Promoting Good Financial Governance in Africa

Speech by Parliamentary State Secretary Thomas Silberhorn to welcome the participants in the Executive Master's in Taxation programme at the opening ceremony, 17.10.2014, BMZ Berlin

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Ladies and Gentlemen,
General Secretary of ATAF, Logan Wort,
Commissioner General of Burundi Revenue Authority, Domitien Ndihokubwayo,
President of the Berlin School of Economics and Law, Dr. Bernd Reissert,
dear students,

Africa is a continent full of potential. In recent years we have witnessed a vibrantly developing continent – continuously growing in various respects, ranging from increasing economic opportunities to a dynamic young population confident enough to shape Africa's future and to represent Africa in global debates around governance, economic development, and peace and security.

However, the current crises on the African continent emphasize more than ever the global dimension of challenges in Africa. It is important that Africa takes a leading role in tackling these crises in partnership with the international community. Solutions must be found for problems such as halting the spread of the Ebola virus, enhancing food security, safeguarding human rights throughout the continent, and combating terrorism. At the same time, we are also facing globally challenging economic times.

Therefore, the main thrust of our cooperation should be not carrying out reactive measures in order to tackle current crises, but pursuing a preventive and sustainable approach that involves tackling the root causes of existing crises in order to establish and realise resilient state structures. 

In this respect, public financial management is a key factor to unlock the trapped potential for economic and social development in many countries.

An transparent, fair and efficient public financial management system is an important pre-condition for sustainable development and poverty reduction. It provides governments with more stable funding so that they can perform their fundamental tasks. It forms the backbone of any functioning state.

Global Financial Integrity estimates that illicit financial outflows from the developing world amount to approximately one trillion US dollar a year. Illicit financial flows are one of the most devastating economic issues impacting the global South. The money thus lost is not available to meet urgent development needs. Even though progress has been made over the past few years, greater global financial transparency must be achieved.

Both tax policies and tax administrative systems are called upon to play a significant role in balancing the budget accounts of most countries. Therefore, administrative capacity must be improved, the tax base must be broadened and tax revenue must be increased as a proportion of GDP. Sharing experience is thus of critical importance; and both South-South and North-South exchanges of solutions are an important dynamic for change, enabling developing countries in particular to strike the right balance between implementing an attractive tax regime for investment and growth, and securing the necessary revenues for public spending.

But taxation has even more far-reaching impacts, as it is an integral building block in establishing good governance and democracy by promoting accountability and ownership. Funding national budgets through taxes rather than foreign aid and loans, increases ownership of government decisions and fosters independence from international ODA. Moreover, encouraging citizens to pay their taxes translates into higher demands for public service delivery, creating a give-and-take relationship between the citizens and the state. This is the argument that lies at the heart of a fair, effective and transparent public finance system, which is summed up as Good Financial Governance.

Good Financial Governance is a holistic, systemic and value-based approach, which includes tax policy and tax administration as well as budget accountability. The Good Financial Governance approach looks at three different dimensions:

  1. the "Principles of Good Governance" – the normative dimension of good financial governance,
  2. ​the "Legal Framework, Structures and Political Interests"·– the political and economic dimension, and
  3. "Public Financial Management" – the technical dimension of Food Financial Governance.

The German government is currently supporting technical and financial cooperation programmes and projects related to Good Financial Governance in fourteen African countries (such as Ghana, Zambia, Cameroon and Burkina Faso). Additionally, the German government supports regional organizations such as the African Tax Administration Forum (ATAF) but also the East African Community (EAC) and the Economic Community of West African States (ECOWAS) in building functioning regional public finance architecture. As Africa is the BMZ's priority continent, the German government is committed to intensifying its cooperation with African partners through initiatives that particularly strengthen responsibility and ownership for each country’s own development.

Our goal is mutual exchange. We want to talk with our African partners, not about them. That is why, last month, we hosted an African Summit here at the BMZ in Berlin. And that is also why we are continuing this dialogue and establishing platforms for exchanging ideas and for mutual learning processes, like this master programme. 

A particular focus for the BMZ is supporting young and talented Africans working towards or within the context of Good Financial Governance, as a crucial contribution to sustainable development and, in the long-term, reducing poverty on the African continent. I therefore warmly welcome you as the first participants in the Master’s Programme in Tax Policy and Tax Administration, which forms the core of the Executive Master’s in Taxation Programme.

You will spend the next few months here in Germany studying at the Berlin School of Economics and Law, followed by a period of study in South Africa at the University of the Witwatersrand, Johannesburg. This programme, jointly developed by ATAF, the Berlin School of Economics and Law and the GIZ programme "Good Financial Governance in Africa", is the first of its kind and is the fruit of a long-standing cooperation arrangement between the African Tax Administration Forum and the German government.

I highly appreciate the active role that ATAF has played within the process of developing this programme. Regional networks are indispensable advocates for good governance. They offer a crucial platform for the exchange of knowledge and reform experiences between the institutions of our cooperation countries and represent the important African Voice at international fora. I congratulate ATAF and GIZ for entering into partnerships with the Berlin School of Economics and Law as well as with the University of the Witwatersrand, which will hopefully not only foster exchange among students from both continents but also result in learning experiences for lecture. This will be another step in strengthening our partnerships. With international trade increasing, the global challenges relating to cross-border tax evasion and tax avoidance are growing stronger, making this partnership more important than ever.

I wish that this programme will live up to all our expectations – including those of the 27 participants from 13 African countries – and that it will serve as an effective measure to greatly boost capacities in the ministries of finance and the tax administrations across Africa. I hope you will be able to act nationally and regionally, and as ambassadors of the African voice in the global initiatives to strengthen domestic resource mobilization.

Exciting months in Germany and in South Africa lie ahead of you. I hope that this programme will provide you with the expertise and skills necessary to fulfil your future positions in leading public institutions. I wish you fruitful exchanges between you and your fellow colleagues as well as with the lecturers from the European and African continents, as this Master’s Programme is an ideal platform for a mutual learning process.

The fact that talented young Africans like you are seeking to expand your horizons and skills set to contribute to your countries' development is promising and important. It is capacity building at its best. I wish you curiosity, energy, passion and whatever you need else to pass your Master's programme and to enjoy your stay here in Germany. We fully count on you!

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