies for the extension of AGOA as it strives to empower local cotton, textile and apparel value chain in the African region in order to increasing its competitive capacity in the global market.

Currently, the demand for fabric in the Sub-Sahara African market far exceeds the present production and supply. Considering the economic cost in sending African cotton to Asia for processing into fabric before shipping it back to Africa to be cut and sewn into garments, ACTIF is playing a key role in cutting this cost by ensuring that the fabric is fully produced adequately in Africa.

This calls for urgency in exploring the opportunities for investing in weaving, spinning dyeing and finishing in the region. In line with this achievement, African governments should be taking initiatives in creating investment-friendly regimes as currently being witnessed in the case of Ethiopia. Also there has been a remarkable increase in support by international organizations such as Business Advocacy Fund that approved its support to ACTIF in carrying out AGOA outreach programs.

Other international organizations, such as Innovations for Poverty Action (IPA) are also actively conducting studies on how to improve various industrial sectors including the Textile and Garment sector across Africa.

Rajeev Arora – ACTIF

 
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Posted by on July 19, 2013 in Africa Development

 

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