Slow Crawl On Corruption

A long walk to freedom need not mean a slow crawl on combating corrupt government

BY PETER O’BRIEN*

The recent (May 12) London Summit on Anti-Corruption resulted in another small step in the right direction. About 40 countries were represented, along with a number of international sports associations and similar bodies that have come under scrutiny for corruption. No real agreements were made, but some initiatives were announced. The UK Government, which for the last several years has been concerned about that country’s poor reputation due to its role in money-laundering, confirmed its plans to establish a register (with retroactive force) of large property owners. The so-called Beneficial Owners Transparency Initiative will shortly be made law. Despite the efforts to persuade other significant countries to follow the same path, to date only 4 of the G20 countries have committed to ending the practice of Secret Company Ownership. The sports associations present (which did not include FIFA, perhaps because of its major meetings in Mexico the following day) agreed to launch, in 2017, an International Sport Integrity Partnership, though the details of this are still unclear.

La Suisse lave plus blanc

The London meeting sensibly sought to focus on a single dimension only of anti-corruption efforts, namely financial secrecy. It is now some 35 years since the Swiss campaigner, Jean Ziegler, published a fierce tract on money-laundering in his own country, “La Suisse lave plus blanc” (in English translation: “Switzerland Washes Whiter”) , and it was towards the end of the 1980s that activities against the international drug trade started to place priority on tracking down where and how the money had been used (especially through the efforts of the Financial Action Task Force, set up with the participation of both national and international institutions). Notwithstanding the flood of additional information (that will require very careful analysis) provided by the Panama Papers, this route remains a tough one.

There are at least three problems to overcome. First, and most important, the reluctance of countries ( and states/regions within them) to embrace full transparency. Put simply, that elusive animal, political will, is hard to manage. Second, the complexity of legal and other arguments relating to what should be the boundaries separating legitimate claims for privacy from claims designed to shroud illegal behavior. Third, the major practical difficulties in carrying out investigative work on the scale required. To date, no international body has been given the resources adequate to such a task.

Corruption vs. Money

Discussions of corruption and money often mix together issues that should be kept separate. Africa’s countries are faced with two challenges: the use of money to distort decisions (such as those involving public procurement) and the avoidance of payments that should be made to the State (leading to what is variously called the “shadow economy” or the “informal economy”). Both things make governance more difficult, and tend to impede economic growth. Both can lead to money laundering. And at least the former often involves foreign entities.

While the London Summit did not unfortunately shed much new light on these matters, the information made available again underlined how so many other countries are locked into the same battle. For instance, data referring to 2012 and covering 20 EU Member States show that best estimates of the size of the shadow economy in relation to GDP are quite alarming. Of the 20 countries measured, the lowest percentage (shadow to total GDP) was for Austria, at 7.6% while the highest was for Bulgaria (31.9%). The median figure, 15.5%, was for Slovakia, a striking finding given it is a country that for years has had only a single, and low, tax rate (meaning tax evasion might be expected to be small). Indeed, both Germany and Sweden have a shadow economy/legal economy ratio of around 14/15%. In other words: the advanced countries not only have a problem with aggressive corruption (that aimed at particular projects and programs) but also with the silent corruption of the shadow economy.

Governance & Incentives

The governance issues, not really examined in London, remain for Africa at the center of the problems. It is now a full 20 years since the then President of the World Bank declared that governance was the great obstacle to be overcome in the efforts towards development, and further declared that “the cancer of corruption” was the central issue in governance. Since then, it seems that little progress has been made. Or, to put it differently, the efforts of a political and technical nature have been neutralized by the growing sophistication (legal, technological and financial) in the criminal world.

The measures against money laundering operate from the premise that if criminals are faced with a high risk that they will never be able to enjoy the benefits of their actions, they will be much less inclined to behave badly. This is a fair line of policy to follow, yet so far the deterrent effect does not seem to have been too powerful. An opposite way of tackling things is to find ways of reducing the incentives to corrupt behavior to start with. Given that for Africa it is this which would seem to provide the best, if modest, hope for achieving home-grown policies against corruption, future efforts should be made along these lines.

No doubt many countries are already experimenting with their own tentative policies. It might be made worthwhile establishing simple information exchanges among countries about how they have designed and implemented such policies, and the results they are achieving. For some years, it has been normal to use an experimental approach towards assessing and improving various anti-poverty programs. It is perhaps now time to follow the same path with regard to anti-corruption.


* About the author: Peter OBrienPeter O’Brien is economics & trade advisor to Africa consulting boutique Pr1merio. With over 30 years’ international expertise in economic and financial analysis, trade negotiations, and deal making, Peter O’Brien has advised governments, NGOs, and private clients on economics, policy, and diplomacy matters. Peter has worked worked in all regions of Africa, providing advice to clients ranging from South African conglomerates to Ethiopian government ministries.  A native of Ireland, Peter is fluent in English, French, Spanish, Portuguese, Italian and German.

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Circles of Corruption: how does Africa stack up against the OECD?

Inside & Outside the Circles of Corruption

By Peter O’Brien, Pr1merio chief Economics & Trade advisor.

Many widely quoted assessments of corruption rank African countries poorly. These ratings are based mainly on indicators related to the ways in which business contracts, especially those involving government funds, are concluded. The suggestion is that resources are wasted due to mechanisms which award deals to groups that, in open and transparent systems, would not have qualified to obtain the contracts. While there is undoubtedly a very real problem, it’s important for Africa’s standing in the business world to understand the actual situation.

For comparison’s sake…

During the present decade, the avalanche of detailed information concerning corruption in OECD countries, and in particular Western Europe and the USA, has been enormous. A central feature of the stories uncovered has been the failure of administrative systems in those places – and a strongly associated feature has been the failure to resolve the problems. Some examples, drawn not from the financial sector (where the cases are so numerous that to describe them is now superfluous) but from industrial activities and projects, will illustrate the point.

Since mid-2015, and growing by the week, the question of environmental pollution caused by faking the results of admissions tests on diesel driven vehicles has rocked the automotive industry. What began as an investigation into Volkswagen has extended to several other global manufacturers. The investigations so far have underlined several things. First, companies themselves have broken their own ethical codes in order to secure some competitive advantage. Second, there clearly exists an unhealthy, cosy relationship between the auto firms and the entities that are supposed to test and certify vehicles as compliant with regulations. Third, the power of organized corporate lobbies has been sufficient to delay remedial action, and in the case of the EU promises to postpone it indefinitely. Fourth, industry elaborated codes of conduct rarely work. Fifth, financial penalties alone are unlikely to alter the structures of corruption.

In Germany, the finalization of the construction of the new airport for Berlin in now several years overdue. The delays, and the additional costs (reported to be above €5 million per day), have been variously attributed to weak negotiation and formulation of the initial contracts, inadequate monitoring mechanisms, collusion among constructors and suppliers, and straight kick-backs to several officials involved. In the UK, the award of government contracts to a company, G4S, to provide security services for the 2012 London Olympics, was found by parliamentary investigation to be grossly negligent. But subsequent to those findings, the same company has been given several other contracts, some of which are currently under new investigations.

Where does Africa stand?

Kofi AnnanSo where does Africa really figure in an imperfect world where corruption and fraud have since time immemorial been part of transactions wherever they take place? The response should probably be along the following lines.

To begin with, African firms, in the sense of companies created and driven by African indigenous capital, till now have very limited capacity to organize the large scale, multi-country manipulations found in the OECD. Put differently, African entities, private and public, are almost certainly far more reactors than primary actors in the game. This generalization applies equally to involvement in the scandals rocking so many of the self -created and self- perpetuating bodies purporting to govern many types of world sport. In soccer and in athletics, some African individuals and entities have hopped on to the gravy train – but the drivers are elsewhere. In other notoriously corrupt fields, such as cycling, Formula One racing or tennis, Africa has yet to play a notable role.

Given that, to date, African enterprises and institutions have not played a significant part in the monitoring and assessment operations supposed to prevent and correct abuses, there is likewise no evidence of weight to put Africa in the hot seat with respect to implementation of anti-fraud and anti-corruption in international cases.

The mention above of individual major projects in Germany and the UK, a reference that could readily be extended to more or less all OECD countries, further implies that Africa is by no means different from other places regarding the presence of  seriously deficient methods of project award and project management. The relative extent of problems is hard to judge, partly because the intensity of investigation required to discover some of the situations in the OECD is so great. In other words, it may be that the cases found in Africa are simply easier to identify.

Not so bad after all…?

What does all this mean? Certainly it does not mean either that we should weaken the effort to reduce fraud and corruption, or fail to pursue the necessary improvements in public administration, public finance management, and legal mechanisms. But it does suggest that, fortunately, the degree and sophistication of fraudulent and corrupt behavior can be contained. It has yet to reach the levels found in the OECD, and indeed most African countries and institutions do not have the wherewithal to undertake corruption on the scale observed elsewhere. Timely action now might well avoid future disasters.

A final point is the actual impact of fraud and corruption on economic performance. In the absence of many detailed enquiries, it is not easy to state with confidence if the impact is worse in African countries, or in some of them, than it is elsewhere. What does seem to be clear is that, up to the present, the bad cases in Africa have received relatively strong publicity. Since in today’s world image is everything, it might be time for some of Africa’s institutions, national, regional and continental, to devote resources to showing what Africa is doing to improve its own systems, and ensure it does not reach the position which some other regions of the world are in.

 

‘Omar Dis-Appear’: Legal Effects of Africa’s Withdrawal from the ICC

Omar Dis-Appear‘: The Potential Legal Effects of Africa’s Withdrawal from the International Criminal Court as a Result of the Omar Al-Bashir Debacle

By Rui Lopes — AAT & AAF contributing author (“The Fascinating Story of Thula Madonsela and Being Undermined“)

The mass withdrawal of the Rome Statute by African states leaves most of them with little to no discretion on whether to prosecute omaralbashir31jan11jus cogens crimes envisaged in the courts jurisdiction due to the absence of the complementarity principle, the principle on which the International Criminal Court is based. These States are therefore forced to prosecute these crimes towards the international community in all instances. However, due to the underdeveloped nature of most of these states legal systems, such mainly being the reason for many African states having become signatories to the International Criminal Court in the first place, such States will be unable to prosecute these crimes, thus breaching their obligations erga omnes owed to the international community as a whole.

The International Criminal Court

iccThe International Criminal Court (ICC) was envisaged as being the first permanent international criminal court prosecuting the most serious crimes committed towards the international community. The nature of the ICC is sourced within an international treaty namely the Rome Statute. Treaties are by many academics compared to contracts, which in order to be performable, the contracting parties must consent to the imposition of obligations and must have the requisite intention to be bound by such. In a situation where a party no longer possesses either the intention to fulfil their obligations or in turn no longer intends to be bound by the contract, such a contract cannot continue and must be terminated.

In much the same manner, Article 127(1) of the Rome Statute visualises situations where States no longer wish to remain a party to the treaty. The Article provides that States may, through a written notice to the Secretary General of the United Nations, withdraw from the Statute. Such a withdrawal shall however only take effect one year after the receipt of such notice. 

On closure examination of the Article, such holds the legal implication that the withdrawing State is bound in its entirety to the Rome Statute for one further year after providing its notification of its intention to withdraw. It has in essence added a provisio to the ‘contract’ that even where a party no longer possesses the relevant intention to be bound (animus contrahendi) or where the party no longer intends to fulfil its obligations, the contract continues to persist for a further year. This is furthermore highlighted in Article 127(2), according to which the State is not cleared of any of its obligations that arose whilst a party to the statute nor its cooperation with the ICC in connection to investigations of any proceedings which are uncompleted at the time of the withdrawal.

From a contractual perspective however it seems contra to every rule in contract law to hold that even where a party no longer possesses the relevant intention to be bound by the contract, the contracting party is still bound to the entirety of the contract and if the party refuses to comply with its obligations, the fault lies in the defaulting party which has its own set of consequences. In relation to international law, even though African States may not intend to be bound any longer by the Rome Statute, these African States may be in default if they fail to comply with the Rome Statute. Here the breaches take the form of not complying with the States obligations erga omnes.

Privity of contract, another extremely important principle of contract law, requires that only those parties to the contract are bound to the contract and that obligations may only flow to those who are parties to the contract, no one else. On an inspection of the Rome Statute, the Rome Statute in essence binds those who were never a party to the contract or those who no longer intend to be a party to the contract. This is evident from Article 13(c) of the Statute, holding that prosecutions may be instituted at the instance of the prosecutor of the ICC, irrespective of whether the State is a party to the treaty or not. The prosecutor is required to have a reasonable basis to proceed with the prosecution and be authorised to do so by the Pre-Trial Chamber of the ICC. Thus the ICC is not prevented from having jurisdiction over States, which have withdrawn from the treaty or were never a party to the treaty. In terms of the Rome Statute, privity of contract has gone completely out the window. 

There are some counter-arguments that seem to take the form that such is a requirement in international law due to the jurisdiction of crimes over which the ICC holds, namely jus cogens crimes. However I posit that since international law is a consensual system that requires the consent of State parties, much in the same manner as a contract, it seems irrational for an International Court, whose entire existence is established through a treaty, to have jurisdiction over a state that never firstly possessed or secondly no longer possesses the intention to be bound to the jurisdiction of such a court.

gaza-docket-3-638In relation to the African withdrawal of the ICC, such may have the effect of leading to a potentially large scale institution of prosecutions against many African leaders within the time of their notification to no longer be bound to the Statute, which has already been witnessed and seems to be the main source of discontent by the African Union i.e. an unorthodox targeting of Africans by the ICC, or furthermore that even where the State is effectively no longer a party to the Statute such does not prevent the International Criminal Court from exercising jurisdiction over someone especially considering where such a prosecution or requirement of arrest has been made a resolution by the Security Council of the United Nations in terms of Article 25 of the UN Charter, a resolution that binds all members of the United Nations. 

However, the central legal implication of withdrawing from the treaty arises from an analysis of Article 12(3) of the Statute. Such an Article defines the court’s jurisdiction and states that such a jurisdiction is limited to the crimes of genocide, aggression, war crimes and crimes against humanity. Notably, as previously stated, all these crimes have attained the status of jus cogens, a set of commanding international law standards which no state may deviate or depart from. These standards (jus cogens) impose obligations upon states, called obligations erga omnes. Such obligations are termed obligations erga omnes as the term erga omnes is Latin meaning ‘towards all’ and thus such obligations that arise from jus cogens standards are owed to the international community as a whole. In relation to the crimes over which the ICC has jurisdiction, the obligations erga omnes that couple these jus cogens crimes, can be found in their relative Charters. Within each of these Charters, it imposes obligations on States to prevent and punish such crimes. For example, in terms of the crime of genocide, such a crime has attained the status of jus cogens, and the obligation erga omnes that couples such can be found in the Genocide Convention which requires a state to prevent and punish such a crime of genocide. Therefore a State is bound through their obligations erga omnes, to prevent and punish all such crimes over which the ICC holds jurisdiction, failing of which the state is in breach of these obligations erga omnes.

However according to Article 17(2), the ICC functions on the complementarity principle, which states that the ICC has jurisdiction in instances where the particular state is genuinely unwilling or unable to prosecute such a crime. This effectively provides the state with a “safety net” in the sense that if the state does not want to or is unable to prosecute the crime, due to a lack of the advanced nature of their legal system, that particular state is not said to have breached any obligations erga omnes. It is for this exact reason that many African states have become parties to the Rome Statute in order to prosecute such crimes, as a result of a lack of an advanced legal system present within their countries (although this may not be true for each and every African state). Therefore the ICC has provided these African states with a platform to prosecute such crimes, thus preventing breaches of their obligations erga omnes

The implication of a state withdrawing from the Rome Statue is that such a state is left vulnerable to breaching their obligations erga omnes in terms of these crimes, namely to prevent and punish. No longer does the state have a discretion on whether to prosecute or not, due to a lack of the complementarity principle, and are in all instances bound to prosecute. The failure of a state to prosecute, irrespective of the reason, will be a breach of their obligations erga omnes.

What then would be the repercussions for African states who have breached their obligations erga omnes

Article 40 of the Draft Articles on State Responsibility contemplates serious breaches of obligations under peremptory norms of international law and the wording of such an Article has two requirements that must be fulfilled in order to be utilised, the first is that there must be a breach of international law by not complying with ones international obligations, in the current instance, where African states do not prosecute such jus cogens crimes, this would be sufficient to constitute a breach of international law by not complying with their obligations owed to the international community. Secondly, the breach is required to be serious in nature. In the current instance it is unfathomable that such a breach is not serious in nature. The non-prosecution of jus cogens crimes such as genocide, war crimes or crimes against humanity are inexcusable and may seem to suggest a condonation of such if a state seeks not to prosecute such or where a state fails to prosecute such. Furthermore what is required by the relevant article is that such a failure to comply with ones obligations erga omnes must be gross and irregular i.e. that there is intent present on the part of the state. I therefore posit that such may be seen through African states intention to withdraw from the ICC whilst knowing that their relevant legal systems are unable to handle the prosecution of such crimes. Such actions demonstrate the intention to not prosecute these crimes, as these States knew of their inability to prosecute such crimes and persisted to withdraw from the ICC and thus such can be said to constitute the gross and irregular conduct contemplated in Article 40. 

Article 41 goes on to describe the consequences of a states serious breach of peremptory norms. Such states that all States are under a positive duty to bring an end to the serious breaches contemplated in Article 40. Such an article does not however prescribe what form the duty to bring an end to such must take and will depend on the circumstances but must in any event be lawful. I posit that such may take the form of rendering assistance in terms of the prosecution of such crimes, however such an article can only be said to be applicable ex post facto the failure to prosecute (Such constituting the breach of international law). It might well be for this exact reason that it is possible for the ICC to continue to exercise jurisdiction over such states. 

The question now becomes: Can Africa ever really escape the jurisdiction of the ICC? MapOfAfrica

Since the ICC works on a complementarity principle, the principle that the court will only prosecute the crimes over which it has jurisdiction in those instances where is a state in unwilling or unable to prosecute the crimes, and since it has been established that even after a state is no longer a party to the ICC, the ICC continues to exercise jurisdiction over those states and those crimes, it seems that even when one has withdrawn from the ICC, one has not escaped the jurisdiction of the ICC, which would have been the entire purpose of withdrawing from the Rome Statute. The question for consideration is then whether it will be possible for Africa to ever escape the ICC’s jurisdiction? The answer to such lies in the complimentary principle itself, as if there was an institution which could prosecute all African crimes over which the ICC has jurisdiction, then the court would be unable to prosecute such as the complimentary principle would not enter into effect. Therefore I posit that the only way Africa can ever escape the jurisdiction of the ICC would be to establish an African Criminal Court. 

However, the possible benefits of African States ‘pulling out’ from the ICC are two fold. Firstly it provides states with the motivation required to improve their legal systems to cope with the prosecution of such crimes rather than the reliance on an international court as a “safety net”. Secondly, the possible creation of an African Criminal Court as contemplated above provides a greater legitimacy of that court in the eyes of African states and its establishment allows for a broader jurisdiction over crimes in comparison to the ICC. Despite the presence of such advantages, withdrawing from the ICC seems to be more detrimental than beneficial to these African states considering the possible breaches of their obligations erga omnes

The way forward

I therefore hold that the mass withdrawal of African states from the Rome Statute will lead to a possible multitude of eventual breaches of these States obligations erga omnes as a result of the inability of their legal systems, not necessarily all of them, to handle the prosecution of such crimes. I hope that if African states are destined on withdrawing, the African Union rapidly establishes a similar court to deal with such prosecutions in order to avoid these breaches of obligations erga omnes. A reformulation to the structure of the Rome Statute is also required as it seems to be out of touch with the basic principles of contract law through which many academics compare treaties to.

How a Billionaire Changed Corrupt Government: Dangote vs. Mugabe

Did a Nigerian CEO single-handedly wipe out source of Zimbabwean ‘indigenisation’ corruption?

The Zimbabwean economy has been struggling hard under the regime of President Robert Mugabe for years, having contracted as much as 40-50% and suffering from galloping inflation rates of over 79 billion % (so-called hyper-inflation, which is exceedingly rare today).  This has, in turn, led to tremendous human suffering, including famine, a significant exodus from the country, a decline in life expectancy, etc.

One of the oft-cited culprits hindering foreign direct investment (FDI) into Zimbabwe has been the official policy of “indigenisation.”  Andreas Stargard, an advisor on African competition and fraud issues and a Primerio director, comments:

“After the 1979 Lancaster House Agreement set in motion the ultimate Land Reforms and other measures that would allow the new majority rule to eradicate the remnants of the British Empire’s colonisation of the former Rhodesia, the Zanu-PF policy of requiring all FDI to cede 51% or more of the investment’s equity interest to native Zimbabweans, foreign interest in the country has dropped significantly.  The indigenisation policy has sent investors running — well above and beyond their already extant currency worries and the spectre of government-sanctioned expropriation.”

Indigenisation and its effects

The indigenisation rule applies to “any person who before the 18th of April 1980 was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person.”  This law, the so-called ‘Indigenisation and Economic Empowerment Bill of 2008‘ (IEEB), has not only hindered DFI, but also led to an exacerbation of corruption within the Zimbabwean business and government circles, as it acting as the Zimbabwean majority front-man has become a lucrative calling for otherwise unqualified government officials or their family members.

The Economist has noted, just prior to the 2008 enactment of the Zimbabwean law, that the vagueness of its provisions could be a harbinger of confusion (and, correspondingly, corruption):

Zimbabwe’s bill contains a lot of ambiguity, and gives a lot of loosely-defined discretion to the government. It is unclear whether the transfer would apply only to future mergers, demergers, restructurings and transfers, or to all existing companies. Moreover, the minister for indigenisation and empowerment would have to approve all ownership transfers and would have the power to impose alternative local partners if he disapproves of those involved in the proposed transactions. He would also have the authority to exempt selected companies from the ownership requirements for a certain period.

Dangote to the rescue

The man who has now called into question — and apparently successfully so — the Zimbabwean indigenisation rules is none other than one of  Africa’s foremost Black billionaire businessmen, Aliko Dangote.  He is the CEO of his eponymous company, Dangote Group, which has expanded from being once a mere concrete business to an conglomerate empire of significant proportions and well over $3 billion in annual revenues — enough to make Mr. Mugabe’s ministers now consider reforming (if only silently and unwillingly) the existing policy’s hurdles to FDI.

Although the Zimbabwean Vice President, Mr. Emmerson Mnangagwa, has denied any connection with the suddenly ongoing reforms to indigenisation rules and the Dangote Group’s recent promise to invest up to $400 million of sorely-needed hard, foreign currency into government coffers and domestic commercial banks, this seems to have been precisely the case, in AAF’s view.  Bloomberg has reported that not only Dangote, but also the (decidedly non-Black, despite its name) BlackRhino private-equity infrastructure fund, which is a Blackstone subsidiary, would consider concomitant investing into Zimbabwean power generation.  Other media outlets likewise reported the dramatic change in demeanour over the past two weeks, since Mr. Dangote’s initial visit to the country and his subsequent threat to withdraw his investment promise, if needed reforms were not undertaken swiftly:

When Nigerian billionaire Aliko Dangote arrived in Zimbabwe last month, the red carpet was rolled out for Africa’s richest man.

He was showered with exclusive hospitality and access to ruling elites, including meetings with the two Vice Presidents Emmerson Mnangagwa and Phelekezela Mphoko before seeing President Robert Mugabe.

Since then, after Mr. Dangote strategically “forgot” to mention Zimbabwe as one of his target countries, thereby prompting deservedly worried Zanu-PF reactions, the ruling party has apparently gotten the memo from the mega-CEO: it recently released an official Presidential memorandum announcing reforms to “improve the easy of doing business” in Zimbabwe.  Says Stargard:

“See, under the existing IEEB rules, it’s not enough to be Black in Zim by the Zanu-PF’s standards for doing business — one must also be Zimbabwean by birth (or at least as of the country’s independence day in 1980).  So Mr. Dangote does not qualify for preferential treatment, and therefore would have to cede over half of his local investment value to domestic ‘business interests,’ AKA a vast array of potentially corrupt shell entities or individuals waiting to benefit from the Dangote/BlackRhino investment slush fund.”

A local Harare attorney, Obert Gutu (Twitter), told a Financial Gazette reporter that in his view, the ambiguities and resulting counter-productive effects outweighed the upsides of the law: “The contradictory statements that are being made by different ZANU-PF cabinet ministers are symptomatic of policy incoherence and institutionalised confusion.”

Mr. Dangote would seem to agree with Mr. Gutu’s views, expressed more than a year ago in the Gazette’s aptly titled article “Indigenisation Act Continues To Create Confusion“:

“It is a populist indigenisation policy that is benchmarked on emotive utterances that do not resonate with the reality that is presently obtaining within the global macro-economic architecture.  For as long as the ZANU-PF government trumpets this populist indigenisation policy, Zimbabwe will not attract any meaningful foreign direct investment. Our national economy will remain fragmented, perilous and fragile.”

We conclude by (1) hoping that Mr. Dangote’s influence (or at least that of his U.S. dollar-denominated chequebook) bears fruit and stamps out a good part of the extant corruption in Zimbabwean politics; and we (2) note that Zimbabwean indigenisation stands not alone in Africa — other countries, notably South Africa with its Black Economic Empowerment rules in effect since the early 2000s, have similar (although perhaps less draconian) measures in place to level the playing field in the former European colonies.  The Zanu-PF version of Black economic empowerment is, however, apparently too counter-productive even for Africa’s most influential Black businessman, as we are now beginning to learn…

To be continued

East Africa: “Rampant corruption” hinders economic development

Tanzania Private Sector Foundation (TPSF) Chairman warns of injury to economic development, emphasises importance of single standard

Dr Reginald Mengi, Tanzania Private Sector Foundation (TPSF) Chairman (source: IPP Media)

In a report by Charles Ngereza, the head of the 231-member strong TPSF was quoted as highlighting the importance of ensuring that a single standard must govern corrupt conduct by both domestic and foreign entities and individuals.  Speaking on the occasion of “European Union Week” at the East African Community Headquarters, he said:

“We hear Africans are corrupt but the question remains, what about international companies which give bribes so as to be favoured in investment projects on the continent? They too should be punished.  Double standards mustn’t be allowed to dominate this matter.”

The Chairman of the 190-member strong East African Business Council (EABC), Felix Mosha, was quoted as optimistically highlighting the EAC’s overall growth-rate increase from 14% to 23% year-over-year, thanks in part to easier border crossings and business infrastructure improvements.

Along the lines of our sister site, AfricanAntitrust.com‘s post from today (“Investment in Africa: Changing landscape, new hurdles”), the article emphasises the potential long-term detrimental effect on economic growth of allowing corrupt business practices to continue.  Anti-corruption measures must be instituted and implemented at an international level “through imposition of sanctions on all international companies found guilty of the practice and manipulation of African leaders in their companies’ interests.”