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Tuesday
Sep172013

The aid Africa needs most

In the prior post, I talked about steps governments in East Africa can take to lift the natural resource curse that plagues the region. Let's look now at how extractive companies and foreign governments can also help make life better for millions of people.

It sounds trite, but extractive companies can stop engaging in corrupt deals with public officials. While a bribe may help achieve short term objectives, it creates an expectation for bribes in future by public officials. They are then motivated into creating inefficiencies and challenges in order to extract more bribes. So even if a company thinks a bribe is needed and won't be detected, it should think about the long-term the bribe would do.

Natural resource companies can also help reduce corruption by making public in their annual returns amounts paid to regional governments for each project. Although a recent U.S. rule requiring this disclosure was struck down by an American court, the disclosure still makes a lot of sense, even on a voluntary basis. It's an effective and important way to help citizens in East Africa hold their officials accountable.

What can foreign governments do to help? Given that all of the companies involved in major exploration activities are foreign (mostly European and American), it follows that the governments of their home countries can give a big boost to accountability. They can step up enforcement of antibribery laws. The FCPA, for example, is a powerful tool in the push for cleaner governments in Africa.

Foreign governments also can encourage or require their companies to disclose payments to governments in Africa -- regardless of laws prohibiting such disclosure in the country of operation. The disclosure will provide an accurate point of reference for the people in the region to hold their governments accountable for the proceeds of natural resources exploitation.

The recommendations today and in the prior post are by no means exhaustive. But they are primary conditions that are needed if the East Africa nations are to avoid the resource curse that has afflicted so many other African countries.

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Michael Ndichu Kuria is a contributing editor of the FCPA Blog. He's a counter-fraud and counter-corruption consultant currently active in the East, Central and Horn of Africa regions. He conducts anti-bribery compliance reviews, forensic audits, fraud and misconduct investigations, integrity reviews, fraud risk management, procurement policy compliance reviews, and controls assessments. He has also designed and reviewed anti-money laundering and counter terrorist financing systems for various public sector and private sector clients across the East African region. He can be contacted here.