Project Reports

This paper analyses the fiscal policy measures adopted by African countries in response to COVID-19 and how these impact progress on their climate change actions of the countries. Specially, it analyses the climate friendliness of the immediate fiscal responses that were adopted by six African countries namely: Nigeria, South Africa, Senegal, Tanzania, Uganda and Benin when the pandemic first hit. The analysis focuses on measures that were included as part of the fiscal stimulus packages designed to address the economic fallout from the COVID-19 pandemic while acknowledging that countries may have undertaken more climate change action outside of these packages. Our Donor This project is supported by the International Development Research Centre (IDRC). The IDRC is a Canadian federal Crown corporation. It is part of Canada’s foreign affairs and development efforts and invests in knowledge, innovation, and solutions to improve the lives of people in the developing world. 3 COVID-19 Fiscal Policy Response and Climate Change Action in Africa It is found that while the focus of countries was to minimise macroeconomic vulnerabilities and welfare losses, some of the measures adopted have implications on the climate response of the respective countries. Nigeria, the only country among the six with clean energy spending in its stimulus package, had an overall green stimulus package. South Africa, the biggest polluter among the six countries (and in Africa) adopted a climate neutral package while Uganda, the least polluting country of the six adopted a climate unfriendly package owing to its acceleration of the construction of environmentally unfriendly industrial parks. Lastly, Tanzania, Senegal and Benin had no climate related policies, thus making their stimulus packages climate neutral. Looking at the policy measures in the stimulus packages, opportunities are identified for these countries and others in Africa to exploit and move towards a greener recovery. These include expanding the packages to include clean energy projects financed through green financing facilities, imposing carbon taxes to help consolidate their deteriorating fiscal positions while simultaneously reducing pollution, and contributing to the development of green finance segments by putting in place a regulatory framework to incentivise financial market players to develop and issue green products.

This article was first published at SAIIA

Globally, tobacco consumption continues to cause a huge burden of preventable diseases. Nigeria has been leading tobacco markets in Africa and the absolute number of active smokers remains one of the highest on the continent. Yet, little is known on the economic costs of cigarette smoking in Nigeria which prevents an effective policy response.

This study seeks to address this gap by estimating the economic costs of tobacco use across different groups, as well as the cost-effectiveness of tobacco tax interventions. The study consists of three separate undertakings that taken together, provide personal anecdotal evidence of the detrimental effects that tobacco consumption has in Nigeria; estimate the direct costs associated with tobacco related diseases; and use an innovative methodology to estimate the indirect costs of tobacco-related illnesses, which were previously unavailable in the country.

This inception report focuses on the emerging trends in Africa’s digital and data environment. The study builds a case for mobilizing action at both regional and national levels, to strengthen data governance frameworks in Africa, particularly in view of the ongoing regional economic integration initiatives under the African Continental Free Trade Area (AfCFTA). We advocate for stronger data policies in Africa as a development tool for bridging identified gaps that could put the region at a disadvantage, and as a means of building greater confidence which is a requirement for growing the digital economy. The findings suggests that while the potential of digital technologies is yet to be fully exploited in Africa, the region has witnessed a surge in the use of digital platforms and tools in recent years. This has influenced the ease and manner in which data gathering and exchange occurs, resulting in heightening concerns around potential data abuse. In response, national efforts and domestic legal frameworks on data governance are gradually increasing in Africa, although rather slowly as there are still significant policy gaps. While the magnitude of the data policy gaps vary across different member countries, African countries have so far largely been unable to match the pace of change in the new data driven global economy. There is also a lack of uniformity in policy approaches being adopted by member states.

The detrimental health consequences of tobacco use have been recorded over many decades. The Royal College of Physicians’ report in 1962, followed by the US Surgeon-General’s report in 1964, established a causal relationship between tobacco use and lung cancer. Since these seminal studies, thousands of scientific studies have established that smoking is not only bad for the lungs, but has a detrimental impact on nearly all organs in the body.

In response to the reports by the College of Physicians and the Surgeon General, many governments, especially in high-income countries, have implemented measures to discourage the uptake and use of tobacco products. These interventions include smoke-free policies, counter-advertising, warning labels on cigarette packs, the banning of tobacco advertising, promotion and sponsorship (TAPS), and, since 2012, plain packaging. Studies have shown that these interventions reduce the attraction of tobacco, and discourage its uptake. However, the single most effective intervention is an increase in the excise tax on cigarettes. Tax increases that increase the retail price of cigarettes make cigarettes less affordable, discourage their use, and improve health outcomes. As well as decreasing tobacco use, an increase in the excise tax increases government revenue.

In 2003, after three years of negotiation and an even longer period of preparation, the World Health Assembly unanimously adopted the WHO Framework Convention on Tobacco Control (FCTC). The FCTC recognises that the tobacco epidemic, which is responsible for 8 million premature deaths each year, is a global problem and requires a global response. The FCTC came into force in February 2005 and has been ratified by 180 countries and the European Union. Nigeria ratified the FCTC in October 2005. By ratifying the FCTC, Nigeria committed itself to adopt evidence-based policies, as described in the FCTC, to reduce tobacco use.

In this study, we document successful cases of effective synergies in countries that, like Nigeria, display a significant presence of the tobacco industry and face similar challenges to trade regulation but were still able to implement higher tobacco tax policies and other tobacco control measures, while reducing the level of illicit trade. The key lesson is that measures to reduce illicit tobacco trade needs to be amalgamated with tobacco taxation, and each can be addressed in its own respect with appropriate strategies. Moreover, Nigeria has not reached the phase where tobacco tax should be a concern for the tobacco industry. With the new tax policy introduced in 2018, this amounts to 16.4 percent excise tax burden in overall, which is still significantly lower than the 75 percent excise tax burden on tobacco products recommended by the WHO. Our analysis of price trends in Nigeria and differential with neighbouring countries show that there has not been significant perturbation in the Nigerian tobacco market to create an arbitrage opportunity.