How Adani Group’s airport deal will be a loss for Kenyans

The proposal to redevelop Jomo Kenyatta International Airport seeks to facilitate a tax holiday for the Indian conglomerate and increase costs.

Odongo Kodongo, The Conversation

01/10/24

Passengers wait for their flights during a strike by Kenya airports union workers to protest against a proposed deal for India's Adani Group to lease Jomo Kenyatta International Airport for 30 years, in Nairobi on September 11. | Reutes

The proposal submitted early this year by Indian conglomerate Adani Group to Kenya Airports Authority to develop and renovate parts of Jomo Kenyatta International Airport has recently been made public.

To facilitate informed public engagement with the proposal, as a project finance student, I thought it would be useful to provide an expert view on its key technical aspects.

Adani exploits a provision in Kenya’s Public Private Partnerships Act of 2021 that allows private companies to initiate project proposals and channel them to the government for consideration.

Briefly, Adani seeks to run Jomo Kenyatta International Airport via a 30-year build, operate and transfer arrangement. Under this arrangement, ownership of the airport remains with Kenya Airports Authority, known as the deal sponsor. The airport business is handled by Adani’s subsidiary, Airports Infrastructure Plc, called the special purpose vehicle.

Airports Infrastructure Plc, which was registered in Nairobi on August 31, 2024, is fully owned by the United Arab Emirates incorporated Global Airports Operator LLC.

Global Airports Operator is a subsidiary of Adani Airports Holdings Limited of India, which in turn is fully owned by Adani Group.

The proposal omits information on Adani Airports Holdings Limited’s extent of ownership of Global Airports Operator. This leaves room for speculation about Global Airports Operator’s beneficial owners.

The proposal shows that the project requires a cash outlay of $2.05 billion including capital expenditures, operating expenses and financing costs. This cost is spread over the project’s development period of about 25 years.

However, my examination identifies important flaws in the structure of the proposed deal.

Cash flows

The first flaw is that the Adani Group, the project operator, will have access to all of the airport’s cash flows. This should not be the case in a typical private public partnership deal like the one proposed.

In such deals, the project operator should only have access to cash flows generated by the new project – that is, the proposed new terminal building and runway and their associated infrastructure. It should not have access to cash flows from the existing assets and operations of the deal sponsor.

Secondly, the proposal shows that the proposed renovation of the existing terminal buildings will be financed from money generated from the airport’s existing operations. The renovations should therefore be undertaken by Kenyan Airports Authority and not included in Adani’s proposed deal. Including them in the deal would complicate cash flow separation and risk sharing.

To be sure, in instances where there are substantial risks associated with the new project’s capacity to generate cash flows, the project operator might require additional guarantees. In such cases, governments often provide guarantees limited to a small proportion of the required cash flows.

The third flaw is that Adani proposes that the government pay it for the developed assets when the partnership ends. This is wrong: the government must not buy assets that it already owns.

Return on investment

There are other provisions that require further scrutiny, as well.

The revenue sharing model proposes a fixed concession fee of US$47 million to the government in 2025. Thereafter, the government would receive a fixed fee plus a variable component calculated to ensure that Adani earns an 18% internal rate of return on its capital investment in the project. Internal rate of return is the average annual profit earned by a project in its lifetime.

For Adani to achieve this enviable outcome, the Kenyan Airports Authority would have to take a higher risk by accepting a concession fee that fluctuates with the project’s performance while Adani’s cash flows are predetermined by its desired profit.

This is neither fair nor equitable risk-sharing. As the project operator and major equity capital provider, Adani must take responsibility for the project’s performance by accepting greater fluctuation in its cash flows.

Affordability of services

Fees for aeronautical services (what airlines pay Adani for using the airport) for the first three years will be determined by the need for Adani’s 18% profit. This is problematic.

The internal rate of return is derived from cash inflows and outflows over the project’s lifetime.

Therefore, to determine user charges for an isolated period of the contract such that the internal rate of return remains fixed would push those fees to very high levels.

Indeed, Adani’s own calculations show that the proposed user charges would make the Jomo Kenyatta International Airport more expensive than the Bole International Airport in Addis Ababa. For some transport corridors, the Nairobi airport’s charges as a proportion of airfares are more than double Bole’s.

Passenger traffic

Adani’s project proposal is flawed when it comes to passenger traffic too.

First, the agreement assumes what it calls a “meteoric surge” in passenger numbers based on an assumed constant annual growth rate of 4.5%. This is too optimistic relative to the airport’s historical performance.

Second, Adani’s projections assume full capacity use over the 30-year period. Any financial modeller knows that full capacity is difficult to achieve.

Overall, because of the long period of projections and optimistic stance, Adani’s forecasting assumptions should be subjected to rigorous stress testing (sensitivity analysis). This has not been done.

Tax holidays

Carefully tucked away in the project’s feasibility report is an unheralded pitch to the government for a tax holiday if Adani wins the tender.

Adani argues that, if granted, a tax holiday would lower the charges to airlines. In my view, this is the proposed project’s deal breaker.

Kenyan policy does allow for tax holidays of various kinds to incentivise capital formation and investments in critical but unattractive sectors. It’s doubtful that the airport business fits this description and therefore merits such an incentive.

Further, the evidence shows that such tax incentives hardly offer meaningful economic growth benefits to African countries. More importantly, an analysis of the proposed tax holiday’s effect on cash flows should be provided to aid its assessment. Adani omits such an analysis.

The land question

A component of Adani’s strategy involves developing and operating facilities, such as offices and convention centres. This is subject to confirmation of land availability. Adani does not propose to buy the land. Rather, it appears that Kenya Airports Authority would have to provide the land.

This begs several clarifications.

If the Kenya Airports Authority owns the land, the opportunity cost of the land utilisation by Adani needs to be incorporated in the cost-benefit analysis.

If the Kenya Airports Authority has to buy the land, the question becomes that of the source of the purchase money and whether land acquisition would be the best use of that money by an authority seeking to outsource tasks, such as renovations, due to cash flow constraints.
Final thoughts

The Public Private Partnerships Act requires a justification when an open tender approach is not used for a proposed project. That this has not been done is worrying, given that the consultant hired by the government to advise on this transaction recommended open tendering.

Adani’s argued benefits of its privately initiated proposal – quicker turnaround time, customisation, and risk mitigation – are not convincing. Such benefits are better realised through an open tender, which provides additional benefits such as competitive pricing and transparency.

Adani labelled its proposal “private and confidential”. It is reasonable to expect that it signed a non-disclosure agreement with Kenya Airports Authority to protect its submission from leaking to potential competitors. The proposal has now been released and its content is open knowledge.

If the government were to stop processing Adani’s proposal and open the tender to all interested investors, Adani might seek legal redress since its competitors would easily design their bids to beat its own. Any unbiased court will find that the “breach of confidentiality” violates Adani’s rights.

Adani will win the suit.

One way or the other, circumstances now make Adani the winner and Kenyans the loser in this fiasco.

Odongo Kodongo is Associate professor, Finance, University of the Witwatersrand.

This article was first published on The Conversation.

Also read:

Modi leads, Adani follows: Is India’s diplomacy in lockstep with a private group’s global expansion?

USA: RSF condemns the agrochemical industry’s shameful practice of profiling and slandering environmental journalists

Organisation:  RSF_en

Following the release of the investigative report “Bonus Eventus Files” on September 27 by several international media outlets, Reporters Without Borders (RSF) condemns the collection and misuse of environmental journalists’ personal information to fuel slander campaigns orchestrated by the agrochemical industry. RSF calls on the authorities to swiftly open a judicial inquiry into these scandalous practices, carried out by an American company.

“They tried to discredit me by spreading lies about my work and putting pressure on my editors. This had real consequences on my career, even leading to the cancellation of conferences where I had been invited to speak,” American investigative journalist Carey Gillam told RSF. Gillam, who has written numerous articles and books on the agrochemical industry, particularly for The Guardian and The New York Times, has been the target of false accusations. She is among the media professionals victimised by the private platform Bonus Eventus, which seeks to influence the public debate on pesticides and genetically modified organisms (GMOs).

As revealed on 27 September by the investigative media outlet Lighthouse Reports, in collaboration with several international news organisations such as Le Monde and The Guardian, the platform has compiled and disseminated the personal and professional information of over 3,000 journalists, scientists, activists, and organisations working on pesticide-related issues, along with malicious rumours intended to damage their reputations.

“The practice of profiling and spreading rumours that could harm journalists’ integrity should never be allowed to flourish in a democratic state. A thorough investigation must be conducted to bring to justice all those involved in these outrageous violations of privacy and the reputation of environmental journalists. These manipulation techniques aimed at influencing the public debate are a direct attack on the public's right to reliable and independent information.

Arthur Grimonpont, Head of RSF's Global Challenges Desk

Discrediting science and independent journalism

The Bonus Eventus network is managed by the PR firm v-Fluence, led by a former communications director at the agrochemical company Monsanto. Its members include executives from agrochemical firms — such as Bayer-Monsanto, Syngenta, and BASF — as well as U.S. government officials. The platform curates and disseminates content (comments, blog posts, interviews) aimed at downplaying the health and environmental impacts of the agrochemical industry, but primarily seeks to cast doubt on studies and news articles that expose damaging truths about the industry, mainly by discrediting their authors. Environmental journalists who have highlighted the dangers of pesticides are particularly targeted.

Lighthouse Reports is also being surveilled and accused of alleged conflicts of interest. The outlet told RSF that these accusations are being used to discredit their investigative work.

Stéphane Foucart, a journalist for Le Monde whose articles are frequently targeted, explained that the information circulated by this platform is used to undermine solid scientific studies and their journalistic coverage. He pointed to a recently published study linking pesticides to increased infant mortality rates. “These attacks are then widely amplified on social media to erode public trust in recognized scientific work,” he told RSF.

How Hostile U.S.-China Relations Are Hurting Science

October 1, 2024 • 

Wharton’s Britta Glennon measures the chilling effect that tense U.S.-China relations are having on the exchange of scientific research.

PUBLIC POLICY
HUMAN RESOURCES

FEATURED FACULTY
Britta Glennon


WRITTEN BY
Angie Basiouny

Escalating political tension between the United States and China is throttling the exchange of scientific research and making it harder for the U.S. to attract and retain talented Chinese scholars, according to a new study co-authored by Wharton management professor Britta Glennon.

“Both countries are focused very much on trying to be self-sufficient in science and less international, and this is the opposite of what the trends have been for a long time,” Glennon said. “There’s more of a nationalist shift. We think there hasn’t been as much consideration of what some of the side effects of that might be [on innovation].”

Glennon spoke to Wharton Business Daily about the working paper titled, “Building a Wall around Science: The Effect of U.S.-China Tensions on International Scientific Research,” which was published by the National Bureau of Economic Research. (Listen to the podcast.) Her co-authors are Robert Flynn, doctoral candidate at Boston University’s Questrom School of Business; Raviv Murciano-Goroff, strategy and innovation professor also at BU Questrom; and Jiusi Xiao, doctoral candidate at Claremont Graduate University.


“The tensions are very much mutual. It’s not a one-sided thing.”— Britta Glennon
The Downturn in U.S.-China Relations

When countries are actively at war, the wounds to science are clear: collaboration stops, less money is spent, foreign scientists are often deported, and some are even killed. But the effect of a cold war on science is less understood. That’s what the research team wanted to explore.

The scholars analyzed resumes of more than 800,000 American and ethnically Chinese STEM graduates to determine how their careers fared since 2016, when there was a marked downturn in U.S.-China relations with the election of President Donald Trump and the ramp-up of prosecutions of Chinese researchers under what was later known as the China Initiative program. They also examined the amount of published research coming from both groups since then. The results were threefold:Mobility — Between 2016 and 2019, ethnically Chinese graduate students became 16% less likely to attend a U.S.-based PhD program, and those who did were 4% less likely to stay in the U.S. after graduation. In both instances, these students were more likely to move to a non-U.S. anglophone country, such as Canada or Australia.
Building on Research — There was a sharp decline in Chinese usage of American science, as measured by citations. But there was no such decline in the propensity of U.S. scientists to cite Chinese research.
Productivity — A decline in Chinese usage of U.S. science does not appear to affect the productivity of China-based researchers, as measured by publications. But heightened anti-Chinese sentiment in the U.S. appears to have reduced the productivity of ethnically Chinese scientists in the U.S. by 2% to 6%.

“There’s a huge increase in anti-Chinese sentiment during this time frame. We think that’s really impacting the ability of these scientists to continue to be productive,” Glennon said, noting a Pew Research Center report that found American adults with unfavorable views about the Chinese rose from 55% in 2015 to 66% in 2020.


“When you have more immigration, innovation increases quite a lot.”— Britta Glennon
Connecting Science and Politics

According to the paper, Trump stoked anti-Chinese hostility during his presidential campaign through consistent rhetoric that China’s rise came at the expense of the U.S. After taking office, he followed up with a trade war to reduce the U.S.-China deficit and the theft of intellectual property. At the same time, the U.S. Department of Justice launched the China Initiative, investigating Chinese and Chinese-American scientists suspected of stealing IP for the Chinese government. Chinese President Xi Jinping countered with retaliatory moves of his own.

Anti-Asian hate worsened during the COVID-19 pandemic, which is outside the time period of study for the paper. But Glennon said she expects to find a widening gap if the research is updated.

“The tensions are very much mutual. It’s not a one-sided thing,” she said.

The scholars said they understand that national security and economic prosperity are primary objectives for the United States. However, they are concerned about the chilling effect that current policies have on the kind of scientific collaboration that leads to broader benefits for America and beyond.

“There’s a lot of research showing a strong link between immigrants and innovation,” she said. “When you have more immigration, innovation increases quite a lot. It’s not just immigrants doing more patenting and more publishing and startups, but also their effect on Americans.”

Political prisoner in Egypt attempts suicide over 'prolonged detention without fair trial'

An Egyptian rights group held both the interior minister and the prosecutor-general responsible for the alleged inhumane conditions at detention centres.

Nabila El-Gaafary
Egypt - Cairo
01 October, 2024

Rights groups have repeatedly accused the Egyptian authorities of "recycling" regime critics into new cases before the maximum duration of pre-trial detention ends. [Getty]

An Egyptian political prisoner attempted suicide over the weekend by jumping off the eighth floor in northern Sharqiya province to protest against his "prolonged detention without standing a fair trial," sparking concerns over inhumane conditions at Egypt's detention centres.

Ahmed Mohamed Ibrahim Abdel-Aziz, 29, has been detained for nearly seven years without trial, though pre-trial detention cannot legally exceed a maximum of 24 months, the Egyptian Network for Human Rights (ENHR) said in a statement on Monday.

Abbdel-Aziz's detention was, nevertheless, renewed for 15 days, on Sunday, prompting him to attempt to jump off the eighth floor of the local prosecution office building, but security personnel inside the room managed to stop him just on time.

According to the rights group, the detainee reportedly attempted to kill himself twice before as a result of the abuse and emotional distress he had been facing in detention, as no medical or psychiatric assessment has been provided to assess his mental state.

Abdel-Aziz, who holds a university degree in Islamic studies from Al-Azhar University, has first been detained almost seven years ago and has never stood trial since, the group said.

"In June this year, a court ordered his release with security precautionary measures. But the order has never been put into force. Instead, he was [reportedly] subjected to enforced disappearance at the hands of the state security agency and faced with new charges two months later," ENHR claimed.

No details about the legal charges against him were immediately available at the time of publication.

Local and international rights groups have repeatedly accused the Egyptian authorities of "recycling" dissidents and political activists into new cases before the maximum duration of pre-trial detention ends.

By doing so, detainees remain incarcerated for years without a fair trial, mostly charged with terrorism-related accusations, reportedly, without concrete evidence or solid police investigations for their lawyers to argue.

ENHR, meanwhile, held both the interior minister and the prosecutor-general accountable for the alleged inhumane conditions at detention centres.

Over the past decade marking the regime of President Abdel-Fattah al-Sisi, local and international human rights organisations have documented cases when authorities used pre-trial detention as an oppressive tool against regime critics, activists and journalists.

Most recently, the Egyptian prosecutor-general rejected the petition of high-profile British-Egyptian activist Alaa Abdel-Fattah to count the two years he had spent in pre-trial detention as part of his five-year sentence that, which technically, ended on 29 September, sparking a local and international outcry.

Award-winning Cambodian journalist who exposed cyberscams is arrested

George Wright and Len Leng
in London and Phnom Penh

BBC

Mech Dara has been honoured for his work by US Secretary of State Anthony Blinken

Mech Dara, an award-winning Cambodian journalist who has reported extensively on human trafficking and corruption, has been arrested and charged with incitement.

Dara, who has reported for the BBC, has been charged over five social media posts which could "incite social unrest", a court spokesperson said. He faces up to two years in jail.

Last year US Secretary of State Anthony Blinken honoured him for his work exposing online scam operations based in Cambodia.

Rights groups have spoken out over his arrest, with Human Rights Watch calling on the country's government to "immediately release him".


Dara was detained after being stopped at a highway toll booth on the border of Koh Kong and Sihanouk province in south-west Cambodia on Monday.

A relative in the car with Dara told the BBC that they were waiting to go through the booth when one military police car, accompanied by five other cars, pulled up alongside them.

"We got him," one said while they were detaining Dara, his relative recounted, adding that Dara told his family not to worry as he was being taken away.

Local rights group Licadho reported that Dara messaged them, explaining that he had been arrested, before his phone was taken away.

His whereabouts were then not known for almost 24 hours, when he appeared in court in the capital Phnom Penh and was charged with incitement to commit a felony. He was sent to pre-trial detention and faces between six months and two years in jail if found guilty.

Phnom Penh Municipal Court spokesperson Y Rin told the BBC that the charges were related to five social media posts made in September, but did not elaborate.

In a statement, the court said the Facebook posts showed "edited pictures" of a "tourist attraction" which it said were "fake".

Is said the posts were "full of ill-intention - inciting, causing anger among the public that was intended to make people think bad of the government".

The vague charge of incitement is often used in Cambodia against government critics.

One of Dara's relatives, who also works as a journalist but requested anonymity due to fear of reprisals, said Dara had been denied access to a lawyer and they were "so concerned" about his safety.

"The authorities didn't show us any official arrest warrant or court papers. I've lost hope, I’m so concerned about practising journalism in Cambodia now," the relative said.

'Every newsroom I work in gets silenced'

One of Cambodia's most prominent journalists, Mech Dara has been at the forefront of investigating the country's cyberscam compounds, which are staffed mostly by trafficked workers.

Often victims are lured by adverts promising easy work and extravagant perks. Once they arrive in the country, they are held prisoner and forced to work in online scam centres. Those who do not comply face threats to their safety. Many have been subject to torture and inhuman treatment.

Last year, Mr Blinken awarded Dara the US State Department’s human trafficking Hero Award for his work.

The US State Department said it was aware of reports of his arrest and was "following developments closely with great concern".

The US last month sanctioned powerful Cambodian tycoon and ruling party Senator Ly Yong Phat, nicknamed the "king of Koh Kong" after his influence over his home province, over alleged connections to the cyberscam industry.

The Cambodian government said the sanctions were politically motivated.

Rights groups have voiced concern over Mech Dara's arrest.

Bryony Lau, deputy Asia director at Human Rights Watch, said “Mech Dara is a respected journalist who has reported on important topics in the public interest such as online scam centres. Yet Cambodian authorities appear to have wrongfully arrested him yesterday.

"They should immediately release him.”

Phil Robertson, director of Asia Human Rights and Labour Advocates (AHRLA), called Dara's arrest "outrageous and unacceptable" and "is emblematic of the Cambodian government's repressive, over the top reaction to any sort of criticism from the media".

Cambodia's independent media landscape has been hit hard in recent years, with publications including the Cambodia Daily and Voice of Democracy - both of which Dara worked for - closed down by authorities.

A Cambodian reporter who exposed scams charged over online posts

A Cambodian reporter who exposed online scams and corruption was charged with a criminal offense that could land him in prison for two years for material he posted on social media

Sopheng Cheang,Grant Peck
THE INDEPENDENT UK

Cambodia Press Freedom

A Cambodian investigative reporter who exposed online scams and corruption was charged on Tuesday with a criminal offense that could land him in prison for two years for material he posted on social media.

Freelance reporter Mech Dara was arrested Monday by military police at a toll booth as he was returning with his family to the capital Phnom Penh from a seaside holiday.

Ei Rin, a spokesperson for the Phnom Penh Municipal Court, told The Associated Press that Mech Dara was charged with incitement to commit a felony or cause social disorder for items he posted online on four days in late September.

The penalty for the offense is imprisonment for six months to two years, along with a fine. He said Mech Dara was sent to pre-trial detention at Kandal provincial prison outside the capital.

The arrest was condemned by journalists who worked with him as well as from press freedom and rights groups.

“Cambodian authorities must release and drop criminal incitement charges against investigative journalist Mech Dara,” said the New York-based Committee to Protect Journalists.

Shawn Crispin, senior Southeast Asia representative for the Committee to Protect Journalists, said Mech Dara’s arrest shows "just how far Cambodia’s government is willing to go to squelch independent reporting,”

About four dozen Cambodian media organizations and civil society groups issued a joint statement calling for his immediate release and to “stop all forms of harassment against media organizations and journalists.”

The statement praised Mech Dara as “a front-line investigative journalist whose stories over the last decade have uncovered corruption, environmental destruction, and human trafficking at scam compounds across the country, and has consistently pushed for accountability and justice.”

The U.S. State Department honored Mech Dara as a 2023 Trafficking in Persons Report Hero for his work exposing the problem.


Mech Dara previously worked as a journalist for the Cambodia Daily and the Phnom Penh Post, two once-vibrant English-language newspapers forced to shut down under government pressure, and the V oice of Democracy radio and website, which was closed by the government last year.

The Paris-based group Reporters Without Borders in its latest report ranked Cambodia 151st out of 180 in its international press freedom index.

The immediate action that appeared to trigger Mech Dara's arrest was his posting of two photos from the southeastern province of Prey Veng that seemed to suggest that a revered mountain with a Buddhist pagoda on top was being destroyed by quarrying stone from it.

Prey Veng officials issued a statement on Facebook denying that was the case. They called on the Information Ministry to take legal action against him.

Although he has written about the environment, Mech Dara is better known for reporting on human trafficking connected to online scam operations. They involve people who are tricked into signing up for what they believe are legitimate jobs in Cambodia, only to find themselves in virtual slavery in tightly guarded compounds where they are forced to swindle online users.

In a scam known as “pig butchering,” they are taught to slowly build up a relationship of trust with their targets, often involving romance, before convincing them to hand over large amounts of money for fake investments. The practice has been going on for several years, based mostly in Cambodia and Myanmar, and recently has drawn heightened legal attention in the United States, where people have been cheated out of millions of dollars.

The United States in September imposed economic sanctions on one of Cambodia's top tycoons because of allegations tying him to forced labor, human trafficking and lucrative online scams.

Ly Yong Phat, one of Cambodia’s richest men, is also a Cambodian senator and a leading member of the ruling Cambodian People’s Party of Prime Minister Hun Manet. Cambodia’s Foreign Ministry expressed “deep regret over the unjust decision” to sanction Ly Yong Phat and suggested that the action could hurt bilateral relations.

Why pay tax? African study finds trust in government is key

by Heikki Hiilamo and Enrico Nichelatti, 

The Conversation

 OCTOBER 1, 2024

Credit: Pixabay/CC0 Public Domain

Taxes are important. They're a primary way in which governments fund essential services like health care, education, infrastructure and social protection programs. They are vital to the economic development of countries.

In sub-Saharan African countries, the need for public services is great and fiscal resources are often scarce. Getting the public to pay their taxes is essential. However, a variety of structural and governance challenges have made it difficult to effectively mobilize revenue.

Recent tax protests in Kenya illustrate the growing tension between taxpayers and the government in the region. The protests underscore the importance of designing tax policies that not only raise revenue but also distribute the tax burden fairly across different income groups. If governments don't address these issues, they risk eroding public trust and increasing tax resistance.

The logistical difficulties of tax collection are another obstacle. Many sub-Saharan economies are characterized by small-scale enterprises and subsistence agriculture, which complicate tax administration. The informal sector—estimated to account for up to 80% of employment in some countries—largely operates outside the formal tax net. It's difficult for governments to capture this significant portion of economic activity within their revenue systems.

Tax collection in sub-Saharan Africa is also hindered by inefficient administrative systems. In many countries, tax authorities are under-resourced and under-staffed, making it difficult to monitor compliance. Personal visits to taxpayers' homes or businesses are often required to collect taxes. This drives up administrative costs and increases opportunities for corruption. In many cases, tax records are manually maintained—a system that's prone to manipulation, inefficiencies and data losses.

Our research shows that one of the most important factors influencing tax compliance in sub-Saharan Africa is trust in government.

Citizens are more likely to comply with tax obligations when the government is perceived as fair and transparent in the use of tax revenues. A strong social contract—where citizens feel taxes are returned to them in the form of public goods and services—is critical.

Conversely, when public services are inadequate or corruption is perceived as widespread, tax morale diminishes. This leads to greater tax resistance. In Kenya, Tanzania, Uganda and South Africa, studies have shown that satisfaction with public services improves tax compliance. Another study has found that perceived corruption has a negative effect on tax compliance in sub-Saharan Africa.

Governance quality also plays a role in shaping tax compliance. Citizens who trust their government and perceive that tax revenues are used to reduce inequality are more likely to pay their taxes.

Progress

Despite the challenges of collecting revenues, many African countries have made progress over the past three decades.

From the mid-1990s to 2016, total revenue (excluding grants) in the median African economy rose from around 14% to over 18% of GDP. Tax revenue increased from 11% to 15% of GDP.

This is a significant achievement, but Africa still remains the region with the lowest revenue-to-GDP ratio globally.

Weak tax administration systems continue to limit governments' ability to finance development initiatives. As a result, many countries struggle to provide essential services like health care, education and infrastructure.

Countries also tend to rely on "regressive" taxes, like taxes on consumption. These affect poorer households the most, as they spend a larger share of their earnings on taxable goods and services. This weakens the redistributive effect of tax systems and can exacerbate poverty and inequality.

Way forward

Technology could help address many of the challenges associated with tax collection. Digital tax systems, mobile money and online filing could help reduce inefficiencies and increase transparency. Some countries, such as Rwanda and Ghana, have already embraced technology to simplify processes and enhance compliance.

However, many rural areas in sub-Saharan Africa lack the internet infrastructure needed to do this. Digital tax systems require tax authorities to invest in infrastructure and training.

Still, as mobile technology penetrates the region, governments will be able to use digital tools to expand their tax base and improve compliance.

Reducing corruption

To strengthen tax compliance, improving the social contract between governments and citizens is essential. Research shows that when people believe their taxes are used for public goods and services that benefit them, they are more willing to comply.

Tax morale can be improved through transparency, reduced corruption, and ensuring that tax revenues are visibly channeled into development projects.

Targeted communication campaigns about how tax funds are used can help restore faith in government institutions.

The path to improving tax systems and compliance in sub-Saharan Africa is long. But with the right policy interventions, governments can unlock revenue potential. This will contribute to stronger economies, better public services, and ultimately, more equitable and inclusive development across the region.

Provided by The Conversation 

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Factors driving slow growth in health spending in Sub-Saharan Africa

The curse of diamonds: How Zimbabwe’s wealth is failing its people

I was listening this morning as the Minister of Mines, Winston Chitando, boasted over Zimbabwe’s increasing diamond production.

Tendai Ruben Mbofana

Indeed, Zimbabwe’s diamond industry has long been touted as a beacon of hope for the country’s economic revival.

In fact, Zimbabwe ranks as the seventh- biggest diamond producer in the world with an output of over 5 million carats worth over US$500 million in 2023, according to statistics released by the Kimberley Process Certification Scheme (KPCS).

In terms of diamond output, the Southern African country was only behind Botswana, Russia, Angola, Canada, South Africa, and Namibia.


Zimbabwe is aiming to produce 7 million carats of diamonds this year, and the sector is targeting an annual revenue of US$1 billion.

Based on the Reserve Bank of Zimbabwe (RBZ) figures, the diamond industry accounts for approximately 30% of Zimbabwe’s total mineral exports.

Whereas, the KPCS report that the Marange diamond fields are estimated to have produced over 20 million carats since 2006.

With production and exports soaring to 5 million carats in 2023, one would expect the communities surrounding these diamond-rich areas to be thriving.

Sadly, the reality is starkly different.

The people of Marange, displaced from their ancestral lands by companies like Chinese Anjin Investments, continue to wallow in poverty, their lives a testament to the dark underbelly of Zimbabwe’s diamond boom.

To directly receive articles from Tendai Ruben Mbofana, please join his WhatsApp Group on: https://chat.whatsapp.com/CBQVPGODBPQG969OBVLyeT

Marange, a region in eastern Zimbabwe, was once home to thriving communities.

However, the discovery of diamonds in 2006 brought chaos.

Over 20,000 people were forcibly evicted from their ancestral lands in Marange to make way for diamond mining, based on Human Rights Watch.

As we speak, according to UNICEF, an estimated 70% of Marange residents lack access to clean water.

The World Health Organization (WHO) reports that infant mortality rates in Marange are 50% higher than the national average.

Yet, promises of compensation and better living conditions remain unfulfilled.

Today, Marange residents struggle to access basic necessities like clean water, healthcare, and education.

Diamond mining has ravaged Marange’s environment.

The once-pristine landscape now resembles a barren wasteland.

Diamond mining in Marange has resulted in the destruction of over 10,000 hectares of forest, according to the Environmental Management Agency (EMA).

The Zimbabwe National Water Authority (ZINWA) says water pollution from mining activities affects over 50% of Marange’s rivers.

A study undertaken by the Midlands State University (MSU) has shown a protracted increase in water quality problems in both Save and Odzi rivers due to the discharge harmful substances from mining operations.

In fact, the Save and Odzi rivers are now a pale shadow of their former selves on account of the massive environmental degradation caused by siltation from the nearby mining activities.

This has forced the people of these areas to fetch water from unsafe sources, exposing them to waterborne diseases.

Deforestation and soil erosion have destroyed fertile land, threatening food security, affecting the livelihoods of 80% of Marange’s farming community, based on the Food and Agriculture Organization (FAO).

The Zimbabwean government’s failure to ensure that diamond revenues benefit local communities is a betrayal of trust.

Where are the schools, hospitals, and roads promised to these communities?

Why have the displaced residents not received fair compensation for their lost livelihoods?

The absence of transparency and accountability in the diamond industry has allowed foreign companies to exploit Zimbabwe’s resources, leaving locals with nothing but dust and despair.

This is not just an economic issue; it’s a human rights crisis.

According to Amnesty International, 90% of Marange residents reported experiencing human rights abuses related to diamond mining.

Over 500 cases of forced labour have been documented in Marange’s diamond mines by the International Labour Organization (ILO) – with most employees underpaid and working under unsafe conditions.

Women and children are disproportionately affected by diamond mining-related violence, with UN Women reporting numerous cases of sexual abuse.

The people of Marange and other diamond-rich areas deserve better.

They deserve to benefit from the resources extracted from their ancestral lands.

They deserve clean water, quality healthcare, and education.

Most importantly, they deserve justice.

Foreign companies, particularly Chinese Anjin Investments, have been accused of exploiting Zimbabwe’s resources with impunity.

Anjin Investments, according to Global Witness, has extracted an estimated US$1 billion worth of diamonds from Marange since 2010.

Yet, research shows that the company has paid less than 5% of its profits to the Zimbabwean government through the Zimbabwe Revenue Authority (ZIMRA).

In all this, their operations have displaced communities, destroyed environments, and ignored labour laws.

The President Emmerson Dambudzo Mnangagwa administration’s failure to regulate these companies has perpetuated the suffering.

The government must take responsibility for its failures.

It must ensure transparent and accountable management of diamond revenues.

Chinese companies as Anjin Investments must provide fair compensation to displaced communities, as well as invest in meaningful essential infrastructure and services.

There needs to be measures in place to protect the environment and hold polluters accountable.

State institutions such as the EMA have to be seen to be fulfilling their mandates without fear or favour.

The Environmental Impact Assessment (EIA) for these mining operations must be adhered to and re-evaluated.

The international community has a role to play in demanding greater transparency in Zimbabwe’s diamond industry and supporting initiatives promoting local community development.

These companies should be held accountable for all environmental and human rights abuses.

We need to see the ILO on the ground assessing the working conditions of employees at these mining companies.

Civil society organizations (CSOs), such as the Centre for Natural Resource Governance (CNRG), must continue to advocate for the rights of affected communities.

They must document human rights abuses, support community-led initiatives, and engage in policy advocacy.

Finally, I recommend the establishment of an independent body to oversee diamond revenue management.

The Auditor-General says that over 50% of diamond revenue is unaccounted for due to lack of transparency.

The Zimbabwean government has allocated less than 10% of diamond revenue to community development projects based on the Ministry of Finance statistics.

We also need the development of a comprehensive compensation package for displaced communities.

Companies operating in the extractive sector must be compelled by law to invest in environmental rehabilitation and conservation.

Lastly, Zimbabwe must strengthen its labour laws in order to protect workers and ensure their enforcement.

Zimbabwe’s diamond wealth should be a blessing, not a curse.

It’s time for the government to prioritize the needs of its citizens over the interests of foreign companies.

We must demand transparency, accountability, and fair distribution of resources.

Only then can we begin to address the historical injustices perpetrated against communities like Marange.

Tendai Ruben Mbofana is a social justice advocate and writer.

 email: mbofana.tendairuben73@gmail.com, or visit website: https://mbofanatendairuben.news.blog/

Post published in: Featured

A chemical cloud moving around Atlanta's suburbs prompts a new shelter-in-place alert

A chemical plant fire southeast of Atlanta is still causing trouble two days later

ByJEFF MARTIN Associated Press
October 1, 2024, 8:01 AM


ATLANTA -- Residents east of Atlanta were again warned to take shelter where they are on Tuesday if a chemical cloud moves over their neighborhood, as winds shifted the plume from a fire at a chemical plant.

A shelter-in-place order had just ended Monday evening for more than 90,000 people closest to the chemical plant where a fire sent a huge plume of orange and black smoke into the Georgia sky on Sunday. People complained about a strong chemical smell and haze for many miles around the BioLab plant in Conyers, about 25 miles (40 kilometers) southeast of downtown Atlanta.

“Due to the weather, the plume is banking down and moving throughout the county. If the cloud moves over your vicinity, please shelter in place until the cloud moves out,” Rockdale County officials told residents on social media early Tuesday.

The fire was brought under control around 4 p.m. Sunday, officials said, but they were still mopping up hot spots in the wreckage on Monday and the polluting smoke “constantly shifted” before dawn on Tuesday. With relatively little crosswinds to disperse the plume, smelly haze lingered across the Atlanta area.

BioLab’s website says it is the swimming pool and spa water care division of Lawrenceville, Georgia-based KIK Consumer Products. Residents around the area expressed frustration that company officials in their public statements didn’t specify what “products” were burning. Atlanta's fire department said it was testing for the presence of chemicals including chlorine, hydrogen sulfide and carbon monoxide.

Federal officials are investigating what led to the fire and how it has been handled. The sprinkler system showered water onto water-reactive chemicals around 5 a.m. Sunday, Rockdale County Fire Chief Marian McDaniel said. There were employees inside the plant, but no injuries were reported.

“We are sending investigators to the site to determine the cause of this dangerous incident and the safety gaps at the facility that allowed this huge fire to occur,” Steve Owens, chairman of the U.S. Chemical Safety and Hazard Investigation Board, said in a statement Monday. “Tens of thousands of people have been put potentially at risk by this catastrophe.”

While the chemical smell remained in many places on Monday, “no immediate life safety issues have been identified,” Atlanta Fire Rescue reported.

Many residents weren't reassured. The foggy air “slapped you in the face” northeast of Atlanta, where Arynne Johnson took her Great Danes outside in Suwanee on Monday morning.

“I used to work at a water park, and it felt like walking into a pool house,” Johnson said. Breathing it gave her a headache, made her cough and “my upper chest and throat have been tight all day,” she said.


Nearer to the plant in Rockdale County, residents north of Interstate 20 were ordered to evacuate on Sunday, while others were told to shelter in place. But residents of Atlanta's densely populated eastern suburbs in DeKalb and Gwinnett counties also reported seeing a haze or the strong smell of chlorine.

Hours passed Sunday before DeKalb emergency management authorities said data suggested the air pollution was “unlikely to cause harm to most people.” The DeKalb statement said anyone concerned about breathing the chemicals could stay inside with their homes sealed up and air conditioners turned off.

Multiple school districts canceled outdoor activities on Monday, and were monitoring developments Tuesday before deciding whether to extend the closures.

There have been other destructive fires at the Conyers complex, which opened in 1973.

In May 2004, multiple explosions in a warehouse led to a huge fire that prompted the evacuation of 300 people as a chlorine-laden cloud rolled through the area, The Associated Press reported, sending up a plume of green, gray and white smoke that stretched 10 miles (16 kilometers) long. At least nine people went to hospitals with complaints of burning eyes and lungs.

In June 2015, six Rockdale County firefighters were hurt in a fire at the complex, and another fire in 2016 prompted some voluntary evacuations near the plant, the Rockdale Citizen reported.

In September 2020, a chemical fire prompted authorities to shut down Interstate 20 during the morning rush hour. Biolab workers tried to isolate decomposing chemicals to prevent the catastrophe, but their forklifts were sliding on the wet floor amid the fumes, and firefighters were hindered by poorly stacked pallets of materials, the Chemical Safety and Hazard Investigation Board later determined. Nine firefighters were evaluated at hospitals after inhaling hazardous vapors.

French unions lead day of protest against the country's new right wing government


France's Prime Minister Michel Barnier arrives at stage to deliver a speech at the National Assembly, in Paris, October 1, 2024

MORNING STAR  UK
Tuesday, October 1, 2024


FRENCH trade unions led a day of protests today to demand that the government’s weakening of pension rights be reversed and for an increase in wages.

The General Confederation of Labour (CGT), Solidaires union centres and teachers’ body the FSU were joined by youth organisations in calling the nationwide protests to coincide with right-wing Prime Minister Michel Barnier outlining his government’s programme.

Mr Barnier was controversially appointed PM by President Emmanuel Macron three weeks ago, even though his Republican Party came last in July’s National Assembly election.

In his inaugural address to the lower house of parliament, Mr Barnier spoke of “colossal” and spiralling debts as a “sword of Damocles” hanging over the finances of France as he sought to justify his announcement of deep cuts to public spending and more taxes.

Although the far-right National Rally party won the most votes in July’s election, the left-wing New Popular Front is the largest bloc in the National Assembly and is expected to put forward a no-confidence motion in Mr Barnier.

There were 185 protests nationwide, including in Paris, Rouen, Reims, Orleans, Marseille, Bordeaux, Toulouse, Strasbourg and Lille.

Sophie Binet, leader of the left-wing CGT, said there was an “enormous democratic and social anger” in France, adding that many people had the “feeling of having been cheated in the last elections.”

FSU secretary-general Benoit Teste described today’s protests as “a first step” that would “allow us to count our forces and show our determination.”

Montreal dockworker strike shuts down terminals at one of Canada's largest ports

The Canadian Press | Posted: September 30, 2024 

Work stoppage began Monday at 7 a.m. at Viau and Maisonneuve Termont terminals

Image | Port-Montreal-Strike 20240930
Caption: Port of Montreal longshore workers begin a three-day strike outside the Viau terminal in Montreal on Monday. (Christinne Muschi/The Canadian Press)

Dockworkers kicked off a three-day strike at the Port of Montreal on Monday, shutting down two terminals that handle more than 40 per cent of the container traffic at Canada's second-largest port.

Some 350 longshore workers walked off the job at the Viau and Maisonneuve Termont terminals at 7 a.m. Monday, part of a limited strike amid contract talks. The strike is expected to last until Thursday morning.

The union local, affiliated with the Canadian Union of Public Employees, says the pressure tactic aims to lend weight to demands around regular scheduling and higher wages.

On Sunday, the Maritime Employers Association (MEA) said it had tried "all possible means" of avoiding a strike, including in mediation and at an emergency hearing before the Canada Industrial Relations Board that afternoon.

"The MEA had sincerely hoped to find common ground between the parties so that we could maintain operations. We are thus disappointed with this outcome," association spokeswoman Isabelle Pelletier said in a statement.

WATCH | Port workers picketing as 3-day strike begins:

           Media Video | CBC News : Longshoremen at Port of Montreal begin 3-day job action

Caption: Dockworkers at two container terminals at the Port of Montreal are now on a three-day strike. Some 350 workers walked off the job at 7 a.m. ET after weekend negotiations with their employers broke down.Open Full Embed in New Tab Loading external pages may require significantly more data usage.

The job action comes one day before a possible shutdown at U.S. ports from Maine to Texas if a union representing about 45,000 dockworkers carries through with a threatened strike.

A lengthy closure could raise prices on goods across the continent and potentially cause shortages at big and small retailers alike as the holiday shopping season — along with a tight U.S. presidential election — approaches.

On Monday, some two-dozen workers toted signs and drew horn honks from drivers passing by at a pair of entrances to the 26-kilometre-long port in southeast Montreal.
Backgrounded by grain silos, gantry cranes and stacks of red and yellow containers, the demonstrators took varied stances.

Caption: Port of Montreal longshore workers begin a three-day strike outside the Maisonneuve Termont terminal in Montreal on Monday. (Christinne Muschi/The Canadian Press)

"It's time to negotiate," read one sign in French. Another said "no" to contract work, "yes" to full-time work.

Others adopted a more bellicose tone: "MEA, it's up to you to decide — respect or war."
Union spokesman Michel Murray told a news conference Friday it would be willing to hold off on a work stoppage if the employer addressed two issues. One concerns unpredictable shifts and the other the reduced use of senior forepersons during operations, he said.

The longshore workers' contract with the Maritime Employers Association expired on Dec. 31, 2023.

Montreal dockworkers reject employer's offer, approve strike mandate

One goal of the partial strike in Montreal is to ratchet up pressure on employers while leaving room for more talks as well as more job action, said Lisa McEwan, co-owner of Hemisphere Freight, a customs brokerage firm.

The headaches caused by a short shutdown should not be underestimated.
"A two-day strike can wreak havoc on the importations into this country," she said.
However, she warned that a drawn-out strike would be much worse for shippers."When it gets really bad, ships get stuck out at sea. Nothing gets moved, everything stays. So then it's a trickling effect."

Container prices rise as the boxes become less available and ocean carriers proceed to hit importers with delay fees, which can ultimately cost consumers, McEwan said.

Caption: An aerial view of the Port of Montreal is shown on Monday. Port of Montreal longshore workers have started a three-day strike at two terminals. (Christinne Muschi/The Canadian Press)

The Port of Montreal is critical to the country's supply chains, Transport Minister Anita Anand said Monday.

"Parties must return to the table and put in the work needed to get a deal done," said Anand, who stepped into the role on Thursday, in a social media post. Her predecessor, Pablo Rodriguez, resigned from cabinet and the Liberal caucus to run for the Quebec Liberal party leadership.

Canada's maritime supply chain has faced several labour disruptions over the past four years, on top of the backlogs and bottlenecks of the COVID-19 pandemic.

A strike by 7,400 B.C. dockworkers dragged on for 13 days in July 2023, shutting down the country's biggest port and costing the economy billions of dollars.

Last October, an eight-day strike by employees on the locks of the St. Lawrence Seaway halted shipments of grain, iron ore and gasoline along the trade corridor.

And in Montreal, longshore workers went on strike for five days in April 2021 and in August 2020 in a 12-day job action that left 11,500 containers languishing on the waterfront.