Africa is not poor, we are stealing its wealth, insists Dearden

Africa Economy

2
309

Nick Dearden, a director at “Global Justice Now” (a UK campaigning organization) and former director of Jubilee Debt Campaign had this to say: “Africa is not poor, we are stealing its wealth.”

Dearden posits that the rich countries of the world are not, currently, “helping” Africa; stating that “Africa is rich; let the super-rich world stop making it poorer.” Nick Dearden went ahead to support his claim with glaring and alarming statistics.

Based on a set of recent revelations,  sub-Saharan Africa is a net creditor to the rest of the world to the tune of more than $41bn. Sure, Dearden says, there is money going into Africa: around $161bn a year in the form of loans, remittances (those working outside Africa and sending money back home), and aid. But there is also $203bn leaving the continent. Some of this is direct, such as $68bn in mainly dodged taxes.

Essentially, Dearden explains, multinational corporations “steal” much of this – legally – by pretending they are really generating their wealth in tax havens.

These so-called “illicit financial flows” amount to around 6.1 percent of the continent’s entire gross domestic product (GDP) – or three times what Africa receives in aid. Then there is the $30bn that these corporations “repatriate”– profits they make in Africa but send back to their home country, or elsewhere, to enjoy their wealth. Dearden reveals that “the City of London is awash with profits extracted from the land and labour of Africa.”

There are also more indirect means by which wealth is pulled out of Africa. Current reports estimate that about $29bn a year is being stolen from Africa in illegal logging, fishing and trade in wildlife. $36bn is owed to Africa as a result of the damage that climate change will cause to their societies and economies as they are held back from using fossil fuels to develop in the way that Europe did. Even when the climate crisis was not caused by Africa, Africans are likely to feel the effect more than most others. Needless to say, these funds are not currently forthcoming.

Loans to governments and the private sector (at more than $50bn) can turn into unpayable and odious debt. Ghana is losing 30 per cent of its government revenue to debt repayments, paying loans which were often made speculatively based on high commodity prices, and carrying whopping rates of interest. One particularly odious aluminium smelter in Mozambique, built with loans and aid money, is currently costing the country £21 for every £1 that the Mozambique government received. British aid, which is used to set up private schools and health centres, can undermine the creation of decent public services, which is why such private schools are being closed down in Uganda and Kenya. Of course, some Africans have benefitted from this economy. There are now around 165,000 very rich Africans, with combined holdings of $860bn. Given the way African economy works, most of these wealth are stored up in tax havens outside of Africa.

A 2014 estimate suggests that rich Africans were holding a massive $500bn in tax havens. Africa’s people are effectively robbed of wealth by an economy that enables a tiny minority of Africans to get rich by allowing wealth to flow out of Africa. This is achieved through neo-colonial policies which compel the administrations of African States to open up their economies to privatization, and their markets to unfair competition. If African countries are to benefit from privatization and foreign investment, they must freely regulate that investment and the corporations that often bring it. The extractive industry is one of such sectors that might warrant the implementation of specially structured templates in economic nationalism.

With few exceptions, the emerging picture has been that countries with abundant mineral wealth experience poorer democracy, weaker economic growth, and worse development. To prevent tax dodging, governments must stop prevaricating on action to address tax havens. No country should tolerate companies with subsidiaries based in tax havens operating in their country, Dearden advises.

2 COMMENTS

  1. Hello just wanted to give you a brief heads up and let you know a few of the pictures aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different internet browsers and both show the same outcome.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.