In transactions with Africa, global banks no Caesar’s wife. PHOTO | FILE I have been keenly following the deliberations of the State Capture Commission of South Africa for relevant lessons and insights for Kenya and East Africa on complicity of international banks in facilitating corruption.
Last week, the star attraction at the judicial commission of inquiry in Johannesburg was the former British MP, Lord Peter Hain. I found his presentation to be a compelling treatise on one of the most interesting subjects of debate today: the role of global banks in facilitating corruption, fraud and money laundering in Africa.
I enjoyed how Lord Hain managed to debunk the accepted wisdom and notion that global banks are as clean as Caesar’s wife when it comes to transactions with African governments.
I decided to take a second look at the summary of our external debt register that was recently tabled in the National Assembly. The first thing I notice is the sheer number and preponderance of second-tier European banks that appear today on our register.
These are the types falling in the category that one might describe as the periphery of the global capital markets. Clearly, we have borrowed too much money from these types.
The second trend you notice is the rate at which these peripheral and fringe banks are supplanting our traditional multilateral institutions that used to give us concessionary credit from the external debt register.
It used to be the case that the regional bank – the Trade and Development Bank (TDB) – formerly PTA Bank’s main mandate was to facilitate regional trade among its member states.
As you examine the external debt register, what you will see of TDB is a case of mission creep: the bank would appear to have jumped into the syndicated loan bandwagon to start doing big deals and earn fat fees from lending to a key shareholder – Kenya. Indeed, TDB has been acting as lead syndicate bank in a good number of very large transactions with Kenya.
Make no mistake. I am not saying that all these commercial banks that appear on our external debt register are engaged in wrongdoing. My point is that from the revelations coming out of the State Capture Commission in South Africa, the syndicated loan bandwagon will find themselves facing increased public scrutiny.The notion that these global European banks are paragons of virtue has been debunked and exposed as […]