Africa, Development & Aid, Economy & Trade, Headlines

AFRICA: Economic Elite Rank Corruption, Ignore Own Role – Critics

Emad Mekay

WASHINGTON, Jun 11 2003 (IPS) - A leading global business group has issued a ”corruption index” for African countries, but corporate governance watchdogs say the World Economic Forum (WEF) ignored the role that its members play in corrupting poor countries.

The rankings released Tuesday by the Geneva-based WEF, known for its high-profile annual meetings in the alpine resort of Davos, Switzerland that attract the world’s corporate and political luminaries, show Botswana leading the 21 African nations ranked for the quality of their public institutions.

Succeeding Botswana in the Public Institutions Index are Tunisia, Gambia South Africa and Mauritius respectively. The bottom five countries are Angola, Kenya, Madagascar, Nigeria and Chad.

The WEF says the rankings are based on the perceived degree of corruption and the "rule of contracts and law", according to interviews with business leaders and firms working in the countries.

”The Public Institutions Index is a very important component of our assessment of a country’s competitiveness and overall prospects for economic growth,” said Fiona Paua, a WEF economist.

But groups that monitor multinational corporations criticise the report because it is written by a business group whose membership draws mostly from international companies, themselves often involved in bribery, kickbacks and shady deals in the developing world.

The Forum is advised by an international business council comprised of leaders of the world’s largest companies, including ABB, Boeing, Coca-Cola, IBM, and Pfizer, among hundreds.

"The idea of using a corruption index within the Public Institutions Index as a way of shining a light on the best and worst practices is itself a good idea, but one wonders if the business sector is the most objective or neutral party to be undertaking such a survey," said Rick Rowden of Action Aid USA.

"This report is the sound of one hand clapping. It’s not as if corruption happens only in a vacuum or only within governments, but corrupt practices operate both ways: its always been a two-way street between government and business," he said.

Botswana takes top place in the index because it got the highest score in the contracts and law sub-index, which considers whether countries protect financial assets and wealth well, and in the corruption sub-index, which looks at how common it is for companies operating in a nation to make undocumented extra payments or bribes connected to export and import permits.

Botswana’s overall score was 5.45 of a possible 7.0 for the Public Institutions Index. South Africa’s fourth-place finish was largely due to its number 17 ranking in the contracts and law sub-index, because of the prevalence of organised crime.

But it ranked third in the corruption sub-index.

The WEF placed Zimbabwe, under President Robert Mugabe, 16th on the main index because of the lowest score among the 21 nations for independence of the judiciary and the second to lowest score for the neutrality of government decisions.

Nigeria, the most populous country in Africa, and Chad, among the poorest, rank 20th and 21st respectively in the Index.

Nigeria’s overall ranking was dampened by the second worst performance in the corruption sub-index, says the report. Chad had the lowest score in both sub-indexes.

The WEF uses the Index, along with Technology and Macroeconomic and Environment indices, to compile annual competitiveness rankings.

”The Forum has a long tradition of bringing together public and private sectors to develop successful partnerships,” said Haiko Alfeld, Director of the WEF’s Africa section, a statement.

”We hope that by shining a light on the best and worst practices, we can help improve the state of governance in the region.”

But Africa activist doubt the sincerity of such statements. During the Forum’s annual meeting in Davos, they, along with African nations, complained that the continent was largely ignored.

"They allow one partially criminal class – CEOs of rich western companies – to fabricate accusations as they wish against their pliable junior partners, African governments," said Salih Booker, executive director of Africa Action.

Activists also suggest that African nations should be able to judge the corporations working in their countries. Civil society groups, including CorpWatch, TransparencyInternational and Global Witness, have accused multinationals of tolerating, if not encouraging, the malpractices of some of their African intermediaries to win contracts.

Last year, Canadian engineering consulting firm Acres International was convicted in a Lesotho High Court of paying bribes through an intermediary to win contracts on a multi-billion-dollar dam project.

Multinationals involved in the Bujagali power plant in Uganda are also under investigation by the U.S. Justice Department after a former manager in a UK-registered subsidiary of Veidekke, a Norwegian contractor in the project, gave 10,000 dollars to a Ugandan civil servant.

"Africans need to do their own ranking of the corruption and poor governance of western companies, governments and the international financial institutions," said Booker.

"That’s where the greatest limitations to poor country economic freedom truly lie."

Other activists questioned the Forum’s commitment to ending corruption. "What role will the participants in the World Economic Forum play – if any – in helping these countries address these issues?" asked Bill Fletcher Jr from TransAfrica.

According to Rowden from Action Aid USA, Uganda has set up six or eight different agencies in the past to combat corruption there, yet they lack funding for the lawyers, accountants, and even computers, necessary to get their jobs done.

"I would challenge the private sector to put their money where their mouths are on this point," he said.

"If the WEF wants to pitch in where official northern donors have failed, they could provide desperately needed funds to foundations that could support many such agencies and organisations in Africa and enable them to be far more effective at combating corruption in their countries."

Fletcher also criticized the report for not comparing the African findings with those of other regions around the world.