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On Wednesday 28 June we were joined by three speakers to discuss the state of the media, land matters and the economy, ahead of the August 8th election.

Kwame Owino is chief executive officer of the Institute of Economic Affairs (Kenya).

Ambreena Manji is Professor of Land Law and Development at Cardiff University and former director of the British Institute in East Africa. She is the author of ARI Counterpoint ‘Whose land is it anyway: The failure of land law in Kenya‘

Denis Galava is a former Managing Editor of the Nation Media Group.

The event marked the launch of “How Kenya is failing to create decent jobs” by Kwame Owino, Ivory Ndekei and Noah Wamalwa”.

The interview with Denis Galava featured in the event is separately available here as well.

Podcast

The post The State of Kenya appeared first on Africa Research Institute.

The food basket

In a single week in the middle of February 2017, inflation figures were released for some of Africa’s largest economies. Headline inflation during January was 40.3% in Angola, 18.7% in Nigeria, 13.3% in Ghana and 6.8% in South Africa. In none of these countries could high inflation be attributed to the economy “overheating”: the latest GDP growth rates for Nigeria and South Africa are minus 1.5% and 0.2% respectively; and the figures for Angola and Ghana are 1.3% and 3%. In 2016, Nigeria and Ghana experienced their worst overall economic performance in two decades.

Measurement of inflation varies, as does the weighting given to food prices in headline national consumer price indices. Food accounts for 17% of the CPI in South Africa, 36% in Kenya and 50% in Nigeria. According to the IMF, the average weighting for sub-Saharan Africa is 40%, well above the 15% in “advanced” economies. In other words, food prices are the single most important component of African inflation indices – by far. Yet a recent study by the IMF observes that central banks and finance ministries usually strip out food and energy prices when defining “core” or “underlying” inflation and formulating monetary policy to contain it. Food and fuel are considered volatile commodities and are excluded so as not to distort the statistical trend. For most people, these are core expenses.

On global exchanges prices for most essential foodstuffs have fallen steadily in US dollar terms since 2011, and are well below the crisis levels of 2007-8. Wheat is trading not far above its 20 year low; maize is well below the spikes of 2008, 2011 and 2013; and rice is about a third as expensive as in 2008. These relatively benign prices are not being enjoyed by consumers in Africa. In February 2017, 9 out of 12 domestic food price warnings issued by the Food and Agriculture Organization of the United Nations (FAO) were for African countries.

Drought, conflict and economic mismanagement

Drought has had a marked effect on southern and eastern Africa. In 2016, South Africa’s food price inflation (16.5%) far exceeded headline inflation (6.5%). According to the PACSA Food Price Barometer annual report, in September 2016 the “big foods” cost 25% more than a year earlier, with a 25kg bag of maize costing a third more. “Low-income households are really struggling. It is becoming more difficult to put food on the table,” the report noted. Many were forced to cut food purchases to below the recommended nutrition level. By December, maize prices in Malawi had reached an all-time high; in Zambia food price inflation peaked at 26.6% earlier in the year; Mozambique is one of the dozen African countries for which the FAO has a current food price warning. Only in Zimbabwe was there food price deflation in 2016, for reasons specific to the country’s economic structure.

By January 2017, the full impact of the failure of the short rains in October/November was being felt in eastern Africa. According to The Standard, in most rural areas of Kenya a 2kg tin of maize was selling for KES100-130, compared to KES70-80 a month earlier. Headline inflation has risen to the top of the Central Bank of Kenya’s targeted range of 5% plus or minus 2.5% and, according to Kwame Owino, chief executive of the Institute of Economic Affairs (IEA-Kenya), looks set to exceed 10% within a few months. The government has declared the drought a national disaster. In Uganda, annual headline inflation rose to 6.7% in February 2017, but food costs were up by 18.8% year-on-year. Tanzania proved more successful than others in the region at containing food price increases throughout 2016, but 2017 started with rumours of imminent shortages and widespread concerns persist.

Source

In Somalia, a major food security crisis is unfolding, with a “very real risk” of famine according to the UN.  Maize and sorghum prices are 70-90% higher than a year ago, depending on the market, although livestock prices have plummeted as pastoralists sell off stock, mostly in very poor condition, to raise cash. Famine has already been declared in war and drought-affected South Sudan, while in Sudan food and fuel price rises drove headline inflation up to 33% in January 2017. During the 2015-16 drought, the worst in 50 years, Ethiopia succeeded in averting famine. Food price rises, at less than 10%, were far lower than in previous occurrences.

Elsewhere on the continent, unsustainable debts or economic mismanagement – as opposed to drought – have wrought havoc with food prices. In Angola, annual food price inflation remains well over 40%. In Mozambique, in the grip of a major debt scandal, the figure surged from 19% in February 2016 to 40% in September. In Nigeria, the 2016 harvest was good and conflict is largely restricted to the northeast, the Delta and southern Kaduna. But massive currency depreciation made Nigerian foodstuffs cheaper for neighbouring countries to import, reducing availability in the domestic market. Combined with shortcomings in agricultural policy, this triggered rampant food price inflation nationwide.

In Kano, the wholesale price of millet rose by an average of 7% per month in 2016, more than doubling in the course of the year. In Lagos, in January, the wholesale cost of a 50kg bag of domestically-grown staple garri was ₦10,000, 66% more than a year earlier; in Abuja, a 50kg bag of rice was ₦18,500, up 61% year on year; and in Ekiti, a mudu of beans was selling ₦500, 43% up year-on-year.  About the only major food product to have become cheaper during 2016 was tomatoes. In a “Cost of Living in Nigeria” survey at the start of 2017, The Cable asserted that “there are strong indications that more Nigerians are living in poverty today than they were just 12 months ago.” In neighbouring countries, grain prices were generally lower in January 2017 than a year earlier.

A persistent trend

While food price spikes caused by drought, war, economic factors, inefficient regional markets or agricultural policy are not uncommon, in time a measure of stabilisation usually occurs. The problem for African consumers is that almost everywhere the trend is persistently upwards. Kenya’s food price inflation has averaged about 12.5% a year for the past five years; Ghana’s averages 8% a year; even in Botswana, which has generally managed inflation better than most, the average is 5% a year. Only in the eight countries in the West Africa Economic and Monetary Union (WAEMU) countries, where the CFA franc is pegged to the Euro, is the five year average closer to 5% a year than the double digit inflation common elsewhere on the continent.  The effect of incessant annual increases of these magnitudes is pernicious, the more so when accompanied by rising fuel prices.

While food prices rise constantly, few are able to increase their earnings to match. Public servants sometimes succeed in applying political pressure for higher salaries, particularly in the run-up to elections. But for the majority in the informal economy or subsistence agriculture earnings fail to keep up with rises in living costs. In Kenya, according to IEA (Kenya), the number of waged employees is fewer than 2.5 million – about 12% of the total number of “eligible workers” between the ages of 18 and 60. In Nigeria, “wages cannot keep pace,” Bismarck Rewane, economic commentator and chief executive of Financial Derivatives Nigeria, told ARI. “Inflation and devaluation has cut the real incomes of Nigeria’s lower middle class by 60%.” Furthermore, many Nigerians are reliant on expenditure by the more affluent, but many employees of cash-strapped firms or state governments are not getting paid at all at the moment.

Since 2000, in an era of much improved macroeconomic management in Africa, food inflation has exceeded core inflation by more than 30%.[1] This is simply too large a differential for policymakers, central bankers and international financial institutions to continue “stripping out” or ignoring altogether. Its consequences are universally insidious, but especially “anti-poor”. Even if the 2008 food price riots in Africa – and elsewhere in the world – are (unwisely) dismissed as an aberration, in countries where the consequences of food price inflation are left unaddressed political stability must eventually be undermined or worsen.

There is no shortage of proposed solutions. The IMF report mentioned in this article suggests that “central banks and fiscal authorities…should take food prices into consideration when assessing the appropriate stance of monetary and fiscal policy”; and “improving the tradability of food—for example, by reducing tariffs and improving transport and storage infrastructure—along with other structural reforms would increase productivity in the agricultural sector and could decrease food price pressures and therefore improve welfare.”[2]Certainly, combinations of economic and agricultural policy measures pursued persistently have improved matters elsewhere. No miraculous discoveries are required. But the start point is recognition of the unsustainability of a relentless rise in the cost of food throughout Africa; and the fact that while droughts and conflict may create price spikes, the root causes of this phenomenon lie with government. Donald Kaberuka, former president of the African Development Bank is fond of recalling how a taxi driver in Senegal once told him: “I can’t eat GDP growth.”

[1] C Emre Helper, Niko Hobdari, Ali Uppal, “Food Inflation in Sub-Saharan Africa: Causes and Policy Implications”, IMF Working Paper 16/247 (2016), p.9

[2] Ibid. p.24

The post The “silent crisis” of food price inflation in Africa appeared first on Africa Research Institute.

Less than two decades after it was granted debt relief, the Government of Mozambique again finds itself unable to honour obligations to international creditors. Pending the publication of an audit of US$2 billion of borrowing by Mozambican companies afforded questionable sovereign guarantees, Africa Research Institute and Zitamar News convened a webinar with four expert panellists: Roberto Tibana, principal consultant at Analitica-RJT; Anne Frühauf, senior vice president with Teneo Intelligence; Tariq Hamoodi, partner at Bybrook Capital; and Dr Joseph Hanlon, visiting senior fellow at the London School of Economics.

This Briefing Note sets out the known details of the controversial loans to Mozambican companies and their ramifications for the government, the banking sector and international financial institutions. It then summarises panellists’ perspectives on the debt, and how Mozambique and its creditors might extricate themselves from the crisis.  

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• Fishy business
• Loan sharks
• Mayday! Mayday! Mayday!
• Navigating choppy waters
• Getting off the hook?

Fishy business

Between February 2013 and May 2014, three Mozambican companies contracted Middle Eastern shipbuilding group Privinvest and other suppliers to provide a tuna fishing fleet and maritime security. The project eventually involved borrowing US$2 billion, roughly equivalent to a third of the national budget. This sum exceeded the total amount of external debt raised directly by the government between 2010 and 2012, and breached commitments made to the International Monetary Fund (IMF) in July 2013.[i]

At the time, President Armando Guebuza was preparing to depart from office and intent on ensuring that his chosen successor secured a victory for Frente de Libertação de Moçambique (Frelimo) in the October 2014 general elections. The Guebuza family is said to have initiated the discussions with Privinvest through connections to the holding company’s co-founder and director, Iskandar Safa.[ii] The national security services, Serviço de Informação e Segurança do Estado (SISE), which report directly to the president, were tasked with establishing three companies: Empresa Moçambicana de Atum (Ematum), ProIndicus and Mozambique Asset Management (MAM). A SISE officer, António Carlos do Rosário, was appointed CEO of all three corporations.[iii]
[quote]Fishing boats were not the only item on an undisclosed shopping list; Rosário later admitted that the tuna concept had been a pretext for defence expenditure[/quote]
During September 2013, the London offices of investment banks Credit Suisse and VTB Capital arranged US$850 million in “loan participation notes”, akin to an unlisted bond, for Ematum.[iv] According to a three-page prospectus, this was intended to fund a tuna fishing fleet capable of landing 20,000 tonnes of tuna per annum.[v] Only a year earlier, a South African company, Oceanfresh, had been granted exclusive rights to fish tuna off the Mozambican coast, with a quota of 12,000 tonnes per annum.[vi] Fishing boats were not the only item on an undisclosed shopping list; Rosário later admitted that the tuna concept had been a pretext for defence expenditure.[vii]

Despite having not built a fishing vessel since the 1980s, Privinvest shipbuilder Constructions Mécaniques de Normandie (CMN) was contracted to supply 24 trawlers, in addition to three patrollers and three interceptors (each designed to be armed with a 20mm cannon and 12.7mm machine gun).[viii] The company had unveiled designs for a new 23.5-metre trawler, alongside plans for a new 43-metre trimaran patroller, only six months earlier. Mock-ups of the 32-metre high-speed interceptors were disclosed on the day the deal was announced.[ix] Guebuza and Safa visited the CMN shipyard on 30 September 2013. Within a month, Ematum had transferred US$836.3 million directly to Abu Dhabi Mar, CMN’s holding company, which is part-owned by Privinvest. The balance of the money raised by Credit Suisse and VTB – US$13.7 million – was spent on banking and transaction fees. Ematum itself was left with no working capital for its operating costs or funds for future debt repayments.[x]

Loan sharks
[quote]The lending package was signed in June 2013, but not disclosed to investors who purchased the Ematum debt just months later. Credit Suisse reportedly purchased insurance against the risk of Mozambique defaulting at Lloyd’s of London[/quote]
Concurrently, Credit Suisse and VTB Capital arranged further loans totalling US$1.16 billion for ProIndicus and MAM, apparently disregarding the considerable implications for investors in the Ematum debt. Credit Suisse raised US$622 million for ProIndicus, a corporation established to provide security for firms involved in offshore gas exploration and shipping in Mozambican waters, despite an absence of demand for these services.[xi] This followed a feasibility study undertaken by the bank in February 2013, initially assuming a US$372 million loan.[xii] The lending package was signed in June 2013, but not disclosed to investors who purchased the Ematum debt just months later. Credit Suisse reportedly purchased insurance against the risk of Mozambique defaulting at Lloyd’s of London.[xiii]

Within months of the loans to Ematum and ProIndicus, VTB Capital privately arranged US$535 million of borrowing for MAM.[xiv] This entity was hastily incorporated in April 2014, ostensibly to provide services to ProIndicus and others.[xv] In May 2014, MAM contracted Privinvest to build two shipyards (in Maputo and Pemba), where it would could construct, under license, Privinvest security vessels. The deal included the provision of spare parts and maintenance for the fleet, and the establishment of a naval training school.[xvi] VTB Capital charged an up-front arrangement fee of US$35 million, equivalent to 7% of the amount raised.[xvii] The co-arranger of the deal was Palomar Capital Advisors, a subsidiary of Privinvest led by Andrew Pearse, who had worked on the fundraising for ProIndicus while at Credit Suisse.[xviii]

In each instance, Manuel Chang, Mozambique’s then finance minister, signed paperwork confirming that the government would guarantee the debts. A parliamentary inquiry later found Chang acted in contravention of Article 179 of the Mozambique Constitution, which requires that the legislature be consulted on sovereign guarantees.[xix] The sums borrowed also exceeded the limit set by the legislature for that year, thus violating the budget laws.[xx] A further irregularity was that the contracts exist only in English, while Mozambican law requires such documentation to be translated into Portuguese and authenticated.[xxi]
[quote]The Office of the Attorney General subsequently characterised the granting of unauthorised sovereign guarantees as a “criminal offence” in the form of “abuse of office”[/quote]
The Office of the Attorney General subsequently characterised the granting of unauthorised sovereign guarantees as a “criminal offence” in the form of “abuse of office”.[xxii] Irregularities surrounding the guarantees may explain why neither the Government of Mozambique, nor the banks arranging the loans, took steps to inform the IMF and World Bank, despite a clause in the loan agreements which stipulated that the guarantor would comply with its obligations to those bodies.[xxiii]

President Nyusi, who took office in January 2015, sought to rectify remaining irregularities. The Government of Mozambique formally assumed responsibility for US$500 million of the US$850 million Ematum debt, including it in the defence budget for that year, and obtaining retrospective parliamentary endorsement for the borrowing. Mozambique honoured the first scheduled repayment, despite a budget shortfall amid declining commodity prices, substantial currency depreciation and delays to the development of liquid natural gas (LNG) reserves. Officially, at this juncture, Mozambique’s external debt stood at some US$6 billion, exceeding the sum at which the country had been granted debt relief under the Heavily Indebted Poor Countries Programme in 2001.

Mayday! Mayday! Mayday!

In March 2016, struggling to meet its obligations, the government was forced to restructure the balance of the Ematum debt. Mozambique asked international investors to exchange US$697 million in Ematum notes for new sovereign bonds with a later repayment date.[xxiv] To assuage its creditors, the government offered a higher interest rate and other incentives, thus increasing its total obligation to US$726.5 million.[xxv] Credit Suisse and VTB Capital arranged the restructuring; however, negotiations with bondholders were rushed. Charles Blitzer, a former IMF assistant director advising investors, asserts that the process failed to comply with recognised principles for fair debt restructuring.[xxvi]
[quote]Only after investors had accepted the restructuring terms did details emerge of the US$622 million loan raised for ProIndicus[/quote]
Only after investors had accepted the restructuring terms did details emerge of the US$622 million loan raised for ProIndicus.[xxvii] The UK Financial Conduct Authority has initiated an inquiry into whether Credit Suisse violated regulations by failing to disclose the existence of the ProIndicus debt to Ematum creditors during the restructuring.[xxviii] The bank’s hand was forced when, on 15 March 2016, Standard and Poor’s downgraded Mozambique’s credit rating, which entitled investors in ProIndicus to exercise their right to immediate repayment.[xxix] This situation prompted Credit Suisse to reveal the US$622 million in additional borrowing.[xxx] The Government of Mozambique then disclosed that a further US$535 million had been borrowed by MAM.

Alarmed by the fiscal mismanagement and fearing a vast corruption scandal, the IMF halted its programme in Mozambique, including payment of the second instalment of a US$283 million loan from its Standby Credit Facility.[xxxi] The World Bank also suspended disbursements, while bilateral donors terminated general budget support. The metical, the national currency, depreciated sharply, losing 40% of its value in two months.[xxxii]

Despite the sovereign guarantee, MAM missed its first payment of US$178 million due on 23 May 2016. In October 2016, the government conceded that it did not have sufficient capital to service any of the three loans, including the restructured Ematum debt. On 18 January 2017, Mozambique missed the first US$60 million coupon payment on its sovereign bond.[xxxiii]

Navigating choppy waters

The government and its creditors are at an reached an impasse. Mozambique wishes to restructure the three debts; however, holders of the sovereign bond have refused to negotiate until an independent audit has been completed, and the IMF resumes its programme.[xxxiv] Webinar panellists acknowledged the challenges faced by Kroll, the firm appointed to audit the accounts of Ematum, ProIndicus and MAM, especially as substantial sums appear to have been transferred directly to Privinvest and associated entities.[xxxv] It is unlikely that Mozambicans will ever know precisely how the money borrowed was spent, or what assets remain unaccounted for, given the veil of secrecy surrounding the transactions.
[quote]It is unlikely that Mozambicans will ever know precisely how the money borrowed was spent, or what assets remain unaccounted for, given the veil of secrecy surrounding the transactions[/quote]
ProIndicus is due to make a capital repayment of US$119 million on 21 March 2017, but is not expected to pay. As the loan was reportedly syndicated by Credit Suisse to numerous Mozambican banks, the country’s financial sector could be severely tested if the government defaults on its obligations as guarantor.[xxxvi] Local bondholders include Millennium BIM and Moza Banco (which is already in administration).[xxxvii] A related risk is that the capital raised by ProIndicus was used as collateral for commercial loans, or for down-payments on contracts for military equipment, thus increasing the risk of yet more undisclosed debt.[xxxviii] When addressing the parliamentary inquiry in late 2016, do Rosário spoke of an entire maritime protection system (Sistema Integrado de Monitoria e de Protecção) supported by 16 radars, 6 patrol aircraft, drones and satellite imagery.[xxxix]

Anne Frühauf, senior vice president at Teneo Intelligence, who advises investors in Mozambique, anticipates a “significant restructuring deal” during 2017. She questions how such a negotiation cannot result in a “haircut” for creditors, despite some having already participated in one restructuring. With the government’s repayment capacity practically non-existent, Frühauf anticipates discussion regarding the possibility of postponing debt repayments until the 2020s – the point at which revenue from vast offshore gasfields should become available, assuming final investment decisions on LNG extraction are taken soon. A major challenge is that holders of the original Ematum debt, which has since been repackaged as a sovereign bond, will resent being treated identically to holders of ProIndicus and MAM debt: in 2016, Ematum bondholders agreed to a longer amortisation period in return for a higher coupon rate. Having been restructured into a bullet payment, the annual interest burden related to the sovereign bond is already much lower than the debt-servicing costs associated with ProIndicus and MAM.
[quote]Frelimo, is reluctant to acknowledge that the guarantees were issued illegally. The Nyusi government would rather assume the liabilities inherited from the Guebuza administration than risk the political fall-out[/quote]
Tariq Hamoodi, a partner at Bybrook Capital in London, anticipates Mozambique honouring its obligations – eventually. Panellists noted that the ruling party, Frelimo, is reluctant to acknowledge that the guarantees were issued illegally. The Nyusi government would rather assume the liabilities inherited from the Guebuza administration than risk the political fall-out. Hamoodi points to the recent restructuring of the Ematum bond as having precluded any admission of wrongdoing. He views all three debts as equally binding and regards any calls for differential treatment as unrealistic. Hamoodi anticipates the three being bundled into a single loan, despite sovereign bondholders holding out for a better deal. One way to alleviate the haircut on international investors might involve Mozambique issuing gas warrants, granting creditors a certain share of future revenues from Empresa Nacional de Hidrocarbonetos (ENH), the state oil and gas company.

Getting off the hook?

Dr Joseph Hanlon, visiting senior fellow at the London School of Economics, pointed out there is an argument against bundling the three loans. ProIndicus and MAM debts were issued by Credit Suisse and VTB Capital as syndicated loans, thus establishing a fiduciary duty on behalf of the banks. By contrast, the Ematum debt is now packaged as a sovereign bond. All three debts were issued in London under contracts governed by English law. Hanlon believes that a legal process in the UK could prove advantageous for Mozambique. He notes that, historically, governments that default on their debts do better than those which attempt to pay from a position of debt distress.
[quote]Hanlon believes that Credit Suisse and VTB misled investors by claiming that the debts were repayable when this manifestly was not the case[/quote]
Hanlon contends that Credit Suisse and VTB face widespread criticism for their failure to either undertake sufficient investigations, or to report their findings to investors. Competent due diligence should have brought to light three facts. First, that in the absence of parliamentary approval, the sovereign guarantees were unconstitutional and illegal. Second, that the Credit Suisse feasibility study was “totally ridiculous”, and founded on assumptions that Mozambique could sell its tuna for three times as much as the Seychelles. Third, that collectively the three loans would make Mozambique’s debt burden unsustainable. Hanlon believes that Credit Suisse and VTB misled investors by claiming that the debts were repayable when this manifestly was not the case.

Hanlon argues that Mozambique should repudiate the “secret” and “illegal” debts issued to ProIndicus and MAM. It would then fall to a bondholder or one of the banks to appeal to the UK courts. The banks might prefer to proceed to arbitration, since the process is private. Hanlon believes that “Credit Suisse do not want to go into open court”, where they would be asked to present due diligence reports. While details of any settlement reached through arbitration would be public, documentation would not need to be disclosed.
[quote]Hanlon believes that a government refusal to honour its sovereign guarantees would be accepted, and possibly even welcomed, by the international financial institutions and donors[/quote]
As for Ematum, Hanlon concedes that the repackaging of the debt as a sovereign bond complicates further negotiations with creditors. In practice, the government has accepted, however reluctantly, its obligation as a guarantor. That distinction aside, he believes that “the original notes were sold on the same false prospectus”, which – unwittingly or intentionally – misled investors. Even if an agreement cannot be reached immediately with holders of the Ematum bond, renouncing the sovereign guarantee on the ProIndicus and MAM loans would bring Mozambique closer to debt sustainability. Such a scenario could enable the IMF to re-engage with the government, providing it with room for manoeuvre. Although bilateral donors will not want to run the risk of aid money being, in effect, used to service the debt, all parties want Mozambique to return to debt sustainability. Hanlon believes that a government refusal to honour its sovereign guarantees would be accepted, and possibly even welcomed, by the international financial institutions and donors.

Frühauf challenges this scenario on the grounds that the government has displayed no political will to repudiate the debts. Investigations have been limited, and politicians have displayed no sign of wanting to issue a declaration of “odious debt” or “illegitimate debt”, which might provoke further scrutiny. Frühauf argues that Mozambique will remain saddled with a heavy debt burden primarily because of political dynamics within Frelimo. The political cost of implicating allies of former President Guebuza or the security services could divide the party and jeopardise the leadership transition. Nyusi’s recent appointment of a new SISE director could, however, indicate willingness to subject the security services to greater scrutiny.[xl] Frühauf posited that internal opposition to Nyusi and his handling of the debt crisis might grow ahead of the crucial party congress in September 2017, and pressure to renounce part of the debt could gain traction.
[quote]Tibana predicted a tricky year ahead for President Nyusi and Frelimo grandees. In September, the party will have to decide whether the incumbent will remain its candidate for the next elections, or if Frelimo needs to replace Nyusi to turn the page on the debt scandal[/quote]
Roberto Tibana, principal consultant at Analitica-RJT, noted that any legal process brought against former finance minister Manuel Chang would inevitably open a can of worms. It remains unclear whether Frelimo elites are ready to “sacrifice” Chang, or indeed to countenance any course of action that might lead to court cases – and revelations. Tibana stressed that government ministers, past and present, would be implicated in any findings. Nyusi was the minister of defence when the debts were issued, making it “difficult to shrug off responsibility”. Tibana believes that all of Mozambique’s creditors will need to take a haircut. He questioned whether Credit Suisse and VTB Capital failed to conduct adequate due diligence or if the loans were issued with their full connivance. Tibana predicted a tricky year ahead for President Nyusi and Frelimo grandees. In September, the party will have to decide whether the incumbent will remain its candidate for the next elections, or if Frelimo needs to replace Nyusi to turn the page on the debt scandal.

External actors could yet intervene to Mozambique’s advantage. The US Securities and Exchange Commission (SEC) has requested copies of the documents provided to purchasers of the Ematum bond. Swiss regulators are also known to be taking a keen interest. If further financial transgressions are disclosed, a declaration of “odious debt” or “illegitimate debt” might become more expedient.  Not all outsiders sympathise with Mozambique’s plight, however.

The government will struggle to extricate itself from its current predicament without presenting the country, and the region, as a far riskier investment destination than had previously been projected. Trust with the international financial institutions and bilateral donors will also need to be restored if Mozambique is to diversify its sources of concessional borrowing, and this is unlikely to be a smooth process. Perhaps most importantly, as Tibana pointed out, the crisis has come as “a big shock” to hard-pressed Mozambicans, a fact that Frelimo elites have been slow to acknowledge, let alone react to. The party’s 2014 campaign song, Moçambique confia em Filipe Nyusi, stressed the trust placed in the presidential aspirant. With Frelimo’s egregious fiscal indiscipline now common knowledge, such confidence will be hard to recover.

For a two-week free trial of Zitamar News, please email subscriptions@zitamar.comreferencing ARI in the subject line.

An edited recording of the webinar is available here

Notes

[i] “Alarm over new debts”, Africa Confidential, 15 November 2013

[ii] “How far to push Guebuza”, Africa Confidential, 12 June 2015

[iii] Gestão de Investimentos, Participações e Serviços (GIPS), the social security arm of SISE, owns 98% of MAM, 50% of ProIndicus and 33% of Ematum. The other shareholders of Ematum are the national fishing company, Empresa Moçambicana de Pesca (Emopesca), and the parastatal fund manager, Instituto de Gestão das Participações do Estado (IGPE). ProIndicus is 50% owned by Monte Binga, which is managed by the Ministry of Defence but owned by IGPE. Ematum and ProIndicus each hold 1% of shares MAM. See “Secret debts devastate economy”, Africa Confidential, 13 May 2016

[iv] A fundraising by Credit Suisse for US$500 million was oversubscribed, leading VTB Capital to issue a further US$350 million. See “Secret security debts devastate economy”, Africa Confidential, 13 May 2016

[v] “MDM calls for measures against those responsible for ‘hidden debts’ – Mozambique”, AIM/Club of Mozambique, 12 December 2016

[vi] “Oceanfresh awarded tuna quota in Mozambique”, Undercurrent News, 16 September 2012

[vii] “Mozambique tuna company was front for security spending, CEO admits”, Zitamar News, 9 December 2016

[viii] Contrary to the CMN announcement, a spokesman for Credit Suisse insisted that “there are no weapons or combat systems of any kind on any of the vessels being built under the EMATUM contract.” See: Boris Korby, Paul Burkhardt and Lyubov Pronina, “Mozambique Tuna Bonds Fund Anti-Pirate Fleet in Surprise”, Bloomberg, 13 November 2013

[ix] “CMN décroche une commande historique de 30 navires”, Mer et Marine, 6 September 2013

[x] “Revealed: Ex-Credit Suisse banker in business with EMATUM ship-builder”, Zitamar News, 11 May 2016

[xi] For ProIndicus, the principal sum borrowed was US$622 million, with a final maturity date of 21 March 2021. The first repayment of US$24.88 million was due on 21 March 2016, with subsequent repayments of US$119.424 million in March 2017, 2018, 2019, 2020 and 2021. Interest Rate: LIBOR + 3.20% until 21 March 2014 and then 3.75% thereafter (payable annually). According to Quinn Emanuel Urquhart & Sullivan LLP, Credit Suisse raised US$522 million, with VTB arranging and underwriting the balance. This assertion is not reflected in the “Summary of Key Terms of Certain Commercial External Indebtedness” issued by the Ministry of Finance in November 2016

[xii] “Leaked Credit Suisse doc puts complete Mozambique coastal security contract at only $372m”, Zitamar News, 21 June 2016

[xiii] Matt Wirz, Julie Wernau and Matina Stevis, “Behind Credit Suisse’s Soured Mozambique Deals”, The Wall Street Journal, 11 August 2016

[xiv] For MAM, the principal sum borrowed was US$535 million, with a final maturity date of 23 May 2019. Four repayments of US$133.75 million agreed for May 2016, 2017, 2018 and 2019. Interest Rate: LIBOR + 7% (payable annually). Arranged by Palomar Capital Advisors and VTB Capital

[xv] “Mozambique: Prosecutors Investigating Ematum, Proindicus and MAM”, Agencia de Informacao de Moçambique, 1 May 2016

[xvi] “Mozambique’s defaulting MAM denied access to Maputo shipyard site”, Zitamar News, 14 June 2016

[xvii] Ed Cropley, “Exclusive: Mozambique paid $35 million for VTB shipyard loan – documents”, Reuters, 11 June 2016

[xviii] “Palomar named as joint arranger on $535m Mozambique shipyards loan”, Zitamar News, 25 November 2016

[xix] The inquiry was held during November 2016, with a confidential report delivered to MPs during December 2016. Article 179(2)(p) of Mozambique’s constitution grants the Assembly of the Republic “exclusive power” over the authorisation of government borrowing for a period of a year or more, and defines parliament’s role in determining the upper limits for any state guarantees

[xx] For 2013, the limit had stood at 183.5 million MZN (approximately US$5 million). In December 2013, parliament amended the budget law and increased the ceiling on government guarantees to 15.8 billion MZN, enabling Frelimo to accommodate US$350 million of Ematum’s “non-commercial activities” in the Ministry of Defence budget for 2014

[xxi] “Relatório e Parecer sobre a Conta Geral do Estado, Capítulo X – Dívida Pública”, Tribunal Administrativo de Moçambique, (February 2015) pp.X-20-21

[xxii] Procuradora-Geral da República spokesman Taibo Mucobora quoted by Voice of America: William Mapote, “Procuradoria de Moçambique admite indiciar membros do Governo Guebuza”, VOA Portgues, 14 July 2016

[xxiii] “Former Finance Minister signed loan guarantees”, A Verdade, 11 October 2016

[xxiv] Elaine Moore and Andrew England, “Mozambique proposes ‘tuna’ bond restructuring”, The Financial Times, 10 March 2016

[xxv] Once restructured, Ematum notes were issued for US$726.524 million on 6 April 2016. These have a maturity date of 18 January 2023 with a single repayment due then. Interest Rate: 10.5% per annum (payable semi-annually) with repayments due on 18 January and 18 July of each year until maturity (commencing on 18 January 2017)

[xxvi] Specifically, Principles for Stable Capital Flows and Fair Debt Restructuring issued by the Institute of International Finance. See Joseph Cotterill, “So long, and thanks for all the tuna bonds”, The Financial Times Alphaville, 11 March 2016

[xxvii] Matt Wirz and Julie Wernau, “Tuna and Gunships: How $850 Million in Bonds Went Bad in Mozambique”, The Wall Street Journal, 3 April 2016

[xxviii] Matina Stevis, “U.K. Regulator Scrutinizes Credit Suisse, VTB Over Mozambique Debt”, The Wall Street Journal, 3 June 2016

[xxix] “IMF cut-off follows secret debt shock”, Africa Confidential, 15 April 2016

[xxx] “Secret security debts devastate economy”, Africa Confidential, 13 May 2016

[xxxi] “Key Facts on Fund’s Engagement with Mozambique”, International Monetary Fund, 27 May 2016

[xxxii] The Mozambican metical had remained steady at 30 meticais to the USD during 2013 and much of 2014. Short on hard currency, the government was no longer able to support the currency during 2015, causing it depreciate to 50 meticais to the USD by March 2016. The value plummeted to 78 meticais to the USD in September/October 2016. During February 2017, the exchange rate has stabilised at approximately 70 meticais to the USD

[xxxiii] “Mozambique bondholders condemn ‘strategic’ default”, Zitamar News, 23 January 2017

[xxxiv] “Mozambique says it will default on debut sovereign bond”, Zitamar News, 16 January 2017

[xxxv] “Sovereign default looms”, Africa Confidential, 23 May 2016

[xxxvi] “Mozambique must restructure debt by March deadline to avoid banking ‘chaos’”, Zitamar News, 20 January 2017

[xxxvii] “Frelimo’s ostrich plan”, Africa Confidential, 8 July 2016

[xxxviii] “The burden of war and debt”, Africa Confidential, 18 November 2016

[xxxix] Joseph Hanlon, “Mozambique News Reports & Clippings”, The Open University, 13 February 2017

[xl] “Nyusi names new head of Mozambique’s security services”, Zitamar News, 30 January 2017

The post Mozambique’s debt crisis: Trawling for answers appeared first on Africa Research Institute.

La croissance des grandes villes d’Afrique est si rapide que les gouvernements centraux et municipaux s’en trouvent accablés. Il y a un manque de planification stratégique ; des lacunes dans la prestation de services de base aux résidents s’élargissent de plus en plus. Depuis les années 90, une décentralisation généralisée a beaucoup fait pour transférer la responsabilité de l’urbanisation aux autorités locales, alors qu’elles ne reçoivent qu’une part modique du revenu intérieur avec laquelle elles doivent s’acquitter de leurs responsabilités.1 Certaines autorités municipales – diligentes et proactives – sont en train d’étudier des moyens pour améliorer la génération des revenus ainsi que les possibilités de diversifier les sources de financement. Selon le contexte légal et réglementaire, l’appétit des investisseurs, ainsi que la solvabilité des emprunteurs et des projets d’investissement proposés, les obligations municipales seraient peut-être un mécanisme de financement valable pour certaines capitales d’Afrique. Ce Briefing Note décrit la tentative de la Ville de Dakar, capitale du Sénégal, de lancer la première obligation municipale de l’UEMOA (l’Union économique et monétaire ouest-africaine), tout en évaluant les répercussions du blocage de cette initiative par le gouvernement central.

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• Capitale contestée
• Confusion de pouvoirs
• Les investissements de Dakar
• Faire son marché
• Dakar évaluée… puis bloquée
• Financer l’urbanisation de l’Afrique
• Sources

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Capitale contestée

Pendant les années 2000, le Président Abdoulaye Wade cherchait à promouvoir Dakar en tant qu’une destination importante d’investissements. Un vaste programme de construction avait créé alors des routes, des centres commerciaux, des hôtels, ainsi que des créations plus controversées : le Monument de la Renaissance africaine, la Porte du Millénaire… En 2008, Dakar a accueilli le Sommet de l’Organisation de la Conférence Islamique (OCI). Commencent alors des travaux pour créer un nouvel aéroport international. La grande vision de Wade évoquait celle du Président Léopold Sédar Senghor, faisant écho aux années 60.

La plupart des Dakarois ne voyaient pas les avantages de cette nouvelle infrastructure. « Les routes ne se mangent pas » affirmait-on souvent à Dakar, ville où seulement une personne sur cinq trouvait un emploi à temps plein. La pénurie chronique d’emplois et de logements abordables, émeutes de la faim, services de transports inadéquats et embouteillages, inondations, gestion erratique des déchets, conduites d’égout cassées, pannes de courant fréquentes… Tels sont les traits de l’« autre » Dakar. En ce qui concerne les bidonvilles et les colonies de squatters où vivent 40 % de la population – ainsi que dans de nombreuses zones d’entreprises et de logements formels – l’Etat reste largement inefficace. Pour Amadou Diop, professeur de géographie, les « caractéristiques clés » de sa ville seraient « la croissance effrénée, l’occupation désorganisée et déséquilibrée des terres, une crise manifeste, et un environnement en déclin ».2

En 2009, Khalifa Sall du Parti Socialiste a été élu Maire de Dakar, délogeant alors un allié de Wade. Sall a promis d’améliorer la ville – surtout pour les habitants les plus défavorisés – et de garantir une plus grande participation du public dans les affaires de la ville. Réélu en 2014, Khalifa Sall était vu comme le porte-drapeau de la participation active des gouvernements locaux à travers l’Afrique, en tant que secrétaire général de l’Association internationale des maires francophones (AIMF) et président de Cités et gouvernements locaux unis d’Afrique (CGLUA). En 2012, Dakar a accueilli le Sommet Africités, la réunion triennale de CGLUA qui rassemble des milliers d’experts et de fonctionnaires venus des quatre coins du continent. D’ailleurs, Khalifa Sall a insisté sur l’adoption d’une Charte africaine du gouvernement local, tout en exigeant la création d’un Conseil supérieur de l’union africaine des autorités locales. Aux yeux de Sall, il fallait que ce soient les plus proches de la population – c’est-à-dire, les autorités locales – qui constituent le moteur du développement favorable aux défavorisés, sinon celui-ci ne se réalisera jamais.

Dakar est depuis longtemps le champ de bataille principal où s’affrontent des intérêts commerciaux et politiques. Par exemple, au début du mandat du maire, entre son administration et Wade éclate un conflit a éclaté sur la gestion des déchets dans la capitale. En cas d’inondations, l’on discute invariablement la responsabilité de remédier aux dégâts. Si Khalifa Sall et le président actuel, Macky Sall, se sont unis pour renverser Wade, et que les deux ont souvent exprimé leur volonté de collaborer pour le bien de Dakar, ils restent quand même des adversaires politiques. Lorsque les partis politiques s’affrontent, comme au cours des élections locales de 2014, cette rivalité est d’une pertinence primordiale. Dans la perspective du rythme et de l’efficacité du développement de la capitale du Sénégal, le programme de décentralisation joue un rôle également important.

Confusion de pouvoirs

Le Code des Collectivités Locales du Sénégal (1996) a été élaboré dans le but d’apaiser les adversairespolitiques du gouvernement d‘Abdou Diouf, président alors depuis 1981. Cette législation prévoyait le transfert de pouvoirs considérables aux autorités locales dans le cadre de la décentralisation et de la dévolution. La loi promouvait d’ailleurs la participation citoyenne et la planification régionale. Sa rhétorique s’appuyait sur le principe de subsidiarité, pour rapprocher le gouvernement de la population. Qui plus est, l’article 58 de la loi 96-07 dispose que nulle fonction ne doit être transférée aux autorités locales sans le transfert de ressources adéquates, provenant de recettes de certains impôts, de subventions, sinon des deux. Dans le cas de Dakar, il n’en a jamais été ainsi. L’Etat refuse, de manière systématique, de transmettre les fonds aux municipalités : à celles surtout entre les mains de l’opposition. Des transferts financiers erratiques, arbitraires, manquant de transparence, font partie intégrale de la décentralisation sénégalaise et décrédibilisent gravement l’objectif déclaré.

A Dakar, la prédominance continue de l’Etat trouve son incarnation administrative dans le préfet du département de Dakar – nommé par le gouvernement – et son incarnation fiscale dans le percepteur, qui constitue le comptable externe de la ville. Ces deux individus ont les pouvoirs nécessaires pour intervenir dans l’administration de la ville, ainsi que la capacité de la superviser. En revanche, la Ville de Dakar ne dispose d’aucun mécanisme qui oblige le gouvernement central à payer ses dus. Mises en place par l’Etat, plusieurs initiatives visant à augmenter les finances des autorités locales ont échoué. Pour la période de 2008-2012, la moyenne annuelle des indemnités versées à la Ville de Dakar – apparemment pour financer les fonctions que lui transférait la décentralisation – représentait la somme modique de 322 millions FCFA (650 000 $US)3 , soit moins de 1 % du budget municipal.

Sans le transfert régulier des ressources auxquelles elle a légalement droit, la Ville de Dakar n’est pas en mesure de s’acquitter de l’ensemble des responsabilités – importantes, d’ailleurs – qui lui sont dévolues.4 Les possibilités d’augmenter les ressources en améliorant la perception locale de revenus sont limitées parce que la fiscalité est hautement centralisée. Si la Ville a réussi à augmenter ses propres recettes de presque 40 % dans la période de 2008–2012, elle ne contrôle que moins de 10 % du total de ses revenus, qui proviennent pour la plupart de frais perçus pour les pancartes publicitaires. Après vingt ans, la décentralisation n’a pas encore apporté ce qu’elle avait promis au début aux résidents de Dakar.

Le cadre de la décentralisation crée un chevauchement important des systèmes de gouvernement local et national. Alors que leurs relations au quotidien se caractérisent par l’harmonie, il se produit fréquemment une « confusion de pouvoirs » qui complique et qui contrecarre la planification et l’administration locales. Des ambiguïtés dans la définition des responsabilités respectives forment un obstacle de taille à une collaboration plus efficace entre les gouvernements central et municipal à Dakar.

Les investissements de Dakar

Khalifa Sall s’était promis que le conseil municipal devrait prouver sa crédibilité quant à la compétence de son administration, que les limites financières ne réduiraient pas le conseil à l’inaction. « Dès le début, nous avons pris la décision d’investir les ressources de la Ville – telles qu’elles étaient – dans toutes les fonctions dont nous sommes responsables : les fonctions sociales, culturelles, sportives, et autres », nous a affirmé le maire.6 Parmi les premières initiatives dans le cadre de l’éducation, on comptait un programme de distribution de lait, des uniformes scolaires gratuits et des ordinateurs pour les écoles primaires, et des examens médicaux gratuits – chaque année – pour les enfants. Et dans le cadre des grands programmes de travaux publics, appuyés par le programme des « bénévoles dakarois » visant les jeunes sans travail, on a entrepris par exemple l’amélioration du revêtement des routes et le désensablement du centre-ville.

Sall a cherché des fonds de toutes parts. Dans le but d’accéder aux prêts et à d’autres fonds externes, Dakar avait été évaluée dans le cadre d’un examen du programme « Dépenses publiques et responsabilité financière » (PEFA) : cela l’a aidé dans sa mission.7 Première entité sous-nationale à se faire évaluer dans ce programme, la performance de la Ville de Dakar était mixte. Selon l’examen, Dakar « [n’avait] pas de programme de réformes, encore moins de programme pour gérer les finances publiques »8 L’on a souligné des insuffisances dans la planification et dans les prévisions. Cependant, cet examen PEFA a initié certaines améliorations : par exemple, dans la comptabilité, l’on publiera par la suite les audits et les évaluations.

Des réformes ont permis à Dakar de faire des emprunts. En 2008, l’Agence Française de Développement a fait un prêt concessionnel de 10 millions d’euros (16 millions $US) sur 20 ans pour améliorer l’éclairage des rues. Avec Sall à la barre, on a aussi accordé des prêts commerciaux : 3,6 milliards FCFA (7,2 millions $US) venus d’Ecobank pour reconstruire un marché au centre-ville ; de la Banque Islamique du Sénégal, un prêt de 2,1 milliards FCFA (4,1 millions $US) sur trois ans pour des feux de circulation ; et de la Banque Ouest-Africaine de Développement, 9,7 milliards FCFA (19,5 millions $US) pour la réfection des routes et des places de parking. A ce jour, le service de la dette et les remboursements de prêt s’effectuent à temps.

« L’expérience des investissements dans les feux de circulation, les routes, les chaussées, nous a beaucoup appris », dit Khalifa Sall. « Nous avons décidé, après, d’entreprendre un programme pour réduire réellement la pauvreté. » On a planifié d’importants investissements dans une zone commerciale de 10 ha à Petersen, à l’extrémité nord de la municipalité de Dakar-Plateau. Dans une stratégie de réorganisation du centre-ville, l’on a prévu un nouveau marché de 13 milliards FCFA (26 millions $US) pouvant abriter au moins 4 000 des marchands ambulants et commerçants de Dakar. Démarche controversée, le maire avait interdit le commerce de rue – après de nombreuses séances de consultation auprès des associations de commerçants pour leur expliquer ses projets et pour entendre leurs objections. Malgré l’objectif de « réduire la pauvreté », visant d’ailleurs les marchands de rue, les relations entre les autorités et les marchands ambulants restent volatiles, parfois même acrimonieuses.

Le regroupement des marchands ambulants du centre-ville dans un seul endroit avait un atout supplémentaire : la décongestion du Plateau et de la partie la plus au sud de la péninsule. Selon la Banque Mondiale, la congestion routière à Dakar, aggravée par le commerce de rue, coûterait 108 milliards FCFA (216 millions $US) en perte de revenus, chaque année. En diminuant sa dépendance financière au gouvernement central, le programme visait d’ailleurs à générer des revenus dont la ville avait grand besoin. Le défi consistait à trouver les fonds nécessaires : 20 milliards FCFA (40 millions $US). En 2012, les revenus d’exploitation de Dakar s’élevaient à 36,5 milliards FCFA (73 millions $US) ; ses dépenses en capital étaient de l’ordre de 11 milliards FCFA (22 millions $US).

Faire son marché
 
C’est dans le contexte d’une immense agitation politique – la course aux élections présidentielles 2012 – la course aux élections présidentielles 2012 – que Sall établit ses projets. « D’un jour à l’autre, le maire ne savait pas s’il allait être jeté en prison [par Wade], ou si les maires seraient tous abolis », affirme Khady Dia Sarr, directrice du « Dakar Municipal Finance Programme » (DMFP), équipe constituée au sein du bureau du maire et composée de quatre cadres sénégalais et d’un expert externe.9 Malgré la possibilité de sources alternatives, l’émission d’une obligation municipale comportait des attraits indéniables. Elle permettrait à la Ville de Dakar d’emprunter une somme importante sous forme de montant forfaitaire, à un taux inférieur à celui des emprunts commerciaux. Elle serait d’ailleurs le signe de sa détermination à ne pas dépendre des financements concessionnels, ainsi que la preuve de sa confiance dans ses capacités à gérer er des investissements générateurs de recettes. Selon Dieynabo Dabo, la coordinatrice du DMFP, les préparatifs de l’émission d’une obligation représentaient « un processus tout nouveau » pour le maire, le DMFP, et toute l’administration municipale. « Personne ne savait au juste ce qu’il fallait faire. » Ayant finalisé ses projets au mois de mai, le DMFP a été lancé officiellement en septembre 2012.

Dans la plupart des pays d’Afrique, les entités sous-nationales n’ont pas droit aux emprunts. Peu nombreuses sont les municipalités pouvant établir leur solvabilité en fonction des flux de trésorerie, un profil d’endettement, ou des antécédents de crédit suffisants pour dissiper les craintes des investisseurs concernant les remboursements. Rares sont celles pouvant démontrer des antécédents adéquats de planification stratégique, de gestion des dettes, ou d’administration compétente. A cet égard, Dakar ressemblait à la plupart des capitales d’Afrique. Ses revenus auto-générés, comme ses ressources, étaient réduits ; son budget dépendait énormément du gouvernement ; ses capacités techniques restaient limitées. En revanche, après l’examen PEFA, la Ville avait établi une Direction de la Planification et du Développement Durable (DPDD) capable de démontrer que Dakar avait une stratégie de développement crédible ; de plus, elle pouvait faire preuve d’une gestion des dettes compétente.

Les préparatifs de l’émission d’obligations municipales sont d’une importance primordiale. Vue la méfiance des membres des services de planification, d’administration, et de finances municipaux, il fallait qu’ils se sentent pleinement consultés et intégrés dans le processus. Dans ce but, l’on a institué un nouveau conseil consultatif englobant la société civile, des représentants des entreprises, des chefs religieux. L’on a mis en œuvre un nombre d’initiatives visant une professionnalisation de l’administration de la ville et une amélioration de l’expertise : du DPDD, pour approfondir le plan stratégique de Dakar ; de la Direction Générale des Finances, pour maximiser la perception des recettes ; de la Direction du Développement Urbain, pour aider à la conception et à la construction du projet d’investissements.

Il fallait aussi savoir comment s’y prendre avec le cadre réglementaire : il était nécessaire que l’obligation respecte les exigences de l’autorité émettrice, le Conseil Régional de l’Épargne Publique et des Marchés Financiers (CREPMF) de l’UEMOA, dont le siège est à Abidjan (Côte d’Ivoire). Au début de 2014, une équipe de la Banque Mondiale a fait le suivi de l’examen ; elle a donné des conseils à la Ville sur la mise en œuvre d’améliorations supplémentaires dans la gestion des recettes fiscales. La réussite d’une émission dépend d’un projet d’investissements crédible, des communications proactives, et du choix du bon moment.

Dakar évaluée… puis bloquée
 
Dès le début, l’on a demandé à l’agence de notation internationale Moody’s de fournir une cote de crédit confidentielle pour la Ville de Dakar. Pour ce faire, l’on a évalué par exemple son aptitude à prendre des décisions, la qualité de sa planification budgétaire, sa gestion des actifs et des créances, ainsi que la prévisibilité de ses revenus. Cette cote servirait de repère permettant de mesurer les améliorations éventuelles avant l’obtention d’une notation publique, officielle. Vu que l’obligation serait lancée dans le marché régional de l’UEMOA, c’est une agence régionale de notations – Bloomfield, basée en Côte d’Ivoire, agréée par le CREPMF – que l’on a choisie à cette fin.

En septembre 2013, après un réexamen rigoureux de ses finances, durant trois mois, Dakar a reçu une notation A3 à court terme et une notation BBB+ à long terme. Une telle cote de qualité (« investment-grade ») aurait suffit à justifier l’émission de l’obligation, selon les directives du régulateur ; cependant, la Ville a aussi fixé une garantie partielle de 50 % du montant principal de l’obligation de la part de l’Agence des Etats-Unis pour le développement international (USAID) pour augmenter encore plus la solvabilité de la transaction. « Le rehaussement de crédit de la part d’un garant éminent tel que l’USAID a dissipé certaines des inquiétudes concernant les défaillances dans les pires des cas », affirme Jeremy Gorelick, principal conseiller financier et technique du DMFP.

La Ville ayant reçu sa notation, il était possible de structurer l’obligation. Le montant de l’emprunt a été fixé à 20 milliards FCFA (40 million $US), à rembourser sur une période de sept ans. L’on a proposé un taux d’intérêt annuel de 6,6 %. Pendant les deux premières années, aucune partie du montant principal de l’emprunt ne serait remboursable ; cependant, l’USAID avait stipulé un fonds de réserve pour financer les premiers remboursements. Une compagnie dakaroise a été chargée d’organiser la commercialisation et le placement de l’obligation par l’entremise de 18 intermédiaires financiers parmi les huit pays de l’UEMOA. En janvier 2015, après les retards provoqués par les élections locales de 2014, le lancement de l’obligation sur la Bourse régionale des valeurs mobilières d’Abidjan, était imminent. La couverture médiatique commence alors, de même que le forum itinérant pour investisseurs. La demande des investisseurs aurait été forte ; en février, le CREPMF émit le visa autorisant l’émission de l’obligation.

Deux jours avant le jour du lancement officiel, le ministère de l’économie et des finances a suspendu l’avis de non-objection qu’il avait accordé au projet en juillet 2014. Il a souligné certaines « objections techniques », ce qui a bloqué l’émission de l’obligation. Dès lors, se soulèvent des questions, des doutes concernant : le niveau d’endettement de la Ville ; la responsabilité de l’Etat, en cas de défaillance, pour la moitié de l’émission non couverte par l’USAID ; l’appartenance politique du promoteur immobilier, bénéficiaire potentiel de la construction de la nouvelle zone à Petersen ; la légalité de l’émission au regard de l’Acte III de la décentralisation. Le 5 mars, CREPMF retire le visa autorisant l’obligation.

Khalifa Sall déclarera que rien n’avait changé depuis la décision du gouvernement permettant l’entreprise du processus. Le préfet et le percepteur – nommé par le ministère de l’économie et des finances – avaient approuvé la légalité budgétaire et générale de l’émission. Bien des alliés du maire voyaient le blocage comme une attaque ad hominem contre lui. Lors des élections locales de 2014, il avait battu la première ministre, Aminata Touré, candidate nommée par le gouvernement pour le déloger et s’assurer le contrôle de la capitale. Ayant gagné son deuxième mandat de maire, la possibilité qu’il mène une campagne présidentielle contre Macky Sall se révélait plus probable : l’influence de la politique nationale sur la gestion de la capitale sénégalaise se voyait confirmée de nouveau.

Financer l’urbanisation de l’Afrique

A ce jour, la rapide urbanisation ne constitue pas un moteur clé de la croissance économique en Afrique subsaharienne. Elle se caractérise par : la prolifération de bidonvilles non planifiés et dénués de services essentiels ; l’explosion du chômage chez les jeunes ; l’escalade dans la dégradation et les risques environnementaux. En général, les projets du gouvernement ne tiennent pas compte de la grande majorité des résidents de la plupart des grandes villes, ni de leur activités économiques informelles, dont dépend un avenir plus prospère. Il existe une insuffisance chronique de financement urbain.

Selon une étude de 2012, le déficit d’investissements municipal d’Afrique aurait été de 25 milliards $US chaque année : « Malgré ce besoin pressant, la plupart des gouvernements locaux d’Afrique ont un accès restreint aux marchés des capitaux et ne disposent pas de finances du secteur privé pour les infrastructures. »10 La diversification des finances est d’une nécessité urgente. Les grandes villes d’Afrique ne peuvent plus vivre en dépendant d’indemnités inadéquates du gouvernement central ou de financements concessionnels (par donation) qui sont limités. Une plus grande autonomie financière est essentielle. Le rôle primordial des gouvernements locaux dans la réalisation des Objectifs de Développement Durable (ODD) a été reconnu dans le Programme d’Action d’Addis Ababa de 2015 ; en octobre 2016, ce rôle sera souligné au sommet mondial Habitat III.

Dakar a fait preuve d’une approche innovatrice devant ses exigences de financement. Dirigée par un maire dynamique, compétent, la tentative de faire d’importants investissements pro-pauvres, générateurs de revenus, financés par une obligation municipale, a beaucoup de leçons à enseigner à d’autre villes. Le DMFP était bel et bien une initiative locale. Les préparatifs de l’émission obligataire n’ont pas nécessité une armée de technocrates externes ; il a suffi d’un noyau d’administrateurs municipaux compétents, appuyés si nécessaire par des institutions externes de financement du développement. Il a fallu que certains services municipaux améliorent l’exécution de quelques fonctions de base : la planification, la communication, la collaboration ont servi dans ce but. En amenant la Ville au point de lancer son obligation, le DMFP a aussi souligné le potentiel du renforcement des finances municipales en Afrique.

Il y a une grande marge d’amélioration dans l’administration fiscale par ou au nom des villes, dans la génération des recettes, et dans le contrôle des coûts. Par exemple, à Dakar, l’administration municipale a facilement amélioré la collecte inefficace du gouvernement central des recettes locales, en vertu d’une entente de partage de revenus ; les impôts fonciers restent gravement négligés comme source de revenus municipaux.11 Les marchés obligataires régionaux existants constituent les bases de l’émission obligataire municipale et étatique pour les investisseurs africains en monnaies locales. Toutefois, il serait possible de les renforcer à l’aide d’une industrie de notation de crédit intérieur qui soit plus développé, plus abordable. Un développement du cadre réglementaire des marchés obligataires régionaux entraînerait une hausse dans la confiance des investisseurs, pour favoriser la mobilisation intérieure de plus nombreux actifs financiers d’Afrique.

Les ressources humaines et économiques de l’administration municipale de Dakar n’excèdent pas celles de la plupart des capitales africaines. Ses antécédents financiers n’étaient pas parfaits. Or, la Ville a réussi à construire un argument convaincant de sa solvabilité et à élaborer une transaction bancable qui dépassait de loin les ratios standard du service de la dette pour municipalités. Ces facteurs, avec la garantie de l’USAID, ont attiré un groupe d’investisseurs prêts à s’y engager. En décembre 2014, le DMFP a reçu le Prix Guangzhou, établi en 2012 par l’CGLUA et la ville de Guangzhou. Le projet de Dakar était le seul de l’Afrique parmi les 259 entrées soumises.

A  l’image de bien de capitales, Dakar se compose en fait de deux cités. C’est la volte-face du gouvernement central, au dernier moment, qui a bouleversé l’émission de l’obligation : ce qui souligne que Dakar est un prix politique farouchement disputé, tout en constituant le centre tristement sous-financé et le cœur de l’activité économique du Sénégal. Cette dualité représente une barrière importante au développement socio-économique de beaucoup de capitales du monde. Cependant, en Afrique, la nécessité de la contourner est particulièrement pressante. Pour que l’urbanisation devienne un moteur du développement, il faudra prioriser la collaboration et le développement avant les partis politiques – passage complexe et tendu, difficile à réaliser partout.

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1. Selon CGLUA, les dépenses des gouvernements locaux dans la plupart des pays d’Afrique constituent moins de 10 % des dépenses nationales, contre la moyenne de 25 % des pays OCDE.
2. Diop, Amadou, « Dakar », chapitre 3, in Bekker, Simon (éd.), Capital Cities in Africa, HSRC Press, 2011, p.42.
3. Comme moyenne approximative pour la durée (2012-14) du Programme des Finances Municipales de Dakar, le taux d’échange utilisé ici sera de 500 FCFA pour 1 $US.
4.La Ville a des responsabilités dans neuf domaines : la gestion du patrimoine, de l’environnement, et des ressources naturelles ; la santé, la population, et l’action sociale ; sports et loisirs pour les jeunes ; la culture ; l’éducation ; la planification régionale ; la planification urbaine et le logement.
5. Diop, Amadou, op. cit., p.40.
6.Les citations dans le texte proviennent d’entretiens à Dakar en mai/juin 2014, sauf indication contraire.
7.L’examen PEFA a été financé par le Mécanisme consultatif sur les infrastructures publiques et privées (PPIAF) – fonds multidonateur. Le cadre PEFA établit 31 indicateurs principaux ; il a été instauré en 2005 pour évaluer les gouvernements centraux.
8.Ville de Dakar: Evaluation de la Gestion des Finances Publiques Municipales: Rapport PEFA sur les performances, 30 janv. 2009, p. 68.
9. A l’automne 2011, le DMFP a obtenu une subvention de 500 000 $US de la Fondation Bill & Melinda Gates pour réaliser l’évaluation de faisabilité. Un engagement ultérieur de la Fondation fournira jusqu’à 4,9 millions $US. Il fallait que le projet génère des revenus et qu’il profite aux pauvres en zones urbaines, selon une exigence spécifique. Le PPIAF, le’USAID, l’AFD, et Cities Alliance ont eux aussi fourni de l’aide.
10.Paulais, Thierry, Financing Africa’s Cities: The Imperative of Local Investment, World Bank and Cities Alliance, 2012.
11. V. Monkam, Nara & Moore, Mick, « Les avantages de l’impôt foncier pour l’Afrique », Africa Research Institute, janv. 2015.

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Central and municipal governments are being overwhelmed by the rapid growth of Africa’s cities. Strategic planning has been insufficient and the provision of basic services to residents is worsening. Since the 1990s, widespread devolution has substantially shifted responsibility for coping with urbanisation to local authorities, yet municipal governments across Africa receive a paltry share of national income with which to discharge their responsibilities.1 Responsible and proactive city authorities are examining how to improve revenue generation and diversify their sources of finance. Municipal bonds may be a financing option for some capital cities, depending on the legal and regulatory environment, investor appetite, and the creditworthiness of the borrower and proposed investment projects. This Briefing Note describes an attempt by the city of Dakar, the capital of Senegal, to launch the first municipal bond in the West African Economic and Monetary Union (WAEMU) area, and considers the ramifications of the central government blocking the initiative.

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• Contested capital
•  A confusion of powers
• Dakar Invests
• Going to the Market
• Dakar rated…and blocked
• Funding Africa’s urbanisation
• Sources

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Contested capital

During the 2000s President Abdoulaye Wade sought to establish Dakar as a major investment destination and transform it into a “world-class” city. A massive construction programme created new roads, shopping malls and hotels, as well as controversial creations such as the Monument de la Renaissance Africaine and Porte du Troisième Millénaire. In 2008, Dakar played host to the Organisation of the Islamic Conference (OIC) summit. Work commenced on a new international airport. Wade’s grand vision echoed that of President Léopold Sédar Senghor in the 1960s.

For most Dakarois, the benefits of new infrastructure were elusive. “You can’t eat roads” was a common saying in a city where only one in five could find full-time employment. The chronic shortage of jobs and affordable housing, food price riots, poor transport services and traffic congestion, flooding, erratic waste management, broken sewage pipes and frequent power cuts typified the “other” Dakar. In the slums and squatter communities where 40% of the population live, and in many formal housing and business areas, the state is largely ineffectual. Amadou Diop, a professor of geography, has described “the key characteristics” of his city as “uncontrolled growth, unorganised and unbalanced land occupation, a marked crisis and a declining environment”.2

Khalifa Sall of the Parti Socialiste was elected Mayor of Dakar in 2009, unseating an ally of Wade. He promised to improve the city, especially for its poorer residents, and to ensure much greater public participation in its affairs. Sall was re-elected in 2014 and by then had emerged as a standard bearer for active local government throughout Africa as general secretary of the International Association of Francophone Mayors (AIMF) and president of the United Cities and Local Governments of Africa (UCLGA). In 2012, Dakar hosted Africities, UCLGA’s triennial gathering of thousands of local government experts and officials from across the continent. Khalifa Sall also pressed for the adoption of an African Charter on Local Government and the establishment of an African Union High Council on Local Authorities. For Sall, those closest to the people – local government – must drive pro-poor development or it will not occur at all.

Dakar has long been the key battleground for competing political and business interests. Early in Khalifa Sall’s first term, for example, conflict erupted between his administration and Wade over waste management in the capital. When flooding occurs, responsibility for making good the damage is always disputed. Although the parties of Dakar’s mayor and the current president, Macky Sall, joined forces to unseat Wade, and the two frequently voice their willingness to work together for the betterment of Dakar, they are political rivals. When party politics are to the fore, as they were during the 2014 local elections, this becomes particularly relevant. Equally significant to the pace and efficacy of the development of Senegal’s capital is the country’s ongoing decentralisation programme.

A confusion of powers

Senegal’s 1996 Municipal Administration Code was formulated to placate political opposition to the government of Abdou Diouf, president since 1981. The legislation provided for the transfer of significant powers to local government through decentralisation and devolution, and promoted citizen participation and regional planning. The rhetoric articulated the principle of subsidiarity, bringing government closer to the people. Furthermore, Article 58 of Law 96-07 stipulates that no function should be transferred to local government without the transfer of adequate resources, provided by receipts from certain types of tax, grants or both. This has never been the case for Dakar. The state has routinely withheld funding from municipalities, particularly those in the hands of opposition parties. Erratic, arbitrary and non-transparent financial transfers are a feature of Senegal’s decentralisation that severely undermines its stated purpose.

In Dakar, the continued predominance of the state is personified administratively by the government appointed préfet du département de Dakar and fiscally by the percepteur, in effect the city’s external accountant. Both are empowered to intervene in, as well as oversee, city administration; but the city of Dakar has no mechanism to force central government to pay its dues. Several initiatives set up by the state to increase local authority financing have not been successful. Allowances to Dakar, ostensibly to fund the functions transferred by decentralisation, averaged a paltry FCFA322m (US$650,000)3 per annum in 2008-12, less than 1% of the city’s budget.

Without the regular transfer of the resources to which it is legally entitled, Dakar cannot fulfil all its devolved responsibilities, which are significant.4 There is limited scope to increase resources by improving local revenue collection because taxation is highly centralised. Although the city succeeded in increasing its own revenues by almost 40% in 2008–12, it has control over less than 10% of its total revenue, mostly generated from fees for advertising billboards. After two decades decentralisation has yet to deliver what it originally promised to the residents of Dakar.

The framework of decentralisation creates considerable overlap between national and local government systems. While relations on a day-to-day basis are mostly harmonious, a “confusion of powers”5 frequently complicates or frustrates local planning and administration. Ambiguity in the definition of responsibilities is a key stumbling block to more effective collaboration between central and municipal governments in Dakar.

Dakar invests

Khalifa Sall was determined that the city council should gain credibility for competent administration and not be reduced to inaction by financial limitations. “We took the decision at the outset to invest the city’s resources, such as they were, in all functions we are responsible for – social, cultural, sport and others”, the mayor told ARI.6 Early initiatives in education included a school milk programme, free school uniforms and computers for elementary schools, and free annual medical examinations for children. Major public works involving the “Dakar volunteers” programme for unemployed youth included paving and sand clearance from the city centre.

Sall sought funding wherever he could. He was helped by Dakar having undergone a Public Expenditure and Financial Accountability (PEFA) review of its financial management system with a view to accessing loans and other external finance.7 T he city was the first subnational entity in Africa to be assessed in this way and its performance was mixed. The review judged that Dakar “[did] not have a programme of reforms, still less a programme of the management of public finances”8. Inadequacies in planning and forecasting were highlighted. Nevertheless, PEFA provided the impetus for improvements, for example in accountability, by making audits and evaluations public. Reforms were sufficient to enable Dakar to borrow. A €10m (US$16m) 20-year concessional loan had already been secured from Agence Française de Développement in 2008 to pay for street lighting improvements. Under Sall, commercial loans were approved: FCFA3.6bn (US$7.2m) from Ecobank to rebuild a downtown market; a three-year FCFA2.1bn (US$4.1m) loan from Banque Islamique du Sénégal for traffic lights; and FCFA9.7bn (US$19.5m) from the West African Development Bank for road rehabilitation and parking. To date, debt service and repayments of these loans have been made on time.

“We learned from the experience of investing in traffic lights, roads and pavements,” says Khalifa Sall. “Next, we decided we would undertake a real poverty reduction project”. A major investment in a 10ha commercial zone in Petersen, at the northern extremity of Dakar- Plateau municipality, was planned. As part of a strategy to reorganise the city centre, the zone included a new FCFA13bn (US$26m) market with affordable space and facilities for 4,000 or more of the city’s marchands ambulants – street vendors – and shopkeepers. The mayor banned street trading, a controversial move, but held frequent consultations with trader associations to explain his plans and hear objections. Although “poverty reduction, with the street vendors” is the objective, relations between the city authorities and marchands ambulants remain volatile and at times acrimonious.

If many of the marchands ambulants of downtown Dakar could be concentrated in a single location, there was another potential benefit. It would decongest Dakar-Plateau and the southernmost part of the peninsula. The World Bank estimates that Dakar’s traffic congestion, exacerbated by unregulated street trading, costs FCFA108bn (US$216m) in lost income a year. The project would also generate much-needed revenue for the city, reducing its financial dependency on the central government. The challenge was raising the required FCFA20bn (US$40m). In 2012, Dakar’s operating revenues were FCFA36.5bn (US$73m) and its capital expenditure FCFA11bn (US$22m).

Going to the market

Sall’s plans were drawn up against a backdrop of immense political turmoil in the run-up to Senegal’s 2012 presidential election. “From day to day, the mayor didn’t know if he’d be thrown in jail [by Wade]. Or if mayors would be abolished altogether,” says Khady Dia Sarr, director of the Dakar Municipal Finance Programme (DMFP), a team of four Senegalese professionals and one external expert established in the mayor’s office.9 Although alternatives existed, the attractions of issuing a municipal bond were clear. It would enable the city to borrow a large amount in a lump sum and at a cheaper rate than commercial borrowing. It would also signal a determination by the city not to rely on concessional financing and confidence in its ability to manage a large revenue-generating investment. Preparation for a bond issue “was a whole new process” for the mayor, DMFP and the city administration, according to DMFP’s co-ordinator Dieynaba Dabo. “No one knew exactly what to do.” Having finalised its plan in May, DMFP was officially launched in September 2012.

In most African countries sub-national entities are not allowed to borrow. Few municipalities are able to establish creditworthiness based on cash flow, debt profile and credit history to allay investor concerns about repayment of the loan. Few can show an adequate record of strategic planning, debt management and competent administration. In this context, Dakar was no different to most African capitals. Its self-generated income and resources were slight, its budget was substantially dependent on central government and its technical capacity limited. But following the PEFA assessment the city had established a Department of Planning and Sustainable Development (DPDD) capable of demonstrating that Dakar had a credible development strategy; and it had a short record of competent debt management.

The preparation for a municipal bond issue is crucial. The mayor and DMFP had to make cautious council members and the city’s finance, administration and planning departments feel involved and fully consulted. A new consultative council was established, which included civil society, business representatives and religious leaders. Small initiatives professionalised city administration and bolstered the expertise of the DPDD, to enhance Dakar’s strategic plan, the Department of Administration and Finance, to maximise revenue collection, and the Department of Urban Development, to help with the design and construction of the investment project.

The regulatory framework also had to be navigated: the bond needed to comply with the requirements of the issuing authority, WAEMU’s Conseil Régional de l’Épargne Publique et des Marchés Financiers (CREPMF), with headquarters in Abidjan, Côte d’Ivoire. Early in 2014, a World Bank team followed up on the PEFA review and advised the city on implementing further improvements in its fiscal revenue management. A successful issue is dependent on a credible investment plan, proactive communications and good timing.

Dakar rated… and blocked

At the outset, international ratings agency Moody’s was commissioned to provide a confidential credit rating for Dakar. The process appraised, among other things, the quality of the city’s decision making, budgetary planning, asset and debt management, and the predictability of revenues. The rating provided a benchmark against which improvements could be made before obtaining an official, public rating. Given that the bond would be launched in the WAEMU regional market, Bloomfield a ratings agency, based in Côte d’Ivoire and accredited by CREPMF, was selected.

In September 2013, after a rigorous three-month re-examination of its finances, Dakar received an A3 short-term rating and BBB+ long-term rating. Although this investment-grade rating would have been sufficient under the regulator’s guidelines for bond issuance, the city secured a partial guarantee for 50% of the principal amount of the bond from the United States Agency for International Development (USAID) to further enhance the transaction’s creditworthiness. Jeremy Gorelick, lead technical and financial adviser to DMFP, commented that “the presence of a credit enhancement from a well-respected guarantor like USAID helped to relieve some of the concerns about worst-case default scenarios.”

Once the city received its rating, the bond could be structured. The loan amount was set at FCFA20bn(US$40m) to be repaid after seven years. Annual interest of 6.6% was offered to investors. For the first two years none of the principal amount of the loan would be repayable, but USAID stipulated a reserve fund to finance the first such repayments. A Dakar-based firm was mandated to arrange the marketing and placing of the bond through 18 financial intermediaries in the eight WAEMU countries. In January 2015, after delays partly caused by the 2014 local elections, the launch of the bond on Abidjan’s Bourse régionale des valeurs mobilières, the regional securities exchange, was imminent. Press coverage and a regional investor roadshow began. Investor demand was reported as strong and in February CREPMF issued the visa authorising the issue to proceed.

Two days before the official launch date, Senegal’s ministry of the economy and finance suspended a written avis de non-objection it had given to the project in July 2014, presenting certain “technical objections” that blocked the bond issuance. Concerns and questions were raised about the city’s level of indebtedness; the potential liability of the state in the event of default for the 50% of the issue not covered by USAID’s guarantee; the political affiliation of the real estate developer who stood to benefit from the construction of the new Petersen commercial zone; and the legality of the issue under Act III of decentralisation. On 5 March, CREPMF withdrew the visa for the bond.

Khalifa Sall responded that nothing had changed since the government had given its permission to proceed. The préfet and the percepteur, an appointee of the ministry of the economy and finance, had approved the general and budgetary legality of the issue. Many of the mayor’s allies saw the block as being directed at Khalifa Sall personally. In the 2014 local elections he defeated the prime minister, Aminata Touré, put up as a candidate by the government to unseat him and win control of the capital. With the possibility of the mayor standing for the presidency against Macky Sall appearing more likely after he secured a second term as mayor, the influence of national politics on the management of Senegal’s capital was once again confirmed.

Funding Africa’s urbanisation

To date, rapid urbanisation has not been a key driver of economic growth in sub-Saharan Africa. It is characterised by the proliferation of unplanned slums devoid of basic service provision, spiralling youth unemployment, and escalating environmental hazard and degradation. The overwhelming majority of residents of most cities and their informal economic activity, on which a more prosperous future depends, are largely ignored by government master plans. There is a chronic shortfall in urban financing.

A 2012 study estimated Africa’s “municipal investment gap” at US$25 billion per annum. The report observed that “despite this pressing need most African local governments have limited access to capital markets and no private sector finance for infrastructure”.10 Diversification of funding is urgently required. Africa’s cities cannot continue to rely on inadequate handouts from central government and limited donor-funded concessional finance. Greater financial autonomy is a necessity. The crucial role of local governments in achieving the Sustainable Development Goals (SDGs) was recognised in the 2015 Addis Ababa Action Agenda; and it will be re-emphasised by the Habitat III global summit in October 2016.

Dakar showed an active, innovative approach to its funding requirements. Led by a dynamic, competent mayor the attempt to make a substantial pro-poor, revenue-generating investment funded by a municipal bond has much to teach other cities. DMFP was very much an indigenous initiative. The preparation for the bond issue did not require armies of external technocrats; a core of competent municipal administrators was sufficient, supported by external development finance institutions where necessary. Key city departments were required to carry out a few basic functions better and this was achieved through planning, communication and collaboration. By taking the city to the point of launching its bond, DMFP also highlighted the potential for bolstering municipal finance in Africa.

There is considerable scope for better tax administration by or on behalf of cities, improvements in revenue generation and cost control. For example, in Dakar the city administration could readily improve on inefficient central government collection of local taxes under a revenue-sharing agreement; and property tax has been seriously neglected as a source of municipal income.11 Existing regional bond markets are the foundations for municipal and state bond issuance in local currencies to African investors, but they could be bolstered by a more developed, affordable domestic credit ratings industry. Further development of the regulatory framework in regional bond markets would boost investor confidence and facilitate domestic mobilisation of more of Africa’s financial assets.

The human and economic resources of Dakar’s city administration are no greater than those of most African capitals. Its financial history was imperfect. Yet the city succeeded in building a convincing argument for its creditworthiness and crafting a bankable transaction that significantly exceeded standard debt service ratios for municipalities. These factors, combined with the USAID guarantee, attracted the core group of investors prepared to commit to investment. In December 2014, DMFP was awarded the Prix Guangzhou, initiated in 2012 by UCLGA and the city of Guangzhou. Dakar’s project was the only one from Africa in a field of 259 entries.

Like many capitals, Dakar is in fact two cities. A central government volte-face that subverted Dakar’s bond issue at the eleventh hour underscored that it is a fiercely contested political prize as well as being the direly underfunded centre and hub of Senegal’s economic activity. This duality has proved a significant obstruction to economic and social development in many capitals worldwide. But in Africa the need to circumvent it is particularly pressing. If urbanisation is to become an engine for development, collaboration and development will have to be prioritised over party politics – a complex and fraught transition to achieve anywhere.

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1.Local Governments Africa (UCLGA), local government expenditure in most African countries is less than 10% of national expenditure vs. an average of 25% in OECD countries

2. Diop, Amadou, “Dakar”, Chapter 3 in Bekker, Simon (ed.), Capital Cities in Africa HSRC Press, 2011, p.42

3. An FCFA500 : US$1 exchange rate has been used throughout as an approximate average for 2012–14, the duration of the Dakar Municipal Finance Programme.

4.The city has certain responsibilities in nine areas: estate, environment and natural resource management; health, population and social action; youth sports and leisure; culture; education; planning; regional planning; urban planning and housing.

5. Diop, Amadou, op. cit., p.40

6.All those quoted in the text were interviewed in Dakar in May/June 2014 unless otherwise indicated.

7.The PEFA assessment was funded by the multi-donor Public-Private Infrastructure Advisory Facility (PPIAF). The PEFA framework has 31 principal indicators and was introduced in 2005 to evaluate central governments.

8.Ville de Dakar: Evaluation de la gestion des finances publiques municipales: Rapport PEFA sur les performances, 30 Jan. 2009, p. 68

9. In Autumn 2011 DMFP received a grant of US$500,000 from the Bill & Melinda Gates Foundation to conduct the feasibility study. It received a subsequent commitment from the foundation to provide up to US$4.9m. A specific requirement of the grant was for the project to be revenue-generating and to benefit the urban poor. PPIAF, USAID, Agence Française de Développement and Cities Alliance also provided assistance.

10.Paulais, Thierry, Financing Africa’s Cities: The Imperative of Local Investment, World Bank and Cities Alliance, 2012

11. See Monkam, Nara and Moore, Mick, “How property tax would benefit Africa”, Africa Research Institute, Jan. 2015

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Informal employment was defined by the International Labour Organization in 1993 as “jobs or work without employment-based social protection in informal enterprises, formal firms and/or households”. It includes self-employed workers, wage workers and contracted or sub-contracted workers that may work in the formal sector but through informal arrangements.

Marty Chen, Co-founder and International Co-ordinator, Women in Informal Employment: Globalizing and Organizing (WIEGO):

• WIEGO is an action-research-policy network working in 20 countries across Africa. We learn through both action and research. Improving statistics on the informal sector is key: better data is required to advocate more effectively and to inform policy discussions.
• The informal economy accounts for 66% of non-agricultural employment in sub-Saharan Africa. In southern Africa the figures are much lower than the average, but in Mali and Madagascar the figure is over 80% – and in Uganda it is 94%. The degree of informality varies regionally in Africa; it is also disproportionately female and significantly shaped by ethnicity.
• Ongoing, active dialogue between informal workers and city authorities will help to create inclusive urban spaces in Africa. WIEGO supports the development of negotiating platforms, by building the capacity of local organisations to enter into and maintain dialogue.
• Most informal workers are poor; most working poor are informally employed. In this sector it is generally the case that earnings are low, while business costs and risks are disproportionately high. Informal workers operate in a very uncertain environment.
• Contrary to popular perceptions, informal workers do not operate outside of the state. In fact, they are directly impacted by the policies, plans and practices of city authorities and local governments – often in punitive form. Increasingly, efforts to “modernise” cities are making them more hostile to informal traders; but the main message of informal workers to authorities is “regulate us, but do not criminalise us”.

Kate Meagher, Associate Professor, London School of Economics:

• A historical understanding of the informal economy in Africa highlights how different institutional histories shaped the development of very different informal economies.
• In the pre-colonial era the informal economy was the economy, but that does not mean there was uniformity across the continent. In West Africa, where centralised states and empires dominated, a more urban environment and regulatory systems for economic activity were well developed. In southern Africa, the complexity and density of regional trade networks and economic systems was much lower.
• The colonial period witnessed the first wave of informalisation in the sense that all economic activity now operated outside newly created, imposed states. Different types of colonial states shaped the differing developments of informal economies in Africa. Cash crop economies, most prominent in West Africa, allowed local informal activity to continue uninterrupted as it did not interfere with agricultural production. Labour reserve economies, predominantly found in southern Africa, were accompanied by a more controlling state that crushed and criminalised economic activity which competed for human resources. The concession economies of central Africa, run through brutal systems of labour control, were shaped by extensive criminality and repression.
• Different African states had different independence histories, but one largely similar shared experience was the introduction of structural adjustment programmes in the 1980s. These led to a severe contraction of the formal sector, thereby forcing an even larger share of population into informal economic activities.
• In the 1970s, the average size of the informal economy in cash crop regions was 58% of the non-agriculture labour force; in concession economies, it accounted for 49%; and in labour reserve economies just 19%. The figures that have all increased substantially in the past forty years.
• In former cash crop economies, the percentage of self-employed is far higher than that of wage workers; in labour reserve economies, this is reversed. A large share of informal employment in southern Africa is with formal companies.
• Africa’s informal economies can generate more employment. Individual entrepreneurs can evolve their activities into small businesses, given the right support. Micro-credit is not helpful, but technical training and local sub-contracting can support a framework that might help address, in part, burgeoning youth unemployment.

Verner Ayukegba, Principal Analyst, Sub-Saharan Africa at IHS Economics and Country Risk:

• In Africa, it is extremely difficult for people who have registered business to access capital – let alone those in the informal sector. In addition, the cost of being “legal” in African economies is very expensive. To register a business, due to government efforts to clamp down on tax avoidance, you are often required to pay taxes in advance of starting trading.
• Governments often pay lip service to improving the business environment: practical steps do not always match up to the promises. For many people, it makes sense to stay in the informal sphere.
• The extent to which the informal sector drives the entire economy is difficult to ascertain accurately because of a lack of data and the absence of a critical understanding of how informal activities manifest themselves. Take motorcycle drivers in Cameroon, for example. They are a fundamental part of the economy but their value is not yet being captured and their potential harnessed.
• Organised groups in the informal economy, such as motorbike unions, have power in a city; they can do more to leverage it for positive change. If they speak loud enough governments will not be able to ignore their demands and will have to listen responsively.

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• Nothing is more important to the future of Africa than the future of China. Africa’s population is projected to grow rapidly, more than doubling to 2.5 billion by 2050. To benefit from this and secure a demographic dividend, Africa is reliant on China as the major buyer of its natural resource exports. As China’s economy slows it will produce and import less. This is already having a marked impact on countries like Zambia which is reliant on copper exports for 86% of its revenue.
• If China’s GDP growth slows to 5%, down from 6.9% this year, this spells disaster for Africa. With static or diminishing income from natural resources, countries that are not food self-sufficient – like Nigeria – will be have generate alternative foreign exchange revenues for that purpose. This issue is only going to become more acute given the demographic projections and Chinese land grabs in Africa. If China’s downturn is less pronounced, the consequences for Africa will be less severe.
• China has provided a lot of easy credit to African governments to build damns and other infrastructure projects. This has brought substantial benefits. However, many projects are being built using Chinese labour and this is a missed opportunity.
• To date, China has been disinterested in the political leanings of African governments when it comes to investment. It has supported the political elites of many of the most unequal countries, like Angola. In a sense, China is non-ideological: it is pursuing a mercantile rather than altruistic approach, extracting resources at the least cost and greatest benefit to itself. Nonetheless, it still wants to be seen as a major player in Africa and has increasingly sought to develop its soft power on the continent by teaching Mandarin, developing media outlets and opening embassies than the US or UK.
• China does not see Africa as an arena for global competition. The US, UK and former colonial powers welcome Chinese involvement, as it does things that are necessary but they are not prepared or able to do – like build big infrastructure, fast. Despite the recent Indo-African Summit India won’t pick up China’s slack anytime soon: it does not have the same growth needs.
• China’s engagement in Africa does have some rough edges. It fails to employ Africans to carry out infrastructure projects, there is a lack of technology and skills transfer to local people, and growing competition between Chinese and African small traders has devastated domestic manufacturing. Support for highly authoritarian regimes also comes at a cost for citizens.
• Xi Jinping’s recently launched corruption drive at home, which led to the detention of Sam Pa, a renowned Chinese investor in Africa, might have wider impacts. It is difficult to know yet whether this is part of a political purge within the Chinese Communist Party or a wider crackdown. Private Chinese companies in Africa cannot operate without official state support. So if it is about tackling corruption at large then the impacts for investment in some African states will be sizeable.

Here are links to some recent articles that complement Professor Rotberg’s narrative or present alternative points of view:

• Deborah Bräutigam’s new book “Will Africa Feed China?” reveals the real story behind allegations of large-scale Chinese land grabs on the continent. A review is available here
• The Mail & Guardian Africa’s Christine Mungai and Charles Onyango-Obbo looked at the impact China’s economic slowdown might have on countries like Angola, Nigeria and Zambia, and on specific sectors like trade and technology
• In the Financial Times, Aubrey Hruby suggested that China’s economic slowdown is an opportunity for Africa to address longstanding economic inefficiencies; and incoming Africa Editor David Pilling argued that China-Africa relations are about more than just raw materials
• Amadou Sy of The Brookings Institution provided a nuanced and accurate picture of China’s direct investment in Africa and scrutinised the facts and fictions behind Chinese land grabs
• In conversation with The Washington Post, Howard French looked beyond the “trade not aid” rhetoric to explore the complexity of Sino-African relations
• JR Mailey, writing for African Arguments, provided analysis on the recent detention of Sam Pa, the Chinese tycoon renowned for striking deals with the most authoritarian of African governments
• IIED’s Xiaoxue Weng discussed China’s impact on Africa’s informal economy, a topic also addressed in this book review of Margaret C Lee’s “Africa’s World Trade”

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Podcast:

The post What are the consequences for Africa of China’s economic slowdown? appeared first on Africa Research Institute.

Dr. Jesse Salah Ovadia, Lecturer in International Political Economy, University of Newcastle; author of The Petro-Developmental State in Africa: Making Oil Work in Angola, Nigeria and the Gulf of Guinea:

• Oil and gas possess unique potential to leverage foreign investment in domestic industry. However, the benefits of extractives development need to be directed towards national development, rather than a small elite.
• Petro-developmental states must harness state capacity and invest revenues from oil and gas productively, but should also utilise local content policies to diversify the economy. Local content can anchor non-oil growth and economic transformation. The rebasing of Nigeria’s GDP last year highlighted the importance of domestic manufacturing and the service industry to the economy as a whole.
• Nigeria’s local content law is both one of the oldest and one of the strongest in terms of what it requires. Every country that has enacted legislation since has weaker regulations.
• The current downturn in the global oil price offers advantages for the development of local content. In Nigeria the depreciation of the naira has made local services cheaper for international investors. As long as oil extraction continues, so too do the benefits of local content.

Dr. Ernest Nwapa FNSE, Pioneer Executive Secretary, Nigerian Content Development & Monitoring Board (NCDMB):

• The discovery of oil distorted Nigeria’s economy, leading citizens to abandon productive sectors in search of easy profits from extractives. No value was added in country; crude was exported and gas was flared. Taxation and royalties were assumed to be sufficient benefits. There was little attempt by domestic businesses to provide materials or services to the hydrocarbon industry. International oil companies (IOCs) everywhere assumed they had no role to play in national economic development until producers established national oil companies (NOCs) to increase indigenous participation in the sector.
• President Obasanjo directed the Nigerian National Petroleum Corporation (NNPC) to work with IOCs to enhance value addition. The NNPC reviewed programmes from Brazil and worked with a Norwegian agency to avoid disruption to operations while creating a transparent way of broadening participation in the industry. A decision was taken to legislate, but to avoid being too prescriptive. Between the genesis of local content policies in 2003 and the final legislation in 2010, the NNPC opened dialogue with IOCs, service companies and regulatory agencies.
• The NNPC began by collaborating with those possessing technology, funding and expertise; it was important to start by building trust, before moving to detailed discussions. Avoiding disruption and remaining globally competitive were two key priorities, but so were the need to ensure sustainability and demonstrate government commitment. Nigeria pushed for immediate benefits to communities affected by oil exploration. Oil exploration brings noise, pollution, and social challenges to parts of Nigeria; and when companies move on they often take electricity and employment opportunities with them.
• In five years, the NCDPM multiplied the number of Nigerians employed in the oil industry ten-fold. This was more than the country had been able to achieve in the previous 50 years. IOCs moved from operating out of hotel rooms to establishing offices and workshops in Nigeria.
• Enshrining a local content policy in legislation is important; but there is a risk of including too much in the laws, which prevents innovation. Equally, targets needed to be revisited. Strong political will and demonstrations of financial commitment are required from government to build confidence. Collaboration with IOCs should result in win-win situations. Nigeria was fortunate that any risk of losing investment was mitigated by a global movement toward adopting local content policies. The supply chain in Nigeria is now robust, with most large companies using local suppliers.

Patrick Obath, Executive Director, ASI Kenya Extractives Industry Development Programme:

• Kenya has much smaller oil and gas reserves than Nigeria, but nevertheless the discovery has resulted in high expectations. Kenya is currently establishing how best to harness income from sector, use oil to catalyse economic transformation, and ensure sustainability. The country is also in the process of devolving power from the national level to 47 county governments. Tensions between different tiers of government, and between counties, may make it difficult to leverage benefits at the local level.
• Communities where resources are located have experienced interventions by NGOs and others warning of a “resource curse”. The challenge is to manage popular expectations. Investors, government and communities are meeting to debate how the proceeds of investment should be shared. At this stage, the aim is to transform knowledge and skills in affected communities so that over the long-term local people can be properly involved in the exploitation of natural resources.
• The sharing of revenue is a political hot potato. There is a false expectation that the day drilling starts, there will be funds available to communities. County governments need to brace themselves for a delay of eight to ten years before they see any returns on the development of oil and gas reserves. Both the national government and the counties need to better understand the investment cycle and plan accordingly.

Isabelle Ramdoo, Deputy Head of Programme, Trade and Economic Transformation at the European Centre for Development Policy Management (ECDPM):

• Local content policies take different forms. There can be quantitative requirements, for example quotas based on numbers, or on value; or qualitative requirements, such as reporting and justification obligations, information sharing, and advertising of opportunities. The scale and provisions can vary widely, both in terms of how ‘local’ the policies seek to be and whether they deal with labour, procurement, joint venture and technology transfer.
• Local content is not an end in itself, but part of a comprehensive development package. Governments also need to consider incentives for both foreign and domestic investors. A major challenge remains linking the extractive sector to others in the economy.
• Even if legislation is well drafted, more than just regulation is required. NOCs must possess a sound understanding of the sector, and the procurement needs at different stages. The government should work to identify opportunities and gaps, finance shortages, and adjust policies to enable local and international companies to cooperate.
• Research and development and innovation are also important. Local content can provide an opportunity to address the technology gap. However, it remains difficult to catch up with international suppliers given the degree of competition in that sector. Collaboration and partnership are the core of successful local content policy.

The Q&A can be listened to here:

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Full Podcast:

The post The “resource curse” or economic transformation: local content policies and realising the potential of hydrocarbon reserves appeared first on Africa Research Institute.

To mark the 40^th anniversary of ECOWAS, Africa Research Institute, in partnership with The Africa Report, hosted a panel discussion to debate its continued relevance and role in improving regional economic, cultural and political integration. Our assembled experts – Arnold Ekpe, Véronique Tadjo and Patrick Smith – shared their thoughts and responded to wide-ranging questions from the audience.

Ekpe on the economy:

An ECOWAS single currency: The single currency remains a dream. It does not make economic sense when the West African economies are so heterogeneous. Regional convertibility is a more sensible approach and would encourage the free movement of capital across the region. The proposed Eco currency would have to be based on the Naira because Nigeria’s economy accounts for 77% of regional wealth; but this would be unacceptable to the francophone countries that use the CFA Franc. They are unable to provide a viable counter-proposal because the CFA is pegged to the Euro and guaranteed by France. How can you have a West African currency without having control of setting policy, printing money and a central bank?

Economic leadership: Currently we look outside, to Europe and elsewhere, for solutions to our economic problems. We must learn to look within Africa. I would support an Africa-Africa summit to discuss how we can work together to move forward economically. There is a lack of visionary pan-African leadership. Within ECOWAS I see a willingness to get things done but an inability to execute; moving from talk to action has always been its biggest challenge.

The fallacy of the African economic miracle: The 6-7% GDP annual growth figures we see in West Africa are not good enough. China grew at double digits for three decades to catch up. If Africa is to do the same we need to create bigger markets and big banks to finance infrastructure. If a country has 45 banks, they have 40 too many.

Funding development: Some African countries have struggled to attract foreign investment for ambitious infrastructure projects. Ethiopia financed its new dam by raising money from its own citizens. More attention needs to be paid to domestic revenue mobilisation if we are to create a pool of revenues for investment. Countries cannot develop from external funding alone.

Tadjo on culture:

Language: One of the biggest missed opportunities is language. ECOWAS made a key decision to keep French and English as official languages, in the belief that this would facilitate communication, but the gap between Anglophone and Francophone countries remains as stark as at independence. A lack of communication means we are not sharing ideas and knowledge across the region. This is true of African languages too.  We are not talking to each other within country borders; there is alienation between elites and the majority of the population. People are trapped within ethnic and linguistic groups. This leads to marginalisation and radicalisation.

The culture industry: We need to make culture an integral part of the economy. Government budgets for culture are an afterthought; there is a lack of political will to support art in West Africa. I see this as a loss of potential earnings.

Smith on politics and security:

Anti-third term movements: The uprising in Burkina Faso to oust President Compaoré was a very important juncture. It sent shockwaves across the continent and we are seeing the after-effects in DRC and Burundi. To ECOWAS’s credit they have tried, just two days ago, to restrict all leaders in the region to two terms but it should be no surprise that the only objectors were Togo and Gambia – the members most hostile to democratic freedoms.

The insecurity threat: If insecurity in northern Nigeria can be tackled the focus might shift to Islamist rebels in Mali. The vast amounts of military hardware in Libya left behind after the fall of Gaddafi poses a significant threat to stability in the ECOWAS region. Security crises will not go away and ECOWAS will have to find a way of financing future interventions.

Nigeria and the region: Buhari’s election in March 2015 was part of wider political movement against corruption and lawlessness that was undermining economic opportunity. His efforts to re-establish the rule of law will be vital to Nigeria’s future and promise to have regional implications with elections in Ghana, scheduled for 2016, drawing some parallels.

A political union: ECOWAS is an economic union in denial. It has done more in political and security interventions – Cote d’Ivoire, Guinea-Bissau, Sierra Leone and Liberia – than anything else.

Audio podcast:

Photos:

Storify:

The post ECOWAS at 40 appeared first on Africa Research Institute.

May 2015

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The purpose of the African Development Bank (AfDB), founded in 1964, is to provide capital to alleviate poverty, improve living conditions and spur economic and social development. It is the largest external funder of infrastructure in sub-Saharan Africa.1 Under the astute leadership of Donald Kaberuka, the Bank has demonstrated resilience and ability to co-ordinate appropriate continental responses to external threats. In 2009, a doubling of loan and grant approvals to US$8 billion helped to mitigate the effects on Africa of a global recession. The following year, shareholders approved a threefold increase of the AfDB’s capital base.

The Bank has forged partnerships with the private sector to fund investment in infrastructure, which it regards as the basic requirement to accelerate economic growth and encourage foreign direct investment and regional trade. It has established itself as a leading source of knowledge on development, provider of technical expertise and trusted advocate for the interests of a continent undergoing rapid change and economic growth.

On 27 May, the Board of Governors will elect a new president at its 50th annual meeting. With donor finance static since the global financial crisis, there are constraints in the Bank’s funding model. Its non-African shareholders demand that the Bank take on more complex roles than traditional project lending. With limited resources, the AfDB is being called upon to lead on issues where it either lacks experience or will find it hard to demonstrate success, including the development of post-conflict and fragile states, regional integration, trade negotiation, gender equality, climate change and infectious disease control. Kaberuka’s successor will face a difficult task.

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• Back from the brink
• An infrastructure bank with a wider remit
• The Africa50 Infrastructure Fund: project preparation and development
• African Development Bank Group key facts
• Constraints and opportunities

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Back from the brink

In the mid-1990s, the AfDB was engulfed by scandal and near-bankruptcy due to bad lending and corruption. Repair of the balance sheet was the main preoccupation during the presidency of Omar Kabbaj. When former Rwandan finance minister Kaberuka succeeded Kabbaj in 2005, the Bank was providing only 6% of total aid to Africa – less than the United Kingdom. Its international standing was low. Some donors questioned its continued existence.

In 2006, a panel of experts convened by the influential Washington-based Center for Global Development recommended that the principal role of the AfDB should be to promote economic growth through private sector development, regional trade integration and better economic management; and that it should specialise in infrastructure development. The advice on major regional and global issues – for example, climate change – was “lead but don’t lend”.²

The backdrop was unpromising. Africa’s economic growth was subdued and the continent had largely been bypassed by a substantial expansion in global trade and investment. Regional integration was a failure. The Bank was in danger of being crowded out by larger, external donors such as the World Bank and European Commission. But Kaberuka’s arrival coincided with a significant improvement in Africa’s economic performance.

Fuelled by demand for its natural resources, growth in South-South trade and the flow of capital from developed to emerging and frontier markets, by 2013 Africa had become the world’s second fastest-growing region. The AfDB benefited substantially from – and built on – this change of fortunes. It returned to its origins as primarily a funder of infrastructure and its 2013-22 strategy articulated a determination to “place the Bank at the centre of Africa’s transformation”.

An infrastructure bank with a wider remit

According to AfDB estimates, Africa requires infrastructure investment of nearly US$100 billion a year for a decade in order to generate broad-based annual average GDP growth of 7%. At present, only half that sum is being spent. Among other projects, the AfDB has co-financed the Kazungula road and rail bridge linking Botswana, Zambia and Zimbabwe; roads from eastern Nigeria to western Cameroon and between the capitals of Mali and Guinea; and the Turkana wind farm in Kenya, the largest of its kind in eastern Africa.

At US$4-5 billion a year, the Bank’s lending meets a fraction of Africa’s infrastructure and development needs. Financing the mega-projects desired by many governments, such as power stations and transport corridors, is not possible alone. “We have to be clever, doing more with less, and so does Africa,” says an AfDB spokesperson. “The only way to make an impact is through partnerships.” Every US$1 the Bank lends to public sector projects helps to raise another US$3 from other donors or private sector investors, a ratio it aims to increase to 1:10.

Partnerships with the private sector and acceleration of regional integration are priorities: private sector lending exceeds US$1.5 billion a year, a tenfold increase since 2006, with energy and transport projects accounting for two-thirds of commitments. Since 2006, the Bank has co-ordinated 50 public-private partnerships (PPPs). It sees its role as one of facilitating private investment by improving the feasibility, and reducing the regulatory and other risks, of projects: risk mitigation lowers borrowing costs. In 2010, it also set up a loan syndication unit, which has lent more than US$4 billion financed by commercial lenders alongside the Bank. Joint funding spreads risk and makes limited resources stretch further: for example, US$373 million was raised for Dakar’s integrated power and transport project, with the AfDB contributing less than 20% of funding.

In its drive to accelerate infrastructure investment, the AfDB has assumed a role in a plethora of initiatives with a similar objective. It is the executing agency for the Programme for Infrastructure Development in Africa, a scheme of the New Partnership for Africa’s Development (NEPAD) Secretariat and African Union Commission for regional and continental infrastructure and services. It is co-financing projects promoted by Power Africa, a US-led plan to add 30,000MW of electricity-generation capacity. Through its Africa50 Infrastructure Fund, the Bank is seeking to channel African currency reserves and savings into infrastructure projects that it is prevented by its AAA credit rating from co-funding directly.

[quote]New and unpredictable demands stretch the Bank’s human and financial resources[/quote]

Flexibility is crucial. “We’ve got a client base whose demands are changing rapidly, especially regarding infrastructure finance,” says Kapil Kapoor, AfDB’s director of policy and strategy. Several initiatives have raised the AfDB’s profile as a knowledge bank and advocate for the continent, such as the African Financial Markets Initiative – a “gateway to Africa’s bond markets” – and the African Legal Support Facility. This helps governments to negotiate complex commercial transactions, deal with asset-seizure threats by hostile creditors and build their own expertise in these areas. It is currently advising on more than US$18 billion-worth of transactions, including a recent iron ore deal between the government of Guinea and mining company Rio Tinto.

New and unpredictable demands stretch the Bank’s human and financial resources. It supported Guinea, Liberia and Sierra Leone as they battled to contain the Ebola epidemic, distributing US$223 million to fund nine operations in the region, launching a response fund alongside the African Union, the Economic Commission for Africa and private sector donors, and contributing an additional US$300 million to transport and infrastructure improvement.

In 2015, the Bank is co-ordinating Africa’s stance at the UN Climate Change Conference and on the sustainable development goals, which will determine the global development agenda for the next 15 years. Member countries are being encouraged to include gender equality in all programmes. “We recognise that these issues are vital to development. But the President has said that we cannot do everything, we must act as an honest broker and a catalyst for change,” says a Bank spokesperson.

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The Africa50 Infrastructure Fund: project preparation and development

Africa50 was established in 2014 as an African-owned, innovative means of accelerating infrastructure development on the continent. The AfDB provided US$100 million in seed funding and initial staffing. At present, private sector investment in African infrastructure averages US$6 billion a year. Africa50 is aiming to raise equity investment of US$10 billion, an amount which would enable it to leverage up to US$100 billion in debt and equity within Africa and globally.

The initial equity investment will be US$3 billion. “The AfDB will commit US$500 million, another US$500 million will come from African governments and we will do this for two more years until we get an A credit rating,” explains Tas Anvaripour, Africa50’s chief executive. “Then we will issue a bond to African pension and other institutional funds, which will make it easy to scale up and do again. We can get to US$10 billion in a few years.”

Despite its name, Africa50 is “not a fund, it is an infrastructure delivery platform,” says Anvaripour. The focus is on the project preparation and development of high-impact national and regional initiatives in the energy, transport, ICT and water sectors, with a view to increasing their attractiveness to investors. “The capital needed to prepare a project to get it to the development stage is only about 10% of total budget. But the private sector is unwilling to fund it because it’s the most risky phase, and governments don’t have the cash. This is where Africa50 comes in – taking projects to the bankable stage.”

From design to financial closure, project preparation typically takes seven to ten years. Africa50 aims to reduce this to less than three years, thereby facilitating the completion of a critical mass of much-needed projects in the short to medium term.
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African Development Bank Group key facts:

• Established: September 1964 (non-regional members admitted in 1982)
• Main constituent institutions: African Development Bank (ADB), African Development Fund (ADF)
• Authorised capital: Units of Account (UA) 66.98 billion (US$100 billion), of which 60% from regional members, 40% from non-regional members (G7 shareholding: 28%)
• Shareholders: 54 regional, 26 non-regional represented by 20 resident executive directors (13 from regional members, 7 from non-regional members)
• Top ten shareholders: Nigeria (9.3%), USA (6.6%), Japan (5.5%), Egypt (5.4%), South Africa (4.8%), Algeria (4.2%), Germany (4.1%), Libya (4%), Canada (3.8%, France (3.8%)
• 2013 funding approvals: 317 operations, total UA4.39 billion (US$6.5 billion) of which ADB UA1.83 billion (US$2.7 billion) and ADF UA2.27 billion (US$3.4 billion)

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Constraints and opportunities

The AfDB’s prudence has protected its AAA credit rating and helped to secure the capital increase in 2010. It also dictates that most lending be allocated to Africa’s 14 middle-income countries; half of its loans are to North Africa. Thirty-four low-income countries are only eligible for about one-third of AfDB resources, through the concessional “window” of the African Development Fund (ADF), which provides grants and interest-free loans. Five countries can access Bank lending and ADF funds.3 In 2004-13, the Bank disbursed approximately US$27 billion to low-income countries through the ADF, substantially funded by non-African member countries, whereas it lent US$36 billion to middle-income countries in the same period. The ADF’s budgeted lending for 2014-16 is US$7.4 billion, a 22% reduction on the previous three year window and equivalent to just US$2.5 billion per annum to address the needs of 39 countries.

The growing mismatch between the AfDB’s structure and the needs of most countries in Africa was highlighted in a recent internal policy review. Strong growth and sound macroeconomic management have enabled many countries to attract commercial loans and foreign direct investment, which now exceed aid as the continent’s main source of finance.4 Some, not all of them in the middle-income category, have been able to access international debt capital markets. Traditional donors no longer hold exclusive sway.

[quote]Bank insiders recognize that its model has to change[/quote]

“The Bank has in the last year or two had difficulty finding people to whom it can lend,” a senior representative of a leading shareholder told ARI. “The North Africans have exhausted what they can borrow. Others like Namibia, Botswana and Angola don’t want to borrow from the AfDB. Meanwhile, the ADF’s pot has been declining, so the amount it can give to the poorer countries in concessional funds is quite small – much smaller than the World Bank. This is a problem when the AfDB is claiming to be the main institution on the continent. Some of the poorer countries want to become non-concessional [i.e. commercial-rate] borrowers. But we have to be careful we don’t create bad debtors in Mozambique, Ethiopia and similar countries.”

Bank insiders recognise that its model has to change. It has sought to encourage multilateral donors to invest in fragile and post-conflict states, an area in which it wants to assume a growing role but acknowledges a lack of capacity at present. All multilateral development banks, including the World Bank, are reassessing their relevance. Well-established international finance institutions are being challenged by new institutions like China’s Asian Infrastructure Investment Bank. “No one here will tell you the AfDB is no longer needed, but we can’t go on being generously funded by the international donors,” says a spokesperson.

There are opportunities. Partnerships with private investors and companies keen to invest in African infrastructure and developing economies are one. “Parallel funding” arrangements with sovereign states that cannot increase their investment in the AfDB due to the strictures of its capital structure are another. In January 2014, Japan pledged to double to US$2 billion its support for the AfDB’s Enhanced Private Sector Assistance for Africa initiative, which supports entrepreneurship and job creation. In May 2014, China and the AfDB launched a new 10-year co-financing facility, the Africa Growing Together Fund, to be run alongside the Bank’s existing lending operations.

African central bank reserves, institutional savings and pension funds are further underutilised resources for development. The AfDB is actively encouraging African governments to use their domestic private sector to provide infrastructure through PPPs and other schemes. It has helped to persuade the South African government to increase the amount its pension funds can invest elsewhere in Africa, a move it says will add billions of dollars in continent-wide investment. The Bank is also keen to tap sovereign wealth funds and pension funds globally. “They want good long-term projects and African infrastructure offers many. The trick is to match long-term investors with Africa’s long-term infrastructure needs”, says Kapil Kapoor. “If the projects are seen as too risky, we try to work out how to lessen the risk.”

[quote]The outlook for Kaberuka’s successor is more promising than it appeared in 2006, but it is likely to be equally unpredictable[/quote]

Governance and a new president

The growing influence of emerging economies has led to pressure to change a governance structure that has altered little since non-African members became shareholders in 1982. Unlike the World Bank and IMF, shareholdings are not based on global economic weighting and remain fixed until the Bank’s next fundraising. “China wants to increase its shareholding and would like to have a permanent executive director – it’s currently in a constituency represented on the board by Canada – but cannot do this until there is a capital increase,” says the senior representative of one shareholder. “India too has a commercial interest in the AfDB and would like to increase its shareholding.”

A new injection of funds is unlikely to occur in the foreseeable future. While it would enable the Bank to lend more to middle-income countries and the large economies of North Africa, it would make no difference to those only eligible for concessional ADF funds. “There is far less of a case for a capital increase in the AfDB than in the Inter-American Development Bank or the Asian Development Bank,” says the shareholder representative, who regards the Bank’s performance as mixed. “The AfDB is generally easier to deal with than the World Bank, but less able to do what it says it will do. Kaberuka hasn’t shown the leadership that we wanted on getting the Bank to deliver results. The African Natural Resources Center in Ghana [established as a non-lending entity to provide expertise to the Bank and member countries] is not up and running. Africa50 is going through teething troubles. There have been so many initiatives, partly as a result of pressure from regional members, to be fair.”

The shareholder representative commends the Bank for “getting to grips with fragile states” and for its role in advocating increased domestic spending on AIDS, tuberculosis and malaria prevention in Africa. “We expect to see more of that”, he adds. “New issues – women, girls and sustainable development – are becoming increasingly important.” As the Bank enters a new era, with its return to its original home in Abidjan, Côte d’Ivoire, this is a reminder that its management has to balance countless, sometimes conflicting – and seemingly increasing – demands from its shareholders and member countries. The shareholders’ 20 executive directors are resident at the Bank’s headquarters, a set-up not replicated by the Asian Development Bank, for example, and one that is unlikely to change.

The outlook for Kaberuka’s successor is more promising than it appeared in 2006, but it is likely to be equally unpredictable. The one-off boost from debt relief is over, as for the time being is the resources boom. Government borrowing is on the rise5 and GDP growth across the continent is slowing as external demand weakens. Job creation, health and education provision, and savings and investment rates have all failed to keep pace with growth. If Africa is to reap a demographic dividend, rather than succumb to a demographic shock, investment must be channelled towards social and infrastructure needs and consolidating growth in low-income economies. Retaining and defining a central role for the AfDB and financing it will require great skill, leadership and improved delivery on the part of its new president over the next decade.

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1. The African Development Bank Group investor presentation, April 2015, p.8
2. de Tray, Dennis, and Moss, Todd, “Building Africa’s Development Bank: Six Recommendations for the AfDB and Its Shareholders”, Center for Global Development, 2006
3. The African Development Bank Group investor presentation, April 2015, p.6
4. See AfDB/OECD/UNDP, African Economic Outlook 2014, pp.48-9
5. See Adams, Paul, “Africa Debt Rising”, Africa Research Institute, January 2015 [/message_box]

The post Bank to the Future: New Era at the AfDB appeared first on Africa Research Institute.

Dr Nara Monkam est directrice de recherche au Forum sur l’Administration Fiscale Africaine – African Tax Administration Forum (ATAF).

Mick Moore est chercheur universitaire à l’Institute of Development Studies (IDS) et directeur général de l’International Centre for Tax and Development (ICTD).

• L’impôt et l’édification de l’état
• Le pour et le contre de l’impôt foncier
• Un méli-mélo de taxes à la sauce foncière
• Le gouvernement à niveaux multiples
• Un fossé rural-urbain et la ‘délégation des activités fiscales’
• Investir dans la réforme
• La volonté politique…
• …et la persuasion
• Une recette réformatrice
• Notes

L’impôt et l’édification de l’état

L’imposition joue un rôle primordial dans l’édification de l’état. Surtout, l’impôt facilite l’établissement d’un contrat social entre les citoyens et l’état, grâce aux processus de négociation permettant la communication entre les contribuables et le gouvernement qui perçoit les recettes. La réalité de l’imposition entraîne un engagement de la part des citoyens : elle les encourage à collaborer avec le gouvernement pour s’assurer que leur argent est employé de manière judicieuse. C’est l’activisme citoyen qui établit les normes de la responsabilité et de la transparence qui favorisent la création ou le renforcement des assemblées représentatives. De telles institutions, qu’elles soient des corps législatifs officiels ou des tribunes non officielles de la société civile, donnent aux gouvernements la possibilité d’un échange avec les contribuables : ils gagnent l’observation de ces derniers en leur offrant une voix dans la détermination de la politique fiscale. Par ailleurs, elles constituent une tribune pour la discussion des priorités en matière de dépenses publiques, de sorte que les bénéfices des recettes soient partagés par les citoyens et l’état.

L’imposition joue un rôle primordial dans l’édification de l’état

Pour réussir à gérer un régime fiscal, il faut que les gouvernements développent des réseaux administratifs efficaces. Le processus de la réforme institutionnelle peut générer de nombreuses retombées positives. Les réformes administratives nourrissent des attentes en matière de méritocratie et de professionnalisme qui peuvent s’étendre à l’ensemble de la fonction publique : ainsi, il y a une amélioration dans l’efficacité. Les informations exigées dans le cadre de la fiscalité accentuent notamment les pressions sur d’autres agences – par exemple, les responsables du bureau du cadastre – pour qu’elles perfectionnent leurs propres services. La perception des impôts a pour effet de renforcer la présence du gouvernement et d’augmenter sa portée dans l’ensemble de son territoire, ce qui empêche les concurrents éventuels – par exemple, les insurgés – de créer des relations de dépendance mutuelle avec les populations locales. Enfin, la perception des recettes génère, elle aussi, des données, des informations utiles dans la planification économique de la nation.

La relative prévisibilité des revenus tirés de la fiscalité intérieure représente un atout, surtout au regard des revenus variables dérivant des aides et de l’exportation de ressources naturelles. Dans la volonté de maximiser la prévisibilité des revenus, l’état s’en trouve donc incité à investir dans la prospérité de ses citoyens, au lieu de se concentrer sur les marchés internationaux ou sur les revenus non gagnés émanant des donateurs.

Certains gouvernements d’Afrique, ayant compris les avantages potentiels de l’imposition, ont créé des autorités semi-autonomes de perception d’impôts (‘Semi-Autonomous Revenue Authority’ – SARA), dans le but de professionnaliser la perception fiscale. La quasi-totalité de ces autorités ont mis en place un régime de taxe sur la valeur ajoutée (TVA), touchant et les biens et les services. Cependant, il n’est pas rare que le secteur formel, cible principale de ces réformes, représente moins de la moitié de l’ensemble de l’économie. Dans une société où la majorité de la population n’est touchée par l’imposition que de manière indirecte, les citoyens ne se sentiront pas impliqués dans la politique.

Par contraste, l’instauration d’un impôt foncier – sur terrains et bâtiments – aurait pour effet de stimuler les processus précités de l’édification de l’état ; elle établirait, d’ailleurs, une relation entre le gouvernement et ceux qui travaillent dans le secteur informel. Les recettes de l’impôt foncier fourniraient des finances aux autorités locales – un niveau gouvernemental négligé et qui manque de ressources dans toute l’Afrique subsaharienne – permettant aux municipalités d’améliorer la prestation des services locaux et d’investir dans les infrastructures : ainsi, les conditions de vie sont améliorées et la croissance économique est stimulée.

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Le pour et le contre de l’impôt foncier

L’impôt foncier, c’est un prélèvement annuel sur les biens immobiliers, tels les terrains et les bâtiments, dont le propriétaire paie ses contributions, en général, à l’état. Cette forme d’imposition s’associe étroitement au financement du gouvernement municipal en raison des liens immédiats entre la valeur de la propriété et les services financés au niveau local. A titre d’exemples, ces services seraient l’approvisionnement en eau, la construction d’égouts, la collecte de déchets, la police, et l’entretien de jardins publics, des écoles, des routes.

Il est généralement admis que l’imposition foncière est hautement progressive et équitable, car c’est la richesse qui détermine la somme due : il ne s’agit pas d’un pourcentage général prélevé sur les transactions. Vu que les terrains et les bâtiments sont – justement – des biens ‘immobiliers’, les propriétaires-contribuables ne peuvent pas éviter le prélèvement en se déplaçant – à moins de vendre leurs biens. Dotées d’un régime d’impôt foncier bien organisé, les autorités locales sont en mesure de compter sur une source de revenus prévisible, autonome, et – potentiellement – lucrative.

L’imposition foncière est hautement progressive et équitable, car c’est la richesse qui détermine la somme due au lieu d’un pourcentage général prélevé sur les transactions

Néanmoins, contrairement aux taxes de consommation comme la TVA, dont les contributions sont payées par un nombre réduit d’entrepreneurs, un impôt foncier annuel est hautement visible aux contribuables ordinaires. Les propriétaires ont une conscience aiguë de l’impôt en question, ce qui donne la possibilité d’améliorer la responsabilisation des gouvernements municipaux. Cela est très positif, d’un point de vue économique (restrictions budgétaires, transparence) et d’un point de vue politique (développement de la démocratie). Cela ne signifie pas pour autant que c’est chose appréciée par les contribuables : sa nature inévitable, intransigeante a eu pour résultat une absence globale d’élaboration. On a estimé que les prélèvements sur les terrains et les bâtiments représentent 0,5% du PIB de l’Afrique subsaharienne.1 Ce manque de volonté de taxer la propriété a privé les gouvernements municipaux des capitaux nécessaires à l’amélioration des services locaux et des infrastructures, sapant ainsi le développement économique et social.

En Afrique, comme ailleurs dans le monde, les gouvernements nationaux citent le manque d’effectifs et les contraintes techniques pour justifier la responsabilité limitée ou inexistante à l’égard de l’impôt foncier. L’argument que prônent toujours bon nombre de gouvernements, c’est que permettre aux autorités infranationales de dépendre des impôts fonciers perçus à l’échelle locale entraînera des iniquités entre les localités riches et les localités pauvres. Des critiques généralisées de la compétence du personnel au niveau des gouvernements municipaux, ainsi que les risques de disparité sont les raisons apparentes que donnent les gouvernements centraux, à travers l’Afrique, pour maintenir la dépendance des autorités locales aux transferts du Trésor public. Cependant, ces réticences pourraient tout autant découler d’une peur de conférer du pouvoir à des politiciens de l’opposition et à leurs fiefs.

Cette hésitation a pour effet de sous-évaluer les bénéfices potentiels de la concurrence entre les municipalités sur le plan d’une amélioration dans la responsabilité et la réactivité des gouvernements ; elle fait fi, d’ailleurs, des cas où les réformes dans l’impôt foncier ont bien réussi. Sans le transfert de la responsabilité de la perception des recettes, et sans la dévolution parallèle d’autres responsabilités et pouvoirs à l’égard des dépenses, les citoyens ne ressentiront pas les bienfaits éventuels de la décentralisation. Le cas de Lagos représente, à cet égard, un exemple typique. Les gens sont attirés à la capitale commerciale du Nigéria en raison de son administration fiscale relativement favorable et son engagement à la prestation des services. La concurrence politique, liée à l’ambition de transformer Lagos en une ‘mégapole’ moderne, ont débouché sur la réussite de réformes dans les impôts fonciers. Ces deux facteurs ont aussi favorisé le développement d’une administration relativement efficace dans l’Etat de Lagos. Vu l’importance de Lagos dans l’économie nationale, cette transformation se révèle bénéfique aussi pour le pays entier.

Les gens sont attirés à la capitale commerciale du Nigéria en raison de son administration fiscale relativement favorable et son engagement à la prestation des services

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Un méli-mélo de taxes à la sauce foncière

Il existe toute une pléthore de modèles d’imposition foncière dans le continent africain : c’est le legs de systèmes fiscaux différents de l’ère coloniale et de réformes sélectives depuis l’accession à l’indépendance. Les gouvernements ont la possibilité de taxer les terrains ou les bâtiments, ou bien un mélange des deux. Par exemple, le Kenya taxe les terrains depuis plus d’un siècle, alors que la Tanzanie – où les terres appartiennent à l’état – ne taxe que les bâtiments. Ailleurs, en Ouganda, les terrains et les bâtiments sont imposés ensemble, alors qu’au Malawi, au Botswana, et en Zambie, on taxe séparément les améliorations structurelles apportées aux terrains.

Les taux d’imposition sont calculés en fonction de la superficie du terrain, sa valeur en capital, ou bien sa valeur locative. Théoriquement parlant, les économistes affirment qu’il est préférable de faire ces calculs à partir des valeurs (en capital, locative) parce qu’elles sont, justement, ad valorem. Cependant, ces valeurs-ci dépendent toutes les deux d’un marché immobilier qui soit développé et performant. Cela nécessite l’existence de relevés d’opérations et de registres fonciers clairs et complets. Qui plus est, ces modèles ad valorem exigent la collaboration d’un grand nombre d’experts agréés capables d’évaluer la valeur des terrains et/ou des bâtiments à intervalles fixes. En l’absence de réévaluations périodiques, le prélèvement perd de sa crédibilité, et les revenus des impôts se voient rapidement érodés par l’inflation et par les hausses des valeurs foncières. Compte tenu des barrières bureaucratiques à l’obtention d’un titre foncier, les marchés immobiliers de nature formelle restent, pour la plupart, à l’état embryonnaire. Donc, l’application pratique du modèle ad valorem s’en trouve limitée.

Comme solution provisoire, beaucoup de pays ont adopté un système d’évaluation sur la base de la superficie. En Ethiopie, au Mozambique, aux Comores, et dans plusieurs états du Nigéria, les gouvernements municipaux imposent une taxe forfaitaire sur les bâtiments en fonction de leur taille, leur localisation : dans une certaine mesure, on a simplifié le système pour qu’il soit transparent et facile à administrer. De la même façon, au Burkina Faso, le gouvernement national applique une taxe d’habitation forfaitaire, dont le taux se détermine à partir des caractéristiques de l’habitat et de l’offre des biens publics locaux. Cette taxe d’habitation a pris pour modèles la taxe urbaine du Maroc et une taxe locative perçue autrefois en Tunisie. Dans un premier temps, au vu de ses capacités administratives limitées au lendemain du génocide de 1994, le Rwanda a adopté un modèle similaire fondé sur la superficie ; de nos jours, on y a instauré un système d’autocotisation. Cette évolution réduit encore plus le fardeau administratif ; mais les risques de paiements en moins s’en trouvent accentués.

A la suite de la guerre civile en Sierra Leone, les conseils municipaux de Freetown, Bo, Makeni, et Kenema se sont écartés du modèle ad valorem consacré par la législation nationale et ont adopté, eux aussi, un modèle simplifié et fondé sur la superficie. Selon ce modèle, on a calculé la valeur des propriétés en fonction des dimensions de la structure, du type de construction, de leur localisation, de leur accessibilité. Cette approche équitable a eu pour effet de garantir la légitimité d’un échelon nouvellement ré-établi du gouvernement, tout en permettant aux quatre autorités locales d’augmenter leurs revenus des impôts fonciers de 300-500% entre 2007 et 2010.

Quel que soit le modèle d’évaluation employé, il faut que les gouvernements entreprennent un recensement cadastral pour identifier tous les terrains et/ou les bâtiments d’un territoire donné, et qu’ils obtiennent un ratio de couverture aussi élevé que possible. Cependant, dans la pratique, ce sont là des projets qui risquent de se révéler coûteux et chronophages. Il faut se servir des informations cadastrales pour créer un rôle d’impôt où sont consignées une description de la propriété, sa localisation, et la somme due. Enfin, il faut que les gouvernements émettent les factures d’impôt, qu’ils perçoivent les taxes, qu’ils s’occupent des arriérés de paiements. A la lumière des points sensibles de l’imposition foncière, il faudrait mettre en place un processus d’appels – que ces appels s’adressent directement aux autorités fiscales ou qu’ils se fassent dans le cadre de l’appareil judiciaire.

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Le gouvernement à niveaux multiples

Les pays de l’Afrique anglophone sont héritiers d’un régime d’impôt foncier où les gouvernements municipaux étaient chargés de l’administration d’un impôt sur les terrains et/ou les bâtiments. De nos jours, ces autorités locales continuent à appliquer ce système. En revanche, dans l’Afrique francophone, l’imposition foncière est trop souvent négligée : les gouvernements municipaux sont dépendants de transferts émis par le centre. Depuis l’accession à l’indépendance, les gouvernements nationaux francophones ont conservé la responsabilité de l’évaluation et de la perception des impôts. Cela dit, on voit apparaître des exemples du système de partage de recettes fiscales au Cameroun, en Guinée, et au Tchad. Cela représente un développement positif, car les gouvernements centraux préfèrent normalement concentrer leurs ressources limitées sur les réformes qui visent une contribution accrue au Trésor public, au lieu d’investir dans le but d’améliorer la production même des revenus.

Au Nigéria, les 36 états sont eux-mêmes responsables de la législation fiscale en matière de l’impôt foncier. Selon l’état, on utilise le système basé sur la valeur en capital, celui fondé sur la valeur locative, ou bien celui qui calcule l’impôt en fonction de la superficie du terrain. Au Ghana, en Sierra Leone, au Libéria, et en Gambie, la législation a consacré un régime d’impôt foncier ad valorem qui attribue des valeurs discrètes à chaque propriété imposable. Cependant, dans ces cas-là, la mise en œuvre de ce système a rencontré des difficultés à cause d’un manque de données concernant le marché immobilier, ainsi que d’une pénurie d’experts capables de faire les évaluations. Parmi ces quatre pays, seul le Ghana est doté de centres pour former de tels experts. La Sierra Leone et le Libéria, pris ensemble, comptent moins de 50 experts évaluateurs pour une population totale de 10 millions d’habitants.

En Afrique orientale et en Afrique australe, c’est aussi le modèle ad valorem que l’on préfère. Il a donné de bons résultats en Afrique du Sud et en Namibie, où les marchés immobiliers sont fortement plus développés, où les gouvernements municipaux disposent des ressources et des compétences suffisantes. En Afrique du Sud, les gouvernements provinciaux offrent aux autorités locales un appui administratif complémentaire et une formation pour faciliter l’évaluation des biens, l’émission des factures, et la perception des impôts. Pour les huit conseils métropolitains du pays, l’impôt foncier constitue approximativement un quart du budget annuel. La combinaison de l’impôt foncier et des revenus provenant des frais d’utilisateurs – de services tels l’électricité, l’eau, l’assainissement – a permis aux grandes villes de l’Afrique du Sud une autonomie relative par rapport au gouvernement central. Par contre, dans les zones rurales de l’Afrique du Sud et de la Namibie, tel n’est pas le cas, car on n’y perçoit pas l’impôt foncier.

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Un fossé rural-urbain et la ‘délégation des activités fiscales’

Malgré le phénomène de l’urbanisation, l’on estime que 60% de la population africaine habitent toujours les zones rurales. Dans de nombreuses zones habitées, la prestation de services et les infrastructures de base restent largement absentes, alors qu’une combinaison de taxes régressives et de méthodes d’imposition quelque peu coercitives adoptées par les gouvernements coloniaux et les chefs traditionnels a porté atteinte à la confiance dans les autorités locales. Nombreux sont les citoyens qui s’enfuient de leur foyer, de manière instinctive, pour éviter les visites des percepteurs d’impôts : ils préfèrent ainsi esquiver tout contact avec l’état. Dans certaines zones rurales, comme certaines zones urbaines informelles, les organisations internationales non gouvernementales (OING) ont contourné les autorités locales en se présentant comme les seuls prestataires de services : le développement d’une interaction constructive entre les citoyens et l’état s’en trouve ainsi sapé, compromis.

Dans certaines zones rurales, comme certaines zones urbaines informelles, les organisations internationales non gouvernementales (OING) ont contourné les autorités locales en se présentant comme les seuls prestataires de services

Au lieu de relever directement ce défi lancé à l’autorité de l’état, les gouvernements du Botswana, du Malawi, et de la Tanzanie ont sous-traité l’évaluation et la perception des impôts au secteur privé. Cependant, une telle ‘délégation des activités fiscales’ comporte des risques élevés, puisque les sous-traitants n’ont aucun intérêt direct dans l’élaboration de relations amicales avec le public ou dans l’édification de l’état. Ce qui prime avant tout, dans ce contexte, c’est le désir de maximiser les revenus ; les entreprises privées sont donc plus susceptibles de se servir des méthodes coercitives au lieu des méthodes fiscales axées sur le contrat social. Cela risque d’accroître les tensions entre les citoyens et l’état. Par ailleurs, si les données sur les propriétés évaluées et sur les revenus générés ne sont pas mises à disposition à des fins d’examen, et qu’elles n’y soient pas soumises, la corruption risque d’être endémique.

L’externalisation de la perception fiscale n’est pas une alternative durable et progressive au développement des capacités administratives locales. Elle sape le développement d’administrations efficaces, tout en minant le contrat social entre l’état et les citoyens. Face à un manque de capacités de l’état, une solution plus réalisable, consisterait à externaliser certains éléments de l’évaluation fiscale et de la perception de manière sélective en les confiant à des spécialistes dans le secteur privé. Il s’agit des arpenteurs, des professionnels de l’informatique, des experts-comptables, des vérificateurs… Néanmoins, l’investissement dans les capacités administratives reste essentiel pour que les autorités locales puissent maintenir toute amélioration dans le long terme.

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Investir dans la réforme

Pour créer un régime d’imposition foncière qui soit efficace, prévisible, et lucratif, il est essentiel de s’attaquer au déficit administratif au niveau des gouvernements. Comme en témoigne le cas de Sierra Leone, de petites réformes peuvent avoir un impact considérable, en augmentant de manière significative les recettes fiscales et en apportant des capitaux indispensables à l’amélioration des infrastructures et à la prestation de services proposés par les gouvernements municipaux. Ce n’est nullement une tâche impossible. Par exemple, les levés cadastraux sont accélérés par l’emploi des outils des urbanistes et des ingénieurs: les systèmes d’information géographique, les cartes numériques, les photographies aériennes. De même, il est possible d’augmenter sensiblement le ratio de couverture grâce à la numérisation des titres fonciers et grâce à l’harmonisation des bases de données locales existantes avec le registre foncier national et avec les dossiers des compagnies de services publics. On peut soutenir de telles actions « à gain rapide » en favorisant un partage d’informations parmi les niveaux différents du gouvernement dans le but de garantir que les ventes immobilières entraînent une facturation correcte des nouveaux propriétaires.

Au début des années 2000, à Niamey, la capitale du Niger, on a démontré le potentiel d’une collaboration entre les agences gouvernementales existantes. On y a créé des équipes mixtes d’officiers municipaux, d’arpenteurs, et de représentants des compagnies étatiques de l’eau et de l’électricité pour permettre au gouvernement municipal de faire concorder en temps réel son registre foncier avec les données sur les rues et les adresses. Une fois créées, les bases de données facilitent la tenue d’un registre foncier, l’émission de factures, et la résolution des cas d’appel ; d’ailleurs, elles servent à renforcer l’intégrité du système en supprimant les possibilités des pouvoirs administratifs discrétionnaires et de la recherche de rente. Là où l’on manque des données complètes et à jour sur les rues et les adresses, ou en l’absence d’un service postal qui fonctionne, les contractuels à court terme peuvent intervenir pour fournir la main d’œuvre ainsi qu’une connaissance des lieux, en livrant les factures d’impôt en main propre, et en pourchassant les retards de paiement.

Comme en témoigne le cas de Sierra Leone, de petites réformes peuvent avoir un impact considérable, en augmentant de manière significative les recettes fiscales

Les gouvernements municipaux doivent examiner soigneusement la meilleure façon de s’assurer une conformité à grande échelle à leur travail. Nombreux sont les contribuables qui sont réfractaires aux taxes, en raison d’un manque d’avantages visibles, surtout dans les zones où les infrastructures sont faibles et où la prestation de services est intermittente ou même inexistante. En principe, il est possible de répondre à la non-conformité aux demandes d’impôt foncier par la confiscation et la vente de la propriété concernée ; dans la pratique, en fait, l’application de telles sanctions est souvent impossible. Devant l’absence d’améliorations dans le domaine des services publics, les autorités locales ne gagneront l’observation des contribuables qu’en créant un climat de légitimité et de confiance.

En Afrique francophone, le premier pas en vue d’assurer la légitimité consisterait à décentraliser les responsabilités de la génération de revenus et des dépenses aux gouvernements municipaux. La sensibilisation et l’engagement des contribuables par le biais du budget participatif a connu un certain succès à Yaoundé, capitale du Cameroun, ainsi qu’à Madagascar, au Sénégal, et ailleurs. La participation étroite des contribuables dans l’élaboration du budget – sa formulation, législation, mise en œuvre, évaluation – accroît la responsabilité et la réactivité du gouvernement municipal, ce qui s’accompagne d’améliorations dans la prestation des services locaux et dans le contrat social et fiscal.

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La volonté politique…

Quand les autorités locales seront plus largement perçues comme légitimes et responsables envers les contribuables, et plus fiables dans l’utilisation des recettes pour leur offrir de précieux services, elles auront plus de facilité à établir des procédures justes dans la perception et dans l’observation, et instaurer un climat de confiance. Les résidents doivent avoir la certitude que leurs voisins paieront leur part d’impôt – quelle que soit leur influence politique, et que les gouvernements municipaux sont déterminés à s’attaquer à quiconque refuse d’accepter leur autorité. Inévitablement, ceux ayant de grands investissements immobiliers résisteront à l’imposition. Cependant, les autorités locales doivent être prêtes à faire face aux intérêts particuliers en poursuivant le non-paiement, en appliquant les décisions de justice, et en fuyant l’exercice d’un pouvoir discrétionnaire à l’égard des passifs d’impôt des riches propriétaires.

Dans le but d’illustrer cet argument, il est utile de comparer les quatre conseils municipaux précités de la Sierra Leone. A Bo, 93% des propriétaires d’entreprise interrogés en 2012 étaient en mesure de fournir un reçu d’impôt foncier ; 87,5% croyaient que l’on poursuivait avec succès les élites locales en cas d’inobservation. Cependant, à Makeni et à Kenema, à peu près 40% seulement pouvaient produire un reçu, et 30% seulement croyaient aux poursuites fructueuses. Ces trois villes avaient fait preuve de gains rapides, mais à Makeni et à Kenema il y a eu une stagnation des hausses annuelles puisque les élites se sont révélées résistantes à l’impôt, tandis que les autorités municipales de Bo ont progressé davantage grâce à une volonté politique soutenue. On ne dispose pas de statistiques comparables portant sur la capitale, Freetown, mais le conseil municipal de celle-ci a concentré ses efforts sur l’imposition de grandes entreprises et sur l’application d’un impôt de capitation visant chaque résident, au lieu d’élargir l’assiette fiscale (en y incorporant les propriétés des élites locales).²

Le degré de volonté locale de cibler les élites constitue un indice décisif, révélateur de la volonté générale d’instituer des réformes

Le degré de volonté locale de cibler les élites constitue un indice décisif, révélateur de la volonté générale d’instituer des réformes. Cependant, pour réussir à identifier les facteurs déterminant le degré de volonté politique, il faudrait que les conseillers externes désireux d’appuyer les réformes aient une compréhension approfondie de l’économie politique en place. Il faudrait, par ailleurs, que leur analyse se conjugue à l’évaluation des liens entre les élites économiques et politiques, de ce qui caractérise la concurrence politique locale ; leur analyse doit également établir si les gouvernements nationaux et municipaux sont sous le contrôle de partis en compétition. Toute réforme durable ne peut pas dépendre uniquement de ces facteurs : elle sera construite, obligatoirement, sur un véritable engagement de la part des dirigeants locaux à la réciprocité et à la transparence, en les soulignant comme moyens de fonder un contrat social.

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…et la persuasion

La légitimité et la transparence sont les bases sur lesquelles les gouvernements locaux doivent construire afin de dialoguer avec le public, tout en considérant, de manière attentive, la forme de la présentation de l’impôt foncier. Alors que certains gouvernements en Afrique ont choisi de ‘montrer du doigt’ des individus, des entreprises en vue n’ayant pas payé leurs cotisations, d’autres gouvernements ont adopté une approche opposée. Chaque année, les offices des recettes du Rwanda, de la Tanzanie, et de l’Ouganda organisent une semaine dédiée à la reconnaissance des contribuables, où les bénéfices résultant du paiement des impôts sont communiqués aux citoyens. Il serait possible de déployer un modèle similaire à l’échelle locale, pour sensibiliser les citoyens aux avantages qui leur reviendront s’ils paient les impôts fonciers.

On pourrait même aller plus loin, dans la perspective de cette approche, en transformant le nom de l’impôt foncier en ‘taxe bénéfique’ locale. Un tel changement d’image permettrait aux citoyens en Afrique d’accepter l’idée de payer des taxes en contrepartie d’infrastructures et de services fournis par les gouvernements municipaux. Dans les zones urbaines, surtout, il serait possible de reformuler l’impôt foncier comme moyen de générer des revenus réservés exclusivement pour financer des améliorations apportant des bénéfices directs aux propriétaires, à savoir la collecte des déchets, l’éclairage public, les routes, les espaces publics…

C’est ce lien, justement, aux yeux des contribuables, entre l’observation et la prestation de services locaux, que les municipalités africaines – par centaines – appliquant déjà le budget participatif, cherchent à promouvoir. Sans aucun doute, la réussite de cette promotion est l’un des facteurs sous-jacents de la réussite de l’impôt foncier en Sierra Leone post-conflit. A la suite de réformes dans la méthode d’évaluation en Sierra Leone, les autorités locales ont mené de grandes campagnes de sensibilisation et d’éducation du public. Des présentations et des émissions-débats radiophoniques ont servi de plate-forme aux élus, aux agents fiscaux, aux chefs traditionnels et religieux pour expliquer aux contribuables le raisonnement du prélèvement, la façon dont les recettes seraient dépensées, les modes de paiement, et les procédures de recours.

Au fur et à mesure de l’expansion des villes africaines, de l’élargissement de la classe moyenne urbaine, une meilleure connaissance – ainsi qu’un respect accru – des droits et des obligations dans le domaine de la propriété pourrait donner aux individus les cadres juridique et financier pour accéder aux crédits, en utilisant leurs terrains/bâtiments comme garanties. Cela permettrait alors d’améliorer les systèmes fonciers et les marchés immobiliers dans les zones urbaines, tout en fournissant une incitation supplémentaire pour la conformité fiscale. Les gouvernements municipaux pourraient donc passer d’un impôt calculé en fonction de la superficie du terrain à un impôt à base de valeur. Dans bien des cas, cette éventualité demeure malgré tout une perspective lointaine.

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Une recette réformatrice

Le potentiel de l’impôt foncier – dans les contextes de la gouvernance municipale et de l’édification de l’état – est clair. Il faut conjuguer la réforme législative, le savoir-faire technique, et la volonté politique pour s’assurer que la taxe devienne une source de revenus durable pour les autorités locales. Dans de nombreux pays, en Afrique francophone surtout, on a consacré les politiques de la décentralisation dans la législation, mais leurs dispositions n’ont pas encore été adoptées. Pour ce qui est des décideurs politiques, la réforme des finances du gouvernement local devrait constituer une priorité. Mais, dans ce contexte, il leur faudra la détermination de bâtir des alliances et de s’attaquer aux intérêts particuliers, pour mobiliser et protéger des revenus lucratifs issus de l’impôt foncier.

Dans le cadre de l’impôt foncier en Afrique, il y a plusieurs tendances positives qui autorisent un optimisme prudent. Dans bon nombre de pays africains, la prospérité s’accroît et l’on assiste à l’émergence d’une classe moyenne éduquée et politiquement engagée. Selon les spécialistes des sciences sociales, ce sont là des signes révélant qu’il devrait y avoir une hausse des recettes fiscales.

Qui plus est, l’Afrique s’urbanise de plus en plus, ce qui augmente la pression populaire exercée sur les gouvernements municipaux pour qu’ils fassent quelque chose. Cela nécessite, à son tour, une réforme du financement du gouvernement municipal et offre des possibilités pour l’introduction d’un régime d’impôt foncier global et efficace. La diffusion du budget participatif, par exemple, est la preuve que les citoyens réclament des droits, des services, et la responsabilisation des gouvernements locaux avec toujours plus d’insistance. Enfin, la baisse des cours du pétrole et des prix des produits de base, ainsi que la diminution de l’aide extérieure, commencent déjà à exposer la dépendance de plusieurs gouvernements africains aux rentes extérieures, ce qui les inciterait à se concentrer sur les possibilités de générer des revenus intérieurs.

L’avenir des gouvernements municipaux et nationaux de l’Afrique dépendra d’institutions et d’une politique fiscale équitables, qui améliorent la prestation des services locaux, et qui encouragent l’observation en établissant un contrat social entre les contribuables et l’état

Malgré les perspectives de l’introduction de taxes foncières, qui semblent s’améliorer, les progrès dans ce domaine demeurent sporadiques. Dans une grande partie de l’Afrique, l’on peut témoigner d’une stagnation de la décentralisation. Il faut d’urgence lui donner un nouvel élan, pour permettre une réforme du financement des gouvernements municipaux, et pour que le potentiel de l’impôt foncier soit réalisé. Les donateurs internationaux doivent accorder une plus grande attention au rôle de la mobilisation des ressources intérieures dans le fondement d’états réactifs, responsables, et efficaces. Les OING, pareillement, doivent tenir compte des conséquences à long terme d’une politique qui contourne les institutions nationales, qui sape – volontairement ou non – l’autorité de ces gouvernements qui essaient de créer des rapports de dépendance réciproque avec les contribuables. L’avenir des gouvernements municipaux et nationaux de l’Afrique dépendra d’institutions et d’une politique fiscale équitables, qui améliorent la prestation des services locaux, et qui encouragent l’observation en établissant un contrat social entre les contribuables et l’état. Pour atteindre ces objectifs, l’impôt foncier constitue l’un des moyens les plus efficaces.

NOTES

1 Fjeldstad, Odd-Helge and Heggstad, Kari, “Local Government Revenue Mobilisation in Anglophone Africa”, ICTD Working Paper 7, Institute of Development Studies, p.15

2 Jibao, Samuel and Prichard, Wilson, “Rebuilding Local Government Finance After Conflict: The Political Economy of Property Tax Reform in Post-Conflict Sierra Leone”, ICTD Working Paper 12, Institute of
Development Studies, p.22

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