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Posts Tagged ‘Developing country’

New Norwegian funding to secure tax revenues in developing countries

Posted by African Press International on September 2, 2013

Norway will support African countries in the negotiation of fair agreements with international companies that are exploiting their natural resouces,”said Minister of International Development Heikki Eidsvoll Holmås. Mr Holmås met the President of the African Development Bank, Donald Kaberuka,in Oslo this week to sign an agreement on an additional NOK 30 million in support. 

Many developing countries are rich in natural resources but their populations remain very poor. One of the reasons for this is that multinational companies have negotiated unfair agreements with national authorities on the exploitation of natural resources such as minerals, oil and gas. This has led to conflicts and continued poverty.

“Norway is seeking to help turn Africa’s ‘resource curse’ into a ‘resource blessing’ by supporting the negotiation of better contract terms. The aim is for the countries to strengthen their own revenues and economies, and in the long term for them to be able to manage without aid,” said Mr Holmås.

Whereas the authorities in many African countries lack the legal expertise they need, multinational companies have their own experts in tax law and commercial law. Norway has now agreed to provide NOK 30 million over a period of two years to strengthen the negotiating capacity of African countries. This work will be carried out through the African Legal Support Facility, which is hosted by the African Development Bank, and which provides legal assistance in the negotiation of contracts and in settling disputes between multinational companies and the authorities in African countries.

“This work also enhances financial transparency surrounding contracts which is crucial to be able to uncover and stop illicit financial flows. Every year ten times as much money disappears out of developing countries through illicit financial flows as is received in the form of aid and development support,” Mr Holmås stressed.

Norway provided NOK 768 million in support to the African Development Bank in 2012. Inclusive growth and the transition to green growth are the two main objectives of the Bank’s Strategy for 2013–2022, which also identifies fragile states, agriculture and food security and gender as areas of special emphasis. The strategy is consistent with Norway’s development policy priorities, as set out in the recent white paper on fair distribution, Sharing for prosperity.

 

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Norway first in the world to audit developing country debt

Posted by African Press International on August 18, 2013

A new report of developing countries’ debt owed to Norway, was presented in Oslo yesterday. “Norway is the first country in the world to have carried out an independent audit of debt agreements. We are doing this to make sure that we are living up to our responsibility as a lender to developing countries,” said Minister of International Development Heikki Eidsvoll Holmås.

Unmanageable debt burdens are one of the fundamental causes of poverty in developing countries. While the international community gives USD 141 billion in aid to developing countries annually, the developing countries pay back USD 464 billion each year to their creditors. Many of the debt agreements were entered into when economic, political and social conditions were uncertain.

“Although the solvency of many countries, such as Brazil, is improving, the debt burden is hampering development in some poor countries. These countries are having difficulty servicing old debt agreements made on unfavourable terms. We now want to address this,” said Mr Holmås, who referred to the first creditor-initiated debt audit as a milestone in Norwegian and international debt policy.

The audit report has been carried out by Deloitte under commission from the Ministry of Foreign Affairs. It covers 34 debt agreements with seven countries: Egypt, Indonesia, Myanmar, Pakistan, Somalia, Sudan and Zimbabwe. Most of the agreements are between 20 and 30 years old. The debts have a total value of almost NOK 1 billion, and when interest on overdue payments is added to this, the total amount is almost four times as much. The report shows that the agreements were largely concluded in accordance with the previous rules and regulations, and partially in accordance with the current rules and the UNCTAD principles. However, it also identifies weaknesses in some of the agreements, which the Government will examine more closely.

“We are once again demonstrating that we are leading the way when it comes to international debt policy, which was a goal for the current coalition Government. We have cancelled almost NOK 7 billion in debts owed to Norway by developing countries over the last eight years, and this has helped the countries to release national resources for poverty reduction. I am pleased that Norway is setting new standards for using the UNCTAD Principles on Promoting Responsible Sovereign Lending and Borrowing, and I urge other countries to follow suit,” said Mr Holmås.

 

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Norway: Oil Fund Report 2013 – serious deficiencies in the Fund’s strategy

Posted by African Press International on August 14, 2013

Today, Re-Define publishes a major new report on Norway’s Sovereign Wealth Fund, now the World’s largest. We find serious deficiencies in the Fund’s strategy that mean it is falling behind its peers in investment returns and has inadvertently taken on concentrated risks by failing to diversify its investments into developing countries, while focusing excessively on liquid investments in OECD economies. 

We recommend major change to the Fund’s strategy. Please let us know if you need more information or would like to arrange an interview with Sony Kapoor, the author of the report. 

Win-win or lose-lose is the question facing Norway’s $760bn sovereign wealth fund according to a major Re-Define-report commissioned by Norwegian Church Aid published today. The report argues that the GPF must urgently re-balance its portfolio away from Developed economies towards emerging and developing countries. This is necessary to deliver higher returns for Norway for lower risk and could generate millions of jobs in developing countries.

The report also highlights how high the exposure of the GPF to policy actions designed to tackle climate change is and recommends a sell-off of all oil, gas and coal assets. It also makes the case for the GPF making green investments in order to reduce risk.

Overall, the report argues that the GPF could be doing much more to exploit the unique potential that its large size, its long-term horizon and its responsibility mandate confer on it.

“Unless it changes its current strategy and invests heavily in illiquid assets in faster growing developing economies, the GPF will continue to fail to deliver on its target 4% rate of return.

The GPF sharply underperforms many of its peers directly as a result of its refusal to be strategic, buy in illiquid assets or invest much in developing countries.

By trying to be conservative in avoiding ‘negative headline risk’ the GPF has inadvertently traded in its obligation to ‘maximize returns subject to moderate risk’ for a strategy that delivers ‘modest returns while taking on concentrated risks’.”

Says Sony Kapoor, Managing Director of Re-Define and the author of the report

In highlighting the shortcomings of the GPF’s strategy, he says that

“For a Fund that supposedly seeks to diversify its investments to minimise risks, the Fund is unacceptably exposed to the structural and demographic problems afflicting over-indebted developed economies.

The GPF squanders its potential for being the ultimate long-term investor by having more than 99% of its investments in liquid securities that investors with much shorter time horizons can also hold.” says Kapoor  

The Fund currently invests a lot in developed / OECD economies, but growth rates and yields in developed countries are expected to be lower, and risks in these economies are expected to rise. Of the 95 countries that grew at 4% or faster in 2011, only Chile and Sweden were OECD countries.

In order to better reflect the current and the future shape of the world economy, as well as to try and harness the fruit of faster expected growth in the non-OECD economies, the GPF must significantly expand its geographic reach of countries it invests in.

For this, the report recommends the setting up of a $200bn GPF-growth that will focus on making infrastructure and private equity investments in developing countries.

“This is the only way GPF can deliver on its fiduciary duty towards Norwegian citizens – by maximizing returns for moderate risk in a both sustainable and responsible way, he says. Not only will this be good for Norway, it will also enable faster growth in poorer economies and creating millions of much-needed jobs”, Kapoor goes on to say.

Based on its direct and indirect effects, additional investments of $200 billion by the GPF-Growth can help create more than a 100 million jobs in the private sector in poor developing economies, thereby having a substantial positive outcome on growth potential, poverty reduction and quality of life in these countries.

Norwegian Church Aid (NCA), a major Norwegian development organization, commissioned the report.

– As owners of the World’s largest Sovereign Wealth Fund we have a great responsibility. Developing countries face massive unemployment and desperately need to create more jobs. But, they lack the capital to do so, Anne-Marie Helland, General Secretary of NCA says.

– If we had invested considerably more in these countries we would have contributed to more jobs, tax income and economic growth in these countries. As it is, we contribute to a more unequal world and that needs to stop, Helland says.

– I’m thrilled by the positive opportunities Norway’s money can create. Our fund can create millions of jobs where they are most needed. By investing more in developing countries we’re putting our money in the future, Helland says.

– Jobs are the best and surest way out of poverty. But investments can combat poverty only if they create decent jobs with good salaries, tax income for the state and by considering the environment. We want good investments, Helland says.

HERE BELOW IS THE COMPLETE REPORT FOR YOUR STUDY:

www.africanpress.me/ Oilfund Final Report 2013 – Norway situation – Investing for the future

 

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In developing countries, families are prioritizing food above all else

Posted by African Press International on June 11, 2013

In developing countries, families are prioritizing food above all else

NAIROBI,  – When food prices rise, poor people in developing countries not only change or reduce their diets, they are also more likely to engage in riskier but better paid occupations such as mining and prostitution, according to a new report.

Squeezed, jointly published by the Institute for Development Studies (IDS) and Oxfam, also reports that the increased strain on families brought about by price hikes is accompanied by a rise in domestic violence and alcohol and substance abuse.

“The failure of wages to keep up with rising food prices is putting a strain on family relationships. For many men, the inability to be the family breadwinner is a real source of stress and can lead to conflict and violence within households. Parents’ inability to invest in the futures of their children is also a major source of stress,” Richard King, policy research advisor at Oxfam and co-author of the report, told IRIN.

The report noted that while there is optimism about rising wages, these have failed to keep up with the pace of food price hikes and inflation.

“People are working harder over longer hours, and their wages are not keeping pace with inflation, so they have to adapt wherever, and however, possible,” said the report.

Social changes

Women, in particular, have borne the brunt of burgeoning food prices, with many of them having to juggle both domestic chores and work to feed their families. In Zambia for example, female nurses and teachers have had to moonlight as street vendors to supplement their incomes, while in Kenya, some young mothers were forced into prostitution to make ends meet, the report said.

According to Naomi Hossain, a research fellow at IDS and a co-author of the report, the need to earn cash to buy food is quickly replacing the importance people put on social relationships.

“As families increasingly struggle to earn enough to eat, we are seeing how money is becoming more important than relationships, to the point that the social implications are potentially alarming. Policymakers need to catch up,” she said.

“As families increasingly struggle to earn enough to eat, we are seeing how money is becoming more important than relationships, to the point that the social implications are potentially alarming. Policymakers need to catch up”

Uncertain and relatively high prices mean prioritizing earning the cash needed for food above all else… Global food policymakers need to check their assumptions about adjustments to food prices, and decide whether they want the kinds of societies where cash matters above all else,” Hossain wrote in a recent blog post.

And Oxfam’s King said, “People are becoming more individualistic, and reciprocal sources of support that people tend to rely on are becoming strained. There is rising stigma and uneasiness attached to turning to neighbours for help, in the knowledge that the same will be expected in return.”

According to the UN Food and Agricultural Organization, poor families were more likely to marry off their daughters so that they there would “one mouth less to feed”. In rural Bangladesh, a Tufts University study found that women in households with lower food security reported experiencing “psychological abuse, and about half of women reported physical abuse from their husbands”.

The Overseas Development Institute reported that initial mechanisms for coping with higher food costs – including cutting back spending on expensive foods, borrowing to cover costs of living, and finding ways to work and earn more – were quickly followed by signs of distress, such as “sales of assets, beginning with consumer goods, with land, tools and livestock, sold only after that buffer was exhausted.”

IDS’s Hossain accuses policymakers of being blind to the social changes brought about by food price hikes. Instead, they fixate on “changes they can measure,” she said.

Agriculture suffering

Agriculture as an economic venture has also suffered. While a hike in food prices should ideally inspire more people to engage in agriculture to produce more food, the result, according to the joint IDS-Oxfam study, has been the opposite.

“Instead of flocking to farming as prices rise, the view of agriculture is that it has become much less reliable over the past few years as a result of uncertainties related to input costs, returns and the effects of climate change. People are turning to more lucrative yet dangerous occupations instead – gold mining in Burkina Faso, for example. Education is seen as a ticket off the farm, and agricultural aspirations are rare,” Oxfam’s King said.

The study recommends, among other things, improved social protection policies to address the vulnerability of the poorest people, including cash transfers or subsidies. Improved management of food reserves and regulation of the international grain trade is also needed. Steps to make agriculture a more reliable vocation should also be taken, such as investing in training, technology and sustainability.

ko/rz  source http://www.irinnews.org

 

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New white paper: fair distribution is key to development

Posted by African Press International on April 21, 2013

Minister of International Development Heikki Eidsvoll Holmås is today launching the white paper Sharing for prosperity: Promoting democracy, fair distribution and growth in development policy. The Government is presenting a range of new measures to be used in the fight against poverty.

“1.2 billion people are living in extreme poverty in the world today. Despite many countries experiencing strong economic growth, poverty does not disappear on its own. Instead, the disparities between rich and poor within countries are increasing. This is unfair. The world needs a more fair distribution of power and resources,” said Minister of Development Heikki Eidsvoll Holmås.

In order to fight poverty, jobs need to be created that pay a living wage. Support for workers’ and employers’ organisations and labour inspection authorities will therefore be increased. It is also important to support civil society actors. In the white paper, the Minister of International Development makes clear that Norway will increase its efforts to ensure that countries can collect their own tax revenues and combat the leakage of tax revenues to tax havens. Norway will also support the establishment of a group of independent experts who can help developing countries to renegotiate unfair agreements with multinational companies.

“It is crucial that developing countries themselves take responsibility for their own development and for combating poverty. Norway will support countries that wish to establish schemes for facilitating direct cash transfers, particularly to women. Research shows that schemes of this kind help to reduce hunger and give children access to education and health services. When, in addition, decent jobs are created, it is possible to achieve growth that benefits the whole population,” said Mr Holmås.

In the white paper, the Government also announces that it will give priority to cooperation with countries that show a positive trend over time with regard to democracy and human rights.

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source mfa.norway

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Norway doubles funding to the International Labour Organization

Posted by African Press International on April 10, 2013

“The Norwegian Government is making a historical commitment to promote better working conditions for people in developing countries through the ILO,” said Minister of International Development Heikki Eidsvoll Holmås.

Mr Holmås and Director-General Guy Ryder of the International Labour Organization (ILO) signed a new cooperation agreement in connection with the ILO European Regional Meeting that takes place in Oslo this week. Norway has been one of the ILO’s most important cooperation partners for many years, and provided NOK 90 million to support its efforts last year.

“We have decided to double our contribution to NOK 180 million for 2013 in order to substantially increase our efforts to create access to work for poor people and to strengthen their rights. Job shortages and unacceptable working conditions are huge obstacles to the world’s economic and social development,” said Mr Holmås.

Last week he presented a new Government white paper on democracy, fair distribution and growth in the context of development policy. It emphasises the importance of strengthening Norway’s efforts to promote labour regulation in developing countries.

“Doubling our support to the ILO is the first concrete step in the follow-up of this white paper. Many poor countries are experiencing economic growth, and wages should increase in line with this growth to ensure fair distribution,” said Holmås.

The additional support includes NOK 15 million to labour organisations and NOK 5 million to the fight against discrimination, with emphasis on gender equality. NOK 20 million will be used to promote youth employment, for efforts in the informal sector, for labour inspection mechanisms, and to enhance protection against unacceptable working conditions, in line with the ILO’s reform agenda.

 

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