WE are often told that Africa is the world’s poorest continent, but new research suggests African countries actually subsidise the rest of the world.
The study, entitled Honest Accounts 2017: How the world profits from Africa’s wealth, shows that much more wealth is leaving Africa than is entering it.
Published by a coalition of UK and African organisations, including Global Justice Now, Health Poverty Action and the Jubilee Debt Campaign, the report states that African countries received $161.6 billion in resources such as loans, remittances and aid each year, but lost $203bn through factors including tax avoidance, debt payments and resource extraction.
The outflow of wealth creates an annual net financial deficit for Africa of more than $40bn.
Researchers found that in 2015 African countries received around $19bn in aid, but more than three times that much, some $68bn, was removed in so-called capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to recuse tax.
African governments received $32.8bn in loans but paid $1bn in debt interest and principal payments, with the overall level of debt rising rapidly.
An estimated $29bn each year was stolen from Africa in illegal logging, fishing and the trade in wildlife and plants.
The report states: “Africa is generating large amounts of wealth and, in some ways, is booming. For example, the largest 500 African companies recorded a combined turnover of $698bn in 2014.
“In 2015, countries in Africa exported $232bn worth of minerals and oil to the rest of the world.
“The value of mineral reserves in the ground is of course even larger — South Africa’s potential mineral wealth is estimated to be around $2.5 trillion, while the untapped mineral reserves of the Republic of the Congo are estimated to be worth an astronomical $24trn.”
The research details various reasons why the majority of people in Africa do not benefit from their resources: “A recent report for War On Want found that 101 companies listed on the London Stock Exchange (LSE) control an identified $1.05trn worth of resources in Africa in just five commodities — oil, gold, diamonds, coal and platinum.
“These 101 companies have mineral operations in 37 African countries and are mainly British, with 59 incorporated in the UK. However, some 25 of the 101 LSE-listed companies are incorporated in tax havens, principally the British Virgin Islands, Guernsey and Jersey.”
Later the research states: “Billions continue to be stolen from African citizens through insufficient global action to curb tax dodging.
“The British Government bears special responsibility in this since it sits at the head of a giant network of overseas tax havens — perhaps more accurately described as secrecy jurisdictions — facilitating this theft, something that could easily become a greater problem post-Brexit.”
The report makes a series of recommendations which promote economic policies that lead to equitable development, preventing companies with subsidiaries based in tax havens from operating in African countries, and transforming aid into a process that better benefits Africa.
Aisha Dodwell, a campaigner with Global Justice Now, said: “There’s such a powerful narrative in Western societies that Africa is poor and that it needs our help.
“This research shows that what African countries really need is for the rest of the world to stop systematically looting them. While the form of colonial plunder may have changed over time, its basic nature remains unchanged.”
Tim Jones, an economist from the Jubilee Debt Campaign, said: “The African continent is rich, but the rest of the world profits from its wealth through unjust debt payments, multinational company profits and hiding proceeds from tax avoidance and corruption.”
Martin Drewry, director of Health Poverty Action, said: “We need to stop our tax havens facilitating the theft of billions, clamp down on illegal activities and compensate African countries for the impact of climate change that they did not cause.”
Bernard Adaba, a policy analyst with Integrated Social Development in Ghana said: “Some serious structural changes need to be made to promote economic policies that enable African countries to best serve the needs of their people rather than simply being cash cows for Western corporations and governments. The bleeding of Africa must stop.”
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