Quina, Joana Gentil (2008) Essays on corruption in sub-Saharan Africa. PhD thesis, University of Warwick.
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We study three topics on corruption that are of particular relevance to sub-Saharan Africa.
Firstly, we address the question of why corruption is such an endemic problem in sub-Saharan Africa. Is it policy driven or "destiny"? We analyse indices of perceived corruption and test several theories regarding the causes of corruption. We find strong support for two arguments: Countries with a British heritage are perceived to be less corrupt, while those with a common law system are perceived to be more corrupt. We find weaker support for four further arguments: Countries with good quality institutions and a greater proportion of women in the labour force are perceived as less corrupt. Countries with greater natural resource abundance and with greater trade openness are perceived to be more corrupt.
Secondly, we look at the supply side of bribery. Within the public procurement process, we study how a firm's uncertainty regarding the official's corruptibility and rival firms' costs influences the magnitude of the bribe it offers. Due to the illegal nature of bribery, we also explicitly consider different punishment mechanisms for corrupt firms. We find that secrecy leads to lower bribe levels, and that bribery can be completely deterred by either appropriate fixed fines or by firms being fined punitive damages.
Thirdly, we investigate whether more corrupt governments receive less aid. We develop a theoretical framework that treats corruption as a tax on aid. Although we are unable to empirically test this model, we use it to motivate our empirical analysis of aid receipts using data on sub-Saharan Africa. We find a negative correlation between a country's perceived level of corruption and its aid receipts. However, we find no causal effect of perceived corruption on aid receipts. We revisit the results of an influential paper in the literature and find that their result of no evidence that countries perceived as more corrupt receive less aid is not robust to a sample of sub-Saharan African countries, although we find no evidence of a causal effect. We find no evidence that the impact of perceived corruption on aid receipts differs across sectors.
|Item Type:||Thesis or Dissertation (PhD)|
|Subjects:||H Social Sciences > HV Social pathology. Social and public welfare|
D History General and Old World > DT Africa
|Library of Congress Subject Headings (LCSH):||Corruption -- Africa, Sub-Saharan, Bribery -- Africa, Sub-Saharan, Economic assistance -- Africa, Sub-Saharan, Africa, Sub-Saharan -- Politics and government, Africa, Sub-Saharan -- Economic conditions|
|Official Date:||April 2008|
|Institution:||University of Warwick|
|Theses Department:||Department of Economics|
|Supervisor(s)/Advisor:||Perroni, Carlo ; Walker, Ian, 1954-|
|Sponsors:||Fundação para a Ciência e a Tecnologia (FCT) ; Fundação Calouste Gulbenkian (FCG)|
|Format of File:|
|Extent:||378 leaves : charts|
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'Corruption is one of the most formidable challenges to good governance, development and poverty reduction' in Africa says 2008 Transparency International Report.
It has been said that corruption in Africa is like an advanced cancer or tumour that cannot be treated. Like cancer, corruption has tragically devastated African societies and made millions of people very poor. From South Africa to Egypt the tentacles of corruption reaches every where. Corruption has no boundaries. From the offices of presidents and prime ministers to the smallest administration unit of government corruption is everywhere. According to the Africa Union (AU) around $148 billion are stolen from the continent by its leaders and civil servants every year. The recent Forbes' list of most corrupt nations had 9 out of the first 16 countries coming from Africa.
In Africa, very few government officials and civil servants perform services for free. You cannot get your birth certificate or passport unless you grease the palm of officials. You cannot get good education for your kid unless you pay a bribe. You cannot obtain electricity meter for your house unless you pay a bribe. You cannot get your goods out from the harbour unless you pay kickback. Anything involving signing of documents involves paying inducements. In Africa you can hardly find someone who has not paid bribe before either willingly or unwillingly. To receive attention when you are sick you need to grease the palm of hospital officials.
In Ghana, officials illegally charge 15 and 150 Ghana cedis for a birth certificate and a passport respectively. Again in Ghana Police officers openly ask bus and taxi drivers to pay bribe before they are allowed to cross mounted road blocks. Customs officials adopt all manner of tactics in order to collect money from importers and exporters before their goods are allowed to leave the ports.
Most projects in Africa are carried out by corrupt contractors who collude and connive with public officials to inflate project cost in order to enrich themselves. As a result every project carried out cost three times the usual cost and it is always the tax payers who bear the brunt of it. Due to corruption, project inspectors fail to do their job and allow substandard work to be done at the expense of the people and the nation.
In Africa, it is totally useless to bid for contracts because contracts are awarded to the contractors who are able to pay the biggest bribe. In most countries there are no announcements for tenders rather contracts are awarded to companies who secretly pay large sums of commission to government officials.
For example on 17th September 2002 a Canadian Engineering company called Acres International was convicted by a High Court in Lesotho for paying $260,000 bribe to secure an $8 billion dam contract in the tiny Southern African nation of Lesotho.
Achair Partners a Swiss company and Progresso an Italian company have been accused of bribing Somali Transition Government officials in order to secure contracts to deposit highly toxic industrial waste in the waters of Somalia.
In 2002 Halliburton a US company was accused of establishing $180m flush fund with the intent of using it to bribe Nigeria officials in order to secure a $10 billion Liquefied Gas Plant contract in the Nigeria. In response to the accusation the company fired Mr. Albert Jack Stanley. Mr. Stanley a former executive of Halliburton (KBR) has pleaded guilty for orchestrating the $180m flush fund. Even though Halliburton denied any knowledge of such a fund a report by the company later named a British called Jeffrey Tesler as the middleman behind the bribery. Such corrupt practices by western companies seeking contracts in Africa are not uncommon.
In Africa contracts are awarded to party faithfuls who in turn make handsome financial contributions to the party in power. Because of corruption and nepotism anyone can become a contractor in Africa. In Africa, state coffers or the treasury are the personal property of the president/prime minister, his family, his cronies and his political party. In most African countries there is no separation or difference between state and ruling party resources.
Corruption is so endemic in African societies that, political parties have been pledging to combat it with deadly force but when they are elected nothing seem to change. When former president of Ghana John Kuffour took office he said 'there will be zero tolerance for corruption' in his government but his party recently lost power amid accusation that he was unable to tame his corrupt officials.
Despite years of exports of oil, gold, diamond, bauxite, tin, coltan, uranium, manganese timber and several other valuable minerals the continent continue to be ranked as the poorest on earth because most of the revenue from these exports do not get to the people but find its way into the bank accounts of corrupt government officials, civil servants and their allies.
Since oil was first discovered in Nigeria about 50 years ago, over $400 billion have been realised from its sale but today the whole population continue to live in abject poverty and the country has nothing to show or account for the billions of dollars she has received for years. Those who have benefited from the oil are corrupt politicians, civil servants, a shadow economy, armed bandits, army generals and the big oil corporations such as Shell, Mobil, BP and their American counterparts. As a result able men and women are battling dangerous seas just to enter Europe and try their luck. Others have resulted to 419 a popular scam used to trick people into given out their money and valuables. In fact Nigeria has consistently featured in the top 1% of the most corrupt nation on the planet.
Between 2005 and 2007 several state governors and their immediate families were arrested by Scotlandyard in London on corruption and money laundering charges.
Among them are James Ibori of oil rich Delta State and his wife Theresa who had their $35m asset frozen by the English court. Mr. Ibori earns about a thousand dollars a month but during his eight years as a state governor he managed to acquire wealth to the tune of $35m and was a key financial contributor to the campaign of the current president of Nigeria. He owns a private jet and a lavish London home.
Another corrupt governor is Diepreye Alamieyeseigha, governor of oil-rich state of Bayelsa who was also arrested in London for money laundering charges. Mr. Alamieyeseigha broke his bail conditions and evaded capture in Britain by dressing up as a woman. When Police conducted a search in his London home they discovered one million pounds worth of cash in his home.
Another governor who was arrested in England was Joshua Dariye of Plateau State. He was arrested in a London hotel for stealing money meant for development of his state.
But these thieves have no rank compared to the heavyweights like Abacha, Mobutu, Eyadema, Lansana Conte, Obiang Nguema, Omar Bongo, Mubarak and Arap Moi.
In the 1990s economic hardship, abject poverty and destruction of the environment forced the people of Ogoniland in Nigeria to demand a say in which Shell operates but the military regime led by Gen. Sani Abacha arrested the environmentalists led by Ken Sorowiwa and executed them. You may wonder why Abacha killed his country men instead of protecting and providing for their needs. According to available data Nigeria government Lawyers within the period that Abacha became Head of State i.e. between 1993 and 1998 he stole $4 billion of Nigeria's oil money and stashed it in several secret bank accounts in Switzerland, Britain, Luxemburg, Jersey Island and Liechtenstein. In April, 2002 these countries agreed to return $1 billion of the stolen money to the people of Nigeria. So far about $2 billion have been returned to the government of Nigeria and the rest of the money is still sitting in bank accounts in Western countries notably Switzerland and Britain.
A visit to the Niger Delta region of Nigeria shows that majority of the people especially the youth are unemployed. Years of oil spills have made the soil unfit for any agricultural activity. Their streams and wells are polluted and the people have no access to basic necessities of life because their leaders have enriched themselves with the money.
Every effort to get the Nigeria government to develop the oil rich areas fell on death ears until the unemployed youth took up arms against the federal government and oil companies. They kidnapped foreign oil workers and demanded ransom before their victims were released. They disrupted the oil production forcing the oil companies to move several miles offshore for their own safety but they were not safe either. Eventually, the companies had to reduce their output by 25% in 2007-8. These disruptions affected supply of oil in the world market forcing the price to skyrocket to $140 a barrel in the summer of 2008.
If Abacha could steal $4 billion within 5 years then you can tell how much the leaders who have ruled for decades have stolen. For example Gaddafi of Libya has been in power for 39 years now. Omar Bongo of Gabon 31 years, Teodoro Obiang Nguema of Equatorial Guinea 28 years, Robert Mugabe of Zimbabwe 28 years, Hosni Mubarak of Egypt 27 years, Paul Biya of Cameroon 26 years, Yoweri Museveni of Uganda 22 years, Omar Al Bashir of Sudan 19 years, Iddriss Derby of Chad 17 years, Yahya Jammeh of Gambia 14 years.
I think you have now got the picture and understand why the African Union says $148 billion leave the continent every year.
The late Lansana Conte ruled Guinea for 24 years from 1984 to 2008. Sometimes having a leader maintaining stability in a country could translate into economic prosperity but this is not the case for Guinea. Even though Guinea is the world's biggest exporter of bauxite, there is little very the country can show for it. Apart from bauxite, Guinea also have large deposits of gold diamond, iron, nickel and uranium yet poverty is so severe that the country was ranked among the top 1% of most corrupt countries in Africa. In fact according to a report by UN, Guinea ranks 160th out of 177 in the UN's Development scale.
According to available documents 70% of revenue from of all mineral exports every year finds its way in the bank accounts of Lansana Conte and his cronies. Today the people lack portable water and electricity. Roads, rail lines, telecommunication, schools, hospitals are in severe deplorable conditions while money meant for their repair and maintenance sit in Europe and America being protected by banking secrecy laws. According to Aljazeera a credible and popular news broadcaster, corruption is so woven in Guinean society that school girls need not study as their promotion to next class is always assured by their male teachers who solicit sex from them. According to the students, those who refuse to sleep with their teachers are made to repeat a year in class. Female teachers on the other hand demand money to be paid in exchange for higher marks.
Why won't the people be poor when their livelihoods have been taken away from them? Why?
On Friday 31, 2007 the Guardian newspaper in Britain reported a corruption scandal perpetrated by former president of Kenya Daniel Arap Moi and his family. According to the Guardian a 110 page report prepared by international risk consultancy firm Kroll exposed Arap Moi and his family and accused them of banking £1 billion in 28 countries including Britain. The report went further to say that the family used Shell Oil Company, secret trusts, front men and his entourage to siphon the money away.
Apart from the money, the Moi family also bought several multimillion pound properties in London, New York, South Africa including 10,000-hectare ranch in Australia and bank accounts containing hundreds of millions of pounds. It is on record that Mr. Moi's sons Philip and Gideon are wealth £384m and £550m respectively. While majority of Kenyans live in rural areas, and live in mud/thatched houses with bamboo/raffia leaves as roofing sheet the Moi family live in a £4m home in Surrey and £2m flat in Knightsbridge. Arap Moi's 24 year rule was largely corrupt and contributed to endemic poverty seen in Kenya today.
How do you expect the continent to develop when monies meant for her development are stolen by her leaders and kept by countries who praise themselves as civilised, cultured, loving and democratic?
In South Africa, Jacob Zuma is still battling it out with the court for his part in the multi-billion arms deal in South Africa in 2001. He was forced to resign as Deputy President of South Africa a clear embarrassment to the ANC government of former president Mbeki.
In 2006 former president of Malawi Bakili Muluzi was arrested for pocketing $12m donated to his poor country by foreign governments. Again former Zambia president Frederick Chiluba was arrested together with two business men Aaron Chungu and Faustin Kabwe and charged with 11 counts of stealing money meant for the Zambia's development.
In Equatorial Guinea where oil export has earned the country billions of dollars, the 600,000 people living in the country continue to live in poverty while Teodoro Obiang Nguema and his cronies continue to siphon the oil revenue with no accountability.
Gabon and Angola both Oil exporting countries are no different. In fact, the governments in Gabon and Equatorial Guinea can best be described as Kleptocracy that is government by thieves. In countries such as Nigeria, Egypt, Cameroon, The Gambia, Sudan, Uganda, Libya, Tunisia a Kleptocracy class of people have replaced anything democracy. In these countries very few people continue to remain in power and the people have no say in the way their country is govern or run. For example Gaddafi of Libya has been in power for 39 years now. Omar Bongo of Gabon 31 years, Teodoro Obiang Nguema of Equatorial Guinea 28 years, Robert Mugabe of Zimbabwe 28 years, Hosni Mubarak of Egypt 27 years and the list is unending.
How do you expect a person to rule for 30 years without being corrupt?
What is clear is that these unelected leaders continue to amass wealth at the expense of their poor countries and continue to mismanage whatever remains of their corrupt activities. Because most of the leaders are former military officers or former rebels with no grasp of economics and management, they are unable to formulate any good economic policies that will transform and grow their economies hence poverty has become a part of the people but their leaders know not what poverty is.
In DR Congo it is estimated that gold and diamond deposits alone could fetch the country 23 trillion dollars not to mention the abundance of timber and other several minerals that are found in large quantities such as columbo-tantalite (coltan) and cassiterite (tin ore) yet years of corruption, mismanagement, conflicts and foreign involvement have made this resource rich nation one of the poorest in the world.
It is often said that western nations cannot maintain their current level of lifestyle without Congo and most corporations in the west can easily go bust without Congo. The question is if Congo is the blood line of the west and the west is rich because of Congo then why is Congo so poor?
And where are the billions of dollars from the sale of these minerals? The answer lies in the history of the nation which is endemic corruption, colonialism, armed conflicts and foreign involvements. Mobutu in his 32 year reign is believed to have taken several billions of dollars from the treasury and deposited it in his numerous Swiss bank accounts. When President Kabila requested the Swiss for the money to be returned he was told Mobutu had just $7.6m. President Kabila frustrated and disappointment with the Swiss announcement said he had expected the Swiss to announce something like $1 billion or more.
But unconfirmed report indicate that the Swiss decided not to give the billions of dollars to the Congo government for fear that it would be stolen again by Kabila and his regime who are also deadly corrupt. Mobutu have several villas and mansions in France and Switzerland bought with money stolen from the Congo people. In 2001, items auctioned in his luxurious home in Switzerland fetched $100,000. The billions of dollars taken away from the country have made Congo one of the poorest in Africa. In Congo today there are no schools, hospitals, roads, telecommunication, rail, electricity and potable water. The only means of transport is through River Congo.
Everyday in Walikale about 16 aircraft fly out of the city with loads of minerals bound for Rwanda. These stolen minerals further find their way in the western mineral markets in London and Switzerland. The proceeds are shared by the Generals, politicians, western companies the businessmen in Rwanda, the warlords in Congo who use part of their share to acquire weapons that are used to terrorise the people and prolong the war. Watch the video below about Congo.
Western governments are quick to preach good governance to Africa but they fail to preach the same message to their banks who act as save havens for these corrupt leaders. The western governments have forgotten that the existence of bank secrecy laws in Switzerland, Jersey Island, Britain, Liechtenstein, Luxemburg, Austria have encouraged these corrupt leaders to bank away monies meant for their countries' development.
The name of Switzerland, Britain, France, Jersey Island, Liechtenstein and Luxemburg came up several times throughout this study of corruption in Africa as I try to establish where most of the stolen monies go. Even though these countries like to portray themselves as civilised and cultured with hearts of angels, they have failed to recognise that keeping monies that were dishonestly obtained from the poor people on earth taint whatever reputation they might have. In the case of Switzerland and her allies who keep these stolen monies it is so pathetic that they know they are receiving stolen monies yet due to greed they have done nothing to stop it.
The next time you are looking for stolen money from your country ask the Swiss government and the Swiss banks they always have a clue about it where about.
Africa is poor today because of colluding and connivance of Swiss and other western banks and the kleptocrats who rule Africa. Corruption is rife on the continent because those who steal the money never lack a place to hide them.
Fighting corruption should not be left to the poor countries alone.
Western media who always portray Africa as underdeveloped and backward must expose the banks in their countries who serve as save havens. The media should put pressure on politicians in Europe and America to reform the banking secrecy laws and make it punishable offence to receive monies from these corrupt leaders. Again the western media must campaign vigorously for all looted monies to be returned to their rightful owners in Africa. The western media must team up with civil organisations to expose western companies who pay bribes to secure contracts in Africa like Acres International, Halliburton, Trafigura, Achair Partners and Progresso.
Western countries have a duty to stop their nations being used as save havens for stolen monies from the African continent. Western countries should reform their banking laws. They should return all looted money put there by corrupt African leaders to the African people. There must be an international coalition dedicated to tracking all stolen monies on the face of the earth with Africa given to priority.
Africans should establish well funded independent Corruption watchdogs to investigate, prosecute and severely punish corrupt officials who engage in corrupt practices. The Africans must demand transparency and accountability in government. Laws must be enacted in Africa to protect whistle blowers who take the risk to expose corrupt practices.
It is by uniting to fight corruption that Africa can ever dream of parting with poverty.
By Lord Aikins Adusei