The principles of tax justice and the climate crisis in Africa’s resource-rich nations

Most countries in sub-Saharan Africa are considered resource-rich. Africa has a vast and varied range of natural resources, which hold intrinsic, aesthetic, cultural value and also contribute to the ways wealth is construed and moved across and out of the continent. Extractive industries are important sources of revenue in many African economies, with natural resources accounting for almost one-third of total government revenues in some countries. Yet the revenue could be much higher, because Africa loses huge amounts in illicit financial flows. Just one component, corporate tax avoidance from mining, costs the continent as much as US$730 million per year. The resulting revenue losses undermine governments’ ability to provide high quality services and make it harder to introduce more progressive tax systems. Women bear the majority of the impacts as they are typically overrepresented among lower-income households and have lower-paid jobs.

Africa’s extractive industries will need to navigate significant changes in the coming decade, as economies transition away from fossil fuels and demand grows for the metals and minerals needed for new technologies. Africa’s extractive industries are made up of both fossil fuels (oil, gas, and coal) as well as metals and minerals (like copper, rare earths and lithium). Many African exporting economies are reliant on fossil fuel extraction—five sub-Saharan African economies hold at least 25 per cent of their wealth in fossil fuels. Commitments to reduce carbon emissions will hurt those economies, though Africa has historically made and currently makes little contribution to the climate crisis.
As much as there are new opportunities for African metals and minerals as part of a transition to renewable energies and new technologies, the extractivist model that has characterized mining in the last century may remain if changes are not made domestically, regionally and internationally. Structural changes are needed across the value chain to avoid perpetuating the same inequities.

In this brief, we explore five principles of tax justice—the “5 Rs” —as they pertain to the extractive industries in Africa’s resource-rich economies, in light of the climate crisis and with a gender lens. The functions of tax include raising revenue, redistributing wealth to create a more equal society, repricing to make activities that infringe on the rights of others more costly, improving representation by reinforcing the social contract between voters and representatives, and supporting reparations to redress historical and colonial legacies. This briefing considers the domestic, regional and international action that can be taken to use tax as a tool for tackling inequality in light of the climate crisis. Understanding how tax can be used as a tool to reprogram economies to shake deeply rooted inequalities is important, given the primacy of revenue from extractives in many African economies.

The context for this brief is the commitment of feminist movements who are part of the Feminist Action Nexus for Economic and Climate Justice (“Action Nexus”) to develop more resources and materials for popular education and legal advocacy that advance a comprehensive feminist agenda. This feminist agenda is not a separate or new initiative, but a well-articulated one that draws on the work of feminist movements over generations. More resources as well as the summary of the seven key demands of our work can be found on the Action Nexus webpage.