UK profits from Africa despite aid and debt pledges

Despite good intentions and billions of pounds worth of aid and debt relief, more money flowed out of poor African coffers into Britain last year than the other way round.

Fresh research by Christian Aid into the financial relationship between Africa in the 12 months since last year’s G8 meeting of world leaders in Edinburgh shows that the UK economy gained over £11 billion – or £187 for every single person in the land.

According to the charity, the tally of all the monies given to sub-Saharan Africa by Britain last year were outweighed by all the funds coming into the UK from that region.

‘These figures show that even in a year when Africa was high on the agenda thanks to Tony Blair’s Africa Commission and the aid and debt pledges at the G8, the underlying truth remains that we in the rich world are taking out vastly more resources from sub-Saharan Africa than we are putting in,’ said Dr Claire Melamed, Christian Aid’s senior trade analyst.

On the plus side, the UK donated £1.35 billion worth of aid and debt relief. Added to this were nearly £7 billion that the UK paid out to sub-Saharan Africa for importing their goods plus an estimated £460 million that flowed out of the UK to the region in remittances from salaries earned by Africans in this country.

When this is added to the estimated £6.8 billion in foreign direct investment by British firms in sub-Saharan Africa, a total of nearly £17 billion is reached.

On the other hand, more than £27 billion from sub-Saharan Africa flowed in the opposite direction towards the UK. This figure includes debt repayments of over £1 billion from Nigeria and other African countries to the UK. Added to this was around £17 billion of capital flight from the region (this is defined as the, often illicit, transfer of funds from the wealth holders in one country to banks or other financial institutions in another country),
over £4 billion worth of profits made by UK companies in Africa and remitted back to the UK, plus nearly £4.5 billion worth of imports of British goods.

‘The conclusions from this are stark,’ said Dr Melamed. ‘The UK government and its people sometimes think that because we are one of the best aid givers among the rich nations, that we are making real progress on poverty.

This is just not the case. In order for aid and debt relief to be really effective, we have to plug the leaks of resources from the Continent to rich countries like the UK.

‘The main culprits in this are large corporations and rich individuals who took £22 billion in profits and capital flight from sub-Saharan Africa last year. This money could have been used to build up local economies in Africa but instead it sits in UK banks. The UK government must take action to close the tax loopholes and end the banking secrecy which allows capital flight to flourish,’ she said.

Below is the analysis of the research in figures. 

Flows Africa/UK 2005

credit: Christian Aid

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