Bank backs launch of Africa Integrity Fund to combat corruption

Out-Law News | 14 Nov 2016 | 2:50 pm | 2 min. read

The African Development Bank (AfDB) has given the go-ahead to create a new fund “to contribute to the prevention, detection, investigation and sanctioning of corruption” across the continent.

The AfDB said target beneficiaries of the $55.25m Africa Integrity Fund (AIF) will include tax authorities, public audit institutions, law enforcement agencies and African governmental bodies.

AfDB president Akinwumi Adesina said: “We must have zero-tolerance for corruption, be it internal or external. We have to tighten our systems thoroughly.”

The AIF will support moves for “the repatriation of stolen assets and alleviating the financial drain from illicit outflows from regional member countries to strengthen transparency and accountability”, the AfDB said.

Financial penalties imposed on entities “found engaged in corrupt activities and other forms of misconduct”, following investigations by the bank’s Integrity and Anti-Corruption Department (IACD), will fund the AIF, the AfDB said. “Presently $33m of the amount is lodged in the bank’s escrow account.”

IACD director Anna Bossman said: “With the adoption of the AIF, financial penalties resulting from the bank’s sanctions regime are re-invested into anti-corruption measures. We are confident that the AIF will become a model for others.”

Bossman told a conference on illicit finance in Cote d’Ivoire last month that engaging the private sector in tackling corruption was “critical”. She said: “Businesses are on the supply side of the corrupt act and therefore have a key role to play in improving corporate integrity and accountability, while promoting growth through an environment conducive to attracting foreign investment.”

The 2014 Global Economic Crime Survey, published by professional services firm PwC, said Africa reported one of the highest overall percentages of bribery and corruption globally in 2014 (39%) – compared to 34% in a 2011 survey. The survey received 5,128 responses from more than 95 countries.

According to the World Bank, “about $1 trillion is paid each year in bribes around the world, and the total economic loss from corruption is estimated to be many times that number... this figure dwarfs the value of all development assistance”.

However, the bank has singled out Nigeria as an example of how African nations are working to tackle corruption. “The country was the first African government to implement the Extractive Industries Transparency Initiative, and one of the first steps it took was a comprehensive audit of the oil sector value chain to verify that all payments were correct and settled,” the bank said.

“The audit revealed $9.8 billion in outstanding recoverable revenues from 1999 to 2008, including an estimated $4.7bn owed by the state-owned Nigerian National Petroleum Corporation. As a result of the audit, at least $2.4bn of the lost revenue was recovered,” the bank said.

Nigerian president Muhammadu Buhari, who was elected last year, said before assuming office his administration intended to combat corruption, which he described as “a threat to our economic development and democratic survival”.

A report published earlier this year by KPMG, ‘What influences foreign direct investment into Africa’ (56-page / 10.4 MB PDF) said “countries that are politically stable and that have better infrastructure, lower levels of corruption and business environments that are more conducive to investment as well as a more diversified economy, do attract higher levels of foreign direct investment”.

However, the report said: “While corruption, poor infrastructure and onerous business conditions are considerations for potential investors into Africa, these are certainly not overriding factors. If the geological attractiveness and/or gas and oil resources are sufficiently attractive, investors will still invest in the country and will find ways of overcoming obstacles.”