Trade Justice

Background

Some key issues stand out: for instance, 45.9% of Zambian government revenue in 2021 was spent on servicing external debt. Anyone can see this is neither fair nor sustainable. Zambia is not alone: along with Zambia, Gabon, Ghana, and Angola all spent over 40% of government revenue on servicing external debt in 2021.

Across the region, Covid-19 has exacerbated the situation – more than 40% of the population in 12 countries do not have access to basic sanitation services. Scarce resources cannot be sent to rich nations, while the poorest countries struggle to feed and provide healthcare to their populations.

The report goes on to find that the Southern African Development Community (SADC) region loses US$8.8 billion in trade-related illicit outflows, and US$21.1 billion in external government debt payments, per year. These huge financial outflows severely diminish resources which should be used for people’s economic and social rights in the region.

Through trade misinvoicing – falsely declaring the price, quantity or quality of a good or service on an invoice submitted to customs – criminals can use intermediaries in secrecy jurisdictions to capture and divert illicit profits to tax havens. Our report estimates that South Africa alone is drained of at least US$5.9 billion a year due to trade-related illicit outflows.

Some of the region’s external public debt is illegal, some is odious, and some is illegitimate. Angola alone is drained of US$12.1 billion a year in principal and interest payments on public debt. Moreover, Southern Africa is owed major climate debts by rich countries.

Multilateral institutions dominated by rich countries, such as the Organisation for Economic Co-operation and Development (OECD) and the G20, have raised concerns about trade misinvoicing and debt in poorer countries. Yet progress on tackling trade misinvoicing is fragmented and slow, and virtually nothing has been achieved to ensure debt justice. The Money Drain lists 12 recommendations to address these problems and promote economic and social rights in Southern Africa.

ACTSA’s recommendations

The Money Drain contains 12 recommendations for Global North countries and SADC countries to: improve accountability for economic and social rights; combat trade misinvoicing and other illicit financial flows; and comprehensively address unjust debt.

For example, in relation to economic and social rights, we call on states to ratify the International Covenant on Economic, Social and Cultural Rights and its Optional Protocol, and ensure that all international human rights obligations, including those that relate to economic and social rights, are fully enshrined in national law. In relation to trade misinvoicing, we call for significant investment in customs agencies, financial intelligence units and financial crime units, particularly in SADC countries, and for a crackdown on secrecy jurisdictions and tax havens, including through a range of transparency measures. In relation to unjust debt, we call for participatory and transparent public debt audits in all SADC countries, and for all loans to governments to be recorded in a comprehensive and publicly accessible registry.

You can find the full 12 recommendations by downloading The Money Drain from our Resources page.

What are we doing?

Our report The Money Drain, is regularly used as a tool for change. Presented after lock-down at a lunch meeting of SADC heads of mission in the UK, we stepped up action against Black Rock with a petition and planned protests in London and Edinburgh, because Black Rock owns £220m of Zambia’s debt – more than any other private lender. You can read more about our action against Black Rock , but simply put, government spending on social services fell by 21% between 2019 and 2021and during the pandemic refused a previous request by Zambia to suspend debt payments during that tough time.

We presented evidence to the UK Parliament on the situation, and we drew Anglican church leaders together to call for unfair treatment directed at Zambia to end. You can get more involved by emailing us: [email protected] and mention ‘Zambia’ in the subject line.

In the report you’ll find an overview of economic and social rights in the SADC region. It also provides up-to-date data on two major actual financial outflows from the region: trade-related illicit outflows and external government debt payments. A proportion of each of these different outflows represents money draining out of Southern Africa that could instead be spent by the region’s governments to further the realisation of economic and social rights.

Where does ACTSA stand?

AWe believe that trade has considerable potential to help Southern African countries to achieve rights, equality and development; but current global trade and investment rules, along with actual bilateral and multilateral trade agreements, are not based on the principles of democratic accountability and international solidarity. Southern African countries should be permitted to protect in the public interest and nurture their infant industries.

ACTSA was involved in discussions about the Economic Partnership Agreements with civil society organisations in the UK and in Southern Africa. We will continue to engage with trade unions and non-governmental organisations to see how we can best monitor the impacts of these trade agreements. In addition, we call on the UK government to develop trade policies that genuinely promote equitable and sustainable development instead of replicating the EU’s flawed approach.

We also believe that investor-state dispute settlement (ISDS) is undemocratic and a clear threat to human rights, health and the environment. Concentrated power needs to be reduced not increased. ACTSA strongly supports the finalisation and ratification of a robust treaty on business and human rights that has primacy over trade and investment treaties.

ACTSA is a member of the Trade Justice Movement.

Find out more

We’d love your help to raise the profile of the campaign to put pressure on governments and multilateral institutionsto take notice and take action. Please do this by sharing our social posts or recent publications, or joining one of our events.