Article: Bleeding a wounded continent dry (Mbeki)

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AN ESTIMATED $50bn (R384bn) is exported out of the African continent illegally every year, former president Thabo Mbeki has said.

"The money is exported illegally instead of being invested," he said.

Mbeki was speaking at the launch of a high-level UN Economic Commission for Africa (Uneca) panel in Johannesburg on Saturday.

The panel, chaired by Mbeki, would investigate illicit and financial flows of finance out of the continent.

Mbeki said the loss needed to be addressed before it undermined the prospect of Africa's development.

"Almost $25bn (R192bn) comes into the continent. That means it loses twice the capital it receives in financial assistance," he said.

"The panel will study the flow of money and understand how it is done. The African continent will expect the panel to provide practical measures to stop the flow."

He said it would take a year for the panel to complete its investigation.

"This is a matter of vital importance to the continent. In the end the investigation should result in action being taken by the continent and individual countries," he said.

"As a panel we have no punitive measures. The panel will make proposals to those with punitive power and explain how it is done."

He said the panel would provide information about the various methods used.

This would include over-invoicing and under-pricing of exports and money-laundering strategies.

"People import an item into South Africa and it is supposed to be sold for R10, but instead South Africans pay R30 for it. This is one of the ways to suck capital out of the continent," Mbeki said.

"In some instances mining companies will export platinum . and in the customs records they will say they are exporting tin, which has a lower price."

He said the panel would not start work on a "blank slate" as there had been previous discussion on the financial outflow.

"We will identify the gaps that are missing and produce something that is actionable. The panel will produce a report that is credible to everybody."

The panel includes Economic Commission for Africa executive chairman Abdoulie Janneh, Coca-Cola's Nigeria chairman Olusegun Apata and director of Global Financial Integrity in the US Raymond Baker.
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http://www.sowetanlive.co.za/news/business/2012/02/20/bleeding-a-wounded-continent-dry

The figures mentioned in the article are astounding. Africa will always be exploited by the Europeans, Asians and the Americans. It makes matters worse when there are corrupt African dictators/presidents who are easily bribed to keep the status quo and who make it paradise for foreign companies to loot Africa. I hope Mbeki gets to the bottom of this and afterwards action is taken to change this continental criminal act.
 
Africa is equally exploited by Africans :P
 
"People import an item into South Africa and it is supposed to be sold for R10, but instead South Africans pay R30 for it. This is one of the ways to suck capital out of the continent,"
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Unless the importer has paid R30 for the item, I don't see how this makes capital LEAVE the continent... locals have paid a LOCAL R30 which he will spend LOCALLY, keeping the money here...

Unless they are talking about the R10 spent to import the item in which case what does the selling at R30 have to do with anything??

"In some instances mining companies will export platinum . and in the customs records they will say they are exporting tin, which has a lower price."
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So they are making more profit/bringing in MORE money to the continent? Isn't this the opposite of what they are saying in the article?

sigh...
 
How much of that amount is politicians syphering (sp?) money off into their swiss bank accounts?
 
hyarion said:
"In some instances mining companies will export platinum . and in the customs records they will say they are exporting tin, which has a lower price."
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So they are making more profit/bringing in MORE money to the continent? Isn't this the opposite of what they are saying in the article?

sigh...
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I'm sure that if they say Tin, on the paper, instead of Platinum, the overseas buyer, is paying less than what he should be paying, plus controls on Tin, is probably much less than on Platinum? I don't see how exporting Platinum as Tin will bring in more money.
 
hyarion said:
Unless the importer has paid R30 for the item, I don't see how this makes capital LEAVE the continent... locals have paid a LOCAL R30 which he will spend LOCALLY, keeping the money here...

Unless they are talking about the R10 spent to import the item in which case what does the selling at R30 have to do with anything??



So they are making more profit/bringing in MORE money to the continent? Isn't this the opposite of what they are saying in the article?

sigh...
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A common method, much loved by mainframe suppliers in the past, was to have a corporate 'exchange rate' which allowed them to get their profits out of the country.

For example, the corporate rate for South Africa would be $1 = R25.00.

So a spare part that cost (say) $100 on the factory price list would cost R2,500 locally.

The excuse was that the local price included the cost of airfreight, import duty, VAT etc.

It did, but it also included a portion of the local subsidiary's profits for the year.

Net result: the local subsidiary just broke even, the profits having been exported in the cost of purchasing the hardware from the factory ...
 
hyarion said:
Unless the importer has paid R30 for the item, I don't see how this makes capital LEAVE the continent... locals have paid a LOCAL R30 which he will spend LOCALLY, keeping the money here...

Unless they are talking about the R10 spent to import the item in which case what does the selling at R30 have to do with anything??



So they are making more profit/bringing in MORE money to the continent? Isn't this the opposite of what they are saying in the article?

sigh...
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I don't think increasing the wealth of multinational mining companies counts as bringing more money into the continent. Very little of that money will stay in the continent since the shareholders, directors, etc are generally not Africans.
 
joelus said:
I don't think increasing the wealth of multinational mining companies counts as bringing more money into the continent. Very little of that money will stay in the continent since the shareholders, directors, etc are generally not Africans.
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The problem is not foreign ownership, but rather that raw materials are seldom refined in SA, instead we sell the raw materials to example Japan, where they refine it, and we buy back the product from them.
 
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Africans are their own worst enemies. Easily bribable and exploitable. That's why corruption at all levels must be rooted out. Making someone like Zuma with 700+ fraud charges president sends out the wrong message.
 
rrh said:
A common method, much loved by mainframe suppliers in the past, was to have a corporate 'exchange rate' which allowed them to get their profits out of the country.

For example, the corporate rate for South Africa would be $1 = R25.00.

So a spare part that cost (say) $100 on the factory price list would cost R2,500 locally.

The excuse was that the local price included the cost of airfreight, import duty, VAT etc.

It did, but it also included a portion of the local subsidiary's profits for the year.

Net result: the local subsidiary just broke even, the profits having been exported in the cost of purchasing the hardware from the factory ...
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SARS has got quite harsh rules to deal with transfer pricing.
 
Nod said:
The problem is not foreign ownership, but rather that raw materials are seldom refined in SA, instead we cell the raw materials to example Japan, where they refine it, and we buy back the product from them.
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That's one of the bigger problems right there. Politicians and business must work together to make the refining of raw materials done where those raw materials are mined, i.e. in South Africa. South Africa is the biggest exporter of platinum and one of the bigger exporters of other minerals so we do have leverage to negotiate a better deal for the country, this goes for all African countries as well. Refining must be done here, if not then cars from overseas must be cheaper to import...........for example.
 
VJB 449 said:
Africans are their own worst enemies. Easily bribable and exploitable. That's why corruption at all levels must be rooted out. Making someone like Zuma with 700+ fraud charges president sends out the wrong message.
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They're always at a disadvantage making them easy to corrupt.
 
R13... said:
They're always at a disadvantage making them easy to corrupt.
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That argument was valid 50+ years ago. Not now.

The ANC has supported somebody like Mugabe for the last two decades. How can anyone justify it? Mugabe totally destroyed his country.
 
So, most every sub-saharan country is run by black governments - who make the trade laws, import/export rules etc,

but it's the Europeans, Asians and Americans are to blame ?

When oh when will the leaders of this continent start accepting responsibility for anything at all.
 
Really $50bn leaves the continent? You mean the Europeans are employing people to generate wealth the value of which is $50bn..how dare they!?
 
hyarion said:
Unless the importer has paid R30 for the item, I don't see how this makes capital LEAVE the continent... locals have paid a LOCAL R30 which he will spend LOCALLY, keeping the money here...

Unless they are talking about the R10 spent to import the item in which case what does the selling at R30 have to do with anything??
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I don't see the problem either, unless mbeki is advocating price controls in which case no one will import the product.

Seems to me this is a whinge for more aid.

Basically he's saying the rest of the world isn't subsidising African corruption enough.
 
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