Western multinationals continue to exploit poor African countries
Most Western multinationals continue to exploit poor African countries by paying less tax while making abnormal profits. They then transfer the proceeds to their country of origin.
This has led to a massive increase in illicit financial flows and Africa is losing billions of dollars.
Every year, an estimated $88.6 billion, equivalent to 3.7% of Africa’s GDP, leaves the continent as illicit capital flight, according to the UN’s Economic Development in Africa Report 2020.
From 2000 to 2015, the total illicit capital flight from Africa amounted to $836 billion. Compared to Africa’s total external debt stock of $770 billion in 2018, this makes Africa a “net creditor to the world”, the report says.
Nigeria accounts for 20 percent (about $10 billion) of the estimated $88.6 billion that Africa loses to Illicit financial flows.
These “staggering losses” would be enough to bridge nearly 75 percent of Africa’s health financing gap, provide inclusive education for all children there, and fund infrastructure projects, UN Deputy Secretary-General Amina Mohammed said in December.
“These flows pose a threat to stability and security in African countries, undermine institutions and democracy, and jeopardize sustainable development and the rule of law,” Ms. Mohammed told a high-level virtual meeting held under the African Union’s (AU) ‘Silencing the Guns’ initiative.
Illicit financial flows refer to the illegal movement of money from one country to another, for example, through tax fraud, criminal activities, money laundering or bogus invoicing.
There is circumstantial evidence that illicit financial outflows contribute to the devastation of peace and security by promoting conflict and providing terrorist and criminal groups the financial means to conduct their operations and undermine peace,” said Fatima Kyari Mohammed, the AU’s Ambassador to the UN.