Global Investing

How can governments reduce corruption in Africa, one of the biggest deterrents to investment in the resource-rich continent? One way is to copy recent legislation in the United States, according to speakers and delegates at a recent forum in London  organised by the Foreign Policy Centre thinktank, and force listed companies to report any payments they make to foreign governments for the extraction of oil, gas and minerals.

The Cardin-Lugar amendment, introduced by the U.S. in July, is designed to help alleviate the curse of oil corruption.

“Too often, oil money intended for a nation’s poor ends up lining the pockets of the rich or is squandered on showcase projects instead of productive investments,” Senator Dick Lugar said when he spoke in favour of the amendment to the U.S. financial reform bill earlier this year.

Oxford economics professor and adviser to African governments Paul Collier, in conversation with African Development Bank president Donald Kaberuka, called for similar legislation for mining companies listed on the London Stock Exchange and the smaller Aim market.

Among supporters in the audience was a representative of the One campaign, whose directors include singer Bono .

With many African countries propping up the bottom of Transparency International’s corruption perceptions index, their credibility could get a boost if companies are forced to declare their hands on payments.