Global Witness (London)

5 February 2013

Africa: We Could End Poverty If ... David Cameron Is Right?

analysis

It's always encouraging to see our leaders pushing the right line for a change. Outlining his agenda for the G8 at the World Economic Forum in Davos recently, the British Prime Minister David Cameron has indicated a new agenda for tackling poverty, underscored by a drive for greater transparency and accountability in the global economy. If these commitments are acted upon, we could see lasting improvements to the lives of the world's poorest people.

Central to the prime minister's plan is tackling illicit financial flows, the hidden company ownership that makes these flows possible, land grabs, and the secrecy by which big oil, gas and mining corporations are doing business. He believes in order to tackle poverty, we have to start looking at the causes rather than the symptoms.

In this instance, the prime minister is spot on.

While there is, rightly, clamour about giving enough aid to end global hunger and poverty, the US$131 billion bestowed to the developing world in 2010 was eclipsed about 6 times over by the US$859 billion in illicit money stolen from developing countries in the same period. [1]

Aid does play important role, but Mr. Cameron asserts that unleashing the power of natural resources in the developing world could potentially dwarf anything aid could achieve. He has a point - in 2010, mineral & fuel exports from the Asia, Africa, and South & Central America was roughly 15 times the amount of aid given to those regions.[2]

But mineral wealth has not automatically translated into development for some of the world's poorest. A country may possess vast natural resources, but without transparency on how companies and governments spend their money, citizens are regularly robbed of the benefits of their countries mineral wealth through poorly negotiated or corrupt backroom deals.

One of the issues the prime minister is taking on for the first time is that of the secrecy around who actually owns a company. Hidden company ownership facilitates state looting. Corrupt elites are able to launder their ill-gotten gains through these anonymous companies into western banks without ever having to disclose their identities. Citizens of poor countries never see their own country's wealth and are left dependent on aid.

Land in developing countries is being bought up by companies at an alarming rate, pushing many of the world's poorest communities away from natural resources they depend on. These deals happen in secret so communities rarely know who is responsible, let alone how to hold the perpetrators to account.

Transparency will help citizens to hold the rich and powerful to account, stem the haemorrhage of money through corruption, and make sure developing nations are better able to benefit from their vast natural resource wealth.

The prime minister must now use the G8 to turn this rhetoric into a reality.

Oil, gas & mining companies must be transparent about licensing, and disclose the payments they make; citizens have a right to know how their nation's wealth is being transacted. Communities should have the right to refuse deals which hand their land over to anonymous corporations. Information on who ultimately owns a company should be collected and made publically available, so that we can see and stop the illicit flow of money out of the developing world.

The challenge of fighting corruption sits just as much with the developed world - none of this would be possible without the banks that take illicit money, the 'shadowy corporations' that flout the rules, and the structures that support them. Mr Cameron has acknowledged this. We want to see him remain true to his words, and use Britain's G8 presidency to drive a new debate on ending poverty.

[1] US$859 billion illicit flows in 2010 according to GFI - US$131 billion in aid to developing countries in 2010 according to OECD

[2] International Trade Statistics 2011, World Trade Organization, Merchandise trade by product,Table II.2 World merchandise exports by major product group and region 2010

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