Africa Loses $50bn a Year in Plundered Resources

Africa’s forests and fisheries, which could be an answer to the continent’s food shortages and poverty, are instead being stripped illicitly to the tune of almost $20-billion each year. When added to the losses the continent is experiencing as a result of other illicit outflows, $50-billion is lost overall each year.

Posted on 05/10/14
By Jay Rover | Via ViewsWeek
Chaired by former UN Secretary General, Kofi Annan, the Africa Progress Panel presents this year's Africa Progress Report - "Grain, Fish, Money - Financing Africa's Green and Blue Revolutions" in London on Thursday, May 8. (Photo by Jess Hurd/Africa Progress Panel)
Chaired by former UN Secretary General, Kofi Annan, the Africa Progress Panel presents this year’s Africa Progress Report – “Grain, Fish, Money – Financing Africa’s Green and Blue Revolutions” in London on Thursday, May 8. (Photo by Jess Hurd/Africa Progress Panel)

Africa is losing 50 billion dollars or 5.7% of sub-Saharan Africa’s gross domestic product (GDP) each year due to unending plunder of its forests, fisheries and other resources by corrupt officials and foreign investors, says a major new report on the continent.


Africa’s rich natural resources offer a unique opportunity for a breakthrough in improving the lives of Africa’s citizens but rising inequality is also blocking the continent from seizing that opportunity, says the 2014 Africa Progress Panel report, Grain, Fish, Money: Financing Africa’s green and blue revolutions. Kofi Annan, the former UN Secretary-General, launched the report in London on May 8.


Chaired by Kofi Annan, former Secretary-General of the United Nations, the ten-member Africa Progress Panel advocates at the highest levels for equitable and sustainable development in Africa. The Panel releases its flagship publication, the Africa Progress Report, every year in May.


The report finds that African countries can reduce poverty and inequality by boosting agriculture, which affects two thirds of the continent’s population. Africa has the potential to feed itself and other regions too. But first plunder of Africa’s timber and fisheries must stop. The report calls on Africa’s political leaders to take concrete measures  to reduce the inequality. It also demands international action to end what it describes as the plunder of the continent’s timber and fisheries.


Africa’s forests and fisheries, which could be an answer to the continent’s food shortages and poverty, are instead being stripped illicitly to the tune of almost $20-billion each year. When added to the losses the continent is experiencing as a result of other illicit outflows, $50-billion is lost overall each year.


“If Africa’s citizens can freely use all theirs talent and creativity, then Africa can truly be prosperous, stable, and fair,” Annan said. “If Africa’s leaders act now to reduce poverty and inequality, invest in their agriculture and fisheries, and protect their people from criminal business, they can leave a legacy of justice, prosperity, and peace.”


Although average income has risen by one-third in the past decade, there are more Africans living in poverty now – around 415 million – than at the end of the 1990s. New global development goals are likely to aim to eradicate poverty by 2030 – but on current trends, one African in five will still be in poverty when that deadline arrives.


Mr Annan, who played a central role in shaping the Millennium Development Goals, says: “When countries sign up to the new global development framework, they should pledge not only to meet ambitious targets but also to narrow the region’s indefensible gaps between rich and poor, urban and rural, and men and women.”


The report’s authors identify agriculture as the key to growth that reduces poverty. They point out that most of Africa’s poor live and work in rural areas, predominantly as smallholder farmers.  The report calls for a “uniquely African green revolution” that adapts the lessons provided by Asia to African conditions.


Africa currently imports US$35 billion worth of food because local agriculture is dogged by low productivity, chronic underinvestment, and regional protectionism. Increased investment in infrastructure and research could dramatically raise the region’s yields and the incomes of farmers. Meanwhile, eliminating the barriers that restrict trade within Africa could open up new markets.


While critical of African governments, the Africa Progress Report 2014 also challenges the international community to support the region’s development efforts. It highlights fisheries and logging as two areas in which strengthened multilateral rules are needed to combat the plunder of natural resources.


Illegal, unregulated and unreported fishing has reached epidemic proportions in Africa’s coastal waters. West Africa is conservatively estimated to lose US$1.3 billion annually. Beyond the financial cost this plunder destroys fishing communities who lose critical opportunities to fish, process and trade. Another US$17 billion is lost through illicit logging activities.


“Natural resource plunder is organized theft disguised as commerce. Commercial trawlers that operate under flags of convenience, and unload in ports that do not record their catch, are unethical,” Mr Annan said, adding that these criminal activities compound the problem of tax evasion and shell companies.



Senegal was estimated to lose as much as $300-million or 2% of its national GDP to illegal, unreported and unregulated (IUU) fishing alone in 2012, according to the report. The panel, quoting reliable estimates from Greenpeace, points to fishing fleets from East Asia and Russia as the main culprits behind IUU fishing.


The extensive subsidies rich nations, including those in the European Union, dole out have helped extend global overfishing, according to the panel. Around $27-billion in cheap fuel and insurance has aggravated the “unsustainable mining” of Africa’s waters.


These issues alongside the battles African farmers face to access finance and markets for their goods has contributed to a food import bill of $35-billion excluding fish, despite having some of the most arable land in the world.


“As with fisheries, Africa is integrated into a timber export market in which illegal, unregulated and unreported trade flourish, generating fortunes for some, while depleting a vital resource,” says the report.


The report calls for a multilateral fisheries regime that applies sanctions to fishing vessels that do not register and report their catches. The report also calls on governments around to world to ratify the Port State Measures Agreement, a treaty that seeks to thwart the poachers in port from unloading their ill-gotten gains.


African political leaders have failed to manage natural resources in the interests of the true owners of those resources – the African people. “If the international system puts in place tough measures to halt the plunder that robs our peoples, then we can generate jobs and incomes for years to come,” said Annan.


As well as losing money through natural resource plunder and financial mismanagement, Africans miss out on money from abroad, not only when aid donors fail to keep their promises but even when those in the African diaspora send remittances home to their families. It is estimated that that the continent is losing US$1.85 billion a year because money transfer operators are imposing excessive charges on remittances.


With greater resource revenue, African governments now have the opportunity to develop more effective taxation systems – and spend public money more fairly, the report adds. For example, 3 per cent of regional GDP is currently allocated to energy subsidies that principally go to the middle class. That money should be diverted into social spending to give the poor a better chance of escaping the poverty trap.


“Africa’s resilience and creativity are enormous,” Mr Annan says. “We have a rising and energetic youth population. Our dynamic entrepreneurs are using technology to transform people’s lives. We have enough resources to feed not just ourselves but other regions, too. It is time for Africa’s leaders – and responsible investment partners – to unlock this huge potential.”


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