You are cordially invited to participate in the 2014 STATE OF THE NATION SUMMIT, being held October 25, 2014, at the Sam Jonah Hall at the African University College of Communication, Accra, Ghana. The theme under consideration is: National Transformation: Role of the Youth.
The organizers would be delighted to have you join in the State of the Nation Summit. Personal invitations are not necessary to attend. This is an open event, and we welcome everyone who is interested in increasing their knowledge about the current state of the nation and what they can personally do to contribute to a positive transformational process.
The organizers are Team One CaaT GH—transforming one community at a time.
The following is a speech by Ex-President Jerry John Rawlings on 12 September 2014 at a seminar attended by Namibian Prime Minister, leading Pan Africanists and other political figures. For any student of International Relations, the Ex-Prez made some relevant observations about the global order.
One of the many interesting anecdotes from his speech includes:
“In one fell swoop, the right of might was made to supersede and almost destroy the sacred might of right.”
How true. This has been the case with U.S. incursions or interventions in Afghanistan, Libya, the Ukraine. I like the U.S. of A. Its a great country with some amazing history and people. I have many awesome American friends but some of the U.S.’ foreign policy directions undertaken by their political elites have not augured well for the globe.
Morality is not an easy subject to broach in our day—not by even the most ‘moral’ voices of our times. A man with blood on his hands (by way of the coup d’état that brought his government to power) might be deemed by some unfit to give any public address on morality. But with such an opinion, I’d beg to differ. Truth is Truth regardless of the mouth from which it ushers. President Rawlings has a blemished record. Agreed! But to his credit, unlike some of SSA’s military rulers, he eventually returned Ghana to democratic rule despite the huge support he still enjoys from the Ghana Armed Forces. He is imperfect like all of us but some of his observations in this speech are worthy of positive reflection by any reader who seeks the development of the human material and our world at large.
Ghana’s former President, Flt Lt Jerry John Rawlings, has in an address in Windhoek, Namibia, challenged the United States and other Western powers to restore morality into the manner they manage global affairs.
The Global financial Integrity disclosed that, “As a percent of GDP, Sub-Saharan Africa suffers more from illicit financial outflows than any other region in the world”. The gravity of this statement is better appreciated when one considers that this part of the globe constitutes a huge percentage of the world’s youthful populations—many of which are poor, live on less than a dollar a day and suffer from low human development with poor access to healthcare, education and security. In effect, the region that needs help the most suffers the most from Illicit Financial Flows (IFF) which if rightfully curbed could aid development.
In the past I have written about Illicit Financial Flows in my article entitled “Africa: Tackling Illicit Outflows” but I have not really taken the time to define what they are. So what are they?
Illicit flows are all unrecorded private financial outflows involving capital that is illegally earned, transferred, or utilized, generally used by residents to accumulate foreign assets in contravention of applicable capital controls and regulatory frameworks. Thus, even if the funds earned are legitimate, such as the profits of a legitimate business, their transfer abroad in violation of exchange control regulations or corporate tax laws would render the capital illicit.
Illicit money is money that is illegally earned, transferred, or utilized. If it breaks laws in its origin, movement, or use it merits the label.
Flight capital takes two forms. The legal component stays on the books of the entity or individual making the outward transfer. The illegal component is intended to disappear from records in the country from which it comes.
By far the greatest part of unrecorded flows are indeed illicit, violating the national criminal and civil codes, tax laws, customs regulations, VAT assessments, exchange control requirements, or banking regulations of the countries out of which the unrecorded/illicit flows occur.
There are two main channels through which illicit capital, unrecorded in official statistics, can leave a country.
The World Bank Residual model captures the first channel through which illicit capital leaves a country through its external accounts. The second type of illicit flows, generated through the mispricing of trade transactions, is captured by the Trade Misinvoicing model which uses IMF Direction of Trade Statistics.
Mohamed Sultan, an economic governance program officer at the Open Society Initiative for West Africa offers yet another explanation of IFFs as follows:
When money is moved secretly and illegally from one jurisdiction to another, this constitutes an illegal financial flow. For developing countries, the term refers to money that leaves the continent instead of being used to finance development.
Such funds may be proceeds from organized crime, smuggling, corruption, money laundering, tax evasion, or international trade manipulations.
While concentrated in a few countries such as Nigeria and Ghana, and essentially stemming from extractive and mining industries, IFFs are a burden for nearly all West African countries. Across the continent, only 3 percent of IFFs are derived from government corruption, while 33 percent comes from organized criminal activity and 64 percent from trade manipulations.
African economies have lost between $597 billion and $1.4 trillion in illicit financial flows in the past three decades. That’s nearly equal to the entire continent’s current gross domestic product. This plunder results in missed development opportunities, increased poverty, and continued injustice.
While many African nations are experiencing unprecedented economic growth, illicit financial flows (IFFs) prevent this growth from translating into better overall living conditions for Africans.
For more on measurements and the impact of IFFs on the human family and specifically sub-Saharan Africa, read the hyperlinked reports.
A couple of weeks ago, I wrote an article titled Africa and the West: Revising the Rules of Engagement. It tackled what in my opinion was uncivil and derogatory treatment of Uganda and Nigeria (and by extension the entire sub-Saharan African people) by some developed countries. These countries attempted to use development assistance as a control mechanism to force these states to abrogate an anti-gay bill arrived at democratically through parliamentary and executive arms of governments.
I wondered why African leaders had not yet spoken up for their citizens and beliefs. In addition to withdrawing aid, the European Union had gone as far as tabling the EU Parliament resolution of 13 March 2014 on launching consultations to suspend Uganda and Nigeria from the Cotonou Agreement in view of recent legislation further criminalising homosexuality (2014/2634(RSP)).
Today I was very pleased to chance upon a response to the EU Parliament from the African, Caribbean and Pacific Group of States (ACP)—79 member nations, all signatories to the Cotonou Agreement save Cuba. .
It is good to see Africans and other developing nations speaking up for what they believe in and not cowering at intimidatory control measures from the West. Hopefully this is a sign that Africans, Caribbeans and the people of the pacific are ready to take up the mantle of responsible [independent vis-à-vis controlled] leadership required to forge a better future for their peoples.
The Global Financial Integrity (GFI) report estimates that sub-Saharan Africa loses more than twice as much in illicit financial outflows than it receives in aid. According to Kevin Watkins, executive director of the Overseas Development Institute (ODI), transfer or trade mispricing is a practice that facilitates the shifting of profits to low-tax jurisdictions. He explains this practice costs less-developed countries “in excess of $550 billion annually: more than five times annual aid flows.” The lack of transparency in the global financial system facilitates such behavior among multi- and transnational corporations. Tax havens are the favorite destinations for such illicit transfers, which otherwise could have been used to boost economic and industrial development.
According to another GFI report, a conservative estimate for overall illicit outflows from Africa, exempting all other flows in illegal activities from 1970 to 2008, total $1.8 trillion. The 2013 Africa Progress Report, citing the GFI investigation, also puts the average annual loss to Africa from 2008 to 2010 at $38 billion — higher than development aid to this region in the same timeframe. Furthermore…
Ukraine’s former president Viktor Fedorovych Yanukovych was removed from office on 22 February 2014. Since then, U.S., E.U. and Russian diplomats have been working to influence the future of Ukraine.
After Yanukovych’s removal, Ukraine’s parliament took the decision to cancel a law that gives legal status to the Russian language in Ukraine. This would have potentially disadvantaged the Russian speaking population in Ukraine. Additionally, Russia recognizes the removal of Yanukovych as illegal and unconstitutional making some arguments based on Ukrainian law during a press conference with Putin.
With the escalation of Western efforts in Ukraine, Russia deployed troops to the Crimea region. The West demanded Russia to pull its troops out under the threat of sanctions which the West imposed on 6 March. The U.S. expanded visa bans on Russian officials and hopes to get E.U. support in imposing further sanctions aimed at Russia’s financial infrastructure and foreign property holdings.
Though the beneficiary of many development programs, sub-Saharan Africa still hosts some of the world’s poorest UNDP Human Development Indicies (HDIs). Qustion is why?
One answer may lie in the fact that Sub-Saharan Africa looses more than double what it gains through development assistance because of illicit financial outflows from the continent via multinational and trans-national entities. That’s the info to be gleaned from the GFI infographic.
The amount of money developing countries loose through transfer mispricing which is one form of tax avoidance that entails shifting profits to low-tax jurisdictions is in excess of US$550bn annually according to Kevin Watkins, Executive Director of ODI. This is five times more what is received in aid. It was estimated by the AU that 30 per cent of sub-Saharan Africa’s annual GDP is siphoned to tax havens. Between 1970 and 2008 the continent lost US$1.8 trillion through illicit outflows according to Global Financial Integrity report.
The G8 and G20 have it in their power to stop this massive injustice but time and again they have not shown the political will to do so. Why? Because many of them are themselves homes to the flourishing tax haven industry plus some of their current leaders have their political campaigns sponsored by big business using such dubious funds.
How much longer can the globe stand by and watch this injustice take place? It is true that illicit outflows occur in almost all nations on earth but truth is developing nations such as are found in Africa feel its bite the most because they are bled of the very little capital they could have had to make ends meet. It’s easy to point fingers at petty corruption by petty politicians in Africa but it can be argued that the type of corruption being discussed here has done way more harm to Africa and most developing regions than any petty corruption ever has.
Having been bled of such colossal sums of capital, is it any wonder that development aid alone has not been able to make a dent in the drive to spur development on the African continent? The globe must rectify this injustice.
As Jeffery Sachs put it, it’s about “stopping the abuse itself by letting very-very rich people from the US or Europe or mega companies like Apple or Google take their profits, and instead of paying the taxes that they should pay as decent citizens, put them tax free into these tax havens with the approval of the politicians of course, who use this to pay campaign contributions.”
Equity and Justice form the foundation of enlightened ethical leadership—Solomon Appiah