African Development Bank (AfDB) President Donald Kaberuka on Monday applauded the G8 for its emphasis on the issues around resource mobilization through greater transparency in taxation of Africa’s natural resources.
Speaking as G8 leaders began meeting in the United Kingdom, Kaberuka urged the international community to promote transparency, curb tax evasion and ensure more balanced contracts in the natural resources sector. He said transactions in the sector were very opaque.
“It is only in this way that our countries will be able to find the financial resources they need to fund infrastructure and trade corridors, which until now have been very dependent on donor funding,” Kaberuka said.
“The African Development Bank is very much fully behind this agenda. That is why we put in place the African Legal Support Facility, a legal technical assistance facility to help low income countries address a growing problem of litigation by vulture funds as well as a technical advisory facility to help regional member countries negotiate extractive resource contracts and create an appropriate, enabling environment with modern legal and regulatory frameworks for the extractive resource sector.
“The African Legal Support Facility has been instrumental in assisting a number of countries negotiate complex contracts, unbundle others, with the aim of ensuring that the countries get what they deserve, that investors get the return they look for, and that everyone is a winner.”
But Kaberuka also acknowledged that internal governance of the natural resources sector in Africa also needed to be improved.
He also spoke on the importance of trade as a driver against poverty.
He said Africa wanted to trade its way out of poverty, and a paradigm shift in its relationship with the G8 was necessary at a time when donor funding for the continent had dropped 20 per cent – the first decline in a decade.
“Nations throughout the world, throughout history have prospered through trade and investment. This applies, even to those rich in natural endowments,” Kaberuka said. “Africa, too, seeks to trade her way out of poverty through trade.
“But Africa must deal with the issue of the cost of doing business, the risks of doing business, and the challenges of small fragmented markets – all of which are extremely high. Some nations are better endowed in natural resources. That does help if carefully managed and invested in creating real wealth.”
Kaberuka said the AfDB currently committed almost US $2 billion annually on economic integration, focused on support to the Regional Economic Communities in planning and strategy; focusing investments on trade related infrastructure, transport and optic fibres; trade facilitation and soft infrastructure; electricity power pools; the development of transport corridors; and the management of shared waterways.