Good morning, and thank you to the South African Institute of International Affairs and my colleagues on this panel, for inviting me to speak this morning.
I have been asked to speak to you today about the synergies between the UK’s Presidency of the G8 and the G20 in relation to Africa.
This is a timely moment to reflect on where we’ve got to in the international debate on transparency, in its broadest sense. In 2013 there has been a good deal of political attention on tax, trade and transparency and a raft of impressive commitments in the G8, in the G20 and at the Open Government Partnership (OGP) Summit in London.
These forums have their distinct identities and agenda. But transparency, as a means of driving jobs and growth, has been a strong common theme.
South Africa is also a perfect venue for this debate. It hosted this year’s BRICS Summit, plays a strong role in the OGP, and has a leading role on tax, across the continental and globe.
Prime Minister David Cameron put forward a ‘3Ts’ agenda for the G8 in 2013. The vision is clear: a world with fairer taxes, freer trade and greater transparency. These conditions are critical to achieving sustained and balanced growth and development. Both in the developed and developing world this vision seems to have resonated – as reflected in the debate at this year’s Africa Finance Ministers’ meeting focussed on growth, and in the G20 deliberations. Tax, trade and transparency are three inter-linked weapons in the war against poverty and the quest for greater prosperity.
The Lough Erne Declaration, agreed at the G8 Summit, committed ten principles which provide the basis for a major push on the three Ts.
The Declaration seeks – first and foremost – to get the G8’s house in order. But it is much more than that. It speaks to every country and benefits all who want to do business in an open, ethical and developmental way. The declaration is a rallying call for action. It will help galvanise action to tackle some of the challenges that Africa faces.
So while the G8 Summit provided a starting point for action within the G8, we hope that it will continue to be seen as an agenda that is relevant in Africa and in all other parts of the world, and not solely a G8 one.
I would now like to take each of the three Ts in turn, to sketch out progress being made and the critical participation of Africa.
Work is focused on ensuring global tax rules are fit for the 21st century. The OECD published an action plan on 19 July, endorsed at the G20 Summit, on the reform of the international tax system. This plan includes both domestic and international actions to address base erosion and profit shifting. As part of this, the OECD will develop a tool to promote standardised country-by-country reporting by multinationals to tax authorities. This will give tax authorities the information they need to address tax risks, in both developed and developing countries. As Prime Minister David Cameron said at the World Economic Forum in January, some companies need to “wake up and smell the coffee” and pay tax, where tax is due. President Kikwete of Tanzania highlighted the extent of this problem in Africa at the Open for Growth event in London on 15 June, when he said that some companies claim they have not made profits - in Tanzania - for years.
On tax evasion, momentum is gathering to set a new global standard in the automatic exchange of tax information. South Africa is playing a leading role, with Finance Minister Gordhan announcing only last month that South Africa would be the first African country to join a pilot. The UK very much welcomes this move. It shows the increasing momentum behind stepping up efforts to crack down on offshore tax evasion. We hope to see more African countries joining.
Alongside these efforts to tackle corporate secrecy and tax evasion it is important to continue to take steps to meet international standards in the identification of the beneficial ownership of companies. This is in line with the commitments made by G20 Leaders in St Petersburg.
It is important developing countries reap the benefits of a more transparent tax system. The G20’s Development Working Group will develop a roadmap showing how developing countries can overcome obstacles to participation in automatic exchange of information. As the co-facilitator of the domestic resource mobilisation workstream of the Development Working Group, South Africa will play a crucial role in taking this forward. The UK also strongly supports this work.
Another important tool supporting domestic resource mobilisation is the OECD’s Tax Inspectors Without Borders programme – a nightmare for any tax evader! This will get the necessary tax expertise to where it is most needed, including in Africa. At an event last week, I heard how much this is valued from a mixture of senior South African officials and African High Commissioners. The UK is committed to continuing to share expertise and help build capacity, and has set up a unit to deliver tax capacity building programmes in developing countries. We already have a partnership with the South African Revenue Service to support tax collectors in Southern Africa. Let’s hope this cooperation is just the start!
Let me now turn to transparency:
Here, the vision we are aiming for is common global reporting standards for extractives. G8 members agreed to take action, individually, on mandatory reporting and / or joining the Extractive Industries Transparency Initiative (EITI). The UK aims to complete its EITI application during 2014, while France, Italy and Germany have also applied to join. We look to others to follow. G8 countries also launched new partnerships with a range of countries, focused on extractives or land transparency. In the G20, the UK is very pleased that work on extractives transparency will be taken forward in the Anti-Corruption Working Group. Raising global reporting standards in this area will help all countries to secure the full benefits of their natural resources.
A fortnight ago, London hosted the OGP Summit. This was the culmination of the UK’s role as senior co-chair of the OGP. We now pass the baton to Indonesia, with Mexico supporting them as junior co-chair. At the Summit in London we were joined by a new African member, Sierra Leone. Four other African governments, Nigeria, Senegal, Cote D’Ivoire and Morocco, signalled their intention to join. I pay tribute to South Africa’s significant contribution, through its membership of the OGP Steering Group, led by Deputy Minister Ayanda Dlodlo, in working to strengthen the OGP initiative in Africa.
The OGP Summit made a powerful commitment to transparency and its economic benefits. It agreed impressive steps to open up government data, with Ireland and Panama joining G8 countries in adopting the Open Data Charter. And 37 governments made ambitious new individual commitments to open government, to fight corruption, strengthen democracy, increase fiscal transparency and empower citizens to transform their lives. South Africa announced a “School’s Connectivity Project”. And Tanzania committed to “Enabling the Public to Access Public Information”. The Summit also agreed to promote the aims of open governance within the UN Post-2015 development agenda process. These are powerful contributions to African and global development.
And finally, trade:
We all know the power of trade to enable prosperity and development. Both the G8 and G20 St Petersburg Summit sent powerful messages on the importance of free trade. This includes the extension of the G20 anti-protectionism pledge. The UK is a champion of Africa’s drive to increase its trade by cutting border crossing times and creating a continental free trade area by 2022.
Looking ahead, huge progress in this area could be made with a deal at the upcoming WTO Ministerial meeting in Bali, in December. I know we’ll all be watching developments closely. A deal would boost the authority and credibility of the WTO, set the ground to conclude the rest of the DDA and provide a global economic stimulus. We need a balanced package at Bali, covering Trade Facilitation, development issues and agriculture. Some studies suggest the Trade Facilitation part of the deal – the cutting of red tape at borders – would boost the global economy by $100 billion a year, with African countries picking up around 10% of this.
While our G8 Presidency ends in December, the UK’s commitment to the 3Ts agenda most firmly does not! We will continue to work for sustainable, transformative change in the years to come.
While it is not for me to go into detail about how best the G8 and G20 can work together, this has clearly been a year of synergies. Looking ahead – indeed to my two colleagues on the panel here – it will be in the hands of the future respective Presidencies to determine how the two continue to interact. But what I can say is this. Our Presidency showed that the G8 can – in getting its own house in order –contribute to raising standards both at home and further afield, including in Africa.