- Burkina Faso
- Cape Verde
- Central African Republic
- D.R. Congo
- Equatorial Guinea
- Guinea Bissau
- Ivory Coast
- São Tomé and Príncipe
- Sierra Leone
- South Africa
- South Sudan
Sunday, May 27, 2018
The Looting of Africa
Jason Hickel, in his new book The Divide, rails against more recent attempts to show that trade and liberalisation are benefiting the poor.
He uses research by the US-based campaign group Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics which shows that in 2012, the last year of recorded data, $3.3tn flowed out of developing-world countries. This contrasts with the $1.3tn – including all aid, investment and income from abroad – that flowed in.
Totting up the net outflow of funds since 1980 delivers the alarming figure of $16.3tn, says Hickel, an anthropologist based at the London School of Economics. To get a sense of the scale, $16.3tn is only a couple of trillion short of total US GDP.
Hickel joins a growing number of academics who have argued that aid and investment, especially in Africa, is far outweighed by what is stolen.
In 1981 around 42% of the world’s population was extremely poor, using $1.90 a day in 2011 prices as a yardstick. By 2013, that figure had fallen to 10.7%. An estimate by the bank suggests it fell further, to 9.1%, in 2016. Likewise, polio and other major diseases are in full retreat.
However, in sub-Saharan Africa, the story is one of terrible and debilitating decline, such that in 2013 there were 389 million people living on less than $1.90 a day, which the World Bank says amounts to “more than all the other regions combined”.
One reason governments struggle to combat poverty can be found in the pernicious activities of western companies, foreign governments which want to maintain access to important minerals and to make sure they stay as cheap as possible.
The Norbert Zongo Cell for Investigative Reporting in West Africa (Cenozo), (named after the Burkinabé newspaper editor murdered in 1998.) revealed how western banks and governments turn a blind eye to billions of pounds’ worth of wealth, generated across west Africa, that is squirrelled away offshore, often out of sight of the tax authorities. Working with the International Consortium of Investigative Journalists (ICIJ), which was behind the Panama Papers leaks, it details how Nigerian billionaire Sayyu Dantata bought six subsidiaries across the region from US oil firm Chevron. The $1bn deal would have been subject to multiple tax regimes depending on the laws of the countries involved. Tax experts working with the ICIJ say the transaction, at the very least, “skilfully avoided the withholding tax regime”.
The Organisation for Economic Co-operation and Development (OECD) has said, the extent of tax evasion in the region is dramatic, with more than $50bn per year funnelled out through illicit flows – a sum more than all the aid the continent receives from individual countries and agencies.