It is beyond anyone’s comprehension why Africa continues to be classified as the poorest continent on earth, yet it has a massive pool of some of the most expensive natural resources.
Without a doubt, the vast majority of Africans live on less than $1 a day and lack even the most basic needs, such as food, shelter, and health care.
So could it be that this apparent looting is the reason why Africa continues to be poor?
This is the question that several campaign groups seek to answer in a special report released on Wednesday.
According to the report, much more wealth is leaving the world’s most impoverished continent than is entering it. It further claims that African countries are collectively net creditors to the rest of the world to the tune of $41.3 billion.
“African countries received $161.6 billion in 2015 – mainly in loans, personal remittances, and aid in the form of grants. Yet $203 billion was taken from Africa, either directly – mainly through corporations repatriating profits and illegally moving money out of the continent or by costs imposed by the rest of the world through climate change,” the report indicates.
What’s worse is the fact that multinational companies working in Africa have found ways to steal three times the amount that African countries receive every year in form of grants by deliberately misreporting the value of their imports and exports in order to enjoy more tax exemptions.
Which begs the question: how much are Africans required to pay for external loans?
The report indicates that African governments collectively borrowed $32.8 billion in loans from external lenders in 2015 but paid $18 billion in debt interest and principal payments.
Many African countries are now trapped in the vicious cycle of borrowing as they have to borrow more money to repay previous debts. A good case in point is Zimbabwe, which has been forced to borrow hundreds of millions of dollars to pay back its arrears to the World Bank so that it can be eligible for further borrowing.
Foreign countries, especially the most developed ones, are also stealing from Africa through illegal logging, fishing, and the trade in wildlife products. At the moment, civil rights groups and environmentalists in Cameroon are engaged in court battles as they seek to stop massive destruction of the precious Cameroon rainforests by a U.S.-based palm oil company.
Furthermore, Africa has to deal with unfair trade policies, most of which allow unprocessed agricultural goods to be exported from African countries and refined elsewhere, causing the vast majority of their value to be earned abroad.
Figures show that the rest of the world is profiting from the continent’s wealth – more so than most African citizens, yet rich country governments simply tell their public that their aid programs are helping Africa. This is a distraction, and misleading, according to the report.
The Way Forward
For Africa to develop, foreign governments must, genuinely, allow African countries to benefit from foreign investments by enabling them to legally regulate such investments and the corporations involved.
It is also imperative for foreign governments to address the issue of tax havens in Africa and ensure investors from their countries fully comply with the existing tax regulations when doing business on the continent.