Africa haemorrhages, a bleeding that must be curbed if life would not be snuffed out of the continent.
The report of the Thabo Mbeki-led High Level Panel on Illicit Financial Flows (IFFs) from Africa says emphatically that IFFs from Africa are large and increasing ‘…from about $20 billion in 2001 to $60 billion in 2010’ and this, as noted in Finding 1 (Chapter 4) of the document, is in respect of ‘merchandise trade sector’ alone. Nigeria accounts for 68.1 per cent or $40.9 billion of this loss, a trend that must be checked if Africa would survive.
The 126-page ‘empirical research’ by the 10-person panel set up in February 2012 by the African Union/Economic Commission for Africa (AU/ECA), Conference of Ministers of Finance, Planning and Economic Development is a response to a number of fears including that many African countries would not meet the Millennium Development Goals, MDG, 2015 targets and that the continent’s development was over-dependent on external resources. The bottom line fact that has emerged from this report is that far more of Africa’s wealth goes to the rest of the world than it receives. In the dramatic words of Mbeki, the former President of South Africa, the study revealed that ‘Africa was a net creditor to the rest of the world.’ In normal circumstances this would be heart-warming. Alas, the circumstances are most abnormal: this continent is, through ‘money illegally earned, transferred or used,’ being ripped off by corporations and individuals who exploit a complex range of legal interpretations, accounting and tax rules, and intra and inter-business dealings. This report indeed makes depressing reading.
Even for a rich continent, $60 billion is a lot of money to lose; for Africa that is in desperate need of funds to drive development and put it on the path of progress, to lose that much to fraudulent transactions is sufficient to frighten the continent into urgent action. Indeed, far more than the figure given by this panel, other researchers have reported that up to $182 billion is drained out of the continent each year when such leakages as skilled workers’ emigration, illegal fishing and debt payments for dubious or irresponsible borrowing are considered.
The Mbeki panel did quite a commendable job to provide a detailed analysis of the phenomenon of IFFs from Africa, the governance and development impact of IFFs, the policy implications and a 15-point findings that should ginger and guide action by the continent’s leaders. And here lies the crux of the matter.
Finding 2 of the report states directly that notwithstanding the technically complex nature of this form of criminality, ‘the success in addressing IFFs is ultimately a political issue [because] the nature of actors, the cross-border character of the phenomenon and the effect of IFFs on state and society attest to the political importance of the subject.’ The point here is that Africa’s political leadership must on the one hand muster the moral courage to eschew corruption that colludes with perpetrators of IFFs, and on the other hand muster the political will to institute and or enforce laws against this heinous plunder of the continent. And according to Finding 3, ‘transparency is key to achieving success.’ African governments, the report says, must keep their books of business transaction open for scrutiny by their own citizens as well as other governments.
In Africa, as in other parts of the world, government is the largest procurer of goods and services. But government is also the creator and the enforcer of laws and regulations that should serve the specific end of good governance, which includes, of course, transparency, accountability, and judiciousness. Opacity, or in the fullest sense, corruption in government, infects other sectors with the consequence that allows IFFs to exist at all and even thrive. Annex II of the report shows the typology of commercially driven IFFs and their impacts.
In virtually all the aspects covered, ranging from outward and inward investments, through public lending and borrowing and tax regimes, to sales of public assets, public procurement and public contracts, either regulatory abuse or abuse of power is shown to be at play. The consequence: the continent is severely short-changed while a few unpatriotic colluders in public and civil services reap stupendous benefit. Between 1970 and 2008, Nigeria reportedly lost in the form of IFFs a mindboggling $217.7 billion. This sum, conserved and judiciously invested in the economy, would have transformed the country beyond recognition.
The Mbeki panel is of the opinion that the dependence of African countries on natural resources makes them vulnerable to IFFs. This is not true, just as the despairing claim that Africa’s resources are a curse, is unacceptable. The extractive industry thrives in many other nations of the world and do yield immense benefits to the owners where and when the government of the day thinks and acts in the best interest of the people as opposed to self-interest. In this connection, whereas the panel cites corruption as an issue in IFFs, corruption in government specifically is the issue that is central to the problem of IFFs. In every aspect, the fervent desire and uncompromising will of government to act strictly in the best public interest – be it in negotiation deals or in regulation – can make all the difference in the fortunes of a nation.
It is granted that Africa cannot solve this problem alone since IFFs require the collusion of benefitting outside interests. Indeed, some multinational corporations have, with the backing of their home governments, grown too powerful for many small nations or weak, incompetent and corrupt governments to deal with. The panel challenged, and rightly so, the global community to take all necessary steps to eliminate secrecy jurisdictions and introduce transparency in financial transfers. But if Africa is to earn the support of its foreign ‘partners’ in the effort to halt IFFs, the leadership must act demonstrably in the continent’s best interest.
It is encouraging that this report was commissioned at all and has seen the light of day. However, Africans expect and demand that the heads of state and government who have received this report will study it, digest it and, for the sake of Africa, marshal the individual courage and forge the collective unity needed to implement the five-point recommendations of the high level panel. That would lift the spirit of the people of Africa.
