POVERTY%20AND%20GOVERNANCE%20IN%20AFRICA

1
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.

2
Africa Facts and Figures

• Area 30.3 mil sq. km (11.7 sq. mls) 20of land
  area.
• Population 890 mil 12 (World).
• GDP 558 bln,
• per capita 670.
• Total debt 60 GDP.
• Poverty lt 1/day 36.
• Composed of 53 sovereign states

3
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

4
Effects of Corruption

• 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

5
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

6
Corruption in Developing Countries

• 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?

7
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

8
Africas problems

• Real problem Too many cant wait" problems
• Leadership bogged down by immediate problems
• Too few resources
• Difficult to set priorities
• A loser in global wealth creation
• In 1990s WT increasing at 6.7 (volume)1
• Africas share decreased from 3.5 to 1.52
• LDCs lost 80 of share in 3 decades, have only
  0.53
• Export raw commodities low, unstable prices
• 1 Sources Trade Policy for a competitive Economy
  and Export-led Growth, Ministry of Industry and
  Trade Tanzania (2003).
• 2http//publications.worldbank.org/commerce/catalo
  g/product?item_id1688508
• 3 political Economy of the World Trading Systems,
  by Bernard M. Hoekman and Michael M. Kostecki

9
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

10
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.