small-scale farmers, shoe repairers, owners of coffee shops, farmers, hairdressers',
60. A strategic target of $US 25.047 billion should be set for the year 2000 (as against an annual average of $US 16.339 billion over the period 1976-2000, with regard to business taxes
(b) Contribution to social security (Table 4b)
58. A contribution to social security would rise to $US 3.561 billion by the year 2000 as against $US 2.283 billion in 1990 (an average of $US 2.06 billion over 1976-2000), i.e. an annual growth rate of 5.6 per cent. Such annual growth rate target could only be possible if there existed: greater participation by the private sector; and, at the same time an increase in payroll with a view to raising the general level of contributions by the employees, especially in the
transport and communications sector.(c) Domestic business tax (Table 4b)
59. For a target of $US 19.138 billion to be attained by the year 2000 from domestic business tax on goods and services in Africa, it would require, on the basis of a revenue of $US 17.521 billion in 1990, an annual growth rate of 0.92 per cent, (i.e. for the period 1976-2000, an average of $US 15.8 billion). Such target is quite achievable if the following steps are taken in order to increase domestic business tax, especially banking services, insurance, transport and communications taxes, etc. The enterprises and businesses concerned will further be subjected to taxes such as patent, motor vehicle, insurance contract tax, vehicle inspection fee, fuel sales
tax, transport equipment tax, etc. These revenues would be obtained mainly:(i) through continuous updating of the list of tax payers, on the one hand; and (ii) by extending the above-mentioned list to informal activities specially to the
generally unregistered small transport companies.
(d) Foreign business tax (Table 4b)
60. A strategic target of $US 25.047 billion should be set for the year 2000 (as against an annual average of $US 16.339 billion over the period 1976-2000, with regard to business taxes on goods and services with the outside world, i.e. on the basis of fiscal revenue of $US 18.149 billion in 1990, an annual growth rate of 3.8 per cent. In order to achieve such an objective it would be necessary to (i) curtail customs fraud especially through tougher sanctions and by providing customs officers with incentives and more resources for their operations; and (ii) in addition, there is the need to project the required level of financial guarantees by the concerned enterprises as well as the modalities for their mobilization; in other words, it is necessary to accommodate as much as possible the African customs administrations' interest with the requirements of an efficient management of the concerned enterprises (especially companies
importing transport and communications equipment)..
(e) Non-fiscal public income (Table 4b)
61. A strategic annual growth rate target of 0.82 per cent is suggested for non-fiscal public revenues in Africa, i.e. $US 13.71042 billion and $US 12.67132 billion respectively by the year 2000 and in 1990 (i.e. an annual average of $US 11.527 billion calculated over the period 1976-2000).
62. Such a performance would require the following measures:
(i) Diversification and if possible bolstering of bilateral and multilateral cooperation with special emphasis on a well targeted strategy for increasing the grants component of public and received;
(ii) Improved management of public enterprises with a view to making them financially self-sustaining. In this respect, the formula of a contract plan, currently initiated in some sectors and especially in transport and communications in Africa should be encouraged and extended between these enterprises and their governments in such a way as to put an end to the very frequent interference of the latter in the day to day management of public enterprises;
(iii) The public enterprises for their good management should be authorized by the public authorities to develop a judicious policy for the preservation of their assets by making adequate provisions for depreciation, insolvency of their customers, various risks, etc.;
(iv) The contract plans can serve as a basis for the transport and communications enterprises as well as the concerned administrations for the gradual recovery of
costs.
(f) Strategic objectives for domestic and external debt (Table 30)
63. The cumulative domestic and external borrowing by African countries will be US$ 509.61 billion up to the year 2000.
64. Africa's strategy as regards debt is to effect the most suitable reduction and conversion mechanisms for the continent's indebtedness.
65. To that end, it will become necessary to bring about an appropriate environment, by:
(i) setting up credible privatization and debt-conversion programmes; in particular, relevant programmes for the transport and communications sectors;
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(ii) seeking potential investors interested in purchasing African debt and guaranteeing those investors an economic and regulatory environment that is congruent with the advancement of private enterprise; and
(iii) offering proof of future capacity to repay the debt so rescheduled.
66. These are the fundamental conditions that will ensure that the African countries concerned benefit from the various available mechanisms of reduction and conversion of their debts while guaranteeing the growth of their economies, particularly in the transport and communications sectors.
Debt reduction and conversion mechanisms
(f-1) Reduction conversion of bilateral debt and of secured private debt
Here, the applicable mechanism varied according to whether the debt in question is bilateral debt/secured private debt; or unsecured private debt.
68. The reduction and conversion of bilateral debt and of secured private debt are treated by the Paris Club in accordance with the mechanisms described below for each of the two categories of debt. ' :
a. In the case of secured private debt:
(i)
on a certain date (the due date) the debtor country submits to the Paris Club a application for debt relief, the two parties agree on a period known as the consolidation period (two or three years, for instance), to run from the due date;the total repayment due (principal and interest, including repayment arrears) within the consolidation period mentioned above, constitutes the consolidated amount:
(iii)
(iv)
(v)
the secured private debt incurred after the due date cannot, in any case, rescheduled;
*
the effect of debt relief mechanisms will vary depending on which of the following options A,B,C is adopted in the rescheduling of the debt;
option A envisages the cancellation of 50 per cent of the consolidated amount; the remaining half is, simultaneously with the rest of the secured private debt, rescheduled at market rates;
(vi) option B envisages the rescheduling of the entire consolidated amount, but at a lower rate of interest, such that the total interest reduction is equivalent to half of the consolidated amount; the grace period and the life of the obligation are longer;
the latter may, for instance, be set at twenty-three years;
(vii) option C envisages a 50 per cent reduction of the consolidated debt and an exceptionally long maturity.
b. In the case of bilateral deht
69. Here, the rescheduling conditionalities envisage a twelve-year grace period, a thirty-year debt-rescheduling period and more concessionary interest rates.
70. Significantly too, the conversion of secured private debt into equity participation and development and is limited to 10 per cent and 20 per cent respectively, up to a maximum of
$US 10 to US$ 20 million and 100 per cent of the consolidated amount, for the bilateral debt.
f.2) Unsecured private debt
71. The rescheduling of this category of debt is dealt with exclusively by the London Club.
It comprises a large forum of creditor commercial banks interested in offering their debtor clients improved facilities for repaying their debts; this is done through the rescheduling and conversion into company equity of the commercial debt.