How Africa can stop the World from continuously plundering her wealth

The Honest Account report released on 25th May to mark Africa Day confirms what has already been known that Africa as a continent is dastardly wealthy but its wealth is basically usurped by non-Africans who live outside Africa.

The report dubbed ‘Honest Accounts 2017 (How the World Profits from Africa’s Wealth)’ written by a group of development campaigners including Global Justice Now has elicited debates and theories. The major ones being: ‘Africa is rich… but we are constantly plagued with influx of aid that we do not necessarily need’ and ‘Africa is poor… we need all the aids we can get to further boost our economies and make us relevant in the sphere of things’.

These two opposing statements are the bane of most arguments when it comes to Africa’s businesses and governance as it relates to the Western world. The report shows that more wealth leaves African countries than enters.

This in no wise disputes a historic fact made by former US President Roosevelt during his visit to the Gambia in 1934. Records have it that the sheer poverty inherent within Gambia led him to describe it as “the most horrible thing I have ever seen in my life.” He then realised that “the British have been within Gambia and Africa in general for a pretty long time and for every dollar that was put into the Gambian economy, they have taken out 10 and this was just plain exploitation of the people.”

Roosevelt was right indeed as the statistics made by Honest Accounts 2017 further proves this fact. It finds that the countries of Africa are collectively net creditors to the rest of the world, to the tune of $41.3 billion as of 2015.  Thus, much more wealth is leaving the world’s most “impoverished” continent than is entering it.

It further stated that African countries received $161.6 billion in 2015 – mainly in loans, personal remittances and aid in the form of grants. Yet $203 billion was taken from Africa, either directly – mainly through corporations repatriating profits and by illegally moving money out of the continent – or by costs imposed by the rest of the world through climate change.

So even though we continue to receive with one hand, they have perfected ways of taking from Africa with or without her consent.

Who is profiting the most from Africa’s wealth?

Multinational corporations and non-Africans seem to be the main profiteers. The report tells us that whilst African countries receive around $19 billion in aid in the form of grants, over three times that much ($68 billion) is taken out in capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to reduce tax.

This further proves that even though Africans receive $31 billion in personal remittances from overseas, multinational companies operating on the continent repatriate a similar amount ($32 billion) in profits to their home countries each year, thereby syphoning a portion of the continent’s wealth to further lubricate their individual economies.

Illegal logging, fishing and the trade in wildlife/plants is also an endangered part of Africa’s economy as an estimated $29 billion is being stolen from this sector yearly.

Other ways in which the rest of the world extracts resources and benefit from Africa include imbalanced trade policies. For instance, unprocessed agricultural goods are often exported from African countries and refined elsewhere, causing the majority of their value to be earned abroad.

The above instances show how the rest of the world profits from the continent’s resources to the detriment of local African economies.

This is how rich Africa is

Statistics have it that Africa is generating large amounts of wealth and, in some ways, is booming. For instance, the largest 500 African companies recorded a combined turnover of $698 billion in 2014. In 2015, countries in Africa exported $232 billion 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 Democratic Republic of Congo are estimated to be worth an astronomical $24 trillion.

Though the numbers are large, the underlying issues of “foreign companies taking most of the profits generated from Africa’s natural wealth and complicity in those controlling tax havens” have enabled the theft of Africa’s wealth. These reasons further explain why the majority of people in Africa do not benefit from the lavish wealth, and why the present mode of minerals extraction actually leads to impoverishment.

Foreign aid as poisoned chalice

After much plundering of Africa’s wealth, the report shows that the UK government uses aids to assuage the effects of an impoverished continent.

Sadly, rather than give aid as a form of compensation for infliction of damages, the British development policy has made it that ‘aid’ should be given based on ‘national interest.’ These aids have been used to support their foreign policy and trade objectives. This ignores the root causes of poverty, which currently needs to be addressed.

What then could the British government and the Western world do? Firstly, it is pertinent that these governments stop forcing African governments to open up their economy to privatisation, and their markets to unfair competition.

Nick Dearden, Director of the UK campaigning organisation, Global Justice Now puts it thus: “If African countries are to benefit from foreign investment and aid, they must be allowed to – even helped to – legally regulate that investment and the corporations that often bring it.” This will mean promoting equitable development by negotiating trade and investment deals that allow African countries to nurture domestic industries whilst tackling climate change, and promoting social welfare and decent work.

It would go further to stipulate the closure of tax havens and ensuring transnational companies pay fair rates of tax in all countries where they operate.

It would go ahead to insinuate lending more responsibly – and restructuring and cancelling debts when necessary by the UK and other powers. Aid should be spent on building public services for everybody and not seen as a form of compensation for years of impoverishment.

If truly the Western world wants to help, achieving all of these may not be easy but it will go a long way in ensuring that Africans benefit from their vast wealth and have access to daily public services that they need. They need to stop looking into how much they can benefit from Africa and start taking action towards the root causes of poverty.

Africa’s action plan

Africa needs an action plan as proposed by Honest Accounts 2017 and the key task is to dismantle the system extracting wealth from Africa. This requires action by African civil society organisations to press for change in their countries, and action by civil society organisations in the countries that are enabling this wealth extraction to take place, such as the UK.

The plans and strategies listed if duly worked on by both parties involved in the plundering of Africa’s wealth can lead to a better and well-nourished Africa.

Source: venturesafrica