As the US decries corruption, a paper suggests the real scandal is multinationals legally extracting billions from Africa’s resource-rich nation
Donald Trump’s decision to cut $50m a year in aid to Zambia – one of the world’s poorest nations – is dreadful, and the reason given, corruption, rings hollow. There is evidence of large-scale looting, but the real scandal is that the theft appears legal, systemic and driven by foreign interests. In a paper presented to the Association for Heterodox Economics conference in London later this month, Andrew Fischer of Erasmus University Rotterdam argues that Zambia’s economy is not being plundered by domestic actors but rather by transnational corporate practices enabled by opaque accounting. His findings point to a staggering extraction of wealth that dwarfs the value of the aid intended to help.
Zambia is blessed – or perhaps cursed – with mineral wealth. It is Africa’s second-largest copper producer. The metal, key to the green energy transition, accounts for around 70% of the country’s export earnings. Despite this, in 2020 Zambia became Africa’s first pandemic-era defaulter. It has only just agreed a debt restructuring with major creditors. How did a nation so rich in natural resources become so poor? Prof Fischer says this is a textbook example of a low-income commodity exporter shaped by foreign capital, where export booms enrich multinationals rather than the country itself. In Zambia’s case, copper may bring in foreign exchange, but much of that money simply flows straight back out.
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