TAX JUSTICE DEBATE BETWEEN YOUTH IN INSTITUTIONS OF HIGHER LEARNING IN EAST AFRICA

THEME: Promoting Youth Equitable Outcomes in the Africa Continental Free Trade Area (AfCFTA) through Sustained Domestic Resource Mobilization and allocation.

Introduction 

Youth for Tax Justice Network (YTJN) is a non-profit Pan-African youth organization working towards meaningful youth participation in influencing resource mobilization, allocation and utilization for the benefit of youth in Africa. It envisions a prosperous and engaged youth who enjoy their social, political and economic rights in Africa. YTJN works with a number of rights holders and duty bearers including the National Youth Councils, Youth Legislators, SADC Youth Forum, youth in business, the AfCFTA Secretariat,

East Africa Community, Secretariat, youth in institutions of learning, the East

Africa Community Youth Ambassadors Platform and like-minded organizations.  

Background 

Since October 2021, YTJN has been implementing a project entitled

„Amplifying Youth Voices in Revenue Mobilization, Allocation and

Utilization in East Africa‟ with support from the Open Society Initiative for Eastern and Southern Africa (OSIEA). This project aims at strengthening existing structures for youth engagement in revenue mobilization, allocation and utilization at national and regional levels and sharing useful information with youth about the importance of domestic revenue mobilization on a variety of media platforms that are accessible to them. 

In 2022, YTJN implemented a cycle of debates in Burundi, Kenya, Rwanda and

Tanzania around the central theme of “Amplifying youth voices against Harmful Tax Incentives in the East Africa Community” under the above named project. Consequently, youth in higher institutions of learning increased their knowledge on tax incentives and proffered solutions to their country governments ceding harmful tax incentives. For example youth recommended that East Africa countries should develop frameworks which guide the awarding, tracking and monitoring of tax incentives and they should align them with the East Africa Council of Ministers Directives on harmonization of tax incentives. 

YTJN is continuing with the implementation of this project in 2023. One of the interventions this year is organizing debates between youth in higher institutions of learning in Burundi, Kenya, Rwanda, Tanzania and Uganda in line with the African Union theme for the year 2023, “The Year of AfCFTA: Acceleration of the African Continental Free Trade Area Implementation”.  

Problem Statement

Domestic resource mobilization has become a concern for economies in the global south because of the changing international financial architecture. The reducing overseas development assistance (ODA) exacerbated by the multiple crises, like the COVID-19 pandemic, the adverse impacts of climate change, debt unsustainability, among other factors and the rising power of corporations have continued to necessitate governments in the global south to resort to domestic resource mobilization as a sustainable way to finance their development. The domestic resources have become fewer and fewer for most countries. The coming into force of the AfCFTA will see Tariffs on 90 percent of goods of State Parties reduced in equal annual installments until they are eliminated; 5 years for Non-least Developed Countries (NDCs) and 10 years for Least Developed Countries (LDCs). This is expected to present challenges for domestic resource mobilization management as countries will eliminate any duties on intra-African trade and adopt common external tariffs for intercontinental trade. 

In order to mitigate the loss of revenue losses during the implementation of the

AfCFTA, on March 10, 2023, the AfCFTA Secretariat and the African ExportImport Bank (Afreximbank) announced the launch of the AfCFTA Adjustment Fund in Kigali, Rwanda after the signing of the fund management agreement in relation to the Base Fund on 9^th February 2022. The Adjustment Fund consists of a Base Fund, a General Fund, and a Credit Fund, which will work together to support African countries and the private sector in their adjustment process. The Base Fund will consist of contributions from State Parties, grants, and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated. It will also support countries to implement various provisions of the AfCFTA Agreement, its Protocols, and Annexes. The General Fund will mobilize concessional funding, while the Credit Fund will mobilize commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.^[1]

The challenge with the Adjustment Fund is that it is supposed to consist of contributions from State Parties, the same State Parties who are unable to finance their budgets and are suffering debt crises. This poses a risk of plunging African countries into deeper debt distress and the youth will have to be shoulder this burden since they are likely to be alive for the longest time. It is also worrying that the fund will rely on grants, concessional funding and technical assistance funds in the face of the dwindling over-seas development assistance.

Further still, the resources required for the Adjustment Fund over the next 510 years are estimated at US$10 billion. However, Afreximbank has so far only committed $1 billion towards the AfCFTA Adjustment Fund. Despite the fact that this demonstrates its strong commitment to supporting economic integration and development in Africa, there is still a long way to go to attain the US$10 billion.

Several analysts have argued that taxes on increased economic activity on the continent will more than make-up for lost trade taxes in the medium to long term. However there is no assurance of such increased economic activity especially since the Regional Economic Communities on which the AfCFTA is anchored are still struggling to integrate economically despite several years of existence.  

Justification

The Assembly of the Heads of State and Government of the African Union committed “to broaden inclusiveness in the operation of the AfCFTA through interventions that support young Africans, women, and Small and Medium Enterprises (SMEs) as well as integrating informal crossborder traders into the formal economy by implementing the simplified trade regime”. In line with the directives of African leaders, the AfCFTA Secretariat is undertaking preparatory work towards the negotiations and development of the AfCFTA Protocol on Women and Youth in Trade. The Protocol is expected to address the specific constraints and barriers women and youth face when trading on the continent. It will create an environment that allows women and youth to utilise the AfCFTA by accessing wider markets, improving their competitiveness, and participating in regional value chains.^[2]

Digital trade is an integral part of free trade and critical to boosting intra-Africa trade. In February 2020, the AU Assembly decided to include digital trade within the AfCFTA. Digital trade issues will be constituted into a Protocol that shall, upon entry into force, form an integral part of the AfCFTA Agreement.  In May 2021, the Council of Ministers established the Committee on Digital Trade to coordinate and facilitate the negotiations of the Protocol on Digital Trade under the AfCFTA. The Committee consists of all State Parties.^[3]

The participation of youth as stakeholders in the implementation of AfCFTA is paramount for sustainable implementation of the agreement. Article 27.2(d) of the Protocol on Trade in Services makes explicit reference to improving the export capacity of formal and informal service suppliers, with particular attention to micro-, small- and medium-sized operators and “women and youth service suppliers”. 

Globally, trends show that the absence of youth perspectives in policy making at all levels has led to undercurrents of dissent and marginalization. The lack of effective communication between youth and their leaders inhibits participation in policy making and development issues. Therefore the voice of the youth in the development of the AfCFTA Protocols is critical for its successful implementation.

In 2022, YTJN developed a policy issues paper entitled “Promoting Youth Equitable Outcomes in African Continental Free Trade Area (AfCFTA) through Sustained Domestic Resource Mobilisation and allocation” with an aim of influencing the language and subject matter of the Protocol on Women and Youth in Trade and the Protocol on Digital trade. The paper was validated by a different youth stakeholders in East Africa. It recommended that the Protocol for Women and Youth in Trade should include provisions that require state parties to particularly commit to institute mechanisms for sustainably increasing domestic revenue mobilisation, to shoulder the likely revenue losses from the elimination of tariff barriers and invest in sectors critical for the welfare of youth and women among other recommendations. These recommendations were shared with the AfCFTA Secretary General H.E Mene Wamkele in Arusha during the inaugural AfCFTA Conference on Women and Youth in Trade which was held in Dar es Salaam, Tanzania. 

H.E Mene Wamkele welcomed these recommendations and urged YTJN to have more consultative meetings with different stakeholders especially youth in order to influence the language and subject matter of the Protocol of Women and Youth in Trade and the Protocol on Digital Trade. 

It is against this background that YTJN will organize a debate between youth in higher institutions of learning in Burundi, Kenya, Rwanda, Tanzania and Uganda themed “Promoting Youth Equitable Outcomes in the Africa

Continental Free Trade Area (AfCFTA) through Sustained Domestic Resource Mobilization and allocation.” 

Objectives

1.    To sensitize the youth on the AfCFTA.

2.    To understand the implications of the implementation of the AfCFTA in its current state on Domestic Resource Mobilization in East Africa.

3.    To provide solutions to the implementation of the AfCFTA without diminishing countries‟ domestic resources which can be included in the Protocol on Women and Youth in Trade and the Protocol on Digital Trade.

4.    To create and strengthen partnerships with different stakeholders working around the AfCFTA. 

Expected outputs

1.    Media statement on key issues that come out from the debate

2.    Student Debate brief outlining key issues and recommendations that can be included in the Protocol of Women and Youth in Trade and the Protocol on Digital Trade.

3.    Activity report.

Methodology

This year‟s debate will be held in conjunction with the Debate Society Uganda and other like-minded organizations. 

YTJN will send out a call for participation in the Debate across the institutions of higher learning in Uganda, Kenya, Tanzania, Rwanda and Burundi. They will be implored to submit written abstracts in line with the theme. A selected team of evaluators will make an assessment of the abstracts and choose the best two from each country. The best two abstracts from each country will be awarded with prizes and the winners will qualify for the East Africa Debate where they will be required to verbally defend their abstracts before a select panel of judges. There will also be an opportunity for cross-examination. The best abstract will be awarded a prize  

Draft program

The debate is slated to happen tentatively on 8^th June 2023