INSTITUTE FOR SECURITY STUDIES June, 2012. A) Corruption Trends in Africa Corruption becoming more complex due to technology Corruption now entangled.

INSTITUTE FOR SECURITY STUDIES

June, 2012

A) Corruption Trends in Africa

• Corruption becoming more complex due to technology

• Corruption now entangled with organised crimes – drug trafficking, tax evasion, smuggling, human trafficking etc

• Corruption now internationalised and trans boundary

• Corruption part of body politic

Corruption trends cont..

• Quite corruption cited as inhibiting development in Africa (WB, 2010): In 2004, 20% of primary sch teachers in rural

western Kenyan could not be found during school hours; In Uganda, this was btwn 20% and 27%

Poor controls resulted in 43% of fertilizers sold in West Africa in the 1990s lacking expected nutrients

Over 50% of drugs sold in Nigerian drugstores in the 1990s were counterfeit

Corruption Trends cont…

• Africa has lost more than USD140 bn due to corruption by own governments & foreign companies since independence (TI, 2006)

• 25 % of GDP of African states is lost to Corruption each year (World Bank Institute)

• This is despite Africa moving towards heavy regulations

• Strong correlation btwn Corruption Perceptions Index on one hand with black market activity and overabundance of regulation (World Bank)

Corruption in Police, KRA, Customs

• In Kenya, apathy to corruption is high but reducing

• Propensity to bribe and not report fell from 64% in 2008 to 56% in 2009 (TI)

• Kenyan Revenue Authority (KRA) reports that when collecting taxes at the port, customs officials are often offered bribes by taxpayers

• Bribe rate is fixed to one-third of the total taxes evaded.

Police, KRA, Custom

• More than 80 per cent of importers, including reputable companies, have tried to avoid paying proper import duties (TI)

• Police: Rated as most corrupt public institution in Kenya (TI)

• Six out of ten Kenyans have paid bribe to police• Number of bribes paid to police reducing, but

amount becoming bigger

Corruption at Customs…..

• KRA struggling to dispose off environmentally harmful substances worth millions of shillings.

• The goods are then transported across Kenya after bribery at several police checks

• Customs procedures in Kenya rated at 3.3 on a 7-point scale of efficiency (7 – very efficient)

• Standardised export shipment requires 8 documents & takes an average of 26 days at a cost of USD 2,055 per container

B) Latest Anti Corruption Instruments

• Use of IT and Automation: removes human agents and thus corruption opportunity

• Increased Transparency: Removes opportunity for discretion

• Detection in operations: Creating systems where details of operations can be monitored

• Preventive Detection: Monitor to detect preparations for corrupt action

Anti corruption instruments..

• Awareness Creation: • Reporting: Mobilising users or community to

report cases of corruption• Deterrence: Publishing information about

reported corruption• Promoting Ethical Attitudes: engaging the

public through discussions in various forums

C) Capital Flight out of Africa

• Africa lost USD18.4 bn annually as a result of capital flight btwn 1970 & 2008 (ADB)

• Had this been invested in Africa, poverty would have been cut by 4 – 6 % annually

• That means Africa could have realised its MDG goals by 2015

• Yet Africa had lowest aggregate level of Human Development indicators in 2011

D) Remittances Into Africa

• remittance flows to Africa since 1991 has exhibited a steady growth (ADB)

• It rose from less than US$ 2 billion in 1991 to nearly US$ 5 billion in 2003

• Nigeria is by far the largest recipient of remittances in Africa, accounting for one-third of all remittance flows to the continent

• Its followed by Kenya, Lesotho, South Africa, Mauritius, Uganda, Benin & Cape Verde

E) Chinese Investments in Africa

• China‘s emergence as a major trading partner for Africa is to continue growing.

• Even though European countries still remain Africa‘s leading partners, things are gradually changing (ADB)

• From China‘s perspective, China-Africa trade is still modest. China-Africa trade comprises only 4 percent of the total Chinese imports and exports

China Investment…

• From an African perspective, China-Africa trade growth is more important as it represents close to 10 percent of the continent‘s exports and imports

• Africa‘s trade with China is with just a few:• Up to 60 percent of Chinese exports are

destined for just six countries: South Africa (21%), Egypt (12%), Nigeria (10%), Algeria (7%), Morocco (6%) and Benin (5%)

China Investments…

• But 70 percent of Chinese imports originate from four countries: Angola (34%), South Africa (20%), Sudan (11%) and Republic of Congo (8%)

High Concentration of Chinese Exports to Africa (2007)

High Conc. Of Chinese imports from Africa (2007)

China Investments: Lessons from Angola

• China has played important role in reconstruction of China

• Chinese financial and technical assistance has kick-started over 100 projects in energy, water, health, education, telecommunications, fisheries and public works

• For each tender, China proposes 3-4• Chinese companies• Angolan Ministry of Finance had little input since

funding was provided directly to Chinese firms

Lessons from Angola…

• Chinese investment has contributed to poverty reduction in Angola

• Angola remains open to other trading partners: officials say they do not want to close options

• New challenges for Angola – China trade: lack of global understanding thus suspiscion; language barriers; policy challenges

Chinese and Corruption

• High corruption in most public works and construction by Chinese companies (TI)

• Chinese and Russian Companies most likely to pay bribes

• China and Russia occupied positions 27th & 28th in the 28 country index of countries most likely to pay bribes in 2011

F) Global Trends in Drug Trafficking

• Cannabis continues to dominate world illicit drug markets in terms of pervasiveness of cultivation, volume of production and number of users

• Morocco & Afghanistan are world’s leading growers & producers of cannabis

• In a 2009 survey in Afghanistan, area under cannabis cultivation was between 10,000 ha & 24,000 ha (UNODC)

Drug Trafficking Trends

• It has a range of 1,500 tons and 3,400 tons for the production of cannabis resin

• In a 2005 survey in Morocco, total area under cannabis cultivation was 72,500 ha in 2005, down from 134,000 ha in 2003

• Other leading producers of cannabis in Africa are Angola, Cameroon, Egypt, Ghana & Nigeria etc

Opiates….

• In 2009, Area under opium poppy cultivation worldwide fell to an estimated 181,400 ha

• This was a decrease of 15 per cent on the level in 2008, which had 213,000 ha

• Afghanistan leads in opium poppy cultivation, which accounts for big portion of heroine

• Coca bush cultivation remained concentrated in Colombia, Peru and the State of Bolivia

Opiates/Coca…

• But Colombia remained with the largest area under cultivation, followed by Peru, for Coca bush

G) Human Trafficking out of Africa….

Figures for Africa (Source: IOM)

Regional overview of cases assisted, by exploitation

H) Failed States

• Somalia continued to occupy the top spot of most failed state for fifth year running in 2012

• Middle East Countries tumbled along with Japan and UK

• Finland remained the most successful state in 2012, followed by Sweden, Denmark, Switzerland and Norway in that order

• List of top five most & bottom five most successful has remained consistent for 5years

..AND BOTTOM 10 MOST SUCCESSFUL STATES

Top Ten Failed States in 2012

1 Somalia 114.9

2 Congo (D. R.)

111.2

3 Sudan 109.4

n/r South Sudan*

108.4

4 Chad 107.6

5 Zimbabwe 106.3

6 Afghanistan

106.0

7 Haiti 104.9

8 Yemen 104.8

9 Iraq 104.3

10 Central African Republic

103.8

167 Netherlands

28.1

168 Austria 27.5

169 Canada 26.8

170 Ireland 26.5

171 New Zealand

25.6

172 Luxembourg

25.5

173 Norway 23.9

174 Switzerland

23.3

175 Denmark 23.0

176 Sweden 21.3

177 Finland 20.0