How Europe and the West underdeveloped Africa:
That’s the essence of a report from several campaign groups released today. Based on a set of new figures, it finds that sub-Saharan Africa is a net creditor to the rest of the world to the tune of more than $41bn. Sure, there’s the money going in: around $161bn a year in the form of loans, remittances (those working outside Africa and sending money back home), and aid. But there’s also $203bn leaving the continent. Some of this is direct, such as $68bn in mainly dodged taxes. Essentially 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 % of the continent’s entire gross domestic product (GDP) – or three times what Africa receives in aid.
Then there’s the $30bn that these corporations “repatriate” – profits they make in Africa but send back to their home country, or elsewhere, to enjoy their wealth. The City of London is awash with profits extracted from the land and labour of Africa. There are also more indirect means by which we pull wealth out of Africa. Today’s report estimates that $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 unable to use fossil fuels to develop in the way that Europe did. Our climate crisis was not caused by Africa, but Africans will feel the effect more than most others. Needless to say, the funds are not currently forthcoming.
In fact, even this assessment is enormously generous, because it assumes that all of the wealth flowing into Africa is benefitting the people of that continent. But 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. But, given the way the economy works, where do these people mainly keep their wealth? In tax havens.
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 can only be put down to the global system of extractive, heterotopian, patriarchal, white supremacist, patrimonial, megalomaniacal, feral neo-capitalism, a system bent on using Africa as a host in concentric circles of brazen parasitism. Given the 1980s forensic estimates of $100 trillion in resources and human capital was stolen from Africa, the aforementioned is staggering, to say the least/
It is a shame given that Africa, known over centuries for being a continent looted and continuously stripped of its mineral and human resources with the theft and larceny, raging unabated to this day.
Next, part in II, African wealth today…..
Sources: Al-Jazeera, The World Bank and others