The Panama Papers are everywhere
Their release confirm what many of us already know about the tax dodging habits of the global elite. And other #WeekendSpecials.
And this week we’ll spend sometime talking about the Panama Papers. First up, however, we’ve got some nice things to say about a conference held in Addis Ababa (31 March-5 April).
(1) The Economic Commission for Africa (ECA), a progressive organization based in Addis and a favorite of ours, held its annual Africa Development Conference this past week. The conference brings together policymakers, academics and other development experts. Attendees are largely African-based and the topics of discussion, because of this, tend to be rooted in African realities.
This year was no different – the main discussion point was how to get the continent to industrialize. If you follow this series, you’ll know we’ve talked about the importance industrialization before on Africa is a Country (see here and here).
(2) One of the highlights of the conference is the delivery of the Annual Adedeji Lecture named after Professor Adebayo Adedeji, a Nigerian economist who headed the ECA in the 1970s and a fascinating personality.
This year’s lecture was delivered by Professor Ha-Joon Chang of Cambridge University and buster-in-chief of myths about the glorious wonders of capitalism. Professor Chang has spent a good part of his academic career dispelling fairytales like the one suggesting that the rise of his native South Korea (and that of the other East Asian Tigers) is wholly attributable to the magic of “free markets.”
The organizers of the lecture could not have picked a better candidate to honor Professor Adedeji than Professor Chang.
(3) The title of Professor Chang’s lecture was “The Industrialization Imperative: Why does Africa still have to industrialize?”. The lecture is based on a 190 page report that Chang has prepared for the ECA that we are still digesting. We hope to do a full blog post once we’ve digested it.
The long and short of Professor Chang’s lecture is that African governments need to resuscitate the usage of “Industrial Policy” in growing industry. By “Industrial Policy,” Chang is advocating for a greater role for the state in planning for industry–using trade barriers to protect “infant industries,” providing subsidies to strategic sectors and state provision of large-scale infrastructure. By the way, and as Chang reminds us, this is precisely how that so-called bastion of capitalism, the United States, industrialized.
The entire lecture is on YouTube and the lecture slides are downloadable here (scroll to the bottom).
(4) Also launched at the conference was “The Measuring Corruption in Africa” report that indicts the many perceptions-based corruption indices that the cognoscenti like to spout (something we’ve talked about before here and here). Here’s an excerpt from the Executive Summary of the report:
The current predominantly perceptions-based measures of corruption are flawed and fail to provide a credible assessment of the dimensions of the problem in Africa…The present report calls upon African countries and partners to move away from purely perceptions-based measures of corruption and to focus instead on approaches to measuring corruption that are fact-based and built on more objective quantitative criteria.
This is diplomatic speak for: “Please throw all those perceptions-based indices in the rubbish bin.”
(5) Relatedly, and a nice segue into the Panama Papers, is this story about Gonzalo Delaveau, the former president of the Chilean branch of Transparency International. Delaveau was forced to resign this week after the leaks showed he was connected to at least five offshore tax evading companies.
Delaveau, as president, must have been intimately involved in the production of Transparency International’s flagship Corruptions Perceptions Index.
(6) The release of the Panama Papers has confirmed what many of us already know about the tax dodging habits of the global elite. We aren’t surprised to see David Cameron’s name come up. Nor are we surprised to see Africans on the list. But the apparent absence of Americans has led some to conclude that this says something about the high ethical standards of the American brand of capitalism. Here’s Megan McArdle writing for Bloomberg:
What we’ve seen from the [Panama] papers so far is not so much an indictment of global capitalism as an indictment of countries that have weak institutions and a lot of corruption. And for all the outrage in the United States, so far the message for us is pretty reassuring: We aren’t one of those countries.
Yes, she wrote that.
(7) Sorry to shutter Ms McArdle’s fairytale: Gabriel Zucman of the University of California at Berkeley and the world’s leading expert on tax havens tells us that the Panama papers are only a tip of the iceberg. It would be folly to make generalizations on such a tiny sample (Statistics 101).
Further, Zucman estimates that about 4% of U.S wealth is held offshore in tax havens. In the same way that we at Africa Is A Country have a taste for Malawian tea (sorry Kenya), U.S evaders tend to prefer to hide their stash in Bermuda, Cayman Islands or Singapore.
(8) And let’s not forget that the U.S is itself increasingly becoming a tax haven of choice.
(9) How to make sense of the fact that Nigeria, Africa’s largest producer of crude oil, is currently facing a grave shortage of petrol?
(10) Hustling for fuel has become such a nightmare that our Nigerian friend, Olumayowa Okediran, uploaded the picture to the left onto Facebook with the following update: “I feel like a king. Fuel is bae”. Things ain’t good when fuel becomes your bae.
(11) Finally, how to make sense of the fact that Nigeria, a country that recently misplaced $16billion, is set to borrow $2billion from China?
To paraphrase that Briton whose name we don’t like to mention: Nigeria is a riddle, wrapped in a mystery, inside an enigma.