Thursday, January 30, 2020

Lesotho's Hunger

According to the UN, more than 500,000 people – a quarter of Lesotho’s population – face severe hunger due to droughts that caused a 60% fall in cereal production last year, compared with 2018.

At least 71,000 people in rural areas are “one step away from famine”, says Jens Laerke, spokesperson from the UN Office for the Coordination of Humanitarian Affairs
Rural areas have been hit as massive fall in food production causes severe hunger for a quarter of country’s population.

“We can’t plant any crops in this drought situation. The rains only came last December and everything we had planted had wilted. We have no livestock left to sell or exchange for grain. So, unless we get help, we are just going to starve,” says Tšepo  Molapo whose children all died at illegal mines in neighbouring South Africa, where they had trekked in search of work. He relies on a monthly government pension payout of about $48 (£37) but the paltry amount cannot feed him and the eight grandchildren he cares for on his own following the death of his wife. “I do not know how I am going to survive with my grandchildren.”

Climate Change and the Locust Plague

Climate change may be powering the swarms of desert locusts that have invaded eastern Africa, ravaging crops, decimating pasture and deepening a hunger crisis, locust and climate experts said. Experts say the scale of the infestation is beyond local capacity as desert locusts can travel up to 150 km in a day and multiply at terrifying speeds.

Hundreds of millions of the insects have swept over the Horn of Africa in the worst outbreak in a quarter of a century, says the United Nations. By June, the fast-breeding locusts - already devouring huge swathes of Ethiopia, Kenya and Somalia - could grow by 500 times and move into Uganda and South Sudan. The hungry swarms threaten to exacerbate food insecurity in a region where up to 25 million people are reeling from three consecutive years of droughts and floods, say aid agencies.
Keith Cressman, senior locust forecasting officer at the U.N. Food and Agriculture Organisation (FAO), said the swarms formed after cyclones dumped vast amounts of rain in the deserts of Oman - creating perfect breeding conditions.

"We know that cyclones are the originators of swarms - and in the past 10 years, there's been an increase in the frequency of cyclones in the Indian Ocean," said Cressman, adding that there were two cyclones in 2018 and eight in 2019. Normally there's none, or maybe one. So this is very unusual. It's difficult to attribute to climate change directly, but if this trend of increased frequency of cyclones in Indian Ocean continues, then certainly that's going to translate to an increase in locust swarms in the Horn of Africa."
The infestation from the Arabian peninsula has also hit countries such as India and Pakistan, with concern growing about new swarms forming in Eritrea, Saudi Arabia, Sudan and Yemen.

Climate scientist Roxy Koll Mathew from the Indian Institute of Tropical Meteorology in Pune said increased cyclones were caused by warmer seas, partly attributable to climate change.

"The West Indian Ocean, including the Arabian Sea, was warmer than usual during the last two seasons," said Mathew. "This is largely due to a phenomenon called Indian Ocean Dipole, and also due to the rising ocean temperatures associated with global warming."

The swarms - one reportedly measuring 40 km by 60 km - have already devoured tens of thousands of hectares of crops, such as maize, sorghum and teff, and ravaged pasture for livestock.

If not contained, the potential for destruction is enormous - a locust swarm of a square kilometre is able to eat the same amount of food in one day as 35,000 people, says the FAO.
"This outbreak was clearly worsened by unusually heavy rains in the region and there is an interaction with the unusual cyclonic activity," said Francesco Rigamonti, Oxfam's regional humanitarian coordinator. "It's difficult to say that it is due to climate change - but there is an interaction between the two. What we do know is that we are having a lot of extreme events like droughts, floods and now locusts in the region, so we need to be prepared." 

Billionaire Bullsh*t

How did the daughter of the former president of Angola amass such wealth? The minimum annual income required to be included in the top 1% of earners in the United States is $328,551. At that rate, it would have taken dos Santos 6,392 years to accumulate her current fortune. 

Does dos Santos deserve to have so much wealth? Indeed, does anyone merit a billion-dollar net worth?  Enthusiasts for free markets might answer the general question with a rousing affirmative. They would say that billion-dollar fortunes are the product of successful investments, often in shares of companies founded and managed by the billionaires themselves, or at least by their parents or ancestors. These capital gains are the market’s reward for cleverness and hard work. 

The vast majority of her fortune was built on the foundation of Angolan oil revenues, which the country’s central bank reports are currently running at a $36 billion annual rate, equivalent to about $1,000 a year per resident. Her level of wealth seems out of place in a country where 42% of the population live in poverty.

The contrast between dos Santos’s affluence and her compatriots’ misery is particularly sharp, but she is not alone. Many billionaire fortunes come from nothing more worthy than having the right parents, good friends in high places, or the opportunity to take unfair advantage of weak governance.  

There are 2,057 people on Forbes’ list of billionaires, from the $131 billion attributed to Amazon’s Jeff Bezos down to the $1 billion of Du Sha, founder of the Chinese retailer Home World Group. 

 Early equity investors suck up gains which rightly belong to the larger economy. Their seed money does far less than the basically unrewarded panoply of systems, services and knowledge that allow new things to be made, distributed and paid for. The persistent growth of large fortunes also suggests that free-market economies are less competitive than they claim to be. 

Karl Marx complained about capitalists getting too much while labourers get too little. The lowly paid workers at Amazon warehouses might agree with his analysis.

Wednesday, January 29, 2020

The Luanda Leaks

Researchers estimate that some 10 to 12 percent of the world's wealth—trillions of dollars—is now hidden through a combination of tax haven secrecy jurisdictions, shell companies, opaque trusts and other mechanisms.

Angola is a country of diamonds, oil and extreme inequality. The plundering of its wealth has a long colonial legacy. The mass hiding of wealth through shell companies is an updated form of colonial kleptocracy. 

the Luanda Leaks, a disclosure by a Portuguese whistleblower of 715,000 pages of documents, scrutiny has fallen on the unseemly mechanisms that wealthy elites around the world steal and hide wealth.

The story exposes the systematic roots of this problem is the visible role of the "wealth defense industry"—the tax lawyers, accountants, consultants, and wealth managers that facilitate and enable this looting process.  These are private companies, often headquartered in the UK and the United States, play an essential role in global plundering apparatus.

 While some banks such as Deutsche Bank, Barclays and Citigroup refused to do business with Isabel Dos Santos, a number of the world's professional service firms were happy to oblige. Dos Santos' wealth extraction would not have been possible without the aid of the Boston Consulting Group, McKinsey & Company, and accounting giant PwC (formerly known as PriceWaterhouseCooper).

PwC acted as Dos Santos' consultant, tax advisor and accountant—assisting with at least 20 companies controlled by she and her husband.  

McKinsey and Boston Consulting were hired by Dos Santos to restructure the state oil company Sonangol.  But these consulting firms were paid by shell companies based in Malta controlled by Dos Santos, not through official state channels, an obvious red flag for those monitoring money laundering.

"Paying huge and dubious consulting fees to anonymous companies in secrecy jurisdictions is a standard trick that should sound all alarm bells," said Christoph Trautvetter to the New York Times, a forensic accountant.

The U.S. and the European Union requires banks and financial firms to report suspicious activities and transactions. But unlike the European Union, the U.S. does not impose the same requirements on accounting, legal and consulting firms. 

Tom Keatinge, the director of the Centre for Financial Crime and Security Studies at the UK-based Royal United Services Center, writes in the Guardian:

"As banks build their defenses, an equally committed army of accountants, lawyers, consultants and advisors works to subvert those defenses.  They use every tool of financial engineering to hide ownership and obfuscate payments, ensuring that deniability is plausible and that if the trail followed by any investigator will be fiendishly complex.  There remain other obstacles to overcoming: shortcomings in national and international regulations, governments' woeful underinvestment in their response to illicit finance, and a lack of transparency concerning company ownership.  This means that, until there is a revolution in how we tackle illicit finance, the sharp minds that enable the theft of national wealth will remain one step ahead."

The professional wealth managers and consulting groups are not capable of policing themselves,

Monday, January 27, 2020

The Suffering in Somalia

The number of Somalians being pushed out of the countryside and into the capital Mogadishu has reached an unprecedented high, putting pressure on the city’s already poor infrastructure and threatening its faltering recovery from three decades of conflict. More people arrive in Mogadishu daily, driven to the city by multiple climate shocks and violence between al-Shabaab, Amisom and the Somali national forces. Last year alone, more than 100,000 people arrived in the capital, many of them returnees from refugee camps in Kenya and Yemen.
Nationally, over 2.6 million Somalis are displaced within the country, with Mogadishu hosting the largest concentration of people forced from their homes. Many in the city have not had a permanent home since the civil war broke out in 1991.

More than 800,000 internally displaced people dwell in informal settlements across Mogadishu, according to the office of the mayor. They are crammed into makeshift shelters with little or no sanitation and limited access to the most basic services. Scattered over 700 sites across the capital, families mainly consisting of women and children share common latrines and survive on one meal a day. Every morning, women from the these camps head into the city centre, looking for casual jobs such as clothes washing. With no family or clan connections to the local host community, they face abuse and sexual exploitation.
There are “critical” levels of malnutrition, according to an assessment by Somalia’s food security and nutrition analysis unit.
A local radio station reported that about a dozen children had died of starvation in one encampment in Kahda district. Among them, said the station, were young twins whose mother had been killed in last month’s truck bomb explosion.
Mogadishu, second on Demographia’s 2015 ranking of the fastest growing cities in the world, has limited capacity to integrate such a large number of displaced people into its urban development system.

“The most significant challenge posed by conflict and natural disaster induced displacement is its impact on rapid and unplanned urbanisation and the rural exodus,” said Dr Hodan Ali, head of Benadir regional administration’s durable solutions unit. “Mogadishu is emerging from 30 years of conflict. The infrastructure, basic services and local government capacity are extremely limited and, as such, its ability to meet the needs of the most vulnerable and impoverished members of the city is small.” He went on to explain, "The biggest challenge we have in Mogadishu is that the majority of the investment goes into aid and handouts. I don’t think that is an effective way of utilising hundreds of millions of dollars and having to see the conditions we have in the camps."

Capitalising on the gap left by a weak government and the lack of a formal camp management system, an illicit business has sprung up, with “gatekeepers” soliciting land for new arrivals, linking them up with aid agencies, and in return taking a cut of what little aid they may receive.

Humanitarian organisations with limited access to the camps due to security restrictions are left with little choice but to collaborate with the unofficial gatekeepers, in effect paying – and empowering – illicit middlemen.
Somalia’s overall humanitarian situation remains critical, with more than 5 million people in need of assistance according to figures jointly released by the UN and federal government of Somalia. The recent flooding in many parts of the country, which affected over half a million people, has compounded the already dire humanitarian crisis. 

The greatest immediate uncertainty for people displaced to Mogadishu, however, remains forceful evictions, since most are staying on private land. Last year alone, more than 100,000 people were pushed off temporary settlements.

Sunday, January 26, 2020

Another Tragedy for Africa

A locust invasion in Ethiopia, Kenya and Somalia has left crops devastated. It is the biggest swarm in decades, with billions of the ravenous insects eating their way through the already climate-ravaged region. For Ethiopia and Somalia, the infestation is the biggest in 25 years, and for Kenya it is the greatest swarm in 70 years, according to the FAO.

Experts warned Friday that the insect infestation could have disastrous effects on a region still recovering from recent drought and aggressive floodingIn an already vulnerable region with high levels of poverty, the locusts can further devastate crops, resulting in "a major food security problem", said Guleid Artan of the Climate Prediction and Applications Centre at a press conference in Nairobi. The locusts were the latest symptom of extreme weather conditions that also saw a 2019 drought end in one of the wettest rainy seasons in four decades in parts of East Africa, with mass floods killing hundreds.

The United Nations Food and Agriculture Organization (FAO) estimated that one locust invasion in Kenya covered around 2,400 square kilometers (930 square miles) and contained up to 200 billion locusts which descend to feed off plants and vegetation.
A locust consumes their own weight in food every day. Farmers face frustration as vegetation for their livestock is consumed by the ravenous locusts. Many were just slowly recovering from three years of drought, a process which usually takes up to five years.
The FAO warned that the insects could "reproduce rapidly and, if left unchecked, their current numbers could grow 500 times by June,'' spreading to Uganda and South Uganda. If the locusts are not controlled by the beginning of the next planting and rainy season around March, herders could see more crops devastated.

Monday, January 20, 2020

Africa's Richest Man

Aliko Dangote, Africa’s richest man, became $4.3 billion richer in 2019 as his fortune continued to grow on the back of investments in cement, flour and sugar.

The Nigerian businessman and Africa’s most prominent industrialist ended the decade with a net worth of almost $15 billion, making him the 96th wealthiest man in the world.
His conglomerate, Dangote Industries, includes the biggest cement company on the continent, the Lagos-listed Dangote Cement Plc. That’s one of four publicly traded companies under the Dangote umbrella that account for more than a fifth of the value of the Nigerian stock exchange.

Angola - National liberation?

Africa's richest woman made her fortune through exploiting her own country, and corruption. Isabel dos Santos, who is known as “the princess” in Angola, the oil-rich nation her father ruled as president for almost four decades, has long denied that her estimated $2.2bn (£1.7bn) fortune is the result of nepotism or corruption. 

The Luanda Leaks are based on a trove of 715,000 emails, charts, contracts, audits and accounts. Documents show how she and her husband were allowed to buy valuable state assets in a series of suspicious deals. 

The leaked documents also show  Dos Santos approved $58m of suspicious payments to a consultancy company in Dubai called Matter Business Solutions.
She says she has no financial interest in Matter, but the leaked documents reveal it was run by her business manager and owned by a friend.

The businesswoman, who spends much of her time in London, controls interests across Africa and Europe spanning banking, telecoms, TV, cement, diamonds, alcohol, supermarkets and real estate. The material reveals an opaque network of about 400 companies, many of them offshore, connected to Dos Santos, Dokolo and their associates, and the assistance given to the couple in managing them by a coterie of European and American management consultants, accountants and lawyers.

1. The state oil company Sonangol sold Dokolo what has become the couple’s most valuable asset: a stake in the Portuguese oil corporation Galp, now worth €750m after an initial loan-backed payment of just €11m.

 2. A total of $115m in payments to consultancy firms, ordered while Dos Santos was chair of the state oil company, were routed through a Dubai company controlled by her associates.
 3. A business venture with the state diamond company allegedly resulted in $200m of public debt propping up an ailing Swiss jewellery brand partly owned by Dokolo.

4. Two Dos Santos companies and their subcontractors stood to collect up to $500m in fees from a Dubai-style real estate development in the Angolan capital, Luanda, that was later cancelled by the new president for “over-invoicing” and “disproportionate compensation”.
The former president's daughter has made the UK her home and owns expensive properties in central London.

Andrew Feinstein, the head of Corruption Watch, says the documents show how Ms Dos Santos exploited her country at the expense of ordinary Angolans.
"Every time she appears on the cover of some glossy magazine somewhere in the world, every time that she hosts one of her glamorous parties in the south of France, she is doing so by trampling on the aspirations of the citizens of Angola."

Dos Santos and her half-brothers and sisters are among the most prominent members of the oligarchy of powerful families in Angola. Her father came to office in 1979 as head of the People’s Movement for the Liberation of Angola (MPLA). After the end of the civil war in 2002, President Dos Santos and the MPLA consolidated power by bringing the most valuable sectors of the economy into government ownership. 

The spoils were shared with a select group with links to politics and the military. As a result, Africa’s second-largest oil producing nation became known as one of the most corrupt countries on Earth, ranking near the bottom of the Transparency International corruption perceptions index.
“These are the classic symptoms of a captured state,” said Steve Goodrich, a senior research manager at Transparency International UK, after reviewing the Luanda Leaks findings. “Here we have industry and politics all in one family, with no apparent separation of powers.”
The blue chip firms PwC and Boston Consulting Group (BCG) collected millions in fees, providing services such as auditing of accounts and management consultancy.
Isabel dos Santos’s half-brother, José Filomeno dos Santos, is on trial for the attempted looting of $500m from the country’s sovereign wealth fund. He has pleaded not guilty. Her half-sister, Welwitschia dos Santos, a member of parliament, was impeached last year after moving to Britain.

Saturday, January 18, 2020

Fake medicines

Globally, the trade in counterfeit pharmaceuticals is worth up to $200bn (£150bn) annually, with Africa among the regions most affected, according to industry estimates. The World Health Organization (WHO) says 42% of all fake medicines reported to them between 2013 and 2017 were from Africa

  • Ivory Coast, Guinea-Bissau, Liberia and Sierra Leone seized 19 tonnes of counterfeit medicines in 2018
  • Smugglers in Ivory Coast were intercepted trying to bring in 12 tonnes of counterfeit pharmaceuticals from Ghana in 2019
  • An Interpol-led operation in seven West African countries seized more than 420 tonnes of illicit pharmaceutical products in 2017
  • Nearly 19.88 tonnes of fake medicines were seized in Mali between 2015-18
The accounting firm PwC says the proportion of fake pharmaceuticals in some countries can be as high as 70%, in developing regions such as Africa. The WHO estimates one out of every 10 medical products in low- and middle-income countries, which includes most of Africa, is sub-standard or fake.
Analysis by the London School of Hygiene and Tropical Medicine for the WHO estimates substandard and fake anti-malarial drugs could be causing 116,000 extra deaths from the disease every year in sub-Saharan Africa at a cost to patients and health systems of on average $38.5m a year.
And in 2015, a study published in the American Society of Tropical Medicine and Hygiene estimated more than 122,000 children under the age of five died each year because of sub-standard anti-malarial drugs in sub-Saharan Africa.
Scientists say poor quality drugs are important contributors to under-five mortality rates.

Thursday, January 16, 2020

Zimbabwe's Corruption

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say in a new study that urges swift policy changes and a sound financial framework to attract investment.

The country has been reeling from one of the worst droughts in decades, with the United Nation’s World Food Programme (WFP) identifying Zimbabwe as one of the 15 critical emergencies around the world at risk of crisis without rapid intervention.
More than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. This month the WFP is doubling its assistance to reach 4.1 million people who are hardest hit in rural areas.
A study  made a note that there is no reform culture among the custodians of reforms in Zimbabwe.

Besides, the country’s multilateral debt, estimated at over $8,2 billion, has prevented any potential inroads with the international organisations involved with the compact.
“Clearance of multilateral debt arrears: the sanctions rhetoric seems to have taken the centre
stage ahead of reform implementation,” noted the study, adding that, “This behaviour has promoted corruption and stands in the way of reforms;
Economic analyst, John Robertson, said nobody agrees with the government on the point of economic sanctions imposed by the Western countries on individuals accused of human rights abuses in Zimbabwe.
“The sanctions are not applied to the country; the sanctions did not cause the country’s failure. The failure is caused by our decision to close down our biggest industries,” Robertson told IPS, referring to the destruction of the agriculture sector and the collapse of the manufacturing sector.
“The policy choices that we made have caused so much damage to our productive sectors starting with agriculture,” said Robertson, adding, “We imposed upon ourselves a serious handicap when we said the land in the country no longer has market value land so [people with] land can no longer borrow against ownership rights to that land because the land is now the property of the state.”
David Moore, researcher and political economist at the University of Johannesburg, told IPS that if the ruling Zimbabwe African National Union – Patriotic Front (ZANU PF) party had maintained its neo-liberal and white-farmer-friendly economic promises it might have kept the “west” on its side.
But cabals and corruption cannot be dismantled – they are the pillars of the party, he said. And so the military-party complex so tight that it cannot be untied: they are integral parts of the country’s political economy.
Academic and social commentator, Rudo Gaidzanwa, concurred saying it will take pushing to get ZANU (PF) ruling party and its military allies to undertake political and social reforms.
“The types of political and economic reforms that the civilians want will undermine the interests of the militarist elements in the state and the security sector,” Gaidzanwa, a Sociology Professor at the University of Zimbabwe, told IPS.
“ZANU won’t stand for anything that undermines their hold over the state and the society. It is not likely that any meaningful reform will occur unless dramatic social and political changes occur in Zimbabwe,” she said, adding that the ZANU PF led-government and elites have used economic sanctions as a convenient excuse to evade responsibility for economic and social crises.
Sanctions have not prevented the president and his cohorts from pillaging mineral resources. The current chaos was ideal for pillaging resources and undermining the rule of law and democracy, she said.
“Rigged elections are an issue because they prevent the will of the people from prevailing,” Gaidzanwa told IPS. “The present situation over contested presidential elections between (Nelson) Chamisa and (Emerson) Mnangagwa is symptomatic of that struggle…These issues have dogged our elections for decades and remain unresolved hence our dire economic and political situation.”
  • After Mugabe was ousted from power Zimbabweans went to the polls in July 2018 to elect a new leader, with Mnangagwa winning 50.8 percent of the voted compared to Chamisa’s 44.3 percent.
  • The results were disputed.