NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING

  • Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • Africa Lost 1.6 Trillion in Capital Flight and Odious Debt Over Forty Years


    Léonce Ndikumana: $619 billion of embezzled capital flight from North Africa with connivance of big banks according to new research -   November 25, 2012
    Members don't see ads. If you are a member, and you're seeing this appeal, click here

    Audio

      Share to Twitter
    Share to Facebook




    I support The Real News Network because it lets viewers voice their uncensored opinions. - David Pear
    Log in and tell us why you support TRNN

    Bio

    Leonce Ndikumana is the Andrew Glyn Professor of Economics at the University of Massachusetts, Amherst. He served as Director of Operational Policies and Director of Research at the African Development Bank, Chief of Macroeconomic Analysis at the United Nations Economic Commission for Africa (UNECA), and visiting Professor at the University of Cape Town. He is an Honorary Professor of economics at the University of Stellenbosch. He has contributed to various areas of research and policy analysis on African countries, including the issues of external debt and capital flight, financial markets and growth, macroeconomic policies for growth and employment, and the economics of conflict and civil wars in Africa. He is co-author of Africa's Odious Debt: How Foreign Loans and Capital Flight Bled a Continent, in addition to dozens of academic articles and book chapters on African development and Macroeconomics. He is a graduate of the University of Burundi and received his doctorate from Washington University in St. Louis, Missouri.

    Transcript

    Africa Lost 1.6 Trillion in Capital Flight and Odious Debt Over Forty YearsPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

    A few months ago, we did a series of interviews based on the book Africa's Odious Debt. Well, there's new research from one of the authors, and he joins us now to talk about that. Léonce Ndikumana is a professor of economics at the University of Massachusetts Amherst. He's the director of the African Policy Program at the Political Economy Research Institute, PERI. And he's coauthor of the paper Capital Flight From Sub-Saharan African Countries: Updated Estimates, 1970-2010. Thanks for joining us again, Léonce.

    LÉONCE NDIKUMANA, DIRECTOR OF THE AFRICAN POLICY PROGRAM, PERI: Thank you very much for the opportunity.

    JAY: So part of the new research was that you looked at Northern African countries. Your previous research was more on the south. So what did you find?

    NDIKUMANA: As you correctly mentioned, most of our research in the past has been on Sub-Saharan Africa, looking at how much capital flight has been fleeing the continent, the subcontinent over the past four or five decades. But this time we have [incompr.] on North African countries. We have looked at four countries—Algeria, Egypt, Morocco, and Tunisia. And we find that [incompr.] in Sub-Saharan African countries there has been a large amount of capital flight from those countries. And the pattern [has been] very similar.

    JAY: Before we go further, just for the people that haven't watched the previous interviews, just talk quickly again about what this capital flight is and why it matters.

    NDIKUMANA: Our analysis looks at capital flight because we believe it's an important development issue. It's a process where money comes to Africa in the form of loans. Money is generated from exploitation of natural resources and then goes missing. And it's deposited in private accounts abroad and is not recorded with government officials. That amounts to a net loss to African countries.

    Normally, it's typically the product of corruption, embezzlement by African private and political agents. But this is facilitated by the [incompr.] hand from global financial centers that are waiting to accept and take in this money and put it in private accounts and not report it to government officials, so what is referred to as secrecy jurisdictions, safe havens, in around the world.

    JAY: Yeah. An important point I think you just mentioned, but this is all done with the connivance of the big banks in Europe and North America, who know this is happening, and they facilitate it.

    NDIKUMANA: Yes. And what is really appalling is the fact that world is [incompr.] Africa with one hand [incompr.] with the other, in the sense that we find that more than half of the money borrowed by African countries ends up in private accounts in the form of capital flight.

    JAY: You looked at North African countries. What did you find?

    NDIKUMANA: In North African countries, for the four countries over the period of 1970 to 2010 we find that as much as $450 billion have gone missing out of these countries. If you look in terms of how much that [incompr.] amount to, this amounts to about 88 percent of the combined GDP of these countries or [incompr.] $2,900 per capita, which means that the average North African countries have lost about $2,900, which is a large amount. Think about alternatively this is money that could have been invested in health, education, and it would have improved the well-being of the population in these countries. So even though in North Africa the living standards are a little bit higher than in Sub-Saharan African countries, the evidence shows that these countries could have achieved even more if this money would have been invested in social services in these countries.

    JAY: Now, we discussed in the previous interview this concept of odious debt, that there's a basis in international law for saying that if the lender knows the country borrowing the money, number one, can never repay it, and number two, that it's going to be embezzled, that that's—the people of that country shouldn't bear the burden of that debt, and it's declared odious—and if you want to know more about that, watch the other interviews, 'cause they're going to be linked just below this video. But in that regard, there is now actually some attempt by Tunisia, if I have it correctly, to actually declare some of its debt odious. Tell us what's happening there.

    NDIKUMANA: The new government of Tunisia, which is the one that came after the revolution, is basically calling for a close scrutiny on the past debts incurred under the Ben Ali regime, because, really, if you look at the massive amount of wealth amassed by Ben Ali and his family, the family of his wife, then you wonder where all that money was acquired from. And the question is whether some of the past loans may have contributed to this private wealth accumulation. So the government is calling for a detailed analysis or audit of the past debts. And there is a lot of public support for this call. And there is also global support for this kind of initiative.

    I just want to mention that from the donor side, Norway has just approved a new regulation which authorizes audit of its own loans to developing countries, and the process is going to start immediately, and a report should be out by the end of next year. We really hope that this will give an example to all other donors, other lenders, public lenders, and hopefully of private lenders, to really embark on transparency on full speed, which would help both the lenders and the borrowers.

    JAY: And the point is, if this audit shows that some of this debt never went to the good of the people of the country or, for example, to the infrastructure projects it was supposed to go to, then the country in question should be able to say, we're not going to pay it.

    NDIKUMANA: Exactly. If the debt audit shows that money was, arguably, lent to the country, cannot be tracked down on bona fide government public development projects, then it becomes the responsibility of the lender to show where the money went. It's not the responsibility of the people anymore to pay the loan, because they did not benefit from the resources.

    JAY: Is there any movement like Tunisia's in some of the other North African countries?

    NDIKUMANA: I haven't heard any similar movement in the other North African countries, but [incompr.] in 2011 where Tunisia was the vanguard [incompr.] revolution. We hope that this movement is going to spread not only in North Africa, but also the rest of Africa.

    JAY: Just for people that haven't seen the earlier interview, just one more time go over some of the numbers. I think the fundamental conclusion was that Africa actually would be a creditor nation if this capital flight and mostly embezzled money was returned. What are those numbers again?

    NDIKUMANA: So, as I said, we have now updated our numbers and have covered North Africa, so we have data for 37 African countries, including 33 Sub-Saharan countries and four North African countries. And if you look at those countries from 1970 to 2010, the total amount of capital flight that had left the continent, if you have assumed that this money would have accumulated interest, amounts to $1.6 trillion over that period, $1.6 trillion.

    Now, these same countries, if you look at the debt that they owe to the rest of the world, it's only about $277 billion. So they are vastly a net creditor to the rest of the world. The amount of [incompr.] that has left the country far exceeds the amount of FDI, which is about—it's about $461 billion.

    JAY: FDI being foreign direct investment.

    NDIKUMANA: Foreign direct investment, $461 billion. It exceeds the amount of official aid that was given to these countries, which amounts to $867 billion. So the perception that Africa is heavily indebted to the rest of the world, is debt-dependent on the rest of—or aid-dependent vis-à-vis the rest of the world, is really not factually true, 'cause if Africa could keep all its resources onshore, they would not need to borrow and they would not need to go around asking for aid.

    JAY: Thanks very much for joining us, Léonce.

    NDIKUMANA: Thank you very much.

    JAY: And don't forget we're in the midst of our year-end fundraising campaign. Every dollar you donate gets matched till we reach $100,000. So somewhere around this video player you'll find a Donate button. If you don't click it, we can't do this. Thanks for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Comments

    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

    Comments


    Latest Stories


    Global Warming and Economic Crisis Lead to One Solution: Climate Jobs
    Will the Ferguson Resistance Fade into History?
    Israeli Agribusiness Demanding Relief From Government as BDS Intensifies
    The Black Freedom Struggle of the 21st Century
    The Battle for Justice in Ferguson Runs through the Soul of the Democratic Party
    Forthcoming IPCC Report Calls for Control of Fossil Fuel Consumption
    Michael Brown and the Ongoing Struggle to Decriminalize Black Life
    Why America Failed to Anticipate the Rise of the Islamic State
    How Ferguson Residents Are Coping with Michael Brown's Killing
    Israel and Gaza Extend Ceasefire amid Last-Minute Attacks
    The Islamic State, Assad, and the Contradictions Faced by the US in Syria
    Michael Brown's Funeral Buried in Media Circus
    Ferguson Resident: "You Can't Talk about Race and Class and Privilege in a Soundbite"
    Fed Chair Signals Possible Policy Shift on Unemployment
    Special Report: Ferguson Police Profiling of Blacks a Major Funding Source for City Budget
    Protecting the Amazon Includes Defending Indigenous Rights
    "I Can't Breathe" - Gerald Horne on Reality Asserts Itself (6/6)
    Xavante's Song
    Canada's Largest Union Protests Pension Cuts
    The Powers Behind The Islamic State
    The Dahiya Doctrine: Evidence of Israel's Intentional Mass Slaughter in Gaza
    Falk: US Limits Ability of UN To Hold Israel Accountable for War Crimes
    Connecting the Dots Between Ferguson and Baltimore
    Abolition of Slavery was Not a Fight Against Racism - Gerald Horne on Reality Asserts Itself (5/6)
    Greenland Glaciers' Rapid Melting Will Have Global Effects
    In Ferguson, Money For Tanks And Tear Gas, But None For Education
    What My Friend Jim Foley Taught Me to Question
    White Unity and American Propaganda History - Gerald Horne on Reality Asserts Itself (4/6)
    Despite Renewed Attacks, Israel No Closer to Defeating Palestinian Resistance
    Police Continue to Violate Press Freedom In Ferguson

    RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting