Africa's $100bn corruption shame

Published: 01-JAN-03

It is impossible to estimate just how many billions of dollars are disappearing each year into the pockets of Africans through corruption. The World Bank and other institutions say that about five percent of the value of all direct foreign investment and imports into countries known to be corrupt disappears. This underestimate amounts to a staggering $ 100 billion a year. Surveys after survey points to Africa as the most corrupt of continents.

The latest Transparency International (TI) Corruption Perception lists 102 countries with only two African countries scoring higher than 5 (Botswana with a score of 6.4 and Namibia with a score of 5.7). Twenty other African countries rate less than 5. Nigeria scores 1.6 and ranks as the second most corrupt country in the world, behind Bangladesh.

Nigeria, alone is responsible for over 30 percent of the incidents of corruption in Africa. As Rose Umoren our Associate Editor in Lagos reports on page 9, corruption in Nigeria has accelerated since the so-called democratic government of Obasanjo was elected. A staggering $36 billion in public money has disappeared with few traces. Daily Nigerian life corroborates the shameful ranking of the country by Transparency International. Nothing is considered off limits. Legislators take cash bribes to register their opinion or vote on matters of national concern. Even with the evident decay of most of the country's infrastructure, politicians and business people are unmoved and continue to pillage the treasury.

Nigeria is not alone. Other African countries have also endured high-profile swindling scandals. South Africa's controversy over a US $5.5 billion arms deal with contractors in Germany, Italy, Sweden and the UK dominated the headlines this year.

The tiny state of Lesotho, has remained in the news following court proceedings in the $8 billion Lesotho Highlands Water Project case which began in 2001.

Journalist Carlos Cardoso of Mozambique was brutally murdered on the streets of Maputo while trying to secure evidence of alleged corruption by senior officials. Cardoso's investigation into a US $14 million bank fraud, linked to the privatisation of Banco Commercial de Mocambique under an IMF structural adjustment programme, is now thought to have led to his assassination.

A recent revelation that the government of Malawi spent US $2.5 million on limousines for ministers has got donors reeling with anger.

Ghana's high courts are currently burdened by ongoing cases of corruption involving high-level officials of the Rawling's government. A former finance minister has already been jailed for stealing nearly $2 million.

In Zimbabwe, a series of press articles alleged massive kickbacks in the tendering for Harare 's new international air- port involving President Mugabe's nephew and others.

In Egypt, a court convicted four MPs of involvement in a multi-million dollar scandal and the Egyptian political scientist Saad el-Din Ibrahim was sentenced to seven years imprisonment on charges that included embezzlement and receiving unauthorised funds from foreign donors.

As Ernst and Young consultants point out in our special report (page 19), corruption exists everywhere, in private as well as public sectors. Corruption exists in rich as well as poor countries. But to put the situation in context, the widespread nature of corruption is not in itself an excuse to steal.

Corruption wherever it takes place is harmful. It is even more harmful in Africa where the lack of the basic infra- structure to protect and preserve lives is non-existent. It would be foolish for instance to succumb to the analogy that because pollution and AIDS exist everywhere, action should not be taken to prevent them.

Botswana rules OK

Despite the gloomy picture in the continent, all is not lost. Botswana stands tall as a good example of how transparent management of public resources has yielded good fortune. Botswana has not been plagued by the disabling corruption so common elsewhere in the continent. Bribery of government officials to facilitate routine business activity is rare. The lack of systemic corruption, coupled with macroeconomic and political stability, has earned Botswana local and international confidence. To find out why Botswana has the lowest political risk factor of any African nation, read our story on page 28.

Elsewhere in this issue, our correspondents have as usual combed the continent for the best and timely business information on offer. Award-winning journalist Newton Kanhema tackles the issue of land reforms in South Africa and poses questions that will interest policy makers in Pretoria and elsewhere. Glen Munro writes on Ethiopia's drive to unlock its investment potential (page 47). Dulue Mbachu in Lagos shines some light on Nigeria's eventual attempt to join the telecommunications revolution. His report is on page 61. Ghanaian bankers and local industrialists are strange bedfellows. The two recently met in Accra to discuss their differences. That rare meeting is covered on page 39.

As you digest this double edition of Business in Africa, we wish you an enjoyable festive season.





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