Rawlings: West Must Restore Morality To Global Affairs

Solomon Appiah:

The following is the speech by President Jerry John Rawlings on 12 September 2014 at a seminar attended by Namibian Prime Minister, leading Pan Africanists and political figures. For any student of International Relations, the Ex-Prez made some amazingly poignant but relevant observations about the global order—so I thought to share his speech on this platform.

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 Afghanistan, Libya, the Ukraine and if the U.S. has its way, Syria.

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 address on morality. But with such folks I’d beg to differ. Truth is Truth regardless of the mouth from which it ushers. President Rawlings has a blemished record but he has also tried to make amends by returning Ghana to democratic rule. He is imperfect like all of us but many of his observations in this speech are worthy of positive reflection by any reader who seeks true development of the human material.

It’s about time we return the balance between the sacred might of right and the right of might.

For the full speech read the shared blog below

Originally posted on J.J. Rawlings:

President Pohamba welcomes President RawlingsGhana’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.

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What are Illicit Financial Flows?

GFI Graph
GFI Graph

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.

This definition was taken from the Global Financial Integrity Report dubbed, “Illicit Financial Flows from Developing Countries: 2002-2011“.

Illicit Money & Flight Capital

Further deepening our understanding, below is an excerpt from another report which defines some more terms for the uninitiated titled, “Illicit Financial Flows From Africa: Hidden Resource For Development“:

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.

He adds:

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.


Africa Tells EU to Back Off Uganda, Nigeria

African,_Caribbean_and_Pacific_Group_of_States_member_nations_map

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. .

The Parliamentary Assembly of the African, Caribbean and Pacific (ACP) Group of States answered the West by issuing the following DECLARATION OF THE ACP PARLIAMENTARY ASSEMBLY on recent proposals adopted by the EUROPEAN PARLIAMENT with regard to UGANDA and NIGERIA.

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.

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Solomon Appiah
Twitter: @s_apiah
Email: connect@solomonappiah.com

 

Africa: Tackling Illicit Outflows

Flickr/Enough Food IF
Flickr/Enough Food IF

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…

For more, do read this article titled Africa: Tackling Illicit Outflows on the Fair Observer° platform filed in the Economics section.

Competing Interests: The Ukrainian Crisis

Flickr/mac_ivan
Flickr/mac_ivan

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.

For the FULL article please click this link…

One bane of Africa’s Underdevelopment: Illicit financial outflows

GFI Infographic
GFI Infographic

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.”

Conditions ripe for Industrialization

New cement factory opens in Ethiopia - one of Africa's fastest-growing nations
Photo credit: Flickr/DFID – UK Department for International Development

Africa is poised to becoming the most populated continent in a few decades with its current population forecasted to double in a mere 36years by the United Nations. The current leaders of the continent have a responsibly to present and future generations to act sagaciously to leave behind a self sustaining, strong continent which can sustain the projected demographic change. They can do this owing to the convergence of many factors to the continents advantage at this point in its development history. For the past decade, economic development in sub-Saharan Africa has been phenomenal thanks to high global commodity prices, improved macroeconomic policies, increased investment in infrastructure, institutional development, the deepening of financial systems, and rising productivity.

Governments in this region must take advantage of the economic growth along with other factors listed in the article below to push for massive industrial development i.e. switching from a mentality of being solely primary producers to a mentality that works to add value to its primary products thereby providing jobs and foreign exchange for its massive populations. This value addition process is the focus of industrialization.

This and much more is discussed in my editorial that can be accessed H E R E.

The article was originally published on the Fair Observer Website. The author Solomon Appiah is a native of Ghana and ardent advocate for strategic public policies that advance the development of sub-Saharan Africa.

Twitter: @s_apiah

Blog: http://solomonappiah.com

Email: connect@solomonappiah.com

Equity and Justice form the foundation of enlightened ethical leadership—Solomon Appiah

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