Rethinking Financing for Development in the Global South: A Feminist Perspective

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This blog has been authored by Mukupa Nsenduluka -Tax Justice Network-Africa, Luckystar Miyandazi – African Union Commission, Katie Tobin – WEDO, Klelia Guerrero García - Latindadd, and Bhumika Muchhala - Third World Network

This blog presents international tax architecture reform as a systemic solution to debt, climate, and resource injustice, and points to the new UN Tax Convention as a key element of the structural transformation of economic and financial governance required to create a more just and equal world, especially for women. The co-authors presented many of these points at an event on the sidelines of the 2024 Financing for Development Forum. Watch the recording of the discussion here. 

A “quadruple crisis” plagues resource-rich nations in the Global South: countries grapple with the impacts of tax abuse, the climate crisis, the social-environmental costs of extraction, and high debt burdens that undermine their provision of public services and disproportionately affect women and gender-diverse people. These injustices are deeply rooted in a flawed and broken global economic system that requires urgent transformation.

For many resource-rich countries, an extractive economic model allows most resources to be exploited and exported in raw form by foreign multinationals. These companies exploit tax loopholes and shift profits to reduce tax payments in the countries where they operate—meaning that most of the value of what’s extracted travels with them, rather than benefitting the “source” country. International tax abuse, enabled by the injustice of the current international system, costs the world US$483 billion annually. The revenue lost through illicit financial flows (IFFs) and tax evasion and tax avoidance could be channelled to financing climate adaptation, mitigation and resilience—and to providing public services that improve the lives of women and all marginalized people. 

African solutions for African problems? 

The quadruple crisis is particularly widespread on the African continent, where most countries are highly indebted and resource-rich. Africa has enough resources to finance its development, but loses approximately USD 89 billion a year through IFFs; of this, USD 40 billion alone comes from the extractive sector. An additional USD 220 billion is lost from the continent annually due to tax incentives.

In November 2023, the African Group of States, supported by the African Union Commission, won a major victory at the UN General Assembly when governments agreed to form a UN Framework Convention on International Tax Cooperation. This decision, at long last, stems from the contributions of African institutions and governments in calling for the reform of the global tax and financial architecture—underpinned by the role of the African feminist movement in advocating for economic justice.

Once finalized, the Convention will become an important multilateral agreement, diverting power away from the OECD-led tax governance system and empowering governments to exercise greater sovereignty over tax decisions affecting their economies. Including among other issues, equitable taxation rights, exchange of information, the need for all countries to work together to eliminate IFFs through tax evasion, tax base erosion and profit shifting and to ensure that all taxpayers, especially multinational companies and transnational corporations, pay taxes to the governments of countries where economic activities occur, value is created and from where revenues are generated.

Achieving this will depend on how the convention and its guiding principles and priorities are conceived. Therefore, over the next few months as the Convention is being shaped, it’s essential to support the efforts of the African Group and other states to ensure that the Convention reduces inequalities both within and between countries.

Tax for environmental and gender justice

At the same time, the UN Tax Convention can directly serve gender equality by addressing tax evasion and abuse and IFFs that drain resources from national budgets and the kinds of public spending that fulfil the rights of women, girls, and gender-diverse people. A feminist structural approach calls attention to both the national and local level impacts of policies around debt, tax, and climate, but also the specific situations of women in mine host communities, for example, in determining natural resource governance and taxation. 

Acknowledging that both gendered inequalities and climate crisis are rooted in our extractive, colonial economic system, the UN Tax Convention should enable the progressive realization of taxes that are: 

  • Coherent: Environmental tax revenue should be directed to climate action, across the value chain, alongside the elimination of unsustainable tax benefits and subsidies; 
  • Prioritized: Regardless of competing issues, environmental taxes must be implemented urgently to advance both equity and climate action; and 
  • Just: Taxes must be progressive, recognize gender impacts, and protect resources but also the communities and the countries that host them. 

A holistic approach across climate, gender, and economic justice can ensure that the Tax Convention supports and promotes the pivotal role of taxation in advancing an eco-social contract.  

Through a global agreement on a wealth tax, for example, the Convention could temper the power of billionaires – the majority of whom are men whose undue influence in global policy setting is now extending to mining transition minerals on the African continent, under the guise of the “green transition.” According to Tax Justice Network (2023): “A progressive tax on extreme wealth on those individuals with assets worth over US$100 million could generate an estimated US$295 billion annually” for climate and development spending. This type of measure, framed around the polluter pays principle and the agenda of progressive taxation, could mitigate both the inequality implications and the disproportionate emissions generated by the overconsumption of these elites. The UN Tax Convention must therefore include a commitment to tax high-net-worth individuals, and to direct the revenue towards climate and development action. 

  • Watch Katie Tobin speak to this point in an intervention during the Tax Convention committee negotiations on May 1 2024, here. 

Finally, by shifting the global tax regime to the democratic and equitable arena of the UN, the Tax Convention has the potential to engender the transformation of global economic and financial governance that will enable countries of the Global South to capture resource revenues, redistribute financing, and budget adequate funds for climate action and gender equality. Given how off-track current global efforts to achieve the suite of international commitments agreed in 2015 (the Sustainable Development Goals, Paris Agreement on climate, and Addis Ababa Action Agenda on financing), it can’t come soon enough.

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