When it comes to global development, one the best ways for funders to leverage their money is supporting work that modernizes tax and budgetary systems. If developing countries could strengthen tax revenues, they'd have more resources to invest in things like schools, health, and transport. Another way to foster growth and development is by scrapping tax systems that are regressive and inefficient, hammering the poor while leaving big money on the table.
The Tax Justice Network-Africa (TJN-A) is on this case, and it recently received a two-year, $450,000 grant from the Omidyar Network to support its work. TJN-As work aims to improve government transparency and oversight in regard budgets, extractive revenues, and other resources used for public services.
No one needs to be told that Africa, as a continent, has more than a few development hurdles to overcome—drought, famine, and the ongoing conflicts in sub-Saharan Africa are just a few of those hurdles. But there are good things happening in Africa as well like, being home to seven out of the 10 fastest growing economies in the world. The problem that Omidyar is attacking with its $450,000 grant to TJN-A is that economic growth has done little to redistribute wealth or increase income equality. A key impediment to such gains is the number of shortcomings in taxation policies across many African nations.
We aren’t going to dive that deeply into various tax policies in Africa, but current tax systems in a number of countries are severely lacking in equity—that is to say, the majority of the tax is placed on the lower wage earners. These regressive systems make it hard for people to advance economically and build a strong middle class that can propel demand and growth. They also fail to pull in enough revenue to fuel robust public investments in human and physical capital, which are key building blocks of prosperity.
TJN-A works for tax reform in 16 African countries, promoting a pro-poor, progressive tax system that is more socially just and democratic.
The grant to TJN-A was awarded out of Omidyar’s Governance and Citizen Engagement Initiative. The initiative supports organizations that are working to build and strengthen the relationships between the people and their governments with the overall goal of promoting a more open and transparent administration. The primary regional focuses of the Governance and Citizen Engagement Initiative are in India, Mexico, Nigeria, South Africa, and the US.
Related: Pierre Omidyar