In June, Gino Brunswijck from the Secretariat came to speak to the UK Antenna. He gave a comprehensive input on globalisation and how, when badly managed, it has adverse consequences in African countries.
On the theme of land-grabbing, we heard how the EU trade policy encourages large-scale agricultural projects which conflict with statutory and customary laws, creating low-pay jobs and leading to social problems, for example how flower insecticides can damage women’s fertility.
With reference to mining, Gino explained how some African countries have rich resources in their subsoil; however, these fail to contribute to the economic development of the country. A few industry and political actors benefit while the majority remains poor. For example, in Ghana and the DR Congo, gold is being mined by artisanal miners and sold informally. The lack of governance in the sector exposes it to risks such as child labour, prostitution, contraband and conflicts. Local producers and governments do not obtain the value of their resource; when, for example, diamonds are exported from DRC to Dubai they increase 40% in value upon arrival in Dubai without any transformation taking place. The largest profits in diamond trade are made outside the producing countries in trading centres like Dubai or commercial centres like Antwerp and London as well as in countries with high banking secrecy which host accounts for diamond companies.
Illicit financial flows
Multinational companies organise themselves in such a way to shift profits to low-tax jurisdictions, which is depriving governments of necessary tax revenue.
Speaking about global trade, Gino illustrated how African countries are disadvantaged by the power of Multi-National Companies controlling the whole chain of production: irresponsible sourcing, exploitative extraction of commodities giving little gain to Africa and evasion of taxation through shady subsidiaries in Tax Havens. These abuses could be overcome by treating MNCs as a unit and reporting data country by country and taxing companies where the economic activity takes place as well as installing sanctioning mechanisms for companies that fail to pay their due part of taxes.
Moving on to ecology, Gino illustrated how pollution from mining, degradation of landscape, deforestation for palm oil plantations and mineral extractions, transport emissions (African minerals transformed and assembled in China and sold throughout the world) and packaging in Europe all show the need for companies to be made accountable for environmental costs.
Globalisation has seen an increase in the world’s wealth but there has been a growth in inequality between a rich minority and the poor majority. Climate change has increased and tax evasion is rife. MNCs, after Doha failed, are seeking bilateral trade agreements such as TTIP so that they can sue governments for regulations that harm profits, e.g. Uruguay was sued by tobacco companies for opposing smoking! This is against democracy. The EU can fight for accountability but national governments should also fight. There is a need to tax MNCs in Africa and do away with tax havens.
There needs to be a better balance between industrialised and developing countries, and between MNCs and African governments. The adverse social impacts of poverty, inequality, low wages, lack of land rights and formalised economic activities, migration, rupture of communities and culture, loss of tax revenue, resources and benefits need to be opposed. There needs to be value creation in the chain of production in Africa, a better distribution of wealth and sustainable development for the future.
Many thanks to Gino for his wide-ranging talk.