Africa: $1 Trillion 'Paid in Bribes Annually'

Charles Kazooba
Kampala

The World Bank conservatively estimates that $1 trillion is paid in bribes each year globally, according to research carried out by the Africa All Party Parliamentary Group (AAPPG).

The report claims majority of the cases accrue from western companies and western agents offering and paying bribes to government officials to secure contracts and other advantages.

The others are western banks, which have been incriminated in laundering the proceeds of corruption that are usually channeled through western shell companies and trusts. The western financial experts are also of assisting corrupt officials to launder their illicit funds.

The report claims that two former African Presidents -- Mobutu Sese Seko of Zaire (now DRC) and Sani Abacha of Nigeria -- each embezzled about US$5billion.

"Africa has developed a particularly bad reputation for corrupt practices. The reigns such as Mobutu and Abacha are some of the world's most infamous kleptocracies. The whole continent has suffered from this reputation which reduces business confidence and investment," the inquiry highlighted.

The commission of inquiry was endorsed by the United Kingdom to determine methods how western governments could support Africa's battle against corruption. The original concerns for the inquiry, according to the report, were raised in consultation with members of the African Diaspora living in UK.

The Transparency International Corruption Perception Index says that out of the 20 most corrupt 10 are in Africa.

"In one country alone, Nigeria, the National Economic and Financial Crimes Commission estimates that in the past 220 billion pounds were stolen or misused by the country's past rulers between 1960 and 1999 and much of these were held overseas. This figure is similar to the amount of international aid given to the entire continent in four decades."

Another study, the report published this year states, by one Tanzania NGO indicated that the annual loss to the country through corruption could be nearly as high as the country's total annual revenue collection.

"Weak governance greatly increases the opportunities for corruption. Some African countries' weak governance and lack of institutional structures have contributed to corruption and in turn may have been perpetuated by it.

Countries recovering from conflict, of which there are several in Africa, rightly need to concentrate on ensuring security, but such initiatives are also undermined by corruption," the 79-report, titled "The other side of the coin", warns.

The study reveals that in Africa proceeds of corruption are banked or spent outside the continent. The African Union estimates that US$148 billion a year leaves the continent because of corruption, and it represents a quarter of the continent's Gross Domestic Product.

Other estimates of the amount of total illicit proceeds coming out of Africa (including corrupt, commercial and criminal proceeds) are in the order of US$100-200 billion. Generally, it implies that for every dollar of foreign aid given to Africa, $4-8 is remitted back in dirty form.

The report claims as much as 60% of trade transactions into or out of Africa are estimated to be mispriced by an average of 11%, which translates into annual capital flight in excess of $10 billion. Fake transactions are estimated to account for a further $150-200 billion.

The major sectors named as sources of corruption in the investigation include security, extractive industries (especially oil and mining), construction, health, political parties and parliaments and aid industry.

As a consequence, the investigators warn that corruption can reduce tax revenues by as much as 50% reducing the funds available to government for public spending.

In addition, corruption obstructs investment and development. "Where corruption becomes endemic the drag on development can be all encompassing. The World Bank estimates that 300%-400% 'governance dividend' can in the long run follow good governance and corruption control. That translates as a three or four fold increase in income per capita and major reductions in other manifestations of poverty, such as child mortality.

Researchers have also estimated that 2-4% of annual growth can be shaved off by corruption," the report further revealed.

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