At a recent event in Dublin, the Rwandan ambassador made the point that $63 billion in illicit flows leaves the developing world. That is more than the foreign direct investment and aid going into those developing countries. Policy coherence would mean Ireland taking meaningful steps on tax justice. The Tánaiste may say that we got rid of the single malt, which is positive but it does not go far enough. What was needed was to take the steps the BEPS process has designed to tackle the underlying problem and prevent replacement structures emerging.
The policy incoherence is also seen in trade treaties in the imbalance between what the developed country gains and the minor gains for the developing world. For example, the Ireland-Ghana tax treaty prevents Ghana taxing the capital gains of mines, factories and large businesses owned by Irish companies. No spillover analysis was done prior to the treaty, which allowed for that and other examples of unfairness [link].
The President of Ghana, a country with some of the best farming and mineral resources in the world, recently told Macron that he wanted to move Africa away from being a dependent nation - "beyond aid". For President Akufo-Addo, the loss of Africa's best youth to Europe is something to mourn, not something that should be celebrated and encouraged, which seems to be the attitude of NGOs in Europe. https://www.youtube.com/watch?v=ZQcCk6x56QE
Why aren't governments listening to African leaders ? Well for a start there are the financial incentives in maintaining the foreign aid industry rather than helping to fix the underlying problems. Irish NGOs receive €5.5 billion per year from the Irish taxpayer. The tax treaties are benefiting Irish companies operating in Africa. What of cocoa, one of Africa's largest raw material exports ? Europe dominates the worldwide chocolate market. It is Europe's top processed crop export and Europe is also the world's largest producer and exporter of chocolate. While Africa exports the vast majority of cocoa beans to Europe, it's share of global chocolate exports is less than 1%. There is significant room to increase chocolate production in Africa, could the foreign aid money be used to help local entrepreneurs there? Imagine Ireland's economy without the food production industry and we can begin to understand the challenges facing Africa.
There is a long way to go to make Africa go "beyond aid", but it requires new thinking, rather than the old outdated aid industry, to fix it.
I thought this was an Energy Blog.
ReplyDeleteAre you branching out into other areas?
If you look at the Irish aid website one of its priority areas is climate change so I now have an obligation to deal with these other issues as people are determined to link climate change and energy to other issues .
Deletehttps://www.irishaid.ie/what-we-do/our-priority-areas/
It is all interrelated - in the general way in which flawed policy tends to get made whether it be foreign tax treaties or national renewable energy policy.
ReplyDeleteIs anything thought out from first principles for the benefit of the wider good instead of being developer led?
Simple things like a cost benefit analysis!
Try go get a bank loan without a furnishing a business plan with cash flow projections, due diligence etc.
If that figure of €5.5Bn to NGO's plus €742m in foreign aid per annum is correct then that is a hell of a lot of money for a little country like Ireland with all of its own national socioeconomic issues to be spending and without making sure spending such vast amounts of money are effective 'on balance' in benefiting developing countries.
The national media and the government should be made attend financial literacy classes.
On the energy front what is the point of throwing more good money after bad when it is clear that the national renewable energy policy has failed?
Nothing is going to fix it. Ireland should have cut its losses ages ago.
If politicians and civil servants and NGO's had to invest their own money then I think it might be a different story.
And do Industrial mines operated by the likes of Glencore, the world’s biggest cobalt supplier benefit from those Ireland-Africa tax treaties?
Cobalt is used in Lithium Ion batteries in Electric Vehicles and Battery Energy Storage Systems.
And so the subject of foreign aid and foreign tax treaties is very much related to energy policy!
In 2005 Raghuram Rajan & Arvind Subraman of the IMF could find no evidence that aid resulted in growth in ant country ever They examine one of the most important and intriguing puzzles in economics: why it is so hard to find a robust effect of aid on the long-term growth of poor countries, even those with good policies. By contrast, private-to-private flows like remittances do not seem to create these adverse effects. Also Zambian economist Dambisa Moyo also concludes that ‘aid does not work, has not worked, and won’t work…….no longer part of the potential solution, its part of the problem….. in face it is the problem’
ReplyDeleteIn recent years most of the aid has strings attached and are granted on condition of free market economic reform, which frequently proves damaging to local fragile start-ups. You can’t plan a market top down impositions on a bottom up development is bound to fail.
Other issue are almost non-existent ownership and property rights and security of tenure the legacy of imperialism and their Marxist independence leaders.
The issues are strategic privately owned cattle on collectively owned or government owned land is a recipe for degradation. Give Africa good property rights and let enterprise work it’s magic.
Help with malaria epidemic’s and AIDS, with infrastructure rail water etc disseminate modern plant and animal husbandry methods to allow food production to thrive
Allow the continent to use cheap affordable transportable reliable dense energy FOSSEL FUELS and stop imposing the most expensive renewable alternatives on the poorest people in the world
Bjorn Lomborg says for the cost of Kyoto each year will be as great as the one-off cost of giving clean drinking water and sanitation to every single human being
The video showing the African leader explaining the problems with French African policy was fortuitous. Little did President Macron realize that his own people would rise up in the yellow vest movement before the end of the year. Transfers of money between European countries and Africans does not work because Africans officials are not supervised as they spend it. There is obvious irony that there is no African manufactured coffee, tea of Cocoa/chocolate on sale in Europe. Surely the fairest deal of all would be to allow European consumers buy African manufactured products. They can't because of import restrictions.
ReplyDelete