Getting the Basics Right: Killing Corruption in African Countries

The key to realizing the potential of African countries is to get the basics right. It means understanding good and poor governance and the role each plays in engendering prosperity or economic failure. It also means understanding the time, place and role of global political agitation and the business and practical realities of economic development. For instance, Zimbabwe turned down the IMF’s Structural Adjustment Program nearly twenty years ago. The basis for rejecting the IMF was to make a political protest against so-called “conditionalities.” The source of IMF’s consternation at the time was that Zimbabwe was using borrowed funds to finance an interventionist war while simultaneously unable to pay its creditors. President Mugabe famously said then that the “IMF should shut up.”[1] It is a classic case of mixing business with politics. In the quarrel with the IMF, President Mugabe’s vision was clouded by political ambition while the IMF was focused on the basics of prudent economic management, i.e., getting the basics right.

A Necessary U-Turn towards the IMF in Zimbabwe

However, after twenty years of economic catastrophe and wasted opportunities, Zimbabwe is reported to be in the final stage of an agreement with the IMF for assistance that will include the terms that the country turned down nearly twenty years ago! [2] It is an example of how mixing business and politics can lead to disastrous results for a country’s people. President Mugabe railed against the IMF twenty years ago but has now changed his attitude and is supporting his country’s effort to gain IMF assistance. In the interim, the institution has changed little, although there has been some structural modification to its general application of remedies in order to achieve more successful results. The point being that on the whole, IMF criteria and lending policy is open knowledge and is not drastically different from when Zimbabwe sought assistance almost two decades ago. [3] Other than coming to its senses there is no other rationale for Zimbabwe to accept today, what it vehemently refused to accept almost twenty years ago.

Fig 1. IMF Conditionalities

Greek Example of Politicizing the IMF

A poster-child of politician’s penchant for vilifying the IMF for the problems they have caused is Greece, a member of the Western alliance. Greece is instructive for African countries in their dealings and relations with the IMF. For decades, Greece was run like a corrupt political enterprise by irresponsible leaders who eschewed the virtues of good governance. Greek people wanted it that way because they repeatedly voted the type of leaders that perpetuated corruption and bad governance to the leadership of Greece. In order to gain entrance into the European Union, Greece “cooked” the books to show debt to GDP ratio, current account deficits, etc., that met European Union requirement because its leaders were looking for successful EU nations like Germany and the U.K., to assume responsibility for their corrupt edifice, also known as the “Greek economy.” Almost immediately after admittance to the EU, Greece revealed that its debt to GDP was not 108% but rather 180% and current account deficit was actually 12.6% instead of 6% as had been declared in the audit of its economy. The nation has been negotiating various debt relief programs with the IMF since 2010. In 2012, Greece registered the largest sovereign debt default in history. Greek politicians have tried to vilify the IMF for their problems and Greece elected SYRIZA[4] on a platform to reject IMF conditions and, if necessary, to take Greece out of the European Union. 

Fig 2 Corruption is an invisible killer 

Alexis Tsipars campaigned on a hardline approach to the IMF and European Union negotiators. After he assumed office and learned of the reality of his country’s financial situation first hand, he was forced to change his position and accept the very conditions that he campaigned against. “The 41-year-old leader went to the polls in January promising to roll back austerity measures imposed by the so-called troika of international lenders – the European commission, International Monetary Fund and European Central Bank – but was instead forced to accept even harsher terms in July after Greece teetered on the brink of bankruptcy and a eurozone exit. As part of the €86bn (￡63bn) bailout deal, Tsipras agreed to significant pension reforms, tax rises and a major privatisation programme.” [5] The chief antagonist of the IMF in his government, his Minister of Finance, Yanis Varoufakis, was forced to resign. Greece changed its tone from antagonist to a plaint debtor whose profligacy, in the first place, created the tangled mess from which the banker is trying extricate it.

UK’s Example of a Pragmatic Approach to the IMF

The first and preeminent lesson to take away from the history of dealings with the IMF is: (1) to understand the role of the IMF as a lender of last resort; and (2) to make sure that leaders manage their affairs in such a way that they never require a bankruptcy banker like the IMF. If countries do not invite the IMF into their affairs, they will never experience conditions for doing business with the IMF (aka conditionalities). Inviting the IMF usually means a country’s financial affairs are out of sorts and cannot be managed without a “bankruptcy banking institution,” which is what the IMF is for countries. Dealing with the IMF requires that governments remove politics from the sphere of issues to consider and above all to refrain from demonizing the hand that is trying to feed them. The IMF is a messenger organization and as a banker has very strict operating guidelines as all banks must. Its job is particularly onerous because it is usually, albeit not always, dealing with countries that have recalcitrant leaders who have misspent their nation’s resources and are looking for a scapegoat on whom to pin the blame.

In contrast to Greek experience, the United Kingdom resorted to the IMF in 1976. [6]As usual, the loan had conditions similar to what every African country and, in fact, every country that invites the IMF receives. The IMF as a banker of last resort is intent on making room within existing revenue flows to enable the government to begin to pay arrears of debt so that the country can access financial markets. It’s very much like an individual or a business going before a Bankruptcy Judge. There was vigorous debate during and after the loan about whether Britain needed the loan and there has been numerous forensic analysis of monetary policy during and after the IMF loan. [7] It was a humiliating experience for the country but its leaders were pragmatic and took the loan even though it portended a change in government for the party in office. The aftermath of the IMF loan and other challenges led to U.K electing the first woman Prime Minister in its history in the late Baroness Margaret Thatcher. Not too many people know of the experience of Britain with the IMF because it was handled with dispatch and efficiency once it had established that the loan was inevitable.

Zimbabwe and Greece’s experience has dragged on for years with each country fighting it every step of the way. For these countries, IMF conditions for a loan facility, has become political fodder with which to stoke the passions of their people, which is shortsighted and wrong-headed as Zimbabwe and Greece have discovered. In confusing the business of borrowing with politics, the leaders of the countries have failed their people and region. Getting it right for countries who find they are facing financial conditions requiring IMF intervention means, separating the business of restructuring their economy with the politics of managing the country.

Getting it right in the fight to kill corruption

Getting it right in governance also means solving problems. Good politics is the art of solving society’s problems. Most African leaders misunderstand their mandate. There are signs afoot that economic storms are gathering on the African continent due to low commodity prices, high unemployment, and poverty. In order to avoid another lost two decades, African leaders have to exhibit a level of governance competence commensurate with the times. It means getting the basics right at every level of governance required to run properly functioning societies.

To Alexis Tsipars’ credit he has taken on the mandate of delivering good governance to the Greek people. “Tsipras told supporters that he would tackle endemic corruption in the country. ‘The mandate that the Greek people have given is a crystal clear mandate to get rid of the regime of corruption and vested issues,’ he said. ‘We will show how effective we will be. We will make Greece a stronger place for the weak and vulnerable, a fairer place.’”

Fig 3 Poverty is one of the fruits of corruption

In African countries, corruption has become a monstrosity that feeds on the aspirations and potential of people and countries. To grow economically, African leaders, whether they like it or not, have to get the basics right by first committing, without equivocation, to killing corruption. It means setting a zero tolerance regime and agenda for corrupt practices and acts. It is the prevalence of lack of accountability in financial affairs and corruption that precipitates the invitation to the IMF in the first place. Through kickbacks on contracts, countries pay more than necessary for services and corrupt officials pocket the difference. Open and transparent bidding will put paid to that instantaneously. Officials establish illegal tolls in administrative processes that allow them to extort funds from citizens who come to their area of responsibility for vital services.

To get the basics right in the context of eradicating illegal tolls from the process of administering public services means creating a system of oversight through electronic monitoring and accountability. Electronic surveillance will catch scoundrels in the act of extortion. To establish failsafe accountability requires a forensic investigation of the entire civil service to determine all the critical control points. These are areas that are susceptible to abuse. Following the results, a process-flow that identifies each duty and the duration required for processing activities should be displayed in full view of the public.  A process for redressing undue delays should be posted so that the public knows where to turn when things are not proceeding in good order. Anchoring the process is an oversight regime that holds each department accountable by reviewing each activity to determine how it was executed and holding the responsible parties accountable when activities are not processed according to set timeline.

In the last Nigerian government, South Africa detained two planes that came into the country toting millions of dollars in cash to pay for weapons for the army. Everyone, except Nigerians of course, knows that that is not the proper way for a nation to purchase armaments. Every African country is hamstrung by the scourge of corruption.

Getting it right on killing corruption means. (1) Creating process-flow systems in administering civil service tasks that thwart corrupt activities. (2) Establishing electronic monitoring devices that catch perpetrators in the act of perpetuating corrupt acts. (3) Having an open and transparent financial administration that informs the public of public revenues and expenditures. (4) Open and transparent bidding for public contracts at all levels of government. (5) Ensuring that every public official declares their assets before, during and after leaving office. (6) Guiding public accounts and revenue flows to ensure that funds due to the public are collected in timely fashion but also that outflows are managed according to proper accounting procedure. (7) Making sure that no public official can treat public funds like their personal fund. (8) Putting real teeth into institutions that manage law enforcement in society. In the process of Killing corruption, getting it right means creating an environment that rebuffs corruption because perpetrators will be caught and punished. 

 ?John I. Akhile Sr. is President and CEO of African Trade Group LLC.,www.africantradegroup.net and author of two books. The newest one, “Unleashed: A New Paradigm of African Trade with the World,” is available on Amazon.com or atwww.unleashafricantrade.com  

[1] https://www.irinnews.org/report/10117/zimbabwe-imf-should-%E2%80%9Cshut-%E2%80%9D-mugabe

[2] https://www.imf.org/external/np/loi/2015/zwe/093015.pdf

[3] https://www.imf.org/external/np/exr/facts/howlend.htm 

[4] https://www.syriza.gr/page/who-we-are.html#.V3lbS7grLIU

[5] https://www.theguardian.com/world/2015/sep/20/syriza-set-to-return-to-power-in-greek-general-election

[6] https://www.nationalarchives.gov.uk/cabinetpapers/themes/sterling-devalued-imf-loan.htm

[7] https://www.nuff.ox.ac.uk/economics/history/paper104/davies104.pdf