Oxfam International Blogs - international financial institutions http://l.blogs.oxfam/en/tags/international-financial-institutions en My message to world leaders: To finance development you must tackle tax http://l.blogs.oxfam/en/blogs/15-05-05-my-message-world-leaders-finance-development-you-must-tackle-tax <div class="field field-name-body"><p><em>Last month Oxfam’s International Executive Director Winnie Byanyima was in Washington for the World Bank/IMF Spring Meetings, and then in New York for one of the drafting sessions ahead of the Financing for Development (FFD) Conference in Addis Ababa taking place in July.</em></p> <p>In Washington and New York last month I had a clear mission: Firstly, I wanted to raise the profile of the forthcoming <a href="http://www.un.org/esa/ffd/overview/third-conference-ffd.html">Financing for Development (FfD) conference</a> taking place in Addis Ababa this July. We need the highest possible political attendance here if we hope to make progress towards the Sustainable Development Goals, or a deal on climate change. There are major summits on these issues this year, and the key question for both is: “Who will pay?”</p> <p><strong>Secondly, I wanted to stress the importance of tackling tax dodging</strong> and harmful tax competition in the context of this financing debate. Just last month a new <a href="http://investmentpolicyhub.unctad.org/Blog/Index/42">report from UNCTAD</a> estimated that developing countries lose <a href="http://uncounted.org/2015/03/26/unctad-study-on-corporate-tax-in-developing-countries/">hundreds of billions</a> of dollars, because of tax dodging by multinational corporations. If these companies can run rings around our tax systems; If the privileged few can stash their earnings in tax havens; if countries continue to compete to offer the lowest tax rates and deals, in a sometimes misguided bid to attract investment; then poor country governments will never get the chance to raise the money they need to tackle poverty and inequality.</p> <p><strong>To address this, poor countries need a seat at the table</strong> and an equal say when global tax rules are being discussed. This is why we are calling for the Addis Ababa Financing for Development Conference to ensure that one of its official roundtables is on international tax cooperation. This would be a space where all countries could address the issue as equals. Ultimately, developing countries and groups like Oxfam want to see a new intergovernmental body on cooperation in tax matters under the auspices of the United Nations. Such a round table at the FfD could be an important step towards agreeing this.</p> <h3>So how did I do in my mission?</h3> <p>There were some encouraging signs. I was not the only one trying to increase the political profile of the Financing for Development Conference. Jim Kim of the World Bank and Christine Lagarde of the IMF both raised the importance of FFD in official interventions, made it central to a meeting of ministers discussing development, and organised <a href="http://www.imf.org/external/meetings/NewSchedule.aspx?meetingid=18">several high level events</a> on it (one of which featured my colleague Ray Offenheiser, President of Oxfam America). </p> <p>Significantly The UN Secretary General, as well as the President of the UN General Assembly came to the Spring Meetings to lobby finance ministers for this very purpose. I was able to thank them for this when I later met them both in New York. They told me they see a growing momentum towards Addis but there remains a big risk that it will be the poorer countries that send their finance ministers, whilst the G7 send only junior ministers from development cooperation departments. This would betray a real double standard: The big guns will come to the Spring Meetings to talk about their own financial stability, but don’t bother when it comes to the financial survival of some of the world’s poorest economies. This is both unfair and unwise thinking, as ultimately the fates and fortunes of poorer countries may affect the long-term prospects of richer ones.</p> <blockquote class="twitter-tweet" lang="en" xml:lang="en"><p lang="en" dir="ltr" xml:lang="en">I recently met President of UN General Assembly Sam Kutesa 2 discuss Financing for Devt &amp; tax cooperation <a href="https://twitter.com/hashtag/ffd2015?src=hash">#ffd2015</a> <a href="http://t.co/hC0WSoLfgt">pic.twitter.com/hC0WSoLfgt</a></p> <p>— Winnie Byanyima (@Winnie_Byanyima) <a href="https://twitter.com/Winnie_Byanyima/status/593665017960079360">April 30, 2015</a></p></blockquote> <script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p><strong>On tax, the picture is equally mixed.</strong> One highlight was Christine Lagarde calling for action on tax dodging at the Earth Day concert, to 250,000 people. I myself was honoured to facilitate an informal meeting between ministers and representatives from a range of governments, who all agree that tax must be a real priority for Addis. I saw that Scandinavian countries are leading the charge on this amongst rich donor countries. Brazil also wants to see action here, as do many developing countries, particularly in Africa where last year’s African Union report by the Mbeki high level panel illustrated the impact of illicit financial flows. Developing countries are rightly demanding that they have the chance to influence the global tax rules that allow vast sums of money to be squirreled offshore.  </p> <p>But for the EU, US and others there is strong resistance to the idea of a truly global conversation on tax. They point to an ongoing OECD-led process to tackle tax dodging, but this is <a href="http://www.worldfinance.com/strategy/the-true-costs-of-tax-avoidance">a process led by rich countries</a> and focused on rich country issues. It is not addressing the specific needs of poor nations that produce so much of the raw materials but see so little of the proceeds that companies make from them. (As the President of the UN General Assembly said to me, the UK may be rightly concerned about getting the tax it is due from Starbucks, but the UK is a country in which no single coffee tree grows.)</p> <p><strong>So as I return I have cause for optimism, but many reasons for concern.</strong> I can see the political profile of the Financing for Development summit getting bigger, but not big enough. We have to use every moment between now and the summit in July to convince the world’s leading economies to step up to the plate in Addis. In particular the meeting of the <a href="http://www.g7germany.de/Content/EN/StatischeSeiten/G7_elmau_en/texte_en/2014-10-08-ankuendigung-gipfel-elmau_en.html">G7 in June</a> is a chance to remind these countries of their responsibilities - to meet their long-standing development financing commitments - and to step up to the challenge of future financing.</p> <p>On the question of what Addis will actually deliver, I can also see things moving in the right direction. Many donor countries like the sound of developing countries raising their own money. Everyone agrees that such “<a href="http://post2015.org/2014/05/22/domestic-resource-mobilization-a-financing-option-for-sustainable-development-in-africa/">domestic resource mobilisation</a>” must be a big part of the picture. But then these big economies need to realise that their tax rules, their tax treaties, and the actions of their companies are the biggest threat to this happening. Addis is a unique opportunity for poor countries to make this case and demand the right to keep the taxes they are owed. The least that G7 countries can do is support the call for tax to be placed firmly on the FfD agenda, and allow developing countries to be heard.</p> <h3>More posts from Winnie Byanyima</h3> <p><strong><a href="https://blogs.oxfam.org/en/blogs/15-01-23-why-oxfam-calling-world-tax-summit">Why is Oxfam calling for a World Tax Summit?</a></strong></p> <p><a href="https://blogs.oxfam.org/en/blogs/15-02-24-bringing-inequality-message-davos-elite"><strong>Bringing the inequality message to the Davos elite</strong></a></p> <h3>What you can do now</h3> <p><a href="https://act.oxfam.org/international/en/actions/world-tax-summit"><strong>Join the call to make corporations pay their fair share</strong></a></p> <h3>You may also like</h3> <p><strong>Download the report: <a href="https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bn-pulling-plug-corporate-tax-eu-190315-en.pdf">Pulling the Plug: How to stop corporate tax dodging in Europe and beyond</a></strong></p> <p> </p> </div><div class="field field-name-title"><h2>My message to world leaders: To finance development you must tackle tax</h2></div> Tue, 05 May 2015 14:34:07 +0000 Winnie Byanyima 26581 at http://l.blogs.oxfam http://l.blogs.oxfam/en/blogs/15-05-05-my-message-world-leaders-finance-development-you-must-tackle-tax#comments Private sector investment is critical to end extreme poverty http://l.blogs.oxfam/en/blogs/13-10-28-private-sector-investment-critical-end-extreme-poverty <div class="field field-name-body"><p>Six months ago, the World Bank Group established our two goals: to <strong><a href="http://www.worldbank.org/en/news/feature/2013/04/17/ending_extreme_poverty_and_promoting_shared_prosperity" target="_blank" rel="nofollow">end extreme poverty by 2030 and boost shared prosperity</a></strong> for the bottom 40 percent of the population in developing countries. Meeting these goals has become the central purpose of our institution. The goals are ambitious, but we can achieve them -- if we engage all partners.</p> <p>Governments must lead the way, while civil society, foundations, and multilateral organizations such as the World Bank Group will all play key roles as well.</p> <p>To reach our two ambitious goals, we also need the private sector. <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/16095/32824_ebook.pdf" target="_blank" rel="nofollow"><strong>Our strategy</strong></a>, which our Governors endorsed this month, includes the role of the private sector as a central focus in our fight to end extreme poverty.</p> <p>Earlier this month, at a <a href="http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/CSO/0,,contentMDK:23365124~pagePK:220503~piPK:220476~theSitePK:228717,00.html" target="_blank" rel="nofollow"><strong>World Bank/IMF civil society forum</strong></a>, Oxfam International’s Executive Director Winnie Byanyima asked whether greater private sector engagement might weaken World Bank Group support for our existing social and environmental policies. As someone who co-founded an NGO that serves the poor in some of the most difficult environments in the world, I understand these concerns.</p> <p>I strongly believe, though, that engaging the private sector helps protect the interests of the poor. The World Bank Group has been working with the private sector in the context of our social and environmental performance standards. Many businesses have embraced our standards. If they want to benefit from our deep local knowledge and relationships--or to use our technical expertise, investment dollars, and risk insurance--then these performance standards are the requirement of our collaboration. We don’t compromise on that.</p> <p>In the past decade, the creation of millions of new jobs has driven poverty reduction worldwide. Indeed, 90 percent of all new jobs come from the private sector. Today, 200 million people in the world are looking for work, and we need to create 600 million jobs by 2020 just to keep employment constant.</p> <p>We have been working with many governments to support their efforts on shaping the business environment for the private sector, which includes strengthening the regulatory environment and greater transparency to fight corruption. At the same time, we will continue working to identify private sector investment that can have a major impact in creating jobs and lifting people out of poverty.</p> <h3>Private sector investment at work</h3> <p>There are several examples of how this is working.</p> <p>In Kenya, our private sector arm, <a href="http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/home" target="_blank" rel="nofollow"><strong>IFC</strong></a>, has worked for nearly two decades with <a href="http://www.vegpro-group.com/home.html" target="_blank" rel="nofollow"><strong>Vegpro Group</strong></a> and 1,700 small-scale farmers who supply its vegetables. Vegpro exports to Europe, complying with environmental and safety standards--which usually means higher incomes for suppliers. About three-quarters of its 7,000 employees are women who enjoy starting wages that are almost 50 percent higher than the average daily minimum.</p> <p>A second example is the <a href="http://www.ecx.com.et/" target="_blank" rel="nofollow"><strong>Ethiopia Commodity Exchange</strong></a>, which developed a new model focused on helping small farmers. In just three years, the Exchange grew from a small project to annual trading of $1.2 billion, with 325 members and 12,500 clients.  It has doubled some farmers’ share of the final price, and given them easier access to loans.</p> <p>We must capture lessons from these types of projects in all countries. The World Bank Group must acknowledge as well that not all our private sector investments have had the success we envisioned. We are learning from failure as well.</p> <p>There is no arguing the point that private sector investment is needed to stretch scarce development resources. <a href="http://data.worldbank.org/indicator/DT.ODA.ODAT.CD" target="_blank" rel="nofollow"><strong>Official development assistance</strong></a>, now $125 billion a year, alone won’t fund the critical investments needed to create enough jobs for the poor or to meet developing countries’ growing infrastructure needs.</p> <p>Today, about $1 trillion per year in private investment flows into developing countries. If a fraction of the additional trillions of dollars currently invested in low-yielding assets were invested instead in developing countries, we could fund crucial investments that create good jobs for the poor.</p> <p>Oxfam and others in civil society have worked to support private sector entrepreneurship for years now, with great success in helping the poor and vulnerable. Engaging the private sector is not about how we feel about business; it’s about how high our aspirations are for poor people. If we rely only upon foreign aid, then our aspirations are far too low.</p> <p>But if we engage responsibly with the private sector, to leverage their investment and their talent, we can create far more good jobs for the poor. If we create more jobs, we can lift more people from poverty. And if we create enough jobs, we can for the first time in human history lift the stain of extreme poverty from our collective moral conscience.</p> <p><em>Jim Yong Kim is president of the World Bank Group.</em></p> <p><em>Please see also <strong><a href="http://oxf.am/Ute" target="_blank" rel="nofollow">A vision in need of some clarity</a></strong>, by Ray Offenheiser, President of Oxfam America</em></p> <h3>You may also like</h3> <p>Blog: <a href="http://blogs.oxfam.org/en/blogs/13-10-23-universal-health-coverage-key-success-world-banks-new-vision" target="_blank"><strong>Universal Health Coverage: key to the success of the World Bank’s new vision</strong></a></p> <p>Oxfam at work: <a href="http://www.oxfam.org/en/development/uganda/internet-now-helping-fund-education" rel="nofollow"><strong>Connecting villages in northern Uganda: Internet Now!</strong></a></p> <p><a href="http://www.oxfam.org/en/about/how-oxfam-fights-poverty" rel="nofollow"><strong>How Oxfam fights poverty</strong></a> -- a six-sided strategy</p></div><div class="field field-name-title"><h2>Private sector investment is critical to end extreme poverty</h2></div> Mon, 28 Oct 2013 08:02:55 +0000 Jim Yong Kim 10488 at http://l.blogs.oxfam http://l.blogs.oxfam/en/blogs/13-10-28-private-sector-investment-critical-end-extreme-poverty#comments