Southwest Nigeria, home to millions of Yoruba people, is also home to both ancient and modern genres of music. The West African pop music known ... as Afrobeats, currently lighting up the global stage, began its 20-year journey from Lagos through London via America, and borrows irreverently from older musical traditions like Highlife, Jùjú and Fuji.
It’s been more than 100 days since Boko Haram—the terrorist group wreaking havoc in northeast Nigeria—kidnapped over 200 schoolgirls. Unfortunately, the group looks like it has no sign of slowing down. In a cross-border attack last week, perhaps one of their highest profile abductions yet, the group kidnapped the wife of Amadou Ali, Cameroon’s Deputy Prime Minister.
some of the worst accomplices of illicit financial flows are accountants, bankers, and lawyers residing in the U.S., Europe, and other tax havens
Boko Haram, and African security in general, will certainly be high on the agenda of the US-Africa Summit, which launches Monday. Billed as the “first such event of its kind,” President Obama has invited 50 African heads of state to the White House.
It’s no secret that poverty and a lack of development can help produce a breeding ground for terrorist groups like Boko Haram. So it should come as no surprise that northeast Nigeria, the terrorist group’s home base, has the highest rate of absolute poverty, and some of the worst unemployment rates, in the country.
Across the Gulf of Guinea, corruption and financial secrecy are allowing a kleptocrat to purchase a mansion in California, Lamborghinis, and almost US$3 million worth of Michael Jackson memorabilia. The person in question is Teodorin Obiang, the son of Teodoro Nguema Obiang Mbasogo, President of Equatorial Guinea.
Global Witness, a London-based advocacy group and member of the Financial Transparency Coalition (FTC), has followed Teodorin’s exploits for years and allege that he siphoned more than US$300 million out of his father’s state and into the U.S. and Europe, all with the help of shell companies and hidden bank accounts.
President Obiang will attend this week’s summit, and will even deliver opening remarks for a daylong side event organised by the Corporate Council on Africa.
Although Equatorial Guinea isn’t facing an Islamic insurgency, its population does suffer from a poverty rate of 76% and a life expectancy of just 53 years, despite the country being sub-Saharan Africa’s third largest oil producer.
Avenues of anonymity
African diplomats have much to discuss when they sit down with their American counterparts, but one thing is clear: whether the conversation is about poverty, instability, or lack of economic growth, financial secrecy is like fuel for the fire.
Secrecy within the financial system contributes to Africa’s growing amount of illicit financial flows—money that’s illegally earned, transferred, or utilised. According to estimates from FTC member Global Financial Integrity (GFI), sub-Saharan Africa lost, on average, 5.7% of total Gross Domestic Product (GDP) every year between 2002 and 2011 to illicit outflows.
A more recent GFI report conservatively estimates that Kenya lost $435 million in tax revenue every year between 2002 and 2011, to trade misinvocing, just one type of illicit flow.
So while there’s always been a focus on the grand corruption carried out by government officials, it’s just a part of the larger problem. It’s estimated that only three percent of all illicit flows are due to corruption and embezzlement, while 65% are attributed to trade manipulations and corporate tax evasion.
And without the avenues of anonymity provided by the enablers of illicit financial flows, money would have a hard time leaving a country illicitly in the first place.
Targeting a corrupt dictator may garner headlines, but some of the worst accomplices of illicit financial flows are accountants, bankers, and lawyers residing in the U.S., Europe, and other tax havens.
This summit is an opportunity to address the link between illicit financial flows and poverty and instability. Whether it’s a corrupt leader looking to fill up an offshore bank account, or a corporation looking to evade taxes on mineral revenues, the same avenues of escape continue to be utilised—anonymous companies and tax havens. The mass exodus of revenue inhibits the ability of governments to spend freely on roads, schools, and health care—the very drivers of development and stability.
For the U.S., addressing this issue should first mean looking in its own backyard. The state of Delaware continues to be one of the easiest places in the world to set up an anonymous company, while other states like Wyoming and Nevada are following in its footsteps. Worldwide, Delaware is only rivaled by Kenya as the easiest place for anonymity to set up shop.
But there are tangible solutions.
Open, public registers on beneficial owners—the people really behind a company—will make tracing down illicit money far less challenging. If ownership data was open to authorities, civil society, and concerned citizens, the complex webs created by criminals, kleptocrats, and corporations would be far easier to decipher.
This week, President Obama will undoubtedly be asked questions on security, poverty and development. He would be smart to remember that financial transparency should be in his answer.
Christian Freymeyer is the New Media & Press Coordinator for the Financial Transparency Coalition and Savior Mwambwa is Regional Advocate for the Financial Transparency Coalition and Policy and Advocacy Manager of the Tax Justice Network – Africa.
You can follow Christian on Twitter @cfreymeyer and @FinTrCo and Savior at @SaviorAfrica.
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