REVIEW: 'Africa's Odious Debts' by Keith Somerville
By Zed Books at Dec 05, 2011
Leonce Ndikumna and James K. Boyce's new book Africa's Odious Debts has been reviewed by Keith Somerville's blog, calling it a "valuable guide to capital flight."
The review is as follows:
It is a perennial question – why is Africa so poor? Followed, in Europe and the Americas by – where did our aid money go? This book tries to answer that and particularly highlights the issue of odious debt – debt incurred by African states without the consent of their people; loans that were not then used for public benefit but for private enrichment; and, debt that was accumulated with the creditors aware (or should have been aware) of the uses to which the funds would be put (p.85).
The authors explain the problem clearly and with sufficient detail and a pleasing kack of jargon and conclude that ‘the people of Africa will benefit from measures to sto the bleeding of the continent through capital flight and odious debt service. The taxpayers of creditor countries will also benefit, as their money is no longer dissipated in poorly managed official loans and bailouts for private creditors’ (p. 100).
This conclusion is backed up by an examination of the contracting, misuse and then the debt burden of the looting of capital and loans. They give the truly shocking figures that between 1970 and 2008, $700 billion in capital fled Africa. If this had been invested, the capital sent abroad would have totalled $944 billion – the GDP for the whole of sub-Saharan Africa for the same period was $997 billion. None of the capital sent out of the continent benefited Africans (other than the rich and powerful who looted it) in any way. Rather, it bled the continent dry and prevented development, poverty reduction and the building of infrastructure.
It should ne noted that Africa’s capital flight is smaller than that of Asia and Latin America in total monetary terms but is far higher in relation to the size of African economies.
The focus of the book is not just on corruption in Africa, but also on the guilt of creditors in this process of capital flight – that creditors could not have been unaware (apart of course from turning a Nelsonian blind eye) of the misuse of loans and other capital flows to Africa. These loans were negotiated with major international banks, with the IMF and the World Bank. These are not naive institutions – yet they permitted the provision of funds that would go back out through the revolving door of capital flight and impoverish rather enrich Africa. They were aware of the mounting debt and debt service burden on African economies resulting from this process of personal and institutional greed – the latter because banks saw it in their interest to continue this process.
Read this book – it is not comfortable reading but it is very, very necessary to understand why Africa has failed to develop.