Resource firms ripping off Africa, says AfDB chief

LONDON: Developed world mining and energy companies operating in Africa should pay more taxes to help the world’s poorest continent climb out of poverty, the president of the African Development Bank (AfDB) has said.“The reality is, Africa is being ripped off big time,” AfDB president Donald Kaberuka told Reuters, a day after attending a meeting in London with other African representatives ahead of the G8 summit of rich countries on the ‘triple-T’ agenda of trade, transparency and tax.“Africa wants to grow itself out of poverty through trade and investment; part of doing so is to ensure there is transparency and sound governance in the natural resources sector,” he said over the weekend.Britain hosts this year’s G8 summit, which taking place in Northern Ireland.Britain has turned up the pressure on the other countries to clamp down on secretive money flows by pressing its overseas tax havens into a transparency deal and announcing new disclosure rules for British firms.Kaberuka attended a lunch on Saturday to discuss the issues with British Deputy Prime Minister Nick Clegg, the presidents of Ghana, Guinea, Senegal, Somalia and Tanzania and the finance minister of Nigeria, all of which have energy or mining resources.“It’s seen as a collective agenda, not just a G8 agenda, that we make sure everybody pays what is due,” Kaberuka said.The Democratic Republic of Congo, for example, lost at least $1.36b in potential revenues between 2010 and 2012 due to cut-price sales of mining assets to offshore companies, according to a report from the Africa Progress Panel, led by former UN Secretary-General Kofi Annan.Africa, and in particular sub-Saharan Africa, has been growing strongly in the past few years, a trend which Kaberuka said had been helped by the cancellation of debt to the poorest African countries at the 2005 G8 summit in Gleneagles, Scotland.The AfDB forecasts growth in Africa at 4.8 per cent this year, with sub-Saharan Africa, excluding South Africa, the fastest-growing region at 6.6 per cent.But aid to Africa from the developed world had been cut for the first time in 10 years and the continent needs to look for ways to make that money go further.“It’s important we begin to use aid smartly,” Kaberuka said. He pointed to projects such as the AfDB’s planned infrastructure fund, designed to use donor funding along with African savings as a base for debt issuance to finance regional infrastructure projects.The AfDB is looking for up to $50b to be issued using the financing vehicle, which Kaberuka hoped would gain a single-A credit rating.Kaberuka also welcomed plans by the BRICS countries - Brazil, Russia, India, China and South Africa - to set up a BRICS development bank.“It could be a good partner for us in terms of building infrastructure,” he said.