Underdeveloped, or overexploitated? Against the narrative that Western aid “helps” poverty in Africa, a new study shows that the pillaging of Africa by Western economic interests is still the major source of poverty. A coalition of UK and African-based development campaign groups published research on Wednesday that indicates that Africa has an annual financial deficit of over US$40 billion in capital leaving the continent each year, the Guardian reported.
The research claims that approximately US$203 billion flowed out of the country in 2015 in the form of repatriated profits of multinational corporations, money moved into tax havens, and costs imposed by climate change adaptations. This massive outflow of capital from the historically colonized continent far exceeds that which flows into it, which according to the coalition is only US$162 billion.
“Africa is rich,” the study notes. “ Its people should thrive, its economies prosper. Yet many people living in Africa’s 47 countries remain trapped in poverty, while much of the continent’s wealth is being extracted by those outside it.”
The study also notes the role that Western governments and international organizations have in “pushing economic models that fuel poverty.”
For example, the study describes how extractivist companies which export minerals, oil, and gas, are able to export massive quantities of wealth while paying little in taxes due to institutionalized tax incentives. The study notes however that these tax policies “are the result of long standing policies of Western governments insisting on Africa lowering taxes to attract investment.”
Companies are also frequently able to avoid paying what little taxes they do owe through the illicit use of tax havens. According to the coalition’s research, US$68 billion of capital outflow from Africa is in the form of illicit financial flows, which they define as the illegal movement of cash between countries into tax havens.
“The key message we want to get across is that more money flows out of Africa than goes in, and if we are to address poverty and income inequality we have to help to get it back,” Tim Jones, an economist at the Jubilee Debt Campaign said according to The Guardian.
The report is highly critical of the role that foreign aid from Western governments has in the continent, claiming that it is often simply funding to promote privitisation of public services, free trade, and private investment. “If aid is to benefit Africa, it must be delinked from Western corporate interests,” the report says.
“Money is leaving Africa partly because Africa’s wealth of natural resources is simply owned and exploited by foreign, private corporations. In only a minority of foreign investments do African governments have a shareholding; even if they do this tends to be small, usually around 5-20%” the report says.
The report’s findings are continuous with a multiple-centuries-long history of colonial and neo-colonial exploitation and extraction of Africa’s vast and rich pools of resources and labor.
“There’s such a powerful narrative in western societies that Africa is poor and that it needs our help. This research shows that what African countries really need is for the rest of the world to stop systematically looting them. While the form of colonial plunder may have changed over time, its basic nature remains unchanged,” Aisha Dodwell, with Global Justice Now said according to The Guardian.
The research confirms what many have said before about the harsh reality of exploitation and pillage that has affected the colonized world. In a sentiment that echoes the findings of the study, former President of Ghana, Kwame Nkrumah said half a century ago that “The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world.