A paper recently published by the Global Justice Now gives an insight into how the World benefit from Africa’s wealth under the guise of financial aids, while painting the Continent as “HELL on earth” or “SHITHOLE”. With Sub Saharan Africa a net creditor, $41bn is being extracted from the continent by the international community. About $161bn is sent in form of loans, reliefs, among others, and $203bn goes out of Africa either indirectly or directly as in cases of dodged taxes. Multinational corporations “steal” much of this legally, by pretending to be generating wealth in tax havens. These so-called “illicit financial flows” amount to about 6.1% of the continent’s entire Gross Domestic Product (GDP), or thrice what it receives in aid. There is also the $30bn that these corporations “repatriate” profits in Africa but send back to their home Country, or elsewhere to enjoy. The UK is among the numerous Countries awash with profits extracted from the land and labor of Africa. The report also estimates $29bn is stolen yearly from Africa by means of illegal logging, fishing, and wildlife trades. Another $36bn is owed to the Continent for damages that may incur from climate change, as Africa is yet to be able to use fossil fuels as is being done in Europe.
The loan-infested Continent
According to Nick Dearden, Director of UK campaigning organization, Global Justice Now,
“If African countries are to benefit from foreign investment, they must be allowed to, even helped to legally regulate that investment and the corporations that often bring it”.
While Ghana is losing 30% government revenue to debt repayments, Mozambique is indebted from international funding of its Mozal facility (aluminum smelter), which is costing £21 for every £1 received by the Mozambique government. However, some Africans have benefitted from this economy, with about 165,000 very rich Africans, with combined holdings of $860bn.
|South Africa||163311.00||Sep/17||USD Million||Quarterly|
Tax havens for rich Africans
A 2014 estimate suggests that rich Africans were holding a massive $500bn in tax havens. Africans are effectively robbed of wealth by an economy that enables an infinitesimal number of Africans to get rich by allowing wealth to flow out of Africa.
Dearden asserts that “Western governments would like to be seen as generous beneficiaries, doing what they can to “help those unable to help themselves”. But the first task is to stop perpetuating the harm they are doing. Governments need to stop forcing African governments to open up their economy to privatization, and their markets to unfair competition”.
What can be done?
With only a few exceptions, Countries with abundant mineral resources experience poorer governance, weaker economic growth, and worse development. To prevent tax evasion, governments must be firmer on actions addressing tax havens. No Country should tolerate companies with subsidiaries based in tax havens operating in their Country. Aids from the international communities can only do a handful, if judiciously spent, so the best approach would be to return some of Africa’s looted wealth, as suggested by President Muhammadu Buhari in response to David Cameron’s “Fantastically corrupt” comment. We should see it both as a form of reparations and redistribution, just as the tax system allows for redistribution of wealth from the richest to the poorest, within individual societies. The same should be expected from the global “society”.
Dearden iterated that “To even begin to embark on such an ambitious programme, we must change the way we talk and think about Africa. It’s not about making people feel guilty, but correctly diagnosing a problem in order to provide a solution. We are not, currently, “helping” Africa. Africa is rich. Let’s stop making it poorer”.