Africa is rich - potential mineral wealth, skilled workers, booming new businesses and biodiversity. Its people should thrive, its economies prosper. Yet many people living in Africa’s 47 countries remain trapped in poverty, while much of the continent’s wealth is being extracted by those outside of Africa.
Research for this report calculates the movement of financial resources into and out of Africa and some key costs imposed on Africa by the rest of the world.
We find that the countries of Africa are collectively net creditors to the rest of the world, to the tune of $41.3 billion in 2015. Thus much more wealth is leaving the world’s most impoverished continent than is entering Africa.
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 profitsand by illegally moving money out of the continent–or by costs imposed by the rest of the world through climate change.
1. African countries receive around $19 billion in aid in the form of grants but over three times that much ($68 billion) is taken out in capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to reduce tax.
2. While Africans receive $31 billion in personal remittances from overseas, multinational
companies operating on the continent repatriate a similar amount ($32 billion) in profits to their home countries each year.
3. African governments received $32.8 billion in loans in 2015 but paid $18 billion in debt interest and principal payments, with the over all level of debt rising rapidly.
4. An estimated $29 billion a year is being stolen from Africa in illegal logging, fishing and the trade in wildlife/plants.
There are other ways in which the rest of the world extracts resources from Africa, but for which figures are not available; for example, trade policies mean that unprocessed agricultural goods are often exported from African countries and refined else where, causing the vast majority of their value to be earned abroad.
The 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 publics that their aid programmes are helping Africa. This is a distraction, and misleading.
Our figures comprise both the movement of financial resources and two categories of costs imposed on African countries by the rest of the world. First, there is the cost to African counries of adapting to climate change: a process which has been overwhelmingly caused by richer industrialised and industralising countries, not Africa –amounting to $10.6 billion a year. Then there is the cost to Africa of mitigating climate change–to reorient African economies on to a low carbon path - again due to the need to tackle climate change: the annual cost here is even greater, at $26 billion. These costs are included since they entail expenditure – a loss of resources – by Africa for processes which it has largely not been responsible.
Time to rethink.
Those claiming to help Africa need to rethink their role. Their priority should be: ‘first do no harm’. Yet much harm is currently being done. In particular, billions continue to be stolen from African citizens through insufficient global action to curb tax dodging. The British government bears special responsibility in this
since its at the head of a giant network of overseas tax havens (perhaps more accurately described as secrecy jurisdictions) facilitating this theft–something that could easily become a greater problem post-Brexit. Other rich countries are also failing to curb the tax dodging practices of their multinational companies.
The second priority of outsiders should be to reconfigure aid as ‘reparations’ for the ongoing extraction of wealth and other damage. being done. The level should be set at the level of the damage, not some arbitrary rate set by governments out of their own ‘generosity’.
Beyond that, redistribution of wealth is important for any society, as a means of addressing injustices and ensuring everyone can live a dignified life. A current problem with ‘aid’ is that it casts Western countries in the role of benevolent benefactors, giving their wealth to poor countries. But exactly the opposite is true. As Jason Hickel of the London School of Economics has written, aid currently does not exist in any meaningful sense, given the actual flows of wealth.
The current extraction of wealth from the poor to the rich world is a continuation of historical trends. In his book Capitalism and Colonial Production, Hamza Alavi estimates that the resource flow from India to Britain between 1793 and 1803 was around £2 million a year, the equivalent of many billions today. The British academic theologian Robert Beckford has given a rough estimate that Britain extracted an astronomical £7.5 trillion in wealth from African countries due to the slave trade.
The 2017 and 2014 reports:
This updated Honest Accounts 2017 follows the first version published in 2014.This calculated, for the first time, the movement of all the main financial resources into and out of Africa, mainly using 2012 figures. It found that $134 billion entered the continent this year, mainly in the form of loans, foreign investment and aid. However, some $192 billion was taken out, mainly in profits made by foreign companies, tax dodging and the costs of adapting to climate change. Africa was found to suffer a net deficit of $58 billion a year.
The figure in the present report is slightly smaller, largely because of the fall in international prices for raw materials, the main export of most African countries, since mid-2014. This has led to reductions in government holdings of international reserves and lower (but still significant) multinational company profits taken out of the continent. In addition, there are now more loans to African governments, another inflow, although this of course comes at the cost of future debt
payments and possibly debt crises (Ghana and Mozambique are countries already back in debt crisis).
i.In this report we use ‘Africa’ to refer to the 48 countries classified as ‘sub-Saharan Africa’ by the World Bank. We have chosen not to use the
term ‘Sub-Saharan Africa' due to the numerous problems associated with this term. However we recognise that ‘Africa’ is also problematic
given that this report does not include North Africa.
Inflow amount:
INFLOW ; Latest available annual $ billion figure; DEFINITION.
Net private grants ; $11.8 billion ; Grants from non-government actors.
Decrease in international reserve holdings; $20.7 billion ; International reserves are finances lent by African governments to other governments (ie, held in reserves outside Africa). In 2014-15 they decreased, entailing a net inflow.
Loans to governments; $32.8 billion ; External loans to African governments in 2015.
Loans to private sector (FDI and non-FDI) ;
$20.6billion ; External loans to the private sector in Africain 2015.
Net portfolio equity; $7.2 billion ; Net inflows from equity securities other than those recorded as direct investment and including shares, stocks, and direct purchases of shares in local stock markets by foreign investors, in 2015.
Net FDI equity; $15.8 billion ; Net foreign investment in Africa–inward FDI minus outward, minus loans, in 2015.
Inward remittances; $31.2 billion ; Remittances from individuals to families in Africa minus
charges on those transfers in 2014.
Official aid from OECD ; $19.1 ; billion ; Grants to Africa from OECD countries in 2015.
Official aid from non-OECD countries ; $0.6 billion ; Grants to Africa from non-OECD countries in 2015.
Debt interest received; $1.8 billion; Interest received from foreign exchange reserves held by African governments, mainly on loans to rich country governments.
INFLOW TOTAL $161.6 billion
Outflow amount.
OUTFLOWS, Latest available annual $ billion figure, DEFINITION
Debt payments by governments, $18.0 billion, External debt service by public sector (government) for Africa in 2015.
Debt payments by
private sector, $9.8 billion, External debt service by private sector for Africa in 2015.
Increase in international reserve holdings, $0.0 billion, International reserves are finances lent by African governments to other governments (ie, held in reserves outside Africa).
Multinational company
profits,
$32.4 billion,
Repatriated profits made by multinational companies in Africa (‘primary income on FDI’) for 2015.
Illicit financial outflows, $67.6 billion,
Net resource transfers (balance of outflows and inflows) from
sub-Saharan Africa, mainly in the form of trade misinvoicing by multinational companies, averaged over the 3 most recent years, 2010-12.
Outward remittances, $3.8 billion, Individuals’ remittances out of Africa minus transfer charges.
‘Braindrain’, $6.0 billion,
The cost to Africa as a result of the migration of health workers (at least $2 billion per year) and African countries’ spending on employing Northern experts to fill skills gaps ($4billion).
Illegal logging, $17.0 billion, Lost revenues from illegal logging.
Illegal fishing, $1.7billion,
Lost revenues from illegal fishing.
Illegal trade in wildlife/
plants and poaching,
$10.0 billion, Lost revenues from the illegal trade in wildlife and poaching.
Climate change
adaptation costs,
$10.6 billion,
Costs incurred by African countries in adapting to climate change impacts from green house gas emissions for which the
rest of the world is responsible.
Climate change
mitigation costs,
$26.0 billion,
Costs incurred by African countries in mitigating the impact of
climate change and putting them on a low carbon growth path.
OUTFLOW TOTAL $202.9 billion
Research for this report calculates the movement of financial resources into and out of Africa and some key costs imposed on Africa by the rest of the world.
We find that the countries of Africa are collectively net creditors to the rest of the world, to the tune of $41.3 billion in 2015. Thus much more wealth is leaving the world’s most impoverished continent than is entering Africa.
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 profitsand by illegally moving money out of the continent–or by costs imposed by the rest of the world through climate change.
1. African countries receive around $19 billion in aid in the form of grants but over three times that much ($68 billion) is taken out in capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to reduce tax.
2. While Africans receive $31 billion in personal remittances from overseas, multinational
companies operating on the continent repatriate a similar amount ($32 billion) in profits to their home countries each year.
3. African governments received $32.8 billion in loans in 2015 but paid $18 billion in debt interest and principal payments, with the over all level of debt rising rapidly.
4. An estimated $29 billion a year is being stolen from Africa in illegal logging, fishing and the trade in wildlife/plants.
There are other ways in which the rest of the world extracts resources from Africa, but for which figures are not available; for example, trade policies mean that unprocessed agricultural goods are often exported from African countries and refined else where, causing the vast majority of their value to be earned abroad.
The 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 publics that their aid programmes are helping Africa. This is a distraction, and misleading.
Our figures comprise both the movement of financial resources and two categories of costs imposed on African countries by the rest of the world. First, there is the cost to African counries of adapting to climate change: a process which has been overwhelmingly caused by richer industrialised and industralising countries, not Africa –amounting to $10.6 billion a year. Then there is the cost to Africa of mitigating climate change–to reorient African economies on to a low carbon path - again due to the need to tackle climate change: the annual cost here is even greater, at $26 billion. These costs are included since they entail expenditure – a loss of resources – by Africa for processes which it has largely not been responsible.
Time to rethink.
Those claiming to help Africa need to rethink their role. Their priority should be: ‘first do no harm’. Yet much harm is currently being done. In particular, billions continue to be stolen from African citizens through insufficient global action to curb tax dodging. The British government bears special responsibility in this
since its at the head of a giant network of overseas tax havens (perhaps more accurately described as secrecy jurisdictions) facilitating this theft–something that could easily become a greater problem post-Brexit. Other rich countries are also failing to curb the tax dodging practices of their multinational companies.
The second priority of outsiders should be to reconfigure aid as ‘reparations’ for the ongoing extraction of wealth and other damage. being done. The level should be set at the level of the damage, not some arbitrary rate set by governments out of their own ‘generosity’.
Beyond that, redistribution of wealth is important for any society, as a means of addressing injustices and ensuring everyone can live a dignified life. A current problem with ‘aid’ is that it casts Western countries in the role of benevolent benefactors, giving their wealth to poor countries. But exactly the opposite is true. As Jason Hickel of the London School of Economics has written, aid currently does not exist in any meaningful sense, given the actual flows of wealth.
The current extraction of wealth from the poor to the rich world is a continuation of historical trends. In his book Capitalism and Colonial Production, Hamza Alavi estimates that the resource flow from India to Britain between 1793 and 1803 was around £2 million a year, the equivalent of many billions today. The British academic theologian Robert Beckford has given a rough estimate that Britain extracted an astronomical £7.5 trillion in wealth from African countries due to the slave trade.
The 2017 and 2014 reports:
This updated Honest Accounts 2017 follows the first version published in 2014.This calculated, for the first time, the movement of all the main financial resources into and out of Africa, mainly using 2012 figures. It found that $134 billion entered the continent this year, mainly in the form of loans, foreign investment and aid. However, some $192 billion was taken out, mainly in profits made by foreign companies, tax dodging and the costs of adapting to climate change. Africa was found to suffer a net deficit of $58 billion a year.
The figure in the present report is slightly smaller, largely because of the fall in international prices for raw materials, the main export of most African countries, since mid-2014. This has led to reductions in government holdings of international reserves and lower (but still significant) multinational company profits taken out of the continent. In addition, there are now more loans to African governments, another inflow, although this of course comes at the cost of future debt
payments and possibly debt crises (Ghana and Mozambique are countries already back in debt crisis).
i.In this report we use ‘Africa’ to refer to the 48 countries classified as ‘sub-Saharan Africa’ by the World Bank. We have chosen not to use the
term ‘Sub-Saharan Africa' due to the numerous problems associated with this term. However we recognise that ‘Africa’ is also problematic
given that this report does not include North Africa.
Inflow amount:
INFLOW ; Latest available annual $ billion figure; DEFINITION.
Net private grants ; $11.8 billion ; Grants from non-government actors.
Decrease in international reserve holdings; $20.7 billion ; International reserves are finances lent by African governments to other governments (ie, held in reserves outside Africa). In 2014-15 they decreased, entailing a net inflow.
Loans to governments; $32.8 billion ; External loans to African governments in 2015.
Loans to private sector (FDI and non-FDI) ;
$20.6billion ; External loans to the private sector in Africain 2015.
Net portfolio equity; $7.2 billion ; Net inflows from equity securities other than those recorded as direct investment and including shares, stocks, and direct purchases of shares in local stock markets by foreign investors, in 2015.
Net FDI equity; $15.8 billion ; Net foreign investment in Africa–inward FDI minus outward, minus loans, in 2015.
Inward remittances; $31.2 billion ; Remittances from individuals to families in Africa minus
charges on those transfers in 2014.
Official aid from OECD ; $19.1 ; billion ; Grants to Africa from OECD countries in 2015.
Official aid from non-OECD countries ; $0.6 billion ; Grants to Africa from non-OECD countries in 2015.
Debt interest received; $1.8 billion; Interest received from foreign exchange reserves held by African governments, mainly on loans to rich country governments.
INFLOW TOTAL $161.6 billion
Outflow amount.
OUTFLOWS, Latest available annual $ billion figure, DEFINITION
Debt payments by governments, $18.0 billion, External debt service by public sector (government) for Africa in 2015.
Debt payments by
private sector, $9.8 billion, External debt service by private sector for Africa in 2015.
Increase in international reserve holdings, $0.0 billion, International reserves are finances lent by African governments to other governments (ie, held in reserves outside Africa).
Multinational company
profits,
$32.4 billion,
Repatriated profits made by multinational companies in Africa (‘primary income on FDI’) for 2015.
Illicit financial outflows, $67.6 billion,
Net resource transfers (balance of outflows and inflows) from
sub-Saharan Africa, mainly in the form of trade misinvoicing by multinational companies, averaged over the 3 most recent years, 2010-12.
Outward remittances, $3.8 billion, Individuals’ remittances out of Africa minus transfer charges.
‘Braindrain’, $6.0 billion,
The cost to Africa as a result of the migration of health workers (at least $2 billion per year) and African countries’ spending on employing Northern experts to fill skills gaps ($4billion).
Illegal logging, $17.0 billion, Lost revenues from illegal logging.
Illegal fishing, $1.7billion,
Lost revenues from illegal fishing.
Illegal trade in wildlife/
plants and poaching,
$10.0 billion, Lost revenues from the illegal trade in wildlife and poaching.
Climate change
adaptation costs,
$10.6 billion,
Costs incurred by African countries in adapting to climate change impacts from green house gas emissions for which the
rest of the world is responsible.
Climate change
mitigation costs,
$26.0 billion,
Costs incurred by African countries in mitigating the impact of
climate change and putting them on a low carbon growth path.
OUTFLOW TOTAL $202.9 billion
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