By Ronak Gopaldas
Africa is a notoriously difficult place to do business. Many investors remain sceptical of their ability to navigate the continent's often murky operational environments, where weak governance, regulatory failure and unstructured economies have created the conditions for corruption to thrive.
The scale of graft has been particularly noteworthy in extractive industries. As a result, the citizens of many African countries rich in oil, gas and minerals are mired in poverty. Rather than investing resource revenues into infrastructure, health care and education, governments, often in collusion with the private sector, have diverted the proceeds into their own pockets.
Angola and Nigeria are plagued by the "resource curse". They are the largest producers of oil in Africa, yet their citizens are among the world's poorest, with approximately 70% of Angolans and 80% of Nigerians living on less than $2 a day, according to the latest World Bank figures.
Transparency International (TI), the Berlin-based watchdog, ranked Angola a dismal 153rd out of 177 countries in its 2013 Corruption Perceptions Index. In 2012 the International Monetary Fund (IMF) reported that between 2007 and 2010 $32 billion disappeared from the country's public accounts.
The Angolan government frequently commits itself to greater transparency, at least on paper. In 2010 it passed the Public Probity Law, which obliges all government officials to declare their wealth. This information, however, is not made public, a direct contradiction of the legislation's title. As a result, this act has yielded few positive effects. Nigeria's poor also suffer from the government's mismanagement of the coun- try's oil revenues. Unlike Norway, which has used its oil wealth to develop and diversify its economy, Nigeria is still stuck in a mono-export economy. Oil accounted for 97% of Nigerian exports between 1980 and 2010, according to a 2013 report by the United Nations Economic Commission on Africa.
Accusations of corruption have plagued successive Nigerian governments: the 2013 TI index placed Nigeria at 144 out of 177 countries. Lamido Sanusi, the former central bank governor, this year accused the Nigerian National Petroleum Company (NNPC), the state oil firm, of stealing billions from federal accounts.
This is not the first time that corruption in the NNPC has been highlighted. But Mr Sanusi's allegations are staggering. He claims that more than $1 billion disappeared every month for a 19-month period between January 2012 and July 2013.
The Nigerian government said last March it would conduct a forensic audit of the NNPC's books, but this has inspired little confidence. "Even if they establish at the end of their findings that the money is missing, I am afraid that the outcome might go the way of other probes we had in the past," said retired police commissioner Alhaji Abubakar Tsav, in a February interview published in the Vanguard newspaper. He was referring to the fate of previous investigations, which for the most part have failed to charge or convict people and companies implicated in corruption.
Despite its prevalence, corruption is not insurmountable. Rwanda and Senegal have made substantial inroads into the scourge. Rwanda has succeeded because its president, Paul Kagame, has adopted a "zero tolerance approach" to corruption. He has backed his rhetoric with strong action when required.
In 2004 Mr Kagame created an ombudsman's office to monitor government transparency. Four years later, on the recommendations of this office, his government suspended Janvier Murenzi, the finance director in the president's office, pending an investigation into graft allegations. Mr Murenzi was ordered to pay a fine in excess of $1m and imprisoned for four years in 2009. "People who embezzle public funds must pay back what they have eaten," Mr Kagame said at a 2009 press briefing.
This has helped investor perceptions: Rwanda placed 50th out of 177 countries in the 2013 TI index, a striking contrast to its fellow East African Community members: Burundi (157th), Kenya (136th), Tanzania (111th) and Uganda (140th).
Rwanda was the world's tenth fastest-growing economy in the decade from 2000 and more than 1m Rwandans were lifted out of poverty, according to a 2013 IMF report.
Senegal provides another encouraging example. When Aminata ToureÌ became prime minister in September 2013, she arrived with a reputation as one of the country's strongest corruption fighters. In her prior role as justice minister, Mrs ToureÌ had led extensive anti-corruption campaigns, prosecuting many government officials accused of corruption, including the son of Abdoulaye Wade, the former president, in April 2013.
In the 2013 Corruption Perceptions Index, Senegal jumped higher in the rankings than all but two countries in the world (Nepal and Laos), moving from 94th out of 177 in 2012 to 77th in 2013.
Institutional competence and laws can also change behaviours related to corruption. Botswana, for instance, has a functioning parliament, a robust anti-corruption commission and an independent judiciary. As a result, not only is Botswana one of Africa's economic success stories, it is also one of the cleanest--ranked 30th out of 177 countries in TI's 2013 index, ahead of all sub-Saharan African countries and even some developed countries such as South Korea.
One measure that mineral-rich countries can adopt is the Extractive Industries Transparency Initiative (EITI). This voluntary programme seeks to promote better use of mineral wealth through increased transparency and accountability. It encourages governments and companies to publish their revenues and payments and then submit them to independent auditing. Currently 45 countries, including 22 African nations, are implementing EITI requirements and 17 are compliant, according to the EITI website.
The African Development Bank endorsed the EITI in 2006, but governments and private companies still resort to inventive ways of hiding their buyoffs and kickbacks. While the initiative in itself is not sufficient to eradicate corruption in the extractive sectors, it is generating more information on revenues that was previously either not available or difficult to access.
In addition to the EITI, African governments and multinationals need to define clearly and publicly their rules of engagement. Transparent resource management with well-defined principles and neutral administration will discourage participants from rent-seeking behaviour.
While corporate Africa's reputation for clean business is unflattering, this is changing. As African companies strive to become world class, many are tightening up their governance, buttressing business codes of conduct and teaching their employees about ethics.
Graft is a cancer that African governments need to remove. This requires fostering greater transparency in their dealings with mining, oil and gas companies; developing and enforcing stronger anti-corruption legislation; and creating economic policies that promote diversified, industrial economies and reduced dependency on resources.
Corruption is not simply about ethics. It is also about how a government is set up and managed. Critical elements in fighting the scourge include an active and engaged media and judiciary, and the use of information technology. The underlying causes of corruption--poor pay incentives, ineffective political processes and a deep-seated acceptance of corruption--need to be expunged. Citizens should demand greater ac- countability and transparency from their governments.
Nigeria: Dodgy Defenders
By Eleanor Whitehead
Since the abduction last April of 200 schoolgirls by Nigeria's militia group Boko Haram, the world has been watching the west African nation's fight against the insurgents and wondering why it is failing so badly. Part of the answer lies in corruption.
Boko Haram, whose name means "Western education is forbidden", wants to impose Islamic rule in Nigeria. The rebels have been waging war against the government from their stronghold in the country's north-east since 2009, but have become more audacious in recent months. The kidnapping of the schoolgirls from Chibok in the embattled northern state of Borno was just a single episode in what has become a near-constant stream of violence.
The number of terrorist attacks in Nigeria has risen sharply in the last two years. In the year to June 30th 2014, 3,479 people were killed, compared with 1,735 between June 30th 2012 and June 30th 2013, according to Maplecroft, a UK-based risk consultancy. More than 1,000 more have been wounded in the last year. Serial abductions-- always a favoured modus operandi--are increasingly common, with hostages used to boost the organisation's international profile and bargain for ransom. After the Chibok incident in April, more than 100 people were kidnapped in May and June, Maplecroft says.
Corruption is both a root cause of the insurgency and a major reason it is proving so hard to control.
The terrorists are "tapping into real governance, corruption, impunity and under development grievances shared by most people in the region", according to an April 2014 report by the Brussels-based International Crisis Group.
There is certainly reason for discontent. As government officials line their deep pockets with huge oil revenues, more Nigerians are sliding into poverty. According to the most recent figures from the Nigerian Bureau of Statistics, 61.2% of the population were living on $1 a day or less in 2010, an increase of almost 10% since 2004. "Most Nigerians are poorer today than they were at independence in 1960," the International Crisis Group comments in its report. They are "victims of the resource curse and ram- pant, entrenched corruption", it says.
Since the oil boom of the 1970s, other sectors of the economy have fallen by the wayside, with grim consequences for employment. Job creation is not keeping pace with population growth. The government is incapable of providing basic social services such as health care, education and security throughout most of the country. But the situation is particularly dire in the north-east, where uneducated children and disenchanted youths can easily be pushed into terrorists' arms.
"Corruption has been a major factor in motivating support for Boko Haram and other radical groups," says Ben Payton, a senior Africa analyst at Maplecroft. "Decades of graft have degraded Nigerian institutions and caused the government to lose legitimacy."
Now that the insurgency is under the global spotlight, Nigerian President Good- luck Jonathan's government is under growing pressure to bring it under control. Since declaring war on the terrorists in 2013, it has put the three worst-affected states in the country's north-east under emergency rule and deployed more forces throughout the region. Nonetheless, attacks on schools, villages and churches have increased. Again, corruption is partly to blame. "The levels of corruption in Nigeria," says Ade Onitolo, a senior political risk consultant with the US-headquartered consultancy IHS, "just make it easier for terrorists to operate."
Most Nigerians do not trust the police and military forces to protect them--for good reason. Transparency International UK's 2013 Government Defence Anti-Corruption Index, which analyses corruption risk levels in national defence
establishments, considers Nigeria one of the countries whose armed forces are most vulnerable to dishonesty. It criticised Nigeria for having no publicly available defence policy or military anti-corruption plan, and for failing to provide officers with training against graft. The report cited the "absence of either the political will or appropriate mechanisms to address incidents of corruption when they occur".
Nigeria's military spending is huge. The government allocated about 340 billion naira (over $2 billion) to defence in the 2014 proposed budget. Yet despite vast funding, the army remains poorly trained and under-equipped. Part of the problem is that money ends up in the wrong places. "The scandals surrounding so-called 'security votes', which allow politicians to appropriate millions of dollars behind closed doors simply by evoking 'national security'...are well documented," Transparency International states in an online posting entitled "Nigeria: Corruption and Insecurity". It estimates that the former military dictator Sani Abacha siphoned off more than $1.1 billion during his rule in the 1990s, leaving the Nigerian army vastly under-resourced.
Today corruption is particularly widespread in military procurement. Funds that are meant to buy equipment or pay salaries go missing, with devastating effects on morale. "Low- and mid-ranking officers have sometimes been forced to personally buy vehicles, ammunition and weapons that should have been provided through government funds," Maplecroft's Mr Payton says.
One general in the north-eastern state of Adamawa, speaking on condition of anonymity, says that less than 50% of his troops' arms are serviceable. Soldiers often go months without being paid, security analysts argue. It is unsurprising that discontent is brewing in the lower ranks. In May disillusioned forces in the north-eastern city of Maiduguri opened fire on their commanding officer following the death of a dozen of their comrades.
Accusations of military involvement in the insurgency are emerging. It is widely reported that some soldiers supply weapons to militants. In May the local press reported that nine generals were under investigation for selling arms to Boko Haram. The following month, the Nigerian newspaper Leadership stated that a court-martial had found ten generals guilty of giving information and ammunition to the terrorists, a charge the army denied. The army spokesperson, Brigadier-General Chris Olukolade, did not answer calls for comment.
Forces are routinely accused of turning a blind eye to Boko Haram in return for bribes, according to media reports. In the case of the kidnapped girls, Amnesty International claimed in a report in May that security personnel were given four hours warning before the girls were taken, yet failed to act. Many locals question how trucks full of hundreds of kidnapped teenagers could have passed through the area's many checkpoints unstopped, and allege that colluding soldiers looked the other way.
"Low morale in the military means that many soldiers are likely to be more willing to accept bribes," Mr Payton argues. "It is highly likely that this is a factor in the army's frequent failure to respond to Boko Haram attacks in rural areas. Civilians have frequently complained that the military have failed to protect them, despite having prior knowledge that attacks were imminent."
The army is also accused of more active human rights abuses. "Nigeria's security forces perpetrated serious human rights violations in their response to Boko Haram-- including enforced disappearance, extrajudicial executions, house burning and unlawful detention," according to a 2013 Amnesty International report, which also claimed that hundreds of people were being illegally held in police detention facilities in the north-east.
Through it all, politicians blame each other. Behind closed doors in Abuja, the capital, government advisers accuse opposition party members of fuelling the insurgency in a bid to topple the leadership. The opposition refutes those claims and says government incompetence is responsible for the ongoing insurgency.
After the Chibok girls' kidnapping, the UK and US deployed military experts to train and support Nigerian soldiers. But speaking off the record, diplomats make clear that their governments can give only limited assistance to forces accused of rights abuses.
Corruption within the defence service is not impossible to overcome. "The Nigerian government must speak out against corruption and should invite civil society organisations to take part in developing an anti-corruption strategy," Transparency International, the Berlin-based watchdog, argues in its online report. "The defence ministry should open itself up to oversight and publish the defence budget in full, including off-budget defence expenditure."
But in one of the world's most notoriously corrupt and opaque countries, where the rot starts at the top, achieving transparency will be easier said than done. Corruption breeds conflict and conflict breeds corruption. Nigeria will have to break this cycle before it can successfully tackle a once-marginal insurgency that is fast escalating into a national crisis.
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