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Sebastien Nkoa

By Sébastien Nkoa Ayissi, OP, Cameroonian economist, banker, and student of Theology at the Catholic University of East Africa in Nairobi, Kenya, and SNDatUN delegate to the Third International Conference on Financing for Development

“He rose on the third day according to the scriptures.” Like in the Bible, the third international conference on financing for development FfD3 wrapped up three days ago. For most of the CSO delegates and participants those three days have been a time of “post traumatic shock.” Three days in the tomb since for over six months CSOs worked hard to follow the various drafts of the document, yet the final text put aside the CSOs main concern: The international tax corporation. But as in the introduction of the Acts of the Apostles, the question is asked to the CSOs: “Why are you CSOs destroyed?” This issue on tax and others will be addressed again very soon. So from there go get ready for new fights.

Why do we believe the fight continues? Indeed let’s go through the final document proposition in order to see which fights are expected to take place. On the issue of DPR (Domestic Public Resources), three main points are to be closely followed up. The first one is about strengthening institutional capacities to deal decisively and effectively with private sector practices aimed at tax evasion in all its manifestations. The second one is about a common agenda on fiscal cooperation with particular consideration for developing countries, especially in relation to IFF (Illicit Financial Flows). And the last one, the need to seek a particular type of PPP (Public-Private Partnership) under which multinationals will pay their taxes and adopt a code of good conduct and transparency in developing countries. Under this umbrella we can say that there are still fights to undergo because as we mentioned in one of our previous articles, it is all about tax issue. The project of mobilizing Domestic Public Resources can be effective if and only if there are strong institutions which are able to sue multinational which misbehave, which steal and which don’t consider the environment in their practices especially in developing countries. This point refers mainly to the private sector which is responsible for the fact that they settle in developing countries, exploit resources yet develop tax evasion in transfer pricing and trade mispricing.

CJ2vi6UWIAAUFgTThese practices cannot help developing countries since everywhere in this world we know that government mobilizes its resources mainly by taxes. And the first way for government to mobilize taxes shouldn’t be by taxing stuff like basic goods that are used by the poor people but in resources that the country has. Here we think about gold diamond iron and so forth that developing countries have in abundance and that are exploited by multinationals without paying due taxes though this should have significantly helped those countries. When it comes to the point of fiscal cooperation with particular consideration to developing countries in terms of IFF, what is considered here is a global consideration. Indeed if the post 2015 development agenda is expected to be realistic there is no need to call for more donations. If the target of 0.7% of ODA/GNI and 0.15-0.2% ODA/GNI to LDCs has not been met, the solution will not come from more donations appeal. The solution proposed by CSOs is very simple and final. GDPs of LDCs LLDCs SIDSs are among the lowest in the world yet cost of commodities like oil, gold, diamond, iron, and so forth have never been so high. When we know that developing countries are providers of those commodities, then two simple questions come into our mind here: how come that as suppliers of commodities that are sold at a higher price in markets GDP of developing countries are among the lowest in the world? The second one, who gain from that transaction if, as we notice, that money does not benefit those it is supposed to benefit? The answers to those two questions are: question one because of tax evasion practices, transfer pricing, and trade mispricing; question two those who gain from that chaos are those who organize it, we mean multinationals.

The second element our analysis wants to explore is the international public finance. Here the question of ODA (Official Development Aid) comes again as another battlefield which is not to be deserted. At this point it is important to notice that ODAs have not been met. Various developed countries except a very few of them have really given what they promised. Here we will call upon the principle of CDR (Common but Differentiated Responsibility) to let developed countries know that we are all in the same boat, we all have a common responsibility in what is going on today in our world. Nobody still lives isolated, what happens today in one side of the world will affect the other side of the world in a way or another. The last financial and economic crisis showed it clearly. The subprime crisis which started in US ended up revealing a world systemic crisis. The Greece bailout that we follow today if not solved in a human way will affect each part of our global world since nobody is isolated. It is then the responsibility of developed countries to meet their commitment by giving what they promised. Once a promise is made it becomes a right for the receiver to ask for it and an obligation for the giver to give. And here again the giver must not orient the gift. ODA must go in the lines of national development plans of the countries that receive them. The point we make here is that most of the time ODA and FDI (Foreign Direct Investment) are given under conditions, and it is clear that if we don’t deny questions of democracy or human right and those in the same line, we disagree with orientation of ODA and FDI toward private sector. ODA on one hand should be oriented toward social sector rather than private sector. Social sector is by definition nonprofit, hence orienting ODA toward it is a real sign of aid since that aid is not supposed to generate more money. FDI on the other hand is expected to serve needs of national development plans in areas like roads and infrastructures which are lacking in developing countries. We can read in paragraph 35 that FDI is concentrated in few sectors in many developing countries and often bypass countries most in need, and international capital flows are often short-term oriented.

CKCNwDkWEAALHB2These are two main points which point out the necessity of continuing the fight, the DPR (Domestic Public Resources) and the IPF (International Public Finance) areas need the fighting fire to be kept on burning. Multinationals shouldn’t just walk away with developing countries resources as if they are in a conquered land, they should not only pay taxes for what they work, but also pay a just price to people from whom they take those resources. ODA in the area of IPF is a right for developing countries and developed countries have the obligation to honor those ODA. They must not only honor them yet they should do it without conditions, ODA should go in the line of national development plans of receiver countries and not oriented toward private sector which most of the time serves the interest of donors spoiling by that means the real intention spirit and purpose of ODA. In our next article we shall stop at the levels of private finance and trade in order to shed more light on the reason why we should keep a track on what has been done in Addis and keep saying: “see you in New York”.


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