From Rev Doors to Trap Doors: One Good Turn for Africa’s
Development Financing
Melvin Ayogu & Tendai Gwatidzo
Standard Bank Group & University of Witwatersrand,
South Africa
28 March 2010
The views here do not represent those of Standard Bank Group 1
Main Points
• Consequences of Capital Flight
• What we are doing• What can you do?
2The views here do not represent those of Standard Bank Group
Context
• Flight of “people’s money” is serious
• But seriousness does not thereby imply policymakers care enough to curb the problem
• Depends on linkage between consequences of asset stripping and political fortunes of policymakers
3The views here do not represent those of Standard Bank Group
As men have learned to shoot without missing, so have birds have learned to
fly without perching−Crime should not pay−Acquire competency in process
of asset recovery just as “they have become adept at stripping”
−International Cooperation [leverage StAR, Basle Institute for Governance, GFI]
The views here do not represent those of Standard Bank Group 4
Development Financing Issues
• Colour of Money (form of financing)• Ideology of Resource Gaps: Aid &
Resource Gaps; Debt & Resource Gaps; Theft & Resource Gaps
• Sources: Foreign Aid, Debt Forgiveness; Lending; Asset Recovery
• Revolving Door Syndrome: (plus ca change..plus …)
The views here do not represent those of Standard Bank Group 5
Debt-Capital Flight Nexus
• Debt-driven Flight• Flight-driven Debt• Debt-fuelled Flight• Flight-fuelled Debt
6The views here do not represent those of Standard Bank Group
The views here do not represent those of Standard Bank Group
Table 1: African Flows
1980 1990 2000 2005 2008e ODA (All donors to Africa in USD billion) 10.42 25.08 15.58 35.53 40.00 FDI in USD billion 0.40 2.81 9.69 29.65 61.90 Private capital flows, net(USD billion) -0.38 3.78 -3.48 27.42 54.73 Remittances* (USD billion) 1.40 1.86 4.62 9.97 20.42 Total External Public Debt ( USD billion) 85.10 228.90 237.05 239.27 n.a Total debt service: interest and amortization paid (USD billion) 18.19 30.28 29.42 38.93 33.00
Source : ODA Data extracted from OECD.Stat ; World economic outlook ,October 2008; AFDB Database and World Bank staff estimates based on the International Monetary Fund's Balance of Payments Statistics Yearbook 2008 (Remittances) e: Estimates ; * Sub-Saharan Africa
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The views here do not represent those of Standard Bank Group 8
Adobe Acrobat Document
The views here do not represent those of Standard Bank Group 9
Microsoft Office Word Document
Intra-Africa Flows
The views here do not represent those of Standard Bank Group
1
Figure 1
East - 16.91%Southern - 76.17%Central - 0.10%
West - 0.14%North - 1.64%Rest - 5.26%
Intra-African Foreign InvestmentSouth Africa Inflow Year 2000
East - 30.65%Southern - 53.80%Central - 0.41%
West - 10.35%North - 0.03%Rest - 4.76%
Intra-African Foreign InvestmentSouth Africa Outflow Year 2000
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The views here do not represent those of Standard Bank Group
1
Figure 2
East - 9.41%Southern - 85.04%Central - 0.03%
West - 1.09%North - 0.31%Rest - 4.11%
Intra-African Foreign InvestmentSouth Africa Inflow Year 2004
East - 30.36%Southern - 49.18%Central - 0.12%
West - 15.39%North - 0.01%Rest - 4.94%
Intra-African Foreign InvestmentSouth Africa Outflow Year 2004
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The views here do not represent those of Standard Bank Group
1 Figure 3
East - 9.41%Southern - 85.04%Central - 0.03%
West - 1.09%North - 0.31%Rest - 4.11%
Intra-African Foreign InvestmentSouth Africa Inflow Year 2004
East - 30.36%Southern - 49.18%Central - 0.12%
West - 15.39%North - 0.01%Rest - 4.94%
Intra-African Foreign InvestmentSouth Africa Outflow Year 2004
Figure 4
East - 10.02%Southern - 70.66%Central - 0.31%
West - 1.60%North - 0.67%Rest - 16.74%
Intra-African Foreign InvestmentSouth Africa Inflow Year 2007
East - 33.69%Southern - 24.97%Central - 1.80%
West - 31.52%North - 0.84%Rest - 7.19%
Intra-African Foreign InvestmentSouth Africa Outflow Year 2007
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Opportunity to Upscale
• If flight capital can be stemmed, the trend in figures 1 2 3 shows potential benefits to regional investment flows
• -
The views here do not represent those of Standard Bank Group 13
Evening befriends the Spider
• www.CapitalConservator.com
The views here do not represent those of Standard Bank Group 14
The views here do not represent those of Standard Bank Group 15
The views here do not represent those of Standard Bank Group 16
Illicit Flows & offshore havens
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Moving Forward
• More Noise• Acquire core competency in Process
• StAR• Basle Institute for Governance
The views here do not represent those of Standard Bank Group 18
Meanwhile
Whether there is the political
will or not?The views here do not represent those of
Standard Bank Group 19
The views here do not represent those of Standard Bank Group 20
ICAS Cape Town 2009
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ICAS Cape Town 2009
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Radio Broadcast
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The views here do not represent those of Standard Bank Group 24
Microsoft Office Word 97 - 2003 Document
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Adobe Acrobat Document
Community of Practice: Advocacy
Sharing information among researchers/ experts: research outcome, resources
Letting the world know what the problem is and the need to do the investigations
Encourage researchers to do more investigation on the problem: Attract researchers to do more investigations
Publish events that might be of interest: conferences, workshops, talks, seminars
The views here do not represent those of Standard Bank Group 26
Resource repository: Publications, findings, recommended readings
Forum for sharing ideas: on line meetings, Web conferencing, message board
Easy way of managing information: have different topics of discussions
The views here do not represent those of Standard Bank Group 27
Maintain information sharing ethics: every one who joins must agree to terms and conditions. People join by invites only (to avoid abuse). Initial group should be ICAS participants
Members of the network/community to find each other: knowing who else belongs to the community
The views here do not represent those of Standard Bank Group 28
The views here do not represent those of Standard Bank Group 29
The views here do not represent those of Standard Bank Group
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