FROM Turkey to Mexico, the world’s most volatile flashpoints will get a lot more unpredictable this year ICG’s president Jean-Marie Guéhenno writes in in an examination 10 conflicts in the world to watch in 2017. In an abridged article, we look at the three Africa cases he highlighted. THE world is entering its most dangerous…
Finally, 10 months after AUCISS completed its investigations and seven months after it initially tabled one of its reports, the time has arrived to make the AUCISS report public. At a summit level meeting held in New York on 26 September 2015, on the sidelines of the 70th meeting of the UN General Assembly, the Peace and Security Council (PSC) answered the call from civil society organizations and AU partners for the release of the AUCISS report.
There are actually two reports. The ‘main’ report, which was prepared under the leadership of the Chairperson of the AUCISS, former Nigerian President Olusegun Obasanjo, is 304-pages long (excluding annexes). Professor Mahmood Mamdani, one of the members of the AUCISS, singlehandedly authored the other report, also described as the dissenting report. The AU Commission submitted to the PSC and the PSC considered and decided to release ‘for public information purposes only’…
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Deadline: 31 October 2015
African Leadership Academy (ALA) seeks to enroll the most outstanding young leaders from across Africa and around the world. ALA is looking for young people who are smart and excel in the academic environment. young people with the potential to lead and impact the world around them through their courage, initiative and innovation can apply.
The Academy admits between 100 and 125 young leaders from across Africa each year for the two-year pre-university program, anchored on Entrepreneurial Leadership, African Studies, and Writing & Rhetoric. Students also take Cambridge A’level subjects as electives, alongside specialized research classes in the Sciences, Humanities and Creative Arts. The Academy is a boarding school; all students area accommodated and catered for at the Academy’s campus in Honeydew, Johannesburg, South Africa for the duration of their studies.
Applicants will receive US$30,000 to pay full fees including tuition, accommodation, meals, and…
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Direct perpetrators of violence, and those acting on their behalf, have benefited from the plunder of South Sudan’s public wealth. South Sudan’s military and political elites are widely reported to have constructed a kleptocratic regime that has captured and controlled nearly all profit-generating sectors of the economy.
South Sudan’s current conflict is a competition among the nation’s elite for power and profits. Instead of leveraging the country’s vast natural resource endowments to advance a historic opportunity for growth and development, South Sudan’s military and political elites are widely reported to have constructed a kleptocratic regime that has captured and controlled nearly all profit-generating sectors of the economy. The prize that comes from political power in modern South Sudan is controlling and benefiting from resources and revenue streams. Even in today’s near-collapsed economy, significant amounts of money still pass through the country’s capital, Juba. Many of the conflict’s players are currently maneuvering for better negotiating positions in the event that peace materializes, the oil wealth resumes, and elites resume their former roles. As the conflict in South Sudan currently stands, there remains much to be learned about the revenue generating or profit skimming networks that finance regime elites and sustain the conflict.
This brief begins to address this subject by categorizing the economic systems that enable conflict and violent kleptocracy in South Sudan. The typologies in this brief are derived from and reflect real-life examples in South Sudan and are supported by disparate open sources, including global public records, media reporting, government documentation, and independent investigation. These typologies are not meant to be seen as exhaustive or definitive, but rather as representative of broader trends of corruption and illicit activity. Throughout the entirety of this report, an illicit activity is defined as an activity that could be perceived as contrary to international norms and standards, but is not necessarily illegal. As such, no illegality is implied by the content herein unless explicitly stated.
We identify seven key trends that contribute to illicit activity in South Sudan
I. Extractives and Resource Trafficking
II. Convergence of Licit and Illicit Systems
III. Corruption and Illicit Financial Flows
IV. Elite Financing and Offshored Assets
V. Security Sector Procurement and Abuse
VI. Disguised Beneficial Ownership
VII. Regulatory and Sanctions Evasion
Shaping South Sudan’s current civil war towards a peaceful outcome will require tackling the close nexus between corruption and conflict. Direct perpetrators of violence, and those acting on their behalf, have benefited from the plunder of South Sudan’s public wealth, while others are fighting for their place in the now seemingly entrenched and institutionalized kleptocratic system. Effective strategies must target the key beneficiaries of this system, none of whom operate in a vacuum. Instead, many perpetrators of violence rely on a wide network of facilitators who are not directly connected to the violence but who, knowingly or unknowingly, provide the means to access and then launder funds towards their personal use. These facilitators include many government officials, military officers, businessmen, investors, and other actors who are more connected to international systems of finance, trade, and investment. These points of convergence, where illicit schemes rely on legitimate global financial infrastructure, at times represent the most profitable and vulnerable links in the conflict value chain, and are where policy, enforcement, and regulatory efforts should be focused.
As a result of this ongoing armed conflict, military priorities and military-run economic networks dominate spending priorities. In South Sudan, corruption has become the lifeblood of the country’s politics, providing the means to co-opt and buy off armed actors, to fund personal patronage networks, and to accumulate wealth. In 2014, the government of South Sudan is estimated to have officially spent US$1.08 billion on its military, close to 63% of the US$1.72 billion in oil revenue from the same year. As such, South Sudan’s military spending is among the highest of the region, despite having an economy that is relatively small when compared to its neighboring countries, according to World Bank data. Even beyond military spending, very little has been allocated to development priorities, which have instead been left almost entirely to donors. In 2012, donors financed 75% of healthcare spending. This level of dependence on outside donors is likely to increase in coming years with the slow resumption of oil production. Healthcare is not the only sector heavily reliant on outside capital; South Sudan’s education sector only received half of its ear marked budget, and remains dependent on donor funding.
A very large amount of South Sudan’s public money has been lost to corruption since the signing of the Comprehensive Peace Agreement (CPA) in 2005. A letter issued by President Salva Kiir in 2012 claimed US$4 billion in stolen funds, although the figure is difficult to verify. The projected oil revenue for the government of South Sudan in the 2014-2015 budget was SSP 12.78 billion or US$4.26 billion, nearly equal to the funds that were allegedly stolen in 2012. Most agree that the scale of waste, mismanagement, and outright theft has been extraordinary, and has diverted very significant funds away from chronic humanitarian and development needs.
Trends & Typologies.
The following typologies attempt to categorize the corruption and illicit activity that sustain and benefit elites. No illegality is implied unless explicitly stated; rather, the goal of this report is to illustrate the current economic landscape in South Sudan that is representative of broader trends. The seven identified typologies are as follows:
I. Extractives and Resource Trafficking
The main source of income for the South Sudanese government comes from the oil sector. South Sudan’s Finance Minister reports the country has received US$19 billion in oil revenues between 2006 and 2014, compared to US$1 billion in non-oil revenues. According to South Sudan’s Under Secretary of Planning, the share of government revenue contributed by oil was as high as 96% between 2008 and 2011, but as a result of the current fighting, productivity has fallen significantly to about 70% by 2014. Oil wealth is central to the conflict; the government needs these funds to sustain the war effort and the rebels recognize that choking oil supplies is their strongest point of leverage. As a result, conflict has centered on strategic oil sites, which has caused operations and profits to significantly decline. Some elites are alleged to maintain stakes in companies in the extractives sector where political allegiance leads to lucrative contracts. According to the 2007 audit report out of South Sudan, oil wealth is also the primary source of money within the financial system, and is paid by oil companies into various government bank accounts before being remitted to the ministries for spending. Corruption and diversion happens at all levels of the economy. Reports indicate that lucrative extraction contracts of some elite-connected companies are the breeding grounds for funds to be siphoned off both before and after they reach ministry accounts. As reported by the 2007 audit report, US$114 million in oil revenue was unaccounted for. Oil, though, is not the only exploitable resource. Minerals, land, and other forestry resources, including teak and mahogany, are areas of growing concern as the government seeks to diversify away from oil.
II. Convergence of Licit and Illicit Systems
There is a high degree of overlap between the licit and illicit economies in South Sudan. It can often be difficult to distinguish public from private, trade from trafficking, and legitimate payments from bribes in South Sudan, but it is in the currency market in which the nexus between the licit and illicit systems is most apparent in the country today. A significant spread between the official rate set by the Bank of South Sudan and black market exchange rates for US dollars has created a sizable vector for illicit currency speculation and money laundering. With the current official rate at three South Sudanese Pounds (SSP) for one US dollar (USD), and a parallel black market rate that is fluctuating between 9 to 15 SSP per one USD, the opportunity for high profit margins in the currency exchange sector invites arbitrage and creates a growing risk of money laundering. Differences in exchange rates make it possible to make up to a 400% profit on every transaction. Few individuals have easy access to both rates, but those who do include at least some well-connected government or business officials. Such currency manipulation can contribute to immense hardships for the average person by exacerbating an already chronic dollar shortage and fueling price inflation, including basic commodities such as food and fuel.
III. Corruption and Illicit Financial Flows
Nearly all sectors of procurement have generated stories of chronic abuse, mismanagement, and waste. Many government purchases and contracts are allegedly awarded with single-source, non-competitively bid contracts at inflated prices, and with minimal documentation and oversight. These contracts are allegedly awarded to bidders with connections to elites, armed group commanders the government is seeking to placate at the time, or as favors for helping the SPLA during the liberation struggle.
IV. Elite Financing and Offshored Assets
Illicit proceeds in South Sudan can be generated from a wide range of sources, including elite stakes in major revenue generating projects for personal benefit. Many of these interests are incurred while ostensibly serving as public officials in ways that can represent conflicts of interest or an abuse of position. These illicit proceeds may be reinvested inside the country for the funding of armed patronage networks or offshored into neighboring and international jurisdictions, often as real estate investments. The size of these flows is uncertain, but a significant portion is believed to flow to regional countries, namely Kenya, Uganda, and Ethiopia. Overall there appears to be a divide between some political elites, who are believed to have property in Kenya and Ethiopia, and some military elites, who are believed to have property in Uganda. The values of these properties generally outstrip government salaries significantly, which, according to the 2013 to 2014 budget book, were set at roughly US$3,300 per month for ministers, and US$2,600 per month for First Lieutenant Generals, the highest pay grade in the military.
V. Security Sector Procurement and Abuse
The security budget is the largest and most important of Juba’s expenditures and has continued to expand in spite of austerity in the civilian sector. Despite its importance, the security sector is a highly opaque section of the South Sudanese budget, with virtually no information provided on specific spending patterns. According to South Sudan’s 2008 audit, only seven out of 40 SPLA divisions reported their payroll figures. Significant spending is also believed to occur “off-budget,” through the use of funds outside the government budget and funds diverted from other civilian ministries. The issue of weapons procurement is a sensitive subject for South Sudanese because, without an arms embargo, the government is within its rights as a state actor to pursue state-to-state weapons transfers and the Government of South Sudan continues to import weapons and military equipment. Non-state armed groups also continue to receive military supplies from other countries in the region.
VI. Disguised Beneficial Ownership
In South Sudan, it is difficult, if not impossible, to definitively prove the registered or beneficial owner of a company and the assets it holds in the country. Powerful institutions such as the SPLM, a political party with strong ties to President Salva Kiir, are said to control a large number of companies invested across the economy, but the lack of transparency makes it difficult to evaluate these claims. Transparency International ranks the country 171 out of 175 on the Corruption Perceptions Index of 2014. The business registry and other ostensibly public documents are not easily accessible and even then may use proxies, instead of the actual owners, as registrants and beneficiaries on paperwork. Many companies, especially those involved in larger scale projects, are registered in a ”‘secrecy jurisdiction” —those where purposely lax disclosure and reporting standards provide relief from tax and financial regulations, corporate governance rules, and even criminal laws. It is alleged by multiple independent sources that generals and other high-ranking officials hold stakes of “25 percent” in many companies. This allegation is often impossible to validate with documentary evidence.
VII. Regulatory and Sanctions Evasion
Regulatory, sanctions, and enforcement actions directed at the conflict in South Sudan have, thus far, only targeted ground commanders and have proven insufficient to deter or disrupt the conflict, or its economic enablers. On April 3, 2014, under Executive Order 13664, the United States Department of the Treasury’s Office of Foreign Assets Control began implementing sanctions on South Sudan. These OFAC sanctions were followed by United Nations Security Council Resolution 2206 in 2015. Until recently, only four individuals were reportedly listed by the US, but these sanctions were updated July 1, 2015, to include two additional individuals. The UN listed the same six individuals concurrently on July 1, 2015. The travel bans and asset freezes against the six armed commanders accused of grave human rights abuses and numerous ceasefire violations are intended to limit their ability to cross borders, access financial accounts, and gain support for their activities in the region. The effect, though, has been minimal. Peter Gadet, for example, perhaps the most well-known of the six sanctioned individuals, is a military commander that spends nearly all his time within South Sudan where the sanctions have little impact. As it currently stands, the scope of the current sanctions designations has been insufficient to change the calculations of the warring parties.
The ongoing conflict in South Sudan is a means to an end – to renegotiate the country’s political power balance and the economic profits that it ensures. Pursuing an end to an increasingly violent civil war requires acknowledging the close nexus between the systemic corruption that permeates the South Sudanese governance structure and the incentives that have brought about the current conflict. Currently, both the direct perpetrators and their facilitators further up the conflict value chain are enabled by a kleptocratic system that has captured and controls all available revenue streams in the country. Within this system, some elites who are both directly and indirectly connected to the violence continue to benefit, while others who have been ejected from the system are fighting to negotiate their return.
A more sustainable path to peace in South Sudan is possible but it requires acknowledging the structural causes that have driven the country’s rapid decline into violence. An elite pact privatized the economy and institutionalized a kleptocracy, and in the process poisoned the country’s politics. Today, an elite bargain appears the most likely path to halt this vicious spiral of violence. To reverse this process, it is thus essential to unpack the predatory nature of the South Sudanese state and the perverse incentives that an influx of money channeled through a narrow set of elites has created. Only by reforming and forcing the South Sudanese state to actually serve its people, instead of its leaders, can the country actually move towards a more sustainable peace. Effectively addressing the conflict in South Sudan requires looking beyond the spasms of horrific violence and focusing on the underlying drivers, namely the various trends that collectively constitute South Sudan’s violent kleptocratic system.
Pressuring the key beneficiaries of South Sudan’s kleptocratic system and choking their illicit financial flows is likely a key source of leverage in impacting the cost-benefit analysis of armed conflict in South Sudan. It is also appears the most appropriate of the range of enforcement measures available to the international community. Direct perpetrators of violence are often field commanders and other localized actors who are relatively immune from international pressure. Their facilitators and enablers, however, include These points of convergence, where illicit financing schemes rely on legitimate global financial infrastructure, at times represent the most profitable and vulnerable links in the conflict value chain, and are also where policy, enforcement, and regulatory efforts should be focused.
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Cereal yields in Africa are less than 50 percent of those in Asia or South America. FAO estimates that one in five Africans is undernourished. Malnutrition, as measured by stunting affects nearly 40 percent of children in Africa. Moreover, Africa will need to feed an additional 900 million people by 2050.
Agriculture supports the livelihoods of 80 percent of the African population, provides employment for about 75 percent but contributes less than 15 percent of GDP. For Africa, sustainable and equitable growth is inextricably bound to agriculture. Africa’s ubiquitous poverty and economic decline becomes easily explicable when you take into account the dire state of agriculture.
Hunger, malnutrition, disease and poverty present formidable barriers to Africa’s productivity, growth and prosperity. According to President Museveni, malnutrition impairs educational achievements, undermines economic productivity and places a huge burden on Uganda’s fragile public health system. The African Development Bank (AfDB) recognizes that Agriculture is vital to promoting growth and reducing poverty in Africa.
As an African scholar and public intellectual, I am scandalized and my pride is deeply wounded by the unending specter of hunger and malnutrition. It is shameful, beyond measure or pardon, that fifty years with Africans at the helm, little progress has been made to guarantee every African child sufficient and nutritious food. I am sure there is enough blame to go round; the UN system and the multi-billion dollar international aid honchos are not innocent.
But, ultimately, the burden of responsibility must rest with people like me, Africa’s intellectual elite. Stagnation of agriculture has been the defining feature of Africa’s economic policy over the last four decades. Spending in agricultural research and development by African countries declined by 27 percent between 1981 and 2000. Conversely, spending in agricultural research and development rose by 30 percent in rest of the developing world; Asia and Latin America.
Egged by experts the African Union, through the Comprehensive Africa Agriculture Development Programme (CAADP), has set a growth target of 6% per annum for agriculture and encourages every country to allocate 10 percent of the national budget to agriculture. CAADP called for $251 billion to fund investments in irrigation, infrastructure, education and markets. Today, less than handful countries allocate 10 percent of their national budget to agriculture and critical investments in agricultural research and development lag behind other developing regions.
Like all areas, which are critical to Africa’s development, such as education, energy, biodiversity conservation and the extractive sector, experts have besieged agriculture. Africa is drowning in advisors. Invariably, the overabundance of external advisors diminishes the cachet of local experts. As Bill Easterly argues in his new book, The Tyranny of Experts: Economist, Dictators and the Forgotten Rights of the Poor, the appeal of technocratic ideas persists beyond overt racism and colonialism.
Africa has been through a multitude of expert-led technical solutions but hunger still persists. Evidently, agriculture is not a vaccine. You cannot have a breakthrough in Boston and roll it out in Vihiga. Ultimately, African universities and national research systems must engage, define the problems and offer appropriate solutions. But one fundamental question remains, can African scholars or their institutions deliver the research and development breakthroughs that have eluded agriculture for more than half a century? And is government and private sector ready to put their money where their mouth is?
Africa has a large and growing population of young people. Where will young Africans currently entering the labor force find employment? Africa has the lion’s share of the world’s arable land. Agriculture is uniquely positioned to absorb this young and dynamic workforce. Africa’s youth dividend will not be credited automatically into the national treasury. We can harness the youth dividend by accelerating the transformative change in agriculture.
African governments and their expert advisors must wake up. There is no such thing as a dual economy in which agriculture is a passive actor – a low productivity supplier of food and a subordinate driver of national growth and economic transformation. Agriculture is the real driver of Africa’s economic growth. There will be no transition to China-style labor-intensive manufacturing until agriculture is productive, efficient and profitable.
Our path to middle income and economic prosperity must be different. Africa must shun technical advisors external beholden to the antiquated linear growth models – from hunter-gatherer to agrarian to industrial to service and knowledge. Our research and academic community must re-imagine our unique path to prosperity.
Dr. Awiti is the director of the East Africa Institute and assistant professor at Aga Khan University.
Situated along the eastern parts of Africa, the Horn of Africa region comprises of Kenya, Uganda, Sudan, Somalia, South-Sudan, Ethiopia, Eritrea and Djibouti with Egypt and Yemen being drawn into the security complex due to their interest and involvement in the region. The region forms part of a much intertwined conflict system better described by security strategists as Volatile, Uncertain, Complex and Ambiguous (VUCA). This sub-region is diverse and its geo-strategic location has resulted in competition and animosities between different local and foreign powers over time. This article critically analyses challenges facing the implementation of IGAD‟s Peace and Security Strategy.
These dynamics according to Getachew have led to the development of a culture of violence based on the tradition of origin, a fixation with territory, a feudal vision of the exercise of power and an absolutist conception of conflict. As such, the nations within the region have usually pursued political and development strategies that ignore the socio-cultural affinities and the economic interdependence between their citizens. This deep attachment to the territorial concept of nationhood and their reluctance to explore the potentials offered by sharing of a common heritage has discouraged the development of coherent policies of sub-regional integration that would promote peaceful co-existence.
The conflict epicenter of the region is never static, currently being in South-Sudan courtesy of the SPLA wars, having shifted from Somalia which is still volatile coupled with insurgencies and the war on terror. On a positive note however, there have been great strides courtesy of the Inter-Governmental Authority on Development (IGAD) mechanisms. These efforts are aimed towards finding lasting solutions to the general problems that uniquely bedevil the region.
The organization has involved itself in trying to resolve instability situations, building of regional mechanisms for the enhancement of economic and social integration, trade and peace building. IGAD in its wisdom initiated a peace and security strategy in 2010 as a proactive measure to mitigate the insecurities around the region and currently is implementing a post 2014 IGAD Peace and Security Strategy. The IPSS is seen as a forerunner to a regional peace and security architecture and a panacea for peace and stability in the region. However, despite these heartening efforts, the regions complex milieu remains heavily burdened by severe social, economic and political connotations of localized conflict, poor governance, economic backlog and prolonged adverse climatic conditions that have implications on the future stability of the regions security, overshadowing the overall advances achieved.
However for the situation to be salvaged, proper functioning and implementation of mechanisms in place should be adhered to the latter. This include, the IGAD Protocol on Conflict Prevention Management and Resolution (CPMR Protocol) which should shun the non interferance clauses and allow EASF to intervene in the internal affairs of a member state on behalf of IGAD in the event of a serious and massive human rights violations, an unconstitutional change of government; or under the principles of Responsibility to protect.
Since the region has served as a theatre for proxy wars both during the Cold War and more recently in the global war on Terror, the region’s statesmen should not lose sight of the fact that external powers have good reason enough to engage in acts aiming at frustrating the attainment of the peace and security. The looming international competition over natural resources such as fish in the waters off the coast of Somalia and lake Victoria, the strategic waterway of the Gulf of Aden and the Red Sea, oil in the Sudan, and the Nile River Reparian promises a continued strategic interest and challenge from powers external to the IGAD states.
Within the security strategy, room must be made for anticipating and meeting the security challenges of the future. Recently, serious, gross, and systematic human rights violations, war crimes, and crimes against humanity, electoral violence, transitional justice, on and off-shore terrorism, and the unlawful use of marine resources have emerged as key threats to human security in the Horn of Africa. As such the available peace and security strategy, together with the post 2012 conflict early warning mechanism should be utilized as effective conflict prevention tools for addressing these threats.
IGAD’s peace and security strategy realized the fact that it cannot afford to overlook the modern approach to security that emphasizes the security of people and the nonmilitary dimensions of security; the creation of forums for mediation and arbitration; the reduction in force levels and military expenditure; and the ratification of key principles of international law governing inter-state relations. In other words, it endeavored to understand security in ways that incorporate political, social, economic and environmental issues.
An effective peace and security strategy must be underpinned by a dual understanding of security and a more progressive conceptualization of peace beyond absence of physical violence. This has been lacking as policy makers remain stuck in state centric approaches and continue to subordinate human security. Yet insecurity dilemma cloud the environment of the region. Member states must also take it upon themselves to respect and implement the commitments that they make. As such, a regional peace and security strategy can only be as good as its building blocks. In a situation where states are the main generators of threats to peace and security within and outside their jurisdictions, it is naiv to expect the startegy to be effective and efficient. A true regional peace and security strategy will only be possible if members deal with the basics such as good governance, respect for human rights and other measures which consolidate states‟ legitimacy and builds human security.
Further, the regional structures created must be equipped with the right mandate and resources to undertake their functions. The starting point should be willingness to cede some sovereignty to such organisations. Member state should do so through compllying to and fully implementing the IGAD Peace and Security Strategy (IPSS), which according to Mwagiru is critical, for it provides a roadmap on where the region intends to go in the context of security.
States must be willing to pay the costs, political, financial or otherwise necessary for the implementation of the strategy and subsequently staff IGAD to the required levels. IGAD need to critically evaluate and re-invent its relevance in the Horn of Africa because there are competing and overlapping regional organizations with peace and security mandate. To do so members must radically re-orient IGAD towards specialization on Peace and security since it has superior competencies compared to other regional economic organizations especially the East African Community (EAC). In addition, and if necessary, IGAD, EAC and EASF need to merge and form a common economic, foreign policy and security strategy to minimize loose ends.
In conclusion, despite the challenges faced, the quest for an effective peace and security architecture in the IGAD sub-region should continue. Developments such as the largely successful implementation of the Comprehensive Peace Agreement leading to the independence of Southern Sudan show the fact that IGAD in concert with other actors is capable of enhancing regional peace and security. By addressing the gaps discussed earlier and taking into consideration the recommendations made, states, communities and individuals in the sub-region can look forward to a future different from the past and present.
Author: Kisame Charles is the Founding Fellow of Polad-House. A Policy and Security ThinkTank/Counsulting firm