East Africa – Pest Outbreak Threatens Crops

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There are serious concerns over the new armyworm outbreak, which has already ruined large areas of cultivation.

On February 14th international leaders held talks in Harare, Zimbabwe, to tackle the armyworm outbreak, which has spread across several African countries, including Zambia, Zimbabwe, South Africa and Ghana.

There have been more recent reports suggesting that Malawi, Mozambique and Namibia may also be seeing outbreaks. The species of ‘fall armyworm’ originates from the Americas and United Nations (UN) FAO coordinator for South Africa, David Phiri, said, “farmers do not know really how to treat it.”

The caterpillars eat maize, wheat, millet and rice, key food sources in southern and eastern Africa. The Centre for Agriculture and Bioscience International (CABI) recently said that it is spreading rapidly and needs an urgent response.

The armyworm name is misleading as the pest is actually a caterpillar, and should not be confused with the African armyworm, which is known in the region. This species originates from the Americas, although no-one is sure how it made it to Africa. It is thought that it could have arrived on a commercial flight or in imported food.

According to the United Nations (UN) Food and Agriculture Organisation (FAO), it has taken only eight weeks for the pest to spread to six southern African countries. The caterpillar stage does the damage but “it’s the adult moth that migrates long distances and that’s how it’s managed to get round Africa,” said Professor Ken Wilson, an armyworm expert.

“These army worms attack the maize leaves, the flower and even bore into the stalk. And because they dig into the stem of the plant, it is difficult to notice them. It is only on close inspection that you realise almost the entire plant has been destroyed” said Chimenya Phiri, Malawian farmer, reported BBC News on February 14th.


Armyworm – www.phys.org

South Africa’s agriculture ministry said little was known about how the armyworms arrived or what their long-term effects would be; “It may become a migratory pest similarly to the African armyworm and may migrate in large numbers from one area to another, causing great damage,” reported UK-based the Guardian.

“If it is a small level of the worms, it’s easy to control, using pesticides. Otherwise, it’s very difficult to control it, so they will have to use different methods – including sometimes burning the crops,” said Phiri.

Zimbabwe’s Deputy Agriculture Minister Davis Marapira said that the pest had been detected in all of the country’s 10 provinces.

The FAO, which is hosting the Harare meeting, said armyworm outbreaks combined with current locust problems “could be catastrophic” as southern Africa has yet to recover from droughts caused by the El Nino climate phenomenon.

Zambia reported that almost 90,000 hectares of maize have been affected. In Malawi, some 17,000 hectares have so far been affected. In Namibia approximately 50,000 hectares of maize and millet has been damaged, and in Zimbabwe up to 130,000 hectares could be affected.

The FAO said it had initiated the process of procuring pheromone insect lure traps, which are used for capturing armyworm and monitoring their spread.

(© AFP 14/2 2017; PANA, Lusaka 16/2)

Find out more in the Africa Research Bulletin:

RWANDA: Food Security Fears
Economic, Financial & Technical Series
Vol. 54, Issue. 1, Pp. 21568A–21568C

Drought and Hunger
Economic, Financial & Technical Series
Vol. 54, Issue. 1, Pp. 21563A–21563C

Africa’s Pulse – Agriculture Could Be The Key
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21424A–21424B.

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Africa – ‘Panama Papers’

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As global reverberations are felt following unprecedented leaks, some of the most pressing concerns are in Africa.

A number of high profile African leaders and businessmen have been named in the recent ‘Panama Papers‘ leak involving the Panama-based firm Mossack Fonseca, detailing the global scale of tax avoidance and evasion; top officials from at least 15 African countries have been named.

The leaks have added to the calls, made in an African Union (AU) and UN Economic Commission for Africa report in 2015 that African money kept in foreign banks should be repatriated to the continent. At a conference in 2015, former South African President Thabo Mbeki said that Africa was loosing US$50 billion through illicit cash flows, more than double the Official Development Assistance (ODA) the continent receives, although a report by the Organisation for Economic Cooperation and Development (OECD) put the amount higher at $150bn, reported Deutschewelle.

The information released in the leaks strongly correlates with findings of the report and confirms the existence of a network of offshore accounts and investment vehicles, driving tax avoidance and evasion. According to a report by the UN Economic Commission for Africa, it is an undeniable fact that these illicit financial flows deserve our full attention continentally and globally.

“There are illicit funds from Africa in European banks. We started discussions with the European Union (EU) some years ago to bring back these funds. We find it morally and economically good for the banks to send the funds back,” said the African Union Commission (AUC) chairperson, Nkosazana Dlamini Zuma.

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BBC

In July 2015, at the UN Financing for Development conference in Addis Ababa, Ethiopia, African nations led the G77 bloc of developing countries who offered to forego international aid if western countries closed tax loopholes and shut down tax havens, reported the Daily Maverick.

The leaks are not entirely new revelations as many in Africa have been pushing for the global tax system to be overhauled, pointing to the billions that is lost from the continent each year. However it is the scale of the networks of financial secrecy, essentially set up to be unaccountable, that is becoming clear, and the intricate and murky connections between world leaders and businessmen.

Journalists have yet to make their way through but a tiny fraction of the 11-million documents and the high profile and politically connected nature of the African individuals implicated, seems to indicate that more are yet to come.

The leak was obtained from Mossack Fonesca by German newspaper Süddeutsche Zeitung who worked in collaboration with the International Consortium of Investigative Journalists (ICIJ) and around 106 worldwide news organisations. Mossack Fonseca is a leading creator of shell companies, corporate entities that are used to hide asset ownership. The leaked internal files contain information on 214,488 offshore entities connected to people in more than 200 countries and territories.

A full breakdown of findings from the ICIJ are available here.

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African Public Officials Implicated – ICIJ

Country Level Findings

Botswana

The President of the Court of Appeals, Justice Ian Kirby, has been named in the leaked files, being said to hold shares in up to five offshore companies mainly in the UK, although he has insisted that all of these are legal. Much of Botswana’s wealth comes from diamond mining, and has been noted to have checks and balances in place to avoid illicit flows of wealth. However, commentators said that it was a worrying sign that many wealthy people in Botswana were considering to invest offshore, reported Deutschewelle.

DR Congo

A leading financial institution with close connections to the gold mining industry, Rawbank, has been implicated in the leaks, which show that the Rawji family, the shareholders of the bank, make extensive use of tax havens and shell companies, maintaining a web of offshore structures such as Khazana Holdings and Hurricane Investments in the British Virgin Islands, Pix Business and Trading Mamu Investments in Panama, and many more. Each of the entities are connected to many other shell companies, which lead to a complex and illusory network of financial connections. There have been concerns that with Dubai’s rise as a gold buyer, a destination for around 70% of DR Congo’s gold, coupled with its financial secrecy, illicit financial flows are growing, reported the Daily Vox.

Jaynet Desiree Kabila Kyungu – twin sister of President Joseph Kabila – considered one of the most influential people in the country, owns a media company together with a Congolese businessman, who were both co-heads of an offshore company in the South Pacific, said to have shares in mobile telecoms operators in DR Congo, reported Deutschewelle.

Egypt

The son of the overthrown President of Egypt Hosni Mubarak was named; Pan World Investments INC, owned by his son Alaa Mubarak, was managed by Credit Suisse in the British Virgin Islands. After the toppling of Mubarak authorities asked Mossack Fonseca to freeze Pan World’s assets, although it is claimed that this was never fully implemented, reported Aswat Masriya.

Ghana

Ghana’s former President John Agyekum Kufour ‘s eldest son, John Addo Kufour, allegedly controlled a bank account in Panama worth US$75,000. They appointed Mossack Fonseca, to manage the fund, reported Deutschewelle.

Guinea

Mamadie Toure, widow of Guinea’s late president, Lansana Conte, was allegedly granted the power of attorney to Matinda Partners and Co Ltd, a British Virgin Islands company, in November 2006. Authorities in the US claimed that Toure received $5.3 million to help a mining company win a mining concession from President Conte just before he died in 2008, reported Deutschewelle.

Kenya

The company which recently bought a controlling stake in the Raila Odinga’s molasses plant in Kisumu – Energem Resources Inc – has been linked to many dubious diamond mining companies in West and Southern Africa and tax havens in the British Virgin Islands.

Kalpana Rawal, Kenya’s Deputy Chief Justice was implicated in several business deals linked to two companies based in British Virgin Islands. The documents revealed Rawal’s involvement in real estate in the UK through offshore companies. Kenya’s constitution bars public servants from owning a bank account outside the country, reported Deutschewelle.

Separately, a Danish national, who has previously been accused of land grabbing in Kajiado Country, has been accused of running Avon Developments Limited, registered in the British Virgin Islands, reported the Daily Nation.

Namibia

The leaks have revealed details about the Sicilian Mafia’s business network between Italians and Namibian businessman Zacky Nujoma, the youngest son of founding President Sam Nujoma. According to reports even though much of the criminal syndicate is imprisoned, the empire – with connections to Namibia, Italy and South Africa – has used financial secrecy companies in the British Virgin Islands, reported the Namibian.

Nigeria

Former Delta State governor, James Ibori, who has already been implicated for embezzling up to $75m in London property, has been named in the leak, leading to concerns that the true amount involved could be much higher.

Senate Bukola Saraki, said to be the third most powerful person in the country, has been named as failing to declare offshore assets in his wife’s name.

Africa’s richest man, Aliko Dangote and his half-brother Sayyu Dantata, have also been linked to Mossack Fonseca’s shell companies. The two are said to have repeatedly bought and sold shares in 13 companies, mainly in the Seychelles, reported Deutschewelle.

Theophilus Danjuma, a retired army general and former defence minister, is one of Nigeria’s richest people, due to ownership of one of Nigeria’s most lucrative oil blocs. The leaks exposed another of his companies – Eastcoast Investments Inc – which he incorporated in Nassau, in the Bahamas, reported the Premium Times.

South Africa

President Jacob Zuma’s nephew Clive Khulubuse has been mentioned in the leaks, as being authorised to represent the offshore company Caprikat Limited, which purchased oil blocks in the DR Congo. According to reports the leak showed that he did not directly benefit from the deal which “deepens the mystery as to what he was doing there. The question arises why would they use him and what benefits would he have gained from that?” Sam Sole, from the investigative team at South African newspaper the Mail & Guardian said.

Zimbabwe

The opposition People’s Democratic Party (PDP) has called for an investigation after the Panama Papers brought to light links between two wealthy Zimbabwean business men, and the Zimbabwean regime. Billy Rautenbach and John Bredenkamp were named as engaging in widespread tax avoidance and externalising huge sums of money outside the country. PDP spokesman Jacob Mafume said “Bredenkamp is an arms dealer and mining tycoon while Rautenbach is the owner of GreenFuels and is involved in diamond mining”, both well known funders of the ZANU-PF ruling regime.

“As a result of the controversial links between Rautenbach and Zanu PF, major shareholders in fuel retail companies such as Sakunda and Redan have been elbowed out of business as the Zanu PF cartel has moved in to create a total monopoly in the fuel sector and thus keep consumers hostage to high fuel prices…What concerns us at the PDP is that the Panama Papers are being released when Mugabe in February said over $15 billion of proceeds from diamond mining remained unaccounted for,” Mafume added, reported New Zimbabwe.

Find out more in the Africa Research Bulletin

KENYA: Graft-Tainted Ministers Sacked (Free to Access)
Economic, Financial & Technical Series
Vol.52, Issue.11, Pp.21059B–21060B

Transparency International: “Endemic Corruption” Plagues Most of Africa
Economic, Financial & Technical Series
Vol.51, Issue.11, Pp.20627B–20627C

TANZANIA: Illicit Outflows Report
Economic, Financial & Technical Series
Vol.51, Issue.5, Pp.20413C–20414B

NIGERIA: Illicit Oil Proceeds Laundered
Economic, Financial & Technical Series
Vol.50, Issue.9, Pp.20119A–20120C

AFRICA: Illicit Financial Flows
Economic, Financial & Technical Series
Vol.49, Issue.2, Pp.19449C–19450C

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Zimbabwe – Corruption in the Diamond Fields

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The government puts a stop to diamond mining and mulls nationalisation as it emerges that billions in revenue has been lost.

On February 22nd diamond miners in Marange were given a 90-day ultimatum to end operations, due to their rejection of proposals to amalgamate the industry. Mines Minister Walter Chidhakwa said in March that all mining operations would be placed under a single company, in which the state would have a 50% share.

The latest move comes after President Robert Mugabe publicly acknowledged US$15bn in lost revenue from the mines, and has declared a nationalisation plan for the industry, although opposition groups and others have called for his resignation, reported NewZimbabwe. 

Already, in Marange, the government owns a 50% stake in six firms; Anjin Investments, Diamond Mining Company, Jinan, Kusena, Marange Resources and Mbada Diamonds. The new entity, Zimbabwe Consolidates Diamond Company (ZCDC), is expected to embark on underground mining operations once fully capitalised, reported the Zimbabwe Independent.

The Marange diamond fields are a widespread area of small-scale production in Chiadzwa, Mutare West. Chiadzwa was the controversial scene of operations to drive out 50,000 illegal diamond panners in 2010. This time as many as 5000 formal employees have lost their jobs and security forces have been deployed to clear those who refuse to leave.

Despite a security presence, looting continues to be rife and there is an ongoing legal battle with some miners who are resisting expulsion. In some areas a new form of business is emerging where those with connections to security personnel are charging others for “protected” access to the fields. Some of these diamond panners are arrested but the majority of them evade the authorities, reported the Financial Gazette.

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Screenshot from VOAvideo

There have been widespread allegations of a lack of transparency within the Zimbabwean diamond sector. Analysts believe that much of the potential revenue has been siphoned off by elite individuals; in 2014 4.7m carats were extracted but only $23m received in revenue.

In 2012 output from diamond mines reportedly rose by 500% to 12m carats, and revenues were expected to follow, instead however they declined, with royalties decreasing to $22.5m in 2011 from $34m in 2010.

A report entitled “Tracking the Trends: An assessment of diamond mining sector tax contributions to Treasury with particular reference to Marange diamond fields,” warned of extensive pillaging through the manipulation of taxes and related fees.

On March 6th sacked former Vice-President and now leader of the opposition Zimbabwe People First (ZPF), Joice Mujuru, caused uproar after he melodramatically claimed that India has built a whole town from smuggled Marange diamonds; Surat in Gujarat, India, is considered the world’s largest diamond cutting and polishing centre. The flow of cheap illegal diamonds was crucial due to a 20% price hike through formal channels.

The opposition Movement for Democratic Change (MDC) has demanded that Minister Chidhakwa must publish figures justifying the closure of the mines. “It is illogical for a government to close down mines and throw people into the streets without a convincing explanation,” said MDC spokesperson Kurauone Chihwayi.

“We are very much disturbed by the lack of transparency and accountability in the administration of natural resources by the Zanu PF government which has a bad tendency of prevaricating when caught engaging in criminal activities,” said Chihwayi.

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VOAnews

Activists and the opposition accuse the Zanu PF government of channelling resources towards the elite and its internal political fights. New Zimbabwe cited figures that claimed that the country earned $60m from 960,000 carats sold in Dubai, whereas Angola earned $117m from 780,000 carats.

According to the Zimbabwe Independent, the fact that President Mugabe has declared $15bn in potential losses, is the “clearest indication yet” that he does have the interest of the country and people at the centre. In 2008 Finance Minister Tendai Biti repeatedly warned over the looting of diamond revenue.

In 2009 a Human Rights Watch (HRW) report, ‘Diamonds in the Rough: Human Rights Abuses in the Marange Diamond Fields of Zimbabwe‘, the group accused the Zimbabwean regime of abetting illegal mining, with the Minerals Marketing Corporation of Zimbabwe (MMCZ), encouraging toleration if illegal activities.

Finance Minister Patrick Chinamasa, commenting on the proposed nationalisation, stated that all revenue will now go straight to the treasury. However the plans has been noted to likely put off many investors; with such a poor record of managing parastatal enterprises, very few would be happy to partner with the government, reported the Financial Gazette.

For a country with a budget of $4bn, of which 30% comes from diamond mining, the proposed move to nationalisation has important economic significance. However, the concerns are that it is largely the regime itself that is responsible for the corruption, both directly, and in driving the incentives that encourage citizens to seek risky, precarious, informal and often illegal employment. The Zimbabwean even commented that nationalisation plan could be understood as the next stage in Mugabe’s utilisation of corruption in the mines for his own gain.

Find out more in the Africa Research Bulletin

ZIMBABWE: Deflation Fears
Economic, Financial & Technical Series
Vol.52, Issue.12, Pp.21100C–21102A

COMPANY BRIEF: Mining
Economic, Financial & Technical Series
Vol.52, Issue.6, Pp.20901A–20901C

DIAMONDS: Zimbabwe
Economic, Financial & Technical Series
Vol.51, Issue.12, Pp.20685B–20685C

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Africa’s illicit financial flows

Illicit Financial Flows mean that Africa is the world’s biggest net creditor. The United Nations says these outflows are at least double the amount of development assistance the continent receives. A new panel will try and address the massive resource leakage – some say $50 billion a year, some much more.

The ‘High Level Panel on Illicit Financial Flows from Africa’, established by the United Nations Economic Commission for Africa (UNECA) was inaugurated on February 18th at the Sandton Convention Centre, Johannesburg.

The multinational panel is to be chaired by Thabo Mbeki, ex-President of South Africa, with Abdoulie Janneh, Executive Secretary of ECA as his deputy.  The members include human rights lawyers, businessmen, financiers and politicians from across Africa and beyond.

In the communiqué issued by the panel after the first working session, they agreed to come up with a communication strategy which will include a dedicated website on illicit financial outflows from Africa.

A technical committee is also going to delve further into the nature, scope, dimensions and impact on development of illicit financial flows and to feed this information through to the panel.

These outflows drain foreign exchange reserves, reduce tax collection, dwindle investment inflows and worsen poverty. The methods and channels are many and varied including tax havens and secrecy jurisdictions, over-invoicing, under-pricing, and different money laundering strategies.

The combination of a heavy debt burden and sustained illicit outflows of capital make Africa the world’s largest net creditor.

In the past four decades, Africa has lost US$1.8 trn through intricate scams involving western companies and local officials. The looting continues up to today and benefits the west while depriving Africa of development funds, says the Southern Times.

Its report – ‘The Trillion Dollar Con’ – looks at multinational corporations (MNCs) and their routine tax evasion, mis-invoicing, import over-pricing and under-pricing of exports.

Washington-based Global Financial Integrity (GFI) also shows how the West is the ultimate beneficiary of laundered money from Africa and Asia.

Africa registered 32.5 % growth in illicit financial outflows between 2000 and 2009 through trade mis-pricing.

GFI says falsified pricing is facilitated by tax havens and secrecy jurisdictions in offshore financial centres that have created space for billions of dollars in unseen and unrecorded proceeds to be moved across borders. The bulk of MNCs have corporate headquarters offshore and through “tax planning” devise ways to reduce or even totally avoid corporate taxes.

The UK hosts more than half of the world’s tax havens, such as those that come under the British Crown Dependencies (Jersey), British Overseas Territories (Cayman Islands, BVI, Bermuda) and members of the Commonwealth.

A UN paper titled “Tackling Ilfflicit Capital Flows for Economic Transformation“, presented to the African Union  in May 2011, reveals the top five African losers as Nigeria (US$89.5bn), Egypt (US$70.5bn), Algeria (US$25.7bn), Morocco (US$25bn) and South Africa (US$ 24.9bn).”Illicit financial outflows from the entire region (Africa) outpace official development assistance coming into the region at a ratio of at least 2:1,” the report says.

GFI estimates Africa’s annual outflows at $30bn but the African Union’s estimates are around $148bn, nearly four times the foreign aid received.

The UN Conference on Trade and Development (UNCTAD) in 2009 estimated the continent’s accumulated stock of capital flight between 1970 and 2004 at around US$607bn, almost three times the continent’s external debt over that period. UNCTAD’s report cited the example of Sierra Leone where capital flight was 425 % of the country’s GDP in 2004. In the DRCongo and Zimbabwe, capital flight was 344 % of GDP and 312 % in Burundi (2004).

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