• Friday, July 12, 2024
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BusinessDay

Lessons from Lough Erne

Shifting geopolitics in an upended region

This month witnessed a meeting of the world’s wealthiest countries’ leaders whose economies together make up around half of the global economy – the 39th G8 Summit. The summit was held at the Lough Erne Golf Resort in Enniskillen, Northern Ireland on June 17 and 18. These forerunners in innovation, economic freedom and socio-economic well-being have highlighted possible solutions to major world issues which include trade, taxes, transparency, terrorism and tackling poverty. Turning our focus to these discussions will provide assistance in creating reforms when their conclusions are tailored to our local economy.

Beginning with trade, as stated in the G8 Lough Erne Declaration, “governments should cut wasteful bureaucracy at borders and make it easier and quicker to move goods between developing countries.” The possibilities for increased trade among African countries have been discussed in recent times, regionally and as a whole. In view of these decisions being implemented, it is important that the Nigerian government considers the above stated action to take full advantage of the opportunities from future alliances.

On the issue of tax compliance, it was decided that “Tax systems – (which are) essential to fairness and prosperity for all… (ought to be) a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world. We will support developing countries to collect the taxes owed them, with access to the global tax information they need.

“Comprehensive and relevant information on the financial position of multinational enterprises aids all tax administrations effectively to identify and assess tax risks. The information would be of greatest use to tax authorities, including those of developing countries, if it were presented in a standardised format focusing on high level information on the global allocation of profits and taxes paid.”

Read also: The global trade (2)

Revenue realised from taxation apart from being a source of government funding goes a long way in providing relief and compensation, especially to communities that in anyway suffer losses from these aforementioned companies. In the case of Nigeria, specifically companies in the extractive sector. This is further discussed in the context of transparency and tackling poverty.

In terms of transparency, transparency in Africa was viewed in the financial and extractive sectors. On the side of finance, “taking measures to enhance financial transparency would also improve the opportunities for African business and for markets to expand. As African economies grow, African financial institutions will increasingly risk exposure to illicit financial activity, affecting the opportunities for African business and markets to expand.” The dividends from financial transparency are innumerable as seen in the banking sector, hence the need for continuous reform in the finance sector in lieu of transparency is worthwhile.

In view of extraction, “the lack of strong systems of transparency and accountability in the management of the extractive sector in some resource-rich countries has too often allowed revenues to be diverted from high-priority national needs. Raising global standards of transparency in the extractive sector and building the capacity of countries to manage their resources effectively will improve accountability, reduce the space for corruption and other illicit activities and ensure that citizens benefit fully from the extraction of natural resources.

“…those governments that wish to move towards the Extractives Industries Transparency Initiative (EITI) standards will voluntarily report their revenues. This would reduce reporting burdens on businesses, help to fight corruption, and encourage more effective and efficient investment, including in developing countries.”

Nigeria deals with what is seemingly endless tyranny in her Northern parts. The ability of terrorism to paralyse a nation and greatly disrupt its productive sector is not farfetched as has been witnessed in various countries. As stated in Lough Erne, “terrorism combines with other factors to threaten stability and economic interests.” A long-term sustainable solution to this matter needs to be reached promptly.

“And we will work with resource-rich countries to help them better manage their extractive revenues so as to provide a route out of poverty and reliance on aid. The need as well to alleviate poverty as a perpetual discuss in our local economy will hopefully be eased as the discourse included Nigeria being a beneficiary to aid… as it is one of the oil producing nations.”

In view of this, it is important to note as stated in the Communiqué on Global Economy Working Session: “Promoting growth and jobs is our top priority. We agreed to nurture the global recovery by supporting demand, securing our public finances and exploiting all sources of growth. The fight against unemployment, particularly long term and youth unemployment remains critical in our domestic and collective agendas.”

Finally, not many words ring truer to the Nigerian economic situation now: also culled from the Communiqué on Global Economy Working Session: “Fiscal sustainability and restoring financial stability need to go hand in hand with well-designed growth strategies, including growth-oriented structural reforms.”

Apakama, a social commentator, wrote from Ekiti State