Africa, despite being hailed as the new frontier of global economic growth, is losing more wealth than it is gaining.
A new report analysing the movement of financial resources in and out of the continent shows that African countries received $161.6 billion in 2015 mainly in loans, personal remittances and grants.
However, $203 billion was taken away directly as corporations repatriated profits and by other illegal means, leading to an annual deficit of $41.3 billion.
“Africa is rich in potential mineral wealth, skilled workers, booming new businesses and biodiversity. Its people should thrive, its economies prosper. Yet many people remain trapped in poverty while much of the continent’s wealth is being extracted by those outside it,” says the Honest Account 2017 Report on how the world profits from Africa’s wealth.
The report was prepared by a coalition of UK and African equality and development campaigners, including the Uganda Debt Network.
According to the report, while African countries received some $19 billion in grants, $68 billion went out in capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to reduce tax.
While the continent received $31 billion in remittances, multinationals repatriated $32 billion in profits to their home countries.
African governments received $32.8 billion in loans, and paid $18 billion in debt interest and principal payments. An estimated $29 billion is stolen each year through illegal logging, fishing and trade in wildlife and plants.
“Money is leaving Africa partly because Africa’s wealth of natural resources is simply owned and exploited by foreign, private corporations,” notes the report.
It adds that for instance, some 101 companies listed on the London Stock Exchange control $1.05 trillion worth of resources in Africa in oil, gold, diamonds, coal and platinum.
Over half of the companies are incorporated in the UK and/or in tax havens like the British Virgin Islands.
Of note is that, Africa also loses a staggering $36.6 billion annually in adopting the impacts of climate change, a problem that has been imposed on the continent by richer industrialised and industrialising countries.
The report contends that while 43 per cent of people in African live in poverty, the continent has considerable wealth but the key problem is that the rest of the world, particularly Western countries, are extracting far more than they send back and continue pushing economic models that fuel poverty and inequality.
It is imperative to note that the largest 500 African companies recorded a combined turnover of $698 billion in 2014 while in 2015 countries on the continent exported $232 billion worth of minerals and oil.
In South Africa, mineral reserves are estimated at $2.5 trillion while the untapped mineral reserves of the DR Congo are estimated as being worth an astronomical $24 trillion.