Southern African Development Community Loses Billions in Illicit Outflows

By Lakshi De Vass Gunawardena
UNITED NATIONS, Aug 20 2019 – The Southern African Development Community (SADC), which comprise 16 member states, loses about 8.8 billion dollars in trade-related illicit outflows and about 21.1 billion dollars in external government debt payments annually, according to a new report released here.

Michael Buraimoh, Director, Action for Southern Africa (ACTSA), told IPS there are several reasons for this, including the lack of capacity to combat trade mis invoicing and managing debt; nature of politics and institutions in Southern Africa leading to corruption and mismanagement; and the unjust nature of the global economy.

The report, titled The Money Drain: How Trade Misinvoicing and Unjust Debt Undermine Economic and Social Rights in Southern Africawas launched ahead of a summit meeting of SADC leaders in Tanzania August 17-18.  

Sunit Bagree, ACTSA’s Senior Campaigns Officer and author of the report, saidIt’s a scandal that rich countries barely seem to care that Southern Africa is haemorrhaging money.”

“A broken international economic system is, fundamentally, why trade misinvoicing and unjust debt are depriving SADC governments of massive funds that they could use to realise economic and social rights for the many people living in poverty in the region,” he noted.

Bagree said SADC governments can certainly do more, for example by employing innovative tools to detect potential misinvoicing of trade transactions and organising comprehensive public debt audits.

“But they must also call out powerful international countries for failing to live up to their responsibilities and turning their collective backs on vulnerable people in Southern Africa,” he declared.

The 16 member countries of SADC are: Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic of Tanzania, Zambia and  Zimbabwe.

The report revealed that in Southern Africa, the youth unemployment rate is 31 percent, 5.4 million people are currently undernourished, at least 617,400 new HIV infections emerge a year, and more than 40 percent of the population in 12 countries lack access to basic sanitation services.

Trade invoicing causes the SADC region to lose at least 8.8 billion dollars a year, and the report estimated that South Africa alone suffers of a loss of at least 5.9 billion dollars per year due to illicit trade flows.

On top of this, the region is bearing even more losses due to debt. The report cites that Angola alone is emptied of 21.1 billion dollars a year as a result of principal and interest payments on debt.

To add to this, the parts of Africa that were devastated by cyclones earlier this year has mass debts to pay back to wealthier countries.

Several institutions have attempted to raise concerns about trade mis invoicing and debts, but progress has been fragmented and slow, and nothing fruitful has emerged.

Asked what role ACTSA will take going forward, Buraimoh said: “We are promoting our report to the media in the U.K. and USA, as well as in Southern Africa and in continental Europe.”

He also revealed they are aiming to meet with and directly influence, the U.K. and U.S. governments, International Monetary Fund (IMF), World Bank, the United Nations, the Commonwealth and African Union (AU) in relation to the report’s findings and recommendations.

This is expected to lay the basis for future advocacy work on debt and trade-related illicit flows with civil society partners such as Jubilee Debt Campaign, Zimbabwe Coalition on Debt and Development (ZIMCODD), Global Financial Integrity and the Southern Africa Trust.

He added that they aim to add value to the work of these partners and join up regional and global work on these two crucial issues, and that this will be a vital contribution to efforts that considers development from a rights-based perspective and as a concept that relates to issues beyond aid.

“By evaluating success of all the above we can measure progress as relates to the report’s recommendations.

As what role the U.N. should play, Buraimoh said the U.N. Human Rights Council has done some good work on these issues.

“We want to see this continue. The U.N. General Assembly should do more, and some U.N. agencies e.g. Economic Commission for Africa also have engaged, while others can do more.”

He said that all need to work together to ensure International Financial Institutions take more progressive approaches.

“You can really help us by getting the report circulated as widely as possible. The more people are energised about this the better it would be for us to make it an international priority. It is a problem plaguing the entire Global South, not only Southern Africa”, he declared.

Solving the Climate Crisis is Beyond Governments

By Claudia Ortiz
PANAMA CITY, Aug 20 2019 (IPS)

Throughout my ten years working in international development and climate policy, I’ve mostly heard colleagues talk about the private sector as if it was this intangible, multifaceted medusa with its own business lingo that is impossible for us policy experts to tackle: “the ‘private sector’ needs a return on investment in order to act on climate” or “the ‘private sector’ does not have the right incentives, but we need ‘private’ capital to solve this crisis”

First, we need to untangle who we are talking about when we refer to “the private sector”. Are we talking about multinational corporations, wealthy investors, banks, entrepreneurs?

Secondly, unless we approach these actors with the problem, invite them to the discussion table, and hear them out, we will certainly never know the best way to get their interests aligned with climate solutions.

On the other hand, UN organisation and multilateral climate and environment funds interact almost entirely with public institutions and governments. So, when it comes to raising the bar on contributions to the Paris Agreement, climate change adaptation, and accessing climate finance, it seems the ball falls into the governments’ court.

We hear the usual refrain: “Governments need to mainstream climate risk into development policies” or “Governments need to act” or “Heads of State need to meet to raise ambition on NDCs [ Nationally Determined Contributions that countries made to the Paris Agreement]”

But will Government officials shaking hands and signing project proposals magically solve the climate crisis?

Here’s an idea: create a robust business case – whether it is by showing returns on investments or economic losses due to inaction – for profit-seeking actors to financially back up an NDC or National Adaptation Plan (NAP) and activate most of the domestic heavy-lifting that is needed to make these plans a reality. 

In Latin America, we see an urgent need for public-private collaboration regarding action on climate change. As far as climate justice goes, the region is on par with most African and Asian peers: their contribution to global warming is less than that of USA and Europe.

However, the mega-biodiverse region remains highly vulnerable to climate change, economic growth is fuelling more carbon emissions, and the need for climate-resilient development is vital. 

Despite a growing economy, according to the International Monetary Fund (IMF), Latin America is growing at a slower rate than previously anticipated and well below growth rates of other regions, largely due to tightening of global financial conditions and lower commodity prices.

Low investment in human capital and entrepreneurship means economic inequality and a vulnerable middle class continues to be an issue in the region, a region that is already over-dependent on natural resources.

This socio-economic situation is further exacerbated by climate change related catastrophic events, changes in rainfall patterns and in temperatures. It is projected that a temperature rise of 2.5°C could have a negative impact on the Latin American GDP of 1.5 to 5 percent. 

To make matters worse, grant and donor funding from multilateral climate and environmental finance sources are on a downward trajectory in the region, partly due to its “middle income” status; meaning governments are expected to use non-grant instruments to mitigate emissions or adapt to climate change.

The bleak reality is that we can no longer rely on grant-funded projects to cut down emissions or urgently adapt to the already devastating effects of the climate crisis.

But, remember the “private sector”? What is the contribution of wealthy investors, small entrepreneurs, and banks to this puzzle? Should they care? Is the region ready?

The good news in Latin America is that opportunities for private capital investment, which has significantly grown in recent years (for example, venture capital investment jumped from US $500M in 2016 to US $2 Billion in 2018 in the region) is at an all-time high. 

There is also a growing sense of business opportunity amongst regional, national and private banks, investors, and entrepreneurs who understand the implications of climate risks in their value chains, operations, and portfolios.

Impact investors are financing reforestation initiatives in Mexico and climate-resilient productive landscapes in Honduras. Banks are developing innovative and flexible financial instruments to support small producers in rural Costa Rica protect their water resources through ecosystem-based adaptation.

Honey and cocoa cooperatives in Guatemala have established climate-resilient value chains by understanding the outstanding risks of climate change to their businesses. UNDP has served as a connector for these partnerships and supported on-the-ground projects which are the vehicles for these fascinating initiatives.

Taking advantage of the NDC and NAP processes, policy makers are approaching businesses, corporations and investors to see how they can contribute to finance the implementation of such plans.

Such is the case of Uruguay, Ecuador and Chile, where UNDP and its partners – including Global Environment Facility (GEF) and Green Climate Fund (GCF) — have been instrumental.

With the Latin America and Caribbean Climate Week (concluding August 23), including the Regional NDC Dialogues organised by UNDP in partnership with UNFCCC, we have another opportunity to welcome the private sector to the discussion table.

Regional and national banks, NGOs, think-tanks and consulting firms will all convene in Salvador de Bahia, Brazil, along with government representatives from across the region, to find ways of working together to fight climate change.

UN Aid Boss Promises “Punishment” for Misconduct in Yemen and Palestine

A United Nations Relief and Works Agency for Palestine Refugees (UNRWA) school in Gaza. Top management at UNRWA are being probed for alleged abuses of power. Credit: Khaled Alashqar/IPS

By James Reinl
UNITED NATIONS, Aug 20 2019 – A senior United Nations official has promised a thorough investigation into allegations of misconduct in field operations in Yemen and the occupied Palestinian territories, saying that those responsible would be punished.

Ursula Mueller, the U.N.’s assistant secretary-general for humanitarian affairs, decried the “devastating” impact of U.N. staffers lining their own pockets with cash that was donated for the world’s neediest people.

The world body’s reputation in the Middle East has been dented by a series of allegations that some of its officials in Palestine and Yemen are guilty of graft, sexual misconduct and other wrongdoing.

“We need to really look at the people who are committing these very devastating activities for the humanitarian response,” Mueller said in response to a question from IPS on Monday.

“When we are made aware of these irregularities or corruption or fraud, we follow up and I think there [are] mechanisms and rules in place to do so. And also these people need to face consequences. That it’s not brushed aside and can go unpunished.”

According to documents, top management at the U.N. Relief and Works Agency for Palestine Refugees (UNRWA), including its commissioner general Pierre Krahenbuhl, are being probed for alleged abuses of power.

The confidential report by the U.N.’s internal watchdog describes an “inner circle” of Krahenbuhl and top aides engaging “in sexual misconduct, nepotism, retaliation, discrimination and other” wrongdoing.

Krahenbuhl struck up a relationship with senior adviser Maria Mohammedi in 2014 that was “beyond the professional” and arranged for her to fly alongside him on costly business class flights, it is claimed.

Krahenbuhl has rejected the report’s claims and said UNRWA is well managed.

Meanwhile, the U.N. is battling separate graft claims in Yemen, where it is tasked with tackling the world’s worst humanitarian crisis after five years of war has pushed millions of civilians to the brink of famine.

More than a dozen staffers have reportedly worked with fighters on all sides to pocket cash from the aid cash swishing around Yemen; some gave high-salary jobs to unqualified people, according to an Associated Press report.
A World Health Organization probe began in November, amid allegations of dodgy accounting by Nevio Zagaria, 20, an Italian doctor, who reportedly handed out well-paying jobs to friends, including a student who was tasked with looking after his dog.

The graft claims — and their damaging fallout — showcase how the U.N. can struggle to keep track of funding dollars and its own workers, who often operate autonomously in rapidly-changing crisis zones.

The scandal in UNRWA, which provides services to some 5 million Palestinian refugees, is particularly damaging, as it comes as the United States Trump administration has called for the agency to be shuttered.

Already, Belgium, Switzerland and the Netherlands have cut funding to UNRWA.

“The United Nations has a zero tolerance for corruption,” Mueller, also the U.N.’s deputy emergency relief coordinator and a former German civil servant and diplomat, told reporters in New York.

“We depend on voluntary contributions from member states from individuals to contribute to humanitarian response … any taint of corruption or fraud is disastrous. So we have fraud prevention mechanisms in place and when we hear about irregularities, we make every effort to follow up and correct it.”

UNRWA was set up in the years after some 700,000 Palestinians were expelled or fled their lands during the 1948 war over Israel’s creation. It provides medical and schooling services to millions of poor refugees in Lebanon, Jordan, Syria and the Palestinian territories.

In Yemen, a Western-backed coalition of Saudi Arabia, the UAE and others intervened in March 2015 against the Iran-backed Houthi rebel movement that ousted President Abd-Rabbu Mansour Hadi from power in late 2014.

South Must Also Set International Tax Rules

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Aug 20 2019 – Recently, Christine Lagarde, outgoing Managing Director of the International Monetary Fund (IMF), argued that developing ‘countries need a seat at the table’ to design rules governing international corporate taxation.

This acknowledges recent IMF findings that developing countries lose approximately USD200 billion in potential tax revenue yearly, about 1.3 per cent of their GDP, due to companies shifting profits to low-tax locations. Oxfam estimated in 2018 that extreme poverty could be eradicated for USD107 billion annually, i.e., about half the lost revenue.

Anis Chowdhury

Corporate taxation?
This comes on top of ‘beggar thy neighbour’ tax competition, encouraged by past policy advice from international financial institutions, such as the IMF and the World Bank, purportedly to entice investments by transnational corporations (TNCs).

Corporate tax rates in developing countries have fallen by about 20 per cent since 1980 with uncertain impacts on ‘greenfield’ foreign direct investment (FDI) outside resource sectors. In most cases, there have been net revenue losses as developing countries heavily depend on corporate taxation.

Low and middle income countries have lost USD167-200 billion annually, around 1-1.5 per cent of a country’s GDP, due to corporate tax competition. As a share of GDP, Sub‐Saharan African countries have suffered the most revenue losses, followed by Latin America and the Caribbean, and South Asia.

BEPS
Developing countries’ complaints about tax losses due to TNC profit shifting and tax evasion have long fallen on deaf ears. Designed by developed countries, international corporate tax rules have generally favoured ‘residence’, mainly developed countries, over ‘source’, primarily developing countries, where TNCs operate and secure profits.

Developed countries also lose revenues, as TNCs ‘game’ the rules to minimize their tax liability globally. Estimated annual revenue losses to high-income OECD countries range from 0.15 to 0.7 per cent of GDP, now of greater concern with their heightening fiscal predicaments following the 2008-2009 global financial crisis.

Jomo Kwame Sundaram

Mandated by the G20, the OECD Base Erosion and Profit Shifting (BEPS) project since 2013 has provided countries with tools needed to tackle ‘transfer pricing’, harmful tax regimes, treaty abuse, etc.

Developing countries still not at table
BEPS actions were decided on, and approved by 44 countries, including OECD, OECD accession countries and other G20 members. Recognizing the different needs of developing countries in its 2014 Report (Part 1 and Part 2), the OECD sought to address some of their concerns with two initiatives in 2016.

The first was the BEPS Inclusive Framework (IF) to include developing countries as BEPS associates; as of August 2019, 134 countries were members. Second, a Multilateral Instrument (MLI), involving more than 100 developed and developing countries, was negotiated to deal with, among others, tax treaty abuses.

Almost all countries are now in the IF. Yet, it has not improved on the original BEPS actions. While developing country BEPS associates supposedly participate on an ‘equal footing’, they have no decision-making role. Apparently, ‘equal footing’ only refers to implementation of the BEPS 4 Minimum Standards. MLI largely addresses OECD member concerns and is not intended to protect the tax rights of source developing countries.

Unsurprisingly, although raised during IF consultations, developing country concerns — such as allocation of taxing rights between source and residence states, taxation of informal economy and their differential needs — remain largely unaddressed and unresolved.

With such failures implying legitimacy deficits, BEPS measures are unlikely to benefit developing countries very much. In fact, the BEPS Project and the BEPS Inclusive Framework were never intended to deal with challenges faced by developing countries.

Dubious benefits
BEPS has developed in line with OECD international model tax treaties, reflecting developed countries’ norms. Its technical assistance programmes — such as Tax Inspector without Borders (TIWB), by the OECD with the UNDP, and the Platform for Collaboration on Tax, by the IMF, WB, UNDP and OECD — help developing countries to achieve BEPS Minimum Standards, disadvantaging developing countries in several respects:

      Accelerates harmful tax competition: While most developing countries have committed to implement BEPS Minimum Standards by joining the IF, developed countries are still taking unilateral actions fuelling tax competition, e.g., the USA’s Tax Cuts and Jobs Act, and the EU’s Anti-Tax Avoidance Directive, disadvantaging developing countries.
      No level playing field: Developed countries’ unilateral actions reflect their continued jockeying for advantage regardless of their ostensible BEPS consensus. Australia and the UK have introduced their own rules to address profit shifting by TNCs, while the US Congress declared that, regardless of BEPS, it would craft tax rules favouring US companies. Developed countries can also opt out of MLI provisions for developing countries. The one-size-fits-all approach thus also penalizes developing countries.
      Too onerous and complex: Most developing countries lack the technical resources, personnel, capacity, technical knowledge and economic means to implement the typically complex and costly BEPS actions. Even with foreign assistance, BEPS implementation burdens their tax administrations. While BEPS implementation may not generate extra revenue, they typically need to spend scarce fiscal resources to comply.
      Distorts priorities: They also divert scare resources from improving tax administration and reforming taxation to tackling tax evasion by individuals. The BEPS ‘one-size-fits-all’ approach is problematic as developing countries have different and varied needs.
      Shrinks policy space: Policy discretion in developing countries is also constrained by BEPS. The minimum tax rule, proposed in the OECD public consultation document of February 2019, limits the right of countries to set their own rules. Developing countries risk being blacklisted by the EU for failing to implement BEPS minimum standards.

Hence, developing countries must examine both the costs and benefits of the IF for implementing BEPS minimum standards while continuing to demand meaningful seats at the BEPS negotiating table, which should be truly inclusive and multilateral, e.g., at the United Nations itself, and not just through a donor-dominated UN fund or program, where accountability to developing countries is limited.

A ‘Cure’ for Ebola but Will it Stop the Outbreak if People Won’t Get Treatment?

Health workers inside a “CUBE” talk to an Ebola patient, while a nurse consults a chart outside. ALIMA Ebola Treatment Centre, Beni, Democratic Republic of the Congo. Two drugs have been found to successfully treat the Ebola virus. Aid agencies have welcomed the news saying it allows communities to access early treatment. Courtesy: World Health Organisation (WHO)

By Issa Sikiti da Silva
COTONOU, Benin, Aug 20 2019 – While people in the Democratic Republic of Congo (DRC) are slowly being made aware that scientists have discovered two drugs that are effective in treating Ebola, letting go of the fear and anxiety that has prevailed across the country this year will require more work.

After several months of intense research, mAb114 and REGN-EB3, two out of four drugs tested, where found to have been effective in a clinical trial, according to a joint statement on Aug. 12 by the World Health Organisation (WHO), DRC’s National Institute for Biomedical Research (INRB) and Ministry of Health, National Institute of Allergy and Infectious Diseases (NIAID).

It is the first ever multi-drug trial for the deadly virus.

The deadly hemorrhagic fever has claimed the lives of 1,800 people since last August.

“This is very good news for patients,” Dr Esther Sterk, Médecins Sans Frontières (MSF) Adviser for Tropical Diseases, told IPS. “It is good that these two drugs are recommended because not only do we expect them to improve their chances of survival, but they are also easier for medical staff to administer.”

The complexities of receiving treatment

But the latest outbreak of the deadly virus has resulted in fear among local communities. With the epicentres of the outbreak largely centred in conflict-ridden areas, communities there have been fearful and mistrustful of the virus and medical workers. Many also found the process of screening for the disease reportedly intimidating.

And on Aug. 13, residents in Goma, the capital of North Kivu province and a city of two million people overlooking Gisenyi in neighbouring Rwanda, was overrun by protestors after the news spread that two Ebola patients were been healed and discharged from the treatment centres.

“People misunderstood it, and thought the government and white people were plotting to infect us all with Ebola by letting these patients go home. It is only later in the day that we were told that these people were free to go because they were treated with a new cure that has just been found,” Christian Kasereka, an informal trader, told IPS.

In July, Marixie Mercado, United Nations Children’s Agency (UNICEF) spokesperson told IPS that, “the Ebola outbreak is taking place in an extremely complex operational environment and the response must of course factor in political, security, and socio-cultural challenges”.

She said that UNICEF was leading the work on community engagement. “We work with a broad swathe of influential community and religious leaders, mass media, schools, and Ebola survivors, to bring crucial knowledge on symptoms, prevention and treatment, to the households and communities most at-risk.

“We are learning from intensive, ongoing research and analysis of community feedback to better understand local needs, fears and concerns, and to adapt the response in ways that are socially and culturally acceptable. There is growing community ownership over the response, but far more is needed,” Mercado said at the time.

Greater community ownership and understanding needed to stop the outbreak

The Goma protests offered truth to her words that more still needs to be done.

Other international health agencies have the same view.

Sterk did caution that while the drugs improved the chances of survival of patients, teams working on the ground could not relax as ways to reduce transmission needed to be found.

“While this is welcome news, it alone, won’t end the Ebola outbreak. We still urgently need to find a way to cut transmission, which requires placing affected communities at the centre of the response by prioritising their healthcare needs and rethinking the current failing response strategies,” Sterk told IPS.

“We expect that using the two most successful treatments will improve the outcome for patients, but the challenges remain there: to break the chain of transmission, to improve the follow-up of contacts, to encourage people to report to a health facility as early as possible when the symptoms appear, to support the healthcare infrastructure in the region so that access to general healthcare is preserved during this difficult time.”

The WHO had echoed these concerns in its statement last week stating that not enough people were being treated. Currently people take 5 to 6 days before seeking treatment.

Euloge Ishimwe, International Federation of Red Cross and Red Crescent Societies (IFRC) head of communications for Africa region, told IPS that people with symptoms often delay or avoid going to a health facility or an Ebola treatment centre, placing their families and communities at risk.

“This also has critical impacts on our work with communities. If communities are engaged and understand the treatment as well as see more people surviving from the disease, they are more likely to seek health care early,” Ishimwe said, adding that the findings were a pinnacle moment in the Ebola response, as it allowed communities to access early treatment.

MSF has worked alongside several partners under the supervision of the WHO and took part in the implementation of the trials while supporting the Ebola treatment centres in Katwa and Butembo between January and February this year.

The study is part of the emergency response in the DRC, in collaboration with a broad alliance of partners, including MSF, the Alliance for International Medical Action (ALIMA), the International Medical Corps (IMC), INRB and NIAID, which is part of the United States’ National Institutes of Health.

The study has since stopped and the successful drugs are being administered to all those affected.

“We must move forward to implement the outcomes of this research. We will continue to conduct rigorous research with our partners. We’ll incorporate those findings into the outbreak response through a variety of prevention and control strategies,” Dr Mike Ryan, WHO Executive Director for Emergencies Programme, had said in a statement.

Highlights of the latest outbreak:

  • The deadly Zaire Ebola Virus – named before the country changed its name to DRC in 1997 – broke out more than a year ago on Aug. 1, 2018, in the northeast of the country.  It is the most deadliest strain of the virus.
  • The outbreak began in the small North Kivu town Mangina, spreading quickly to the larger town of Beni, which is the administrative centre of the region. And then on to the larger towns of Butembo and Katwa, which are also in North Kivu.
  • It then spread to Ituri Province in the north-east, close to Uganda’s border.
  • So far, the virus has killed some 1,800 people, while 862 people have been cured out of some 2,700 cases, according to the DRC’s health ministry.
  • A month ago, on Jul. 14, the first case of Ebola was confirmed in Goma, the capital of North Kivu. The patient died.
  • Two weeks later on Jul. 30, a second person in Goma was diagnosed with Ebola; the peson died the next day and a third case was announced.

What’s next? 

Professor Jean-Jacques Muyembe, director general of DRC’s National Institute for Biomedical Research (INRB), and a co-discoverer of Ebola in 1976, said that the city of Goma was now out of danger since about 200 contacts and suspected cases have been identified. “We are waiting for the latest results and monitoring as the points of entry to the city are being reinforced.”

IFRC Africa’s Ishimwe said the Ebola outbreak was far from over. “This news doesn’t mean it’s over – there is still a lot of work to do. We must stay the course until the last case is treated and the region is declared Ebola-free.”

But Anita Masudi, a resident from Butembo, North Kivu, one of the epicentres of the Ebola outbreak, is relieved.

She told IPS: “Oh yes, we are very happy about what’s happening out there though I’m not sure if  everyone can now relax hoping that it’s the end of Ebola in the North Kivu. Nevertheless, I’m not afraid any more.”