Donors Must Rethink Africa’s Flagging Green Revolution, New Evaluation Shows (Commentary)

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Opinion

BOSTON, Mar 23 2022 (IPS) – • A scathing new analysis of the Alliance for a Green Revolution in Africa (AGRA) finds that the program is failing at its objective to increase food security on the continent, despite massive funding from the Bill & Melinda Gates Foundation and the US, UK, and German governments.

• On March 30, critics of AGRA will brief U.S. congressional aides about why they think it is doing more harm than good.

• As fertilizer and food prices spike with rising energy prices from the Russia-Ukraine war, African farmers and governments need the kind of resilient, low-cost alternatives that techniques like agroecology offer, a new opinion piece argues.

A critical new donor-funded evaluation of the Alliance for a Green Revolution in Africa (AGRA) has confirmed what African civil society and faith leaders have claimed: “AGRA did not meet its headline goal of increased incomes and food security for 9 million smallholders.”

The evaluation should be a wake up call, and not just for the private and bilateral donors that have bankrolled this 15-year-old effort to the tune of $1 billion. It should also rouse African governments to repurpose their agricultural subsidies from the Green Revolution package of commercial seeds and fertilizers to agroecology and other low-cost, low-input approaches. They have been providing as much as $1 billion per year for such input subsidies.

Failing Africa’s farmers

Carried out by consulting firm Mathematica, the evaluation confirms that the Green Revolution has failed to achieve AGRA’s stated goal to “catalyze a farming revolution in Africa.”

Wambui Mwihaki, a farmer from central Kenya, takes stock of her thriving maize crop following adoption of agroecology. Credit: David Njagi for Mongabay.

The assessment was funded by AGRA’s primary sponsor, the Bill & Melinda Gates Foundation, on behalf of other lead donors in AGRA’s Partnership for Inclusive Agricultural Transformation in Africa (PIATA): the U.K. Foreign, Commonwealth & Development Office; the Rockefeller Foundation; the U.S. Agency for International Development (USAID); and Germany’s Federal Ministry for Economic Cooperation and Development. The evaluation includes a summary of findings, a statistical appendix, and AGRA’s formal responses to the findings, all available publicly.

Such transparency is welcome. AGRA has been plagued by a lack of accountability since its founding in 2006. I undertook my own assessment of AGRA in 2020 when I could find no comprehensive analysis, from AGRA nor its donors, of its progress toward ambitious goals to double yields and incomes for 30 million small-scale farming families while halving food insecurity by 2020. Using national-level data, I found little evidence of progress, with meager productivity increases, little progress on poverty, and a 31% increase in the number of undernourished people in AGRA’s 13 focus countries.

The new evaluation is far from comprehensive. It covers only AGRA’s last five years of work, ignoring its first 10. It reports on results in just six of AGRA’s current 11 focus countries. Its data on yields is almost exclusively on maize and rice, to the exclusion of the many other staple food crops crucial to Africans’ sustenance. And it fails to incorporate or address the concerns raised publicly by African civil society and faith leaders in public letters to AGRA’s donors.

Agroforestry is a kind of agroecology where crops are grown in combination with trees, like this pumpkin that Eunice Manyi raised among fruit trees in Kenya. Credit: David Njagi for Mongabay.

Still, the findings about poor outcomes for farmers should raise concerns for private and bilateral donors to AGRA’s PIATA strategy and for the African governments that are active partners – and funders – in that effort.

Quoting from the evaluation:

    • “PIATA improved maize yields in Ethiopia, Ghana, and Nigeria, but not in Tanzania, Burkina Faso, or Kenya.” Maize is AGRA’s most heavily supported crop, so the failure to achieve yield growth in half the countries studied is alarming.
    • “Across these six countries, only farmers in Burkina Faso experienced improved maize sales as a result of PIATA.” This raises serious questions about the Green Revolution “theory of change.” Even when yields rose, they failed to translate into rising incomes for farmers.
    • “Farmers who adopted improved inputs and experienced yield increases were typically younger, male, and relatively wealthier…. productivity and income gains were also concentrated among these relatively high-resource farmers.” This finding directly contradicts the stated goals of USAID and other bilateral donors to ensure that their assistance programs benefit and empower women.
    • “AGRA’s next strategy could formally recognize that agricultural technologies and practices—such as fertilizer use and rice cultivation—can negatively impact environmental conditions and greenhouse gas emissions.” Evaluators fault AGRA on a wide range of environmentally damaging impacts, including a lack of attention to helping farmers adapt to climate change.
    • “AGRA surveys are currently not suited for rigorous impact analysis.” Evaluators offer many criticisms of the initiative’s poor monitoring and evaluation methods.

Time to rethink Green Revolution model

Evaluators gave AGRA credit for some of its work, saying it “was successful in developing key policy reforms, mobilizing flagships and partnerships, and reaching farmers with extension and seeds,” and it helped “incentivize private sector engagement in the production and delivery of improved seeds in some countries.”

But these intermediate objectives, carried out with substantial funding over 15 years, have thus far failed to further the goals of improving farmers’ productivity, incomes, and food security. When one’s development successes fail to produce the intended results, after 15 years and one billion dollars in donor funding, it is time to reconsider the efficacy of the initiative. It is time to rethink the Green Revolution model.

See related: Push-pull agroecology method debugs organic farming’s pest problem in Kenya

Farmers with seeds in West Africa. Image courtesy of Grassroots International.

AGRA’s management responded to the evaluation saying, “We must therefore rethink our models and focus our support, and that of our partners, on building resilience and adaptation specifically for smallholder farmers.” But there is little sign AGRA intends to pull back from its costly input-intensive Green Revolution model. AGRA president Agnes Kalibata recently defended the status quo in a Q&A with the East African.

Hopefully donors and African governments will take the new evaluation more seriously. African civil society and faith leaders have urged donors to shift their funding to agroecology and other low-cost, low-input systems, which were endorsed last year by the U.N. Committee on World Food Security as a key strategy for climate-resilient development. Such approaches have shown far better results, raising yields across a range of food crops, increasing productivity over time as soil fertility improves, increasing incomes and reducing risk for farmers by cutting input costs, and improving food security and nutrition from a diverse array of crops.

USAID was quick to reject any change in aid priorities. A spokesperson told US Right to Know, “USAID reviewed the findings and recommendations and is satisfied with the independence and rigor of the [Mathematica] evaluation. We appreciate AGRA’s response to the report conclusions and concur with their proposed next steps to improve performance outcomes.”

That will not satisfy African civil society and faith leaders, who were not consulted for the Mathematica evaluation. They plan to take their complaints to the U.S. Congress, which this year has to reauthorize funding for AGRA through its Feed the Future initiative. On March 30, they will brief congressional aides in a closed-door session to explain why the supposed beneficiaries think AGRA is doing more harm than good. As evaluators acknowledge, the main beneficiaries are wealthier male farmers, an outcome at odds with the stated goals of U.S. development policy.

As fertilizer and food prices spike with rising energy prices from the Russia-Ukraine war, African farmers and governments need the kind of resilient, low-cost alternatives agroecology offers. Kenyan farmers report today that the biofertilizers they make themselves from locally available materials cost one-quarter the price of fossil-fuel-based fertilizers.

African governments should recognize that continuing to subsidize increasingly expensive synthetic fertilizer is a losing proposition, especially when that and other Green Revolution inputs are producing such meager results.

It is time for private and bilateral donors – and African governments – to stop throwing good money after bad and recognize that their 15-year effort to “catalyze a farming revolution in Africa” through Green Revolution seeds and fertilizers has fallen short. Fortunately, more promising alternatives are proving their efficacy all over the world. They deserve support.

Timothy A. Wise is a Senior Research Fellow at Tufts University’s Global Development and Environment Institute. A detailed analysis of the recent evaluation of AGRA is available from the Institute for Agriculture and Trade Policy (IATP), where the author is a senior advisor.

IPS UN Bureau

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Peasants Marginalized by Big Farmers

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Opinion

NEW DELHI and KUALA LUMPUR, Feb 15 2022 (IPS) – A recent Food and Agriculture Organization (FAO) study shows the largest farms cultivate a high and increasing share of agricultural land in much of the world.

Farm size concentration
World Agricultural Census data for 129 countries show about 40% of the world’s farmland is operated by farms over 1000 hectares (ha) in size. About 70% is operated by the top 1% of farms, all bigger than 50 ha each.

Vikas Rawal

A rising share of farmland is in larger farms. But farm sizes in developed and developing countries seem quite different. Farms smaller than 5 ha accounted for 63% of land in low and lower middle-income countries. But such farms covered only 8% of farmland in upper middle and high-income countries.

The “share of farmland farmed on the largest holdings has increased in … several European countries (France, Germany and the United Kingdom of Great Britain and Northern Ireland) and in the United States of America.” Similarly, in recent decades, more land in many Latin American and sub-Saharan African countries is in larger farms.

Data coverage uneven
Most agricultural censuses in developing countries do not cover large scale farms well. Official agricultural statistics in many developing countries focus on farm households, often ignoring corporate farms.

Agricultural censuses typically rely on land records, usually neither up to date nor complete. Large farms often have land registered to different persons and entities, typically to avoid taxes and bypass land ownership ceilings and regulations.

Government surveys in India have not comprehensively covered large farms, understating inequality. Other data from India suggest the top fifth of farms account for 83% of land.

Even where large farms are legally recognized as commercial entities, land is often held via subsidiaries in complex arrangements. For such reasons, the extent of concentration is probably greater than what the study suggests.

Jomo Kwame Sundaram

Ominous trends
Despite its limitations, the study findings are ominous. Changing inequalities in farmland ownership and cultivation have reduced the smallholder or peasant share of food production.

The study suggests that ‘land grabs’, new laws and policies have enabled large (capitalist) farmers, agribusiness corporations and other commercial entities to control most of the world’s farmland.

Disparities in government support allowed by World Trade Organization and other trade agreements have enabled large farms in developed countries, like the US, to gain more advantages over relatively uninfluential peasants in the South.

More advantages to big farm capital in recent decades, particularly to large-scale commercial agriculture in the global North, have enhanced their edge. More peasant distress has pushed many deeper into debt. Many of the most vulnerable have had to migrate, seeking precarious employment elsewhere.

Under various pressures not to protect food agriculture, developing countries have cut support for peasants. Withdrawal of such assistance has forced farmers to buy inputs at commercial prices. Meanwhile, many have to sell their produce cheap to those providing credit or other facilities.

By enabling easier land takeovers, commercial farming has quickly spread in ecologically fragile areas such as the Brazilian Cerrado, various parts of sub-Saharan Africa and steep slopes subject to deforestation.

Small farms, world food
The study has triggered a controversy by asserting that ‘family farms’ is a broader category than smallholdings. These would include large family-owned or run farms.

Hence, family farms account for 80% of the total value of food produced in the world, while smallholdings account for only 35%. These estimates have been contested by several civil society organizations who have protested to the FAO Director General.

Most agricultural censuses do not provide data on production by farm size. Instead, the study divides the total market value of a country’s food output by its total farmland. It then assumes a constant food output value per hectare. But this ignores significant differences in crop output among farms of different types.

Commercial bias
In many countries, large farms produce more commercial crops, not necessarily food. These may be for manufacturing (e.g., rubber, cotton), animal feed, or to be industrially processed for consumption (e.g., sugar, palm oil, coffee).

Many smallholder peasants consume significant shares of their own farm outputs. They typically work on limited land and need to meet their own food needs, rather than maximize cash incomes. Hence, their priorities may be rather different from those of commercial farms.

More fertile regions (e.g., river deltas) tend to have greater population densities, smaller farm sizes and higher productivity. Such smaller farms often grow multiple crops yearly, while larger farms with harsher agro-climatic conditions (e.g., higher temperatures, more snow or less water availability) often only have a single crop annually.

Although not universal, and often overstated, there is evidence of smallholders having higher land productivity, inversely related to farm size, owing to differences in the way factor inputs are used by various types of farms.

By assuming constant food output value per hectare, the study ignores many important variations, and probably under-estimates the contributions of small farms to world food supply.

Peasants marginalized
The study shows how various systemic advantages and biases have enabled big capitalist farms to control more of the world’s farmland and food supplies. But the share of food supply produced by smallholder producers is far from settled.

While more pronounced in rich countries, large corporate farms have also been growing in many developing countries. Even where family farming is predominant, increasing farm sizes have been apparent.

The study rightly notes the need to consider different types of farms in making appropriate policies for family farms of various sizes. This is necessary to better formulate policies to address poverty and livelihoods, especially for smallholder producers in distress.

It even suggests the need to “hold large scale and corporate agriculture accountable for the negative externalities of their production (for example on the environment)”. Besides better farming data, farmland concentration and its many implications in various parts of the world should be more appropriately addressed.

Vikas Rawal is Professor of Economics at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. He has conducted field research on agrarian relations in different parts of India for three decades, and works on global agricultural development challenges. Inter alia, he was lead author of The Global Economy of Pulses (FAO).

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Ecuador and the Pandora Papers: Death Threats and Impunity

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Opinion

MEXICO CITY, Dec 20 2021 (IPS) – In a ceremony in early October, the president of Ecuador and my opponent in the presidential elections, Guillermo Lasso, issued a warning to those “daring who seek to scrutinize” his assets. He was referring to the Pandora Papers published by the International Consortium of Investigative Journalists (ICIJ), which revealed how dozens of world leaders – including Lasso – hid billions of dollars to avoid paying taxes.

His threatening words were directed primarily at me, because of my knowledge of the offshore underworld and my determination to investigate him despite receiving death threats.

In 2017, Ecuador approved an anti-corruption law prohibiting public servants from holding assets in tax havens, directly or indirectly. This term was there to avoid the use of opaque and complex financial structures like trusts, foundations or partnerships. Last year I formally challenged Lasso’s candidacy for that reason, but he then signed an affidavit in which he claimed not to have properties in tax havens and the electoral commission agreed with him.

That led me to drop this issue and when I lost the election in February, I even gave a concession speech and spoke by phone to congratulate him. He offered me to put an end to the political persecution against progressives that former president Lenín Moreno had started.

However, the Pandora Papers revealed that Lasso had in fact transferred shares in limited liability companies representing 130 Florida properties from Panama to two trusts in the state of South Dakota. Lasso also recognised the existence of 14 entities that had been hidden from the Ecuadorian tax authorities.

Lasso denied having ties to these entities before assuming the presidency, including Banco Banisi in Panama. However, an investigation by the Latindadd organisation revealed that Lasso, a day before signing the affidavit, transferred his shares from Banco Banisi to the Banisi International Foundation, a new private interest foundation where his children are nominal beneficiaries but without any decision-making powers.

After the Pandora Papers were released, a large majority in parliament ordered an investigation. Official institutions cooperated little or nothing, claiming that it is confidential information while Lasso refused to attend the hearings. When the parliamentary commission approved the report linking Lasso to tax havens, his government immediately attacked the commission, and the Prosecutor’s Office launched a criminal investigation against the parliamentarians.

Soon afterwards, I started receiving threats and intimidation, not for having been a presidential candidate, but for insisting in investigating Lasso and speaking in the media about this case as an economic expert in offshore banking. Government supporters then launched coordinated troll attacks on social media, spreading false news about me, death threats, and insults.

A member of parliament linked to Lasso accused me of money laundering based on a false meme widely disseminated on social media. And criminal investigations were launched against me based on false news, also involving my retired parents and all former progressive candidates. Dozens of national and international civil society organisations, including the Financial Transparency Coalition, published a statement of support which I deeply appreciate.

But unfortunately, nothing has changed.

On December 8, the Comptroller General concluded that Lasso had no offshore interests since it did not consider South Dakota a tax haven, despite being widely recognised for this. But the blockade of the investigation against Lasso did not end there. That same day, a majority of the National Assembly of Ecuador decided not to impeach the president, referring their investigation to other state institutions, but asked him to go to parliament and give an explanation, which he refused to do.

Ironically, Lasso – along with the presidents of other countries such as Kenya and Chile, whose leaders were also revealed in the Pandora Papers to have hidden assets in tax havens – was invited to the recent ‘Summit for Democracy’ organised by the United States. During the summit the creation of a beneficial ownership registry was announced, including for South Dakota trusts, as well as anti-fraud measures on real estate which could impact Lasso, but it’s still uncertain whether these commitments by the US and other countries will become reality.

In total, $7 trillion is hidden in secret jurisdictions and tax havens, equivalent to 10% of global revenues, according to the UN High-Level Panel on International Financial Accountability, Transparency and Integrity. Meantime especially developing countries are fighting the resurgent Covid-19 pandemic and its economic impacts, struggling to provide basic social protection to its citizens and purchase vaccines.

So clearly the problem of tax evasion and financial opacity, and money being funneled by powerful individuals to tax havens, is an issue that not only affects my country, but affects everyone. Fighting for financial transparency is a fight for truth and social justice that we cannot afford to give up.

Andrés Arauz is an Ecuadorian economist and candidate for President in the 2021 elections, currently based in Mexico City where he is a Doctoral Fellow at the National Autonomous University of Mexico, UNAM.

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Mother of Summits: Sweet and Sour Diplomacy, but Nothing Cooked!

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SINGAPORE, Nov 22 2021 (IPS) – It has been said that when Greek meets Greek, then comes the tug of war. The summit of the leaders of world’s two strongest powers, the United States and China, came face to face at long last. Albeit virtually. Still, this was undoubtedly the “mother of summits” this year. There were two telephone conversations earlier, but according to US officials this nearly four hours of summitry was far more “candid intense, and deeper interaction”. If there was one single take-away from this meeting, it was the establishment beyond all reasonable doubt of the incontrovertible fact that the US and China were indeed the two most influential global state actors. The decisions between the two, represented by their leaders, would profoundly impact the rest of humanity far into the future.

Dr. Iftekhar Ahmed Chowdhury

Given that in terms of deliverables, the consensus among all analysts was that nothing significant was expected, the event was important in that it put to rest the bickering between the subordinates that was pushing the world towards a precipice. It was about time the supreme political masters, Joe Biden of the US and Xi Jinping assumed the reins of control of the most important relationship of our times. Both sides were intellectually convinced that the stiffest possible competition between the two was on the cards. The challenge was to manage this in a way to prevent a conflict that would be catastrophic. This was one point on which, luckily, there was understanding on both sides.

There was not much on anything else. Prior to the meeting that Biden was focussed on writing the rules of the engagement of China “in a way that is favourable to our interests and our values and those of our allies and partners”. Unsurprisingly, Xi and the Chinese did not play ball. Both sides basically emphatically stated their positions on issues and showed nary an inclination to concede an inch to the other. In the end, as was expected, there were no breakthroughs. The irreconcilable positions remained in- tact, with a vague call by both sides for more cooperation.

A virtual meeting is bereft of the positive influences of informal chats, banquets, and the opportunity of developing personal camaraderie. Still, both leaders exuded friendly demeanours, and Xi called Biden “an old friend”. On Taiwan, the dialogue was tough. Xi reminded Biden of the US position on the Peoples ‘Republic being the sole legitimate government of China , reinforced by here communiques issued in 1972, 1979 and 1982. Following the talks the White House clarified that the “One China’ was also guided by the Taiwan Relations Act and the Six Assurances committing the US to opposing” unilateral efforts to change the status quo”. Xi made it clear that Taiwan for China was a “core issue”; it was a province of China, and any support to its independence was akin to playing with fire. “Whoever plays with fire will get hurt” was a message he strongly underscored.

There seemed a glimmer of hope on one front, though. In the past China has refused to be drawn into any nuclear arms control agreements given that its arsenal was far smaller than those of the US and Russia. But recent significant qualitative improvements of its capabilities have been worrying the US. At the meeting China showed willingness to talk on the subject. However, there is no possibility of agreements beyond the rim of the saucer because the Chinese will naturally demand steep cuts in US numbers which will be unacceptable to Washington. However, there could be forward movement through diplomatic engagements on matters such as Confidence Building Measures (CBMs), will the positivity that would entail.

There is a fundamental difference in the approach of China and the US to negotiations. The US believes in a kind of “a la carte” method of choosing areas where it believes there is scope for collaboration while competition, and even confrontation, continues others. The Chinese on the other hand reject this as “cherry picking” and see the agenda as a comprehensive package. What is the use of understanding on one subject, while differences on another cam lead to war? Unless this basic divergence is resolved, negotiations are unlikely to be able to yield any worthwhile results. Discussions will continue to be both sweet and sour, as the summit deliberations were, but nothing seriously palatable will get cooked!

Xi has in the meanwhile has consolidated his own power in China to a point that he may be set obtain a third term of office. More importantly, he is viewed as the navigator in the journey towards national rejuvenation leading to China becoming a modern fully developed nation by 2049 which will bring him yet closer to the status of the Great helmsman, Chairman Mao Zedong, himself. All these were the outcome of the Sixth plenum of the Chinese Communist Party which met last week and adopted a “historical resolution” that buttressed Xi’s power and position.

Incidentally, in the history of the party this was the third historical resolution. The first was adopted in 1945 under Mao four years prior to the revolutionary victory, and the second by the ‘reformist” Deng Xiaoping. While Mao was the one who restored a sense of pride among the Chinese people enabling them “to stand up” and Deng made them rich through his reforms, Xi, by the dint of this “thought” (which supersedes “theory” in Chinese political lexicon) gave them strength and shared prosperity. In an abstruse political milieu where the count of numbers means a great deal, a Xinhua communique on the meeting mentioned Xi’s name at least fourteen times, compared to seven of Mao and Five of Deng. That tells a lot.

Consequently, it is now all but certain that Xi will be elected to an unprecedented third term in office as party General Secretary at the 20th Party Congress next year. There is also some talk that he may assume the title of “Chairman” as well which will bring him at par with Mao. The plenum also elevated Xi Jinping Thought to 21st Century Marxism, completing the process of “Sinicization” of Marxist philosophy. Xi has been pragmatic in welding the conservatism of Mao, but shunning his repressive methods, with the reforms of Deng, correcting the “capitalist excesses”, and bringing China on a socialist path that would lead to a “modern society” with “shared prosperity “. Small wonder that many Chinese observers are beginning to see him as a “Philosopher King” in the mould of Plato in the West and Confucius in the East, a perfect mix for the cauldron of power and authority. An interesting footnote is that the Chinese Communist Party formally announced its third “historical resolution”, cementing Xi’s powers hours after the Summit, though it was leaked earlier, which pointed to a thought-through calibrated set of actions.

Nowhere the same degree, Joe Biden also seems to have achieved a modicum of success of his own despite powerful head winds. He has managed to create a sense of cohesion among America’s allies, though his path has had numerous pitfalls and bumps. Importantly he has managed to secure the passage into law of the massive legislation in terms of the US $1.2 trillion bill on a revamp of infrastructures, to “build back better”, a campaign pledge. This for him is no mean achievement, proving that persistence pays. But for him and his Democratic Party the future is not as rosy as that what appears to be for his Chinese counterpart. A Republican win in the Presidential race is a distinct possibility. That could lead to turmoil and backlash in US domestic politics, requiring the identification of a common foe to rally the nation. China is the obvious candidate. If, consequently, the “ultimate red line” for China, such as on the issue of Taiwan is crossed, a catastrophe could follow.

Surely the Chinese have made those calculations. From now to then, China and Xi will, while seeking to avoid an immediate conflict, be preparing to, in the words of the Global Times seen as a State media outlet, “to deal with the biggest storms in the world, the most powerful and comprehensive siege from the US and its allies”. Halfway down this decade it will be high- risk for one to wager too much in favour of peace!

Dr Iftekhar Ahmed Chowdhury is the Honorary Fellow at the Institute of South Asia Studies, NUS. He is a former Foreign Advisor (Foreign Minister) of Bangladesh and President & Distinguished Fellow of Cosmos Foundation. The views addressed in the article are his own. He can be reached at: isasiac @nus.edu.sg

This story was originally published by Dhaka Courier.

 

Fair Tax Plan Could Prejudice Global South

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Questions are asked whether the Organisation for Economic Co-operation and Development (OECD) agreement to force the world’s biggest companies to pay a fair share of tax will benefit the global South. Credit: Hugo Ramos/Unsplash

BRATISLAVA, Oct 20 2021 (IPS) – An agreement between 136 countries aimed at forcing the world’s biggest companies to pay a fair share of tax has been condemned by critics who say it will benefit richer states at the expense of the global South.

A deal agreed on October 8, and which covers around 90% of the global economy, includes plans for a global minimum corporate tax rate of 15%.

The Organisation for Economic Co-operation and Development (OECD), which led negotiations on the agreement, has said it will help end decades of countries undercutting each other on tax.

But independent organisations campaigning for fairer global taxes and financial transparency argue it will rob developing countries of revenues needed to recover from the COVID-19 pandemic, ultimately pushing millions more people into poverty.

Matti Kohonen of the Financial Transparency Coalition (FTC) civil society group told IPS: “In principle, a global minimum corporate tax is a good idea, but only if the rate is right and implemented properly. Under this deal, the main beneficiaries are the OECD – which led the negotiations – and its largest members.”

Calls for a global minimum corporate tax rate have grown in recent decades amid increasing scrutiny on the tax practices of multinationals.

The OECD deal, which has an aspirational implementation date of 2023, is designed to set a floor on corporate taxation and stop companies shifting profits to countries with the lowest tax rates they can find.

The OECD says the minimum global rate would see countries collect around USD150 billion in new revenues annually, and that taxing rights on more than USD125 billion of profit will be moved to countries where big multinationals earn their income.

But independent groups say the agreement falls far short of what is needed for a fair global corporate taxation system and has ignored the needs and wishes of developing nations, which rely more heavily on corporate tax than richer states.

According to OECD research Corporate Tax Statistics: Third Edition (oecd.org), in 2018, African countries raised 19% of overall revenue from corporate taxation as opposed to 10% among OECD states.

Critics point out that the 15% floor agreed to is well below the average corporate tax rate in industrialised countries of around 23%, potentially creating a ‘race to the bottom’ as countries cut their existing corporate rates.

It is thought a number of developing states had wanted a higher minimum global rate.

Civil society groups critical of the agreement also have concerns over many exemptions in the deal – there is a ten-year grace period for companies on some aspects of the agreement, and some industries such as extractives and financial services, are exempt.

Meanwhile, they highlight, only 100 of the world’s largest companies would be affected by part of the agreement aimed at getting highly profitable multinationals to pay more taxes in countries where they earn profits. Moreover, the minimum global tax will only apply to companies with a turnover of more than 750 million USD, which would exclude 85-90% of the world’s multinationals.

The fact that countries will have to waive digital services taxation rights, which are important sources of revenue for some developing states, is also problematic. And there are concerns that in many cases extra tax paid by corporations ‘topping up’ their tax bill to 15% will go to countries where they are headquartered. In many cases, this will be in already rich nations such as the US, UK, and Europe.

Chenai Mukumba of the Tax Justice Network Africa advocacy group told IPS: “We have an opportunity to reform the global tax system to make it right for global south countries, but we are settling for so much less. This is a lost opportunity to balance the scales, to put fairness at the centre of the system.”

The deal could have a negative effect on African countries, in particular, she pointed out.

Nigeria and Kenya have not signed up for the fair tax deal. Credit: Muhammadtaha Ibrahim Ma’aji/Unsplash

Kenya and Nigeria are among four countries that have not signed up for the deal.

“A lot of African countries currently have corporate tax rates of 25-30%. If the minimum rate is 15%, there is a great incentive for companies to shift profits elsewhere,” Mukumba said.

“Kenya hasn’t signed up to the deal because it is trying to raise revenue from its digital services taxation rights. It may end up buckling to the pressure [to join the deal],” she added.

OECD impact assessment studies for the deal published in 2020 https://www.oecd.org/tax/beps/economic-impact-assessment-webinar-presentation-october-2020.pdf showed that developing nations would gain as much as 4% extra corporate tax revenue.

The organisation told IPS this month (OCT) that it is now expecting those extra revenues to be even higher because of changes to the agreement since last year.

However, studies Pillar 1 impact assessment – 04.10.21 FINAL (oxfamireland.org) by the global aid group Oxfam estimate that 52 developing countries would receive around only 0.025 percent of their collective GDP in additional annual tax revenue under the redistribution of taxing rights.

The group also says a 25% global minimum corporate tax rate would raise nearly USD 17 billion more for the world’s 38 poorest countries – which are home to almost 39% of the global population – as compared to a 15 percent rate.

Speaking just after the agreement between the 136 countries was reached, Oxfam said in a press release that the deal was “a mockery of fairness that robs pandemic-ravaged developing countries of badly needed revenue for hospitals and teachers and better jobs”.

It added: “The world is experiencing the largest increase in poverty in decades and a massive explosion in inequality, but this deal will do little or nothing to halt either.”

Despite the criticism, OECD officials are adamant that the agreement will benefit developing nations.

They point out that it does not affect any state’s national corporate tax rates, and that the 10-year grace period only applies to a very small amount of income – 5% of the carrying value of a firm’s tangible assets and payrolls in a jurisdiction.

Grace Perez Navarro, Deputy Director of the OECD’s Centre for Tax Policy and Administration, told IPS: “The global minimum tax is aimed at stopping tax competition that is causing a race to the bottom in corporate tax rates.

“It does not require countries that have higher rates than 15% to lower their corporate tax rate, it just ensures that those countries will be able to collect at least 15%, no matter what type of creative tax planning a multinational comes up with.

“It will also reduce the incentive of multinationals to artificially shift their profits to low tax jurisdictions because they will still have to pay a minimum of 15%.”

She added: “It will also relieve the pressure on developing countries to offer excessive, often wasteful tax incentives while providing a carve-out for low-taxed activities that have real substance. This means that developing countries can still offer effective incentives that attract genuine, substantive foreign direct investment.”

But Mukumba said the problem is not that the deal will not bring any extra revenue to developing nations, but that richer nations will get much more out of it.

“Developing nations want a global corporate tax minimum, they have pushed for it in the past. They will get revenue under this deal, yes, but nowhere near as much as richer nations will get out of it,” she said.

This is problematic at a time when many developing nations are struggling with the effects of the COVID-19 pandemic and need revenue.

“This [deal] will mainly support recovery efforts in the G7 countries instead of developing countries which have been most impacted by the COVID-19 pandemic and are more in debt, preventing them from generating enough revenues to recover from the crisis and ultimately throwing millions more people into extreme poverty,” said Kohonen.

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Guess Who’s Behind Paralysis on COVID19 in the UN Committee on World Food Security

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Opinion

ROME, Oct 19 2021 (IPS) – ‘COVID 19 has multiplied hunger and malnutrition challenges. We need transformative action!’ The first speaker at the UN Committee on World Food Security’s (CFS) 49th Plenary Session, the Secretary-General of the United Nations, turned the spotlight on the disastrous impacts of the pandemic that have afflicted communities around the world for close to two years.

Nora McKeon

He was echoed by the presenter of the 2021 edition of the State of Food Security and Nutrition in the World for whom ‘COVID is only the tip of the iceberg’, while keynote speaker, Jeffry Sachs, emphasized the multifaceted nature of the crisis, with chronic poverty and conflict at the center.

Delegation after delegation took the virtual floor to share their concerns: Kenya speaking for the Africa Group, Colombia, Cuba, Costa Rica, Norway, Morocco, Peru, Spain, Indonesia, Mexico, Malaysia, Mali, Cape Verde, South Africa, Uganda, Saint Lucia and more. The impacts of Covid 19 on food security and nutrition are heavy and lasting. The vulnerable are the most effected, within and between countries. Covid has deepened and exacerbated existing structural fragilities and injustices in our food systems. Its causes are multisectoral and cannot be treated in a siloed way.

‘Multilateralism, solidarity and cooperation are key to the way forward’, the President of ECOSOC added, and ‘the CFS is a unique multilateral forum because it brings all the actors together in the name of the right to food’. The text adopted at the end of Day 1 summarized all of these contributions, and deepened concern by drawing attention to the possibility of recurrent pandemics.

With this kind of an opening one could have expected a standing ovation when it was proposed, the following day, that the CFS put together a globally coordinated policy response to the impacts of COVID 19 on food security and nutrition and a proposed precautionary approach towards possible future shocks of this kind.

This proposal was a long time in the building. For a year and a half the CFS’s Civil Society and Indigenous Peoples’ Mechanism (CSM) had been documenting the experience and proposals of its constituencies and communities and bringing this evidence from the ground into the global debate. Earlier this year an informal ‘Group of Committed’ governments and other CFS participants had come together to push for the CFS to take determined action. How could it fail to live up to its mandate in the face of the most serious threat to global food security the world has faced since the 2007-2008 food crisis?

Just a week before CFS49 the Group of Committed had held a seminar where evidence and proposals for global policy action were presented by national governments, regional and local authorities, small-scale food producers, the urban food insecure, along with UN agencies, the Special Rapporteur on the Right to Food, and the CFS’s own High-Level Panel of Experts.

The seminar demonstrated that action is being taken by different actors and authorities at local, national and regional levels, while UN agencies have developed and adopted relevant policy instruments and programmes in their respective sectors. What has been missing thus far is a way of putting the different perspectives and initiatives together into a multisectoral, multilaterally coordinated approach. Filling this gap was the proposal that was put on the table in CFS49.

‘We need a globally coherent and coordinated response to support governments’ efforts and the CFS is the appropriate place for this to happen,’ the Ambassador of Mali had exhorted in his opening address.

So what about the standing ovation? The proposal was supported by countries from the Global South led by African countries, the most affected by injustice in access to vaccines, dependency on food imports, and indebtedness, but including also Mexico, Peru, Morocco, the CSM and the Special Rapporteur on the Right to Food. ‘This is the place to deal with COVID!’ he said. ‘It is the priority food issue today. It wasn’t addressed by the UN Food Systems Summit. The CFS has the mandate and the tools, and the other UN agencies are highly committed to cooperate.’

But, incredibly and unacceptably, the proposal did not pass. It was blocked on specious, procedural grounds by a steamroller coalition of big commodity exporters who push back on any possible limitation that might be placed on global trade in the name of human rights, equity, environmental concerns: the US, Canada, Argentina, Brazil, Russia. The EU, shamefully, was silent.

The implications for inclusive multilateralism, democracy, the needed radical transformation of our food systems are severe. ‘A key barrier to transformation is interference from corporations,’ stated the delegate of Mexico. ‘Governments need to assume their role as agents of change, regulators of food systems, and protectors of the planet, but we can’t do it alone. Global attention is needed and the CFS is the right place for it.’

But The CFS is being held hostage. The arrogance with which a few are ignoring reality, evidence and urgency is leading to an unacceptable increase in the violation of the human rights of the many. Patience is wearing thin. ‘If I’m in this room it’s to honor the concerns of those most affected in my region,’ a member of the Group of Committed asserted in the aftermath of the session.

And the people of her region, along with others from around the world, are raising their voices ever more loudly, as in the counter mobilization to transform corporate food systems organized last July in parallel to the Pre-Summit of the UNFSS [hyperlink]. Radical food system transformation is being built from the ground up and the CFS, however handicapped, is the most resounding global echo chamber for people’s claims.

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