The worldwide scale of corruption is enormous: Around USD 1 trillion are paid in bribes per year (1). This is particularly problematic in the Global South, where funds lost to corruption are estimated at 10 times the amount of Official Development Assistance (ODA), according to the United Nations Development Programme (2).
Corruption is a major obstacle for more investments of German businesses in Africa, as a recent study commissioned by the Global Perspectives Initiative has shown. In fact, German entrepreneurs are rather hesitant to invest on the African continent. While around 800 German companies are active across Africa, only 1 % of German direct investments flow to the continent.
Ensuring better economic partnership is a central prerequisite to achieve the Sustainable Development Goals (SDGs) by 2030, which the German government clearly appreciates: A new development investment law intends to help more small and medium-sized companies do business in Africa. Furthermore, the risk of German firms doing business in Africa shall be reduced through Hermes guarantees, which protect German companies in case of non-payment by foreign debtors. These measures are welcomed by the majority of German business leaders, as the GPI study indicates.
In order to better understand the impact of corruption on sustainable development in Africa, GPI spoke to Jeff Kabondo, a renowned anti-corruption activist from Malawi. With more than 15 years’ experience in good governance and anti-corruption work across Africa, he is the Executive Director of Malawi’s National Integrity Platform, the country’s leading civil society organisation combating corruption.
1) What is the impact of corruption on sustainable development in Malawi and in other African countries?
I would like to highlight a number of areas, where corruption has an impact: Firstly, when we look at service delivery in key sectors of the state, such as education, health or agriculture, these areas are greatly affected by corruption and service delivery is undermined.
In addition, the quality of democratic governance is under threat as corruption is very rampant in processes and institutions of governance and democracy. For instance, electoral processes in Africa have often been marred by stories of fraudulent activities aimed at distorting election results in favour of politicians that want to remain in power even against the will of the majority.
If corruption remains as strong, citizens will lose trust in elections, which may eventually threaten peace and stability on the continent. As a logical consequence, corruption also poses a threat to state security.
In parts of Africa that are affected by fragility, conflicts are perpetrated by the fact that corruption is not under control. I would even say that in some countries across the region, elites would rather have state systems that are not working to entrench their malicious activities and benefit from corruption in the public and private sector. This particularly applies to countries that are rich in natural resources, where you find that these natural resources do not necessarily benefit the people of the country, but rather the few that are involved in corruption. Some elites would want to maintain this status quo, so that they can access natural resources for their vested interests.
For me, this can be a cause for the breakdown of security. Even here in Malawi, a rather peaceful country, corruption contributes to unemployment and thereby jeopardises social peace and cohesion.
2) Despite its severe repercussions, corruption is often side-lined in favour of other political priorities, like tackling poverty and malnourishment. How can we generate a better understanding of the far-reaching role that anti-corruption initiatives can play to foster sustainable development on the African continent?
Indeed, there is a tendency to look at the effects of corruption, while ignoring that we also need to look at the causes of poverty in many African countries. It is a chicken and egg question: We are trying to address social problems like poverty or inequality, but we do not necessarily consider that corruption is playing a great role in creating and maintaining these issues.
Hence, there is a need to promote the understanding that we do not only need to address the effects of corruption, but we must also focus our efforts on connecting corruption with persisting poverty and other socio-economic challenges. Only then can we sustainably manage these problems.
I therefore believe that there is an urgent need to mainstream anti-corruption measures in all governmental interventions. If corruption persists, poverty will still be around. With corruption, sustainable development is in far reach.
3) The Global North still hosts numerous tax havens that welcome embezzled money from Africa and Western companies are entangled in some of the most recent corruption scandals on the African continent.
How can we ensure that Western governments and companies prevent corruption, tax evasion as well as money laundering in Africa more effectively?
As you have rightly said, many perpetrators of corrupt activities want to get their stolen money outside their own country and would usually go to tax heavens. Some countries in the Global North have started monitoring the movements of illicit assets and wealth and we already see that justice has been carried out in a number of cases. But more needs to be done: Law enforcement agencies in the Global North need to deepen their collaboration with their counterparts in the Global South to stop the international movement of proceeds of corruption.
When illicit assets are parked in tax heavens in Europe, for example, why not help repatriating these funds to the countries that the money came from? That would be a great help in building up the economies of development countries. We need those resources; they belong to the people.
In terms of companies from the Global North, they need to be liable for criminal activities here in Africa. If a Western company is involved in any corrupt activity here in Malawi, that company should be held liable in its country of origin. That would help to prevent corruption, as our systems of governance here tend to be compromised. In order to prosecute these international corporations, we need the support from their countries of origin, as their judicial systems are stronger. If a red flag is raised here in Malawi, the countries of origin must help to prosecuting or penalising these companies. Repatriating stolen assets is a huge financial opportunity for the African continent.
Thank you very much for the interview.
- Daniel Wegner, Project Manager Global Perspectives Initiative
Daniel Wegner, Project Management