The poverty of ordinary Africans is underreported and rising.
The figures most widely cited are those from the World Bank, which states that the number of ‘extremely poor’
people in Africa has increased to 388 million now compared with 284 million in 1990 (although the percentage has fallen, from 56% to 43%). However, the World Bank defines the ‘extremely poor’ as those living on $1.90 a day or less. This is misleading since someone living on $2 a day is clearly still extremely poor.
Whilst such poverty lines are problematic and essentially arbitrary, when higher thresholds are considered, the scale of poverty becomes much larger:
• The World Bank notes that 67% of Africans live on $3.10 a day or less – around 670million people.
• The World Bank has also said that 65% of Africans lived on $3.10 a day or less in 2013– around 615 million people. This compares to 500 million in 1999. So on this reckoning, more than 100 million Africans have become poor so far in the 21st century. Others estimate even higher figures. The African Development Bank estimated in 2011 that 82% of Africans lived on less than $4 a day – this would amount to over 800 million people.
The fact that African poverty is this overwhelming – and rising – shows the urgency with which the system of extracting.
Africa is rich
Africa is not poor. Whilst many people in African Countries live in poverty, the continent has Considerable wealth. A key problem is that the rest Of the world, particularly western countries, are Extracting far more than they send back. Meanwhile, They are pushing economic models that fuel poverty And inequality, often in alliance with African elites. Africa is generating large amounts of wealth and, in Some ways, is booming.
For example, the largest 500 African companies recorded a combined turnover Of $698 billion in 2014.9 in 2015, countries in Africa Exported $232 billion worth of minerals and oil to The rest of the world. The value of mineral reserves In the ground is of course even larger – south Africa’s Potential mineral wealth is estimated to be around $2.5 trillion. While the untapped mineral reserves of The Democratic Republic of Congo are estimated to be Worth an astronomical $24 trillion.
Many African tax policies are the result of long Standing policies of western governments insisting on Africa lowering taxes to attract investment.
These are very large numbers but various reasons Explain why the majority of people in Africa do not Benefit from them, and why the present mode of Minerals extraction actually leads to impoverishment. These include:
Foreign companies take most of the profits Generated by africa’s natural wealth When multinational companies export commodities Such as minerals from African countries, their Governments often benefit only marginally, receiving Very little tax revenue from those companies. In key Sectors such as mining and oil and gas, companies Tend to pay low taxes, and/or are given tax incentives That reduce them still further. Companies are anyway Easily able to avoid paying the taxes that are due, Because of their use of tax planning through tax Havens. Many African tax policies are the result of long Standing policies of western governments insisting on Africa lowering taxes to attract investment.
Money is leaving africa partly because Africa’s wealth Of natural resources is simply owned and exploited By foreign, private corporations. In only a minority of Foreign investments, do African governments have a Shareholding; even if they do, this tends to be small, Usually around 5-20%.
A recent report for War on Want found that 101 companies listed on the London Stock exchange control an identified $1.05 trillion Worth of resources in Africa in just five commodities – oil, gold, diamonds, coal and platinum. These 101 Companies have mineral operations in 37 African Countries and are mainly british,( PDF) with 59 incorporated In the UK. However, some 25 of the 101 LSE-listed Companies are incorporated in tax havens, principally The british virgin islands, Guernsey and Jersey. They found the firms paid at least $1.36 billion below the market value – almost double what the DRC spends each year on health and education combined.
“Honest Accounts” is a 2017 Report published by a coalition of UK and African organisations. The full report can be found HERE.
The report Honest Accounts 2017: How the world profits from Africa’s wealth, published by a coalition of UK and African organisations.