Sex for food new low point in the African horn famine disaster

More horror stories from the Horn of Africa, where an estimated 12 million people hit by famine continues. UN warns that millions will die if not militant, Islamic groups will open up that relief can arrive. But that will only solve some of the issues on a temporary basis.

– We are at risk of famine, which has already cost thousands their lives, will spread to five or six more regions, said Emergency Relief Coordinator in FC, Valerie Amos.

Drought and food deprivation have send millions especially mothers with children on the run and away from armed conflict in the north.

– It is difficult to imagine how the mothers must leave some of their children while they wander for weeks in hopes of finding safety, says Amos was quoted on Tuesday.

Whether they succeeded to reach refugee camps, for example in Kenya, that is a part of the world which also is severely hit by the drought so even there they are not sure of getting food or security.

– We know that 80 percent of those who come to the camps are women with children. We get constant information about women experiencing sexual assault and rape on their way to the camps. They are more vulnerable when they go on long walks without male family member, says Secretary General of CARE Norway, Torild Skogsholm to the online newspaper

There are also reports that women are forced to provide sex to get a little food.

– We know that it happens, but it is difficult to find numbers on it when women do not want to stand up and talk about it, says Skogsholm. We know from the crisis in 2007 that the problems of ‘Sex for Food’ are quite comprehensive.

Se continues I feel the need to encourage anyone involved in emergency relief in the area to be aware of this problem also. This can be prevented if anything were done now, she says.

– What can we do? We are afraid. Some of the men helping to stand guard at night yet were our neighbors raped, Mohamud said to AP.

She talks about how women in the camp – which is designed for 90,000 people, but now living around 440,000 – go together every time they have to leave the shed, for example. to go to the toilet or other activities were one is normally is alone.

The UN has declared famine in three new areas in Somalia so that the total number of areas affected is at five. This means that at least two adults or four children per 10,000 inhabitants die of starvation every day and that 30 percent suffer from acute malnutrition.

When Governments operate through Tax havens

Logo of the African Development Bank (AfDB), p...

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Should the market emulate the state or should the state act more like the market? This has become a hot issue as the became apparent that the new African Guarantee fund will be established in the tax haven rather than in Kenya were it will operate in practice.

The African Guarantee Fund or AGF is supported by Denmark, Spain and the African Development bank and contains around 50 million USD at the moment this figure is however expected to grow to 300 million in three years time. It is expected that AGF will invest in small and medium size companies (SMEs) who need access to credit. The back will operate through other banks in the region and not have direct relations to the customers.

The controversy comes from the way that the bank is going to e operated as AGF is set up as a company limited by shares under the business law of Mauritius, a country that have no urgent need for a access to the bank services. A branch of AGF will be established in Nairobi, Kenya, from where the staff of the company will conduct the business. A second branch is likely to be set up in a West African francophone country within a few years. AGF will operate as a non-bank financial institution with a Board of Directors responsible for the overall management and a Chief Executive Officer heading the operations.

With its headquarters in Kenya it would be natural that the bank would be a legal entity there but this is however not the case. The reason is that the corporate tax on Mauritius is 3% while it in Kenya is 25% (inline with the Danish tax on companies) and therefor it is cheaper to operate offshore maximising the return.

These types of legal set-ups are not uncommon in the world of global business were there the boundaries of companies are fluent and business is conducted on a global scale. Companies have for years been criticised for their tax practices as they often avoid high-tax countries for regions that have lower tax and a more relaxed approach to legislation. The most famous (or infamous) tax havens are Bermuda, The Bahamas, Cayman Islands, Panama, Monaco and Switzerland. The companies that are currently operating through tax havens are big multinationals like Citigroup, Pepsi, Morgan Stanley, Bank of America and Oracle.  Quite a few of these were heavily involved in the financial scandals that lead to the global recession that we are currently experiencing.

The main question is if a Civil Society organisation like AGF, should operate the same way and under the same ethical codex as multinationals that politicians frequently criticise?  One government official from the Danish Liberal Party Integration Spokesman Karsten Lauritzen has rejected criticism that Denmark, which regularly complains about the use by international companies of tax havens, should itself choose to place a financial institution where it pays least tax.

As he puts it “We are not in Mauritius to earn money. The goal is to channel as much money as possible to poor people in Africa, so I cannot see that there is a problem,” He added that the predominant reason for the location was because it was easier and less bureaucratic to set up a financial institution in Mauritius. Which goes without saying when one of the main income sources for the country is to provide cheap and easy access to building offshore companies.

At the same time he basically stamps the Kenyan government and business environment as corrupt and unnecessary bureaucratic.

While some of the stakeholders continue to support the bank project there are critical voices starting to be heard, who really does not like to be associated with this form of speculative thinking. The NGOs are more critical of the banks lack of focus on the poor and people in real need of aid rather than credit than the more complicated tax system in which it will operate though.

But the central dilemma remains the same. If AGF is going to operate on market terms it needs to function as everybody else on the market basically levelling the playing field so to speak. And in this line of business it means that one operate through places were the tax is low and the relative bureaucracy is small translating into less cost and more profit.

On the other hand if one wants to do the ethical ‘thing’ it means that AGF needs to operate outside the market and therefor will not be subjected to the conditions that a only a market can provide. This means that it will not be able to have the same return on investment that other investment banks will be able to provide and therefor it will properly not be financially sustainable in the long run.

The ethics is clear to most. There is a huge difference if a company pays 3% or 25 % in tax and most of us have been critical of big corporations that for years have paid minimum tax while at the same time having huge profits. So when the government does the same by operating a company through a tax haven we perceive this as being unethical and to some extend hypocritical. On the other hand we would like to see that our tax money is put to good use and not eaten up by taxes and other forms of fees along the way.

I think this case highlights a huge dilemma that we are faced with. To what extend should we have an overlap between Government and Private business. With CSR we have already seen a move from regulation by law to self-regulation, self-monitoring and self-reporting. This case shows that the move also goes the other way when governments and CSO starts to operate like business and under the same conditions. While we ‘expect’ companies to some extend to be unethical and hypocritical we maybe in the future that even governments will act in much the same way. The question is if this is really what we want? and does the aim really justify the means even when its for the ‘greater good’?