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	Multi-nationals in emerging nations failing to tackle corruption by Transparency International, agencies   11 July 2016 (Thomson Reuters Foundation)   Multi-national companies based in emerging nations are failing to tackle corruption with a lack of transparency allowing unscrupulous practices to continue and exacerbating poverty, a study by an anti-corruption group said on Monday.   The report by Transparency International found that three quarters of the 100 fastest-growing companies based in 15 emerging market countries and active in 185 countries scored less than half marks in transparency tests.   José Ugaz, chair of Transparency International, said customers should demand companies have high anti-corruption standards or take away their business, companies need to be more transparent, and governments must have strong anti-bribery laws.   "Pathetic levels of transparency in big emerging market companies raises the question of just how much the private sector cares about stopping corruption, stopping poverty where they do business and reducing inequality," Ugaz said in a statement.   The study found Chinese companies fared worst, with an average score of 1.6 out of 10 in the tests, due to having weak or non-existent anti-corruption policies and procedures.   By contrast, India led the way, with its companies in the study being open about their company structures and holdings which was attributed to the country''s Companies Act.   According to the IMF, emerging markets account for over 70 percent of global growth, with concerns that corruption will hamper growth and limit socio-economic progress.   The report follows the "Panama Papers" leaks which exposed the use of shell companies and offshore tax havens, often for illegal purposes such as tax evasion and money-laundering. This put tax avoidance and corporate secrecy at the top of the global agenda.   The Transparency International study took into account three different ways in which companies can address corruption.   These included the reporting of anti-corruption programmes such as policies to ban bribes or "facilitation payments", the disclosure of company structures and holdings, and the disclosure of key financial information in each individual country where they operate, such as tax payments.   Transparency International researchers said this information was gathered from corporate websites and other publicly available sources.   On average the companies scored 3.4 out of 10, which was a drop of 0.2 compared to the last similar survey in 2013.   Researchers said one explanation for this worse result could be the emergence of more stringent legal requirements.   But this score was also lower than a survey of 124 of the world''s largest multinational companies by Transparency International in 2014 which led to an average score of 3.8.   "Across emerging markets all companies need to do much more to pursue comprehensive public reporting to address corruption and provide the transparency that is the basis for robust and accountable governance," the group said in its report.   Emerging market multinationals transparency standards are unacceptably low. (Transparency International)   What do Brazil’s corruption scandal and the accusations of missing funds involving Malaysia’s prime minister have in common? Big multinational companies have had a major role in both of them.   One would hope those scandals would teach the emerging market multinational community a lesson about the importance of transparency and being more open about their businesses to increase accountability. But unfortunately one would be wrong.   The results from the new report “Transparency in Corporate Reporting: Assessing Emerging Market Multinationals” show that emerging market multinationals still have a long way to go until they can call themselves responsible global citizens. Their transparency standards remain low – 75 of 100 companies measured scored less than 5 out of 10 – suggesting they are ill-equipped for the post-Panama Papers era where corporate secrecy is no longer considered acceptable.   Companies that disclose how they fight corruption send a strong signal to stakeholders and citizens that they are committed to clean business practices. If they are not prepared to make such commitments, businesses can end up contributing to the abuse of power, bribery and secret deals.   With an average score of 48 per cent, the 100 companies assessed in the report have barely registered improvement in the disclosure of their anti-corruption programmes since 2013, when their average score was 46 per cent.   Eighty-one of the 100 multinationals assessed do not disclose a policy that explicitly prohibits facilitation payments, also known as petty bribes. Forty-one companies fail to report they have channels for employees to report suspected breaches of the companies’ anti-corruption policy.   The study also looks at the amount of information companies disclose on their related subsidiaries, holdings and other entities abroad. Knowledge of these global structures is a necessary for citizens, regulators and investors to understand the economic and social impact of multinational business in their societies and communities.   Our report shows regulation can enhance transparency at emerging market multinationals. The 19 Indian companies assessed achieve a high average score of 77 per cent because they are required by law to disclose key information about all their corporate entities abroad including their name, country of operation, percentages owned and some key financial data.   Nine companies – among them eight from China and one from Mexico – score 0 per cent.   The payments companies make to governments should benefit the communities these companies operate in. This is why this study also evaluates the disclosure by country of five industry-neutral financial indicators: revenues, capital expenditure, income before tax, income tax and community contributions.   With a very low average result of 9 per cent, the findings show emerging market multinationals are unwilling to disclose key financial information on a country-by-country basis.   Almost half of the emerging market sample (49 companies) score a zero in this dimension, including 26 Chinese and seven Brazilian companies.   Chile’s retailer Falabella, however, scores 60 per cent, confirming that financial disclosure by country is possible and does not put a company at a competitive disadvantage, as the common argument goes.   Again, due to legal requirements all Indian companies score above average. It is only a matter of time until mandatory reporting on key financial information will spill over to other countries and regions. Companies need to catch up or be left behind in the fight against corruption.   This report is being published in the wake of the unprecedented release of the Panama Papers, which have exposed the industrial-scale use of shell companies and offshore tax havens. The tax havens are sometimes used for illegal purposes such as tax evasion, money-laundering and financing corruption. While the secrecy offered by these countries can be used for illegal or illicit purposes, it can also be used for legitimate business reasons.   The study reveals that many of the companies assessed have operations in countries such as Switzerland, Luxemburg, the Cayman Islands or Panama that feature prominently among the top 15 countries listed on Tax Justice Network’s Financial Secrecy Index.   In line with the overall low disclosure levels of key financial data in this report, companies reveal very little financial information for these countries. The average disclosure rate of key financial information for the 23 companies that have operations in Switzerland is only 17 per cent. Similarly, the eight companies that say they do business in Panama disclose just one per cent on average.   It is important to note that the data collected for this report does not allow for any conclusions as to why operations in secrecy jurisdictions were set up and for what purpose. Also, it is welcomed when companies disclose their operations in foreign countries including those in secrecy jurisdictions. We advocate for more disclosure, not less.   However, in the wake of the Panama Papers and other leaks, companies must understand that corporate secrecy cannot be upheld. The risk of further unexpected leaks revealing illegitimate if not illicit practices is very real. Pressure from citizens and other stakeholders (including investors) to end secrecy will surge and companies resisting this trend will be increasingly at a competitive disadvantage and may experience financial loss. Visit the related web page
	The Geography of Poverty by Jomo Kwame Sundaram Inter Press Service, agencies   JAKARTA, June 30 2016 (IPS)   World leaders agreed in 2000 to halve the number of people living in poverty by 2015. The poverty line was defined as the purchasing power parity (PPP) equivalent to a US dollar a day, later adjusted to the 2005 PPP equivalent of $1.25 daily in 2008 to the 2012 PPP equivalent of $1.90 daily in 2015. As the cost of living rise unevenly across the world, the World Bank periodically updates the global poverty line to reflect these changes. Nevertheless, there are many concerns about how the line was defined and has been revised over the decades.   According to the most recent estimates of the World Bank, 12.7 per cent of the world’s population lived at or below $1.90 a day in 2012, compared with 37 per cent in 1990 and 44 per cent in 1981. This means that in 2012, 896 million people lived on less than $1.90 a day, compared with 1.95 billion in 1990, and 1.99 billion in 1981.   Global progress in reducing extreme poverty over the last three decades has been modest and uneven across the regions. East Asia saw the most dramatic reduction in extreme poverty, from 80 per cent in 1981 to 7.2 per cent in 2012, mainly due to rapid growth in China since the 1980s that saw its poverty rate decline from 66.6 per cent in 1990 to 18.8 per cent in 2005 and around 10 per cent in 2012. In South Asia, the share of the population living in extreme poverty dropped from 58 per cent in 1981 to 18.7 per cent in 2012. But extreme poverty in Sub-Saharan Africa has hardly declined, standing at around 42.6 per cent in 2012.   Even though poverty rates have declined, a large number of people still live in abject poverty. For example, in 2012, there were about 140 million poor in China alone, 309 million in South Asia and 388.7 million in Sub-Saharan Africa.   The measurement of poverty declines does not tell us how far below the poverty line the remaining poor are. Unfortunately, many are currently very far below it in Sub-Saharan Africa. The average consumption of Africa’s poorest people is only about 70 cents a day—barely more than it was 20 years ago. Even 20 more years of progress will not move the remaining millions out of poverty in Africa. At current growth rates, a quarter of Africans will still be consuming less than $1.90 a day in 2030.   Moreover, progress has been slower with higher poverty lines. Over 2.1 billion people in the developing world lived on less than $3.10 a day in 2012, compared to 2.9 billion in 1990. Over this period, the share of the population living under that level nearly halved, from 66 per cent in 1990 to 35 per cent in 2012.   A large number of people may not be defined as poor, but they may nevertheless be very vulnerable. For those earning just above the extreme poverty line ($1.90 a day), progress can be temporary: economic shocks, food insecurity, and climate change threaten to rob them of their hard-won gains and force them back into poverty.   In addition to income, wide- ranging deficits in the human condition remain pervasive, not only in most low-income countries but also in many middle- income countries. Access to basic education, healthcare, modern energy, safe water and other critical services, often determined by socioeconomic status, gender, ethnicity, and geography, remain elusive for many.   The distribution of people living in poverty within and across regions has changed over the past three decades. While about 57 per cent of the world’s poor lived in East Asia and the Pacific in 1981, the sub-region was home to only around 16 per cent of the global poor in 2012.   In contrast, Sub-Saharan Africa’s share of the world’s poor increased dramatically from 10.7 per cent in 1981 to around 41 per cent in 2012. South Asia’s share increased from 29 per cent in 1981 to 39.5 per cent in 2012 despite the poverty rate in South Asia falling by half. Poverty is often attributed to economic growth. But despite impressive growth during 1990-2008, India’s poverty rate only declined from 51 per cent to 37 per cent.   In 1990, 93 per cent of the world’s poor lived in low- income countries (LICs). In 2007-2008, 75 per cent of the world’s approximately 1.3 billion poor lived in middle-income countries (MICs), while about a quarter of the world’s poor, approximately 370 million, lived in the 39 LICs, largely in sub-Saharan Africa. According to the World Bank’s recent estimates, the MICs’ share of global poverty stands at 73 per cent. Clearly, most of the world’s poor no longer live in LICs.   Only five countries (China, India, Pakistan, Indonesia, Nigeria) account for much of this shift as these MICs are no longer considered LICs. Besides China and India, the share of global poverty accounted for by other MICs has risen from 7 to 22 per cent. Fragile LICs’ share of global poverty did not move much; they accounted for at least 12 per cent of the world’s poor in 2011, compared to 13 per cent during the late 1980s. Ironically, poverty is pervasive in natural resource based (NRB) countries, accounting for 37 per cent of global poverty, despite the recent decade-long resource price boom. The combined share of the world’s poor living in natural NRB and fragile and conflict-affected (FCS) countries in 2011 was about half.   Growing inequality has meant that rising tides have not lifted all boats, especially of the poor. Not only have there been widening income gaps between countries of the North and South until recently, but within-country income inequalities have also increased in most countries.   Multidimensional poverty   The experience of poverty is increasingly seen as ‘multidimensional’. A wider understanding and definition of poverty, adopted by the 1995 Copenhagen World Summit for Social Development, includes deprivation, social exclusion and lack of participation. Using this broader definition, the situation appears worse than what the monetary income poverty line would suggest.   For example, according to UNDP’s new Multi-dimensional Poverty Index (MPI) of ten indicators of social development, first used in the Human Development Report 2010, which considered 104 countries that had data for 78 per cent of the world’s population, there are 1.7 billion poor, of whom 51 per cent live in South Asia and 28 per cent in sub-Saharan Africa.   The Human Development Report 2015 covered 101 countries and found almost 1.5 billion —about 29 per cent of their total population — experience (multidimensional) poverty, with at least 33 per cent of the indicators reflecting acute deprivations in health, education, and standard of living. And close to 900 million people are vulnerable to falling into poverty when financial, natural or other setbacks occur. The latest (June 2015) findings of the Oxford University-based Poverty & Human Development Initiative suggest that of the 1.6 billion people in multidimensional poverty, 54 per cent live in South Asiaand 31 per cent in Sub-Saharan Africa.   Interestingly, most (62%) MPI poor people do not live in failed states, although in countries classified as “in very high alert” by the Fragile States Index, 72 per cent are multi-dimensionally poor. Most – 70% – MPI poor people live in MICs. The MPI reveals a starker situation than the $1.90-a-day poverty line. For example, in Chad and Ethiopia, the incidence of MPI is about 87 per cent, whereas, for $1.90/day poverty, it is only 37 per cent.   Nearly half – 736 million people — of all the MPI poor live with such extreme deprivations – like severe malnutrition or no more than one year of education in the household – that they should also be considered destitute.   The disparities between the two trends compels us to be more modest in claiming too much progress against poverty, and reminds us of the many dimensions of the ongoing struggle to make meaningful progress for all who continue to live in poverty as well as those who are no longer deemed poor, but remain very vulnerable to slipping back. The challenge appears to be especially great in South Asia and sub-Saharan Africa.   * Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development   May 2016   Global Multi-dimensional Poverty Index 2016, by Sabina Alkire and Gisela Robles - Oxford Poverty & Human Development Initiative   The Global Multi-dimensional Poverty Index (MPI) is an index of acute multi-dimensional poverty that covers over 100 developing countries. It assesses the nature and intensity of poverty, by directly measuring the overlapping deprivations poor people experience at once, then building up from this information.   It provides a vivid picture of how and where people are poor, within and across countries, regions and the world, enabling policymakers to better target their resources at those most in need through integrated policy interventions that tackle the many different aspects of poverty together.   The MPI was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the UNDP’s Human Development Report Office, and has been proposed as an indicator in the Sustainable Development Goals, which view ‘poverty in its many dimensions’.   A total of 1.6 billion people are living in multidimensional poverty; about 30% of people in the countries analysed. There are 50% more MPI poor people in the countries analysed than there are income poor people using the $1.90/day poverty line.   Almost one third of MPI poor people live in Sub-Saharan Africa (32.%); 53% in South Asia, and 9% in East Asia. Three quarters of MPI poor people live in Middle Income Countries. Nearly half of all MPI poor people are destitute – 768 million – and 91% of destitute people live in South Asia and Sub-Saharan Africa.   In 2016 we use internationally comparable survey data from 102 countries covering 75% of the world’s population.   Multidimensional Poverty in Africa   Over half (54%) of people in the African countries analysed suffer from multidimensional poverty: 544 million people endure multidimensional poverty in 46 countries analysed in the region.   Among 35 countries where changes to poverty over time were analysed, 30 of them have reduced poverty significantly. Rwanda had stand out performance.   The MPI registered impressive reductions in some unexpected places. 19 sub-national regions – regional ‘runaway’ successes – have reduced poverty even faster than Rwanda. The fastest MPI reduction was found in Likouala in the Republic of Congo.   The Sahel and Sudanian Savanna Belt contains most of the world’s poorest sub-regions, showing the interaction between poverty and harsh environmental conditions. Poverty looks very different in different parts of the continent.   While in East Africa deprivations related to living standards contribute most to poverty, in West Africa child mortality and education are the biggest problems.   The deprivations affecting the highest share of MPI poor people in Africa are cooking fuel, electricity and sanitation.   More people tend to suffer from MPI poverty than $1.90/day poverty. Yet nine important exceptions, where income poverty exceeds MPI, are in Africa. The number of people in multidimensional poverty in East Africa outnumbers those in West Africa, but we would not get similar conclusions if we only focus on income poverty.   East and West Africa have the largest number of poor people both in terms of income and multi-dimensional poverty. North Africa is the least poor region.   The number of poor people went down in only 12 countries. In 18 countries, although the incidence of MPI fell, population growth led to an overall rise in the number of poor people.   The Global MPI has 3 dimensions and 10 indicators; for details see www.ophi.org.uk/multidimensional-poverty-index A person is identified as multidimensionally poor (or ‘MPI poor’) if they are deprived in at least one third of the dimensions. The MPI is calculated by multiplying the incidence of poverty (the percentage of people identified as MPI poor) by the average intensity of poverty across the poor. So it reflects both the share of people in poverty and the degree to which they are deprived.   The Global MPI shows not just which people are poor and where, but how they are poor – in which indicators they are deprived simultaneously. It reveals different intensities of poverty, as some people are disadvantaged in more indicators than others. And it can be disaggregated to reveal the levels and trends of poverty within a country, or between ethnicities, castes or other social groups.   * Access the Index via the link below:   http://www.ophi.org.uk/multidimensional-poverty-index/global-mpi-2016/ http://www.ophi.org.uk/wp-content/uploads/OPHI-Africa-MPI-Poverty-release-1-June.pdf http://www.ophi.org.uk/policy/multidimensional-poverty-index/ Visit the related web page
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