A Catch 22 for African Development
31 Jul 2017
I was at an African energy conference in Cape Town recently which was well attended by African leaders, ministers, and other high ranking government officials from numerous countries including South Sudan, Equatorial Guinea, The Gambia, Nigeria and South Africa.
The discussions centred around energy projects and investment opportunities on the African continent. They examined the increasing energy and infrastructure demands of developing nations, commented on the strengths and weaknesses of local regulations, and elaborated on the risks & challenges of pouring money into unfamiliar territory.
The speakers comprised of government officials from the nations mentioned above, as well as high calibre experts from law firms, energy companies and other organisations. While the talks and debates were undoubtedly informative and interesting, there was one major void which I found most frustrating. A massive elephant sat in the room, and during my attendance (I did miss some of the talks), its presence was only acknowledged ever-so briefly.
Naturally, the politicians elaborated and promoted the immense opportunities in Africa with unwavering optimism. “Come do business in Africa!” they preached. “Our doors are transparent and wide open.” Time and time again they confirmed that Africa was ripe for investment; that the mechanisms for development were moving ahead at full steam; and that their governments stood ready to promote the catalysts for change.
And do doubt, a plethora of business opportunities on our rich and wonderful continent do exist, and a multitude of African corporations and multinationals are thriving. But their remains an endless and prevalent entanglement of red tape and an abyss of obfuscatory pockets which form a monumental barrier to entry for bona fide investors. A decades-old greed at the very top of the food chain had assembled a silent elephant at Cape Town’s ICC, out of the dollars and yuans and rands which continue to deny the common citizen of the fruits of investment in the under-developed world. An elephant which somehow eluded the lips of our respectable politicians and panelists.
As the leaders spoke about the ease and convenience of investing in their respective countries, our polished corporate experts scrutinised and debated the issues of supply and demand and legislation and badly drafted contracts and commodity prices and returns on investment and technical challenges and project finance and risk management… and every other commercial factor under the sun. Apparently, according to the experts, those are the principle challenges which shape the African economy, and those were the issues which received an undisputed focus. To my mind however, the greatest challenge facing the African economy is an issue far exceeding the sum of all the challenges and opportunities which were so hotly debated.
Where was all the talk about the chronic and pervasive corruption? Surely it was at the forefront of their mind as the greatest barrier to entry in the developing world, both from a moral and financial perspective?
As a minister from Equatorial Guinea addressed the audience and discussed the commercial attractiveness of one of the continent’s wealthiest oil producing countries per capita, I realised how little I knew about the tiny central African country. So, as any inquisitive millennial would do, I wikipedia’d it.
“The anti-corruption lobby Transparency International has put Equatorial Guinea in the top 12 of its list of most corrupt states. Freedom House, a pro-democracy and human rights NGO, described Obiang as one of the world’s “most kleptocratic living autocrats…”
Was it my ears or my eyes that were deceiving me? Who was a more credible source of information? I will let you, the reader, be the judge of that.
It is common knowledge that African corruption is feasting like it’s going out of fashion. Buffets, mansions, oil money… Without conducting any in-depth research for the purposes of this article, I feel pretty, pretty confident in assuming that when governments steal billions from their own people, they create the biggest hindrance to the development of Africa and its inhabitants. Incredibly, many of our glorious leaders maintain the unabashed audacity to beseech the IMF and the World Bank and other international NGOs for donations to promote and accelerate the development of their cash strapped countries. And unsurprisingly, often times when they succeed, millions more are lost to the elite sons and daughters of Africa (presumably also enriching some very happy UN officials along the way).
So where were the industry naysayers and panel experts who must have been wondering: “hold on a second Sir… what about the corruption? How much did the oil giants have to slip into your pockets to secure the gift of offshore oil blocs or LNG plants? What does an investor have to pay you personally for the honour of developing your people’s nation?” The government representatives and the trusted corporate analysts and industry specialists on stage failed to raise the dreaded C- word and examine the primary challenge facing Africa. And one can only assume that the omission of our wise and highly experienced experts was a product of self-interest – don’t offend your clients, and certainly not in public.
That said, it’s not entirely fair to blame self-serving corporations for sweeping debates about corruption under the table. After-all, entities that intend to profit in Africa, must play by African rules or be ousted. Oftentimes, companies are caught in a catch 22 which could seal their fate – if they refuse to bribe in order to secure the rights to explore and extract and develop, certainly someone else will. And if no one does, development in Africa could stagnate even further.
So who is really to blame?
Well, first and foremost, it’s the political elite who have forsaken their people. Power hungry dictators, officials and generals who have enriched their own egos and paid with the tears and the souls and the dignity of millions of hapless citizens – the same majorities who many moons ago danced in the streets as their beloved saviours rose to the throne with grandiose vows of salvation. But all too soon, the spoils of power overthrew their love for their nations, and their addiction to riches hijacked their veins like a drug.
Additionally, but not less guilty, the “First World” is to blame. Western countries, in one way or another, continue to purchase oil and gas and minerals from blatantly corrupt governments the world over, and their cash, reeking of overwhelming hypocrisy, trickles sparsely to a subjugated populace. They turn a blind eye to the dealings of their corporate powerhouses, and presumably, actively partake in trades which enrich and empower the world’s leaders. For the most obvious examples, look no further than the rulers of the OPEC nations who profit immeasurably from their dealings with the western world. They live lavish and extraordinary lives, while poverty and inequality in their kingdoms runs rampant. Or look at Russia’s Putin and other elite politicians whose iron fist has amassed a wealth beyond comprehension (or formal detection).
Thirdly, the courts and the judges are to blame for failing to implement the law with courage and foresight. They slap corruption on the wrist as if she were a school girl being disciplined for calling the teacher a fascist (back when corporal punishment was still allowed). Or even less so – our corruptors are “relieved of their duties.” Relieved to keep the stolen money, that is. Unfortunately, cowardly judges are commonly just an appendage of government and have no resolve of their own. Alternatively, they snap like twigs to the force of political influencers. They hide behind legal jargon, precedents and technicalities, thereby wasting opportunities to take out the trash and rise up as heroes (for doing their jobs). Inevitably, when courts and judges and prosecutors lack the determination to upbraid corruptors so that the punishment fits the crime, they advocate the putrefaction of our societies. For the corruptor, it’s a simple calculation of risk vs reward.
And lastly, I guess I’m also marginally to blame (along with the rest of the attendees), for failing to speak up and dismantle the elephant right there and then, when the real experts let us down. For that I have no real excuse.
Nevertheless, the conclusion is clear – you can have the best regulation in the world, growing demand, tax incentives, technological miracles, genius entrepreneurs – but as long as corruption burgeons like a fungus, and greedy political elites benefit personally from the resources and the needs which collectively belong to the individual inhabitants of the world’s nations, the common man will always come out second best. We cannot simply rely on the Western World to completely change its tune overnight (although their anti-corruption measure are slowly increasing), nor can we assume that corrupt officials will miraculously acknowledge the error in their ways after some startling epiphany. For now, the politics of greed are here to stay. It is up to the courts to strive for impartiality. They must clamp down fearlessly on corrupt leaders from both the developing and the developed world who continue to fuel a culture of nepotism, avarice and narcissism.
Finally, to quote Douglas Adams – It is a well-known fact that those people who must want to rule people are, ipso facto, those least suited to do it… anyone who is capable of getting themselves made President should on no account be allowed to do the job.(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)