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On June 16th, 2015, the Government of Tanzania tabled in parliament three bills related to extractive industries under Certificates of Urgency. The bills are The Tanzania Extractive Industries (Transparency and Accountability) Act 2015, The Oil and Gas Revenue Management Act 2015 and The Petroleum Act 2015. 
 
To this effect, we the undersigned Civil Society Organizations convened and deliberated on the bills in Dares Salaam from the 21st to 23rd of June, 2015 aiming at providing inputs for improvement of the proposed legislations with national interests at the fore.
 
We highly COMMEND the government for its efforts and determination to manage this national wealth effectively and strategically for the benefit of the current and future generations of this country. We UNDERSCORE the fact that, in the overall, the three bills have many positive aspects to safeguard national interests in tandem with encouraging investments in the sector, as well as ensuring transparency and maintaining macro-economic stability.
 
Despite this, we are CONCERNED about the rushed process to pass these important pieces of legislation and with apprehension, we note that this is becoming the norm as in 2010 with the Mining Act, similar haste was observed. More important, nevertheless, it is critical that the government gets the legislations right.
 
We APPEAL to members of Parliament to diligently scrutinize the bills even though there is much attention being afforded to the general election and other priorities are being overridden. 
 
1.1 Draft Petroleum Act, 2015
While the bill sets up a sophisticated institutional structure for managing the petroleum sector, designed potentially to promote checks and balances and specialization among the different functions necessary in order to manage the sector effectively, there are several sections that risk creating administrative overlap, confusion, or distorting the incentives of these public institutions to optimally manage the sector. 
 
Most importantly, the unclear use of the word “exclusive” in relation to National Oil Company’s powers in Sections 10(2) and 45 creates a risk of conflicting interpretations and accountability challenges. While such a system can confer certain advantages in terms of empowering the NOC to learn the business and chart its own partnership strategies, it also carries the risk that the selection of partners will be driven more by the NOC’s commercial interest than the overall national interest. This is inconsistent with the spirit of the National Gas Policy and the 2014 draft Petroleum Policy.
 
Section 6: “The Commissioner for Petroleum Affairs shall be the advisor of the Minister on policy, plans and regulations as well as the day to day administrative matters in the oil and gas subsector.”
 
Concern: creating the position of petroleum commissioner who will be at the same level as the commissioner for Energy could possibly create functions overlap and conflict, but also technically petroleum falls under Energy sector.
 Recommend: To create Deputy Commissioners with specific functions on Petroleum and/or Energy since It may be appropriate to retain and strengthen office of the Commissioner for Energy to avoid overlap
Section 45: “The National Oil Company shall have exclusive right over all petroleum rights granted under this Part.” 
Concern: These two sections are conflicting  S.45 (40 specifies the NOC share and S. 219 (1) which gives the government discretion to decide the share also this section raises accountability challenges as well as creating institutional monopoly.
 
Recommend: The exclusive rights for NOC should be subjected to parliamentary scrutiny
 
Section 101 (3): “The license holder and contractor shall not flare or vent petroleum without prior consent from PURA.”
 
Concern; the law makes PURA the final decision maker without concerting environmental management agencies.
 
Recommend:  The Minister to issue permission to flare upon written advice from PURA and NEMC
 
Furthermore, it is critically important that the bill makes provisions that require publication of key information to enhance transparency of the petroleum sector. These may include but not limited to: bidding documents- pre-qualification criteria, a list of pre-qualified companies, bid criteria, list of bidders, the winning bid, a bid evaluation report justifying the winning bid based on the criteria. Full text contracts, along with their amendments and annexes, and beneficial ownership of license holders, Environmental impact assessments, environmental management plans and annual reports and local content plans and reports.
 
1.2 Oil and Gas Revenue Management Act 2015
The proposed legislation contains very important provisions to ensure prudent management of revenues accruing from oil and gas extraction; maintain fiscal and macroeconomic stability and aligning strategic investment with medium to long term development priorities, hence, sustainable development. However, the proposed fiscal rules do not guarantee intergenerational equity in terms of saving a proportion of the revenues for future generation as provided in the Natural Gas Policy 2013. 
 
Limiting the funding for strategic development expenditure to 60% of funds transferred to consolidated account may undermine requirements for such investments when the absorption capacity warrants spending 100% or more of the transfer to consolidated account from the Fund. Further, the proposed law lacks clarity on the maintenance of fiscal deficit (Section 17. (1)(b). For more clarity, the provision ought to be improved to ensure that maintenance of fiscal deficit takes into consideration the timing of revenue flow (excluding designated oil and gas revenues) from such a time when revenues attain a level of atleast the set cap of 3% of GDP when revenues fall permanently bellow the cap.
 
While the proposed law intends to ensure availability of funds for investment by the National Oil Company (NOC), tying funds of the NOC to 0.1% of GDP  does not necessarily guarantee a share of revenues that is appropriate given its objectives and or its capacity to spend. To avoid potential challenge of either underfunding or overfunding of NOC, the government may consider funding through Consolidated Account based on the NOC’s medium to long term investment plan. 
 
1.3 Tanzania Extractive Industries (Transparency and Accountability) Act 2015
We believe that the proposed law will strengthen Tanzania’s commitments to revenue transparency started by joining EITI global movement in 2009.We note that since then TEITI Multi stakeholder Group (Operations) has been done through a Memorandum of Understanding, without any legislation. The proposed law will provide legal basis for the enforcement of commitments as underpinned by the EITI standards and in line with government commitments to openness and accountability in oil, gas and mining sectors.
 
However we need to raise some obvious weaknesses in this proposed law including making the committee a government entity thereby lacking independence. We call upon the government to ensure that the governing body (TEITI MSG) retains its autonomy and independence in electing its own members, raising its own material and human  resources as well as ensure protection from political interference. 
 
Furthermore the minimum penalties suggested for not disclosing the information as required does not reflect the value of the extractive sector and needs to be reversed. 
 
Signed:
(1) Policy Forum
(2) Oil, Natural Gas & Environmental Alliance (ONGEA)
(3) HakiMadini
(4) Interfaith Standing Committee on Economic Justice 
(5) Governance and Economic Policy Center
(6) International Alliance of Natural Resources in Africa (IANRA)
(7) Governance Links
 
 
 

An Interim Working Group (IWG) of the African IFF Campaign Platform made up of six Pan-African organisations namely Tax Justice Network-Africa (TJN-A), Third World Network-Africa (TWN-Af), Africa Forum and Network on Debt and Development (AFRODAD), the African Women’s Development and Communication Network (FEMNET), the African Regional Organisation of the International Trade Union Confederation (ITUC-Africa) and Trust Africa supported and joined by the Global Alliance for Tax Justice (GATJ) will launch a unified African Campaign platform on IFFs. The launch will be held on the 25th June 2015 in Nairobi, Kenya.

The main goal of the campaign is to stop IFFs from Africa. The aim of the launch is to implement one Africa Campaign on IFFs that is led and driven by African civil society organisations with support from other partners including international non-governmental organisations (INGOs).

As a follow up to the public launch of the Campaign in June, a side event will be held on the margins of the upcoming 3rd Financing for Development Conference (FfD3) in July in Addis Ababa, Ethiopia. The purpose of the side event would be to introduce the Africa IFF campaign, re-emphasis the importance of taking forward the recommendations contained in the “Mbeki HLP report”, and highlight some of the joint plans that CSOs and other African institutions such as the African Union and UNECA have been undertaking to push for the implementation of the “Mbeki HLP report”. The side event will target African delegations, CSOs, African institutions and agencies present at the
FfD3 conference. The side event will feature a panel session comprised of representatives from the African Union Commission, Africa Group delegation, UNECA and civil society.

For more information on how you can be involved in the period leading up to the 25th June campaign activities and beyond please contact Savior Mwambwa mwambwa@taxjusticeafrica.net

An Bill to provide for regulation of upstream, midstream and downstream petroleum activities, establishment of the Petroleum Upstream Regulatory Authority, to provide for the National Oil Company, to secure the accountability of petroleum entities and to provide for other related matters.

Read the bill by clicking the attachment below.

This Bill intends to introduce the Tanzania Extractive Industries, Transparency and Accountability Act, for the purpose of establishing  the Extractive Industries, Transparency and Accountability Committee whose prime duty is to ensure that there is transparency and accountability in extractive industry. In securing transparency and accountability of extractive industries, this Bill responds to challenges faced by the Government in managing extractive industries including low contribution of the industry to the National Growth Domestic Product (GDP) as compared to the sector growth, inadequate capacity of the Government institutions in administering the sectors, lack of transparency in disclosing information relating to the investment of extractive industries and revenues accrued from natural resources extraction.

Read the bill by clicking the attachment below:

Bill presented to parliament for first reading on 16th of June, 2015. The Oil and Gas Revenues Management Act, 2015 is an Act to provide for the establishment and management of the Oil and Gas Fund, to provide for the framework for fiscal rules and management of oil and gas revenues and to provide for other related matters.

Read the bill by clicking the attachment below

 

Photo Credits:United Nations Democracy Fund (UNDEF)

“With more women in the boardroom, greater legislative rights, and an increased mass of women’s visibility as impressive role models in every aspect of life……. one could think that women have gained true equality” (2000 and beyond) theme for the International Women’s Day, 2015.

But to what extent does that quotation reflect our experience of the reality within our own society?

In Tanzania, gender participation in socio-economic, political and cultural spheres began to gain momentum in the 1990s when the government reaffirmed its commitment to the Convention on the Elimination of all forms of Discrimination Against Women (CEDAW) and the Beijing Platform for Action, following the Beijing conference, which upholds:

-          women’s legal capacity;

-          economic empowerment of women and poverty eradication;

-          women’s political empowerment in decision-making, and

-          enhancement of women’s access to education, training and employment .  

On political empowerment, Tanzania Constitution in Articles 66 (1, b) and 78 (1), states that women members must not make up less than 30% of the National Assembly. The special seats for women are distributed among the political parties in proportion to the number of seats awarded to them in parliament.

The introduction of a quota system in Tanzania in 1985 and the adoption of Affirmative Action has indeed increased women political participation. Despite the fact that this system has helped address the issue of gender imbalance in terms of number, it has nevertheless been unsuccessful so far in building the capacity of the majority of women to progress further – and to aspire to the presidential post in Tanzania.

Although there has been an improvement over the last couple of years towards achieving gender parity in Tanzania, the challenge remains that there are still large ‘gender gaps’ which need to be addressed.

Women are now seen in politics more than ever before but still there is an air within parties which shows election campaigns being dominated by men.  Currently we are hearing of more than 30 politicians announcing their presidential bid but there are only three female candidates amongst all those who announced.

Despite the efforts of Tanzania Private Sector Foundation (TPSF) which launched a special fund in 2014 to empower women to stand as candidates during the general election, there are still challenges facing women.  These include election funding, cultural aspects, patriarchal systems and gender roles within our society, to mention just four.  These and others are amongst the factors which hinder the participation of many women in the election process.

There are several initiatives which might be introduced to support women in the political arena.  It is important to make the system accessible to women who are capable of competing for the highest position, yet there is a basic problem that women cannot join men in election campaigns because they simply don’t have resources to do so.  Also, it is important to find ways of breaking down cultural barriers which have become embedded within patriarchal systems: when it is easier to cross such barriers, more women will be enabled to join the race.  Positive messages will help to break down preconceptions: it has been built into the minds of so many of us that the “Presidential Post” is a post to which only men can aspire.  We must not forget that our constitution provides this right to any Tanzanian who meets the requirements regardless of their sex.  

Surely the time is now to call for positive support to enable more women to take part in the 2015 general election. This, in turn, will encourage more women to set their sights on 2020. Therefore let’s make a start.  Let’s make a difference.  Let’s think globally and act locally by ensuring that women too are encouraged and supported in the 2015 Presidential race.

To confidently claim that the government is using the maximum of its available resources, the allocations have to be sufficient to address the available challenges. Looking and the Tanzania education budget for financial year 2015/16, the government still has not met the universal agreed standard of investment to the sector as the 17% allocation still falls short of the 20% of the National budget as stipulated in the Dakar EFA agreement and UNESCO’s  Global Education Forum. 

This was said by Mwemezi Makumba, Programme Officer at Hakielimu during the Policy Forum breakfast debate held on the 29th of June 2015 at the British Council Auditorium titled “The National Budget 2015/16:  Is government using the maximum of its available resources towards health and education?

It was revealed that from the proposed National budget for FY 2015/16 which has a total allocation of Tsh. 22,446 billion, an increase of around 2,593 billion (11.5%) from Tsh. 19,853 billion allocated in the previous year, the government proposes to spend Tshs. 3,887 billion (3.89 trillion) towards the education sector. Again this is an increase of 422 Million (10.8%) from Tsh. 3,465 billion allocated in 2014/15.

Makumba said that although the government continues to give priority to the education sector above other sectors in terms of allocation by apportioning 3,887 billion of the total proposed 22,446 billion national budget (17%), in actual expenditures this was not the case.

He further argued that there was a huge mismatch between recurrent versus development budget execution with the latter falling short because of late or no disbursements in some cases. He stressed that it is difficult to confidently claim that we are using the maximum of our available resources to education when development budget allocation is underspent while recurrent spending on salaries, goods and services is utilized to a great extent. This means that a bulk of funds are being spent on consumptions that rarely extend beyond a fiscal year rather than the acquisition of assets that lay the groundwork for sustainability and growth in education, a sector that has seen neglect in many years.

Mwemezi also said that the education budget is implemented by too many Ministries, increasing the administrative costs and rising recurrent expenditures at the cost of development spending.

Mr. Robert Kasenene, the second presenter at the breakfast debate and arepresentative from United Nations Association of Tanzania (UNA-Tanzania), presented on “Budgeting for contraceptives in Tanzania: Will Investing in Family Planning accelerate economic growth?” and emphasized the importance of streamlining budgeting for Family Planning. He revealed that although this was relatively new in the Tanzania budget where the budget line for it was introduced in 2010, the annual financing needs are now estimated at Tsh. 20 billion for services and supplies whilst the spending from Government sources was still at Tsh. 2.5 billion pointing to a gap that needed to be filled soon as the need for FP services and contraceptives is growing at rate of between 2 to 3.5%.

Illustrating this urgent need, he revealed that Tanzania has a growing population where over 60% are below 35 years of age, 10 – 24 year-olds make up to 35% of the population, women of reproductive age reach 12 million (not segregated) and the birthrate is at 5.29 per 1000 (WB, 2012) which is high.

Kasenene said that in light of such high birth rates, poverty and more dependents, healthcare costs were compounding abilities for women to adequately contribute to economic activity and output. This he therefore stressed required available and adequate Family Planning services and commodities giving users an opportunity to choose and have time to be productive in generating income.

Commenting on the presentations, the discussant Dr. Rufaro R. Chatora, theWorld Health Organization (WHO) Representative was more concerned as to why the national budget is seen to increase while the intended results are not met.

He recommended that the government look into raising sufficient resources to fund social sectors.

On the 18-24 May 2015, Policy Forum – Local Government Working Group (LGWG) was invited to participate in the “World Village Festival” and other subsequent events organized by Kepa in Helsinki, Finland. The event brought in different NGOs from Europe, the Middle East and Africa to discuss the opportunities and challenges related to development that developing countries are facing but more specifically how decisions made in the north affect the lives of people in poorer countries.   

Participating in the discussion entitled “Artisanal Miners: what are the challenges at local level” Alex Modest Ruchyahinduru, Manager of Communication and Advocacy pointed out that Tanzania just like any country in Africa with mineral resources, artisanal miners do face several challenges including evacuation of their mining places adding that this has been due to lack of license security compared to big investors with big mining license who are given first priority.

He said, due to small capital and lack of collateral, artisanal miners in Tanzaniaare unable to secure loans from banks and other financial institutions for their starting capital and more worse for female miners and for miners who operate without licenses. This also affected them in accessing marketing information in related to their products e.g the prices of Gold they sell it for, in comparison to the real value. Apart from obtaining finances, he added that artisanal miners also face some other challenges like transport, tax regime, job security and child labour.

He also said that lack of skills of artisanal miners on the mining sectors has also been a challenge. Most miners lack the technical know-how to improve their capacity and productivity and hence earn very little raw materials. “Most activities to support mining sectors have leaned on the large scale mining operations”

He added that the inclusion of artisanal miners in Government Policy and development planning and from social and environment policies such as health care and natural resource management is fundamental and hence the government and CSOs need to work together to bring change and attitudes on the ground.

The National Budget for Financial Year 2015/16 is currently being discussed in Parliament. The consolidated government budget will be tabled by the Minister for Finance after the ministerial budgets have been discussed. Given the importance of this event to the nation, the members of the Policy Forum Budget Working Group, would like to contribute to this key process by sharing our analysis. 

This year’s national budget marks the end of the current Parliamentary and Presidential term, as well as the end of the current five year development plan. The financial year 2014/15 (as was also the case in 2013/14) saw revenue shortfalls which meant planned spending was short of the approved budget; affecting infrastructure projects and social investments. It also saw a decrease in government contribution to the provision of social services such as education, water and health. Like in the previous financial period, yet again 2014-15 saw serious delays in disbursements by government and Development Partners.  Recognizing the adverse effects of these challenges, we put forward the following policy recommendations:  

Domestic Resource Mobilisation

We agree that there have been efforts on the part of the government to ensure that our national budget is less dependent on donor funding. The introduction of the Value Added Tax (VAT) and Tax Administration Bills last year in the Parliament is, in part, evidence of these efforts by the government to ensure proper collection and management of financial resources from within.

Recently, when the Minister for Finance Hon. Saada Mkuya presented the pre-budget proposals to the Members of Parliament in Dar es Salaam, she pointed out that the 2015/16 budget is pegged at Sh 22.48 trillion from Sh 19.8 trillion for the year 2014/15: an increase of 15%.  Of the Sh 22.48 trillion, the recurrent budget is set at Sh 16.7 trillion while development budget is to receive Sh 5.7 trillion (about 26%) of the total budget.

In terms of the sources of this budget, the Minister highlighted that from the Sh 22.48 trillion budget, Sh 14.82 trillion will be collected locally. Further breakdown of the amount to be collected locally shows that the Tanzania Revenue Authority is expected to collect Sh 13.35 trillion, compared with Sh 11.297 that the authority was expected to collect in 2014/15. Non tax revenue is expected to be Sh 949.2 billion while the local authorities are expected to contribute Sh 521.9 billion to the budget.  Apart from borrowing from both internal and external lenders, the government expects to receive about Sh 2 trillion from Development Partners (DPs).

This move by the government is welcome and commendable. The biggest challenge, however, is whether the government will be able to collect these revenues adequately as projections still appear ambitious. Bearing in mind that this is an election and constitution referendum year, Policy Forum feels more effort is needed to raise revenues; since a lot of resources will be absorbed by these electoral processes.

Is the budget realistic?

The implementation of the previous budget does not provide reassurance that the forthcoming 2015/16 budget will be executed effectively and realistically. From the Minister’s report, delays in disbursement are still critical. For example, until March 2015 only 38% of the development budget had been disbursed. This literally means that more than 50% of the earmarked development projects have not been implemented, while there remains less than 3 months before the year ends. This was also the case for the recurrent budget, as it has been reported that most of the local authorities have not received the approved budget which was meant for operational expenses.

One would therefore doubt the increase in the budget without a clear statement as to how the funds will be raised.  Lower priority expenditure needs to be quickly ascertained so that government can be prudent in their spending in 2015/16.

Has there been adequate oversight in the planning process?

As CSOs we have learned that during the preparation of the budget estimates, unfortunately the Parliamentary Budget Committee was not involved. This raises questions about the integrity of the whole budget process as the committee is mandated to oversee and advise the government on different options for raising revenue as well as allocating these resources hence it has to be consulted fully. This consultation is made more important because the committee engages with different stakeholders, including CSOs and the private sector, who add value to the budget process. We therefore encourage the Ministry for Finance to undertake regular consultations with the budget committee.

A call to refocus 2015/2016 education budget priorities

While we recognize that the education sector is given priority within the allocations; our major focus in the 2015/2016 education sector budget is how attentive the allocations are to the learning needs and challenges. These challenges include the long-standing inadequacy of capitation grants, concerns over unimplemented policy and unresolved stakeholder’s grievances within the sector. Therefore, regardless of the amount allocated to this sector in the 2015/16 budget, due consideration should be given to the following concerns:

Explaining the fee-free education narrative; The new education policy of 2014 states that ‘the government will ensure that basic education is provided fee-free through the public education system’. We believe that it is well-intended but it should be reflected during the presentation of the 2015/2016 budget revenue and expenditure estimates: the government should clearly state how it plans to ensure that this policy statement on fee-free education is implemented as it has already begun to cause some tensions between parents/guardians and school officials with the former reneging on their commitments to make school contributions.

Government sets the capitation grant at Sh 10,000 and Sh 25,000 per primary and secondary school learner respectively. However, it should be remembered that the current capitation grant values were set in 2002 (primary) and 2004 (secondary).  In both cases, this is more than 10 years ago. The cost of living has since gone up, inflation has increased, and the value of the Tanzanian shilling has continued to fall. It would not be practical for Government to insist on maintaining the same level of capitation grant when its value (in terms of purchasing power) has decreased. It is therefore our desire that Government should clearly state during the 2015/2016 budget planning process how it will adjust the capitation grant value to reflect the actual cost of living.

Moreover, the actual PEDP and SEDP performance in relation to the disbursement of the capitation grant has been quite low during the past 10 years. Capitation grants hardly ever reached schools within the planned time-frame or in the intended amounts. And yet, the new education policy has added the scrapping of school fees to this resource challenge. The disbursement of the capitation grant to schools since the beginning of PEDP and SEDP has never been satisfactory. According to the Big Results Now (BRN) implementation report for the 2013/2014 financial year, the government was only able to provide an average of Sh 4,200 instead of Sh 10,000 per primary school learner and Sh 12,000 instead of Sh 25,000 per secondary school learner.

This trend has persisted even in the 2014/15 allocations, where by 30th March 2015, only an average of Sh 865 instead of Sh. 10,000 had reached public primary schools, while an average of Sh 5516 instead of Sh 25,000 had reached secondary schools. This year’s budget should provide solutions to the resource gap which results from inadequate and often late capitation grants and the scrapping of school fees.

In order to improve management and performance in schools, it is important that these institutions are regularly inspected. Parliament should ensure that, in the 2015/2016 budget, it advises government to review BRN implementation in order to address challenges in areas such as school inspection and raising the morale of teachers to teach and learners to learn.

Gender

Deficiencies in the budget (including improper prioritization, delays in disbursement, inadequate funding, etc) affect the different groups in the society differently.

The marginalized groups, for example feel the burden more than the rest of the groups. The delays in disbursement that have been experienced (worsened by non-disbursement in some cases) mean that the level of services expected to be delivered was not met.  As this happens, there are people who do not have the alternative means of seeking services elsewhere, rather than succumbing to the situation and facing the effects as they come.

The 2015/2016 budget proposal indicates that the government intends to increase capital to the Agriculture Bank; so that when it starts it is able to provide loans to farmers.  In Tanzania, 98% of the rural women defined as economically active are engaged in agriculture; and produce a substantial share of the food crops for both household consumption and for export. The call for a robust gender-responsive agriculture budget could be answered by this initiative. The intended Bank should purposefully and clearly plan to ensure that rural women and small-holding farmers are able to access the said loans.

Policy Forum again would wish to reiterate that stronger gender mainstreaming elements should feature in the social services sectors; if women’s lives are to improve.

Most of the prioritized interventions in the 2014/15 budget involved large scale investment in projects which are predominantly owned by men; with expected long term effects for farmers such as irrigation and large scale farming; rather than issues of Inputs like better seeds, or rural finance, which could have similar effect with less resource. We would encourage that special consideration be given to the marginalized groups in the society.

Conclusion

The budget process is a never-ending one.   Therefore, we learn as we interact with the process and this learning should contribute to improving the subsequent budget. It is imperative that the Ministry for Finance takes ideas from a range of stakeholders on how best we can plan, with our resources. The Budget Committee should also be used, to apply its expertise in the process. As the government embarks upon measures to mobilise resources, it is also important that accountability for the use of those resources is strengthened. That fits readily with the need to improve financial transparency within the delivery of public services. The released audit report by the Controller and Auditor General for the financial year that ended on June 2014 indicates that there is still a problem in the use of public resources. But again, there is weak implementation of the recommendations that he provides in his audit report. For example, only 38% of audit recommendations issued in the previous year were fully implemented. This indicates unsatisfactory performance. Effective follow up on audit recommendations is essential to get the full benefit of audit work.

The policy issues we raise here, however, require considerable commitment if they are to be addressed.  The continued challenges in the water, health and education systems – and the agriculture sector in Tanzania cannot be allowed to continue.   A healthy, well-fed society, which is educated and skilled, is vital for growth of the country’s economy. It is for this reason we urge the government to consider these modest recommendations as we work together to make policies work for people in Tanzania.

Africa loses a big chunk of money as a result of illicit financial flows (IFFs).  Different studies have indicated that these IFFs are responsible for draining the African continent of resources for development and are detrimental to revenue mobilization efforts. For example the recent report by the High Level Panel on Illicit Financial Flows (AU/ECA HLP) from Africa, show that the continent loses more than $50 billion annually through IFFs. Such astounding figures are a case for serious concern, given that taxation is the most sustainable source of development finance, but African tax systems still do not raise enough revenue to meaningfully finance their own development.

These outflows of revenue from Africa are said to be higher than the amounts received annually in development aid and much greater than the amounts raised annually by most African governments in taxes. It can therefore be suggested that should these IFFs stop, Africa can stop being a net debtor and turn into a net creditor. The Global Financial Integrity for example has estimated, that Tanzania lost 2.5 billion euros between 2002 and 2011 due to transfer mispricing by companies. This is such a huge amount of money that would have contributed significantly to improvement of social services delivery in the country.

Due to these serious concerns, the Tax Justice Network – Africa (TJN-A) and the East African Tax and Governance Network (EATGN) organized a two days round table meeting to discuss strategies and agree on concrete steps that can be undertaken by different actors to ensure the domestication and implementation of the report recommendations in national policy. The meeting also aimed at providing space particularly for CSOs to exchange ideas and map out opportunities for mainstreaming into already ongoing fiscal policy reforms at the national level. This meeting was held from Thursday 21st to Friday 22nd May 2015 in Nairobi, Kenya. It drew together different stakeholders mostly from the CSOs community to discuss and strategize on how best we can work both individually and collectively to curb IFFs.

Throughout the discussions, it became apparent that CSOs need to work together with their government to ensure that the commitment by our governments to implement the recommendations contained in the HLP report is realized. Committing to implement the recommendations is one thing and real implementation of these recommendations is another thing. Based on the experience that most of the times these commitments are political, there is a need for CSOs to engage and push for implementation.

The discussion also called for more engagements with the Ministers for Finance as well as revenue authorities in the respective countries. However, for these engagements to be meaningful more research is needed so that we have strong base to back our arguments.

To this end, we call for our Minister for Finance as she looking forward to attend the financing for Development Conference in Addis Ababa in July to raise into discussion these issues of IFFs so that there is an international commitment to end these harmful acts globally and regionally and help in raising domestic revenues. More important is the need for a call for increased transparency of the international and national tax systems in order to regulate, monitor and increase the accountability of tax systems

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