June 2023 / Focus Africa

$20 million Equity investment approved by African Development Bank in the Africa50 Infrastructure Acceleration Fund I. The investment will support Africa50's target of mobilising $500 million private capital for strategic infrastructure across the continent. (Africa Market Trends)

50 MW Solar power plant to be constructed in Tanzania, making it the largest in the East African country. The deal between Tanzania Electronic Supply Company Limited and Total Energies aims to optimise the energy sector and strengthen the availability of electrical power in the country. (Africa Energy Portal)

300  Businesses from 22 countries in Africa have joined the single market trade hub launched by Ecobank Group. The launched trade hub connects traders across Africa and serves as an exchange and information repository to respond to the evolving trading needs of SMEs. (Africa Global Funds)

$129 million Funding issued by African Development Bank to expand healthcare access in Morocco. The financing aims to improve access to primary and secondary healthcare infrastructure and modernise services by deploying innovative solutions that improve connectivity. (Morocco World News)

1000 Electric motorcycles operating on Rwandan and Kenyan roads for commercial use sold by Kigali-based electric motorcycle startup Ampersand. This is more than any other electric motorcycle company in Africa, as the company plans to reach 3000 by the end of 2023. (Africa Business Communities)

89 MW Wind farm in South Africa set to begin construction after a financial close by African Infrastructure Investment Managers. The Castle Wind project will play a key role in reducing carbon emissions, mitigating climate change and providing energy security in South Africa. (Afrik21)

5,500 MW 

Additional renewable energy expected to be added to the grid in South Africa by 2026 to offset the electricity crisis. The country has 66,000 MW of wind and solar projects under development to help reduce the intensity of load shedding. (Zawya)

123 Cities across Africa to be built should the deal between African Union and a unit of Singapore's Temasek go through. The $202 billion construction plan aims to meet the housing deficit in Africa and is expected to last for two decades. (The Straits Times)

$107 million Loan issued by the African Development Bank to Tanzania to drive sustainable recovery from the effects of Covid-19 and the Russian invasion on Ukraine. The budget support loan will have three components that will help enhance domestic resource mobilisation, strengthen the management of environment resources and improve livelihoods. (Africa Market Trends)

$500 million Financing promised for the Alliance for Green Infrastructure in Africa (AGIA) at the Summit for a New Global Financing Pact in Paris last week. The alliance will mobilise $100 million in grants for projects preparation and $400 million in blended financing for project development. (The Sun)

500 Agribusinesses in the East Africa Community set to benefit from increased trade opportunities with the European Union under the MARKUP programme, which aims to promote access to the $2.4 billion EU market through training and other support. (Monitor)

40% Senegal's targeted renewable energy generation capacity by 2030, up from 31% currently. This week, the West African nation secured financing commitments of $2.7 billion from European countries to help achieve this goal as part of the Senegal Just Energy Transition Partnership (JETP). (Reuters)

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The Sub-Committee on Tax and Illicit Financial Flows of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration recently concluded its meeting focusing on the design and implementation of the global tax rules in Africa to improve tax collection methods for African countries. The meeting was organized by the African Union, according to a 2 June statement.

Implications related to Pillar Two

The African Tax Administration Forum (ATAF) has already indicated that the Pillar Two system mainly benefits the resident states that are, in most cases, developed countries to the detriment of developing countries. Also, African countries have fewer resident ultimate parent entities leading to limited options for tax collection under Pillar Two. For previous coverage.

Accordingly, the Sub-Committee reiterated its stance that the qualified domestic minimum top-up taxes might support African countries in protecting their tax revenues under Pillar Two. This means that African countries should impose a top-up tax on the low-taxed income of their constituent entities.

Raymond Nazar, Head of the Policy Unit at the Ministry of Finance of the Republic of Ghana and the Chair of Experts of the Sub-Committee, stated that "enacting legislation to protect tax bases could result in a revenue of around USD 220 billion".

Revenue collection from a VAT perspective

The participants also addressed revenue collection from a VAT perspective. Since the consumption of digital goods and services, delivered across borders and intangible in nature has increased in the past years, it is often challenging to apply an appropriate tax collection method. This might require the implementation of simplified VAT regimes. Accordingly, participants of the meeting also adopted recommendations to use the VAT toolkit the ATAF prepared for improved revenue collection on cross-border supplies.

In terms of expected revenue, Nazar stated that "cross-border transactions and e-commerce have the potential to generate approximately USD 40 billion in revenue for the African industry by 2023".