Standard Chartered remains committed to expanding its presence in Africa to tap the vast potential of the continent's high-growth economies, the firm's executive director told CNBC.
"Seven of the 10 fastest growing countries in the world are in Africa. It has huge consumer potential. Last year, the African consumer spent over a trillion dollars, which is more than consumers spent in India," V Shankar, who is also CEO of Standard Chartered Europe, the Middle East, Africa and the Americas explained to CNBC's "Access: Middle East" on the sidelines of the World Economic Forum in Jordan.
Last year, the London-based bank made revenues of $1.6 billion from the continent, a figure it's looking to double in the next five years. "We are planning to add a hundred new branches, we said by 2015,and we've already added 27 last year".
Sub-Saharan markets are attracting interest from bankers around the globe, inspired by lackluster economic growth and saturation in many developed economies. Other heavyweights of the likes of JPMorgan and China's ICBC have been bolstering their presence. For Standard Chartered, new business is being discovered in both wholesale as well as consumer banking.
A recent report by the European Investment Bank (EIB) underscored the nascent state of the industry in Sub-Saharan Africa, describing banking systems as "still underdeveloped, with low and inefficient intermediation and limited competition".
Shankar is aware that political risks remain in many of the markets the bank operates in. But recent strides by the likes of Sierra Leone and Kenya are keeping him positive that Africa's time has arrived. Setbacks, as currently evident in Mali, were to be expected. "Now here's the good story about Africa. Governance is improving and the political stability is increasing".
Dubai a 'Remarkable Story of Turnaround'
StanChart had a front-row seat to the Dubai bubble that burst spectacularly in 2009 by being one of the lenders to the now infamous Dubai World. Economic indicators have recovered since, in part due to more tourist arrivals as the Arab Spring rages in neighboring countries
"Dubai has been a remarkable story of turnaround. It's benefited from the Arab Spring, and the three levers that drive Dubai's economy are in very robust shape: travel, tourism and transportation, and logistics and trade"
Shankar showed little concern about outstanding debts. The bank's own estimates identified $48 billion in debt maturities between 2014 and 2016.
"I'm optimistic for (the) following reason: a large chunk of that debt is actually owed to Abu Dhabi. One should hope that that will be renewed and refinanced, and there is also fantastic demand for Dubai debt in the bond markets"
Meanwhile, tightening sanctions on Iran, historically an important trade partner for Dubai, have hit trade and forced several banks to closely examine dealings with Iranian clients. In 2012, the US government accused StanChart of violating US sanctions on Iran by hiding some $250 billion in transactions. The suit was eventually settled with Standard Chartered paying out $667 million to the US government.
"Look, the reality of the situation is, we got it wrong, then unequivocally apologized, we learned a lesson. It is time to move forward. We as bankers must up our game, that is the reality."
The bank stopped business with Iran in 2007, and what remained would not last for long. "To the extent that we have anything left it is very minuscule and is remnants of business done pre-2007 and it will be phased out very shortly…as and when we get repaid".
Source: CNBC Africa
The European Investment Bank (EIB) and the Eastern and Southern African Trade and Development Bank, or the PTA Bank on Tuesday launched a 160 million-euro lending program to support investment across eastern and southern Africa.
Under the deal inked in Kenya's capital Nairobi, agribusiness, energy, manufacturing and service sector industries will access a seven-year loan in local currency, or a 15-year loan in US dollars or euros from PTA Bank.
EIB Vice-President Pim Van Ballekom said the new program reflects a shared commitment to support private sector in Africa. "The new lending program is the largest ever engagement to support business investment in Africa by the EIB. This will help firms in 12 countries to create new jobs and explore new business opportunities in key sectors," Ballekom said, adding that it will support investment by larger companies for the first time.
The program is being managed in the region by the PTA Bank.
"We are delighted to join forces with the EIB to give a much needed boost to increased investment in the real economies of eastern and southern Africa, which is key to job creation and economic transformation. The program is a strong addition to other lending programs we have launched with other funding partners," said PTA President Admassu Tadesse.
EIB is the world's largest multilateral finance institution. Last year, it provided 1.1 billion euros for investment in sub- Saharan Africa.
East Africa’s first utility-scale solar energy project is now online at the Agahozo-Shalom Youth Village in Rwanda.
The completion of Gigawatt Global’s 8.5 gigawatt (GW) solar project has boosted the country’s total grid capacity by 6 percent and represents the first completed project under the Africa Clean Energy Finance Initiative.
The $23.7 million solar energy project was officially brought online at a ceremony on February 5th attended by Rwanda’s Minister of Infrastructure, Hon. James Musoni, and the Chief of Staff of the US Government’s Overseas Private Investment Corporation, John Morton, amongst others.
“Top quality developers like Gigawatt Global are the keys to success for President Obama’s Power Africa Initiative,” stated Elizabeth Littlefield, President and CEO of OPIC. “After OPIC provided critical early-stage support through the ACEF program, Gigawatt smoothly and swiftly brought the project online to give Rwanda enough grid-connected power to supply 15,000 homes. Gigawatt Global in Rwanda is a clear demonstration that solar will be a key part of Africa’s energy solution.”
Source: Clean Technica
Investors in industrial commodities may need to batten down the hatches in the year ahead, while precious metals could show improved signs of growth over the next three years, says the Head of International Mining & Metals at Standard Bank, Rajat Kohli.
“It is going to be challenging for industrial commodities, as it is not an easy environment. Patience will be needed,” he says.
While copper recently recovered from five-and-a-half year lows after a vicious sell-off, prices remain well below $6,000 a tonne and still remain under pressure.
Although there is sustained evidence supply is coming under control as companies cut production levels to manage supply better, Mr Kohli does not foresee a short-term recovery. “It depends on how deep we are into the price curve relative to what producers are producing. There will be more pain,” says Mr Kohli, who is based in London.
While precious metals are in for a “pretty challenging year”, Standard Bank prefers them over base and bulk metals. “I sense there will be greater relative price strength over the next three years,” says Mr Kohli.
According to the World Bank’s latest commodity research, the precious metals price index declined 8.4% in the fourth quarter of 2014 and fell to a four-year low in November, with platinum, gold and silver down 7, 10, and 20 percent for the year, respectively.
After finding some price support in the first half of 2014 due to receding geopolitical risks, fundamental weakness of the markets contributed to the declines in the second half of the year as physical demand for precious metals by traditional buyers, notably China and India, is off compared to the previous year, when a large drop in prices induced buying, says the World Bank.
Factors that could prove critical to prices and prospects for mining companies will be Chinese demand, oil prices, the impact of currency price movements, US interest rates, and quantitative easing in Europe.
While costs for some miners and producers will decline due to lower oil and gas prices, this does not necessarily translate into improved bottom lines. “It also puts downward pressure on commodity prices,” says Mr Kohli.
Oil prices went into freefall from June last year to lose 55% in value amid a plunge to their lowest levels in five years. According to the World Bank, this was the third-largest seven-month decline of the past three decades for oil, only the 67% drop from November 1985 to March 1986 and the 75% drop from July to December 2008 were larger.
But just as important as the future of oil prices, is the outlook for China’s economy. According to the World Bank, strong and sustained economic growth in emerging economies, notably China, has been the most frequently discussed driver of commodity prices, not only as a cyclical factor but also as a key cause of the post-2000 super cycle. This cycle is a primarily demand-driven price cycle that lasts several decades instead of the few years typically associated with the cyclicality of economic activity.
By 2012, China consumed almost half of the 91 million tons of metals produced globally, up from only 4% of global supplies of 43 million tons in 1990. In contrast, OECD economies consumed as much metals in 2012 as they did in 1990.
Mr Kohli says any slowdown in China and global growth levels is negative for the commodity sector. “We have seen a significant correction in prices and it is a concern if there is a further slowdown in growth,” he says.
Mr Kohli points to concerning new statistics around growth for both China and the world economy.
China’s GDP growth print was 7.3% during the last quarter of 2014, while growth momentum slowed in the quarter. The IMF, meanwhile, cut its global growth forecast to 3.5% for 2015. It also cut South Africa’s growth forecast to 2.1%. “Nonetheless, it should be noted that slower growth is off a larger GDP platform.”
Mr Kohli says a strong dollar translates into weaker local currencies. This provides relief for producers whose inputs are largely priced in their home currency, but also places pressure on commodity prices because they are priced in dollars.
Looking ahead, aside from price volatility arising from geopolitical events, there is a focus on US interest rate strategy and the success (or otherwise) of the European Central Bank’s quantitative easing programme for the Eurozone. “These events, together with the impact on currencies, need to be balanced against each other,” he says.
Source: Standard Bank
While most regions in Africa are recording significant uptake of mobile money, the West African region is lagging behind, according to a new report.
East Africa in particular has recorded a significant growth of mobile money services, largely because of the expanding usage in Tanzania and Kenya, while West Africa is not experiencing any growth at all, according to “Mobile Money in the Ebola Crisis,” by Mondato, a mobile financial services industry research and advisory company.
In the West African countries of Sierra Leone, Guinea and Liberia less than three out of every five people have mobile phones. This situation is limiting the utilization of mobile money services in these countries, the report said. People who do have mobile phones seem to use mobile money. In Sierra Leone, the report said, more than 16, 000 Ebola response workers received their payment via mobile money.
Meanwhile, Nigeria, Africa’s largest telecom market, has a huge addressable population and a large number of mobile phone deployments, but has low levels of adoption and usage, the report said.
“Ghana is the regional star pupil but up to now the ecosystem was confounded by a quixotic regulatory environment,” the report said.
Outside West Africa, governments in other regions of the continent have crafted favorable regulatory policies that have promoted usage of mobile money services. This has resulted in stiff competition between banks and mobile phone companies. The competition also, however, has resulted in partnerships between banks and mobile phone operators as they try to attract the so-called unbanked population.
Orange Telecom and pan-African banking group Ecobank, for example, last week announced a partnership to roll out a service that will enable Orange money subscribers who also have bank accounts with Ecobank to transfer money between their accounts using mobile phones.
The service has been launched in Mali and will be rolled out in several other African countries including Cameron, Nigeria, Senegal and the Democratic Republic of Congo (DRC).
Source: PC World
Across the world, football teams have become increasingly lucrative entities given the passionate support fans across the world have for the sport. As such, associations with these entities have become an avenue for brands to connect as well as deepen relationships with supporting fans across the world.
The model for striking partnerships with football teams has become well practiced across the world as sponsorship now account for around 30% of global sports revenue which is expected to hit $145 billion this year. Supporting the model of striking partnerships with football teams, Director of the Centre for Sports Business at Salford University, Professor Chris Brady has alluded to the size of the sport globally as validation for the investment by brands saying ‘the brand awareness of football is like no other.”
In Africa, brands are increasingly exploring opportunities to strike partnerships with football teams but given the lack of development in a majority of the local leagues, national football teams are ultimately a more attractive proposition from a simple strategic point of view: Africans are passionate about their national teams but less so about various local clubs as a majority of the fans on the continent lend to support to Europe’s leading clubs.
Given this factor, sports kit companies are more interested in reaching sponsorship deals with national teams who ultimately provide these brands with a bigger base of supporters which they can leverage via sales of replica shirts and general gear.
In this regard, it appears that German sports kit manufacturer PUMA are leading the race to be leading sports kit company on the continent as they have steadily grown over the years in terms of operation and popularity.
Perhaps the biggest indication of PUMA’s careful selection strategy was on evidence at Estadio de Bata, venue of the 2015 African Cup of Nations as the two teams on display, Ghana and Ivory Coast, were both kitted by PUMA. Similarly, PUMA were kit sponsors of four of the five teams at the FIFA World Cup with the Super Eagles of Nigeria being the exception as they were, at the time, contractually bound to Adidas.
PUMA’s operations in Africa could see them becoming the most dominant sports kit company over the next decade as the market in Africa continues to open up. The company are also beginning to explore personal endorsement deals for individuals having signed up household names in South Africa such as Oupa Manyisa, Lehlohonolo Majoro, and Willie le Roux since the turn of the year in addition to deals with continental stars like Yaya Toure.
The company is also a supply partner of the Kenyan Premier League and looks set to continue to widen operations on the continent. Given Ivory Coast’s recent triumph as champions of the African Cup of Nations, the sports kit company will fancy their chances of leveraging the newly found success in retail sales of branded items as this constitutes the biggest revenue stream from football team kit sponsors. The company also has significant initiatives as it actively works with stars like Yaya Toure to distribute kits to young promising footballers as well as encouraging talent development on many levels.
Even though the possibility of recording millions of revenue in replica sales is less plausible, in addition PUMA could explore the cross-over appeal of African stars in other regions. A prime example could be Yaya Toure who remains a well-respected footballer in Europe and Asamoah Gyan who is revered in Qatar.
While, last year, Adidas was overtaken by Nike for the first time as market leader since 2010 and PUMA trails the big two globally- in Europe’s top five leagues, Nike supplies shirts for 26 clubs, Adidas supplies 18 clubs while PUMA supplies just nine-, Africa may well turn out to be the German company’s stronghold as they anticipate an economic boom which could inadvertently result in the ability of more Africans to spend more on their passion; football. Should this time come, PUMA will reap the most rewards as while others focused on other regions, PUMA have steadily built a strong base here and whatever success they enjoy in the near future cannot be begrudged.
Source: Ventures Africa
The rout in commodity prices to the lowest in 12 years will spur deeper spending cuts by the world’s biggest mining companies in Africa, hurting a region more reliant on mineral exports than any other on the planet.
Miners will scale back spending by $20 billion this year, according to Macquarie Group Ltd., as they cut growth plans amid waning demand for raw materials. With projects planned during the decade-long commodities boom now being shelved, Africa is likely to bear the brunt of the cuts, investors say.
“People are cutting back on Africa more than say Australia because Africa tends to be high on the cost curve,” said Andrew Lapping, who helps manage $39 billion at Allan Gray Ltd. in Cape Town. “Suddenly they’re having to cut capital and decide which are their best projects. There are less of those in Africa than in other regions.”
Unrest in the Democratic Republic of Congo as well as uncertainty over mining taxes in Zambia — the two largest copper producers on the continent — has added to investor unease in recent weeks. The pullback presents a challenge to nations such as Botswana and Guinea which, according to the International Council of Mining & Metals, derive more than 60 percent of their exports from minerals.
Prices of minerals and metals dropped to the lowest since August 2002 on Jan. 29, according to the Bloomberg Commodity Index. Companies are contending with the slump in the wake of an era of debt-fueled expansion that’s left some balance sheets stretched. Macquarie estimates total spending this year of $79 billion is 39 percent down on the industry’s peak outlay of $130 billion in 2012, it said in January.
As a result, the world’s biggest mining companies are moving away from the continent that hedge fund Harbinger Capital Partners LLC called “the last untapped resource frontier left on earth” in 2010, before the prices of iron ore and gold peaked a year later.
BHP Billiton Ltd., the world’s biggest mining company, is moving to spin off its Africa-focused assets into a new company called South32, while Rio Tinto Group, the second-largest, exited its Mozambican coal business last year after writing it down by $3 billion.
Glencore Plc’s South African coal unit will cut annual output by half amid a “continued deterioration in the export coal price,” it said last month. Anglo American Plc is looking to sell platinum mines in South Africa and its iron-ore unit is planning to reduce capital expenditure 20 percent.
“Traditional mining areas, even places like Australia and Canada, will all be hit but particularly in Africa where you’ve got big projects being built,” said Clive Burstow, who helps manage $44 billion at Baring Asset Management in London. “Companies have become very Darwinian in how they look at capex. Projects have to make a return.”
West Africa-based producers of iron ore, which has declined 54 percent to $61.64 a metric ton since the beginning of 2014, have been particularly hard hit.
London Mining Plc was planning a $400 million expansion of its Marampa operation in Sierra Leone in July but by October it had called in administrators. African Minerals Ltd., which also produces the steelmaking ingredient in the country, shut its mine in December.
In Zambia, First Quantum Minerals Ltd. and Glencore are among companies that have suspended projects valued at more than $1.5 billion in Zambia because of a tax dispute, while Barrick Gold Corp., the biggest producer of the metal, has started the process to put its Lumwana mine under care and maintenance.
Vedanta Resources Plc, founded by Indian billionaire Anil Agarwal, is reviewing its Zambian copper unit amid a 23 percent slump in the price of the metal to $5,663 a ton since the start of 2013 and higher taxes introduced last month.
“We are facing a very, very difficult situation,” Chief Executive Officer Tom Albanese in a panel discussion in Cape Town Monday. “We will have to make some very difficult decisions even with the support of the government.” A situation where the government is chasing capital and chasing investment away it makes our job even harder,’’ he said.
Minerals from Zambia, Africa’s largest copper producer after Congo, comprised 69 percent of the country’s total exports in 2012, according to ICMM.
“At a time when commodity prices are falling, Zambia goes and tries to increase its tax take,” said John Moorhead, a London-based fund manager at Pictet & Cie., which has $472 billion of assets. “Companies need property rights and a clear and fixed tax regime to make long-life investments.”
While the 19 percent decline in 2014 in capital spending in Africa was in line with the rest of the world, the cuts will have more impact in the continent due to its reliance on resources, according to PricewaterhouseCoopers LLP.
Of the 20 countries most reliant on mineral exports, 10 are in Africa, the ICMM said.
The Nedbank Africa Mining Index, which consists of 20 companies including Johannesburg-based Impala Platinum Holdings Ltd. and AngloGold Ashanti Ltd., touched a six-year low in December, indicating investors’ negative outlook for the continent’s prospects.
“Africa has such potential and resources to be developed,” Pictet’s Moorhead said. “But to realize that, you need to spend a lot of cash and that’s a story, in general, investors don’t want to hear right now.”
Source: Bloomberg News
The bunches of bananas that Teo Kataratambi and her husband, Silver, grow on their land fetch the equivalent of only £1.40 each. The larger bunches that they used to grow sold for double that amount.
A few years ago, though, the Kataratambis noticed a drop in the size and quality of the fruit they produce on their small third-generation farm in Nyamiyada village, south-west Uganda.
“In the first years, the soil was good but then it changed,” says Silver. Teo adds: “We don’t make much money. We can’t break even.”
The change was caused by years of farming without using sufficient fertilisers to replenish the soil’s nutrients. The result, as the Kataratambis now see, is poor crop yields. In contrast with their counterparts in the global north and Asia, many farmers in sub-Saharan Africa rely on manure rather than chemical fertilisers. But the organic alternative cannot meet the demand.
Fallen leaves help fertilise the soil on a banana plantation in south-west Uganda
In Europe, organic farming makes up only 5.4% of all agricultural land, according to Eurostat. Food and Agriculture Organisation data shows that, globally, less than 1% of agricultural land is farmed using organic methods.
Organic fertiliser can help freshen up Africa’s ailing, rusty-red soils, but there is not enough land available to produce manure in sufficient quantities, says Professor Ken Giller, a soil scientist at Wageningen University in the Netherlands. One cow can produce about 15kg of nitrogen in manure annually. But a healthy maize crop needs up to 100kg of nitrogen a hectare, Giller says.
Manure doesn’t contain all the nutrients that plants need to grow, adds Giller, leader of the N2Africa programme, which encourages African farmers to grow legumes to help fertilise their soil. Harvests have stagnated on the continent since the 1960s, according to data from the World Bank. On average, farmers in Africa harvest about one ton of maize (corn) a hectare, whereas their American counterparts reap up to 12 tons.
“Sub-Saharan Africa has by far the lowest rate of improved seed and fertiliser use of any region … [leading to] increased hunger and food insecurity,” says Sarwat Hussain, a World Bank spokesperson. Ugandan farmers are among those that use fertiliser the least.
The changing climate and booming populations will add further demands on Africa’s overworked soils. At the UN climate change conference in Lima, Peru, in December, politicians and scientists will discuss the impact on agriculture and the role of fertiliser.
African farmers are sometimes put off chemical fertiliser because of cost. The Kataratambis say they can’t afford to buy chemical fertilisers – consistently.
Simon Weteka is a fertiliser dealer in Kapchorwa, east Uganda.
A bag of fertiliser could cost Ugandan farmers the equivalent of £40 – double the sum paid by their American or European counterparts. Much of the extra expense comes from import and transport fees, since chemical fertiliser is often manufactured abroad. Some economists claim international fertiliser companies are manipulating the market by charging certain African nations more than richer countries.
Martin Byamukama, sales manager of a fertiliser dealership, sits in a quiet alcove off the main drag of Kampala’s bustling Container Village – the country’s main trading area for agricultural products. Byamukama and his colleagues travel by road to Kenya to buy fertiliser (Uganda is land-locked). This travel ramps up the cost. Byamukama calculates that it costs him about £4.60 in fuel, import and loading fees to transport a 50kg bag of phosphate fertiliser from Mombassa in Kenya back to Kampala. Byamukama’s customers – farmers and smaller fertiliser dealers, many of whom work in villages around 200km away – can add another £14 to the bill.
About 1,800 meters up Mount Elgon in eastern Uganda, Betty Liaibich’s one acre plot of rocky land feeds her 10 children and pays for their school fees. Her success is down to her tenacity and the chemical fertiliser she uses each season on her maize, beans and cabbages.
Roughly 20 years ago, Uganda’s publicly funded National Agricultural Research Organisation showed Liaibich and her neigbours how fertiliser works. They have been using it ever since.
“Once you have introduced fertiliser, you won’t go back,” says Liaibich.
Fertiliser is slightly cheaper here. The area is close to Kenya, and local dealers cross the border to Kitale to import the fertiliser themselves, rather than buying from Ugandan middle men. But still, Liaibich and her neighbours cannot afford to buy the recommended amounts to get the best out of their crops.
Subsidising the cost of fertiliser could encourage farmers to use more. National subsidy schemes in Malawi and Rwanda are showing some success. But they are controversial; the World Bank warns that subsidies often benefit the wealthiest farmers rather the poorest, and that they can stifle the private sector and economic development.
Organisations such as the FAO are pushing for greener solutions, including encouraging farmers to grow trees and legumes to fertilise the soil. But most experts agree Africa’s green revolution can’t blossom (pdf) without chemical fertiliser.
“Using legumes is a great way to help fertilise the soil, but we recognise that, on its own, it is not enough,” says Giller. “The bottom line is there is not enough in the system to keep it going organically.” The process of revitalising African farming must be based on both conventional and alternative approaches, agrees Dr Bashir Jama, who runs a programme on soil health for the Alliance for the Green Revolution in Africa (Agra), an NGO working to improve food security.
There is more to improving soil health than chemical fertilisers, says Jama, but they are essential to increasing production and meeting the goal to end hunger in Africa by 2025, which was agreed by African leaders in June.
Without fertilisers, Jama warns, farmers will increasingly struggle to feed their families as the drain of nutrients from African soils becomes a major threat to food security on the continent over the next 20 years.
“It is a misconception to say Africa can grow crops using just organics. The rest of the world is fed using fertiliser,” says Jama. Chemical fertiliser can help kickstart Africa’s farms and, as crop yields rise over time, farmers can use the extra crop residues as organic manure, and so reduce their dependence on chemical fertiliser, suggests Jama.
Organic approaches are more sustainable in the long run, he says, but chemical fertiliser use is unlikely to grow in Africa to the levels seen in the West and Asia that cause environmental problems, he says. Without fertilisers, Jama warns, some vulnerable countries, including Niger, will struggle to feed their growing populations in as little as three years.
• The reporting trip to Uganda was facilitated by an innovation in development reporting grant from the European Journalism Centre
Source: The Guadian UK
Africa is losing more than $50bn (£33bn) every year in illicit financial outflows as governments and multinational companies engage in fraudulent schemes aimed at avoiding tax payments to some of the world’s poorest countries, impeding development projects and denying poor people access to crucial services.
Illegal transfers from African countries have tripled since 2001, when $20bn was siphoned off, according to a report released by the African Union’s (AU) high-level panel on illicit financial flows and the UN economic commission for Africa (Uneca).
The report was praised by civil society groups as the first African initiative to address illicit outflows from the continent.
In total, the continent lost about $850bn between 1970 and 2008, the report said. An estimated $217.7bn was illegally transferred out of Nigeria over that period, while Egypt lost $105.2bn and South Africa more than $81.8bn.
Trade mispricing, payments between parent companies and their subsidiaries, and profit-shifting mechanisms designed to hide revenues are all common practices by companies hoping to maximise profits, the study said.
Nigeria’s crude oil exports, mineral production in the Democratic Republic of the Congo and South Africa, and timber sales from Liberia and Mozambique are all sectors where trade mispricing occurs.
Former South African president Thabo Mbeki, who chairs the panel, said: “The information available to us has convinced our panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organised crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.”
Criminal networks engaged in drugs and human trafficking, animal poaching, and theft of oil and minerals also contributed to money leaving the continent.
Reducing these losses requires urgent and coordinated action, the report said, calling for renewed political interest in fighting corruption, increased transparency in extractive sector transactions and a crackdown on banks that aid fraudulent transfers.
African and non-African governments and the private sector – including oil, mining, banking, legal and accountancy firms – were all involved in schemes designed to launder money and avoid paying corporate tax, according to the study. More than $1tn was siphoned off globally through illegal schemes between 2007 and 2009, the report said, noting that lost African revenues comprised 6% of that total. But the authors cautioned that poor data and complicated laundering networks could make the amount much higher.
“Illicit financial flows from Africa range from at least $30bn to $60bn a year,” the report said. “These lower-end figures indicated to us that in reality Africa is a net creditor to the world rather than a net debtor, as is often assumed.”
But efforts to stop funds reaching terrorist groups, such as Nigeria’s Boko Haram and Somalia’s al-Shabaab, have led to improved anti-money laundering institutions in many African countries, the report said. This includes passing legislation designed to stop illicit flows, creating financial intelligence units and monitoring banking activities.
The report called for the UN to crack down on European and US firms that engage in tax avoidance and money laundering. Joseph Stead, senior economic justice adviser at Christian Aid, said: “This is the first time that African countries have spoken out so strongly and in unison about how these financial crimes are hurting their people. That is a big deal.
“From now on, it will be much harder for the Organisation for Economic Co-operation and Development and other rich country groupings to argue that tax dodging, corruption, money laundering and so on are not a top priority for African governments.”
Governments that “turn a blind eye” to illicit outflows are forcing their poorest citizens to forgo hospitals, schools and environmental protection, said Sipho Mthathi, Oxfam’s executive director for South Africa. “Oxfam estimates that Africa alone is losing almost half of the global $100bn of annual illicit financial flows,” she said.
The bulk of Africa’s illicit transfers originated from west Africa, where 38% of all funds leaving the continent were generated. Profit-making activities in north Africa accounted for 28% of the flows, while southern Africa, central Africa and eastern Africa each made up about 10%, the report showed.
Global Financial Integrity president Raymond Baker said the report represented a historic moment in the effort to fight Africa’s “most pernicious economic problem”. “This is a turning point in the movement to curtail illicit financial flows and promote financial transparency, both within Africa and globally,” he said.
The high level panel was founded by the AU and Uneca in 2012.
Source: The Guardian UK
India, with approval from the International Seabed Authority (ISA), will launch exploration of mineral deposits such as polymetallic sulphides off the coast of Mauritius.
The explorations were likely to be launched within a year after the government of India signed a 15-year contract with the ISA, said the Director of the National Centre for Antarctic and Ocean Research S. Rajan here on Sunday. He was addressing a session of the World Ocean Science Congress 2015, said a press release from the organisers of the Ocean Science Congress.
The Ocean Science Congress, jointly organised by Swadeshi Science Movement and the Kerala University of Fisheries and Ocean Studies (Kufos), ended here on Sunday. Exploration for seabed minerals would be launched in the 10,000-sq.km. mid-ocean ridge off Mauritius, said Mr. Rajan.
The press release said that India, through the Ministry of Earth Sciences, had submitted an application for Deep Sea Mining Licence with the International Seabed Authority in April 2013. Approval for the plan of work came through in July 2014. The project would be implemented in three phases from the date of agreement, the press release added.
It said the proposed exploration was expected to lead to “vast deposits of lead, zinc and copper ranging from several thousands to about 100 million tonnes”.
Mr. Rajan also told the session in Kochi on Sunday that India had made a submission before the United Nations Commission on the Limits of the Continental Shelf with a view to extending India’s Continental Shelf Limit to 350 nautical miles from the 200 nautical miles now. “This will allow the country to widen its area of exploration of large scale mineral deposits”.
The press release also cited the Director of National Institute of Ocean Technology M.A. Atmanand as saying that the Institute had taken up several projects such as beach restoration, weather forecast and tsunami warning.
Source: The Hindu