By Binta Terrier—Founder of PLAD and The Africa Syndicate Blog
Answer is no! “Corrupted Africa” is sustained by external entities. Merriam-Webster defines corruption as: “dishonest or illegal behavior especially by powerful people (such as government officials or police officers)” or “the act of corrupting someone or something.” Thus, it is a dishonest or fraudulent conduct by those with power to do so from within or outside the continent. Giving and/or taking bribes to illegally acquire resources, double- dealing, fraud, misconduct, crime and wrongdoing. As widely reported, US$ billions of bribed and stolen moneys annually flow out of Africa and are deposited in foreign banks: Swiss, Dutch, Luxmburg, and French banks. Why these banks do not question the sources and legality of these deposits, and used to acquire private mansions and luxury goods in these same countries? Yet, developed nations, particularly the G-7 countries, claim to want to end extreme poverty in Africa through UN and the World Bank Group programs, while European domestic banks are harboring stolen moneys from the poor Africans. How credible are these programs?
Granted that no region in the world is immune to corruption, Africa’s case is alarming because of the large income disparity. Interestingly, not a single African leader who comes to power is an expert on the intricacies of foreign transfers and loopholes. This is acquired through corrupt domestic and foreign advisors who help them funnel illegal gains into foreign banks.
In the United States of America, if someone stole a car and parked it on my driveway, I would be harboring a stolen car from a thief and both of us would be thieves; and penalized accordingly by the judicial system. Why then, are stashed stolen moneys in Swiss, Luxemburg, French and Dutch banks acceptable? In addition: Why former corrupt foreign government officials’ involvement in Africa’s national affairs under the guise of “friends’ allowed? Why greedy Foreign “ philanthropists” are allowed to influence mining, agriculture, health policies in Africa under the guise of “ caring” ? As widely publicized, if some African leaders are corrupted, then, they have strong assistance. Hence, finger pointing is not going to solve the problem.
Another corruption strangling Africa’s economy is “transfer pricing.” US$ billions move out of Africa annually tax-free. Transfer pricing consists of foreign companies bluntly setting the price of a commodity then, selling it to their controlled subsidiaries (or related) legal entities within the group to avoid paying taxes where the commodity originated. Thus, to avoid paying taxes to African governments, especially in the mining sector, foreign companies operating in Africa (mining, fishing, ports), sell goods to one of their subsidiaries abroad below market price (cheap) which, then, sells the goods at “actual” world market price, ripping higher and tax-free benefits, with less tax revenue for African governments.
How to tame corruption in Africa?
First: our African leaders must accept the fact that political power without economic power is a recipe for their doom and, therefore, they have to come up with enforceable policies to effectively address these forms of corruption.
Second, there is a lesson to be gleaned from a recent ruling by U.S. District Judge Lorna Schofield in Manhattan on the French bank, BNP Paribas SA. She accepted the plea entered by the company’s top lawyer for BNP Paribas, then, sentenced the bank on Oct. 3, 2014. Subsequently, she issued a fine of $8.97 billion for violating the International Emergency Economic Power Act and the Trading with the Enemy Act for processing almost $9 billion in banned transactions from 2004-2012 with Sudan, Iran and Cuba. BNP management broke the law, and they were punished accordingly by US authorities.
Africans must start putting in place enforceable regulatory frameworks with the collaboration of those who want to end extreme poverty on the continent. To end extreme poverty in Africa and stabilize the continent, Africans do not need foreign aid. All they need is to help contain the external greed which is an obstacle to its economic progress. A concerted effort by all foreign powers and Africans to implement a nationally and internationally enforceable regulatory framework similar to the anti-money laundering introduced after 9-11 would be helpful in containing the illegal money flowing out of the continent. Also redirect foreign aid money to better use in originating countries.
Following the money would be easy to address. What all the banks have to do is be transparent. So far, it appears as the United States is the only country in which stolen money cannot be deposited in any domestic bank. Why the rest of the powerful countries which want to eradicate extreme poverty do not adopt the same regulation? Granted that President Mbeki is spearheading a committee on the outflow of funds from the continent, but Africa needs coordinated efforts with G-7 countries to keep its money where it should be--on the continent.
It is refreshing to see that some of our African leaders have taken concrete steps to start addressing corruption and are sanctioning corrupted officials.
In his January 7, 2016 article published in Project Syndicate, Mr. Meyer, a former communications director for UN Secretary-General Ban Ki-Moon, currently Dean of the Graduate School of Media and Communications at Aga Khan University in Nairobi, stated rightly that “To the chagrin of most Africans, the world has long viewed their continent through the prism of the three “Cs” – conflict, contagion, and corruption. Yet the first two are anything but general. Civil war is confined mainly to particular regions – for example, South Sudan or the Democratic Republic of Congo. And Ebola in West Africa spread more to Europe and the United States than to the rest of the continent. But the third, corruption, has been universal, blighting almost every country.” It is difficult to not concur with Mr. Meryer’s analysis on the positive changes that have taken place and are ongoing in countries like Rwanda, Nigeria, Benin, Senegal and Tanzania.
What have these leaders done to merit praise and recognition from us? Let’s note that:
Rwanda: since President Paul Kagame took the reins of his country, it has emerged in no time from genocide to the current level of stability and economic rise. Now, one may or may not agree with him, his methods of governance, or for extending his stay in power. The facts remain that corruption in Rwanda is believed to be quasi non-existent, the economy is growing in an inclusive manner, and income disparity is leveling off. Each Rwandan has full access to health care, each child has full access to education, and there are no rolling blackouts. The country is energy sufficient and transfers of remittances from its Diaspora are now flexible.
Nigeria: Newly elected Muhammadu Buhari, unlike his predecessors, has launched a serious “war” against corruption at the highest level of government. “In November, two top officials were charged in a $2 billion scam to buy fighter jets, helicopters, and ammunition that were never delivered. In October, the former oil minister and the chief of the national petroleum company were arrested.” Nigeria is Africa’s largest oil producer and most populated country (179 million) with huge markets and large number of educated youth thus, a potential for economic growth, but has been mired in corruption scandals for years. Previous governments are reported to have funneled the equivalence of 3% of GDP in foreign banks annually. Frivolous spending of petro-dollars billions was made in Rolexes, luxury vehicles, mansions, first class travels around the world, while education and health care are crumbling and job creation stagnant. Buhari is definitely changing the “status quo” for the betterment of Nigeria and the rest of the Africa.
Benin: Thomas Boni Yayi, courageously apologized after corrupt officials stole $4 million in foreign grants. We are hopeful that his successor who will be elected in March 2016 will follow his steps and do more.
Senegal: Macky Sall began his anti-corruption campaign soon after taking over from former president Wade. He began by declaring his assets of $2.6 Million, cut government spending to build new infrastructure. In March 15, 2013 Karim Wade, the son of President Wade, was placed under house arrest and subsequently sentenced to 6 years in prison with a 210 million euros fine. Since then, Senegal’s anti-corruption campaign has gained speed.
Tanzania: President John Pombe Magufuli has waged a war against corruption. The things he is being credited for include notably a reduction of parliament extravagant dinners to fund hospital beds after he visited a hospital and saw patients lying on the floor in corridors. Likewise, Independence Day celebration costs were curtailed, and the money saved was spent on medicine for a cholera outbreak. Business-class travel and expensive government retreats are banned. The president sacked perceived corrupt senior officials, and reduced complicated regulations and loopholes that crooked government employees used to extract hefty bribes. There is no doubt that corruption is a serious African disease that must be eradicated. African leaders must not only think carefully about their legacy–what they leave behind, but also prepare strong and courageous successors to carry over their work and expand on it for future generations.
The latter could be the biggest challenge of all.
Granted that no region in the world is immune to corruption, Africa’s case is alarming because of the large income disparity. Interestingly, not a single African leader who comes to power is an expert on the intricacies of foreign transfers and loopholes. This is acquired through corrupt domestic and foreign advisors who help them funnel illegal gains into foreign banks.
In the United States of America, if someone stole a car and parked it on my driveway, I would be harboring a stolen car from a thief and both of us would be thieves; and penalized accordingly by the judicial system. Why then, are stashed stolen moneys in Swiss, Luxemburg, French and Dutch banks acceptable? In addition: Why former corrupt foreign government officials’ involvement in Africa’s national affairs under the guise of “friends’ allowed? Why greedy Foreign “ philanthropists” are allowed to influence mining, agriculture, health policies in Africa under the guise of “ caring” ? As widely publicized, if some African leaders are corrupted, then, they have strong assistance. Hence, finger pointing is not going to solve the problem.
Another corruption strangling Africa’s economy is “transfer pricing.” US$ billions move out of Africa annually tax-free. Transfer pricing consists of foreign companies bluntly setting the price of a commodity then, selling it to their controlled subsidiaries (or related) legal entities within the group to avoid paying taxes where the commodity originated. Thus, to avoid paying taxes to African governments, especially in the mining sector, foreign companies operating in Africa (mining, fishing, ports), sell goods to one of their subsidiaries abroad below market price (cheap) which, then, sells the goods at “actual” world market price, ripping higher and tax-free benefits, with less tax revenue for African governments.
How to tame corruption in Africa?
First: our African leaders must accept the fact that political power without economic power is a recipe for their doom and, therefore, they have to come up with enforceable policies to effectively address these forms of corruption.
Second, there is a lesson to be gleaned from a recent ruling by U.S. District Judge Lorna Schofield in Manhattan on the French bank, BNP Paribas SA. She accepted the plea entered by the company’s top lawyer for BNP Paribas, then, sentenced the bank on Oct. 3, 2014. Subsequently, she issued a fine of $8.97 billion for violating the International Emergency Economic Power Act and the Trading with the Enemy Act for processing almost $9 billion in banned transactions from 2004-2012 with Sudan, Iran and Cuba. BNP management broke the law, and they were punished accordingly by US authorities.
Africans must start putting in place enforceable regulatory frameworks with the collaboration of those who want to end extreme poverty on the continent. To end extreme poverty in Africa and stabilize the continent, Africans do not need foreign aid. All they need is to help contain the external greed which is an obstacle to its economic progress. A concerted effort by all foreign powers and Africans to implement a nationally and internationally enforceable regulatory framework similar to the anti-money laundering introduced after 9-11 would be helpful in containing the illegal money flowing out of the continent. Also redirect foreign aid money to better use in originating countries.
Following the money would be easy to address. What all the banks have to do is be transparent. So far, it appears as the United States is the only country in which stolen money cannot be deposited in any domestic bank. Why the rest of the powerful countries which want to eradicate extreme poverty do not adopt the same regulation? Granted that President Mbeki is spearheading a committee on the outflow of funds from the continent, but Africa needs coordinated efforts with G-7 countries to keep its money where it should be--on the continent.
It is refreshing to see that some of our African leaders have taken concrete steps to start addressing corruption and are sanctioning corrupted officials.
In his January 7, 2016 article published in Project Syndicate, Mr. Meyer, a former communications director for UN Secretary-General Ban Ki-Moon, currently Dean of the Graduate School of Media and Communications at Aga Khan University in Nairobi, stated rightly that “To the chagrin of most Africans, the world has long viewed their continent through the prism of the three “Cs” – conflict, contagion, and corruption. Yet the first two are anything but general. Civil war is confined mainly to particular regions – for example, South Sudan or the Democratic Republic of Congo. And Ebola in West Africa spread more to Europe and the United States than to the rest of the continent. But the third, corruption, has been universal, blighting almost every country.” It is difficult to not concur with Mr. Meryer’s analysis on the positive changes that have taken place and are ongoing in countries like Rwanda, Nigeria, Benin, Senegal and Tanzania.
What have these leaders done to merit praise and recognition from us? Let’s note that:
Rwanda: since President Paul Kagame took the reins of his country, it has emerged in no time from genocide to the current level of stability and economic rise. Now, one may or may not agree with him, his methods of governance, or for extending his stay in power. The facts remain that corruption in Rwanda is believed to be quasi non-existent, the economy is growing in an inclusive manner, and income disparity is leveling off. Each Rwandan has full access to health care, each child has full access to education, and there are no rolling blackouts. The country is energy sufficient and transfers of remittances from its Diaspora are now flexible.
Nigeria: Newly elected Muhammadu Buhari, unlike his predecessors, has launched a serious “war” against corruption at the highest level of government. “In November, two top officials were charged in a $2 billion scam to buy fighter jets, helicopters, and ammunition that were never delivered. In October, the former oil minister and the chief of the national petroleum company were arrested.” Nigeria is Africa’s largest oil producer and most populated country (179 million) with huge markets and large number of educated youth thus, a potential for economic growth, but has been mired in corruption scandals for years. Previous governments are reported to have funneled the equivalence of 3% of GDP in foreign banks annually. Frivolous spending of petro-dollars billions was made in Rolexes, luxury vehicles, mansions, first class travels around the world, while education and health care are crumbling and job creation stagnant. Buhari is definitely changing the “status quo” for the betterment of Nigeria and the rest of the Africa.
Benin: Thomas Boni Yayi, courageously apologized after corrupt officials stole $4 million in foreign grants. We are hopeful that his successor who will be elected in March 2016 will follow his steps and do more.
Senegal: Macky Sall began his anti-corruption campaign soon after taking over from former president Wade. He began by declaring his assets of $2.6 Million, cut government spending to build new infrastructure. In March 15, 2013 Karim Wade, the son of President Wade, was placed under house arrest and subsequently sentenced to 6 years in prison with a 210 million euros fine. Since then, Senegal’s anti-corruption campaign has gained speed.
Tanzania: President John Pombe Magufuli has waged a war against corruption. The things he is being credited for include notably a reduction of parliament extravagant dinners to fund hospital beds after he visited a hospital and saw patients lying on the floor in corridors. Likewise, Independence Day celebration costs were curtailed, and the money saved was spent on medicine for a cholera outbreak. Business-class travel and expensive government retreats are banned. The president sacked perceived corrupt senior officials, and reduced complicated regulations and loopholes that crooked government employees used to extract hefty bribes. There is no doubt that corruption is a serious African disease that must be eradicated. African leaders must not only think carefully about their legacy–what they leave behind, but also prepare strong and courageous successors to carry over their work and expand on it for future generations.
The latter could be the biggest challenge of all.