Africa’s Missing Money

"The danger to world peace springs not from the action of those who seek to end neo-colonialism but from the inaction of those who allow it to continue." Kwame Nkrumah, Neo-Colonialism, p. 259

Next time you read about some corrupt African leader looting his country, lining the pockets of his cronies, stashing millions in Swiss bank accounts, buying villas in Paris and penthouse apartments in New York, setting up his playboy son to run some excessively lucrative state enterprise or another while the people of said country live in abject poverty, hold your reaction. Before you sigh and bemoan Africa’s cultures of corruption, callous despots, and managerial ineptitude, stop and ask yourself what’s missing from the picture. 

What’s missing – at least in most Western media coverage – are the Western enablers, the governments and the multinational corporations who turn a blind eye to the excesses of “friendly” leaders whose political survival depends on their presence and patronage. Why fight a system of corruption that benefits multinational corporations who are able to negotiate killer deals with politicians who don’t have the interest of their citizens at heart?  A signing bonus here, a contract for a dubious company there…things get worked out.

And the kleptocratic leader plays a useful role. If international media coverage is focused on the exploits of this or that African president, no one is paying much attention to the larger problem of MNCs and the vast sums of money they move out of Africa illegally. Since the financial meltdown in 2008, however, there has been a bit more scrutiny of cash flows and hopefully this trend will continue. Here’s a post from the Task Force on Financial Integrity and Economic Development.

 

Africa’s Missing Millions/Billions/Trillions

By Chris Jordan

Chris Jordan is an economic justice campaigns officer at ActionAid UK in London.

Earlier this week, I attended a fascinating event in parliament, called ‘Africa’s Missing Millions’.

My quibble that the title should actually be ‘billions’ didn’t deter a standing-room-only crowd gathering to hear  Dev Kar from  Global Financial Integrity talk about his research into the vast sums of money that flow out of poor countries on a daily basis.

Dev estimates that in 2008,  $1.26 trillion in illicit money left developing countries.   This is a problem that’s getting worse – with outflows rising 18% each year since 2000 – particularly in Africa, which is rising by 28% a year.  Over half of the total comes from multinationals illegally shifting profits out of poor countries.

As well as the frankly shocking amounts of money being drained away, one of the most interesting insights from Dev was his take on why the international community hadn’t taken this more seriously up to now.   After spending 20 years working for the IMF, he’s well placed to conclude that it has simply been seen as the fault of poor countries.

‘Capital flight’ as it’s traditionally been know has been blamed on bad economic management in the developing world – instead of being identified as a systemic failure, tacitly encouraged by rich countries and enthusiastically exploited by many multinationals.

With a greater focus on the role of tax havens around the financial crisis, and campaigns showing exactly how multinationals are shifting profits out of poor countries, the tide is starting to turn.  But we’ve a way to go before world leaders fully recognise the scale of the problem, so it’s vital that we  keep up the pressure

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