PHA-Exchange> Drain of African Resources

[Claudio]

From: "Fiorenza Monticelli" <fiorenza at hst.org.za>
> Drain of African Resources
> --------------------------
> 
> Stopping the drain of Africa's wealth a bottom line for Africa's
> health
> 
> EQUINET NEWSLETTER 62:
> http://www.equinetafrica.org/
> 
> The 2005 Commission for Africa report leaves the impression of a
> continent receiving a vast inflow of aid, with rising foreign
> investment, sustainable debt payments and adequate remittances
> from the African diaspora to fund development. Our discussion
> paper tells a different story: of significant and dramatically
> rising flows of resources out of Africa northwards, draining the
> continent of the important resources needed to address its own
> development, including in health. The paper synthesizes data
> about the outflow of Africa's wealth, to reveal factors behind
> the continent's ongoing underdevelopment, as the basis for pro-
> posing policy measures to reverse these flows.
> 
> The statistics speak loudly of a continent being progressively
> dispossessed of its wealth, and thus the resources it needs to
> improve health and human development:
> 
> * A debt crisis with repayments in the 1980s and 1990s that were
> 4.2 times the original 1980 debt levels, and annual debt repay-
> ments equivalent to three times the inflow in loans and, in most
> African countries, far exceeding export earnings, leaving a net
> flow deficit of by 2000 of $6.2 billion. * Unequal exchange in
> trade and trade liberalisation policies that have lowered rather
> than increased Africa's industrial potential and exacted an es-
> timated toll in sub-Saharan Africa of $272 billion over the past
> 20 years.
> 
> * Flows of private African finance that have shifted from a net
> inflow during the 1970s, to gradual outflows during the 1980s,
> to substantial outflows during the 1990s. * Falling foreign di-
> rect investment (FDI) from roughly one third of FDI to third
> world countries in the 1970s to less than 5% by the 1990s, and a
> shift to highly risky speculative investment in stock and cur-
> rency markets - with erratic and overall negative effects on Af-
> rican currencies and economies.
> 
> Africa is commonly and mistakenly represented as the (unworthy)
> recipient of a vast aid inflow. Aid flows in fact dropped 40%
> during the 1990s, and the phantom aid that flows back to the
> source countries in technical and administrative costs was esti-
> mated in one study to be $42 billion of the 2003 total official
> aid of $69 billion, leaving just $27 billion in 'real' aid to
> poor people.
> 
> There is also a perverse subsidy in the extent to which indus-
> trialised countries exploit the global stock of non renewable
> natural resources . This takes place through the extraction of
> minerals and natural resources from Africa by Northern investors
> with little investment in return and few royalties provided. It
> also takes place through use of global goods like the earth's
> clean air. Forests in the South absorbing carbon from the atmos-
> phere are estimated for example to provide Northern polluters an
> annual subsidy of $75 billion. A method for measuring resource
> depletion used by the World Bank suggests that a country's po-
> tential GDP falls by 9% for every percentage point increase in a
> country's dependency on resource extraction. This implies, for
> example, that Gabon's people lost $2,241 each in 2000, based on
> oil company extraction of oil resources,
> 
> These outflows deplete the resources available for productive
> and human development. They are felt most heavily by women and
> poor communities, and undermine progress towards the achievement
> of human security for the majority of African people.
> 
> They imply that the first step to effect genuine growth and to
> deliver welfare and basic infrastructure is for African socie-
> ties and policymakers to identify and prevent the vast and ongo-
> ing outflows of the continent's existing and potential wealth.
> 
> Current global reform agendas do not address these outflows.
> While they point to debt and unfair trade, they do not seek to
> reverse the outflow of African wealth.
> 
> Campaigns to reverse resource flows and challenge perverse sub-
> sidies are emerging from grassroots struggles and progressive
> social movements, such as those in Africa that are resisting
> privatisation and commodification of basic services, pressuring
> for rights to generic anti-retroviral medicines and resisting
> encroachments on human development through trade and macroeco-
> nomic policies that intensify inequities.
> 
> These grassroots struggles can be consolidated by national gov-
> ernments and regional co-operation to improve disclosure of fi-
> nancial flows and apply policies within Africa to prevent the
> outflows and encourage the 'stay' of domestic investment re-
> sources. The paper points to some options - systemic default on
> debt repayments, strategies to enforce domestic reinvestment of
> pension, insurance and other institutional funds; national-scale
> regulation of financial transfers from offshore tax havens;
> clearer identification and renegotiation of tied or phantom aid;
> and improved calculation and negotiation around of the costs of
> FDI (not simply the benefits), including natural resource deple-
> tion, transfer pricing and profit/dividend outflows.
> 
> EQUINET welcomes the focus on this year's World Health Day on
> one area through which Africa is bleeding- its loss of human re-
> sources. We would however urge that to deal with this effec-
> tively in the continent, and address the inequity globally in
> the resources needed for health and human development goals, we
> need to deepen the debate. In 1998 EQUINET highlighted that a
> critical dimension of equity is the power and ability people
> have to make choices over health inputs and their capacity to
> use these choices towards health. For Africa this must surely
> include bringing control over the resources for health and de-
> velopment back within the continent.
> 
> Please send feedback or queries on the issues raised in this
> briefing to the EQUINET secretariat at TARSC,
> mailto:admin at equinetafrica.org
> 
> EQUINET work on economic policy and health is available at the
> EQUINET website at http://www.equinetafrica.org
> _