Friday, September 18, 2009

Capital flight out of Africa

Following this astonishing research on the $600-odd billion drained out of Africa as capital flight, we have more data now flowing from the Task Force conference. Richard Murphy (who is attending) notes this:

"Capital flight out of South Africa could be 20% of GDP. . . . This data from economists at the University of Witswaterand, Johannesburg."

It is, as he notes, staggering. And he adds, in another blog:

"Paul Collier of Oxford is speaking at the Task Force – he chairs its economists panel. One third of Africa’s wealth is outside Africa he says. If returned that would increase its capital by 50%.
. . .
Now he’s talking plunder of natural assets: I have had to suffer economists arguing this week that there is no price abuse out of Africa. Paul does not agree at all.
. . .
That failure he says has halved real wealth in Africa in 30 he says. That’s because wealth was stolen from the many by the few and by the few from the future. And it has been taken out of Africa. We need he says a legal counter part of this concept of economic plunder. Then we can create culpability.
. . .
Aid he says is not enough – we need to use codes and laws and instruments to deliver benefit. I call one of those country-by-country reporting. His example is from the FATF – and he says Nigeria was forced by the FATF to tackle corruption – and the pressure was massively effective. Unfortunately of course the head of that process in Nigeria is now in exile.
. . .
He’s right. We can resolve this."

Richard Murphy is quite right with these conclusions (although Collier is quite wrong when he describes the FATF forcing Nigeria into tackling corruption - as forthcoming research from Chatham House in November will show, it was complex internal Nigerian processes that led to this temporary burst of anti-corruption zeal - so Nigeria's president Obasanjo was certainly "massively effective" in creating the zeal, his motives were less clear, and the actual effect on corruption has, sadly, been far less impressive.)

And his conclusion is very fine.

"Accountants have a major role to play in this." I’ve said before the International Accounting Standards Board could do more good for Africa than Bono and Geldof ever have. So why do they refuse to do so?"


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