Major International Business Headlines Brief::: 06 October 2022

Thu Oct 6 08:23:53 CAT 2022

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Major International Business Headlines Brief::: 06 October 2022 

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ü  Petrol price rise warning after Opec oil output cut

ü  Covid: Hong Kong to lure tourists with free air tickets

ü  Apple iPhone: Can India be China’s ‘plus one’ to the world?

ü  Faisal Islam: Is Truss's growth plan running out of time?

ü  Elon Musk, Twitter and the mysterious X app

ü  Tesco: People watching every penny to make ends meet

ü  Nigeria: Lawmakers Question Upward Review of Nigeria's Gas Project By $8 Billion

ü  Africa: How Corruption Cripples Business At Africa's Seaports

ü  Southern Africa: Anticipating Change - Re-thinking SADC Industrial Policy

ü  South Sudan: New Report Details Billion Dollar Scam in Massive Bank Credit Programme

ü  Nigeria: Lawmakers Question Upward Review of Nigeria's Gas Project By $8 Billion

ü  Britain’s shadow banking system is raising serious concerns after bond market storm

ü  Asia markets mixed after U.S. stocks slip, OPEC+ announces production cut

ü  Anglo American and EDF launch Envusa to green South African mines with power and hydrogen

ü  Nigerian oil export terminal had theft line into sea for 9 years

 <mailto:info at bulls.co.zw> 

Petrol price rise warning after Opec oil output cut

Some of the world's top oil-producing countries have agreed to cut the amount they export in a decision expected to raise petrol prices around the world.

Members of Opec+ - a group that includes Saudi Arabia and Russia - said they would slash production by two million barrels per day.

The group said it wanted to stabilise prices, which have fallen in recent months as the world economy slows.

But the decision raised fears that prices for motorists will climb.

Expectations that countries were planning to pump less had already pushed oil prices higher this week. The price of a barrel of Brent crude jumped another almost 2% to more than $93 a barrel on Wednesday.

A spokesman for the RAC motoring group said the reduction announced Wednesday would "inevitably" lead to higher oil prices, forcing up the wholesale cost of fuel.

"The question is when, and to what extent, retailers choose to pass these increased costs on at their forecourts," spokesman Simon Williams said.

The cut announced by the Organization of the Petroleum Exporting Countries (Opec) and allies marks the biggest reduction by the group since the height of the pandemic in 2020.

It comes despite pleas from the US and others to pump more, after oil prices spiked this spring when the war in Ukraine disrupted supplies.

Why are the world's big oil producers cutting supplies?

In a statement, the White House said US President Joe Biden was "disappointed by the short-sighted decision".

The US pledged to continue to release oil from national stockpiles "as appropriate" and look at other ways to try to rein in prices at the pump, which are a key issue for American voters in midterm elections scheduled for November.

The move is also likely to disrupt US-led efforts to set a price cap for oil from Russia, a plan the US had suggested as a way to limit money flowing into the country and being put toward military use.

Opec members defended their decision as a response to significant "uncertainty" about future demand for oil, amid fears that the global economy is headed to a recession.

"The decision is technical, not political," United Arab Emirates Energy Minister Suhail al-Mazroui told reporters as Opec+ members gathered in Vienna to discuss the plans.

The latest decision by OPEC+ is not just significant for oil markets, but for geopolitics as well.

The fact that the Saudi-led cartel has taken this decision just three months after President Joe Biden's controversial trip to Saudi Arabia to convince the kingdom's de facto ruler, Crown Prince Mohammed Bin Salman to pump more barrels to cool down prices is a huge blow for the White House.

The move not only carries the risk of pushing up oil prices but will also damage efforts by the West to restrict the Russian oil income used to sustain its war in Ukraine.

Many countries will see this as a clear indication of major oil producers, especially Saudi Arabia siding with Russia in the name of protective oil market management.

It appears that the decision had support across the group as the OPEC+ energy ministers approved the proposal in a meeting that lasted 30 minutes.

As far as oil markets go, even though this is a substantial reduction, the actual impact on global supplies on the ground would be smaller because several members of OPEC+ are already pumping far below their official quotas.

But that may not be enough to calm the sentiments of the oil markets in the coming days.

Presentational grey line

Higher oil prices were a major driver of the run-up in consumer prices that hit countries around the world earlier this year, pushing inflation rates to levels not seen in decades and raising political tensions.

The more recent drop had provided some relief to consumers, even as prices of many other staples, including food, continue to rise.

A barrel of Brent Crude oil was trading at $84.06 in late September - down from highs of around $130 this spring.

Despite falling oil prices and concerns about the global economy, Caroline Bain, chief commodities economist for research firm Capital Economics, said it was unusual timing to slash supply.

"Global oil stocks are historically low and, so far, high prices have failed to materially dent demand," she added.

Analysts said that the impact of the cuts is likely to be less significant than its size might suggest, since some countries were already producing less than they had said they would, with Capital predicting a 1% drop in global supplies as a result.

Kathleen Brooks, director at Minerva Analysis, said the output cut was the "worst case scenario people were looking for" - one that would weigh on UK financial markets and raise fears that prices across the economy would continue to rise.

It "changes the narrative in terms of peak inflation - we might not be there yet," she said.-BBC

Covid: Hong Kong to lure tourists with free air tickets

Hong Kong says it will give away 500,000 airline tickets, worth HK$2bn ($254.8m; £224.3m), as it tries to boost its Covid-hit tourism industry.

The city rolled back several of its coronavirus rules in recent weeks.

However, major airlines are struggling to get their flight schedules back to pre-pandemic levels.

On Wednesday, British airline Virgin Atlantic said it will stop operating in Hong Kong because of issues linked to the Ukraine war.

"The airport authority will finalise the arrangement with airline companies. Once the government announces it will remove all Covid-19 restrictions for inbound travellers, we'll roll out the advertising campaigns for the free air tickets," Dane Cheng, executive director of the Hong Kong Tourism Board said.

Mr Cheng added that the free tickets, which were bought to support Hong Kong airlines during the pandemic, will be distributed next year to inbound and outbound travellers by the city's airport authority.

Meanwhile, Virgin Atlantic said it would close its office in Hong Kong and no longer fly between the city and London Heathrow after 30 years in the Asian aviation hub.

"Significant operational complexities due to the ongoing Russian airspace closure have contributed to the commercial decision not to resume flights in March 2023 as planned", the British carrier said.

The airline, which was founded by billionaire Richard Branson, halted flights to Hong Kong last December.

Russia's invasion of Ukraine has caused several airlines to suspend flights or take longer routes to avoid flying over the area.

"We're very sorry for the disappointment caused to our loyal customers on this route and anyone booked to travel from March 2023 will be offered a refund, voucher or the option to rebook on an alternative Virgin Atlantic route," Virgin added.

Until recently Hong Kong had some of the world's toughest rules as it followed China's zero Covid policies.

Last month, Hong Kong's government said it would no longer require people arriving in the city to go into hotel quarantine, or show a negative Covid test before boarding flights to Hong Kong.

Now, in the three days after arriving travellers have to monitor themselves for possible infection. The news sparked a rush for flight tickets to and from Hong Kong.

Prudence Lai, senior analyst at market research firm Euromonitor International thinks the offer of free air tickets will help speed up the process of mending Hong Kong's reputation as a popular travel destination.

"The pre-Covid status of Hong Kong represents the market potential of a full recovery," she told the BBC.

"However, this is highly dependent on when mainland Chinese tourists will return, as mainland China contributes to more than half of Hong Kong's inbound arrivals and travel receipts," Ms Lai added.

Hong Kong had 184,000 visitors in the first eight months of this year. That marks a significant drop in tourist numbers compared to before the pandemic - 56m people visited the city in 2019 as a whole.-BBC

Apple iPhone: Can India be China’s ‘plus one’ to the world?

Last week, Apple announced plans to make its latest phone model - iPhone 14 - in India, a significant milestone in the company's strategy to diversify manufacturing outside of China.

Five percent of iPhone 14 production is expected to shift to the country this year, much sooner than analysts had anticipated.

By 2025, a quarter of all iPhones the company makes could be produced in India, say analysts at investment bank JP Morgan.

Apple has been manufacturing iPhones in the southern Indian state of Tamil Nadu since 2017.

But the decision to make their flagship model in India is a noteworthy step as trade tensions between Beijing and Washington show no signs of letting up.

The move also assumes significance in the backdrop of the global supply chain "de-risking" which is underway because of China's "zero-Covid" policy.

Beijing's hard-line approach to eradicating the pandemic has led to industrial lockouts and large-scale supply chain disruptions

As a result, global firms are increasingly adopting a "plus one" strategy - or avoiding investing in China alone - to re-orient their supply chains.

"Companies are no longer willing to sit and wait for a policy change in China, or put their eggs in one basket for their sourcing needs," Oscar De Bok, CEO of logistics company DHL's supply chain business, told the BBC.

"They want to make sure they have two or three alternatives," said Mr De Bok, adding that this trend towards "omni-sourcing" had clear beneficiaries in countries like India, Vietnam and Mexico.

Mr De Bok was in India's financial capital Mumbai to announce a €500mn ($49mn; £43mn) investment to double DHL's warehousing capacity and headcount in the next five years.

He said this commitment was driven, in part, by the growth of foreign investment in sectors such as manufacturing and electronics where Prime Minister Narendra Modi's government has been offering financial incentives to companies that are keen on making India their production hub.

As part of this production-linked incentives (PLI) scheme, mining conglomerate Vedanta Resources has also earmarked investments of close to $20bn (£17bn) to set up a semiconductor plant in India in collaboration with the Taiwanese electronics manufacturing giant Foxconn.

Anil Agarwal, Chairman of Vedanta Resources, said last month that the world was looking to adopt a "China plus one" strategy and that "India is clearly in a sweet spot".

Advantage India

India, which is Asia's third largest economy, has been working hard to position itself as an attractive manufacturing and exports hub for multinationals.

It has a large domestic market and plentiful low-cost talent.

With GDP growth in the range of 6-7%, and headline inflation that's more modest than in many other parts of the world, India has been one of the better-performing major economies this year.

Its merchandise exports crossed the $400bn mark after stagnating at the $300bn ballpark for nearly a decade.

Besides fiscal sops, Mr Modi's administration has also been giving a major push to bilateral trade pacts in a bid to integrate India more deeply into global supply chains and rejig its image as a notoriously slow negotiating partner.

Businesses have welcomed these initiatives.

But India's approach to trade liberalisation, experts say, has been one step forward three steps back.

The rush to sign free trade agreements to improve market access and reduce tariffs has been accompanied by rallying cries of self-reliance and duties going up on at least 3,000 items, many of them on critical inputs in manufacturing processes.

Privately, many foreign companies also complain about the lack of a level playing field and growing protectionism.

Small and medium-sized companies - the backbone of India's economy - continue to find it hard to navigate India's byzantine bureaucracy. Truly disruptive reforms on land acquisition and quicker licensing have been elusive, experts say. And rickety infrastructure remains a major sticking point.

"Apple is certainly a success story so far but making India a manufacturing hub will require not just big-ticket headline grabbing investments but also a supportive ecosystem for SMEs [Small and Medium Enterprises]," says Mihir Sharma, director at the Observer Research Foundation (ORF).

"It is too early to tell if all these investments will be made at scale, and whether they will be sustainable over time."

Mr Sharma says SMEs - which employ a bulk of India's workforce - have been largely left out of Mr Modi's fiscal incentives scheme.

According to ORF, barring textiles and apparel, the scheme doesn't cover other labour-intensive manufacturing industries which could enable India to meaningfully leverage the plus-one strategy of export-led growth and create jobs for the 12mn Indians joining the workforce every year.

Mr Sharma adds that India will need to upskill its workforce and create "a more welcoming business climate" to be able to compete with other Asian economies.

Thailand, Vietnam and South Korea - all stand significantly above India in the World Bank's Ease of Doing Business rankings. Vietnam has also created a 2030 master plan to build an integrated infrastructure corridor critical for mass manufacturing.

Tipping point

But despite these timeworn challenges, India is in a better position than ever before to leverage this "historic opportunity", says Alex Capri, Research Fellow at the Hinrich Foundation.

He says that certain "key concentrated nodes" in India - southern states such as Tamil Nadu, Telangana, and the National Capital Region in the north - are well poised to develop a critical mass in manufacturing, as the US and its allies decouple from China.

This is likely to unleash an era of competitive federalism among the states.

India could also benefit from Taiwanese tech companies moving capacity to the country under "friend-shoring" arrangements to take advantage of the easy availability of cheap talent, Mr Capri adds.

So is this a tipping point?

"One of my Indian friends told me, India never misses an opportunity..... to miss an opportunity. But I think this time it is different," Mr Capri says.-BBC

Faisal Islam: Is Truss's growth plan running out of time?

"Growth, growth, growth," is the metric the prime minister wants us to use to judge the effectiveness of her government. That much she made clear in her conference speech.

In forthcoming weeks we will get the economic reforms, in planning, regulation, worker visas, and elsewhere, that the PM hopes will unleash that growth.

As one minister from the John Major era, who phoned me after the speech, said, even if the strategy works perfectly, it will take time. In the mid-1990s he experienced an economic shock that affected mortgages, and that was linkable, at least in part, to government decisions. In his view "British voters do not give credit for cleaning up your own mess".

And will the strategy work, even in the long-run?

The theme of the PM's speech to conference was that she would take on the "vested interests" of the "anti-growth coalition" in order to deliver a step-change after two decades of anaemic growth.

The epitome of the problem, for her, is a 70-year high in taxation, which is why she is urgently prioritising tax cuts.

There is a tremendous amount of debate over why the UK has had sluggish growth, more or less since the financial crisis. But a 70-year high in taxation is not usually a big part of it.

For a start, it has never actually come about, because it has always been a forecast for future years (from the Office for Budget Responsibility), rather than fact, and it seems contrary to attribute decades of low growth to something that was only a prediction. Taxation over the past quarter of a century, under prime ministers Blair, Brown, Cameron, May and Johnson, has averaged 32.8% as a proportion of economic output, or GDP. Under Mrs Thatcher's 11 years that number was 32.4% of GDP.

It is clear that some lower taxes can help boost growth; all of this begs the question as to what has been weighing down the economy. Indeed it is striking the government's comprehensive and transformational policy agenda is proceeding without a thorough, published analysis of what the growth problem is, why it occurred here and not in say the USA or Germany, and therefore how it should be addressed.

That brings us back to the "anti-growth coalition". At a tense political conference, the PM was always going to focus on her external political enemies. But that coalition stretches well into her own membership in that hall.

Planning reform, for example, would help growth and productivity, but always seems to get thwarted. One interesting part of the Kwarteng growth plan refers to changing regulations to allow more onshore wind to be built. That certainly would be a statement of intent.

What other policies could increase forecast growth so quickly that they would help the current numbers add up, when the OBR does its sums? Increasing the number of foreign workers to address the visible labour shortages around the country. Are people who oppose changes to the immigration rules for political reasons part of the "anti-growth coalition"? Moves to lower new post-Brexit, non-tariff trade barriers for British exporters, could also help reverse recent reductions to the OBR's long-term growth forecast. Neither move is on the government's agenda.

Number 11 may, in general, struggle to persuade the OBR that its plans will materially change the economy. And, indeed, there is then the reverse risk in the short term: that the turbulence of the past fortnight could have a permanent effect on perceptions of the UK's macroeconomic stability.

For 20 years Britain has set the gold standard for institutional independence when it comes to economic policy, built up by successive governments. That meant low borrowing costs, even through financial, and eurozone crises, and the pandemic too. In recent weeks this administration allowed the perception to grow, that it was fiddling with these essential controls on the economy. That perception was fed by leadership campaign rhetoric, and the mini-budget's massive tax cuts, presented without hard borrowing numbers.

Whereas sterling recovered its losses over the last few days, government borrowing costs remain materially higher. Perceptions of how high the Bank of England will have to raise benchmark interest rates are also higher. Rates were always going to get back to normal - higher levels - at some point after a decade-and-a-half of ultra-low interest rates. But it didn't have to happen so violently, in a matter of days. It is rates for mortgages and company lending that have been "moving on up", to echo the PM's choice of theme tune.

The OBR is right now calculating how hard the extra interest rate shock will hit the economy, and how much it will cost the government too. And it is true to say that UK growth will also be affected by rising economic challenges elsewhere in the world, including the eurozone and the USA.

So if the PM's speech was light on policy, that might reflect the need to not do anything at this point, that could further spook markets. Above all, it seems the lesson of the last week may have sunk in: that macroeconomic stability, rooted in institutional credibility, is actually a prerequisite for "Growth, Growth, Growth".-BBC

Elon Musk, Twitter and the mysterious X app

It was beginning to feel like Elon Musk and Twitter were locked in an eternal dance.

And then it came to an abrupt end - for now at least - with a short, succinct letter from Musk's lawyers to Twitter's, which announced that he intended to buy the firm after all, and an enigmatic tweet from Musk himself to his 107 million followers about creating "X, the everything app".

The dance began in April 2022. Musk bought up some Twitter shares and was invited to join its board. He initially accepted, and then declined. Then came the first bombshell - he wanted to buy the whole platform instead.

Twitter went into defensive mode and tried to prevent him from becoming a majority shareholder. Then he offered a $44bn takeover package - more than the firm was worth - and its investors pushed for it to go ahead.

Twitter accepted. Then, bombshell number two: Elon Musk argued that the company's estimation of the amount of spam and bot accounts on the platform was inaccurate. Both parties dug in their heels.

This has never been resolved - and led to Musk saying he was pulling out. But it is important - because if Twitter really is bloated with stuff that isn't real, that makes it a much smaller and less attractive proposition than it may appear.

Courtroom drama

There was speculation that Musk's offer had been made impulsively, and his plan to finance the deal, which involved selling off some of his shares in his electric car firm Tesla, had made investors in that company nervous, forcing him to look for an exit strategy.

In less than a fortnight's time, the two warring parties were due to face each other in court because by this point, Twitter had done its own U-turn and wanted to force the sale through. There was a $1bn termination fee at stake for either party if it walked away.

There had already been some embarrassing revelations revealed in court documents - such as private messages which showed that Elon Musk and Twitter CEO Parag Agrawal had fallen out, and Twitter founder Jack Dorsey had tried to mediate.

Was there more to come during the deposition? It is possible that Mr Musk is buying himself some time and saving face, ahead of a court case that many predicted he was unlikely to win.

The 'everything' app

As for his tweet about "X, the app for everything" - we will have to watch this space. He could well be eyeing something along the lines of the hugely successful Chinese app WeChat. That's a kind of "super app" which incorporates a lot of different services including messaging, social media, payments and food orders - there is as yet no such thing in the west.

Compared with its rivals, Twitter is a comparatively small platform with around 300m monthly users, and it has never experienced the exponential growth of say TikTok or Instagram. But it is considered influential, and is widely used by politicians, world leaders and businesses, to share comment and opinion.

When he first announced his intentions to buy Twitter, Mr Musk said he wanted to open the platform up to more "free speech" and less moderation - a tricky line for any social media firm to walk and keep in line with various regional regulations and laws on hate speech.

While the news is undoubtedly good for Twitter the business, whose shares rose by 20% after the lawyer's letter was revealed, Musk may decide to turn the platform into a very different kind of playground. This could alienate its current fans - but also bring in a whole new crowd. Either way, CEO Parag Agrawal is probably dusting down his CV.-BBC

Tesco: People watching every penny to make ends meet

Tesco has said people are "watching every penny" as they try to make ends meet, amid rising costs.

The UK's largest supermarket chain said customers are looking for ways to make their money go further, including switching from branded products and cutting back on eating out.

It came as Tesco reported a fall in profits and warned full-year earnings would be at the lower end of guidance.

It also announced a further boost to pay for UK workers.

The cost of living is increasing at its fastest rate in nearly 40 years, driven by the rising cost of food and energy.

It is eating into household budgets, with prices rising faster than wages.

Tesco said consumers were already spending less as shopping habits normalised after the pandemic, but they are cutting back even more now because of inflation.

The supermarket giant said operating profits in its retail division fell by 10% in the six months to the end of August. However, sales across the whole group excluding its fuel business increased by more than 3% .

The retailer now expects annual underlying retail earnings of between £2.4bn and £2.5bn, which is at the lower end of previous guidance.

Tesco boss Ken Murphy said customers were trying to "make their money go further, whether they are switching from branded products, between categories or cutting back on eating out".

"As we look to the second half [of the year], cost inflation remains significant, and it is too early to predict how customers will adapt to ongoing changes in the market," he added.

"We know our customers are facing a tough time and watching every penny to make ends meet."

Shoppers are being squeezed and supermarkets are feeling the pressure, too.

It's more competitive than ever in the grocery aisles. And there's a massive shift in shopping habits underway.

Tesco says customers are switching from branded to cheaper own label products, making more frequent shopping trips and putting fewer items in their baskets as well buying more frozen food.

Like other supermarkets, Tesco is also having to absorb some cost price increases to protect customers and stop them from shopping elsewhere. And that's hitting retail profits, as well as the return to more normal shopping habits after the pandemic.

For all retailers, there's a lot of uncertainty ahead. But Tesco, helped by its huge scale, looks well placed to navigate the cost of living crisis.

Tesco faces mounting competition from discounters such as Aldi, which became the fourth-largest UK supermarket for the first time in September as shoppers looked to make savings.

In its update, Tesco said it would lock in the prices of more than 1,000 everyday products until next year to help consumers cope with rising costs.

It also announced that its shop staff in the UK are set to receive another pay rise, their second this year.

Rival chains Morrisons, Sainsbury's and Asda have also hiked pay for their store workers this year, as UK supermarkets battle for staff amidst increasing competition in the sector.

Matt Britzman, equity analyst at Hargreaves Lansdown, said Tesco was under pressure from competitors as shoppers felt the pinch.

"Supermarkets are no strangers to dealing with cost-of-living pressures, there's been an all-out price war in the industry for some years now," he said.

"Amongst the larger players, Tesco's arguably been one of the standout businesses in the battle against low-cost outfits [such as Aldi and Lidl] but pressures on consumer spending can only build for so long before something must give."-BBC

Nigeria: Lawmakers Question Upward Review of Nigeria's Gas Project By $8 Billion

EGTL project is a 120,000 bpd gas project located in Delta State.

An ad hoc committee of the House of Representatives has queried the increase in the cost of the execution of the Escravos Gas-to-Liquids (EGTL) project from $2.9 billion to $10.7 billion.

The committee, investigating the Joint Venture of the NNPC limited, issued the query on Tuesday when Chevron Nigeria Limited appeared before it.

The Managing Director of Chevron Nigeria, Rick Kennedy, and other officials of the company appeared before the committee.

The Chairman of the Committee, Hassan Fulata (APC, Jigawa), questioned the Chevron delegation on the reasons for the review of the cost of the project from $2.9 billion to $10.7 billion.

EGTL project is a 120,000 bpd gas project located in Delta State.

Mr Fulata disclosed that a similar plant was built in Qatar for less than $2.5 billion within a very short period.

He also stated that NNPC Limited had protested the cost review and demanded a value-for-money audit.

Responding to the question, Monday Ovuede, Chevron's Director of JV, said several factors caused the upward review of the cost of the project from the initial $2.9 billion to $10.7 billion.

On the Qatar project, Mr Ovuede said the project was built in an industrial complex with a seaport and access to an international airbase.

He added that there was access to skilled labours compared to Nigeria, but such skills were hard to come by.

"The plant in Qatar is built in an industrial complex close to a seaport and there is an international airbase there. It has access to skilled labour from Europe. When you come to our side, we try to build--for some of the technology, we had to develop the local labour to the level required to implement the project," he said.

Speaking further, Mr Ovuede explained that immediately after the project was signed, prices of commodities like oil and steel went up, necessitating an upward review of the project.

He added that Chevron agreed to a value-for-money audit despite not having it in the contract for the project.

"This is a very complex technology to be executed in this part of the world. When project construction started in 2005-- coincidentally, if you check the record, commodity prices, including that of oil and steel, started rising in the international market.

"The project was given as engineering, procurement and logistics, which means the sum was fixed. In the course of executing the contract, the contractors came back," he said.

The explanation by Mr Ovuede did not satisfy the lawmakers, who protested the response.

Ibrahim Isiaka (APC, Ogun) moved a motion for Chevron to submit a written response justifying the increment.

In addition, Mr Fulata also accused Chevron of claiming capital allowance for the project without capital importation or a certificate to make such a claim.

Consequently, the committee directed Chevron to appear again next Tuesday with relevant documents to defend the issues raised.

-Premium Times.

Africa: How Corruption Cripples Business At Africa's Seaports

Ports in Africa lose vast sums of money because of corrupt port officials, inefficiencies, and poor infrastructure, among others. Corruption has affected economic growth and slowed the clearance and forwarding of goods.

For fear of scrutiny, many port authorities keep their losses under tight guard and only release profit figures, which is a small fraction of the losses accrued. Moreover, in many cases, the websites of port authorities have not been updated with information on losses in real-time.

For instance, customs officials at Lagos Port, one of Africa's busiest ports, said the port generated revenue of $1.2 billion (€1,23 billion) in the first quarter of 2022.

But a joint report by the Maritime Anti-Corruption Network (MACN), a global sea trade and shipping group, and the Lagos Chamber of Commerce and Industry said that Nigeria loses $7 billion annually to corruption and inefficiency, according to Nigeria's daily The Vanguard and Business Week.

The profit and loss statements that summarize the revenues, costs and expenses accrued are hardly shared in the public domain.

Separately, in the 2020/2021 report, MACN identified Nigeria as one of the most challenging countries to do business. The organization said corrupt demands posed a significant risk to member companies that faced extortion, harassment, and threats of violence.

Moreover, regulations and procedures in ports were lacking in detail and consistency, giving authorities broad discretionary powers, the report said.

However, MACN said a helpdesk and an anonymous reporting system for distressed vessels had helped curb corruption demands. Since the helpdesk launch, over 460 pre-notification arrivals have been processed through the system.

The plight of clearing agents

Samuel Adebisi, a clearing agent at Lagos Port, told DW that it is challenging to clear goods without paying a bribe to the customs officials.

"Officials mount several illegal toll points where they extort money before any truck can move in or out of the port," he said. In addition, the roads that enter the port are another nightmare for the clearing agents, and trucks are known to queue for weeks on the bad road that leads to the port.

"They [customs officials] keep collecting charges without even fixing the road at the port to the extent that containers sometimes fall off trucks," Adebisi added. Apart from extorting money from the agents, there are frequent cases of missing goods or parts of imported motor vehicles.

Mayowa Adeola, a resident of Lagos, told DW that there's hardly anyone who imports anything into Nigeria without items being stolen.

"I have an Audi Q7 (2010) model at the port, whose bumper and grill have been stolen, these things happen very often, and I think it is because no one presses charges against the customs officials," Adeola said.

Due to the rampant extortion, truckers often protest outside the port, and there have been frequent calls for the government to intervene so that business at the port can improve. On a previous visit to Lagos Port, Nigeria's Vice President Yemi Osinbajo promised to improve the situation.

"This is a crucial economic axis for Nigeria because most of our imports and exports come through here. Therefore, we cannot afford to have the state of affairs as it is," Osinbajo said.

"I have already drawn up some sort of a road map and a checklist of the various things we need to do in the next couple of weeks, and we are committed to making sure that it works," Osinbajo emphasized.

The situation at the Lagos Port paints a larger picture of the systemic problems in Nigeria - where politicians make promises but fail to fulfill them.

The Liberian dilemma

At the Monrovia Free Port in Liberia, importers face the same challenges as their Nigerian counterparts. The importers told DW that among the challenges they face is a backlog of containers and shipments, and clearing their goods has become a nightmare.

Dominic Nimely, an importer at the Free Port, said they are soon running out of business because of high costs and the long waiting time to clear goods.

"Freeport has lots of disadvantages in doing business in Liberia. One has to do with the various shipping lines. We used to pay $75 to collect our delivery orders. After Madam Sirleaf's first term, it went up to $250," Nimely told DW.

"There is a lot of bureaucracy, and it's like we are doing business for the government and banks. In addition, APM Terminal doesn't take Liberian Dollars, and there is nothing being done."

APM is an acronym for (Annam Peter Moller), a Danish shipping company that signed a 25-year agreement during former President Ellen John Sirleaf's tenure to manage Liberia's Free Port.

Importers accuse APM of conspiring with other cargo handling companies to delay the clearance of goods to charge higher tariffs deliberately.

"APM and three other companies have a cartel to delay paperwork so that you pay storage money. We have filed complaints to the commerce ministry and to the Liberia Revenue Authority (LRA), but nobody seems to care," Nimely said.

But for its part, APM issued a statement saying that it has embarked on improving customer service using technologies. That way, the role middlemen play at FreePort will be minimized.

Robert Feahn, who has spent seventeen years working as a customs broker and car importer at the Free Port, said he is soon leaving the business because of high tariffs imposed on goods passing through the port.

"Can you imagine that if you import three cars into this country, you could be charged between $7,000-$8,000 per car?"

"If I happen to get those cars out of the port, how am I going to sell them to get my money back? It's simply trying to take us out of business. Foreigners are taking over the business, and we, the typical Liberians, are going out of business," Feahn told DW.

But Saa Saamoi, the Customs Commissioner at the LRA, downplayed the accusations and instead blamed delays on importers themselves.

"Some of the reasons people get delayed at the port is not because of the officials, but because they are trying to find ways to cheat the systems in place," Saamoi told DW. "Additionally, some importers don't follow the right procedures when clearing goods and are advised to start afresh. That contributes to the delays."

Saamoi said his institution is committed to fighting bribery by red-flagging rogue brokers and vowed to revoke their licenses.

"Right now, we are preparing to publish "red-flagging brokers" or whichever broker or customs officer is involved with customs-related frauds on our website."

Saamoi said there will be zero tolerance for corrupt customs officers and added that "the LRA has dismissed more officers than any other public institutions in this county - and it's all related to fraud and integrity issues, nothing else."

The United States recently sanctioned three senior Liberian government officials, including the head of Liberia's National Port Authority, Bill Twehway. Under pressure from the United States to tackle rampant corruption - Liberia's President George Weah immediately sacked the trio pending further investigations into their dealings.

Ghana's push for better services

At Ghana's busiest ports of Tema and Takoradi, importers and shipping companies are at the forefront to ensure customs officials don't ask for bribes to let goods go through and clear cargo in time.

The two ports receive approximately 1,650 vessels yearly, including tankers, cargo, and cruise ships. Despite recent improvements in infrastructure at the ports, Edward Akrong, the president of the Ghana Institute of Freight Forwarders, said there are still bureaucratic tendencies, especially in processing the necessary documents to clear goods.

"If I make a declaration today and pay the duties, that means that I should walk out later in the day with my goods, but that is not always the case," Akrong said. He added that depending on the kind of goods one brings into the country. The law requires that I obtain "all the necessary permits from the standards authorities like the FDA [Food and drugs authority] or the EPA [Environmental Protection Agency]. That is where the issues are because it comes with costs and time."

Ghana's ports contribute significant revenue to government coffers, and 70% of the country's business is conducted at ports. However, despite the high volumes of goods handled at the ports, high tariffs frustrate business growth.

Sampson Asaki Awingobet, the Executive Secretary to the Importers and Exporters Association of Ghana, told DW that his group is one of the biggest clients of the ports. Still, the government needs to revise the high charges imposed on importers and exporters.

A limping economy and high tariffs

And with Ghana's worsening economic situation resulting in the loss of value of its local currency, the cedi, importers, and exporters must pay more.

The charges keep fluctuating in case of delays in paying on time. "For instance, if someone's import duties are 78,000 Ghana cedis ($7,720, €7,771) at the start of the week and they can't pay on time, the following day they end up paying an additional 25,000 cedis because the rates have moved from 7.2 to 9.5," Awingobet told DW.

In many instances, clients can't clear their goods from the ports in time, and these inefficiencies have resulted in corrupt activities among some staff. Akrong said processing challenges could undermine Ghana's quest to become a major trading hub for neighboring countries. He called for reforms to make Ghana's ports attractive for doing business.

"With the charges, I think they are superfluous, and seriously, they need to look into it. So, we need to consider the fees to make our ports business-friendly. Then, the high cost wouldn't be a deterrent to the usage of our ports.

Asaki from the importers and exporters association also recommends that the government must not burden the ports with raking in excessive revenue.

"I think the government should not use taxes to prevent importers from using our ports. I strongly believe that it should be easier and compliant so that they can comply. If you make it so that people want to evade the taxes, then you end up not getting the desired results," Asaki concluded.

The East Coast woes

The Mombasa Port in Kenya, under the Kenya Ports Authority (KPA), serves as the gateway to countries in the East African region and some in the Horn of Africa, like Ethiopia and Somalia.

However, despite undergoing modernization and expansion in the last ten years - the Mombasa Port has been dogged by corruption and poor management. Traders complain of syndicated corruption from the top administration to the lower officials.

Charles Nganga, an importer of used vehicles, told DW that corrupt dealings at KPA have grossly affected business. Nganga said port officials give traders a few days to clear their goods.

"Once your shipment arrives at the port, you are given only four days clear it. Beyond the four days, you will be charged $100 per day, which will be added to the total amount of import duties," Nganga said.

In addition, Gilbert Langat, the Chief Executive Officer of the Kenya Shippers Council, says that corruption at KPA also involves other players within the private sector who import counterfeit products.

"Corruption is not about the port officials or the KRA(Kenya Revenue Authority) officials. Corruption is two-way, and there must be two players for it to happen. As shippers and owners of the cargo, what is our role? "We are the ones that order for this cargo; why are we bringing in counterfeits and substandard goods?"

In an interview with DW, Sandra Sequeira from the Department of International Development at the London School of Economics (LSE) justified Langat's claims and said there are two types of common corruption forms at seaport; Collusive and coercive corruption.

During her research, investigating and tackling corruption in African ports, Sequeira says, bribes at Africa's seaport took two forms. "Collusive corruption where both parties benefited from an illicit deal, such as paying to evade tax, and coercive bribery or extortion, which only benefitted the corrupt official."

Sequeira added that "It is challenging to stop collusive corruption because firms pay customs officials to have their goods cleared quickly or even jump the queue,"

South Africa's power outages

In South Africa, ports are hampering economic growth for various reasons. For instance, domestic load-shedding and flooding in KwaZulu-Natal caused exports at the Port of Durban to fall by a third during April and May compared with the same period last year.

According to a World Bank Container Port Performance Index (CPPI) for 2021, South African ports are beset with operational inefficiencies. For example, at the start of this year, cargo ships entering Cape Town had to wait up to two weeks to berth before customs and offloading could commence.

The index, which rates the performance of ports worldwide, showed Durban, Cape Town, and Ngqura were in the bottom ten ports out of the 370 ports in the world. The CPPI used two approaches to grade port performances - Administrative and Statistical.

While the former was the aggregate of the general performance of the port, the latter involved factors such as the availability and quality of the infrastructure, the layout of the port, the expertise of the employees, and the berth.

Importers always attribute the delay in clearing their goods to unscrupulous officials at the various seaports. However, there are other factors as well. For example, ships may spend additional time in a port after the departure from a berth, and they may dwell within a port's limits for reasons that include bunkering, repairs, or simply waiting in safe areas if unable to berth on earliest arrival at the next port.

Except for bunkering not being performed simultaneously with cargo operations, these causes of additional port time are not necessarily reflective of the efficiency or poor performance of the port, according to the CPPI.

LSE's Sequeira said that corruption can have far-reaching effects on the economy and even affect the effectiveness or success of trade policy in Southern Africa.

"I found evidence that trade volumes did not go up as expected even when a country reduced tariff levels on several products. And my research documented that one of the key reasons might have been that firms were not paying tariffs because of corruption."

"So when they change tariffs through these trade liberalization schemes, it had a minimal impact on firms' ability to import and export more. So this has big implications for how we think about the effects of all these trade deals and trade liberalization schemes in the developing world," Sequeira added.

According to the researcher, the situation at Maputo Port in Mozambique changed after she presented her findings to government officials. "The significant corruption that I found in the port of Maputo, accelerated a movement towards having online interactions between firm representatives and port officials. So what this did was to cut back on face-to-face interactions and make it harder for these two players to engage in bribery deals," Sequeira told DW.

Sequeira's research showed that in the most extreme case, a firm would be willing to pay three times as much as the bribe to travel 'the long way round' to use the non-corrupt port in Durban. "These firms were willing to pay a premium to avoid bribe payments' uncertainty.

As well as a loss of revenue for the port, this loss of trade also meant that Mozambique missed out on the broader benefits that come from imported goods, such as technology, and their potential to help encourage economic growth and development."

Firms that experienced collusive forms of bribery were more likely to use the corrupt port because it reduced their costs, but this corruption was associated with the equivalent of a five percentage point loss of tariff revenues for the government.

However, at the moment, firms operating from the Port of Maputo now have less incentive in Mozambique to pay a bribe to try to evade a tariff, as tariffs are much lower than before.

"The evidence that we have is that the bribe paid is relatively small and a gain for the firm. For example, if you want to jump the queue or be the first in line to enter the port. So while this can increase costs for the firm, it's mostly a transfer from the private sector [firm] to a public official. So there isn't much of a revenue loss for the government in these instances," Sequeira emphasized.

There is great potential for many ports across Africa if digital systems are introduced and not tampered with. "Ports Authorities should think of fighting corruption as a kind of moving the goalposts and should always be kept on toes."

Southern Africa: Anticipating Change - Re-thinking SADC Industrial Policy

Given the shifting landscape brought on by the Fourth Industrial Revolution (4IR) and crises such as COVID-19, the SADC region has much to gain by strengthening the anticipatory and adaptive capacity of industrial policymaking.

SADC strategies such as Vision 2050 , the Regional Indicative Strategic Development Plan and the Industrialisation Strategy and Roadmap aim to harness technological innovation to boost region-wide industrialisation for sustainable and inclusive economic well-being. An anticipatory approach to industrial policymaking and governance could pave the way towards the necessary transformation articulated in these strategies.

As the COVID-19 pandemic has demonstrated, waiting until a crisis has struck is too late to implement mitigation strategies. Anticipatory governance offers national decision-makers an alternative, more proactive approach which considers the current complex and uncertain environment.

Anticipatory governance extends through society by building capacity to act on emerging trends such as digitisation and climate action, thereby helping policymakers address complex problems through experimentation with multiple stakeholders. Importantly, the approach embeds foresight into the policy process so it can adapt to new trends and address uncertainty through actions in the present.

The upcoming Conference of the Parties (COP) 27 climate change summit provides the ideal platform for SADC policymakers and the private sector to exercise foresight and pursue anticipatory governance.

There are five key opportunities for SADC decision-makers to embed anticipatory governance in industrial planning:

1. Reskill, upskill and develop new skills  

The emerging 4IR and regional strategies such as the SADC Industrialisation Strategy and Roadmap  emphasise the digitisation imperative for education and training systems. Higher education and vocational skills to power the green economy in the SADC region will also be critical to cater for new industry demands and spur economic growth.

UNESCO's Futures of Education initiative – aimed at re-thinking education's role and its interaction with the future – provides a roadmap for collaborative and anticipatory action by SADC governments. This initiative outlines the need to position education and training systems so that they become adaptive and able to take advantage of change and uncertainty. Capacity building to unlock personal and collective agency of citizens in a changing word will be key.

2. Foster innovation ecosystems to experiment

Competitive advantage in the 4IR world will mean an innovation-driven economy for the SADC region. This can be achieved by leveraging the untapped youth potential through skills development and supporting innovation ecosystems to build critical competencies and skills pertaining to blockchain, financial technology (fintech) or renewable and decentralised energy technology.

Innovating ecosystems create microcosms to experiment with new products and services to alleviate local problems and leverage global demands. Fostering regional innovation will also be key to leapfrog legacy industries and identify uniquely 'homegrown' sustainable economic and social pathways. Increased innovation will also translate into economic diversification, intra-regional trade and investment flows.

Importantly, regional collaboration will be key to supporting innovation. National governments working in silos will hinder knowledge transfer and limit the scale of innovation. Instead, SADC member governments should aim to harmonise country-level strategies to leverage collective intelligence, imagination and anticipatory capabilities.

3. Leverage our data

As governments are the biggest repositories of data, SADC member states should leverage their existing data repositories and implement open-data policies to promote data-informed innovation by citizenry and governments alike. This offers the potential to create new jobs, better inform policy design by governments and enhance the delivery of public services. To support this, mobilising investment to strengthen and expand internet infrastructure, including increasing access speed and reducing costs – will be essential.

Tax break incentives to expedite the shift to 5G technologies (so that mobile phones become the chief entry point to the internet) will help to promote a conducive economic environment. In addition, duty-free imports of telecommunication equipment, including telephones, will be critical to increase internet access for citizenry.

4. Develop green economy clusters

The SADC region's richness in various minerals and metals needed to scale renewable energy technologies offers opportunities for value-addition, such as the manufacturing of batteries. This provides an opportunity for industrial policymaking to ensure economic inclusivity in the emerging green economy, by developing the capacity of small, medium and micro enterprises – as well as previously marginalised groups such as women and youth.

5. Reposition the mining sector

For most SADC countries, the mining sector is a significant driver of foreign exchange earnings. It currently contributes at least 10% to the region's GDP. The sustainability of the sector is therefore an important regional economic driver. Promoting innovative business models in the mining sector across SADC can reposition the sector as a leader in the emerging circular or bio-economy. For example, outcome-based or servitisation models ( selling machine hours instead of selling a commodity) can foster the emergence of high-value service industries as well as broaden and re-imagine what industrial development can look like on the continent. This is also referred to as 'industries without smokestacks'.

Regional strategies have the potential to spur social and economic transformation through industrialisation. By embedding foresight in industrial policymaking at a country and regional level, policymakers can ensure improved decision-making, implementation and the ability to cope with future challenges.

Anticipatory governance has the potential to put the SADC region at the heart of an inclusive and ever-changing global economy.

Ndeapo Wolf is a Programme Coordinator in the Institute's Futures programme, Letitia Jentel is a Research Fellow in the Futures Programme, and Dr Deon Cloete is the Programme Head of the Futures Programme.

Download the SAIIA research report on which this piece is based .

South Sudan: New Report Details Billion Dollar Scam in Massive Bank Credit Programme

Economic Future of South Sudan "Highjacked, Mortgaged, Then Stolen"

Banks in Qatar and Kenya, Qatar National Bank and CfC Stanbic, Provided Letters of Credit in Exchange for Projected Oil Revenues

Funds for Critical Fuel, Food, Medicine Vanished, Leaving People to Die

Nearly a billion dollars vanished in a massive bank credit scam that had devastating, deadly impacts on children and communities across South Sudan, according to a new investigative report released today by The Sentry. The funds, officially meant to deliver fuel, food, and medicine across South Sudan, disappeared into a maze of international shell companies that never provided any goods or services, leaving people to die as hospitals were gutted of medicine and neonatal ward generators went cold.

The three-year investigation "Cash Grab: How a Billion-Dollar Credit Scam Robbed South Sudan of Fuel, Food, and Medicine" details how massive credit lines provided by banks in Qatar and Kenya were turned into an opportunity to steal by corrupt leaders and their cronies, with the government of South Sudan left on the hook to pay back the loaned money.

John Prendergast, Co-Founder of The Sentry, said: "These massive kleptocratic schemes continue unchecked. Since this letters of credit scheme was launched, corruption in South Sudan has only escalated. Shockingly, billions of dollars' worth of contracts continued to be awarded to insiders connected to President Kiir, some of whom have already been sanctioned and involved in bribes and kickbacks. Several individuals spotlighted in our investigation who were paid but did not provide urgent services and supplies are still being awarded government contracts today."

South Sudanese President Salva Kiir's children, nieces, and nephews have held shares in at least five companies that received millions from credit-backed contracts, The Sentry found. Multiple individuals exposed in The Sentry's report for profiting in the complex scheme continue to receive government contracts.

Debra LaPrevotte, Senior Investigator at The Sentry and report author, said: "In South Sudan, opportunities to do a great deal of good are turned into a license to steal by President Kiir and his inner circle. Those involved in this billion-dollar scheme hijacked the ministry in control of the nation's most valuable resource, mortgaged the economic future of the nation, then simply grabbed the cash for themselves."

A report on the letters of credit program by the auditor general of South Sudan was presented to President Salva Kiir and the South Sudanese parliament in 2015 but was never made public, no action was taken, and no one was brought to justice or held accountable for the program's failures - legally or politically. The auditor general's report, reviewed by The Sentry as part of its investigation, shows that the disbursement process developed into a confusing, disjointed system that corrupt actors circumvented or subverted.

Brian Adeba, Deputy Director of Policy at The Sentry, said: "The letters of credit scandal captured the attention of the South Sudanese people, sparking discussion and speculation, but remaining a mystery for years. We now know that the corrupt profiteers in this scheme were deliberately hidden and protected by the government. With the beneficiaries now exposed, it is time for South Sudanese to hold their leaders accountable not only for this ongoing failure to counter corruption, but for active participation in the cover up."

The Sentry's report details how ineffective due diligence by the banks providing the credit facilities - coupled with the government of South Sudan's lack of transparency and capacity to properly oversee the massive program - failed the people of South Sudan.

Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: "This investigative report should be a reminder to banking compliance officers around the world of the importance of carrying out independent due diligence to prevent financial crime. Effective anti-money laundering measures could have allowed these banks to identify risk indicators for large-scale corruption. When you miss these red flags, it has real world impact. The connection between people sitting in cubicles and the life-and-death implications of their work could not be more stark."

Denisse Rudich, Senior Advisor at The Sentry, said. "One of the biggest problems with the letters of credit program is that the banks didn't require physical verification that the promised goods were delivered. The letters of credit were often paid out based on false or misleading documents presented by companies selected by the government of South Sudan. Banks need the right controls in place when offering loans to high-risk clients in high-risk countries, not only to protect themselves, but because the lack of controls can have potentially devastating consequences for millions of people."

The Sentry's investigation included the review of hundreds of corporate records and government documents, as well as dozens of interviews with former officials and banking experts with first-hand knowledge of the program.

South Sudan has been ranked for the past two years as the most corrupt country in the world.

Selected excerpts from the report:

The Sentry's three-year investigation into the letters of credit program found that multimillion-dollar contracts were awarded to foreign-run companies, companies that only existed on paper, and inexperienced middlemen.

The Bank of South Sudan - the country's central bank - signed several credit facility arrangements with the Qatari government-owned Qatar National Bank and CfC Stanbic, a subsidiary of South Africa's Standard Bank Group. The agreements allowed South Sudan to borrow $993 million in lines of credit: $793 million from QNB and $200 million from CfC Stanbic. The credit lines were supposed to be repaid through the oil production that the country was hoping to resume shortly.

Businesses with connections to the ruling class - including President Salva Kiir's family, the then-governor of the central bank Kornelio Koriom, and multiple military officials - were among those that received contracts collectively worth tens of millions of dollars under the program, according to official documents reviewed in connection with this investigation.

Almost $1 billion effectively walked out of the country, and the human cost remains to be calculated. At the peak of the letters of credit program, when hundreds of millions of dollars in goods should have arrived in markets, more than two million people went without food, hospitals and clinics had to treat patients without medicine, and fuel shortages resulted in black market price gouging.

Documents reviewed by The Sentry showed that contracts intended for local South Sudanese traders were awarded to companies owned by inexperienced middlemen, foreign-owned companies, and companies that existed only on paper.

The country was saddled with unmanageable debts that continue to constrain the government's ability to devote funds to crucial services. Food, medicine, and fuel shortages persist to this day.

Key policy recommendations (complete recommendations are detailed in the report):

South Sudan

Conduct a rigorous investigation into the allocation of letters of credit backed contracts and those companies that did not deliver products, in line with the auditor general's recommendation, and initiate asset recovery.

Strengthen the anti-money laundering and countering the financing of terrorism (AML/CFT) regime.

Implement Chapter IV of the Revitalised Agreement on the Resolution of the Conflict in the Republic of South Sudan (R-ARCSS) to address the crippling cycle of debt, economic mismanagement, and corruption undermining economic prosperity and fueling conflict.

Create a public register disclosing shareholders and beneficial owners.

Improve the public record-keeping and archiving system.

Create a centralized e-transparency system that allows access to government financial data in order to create government accountability and fair contracting.

Empower and resource oversight institutions. South Sudan has already developed much of the institutional infrastructure essential for accountability and good governance. However, a lack of independence and human and financial resources hamstrings key oversight institutions such as the Anti-Corruption Commission and the National Audit Chamber.

Implement an external third-party audit and investigation. The results of the audit should be made public. The government should allow a full third-party investigation into asset tracing and recovery to enable the identification and repatriation of funds.

United States

The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) and the Department of Justice should investigate the ways in which the proceeds of the corruption apparent in the letters of credit program were laundered out of the country. The transactions identified in this report involve the use of US dollars. FinCEN and the Justice Department therefore have the authority to seek information from financial institutions and foreign counterparts whose jurisdictions may have been involved in laundering the proceeds of corruption. This information can form the basis for potential further action, including the review of transactions with regional correspondents, Qatar National Bank, and CfC Stanbic to identify potential illicit financial flows.

Consideration should be given to applying network sanctions to any groups of companies connected to family members of the political elite that are found to be used for nefarious means.

Kenya and Uganda

Investigate illicit money flows. Authorities in Kenya and Uganda should investigate the transactions identified in this report in which money sent to bank accounts in the two countries raised red flags for possible trade-based money laundering. Financial intelligence units (FIUs) should investigate the movement of letters of credit transfers to and through Kenyan and Ugandan banks. Revenue authorities should determine if taxes were paid on the funds deposited in relevant corporate accounts, and customs authorities should determine if goods were exported to South Sudan. Law enforcement should investigate illicit flows to determine if funds were stolen.

The respective Kenyan and Ugandan customs and revenue authorities should investigate the Uganda and Kenya registered companies mentioned in this report for potential nonpayment of taxes and associated tax evasion as predicate offenses for money laundering.

Financial regulators, including the central bank and FIUs in Kenya and Uganda, should issue circulars to the country's financial institutions warning of the risks of dealing with South Sudanese entities, especially those with connections to political elites as identified in this report.

Banks

Conduct enhanced due diligence and enhanced ongoing monitoring, screening, and transaction reviews.

Global banks should work with their banking partners in Kenya and Uganda to ensure that their systems and controls are reasonably designed to identify and mitigate the risks from transfers involving illicit funds with connections to South Sudan. International financial institutions should also work with their branches and respondent banks in the region to provide facilities and financial services to legitimate South Sudanese businesses and transactions.

Banks involved in the letters of credit program

QNB and CfC Stanbic and the Kenyan and Ugandan banks involved in the letters of credit program should initiate independent, third-party audits to investigate the banks' roles in the letters of credit scandal.

Global and regional banks named in this report should sweep historical records to identify evidence of wrongdoing and fraud and report findings to local Financial Intelligence Units (FIUs).

At the same time, banks mentioned in this report should launch internal investigations into the circumstances that led to this grand-scale abuse and self-report to relevant regulators and, where evidence of criminality has been identified, to relevant law enforcement authorities.

Ensure compliance with AML/CFT, anti-bribery and corruption (ABC), and international trade finance standards and best practices. In particular, banks should carry out enhanced diligence and oversight in high-risk trade finance transactions.

World Bank and the International Monetary Fund

The International Monetary Fund (IMF) should work with South Sudan to realize a dramatic improvement in governance, including strengthening institutions and accountability mechanisms. The World Bank and the IMF should also condition future technical and financial assistance on a credible reform of the country's institutions of accountability.

The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy.

Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you'll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts.

Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice. Learn more at www.TheSentry.org

Nigeria: Lawmakers Question Upward Review of Nigeria's Gas Project By $8 Billion