Why doesn’t SA help Africa collect taxes?

Landlocked Malawi's President Peter Mutharika, sadly, has resurrected the mad scheme of his late brother Bingu wa Mutharika. File picture: Andrew Kelly

Landlocked Malawi's President Peter Mutharika, sadly, has resurrected the mad scheme of his late brother Bingu wa Mutharika. File picture: Andrew Kelly

Published Sep 28, 2015

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SA is supposed to be helping developing countries to improve their own tax collection, writes Peter Fabricius.

 

Landlocked Malawi’s President Peter Mutharika, sadly, has resurrected the mad scheme of his late brother Bingu wa Mutharika, to create a commercial waterway to the Indian Ocean via the Zambezi and Shire rivers in Mozambique.

Malawian, Mozambican and Zambian officials met last week to discuss an independent feasibility study which concluded the two rivers would only be navigable if many millions of US dollars were constantly spent on dredging and clearing vegetation from their banks.

“Not to mention investments in port infrastructure,” Mozambican Transport Minister Carlos Mesquita said.

Maputo has concluded the waterway was not economically viable.

That should have killed the project as Mozambique’s co-operation is obviously vital.

Malawi, though, has apparently not given up the idea.

In 2010 Bingu wa Mutharika went as far as building a port at Nsanje, on the Shire River in Malawi, at a cost of US$20 million – without consulting Mozambique, which refused to let any vessels traverse its rivers.

The waterway is not only unfeasible, it is also unnecessary.

As Mesquita noted, railways already run from Malawi to the Mozambican ports of Beira and Nacala.

Resources should be used in a “coherent and sustainable fashion”, Mesquita admonished.

Quite.

Swaziland also recently announced plans to dig a canal of about 76km through Mozambique to the Indian Ocean to ship its exports and imports.

This canal would have to rise about 250m – 10 times the height of the Panama Canal, one of the engineering wonders of the world.

It is deeply irresponsible of these governments to waste so much time and taxpayers’ or aid donors’ money on these vanity projects.

And how could the African Development Bank have lent Malawi US$3.5m to fund the feasibility study for a project which was manifestly unfeasible?

Maybe the bank did so because “infrastructure” is the buzzword in African development right now.

This weekend world leaders adopted Agenda 2030, including the 17 Sustainable Development Goals (SDGs) which will soon replace the eight Millennium Development Goals (MDGs) to guide the international community’s efforts to eliminate poverty, ill-health and other development problems for the next 15 years.

Apparently, though, the AU is worried that the global Agenda 2030 will divert international support from its own Agenda 2063, a grand plan to lift Africa out of poverty in 50 years.

The AU’s main concern seems to be a lack of investment in African infrastructure, which is key to Agenda 2063 but not to Agenda 2030.

Yet if the Malawian and Swazi plans to waste fortunes on mad waterways are anything to go by, infrastructure might not be the priority.

The much greater priority for African development should be something less tangible but potentially much more beneficial than outlets to the sea.

It is to jack up their tax revenue collection.

In July 174 nations met in Addis Ababa for the Financing for Development summit and launched the Addis Tax Initiative.

It is a strong partnership among developing countries committed to reforming their tax systems and developed states, international financial institutions and charities like the Bill and Melinda Gates Foundation, to boost mobilisation by developing countries of their own domestic resources, mainly taxes.

The commitment from the developed world is to stamp out the tax dodging by multinationals which siphons off at least US$50 billion a year from Africa which should be used for development – and which would make foreign aid redundant.

There is strong empirical evidence that taxes are far more effective than foreign aid if used correctly, not least because they give the citizens of developing countries a sense of ownership of their own development – and a greater incentive to make their governments accountable for spending it right.

South Africa, which has an exemplary tax collection service, is chair of a G20 development working group that is supposed to be helping developing countries to improve their own tax collection.

But there is no evidence it has been helping its fellow African countries to do so.

Why not?

Pretoria News

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