DAKAR and KUALA LUMPUR, November 22 (IPS) – The continued plunder of Africa’s natural resources due to capital flight is holding the country back once again. Many African countries face a protracted recession amid mounting debt, rubbing salt on deep wounds of the past.
With less foreign currency, tax revenue and policy room to deal with external shocks, many African governments believe they have little choice but to spend less or borrow more. in foreign currency.
Most Africans are struggling to cope with food and energy crises, inflation, higher interest rates, adverse climate events, and poor provision of social and health services. than. Unrest is growing due to deteriorating conditions despite a rise in prices for some commodities.
Economic bleeding
After ‘losing decades’ from the late 1970s, Africa became one of the world’s fastest growing regions at the turn of the 21st century. Debt relief, commodity boom and other factors seem to be support for scams’Africa is on the rise‘ story telling.
But instead of long overdue economic transformationAfrica has seen unemployment growth, increase economic inequality and more resource transfer foreign. Capital flight – involving plundered resources laundered through offshore banks – has bled the continent.
Follow Advanced Control Panel Regarding Illegal Financial Flows from Africa, the continent loses more than $50 billion annually. This is mainly due to ‘trade misinvoicing’ – exports missing invoices and imports exceeding invoices – and fraudulent commercial arrangements.
Transnational corporations (TNCs) and criminal networks account for most of this African economic surplus. Resource-rich countries are more vulnerable to looting, especially where capital accounts have been liberalized.
Externally imposed structural adjustment programs (SAPs), following the public debt crisis of the early 1980s, forced African economies to open up even more – at great economic cost. SAP made them more (dish) depends on imports while increasing vulnerability to commodity price shock and global liquidity flow.
Leonce Ndikumana and his colleagues estimated more 55% of capital fled – defined as property illegally purchased or transferred – from Africa is from oil-rich countries, with Nigeria alone losing $467 billion between 1970 and 2018.
During the same period, Angola lost $103 billion. Its poverty rate has increased from 34% to 52% in the past decade, as the number of poor people more than doubled from 7.5 to 16 million.
Oil proceeds have been embezzle by the TNCs and the upper classes of Angola. Abusing her influence, the daughter of the former president, Isabel dos Santos has acquired a huge fortune. One report founded more than 400 companies in his business empire, including many in Tax heaven.
Between 1970 and 2018, Côte d’Ivoire lost $55 billion in capital flight. Grow 40% of the world’s cocoa, it only gets 5–7% of global cocoa profits, with farmers receiving very little. Much of the cocoa income goes to TNCs, politicians and their collaborators.
South African mining giant (SA) has lose 329 billion USD capital flight over the past five decades. False invoicing, other forms of misappropriation of public resources, and tax evasion increase private wealth lurking in offshore financial centers and tax havens.
Financial austerity has slowed job growth and reduced poverty in ‘the world’s most unequal country’. In SA, the richest 10% own more than half of the nation’s wealth, while the poorest 10% own less than 1%!
Theft of resources and debt
With this plundering model, the resource-rich African nations – which may have accelerated their development during the commodity boom – now face mounting debt, depreciating currencies and import inflation, when interest rates are pushed up.
Zambia’s failure to meet its external debt obligations at the end of 2020 has caused title. But foreigners make up most of Zambia copper export Proceeds are not acknowledged.
During the period 2000-2020, the total foreign direct investment income from Zambia was twice the total pay for external government loans and government-guaranteed loans. In 2021, Zambia’s ‘main income’ (mainly capital income) account deficit balance of payments is 12.5% of GDP.
Since interest payments on foreign public debt ‘only’ represent 3.5% of GDP, most of this deficit (9% of GDP) is due to remitted profits and dividends, as well as payments interest on private foreign debt.
For the IMF, World Bank and ‘creditor countries’, debt ‘restructuring’ is a condition for continued such looting! The worsening external debt of African countries is partly due to a lack of control over export earnings controlled by TNCs, with the support of African elites.
Resource plunder, which involves capital flight, inevitably leads to foreign debt exhaustion. Invariably, the IMF demanded that governments tighten their belts and open African economies to the interests of the TNC. So we go full circle, and really, it’s vicious!
The plunder of wealth in Africa dates back to colonial times, and even before that, with The Atlantic Trade of African Slaves. Now, this is enabled by transnational interests creating international rules, loopholes and all.
Such facilitators include many bankers, accountants, attorneys, investment managers, auditors, and other wheelchair dealers. Thus, the source of the wealth of ‘high net worth individuals’, corporations and politicians is disguised, and its transfer abroad is ‘money laundering’.
What can be done?
The capital flight was not mainly due to the ‘normal’ portfolio choices of African investors. Therefore, an increase in return on investment, for example, with a higher interest rate, is can’t stop it. Worse, such policy measures discourage necessary domestic investment.
In addition to enforcing effective capital controls, strengthening the capacity of national specialized agencies – such as customs, financial supervision and anti-corruption agencies – is important.
African governments need stronger rules, regulatory frameworks and institutions to curb corruption and ensure more efficient management of natural resources, for example by revising investment agreements bilateral and investment codes, in addition to the renegotiation of oil and gas, mining and infrastructure contracts.
Records of all investments in the extractive industries, the tax payments of all involved, and public prosecutions must be open, transparent and accountable. Economic crimes should be strictly handled with deterrent penalties.
The general public – particularly civil society organisations, local authorities and affected communities – must also know who and what is involved in the extractive industries.
Only an informed public who knows how much is harvested and exported, by whom, how much the government collects and their social and environmental impacts, can control corporations. and government.
Improved financial transparency and international trade is essential. This requires an end to banking secrecy and better regulation of TNCs to limit false commercial billing and transfer pricing, still facilitating resource theft and looting.
The OECD argument has long been blamed for capital flight abroad Tax heaven on remote tropical islands. But those in rich countries – such as the UK, US, Switzerland, the Netherlands, Singapore and others – are the biggest culprits.
Stopping the bleeding of plundering Africa’s resources by denying refuge to illegal cessions should be the duty of rich nations. Automating the exchange of tax-related information will become really common to prevent false invoicing, transfer pricing abuse, and concealment of stolen assets abroad.
single tax of transnational corporations can help put an end to tax abuses, including tax evasion and avoidance. However, the OECD Inclusion Framework proposals benefit governments and their own business interests.
Africa is not inherently ‘poor’. Instead, it was impoverished by fraud and looting that led to the transfer of resources abroad. A serious effort to end this requires an admission of all responsibility and guilt, at the national and international levels.
The veins of Africa were slit open. The centuries-long bleeding must stop.
Dr. Ndongo Samba Sylla is a Senegalese development economist working at the Rosa Luxemburg Foundation in Dakar. He is the author Fair trade scandal. Poverty marketing to benefit the rich and co-author Africa’s Last Colonial Coin: The Story of the CFA Franc. He also edited Economic and Monetary Sovereignty for 21st Century Africa, Revolutionary Movements in Africa and Imperialism and the Political Economy of the Debts of the Southern Hemisphere. He tweets at @nssylla
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© Inter Press Service (2022) — All rights reservedOrigin: Inter Press Service
