Africa’s billion dollar losses

 

Africa is rich – but the rest of the world is benefitting from its wealth

Our second Honest Accounts report reveals that countries in Africa are rich –However this wealth is not benefitting African citizens, but the rest of the world.

Whilst countries in Africa receive $162 billion in resources such as aid, loans, and foreign investment a whopping $203 billion is taken out, mostly by multinational corporations, debt payments, tax dodging, and the costs imposed by climate change caused by the rest of the world.

In total, the rest of the world receives over $41 billion a year from African countries.

This is more than enough money to provide decent healthcare to all people in Africa.

This stands the story about poverty on its head. Africa is already rich. What is needed are policies that mean that ordinary Africans benefit from this wealth, rather than seeing it taken out by multinational corporations and global elites. If ordinary Africans could benefit from this wealth, it would help provide education, clean water, housing and healthcare.

We need action to address the causes of poverty in Africa.  These include: tax dodging, a lack of corporate regulation, debt, climate change and unfair trade policies.

Re-thinking our relationship

Our research shows that we need a massive rethink about the way we talk and think about the world’s relationship with countries in Africa. This means accepting that aid alone will not solve poverty. Aid is, often, a good thing;  used well it can help countries develop.  But it will always be a sticking plaster if we fail to address the root causes of poverty and poor health.

We need to have a more honest conversation about the causes of poverty. A conversation that takes into account this bigger picture. If we can agree that aid alone won’t solve poverty, then we can begin to tackle the wider issues that facilitate a net transfer of wealth out of Africa.

This means:

  • 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.

 

  • Closing tax havens and ensuring multinational companies pay fair rates of tax in all countries where they operate.

 

  • Lending more responsibly – and cancelling debt as necessary.

 

  • Making sure aid is spent on building public services for everybody.

 

  • Compensating Africa 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. 

Read our new briefing here

* This report updates our figures from our 2014 report. The new figure is slightly lower than the 2014 figure, which calculated that Africa was a net creditor to the tune of $58 billion. Reading this as an improvement however would be wrong. In part, the decrease in the amount of wealth being taken out of Africa is largely due to a reduction in commodity prices. This has meant lower profits being taken out of the continent. In addition there are more loans going to Africa, increasing the inflows. But this comes at a price, increasing future debt repayments and raising the risk of future debt crises. We are already seeing this happen in Ghana and Mozambique.

Find out more about the causes of poverty and poor health:

 


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