Transcript poverty and governance in africa

POVERTY AND GOVERNANCE IN
AFRICA
Presentation to the World Bank
Staff at Brown Bag Lunch
By: Frederick Sumaye
Former Prime Minister of UR Tanzania
(1995 to 2005)
May 17th, 2007.
Africa: Facts and Figures
• Area: 30.3 mil sq. km
(11.7 sq. mls) = 20%of
land area.
• Population: 890 mil
=12% (World).
• GDP $ 558 bln,
per capita $670.
• Total debt 60% GDP.
• Poverty <$ 1/day 36%.
• Composed of 53
sovereign states
Historical Perspective
• Oldest? Civilization
• Slave Trade – destruction of society
• Scramble for Africa – Colonization
– 1884 Berlin meeting
• Struggle for Independence
– Wars and bloodshed
– Struggle for power within countries
• Scramble for Africa - capitalism vs communism
• Scramble for Africa – natural resources
Effects of Corruption
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Old vice (since creation?)
Exist in both rich and poor countries
More rampant in poor countries?
Serious propagates bad governance
Negatively impacts on development
Unfair/differential treatment of citizens
Poor accountability/inefficiency
The Cost of Corruption
• WB estimates $80bln/year bribery in Transnational Corporations
• After 1977 Corrupt Practices Act US Companies lose $30bn/year
• 1999 report (US) found allegations of corruption of $37bn. In 4
months
• Over 5 year period bribery has influenced 294 contracts worth 145
bn.
• 1990 European Countries allowed tax deductibility of bribes as
business expense (15% high corruption countries and 3% European
Union)
• 1992/93 Corruption scandals reached highest political echelons of
Belgium, Spain, Italy, Japan, France and Russia.
• 5 large WB clients are ranked by TI as among the most corrupt
countries in the world
Source: Global network to Curb Corruption: The experiences of Transparency International by
Fredrik Galtung
Corruption in Developing Countries
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More rampant in many countries
More visible – small economies
More detrimental
Many speakers – borrowed/grant money
Who prosecutes and who judges?
– In investments in minerals/oil how much taken
and how much is left?
Leadership, Poverty & Corruption
• Poverty & corruption are indirectly related
– Grand corruption - NO relation to poverty
– Petty corruption – may be related
• Leadership in extreme poverty
– Difficult & dangerous
– Prone to corruption accusations
– Prone to conflict
– Easily confused with bad governance
Africa’s problems
• Real problem: Too many “can’t wait" problems
– Leadership bogged down by immediate problems
• Too few resources
– Difficult to set priorities
• A loser in global wealth creation
– In 1990’s WT increasing at 6.7% (volume)1
– Africa’s share decreased from 3.5% to 1.5%2
– LDCs lost 80% of share in 3 decades, have only
0.5%3
• Export raw commodities – low, unstable prices
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1 Sources: Trade Policy for a competitive Economy and Export-led Growth, Ministry of Industry and Trade Tanzania (2003).
2http://publications.worldbank.org/commerce/catalog/product?item_id=1688508
3 political Economy of the World Trading Systems, by Bernard M. Hoekman and Michael M. Kostecki
How did we help Africa?
• WB and others – assisted development
– Expert advice- with knowledge on the ground?
– Predetermined ‘medicine’
• Failure of loan repayment
– Interest – simple, compounding rate?
• Crippling debt burden
– Loan servicing eg Zambia 62%, Mozambique 57%, Tanzania
42% (of govt. spending in 2001)*
– Outcome – continued/increasing poverty?
*Source: UNDP/WB figures – The political economy of AIDS in Africa by Nana K. Poku, CfHIV/AIDS/ECA &
Alan Whiteside
Which way forward?
• Help Africa were wealth is created- private
sector
– Production, processing, marketing
• Loans repaid- business profits
• Governments – conducive environment to
business
• Others – Me, start a social entrepreneurship
organization to help private sector do
competitive trade.