Archive for the 'UK' Category

UK boosts African tax collection

“For every £1 spent on operating costs an additional £100 is returned in tax revenues” is the claim for results achieved on a programme to boost tax collecting in developing nations. The UK Government’ s Department for International Development (DFID) on 19 Feb announced plans to give £47 million ($61m) to boosting tax collection “aimed at helping end their reliance on aid”.

According to calculations by website Nurmara , using estimates by the Organisation for Economic Co-operation and Development (OECD), tax collection in Africa is 18% of GDP (15% in sub-Saharan Africa). OECD says tax revenues in developing countries are about 14% of GDP, far lower than the 35% average for developed countries.

Less tax revenue means less funding for public services. In a press release International Development Secretary (Minister) Penny Mordaunt said: “This new UK support will help countries collect more taxes and leave them less reliant on aid. It will turbo charge their development.

“Governments in the developing world want to move beyond aid and we want to help them get there faster. We are supporting their efforts to implement a fairer, more transparent tax system which is vital in helping our aid money go further.”

The UK Government’s £47m package is broken down:
• £10.3m to the OECD including support to Tax Inspectors Without Borders (TIWB), an initiative by OECD and United Nations Development Programme which assists developing countries to implement international tax standards by sending experts overseas.
• £7.4m to the World Bank’s Global Tax Programme to work with countries to build effective tax systems.
• £3.7m to support the Platform for Collaboration on Tax (PCT), launched in 2016 by the International Monetary Fund (IMF), the United Nations and the World Bank Group. It aims to boost cooperation on tax issues.
• £4.2m to the African Tax Administration Forum (ATAF), based in Pretoria. The website was updated last year on events and reports, but outlines strategic objectives to be achieved in 2013-2015. According to the UK Government, ATAF “provides leadership of the tax reform agenda on the African continent and represents the needs of developing countries in international forums.” HMRC (the UK tax authority) will provide up to 2 tax experts for 4 years to help ATAF’s member states build a sustainable and impactful organisation.”
• £2.25m to the Intergovernmental Forum for Mining, Minerals, Metals and Sustainable Development (IGF) to help developing countries tackle tax avoidance in mining and unlock opportunities to increase government revenues and economic activity in the sector.
• Around £1m to the IMF Tax Administration Diagnostic Assessment Tool (TADAT), designed to provide an objective assessment of the health of key components of a country’s system of tax administration.
• Around £13m to the IMF’s Africa Regional Technical Assistance Centres’ (AFRITACs), which support African countries to build capacity in tax administration, public financial management, economic and financial sector management, and national statistics. Around £2.6m will specifically support boosting tax revenue.
• Around £5m to Institute for Fiscal Studies to develop tax-policy analysis in 4 developing countries, to reduce poverty and inequality and a research fund to increase knowledge of tax collection in developing countries.

Tax collection statistics 2016 by the OECD.

Useful OECD statistics and overviews on tax collection in 21 African countries can be found via this website.

One marked difference between paying tax in UK and in some African countries is how friendly and supportive customer-facing tax officials can be in UK, projecting an image that they realize running a business is hard and competitive, and trying to make it as easy as possible for businesses to meet their obligations to pay tax.

Dealing with some African tax administrations makes you feel you are dealing with officials determined to trick or extort you into handing over more than you should. Appeal mechanisms based on “pay the demand first, query later” and it can take years to receive repayments. As tax authorities push up tax as a percentage of GDP they tend to hit companies that try to pay tax the hardest, because they are more transparent and give unscrupulous tax officials more to grab, compared to companies that seek to be as shady as possible. The result is far less transparency and tax collection. Tax putting businesses out of operation, losing future revenues including payroll tax, is not unknown when they could be doing all they can to nurture businesses into paying their tax.

By comparison, in several European countries I have been surprised to hear people say “I’m happy to pay my fair share of tax”. They feel they get value for their money such as health, education, infrastructure, and social welfare for the needy. They also see tax as a measure of their success in making money.

African tax administrations can improve skills at making tax collection easy and transparent for businesses.

African countries should start awards for taxpayer business of the year and business leaders should be proud to compete for it.

Africans inspiring London Stock Exchange

Opening bell ceremony at London Stock Exchange for Companies to Inspire Africa 2019, credit LSEG

The London Stock Exchange Group launched the 2nd edition of its Companies to Inspire Africa Report, on Wed 16 Jan, identifying dynamic growth businesses in Africa to build an information database and showcase them to a global audience. Many speakers expressed sympathies after a terror attack in Nairobi on 15 Jan.

International Development Secretary, Penny Mordaunt MP, said the positive African launch was uplifting after the previous night’s “depressing” vote in Parliament: “Five of the world’s fastest-growing economies are African and by 2050 a quarter of the world’s population will live there. This growth presents unique opportunities for us all (see speech here)

“The Companies to Inspire Africa report highlights the leading private companies operating in Africa, which have the most inspiring stories and the strongest growth potential. By combining African-led ambition with British expertise we can unlock investment and create more jobs for Africa and the UK. This is a win for Africa and a win for the UK.”

David Schwimmer, CEO of LSEG, said: “These high-growth companies have the potential to transform the African economy and become tomorrow’s job creators. At LSEG, we are committed to helping companies realise that potential and we are pleased to highlight and celebrate the company success stories behind one of the world’s fastest growing markets.”

He highlighted LSE’s role as a huge centre for African businesses and governments to raise capital. Successes include hosting bond issuances for Nigeria, Egypt, Angola and Ghana, and in November 2018 Quantum Terminals (liquid gas storage, cleaner fuel for households) from Ghana succeeded in the first local-currency bond to list in London.

He also mentioned the ELITE programme, an international network for growth and funding options,   which has enrolled over 90 companies with 20,000 employees in 8 African countries. The programme was launched in 2016 with the Casablanca Stock Exchange and has expanded across West Africa with support from CSE and the Bourse Régionale des Valeurs Mobilières (BRVM).

About the report

The report is a 144-page book with great infographics and photos, put together by LSEG and Wardour.

It includes inputs by President Uhuru Kenyatta of Kenya and Prime Minister Theresa May of UK, plus many other key leaders working in Africa. It highlights a good number of exciting companies across Africa including innovative farming and even drones for agriculture, top consumer goods services and the size of the growing consumer goods market, many dynamic companies with women leaders, fintech, better banking and other financial services, healthcare, education, industry, renewable energy and technology and telecoms.

Partners to the report who helped with the selection and research are Asoko Insight and PwC. It was sponsored by African Development Bank, CDC Group, Instinctif Partners and Stephenson Harwood.

The 360 companies were selected from 4,000 nominations by LSEG’s partners, development finance institutions, venture capitalists, private equity firms, impact investors. Research partner Asoko Insight nominated some and helped with data collection and company information, according to CEO Rob Withagen. To be included a company had to be active and privately owned, with headquarters and primary operations in Africa. It must have demonstrated growth over last 3 years measured in: revenues, number of employees, operational output or geographical expansion. It needed to be audited by a recognized auditor and individual company or consolidated group annual revenue must not exceed $1bn for the years 2015-2017. It includes 97 Nigerian companies, 66 from Kenya, 31 Ugandan and 23 South African

The report is also launching in Lagos.

A comprehensive searchable database of the report, along with a downloadable PDF of the publication is available at

London Stock Exchange Group has a long history of supporting the development of African capital markets and investment in African companies. To learn more, click here.

Companies to Inspire Africa 2019 report in numbers:

The report identifies 360 companies from 32 countries representing 7 major sectors. It highlights the entrepreneurial and dynamic landscape of the African private sector. Companies featured include small entrepreneurial businesses through to well-established corporations. A searchable database of the report and a downloadable PDF of the publication are available at The first edition of the report was published in 2017.

•             Average revenue Compound Annual Growth Rate (CAGR) is 46% (up from 16% in 2017 report) and average employee CAGR at 25%, over three years, in 2019 report

•             23% of the companies are led by women, almost double the proportion in the 2017 report: Standout sectors where senior female executives are having a big impact are: healthcare & education, and financial services. Ten out of the 20 Ghanaian companies featured are led by women.

•             The fastest growing sectors are financial services (revenue growth rate 70%) and renewable energy (revenue growth rate 66%)

•             Consumer services is the most represented sector with 79 companies from 20 countries this year, reflecting the growth of sub-sectors such as consumer goods, food & beverages, leisure & tourism, media and retail, and the growing middle class in Africa

•             Agriculture remains an important sector for the continent with 53 companies, almost 15% of companies in report

•             Most companies per country are: #1Nigeria (97 companies) and #2 Kenya (66). Nigeria was already most companies in 2017, but strong representation from the industry and technology & telecom sectors

•             The companies in this year’s report are creating significant employment opportunities across Africa with each company employing an average of 363 people.