The Herald Business on Friday carried an article on a report presented at the World Economic Forum (WEF) at its meeting in the Nigerian capital, Abuja, last week.The report made common but always shocking figures on what it called “illicit outflows of financial resources” from Africa. It stated that these illicit outflows from the African continent now amount to US$50 billion annually. It estimated that between 1980 and 2009 these illicit outflows, carried out by multi-national corporations, had cost the continent between $1,2 and $1,3 trillion.
Former South African president Thabo Mbeki led the panel which produced the report. It stated that “transfer mispricing” was used by multinationals operating in Africa “to stash away huge profit” in tax havens to avoid being taxed by “host governments” (African governments).
On a separate page in the same edition of Business Herald was an article defiantly titled: “Journalists, analysts not zombies”. I almost said yes, they are, sometimes or oftentimes.
The Zimbabwe Independent the same day had an article titled: “Repeal hostile policies, Zim told”. It cited lack of property rights, policy inconsistency and indigenisation and economic empowerment as such hostile policies militating against efforts to attract foreign investment. Another, one of many such headlines, said: “Policy consistency, clarity key to foreign investment”.
Many foreign ambassadors, from India, Brazil to the US and local leaders of industry, were quoted lamenting Zimbabwe’s policy failures.
In separate conversations Finance Minister Patrick Chinamasa and deputy Foreign Affairs Minister Christopher Mutsvangwa were also quoted stating that Zimbabwe was ready to engage the international community and to do business. (It’s as if Government ever proclaimed a policy to say the country was closed for business.)
Back to the Abuja report, it pointed out that commercial tax evasion was not only the cause of Africa’s resource poverty but one of the major “causes of the bleeding points of critical development resources from Africa”.
Abdullah Haddock, deputy executive secretary of the United Nations Economic Commission for Africa, a member of the team which compiled the report, said these tax scams by multinational firms impacted “negatively on the fiscals and revenue of the government”, adding: “And that has an impact on spending on health, education, infrastructural development of the continent … and employment.”
Back home, Confederation of Zimbabwe Industries president Charles Msipa blamed Zimbabwe’s lack of competitiveness in attracting FDI on poor access to finance, political instability, poor infrastructure, corruption, restrictive labour legislation and Government bureaucracy, according to the Zimbabwe Independent.
I was left with a big question: how much foreign investment do we need as a country and as a continent? To what extent is such investment efficacious in meeting the development needs of the country? To what extent do our people benefit from the resources exploited and exported in pursuit of this foreign investment?
No doubt I was left without any answers from our journalists and analysts. Well, because they are the ones complaining about our investment environment far more than prospective investors. It is no coincidence that there is always a rhyme and reason between what foreign ambassadors here say and the issues complained of by the opposition, civic society organisations, captains of industry and our own journalists. The foreign ambassadors largely echo what they are told is wrong with this country, which typically rhymes with the anguish caused by Zanu-PF’s victory in the July 2013 harmonised elections.
We are fighting ourselves; we are our own worst enemy. Government and industry are working at cross purposes while journalists never bother to seek clarification and specifics from captains of industry on what they find inconsistent with Government policy and whether they have committees or councils which engage Government directly to set things straight. Instead, when President Mugabe says we are not going to indigenise banks or that the indigenisation policy is flexible, the reaction from the media is to applaud “a major climbdown”? To whose benefit?
Is that part of the inconsistency or part of policy clarity? What are the analysts telling investors? Are they in touch with Government? Is this “them” and “us” attitude, or, to put it crudely, “tongai tione” expected to attract investors? Surely you don’t expect investors to come cheaply if your attitude as so-called analysts is to tell them “our country is a no-go area”. In fact, it is as if our analysts are told by potential investors what to look for and criticise.
Yet the same analysts and journalists are not so alert when the investors loot Africa’s resources or engage in all sorts of illicit practices like tax evasion which impoverish our countries. They are zombies cheering the rape of the motherland. These are our technical experts, the educated, the sons and daughters we sent out to learn the ways of the white man so that they can be our ears and eyes. Our purblind messengers and ambassadors! They are all ears when a small time African thief pilfers $500 but blind to the corporate robber who runs away with $10 million concealed in accounting books.
Mbeki’s Abuja report noted that part of the problem was Africa’s lack of capacity to deal with these sophisticated criminals. It said there was need to build the capacity of state institutions, regulatory bodies and banks which can read books.
An expert pointed out: “We lack the institutions that are professionally trained and that are of the right level that would match the rigour, the quality of those who practise the illicit finance on the continent. The companies, the multi-nationals are using the best brains in the world.”
What is my point?
The Mbeki report states clearly that the $50 billion illicitly siphoned out of Africa annually by these investment crooks is the equivalent of what the continent might expect to receive as FDI every year.
And this is just what is taken out illicitly. But governments are also forced to give rebates for machinery, tax concessions, proper rates of return on investment, reduce the cost of labour and many other tricks. And often the cost of machinery itself is inflated beyond reason and the cost of mining made to sound out of this world. All that money is taken out. Combine this with the failure by our local experts to quantify the cost of the simplest project like the ethanol plant in Chisumbanje and it tells you all you need to know about why Africa has regressed since the dawn of majority rule.
We simply can’t read. The solution is not relaxing investment rules, or flexible policies, or abandoning indigenisation or reversing the land reform. We need to get a fair share of return for the exploitation of our resources. We need to set the terms of their exploitation. They are finite.
Those who steal our resources also take the money to stash it away in safe havens for use in perpetuity while we remain staring at gaping holes where they looted our black granite, gold, diamonds, chrome, iron, platinum, emeralds and asbestos.
History tells us that nations are in perpetual war for resources. Those wars are fought through these investors. And our colonial history tells us even missionaries were not as pious as their unctuous words.
They carried the Bible and the dagger. Why do we behave as if investors, capitalist investors, were heads of charity organisations coming to feed orphans and expecting nothing in return? These Shylocks will always demand more than their pound of flesh!
Africa, open thine eyes to measure thy worth, to appreciate the treasure the Lord has given thee!
841 total views, no views today