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Is Bell Pottinger the Turning Point for South Africa’s Anticorruption Fighters?

Samantha Maloof

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At the crumbling Bell Pottinger, shock must still be setting in. Less than two years ago after the British PR firm agreed to a £100,000 per month contract with South Africa’s well-connected and widely despised Gupta business empire, the company is collapsing as its reputation for representing the worst of the worst catches up with it.

On behalf of the Guptas, Bell Pottinger engaged in a campaign to incite racial hatred. By weaving narratives of “white monopoly capital” and “economic emancipation,” it stoked still-raw divisions within South African society to launder its clients’ reputations. South Africa’s civil society was in no mood to reconcile once the truth of the nefarious campaign came to light. Instead, the dogged efforts of anticorruption campaigners in South Africa hit Bell Pottinger all the way back in London.

Acting on a complaint from South Africa’s opposition Democratic Alliance, the UK Public Relations and Communications Association ejected Bell Pottinger and brought the company to its knees. South African activists are now after international consultancy firms McKinsey and KPMG, which have made millions working for the Guptas. South African NGO Corruption Watch has gone straight to the US Department of Justice with complaints about McKinsey.

South African corruption watchdogs have reason to celebrate. For years, an institutionalized culture of graft has set in across South Africa, abetted by President Jacob Zuma and his family. Zuma is an “ultimate survivor.” Despite multiple attempts to oust him, 780+ charges of corruption and public indignation over his clan’s ties with the Guptas, Zuma remains in power. His children have not fallen far from the tree: it was his son Duduzane who coordinated with Bell Pottinger on behalf of the Guptas.

Now that culture of impunity may be showing cracks. In working with authorities in the UK and the US, South African civil society is showing it understands that the fight for transparency crosses borders. As Bell Pottinger, McKinsey and KPMG reap the rewards of their work, other firms will learn the rules of decency still apply south of the Sahara.

Unfortunately, not all Western firms are as sensitive to public criticism. Anticorruption fighters are notching long-overdue victories in “Guptagate,” but they may soon have to use their new international partnerships to take on one of the most ruthless industries on the planet: Big Tobacco.

In terms of global predations on Africans, tobacco might be the most nefarious. Major companies like British American Tobacco (BAT) have a disturbing strategy: if American and European consumers are turning their backs on smoking, the global tobacco industry can instead pitch its deadly products to a whole new class of consumers in “untapped” sub-Saharan Africa.

The industry’s plans are stunning in their callousness. For decades, BAT has seen developing African markets as a main driver of future profits. As a 2007 tobacco conference in South Africa, the company described the country’s “Black middle class” as – incredibly – “Black Diamonds.” Indeed, the marketing carried out by BAT and its competitors deliberately targets young people as a future population of nicotine addicts to exploit.

BAT has also cajoled African governments into toeing their line. In South Africa, though, Jacob Zuma’s friends and family haven’t needed cajoling. One of his other sons, Edward, served as a tobacco company executive at a firm allegedly involved in the same kind of tobacco smuggling BAT has been accused of. After leaving the company, Zuma found himself locked in a legal dispute with the South African Revenue Service (SARS) over unpaid tobacco taxes.

A deeper scandal shows Zuma government officials working hand-in-hand with tobacco interests. In 2014, SARS became the target of a discomfiting campaign by South African politicians trying to negotiate with the taxman on the industry’s behalf. According to South Africa’s Daily Maverick, members of SARS and even Deputy Minister Marius Fransman helped the tobacco industry solicit the government’s cooperation to fight “illicit trade” and drive out SARS officials investigating its tax bills. One of the key figures in the scandal, Cape Town “kingpin” Mark Lifman, even attended Zuma’s birthday.

Fortunately, some South Africans are fighting back. Big Tobacco’s worst enemy may be Pravin Gordhan, former Finance Minister and SARS chief. Gordhan has been the tip of the spear in investigating tobacco smuggling in South Africa. He encouraged “sin taxes” on products including tobacco and initiatives like plain packaging (encouraged by the World Health Organization). Of course, this also made Gordhan a central target. His former deputies at SARS were put on trial while Gordhan himself was fired by Zuma at the end of March.

The firing has to do with far more than tobacco, but Edward Zuma (he of the cigarette tax dispute) still holds a grudge. Last month, the younger Zuma heckled Gordhan during a speech and claimed he “sold the country to the white men in Stellenbosch.” Like his brother Duduzane, Edward is apparently fond of dabbling in racial encitement.

In forcing Gordhan out, Zuma defended a corrupt system of patronage at the cost of economic crisis. As the Maverick showed, Big Tobacco may be just as guilty of “state capture” as the Gupta companies. Will the young South Africans the industry is banking on take up the fight against it? As Bell Pottinger now knows, foreign companies should be careful before assuming they can operate with impunity.

Samantha is a freshly minted graduate in International Relations based in Cairo, currently working as a research assistant in a small think tank looking at development and inequality in Africa

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Persistent Conflict and Instability Hamper the Recovery of the Central African Republic

MD Staff

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According to the first issue of the Central African Republic (CAR) Economic Update published today by the World Bank, the deterioration in security conditions and the humanitarian situation is dampening hopes for a robust economic recovery in the Central African Republic. After peaking at 4.8% in 2015, the growth rate slowed to 4.5% in 2016 and 4.3% in 2017. Despite the optimism prevailing since the 2016 presidential election and the government’s promising fiscal consolidation policy, the CAR remains a fragile state that could draw lessons from the successful experience of other fragile states in order to sustain its peacebuilding and recovery efforts.

Titled “Breaking the Cycle of Conflict and Instability,” the World Bank’s publication provides an in-depth analysis of the factors creating fragility and proposes a number of avenues to achieve economic recovery. It identifies three essential prerequisites to break the cycle of instability and conflict: restoring security, combating impunity by guaranteeing compensation for the harm suffered by the victims, and promoting equitable and inclusive economic and social development.

Without a doubt, the persistent insecurity is the biggest obstacle to poverty reduction, as each new violent confrontation between armed groups leads to additional displacement, destroys private property, and complicates the work of humanitarian organizations,” said Jean-Christophe Carret, World Bank Country Director for the Central African Republic. “The protracted security crisis in the CAR is taking a toll on the capacity of the state to provide essential public services and goods in the areas of health, education, and water.

The report recommends that lessons be learned from other post-conflict countries such as Ghana, Liberia, and Rwanda, which have managed to put prolonged periods of instability behind them.

“The experience of these countries underscores the importance of promoting the development of civil society in order to consolidate democratic progress, strengthen public accountability, and enhance transparency while implementing a pragmatic set of policy and institutional initiatives to achieve gradual but steady improvement in the quality of the public service,” said Souleymane Coulibaly, World Bank Lead Economist for the Central African Republic and publishing coordinator for Economic Updates.

The new Economic Updates series for the Central African Republic will review economic trends in the country on a biannual basis in order to help the government and its development partners identify new opportunities and tackle persistent challenges.

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Mauritania Conference : AU Reopen Western Sahara File

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Since the kingdom of Morocco left the OAU in 1984, the Kingdom’s participation with the African states has been seen by its enterprise involvement in several fields like oil imports and humanitarian aid. At the end of the 90s, under the King Mohammed VI rule, Morocco’s African alignments accept a new measurement whereby, continental banking, commercial and economic exchanges took the significant stage in Morocco’s re-engagement with the African States. The main objective for this collaboration and mutual African team banding was to build up a solid South-South strategy cooperation, tapping into Morocco’s longstanding historical, cultural, geopolitical and economic band with the African continent.

On the beginning of July, the 31st Ordinary Session of the African Union(AU) meeting, which took place in Nouakchott, the capital of Mauritania which is expectedly going to discuss a report on the Moroccan Sahara Issue.

Depending on the African Union calendar released, this meeting will hold the presentation of three main reports, including a report on the Moroccan Sahara Issue, conferred by Moussa Faki Mohamed, Chairman of the AU Commission.

Basically, this is the first time that the Western Sahara dispute has been conferred with the calendar of an African Union conference since the Kingdom’s return to the African organization last year, after it had left the country three decades ago because of the same issue, which necessitates the kingdom of Morocco would face any challenge to its national case as its priority .

On Thursday, Moussa Faki Mohamed, head of the African Union Commission in Morocco, met with King Mohammed VI, Prime Minister Saad Eddin Othmani and Minister of Foreign Affairs and Cooperation Nasser Bourita, along with some of the King’s advisors to discuss the Sahara Dispute which is a report in AU.

The communiqué issued by the African Union on Vicky’s visit to Morocco did not refer to the Sahara issue with Moroccan officials. The communiqué issued on Friday made reference to the role of the Kingdom in the Union Foundation, as well as issues of major concern.

The Moroccan government refuses the inclusion of the Sahara report in the AU calendar and esteems the report to be an exclusive competence of the United Nations, especially in the presence of a total of parties opposed to the Moroccan proposal, led by the separatist Polisario Front, supported and financed by Algeria and some other countries.

Additionally, to offering a report on the Moroccan Sahara Issue, it is anticipated that the 31st AU Meeting, on 1 and 2 July, will show a report on the tools and implementation of the institutional reform decision of the African Union by Paul Kagame, President of the Republic of Rwanda. Additional report on the Africa-Africa Free Trade Area will be handled by Mohamed Essovo, President of the Republic of Niger. Moussa Faki will come up with another report on the African Common Position on the African, Caribbean, and Pacific countries beyond 2020.

This African Union Agenda also includes the presentation of the subject of the year on “Victory in the struggle against corruption: a sustainable path towards African transformation”, to be seen by Mohamed Boukhari, President of the Republic of Nigeria, to be pursued by a debate by the Conference. The concluded sessions will argue the discussion of the activities of the Peace and Security Council on Africa, in which Morocco won a seat months ago.

The calendar of the African Meeting contains a report on the implementation of the African Union’s main roadmap for practical ways to silence guns in Africa in 2020, the adoption of the AU’s 2019 budget and the ratification of appointments in the Federation’s institutions.

Morocco’s acquisition to the African Union will undisputed change the policy of how the Pan-African organization stands the Western Sahara file. Despite Morocco’s diplomatic orientation to refine solving the Sahara dispute in a pragmatic way, its policy will sustain the same as for the acceptance of the SADR is concerned. The kingdom of Morocco is likely to endure its changeless policy to delegitimize any declare or allege of the Polisario in its search for being an independent state. It will also try to undermine the political impact of the Polisario leadership and its keen supporters, South Africa and Algeria.

At the same time, to disband the SADR from the African Union will be a weak mission, as the latter can only discourage other countries whose governments were agreed towards unconstitutional layers. Several African states refuse to disband the SADR. Regardless of Morocco’s intense African policy calendar and huge commercial economic projects, there stay countries who still cover the Polisario leadership. For instance, the case of Nigeria, which get advantage from Morocco’s economic bonus, continuing exercises its position to support the Polisario in their faith for independence.

Currently, the Kingdom of Morocco has used its diplomatic and economic might to return its empty seat at the African Union, it has to bestow that it is a capable partner whose membership will favor the African Union, therefore, solving and resolving the deadlock of an African colonial dispute. In contrast, the SADR can also urge for a resolution by sustaining powerful AU member states endorsement, especially, South Africa and Algeria, to guarantee the Kingdom of Morocco brings up some sort of a win-win barraging agreement.

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New Somali Business Fund Creates Jobs

MD Staff

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Unemployment is chronic across Somalia. The SBCF is expected to generate more than 2,000 jobs, most of which will go to young people. Photo: Hassan Hirsi/World Bank

Sahal, a dairy farmer, is CEO of Bovine Industry, an urban dairy farm in central Mogadishu. The company cross-breeds Somali cattle with Jersey cattle to produce higher-quality milk.

“Mogadishu is the only capital in the world where you can’t buy fresh milk,” Sahal said. “How can a country that exports the most livestock in the world not have fresh milk?”

Despite the clear need for fresh milk, it has been difficult for Sahal and other small and medium enterprises (SMEs) like his to access capital to grow their businesses. That was before the November launch of the Somali Business Catalytic Fund (SBCF), which aims to spur economic growth in country by supporting SMEs and entrepreneurs.

With support from the SBCF, Sahal was able to fit his backyard business with grazing grass and fences. The demand for fresh milk is soaring, with an average waiting list of three months for a single liter. Soon, Sahal will be able to increase his herd of 15 cows, producing more milk and allowing him to employ more people. He believes that development should be based on grassroots needs, and simple supply/demand analyses.

“Farmers have the knowledge to pasteurize milk, produce yogurt and expand the Somali dairy sector,” he said. “We just need the machinery and capital to make it happen.”

SBCF, the Bank’s flagship job creation initiative in Somalia, targets businesses that focus on innovative processes, products and markets new to the region. It is also intended to stimulate the business and technical services industry to build sector expertise in agriculture, livestock and energy, among others. So far, the SBCF has selected 101SMEs across the Somali peninsula – South Somalia, Puntland and Somaliland — to receive financial and technical support. The selected firms are expected to generate more than 2,000 jobs.

“Poverty reduction in Somalia must be private sector-led. We have relied on traditional aid since the early 1990s, and handouts have not been a sustainable method to reduce poverty,” said Sahal. “I believe that access to capital is crucial for both job creation and dignified poverty reduction.”

Asli Health Care Company, based in Hargeisa, has also benefited from the SBCF. The company’s manager, Nemo Yusuf, founded the company after she and her partners studied imports to Somaliland. Through a market study, she and her partners studies the viability of producing beauty products and creating jobs in the process.

“We observed an excess of imports of personal healthcare and beauty products from China and the Middle East, most of which could be produced domestically,” she said. “Our study confirmed that we could produce and sell shampoo, soaps and detergents competitively,” she said. “A reality that is too familiar with Somalis is that we import most products, when we should be producing them.”

Through the SBCF, Yusef was able to purchase high-speed manufacturing equipment, allowing her to produce shampoo bottles that limit waste from importing more plastic.

Her company is also supported through the SME Facility (SMEF). SMEF provides technical assistance and business development services to assist Somali entrepreneurs to launch, manage, and grow successful businesses. Asli and her partners were trained in budget planning, finance, and human resources training, which is helping their business become more effective. SBCF and SMEF fall under the Somali Core Economic Institutions and Opportunities (SCORE) Program, which is funded by the World Bank’s Multi-Partner Fund (MPF).

Armed with this knowledge, Yusuf and her partners have expanded their business. They created a sachet-packet shampoo line as a new product.

“There is a demand for one-time use 10 milliliter sachets, especially among young people and those who cannot afford full bottles,” Yusuf said. “We are in the process of manufacturing our own bottles to drive prices even lower.”

Challenges in Hargeisa are similar to those in Mogadishu, where Yusuf said “accessing capital is probably the main constraint to private sector growth.” There are also challenges such as the availability of skilled labor, supply-chain issues related to infrastructure, affordable energy and economic policies that support private sector competitiveness are also prominent.

Yusuf can see the results in Hargeisa, where the large market could be used to create jobs for young people as well as keep currency in the market and limit inflation.

“Our company is managed entirely by fellow citizens,” she said. “We have employed an additional 17 people to support the expansion of our company, of which most are young people. A third of our employees are women.”

World Bank

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