Corruption is one of the major impediments to economic and social development. As corruption permeates various sectors, it is essential to identify and tackle its root causes, promote transparency and accountability, and foster a culture of integrity.
By doing so, we can mitigate the devastating impact of corruption on our societies and pave the way for sustainable development. Moreover, it is crucial to recognise that the dominant Western discourse on corruption in Africa has been criticised for its narrow focus on public sector malfeasance, which serves to legitimise interventions that erode state sovereignty and promote corporate interests.
In reality, corruption in Africa is a complex phenomenon that involves both public and private sector actors. Furthermore, the emerging narrative highlighting corrupt networks linked to ruling regimes must be balanced with an acknowledgment of the significant role of private capital in perpetuating large-scale corruption, which hinders Africa’s economic and social progress. Annually, corruption drains an estimated US$10 billion from African economies, diverting crucial resources from healthcare, education, and infrastructure development, and undermining economic growth.
In addition, the Stolen Asset Recovery Initiative has documented 564 recovery cases across 141 jurisdictions, yet progress must be made faster, as emphasised by Kodjo Attisso, Regional Adviser at the United Nations Office on Drugs and Crime. This highlights the need for more effective mechanisms to track and recover stolen assets.
Meanwhile, the concept of “African solutions to African problems” underscores the imperative for African nations to assume the forefront in identifying and executing remedies for their distinct challenges, rather than depending on external interventions or recommendations. The neoliberal anti-corruption agenda consistently ignores corporate financial crimes such as transfer mispricing, trade misinvoicing, accounting irregularities, financial mismanagement, and massive tax avoidance, which extract colossal wealth from the continent.
The greater concern, as Malaysian sociologist Syed Hussein Alatas termed it, is “tidal corruption”: a systemic deluge of corruption by private capital that floods the entire state apparatus, involving those at the very centre of power. A stark example of this tidal corruption is how the Mozambican government’s secret accumulation of over US$2 billion in loans from international banks — Credit Suisse and VTB — between 2013 and 2014, sparked a major financial crisis. The funds, ostensibly for maritime surveillance and tuna fishing fleets, were largely diverted through bribery and illicit payments to state officials and company executives, ultimately plunging Mozambique into an economic crisis, triggering a sovereign default, and halting international donor support.
Similarly, the extractive sector in Africa — encompassing oil drilling in Angola, coltan mining in the Democratic Republic of Congo, or natural gas extraction in Mozambique — provides a particularly fertile ground for this large-scale wealth extraction.
These sites are often remote enclaves, far from capital cities and the scrutiny of regulators and citizens, thereby providing ample cover for illicit resource siphoning. In the same vein, the DRC’s vast mineral reserves have been plagued by systematic corruption, with state officials, private companies, and middlemen siphoning off revenues through undervalued concessions, illicit mining, and trade.
- Open letter to President Mnangagwa
- Feature: ‘It’s worse right now than under Mugabe’: Sikhala pays the price of opposition in solitary cell
- Masvingo turns down fire tender deal
- Human-wildlife conflict drive African wild dogs to extinction
Keep Reading
Shell companies and offshore structures obscure ownership and facilitate illicit transactions, while minerals often enter international supply chains, implicating global buyers, traders, and financial institutions.
Furthermore, Angola’s oil wealth was systematically siphoned off through grand corruption and state capture during José Eduardo dos Santos’ presidency. His daughter, Isabel dos Santos, amassed vast wealth through opaque deals, state contracts, and preferential access to national assets.
A complex web of shell companies and offshore structures hid ownership and facilitated illicit transfers, while international banks and financial advisory firms enabled the global movement of these funds.
In South Africa, the state capture phenomenon under former president Jacob Zuma involved the systematic manipulation of public institutions and state owned enterprises for private gain. The Gupta family and their associates used shell companies to secure inflated contracts, facilitate kickbacks, and launder money. International banks, auditing firms, and consulting firms were implicated in enabling these schemes.
More recently, Zimbabwe’s Gold Mafia provided a chilling contemporary illustration of this “tidal corruption”, where corporate entities facilitate the siphoning of billions of dollars from the country through complex networks involving international buyers, complicit financial institutions, and lax regulatory environments in external jurisdictions.
These pervasive examples of “tidal corruption” underscore the urgent need for a robust, Africa — led framework that specifically targets corporate financial crimes.
Current international conventions, while useful, often do not adequately address the unique complexities and scale of wealth extraction facilitated by corporate entities within Africa. An AU Convention on Corporate Corruption would not only signify Africa’s commitment to self-determination in tackling its gravest challenges, but would also provide a harmonised legal instruments.
AU convention case
It is time for the African Union (AU) to champion a new understanding and actively combat this “tidal corruption”.
An AU Convention on Corporate Corruption would be a pivotal step in challenging the biased narrative, reclaiming state capacity, and truly addressing the illicit financial flows that continue to underdevelop the continent. Focus must shift from the abused power of public officials to the predatory power of unchecked private capital. The widespread corruption in governments throughout Africa has its origins in long-standing cultural and political traditions centered on patronage and is often aggravated by a political attitude of strong entitlement. Implementing the notion of African solutions to African problems within the framework of corruption in postcolonial Africa is a challenging and enduring undertaking.
The following steps are key in addressing corporate corruption:
l Redefine corruption: Broaden the definition to explicitly include corporate financial crimes, illicit financial flows, aggressive tax avoidance, and the role of enablers like accounting firms, banks, law firms in facilitating these practices;
l Harmonise legal frameworks: Work towards common standards across AU member states for investigating, prosecuting, and penalising corporate financial crimes, including extraterritorial jurisdiction where illicit flows originate or terminate outside the continent;
l Enhance transparency and data sharing: Mandate beneficial ownership registries, public contract disclosures, and automatic exchange of tax information among AU members and with international partners, to track capital flows more effectively;
l Strengthen regulatory capacity: Provide technical assistance and capacity building for African states to develop robust regulatory bodies, auditing capabilities, and financial intelligence units equipped to monitor and challenge multinational corporate practices;
l Promote asset recovery: Establish more effective mechanisms for identifying, tracing, freezing, and returning stolen assets, including those hidden through complex corporate structures;
l Challenge global tax architecture: Advocate collectively for a fairer global tax system that curtails corporate tax avoidance and ensures resource-rich nations receive a just share of profits generated on their soil; and
l Hold enablers accountable: Introduce measures to hold international accounting firms, banks, and legal firms accountable for their role in facilitating illicit financial flows and corporate corruption in Africa. The AU should work towards common standards across member states for investigating, prosecuting, and penalising corporate financial crimes, including extraterritorial jurisdiction, where illicit flows originate or terminate outside the continent. A collaborative endeavour, including governments, civil society, and international partners is necessary to combat corruption and promote transparency and accountability.
Nyawo is a development practitioner, writer and public speaker. These weekly New Perspectives articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — kadenge. [email protected] or +263 772 382 852.
