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$192 billion drained from Africa every year by rest of world

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$192 billion drained from Africa every year by rest of world

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Published by Max Salsbury for 24dash.com in Communities and also in Finance, Health

$192 billion drained from Africa every year by rest of world $192 billion drained from Africa every year by rest of world

Africa is losing $192 billion every year to the rest of the world through the likes of illicit financial flows, profits removed by multinational companies, debt payments, the 'brain drain' of skilled workers, illegal logging and fishing, and the costs incurred as a result of climate change, research has revealed.

The massive financial losses are offset somewhat by the amount of foreign aid the continent receives. However, as things stand, £640 is lost for every £100 received in aid.

Africa’s net loss, when compared with all inflows to the continent, is $58bn.

The new research by 10 British and African non-governmental organisations has highlighted the huge disparity between aid and the resources leaving Africa.

The organisations are calling on the UK government to reassess its focus on 'aid', which they say paints a misleading picture of Britain’s 'generosity' towards the continent.

And they are also pressing for urgent government action to address the UK’s "responsibility" for African poverty, including the losses which occur through the network of tax havens under British jurisdiction.

According to the Overseas Development Institute, the $192bn Africa loses every year is "more than is needed annually" to eliminate hunger, provide universal primary and improved access to secondary education, affordable health coverage for a range of diseases, safe water and sanitation, and sustainable energy for everyone in the world - not just Africa.

The NGOs believe their research is the first attempt at a comprehensive comparison of the range of resource flows in and out of Africa.

Their research shows that Africa loses:

• $46.3bn in profits made by multinational companies.
• $21bn in debt payments, often following irresponsible loans.
• $35.3bn in illicit financial flows facilitated by the global network of tax havens.
• $23.4bn in foreign currency reserves given as loans to other governments.
• $17bn in illegal logging.
• $1.3bn in illegal fishing.
• $6bn as a result of the migration of skilled workers from Africa.

In addition to these resource flows, Africa is forced to pay a further:

• $10.6bn to adapt to the effects of climate change that it did not cause.
• $26bn to promote low carbon economic growth.

The research highlights the plight of Ghana, which had $7.4bn of debt cancelled in 204 and 2005.

The cancellation saw the country's annual foreign debt payments fall from over 20% of government revenue to less than 5%.

It is estimated that 98% of children now complete primary school in Ghana, up from 70% in the early-2000s, before debt cancellation.

However, a boom in lending to the West African country means the government’s foreign debt repayments are predicted to reach 20% of government revenue once again in 10 years’ time.

This assumes that the economy grows by 6% a year, and that the amount collected in taxes increases even faster. If this does not happen, the debt payments will be even higher, the NGOs report claims.

Three-quarters of Ghana’s debt is owed to other governments and multilateral institutions, primarily the World Bank, African Development Bank and IMF.

Martin Drewry, director of Health Poverty Action, said: “These figures expose the gross misconceptions about aid and ‘charity'. Common understanding is the UK ‘helps’ Africa through aid, but in reality this serves as a smokescreen for the billions taken out.

"Let’s use more accurate language. It’s sustained looting – the opposite of generous giving – and we should recognise that the City of London is at the heart of the global financial system that facilitates this. As the general election approaches, all party leaders must step up and outline how they intend to take real responsibility, and stop this plundering of Africa.

"And NGOs need to change too. We need to move beyond our focus on aid levels and communicate the bigger truth – exposing the real relationship between rich and poor, and holding leaders to account.”

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said: “Tackling inequality between Africa and the rest of the world means tackling the root causes of its debt dependency, its loss of government revenue by tax dodging, and the other ways the continent is being plundered.

"Here in the UK we can start with our role as a major global financial centre and network of tax havens, complicit in siphoning money out of Africa.”

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