Corruption Africa's worst silent enemy

The sub Saharan Africa, according to a report by the Global Financial Integrity (GFI), an organisation based in Washington DC for 2000-2009 released January 2011, loses an estimated US$0,276trillion in illicit cash outflows. Most of this is ill-gotten money from corrupt activities is stashed in western and European banks which use it for the development of their countries and to loan back to the continent. 

Two babies’ names – one a five-month old and another a one-month old – were recently found on payrolls in Nigeria.

The one month old baby’s name was on government’s payroll while the five-year old’s was on a municipality’s. Although the one-year old could hardly sit or talk, records showed that it had a diploma.

This is the extent to which corruption has gone not only in Africa but globally and the figures are staggering.

On one hand, in southern Africa alone US$40b is lost to corruption, according to World Bank while an available African Union study estimates that the continent loses US$140b annually. 

This, the report says is 25% of African countries’ combined income.

On the other hand, the African Development Bank estimates that 50% of tax revenue is lost to corruption and that lower income households spend an average 2-3% of their income on bribes while rich households spend an average of 0.9%.

The ADB also says the lost revenue is usually greater than some of the countries’ foreign debt with award-winning financial reporter and editor of Absolute Return, Michelle Celarier estimating that as much as $30 billion in aid for Africa has ended up in foreign bank accounts. 

“This amount is twice the annual gross domestic product (GDP) of Ghana, Kenya, and Uganda combined,” she writes in Euromoney. 

Global Financial Integrity (GFI) an organisation based in Washington DC in its report titled Illicit Financial Flows from Developing Countries: 2000-2009 and released January 2011 estimate that US$0,276trillion out of the US$1.26trillion cash outflows from developing countries is from Sub Saharan Africa.

The report shows that there was an increase in illicit cash outflows from US$1.06trillion in 2006 in 2008. From 2000 to 2008, annual averages of about US$725b to US$810b were recorded.

These figures do not cater for smuggling, mispricing and asset swaps. If these are factored in, the figures can be higher than this.

GFI director Raymond Baker says, “The amount of money that has been drained out of Africa - hundreds of billions decade after decade - is far in excess of the official development assistance going into African countries."

The report further notes that the West and Central African regions bled cash most with Nigeria alone accounting for US$130b.

“Bribery, theft, kickbacks, and tax evasion were the greatest conduit for the illicit financial out flows from the major exporters of oil such as Nigeria,” Baker says adding that the stolen money goes to Western Institutions. 

Delegates to the Southern African Forum Against Corruption (SAFAC) who met in Windhoek, Namibia for its 9^th General Meeting this week expressed great concern with the slow pace governments were acting or not acting on corruption.

SAFAC is a Southern African Development Community’s protocol against corruption created in 2001 and has 18 states as its signatories.

Sadc was the first to create an anti-corruption organ before the United Nations’ Convention Against Corruption (UNCAC) and The African Union’s Convention on Preventing and Combating Corruption.

Dr Edward Hoseah, SAFAC chairperson during his speech at the Windhoek summit described corruption as ruthless to the poor.

“Corruption is ruthless to our people and particularly the poor who are most vulnerable to corruption,” he said.

Dr Hosea pointed out that the Sadc Protocol and its implementation is a litmus test for effective measures in the region.

“The willingness of our political masters to heighten and fast track the implementation of the Sadc Protocol is extremely fundamental to manage our citizens’ expectations. The fundamental question that each Sadc member has to answer is to what extent have Sadc members ratified and put the strategic interventions that addresses the daunting challenges that corruption imposes on the economy, political and social realities,” he said.

According to the 2010 Corruption Perceptions Index (CPI) Africa is the worst corrupt region in the world. At the bottom - number 178 – lies Somalia, Equatorial Guinea, Angola, Burundi and Chad. 

Regionally, none scored less than five with Botswana the supposedly corruption-free country at 5.8 out of a 10-point scale.

Apart from Botswana, Mauritius has 5.4; SA, 4.5; Namibia, 4.4; Lesotho, 3.5; Malawi, 3.4; Swaziland, 3.2; Zambia, 3; Mozambique, 2.7; Tanzania, 2.7; Madagascar, 2.6; Zimbabwe, 2.4; and the DRC, 2.

So far only SA’s Jacob Zuma has been decisive when dealing with corruption after he sacked Sicelo Shiceka, the local government minister, who allegedly spent R547000 (£43,000) of public money on visiting a convicted drug dealer girlfriend in prison in Switzerland. 

Gwen Mahlangu-Nkabinde, the public works minister, and Bheki Cele, the police chief, are accused of leasing a new police headquarters at a massively inflated price. 

Cele has been suspended on full pay pending the results of a public inquiry.

Other than SA, the rest who ratified the protocol on corruption either institutes commissions to look into corrupt activities and then when they get reports of the findings, they sit on them.

But most of the countries have either been running after small fish while letting big ones to swim away. A number of reports from state sponsored commissioned in corruptive activities are currently being sat on years after the conclusion of the investigations.

Such inaction has caused so much underdevelopment considering that corruption is a crime.

Jonathan Lucas, United Nations’ southern Africa Office on Drugs and Crime representative defined said corruption as ‘a crime against development, democracy, education, prosperity, public health and justice’.

Lucas notes that unchecked corruption prevents the world from reducing extreme poverty and averts child deaths.

“It will have a devastating effect on the attainment of the Millenium Developmental Goals (MDGs),” he told delegates during an International Anti-Corruption Day in Tshwane a year ago. “It is now seen by people across the world as a serious crime, a crime which weakens societies, ruins lives, and spurs underdevelopment." 

A research by Transparency International titled The Anti-Corruption Catalyst: Realising the MDGs by 2015 notes that corruption costs education, health and water.

Using data from 42 countries among them Kenya, Ghana and Liberia, the report says corruption is associated with low literacy rates and high maternal death rates while data from 51 other countries reveal that when and where bribery is rife, access to safe drinking water. 

“Corruption – whether petty, grand or political – exacts a high cost on development. Abuses in one sector do not spare the others from collateral damage,” the report observes.

It further notes that, according to seven-country study involving  Ghana, Madagascar, Morocco, Niger, Senegal, Sierra Leone and Uganda, a bribe asked for by a schoolmaster to enrol a family’s daughter in the ‘free’ elementary school means a girl’s education and opportunities may be irreversibly blocked. 

“When newly elected parliamentarians whose campaigns were supported by pharmaceutical companies pass policies that increase the local cost of needed drugs, sick people face a lack of treatment, which may lead to lost days of work and wages, and a cycle of poverty.”

But worst of all, a World Bank Africa Development Indicators 2010 report adds, is the quiet form of corruption which undermines public trust in government and the services it provides.

Quiet corruption is where civil servants fail to deliver service to the deserving poor thereby foiling progress and development.

“This form of corruption, smaller in monetary terms not usually involve powerful officials or large amounts of money, is particularly harmful for the poor. One example of this type of low-level corruption comes from Burkina Faso, ranked 98th in 2010’s CPI with a score of 3.8. 

“RENLAC, the Burkina Faso anti-corruption network, identified a primary school inspector who used to arrange for teachers posted to rural areas to be transferred back to cities if they paid her small sums of money, thus depriving the rural poor of much needed teachers.”

Most worrying is the fact that the illicit monies are sent to foreign banks where they are used to develop those nations. This means that if corruption is a crime, then the banks that keep stolen money are accomplices to crime against humanity.

For example, during a 1999 US Senate inquiry it was revealed that the out of Citibank’s 40,000 clients, 350 of them were senior foreign government officials or their relatives, together with President Omar Bongo of Gabon, who transferred US$100m through personal accounts in Citibank's New York branches.

The revelation show Bongo’s two private accounts all in the name of fictitious corporations as well as a special account to receive payments from oil companies which included alleged bribes or "donations" from the French government's oil company Elf-Aquitaine. 

It is no surprise that Citibank makes more than US$1m annually net profit from Bongo's accounts.

This revelation made Democratic US Senator Carl Levin Chairman Senate Committee on Armed Services to condemn the US saying, “America cannot have it both ways. We cannot condemn corruption abroad, be it officials taking bribes or looting their treasuries, and then tolerate American banks making fortunes off that corruption.”

Frank Vogl, TI co-founder says, “Those who take bribes must find safe international financial channels through which they can bank their ill-gotten gains. Those who provide the bribes may well assist the bribe takers to establish safe financial channels and launder the cash." 

Collectively, some African leaders have had up to US$20b deposited in Swiss banks with former Haitian President "Baby Doc" Duvalier stashing anything between US$300-900m in offshore banks, while Philippine President Marcos had well over US$2b in western banks. 

The introduction of private banking services and offshore financial centres is seen as major conduits and repositories for bribes and corrupt gains.

For example, other reports note that an estimated US$40b from poor and former communist economies finds its way into US or European banks every year, much of it illegitimately gained while some US$30b of western aid has ended up in Swiss bank accounts alone. 

With such protection and secrecy, greed people on the continent go out of their way to have babies on pay rolls.