Battling Corruption in Resource Rich Africa

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When more than 40 heads of state recently met in Washington for the U.S.-Africa Leaders Summit, improving economic opportunities topped the agenda. The leaders could take pride in Africa’s recent economic performance. But the gathering also spotlighted a daunting obstacle to sustaining robust and widely shared growth on the continent: rampant corruption that robs citizens of billions of dollars every year.

By one estimate, illicit financial flows from Africa amounted to US$1.4 trillion between 1980 and 2009 — more than the economic aid and foreign direct investment the continent received during that period.

 A joint report by the African Development Bank (AfDB) and Global Financial Integrity (GFI) found that a staggering 60 to 65 percent of this lost cash disappears during “commercial transactions by multinational companies.”

The extractive industries — which take natural resources like oil and minerals from the ground — are particularly prone to corruption, because they generate huge wealth that is easily diverted to line the pockets of venal rulers or businesses.

 This can be devastating in resource-rich developing countries like the Republic of Congo, where the government depends on earnings from extractive industries for 85 percent of its revenue.

 The siphoning of Africa’s riches is an old story, of course, though today’s culprits are not European imperialists like Belgium’s King Leopold II, but unaccountable African officials and corporations, both foreign and domestic.

 The paradoxical result is the persistence of grinding poverty amidst apparent plenty, a paradox visible in Angola, the Democratic Republic of the Congo, Nigeria and a dozen other African nations. For too many Africans, improving governance of natural resource extraction is “a matter of life and death.”

The sentiment is broadly shared among civil society groups across the continent. African citizens are increasingly aware that corruption and poor governance is cheating them and their countries out of billions of dollars.

 In a moving letter to U.S. President Barack Obama on the eve of the summit, civil society leaders from nine African countries declared that their children’s future depended on ending this destructive cycle:

Our natural resources are an opportunity for us to create better lives for our future generations, but if good governance does not prevail, that chance will be squandered. And with oil, gas and mining, the one chance is all you get… We are fighting everyday to change our future. We risk arrest and intimidation to bring the issue of natural resources into the open. Where once silence reins people now debate in the streets how their revenues should be managed.

Improving governance in the extractive industries would go a long way toward achieving the five goals of the Obama administration’s vision for the Africa summit: expanding trade and investment ties, engaging young African leaders, promoting inclusive sustainable development, expanding cooperation on peace and security, and gaining a better future for Africa’s next generation.

Upon closing the summit, Obama announced that the assembled leaders had “agreed to step up our collective efforts against the corruption that costs African economies tens of billions of dollars every year — money that ought to be invested in the people of Africa.” The centerpiece of this effort would be “a new partnership to combat illicit finance,” based on “an action plan to promote the transparency that is essential to economic growth.”

But where do we begin? Though it is an uphill battle, there are already a number of worthwhile international initiatives seeking to empower citizens to fight corruption and help ensure that natural resources benefit local communities.

 The authors of the abovementioned letter, for example, all belong to one network of NGOs called Publish What You Pay, which campaigns for transparency in extractive industries.

 The idea is that forcing companies and governments to publicly release information about their negotiated contracts and commercial transactions will discourage them from engaging in corrupt practices, and allow citizens to hold them accountable if they do.

The Extractive Industries Transparency Initiative (EITI) is another, increasingly influential coalition that requires participating governments to ensure that transactions between extractive companies and governments are fully disclosed to the public.

 To maintain their status as “EITI-compliant,” member countries must prepare annual reports about how they are implementing common standards. In parallel with this campaign, the Organization for Economic Cooperation and Development (OECD) has released its own set of best practices, “Guidelines for Multinational Enterprises,” and the United Nations has produced its own document, “Guiding Principles on Business and Human Rights.”

These are all welcome initiatives. But what has their impact been? And how might they be improved?

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