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Money Laundering
At the
G8 summit in 2013 that took place in Lough Erne, Northern Ireland, the leaders of the eight nations committed to a number of measures aimed at preventing the use of businesses and legal arrangements that promote money laundering, tax avoidance and tax evasion, including the G8 Action Plan.

Financial Crime and Poverty

Between April and July 2021, when the rest of the globe was in upheaval, billionaires’ wealth surged by 27.5%, even during a pandemic. Reliable estimates indicate that between $20 billion to $40 billion is stolen annually from developing nations, undermining economic growth and depriving those who need public services the most.

According to a U.N. panel study asking for a global crackdown, systematic tax violations, corruption and money laundering are keeping billions of people around the world impoverished. It claimed that up to 10% of the world’s wealth may be stashed away in offshore jurisdictions at a time when governments are facing mounting budgetary difficulties due to the COVID-19 pandemic and rising inequality. According to a panel of international presidents, governors of central banks and representatives of business and civil society, criminals launder up to 2.7% of the global GDP annually.

The Impact of Transfer Mispricing and Money Laundering on Poverty

According to the OECD, annual tax haven losses in developing nations could be three times greater than annual foreign aid inflows. As an illustration, through transfer mispricing, the Democratic Republic of the Congo (DRC) sold state-owned mines for an incredibly cheap price to anonymous “shell” corporations in the Virgin Islands, only to be sold on to major listed businesses at their market price. Such transactions cost the DRC $1.35 billion USD, which is double the nation’s budget for health and education in a place where 71.3% of the population currently lives in poverty.

Developing nations thus lack the public resources that would give people access to food, healthcare and education to help them escape poverty. Money laundering, on the other hand, has detrimental effects on the economies of developing countries through escalating crime and corruption, lowering foreign investment, weakening financial institutions, compromising the economy and private sector, thwarting efforts at privatization and losing tax revenue. All of the effects are the bricks shaping the foundations of poverty.

G8 Actions Against Financial Crimes

The G8 Action Plan calls for greater disclosure of a company’s ownership and financial details, particularly when it comes to shell corporations that help launder money from questionable sources. The nations vowed to pursue laws that can undergo robust enforcement and have support from “effective, appropriate and deterrent sanctions.”

Now that nations have made the promises that the declaration outlined, each nation will publish a national action plan outlining the specific steps to take. The G8 Action Plan supports the following key concepts that are essential to the openness of ownership and management of businesses and legal structures, subject to our varied constitutional situations and the recognition that a one-size-fits-all approach may not be the most effective.

G8 Financial Crime Principles

  1.  Companies should have adequate, accurate and up-to-date basic information, including knowledge of who controls, owns and benefits from them.
  2.  Onshore law enforcement, tax administrations and other relevant authorities, including, if necessary, financial intelligence units, shall have access to information on the beneficial ownership of firms. Countries should take steps to make it easier for financial institutions and other regulated firms to get information about a company’s beneficial ownership.
  3. Trustees of explicit trusts should be aware of the trust’s beneficial owners, including its settlor and beneficiaries. Law enforcement, tax agencies and other pertinent entities, such as financial intelligence units as necessary, should have access to this information.
  4. In order to reduce the risks to which their anti-money laundering and combating the funding of terrorism system is subject, authorities should recognize them and put in place effective and proportional measures. It is important to tell the appropriate authorities, enterprises that are subject to regulation and other jurisdictions about the findings of the risk assessments.
  5.  It is important to prevent the abuse of financial tools and specific shareholding arrangements that may impede transparency, such as bearer shares and nominee shareholders and directors.
  6. Nations should place effective anti-money laundering and counter-terrorist financing requirements on financial institutions and designated non-financial businesses and professions, including trust and company service providers, in order to identify and confirm the beneficial ownership of their clients.
  7.  Companies, financial institutions and other regulated organizations shall be subject to effective, appropriate and deterrent fines if they fail to uphold their respective commitments, particularly those relating to client due diligence.
  8.  To counteract the misuse of businesses and legal arrangements for illegal conduct, national authorities should collaborate successfully inside their own countries and across international boundaries. Upon requests from international counterparts, countries should make sure that their relevant authorities can quickly, helpfully and effectively give information on basic companies and beneficial ownership.

Looking Ahead

G8’s agenda has enhanced the opportunity to advance the plan that will address illicit finance at the Lough Erne Summit despite the fact that the effects would take time to materialize. The G8’s ability to cooperate in order to launch ground-breaking international projects will determine the degree of success, though. Enhancing financial transparency, good governance, information exchange and accountability must be the main goals of these projects because doing so will significantly reduce the likelihood of criminals being able to access the global financial system.

– Karisma Maran
Photo: Flickr

Small Farmers New Agriculture Methods
When this issue of global poverty and hunger is discussed, one topic is often central to the conversation is the impact of small-scale farmers. In the developing world, these farmers are essential not only for providing food for their communities, but also for creating jobs and improving the local economy. While many experts are adamant that encouraging small farmers to participate in the “global cash economy” – meaning that farmers operate primarily to sell crops for cash – is the most effective way to diminish global poverty, others are advocating for a new approach.

 

New Methods Aid Small Farmers

 

This new method focuses on “non-mentised agriculture” and acknowledges other factors besides the sales of surplus crops as a way to alleviate hunger and poverty. Another term for this new method is the concept of ‘value-chains,’ the link between “input suppliers, farmers and markets.” The Gates Foundation, the Alliance for a Green Revolution in Africa, USAID’s Feed the Future, and the G8’s New Alliance for Food Security and Nutrition support the utilization of value-chains and are confident in its ability to decrease global poverty.

Value-chains differ from the cash economy model by acknowledging that, although farmers need to earn money from their crops, not all of the crops will be sold on the market. One way farmers are doing this is by switching from growing cotton, which is strictly a cash crop and harmful to the environment, to other types of food crops (like rice, maize and soybeans in Ghana). Value-chains also call for more interaction between small farmers, markets, financiers, equipment services and other forms of agriculture training.

By working with these other groups, small-scale farmers will be able to better financially manage their farms and decrease production costs in order to increase surplus crops and earn a profit. With this method, financers also have the opportunity to invest in small farms. It is through improving agriculture strategies and creating business-minded farmers that profits will begin to increase not by farming primarily cash crops. However, because the chain-value method does not rely on many cash transactions, any economic improvements for farms go widely unreported. Once government officials develop a better tool for measuring such progress in the agriculture community, the impact of the chain-value will be better understood.

– Mary Penn

Sources: Al Jazeera, Vibe Ghana
Photo: Vocabulary

The Group of Eight, or G8, summit was held in Enniskillen, Northern Ireland last week. The G8 Summit is an annual conference at which leaders from nine of the world’s most powerful nations and bodies come together to discuss the global issues of the day. Representatives from the United States, United Kingdom, Canada, Russia, Japan, Italy, Germany, France and the European Union all sat down together to discuss the Syrian conflict, international trade agreements, and meeting Millennium Development Goals (MDGs). Though only briefly discussed, one of the most important topics on their agenda was poverty and how it related to health and development.

In the days leading up to the summit, anti-poverty groups came out in force to demonstrate on behalf of their cause. In Belfast and at Lough Erne resort, where the global leaders were staying, over 10,000 activists took to the streets to make their voices heard. Prime Minister of the UK, David Cameron, had already vowed to put “impact investing” on the G8 agenda, and the people wanted to be sure that he stuck to his word. Impact investing- a combination of philanthropy and profit- was a topic that would coincide well with other issues up for discussion.

More than three billion people worldwide, about 40% of the world’s population, live in poverty. 1.5 billion people living in “resource rich” countries survive on less than $2 a day. Tax avoidance schemes conducted by foreign investors deprive nations of around $161 billion per year, and global leaders have allowed these practices to continue. The removal of all barriers to foreign investment and the privatization of industries have maintained a status quo where investors benefit more from the country than its people receive in return.

One of the MDGs agreed upon in 2000 was a reform in the structure of economic relations between developed and developing countries, including fairer trade relations. This would allow developing nations to work their way out of poverty, as opposed to allowing wealthier countries to take advantage of their natural resources. As opposed to pursuing a solution to this goal, wealthy nations and investors have denied developing economies the opportunity to build their own industries. Policies that force developing countries to rely on inward “investment” have been embraced instead.

In countries where development initiatives, such as funding for education and improving health care, have been embraced, there has been marked improvement. In Ghana and the Philippines, development index scores have come up over the past few years after implementing such programs. In that same span of time, since 2009, 60 countries have introduced legislation to discourage or prohibit activism in all forms. Organizations that seek to improve the lives of the poor are limited to only providing basic services.

What is needed now is a sustainable development model for nations trying to climb out of poverty. Accountability, transparency and commitment are all essential to shared development goals.

This past week may have been the first step towards reaching this new objective. On the Saturday before the official start of the G8 summit, the participating leaders came together in a pre-G8 meeting and they all agreed to join a tax sharing agreement. This new agreement means that companies and investors must report what they pay to home-nations to insure that developing countries are receiving their rightful portion of the profit pie. If the world’s top leaders commit to seeing this agreement succeed, it could mean the beginning of a brighter future for the developing world.

– Allana Welch

Sources: Hindustan Times, Action Aid, The Journal, The Telegraph, One.org

Pledge to End Malnutrition During G8 Summit

By the time the G8 Summit took place on 17th-18th June, several nations were already taking action to combat child malnutrition. On June 8th, at nutrition for growth summit co-hosted by Prime Minister David Cameron, the vice-president of Brazil, Michel Temer, and the Children’s Investment Fund Foundation, commitments of up to $4.15 billion were pledged by developed nations. These pledges will double the funding currently given to global nutrition.

Additionally, a global ‘nutrition for growth’ compact was signed by representatives of 24 governments and 28 businesses, as well as various scientific organizations. The focus of this compact is to provide benefits to at least 500 million women and children through effective nutrition interventions, reduce the incidences of stunted growth due to malnutrition, and save at least 1.7 million lives by the treatment of severe malnutrition.

The benefits of this could be far-reaching. Reports point to malnutrition as the underlying cause in the death of 3.1 million children annually, as well as adversely affecting the growth and development of another 165 million. As a result of this, it is estimated that Africa and Asia lose 11% of GDP every year due to issues surrounding malnutrition.

Commitments, though, are equally important from the developing countries in terms of spending on nutrition and prioritizing internal poverty and hunger. And in some instances, these pledges were forthcoming. The president of Malawi, Joyce Banda, pledged Malawi would treble spending on nutrition (from 1% to 3.3%) by 2020. Similarly, Burkina Faso committed to reducing chronic malnutrition from affecting 32.9% of the population to 25% by 2020.

It will take this tandem effort to ensure that the pledges made are actually brought to fruition. Both the developed and the developing nations must work together to ensure that the aims of the summit are achieved and that no more innocent lives are wasted.

– David Wilson

Source: The Guardian

charlie
Charlie McDonnell has embraced the publicity of being a “YouTube sensation” despite the negative connotation that can come with that title. The British musician debuted his YouTube talent in 2009 with a video, Duet With Myself.  The clip has been viewed close to 8.5 million times and his YouTube  site has gained over 2 million subscribers.  By his own admission, McDonnell does not claim his videos are brilliant, but he is making money and using his online presence to make an impact.

McDonnell was chosen by nonprofit group Save the Children to promote the fight against hunger with an official title as “YouTube Ambassador.” With that he does what he does best, making YouTube videos that reach a large audience. His current task is playing a key role in the Enough Food for Everyone IF campaign which is backed by Save the Children among other charities. The IF campaign calls on leaders of the world’s rich countries to continue to fight global hunger.

In 2005, wealthy nations pledged to spend 0.7% of their incomes on aid, but few have followed through with their promise. Britain has made it to 0.55% while the US is only at 0.2%.  The IF campaign is calling on these countries to increase foreign aid and reduce corporate land takeovers in developing nations. A rally in Hyde Park is scheduled ahead of the G8 meeting later in June and McDonnell will take part in a live web chat with Bill Gates, who will be there talking about the work the Bill and Melinda Gates Foundation is doing.

Earlier in 2013, McDonnell and his mother traveled to Tanzania with Save the Children to see firsthand the impact of global poverty.  McDonnell said that it was his first time to really see the impact of hunger. While in Tanzania, McDonnell met 16-year-old Frank Kapeta, a Save the Children Youth Ambassador who as a young boy ate as little as one meal a day.  The two traveled to Frank’s village where his grandmother showed McDonnell how to make ugali, a staple food in the village. It is ground flour and water and has little to no nutritional value.

McDonnell and his mother have been leading the #IFYouTube campaign focused at calling the online community to action concerning hunger. For McDonnell, this issue is very important and must be tackled. His experience in Tanzania humbled him and led him to use his online presence to fight hunger and encourage others to do likewise. His is an example of a “YouTube Sensation” gone right.

– Amanda Kloeppel
Source: Metro

billgates
Over the weekend, a rally in London attended by thousands sought to raise awareness around the issue of global hunger and encourage leaders, before the G8 summit later this month, to make ending hunger a top priority. The rally was in London’s famous Hyde Park. It was hosted by the “Enough Food for Everyone – IF” campaign and boasted the likes of Bill Gates and “Slumdog Millionaire” director Danny Boyle.

Prime Minister David Cameron hosted talks on malnutrition and led the discussion around the fight against global hunger. Boyle believes we can end hunger and that is necessary to do so.  Boyle hopes in a day when no countries which participate in the Olympics will have children dying of hunger. It’s a high goal, but a realistic one according to supporters at the rally.

The G8 summit is set to be held in Northern Ireland on June 17-18 and the rally hoped to put malnutrition on the radar of governments, NGOs, businesses, and nonprofits attending the summit. Cameron discussed the topic with Vice President of Brazil Michel Temer and received a pledge of $4.15 billion by 2020 and a renewed commitment to fight against hunger and malnutrition.  Also in attendance were representatives from 19 African countries, numerous donor countries such at the US and Japan, the EU, the World Bank, the World Health Organisation, and UNICEF.

A rally bringing together some of the global leaders in the fight against poverty and hunger is sure to make waves and spread awareness, which is what the Prime Minister hoped to do. Leaders are encouraging those at the G8 summit to focus priorities on hunger and malnutrition. Such action is another important step in the creation of the next generation of development goals.

–  Amanda Kloeppel

Source: The News
Photo: The Guardian

G8_and_Superbugs_antibiotics

What do we do when our own medicine becomes our greatest threat? For the world today, this question is becoming more and more significant. G8 leaders met in London on Wednesday, June 12 to discuss the global threat of antibiotic-resistant microbes, or superbugs.

In a statement published on Thursday, the G8 science ministry said that they consider antimicrobial drug resistance as one of the major health security challenges of the twenty-first century. “Across the G8 we should regard the spread of antibiotic resistance as a global challenge that is up there with climate change, water stress and environmental damage, and there are genuine policy consequences that follow from that,” said science minister Mr. Willetts.

As usual, those living in extreme poverty are most at-risk. As bacteria develop resistance to widespread antibiotics in humans, animals, the soil, and water sources, they become more dangerous to humans—and especially the most vulnerable sectors of the world’s population.

To combat the development of superbugs and protect those most vulnerable to them, G8 leaders decided to make sweeping changes in the medical and pharmaceutical community. These included:

1. Limiting the use of antibiotics in humans, animals, and plants.
2. Investing in more research about the evolution of resistance and in developing better diagnostics for precise prescription.
3. Improving international collaboration on surveillance of bacterial strains.

The need for steps like these is urgent, and the G8’s decision was hailed with applause from the humanitarian community. If the world continues support these decisions, health security will continue to improve.

– John Mahon
Source: The Independent, Agripulse
Photo: The Independent

USAID_ Food_Security_opt
Just over a year ago, President Obama announced the launch of the New Alliance for Food Security and Nutrition, a joint commitment by the G8 nations, African countries and private sector partners. This week, a reflection over the last year celebrated the remarkable progress that has been made by the alliance in farming communities in Africa.

The initiative, launched on the eve of the G8 summit last in 2012, aims to lift 50 million people out of poverty by 2022 by implanting inclusive and sustained agricultural growth. In a speech last week, USAID Administrator Rajiv Shah said, “In one year, the New Alliance has grown into a $3.75 billion public-private partnership that embodies the principles of Grow Africa, an African-owned and led platform for catalyzing reform and mobilizing private investment.”

Over the last year, the alliance has provided support to six African countries in order for them to facilitate trade, stimulate new markets, and create new jobs. Techniques such as expanding seed production and distribution, and developing infrastructure, have helped spur agricultural growth, and have aided smallholder farmers with increased access to commercial markets. In 2013 alone, three new programs have been launched; the Agricultural Fast Track Fund, the Open Data for Agriculture, and a Technology Platform that will assess the availability of improved agricultural technologies for farmers in developing countries.

Food security and nutrition is vital in these farming communities; as Administrator Shah remarked in her speech, “long-tern food security is defined not only crop yields and vibrant markets, but also by the health of a child and the resilience of her community.” Although there are still many issues facing farmers in African countries, the New Alliance remains positive about the future. “By introducing innovation across the entire continuum from farm to market to table,” Shah said, “we have the opportunity to tackle extreme poverty by the roots and shape a world with far more partners in trade than recipients in aid.”

– Chloe Isacke

Source: USAID,Feed the Future
Photo: IFAD

Colin Brannen to Cycle for World's Poor

Age is but a number for Colin Brannen, a 76-year old from London who plans to ride his bike from Newcastle-Upon-Tyne to London and back to raise awareness to end global hunger. The former teacher does not own a car and will take time along his route to stop and talk to people about global hunger and the IF Campaign.  This campaign tackles the idea that the world makes enough food for everyone, and yet not everyone has enough food.

Brannen’s goal is to get to London to take part in the IF campaign’s rally in Hyde Park on June 8.  The rally and campaign is being supported by Christian Aid and over 200 different development organizations.  Brannen has been a Christian Aid organizer for over 30 years.  Throughout his ride he will discuss with people what Christian Aid is doing to support the IF campaign.

According to Brannen, campaigning is increasingly important in current times.  Poverty reduction is not all about raising money, although that is important, it is equally about raising awareness and inspiring action.  Brannan hopes to bring change and encourage the government to be more supportive of the fight against poverty.

As an avid cyclist, Brannen has cycled to raise awareness for social and justice issues throughout his life.  In 1998, he cycled to Birmingham for the G8 conference and part of the way to Cologne, Germany in 1999 for another G8 rally. In 2004, he cycled to Brighton for a trade justice event.  Christian Aid is asking people to show their support for ending global hunger by attending the rally.  In a world where we produce enough food for everyone, it is inexcusable that one in eight people still go hungry.

The IF campaign is calling for G8 leaders to take action at the meeting in Northern Ireland later in June and continue to fight hunger.  For more details go to the Christian Aid website at www.christianaid.org.uk/if.

– Amanda Kloeppel

Source: Christian Today

How Tax Havens Are Hurting Those In Poverty
Some people may not realize it, but avoiding taxes can hurt more than the government–it actually negatively affects those living under the poverty line the most.

Some large businesses can get away with paying fewer taxes through the use of tax havens. Tax havens allow these businesses to sneakily conduct business through other countries that have extremely low tax rates to legally avoid paying taxes. For example, Associated British Foods was suspected of using tax haven conduct to avoid paying enough tax money to Zambia that could have put 48,000 children in school. Two other major companies were also accused of denying the Democratic Republic of Congo an estimated $1.36 billion.

According to the Organisation of Economic Co-operation and Development, avoiding taxes severely hurts poor people living in developing countries, and these nations lose three times more money as a result of tax havens than they receive in aid each year.

Tax havens are one of the largest invisible obstacles that affect poverty, and they are difficult to regulate because they are difficult to find. Not all companies that conduct business in multiple countries are using tax havens, and it’s tough to tell from what a company reports if it is utilizing any tax haven subsidiaries. Combined with the idea that tax havens can significantly increase a business’s profit, it will be difficult to find and stop these companies from denying tax money to the nations that need it most, but it can be done. Next month the G8 will meet to talk about some of the world’s most pressing problems, and hopefully, tax havens will be on the discussion list.

Katie Brockman

Source: The Guardian