African tax haven receives thousands times more UK investment than poorer nations

On 20 January 2020 the UK will host the UK-Africa Investment Summit. The Government’s aim for the summit is to strengthen the UK’s partnership with African nations, so that the UK is their “investment partner of choice”. It says this will build “a better future for all”

However, the pattern of UK investment in Africa to date raises questions about whether future investment will benefit the poorest countries there and how the Government intends to monitor this.  

The UK network for organisations working in international development (Bond) points out that the summit is largely funded by official development assistance (ODA) funds, so its main priority should be the economic development and welfare of developing countries.

Facts about the UK’s investment in Africa

The UK’s direct investment in Africa was worth £39bn in 2018, up from £34bn in 2017, though still lower than in 2012 (£42bn). However, behind the headline figures there are huge variations in the level of UK investment between African countries. 

In 2017 nearly half (47.1%) of UK direct investment to Africa was in just two countries, South Africa and Mauritius, which account for less than 5% of the continent’s population. UK investment in South Africa was worth £9.6bn, and Mauritius £6.4bn. Tax Justice Network has described Mauritius as one of the most corrosive corporate tax havens against African countries and one of the most financially secretive jurisdictions in the world.

UK investment figures are not available for many poorer African countries, but the figures we do have show that UK investment in low income African countries is a fraction of investment in South Africa and Mauritius. 

Tanzania has a similar population as South Africa (57 million), but UK investment there is 150 times smaller, worth £64m compared to £9.6bn in South Africa.

The Gambia has a slightly larger population (2.1 million) than Mauritius (1.3 million) but UK investment there is around 9,000 times smaller, worth £0.7m compared to £6.4bn in Mauritius. 

On average, UK investment per person in low income Africa countries is 150 times smaller than UK investment in South Africa and 4,500 times smaller than in Mauritius. The World Bank defines low income countries as those with Gross National Income per capita of $995 or less in 2017.  

The value of UK investment in most low income African countries, where we have data, fell between 2016 and 2017. UK investment was lower in Mozambique, Uganda, Malawi, Congo (Democratic Republic), Niger, The Gambia and Madagascar. Tanzania and Liberia were the only low income African countries to see increases.

Separate research shows that some of these countries spend a significant amount of their income (0.5-1% of GDP) on services from the UK.

UK outward Foreign Direct Investment (FDI) positions in Africa 2016-2017

Selected countries based on data availability

Sources