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Wealth inequalities reaching extreme levels in West Africa -Oxfam report1 minute read

The report said the vast majority of West Africans were “denied the most essential elements of a dignified life

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Wealth inequalities reaching extreme levels in West Africa -Oxfam report
The ECOWAS Bank for Investment and Development (EBID), Lome, Togo. Photo credit: www.bidc-ebid.org

West Africa suffers the most inequalities on the continent but many governments prefer to ignore problems despite economic growth, a report by Oxfam and Development Finance International said on Tuesday. 

According to the “West Africa Inequality Crisis” report, six of the ten fastest-growing economies in Africa were in West Africa, with Ivory Coast, Ghana and Senegal among the world’s 10 fastest-growing economies.

“In most countries, the benefits of this unprecedented economic growth have gone to a tiny few,” the report said.

“Inequality has reached extreme levels in the region, and today, the wealthiest 1 per cent of West Africans own more than everyone else in the region combined.”

The report said the vast majority of West Africans were “denied the most essential elements of a dignified life, such as quality education, healthcare and decent jobs”.

In Nigeria, for example, the wealth of the five richest Nigerian men combined stands at $29.9 billion – more than the country’s entire budget in 2017, the report said.

Rather than tackle inequality, some of the region’s governments were underfunding public services, such as health and education, and failing to tackle corruption, Oxfam’s regional director, Adama Coulibaly said.

The report called on governments to do more to promote progressive taxation, boost social spending, strengthen labour market protection, invest in agriculture and strengthen land rights for smallholders.

For example, it said the region loses an estimated $9.6 billion annually because of corporate tax incentives offered by governments to attract investors. 

But not all governments were tackling inequality the same way. Cape Verde, Mauritania, and Senegal were among the most committed to reducing inequalities, it said, while Nigeria, Niger and Sierra Leone were among the least.

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Nigeria’s attorney general withdraws $2 billion tax litigation against MTN

In 2015, the telecommunications regulator in Nigeria slammed MTN a $5.2 billion fine for failing to disconnect unregistered SIM cards

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Nigeria's attorney general withdraws $2 billion tax litigation against MTN

Nigeria’s attorney general has withdrawn a $2 billion tax demand against the MTN Group. The telecom company and attorney general both announced on Friday.

In a letter filed with the Nigerian Stock Exchange, MTN said that the government had decided to drop its case and refer the issue to tax and customs authorities, with a view of resolving any remaining contentious issues. MTN Nigeria’s Chief Executive Ferdi Moolman said in statement, that MTN is very pleased with the decision of the (attorney general) and commends the AG for his wisdom.

In a statement, the office of Attorney General, Abubakar Malami said the decision demonstrates unflinching commitment to the rule of law where all statutory agencies will be allowed to independently work with a view to fulfilling their mandates.

Malami had ruled that the firm owed taxes relating to the import of equipment and payments to foreign suppliers from 2007 to 2017.

The firms’ shares on the Johannesburg Stock Exchange rose more than 5% after the announcement. Nigeria is its biggest market, with roughly 60 million users.

The company, whose local unit listed on the Nigerian Stock Exchange last year, said at the time that it would sell more shares to the public and increase local ownership once the tax row was resolved.

Background-

In 2015, the telecommunications regulator in Nigeria slammed MTN a $5.2 billion fine for failing to disconnect unregistered SIM cards. MTN eventually reached a deal in which the fine was cut to $1 billion.

In August 2018, MTN’s shares fell by more than 20% after the central bank demanded the company repatriate $8.1 billion that it said the company had illegally sent abroad. MTN agreed to pay $53 million to settle the case.

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Ghana targets $3 billion diaspora funding for investment

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Ghana is targeting its diaspora to raise $3 billion in funding for economic development, according to the country’s Finance Minister, Ken Ofori-Atta.

The country will structure an investment vehicle to offer better rates than what depositors typically can earn in countries such as the U.S.

According to Ofori-Atta, the ministry is in talks with the central bank about the proposal’s details and plans to launch the programme later in the year.

The funding will be used to build infrastructure and develop the agricultural and tourism industries.

President Nana Akufo-Addo’s government seeks to boost development and accelerate growth in the world’s second-biggest cocoa grower and Africa’s largest gold producer ahead of elections scheduled for December.

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What is the future of the CFA Franc ?

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CFA- Franc notes

The future of the CFA franc in the six-member Central African Economic and Monetary Community (CEMAC) is being debated after it was announced last week, that eight West African countries have agreed to change the name of their common currency to Eco. They also severed the CFA franc’s links to former colonial power, France.

The CFA franc used by west and central African states is considered by many, as a sign of French interference in its former African colonies and an integral reason for the underdevelopment of CEMAC, which remains the poorest economic bloc in Africa.

Following agreements signed in 1948, The CEMAC member states have more than 50 percent of their financial reserves kept in the French treasury. Chad, Gabon, Equatorial Guinea, Central African Republic and Congo use the CFA franc.

The CFA franc was pegged to the French franc until 1999, when its value was fixed at about 660 CFA francs to one euro.

When French-speaking African states became independent, it was necessary to define the monetary relations between themselves, France and the rest of the world. With the exception of Guinea, then Mali, who chose to have an independent currency, other states’ monetary relations arose directly from the status quo, and the three currencies issued respectively in West Africa, East Africa and Madagascar remained in place. 

They formed the basis for the exchange rate regime of independent states in the Franc zone. 

The Franc zone is however not only an exchange system but also one of economic cooperation and there were three hallmarks to the exchange system in African countries of the Franc zone – convertibility, exchange rate and operations.

On a recent visit to Ivory Coast, French President, Emmanuel Macron and Ivorian President, Alassane Ouattara announced an overhaul of the CFA franc.

The French-backed currency was initially pegged to the French franc but has been linked to the euro for about two decades.

According to Ouattara, the currency will be renamed the “eco” next year and French officials will no longer be represented on its governing bodies. In addition, a requirement that the eco’s member states keep half their foreign reserves in France will be rescinded.

The currency will also remain pegged to the euro.

According to Daniel Ona Ondo, president of the CEMAC commission, the six member states’ economic growth rate is estimated at 3 percent in 2019 — up from barely 1 percent in 2018 — and inflation remains under control at less than 3 percent, adding that the most demanding issue is regional integration before currency reforms.

Fourteen west and central African countries divided into two monetary unions, ECOWAS and CEMAC, use the CFA franc. 
 

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