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Gangsters’ paradise

Gangsters’ paradise

One of the dark sides of globalization and technology advancement is the continued expansion of the underground economy. Africa’s initial conditions of weak institutions, poverty, and a population that feels disenfranchised from its government has made it increasingly vulnerable to organized crimes over the years. Reports of political and economic failures tend to overwhelm the role played by the illegal economy in such failures.

From drug peddling to human & arms trafficking, natural resource exploitation or even smuggling, illicit activities have established a culture of quick and easy money that is progressively eroding the foundations of any sustainable and well-balanced socio-economic development on the continent. Many of the countries with a high incidence of organized crimes are among the least socially and economically developed on the continent. While Africa’s criminality (according to Enact) score stood at 4.97 on a scale of 10 in 2019, the score masks the high levels of illicit activities being perpetrated in hotspots in the West and Central African Region.

Organized crimes have been institutionalized in some of these countries. In Somalia for instance, a stock exchange was set up in Harardhere – as far back as 2009 – to crowdfund pirate ransom & hijack missions on the sea and investors got to share in the spoils of successful missions. This was quite like venture capitalism in the world of finance. Like narcotics itself, the money generated by the cocaine transit trade has become addictive for some political and military figures in Guinea-Bissau, causing several previous attempts to end the illicit trade to fail.

Organized crime syndicates thrive on illicit value chains, quite like those that cause legitimate businesses to flourish. Oligopolistic supply, enabling financial systems and financiers, absence of regulation, a concealed distribution network, and an identified market with extraordinary demand to ensure profits surpass the perceived risks, continuously support the existence of organized crime rings. Systemic corruption also creates a conducive environment for racketeering.

Unfortunately, these crimes permeate government agencies and institutions, fueling corruption, and infiltrating business and politics. The quantum of money involved also easily corrupts small governments; and can corrupt large corporations and larger, more stable governments if left unchecked. This makes the perpetrators seemingly untouchable by law enforcement agents.

The line between licit and illicit activities have also been thinning out over the years as professionals such as accountants, attorneys, notaries, bankers, and real estate brokers, cross both the licit and illicit worlds by providing services to legitimate customers and criminals alike. Criminals also draw on the public reputations of licit actors to maintain facades of propriety for their operations while organized crime networks also rely on industry experts, both witting and unwitting, to enable corrupt transactions and to build the necessary substructure to pursue their illicit schemes.

Transnational criminal activities undermine financial institutions, laws, national morals and pose a threat to national security. They deter investments in the short-term and hinders economic and social development over an extended period. The effect of organized criminal groups can be devastating as public insecurity is almost always pervasive in such environments. Allowing these networks and individuals to develop unchecked, threatens the fabric of fledgling democracies.

So how can we curb this? For violent crimes, such as trafficking of people or drugs, robberies and organized crime, the motivation will usually be the large potential financial benefits compared to other activities. The main strategies will therefore be centered on reducing the opportunities, increasing detection rates and severity of sanctions.

Cash is one of the main culprits in the illegal economy as it reduces the registration and traceability of transactions. Electronic payments can jettison this by ensuring that transactions are registered and a move to a cashless society can effectively reduce undeclared transactions. To facilitate this shift, investment and development of payment substructure is needed at both the private and public levels.

Even as recorded cash transactions may be on the decrease, the use of cryptocurrencies is starting to emerge. While the overall usage of such cryptocurrencies is minimal at present, there is a risk that higher value transactions, where the use of cash appears to be decreasing over time, may in the future increasingly be made via cryptocurrencies.

Also, given the critical role of justice and security in foiling the expansion of the underground economy, the international community must review its approach to development policies by not only issues of security and justice in their bilateral and multilateral agendas, but also by making it a vital cornerstone of policies and programs geared toward supporting good governance, and therefore the establishment of states ruled by the law.
While the region’s high degree of criminality continues to weigh heavily on its institutions and economic system, a deeper understanding of where and how organized crime operates in the legal economy is crucial in view of containing its spread and ensuring the smooth functioning of market competition and economic growth in the long run.

To some extent, there exists a connection between some elites and these perpetrators, and these relationships are usually mutually profitable. Therefore, it is particularly important to monitor these relationships – especially the publicized ones – as well as public-private sector relations, to limit the penetration of crime rings and fight the expansion of criminal organizations. Attempts to dislodge or eliminate organized crime are not likely to be successful unless the forces that create them (i.e., the beneficial super fixers) are prosecuted and dealt the most severe punishments.

 

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