1. POVERTY AND GOVERNANCE IN AFRICA the Presentation to the World Bank Staff at Brown Bag Lunch By: Frederick Sumaye Former Prime Minister of UR Tanzania ( 1995 to 2005 ) May 17 th, 2007.

2. Africa: Facts and Figures Area: 30.3 mil sq. km (11.7 sq. mls) = 20%of land area. Population: 890 mil =12% (World). GDP $ 558 bln, per capita $670. Total debt 60% GDP. Poverty <$ 1/day 36%. Composed of 53 sovereign states

3. Historical Perspective Oldest? Civilization Slave Trade – destruction of society Scramble for Africa – Colonization – 1884 Berlin meeting Struggle for Independence – Wars and bloodshed – Struggle for power within countries Scramble for Africa - capitalism vs communism Scramble for Africa – natural resources

4. Effects of Corruption Old vice (since creation?) Exist in both rich and poor countries More rampant in poor countries? Serious propagates bad governance Negatively impacts on development Unfair/differential treatment of citizens Poor accountability/inefficiency

5. The Cost of Corruption WB estimates $80bln/year bribery in Transnational Corporations After 1977 Corrupt Practices Act US Companies lose $30bn/year 1999 report (US) found allegations of corruption of $37bn. In 4 months Over 5 year period bribery has influenced 294 contracts worth 145 bn. 1990 European Countries allowed tax deductibility of bribes as business expense (15% high corruption countries and 3% European Union) 1992/93 Corruption scandals reached highest political echelons of Belgium, Spain, Italy, Japan, France and Russia. 5 large WB clients are ranked by TI as among the most corrupt countries in the world Source: Global network to Curb Corruption: The experiences of Transparency International by Fredrik Galtung

6. Corruption in Developing Countries More rampant in many countries More visible – small economies More detrimental Many speakers – borrowed/grant money Who prosecutes and who judges? – In investments in minerals/oil how much taken and how much is left?

7. Leadership, Poverty & Corruption Poverty & corruption are indirectly related – Grand corruption - NO relation to poverty – Petty corruption – may be related Leadership in extreme poverty – Difficult & dangerous – Prone to corruption accusations – Prone to conflict – Easily confused with bad governance

8. Africa’s problems Real problem: Too many “can’t wait" problems – Leadership bogged down by immediate problems Too few resources – Difficult to set priorities A loser in global wealth creation – In 1990’s WT increasing at 6.7% (volume)1 – Africa’s share decreased from 3.5% to 1.5%2 – LDCs lost 80% of share in 3 decades, have only 0.5%3 Export raw commodities – low, unstable prices 1 Sources: Trade Policy for a competitive Economy and Export-led Growth, Ministry of Industry and Trade Tanzania (2003). 2http://publications.worldbank.org/commerce/catalog/product?item_id=1688508 2http://publications.worldbank.org/commerce/catalog/product?item_id=1688508 3 political Economy of the World Trading Systems, by Bernard M. Hoekman and Michael M. Kostecki

9. How did we help Africa? WB and others – assisted development – Expert advice- with knowledge on the ground? – Predetermined ‘medicine’ Failure of loan repayment – Interest – simple, compounding rate? Crippling debt burden – Loan servicing eg Zambia 62%, Mozambique 57%, Tanzania 42% (of govt. spending in 2001)* – Outcome – continued/increasing poverty? * Source: UNDP/WB figures – The political economy of AIDS in Africa by Nana K. Poku, CfHIV/AIDS/ECA & Alan Whiteside

10. Which way forward? Help Africa were wealth is created- private sector – Production, processing, marketing Loans repaid- business profits Governments – conducive environment to business Others – Me, start a social entrepreneurship organization to help private sector do competitive trade.