How Europe’s Greedy Lending to Africa Is Driving the Migration Wave That Fuels the EU’s Xenophobic Politics

Yves here. The headline may seem screechy, but an ugly fact not often enough described in polite company is that Africa is still being exploited by the first world. For instance, Nicholas Shaxson described in his classic Treasure Islands how so much money was extracted from Africa via “offshore,” meaning via tax havens, on top of transfers that are visible to the tax man, that Africa was a net supplier of capital to the rest of the world. That’s the opposite of what ought to be happening in a resource-rich but otherwise impoverished region.

By Vijay Prashad, an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter, a project of the Independent Media Institute. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He has written more than twenty books, including The Darker Nations: A People’s History of the Third World(The New Press, 2007), The Poorer Nations: A Possible History of the Global South (Verso, 2013), The Death of the Nation and the Future of the Arab Revolution (University of California Press, 2016) and Red Star Over the Third World (LeftWord, 2017). He writes regularly for Frontline, the Hindu, Newsclick, AlterNet and BirGün. Produced by Globetrotter, a project of the Independent Media Institute

If you ask an African migrant in Europe who came across the Mediterranean Sea in a boat if they would make the journey again, most of them would say “yes.” Many of them had been on vans and trucks that took them across the dangerous Sahara Desert, and many of them had beenon board vessels that struggled to get across the choppy waters. They might have seen their fellow migrants die of thirst or of drowning, but none of that halts their conviction that they’d cross the sands and the seas again.

Harsh treatment by European border guards and an overwhelming experience of racism inside European society do not bring regret or suggest that they would not do it again.

“It was all to earn money,” said Drissa from Mali. “Thinking of my mom and my dad. My big sister. My little sister. To help them. That was my pressure. That’s why Europe.”

Myths About African Migrants

A UN Development Program report, released on October 17, shows that 97 percent of the nearly 2,000 African migrants in Europe interviewed would take the same risks to come to Europe again knowing what they know now about the danger of the journey or what life in Europe would be like. What is powerful about this UN report is that it dispels the many myths about African migration.

There is a terrible view that Africans are somehow “invading” Europe, even worse “swarming” into Europe. Anti-immigration rhetoric speaks of building fences and creating a Fortress Europe. It is as if there is a war, and Europeans must arm themselves against invaders. A year ago, the UN’s Special Adviser on the Prevention of Genocide Adama Dieng warnedthat European politicians fan the flames with hateful rhetoric that “is legitimizing hatred, racism and violence. While extremists spread inflammatory language in mainstream political discourse under the guise of ‘populism,’ hate crimes and hate speech continue to rise. Hate crimes constitute one of the clearest early-warning signs for atrocity crimes.” At the UN in Geneva this May, Dieng—a Senegalese lawyer—said, “Big massacres start always with small actions and language.”

The UN report shows that the hatefulness around the African migrant is misplaced. The reasons for major flows of migration to Europe actually come from within Europe itself. Those leaving war zones—Syria and Afghanistan in West Asia, but also Eritrea and Libya—come in expected numbers as they flee bombs that are often produced inside Europe. These numbers are much higher than for those Africans who come to Europe for work.

In fact, more than 80 percent of African migrants stay on the continent. The proportion of African emigration out of the continent compared to Africa’s population “is one of the lowest in the world,” says the United Nations. Most of the migrants who go to Europe, according to European data, come by regular channels—with a visit to the embassy, an application for a visa, the granting of the visa, and then a flight into the country; irregular arrivals, many of whom might come by boat, are far fewer than those who come with a valid visa. It is racism that fails to acknowledge this reality.

Remittances

If you dig into the numbers from the UNDP report, you find that 58 percent of the African migrants in Europe were either employed at home or in school when they decided to leave; most of the migrants had jobs and earned competitive wages. What drove them is the insecurity in their countries, and the fact that they felt they could earn more elsewhere. More than half of the migrants had been supported financially by their families to make the journey, and 78 percent sent back money to their families.

World Bank statistics show that remittances to African countries are growing. In line with the global trend, sub-Saharan Africa received more foreign exchange from remittances than from foreign direct investment (FDI).

In 2018, according to the World Bank, remittances to sub-Saharan Africa totaled $46 billion—almost 10 percent more than in 2017. The countries that received high remittances were Comoros, Gambia, Lesotho, Cabo Verde, Liberia, Zimbabwe, Senegal, Togo, Ghana, and Nigeria.

The total FDI flow into sub-Saharan Africa, accordingto the UN Conference on Trade and Development (UNCTAD), was $32 billion, up by 13 percent from 2017, but a significant amount less than the remittance flows.

Migrants who send money home are more important than the corporations and banks that bring investment dollars into these countries. It’s too bad the bankers are treated better than the migrants.

African Debt Crisis 2.0

Africa is on the threshold of a major debt crisis.

The last debt crisis was in the 1980s, as part of the broader Third World debt crisis. In the decolonization period, Africa—looted of its wealth by colonialism—had to borrow money for development; these funds were large, but worse was the manipulation of dollar-denominated debt by the London Interbank Borrowing Rate (LIBOR) and by the U.S. Treasury’s interest rates. Skyrocketing debt in the 1980s produced a long period of austerity and suffering. That debt simply could not be paid as long as multinational corporations effectively stole Africa’s resources and refused to pay taxes on that drain of wealth. This was the reason why initiatives such as the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI) were created by the World Bank and the IMF in 1996 and 2005, respectively. By 2017, these initiatives provided $99 billion to reduce Africa’s debts from a debt-to-GNI (Gross National Income) ratio of 119 percent to 45 percent.

No change in the structure was made—no assault on transfer mispricing and base erosion and profit shifting (BEPS), mechanisms used by Western-based multinationals to continue their plunder of the African continent. When the 2014 commodity price shock came, many African countries slipped gradually toward a new debt crisis. The new debts are not all government debt, but they include very high proportions of private sector debt, which has tripled from $35 billion (2006) to $110 billion (2017) according to World Bank figures. Debt repayments have risen dramatically, which means that investments in health and education have declined, as has access to capital for small-scale private sector businesses.

Currently, according to World Bank numbers, half of the 54 states in Africa struggle with high debt-to-GDP (Gross Domestic Product)—with many of these over the 60 percent threshold that signals a crisis. The rate of increase of this debt has set off alarms across the continent.

What does this mean?

It means that if there is any financial crisis in the West, it will draw away financing from Africa, plunge the region into another major debt crisis, and set millions of people in search of better earning opportunities. Families and countries in Africa have come to rely upon these remittances. They are part of the structural fabric of finances.

Racism against the migrant is an enormous problem, and it must be tackled in itself.

But deeper than that is another problem that has grown as a result of no effective post-colonial policy—the structural problem of the ongoing theft of resources from Africa, and of the lack of financing for the continent to develop its own potential. Allowing multinational firms to steal African resources, and allowing foreign banks to lend to Africa at virtually usurious conditions, simply creates a cycle of crisis that results in migration and remittances as the band-aids.

Europe does not have a refugee or migration crisis. The real crisis is in Africa, where the thief—often a European firm—continues to undermine the continent’s ability to breathe.

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17 comments

  1. Colonel Smithers

    Thank you, Yves.

    You won’t be surprised to hear that my employer is ramping up lending to the continent, especially since Barclays and HSBC have scaled back. Thuto may have heard similar from his contacts in Johannesburg. One of our colleagues was decorated by his monarch for such services last year. New offices are planned for Abidjan and Nairobi.

    The new head of trade finance wants to ramp up even more, so that exposures can be securitised and more loans traded in the secondary market. What could go possibly wrong?

    It does not matter to the bank and its leadership anyway as the bank will protected from market discipline and its own folly. The leadership is close to Merkel’s Christian Democrats, so none will face any personal discomfort. ‘Twas ever thus.

    Looking at the balance sheet, especially the toxic waste called non core or capital release, most of that was transacted this decade, not before 2008. Privately, the leadership admits that returns on equity above 2% are unlikely.

    Reply
    1. Ignacio

      The debt trap perpetrated by “western” financial institutions is what keeps Africa on their knees and obligued to accept foreign investors at any price. For what I have read public debt has been lately replaced with private debt.

      Reply
      1. hemeantwell

        One of the big points Cedric Durand makes in Fictitious Capital is that the perplexing combination in metropole nonfinancial firms of low rates of capital investment/accumulation with perky profit rates has been their ability to max out exploitation in these parts of the world. The giant sucking sound hovering over that area isn’t only generated by finance.

        It’s way past time for the “Development of Underdevelopment” thesis to be dusted off and given another run around the track. I never accepted the original dustbinning of it, but the current intensity of these processes of surplus alienation from host countries, particularly around labor remuneration, beg for a replay.

        Reply
  2. Ignacio

    Not to mention that Europe, and not only Europe, promotes bilateral agreements and free trade agreements for the only purpose to favour the interests of its corporations in Africa, for instance agrobusiness trying to protect plant varieties which are the property of these companies. It turns out that African countries have little sovereignity on something as basic as agriculture. Land hoarding to produce palm oil, cotton and other products for exportation migth leave little room for local populations to simply keep producing their tradicional foods. I have read an old report (in spanish) saying that by 2011 land hoarding/grabbing in Africa reached 63 million Ha. Several european companies (as well as from other countries) grab fertile land to produce whatever they want to take to european markets (pineaples, vegetables, cotton etc.). For instance, Indian companies do the same to produce flowers in Ethiopia, KSA for agricultural products etc. See examples below:

    Landless: How the Dutch development bank marginalises farmers.
    En Afrique, les communautés résistent à l’accaparement des terres destinées à la production d’huile de palme
    Accaparement de terres : La SIAT doit revoir sa copie en Côte d’Ivoire

    Reply
  3. Reality Bites

    This is absolutely correct but comparing bankers and remittances is misplaced. Remittances, as noted, are often used to fill the missing social safety net in many developing countries. The problem with remittances is that they also end up going to build large houses that often end up as white elephants. You frequently come across housing in places like Pakistan or parts of Central America that are big and beautiful but the roads and water infrastructure around then are nonexistent or they can’t pay for electricity. Remittances by their very nature cannot be harnessed to build the necessary infrastructure to support communities in many distressed areas.

    This is why countries often ended up turning to the Chinese for their needs. Many developing countries recognize the the debt trap offered by western bankers but they have no alternative without turning to China. The Chinese are often willing to build infrastructure that is sorely needed but cannot provide a profitable return. The problem for China is that at some point they will face a backlash from the populations in these countries that will result in expropriations just as they did with the US in the 1970s.

    Reply
  4. Mattski

    You know, Yves, I link a lot of these pieces on my FB page, but always lament the fact that the same NC tiger shows up as the image with every one (NNTAWWT).

    How difficult would it be to accompany these articles with a more diverse set of images? I think that both you and I would get more hitz! Perhaps I am not the first to make such a request. . .

    Reply
  5. Mattski

    Not just lending, but exhaustion of Africa’s material base. The award-winning End of the Line, a documentary about fishing, draws a gut-wrenching very direct line from the exhaustion of West Africa’s fisheries to the migrant camps in Africa and the pain migrants face in Spain and Italy.

    Reply
  6. Felix_47

    Where are the intellectually talented Africans? Where are the revolutionaries and idealists? Where are the entrepreneurs? Where are the doctors? They are in England, the US, Europe….anywhere but Africa. One thing mentioned in the survey was that most of the migrants are urban, and better educated than those who stay behind…..and they have more money. In my neighborhood there are three families of African doctors sending their kids to Ivy League schools no less. I have to scratch my head…..like we need more doctors in the US doing marginally unnecessary care as opposed to Africa? Would Russia have been able to pull itself out of terrible backwardness had emigration been easy? Would North America have been developed if the return trip to developed Europe was easy? Would Australia been developed if leaving was so easy? Would China have advanced if everyone could have left? Would Singapore? Would South Africa under the Boers? Maybe if the migrants were not given asylum and forced back the malcontents would rise up and throw off the yoke of their oligarchs and kleptocrats whose family and children seem to be in Europe or the US living on the benefits. We decry the drowning rate in the Mediterranean but it really is quite low in comparison to historical numbers. One thinks they need their own Lenin or Stalin or Mao. A liberal Wilsonian American style republic with its freedoms may not be up to the task of bringing societies out of tribal backwardness.

    Reply
    1. Bert Schtliz

      Capitalist debt expansion is very addictive. Socialism can’t provide the same living standards despite being “stable”. I have said for years, capitalism acts like Meth/Coke on the brain. “recession” or “depression” is withdrawal. Reminds me at the end of “They Live” when Roddy Piper is getting lectured on the ‘good life’. Ah, so true.

      Reply
  7. Maff

    Hang on a second, since when is it unreasonable to decide who is allowed to enter our countries? Unless you are one of those “borderless world” nut jobs, that is. The idea that we should just shrug our shoulders and let everyone and anyone enter is clearly untenable. There must therefore be serious enforcement, before, at and after the border. Look at what happened to the illegal immigration numbers into Australia when they got serious. You don’t have to be a racist to think like this and I am getting pretty sick and tired of such insinuations.

    Reply
    1. Bert Schtliz

      Irrelevant point. Capitalism is what drives it and you don’t seem to get that. Frankly, I see “European countries” as bourgeois/banking driven “house slaves”. Maybe those countries need to be abolished and let the “tribals” fight over the land. Essentially what the Anarchists wanted 100+ years ago.

      Reply
    2. Ignacio

      It is a vicious cycle. Migrants come because they cannot longer make a living there because their land is used to produce, for instance, palm oil for our consumption and they simply have no access to water&food. Then we decide that we cannot accept them although we have the rigth to exploit their resources, but still we allow for some to enter and be exploited as cheap unsecured workforce in positions nobody here likes and at the same time dislike that because the job “standards” are lowered. Triple whammy here of the rigtheous against the exploited.

      Reply
  8. Bert Schtliz

    Yes, so good of post. Capitalist expansion is going to bring bodies back with it. Look at central america. Republican evangelicals and Republican businesses basically set up “underground” railroads for these people via these flows. For somebody like Donald Trump this is great. He can use them for selling for the global mob cartel he represents. Just think all those baby’s for sale!
    Only through social nationalism and revolutionary socialism globally can this problem be resolved, destroying global capitalism.

    Reply

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