Billions are being pumped out of Africa every year, research shows
Tax havens, transnational companies and climate change: the world keeps looting Africa’s resources. Matthew Bramall reports on new research on the topic.
In 1943, US President Roosevelt visited the Gambia. The sheer poverty led him to describe it as ‘the most horrible thing I have ever seen in my life’. When he returned to the US, he did some sums: ‘The British have been there for 200 years – for every dollar that the British have put into Gambia, they have taken out 10. It's just plain exploitation of those people.’ Roosevelt was right.
As the new Honest Accounts 2017 research shows, over 70 years later, and despite the end of colonialism and decades of ‘aid’, the exploitation of the African continent continues unabated.
Honest Accounts 2017 was published on Wednesday 24 May by a group of development campaigners including Global Justice Now, and reports more wealth leaves African countries than enters it every year.
Today, African countries receives £162 billion in resources including aid, loans and foreign investment. Yet it loses £203 billion through activities such as illicit financial outflows (to you and me: tax dodging), transnational corporations taking out their profits (on which they have often paid little tax), and the costs imposed by climate change (which Africa didn’t cause). All in all, an annual deficit of US $41.3 billion.
If Honest Accounts 2017 does one thing, it lays bare that Africa is rich. The problem is that it is those outside the continent, not ordinary Africans, who are benefitting from this wealth. Whilst the methods may have changed, the exploitation that horrified Roosevelt remains. We continue to take with one hand far more than we give with the other.
The consequences of this for the lives of African citizens are stark. Over 50 per cent of people in African countries are denied access to modern health facilities. There are just 14 health professionals for every 10,000 people on average – more than seven times fewer than Europe. The lack of adequate publicly funded health care means that many people in Africa are simply not able to seek healthcare when needed, whilst 11 million are pushed into poverty every year to pay for it.
For many of the reasons outlined in Honest Accounts 2017, African governments often simply do not have the funds to provide adequate healthcare for their citizens. Whilst health spending as a percentage of GDP has increased, it remains low – and GDP itself remains low, in part because of this wealth extraction.
A snapshot of all of this is provided in the Democratic Republic of the Congo (DRC), where an estimated 95 per cent of the population live on less than US $2 a day, and where we currently witnessing the latest Ebola outbreak. Citizens of DRC are amongst the poorest in the world, but their country sits on an eye watering $24 trillion in mineral deposits. The DRC is rich, but its people are poor because most of its wealth flows outwards, leaving millions without access to basic healthcare, education or clean water.
In 2013, Global Witness and the Africa Progress Panel, led by Kofi Annan, examined five major sales of mining rights in the DRC between 2010 and 2012. They found the firms paid at least $1.36 billion below the market value – almost double what the DRC spends each year on health and education combined.
In a nutshell: the DRC exports more money than it spends on its own people.
Yet this isn’t something beyond our control here in Britain: each deal examined by Global Witness involved firms linked to one of Britain’s own tax havens – the British Virgin Islands.
The British government is implicated widely in the theft of resources from Africa, and not just through tacit support of tax havens: British transnationals are amongst the most active on the continent; we are increasingly giving more of our aid as loans, contributing to the impending debt crisis; and we are historically amongst the largest contributors to climate change, which costs the continent US $37 billion each year.
Aid: a misleading narrative
Of course, today this isn’t colonialism, but the exploitation of African countries continues. The ways and means are different, and the scale of the problem is vast, but this is an issue that Roosevelt would recognize from his time in the Gambia.
Unfortunately, rather than viewing ‘aid’ as a form of compensation for the damage we inflict, it has recently been made explicit in British development policy that ‘aid’ should be in the ‘national interest’, and put to use supporting foreign policy and trade objectives. This ignores the root causes of poverty, which we urgently need to address.
So what should we be doing? We can’t deny it – there are no shortcuts here; we need a radical shift in the way the UK government and others behave towards African countries.
The first thing we need to do is to acknowledge this: aid alone is not going to solve poverty. This myth makes it almost impossible to have the sorts of conversations we need to be having urgently. If we can agree on this, then we can begin to tackle the wider issues that facilitate the transfer of wealth out of Africa.
This will mean promoting equitable development by negotiating trade and investment deals that allow African countries to nurture domestic industries, help tackle climate change, and promote social welfare and decent work. It means closing tax havens and ensuring transnational companies pay fair rates of tax in all countries where they operate. It means lending more responsibly – and restructuring and cancelling debt as necessary. It means making sure aid is spent on building public services for everybody. And it means compensating African countries for the damage caused by climate change.
Achieving all of that will not be easy, but acting on these issues is a crucial step to ensuring ordinary people in Africa can benefit from their continent’s wealth, and access the health, education and other public services they need. Britain and others who benefit at the expense of African citizens need to stop obsessing about how much aid to give and start taking action on the root causes of poverty – in particular those for which they bear some responsibility.
Matthew Bramall works at Health Poverty Action.