ONEAfrica report: Corruption costs $1trn, root cause of African poverty
Irish superstar musician Bono, the front man for rock group U2, is a regular attendee at the WEF's annual meeting in Davos. He wears his passion for Africa on his leather jacket sleeves. It hasn't been an idle cause. Bono was in the forefront of the successful campaign to bring debt forgiveness for Third World nations and has switched his focus to working on alleviating poverty. But rather than just mouthing it (like some politicians we know) he's making practical progress. Including the release of today's research into Third World corruption by ONEAfrica, the organization he co-founded. Zambian Nachilala Nkombo came across to the CNBC Africa Power Lunch studios to talk about the results. And urged the rest of us to join the dots. – AH
ALEC HOGG: Welcome back to Power Lunch. Well, it doesn't get any better, does it. According to new research by the ONE Campaign, $1tr per year is being siphoned out of developing countries and much of it from Africa, through corrupt activity involving shady deals for natural resources, the use of phantom firms, money laundering, and illegal tax evasion. For the first time, right here on CNBC Africa, Nachilala Nkombo who's Deputy Director of ONE Africa is with us to release this research report. Before we go into what you found, your focus at ONE Africa is actually on eradicating poverty.
NACHILALA NKOMBO: Yes, we were founded ten years ago. We have a particular mandate and focus on looking and promoting policies and programs that end extreme poverty in Africa and the rest of the developing world.
ALEC HOGG: Many people are going to say 'what does poverty have to do with corruption and people siphoning money away from developing countries'.
NACHILALA NKOMBO: Well, to deal with development and to address the issues of poverty, you need public resources to be made available. Losing massive amounts of resources through shady deals and corruption, the money that's available for healthcare and education is actually taken away through criminal activity.
ALEC HOGG: Nachilala, in my world (in the work I do), we are exposed to shady deals all the time. I think a fraction of them finally make it into the public domain because we have to be sure we're not going to be sued and put out of business. However, you get a rather jaundiced approach when you're sitting where I am, because of the flow of information. But the thing that continually bothers me and confuses me is why the public doesn't stand up and say 'no more. We have a Public Protector who said our President in this country stole $20m from the Public Purse. Yet, he is still the President'. Why is it that we as Africans are so tolerant?
NACHILALA NKOMBO: Well, it's probably part of a legacy of oppression for many years. Maybe we trust the Government too much and we have not really had the access to information in some cases, such as the shady deals in extractive industries. A real shame and pity is that Africa's the richest continent in terms of minerals and gas and yet, we are the poorest continent. Part of the problem is that public information on Government arrangements/Government expenditures is not publicly available. Yes, you'd find that here from your studio at CNBC, you have access to information about the monies that were spent by the President of this country, but someone in a corner of Limpopo may not have that information, so we need everyone to be on board.
ALEC HOGG: I used that example because it isn't just here at CNBC. It's the Public Protector. It's all over. It's transparent, but it's almost as though it doesn't matter because the powerful are so powerful that they don't listen. They don't need to listen.
NACHILALA NKOMBO: Well, the people are more powerful if they organise and mobilise. We know the story about what happened to North Africa. That story isn't isolated, but North Africans were able to challenge their Governments when they united and called on their leaders to step down and at least, take some of the actions expected of them in terms of what they perceived as better governance. I think that could come to the rest of sub-Saharan Africa. That could come to South Africa with better organisation.
ALEC HOGG: It's all about communication, isn't it? You said it a bit earlier. That guy sitting in a corner in Limpopo doesn't really care because maybe he doesn't connect the dots between what you've discovered and how it affects him.
NACHILALA NKOMBO: Exactly. Because you don't connect the dots between what you've discovered, and the fact that there's no nurse and there's no teacher in a school. Really, the discussion this morning is about exposing that and saying that Africa actually generates enough revenues, but because of shady deals we don't get to know how much money is actually owed to us, as citizens.
ALEC HOGG: So as an active citizen, what should we be doing?
NACHILALA NKOMBO: Well, as active citizens (1) we need the Government to make information more available. We need to be talking to each other more. We need to connect better. We need to address each and every problem that comes up, that point to the fact that there's corruption and there's this lack of transparency, even though corruption may not be spotted directly in a particular case. We need to be more proactive and demand that principles of transparency at all levels of Government, from the local to provincial to national level are adhered. In addition, we need to celebrate those leaders (or those Governments or sub-government) that are doing the right thing, because only those Governments that are following the principles of transparency and accountability as citizens, will set the standard.
ALEC HOGG: Who's doing it right on the continent?
NACHILALA NKOMBO: Well, we know for example, that Botswana has done relatively well in terms of managing the revenues from its natural resources. It's now, actually moving to a stage of trying to beneficiate its diamonds. They're looking at exploring ways in which value could be added to its diamonds. South Africa produces a range of minerals, but I think the discussion on beneficiation has also been stuck.
ALEC HOGG: What does it have to do with corruption? Beneficiation is an economic policy. I'm asking about natural resources in certain parts of the continent that have just been siphoned off, which is your point – a 'Sani Abacha' type of syndrome that you have in Nigeria.
NACHILALA NKOMBO: In Nigeria, we know about Sani Abacha – that $400bn have been lost through thieves in that particular country – but that money could go a long way in terms of constructing roads, training teachers, and providing drugs.
ALEC HOGG: Who's doing it well? Whom can we look to on the continent? Your own country (Zambia): are you doing a good job? Is it getting better?
NACHILALA NKOMBO: We probably are getting better, but we're not there. Again, I'll come back to Botswana because as small a country as Botswana is, it's able to provide resources to fund its social programs. Mining activity is happening in one part of the country but the other parts of the country that are deprived do have social services. Another country is Rwanda. It seems as though, on the African continent, the smaller countries seem to be getting it right and seem to be doing it better in terms of really allocating the public resources to go into services that people need.
ALEC HOGG: It's a wonderful point you made there. Nachilala Nkombo is with ONE Africa. If you're smaller, you can manage things easier. Yet, you have big countries that try to centralise everything. My goodness, there's a good message there, and another message is to confirm it. We're going to be talking about this a little bit later. Rwanda has moved up four positions on the World Competitiveness report. Mauritius is the top African country. That was up by six positions, to 39th. South Africa: down three, to 56. Rwanda is at 62, so it's catching South Africa very rapidly. Fascinating insights and it is much more of an impact on not just active citizens, but all citizens than we would ever anticipate – the reality of corruption. That was Nachilala Nkombo, who's Deputy Director of ONE Africa.