A new report has revealed that at least a trillion dollars is taken out of developing countries each year through corruption, illegal tax evasion, the use of shell companies and shady deals, to the detriment of development programmes. This is a scandal of immense proportions and global action to stem it should be taken now, writes Nachilala Nkombo.
As the world’s richest countries, the G20 meet in Brisbane, Australia, this month, they should take a serious look into issues raised by a damning report which reveals that the world’s poorest countries are deprived of at least $1 trillion each year by criminals and corrupt officials who exploit layers of secrecy to siphon off cash through money laundering, illegal tax evasion and embezzlement.
Perhaps the greatest injustice of our lives is that we have some of the world’s poorest people living on top of some of the world’s richest natural resources, without benefitting from the wealth. Historically, this has been the norm as slavery, colonialism, neo-colonialism and other isms, were aimed at robbing and impoverishing resource-rich countries.
Today, the continued existence of poverty in the midst of plenty in these countries is explained by a scandal quantified by new research from the ONE Campaign.
The ONE report should make everyone take notice and make African governments sit up. It is no wonder that since the Millennium Development Goals were adopted in 2000, their attainment in Africa has been largely elusive. In some parts of Africa poverty is actually increasing.
When governments are robbed of their own resources to invest in health care or food security, it costs lives.
This makes corruption a deadly killer that must be stopped urgently. It is estimated that each year, as many as 3.6 million deaths could be prevented in Africa and other developing countries if action was taken to end the culture that allows corruption and criminality to thrive.
In sub-Saharan Africa, for example, an additional 10 million children per year could be educated if corruption was curbed, half a million primary school teachers could be hired, over 11 million people living with HIV/Aids could have ARVs provided for and 165 million vaccines could be paid for.
In Nigeria it is estimated that the country has lost $400bn to “oil thieves” since the country gained independence in 1960. This money lost could vaccinate all of Nigeria’s 29.7 million children under the age of five, saving more than one million lives over time. Over 168 million Nigerians could get a bed net to protect against malaria; all 3.2 million HIV-positive Nigerians could be provided with life-saving antiretroviral drugs; and more than 494,000 additional primary school teachers could be hired, resulting in an 86% increase in Nigeria’s teacher workforce.
This is as true for Nigeria as it is for Tanzania, South Africa, DRC, Ghana, Equatorial Guinea, Zimbabwe and Zambia, where positive growth numbers do not translate into a reduction in poverty, as grand corruption, particularly in the extractive sectors, robs these nations of valuable resources that could be used to fund the fight against extreme poverty, disease and hunger. With the scandal out, now is the time to create transparent governance structures to combat the root cause of this problem, ensuring that Africa’s vast natural resources – in mining, in oil and gas – begin to transform and benefit the continent.
The siphoning off of the trillion dollars from poor nations not only exposes major weaknesses in the national governance of natural resources. It is fuelled by loopholes in the global financial systems that enable the operations of multinational companies active in poor countries to hide money abroad.
The trillion dollar scandal (TDS)
The TDS is a global problem that calls for global solutions.
Completely stopping the TDS requires commitment and action from world leaders to remove the enabling conditions in their countries that allow this costly corruption to continue and thrive. As the G20 meet on 15 and 16 November 2014 in Brisbane, Australia to discuss boosting economic growth and international tax, organisations such as ONE are calling for action in four areas.
Firstly, ensure full and mandatory public disclosure in the oil and gas minerals extractives sector, with country by country and project by project payments revealed to citizens.
Secondly, make fully public, the ownership of companies. Currently anonymous companies aid and abet money laundering for organised crime, human traffickers, drug and gun smugglers and corrupt officials.
Thirdly, facilitate the automatic exchange of tax information between developed and developing countries.
Fourthly, make government budgets transparent and open to the public. According to the Open Budget index, only 3% of African citizens live in countries with sufficient public information on national budgets. In particular, citizens at a local government level must be able to walk into a local municipal authority office and ask local officials specific questions on how local government budgets are being spent. This is sadly too rare and means citizens and the local media cannot follow the money and monitor what should be going into delivering basic lifesaving services.
In our natural resources and in our people we have the wealth and power to not just end extreme poverty and preventable needless child and maternal deaths, but also ensure every African – indeed every citizen in every nation globally – has access to decent basic services and a chance of a good life led with dignity. But perversion in our political and commercial systems eats away many dreams of this kind of life.
According to Jim Yong Kim, the World Bank president: “Every dollar that a corrupt official or a corrupt business person puts in their pocket is a dollar stolen from a pregnant woman who needs health care; or from a girl or a boy who deserves an education; or from communities that need water, roads and schools. Every dollar is critical if we are to reach our goals to end extreme poverty by 2030 and to boost shared prosperity.”
The task of ending this situation starts not just with our leaders, but with each and every one of us.
Nachilala Nkombo is Deputy Director at ONE Africa