Corrupt Leadership & Huge Illicit Financial Flows from Africa,By Ken Tadaferua -gbenudu.com



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Mohammed “Mo” Ibrahim, the billionaire Sudanese-British mobile communications entrepreneur set up the Mo Ibrahim Foundation in 2006 and the Ibrahim Award for Achievement in African Leadership in 2007. The Ibrahim Award Prize is the world’s largest annual award, even bigger than The Nobel. It pays its laureate, a handsome $5 million spread over 10 years plus $200,000 annual payment for life for projects initiated by the laureate.

To qualify for the award, the recipient must be a former African head of state that left office not less than three years before the award. She or he must celebrated for excellent leadership, must be a role model in democratic rule, has demonstrated exceptional leadership in developing his or her country, lifted people out of poverty and paved the way for sustainable and equitable prosperity.

But only three African heads of state have gotten the distinguished award. They are Joaquim Chissano of Mozambique (2007), Festus Mogae of Botswana (2008) and Pedro Pires of Cape Verde (2011). For four years (2009, 2010, 2012 and 2013), no leader, from the 53 African countries covered by the Foundation, was found worthy to win the Prize.

Why was the prize not awarded in those four years despite the loud claims of democratic and economic progress, growing gross domestic product, large inflows of foreign direct investments, improved credit ratings (Nigeria just got a BB- from Fitch), massive privatization and deregulation programs across Africa? Is Mo Ibrahim saying that the African leaders, under whom these heavily publicized advancements did make headlines, are not worthy of his prize?

Mo explains: “Our Index showed that the economic progress being made comes amidst democratic stagnation and even recession. Our powerhouses – Egypt, Kenya, Nigeria and South Africa – are under-performing” and he adds, “we are not seeing the kind of visionary leadership that will help us make the transition from our twentieth century challenges to becoming dynamic twenty-first century players on the global stage.” For Mo, Africa sorely lacks visionary leadership.

Again, at the UN Economic and Social Council meeting last April in New York, he said, “Africa must use science, data and innovation to drive development based on facts and not speeches,”

The Mo Ibrahim Foundation reports that though 46 African countries have seen improved governance since 2000, it is also true that safety and the rule of law have deteriorated overall, with only 20 countries showing an improvement in this category since 2000, partly because of increased internal unrest and internal conflicts in the continent.

Even the World Bank, which trumpets improvements in African jaded economic indicators, gives a gloomy scorecard on the economic progress and standard of living among the great majority of the peoples of the continent.
According to Africa’s Pulse, a publication by the Chief Economist of the World Bank: rebounding oil production, rising trend in raising funds from the international capital markets, deceleration of inflation, leap of remittance inflow to over $32 billion, strong household consumption, have seen the sub-Saharan Africa’s economy expand at an “estimated 4.6 percent annually during 1999-2010 (5.2 percent excluding South Africa)”
However, the publication notes that: “Despite these successes, still more people are likely living on less than $1.25 a day in sub-Saharan Africa today than at the turn of the millennium—an estimated 413 million in 2010 compared with 376 million in 1999” More progress, more poverty. Why?

The Chief Economist says that sub-Saharan Africa’s population is expanding rapidly by 2.7 percent a year resulting in a more modest expansion of its GDP when expressed in per capita terms. Also, that the conversion of Africa’s growth into poverty reduction is hindered by higher initial inequality.

The publication suggests that Africa must first sustain robust GDP per capita growth to reduce poverty. Also that Africa must deal with the challenges of income distribution and inequality, renew investment in the rural countryside, introduce social assistance and redistribution programs, diversify exports to reduce the preponderance of commodities (which are highly vulnerable to price shocks) in the export basket and produce reliable statistics for measuring progress and policy analysis.

It is intriguing that crime in the form of corruption and illicit financial flows were not noted by the publication as Africa’s biggest challenge. African leaders have not been able to muster the personal discipline and political will nor the vision and courage to deal with this problem. At best they pay mere lip service to dealing with corruption and illicit financial flows out of Africa because they are themselves corrupt.

Global Financial Integrity, a US research and advocacy organization and the African Development Bank, recently released a 2013 joint report titled: Illicit Financial Flows and the Problem of Net Resources From Africa: 1980 -2009.

According to the Report: “During the 30 years (1980-2009) covered by the study, Africa provided net resources to the world of up to $1.4 trillion on a cumulative basis, far exceeding inflows over the same period.” It reports that, “despite foreign aid, natural resource exports, and other transfers, developed countries still take away more resources than they give to Africa.”

Most importantly the study established that, “the illicit hemorrhage of resources from Africa is about four times Africa’s current external debt and almost equivalent to Africa’s current GDP.” How can a continent suffering from this parasitic drainage be said to be making economic progress?

The damage inflicted on Africa by its elites and criminal agents of corporations and institutions from other parts of the world, in particular, Western nations is overwhelming.

It is interesting that the report notes: “Three African regions – west and central Africa ($494bn), north Africa ($415bn) and southern Africa ($370bn) – accounted for 95 percent of total cumulative outflows over the 30-year period. In west and central Africa, outflows were driven largely by Nigeria, Congo-Brazzaville and Ivory Coast.”

The drainage of the continent’s resources is due, the report says, to the global shadow financial system comprising kickbacks, tax havens, tax evasion, secrecy jurisdiction, disguised corporations, trade mispricing and money laundering. It includes corruption, bribery and theft by government officials. But does not include money lost through trafficking and smuggling which if added will significantly increase the volume of resource loss from Africa.

The impact of this structure and the funds it shifts out of Africa, the study notes, is staggering: “It drains hard currency reserves, heightens inflation, reduces tax collection, cancels investment, and undermines free trade. It has its greatest impact on those at the bottom of income scales in their countries, removing resources that could otherwise be used for poverty alleviation and economic growth”.

To deal with this problem, the study recommends that African governments must take domestic measures to address corruption, ensure greater transparency, strengthen anti-money laundering efforts and improve investment codes, none of which is technically difficult except that they require political will for success. It advocates for reform of the tax regime to make multinational firms pay their share

Are African leaders not aware of the illicit financial flows and its destructive impact on their countries’ economic development? Even if they are, they lack the courage and political will, as they too are neck deep in the rot to stop it. This explains their inability to put Africa on economic recovery and prosperity.

It is easy, therefore, to see why Mo Ibrahim Foundation did not give the award for four years. Selfish, greedy, corrupt and visionless, the so-called leaders are not worthy. It is easy also to see why all the talk of economic progress by African finance ministers and their phony foreign supporters is at best a bad joke.(Nigeria Today,News Analysis,Nigerian Affairs,Business)


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