Much more wealth is leaving Africa, the world’s most impoverished continent than is entering it, according to a new research into total financial flows into and out of Africa.
The study by a coalition of UK and African equality and development campaigners, published on Wednesday, claimed the rest of the world is profiting more than most African citizens from the continent’s wealth.
It found that African countries received US$161.6 billion in resources such as loans, remittances and aid each year, but lost US$203 billion through factors including tax avoidance, debt payments and resource extraction, creating an annual net financial deficit of over US$40 billion.
“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,” said Tim Jones, economist from the Jubilee Debt Campaign.
He noted that key factors contributing to this inequality include unjust debt payments and multinational companies hiding proceeds through tax avoidance and corruption.
“The key message we want to get across is that more money flows out of Africa than goes in, and if we are to address poverty and income inequality we have to help to get it back,” Jones said.
The report ‘Honest Accounts 2017: How the world profits from Africa’s wealth’, was published by a coalition of UK and African organizations, including Global Justice Now, Health Poverty Action and Jubilee Debt Campaign. It made a series of recommendations as to how the system extracting wealth from Africa could be dismantled.
These recommendations include promoting 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 genuinely benefits Africa.
According to Bernard Adaba, policy analyst with ISODEC in Ghana: “’Development’ is a lost cause in Africa while we are hemorrhaging billions every year to extractive industries, western tax havens and illegal logging and fishing.
He 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 prevailing narrative, where rich country governments claim their foreign aid helps Africa, is “a distraction and misleading”, the campaigners said.
“There’s such a powerful narrative in Western societies that Africa is poor and that it needs our help,” Aisha Dodwell, a campaigner with Global Justice Now said. “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.”
The report pointed out that Africa has considerable riches. South Africa’s potential mineral wealth is estimated to be around US$2.5 trillion, while the mineral reserves of the Democratic Republic of Congo are put at US$24 trillion.
However, the continent’s natural resources are owned and exploited by foreign, private corporations, the report said.
“To end poverty we need to focus our efforts on preventing the policies and practices that are causing it,” suggested Martin Drewry, director of Health Poverty Action. “That means 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.“
Source PANA
