DEBTINTHE1990s/197Sub-Saharan Africa receives little FDI, but this does not prevent the
head offices of MNCs operating in the region from repatriating their
profits to the North. In 1995, repatriated profits were worth twice as
much as total FDI.
Table 14.5 Profit repatriation by MNCs operating in sub-Saharan
Africa (Sbn)
1980 1990 1995 1996
4 4.5 4.4 4.2Source: World Bank, Global Development Finance, 1997.
Sub-Saharan Africa is Bleeding
The three phenomena described above can be summarised in the
following way: growing debt burden in spite of large debt payments;
unequal trade creating a growing trade deficit; repatriation of
relatively high sums of profits to North-based MNCs while FDI
remains very low. When all the negative effects of this state of affairs
are added up, it becomes clear that the media and international
financial institutions' favourable reports on Africa are little more
than downright falsifications.
This appreciation is confirmed in the IMF's own internal
documents, where one can occasionally find analyses that stray a
long way from the optimistic proclamations of official press
statements. For example:
The debt burden remains extremely high, accumulated overdue
payments increase this burden further still. This can be seen in the
fact that most countries on the continent owe total debt that is four
times annual export earnings.
Only a few countries show signs of being able to service such
high debt. For most of the others, however, actual debt servicing
accounts for more than twice incoming funds from lenders and
donors. The danger is that excessive debt will be an obstacle to
direct investment and other private capital flows. (IMF, 1995)