Written by: Lydia Nyachieo

On September 25^th, Ghanaian President Nana Akufo-Addo addressed the general debate at the 74^th UN General Assembly. Aside from talking about the importance of education, the transformative power of technology, and global inclusivity, one of his main points addressed poverty. Specifically, President Addo argued how “unfairness in the economic order undermines the fight against poverty.” 

Many of us often think of Africa as a continent comprising of mostly ‘developing’ or ‘less developed’ countries — many of which always seem to be attempting to catch up with the rest of the world, particularly in economic development. While this certainly is not true everywhere in Africa, there are many African cities that are more developed in terms of infrastructure and business hubs than some in the global north, and it’s true that the continent contains some of the world’s poorest countries.  

Many historic factors that have contributed to this fact stem from colonialism, whose roots have continued to place African nations at a disadvantage compared to other affluent nations. But we should not accept this ‘developing-tier’ status as the norm. As President Addo explains, Africa is rich in resources, both physical and intellectual, from which it could benefit more if a fairer world economic order were in place. We need to shift our thinking about African nations from being places that need rescuing with foreign aid to those that would benefit from a more just global economic system. 

Illicit Financial Flows 

One manifestation of the unfairness President Addo talks about is the exploitation of African resources by external corporate entities. As he said in his speech, 

“we, who own these fundamental resources by birth right, have remained poor, whilst our minerals have brought vast wealth to nations and peoples outside our continent. It is worth pointing out also that not only do we not get a fair share of the wealth once extracted, our lands, our environment, our oceans, are often left devastated by the process.” 

Examples of these resource-rich nations include the Democratic Republic of Congo (DRC). Besides being a major producer of diamonds, gold, and copper, DRC also holds more than 60% of the world’s cobalt supply, an element used in aircraft engines and batteries, and 80% of the world’s coltan supply, a mineral used in the production of electronics like cellphones and laptops, as well as surgical instruments and implants. DRC is one of the most resource-rich countries in the world, yet its citizens are among the poorest. 

When talking about the foreign exploitation of Africa, President Addo referenced a report by the High Level Panel on Illicit Financial Flows (IFFs) from Africa. The report estimates that Africa is losing an estimate of $50 billion dollars annually through IFFs; that is money illegally earned, transferred, or used.  

According to the report, one of the main sources of IFFs in Africa is when large corporations manipulate loopholes in international law in order to evade paying taxes or to hide wealth and stolen resources. For example, in South Africa, one company was found to have avoided paying $2 billion in taxes by claiming that the majority of its business was legally based in the UK and Switzerland, when in reality, most of its business was conducted in South Africa. Multinational companies can also have tax havens in non-African countries where they hide their profits in order to avoid paying taxes.  

Correcting these IFF systems will be far from easy, but one start could be for developed countries to make these multinational companies be more transparent about international transactions, as well as hold them accountable for shady, unethical business practices, regardless of the profit. 

SAPs 

Another key example of unfairness in the broader global economic order is the enforcement of Structural Adjustment Programs (SAPs) by the World Bank and the International Monetary Fund (IMF). SAPs are economic policies that the IMF require governments to implement in their country in order to get a loan or other financial aid from the IMF. They are aimed at stabilizing a country’s economy and promoting growth after a crisis or amid overbearing debt. SAPs often come in a mixture of neo-liberal policies, such as privatizing public services, opening up a country’s economy to free trade with other countries, cutting government subsidies for agriculture producers, and reducing government spending on social services, such as health and education. 

The IMF and the World Bank began implementing SAPs in Africa as a response to the social and economic crises that many sub-Saharan countries began facing in the mid-1970s. Yet, these policies have been criticized for assuming that ‘one size fits all’. As University of New Hampshire Professor Joe Lugalla states, they are enforced “as if all countries shared common history, held the same destiny, experienced similar problems, and had the same development agenda and priorities”. 

These policies have been implemented in Africa for about 30 years now. While some groups of people have benefitted from their effects, particularly those who have more access to the global market, others have experienced the downfalls. The benefits of structural adjustments are not distributed equally, meaning that there are some winners, but many losers. The negative effects of SAPs often fall disproportionately on the poor. For example, in a 2002 article in the Journal of Social Development in Africa, Joseph Kipkemboi Rono explains that the SAPs implemented in Kenya throughout the 1980s were linked to higher income inequality, inflation, devaluation of the Kenyan shilling, unemployment, lowering living standards, increasing crime rates, and welfare problems in education and health. This in no way means that African countries have not developed at all since the 1980s; many countries have and continue to flourish. The point is that SAPs have not really contributed to their growth as predicted by the IMF and World Bank. In some cases, they have the opposite effect. 

SAPs have been criticized as a form of neocolonialism, since they force countries in a vulnerable position to enact policies that counter some of their own interests — policies that are implemented by organizations and governments who do not experience many of its consequences, especially the negative ones. While the IMF is not owned by any country, the US alone has about 17 percent of the voting power in the IMF, while the EU states have around 30 percent combined, out of the 189 participating countries. Thus, the countries that often carry the votes to enforce SAPs in the IMF are those who rarely need IMF aid and rarely have SAPs enforced upon them. This inequity of power presents another form of unfairness in the global economic system. 

Corruption 

Despite these external forces that make it hard for African nations to fight poverty, it can not be overlooked that one of the biggest hindrances to the economic growth and development in Africa stems from within the continent, in the form of corruption. 

On the local scale, everyday corruption in many African countries happens when citizens have to pay bribes to officials in order to have access to basic public services. These services include healthcare, education, getting legal documents such as passports and birth certificates, and legal protection, like when reporting a crime to the police. According to a 2019 survey done by Transparency International, about 1 in 4 African citizens are forced to pay bribes for such services, and the poor are twice as likely to have to pay bribes than the rich. The survey also found that the most corrupt institutions are the police, government officials, and members of parliament.  

On the national scale, corruption occurs when those in high power embezzle public funds, which they stash in foreign banks or with family and friends. Several African leaders have been alleged to have done this. For example, in 2017 Teodorin Obiang – the Vice President of Equatorial Guinea and coincidently the president’s son – was found guilty of embezzlement in French court. He had been accused of draining his country’s oil wealth for personal luxuries – much of which he stashed in Europe and the US – including 18 luxury cars, a $31.5 million Parisian mansion, a $38 million private jet, a yacht, and expensive Michael Jackson memorabilia. At the backdrop of this concentrated wealth, around 77 percent of Equatorial Guinea’s population is below the poverty line. 

Thus, in order for everyday African citizens to benefit from the fairer world economic order that President Addo talked about in his speech, both large-scale and small-scale corruption within the continent needs to be uprooted. Other world governments should also be firm in disallowing laundered assets from African leaders to be held in their country, such as France did in 2017. 

Why It Matters 

So why does all this matter? As President Akufo-Addo states, “For us, poverty is a daily reality that we live with and feel, for far too many of our people are burdened with it, and it robs us of the dignity that should be the inherent right of every human being.”

Many of us have probably become desensitized to the fact that most African nations are “developing” or “underdeveloped.”. Yet, it does not settle well that one person can have luxury beyond belief in one part of the world, whereas their fellow human beings are living in abject poverty in another. It does not settle well that those who would work for their livelihood, if they could, are deprived of opportunities to make a decent living. Because of corruption and some unfair socioeconomic systems, many can simply feel stuck in those dire circumstances, and on an uneven playing field. Removing these and similar roadblocks will help everyday citizens be in a better position to flourish. As President Addo also said in his speech, there’s a lot of “ingenuity and innovative prowess” in Africa, and there are so many great things that people all over the continent have already been achieving towards the development and advancement of its people; it would just be easier if we had a more equitable and fair world economic order. 

This is in no way saying that all the economic challenges of African nations are solely caused by the issues discussed, or that by addressing these issues, all of Africa’s problems would be fixed — far from it. However, if we really want to approach the fight against poverty throughout the world as President Akufo-Addo declared, we must start by creating the right global economic foundations based on honesty, fairness, and international economic justice.