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Bottom-up Accountability Initiatives to Claim Tenure Rights in Sub-Saharan Africa
Summary of the research
This section summarises an on-going action-research project run by Masifundise Development Trust (MDT), an NGO working to empower Small-Scale Fishers (SSF) in the Republic of South Africa (RSA). The research examines the ways in which in one community, Arniston in the Western Cape’s South Coast region of South Africa, access to tenure rights are impacted by various governance arrangements. The research project uses the FAO Voluntary Guidelines on the Responsible Governance of Tenure of land, fisheries and forests in the context of national food sovereignty (hereinafter 'the tenure guidelines' or VGGT) as a tool to assess the impact of various governance frameworks on small scale fishing communities and uses the guidelines to empower communities to protect their tenure rights in the context of promoting their food sovereignty. This research unpacks the experiences of a small-scale fishing community who face different struggles as a result of governance structures impinging on their fishing rights and food sovereignty. This community is adjacent to a Marine Protected Area (MPA) and this case illustrates how MPAs impact small scale fishers’ tenure rights, and how communities resist and negotiate the challenges of exclusion. Furthermore, this research examines other governance frameworks such as the soon to be implemented Small-Scale Fishing (SSF) policy and how it complements the rights enshrined in the VGGT.
Preliminary findings suggest that the fishers have great insight into the ecosystem and, because it is their only source< of income, they have great respect for marine resources and the protection thereof. Their historical tenure arrange- ment, which was more collective than individual, ensured food sovereignty for the entire community and protected their human dignity as a people. Crime was almost non- existent and the general wellbeing of the community was marked by a harmonious life style where they were all equals. Their daily catch and fish was freely bartered with neigh- bouring farmers for vegetables and sometimes meat. According to members of this fishing community, Arniston used to have a rich tradition of making sour fig jams. These jams would be sold at community festivals. Today the farms are privately owned and the fishers need to get permission from the farmer, and a permit from Cape Nature Conservation (NCC), to be able to continue to make the jam. They feel that they are being squeezed out of their tradition and cul- ture. In the view of this fishing community, today players like Government and conservation agencies have impinged on their tenure, as well as their fishing rights and food sovereignty. They believe that, without the interference of new policies and legislature, Arniston would have been a thriving community today. Further to this, the research shows that the impacts of decisions made outside of the discussions with the fishing community of Arniston continue to jeopardize their access to food sovereignty and are in direct opposition to their basic human rights to food, security, freedom etc. They are extremely vulnerable, especially during the winter months as they can no longer access the vywes (fishing traps made with rocks) to harvest fish trapped in them. The women have also lost access rights and freedom to access intertidal resources, and therefore food security, during winter months.
They also fear that now that the 2016 elections are over, the Department of Agriculture, Forestry and Fisheries (DAFF) may not have the political will to implement the SSF policy. Over the past 3 years most members of this community feel that they have seen great injustices in the rights allocation system and fear that they might be excluded when the right under the SSF policy is implemented. They also feel that they have been done an injustice by their forefathers who allowed DENEL to erect a weapon testing plant so close to their community. Amidst contradicting views on the 6 | Bottom-up Accountability Initiatives to Claim Tenure Rights in Sub-Saharan Africaeffect of DENEL on their fish stock, most of the current generation strongly feel that the relationship between DENEL and the community must be revisited and, as will be read in sections four and five of this report, they have engaged in actions and negotiations with DAFF to demand some accountability in this respect. In a nutshell, most members of this community identified the following as a threat to their future as a traditional fishing village:
• No access to food during winter months;
• Less fish in the fishing grounds due to military testing;
• No access to land and sea;
• Women are denied access to food in the intertidal zone during low tide;
• Community has become divided with an increase in intra-community conflicts;
• Education is affected during times of military testing due to lot of noise and disturbance;
• Fishers are criminalised for exercising their customary rights to land and sea;
• Customs and traditions are compromised;
• Fishers are unemployed during times of military testing because they are not allowed to engage in their Livelihood activities;
• Environmental destruction because of military testing (fires, noise and air pollution, destruction of fishing grounds.
South Africa Country Report (pdf, 3.42 MB)
Making governance work for water-energy-food nexus approaches
This Climate and Development Knowledge Network (CDKN) working paper explores the effectiveness of governance for the 'water-energy-food nexus'. It looks at approaches that recognise the links between sectors, factor these in during decision-making and promote integrated policy-making.
The paper synthesises findings from CDKN-supported action research in this area, drawing on findings from Indonesia, Kenya and the Amazon Basin. It demonstrates that the effectiveness of horizontal (cross-sectoral) and vertical (between levels of government) coordination – essential for a nexus approach – is determined by institutional relationships, which can be influenced by political economy factors. The capacity of governing organisations to understand nexus links and to collaborate with each other is also found to be critical.
What makes a CEO 'exceptional'?
By Michael Birshan, Thomas Meakin, and Kurt Strovink
We assessed the early moves of CEOs with outstanding track records; some valuable lessons for leadership transitions emerged.
New CEOs face enormous challenges as they start assembling a management team and setting a strategic direction in today’s volatile environment. To provide some guidance for transitioning CEOs, we looked at the experiences of exceptional CEOs, those defined as the very top performers in our data set of roughly 600 chief executives at S&P 500 companies between 2004 and 2014.
Our focus was on the top 5 percent of the CEOs in our sample as a whole whose companies’ returns to shareholders had increased by more than 500 percent over their tenure. We contrasted this group both with our full sample and with a subset of CEOs whose companies achieved top-quintile performance during their tenure as compared with their peers.1
The exceptional group includes some leaders who managed remarkable performance in part due to unusual circumstances, for example, by guiding a company through bankruptcy proceedings and then returning it successfully to the public markets. It also includes CEOs who were able to deliver the highest returns through strategic repositioning and operational discipline over many years, within more normal industry and economic conditions. Overall, the exceptional CEOs were neither more nor less likely to be found in particular industries, to lead companies whose size differed from the mix in the broader S&P 500, or to join particularly high- or low-performing companies. Here are three lessons that emerged from close scrutiny of these exceptional leaders.
The outsider’s edge
In our earlier research, we found that on average, CEOs who are hired externally tend to pull more strategic levers than those who come from within and outperform their internal counterparts over tenure. Our research on exceptional CEOs reinforced this finding: these CEOs are twice as likely to have been hired from outside the company as the average CEO in our data set (Exhibit 1), and roughly 1.5 times as likely to have been external hires as the other top-quintile CEOs.
Still, 55 percent of the exceptional CEOs were internal hires. Clearly, insiders can move aggressively and achieve outstanding results. Doing so often means cultivating an outsider’s point of view to challenge the company’s culture with greater objectivity and overcome the organizational inertia that sometimes limits an insider’s span of action.
The findings offered additional insights on how CEOs may gain a clear-eyed perspective for action. In our sample as a whole, CEO’s joining low-performing companies derived the biggest benefits from conducting a strategic review. Our exceptional CEOs did not join struggling companies in disproportionate numbers, but they were significantly (about 60 percent) more likely to conduct a strategic review in their first two years on the job versus the average CEO in our sample (Exhibit 2).
Informed by this view of the company’s past—and potential future—performance, this elite group was bolder than other top-quintile CEOs, far surpassing them in the average number of strategic moves they made in their first year. Changing strategic direction typically requires freeing up resources, often in part by cutting costs in lower-priority parts of the company. While cost-reduction programs are, according to our earlier research, a no-regrets move for all CEOs, the exceptional CEOs were significantly more likely to launch such initiatives than the average CEO, thereby building strategic momentum.
In our research on CEOs overall, organization redesign appeared to be a critical part of the typical high-performing CEO’s tool kit, and management reshuffles were particularly important for CEOs taking over lower-performing companies. Our sample of exceptional CEOs, though, was less likely than the average CEO to undertake organizational redesign or management-team reshuffles in the first two years in office. This could be a function of the strategic game they were playing: they may have inherited high-performing companies (which can be hurt by reshuffles) or prioritizing, since there are only so many initiatives and changes that organizations and people can absorb in a short space of time. Indeed, since the exceptional group contained an above-average proportion of outsider CEOs launching fundamental strategic rethinks, the data may reflect a sequencing of initiatives, with structural change following strategic shifts.
Article - McKinsey Quarterly - April 2017
Ten of world's leading think tanks launch new debate platform to address global issues
On March 4, 2017, The Genron NPO hosted a public forum at the U Thant International Conference Hall at the United Nations University in Tokyo, as a part of the Tokyo Conference 2017, a newly launched multilateral debate forum to address global issues. Representatives from leading think tanks from India, Brazil, Indonesia, and all of the Group of Seven (G-7) countries took part in discussions based on the theme, "The Future of Democracy, Liberalism, and the World Order."
The think tanks represented at the conference all share concerns about a potential decline in individual freedoms, democracy and the rule of law. Their discussions at the conference resulted in the drafting of a joint five-point message that will be delivered by a representative of the Japanese government to the government of Italy, which is chairing the G-7 summit to be held in May 2017. Details on the content of the message can be found on the Genron NPO website.
Session 1: Populism and the Future of Democracy
Genron NPO President Yasushi Kudo provided an outline of the results of a questionnaire conducted by the organization, then began Session 1 of the public forum by introducing Shinsuke Sugiyama, the Japanese Vice-Minister for Foreign Affairs, who provided a speech.
Sugiyama began by suggesting that a calmer approach to the current global situation may be prudent. He referred to the writing of British diplomat Sir Robert Cooper, who claimed that the years 1919 and 1989 were major turning points in international relations over the last century. The Paris Peace Conference in 1919 laid the foundations for the League of Nations, while 1989 was the year of the Malta Summit - a meeting between U.S. President George H. W. Bush and Soviet Premier Mikhail Gorbachev - during which the two leaders declared the Cold War over.
Sugiyama asked whether future historians looking back on 2017 will see it as being equivalent to 1919 and 1989 in terms of impact. He cautioned that, while there may be undercurrents to the Trump phenomenon that should be analyzed, panicking is the wrong approach.
Ichiro Fujisaki, chairman of the Sophia Institute for International Relations, who also serves on the Advisory Board of The Genron NPO, moderated the Session One discussions, a selection of comments from which can be found below.
James Lindsay, senior vice president at the Council on Foreign Relations in the U.S. spoke first, stating that while he believes this is a time of "turbulence and uncertainty," much will depend on how policy makers react. In fact, one possible outcome of change is a new, better and revitalized order.
Whether democracy is in crisis or not is a difficult question, he added, noting that while democracy is fundamentally about people having the right to choose, it "doesn't guarantee that the people will choose wisely, or perhaps more accurately, that they will choose how we wish them to do so."
Next to speak was the representative from the United Kingdom, John Nilsson-Wright, senior research fellow in the Asia Programme at Chatham House.
Nilsson-Wright discussed how one possible explanation for the rise of populism is that it emerged out of a sense of economic grievance with the emergence of low cost-labor competition, and a "growing easternization" - i.e. the movement of the center of economic gravity into Asia.
Another explanation behind the increase in populism is anti-elitism fueled by resentment and irritation. Part of that comes from the failure of communities, he said, and to fix that it is necessary to create a sense of community that "transcends national boundaries."
Barbara Lippert, director of research at the German Institute for International Security Affairs, pointed out that even before the arrival of Trump, there was a trend towards populism in Europe, fed by the populist distaste for the common values espoused by the E.U. Lippert also said that it should be remembered that populism isn't limited to the right of the political spectrum; it's on the march on both right and left, "but it's only one part of the broader political scenery." It is not a coherently organized movement, but rather one with "many faces".
Ettore Greco, director of Italy's Istituto Affari Internazionali, pointed to a number of factors contributing to the rise of populism. One factor is the widespread anxiety about the long-term economic future, especially among the young. Globalization has had a devastating effect in some areas, and there need to be policies that protect those who "are left behind".
Another factor is the public's growing uneasiness with increased diversity and issues with integrating immigrants. People are looking to have better border control, and perhaps, there is also a need to think about sharing the burden of migrant flow globally.
Sunjoy Joshi, director of India's Observer Research Foundation, intimated that it would be better to define what we mean by "democracy" before engaging in such discussions. It would be wrong, he said, to assume that democracy should guarantee the liberal order of free trade and open markets. Also, the rise in populism should be seen as a sign for those in the World Economic Forum and the "bankers on Wall Street" that perhaps a "course correction" is in order.
Joshi believes that judicious application of policy is necessary, pointing to the inherent complexities in the system, and stating that our governments need to be far more resilient and adaptive. As Joshi stated, the world has moved far beyond the requirements of the 18th or 19th century. He believes that rather than worry about "why", the G-7 should be made more democratic by including others - including countries like India, Brazil and Indonesia - at the table.
Akihiko Tanaka, who formerly served as president of the Japan International Cooperation Agency and is currently a professor at the University of Tokyo, noted that two potential events would result in large changes in the global status quo on a level similar to the changes of 1919 and 1989.
The first would be drastic changes in current security treaties. Trump made various claims while campaigning that could lead to such changes, though Tanaka pointed out that he has since pledged to continue supporting the U.S. -Japan alliance.
The second potential catalyst would be a failure of liberal democracy in the U.S., and a rise of an authoritarian regime in the country. Tanaka noted that the U.S. constitution was designed to be powerful enough to limit the possibility of such a situation.
In wrapping up the first session of the public forum, Fujisaki offered his opinion that
the populist pendulum may swing back in the other direction. The major strength of the U.S. over China and other nations is the "richness of its democracy, and its tradition of protecting basic human rights and freedom of speech." People want to share these basic values, not those of modern China.
He also reiterated comments made by numerous participants that there needs to be a greater focus on those who have been negatively affected by globalization.
Session Two: Trump Administration and the Future of the International System
Session Two was opened with a speech by Japanese Vice-Minister of Finance for International Affairs, Masatsugu Asakawa, who described how there are two methods of coordinating policy in a globalized society: "multilateralism + globalism" and "regionalism + bilateralism."
Asakawa said that the international cooperative framework has leaned towards both in differing measures at different times over the past 20 years, but he asserted that neither method negates the other.
Asakawa cited the Chinese economy as being a potential risk to international finance.
"There is still high capital outflow momentum," Asakawa said. "However, Chinese authorities are intervening in the fall of the renminbi by purchasing more of the currency and implementing controls on capital outflow, and we support their efforts."
Asakawa concluded by emphasizing the importance of how China deals with the issues it faces, from excess production facilities and bad loans to the introduction of a social security framework and financial resources with its aging populace and declining birthrate.
Genron NPO President Kudo took over as moderator for the second session, and asked participants to provide insight on the new Trump administration and the future of the international system.
Thomas Gomart, director of the French Institute of International Relations, stated that it is necessary for the world to address the effects of the internet. Gomart described that while the internet is a path for "empowerment, entrepreneurship, and freedom," at the same time, it has become a tool for censorship and control by some states. The world must think about the future of digital governments, particularly in terms of the G-7.
In the current climate, the U.S. will continue to dominate, but Gomart believes, "it has lost its moral leadership." China appears to stand as the emerging power and Russia stands as the declining power, which "represents some risk". In addition to the great powers, Gomart touched upon the fragmentation of the Middle East and emergence of Africa, both of which are concerns. Keeping the world open to globalization is the responsibility of the G-7, according to Gomart, but also of other countries like Brazil, India and South Africa. All of which "must defend the principles of moderation and public goods, and defend the principle of the fight against climate change."
Rohinton Medhora, president of the Centre for International Governance Innovation in Canada, referred to a question Asakawa posed about whether globalization and nationalism are compatible. Medhora believes that they are, and in fact, he believes that "nationalism will save globalization". Each country can invest in its own safety nets, innovation strategies, and investment in research and development, and that is just one way through which nationalism can direct the path that globalization takes.
Medhora also referred to a story in the New York Times claiming that there are two factions in Trump's White House: one demanding that the U.S. should "keep denying climate change, and exit the Paris Agreement," and another faction (which includes the Secretary of State and Trump's own daughter) that argues that the current systems and processes can be used to benefit the U.S. and still allow the country to meet international norms.
"New global governance mechanisms, along with traditional ones like trade, can converge, even in the current era," Medhora concluded.
Carlos Ivan Simonsen Leal, president of Brazil's Getulio Vargas Foundation, provided a perspective that differed from those of others on the panel.
He first asked the panel to consider what the Trans-Pacific Partnership (TPP) truly promotes. Perhaps it promotes more trade, perhaps greater isolation of China, he said. Regardless, Trump making the decision to leave the TPP is not simply a sign of his desire to appease voters at home; it is also necessary for him to focus where U.S. money goes.
"It's not so insensible," he emphasized. "Fiscal limits have been reached, maybe surpassed."
The U.S. must be careful with its investments, and in Leal's opinion, the TPP "would weaken the United States, contrary to what most people think."
Leal also pointed to the increased polarization of world trade with commodities and energy on one side, and high aggregated value products on the other. The questions of integrating services and industry are largely ignored and "we still think about these problems in the same way as we used to think 30 or 40 years ago" when world trade was simpler.
According to Leal, the world has changed and new strategies are necessary, and although he pointed out that it is too early to make any judgements, he doesn't see what is happening as a series of blunders as yet. Someone must think outside of the box in order to fix the issues the world faces, and perhaps Trump is doing just that.
Philips Vermonte, executive director for the Centre for Strategic and International Studies in Indonesia, pointed out three factors that contribute to the advancement of globalization, and the roadblocks related to each. The first factor is that of technological advancements destroying barriers to trade, or as Vermonte put it, "the dissolution of distance by technology, both ICT and transport." Technology will continue to advance, he said, so this factor will remain.
The second factor is comprised of reduced obstacles to trade such as tariffs, domestic subsidies, and preferential treatment, while the third factor is political, including facets both cultural and domestic.
While the first factor encourages continued advancement of the globalization agenda, Vermonte said that the second and third factors continue to create obstacles. However, he believes that one solution may lie in the founding of regional organizations. The European Union is currently in disarray, but in Southeast Asia, and for the ASEAN Plus 3 nations, the death of the TPP leaves the alternative of the Regional Comprehensive Economic Partnership. While the major powers must accept such agreements for them to succeed, Vermonte believes that regional organizations must take up the responsibility of maintaining the momentum behind continued open trade.
Yasuchika Hasegawa, chairman of Takeda Pharmaceutical Co. who also serves on the Advisory Board of The Genron NPO, was also asked to comment and he referred to a McKinsey survey that revealed that increases in global wealth, services, salaries, data, and freedom of movement have contributed to increasing the world's GDP by about 10 percent over the last 10 years. In contrast, he noted, in the period between 1980 and 2008, there was no growth in personal income for those in the lower half of incomes in the OECD member states. Hasegawa stated that the data showed assets belonging to the top 1 percent increasing by about 70 percent, all while income disparity continued to expand.
Hasegawa believes that this illuminates the length of time it takes for the benefits of globalization to be felt by everyone, and pointed to that "benefit lag" as a cause of the opposition to globalization. He believes that the growth of liberal democracy in many countries is a good thing, but more care must be taken, as the fruits of that growth are currently disproportionately allocated to the wealthy.
Kudo wrapped up Session Two by reminding those in attendance that while globalization continues to be important for the common good, up until now, there have been no mechanisms in place that allow its benefits to reach more people.
Educating people on its benefits can prevent the loss of freedom and, in the extreme case, a return to fascism. The world's nations must continue to make use of the multilateral frameworks in place, and continue to promote democracy in each country, he said.
IMANI Report: Fighting Waste and Corruption starts at the Presidency
In less than two months, the Government’s first budget is likely to be ready. As far as IMANI is concerned, the budget development process offers the government the opportunity to register some real achievements within 100 days of taking office. All the President has to do is to take a scalpel to the budget of a strangely named super-entity, christened the Office of Government Machinery (OGM), an amorphous receptacle hosting such agencies as the Office of the President, Office of the Head of Civil service, National Security, assorted Commissions and a potpourri of ‘councils’ of all kinds, and start to trim and shape.
Due to this confusing mashup, we today have the Presidency of Ghana currently involved in supervising poultry farmers in the sale of eggs, distributing fishing nets, and promoting condoms, all at highly inflated costs!
It is not surprising that some of the biggest scandals we have seen took place in agencies locked in this Office of Government Machinery (OGM) structure, such as SADA.
To tame this runaway OGM horse before it leaves the stable, the following actions are critical:
1. Immediately take steps to rationalize the agencies placed within this poorly coordinated structure and reduce the number of entities reporting directly to the President to the bare minimum. Many of the mandates can be aligned with Ministerial mandates and placed in tighter reporting systems within the Ministries.
2. Outline plans and strategies to reverse the practice of overspending and establish key indicators that the public can hold government agencies accountable to. Reasons for any overspending should be clearly explained in audit reports which should be timely and available to the public.
3. Implement an institutional audit to remove redundancies like the Ghana AIDs Commission, whose role can fit cleanly within existing infectious disease programs at the Ministry of Health. The institutional audit should be followed by a financial restructuring with the aim of saving $50 million by 2018. With competitive procurement and a dedicated financial management system across the leaner remnant of the reformed OGM, 40% of the OGM budget in the last financial year can be shaved off.
4. To galvanise the political will for these drastic reforms, radical transparency is required. The government should proceed to publish the contracts awarded in the various units within the Presidency and redact only the sections of national security contracts of proven sensitivity.
The beautiful thing about implementing these recommendations is that benefits shall be evident within 100 days from January 7th, 2017, and considerable fiscal impact would be felt well ahead of the 18-month timeline for other government expenditure reforms across the government and the work of the Special Prosecutor to start showing results. What could be more urgent in the President’s in-tray than this?
Notes from Franklin Cudjoe's official EU: Ghana's New Trade Minister Must Consolidate the iEPA not Abrogate it.
Franklin Cudjoe is Founding President of IMANI Center for Policy & Education.
Last week I urged the new Ghanaian government to be guided by pragmatism in listening to advice from all quarters, but be far sighted in adopting workable ones. I have heard some trade advocacy groups who paid a courtesy call on the then President-elect, Nana Akuffo- Addo, suggesting abrogation or review of the already ratified iEconomic Partnership Agreement between Ghana and the EU. One of them sadly was the rather befittingly named Private Enterprise Foundation. I had hoped that sound evidenced-based reasons would accompany such arguments rather than resort to populist methods.
It will be suicidal for the NPP government, that boasts of private sector and market-oriented policies to be swayed by populist advice, more so when it has promised to unleash a new wave of industrial estates in each of Ghana’s 276 districts that might engage in agro-processing products for potential markets abroad.
Ghana has 100% duty free and quota free access to EU markets and if the positive annual growth in non-traditional exports are a guide, the new government should invest more of its efforts in that part of agriculture.
It is important to emphasise that the debate over EPAs were legion, but reasons against its positive impacts on Ghana’s and Africa’s growth are scantily unconvincing. The web linked paper here contributed to Ghana’s ratification of the trade agreement with the EU.
On my recent official visit to the European Union and a tour of its related agencies, I had made these same arguments contained in the web linked paper above to a number of sceptical European Members of Parliament in Brussels who had limited understanding of the economic dynamics on the ground in Ghanaian and Nigerian markets especially. Far from their world view is the reality in Ghana and Nigeria, at least being two markets I know considerably well. For instance, in March 2016, I asked Aliko Dangote directly during the Economist Magazine’s conference on Nigeria, whether he feared the EPAs. His response was that he was yet to be convinced on the economic math and how his range of businesses will be affected, yet he added that he had developed such capacity and scale that he can compete with China for instance anywhere and any day in Africa. Dangote suggested complementarity in any trade arrangement between Nigeria and any economic bloc.
That said, the road to the present had been extremely bumpy primarily due to lethargy on the part of our political leaders. Friends familiar with the iEPA (interim) involving Ghana say that it was eventually was voted in the EU Parliament in favour of Ghana on December 1, 2016 and has since December 25, 2016 been published on the EU website consequently becoming Law. A businessman exporting to the EU market from Ghana lamented when he said to me that ‘’It is essential to note that a significant number of EU MEPs voted against Ghana and some even abstained. Many European countries were not in favour and this is a lesson for us, as a government, to be ahead of the game when it comes to trade deals, agreements, partnerships, especially protecting & strengthening our export-led economy as our neighbour La Cote D'Ivoire is doing without looking back, attracting a lot of FDIs / new multinationals, even those from the Far East.”
He warned that Brexit was another one occurrence Ghana has to be fast to negotiate a similar bilateral deal as that of the EPA, not leaving things to the last minute. Ghana needed to take a crucial look “industry rebuilt / focusing on achieving high standards of quality capitalising on the market access regime (duty free & quota free) wherever we open doors and above all, creating jobs.”
It is indeed time for Ghana to be ahead of the curve in all global trade regimes that will likely impact us. While on a tour of the EU last September, I interacted with officials directly responsible for trade, migration and sustainable development. A legion of ideas on developing countries putting forth bankable ideas on the negotiating table exist. We simply need to up our game. There is for instance the July 2017 review of the Cotonou-ACP agreement with a report that will likely impact our trade deals with the rest of the world. How do we in Ghana ensure that our trade arrangements are aligned with the Cotonou-ACP agreement and ECOWAS and that of the African Union? These are matters that need to dominate the attention of our new government and our new Trade Minister in particular as really, trade anywhere in the world should not be a zero-sum game. Trade must benefit all partners but we must be ready with data and common sense arguments not emotion and hysteria over colonial hangovers.
For more information about IMANI visit www.imaniafrica.org
Speech by Tove Degnbol, Danish Ambassador to Ghana at IMANIâ€™s 6th Public Sector Awards
The theme for this year’s programme, “The Virtues of a Leaner Government in the Face of Fiscal Difficulties’’ is important and timely. Any government should constantly consider whether better service to the public can be delivered for the same resources, and the current fiscal constraints facing the Ghanaian economy is a further incentive for the Government to address waste, be more efficient, support productivity improvements – in short – to aim at a leaner government.
In 2015, the Government of Ghana signed on to a programme with the IMF with the aim of fiscal consolidation and strengthened policy and reform implementation, including focus on strengthening control of the wage bill; improving revenue administration, and enhancing public financial management. Since its inception, a number of reform measures have been introduced, and progress has been made in achieving some of the targets set.
The challenges, however, remain, as Ghana has a growing and a very young population, the demand for more and better services is increasing, and with the attainment of Middle Income status, the population has higher expectations. There is a widespread demand for changing the way the public sector does business and interacts with its clients.
The new government that will soon come into office has defined it as an ambition to improve efficiency. This will require improvements in the form of streamlining complex procedures, revisiting processes and seeing how redundant procedures can be scrapped and necessary ones improved for more efficiency.
The Government of Denmark has some experience with the process of leaning the public sector. Over the past years, there has been a lot of focus both on improving efficiency of individual ministries, municipalities and public institutions, and on measures to cut down costs across the entire public sector. There is no question that a lot has been achieved, and that we are much more cost-conscious now than we were some 10-15 years ago.
In a number of areas, it has been possible to improve the service provided to citizens without increasing or even while reducing the costs. This regards much of the service provided by municipalities to citizen, where digitalisation and more information displayed at interactive webpages have implied simplified procedures and cutting away redundant steps. A small but important example is the public libraries (one in every town and several in the larger cities), where a person who wants to borrow a book is scanning the book and his or her ID card both when collecting and returning the book. The long queues at the counter are gone, and the service is improved by automatic emails sent to the borrower when the deadline for returning the book is approaching. These initiatives have made it possible for the administration to work more efficiently with less staff.
I have to say, however, that the experience is mixed. It is a delicate balance to maintain focus on improving efficiency and service delivery and not turn a leaning process into a cost-cutting exercise where the aim of improving the service disappears.
One of the areas, where we must admit that a leaning process went too far and resulted in both poorer service and a significant financial loss, is the attempts made to improve the efficiency of the Danish tax administration. Significant staff reductions had the unintended impact of weakening control procedures, so it became too easy to avoid paying tax. When the system was attacked by organised international criminal gangs, which identified loopholes in control mechanisms and managed to have the tax system transfer large amounts out of Denmark, it took a long time to discover and stop it.
Our experience tells us that before undertaking changes in a public sector organisation, it is important to assess its mandate and consider whether this is still relevant. It is important to assess whether the organisation is already delivering on its mandate and how efficient its delivery is. It should be assessed if the organisation has a client/customer orientation, and the customer satisfaction should be assessed. If the organisation is not meeting client expectations, an assessment of its capacity should be made, and main constraints should be identified. Staff of the organisation plays a key role in the assessment, and one of the strengths of leaning is that it both causes and allows the people, who actually do the work, to lead the way in taking the waste out of the their processes.
Thus, leaning government activities is about meeting expectations of the people and improving efficiency and it is important not to embark upon leaning just for the sake of leaning.
Another experience from Denmark is that leaning government is a process; it is not achieved in a single year. It requires commitment and sustained effort; it means transforming mind sets, and it may require changing decades-old organisational cultures. It requires that not only is there an assessment of progress, as we are showcasing here tonight, but it also requires having in place a whole public sector reform programme, wholly committed to by the leadership of the country, having the full backing of the public sector organisations’ managers, and the creation of a shared vision across each organisation.
Through Danida’s support, IMANI has been conducting the annualInspirational Public Sector Leadership Awards (IPSLA). It is an annual public service excellence award which seeks to reward the successful and effective delivery of service by public institutions in Ghana to their stakeholders. The institutions are assessed according to their ability to deliver on their mandate.
The award recognizes public institutions primarily on three factors; 1) Public engagement, 2) Independence and 3) the Promise of Transformation. Examples of factors considered are engagement with stakeholders, demonstration of transparency and accountability in its activities; practicing good management principles; efficiently implementing a well thought out policy plan, as well as showing innovative leadership.
Denmark is proud to support IMANI under our ‘Tax and Development Programme’. This is part of our efforts to strengthen domestic accountability in Ghana with an aim to improving public awareness on budgetary and tax issues and strengthening capacity in the non-government sector to understand and communicate how the government budget process is informed and executed. The efforts of IMANI are important as they contribute to stimulating public interest in the tax system and the subsequent budgetary allocation and execution of public funds.
With a new government, organisational changes are likely to come. New directions will emerge as new policy measures are introduced. This new directions offer both opportunities and challenges to making refinements and improvements in the way the public sector delivers on its mandate and on how it engages with citizen.
It is my hope that the Inspirational Public Sector Leadership Awards does not end with the annual awards ceremony but that public sector institutions selected as the top five winners this year will strive to maintain and improve on their delivery. For the other remaining institutions, the next assessment should hopefully find them as evidencing improvements worthy of being highlighted.
IMANI sets out five key priorities for the next administration.
As government revenue rises to record levels due to oil and gas production, especially with the oncoming $7bn ENI gas project, the new government will have more resources to devote to improving basic healthcare, build productive livelihoods through private-sector led job creation, deepen decentralise decision making, pumping water into neighbourhoods and building roads.
What follows is a list of areas where the new government must focus its attention in order to avoid the mistakes of the past and to develop robust management systems to ensure the country’s social and economic development.
1. Risk Analysis on all Government Projects
The presidency should not become the strategic hub for policy planning from a financial and technical point of view. Political accountability resides in the executive, and that is enough. At IMANI we concede that for most strategic projects the requisite expertise may be spread across multiple ministries, departments and agencies. The Cabinet Office can be strengthened and given powers that allow it to coordinate expertise across the civil service.
We have centres of expertise that could be asked to help government create a kind of ‘administrator general’ role in the cabinet to vet all proposed projects. It goes without saying that such a move can only succeed if it follows a strengthening of the Cabinet Office to ensure coordination across the technical, financial and political accountability functions of the executive.
2. Truly Reform the Pension Sector
Potentially, income from pension contributions is more sustainable than oil. For as long as people continue to work, there will continue to be pension contributions. Scheme trustees can invest funds in the private sector, real estate, listed equities and government treasuries. Pension sector reforms planned nearly seven years ago, are only now being implemented and not without problems. Certainly, things can be a little faster.
3.Determine an optimal level of taxation
What level of public spending is desirable for a developing country such as Ghana? Should the government spend one-tenth, one-third or half of the national income? The size of government expenditure is naturally associated with the ideal level of tax revenue.
Taxes are a necessary evil, but a generally accepted view is that they should not be a disincentive for profitable economic activity. In Ghana, however, a lot of industry captains and the labour force complain about the tax rates. The perception in the formal sector is that it bears too much of the tax burden to achieve the government’s revenue targets.
4. Avoid wasteful projects
Even though we all applauded the decision to go biometric in the last two elections, every objective observer knew we have already collected biometric details of citizens for the following purposes: national passports, the e-Zwich payments platform and the national identification system. It has been proposed that we do the same for voters’ ID cards, drivers’ licences and National Health Insurance Scheme (NHIS) cards. A harmonised system means you may even be able to use one card for multiple systems.
Even ignoring the inconveniences and inefficiencies, the monetary costs of deploying parallel infrastructure is no small matter. Let us assume the cost of the Electoral Commission system is the benchmark. A crude estimate of the total cost is a whopping $400m. We believe we can cut $250m off this figure through harmonisation.
5. Review the single spine salary structure for the civil service and consolidate salaries.
Previous government’s attempt to quadruple the salaries of public sector workers through the single spine salary scheme has been a drawback to strengthening the private sector as an innovator. The single spine scheme may appear to bring relative peace on the labour front, but for how long? Simply, single spine is a diversionary tactic embraced first by the NPP and implemented by the NDC to sidestep critical issues since the structural adjustment period.
The fundamental logic of single spine is crooked. Wage harmonisation in the public sector betrays an arrogance of central planning rarely encountered in our tepid age of policymaking. There is no credible science that can, without descending into farce, establish equivalences between different job roles in different settings. The new government must continue the gracious attempt by the NDC government to wean off many productive government agencies the payroll. A few have been removed.
Finally, the new government should consolidate salaries for all civil servants. The government bleeds profusely from allowances paid to middle to top level civil servants for many meetings, mostly needless ones. In 2016 alone, almost half of all funds set aside for wages and compensation, nearly Ghc14bn go into allowances.
Once again, we wish the newly elected leaders, President and Parliamentarians very well.
Founding President, IMANI
TRAILER: Voices of political campaign in Ghana, 60 years of political contest
IMANI Center for Policy and Education and SOAS & SPURS Limited, a Ghana-based media production house will be premiering a film on the evolution of political campaigning in Ghanaian politics since 1956.
This is a film about the evolution of political campaigning in Ghanaian politics since 1956. The film among others seek to question whether campaigning style reflects the direction of the ultimate vote. What have been the most recurring themes over the past 60 years and which voices have been the most resonant in addressing the themes to the electorate in these specific time periods?
Have their successors been able to carry on today or are the same mistakes being made, or have lessons been learnt in current campaign strategy and methodology? For example, the history of the choice of running mates is very insightful in determining factors political heavy weights consider. So is the way the media gets to be manipulated by the campaign teams of the various political parties. This revealing film bares it all from the eyes of insiders in a way never seen before.
Ace broadcast journalist Paul Adom-Otchere adds a unique perspective to the narration of the events falling back on 20 years of broadcast journalism experience at the core of events that have shaped the nation.
For further information please email firstname.lastname@example.org
Broadening financial inclusion in sub-Saharan Africa: policies should prioritise financial stability
- The recent IMF and World Bank annual meetings focused on how to achieve more inclusive growth, particularly in low-income, fragile economies.
- Despite instances of significant financial innovation, financial inclusion in lower-income countries is uneven, especially in the regional case of sub-Saharan Africa.
- Increased banking coverage must happen simultaneously with the necessary, domestic macro-prudential policies that protect against the greater risks of transmitting financial shocks.
The IMF's three numbers
At the recent IMF and World Bank annual meetings, among the many statistics quoted, IMF director Christine Lagarde singled out three: 1.4%, 1.6% and 1.8% denoting the IMF’s 2016 projection for sub-Saharan Africa’s (SSA) GDP growth, the projection for US GDP growth, and the estimate for export growth in the advanced economies. Lagarde noted that the IMF’s projection for SSA’s GDP growth of 1.4%, is particularly disappointing given the SSA’s potential growth rate.
Inclusive growth in developing economies, therefore, became a key focus – growth that lowers the poverty rate and ensures equality of access to markets, resources and an unbiased regulatory environment. And improved financial inclusion – access to and availability of financial services to all – would play a crucial role in this. Fragile states, in particular, would benefit from more jobs for the vulnerable in low-income states, which would also bring increased security to the economy.
The quality of jobs would be important too. SSA’s vulnerable employment, in own account and unpaid family work, is estimated at 70% of total employment. However, even though financial inclusion and better financial intermediation is proven to encourage growth with higher paid jobs in the formal sector, around half of working age adults still lack access to financial services – an estimated 2 billion people.
Uneven financial inclusion
Financial development can protect against risks during an economic downturn. And more broadly, it can boost growth and dampen the impact of shocks for firms and households by alleviating borrowing constraints, and helping to calibrate dollar liabilities. However, financial inclusion in lower-income countries is uneven, especially in the regional case of SSA.
Many SSA economies have seen significant financial innovation. Private sector credit has experienced its median ratio to GDP increase by 10 percentage points from 1995 to 2014 (though at 21%, it is still around only half of that in the Middle East and North Africa, and East Asia). For lower-income households and firms, microfinance has enabled financial inclusion. And mobile banking services, such as M-Shwari and M-Pesa in Kenya, have promoted stronger domestic banking systems, reducing the reliance on informal savings mechanisms.
Yet SSA’s efforts towards financial inclusion have fallen behind. Only 34% of the population have bank accounts, compared to 94% in high-income OECD countries. While only 7.3% of the SSA population report using an account to receive their wages. Low coverage extends to South East Asia: Vietnam and Cambodia’s share is a respective 21.1% and 3.3% of their (over 25) populations.
A macroeconomic policy reset
The macroeconomic impact of increasing banking coverage has systemic consequences. The simultaneous relaxing of financial constraints, such as greater access to bank accounts, and a lower cost of financial intermediation, can amplify growth significantly. A key channel is the mobilisation of savings that provides future access to liquidity, allowing households to manage financial risks and to cushion against shocks.
However, more finance does not automatically lead to more growth. Its effect on economic growth is ‘bell shaped’ and weakens at higher levels of financial development. This weakening stems from premature financial deepening (increased size of market), rather than from greater access. From a macroeconomic perspective, broader banking coverage would heighten the impact of monetary policy-driven interest rate changes.
If financial inclusion is to increase, a policy reset is needed to safeguard domestic financial stability alongside SSA financial deepening. Although the complexity of SSA economies’ supervisory capacity varies significantly, strengthened macro-prudential policy can protect against the greater risks of transmitting financial shocks – a key policy gap in some pan-African banks. Stability and inclusion can be achieved through better banking supervision and, more concretely, in adopting international standards such as loan loss provisioning and financial reporting. Given the uncertain economic outlook in the year ahead, regulatory progress would lay the foundations for broader banking coverage by the next 2017 Autumn meetings.
First mover benefits from labour rights reporting
As international labour rights accountability requirements begin to crank up, companies reporting now on modern slavery will be best prepared
The first reporting deadline under the United Kingdom’s Modern Slavery Act has passed as the mandatory requirement to publish statements took effect from 1st October. And many companies have produced their first efforts – the Business & Human Rights Resource Centre’s tracking of the publication of modern slavery statements has counted more than 700.
More statements will come as the financial year rolls on and individual companies hit their six month deadlines, of course, but 700 statements so far is low. The Modern Slavery Act applies to companies that are based in or have operations in the UK, and have a global turnover of £36m or more, meaning that about 12,000 companies should be covered.
Companies that don’t comply with the act risk civil proceedings in the UK courts compelling them to do so. Public scrutiny and resulting negative publicity are the greater drivers for business to act.
Though some companies are diligently publishing statements that fully meet – or even go beyond – the requirements of the act, compliance overall has been patchy. Many of the statements that have been published lack meaningful content.
Early publishers have included BT Group, the Crown Estate and Fujitsu, who have explained what they have done to eradicate slavery and human trafficking in their supply chains. If companies have done nothing, they should declare that they have done nothing.
The Modern Slavery Act is not, of course, the only legislation that requires companies to disclose what human rights due diligence they are doing. There is the 2010 California Transparency in Supply Chains Act. And a French law on the corporate duty of care for what happens in company supply chains is also under preparation. A process is evolving, and there’s “an expanding regulatory track,” says Stuart Bell, director of labour rights specialists Ergon Associates.
It goes without saying that the issue of modern slavery in supply chains is complex and one that companies understandably struggle to tackle. Many brands have multiple suppliers in many countries and so have a real challenge to be sure that human rights standards are being maintained everywhere.
There is a massive data gap. Even the prevalence of modern slavery can only be broadly estimated, with about 46 million individuals worldwide affected according to the Global Slavery Index.
Better than nothing?
Kate Larson, director of anti-slavery initiative Business for the Unseen, says in this context the Modern Slavery Act should not be judged too harshly. “We’re much better off having the law than not,” she says. It does at least mean that many companies that have never before looked at the issue will now do so, and “civil society can start to compare a lot more,” when a critical mass of company modern slavery statements builds up.
She adds that many top brands that were already doing work to eradicate modern slavery in their supply chains wanted the mandatory disclosure requirements, because “other companies were getting away with zilch”.
Nevertheless, the experience so far of the Modern Slavery Act and similar legislation raises the question of whether such approaches are sufficient. Laws that require disclosures but which for enforcement rely mainly on the naming and shaming of laggards rather than any strict measures are not the only initiatives underway. Other measures are on the horizon that will oblige corporations to take responsibility for their supply chains.
Tougher laws loom
There is pressure for an International Labour Organisation convention on legal liability – meaning that companies could be held accountable for serious rights abuses throughout their supply chains. This was discussed at the International Labour Conference in Geneva in June 2016 and is being seen as a next step in eradicating modern slavery.
Neil Howard, a researcher at the University of Antwerp’s Institute of Development Policy and Management, says that while measures such as the Modern Slavery Act “raise the profile of the issue,” they are “window-dressing legislation.” There is no evidence that such laws actually lead to reduced slavery in supply chains, he argues.
There needs to be an international level-playing field – thus an ILO convention – with companies facing extra-territorial accountability for the way their products are produced, Howard says.
“It’s no longer pie in the sky that a company could be held liable for something that happens a long way away,” he adds. And companies that comply fully with the Modern Slavery Act and other similar legislation will be better prepared when tougher laws on global accountability for labour rights come along.
Climate finance roadmap to US$100 billion
The Roadmap aims to provide increased predictability and transparency about how the US$100 billion goal will be reached, and sets out the range of actions developed countries will take to meet it. 38 countries plus the European Commission were involved in the realization, led by Australia and the United Kingdom. Drawing on analysis by the OECD, the Roadmap shows that developed countries are well-placed to meet the goal, through a combination of public and mobilized private finance.
More information on Australian Government website.
IMANI AFRICA REPORT: HOW TO PREVENT FUEL FRAUD IN AFRICA
Refined petroleum products are an important resource in every country.
Various governments impose taxes on fuel to generate revenue that finances essential public goods and services for the benefit of the citizenry. Governments also provide a boost to targeted sectors of the economy or help the needy by way of fuel subsidies.
An unintended effect is that the price differentials created by these taxes and/or subsidies produce a financial incentive for unscrupulous individuals and businesses to engage in several forms of fuel fraud. These include: smuggling, adulteration and dilution of fuels, transit fuel diversion and round-tripping as well as outright theft. Moreover, fuel fraud is not just an in-country problem but can cross borders where cheaper, inferior products are smuggled in as adulterants or subsidized fuels are smuggled out to neighbouring countries where they sell at higher prices. Smuggling of unwanted adulterants into Philippines’ fuel supply chain, for instance, has been estimated to cost the country as high as $750 million annually in tax revenue. This money could certainly have done a lot for the Philippines. This makes one wonder how much African countries are losing annually due to fuel fraud. The situation could be worse for African countries that simultaneously tax certain petroleum products and subsidize others. This is because not only is the expected tax revenue not realized but the subsidies are also wasted as they are diverted from the targeted recipients to criminals. The government loses twice when crooked businesses dilute taxed fuel with the cheaper subsidized products.
Attempts have been made in the past to mark or identify various fuel products in order to prevent fraud. For example, fuel marking with dyes has been in use since the 1950s but can be easily defeated using cheap and simple methods to launder out the dye. However, newer technologies using molecular markers as part of an overall fuel supply chain protection program have proven to reduce existing criminal activities and deter others. The impact of fuel fraud, how fuel marking programs operate and the results of some current African programs are presented here to support the further adoption of this technology across the continent.
Impact on Government Revenue
A report by the World Bank (2001) on petroleum taxation stressed that “taxes on petroleum products are a critical source of government revenue.” The report further explains, “….taxing fuel is one of the easiest ways to get revenue: collecting fuel taxes is relatively straightforward, and the consumption of fuels as a group is relatively price inelastic and income elastic, ensuring buoyant revenue as income rises and tax rates are increased”. In other words, because petroleum products cannot easily be replaced by close substitutes, taxing them is less distortionary: the decrease in demand due to the tax-inclusive price will not be that large. Additionally, as personal incomes increase, individuals are more likely to increase fuel consumption, making fuel tax revenue vital to the government.
Where fuel fraud is prevalent, a large amount of the anticipated tax revenue will not be collected. Tax evasion occurs when taxed fuels are diluted with products that have lower taxes or no taxes, such as: fuels smuggled in from other countries; subsidized petroleum products; duty-free transit fuels; stolen petroleum products; inferior products such as solvents, waste oils and others. Fuel fraud takes place in many countries, including even advanced countries in Europe. Bloomberg news reported that fuel fraud costs the EU about $4 billion annually in tax revenue. Elsewhere in Africa, Algeria lost approximately $1.3 billion to fuel fraud in 2013. These figures are indeed alarming especially for African countries that rely heavily on foreign aid to support a large percentage of their budgets annually. Failure to collect taxes due to fuel fraud could lead to unnecessary fiscal deficits and aid dependency.
The government of Ghana has for some time been riddled with a heavy debt burden despite the discovery and subsequent production of crude oil (in commercial quantities) in 2011. Driven in part by an IMF fiscal reform and credit facility, the country adopted a modern fuel- marking program, using the expected increase in revenue to close the fiscal gap. The results include over 100% Return on Investment (ROI) and an estimated increase of about $11 million in tax excise collection per annum. The fuel marking programme has helped the government to raise more revenue from the taxed petroleum products without having to increase the tax rates. The Ghana National Petroleum Agency’s (NPA) program is based on the technology and best practices of US-based Authentix, Inc.
Governments that implement fuel marking programs can generate virtually all the expected revenue to fund vital goods and services, creating a good governance environment for businesses to thrive, the economy to grow and ultimately improve the living standards of the people.
Impact on Subsidy-Targets
Another crucial issue for governments is subsidy abuse. Various governments provide subsidies to boost industries such as farming and fishing, help provide a social safety net for the needy as well as distribute the benefits of discovered abundant natural resources. A common subsidy is the provision of lower taxes or no taxes for kerosene so that poorer families can have access to affordable cooking and heating fuel. There may also be subsidies provided for marine premix fuel and off-road diesel with the overall objective of increasing economic growth.
The lower price of subsidized products provides an incentive to use it as an adulterant in more expensive or fully-taxed fuels. Subsidy abuse also occurs when subsidized fuels are smuggled out to higher-priced markets in typically the neighbouring countries to lower transportation costs. There is also the issue of round-tripping of imports notable in Nigeria. Although Nigeria exports crude oil, refined petroleum products are usually imported and subsidized. After these products are imported and the subsidy is paid, some criminals take them out of the country and bring them in again to double the subsidy. In Niger, round-tripping of exports also exists. The immediate effect is that subsidy funds are diverted from the intended beneficiaries to criminals and may well be used to finance other criminal activities.
There are several impacts of subsidy abuse. The economic growth goals for the targeted sectors are not achieved. The government also loses twice when these subsidized fuels are mixed with the fully taxed ones, losing the tax revenue and the investment in the subsidies. Increases in subsidy expenditures due to diversion could culminate in the depreciation of the country’s currency and its credit rating. Subsidy diversion is a problem for many countries. 5
Fuel marking programs can help combat subsidy abuse by marking the low- and no-tax fuels at concentrations in the low parts per billion levels and testing for the marker in the higher taxed fuel. Once marked, even when added at low quantities, the presence of the subsidized fuels can be detected using special analysers at the border or within the country catching both smuggling and adulteration of high taxed fuels. Ghana, for instance, has seen a 78% reduction in adulteration as a result of the program. Serbia also recorded a significant decline in the sales of base oils (known as diesel adulterants) by seven times. Similar fuel marking programs would enable African governments to obtain a large proportion of the fuel revenue due to them and also ensure that the subsidies reach predetermined beneficiaries.
Other relevant impacts
Apart from tax evasion and subsidy abuse due to fuel fraud, there are also other negative effects which the fuel marking programs could help address.
When fuel is adulterated with cheaper or inferior products, the quality of fuel suffers and typically does combust completely in machines or vehicles. This could lead to a quicker rate of depreciation of various machines or vehicles. This means that money which could have been used for profitable investments would be spent on maintenance instead. This could discourage Foreign Direct Investment if investors lose confidence in the profitability of their ventures due to this challenge. Fuel marking programs can reduce the rate of adulteration quite quickly, helping to ensure that citizens get value for money and removing some barriers to foreign investment.
Additionally, dilution of fuels with waste oils could have a serious detrimental impact on the environment. With greenhouse gas emission and climate change as a global concern, this effect cannot be overlooked. Fuel marking programs provide the evidence to help remove polluting adulterants from the fuel supply chain hence improving the environment. A fuel marking program would culminate in the supply and sale of more environment-friendly petroleum products by reducing adulteration and maintaining high quality.
Some Key Prerequisites of a Successful Fuel Integrity Program
There are some other essential factors to consider so that African governments can implement successful programs in their countries.
First, a government should seek out a partner with a proven track record of excellence in fuel marking programs with the state-of-the-art molecular fuel -marking technology. The partner should conduct a situational analysis to identify the problem(s) particular to the country, designing a technical and operational solution for the program that specifically addresses those problems. Often a multi-layered approach is used with a field test to screen for diversion or dilution problems. If a field test fails, further lab tests are conducted with sophisticated analysers that provide high quality evidence in support of enforcement actions or legal proceedings. To ensure that the program is meeting its objectives, the government should insist that regular procedural performance and marker inventory audits be included in the program design and costs.
Although it may appear as a good idea to give different parts of the fuel marking program to different companies in order to create competition and efficiency, this may lead to a lack of accountability. Best practice would be to partner with a company that will have the sole responsibility for the program, while potentially using local subcontractors for some operational aspects in order to create employment locally.
Second, legislation is critical to the success of the program. The government and other relevant institutions must cooperate with the partner to pass legislation and/or clear any ambiguities in existing legislation to ensure that culprits caught and arrested could be prosecuted. Without legislation and cooperation, the program cannot succeed in curbing tax evasion and subsidy abuse. Cooperation by the Government of Ghana and the NPA with Authentix yielded positive revenue results for Ghana. It is no surprise therefore that the NPA and its Chief Executive, Mr Moses Asaga, recently received two awards from the prestigious Socrates Committee of the Europe Business Assembly in Cannes, France. The NPA received the International Prize for Best Enterprise for 2015 award, while Mr Asaga was honoured with the Best Manager award for 2015.
Last but not least, legislation should be paired with strong enforcement of punitive measures. If culprits caught are not punished, the law will be seen as harmless. This does not create the strong deterrent effect necessary to reduce fuel fraud. Punishments such as fines, immediate bans and imprisonment should be meted out to culpable entities in order to ensure that the program delivers desired results. In Ghana, the deterrent effect culminated in a substantial reduction in the amount of fuel product dilution from 34% to 7% within just 6 months of the program.6
Fuel fraud via tax evasion has robbed African governments of millions of US dollars in tax revenue annually. Subsidy expenditures from the remaining scarce resources also find their way to various criminals instead of intended beneficiaries such as the poor in the country.
The fuel marking programs that use modern marker technology is an innovative way of curbing these illicit activities and ensuring that individuals and firms get value for money spent on fuel. Despite calls from economists such as Nobel Laureate Joseph Stiglitz and Christine Lagarde at the recently held World Economic forum in Davos for a new measure of economic progress other than GDP growth, GDP growth still remains crucial (for the time being). African governments have for too long focused solely on capital (investment) and labour to stimulate economic growth while relatively neglecting total factor productivity typically from technological advancement and innovation. Meanwhile, studies show that total factor productivity could account for about 60% of a country’s economic growth. It is high time governments of African countries leveraged the technology used in these programs to boost economic growth and generate revenue internally rather than depend heavily on foreign aid and borrowing to finance essential public goods and services.
This paper was authored by Hubert Nii-Aponsah, IMANI Africa’s Deputy Head for the Center for Political and Economic Affairs. For comments and enquiries, please email email@example.com
 Asian Development Bank. (2015). “Fuel-Marking Programs: Helping Governments Raise Revenue, Combat Smuggling, and Improve the Environment”. Issue 24, The Governance Brief.
 Philippine Daily Inquirer. (6th March, 2014). “With Oil Smuggled in, Government Waves Tax Revenues Goodbye”.
 Robert Bacon. (2001). “Petroleum Taxes – Public Policy for the Private Sector”. The World Bank.
 Konstantim Rozhnov and Marek Strzelecki. (27th August, 2013). “Fuel Fraud Costing Europe More Than $4 Billion in Lost Taxes”, Bloomberg news.
 Shoaib-ur-Rehman Siddiqui. (28th September, 2013). “Algeria smuggling crackdown cuts fuel line to Morocco”. Business Recorder.
 Asian Development Bank. (2015). “Fuel-Marking Programs: Helping Governments Raise Revenue, Combat Smuggling, and Improve the Environment”. Issue 24, The Governance Brief.
 Citifmonline. (17th March , 2016). “Buhari battles to clean up Nigeria’s oil industry”. Retrieved fromhttp://citifmonline.com/2016/03/17/buhari-battles-to-clean-up-nigerias-oil-industry/
 Biman Mukherii, Sudeep Jain and Saurabh Chaturvedi. (28th August, 2013). “Subsidies, Oil Prices to Put Pressure on India’s Rupee, Fiscal Gap”, India News.
 Business World. (12th October, 2015). “NPA, Asaga win awards”. Retrieved from file:///C:/Users/Otoson/Desktop/fuel%20paper/NPA,%20Asaga%20win%20awards%20-%20Business%20World%20Ghana.html
 William Easterly and Ross Levine. (2001). "It's Not Factor Accumulation: Stylized Facts and Growth Models". The World Bank Economic Review, Vol. 15, No. 2 177–219
Reforming the UN Development System Can North and South Overcome their Political Differences in Making the UN Fit for Purpose?
Discussion Paper 14/2016
Bonn: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)
In July 2016, Member States of the United Nations (UN) concluded the ‘ECOSOC Dialogue on the longer-term positioning of the UN Development System’ in which they had discussed options for reforming the UNDS for nearly two years.
The next step in the reform process will be intergovernmental negotiations on specific reform measures. Against this backdrop, this paper offers a genuinely political analysis of the UNDS and the current reform process. Special emphasis is given to the continuing North-South divide within the UNDS. The paper starts by introducing three theoretical perspectives on the UNDS which emphasize the roles of power, utility and attitudes.
These three factors correspond to major shifts in the international development landscape, namely, a global power transformation, the rising need for collective action and a new social context for global cooperation. From these considerations emerges an understanding of the political space and the yardsticks for a successful UNDS reform, whereby success is understood in terms of future political relevancy.
In the empirical section, the paper turns to the ECOSOC Dialogue and offers an analysis of major reform options under consideration by Member States in the areas of the ‘functions’, ‘governance’, ‘funding’ and ‘organization’ of the UNDS. The paper concludes by identifying three strategic directions for reform and how Member States should change their behaviour towards the UNDS if they wish to fully exploit the UNDS’s comparative advantages as the epitome of multilateral global development cooperation.
Download paper here
Is the African Union's financial independence a possibility?
Photo courtesy of UN Photo by Eskinder Debebe
Author: Miyandazi, L. ECDPM Talking Points blog
As a continental organization, the African Union (AU) is in a constant struggle to cope with the multifaceted social, economic and political problems that have become particularly worrisome over the last two decades. Consequently, resolving this has great resource implications. Yet, the quest to find alternative, adequate, stable, and predictable funding for a fully functioning AU has been discussed severally at various experts and ministerial meetings, but with no formal decisions being made. A ray of hope, however, comes in the form of the recent adoption of a more bold declaration on AU financing at the 27th AU summit. The big question is: Could this be what the union needs to finally meet financial independence?
Who Funds the AU?
Between 2009 and 2010, 66.36% of the total AU budget was financed by only five countries (Algeria, Egypt, Libya, Nigeria, and South Africa). More recently, each of these countries continues to face grave internal and external challenges. Hence, AU’s dependence on partner financing gradually increased from 45% of the budget in 2010 to over 70% today. For example, payments by the European Commission increased from €91 million in 2010 to €330 million in 2015, of which almost 90% was for peace and security. Other major donors to the AU include the United States, World Bank, China and Turkey.
A major step to generate more funds for the AU was first taken through the formation of the High-Level Panel on Alternative Sources of Funding the African Union. The Panel suggested options including: “a) US$2.00 hospitality levy per stay in a hotel; and b) US$10.00 levy on flight tickets for flights originating from Africa or with destinations in Africa”. If realized, these two options were expected to generate $728 Million for the AU by 2017. Additionally, the panel proposed a US$0.005 per SMS levy, which was to raise $1.6 billion if applied by 2017. The AU Assemblyapproved these options in principle with mechanisms for their operationalization back in 2013. They further requested that the possibility of increasing statutory contributions from Member States be explored.
Collection of the taxes (levy on air tickets and the tourism levy) was to be carried out in close collaboration with Member States. In particular, it was suggested that flight tickets levy be enforced in partnership with the International Air Transport Association and national transport agencies, while the tourism tax be collected in close collaboration with the Ministries in charge of Tourism in Member States. Accounts were then to be opened in Member States’ Central Banks to receive the resources collected from the two taxes.
Despite the positive nature of the suggestions, the proposals posed evident worry about increasing the tax burden of citizens in Africa. Moreover, countries that depend heavily on tourism were worried about implications of the flight levy charges and stakeholders in the mobile phone sector insisted that the implementation of the SMS levy charge would trickle down to affect millions of mobile subscribers in Africa by increasing the threshold of SMS charges. Ultimately, in 2014, African finance ministers rejected the High-Level Panel’s proposals. Nevertheless, in 2015, the AU Assembly adopted a proposal by AU finance ministers to increase Member States’ contributions to fund 100% of AU’s operational budget, 75% for the programme budget and 25% of the peacekeeping budget. This was to be implemented within five years from 2016 on-wards.
A New Dawn…
Current developmental matters in Africa are anchored on implementation of two key initiatives, Agenda 2063 and the Sustainable Development Goals (SDGs) 2030 Agenda. Financing for development based on those key agendas for Africa hinges almost entirely on its ability to mobilize financial resources within the continent, as opposed to externally. For instance, to implement the SDGs, Africa is estimated to need between$614-$613 billion per year. Additionally, there is a need for the union to allocate funds for issues of Peace and Security.
More recently, during the 2016, 27th AU Summit in Kigali, Rwanda,Donald Kaberuka, AU High Representative for the Peace Fund, presented a plan expected to yield more internal funds for the Union. Heproposed a 0.2% levy on all African eligible imports,. The Kaberuka proposal expects to bring in up to $1.2 Billion yearly for the AU. This is estimated to cover 100% of AUs’ operating budget, 75% programme budget and 25% peace and support operations budget.
Member States’ contributions are grouped in three tiers: as of 2016, 60% of the budget covered equally by countries with shares of gross domestic product that is 4% above the continent’s total (Algeria, Angola, Egypt, Libya, Nigeria and South Africa), 25% equally covered by countries with shares of GDP between 1% and 4% (12 countries), and the third tier consists of countries with shares lower than 1% (36 countries) to equally contribute to the remaining 15% of the budget.
This formula is a more forward-looking proposal in line with the AU’s strategic plans of financing its own inclusive growth and sustainable development. However, questions around modalities of implementation, transparency and compliance by countries and the overly ambitious plan to have this levy already working by 2017 have still not been addressed and these are likely to be the core factors that decide whether the Kaberuka report actually works.
IMANI Alert: Vision 2021: The Future of Ghana as Promised by NDC's Manifesto
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Inclusive Land Governance in Mozambique: Good Law, Bad Politics?
Cabral, L. and Norfolk, S.
IDS Working Paper 478
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This paper analyses inclusive land governance in Mozambique. It focuses on the country’s legal framework and the DUAT, the right to use and benefit from the land. The DUAT is a distinctive element of the Mozambican legislation that has land as the property of the state but recognises land use rights for occupants and users on the basis of a unitary system of tenure.
The challenges of putting in practice what is thought to be one of Africa’s most progressive legal frameworks are discussed. These are set against a context where despite land abundance there are concerns over land grabbing and dispossession of rural communities, which constitute over 70 per cent of the country’s population. The law may be progressive but government politics are not, as an increasingly hegemonic elite controls Mozambique’s political system and resources.
IMANI's Business & Economic Environment Report (2011-2016): Challenges and Policy Recommendations
A suitable environment for businesses to succeed remains an important precursor to economic growth and ultimately the improvement of living standards.
From a macroeconomic perspective, real GDP growth slowed substantially from about 14.0% in 2011 to 3.9% in 2015 which was indicative of an anaemic macroeconomic environment. The rate of inflation generally trended upwards partly due to supply-side pressures from a severe energy crisis. Tight monetary policy did not effectively contain inflationary pressures and wide interest spread slowed growth of credit to the private sector.
Persistent twin deficits of fiscal and current account deficits (and rising public debt) further indicated systemic weakness of the Ghanaian economy in relation to the world economy notably susceptibility to commodity price slumps. This compelled the government to go for an IMF support programme-Extended Credit Facility in 2015. A new tax reform Act 896 which increased tax rates overall also took effect from January 2016.
Against this background, IMANI with the support of BUSAC conducted a comprehensive analysis of five (5) major business challenges since 2011 coupled with key policies/bills/laws intended to ameliorate the situation. Hence IMANI’s report aimed to:
1) Identify and examine major business challenges since 2011.
2) Analyse and discuss key policies/bills/laws with the view to appreciate gaps/inconsistencies related to each identified challenge.
3) Make robust recommendations to deal with the challenges and improve the business environment.
Recalling IMANI 2008 Election Analysis: What Are Their Business Plans for Ghana?
The question explicit in the title of this article is directed at the political parties aspiring to govern this country. We are by no means ignorant of the fact that nations are infinitely more complex than businesses. Nor are we by ‘business plan’ referring to those multi-year ‘development plans’ favoured by certain ‘political visionaries’ ONCE THEY ARE IN POWER.
We use ‘business plan’ generically to refer to any espousal of a plan of action that also contains some financial figures by means of which the viability of the plan in question can be evaluated. In the context of the political parties we are addressing, we are inquiring whether their MANIFESTOES, in their currently released or about to be released forms, are viable plans of actions.
You will appreciate our point better after you have read the underlisted ‘promises’ made to the electorate by the various political parties vying for our votes:
1.Provide free secondary education to all pupils in an extension of the current FCUBE program.
2.Provide free tertiary tuition to all qualified students.
3. Provide free electricity to the masses by means of ‘permanent magnets’.
4.‘Grow’ donkeys in sufficient numbers to transform the agricultural capacity of the North, in an integrated pastoral system in which the donkeys provide both free ‘fertilizer’ and mechanization-substitutes.
5.Mobilise internal resources to the tune of $840 billion, up from the current ~$7 billion. On a comparative basis, this means Ghana’s GDP during the tenure of this party will be ~$2 trillion, making the country the 5th wealthiest in the world – richer than the UK and France.
6. Construct a pipeline from the newly discovered Western offshore oil fields to the North as part of an integrated petroleum complex. Figures from comparative endeavours elsewhere in the world (taking into account the geographical and industry context in Ghana) suggests a project outlay of 5 to 8 billion dollars (definitely greater than the current combined national expenditure).
What we find worrying is that when journalists choose to scrutinize these plans, even in the superficial manner they usually adopt, they ask a generic ‘how will you do it’ question, thus providing enormous room for politicians to ramble long-winded strategies containing even lesser content than the original statement of purpose.
It is not sufficient for a political party to ‘cost’ the individual initiatives they are proposing, something most of them are not even bothering to do anyway. They must produce a COMPLETE pro-forma budget which demonstrates what the opportunity cost for each initiative will be by showing the source of budgetary receipts alongside the inventory of expenses. A manifesto without such a pro-forma budget cannot suffice as a proper statement of intent.
Nearly all political schemes are feasible in a certain context. The true measure of feasibility comes when all the schemes are hung together and their costs summed up against projected inflows of resources to determine whether the overall political program is viable or not.
It may be entirely logical to argue for the entire northern corridor to be turned into an irrigation belt in order to feed a proposed cereal industry, but the question is whether in the inevitable trade-off that must occur for that to happen we are happy to sacrifice low public debt, NHIS concessions or the school feeding program in view of the expected levels of tax gain and donor aid.
It is true that not all our compatriots are capable of following detailed assessments of political programs, and that only a few even bother to read manifestoes. But that is why the Media exists. That is why, like most other societies, an academic elite subsists on the backbreaking labour of manual workers and other economic producers. It is the duty of such to transmit sophisticated analyses in forms accessible to the general population. But the quality of what they convey will, obviously, be coloured by the substance of what they receive from politicians.
Our argument is further that calls for an ‘issues-based’ electioneering campaign are empty demands unless we place a greater emphasis on improving the quality of manifestoes as actionable statements of intent. What constitutes an ‘issue’ is ultimately a subjective decision over which reasonable people can disagree.
Objective politicking, on the other hand, cannot proceed in the absence of some form of figure-based analysis and commentary.
We call on the Media and Civil Society institutions in this country to join us in a loud demand for all political parties to supply pro-forma statements of national accounts for, at least, their first term in office alongside, and correspondent with, their manifestoes.
What Are their Business Plans For Ghana (Part II)
– X = Y + Z + W
By Bright B. Simons & Franklin Cudjoe
We wrote in an earlier article (http://africanliberty.org/node/420) that the political programs of all the political parties are, or should be, significantly restricted by the financial figures they are able to produce in support of their pledges.
For example, if a political party pledges that it shall expend X dollars on its political program, two figures must immediately be demanded: the domestic revenue mobilization component (Y) and the external input component (Z). Obviously, X = Y + Z.
The plausibility of the Y figure, without doubt, can easily be determined by looking at the IRS and CEPS figures for the current dispensation (a task made easy by the availability of Revenue Agencies Governing Board reports). In doing this, the concerned observer ought to make room for plausible GDP growth, as this impacts on domestic revenue gain. Nevertheless, the compound growth of domestic revenue yields is unlikely to exceed 30% of present day totals over the course of the forthcoming 4 years. The impact of the oil find is discussed separately.
The Z figure comprises of domestic debt (loans from local sources and treasury bills), and credit raised on the international markets (through government bonds or direct loans from the global private sector), as well as donor grants and multilateral/bilateral loans and the proceeds of state enterprise diversitures. All these components are predictable to a reasonable degree. Or at least it is easy to objectively question the assumptions on which they are based, thus furthering non-partisan analysis and public interest discourse.
Other income receipts such as dividends paid to the state as a result of state interests in operating enterprises and royalties from natural resource (mining etc.) concessions fluctuate more erratically, but their overall contribution to the state budget tend to be minimal and it is possible to make educated estimates into the future.
Thus a political party should be able to take account of these ‘major numbers’ when drafting its manifesto if the citizenry is to be assured of its competence to deliver, since they are the product of basic calculations.
For instance, the Z figure cannot be tampered with capriciously since any loan element impacts on the national debt, which in turn impacts on interest rates. Interest rates affect sustainable GDP growth and the rate of inflation. Thus if the Z component of a party’s financial plan in its manifesto is much too high (especially in comparison with the Y component – the domestic revenue component), one can only expect that the national debt will skyrocket leading to adverse outcomes that may undermine the party’s ability to deliver its program. The grant element (‘free’ money from donors, as it were) is easily projected based on past figures (especially so in recent times due to the emergence of the multi-donor budget support system), thus the flexibility of a political party to raise funds resides primarily in the loan elements of the Y and Z component. However as we have mentioned above, the loan element impacts on national debt (and, when concentrated in the Z –domestic- component, may also crowd out the private sector).
Another revenue element that is likely to come up frequently in debates during manifesto discussions is the projected inflow of oil proceeds. The first two years of the next government will not see any flow of oil revenue. From 2010 to 2012, the remainder of the next term, oil production will average about 100,000 barrels a day. The historical mean of oil prices suggests 100 dollars as a prudent projection.
This implies that the gross oil proceeds for the forthcoming - 2008 to 2012 - term of the next government will be 7.5 billion dollars. Value addition is unlikely to occur in Ghana between 2010 and 2012, thus we must use the Brent crude figures adduced above for our analysis. We must not add auxiliary economic activities since these have already been factored into the gross oil proceeds (the oil companies will only pay out of what they earn to any spin-off sectors). Let’s bear in mind also that the rise of increasingly autonomous supplementary service industries will be a delayed rather than immediate development. Lastly, gas output, from what we have been told, is likely to be negligible over the period under discussion. 7.5 billion dollars thus seem a rigorous projection. We must then consider total government receipts from these gross oil proceeds. If royalties have been negotiated at 15% and a further 25% is charged as corporate tax, then 40% of the above-stated proceeds will accrue to government. It is highly doubtful that the oil industry will pay 40% of gross earnings in a new contract to a government that is new to the sector (all this notwithstanding any provisional agreements already in place – we assume that a new government can renegotiate any pre-existing arrangements). 30% of gross will be generous, but we will use that figure all the same. This implies that the revenues accruing to the next government from the oil sector during its tenure is highly unlikely to exceed 3 billion dollars. We must consider oil a special category of revenue component and label it W.
In that sense the manifesto programs of all aspiring political parties are constrained by the elementary first-order equation: X = Y + Z + W, on the revenue side (better informed analysts shouldn’t hesitate to maul our calculations). Civil Society and Media must ensure that our politicians, in their pronouncements going forward, show the discipline imposed by this constraint.
Bright B. Simons is Honorary Vice-President at IMANI. Franklin Cudjoe is Founding President and CEO of IMANI. Originally penned September 13 & 29, 2008
IMANI Publication: The stupendous promise of creating new districts by President Mahama and his opposite numbers.
There seems to be no end to the many political promises we have witnessed in this election.
President Mahama is reported to have promised the creation of new districts when the right set of geographic and possible economic conditions are ripe. Earlier we read about the leading opposition leader's quest to create a new region out of the existing Western region.
Meanwhile, IMANI's researchers Brian Dzidefo Dzansi, Keshia Osei-Kufuor, Isidore Kpotufe and Odekro's Lolán Ekow and team are researching the needlessness or otherwise of creating new districts. It is a STAR-GHANA funded project.
However, Emmanuel Buadi Mensah (Research Fellow of IMANI) and Victor Osei Kwadwo both PhD fellows in Economics and Governance, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology and IMANI Africa have published a paper on the craze and rationale for creating new districts. The paper titled ''DISTRICT CREATION IN GHANA: A POLITICAL EXPEDIENCE OR POVERTY ALLEVIATION MECHANISM? Download the full report here.
The authors argue that the pro-poor hypothesis of decentralisation with respect to the creation of districts is flawed at best and elusive at worst to the good governance and efficiency proposition. There is no evidence to the claim of district creation reducing poverty in Ghana, yet it has been used to explain the 94.4% increase in districts created since 1988. Using a cross-sectional data, this paper assesses the poverty reduction basis of district’s creation in Ghana. It concludes the creation of districts as a convenience political exercise and a trapping mechanism which maintains a poverty status quo rather than alleviation.