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Africa Gets Serious About Stamping out Corruption

Africa Gets Serious About Stamping out Corruption

The African Union declared 2018 the Anti-Corruption Year. Success hinges on overcoming a number of obstacles.

C

orruption has been a roadblock to Africa’s success for too long. It’s time to put a halt to it.

That’s the message delivered by members of the African Union (AU) who gathered at the 30th Assembly of Heads of State and Government this past January in Addis Ababa, Ethiopia. Fed up with illicit business practices that have long hindered the continent’s economic viability and damaged its reputation, the AU declared 2018 as the “Anti-Corruption” Year.

Years of high profile anti-corruption settlements and salacious press accounts of widespread bribery helped provoke the response from the AU. Two notables involved government officials were found to have colluded with multiple multinational corporations demonstrating how widespread the issue truly is.

In several cases, funds misappropriated by corrupt African officials were seized by foreign countries, forcing Africa to forgo millions of dollars. According to the AU’s recent Mbeki report, as much as $50B is misappropriated from Africa each year — more than three times what the U.S. sends in overseas development assistance to Africa. Those millions could theoretically go toward improving the lives of Africans across the continent. More than 87 million people in Nigeria alone live on less than $1.90 a day, for example.

The AU’s 2018 declaration aligns with Agenda 2063, which seeks to provide a strategic framework for the socio-economic transformation of the continent over the next 50 years. The efforts are being spearheaded by the New Partnership for Africa’s Development (NEPAD), the technical body of the AU that was established given Africa’s changing socio-economic landscape.

But stemming corruption will take more than a declaration. Development, adoption and enforcement of anti-corruption measures by AU member states are a vital part of creating lasting change. Here are three issues that the AU will need to address if it expects to make real progress for Africa:

1. Corruption is rampant.

According to Transparency International’s 2017 Corruption Perception Index (CPI), with the exception of a few countries, sub-Saharan African countries are perceived to be some of the most corrupt countries in the world.

For perspective, the index ranks 180 countries and territories by their perceived levels of public sector corruption. Experts and businesspeople in these regions use a scale of 0 to 100 to gauge corruption, where 0 is highly corrupt and 100 is wholesome. In 2017, Botswana was the highest-ranking sub-Saharan African country with a CPI score of 61. Somalia, however, scored a 9, putting it in last place of the 180 countries assessed.

2. Corruption is status quo.

Unfortunately, the perception when dealing with many African nations is that one must pay a bribe to do business. In a 2015 report, Transparency International estimated that 75 million people in Africa had paid a bribe within the last calendar year.

Individuals and families are also directly affected by the corruption. Per the Illicit Financial Flows report, 1 in 2 citizens in sub-Saharan Africa reported paying a bribe for land services, like registering property or preventing their family home from being stripped away. 

The question becomes: How does Africa get countries to adopt anti-corruption efforts and foster a zero-tolerance attitude toward bribery? Furthermore, how can the continent balance short-term incentives and benefits with what will help the country prosper in the long term? If money seems to be the answer, that too poses a significant challenge.

3. Corruption is expensive.

The challenge many African member states face is they do not have the fiscal capacity to deal with corruption challenges. According to Emmanuel Nnadozie, Executive Secretary of the African Capacity Building Foundation (ACBF), African countries often go face-to-face with multinational firms that have more capacity to evade taxes and engage in other corrupt practices. 

Consider the recent scandal with two international petroleum companies. The companies stand accused of dumping roughly $1.1 billion into a government’s escrow which was then distributed as payoff to said government’s officials. While bribery and corruption have become commonplace, it’s rare to see the CEO of a major company in the hot seat, marking a shift in multinationals culpability in these cases.

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Fighting Back 

On March 16, 2018, South Africa’s national prosecutors announced they would reinstate corruption charges against former President Jacob Zuma in a case related to a multibillion-dollar arms deal in the late 1990s. Prosecutors allege that Zuma and other South African officials took kickbacks from the purchase of military hardware. This marks a shift in African politics, sending a message to the political class that corruption, be it in the past or in the future, will not be tolerated and that the age of impunity is over.

To further this push, AU member states should consider the following:

  • Think of their countries like a business: The tone of anti-corruption must trickle down from the top. Heads of state need to take on the role of “anti-corruption commander-in-chief” and enforce anti-corruption measures so a transparent and ethical environment can be fostered.

  • Get serious about anti-corruption: African governments need to hire competent people, find funding and not use anti-corruption as a political tool. Costs can be mitigated by leveraging private sector investigative platforms already in place.

  • Establish a consumer price index (CPI): A CPI tracks price changes for a market of goods and services over a period of time. To maintain membership, the AU could require a member state that fails to maintain a minimum CPI to develop a plan to get back to compliance, which should be comprehensively reviewed by the AU.

The road to effective anti-corruption is long. However, with a consistent push for good business practices and a strong anti-corruption framework in place, the AU could see a light at the end of the tunnel.

Published October 2018

© Copyright 2018. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.  

About The Authors


Irumire David Okhumale
irumire.okhumale@fticonsulting.com
Managing Director
Forensic & Litigation Consulting
FTI Consulting

Daniel Mukira
Daniel.Mukira@fticonsulting.com
Senior Consultant
Corporate Finance & Restructuring
FTI Consulting

Patrick Welsh
Patrick.Welsh@ropesgray.com
Counsel
Ropes & Gray LLP

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