Illicit capital outflows are negatively impacting the revenue potential of countries across Africa. According to the Copenhagen Consensus Center, Africa is losing around 3.4 percent of GDP, or $76 billion annually. Deloitte Anti-Corruption Expert, Chip Cottrell tells Bloomberg Television Africa’s Eleni Giokos what is being done to stem the outflows.

In fact there have been studies, including some done by Deloitte, that indicate that it is even much greater than the numbers you have quoted. There are a number of high growth economies that are in the small countries and then there are large growth economies in the larger countries. But, it’s getting better. In the smaller countries, it tends to be a higher percentage. In the larger economies, it makes sense that it will be a smaller percentage. But, it is being addressed. It is being talked about now and we are seeing that as a really important part of the next step,” said Chip Cottrell (CC).

Eleni Giokos (EG): We are starting to see African countries experiencing repercussions because of corruption scandals. Malawi is experiencing this where we saw the freezing of aid. Tanzania is on the verge of experiencing the same repercussions. Do you think it is a good thing?

CC: A lot of this is stemming from some grassroots efforts as well as global pressure. One of the examples of that has been the focus by the World Economic Forum   and the Partnership Against Corruption Initiative looking at ways of engagement, both at a global level and a very much grass roots level. You mentioned Malawi.Malawi is probably a great microcosm some of the change that is, that needs to occur. Tanzania is an example where there have been some great strides made from the corporate side as well as some grass roots efforts. For example as well, in the country of Nigeria, the grassroots efforts from the Clean Business Partnership Initiative, it has made a small group of corporates engaged in brining change at a very microcosm level. That basis is expanding and it has meant that people start to understand where there is transparency, what accountability means, and how this is going to change the economy both for the government and for the people over a relatively short period of time.

EG: We are starting to see more regulation coming through in Africa. Many African countries are trying to instil a culture of regulation and compliance. Do you think that it is happening fast enough?

CC: Well, this has been an age old problem. It is a question of whether or not it is the supply or demand side to this initiative. And, it isn’t quite as simple as all that but I think the fact that the discussion is occurring is a lot more impactful now than it ever has been. The government has to recognize that there is impact on a number of these changes. You can use some of the examples in the smaller, developing countries that have high growth, where it may take 180 to 250 days to get a permit just to open up, or a licence to start a company. In some of the larger economies, it is taking less than 20 or 30 days. Now, what you can see is that there is a clear indication, with all of those, with all of that timing, for people to have their hand out and at a number of different levels. That is just a concrete example of the types of things that can change relatively quickly and I think we are going to see that.

credit: Bloomberg Television Africa

Elsewhere on Ventures

Triangle arrow