Norway Study Tour by Zimbabwean Officials Comes to an End

The MEFMI led study tour   to Norway by a delegation of senior Zimbabwean Government officials to study the management of financial resources from natural resources came to an end on Friday 24 October 2014.  The delegation was led by the MEFMI Executive Director, Dr Caleb Fundanga.  Officials from the government of Zimbabwe who were part of the delegation were the Permanent Secretary in the Ministry of Finance and Economic Development, Mr Willard Manungo, the Senior Division Chief, Economic Research & Special Projects at the Reserve Bank of Zimbabwe Mr Simon Nyarota, the Commissioner General of the Zimbabwe Revenue Authority Mr Gesham Pasi and the Acting Chief Executive Officer and Chief Economist of the Chamber of Mines of Zimbabwe Mr Isaac Kwesu.  MEFMI staff who were part of the delegation were the Publications & Networking Officer Ms Gladys Siwela and the Programme Officer in-charge of Foreign Private Capital Monitoring, Natural Resources and Regional Issues Mr Evarist Mgangaluma.

The study tour saw the officials interacting first hand with some officials and pioneers of what has now become a highly successful model on how to effectively plan and manage wealth that is generated from natural resources. Mr Farouk Al-Kasim, who is regarded in Norway as a great contributor to the model attributed the success of the Norwegian model to the transparency and democratic governance structure that prevails in Norway.  He stated that an important and underlying factor to the success is that the natural resources belong to the people of Norway and the future generations.  In that respect a resource fund specific to petroleum was established in 1990.

With a population of about 5 million people and unemployment rate of 3.5% Norway has the highest GDP per head in the world.  The tax regime sees the country collect 42.5% of GDP.  The total tax on oil profit is 78% which is channeled as a whole into the government’s petroleum fund.  The government spends up to 4% of the annual return on the fund.  The fund currently invests in close to 8000 companies throughout the world which include Tesco, Facebook, Vodacom and Petrobas.

The officials that the delegation met stated that embracing the Norwegian model was also made easy by the aspect of high transparency particularly in relation to the tax system.  Norway has one of the most transparent tax systems in the world which allows all citizens to access information on tax and tax remittances by everyone.  The tax system has further managed to reduce tax evasion through transfer pricing, a chronic problem facing petroleum industry.

On a per-capita basis, Norway is the world’s largest producer of oil and natural gas outside the Middle East. Currently the country has the fourth-highest per capita income in the world that is mainly driven by natural resources. The petroleum industry accounts for around a quarter of the country’s gross domestic product. The Norwegian tradition of communal ownership of natural resources was exhibited throughout the organisations that the Zimbabwe delegation visited.

According to Authorities, the major pillar of success of Norway in managing the wealth that is generated from its natural resources is the democratic governance structure which has also promoted and encouraged a self- assessment tax system.  The tax information from both individuals and corporates is gathered from sources such as bank statements and employment records.  Tax compliance is a culture that has been engrained in the Norwegians, in the same manner that most of the officials that are working in the offices that are directly involved with the oil industry.

Put into practice, the ethos and strategies that Norway has in place can assist MEFMI member countries that are resource rich to enhance revenue collection and accountability at all levels. The ten (10) Norway oil commandments have propelled Norway from being one of the poorest country prior to the late 1960s to one of the richest currently.

MEFMI will soon be releasing a report specific to lessons learnt from the field visit in Norway, which will be availed to all its member countries.