Dispossession of local communities in the name of investment: Large scale public-private partnership (mega-PPPs) in Africa

 

 

In the context of weak land governance and insecure land tenure (estimates suggest that per cent of rural land in Africa is registered), there is a serious risk that mega-PPPs will lead to the dispossession or expropriation of local communities in the name of investment.

 

Inequality is already significant in Africa. Measurements such as the Gini-coefficient show that inequality on the continent is second only to Latin America in its severity. Land transfers to investors threaten to worsen this inequality by creating ‘agricultural dualism’ between large and small farms. This process will remove already diminishing plots of land from family farmers; while the co-existence of large and small farms has been shown to drive inequality and conflict in other contexts.Also, equitable agricultural development requires diverse forms of support to account for ‘different rural worlds’, including contract oversight for commercial producers, the development of local markets for poorer farmers, and job-creation and social protection for marginal groups.

Mega-PPP projects are unlikely to deliver this type of agenda, instead focussing on wealthier, more ‘commercially viable’ farmers and bigger, politically well-connected companies.

 

 

Not So Mega?

The risky business of large-scale PPPs in African agriculture

By Robin Willoughby*

 

At a large summit on the future of African agriculture last week, the buzzwords were ‘investment opportunities’, ‘transformation’ and ‘public-private partnerships.’

Despite the worthy aims of the hosts ‘A Green Revolution for Africa (AGRA)’, discussion of poverty, rights, gender or inequality was rather absent from the plenary.

The risks of large scale public-private partnership (mega-PPPs) are enormous, particularly in the areas targeted for investment. Huge land transfers are a core component of the mega-PPP agenda.

Mega-PPP projects are focussing less on the needs of poor small-scale farmers and more on wealthier, more ‘commercially viable’ farmers and bigger, politically well-connected companies.

Last week, I attended a large summit on the future of African agriculture in Addis Ababa, hosted by A Green Revolution for Africa (AGRA).My participation really made me reflect on the problems of ‘groupthink’ within these types of conference, with each of the participants taking it in turns to stand on the podium and agree with one another more and more vociferously. The buzzwords were ‘investment opportunities’, ‘transformation’ and ‘public-private partnerships.’

This narrative is to be expected at a private sector agri-investment conference – but seems confusing when this type of meet-up is designed by philanthropic organisations to address rural poverty and the widespread challenges in African farming. Despite the worthy aims of AGRA, discussion of poverty, rights, gender or inequality was almost entirely absent from the plenary.

As one of the other participants said to me: “if everything is going so well – why are we all here?”

At the summit, I launched an Oxfam Briefing Paper on large-scale public-private partnerships initiatives, which echoes some of these themes.

The report points out that despite the large amount of hype around mega-PPPs such as the New Alliance for Food Security and Nutrition, GROW Africa, and numerous growth corridor initiatives – there is very little robust evidence on the proposed benefits of these arrangements, around who bears the risks or who holds the power in decision making.

So where do the risks and benefits lie?

The paper shows that public-private partnerships can play an important role in supporting farmers. For example, smaller-scale initiatives such as micro-credit, weather-index insurance and attempts to link farmers into markets offer useful examples of PPPs – particularly when they are co-designed with end-users and local communities.

Oxfam’s work with consumer goods company Unilever in a targeted partnership called Project Sunrise shows that well-designed partnerships can also be used for innovation and learning.

But the risks of mega-PPPs are enormous, particularly in the areas targeted for investment.

Threats to land rights
Land transfers are a core component of the mega-PPP agenda. The total amount of land pegged for investment within just five countries hosting growth corridor initiatives (Tanzania, Mozambique, Malawi, Ghana and Burkina Faso) stands at over 750,000 km² – the size of a country such as France or Ukraine.

Not all of this land will be leased to investors, but the initial offering in these countries stands at 12,500 km² (over 1.2 million hectares) – the amount of land currently in agricultural production in Senegal or Zambia.

In the context of weak land governance and insecure land tenure (estimates suggest that per cent of rural land in Africa is registered), there is a serious risk that mega-PPPs will lead to the dispossession or expropriation of local communities in the name of investment.

The pricing of land can also be set at extraordinarily low levels. The GROW Africa initiative advertised land for lease in Mozambique for $1 per hectare per annum over 50 years. This is around 2,000 times cheaper than comparable land in Brazil – raising concerns that African governments are seriously undervaluing their core assets.

Worsening inequality
Inequality is already significant in Africa. Measurements such as the Gini-coefficient show that inequality on the continent is second only to Latin America in its severity.

Land transfers to investors threaten to worsen this inequality by creating ‘agricultural dualism’ between large and small farms. This process will remove already diminishing plots of land from family farmers; while the co-existence of large and small farms has been shown to drive inequality and conflict in other contexts.

Also, equitable agricultural development requires diverse forms of support to account for ‘different rural worlds’, including contract oversight for commercial producers, the development of local markets for poorer farmers, and job-creation and social protection for marginal groups.

Mega-PPP projects are unlikely to deliver this type of agenda, instead focussing on wealthier, more ‘commercially viable’ farmers and bigger, politically well-connected companies.

Asymmetries of power
Finally, for any form of large-scale public-private partnership to be effective, it requires effective governance to ensure a fair sharing of risks and benefits; and regulation to ensure that more powerful players do not use political and economic clout to capture a dominant position in the market.

These conditions of good governance do not exist, on the whole, in most African countries.

The asymmetries of power within these arrangements can be enormous. In the SAGCOT programme (a mega-PPP in Tanzania), four large seed and agrichemical companies involved in the initiative have combined annual revenues of nearly US$100 billion. That is more than triple the size of the Tanzanian economy.

This raises serious concerns that these companies could lobby for policies that are in their interest and squeeze out small- and medium size enterprise from burgeoning domestic markets.

What are the alternatives?
Is there an alternative to the mega-PPP vision of agricultural development? I think so:

Public sector investment in research and development, extension services and targeted subsidies for credit can spread the benefits of agricultural investment widely and encourage private sector participation in the sector. Currently, governments in Sub-Saharan Africa only spend 5 per cent of their total annual budget on the sector, which is unforgivably low.

Securing land rights for local communities. This will help to ensure that communities within the target area for these schemes are not dispossessed in the name of investment. Secure land tenure also encourages smallholders to invest for themselves in land and productive activities.

Finally, alternative business models such as the development of producer organisations and the clever use of subsidies to encourage local processing facilities can develop agricultural markets without the need for ‘hub’ plantation farms or growth corridors. These models should be explored in more depth as part of a more inclusive PPP agenda.

With some US$6 billion of donor aid committed to further the aims of the New Alliance and $1.5 billion earmarked for growth corridor initiatives, mega-PPPs lead to a fundamental question. Would this money be better spent on lower risk models of agricultural development that give a greater share of the benefits to the poor?

Read more @http://naiforum.org/2014/09/not-so-mega/

 

*Robin Willoughby is Food and Climate Justice policy adviser at Oxfam GB and leader of Oxfam International’s agricultural investment policy work.

Africa’s Jobless Growth: Economic success just for a few cannot be a replacement for human rights or participation, or democracy August

Africa is Rising! At Least Its 1% Is

 Zainab Usman*

Africa’s economy may be booming, but this will do little to help unemployment and poverty if growth is jobless and its spoils are limited to the few.

“What we need in Africa is balanced development. Economic success cannot be a replacement for human rights or participation, or democracy … it doesn’t work…it worries us a lot when we don’t see the trickle-through factor, when gain goes to the top 1% or 2%, leaving the rest behind.” – Mo Ibrahim October 15, 2012

It did not come as a surprise to many when, on October 15, the Mo Ibrahim Foundation announced that there was no winner for its annual $5 million African leadership award – for the third time since its inception in 2006. What was surprising, however, was that the foundation’s chair, British-Sudanese billionaire Mo Ibrahim, alsoadmonished the much-celebrated recent economic ‘success’ of the African continent for largely failing to translate into better human rights and social development, and for essentially creating a few elitist winners at the top whilst the rest were left struggling at the very bottom.

Recent reports, forecasts and editorials of influential financial magazines are incredibly optimisticabout Africa – its booming economic growth, its investment opportunities and its growing middle-class. Sub-Saharan African countries are reportedly among the fastest growing in the world with six out of ten world’s fastest growing economies, and recording growth rates averaging 4.9%, higher than the developing country average and much higher than the developed country average.

The Economist’s December 2011 print issue was boldly titled ‘Africa Rises’ and in August 2012, it again boldly proclaimed that ‘A Continent Goes Shopping’, underscoring the voracious purchasing power of the African middle-class to buy consumer and even luxury goods. The current received wisdom in these sleek reports, glossy magazine pages and glass-panelled conference rooms is that sub-Saharan Africa really is the place to be and to invest in, with all its abundant opportunities.

Jobless growth

This much-trumpeted economic success is mostly true, until one looks at the other side. Then questions arise over to what extent growth is spread across sectors of the economy, and whether such economic growth is translating into corresponding improvements in human and social development.

It is common knowledge that this new dawn of booming economic growth is largely the consequence of the recent rise in the global commodity prices of natural resources, chiefly oil, while the vibrancy of other sectors of the economy such as banking, telecommunications and construction trail behind in terms of growth. Many African countries primarily depend on the exportation of natural resources – and industry which is highly capital- (and technology-) intensive, providing few jobs. Only five of Africa’s fifty-four countries are currently not “either producing or looking for oil”.

It is therefore no surprise that many African countries, especially the economic powerhouses of the continent, are bedevilled by high unemployment, particularly amongst young people – hovering at25% in Egypt, 48% in South Africa and 42% in Nigeria. Thus, growth in capital-intensive sectors – such as resource exports, banking, and telecommunications – is barely trickling down to create jobs and economic opportunities for the vast majority of the people – a phenomenon commonly known as ‘jobless growth’.

Many sub-Saharan African countries experiencing record-level economic growth still have low rankings in human development indices, despite marginalimprovements in education enrolment and, with countrywide variations, maternal health. This contradiction is further reinforced by the growing inequality that characterises many of such African ‘powerhouses’. Luanda in Angola (thanks to flowing petro-dollars) and N’Djamena in Chad were, respectively, the second and eighth most expensive cities to live as an expatriate in 2012 – ahead of Sydney, London and New York according to Mercer’s Cost of Living Survey. Juba in the newly independent South Sudan is also gaining notoriety for its high cost of living, while the price of select real estate in Abuja and Lagos in Nigeria reportedly rivals that of some Western cities. These expensive cities are in countries grouped within the ‘Low Human Development’ category of the United Nation’s Human Development Indexbased on indicators such as health, income and education.

A tale of two cities

There has certainly been some improvement – for one, there is now an identifiable middle-class in Africa with money to splash around in the cinemas of Abuja and pricey hotels of Accra, the malls and retail outlets of Johannesburg and the exclusive residential estates of Lagos and Nairobi. However, once you step out of these glitzy inner cities and look to the outskirts, the glaring contrast between the shiny modernity and the urban deprivation in the slums hits you like the searing tropical sun.

 

The task thus remains for governments to devise sustainable development strategies that are tailored specifically to suit the African context. Such strategies must sustain the momentum of economic growth while ensuring that growth spreads to and strengthens sectors such as mechanised agriculture, light manufacturing and small-scale enterprises, which have a direct impact on the lives and incomes of citizens.

Such transformational policies should ensure that revenue windfalls are utilised wisely towards social and welfare policies, which will empower millions of Africans out of poverty, thereby creating a robust middle-class rather than just enriching an already existing sliver. It also means that such funds can be saved to help with later needs, as with the Sovereign Wealth Fund embarked on by countries such as Angola and the new oil-producer Ghana.

Importantly, the African youth bulge needs to be transformed into a demographic dividend by providing employment and economic opportunities to an increasingly educated African youth and by providing critically needed infrastructure so that abundant innovative ideas, which are capable of transforming lives and societies, can materialise into reality.

Ultimately, these are still governance challenges that Africa has a long way go to overcome, but the marginal improvements in some aspects of governance, especially women’s rights, as the Mo Ibrahim Foundation’s Index has shown, gives room for some cautious optimism. Mo Ibrahim’s admonishment could not have come at a better time.

Read @ it original source:http://thinkafricapress.com/development/mo-ibrahim-issues-timely-caution-afro-optimists?utm_content=buffer46624&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

*Zainab Usman is a Nigerian freelance writer. She is currently a DPhil candidate at the University of Oxford in Governance and Political Economy of Economic Diversification in Sub-Saharan Africa. She has a BSc in International Studies from Ahmadu Bello University Zaria and a Masters in International Political Economy and Development from the University of Birmingham. Zainab is an advocate of good governance, poverty reduction and women and youth empowerment. She regularly blogs atzainabusman.wordpress.com.

Ethiopia’s capital flight is estimated at US$24.9 billion or 83.8% of the GDP

 

 

The term capital flight has been given many interpretations in the economic literature and in the  press, leading to confusion and misinterpretations. In the popular press, capital flight is presented as illegal or illicit financial flows. It is housed in the same domain as money laundering, tax  evasion, transfer pricing, underground trafficking. Yet, while these activities are illicit, not all of  them amount to capital flight. At the same time, while most capital flight may be deemed illicit. Capital flight may be illicit in one of three ways: when it consists of money acquired illegally and transferred  abroad; when funds are transferred abroad illicitly by violating capital account regulations; when capital is hidden abroad and therefore not being subject to taxation and other government regulations. It is not possible to make this determination a priori from the data that is used to calculate capital flight, which involves a reconciliation of recorded capital inflows (mainly external borrowing and foreign direct investment) and the use of these resources (to cover the current account deficit and accumulation of reserves). The term capital flight means capital flows from a country that are not recorded in the country’s Balance of Payments (BoP). If all the ransactions were correctly and systematically recorded, inflows would balance out with outflows, except for small and random statistical errors as recorded in the ‘net errors and omissions’ line of the BoP. Where large discrepancies are observed, in other words, where there is  substantial ‘missing money’ in the BoP, this is taken as an indication of the presence of capital  flight.

http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_351-400/WP353.pdf

Ethiopia’s capital flight is estimated at US$24.9 billion or 83.8% of the GDP

 

(Source: Political Economy Research Institute, the University of Massachusetts).

 

 

August 17, 2014 (PERI Research) — Ethiopia’s capital flight is estimated at about US$24.9 billion which is 83.8% of the country’s Gross Domestic Product (GDP). Ethiopia is ranked 8th in the group of 33 countries for which data are available but it stands first when compared to non-oil and/or mineral exporting countries. Even the latter was considered to be substantially lower than the actual flows give that large stock of immigrants. The true figure could be as high as one billion dollars. If so, Ethiopian capital flight would be commensurately larger than the estimated.

 

Capital losses through trade misinvoicing and unrecorded remittance
Substantial export underinvoicning (net outflows) couple with import underinvoicing (net inflows), with the balance resulting in a net outflow, as in the case of Sudan or a net inflow, as in the cases of Ethiopia and Ghana.

Unrecoreded remittances also contribute substantially to estimated capital flight in some countries. In Ethiopia, the volume of remittances reported by the World Bank in 2010 was about half the amount reported by the Central Bank ($661 million).

The following figures are in millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Source: Political Economy Research Institute, the University of Massachusetts).

http://ayyaantuu.com/horn-of-africa-news/ethiopias-capital-flight-is-estimated-at-us24-9-billion-or-83-8-of-the-gdp/

http://www.peri.umass.edu/fileadmin/pdf/ADP/SSAfrica_capitalflight_Oct23_2012.pdf

http://concernedafricascholars.org/bulletin/issue87/asiedu/

 

The Conflict between the Ethiopian State and the Oromo People, by Dr. Alemayehu Kumsa

 

 

 

 

 “What is important to consider is the significance of the fact that the people who control TPLF (Tigrai People’s Liberation Front) and Government are very parochial minded and appalling arrogant charlatans. They are extremely violent, insanely suspicious … With twin character flaws of excessive love of consumer goods and obsession with status and hierarchy… Fear, blackmail, intrigue, deception, suspicion, and brutality are its defining characteristics. It is absolutely insane for anyone to expect democracy from a secretive and tyrannical organization as such the TPLF and its spawn” (Hagos 1999:66)71. This study proves the observation of Prof. Gellner (1983) “the Amhara Empire was a prison house of nations if ever was one”72. The contemporary government of Ethiopia controlled by Tigrians is worse than all previous governments economically, politically, militarily and in human rights violation of Oromo and other nations which means, it is one of the worst prison houses of nations in Africa.

 

The Conflict between the Ethiopian State and the Oromo People

Author: Alemayehu Kumsa, PhD

Published: Centro de Estudos Internacionais do Instituto Universitário de Lisboa (ISCTE-IUL) (5th European Conference on African Studies/ECAS – June 27-29, 2013)
Keywords: Colonialism, Abyssinia, Oromo, Ethiopia, Liberation Movement

Abstract:
Colonialism is a practice of domination, which involves the subjugation of one people to another. The etymology of the term from Latin word colonus, meaning farmer. This root reminds us that the practice of colonialism usually involves the transfer of population to new territory, where the arrivals lived as permanent settlers while maintaining political allegiance to the country of origin. Colonialism is a characteristic of all known civilizations. Books on African history teaches us that Ethiopia and Liberia are the only countries, which were not colonized by West European states, but the paper argues that Ethiopia was created by Abyssinian state colonizing its neighbouring nations during the scramble for Africa. Using comparative colonial history of Africa, the paper tries to show that Abyssinian colonialism is the worst of conquest and colonial rule of all territories in Africa, according to the number of people killed during the conquest war, brutal colonial rule, political oppression, poverty, lack of education, diseases, and contemporary land grabbing only in the colonial territories. In its arguments, the paper discusses why the Oromo were defeated at the end of 19th century whereas we do have full historical documents starting from 13th century in which the Oromo defended their own territory against Abyssinian expansion. Finally the paper will elucidate the development of Oromo national struggle for regaining their lost independence.

Article in PDF format   ……   Alternatively, On Gadaa.com

Ethiopia is rated Not Free in Freedom of the Press 2014: Descent into hell continues in the Horn of Africa

 

DESCENT INTO HELL CONTINUES IN THE HORN OF AFRICA

The levels of poverty and authoritarianism are higher in the Horn of Africa than anywhere else in the continent. Civil liberties are collateral victims. http://rsf.org/index2014/en-africa.php

World Press Index 2014: Ethiopia ranked 143/ 180

According to related index by freedom House, Ethiopia ranked 176/197

Ethiopia is rated Not Free in Freedom in the World 2014, Freedom of the Press 2014, and Freedom on the Net 2013.

http://freedomhouse.org/report/freedom-press-2014/press-freedom-rankings#.U-xp-tJDvyt

http://www.freedomhouse.org/sites/default/files/FOTP_2014.pdf

 

 

The 2014 World Press Freedom Index spotlights the negative impact of conflicts on freedom of information and its protagonists. The ranking of some countries has also been affected by a tendency to interpret national security needs in an overly broad and abusive manner to the detriment of the right to inform and be informed. This trend constitutes a growing threat worldwide and is even endangering freedom of information in countries regarded as democracies. Finland tops the index for the fourth year running, closely followed by Netherlands and Norway, like last year.

The 2014 index underscores the negative correlation between freedom of information and conflicts, both open conflicts and undeclared ones. In an unstable environment, the media become strategic goals and targets for groups or individuals whose attempts to control news and information violate the guarantees enshrined in international law, in particular, article 19 of the International Covenant on Civil and Political Rights, the 1949 Geneva Conventions and the 1977 Protocols Additional 1 and 2 to the Geneva Conventions. Tyrannic  countries such as Ethiopia, Turkmenistan and North Korea where freedom of information is non-existent continue to be news and information black holes and living hells for the journalists who inhabit them.

 

Post-Zenawi Ethiopia – a missed chance to liberalize

Prime Minister Meles Zenawi’s death in August 2012 and his replacement by Hailemariam Desalegn raised hopes of political and social reforms that would benefit freedom of information. Sadly, these hopes have been dashed. The repressive anti-terrorism law adopted in 2009 is a threat that continues to hang over journalists, forcing them to censor themselves. Media that dare to violate the code of silence, especially as regards government corruption, are systematically intimidated.

Five journalists are currently detained in Kality prison on the outskirts of Addis Ababa. Two of them, Woubeshet Taye, the deputy editor of the Amharic-language weekly Awramba Times, and Reyot Alemu, a columnist with the national weekly Fitih, have been held for two and a half years, since their arrest in June 2011 on terrorism charges. There is no sign of any loosening of the vice that grips the Ethiopian media and the regime is unlikely to tolerate criticism before the elections in 2015.

Djibouti – unable to hear the voice of those without a voice

Djibouti is a highly strategic regional crossroads. Because of its economic and geopolitical advantages, it is easy to turn a blind eye to the dictatorial methods used by Ismail Omar Guelleh, who has ruled since 1999. Under Guelleh, Djibouti has steadily cut itself off from the outside world and suppressed criticism. The list of journalists who have been jailed and tortured gets longer and longer. Releases are only ever provisional. The journalist and Guelleh opponent Daher Ahmed Farah is a case in point. He has been jailed five times and arrested a dozen times since returning to Djibouti in January 2013.

The concept of independent media is completely alien to Djibouti. The only national broadcaster, Radio-Télévision Djibouti, is the government’s mouthpiece. The few opposition newspapers have disappeared over the years. There is an independent radio station based in Europe – La Voix de Djibouti. Two of its journalists have been jailed in the past 12 months.

Eritrea – Africa’s biggest prison for journalists

Ever since President Issayas Afeworki closed down all the privately-owned media and jailed 11 journalists in 2001, of which seven are reported to have died while in detention, Eritrea has been Africa’s biggest prison for the media. A total of 28 journalists are currently detained.

There are no longer any privately-owned media, and the state media are subject to such close surveillance that they have to conceal entire swathes of contemporary history such as the Arab Spring. Accessing reliable information is impossible in the absence of satellite and Internet connections. A few independent radio stations, such as Radio Erena, manage to broadcast from abroad.

Somalia – danger and authoritarianism

Those who had seen some improvement in Somalia were quickly disabused. Journalists still trying to provide objective news coverage are targeted by both terrorists and security-driven government officials. In 2013, seven journalists were the victims of terrorist attacks blamed with varying degrees of certainty onthe Islamist militia Al-Shabaab. In November, Al-Shabaab deprived an entire region of television by seizing satellite dishes on the grounds they carried images that did not respect Islam. Information is seen as threat.

Unfortunately, the Somali government does not help. On the interior minister’s orders, police evicted Radio Shabelle, winner of the 2010 Reporters Without Borders Press Freedom Prize, from its building and seized its equipment in October 2013 after a series of reports criticizing the upsurge in violence in Mogadishu. It was a double blow because the station also used the building to house its journalists, for whom moving about the city is very dangerous. When the equipment was returned a few weeks later, it was so badly damaged as to be unusable. Not that the station is authorized to broadcast anyway, because the communication ministry refuses to give it a permit.

 

Read more @ http://rsf.org/index2014/en-index2014.php#

 

http://rsf.org/index2014/en-africa.php

Africa:Why are we so poor? Yet we are so rich?

 

 

 

Africa’s poverty persists in the midst of a wealth of natural resources, estimated by the United Nations Economic Commission on Africa as including 12 percent of the world’s oil reserves, 42 percent of its gold, 80 to 90 percent of chromium and platinum group metals, and 60 percent of arable land in addition to vast timber resources.

 If these were idle, unexploited resources, it would be one thing.

 

However, the reality is that they are increasingly being exploited: investment and trade in Africa’s resources sector is on the rise, largely accounting for the sustained GDP growth rates witnessed over the last decade. The Economist magazine has reported increased foreign direct investment into Africa, rising from U.S. $15 billion in 2002, to $37 billion in 2006 to $46 billion in 2012.

 

While trade with China alone went up from $11 billion in 2003, to $166 billion in 2012, very little can be pointed to in commensurate changes in human development and fundamental economic transformation. It is multi-national corporations and a few local elites which are benefiting disproportionately from the reported growth – exacerbating inequality and further reinforcing the characteristic “enclave economy” structural defect of most African economies.

 

 

The disparity between sustained GDP growth rates and Africa’s seemingly obstinate and perverse state of underdevelopment, extreme poverty and deepening inequality brings to the fore issues of inclusivity and responsible governance of domestic resources. The question that is being asked by many – especially Africa’s young people who have assumed the agenda for economic transformation as a generational mandate – is this: Why are we so poor? Yet we are so rich?

Read more @http://allafrica.com/stories/201408120664.html

 

 

Africa: Illicit Financial Flows Drain US$55.6bn Annually from the Continent

Illicit Financial Flows Drain US$55.6bn Annually from African Continent

Only Ethiopia has lost $11.7 billion to illicit fund outflows in the last decade.  

A climate of corruption, Ethiopian edition

Working Group Must Address Trade Misinvoicing and Role of U.S. Business and Government in Facilitating Illicit Finance to Be Truly Effective, Warns GFI

Illicit Financial Flows Drain US$55.6bn Annually from African Continent, Sapping GDP, Undermining Development, and Fueling Crime, Corruption, and Tax Evasion

August 7, 2014, WASHINGTON, DC (GFI) – Global Financial Integrity (GFI) welcomed the announcement from the White House and African leaders today regarding the establishment of a bilateral U.S.-Africa Partnership to Combat Illicit Finance, but the Washington-DC based research and advocacy organization cautioned that any effective partnership must be sure to address deficiencies in both the U.S. and in Africa that facilitate the hemorrhage of illicit capital from Africa.

“We welcome the move by President Obama and certain African leaders to form this partnership on curbing illicit financial flows from African economies,” said GFI President Raymond Baker, who also serves on the UN High Level Panel on Illicit Financial Flows from Africa. “Illicit financial flows are by far the most damaging economic problem facing Africa. By announcing the creation of the U.S.-Africa Partnership to Combat Illicit Finance, President Obama and African leaders have taken the first step towards tackling the most pernicious global development challenge of our time.”

GFI research estimates that illicit financial outflows cost African (both North and Sub-Saharan African) economies US$55.6 billion per year from 2002-2011 (the most recent decade for which comprehensive data is available), fueling crime, corruption, and tax evasion. Indeed, GFI’s latest global analysis found that these illicit outflows sapped 5.7 percent of GDP from Sub-Saharan Africa over the last decade, more than any other region in the developing world. Perhaps most alarmingly, outflows from Sub-Saharan Africa were found to be growing at an average inflation-adjusted rate of more than 20 percent per year, underscoring the urgency with which policymakers should address illicit financial flows.

The problem with illicit outflows from Africa is so severe that a May 2013 joint report from GFI and the African Development Bank found that, after adjusting all recorded flows of money to and from the continent (e.g. debt, investment, exports, imports, foreign aid, remittances, etc.) for illicit financial outflows, between 1980 and 2009, Africa was a net creditor to the rest of the world by up to US$1.4 trillion.

Trade Misinvoicing at the Heart of Illicit Outflows

According to GFI’s research, most of the illicit outflows from Africa—US$35.4 billion of the US$55.6 billion leaving the continent each year—occur through the fraudulent over- and under-invoicing of trade transactions, a trade-based money laundering technique known as “trade misinvoicing.” As GFI noted in a May 2014 study, trade misinvoicing is undermining billions of dollars of investment and domestic resource mobilization in at least a number of African countries. The organization emphasized the importance of ensuring that the new U.S.-Africa partnership prioritizes the curtailment of trade misinvoicing.

“The misinvoicing of ordinary trade transactions is the most widely used method for transferring dirty money across international borders, and it accounts for the vast majority of illicit financial flows from Africa,” said Heather Lowe, GFI’s legal counsel and director of government affairs. “While it is easy to place the blame for this on corrupt officials or transnational crime networks, the truth of the matter is that the bulk of these fraudulent trade transactions are conducted by normal companies, many of them major U.S. and European companies.”

Ms. Lowe continued: “Just yesterday, President Obama announced the Doing Business in Africa Campaign, a U.S. government initiative focused on boosting trade between U.S. and African companies, without a signal mention of the elephant in the room: trade misinvoicing. Increasing trade is important to boosting economic growth across Africa, but only if the trade is done honestly and at fair market values. The single most important step that wealthy nations like the U.S. can take to help African economies curtail illicit flows is to trade legitimately and honestly with Africa. While this topic was not addressed at the U.S.-Africa Business Forum yesterday, it must be on the table as the U.S.-Africa Partnership to Combat Illicit Finance commences its work.”

U.S. Must Clean Up Its Own Backyard

GFI further emphasized the need to address the role of the U.S. financial system as a major facilitator of such outflows.
“For every country losing money illicitly, there is another country absorbing it. Illicit financial outflows are facilitated by financial opacity in tax havens and in major economies like the United States,” said GFI Policy Counsel Joshua Simmons. “Indeed, the United States is the second easiest country in the world—after Kenya—for a criminal, kleptocrat, or terrorist to incorporate an anonymous company to launder their ill-gotten-gains with impunity.

“While governance remains an issue for many African countries, structural deficiencies in the U.S. financial system are just as responsible for driving the outflow of illicit capital. This initiative cannot place the onus entirely on the shoulders of African governments. The burden for curtailing these illicit flows must be shared equally by policymakers in the U.S. and in Africa for this partnership to be effective,” added Mr. Simmons.

http://ayyaantuu.com/africa/illicit-financial-flows-drain-us55-6bn-annually-from-african-continent/

http://globalvoicesonline.org/2012/01/25/ethiopia-reflecting-on-corruption-in-ethiopia/

Oromo: “For a people facing complete erasure, survival itself is a revolutionary act”, IOYA’s Former President Ayantu Tibeso at the Macha-Tulama Association’s 50th Anniversary Celebration

 

 

 

 

The fact that we are gathered here today to honor the founding of Macha Tulama 50 years ago speaks to the fact that despite all odds, we, as a people are survivors. Ethiopian history is full of attempts to annihilate the Oromo—culturally, politically, socially, economically, in all and every ways possible.Oromos — cast as foreign, aliens to their own lands, have been the targets of the entire infrastructure of the Ethiopian state since their violent incorporation. Our identity, primarily language, religion and belief systems and cultural heritage have been the main targets of wanton destruction.   Oromo and its personhood were already demonized, characterized as embodiments of all that is inferior, shameful and subhuman from the beginning. Oromo people were economically and politically exploited, dominated and alienated.

Ayantu Tibeso

Africa’s Slide Toward Disaster

Africa’s Slide Toward Disaster

By HELEN EPSTEIN, The New York Times, Opinion page,       AUG. 1, 2014

A specter is haunting Africa — the specter of impunity. Many countries the United States considers allies are in the grip of corrupt, repressive tyrants; others are mired in endless conflict. As Washington prepares to host the first-ever U.S.-Africa Leaders Summit next week, American policy makers must acknowledge their contributions to this dismal situation. By lavishing billions of dollars in military and development aid on African states while failing to promote justice, democracy and the rule of law, American policies have fostered a culture of abuse and rebellion. This must change before the continent is so steeped in blood that there’s no way back.

The summit seeks to highlight Africa’s development successes and promote trade and investment on a continent rich in oil and natural resources. Justice and the rule of law aren’t on the agenda. But they should be, unless American C.E.O.s want to see their investments evaporate.

Read interesting comments @ http://ayyaantuu.com/africa/africas-slide-toward-disaster/#respond

Read more @http://www.nytimes.com/2014/08/02/opinion/africas-slide-toward-disaster.html?partner=rssnyt&emc=rss&_r=0

Africa: A resurgent “Dictators’ Club

 

 

‘The international community’s failure to demonstrate strong opposition to the antidemocratic trajectory of many African countries is allowing authoritarian heads of state to gain more power and influence. The United States should single out and prioritize the needs of the few African leaders working to comply with international law and to promote democratic governance domestically and regionally. One way Washington can do this is by acknowledging and giving preference to the democratic states participating in the U.S.-Africa Leaders’ Summit next week. If current trends are not thwarted, the future of the continent could fall under the control of a resurgent “Dictators’ Club.”’

 

“Repressive leaders are also copying one another’s laws, which collectively undermine basic freedoms for the continent’s citizens. In 2009, Prime Minister Meles Zenawi of Ethiopia enacted the Anti-Terrorism Proclamation and the Charities and Societies Proclamation, which essentially aimed to eliminate independent civil society activity. Within a few years, Presidents Yoweri Museveni of Uganda and Uhuru Kenyatta of Kenya had introduced nearly identical laws, which are muzzling the work of human rights defenders, the independent media, local journalists, and members of the political opposition across East Africa.”

 

 

Reemergence of the African Rat Pack

Alyssa Rickard, Program Associate, Africa Programs

Freedom House.

(Freedom House, 30 July 2014)The reemergence of unconditional solidarity among Africa’s incumbent leaders is threatening respect for human rights and good governance throughout the continent. The phenomenon is obviously bad for the people of Africa and for the overall progress of democracy. But the worst consequence of many African leaders’ support for even their most authoritarian colleagues is the growing regional acceptance—and in some cases promotion—of deeply repressive policies.

Strong bilateral relationships in Africa, for instance between Presidents Jacob Zuma of South Africa and Robert Mugabe of Zimbabwe, are undercutting domestic and regional democratic frameworks. In Zimbabwe’s 2013 election, Zuma—acting as the chief election facilitator for the Southern Africa Development Community (SADC)—disregarded his obligation under the organization’s Principles and Guidelines Governing Democratic Elections to maintain neutrality by publicly rebuking a technical team for questioning the election preparations. Zuma then endorsed Mugabe’s reelection on behalf of SADC, even when clear evidence of vote rigging emerged, which Botswana cited as another violation of SADC’s guidelines. Nevertheless, Zuma stood by his counterpart in Zimbabwe, bolstering the idea that the region’s entrenched leaders can rely on one another in their efforts to maintain power, even if this means violating their own democratic standards.

This type of solidarity in Southern Africa has extended beyond domestic affairs to include limiting citizens’ access to justice on a regional level, as clearly demonstrated by the disbandment of the SADC Tribunal, launched in 2005 to enforce the SADC Treaty. The tribunal’s fate was sealed when it ruled that Zimbabwe’s seizure of land from white farmers without compensation was illegal and discriminatory. Mugabe refused to obey the decision, challenging the court’s authority and paving the way for its suspension in 2010. Despite the best efforts of civil society groups in the region, Southern Africa’s heads of state sided with Mugabe and voted to remove the individual mandate of the court, meaning victims of state abuse could no longer file cases against their governments. Not only was this a blow to human rights protection, but it also discouraged private-sector investment, as property owners would have no legal recourse beyond national courts. Once the SADC court ruled against the big man’s interests, political imperatives suddenly took precedence, and legal order was sidelined.

Repressive leaders are also copying one another’s laws, which collectively undermine basic freedoms for the continent’s citizens. In 2009, Prime Minister Meles Zenawi of Ethiopia enacted the Anti-Terrorism Proclamation and the Charities and Societies Proclamation, which essentially aimed to eliminate independent civil society activity. Within a few years, Presidents Yoweri Museveni of Uganda and Uhuru Kenyatta of Kenya had introduced nearly identical laws, which are muzzling the work of human rights defenders, the independent media, local journalists, and members of the political opposition across East Africa.

A similar contagion effect occurred after the signing of what UN High Commissioner for Human Rights Navi Pillay referred to as “a piece of legislation that in so few paragraphs directly violates so many basic, universal human rights.” Nigeria’s Same-Sex Marriage Prohibition Act, signed early this year, went far beyond other anti-LGBTI laws by banning association with or operation of “gay” organizations. Instead of pushing back, many of the continent’s leaders supported Nigeria with their own repressive measures, including the signing of an “anti-homosexuality” bill in Uganda, the introduction of a draft law to criminalize gay and transgender people in the Democratic Republic of the Congo, the launching of a parliamentary caucus to ensure the implementation of anti-LGBTI laws in Kenya, and the refusal of justice for victims of homophobic attacks in Cameroon. Many argue that this is not surprising given the preceding rise in homophobic rhetoric from many African leaders, but since the Nigerian bill was enacted, attacks against LGBTI people across the continent have increased, even in more tolerant countries such as Côte d’Ivoire and Sénégal. Nigeria’s leadership catalyzed a steep regression for the protection of LGBTI individuals that could take decades to reverse.

Big-man interests are also driving a movement to withdraw en masse from the International Criminal Court (ICC), which would enable impunity for mass atrocities. Urged on by President Kenyatta, who is currently accused of crimes against humanity at The Hague, the African Union (AU) held a special meeting in October 2013 to discuss an ICC withdrawal. Due to the efforts of countries like Botswana, Côte d’Ivoire, Mali, and Sénégal, the AU rejected the proposition, but Kenyatta succeeded in obtaining a resolution calling on the ICC to postpone his trial and to exempt sitting heads of state from international prosecution. As if this were not enough, an amendment to the newly established Protocol on the Statute of the African Court of Justice and Human Rights was adopted at a June 2014 summit, giving immunity to African heads of state and senior government officials (yet to be defined) at what was supposed to be the continent’s new regional human rights court.

If the immunity amendment to the African court’s statute is ratified by AU member states, leaders will not be deterred from committing the same crimes of the past, and African citizens will have one less option for protection against human rights abuses. Furthermore, the amendment is entirely at odds with the normative frameworks already ratified by the AU member states to protect human rights, including the African Charter on Democracy, Elections, and Governance and the African Charter on Human and Peoples’ Rights. Compliance with and enforcement of these frameworks are the best hope for strengthening democratic governance in Africa. However, these treaties, laws, and protocols will be useless if authoritarian leaders succeed in working together to ignore and actively undermine them.

It is therefore extremely important for countries like the United States to work actively with their African partners to uphold democratic principles on the continent. The international community’s failure to demonstrate strong opposition to the antidemocratic trajectory of many African countries is allowing authoritarian heads of state to gain more power and influence. The United States should single out and prioritize the needs of the few African leaders working to comply with international law and to promote democratic governance domestically and regionally. One way Washington can do this is by acknowledging and giving preference to the democratic states participating in the U.S.-Africa Leaders’ Summit next week. If current trends are not thwarted, the future of the continent could fall under the control of a resurgent “Dictators’ Club.” Read @http://freedomhouse.org/blog/reemergence-african-rat-pack#.U9lHW9JDvys

Aid to Africa:A smokescreen to hide the “sustained looting” of the continent

Although sub-Saharan Africa receives $134bn each year in loans, foreign investment and development aid, $192bn leaves the region, leaving a $58bn shortfall. See @ http://www.theguardian.com/global-development/2014/jul/15/aid-africa-west-looting-continent?CMP=fb_ot

 

 

Mark Anderson writes for the Guardian:

Western countries are using aid to Africa as a smokescreen to hide the “sustained looting” of the continent as it loses nearly $60bn a year through tax evasion, climate change mitigation, and the flight of profits earned by foreign multinational companies, a group of NGOs has claimed.

Although sub-Saharan Africa receives $134bn each year in loans, foreign investment and development aid, research released on Tuesday by a group of UK and Africa-based NGOs suggests that $192bn leaves the region, leaving a $58bn shortfall.

It says aid sent in the form of loans serves only to contribute to the continent’s debt crisis, and recommends that donors should use transparent contracts to ensure development assistance grants can be properly scrutinised by the recipient country’s parliament.

“The common understanding is that the UK ‘helps’ Africa through aid, but in reality this serves as a smokescreen for the billions taken out,” said Martin Drewry, director of Health Poverty Action, one of the NGOs behind the report. “Let’s use more accurate language. It’s sustained looting – the opposite of generous giving – and we should recognise that the City of London is at the heart of the global financial system that facilitates this.”

Research by Global Financial Integrity shows Africa’s illicit outflows were nearly 50% higher than the average for the global south from 2002-11.The UK-based NGO ActionAid issued a report last year (pdf) that claimed half of large corporate investment in the global south transited through a tax haven.

Supporting regulatory reforms would empower African governments “to control the operations of investing foreign companies”, the report says, adding: “Countries must support efforts under way in the United Nations to draw up a binding international agreement on transnational corporations to protect human rights.”

But NGOs must also change, according to Drewry: “We need to move beyond our focus on aid levels and communicate the bigger truth – exposing the real relationship between rich and poor, and holding leaders to account.”

The report was authored by 13 UK and Africa-based NGOs, including:Health Poverty Action, Jubilee Debt Campaign, World Development Movement, African Forum and Network on Debt and Development,Friends of the Earth Africa, Tax Justice Network, People’s Health Movement Kenya, Zimbabwe and UK, War on Want, Community Working Group on Health Zimbabwe, Medact, Healthworkers4All, Friends of the Earth South Africa, JA!Justiça Ambiental/Friends of the Earth Mozambique.

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said: “Tackling inequality between Africa and the rest of the world means tackling the root causes of its debt dependency, its loss of government revenue by tax dodging, and the other ways the continent is being plundered. Here in the UK we can start with our role as a major global financial centre and network of tax havens, complicit in siphoning money out of Africa.”

A UK government spokesman said: “The UK put tax and transparency at the heart of our G8 presidency last year and we are actively working with the Organisation for Economic Co-operation and Development to ensure companies are paying the tax they should and helping developing countries collect the tax they are owed.” Read  @http://www.theguardian.com/global-development/2014/jul/15/aid-africa-west-looting-continent?CMP=fb_ot

http://www.gfintegrity.org/report/2013-global-report-illicit-financial-flows-from-developing-countries-2002-2011/