New Norwegian funding to secure tax revenues in developing countries

“Norway will support African countries in the negotiation of fair agreements with international companies that are exploiting their natural resouces,” said Minister of International Development Heikki Eidsvoll Holmås. Mr Holmås met the President of the African Development Bank, Donald Kaberuka,in Oslo this week to sign an agreement on an additional NOK 30 million in support. 

Many developing countries are rich in natural resources but their populations remain very poor. One of the reasons for this is that multinational companies have negotiated unfair agreements with national authorities on the exploitation of natural resources such as minerals, oil and gas. This has led to conflicts and continued poverty. 

“Norway is seeking to help turn Africa’s ‘resource curse’ into a ‘resource blessing’ by supporting the negotiation of better contract terms. The aim is for the countries to strengthen their own revenues and economies, and in the long term for them to be able to manage without aid,” said Mr Holmås.

Whereas the authorities in many African countries lack the legal expertise they need, multinational companies have their own experts in tax law and commercial law. Norway has now agreed to provide NOK 30 million over a period of two years to strengthen the negotiating capacity of African countries. This work will be carried out through the African Legal Support Facility, which is hosted by the African Development Bank, and which provides legal assistance in the negotiation of contracts and in settling disputes between multinational companies and the authorities in African countries. 

“This work also enhances financial transparency surrounding contracts which is crucial to be able to uncover and stop illicit financial flows. Every year ten times as much money disappears out of developing countries through illicit financial flows as is received in the form of aid and development support,” Mr Holmås stressed.

Norway provided NOK 768 million in support to the African Development Bank in 2012. Inclusive growth and the transition to green growth are the two main objectives of the Bank’s Strategy for 2013–2022, which also identifies fragile states, agriculture and food security and gender as areas of special emphasis. The strategy is consistent with Norway’s development policy priorities, as set out in the recent white paper on fair distribution, Sharing for prosperity.