40% African Wealth in Foreign Banks
From Kingsley Nwezeh in Paris, France, 10.04.2005
Lack of development that bedevilled African countries was tied to the stashing away of over 40 percent of the continent’s wealth in foreign banks by African leaders, a situation that has stalled the progress of the New Economic Partnership for Africa’s Development (NEPAD).
Speaking at the French Ministry of Foreign Affairs in Paris, Professor Phillipe Hugon, researcher at the French Institute for International and Strategic Relations and consultant to the World Bank, United Nations Economic Scientific and Cultural and Organisation (UNESCO) and European Commission (EC) said the movement of funds to foreign countries is affecting the Public Private Partnership (PPP) mechanism enshrined in the NEPAD initiative and thereby stalling the development of the continent.
40 percent of Africa’ funds is placed in European and American banks. It has to be repatriated back to Africa to meet the challenge of reconstruction. NEPAD requires public and private capital.
Non African capital comes into Africa while African capital do not go into Africa. Private capital cannot be invested alone in poverty-stricken Africa, it must be supported by public funds. You have no African investments in Africa? he said.
He said the amount also included dividends and other profits multinational companies made available to leaders and private individuals “who rely more on the Swiss (banks) system than in Africa.”
As a panacea, he affirmed that to ensure the workability of the NEPAD initiative, multiple actors notably the civil society, small African enterprises, public authorities, trans national private sector organisations and international donor agencies should be involved in the actualisation of the initiative which requires $50b yearly to sustain as according to him, the issue is not to build infrastructure but linking such projects to companies that would make them workable and profitable.
In her own speech, the French Minister of State for Cooperation, Development and Francophpone, Mrs Brigitte Girardin said France was working in concert with other countries and the money lending institutions notably World Bank and the International Monetary Fund (IMF) to ensure that development assistance was dependent on good governance.
We are working to ensure that aids support good governance and that development funds are given to Africa if only there is good governance and peace. We are talking with IMF and we have to reach a good agreement with the IMF to give assistance on the condition of good governanceâ*?, she said.
Speaking earlier, Mr Phillipe Gautier an official of the MEDEV International, a French organisation charged with the movement and regulation of over 700,000 French investment companies located across the globe said the NEPAD document was not working out owing to the fact that there was a feeling of disenchantment on the part of the international community and Africans over the inability of the project to take off.
The NEPAD idea is okay but we see very little coming out of it. Even President Abdul Wade, one of the initiators of the project has said he is disappointed with the way NEPAD is working. NEPAD was meant for development but that aim is now defeated. The secretariat of NEPAD consumes so much money but does not generate resources. With international donors, we have tried to find ways and means of involving the private sector in the upstream of government but it is difficult to implement because there is no room for tenderâ*?, he said while noting that the organisation has made proposals to the effect that projects that do not benefit companies was not worth it even as he noted that legal obstacles exist in the area of Public Private sector Partnership (PPP).
NEPAD is supposed to receive substantial funds with private financing. PPP was very much promoted in the framework of NEPAD. Today, the PPP concept very much promoted in the framework of NEPAD is not working in Africaâ*?, he said.
Speaking on the same matter, special adviser to Group of 8 technologically advanced nations (G8) and Heads of Government of the European Union (EU) and director for economic affairs in the French Ministry of Foreign Affairs, Mr Jacques Lapouge said developed nations were ready to commit $50b yearly up to 2010 to the developing world, half of which would go to Africa while another $25b would be raised in the same year just an additional $78b would be advanced much later which showed that 0.5 percent of developing nations Gross Domestic Product (GDP) for 2007 and 0.12 percent for the year 2012 was going to developing nations just as the 2/3 of the said figure would go to Africa.
Even at that, he said that France considered the plan insufficient hence it was looking at the possibility of what has come to be known as Innovative International Financing (IIF) which led to the French initiative to tax airlines all over the world in order to be able to raise $10b yearly for development assistance
The idea, he said, was for airlines to pay a tax of between 5-20 Euros per economic class ticket, an idea that is already receiving support from about 77 countries except the United States.
Britain, which already has a similar tax for its airlines has also agreed to dedicate part of it to the initiative even as he noted that the European Commission would soon make its own plan, IMF having done its own all of which are geared towards NEPADâ*™s three major planks of security, good governance and social development.