Make India Drought-Proof

Sunita Narain

Meteorologists are still not sure of the timing and intensity of El Niño. But it is clear that this monsoon will not be normal and there is a serious possibility that some parts of the country will be hit by drought and crop failure. The question is why we remain so unprepared to deal with crippling water shortages year after year. Why have all our efforts to drought-proof India failed? What should we do now?

We have been gravely remiss about water management. I say this because we had no excuse not to act. The past 10 years have been good rainfall years. This is the bounty that governments had no right to squander away. It was in these 10 years that everything could have been done to harvest rain, to recharge groundwater, to build rural ponds and tanks and to improve the efficiency of water use. There is no excuse because the problems are known and the solutions have been tested, just not applied and worked upon.

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Can "Natural Capital Accounting" Come of Age in Africa? Part 1

Patrick Bond

In early June, a University of Pretoria conference at the Governance Innovation Centre, keynoted by Indian eco-feminist Vandana Shiva, contemplated how to go “beyond GDP.” The current system of economic bean-counting is terribly inappropriate for a continent “rising” in rhetoric but, in reality, being looted at a breakneck pace.

As the Pretoria host, Prof. Lorenzo Fioramonti, author of the 2012 book Gross Domestic Problem, explained, “Gross Domestic Product focuses exclusively on market activities—that is, present income and production flow—whereas alternative measures of inclusive wealth highlight the importance of stocks of assets and their changes over time. The politics of GDP makes countries blind by rewarding short-term consumption and wholesale exploitation of natural assets at the expense of social justice and sustainability.”

The head-in-sand, ostrich-mimicking economists and financial journalists who use GDP without correction probably aren’t even aware that the figure does not include resource depletion, unpaid women’s and community work, pollution, loss of farmland and wetlands, family breakdown and crime. There are many substitutes for GDP, and one—the Genuine Progress Indicator—shows a substantially lower level of world welfare, around $36 trillion using GDP compared to less than $10 trillion using GPI in 2005, once these corrections are made.

World corrections to Gross Domestic Product (GDP)

Source: Rethinking Progress

Africa is hardest hit by two of these corrections—resource depletion and white collar crime—so any fantasy of “Africa Rising” must be completely rethought once we recalculate. Regarding crime, as University of Massachusetts economist Leonce Ndikumana has shown, more than US$1.7 trillion was looted from Africa through Illicit Financial Flows (IFF) not tracked through GDP from 1970-2010.

According to Simon Mevel, Siope Ofa and Stephen Karingi from the UN Economic Commission on Africa, IFF includes “1) Corruption, which is the proceeds from theft and bribery by government officials; 2) Proceeds from criminal activities, including drug trading, racketeering, counterfeiting, contraband, and terrorist financing; 3) Proceeds from commercial tax evasion mainly through trade mispricing and laundered commercial transactions by MultiNational Corporations (MNCs).” As they concede, the problem is getting worse, with trade mispricing alone rising from less than $30 billion a year before 2006 to more than double that level in the subsequent four years.

Source: Simon Mevel, Siope Ofa and Stephen Karingi, United Nations Economic Commission for Africa

The NGO Global Financial Integrity lists five African countries as having lost the most to IFFs during the period 1970-2008:

1 Nigeria $217.7 bn

2 Egypt $105.2 bn

3 South Africa $81.8 bn

4 Morocco $33.9 bn

5 Angola $29.5 bn

Here in South Africa, misinvoicing has become a major national controversy. Dr. Dick Forslund, a Swedish economist based at Cape Town’s Alternative Information and Development Centre, recently questioned how the big MNC mining houses could fail to get market-related prices during international platinum sales, which in turn meant they were underpaying their own books by at least $1.5 billion over the last decade.

The firms denied it, and as if on cue, African National Congress general secretary Gwede Mantashe immediately launched a paranoid attack on Forslund, who was assisting the Association of Mineworkers and Construction Unions (AMCU): “The articulation of the AMCU position by white foreign nationals signals the interest of these foreign forces in the destabilisation of our economy.”

Mantashe did not mention ANC deputy president Cyril Ramaphosa, for many years a 9% shareholder and board member of Lonmin, the London firm once run by Tiny Rowland, who was “the unacceptable face of capitalism” according to then Tory prime minister Edward Heath in 1973. Lonmin’s Marikana platinum operations became infamous in August 2012, because of what appears now as a pre-meditated massacre that took place the day after Ramaphosa sent emails to the police and mining minister upgrading a labour dispute to “dastardly criminal.” The police shot 34 dead, many execution style.

In the same spirit, Pretoria’s diamond valuators have winked and nodded while DeBeers apparently mispriced US$2.83 billion from 2004-12, according to Africa Report columnists Sarah Bracking and Khadija Sharife.

These are just some of the reasons why in South Africa, the country that PricewaterhouseCoopers recently reported was the world’s worst for corporate fraud, “natural capital” should be carefully counted. Otherwise, the mining and oil MNCs will loot us blind.

Triple Crisis welcomes your comments. Please share your thoughts below.

Can “Natural Capital Accounting” Come of Age in Africa? Part 1

Patrick Bond

In early June, a University of Pretoria conference at the Governance Innovation Centre, keynoted by Indian eco-feminist Vandana Shiva, contemplated how to go “beyond GDP.” The current system of economic bean-counting is terribly inappropriate for a continent “rising” in rhetoric but, in reality, being looted at a breakneck pace.

As the Pretoria host, Prof. Lorenzo Fioramonti, author of the 2012 book Gross Domestic Problem, explained, “Gross Domestic Product focuses exclusively on market activities—that is, present income and production flow—whereas alternative measures of inclusive wealth highlight the importance of stocks of assets and their changes over time. The politics of GDP makes countries blind by rewarding short-term consumption and wholesale exploitation of natural assets at the expense of social justice and sustainability.”

The head-in-sand, ostrich-mimicking economists and financial journalists who use GDP without correction probably aren’t even aware that the figure does not include resource depletion, unpaid women’s and community work, pollution, loss of farmland and wetlands, family breakdown and crime. There are many substitutes for GDP, and one—the Genuine Progress Indicator—shows a substantially lower level of world welfare, around $36 trillion using GDP compared to less than $10 trillion using GPI in 2005, once these corrections are made.

World corrections to Gross Domestic Product (GDP)

Source: Rethinking Progress

Africa is hardest hit by two of these corrections—resource depletion and white collar crime—so any fantasy of “Africa Rising” must be completely rethought once we recalculate. Regarding crime, as University of Massachusetts economist Leonce Ndikumana has shown, more than US$1.7 trillion was looted from Africa through Illicit Financial Flows (IFF) not tracked through GDP from 1970-2010.

According to Simon Mevel, Siope Ofa and Stephen Karingi from the UN Economic Commission on Africa, IFF includes “1) Corruption, which is the proceeds from theft and bribery by government officials; 2) Proceeds from criminal activities, including drug trading, racketeering, counterfeiting, contraband, and terrorist financing; 3) Proceeds from commercial tax evasion mainly through trade mispricing and laundered commercial transactions by MultiNational Corporations (MNCs).” As they concede, the problem is getting worse, with trade mispricing alone rising from less than $30 billion a year before 2006 to more than double that level in the subsequent four years.

Source: Simon Mevel, Siope Ofa and Stephen Karingi, United Nations Economic Commission for Africa

The NGO Global Financial Integrity lists five African countries as having lost the most to IFFs during the period 1970-2008:

1 Nigeria $217.7 bn

2 Egypt $105.2 bn

3 South Africa $81.8 bn

4 Morocco $33.9 bn

5 Angola $29.5 bn

Here in South Africa, misinvoicing has become a major national controversy. Dr. Dick Forslund, a Swedish economist based at Cape Town’s Alternative Information and Development Centre, recently questioned how the big MNC mining houses could fail to get market-related prices during international platinum sales, which in turn meant they were underpaying their own books by at least $1.5 billion over the last decade.

The firms denied it, and as if on cue, African National Congress general secretary Gwede Mantashe immediately launched a paranoid attack on Forslund, who was assisting the Association of Mineworkers and Construction Unions (AMCU): “The articulation of the AMCU position by white foreign nationals signals the interest of these foreign forces in the destabilisation of our economy.”

Mantashe did not mention ANC deputy president Cyril Ramaphosa, for many years a 9% shareholder and board member of Lonmin, the London firm once run by Tiny Rowland, who was “the unacceptable face of capitalism” according to then Tory prime minister Edward Heath in 1973. Lonmin’s Marikana platinum operations became infamous in August 2012, because of what appears now as a pre-meditated massacre that took place the day after Ramaphosa sent emails to the police and mining minister upgrading a labour dispute to “dastardly criminal.” The police shot 34 dead, many execution style.

In the same spirit, Pretoria’s diamond valuators have winked and nodded while DeBeers apparently mispriced US$2.83 billion from 2004-12, according to Africa Report columnists Sarah Bracking and Khadija Sharife.

These are just some of the reasons why in South Africa, the country that PricewaterhouseCoopers recently reported was the world’s worst for corporate fraud, “natural capital” should be carefully counted. Otherwise, the mining and oil MNCs will loot us blind.

Triple Crisis welcomes your comments. Please share your thoughts below.

Picking Up the Pieces from a Failed Land Grab Project in Tanzania

Timothy A. Wise

I arrived in Tanzania, one of the frontlines in the battle over land grabs in Africa, just as another round of international negotiations on guidelines for “responsible agricultural investment” (RAI) wrapped up in Rome late last month. The policy document is intended to curb so-called “land grabs” in Africa and other developing countries.

Negotiations were not going well. The governments of developed countries were debating every point in the guidelines, which are slated for approval by the UN’s Committee on World Food Security (CFS) in October. They were resisting many of the most basic principles to guarantee the right to food and land for farmers and herders who have seen their land and livelihoods given away to foreign companies and governments.

Those distant policy debates seemed urgent as I sat down with villagers from the Kisarawe area of Tanzania, southwest of Dar es Salaam, where 11 villages have given up 20,000 acres of land to the British-owned Sun Biofuels for a large-scale biofuel plantation. The biofuel project has failed, and now the villagers are staring at 5,000 acres of useless jatropha trees surrounded by guards hired to keep villagers off what used to be their land.

When the villages agreed to give up the land, they’d been promised compensation for it and, more importantly, more than 1,000 jobs, a variety of community development projects—roads, wells, schools, health clinics—and agricultural investment in local farms.

But those security positions were the only jobs the farm was providing. The local village councils and some farmers have gotten a little compensation for the land, but have nothing else to show for it.

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