INTRODUCTION
Starting in the 1960s with the rise of the Eurodollar market and wider liberalisation of financial markets, a constantly innovating capitalism in which money flows are deregulated, informalised and globalised has transformed the world economy. One of its key features is an ‘offshore world’ of financial structures, institutions and techniques designed to provide secrecy, asset protection and tax exemption. Although often associated with small states, the expansion of offshore has been fostered by the global financial industry and associated service providers and long benefited from the support of major industrial states as well as rising powers. The offshore world is thus not a ‘peripheral development but is structurally related to, and indeed enables, the globalising tendencies of the modern economy’ (Palan Reference Palan2005: 12). While disputes on offshore data are rife, notably on the definition and measurement of financial flows,Footnote 1 the economist Gabriel Zucman claims that $7.8 trillion, or about 8% of global wealth (and 40% of corporate profits), is hidden in tax havens.Footnote 2
The impact of offshore is even greater in particular regions. Although data on this subject need to be approached cautiously, UNCTAD (2020) estimates that $88.6 billion per year leave Africa in the form of capital flight,Footnote 3 with much of it routed through, or ending up in, offshore financial centres. By contrast, African countries only received $45 billion in foreign direct investment (FDI) in 2019. The significance and consequences of the offshore world for Africa have been further illustrated by investigative efforts such as the Pandora Papers, Panama Papers and Luanda Leaks, among others, that reveal massive engagement by foreign investors as well as African regimes and High Net Worth Individuals (HNWI) in offshoring strategies that impact negatively on African development.Footnote 4 The insights from these investigations confirm the portrait established by myriad policy and advocacy work on Africa. Together they present Africa as a continent affected to an unusual extent by the strategies of tax avoidance/evasion, outward financial flows (both legal and illegal) and corruption enabled by the offshore world.
The offshore world's limited presence in the study of contemporary African political economy is therefore striking. The purpose of this paper is to highlight this gap, provide a preliminary analysis, and suggest that the politics of African insertion in the global offshore economy merits more attention from scholars of African politics. The aim here is diagnostic and analytical, and the paper is concerned with reviewing the extant work and examining areas where further research is necessary. The structures and relationships outlined in this paper are essentially global ones into which Africa is incorporated. This research agenda is therefore about more than adding an African perspective to the study of global offshore processes: as Adam Hanieh suggests in his study of Persian Gulf capitalism, the goal is to learn about ‘global capitalism and its spatio-temporal dynamics’ (Hanieh Reference Hanieh2018: 4) from the vantage point of the African experience.
The paper proceeds as follows. The first section discusses the advent of the offshore world and its impact on the global economy. It notes the Eurocentric character of much of the scholarship on offshore as well as its lack of systematic engagement with African experiences. While acknowledging the importance of pioneering work by economists on African capital flight and illicit financial flows, the paper shows that the political dimensions of offshore are insufficiently addressed in the Africa literature.Footnote 5 I argue that experts on African politics, political economy and international relations should play a vital role in this research agenda. Our field possesses a sophisticated political understanding of regional and national dynamics that is vital for both detailed corroboration and grasping variance across different African societies.
The second section places the encounter of African economies with the offshore world within the longer span of the continent's history before outlining the exogenous shocks of recent decades. Often discussed in the literature in terms of global delinking, the late 20th century economic crisis was also the harbinger of structural change. This entailed the opening and liberalisation of African economies, the professionalisation of financial governance, and the growth of globally connected financial sectors. African elites eventually became deft at exploiting the novel options and diversified geographies of the offshore world and joined the continent's foreign investors, extractive industries and trade partners in this new dispensation.
The third section provides the empirical core of the paper. It outlines a number of themes where relevant questions about Africa and the offshore world can be investigated. These are the politics of finance and banking; the extractive industries and commodity trading; the political economy of metropolitan service providers; the engagement of African elites with the offshore world; and the increased salience of Asian financial centres in Africa's global offshore linkages. While in no way exhaustive, these themes allow an initial exploration of Africa's engagements with the offshore world and their impacts on domestic politics, state-society relations, the international relations of African states and the continent's insertion in the global political economy. An exploration of these themes also demonstrates the significant variation in the impacts of offshoring according to different states’ contemporary politics, institutional legacies, and resource endowments. The concluding remarks highlight the paper's key insights and make a case for taking this research agenda further.
THE ADVENT OF THE OFFSHORE WORLD
The offshore world is the result of shifts in the global economy owing to the rise of the Eurodollar (i.e. US dollar-denominated deposits held abroad and not subject to US banking regulations) market and wider liberalisation of financial markets from the 1960s. The existence of jurisdictions that designed their ‘financial regime to offer international financial services to non-resident firms and individuals’ (Sharman Reference Sharman2010: 4) through financial structures, institutions and techniques providing secrecy, asset protection and tax exemption dates back to the period between the two world wars.Footnote 6 The Bretton Woods limits on capital mobility meant that offshore structures played an ancillary role until the early 1960s. At that stage, the creation of a Eurodollar market in London became the first step in a broad process of liberalisation of western financial sectors that led to worldwide cross-border lending and an end to capital controls.Footnote 7 From the 1970s, a large number of jurisdictions (typically micro-states and lingering outposts of European empires) proceeded to establish financial centres to take advantage of these opportunities. Over time, these changes produced a highly financialised and constantly innovating capitalism where money flows became more deregulated, informalised and globalised. By the 1990s, this pattern had come to encompass much of the world's financial system, including former members of the Eastern Bloc and liberalising developing states. According to the OECD, an estimated 10 trillion Euros are currently held in offshore accounts.Footnote 8 Far from being peripheral to the global economy, these are now ‘the most important instruments in the contemporary, globalised financial system’ (Palan et al. Reference Palan, Murphy and Chavagneux2010: 4).
Some analyses explain the rise of the offshore world through market and technological developments that states were unable to keep up with. Offshore can instead primarily be seen as an exercise in state power in the context of a changing state system. Far from coterminous with post-war capitalism, unregulated financial flows were initially severely curtailed and there was little by way of international lending until the 1960s. In his classic study, Helleiner (Reference Helleiner1994) emphasised the roles of the UK, the USA and Japan in pushing for financial liberalisation (continental Europe only belatedly joined in in the late 1980s). These key states sought for different reasons to end capital controls. In the case of the UK, the goal of maintaining London as a global financial centre despite its relative decline was pursued through liberalising policies as well as the harnessing of British Overseas Territories into a global offshore network that remains disproportionately important today.Footnote 9 That being said, the offshore world was not only nurtured by western states and their current or former dependencies. Powerful states such as China, Russia and India have until recently been de facto supportive of its arrangements,Footnote 10 and their elites keen users of offshore strategies,Footnote 11 although a partial pushback against offshore may now be occurring.
Today, the concept of ‘offshore’ remains somewhat contested.Footnote 12 In its widest sense, it refers to business activity pursued through ‘devices and structures that involve using the laws or facilities of another country’Footnote 13 to access conditions that are more favourable than in the home country. Companies and individuals often move their business or assets offshore in search of low taxation, asset protection, light regulation and secrecy. While offshore services are legal, they can be and are often used for illicit activities.Footnote 14 The definition adopted by the international financial institutions and some of the relevant financial scholarship focuses on the workings of offshore financial centres (also known as tax havens) and emphasises their catering to non-residents, low to non-existent taxation and low regulatory environment (Zoromé Reference Zoromé2007). The image of offshore financial centres is thus often associated with the micro-states that use their formal sovereignty to carve out outsized roles in private banking, beneficiary ownership registries, captive insurance, tax planning, estate management and other thriving offshore sectors.
This is accurate as far as it goes, but only captures part of the reality of offshore, for the powerful states that were pivotal from the onset in the process of deregulation and financial liberalisation remain central to the offshore world. As the Economist notes, ‘offshore is not so much a geographical concept as a set of activities and offerings’ available across the globe and whose greatest providers include ‘firmly onshore’ economies such as the USA and the UK.Footnote 15 ‘Some of these offshore enclaves are territorial in nature’, writes Palan (Reference Palan2005: 19), ‘while others are virtual juridical enclaves that have no physical boundaries’. In sum, offshore is not a place, but a worldwide range of ‘juridical realms’ in which onshore and offshore live in close articulation.
The singular focus on the financial, as opposed to the political, dimensions of offshore is equally limiting, as Susan Strange (Reference Strange1998: 126–37) noted presciently a generation ago. Following Palan (Reference Palan2005), I discuss the offshore world in this wider sense, and seek to understand the broader (i.e. including non-financial) impacts of offshore innovation. This is because the offshore world has spawned an alternative transnational space in which corporations and wealthy individuals can break free from the tax and legal obligations of ‘onshore’ existence. This affluent sphere is peopled by an array of facilitators from the core of the international system that includes, among others, bankers, accountants, asset managers, lawyers, real estate agents, management consultants and PR firms. In this ‘parallel world of selective lawlessness’, the powerful can easily acquire foreign passports, straddle different jurisdictions and ‘enjoy the benefits of laws that suit their interests while ignoring laws that inconvenience them’ (Harrington Reference Harrington2016: 295–7). Through the mechanisms of the offshore world, their lives now have an unprecedented geographic footprint and influence. The far-reaching political consequences of this need to be at the centre of any research agenda on offshore.
The rise of offshore has not proceeded unimpeded. There have been periodic attempts at reform since the 1990s, usually in the aftermath of major corporate scandals involving tax avoidance or outright fraud, financial crises such as in 2008, or tragic events like 9/11. A review of these varied efforts by states, international organisations and advocacy groups is beyond the ambit of this paper. Areas of recurrent focus include first and foremost tax evasion, followed by anti-money laundering, the recovery of stolen assets, increased transparency in the extractive industries, the fight against terrorism and organised crime and, more recently, the curtailing of secrecy tools such as concealed beneficiary ownership. The outcome of most of these reform efforts has tended to be piecemeal and ambivalent, impacted as they are by powerful economies where offshore interests loom large.Footnote 16
Perhaps for this reason, demands for transparency and reform (and threats of blacklisting) are mostly targeted at the smaller tax havens. OECD economies and the dependencies of some major economies such as Hong Kong, which engage in similar practices, are subjected to less scrutiny. Reforms have thus appeared as an evolution within the global financial economy rather than decisive attempts to shut down offshore mechanisms (Sharman Reference Sharman2017). Whether articulated by bodies such as the US Treasury Department (Zarate Reference Zarate2013) or the Paris-based Financial Action Task Force (FATF), reform drives have mostly concentrated on stemming the provision of financial services to so-called rogue states, terrorist groups and criminal organisations. Politically Exposed Persons (PEPs) or the interests of incumbent kleptocratic regimes have received far less attention. Moreover, reform has tended to proceed slowly enough for offshore ingenuity to circumvent it, sometimes acting as a spur to further innovation and geographic diversification. Late 2021 and early 2022 saw anti-offshore breakthroughs in US policy that may prove transformative, if aligned with significant pushback from Europe, the UK and major states in the developing world, but at the time of writing the ultimate impact of these measures is difficult to ascertain.
Two further aspects of the offshore world need to be highlighted. The first pertains to the relationship between the legal and the illegal. There is little doubt that financial deregulation ‘has enormously increased the scope and profitability of transnational organised crime’ (Ellis Reference Ellis2016: 218).Footnote 17 As explained below, one of the most vibrant policy and scholarly dimensions of the study of offshore pertains to illicit financial flows. However, on account of the centrality of offshore to the global economy, much of which is entirely legal, the relationship between legal and illegal is in fact a ‘symbiotic’ one (Glenny Reference Glenny2008). The narrower definition of IFFs, which focuses on straightforwardly illegal actions, is certainly more rigorous than a wider definition that also includes ‘immoral’ behaviour (see note 1), but it misses out the indeterminacy of many practices. Wealthy individuals and corporations engaged in legal ‘tax planning’ sometimes use the same structures, human resources and processes as criminal actors. Pliable legal frameworks, regulatory loopholes and the creativity of professional enablers constantly muddy already elusive and ever shifting legal boundaries. It is therefore best to think about the offshore world as straddling them, rather than along binary lines. As Eva Joly notes, offshore is not ‘a violation of the system, but the system itself’.Footnote 18
The second aspect is that the offshore world did not come into being over time as the implementation of a blueprint: ‘ruling classes do not set up structures and institutions in anticipation of what may happen fifty years hence’ (Palan Reference Palan2005: 182). Western states did pursue self-interested financial liberalisation policies but the outcomes over recent decades owe much to unpredictable innovations by actors of the offshore world (Harrington Reference Harrington2016). This holds true both in terms of the financial and secrecy instruments developed by offshore professionals and the political uses of the offshore system by the powerful worldwide. As Palan notes, ‘disparate policies, tactics, and state forms, apparently unrelated geographically or thematically, became locked together … ending up in the later decades of the twentieth century as an integrated offshore economy’ (Reference Palan2005: 182).Footnote 19 The centrality of resourceful improvisation in the making of the offshore world attests to its shape-shifting pragmatism and the constant innovation that is at its core.
The study of the offshore world in African IPE
The general IPE literature on the offshore world is rigorous and extensive, as attested by the bibliography cited in this article.Footnote 20 However, with few exceptionsFootnote 21 it pays scant attention to Africa. This is partly related to the frequent critique that most IPE research has concentrated on the industrialised world (Hanieh Reference Hanieh2018). The study of offshore has also tended to focus on offshore financial centres rather than on their sources of capital, especially those outside the major economies. This gap is compounded by the fact that while studies of the offshore world have mostly ignored Africa, most IR, IPE and political science scholarship on contemporary Africa has not studied the consequences of offshore for the political economy of African states and their linkages to the world economy. A reason for this lies in the perceived and actual difficulties of data collection as well as access to the political and professional constituencies active in the offshore world. This goes some way to explain the centrality of investigative journalists to much of the existing work. These methodological and data gathering problems are considerable but not insurmountable and, I argue, should not prevent Africa scholars from engaging with this pressing research agenda.Footnote 22
A partial exception to this lack of attention is the literature on illicit financial flows (IFF)Footnote 23 and capital flight from Africa. Foundational contributions include the investigative and advocacy work of NGOs such as the Tax Justice Network, Global Financial Integrity and Global Witness,Footnote 24 and the pioneering academic work of Léonce Ndikumana and James BoyceFootnote 25 and Odd-Helge Fjelstad.Footnote 26 Despite the data limitations, IFF research has produced major results. First, it has shown that IFFs have considerable impact on the economies of developing countries, and to a higher extent than is the case with OECD countriesFootnote 27 (e.g. Cobham Reference Cobham2014; Cobham & Jansky Reference Cobham and Jansky2020). For a number of African countries, the volume of IFFs as percentage of their GDP is indeed substantial. While vulnerability can variously occur through trade, FDI, portfolio investment and bank deposits, IFF research has identified secrecy as the common denominator enabling IFFs from Africa (UNECA 2015). Second, IFF research has belatedly impacted the work of organisations such as the African Union and UNECA (whose 2015 Panel on illicit financial flows out of Africa briefly placed IFFs on the African policy agenda, though there has been little follow-up; see Lopes & Soares de Oliveira Reference Lopes and Soares de Oliveira2021), the UK's former Department for International Development, the World Bank and the OECD, which have commissioned some of the most important research in this field, as well as the research and advocacy agendas of global civil society organisations. In short, the impact of IFF research on the policy agenda is undeniable, even if policy change is slow-moving.
However, the broader scholarly impact of this important IFF literature is less than one would expect. This is for reasons having to do with its own characteristics as well as the reaction to it from mainstream work on African politics, political economy and IR. On the former, while indispensable in terms of generating influential estimates of African IFFs and therefore contributing to an understanding of the scale of the problem, the IFF literature tends not to consistently focus on the political and social dimensions of IFFs, their domestic-global linkages, and on how they impact the internal politics of African states.Footnote 28 With only a few exceptions, the IFF literature emanates primarily from either outside academia or from Economics and Business scholars who are invaluable experts of capital flight and tax evasion, but not of the politics of individual African countries and their external connections. Alternatively, this article argues that one needs to look beyond the quantitative measures and study the impact of these flows on the political economy, domestic institutions and international politics of African countries.
The reception of the IFF literature by African political economy, international relations and political science has also been muted. The sheer scale of IFFs out of Africa revealed by even the most modest estimates makes it a compelling political economy topic. The fact that this has not been the case is partly explained by the modest amount of political economy work on African finance more generally, especially if one excludes the study of sovereign debt.Footnote 29 Political economy experts have preferred to focus on the extractive industries (this is the case of much of my own work), commercial agriculture and fledgling attempts at African diversification and industrialisation. Much research on African financial sectors, and the financial linkages of the primary sectors just mentioned, steers clear of political questions.Footnote 30 Even vibrant strands of African political economy work have paid only limited attention to IFFs. Political Settlements Analysis (PSA), for instance, has not seen this as a major preoccupation. Blankenburg & Khan (Reference Blankenburg, Khan and Reuter2012), for instance, question negative assumptions about IFFs, claiming instead that notions of ‘illicit’ vary according to context and that mere state law may contradict social legitimacy, especially in cases where minorities are persecuted or assets confiscated. They further argue that one cannot assume that financial resources staying in-country would lead to development. The subsequent, residual PSA work on IFFs (though the more recent Khan et al. (Reference Khan, Andreoni and Roy2019) may herald future empirical work) and the scarce references to IFFs in general PSA work shows scant engagement thus far.
This article argues instead that the insights of IFF research are vital for the production of knowledge about African economies and their links to the rest of the world. Research shows that IFFs are detrimental for African states, moving African capital towards financial centres outside Africa rather than within the continent (Cobham Reference Cobham2014; UNECA 2015; Abugre et al. Reference Abugre, Cobham, Etter-Phoya, Lepissier, Meinzer, Monkam and Mosioma2019; Signé et al. Reference Signé, Sow and Madden2020), with little evidence of African reinvestment through so-called roundtripping. However, the Political Economy research agenda foregrounded in this article does not necessitate a normative view about IFFs or the postulating of counterfactuals whereby African capital would have been put to good use if left at home. The same applies to a singular focus on IFFs in terms of criminality, when we are in fact dealing with the broad consequences of financial globalisation, an epochal shift that cannot be reduced to its illegal or negative dimensions. As stated above, a sole focus on illegality risks narrowing the analysis and missing out on important changes (institutional, economic, sociological, and in patterns of international relations) which are neither intrinsically good nor bad, nor necessarily illegal, but are nonetheless considerable. In short, scholars do not need to share definite views on the developmental impact of Africa's engagement with the offshore world. It will suffice to accept that IFFs are a matter of systemic importance and that we need to better understand how Africa's links with the offshore world work and in which directions they are evolving.
UNDERSTANDING AFRICA'S LINKS WITH THE OFFSHORE WORLD
Africa is an episodic presence in all but a few system-wide accounts of global politics, political economy and international relations. Even deliberate attempts to transcend Eurocentrism, as best embodied in the scholarly enterprise of global/world history, have been criticised for their insufficient concern for African history.Footnote 31 In contrast, Africa scholars have long acknowledged the importance of extra-African links for the continent's internal politics, international relations and economic life and argued that African history can only be understood in a global and comparative context.Footnote 32 Historical accounts of medieval and early modern Africa have focused on long-distance trade and the importance of political, religious and artistic connections across the Sahara, the Indian Ocean and later, the Atlantic.Footnote 33 Interpretations of Africa's external relationships have varied. Some scholars have highlighted African initiative. Others, particularly in the last decades of the 20th century, saw the continent's poor states as primarily dependent on external dynamics, sometimes blamed for a ‘great divergence’ that under-developed African economies.Footnote 34 More nuanced accounts attempted to marry the continent's asymmetrical rapports with the outside with an emphasis on African agency in shaping external relationships in the interest of its elites.Footnote 35
What these different readings share is a sense that Africa's trajectory must be understood in global-systemic terms. The three decades of African economic growth from the end of the Second World War to the mid-1970s were a product of a positive global conjuncture (Cooper Reference Cooper2002), while the subsequent oil crisis and stagflation in the major industrial economies resulted in an unprecedented economic shock for Africa (van de Walle Reference van de Walle2002). Faced with a massive fiscal deficit on account of the collapse in the global price for their export commodities, most African states borrowed heavily to keep up their expensive administrative and patronage setups. But by the early 1980s many were verging on bankruptcy and had to accept substantial intrusion from the international financial institutions in the form of structural adjustment programmes (SAPs) whose aim was the liberalisation and de-regulation of African economies. Western donors and financial institutions explained the crisis with reference to the pathologies of domestic governance and had little to say about the impact on Africa of global structural change. Their critics instead presented the disappointing outcomes of African developmental agendas as the result of structural asymmetry in the world economy. This latter view certainly underestimated the importance of poor domestic choices, mismanagement and political instability in early postcolonial Africa.Footnote 36 However, it is no longer contentious to state that powerful structural shifts were a major contribution towards the ‘bifurcation of destinies’ of different economies across the globe (Arrighi Reference Arrighi2002). For many western as well as East Asian economies, the initial pain of the 1970s crisis led to innovation and success in the 1980s and beyond. For narrow commodity exporters, and especially African ones, it resulted in more than 20 years of acute crisis and decline until the turn of the century.
This pervasive political and economic turmoil had two major impacts on African political economy scholarship until the early 2000s. The first was a predominant focus on structural adjustment, its key actors (governments and the international financial institutions) and nefarious results for African development and state sovereignty, to the detriment of other consequences for Africa of the ongoing global transformations. The second was the common assumption, explicitly or implicitly informed by dependency theory, that African states endured these exogenous pressures with minimal leeway.Footnote 37 Some scholars emphasised Africa's status as a ‘black hole’ to which capital did not go (Castells Reference Castells2000), the ‘end of sovereignty’ on the continent on account of IFI intrusion (Plank Reference Plank1993) and the ‘abjection’ felt among Africans due to their economies’ supposed ‘delinking’ from the world economy (Ferguson Reference Ferguson2007). In fact, Africa's economic crisis was a world-systemic manifestation of the continent's deep connections to the global economy rather than a symptom of its separation from it.Footnote 38
Most important, the decades of crisis and structural adjustment also witnessed the beginning of an ongoing external reconfiguration and internal change in African political economies brought about by financial globalisation. Even in the 1980s and 1990s, African economies were not simply enduring hardship: structural adjustment led to deregulation, financialisation, a shift in boundaries between public and private realms, and further integration into world markets. This process was messy, deeply contested and (like structural adjustment itself) happened to varying extents across different African states. It accelerated after 2000 with the continent's improved fortunes resulting from a new conjuncture driven by resource-hungry Asian economiesFootnote 39 that led to a return by most African economies to strong growth until 2014.
Despite the dominant rhetoric of these ‘Africa Rising’ years emphasising autonomy from donors and a return of the developmental state, the Washington consensus's ‘cardinal principles … of privatization, liberalization and deregulation’ remained robust in most African economies (Péclard et al. Reference Péclard, Kernen and Khan-Mohammad2020: 17). African states experienced an expansion of inward and outward financial flows, the growth of financial sectors and their greater opening to the global financial economy, an increase in private banking institutions and corresponding bank relationships, a return to international credit markets, emission of Eurobonds, ratings by credit rating agencies and the establishment of new links to less traditional business centres. This was accompanied by the professionalisation of financial governance by both states and financial institutions and a steep learning curve for African elites as they came to understand the possibilities of the offshore world. As explained in the third section, this ‘reconnecting with financial globalization’ (Vallée Reference Vallée2011) has restructured not only domestic power dynamics within African countries but also Africa's relations with financial hubs varying from London and Geneva to Dubai and Singapore. The degree of African insertion in the global financial economy increased exponentially and with it, the continent's enmeshment in the offshore world.
The way in which this has occurred is country- and sometimes sector-specific, and there is striking variation across the continent. Factors such as resource endowments, institutional capabilities, the nature of political regimes, and colonial and early postcolonial histories matter for understanding some outcomes. Countries such as Ethiopia, where the role of the state in banking remains significant, do not have the same linkages that, say, Nigerian or South African banks have with the international financial system.Footnote 40 The existence of old rapports made some contemporary connections easier to establish: Anglophone countries’ links with UK banks and the post-imperial British system of tax havens; the centrality of French networks in West Africa; the privileging by Angolan oligarchs of Lisbon connections; the dense networks between the Horn of Africa and the Persian Gulf. This said, the key characteristics of Africa's engagements with the offshore world are their newness, multiplicity and adaptability. In line with the constant improvisation and opportunity-driven innovation of the offshore world, this means that African countries have established strong connections to regions to which they had been only tenuously related until recently.
One particular trait of Africa's engagement with the offshore world is noteworthy. African states are major ‘consumers’ of offshore, but few if any are offshore themselves, i.e. in contrast with many states in the developing world, African states have by and large not developed international financial centres or tax haven facilities with any amount of success. Two exceptions to this are atypical African island states – Mauritius, which is a major gateway for investment into Africa and has Double Taxation treatiesFootnote 41 with many other African states;Footnote 42 and, to a lesser extent, the SeychellesFootnote 43 – that illustrate the rule. Failed attempts by states such as Liberia,Footnote 44 Kenya, Gambia and GhanaFootnote 45 to set up offshore structures as well as incipient efforts by Cape Verde,Footnote 46 Botswana and Rwanda, among others, further underline the near absence of African states in the provision of offshore services. This begs the question: why haven't more African states used offshore as a tool to leapfrog their economic deficiencies?Footnote 47 Offshore has worked elsewhere in expanding the sovereignty and wealth of weak and small states.Footnote 48
The following are possible explanations, though the conditions under which African elites have or haven't pursued OFC strategies merit further research. African states lack relatively apolitical financial sectors insulated from the hazards of domestic governance and instead tend to have weak governance capacity, scarce human resources to man a financial centre and poor judicial systems (a key legacy in former British empire Caribbean outposts that enabled their expansion of offshore facilities). Most important, offshore agendas have rarely been purposeful domestic state-building strategies for African elites, with the cases mentioned above invariably pursued in a half-hearted and short-lived manner. Most African states have historically seen private sector-unfriendly over-regulation rather than the sort of strategic deregulation characteristic of offshore centres. Many also have histories of political interference, radicalism and expropriation. In short, the conditions that have obtained in many postcolonial African states seem to have mostly motivated not only foreigners to keep their money out, but also the (potentially vulnerable) local rich and powerful from wanting to keep their money in.Footnote 49
Africa's lack of an offshore sector underlines the limits of global connectedness. The emphasis of this article on the political salience of African links to the global financial economy should not create the impression that all African economies, and every sector within individual African economies, are equally implicated in this process or, in other words, that everything is connected to everything else. Global financial flows are not indiscriminate agents of structural change in African societies. They need to be studied with a view to the specificity of connections and of processes that are ‘large-scale but not universal’, through concepts that are ‘less sweeping’ and ‘more precise’ than those posited by many studies of globalisation (Cooper Reference Cooper2001: 191–2).Footnote 50 Bearing this fully in mind, this article nonetheless argues that the dynamics it describes are no longer primarily to be studied as narrow connections to the global economy. The links established with the offshore world are now systemically important and often defining of international relations and domestic politics, where they impact the functioning of states and ruling parties and the lives of elites. To illustrate this, the next section explores a wide range of African interactions with the offshore world which constitute five pillars of a possible research agenda. This has no claim to being an exhaustive list but outlines important and relatively under-researched arenas.
AFRICA AND THE OFFSHORE WORLD: MAJOR THEMES
Banking and finance
The starting point for an inquiry into Africa and the offshore world should be the political consequences of the momentous changes experienced by African financial sectors in recent decades.Footnote 51 African states had dissimilar degrees of financial sector development in the 1960s and the 1970s varying from asset size to bank ownership. But the vast majority were relatively small and, after tapping into international financial markets during the 1970s, were effectively cut off until the early 21st century. Reforms brought about by the adoption of structural adjustment in the 1980s and 1990s, especially the privatisation of state banks, the concession of new licences, and the return of foreign banks, led to an expansion of African financial sectors and of linkages to the global financial economy. This process of ‘financialisation’ (Bracking Reference Bracking2016) has not displaced the centrality of primary commodities in African political economies, but has impacted on political, institutional and socio-cultural realms in a manner that results in ‘the growing embeddedness of daily [political and economic] life in the global financial system’.Footnote 52
These trends were eventually consolidated by African states’ return to international credit markets (16 states issued foreign currency bonds between 2006 and 2016) and the regional expansion of some African banks, primarily from Nigeria, Kenya and South Africa. In the intervening period, many countries had experienced a professionalisation of African economic management, with more technical staff in ministries, central banks and private banks sharing the backgrounds of their international counterparts than ever before. The resulting exponential growth of banking is a positive outcome for African economies. Even if African banking remains for the most part reluctant to engage in broad-based lending, the percentage of bankable population in almost all countries has increased since 2000. The rise of African financial sectors cannot be reduced to the offshore dimension, but it nonetheless looms large.
African involvement in the offshore world did not wait for this liberalisation of financial sectors. Capital flight to tax havens was a major and still widely under-researched dimension of decolonisation (Ogle Reference Ogle2017, Reference Ogle2020),Footnote 53 and as the sub-section below on the extractive industries shows, the use by foreign corporations of transfer pricing strategies to declare profits in low-taxation financial centres dates back decades. A still to be conducted study of the workings of BCCI, then one of the world's major banks, in Nigeria in the 1970s and 1980s would show its provision to Nigerian elites of the sort of services we associate with a later period.Footnote 54 Gabon-based, French-staffed Banque Française Intercontinentale (FIBA) was a key tool of French national oil company Elf Aquitaine's Africa-wide corrupt networks until its closure in 2000, at which stage the primarily African-staffed BGFI took up a similar role.Footnote 55 Stephen Ellis studied the use of Seychelles offshore structures by western and South African intelligence agencies in the 1980s (Ellis Reference Ellis1996). Despite these precedents, there is little doubt that the later expansion of global links, and especially that of service provision in metropolitan centres (see below) and of correspondent bank relationships with major outside banks, have facilitated access to the international financial system and capital flight out of Africa. Although FDI to Africa saw a major increase in the early 21st century, total FDI and total ODA combined fall short of the estimated capital flight out of the continent.Footnote 56
Financial governance varies across African states, but most have sought some convergence with international standards (e.g. the adoption of Basel standards, FATF guidelines, AML legislation), while even reluctant ones attempt ‘mock compliance’ (Jones Reference Jones2020) in an effort to preserve access to the international financial system, partly because of its role as highway to the offshore world. Kleptocratic regimes in countries such as Angola, Congo Brazzaville and Equatorial Guinea in particular have taken full advantage of money laundering channels.Footnote 57 Mozambique has used the emission of a sovereign bond for one of the most brazen corruption scandals in contemporary Africa (see Kroll Associates 2017; Cortez et al. Reference Cortez, Orre, Fael, Nhamirre, Banze, Mapisse, Harnack and Reite2021). In many ways, African economic progress during this period, and especially the expansion of African financial sectors and their worldwide linkages, helped deepen this entanglement with the global offshore economy and therefore diminished the benefits for African economies of recent economic growth (Ennes Ferreira & Soares de Oliveira Reference Ennes Ferreira and Soares de Oliveira2019).
Extractive industries and commodity trading
Oil, gas and mining are the main economic sectors in contemporary Africa and dominate exports to the rest of the world. Hence, how these industries are structured and governed is defining for most African states. From upstream production to oil services and trading, offshore is central to their functioning (Gillies Reference Gillies2019). This pre-dated the 2000s. Oil and gas corporations and commodity traders have long engaged in secretive strategies and transfer pricing subterfuges.Footnote 58 Recent research shows that a staggering 96.7% of independent trading companies use offshore financial centres to register subsidiaries.Footnote 59 FDI often flows from offshore jurisdictions and contracts are invariably structured through offshore mechanisms that enable transfer pricing strategies for private firms and discretionary power for African elites, especially through the heavy involvement of national oil companies such as Angola's Sonangol, Nigeria's NNPC and Congo Brazzaville's SNPC in such deals.Footnote 60 Resource-rich but indebted African states such as Chad, Equatorial Guinea, Congo Brazzaville and South Sudan have consistently made use of resource-backed loans on the basis of future production whose interest rates, maturities and repayment structures are by definition opaque and unregulated (Public Eye 2020) and are often run out of offshore financial centres. Such amenable financial centres, primarily in Western Europe and in British Overseas Territories, also long provided an expanded outlet for money laundering mechanisms that enable elite capture of national resources.
In recent decades, however, the scale of such practices increased exponentiallyFootnote 61 as revenues from the continent's resource boom flowed to other jurisdictions in the form of both legal capital flows and illegal capital flight (Ndikumana & Sarr Reference Ndikumana and Sarr2019). This was intensified during the commodity boom that started circa 2004 and ended in 2014, which resulted in unprecedented revenue streams into the continent (and out again). As the linkages outlined above were by then fully formed, they facilitated financial flows, especially from the countries experiencing major revenue windfalls. The resort to resource-backed loans became central to the financial links established by African partners with both commodity traders and Chinese banks, with exponential growth since the turn of the century despite their ‘weak governance and opaque conditions’.Footnote 62 According to the Natural Resources Governance Institute, Africa and Latin America had contracted $152 billion in such loans by 2020, 77% of which was held by the China Development Bank and Eximbank.Footnote 63
Perhaps the least studied dimension of the longstanding nexus between offshore and the extractive industries is the trading of oil and gas through intermediaries often connected to Switzerland and, more recently, Dubai and Singapore. The large academic literature on the politics of natural resources in Africa contains little work dedicated to this.Footnote 64 African oil featured disproportionately in the profits of opaque traders such as Glencore, Vitol and Trafigura, with African oil producers continuing to make use of such trading companies, instead of direct sales, to a much greater extent than in any other major oil region of the world. The resort to commodity traders for resource-backed loans, precedents for which go back to the 1980s, increased massively since the early 2000s (Soares de Oliveira & Vallée Reference Soares de Oliveira and Vallée2021). In contrast with previous decades, the 2004–14 boom also saw increasingly prominent African, mostly Nigerian, oil trading ventures. Yet much of this was run out of Geneva, premised on political access in Nigeria, and in partnership with, rather than in competition with, the established trading companies. Revelations about the extent of corruption underpinning Nigerian oil trading under Minister of Petroleum Resources Diezani Alison-Madueke (2010–15) point to a more brazen use of offshore mechanisms than ever before (Gillies Reference Gillies2019; Prelec & Soares de Oliveira Reference Prelec and Soares de OliveiraForthcoming). The rise of Dubai and Singapore as commodity trading hubs (as well as of commodity traders such as China's state-owned Zhuhai Zhenrong Company) shows the expansion of these strategies beyond its traditional epicentres.
The political economy of service providers
Africa's dealings with the offshore world operate through a wide range of service providers in a global ‘Moneyland’ (Bullough Reference Bullough2018) for the rich and powerful. These facilitators are based not just (or primarily) in tax havens but in the world's major capitals and onshore financial hubs. Importantly, they did not come into existence to service an African clientele. They are first and foremost realities of metropolitan capitalism which have come to provide services to (in addition to western elites) elites from Latin America, the Middle East, the former Soviet Union, etc. There are examples of African elites densely connected with service providers in western capitals dating back decades, especially in resource-rich states. Côte d'Ivoire and Gabon had long-standing proto-offshore world links to Paris,Footnote 65 while rich Nigerians in the 1970s ‘knew that their money was not guaranteed to remain safe [and] smuggled it out of the country any way they could’ (Ellis Reference Ellis2016: 98–9). Nonetheless, the use of professional facilitators only achieved its current spread and depth with Africa's renewed economic health and return to international capital markets in the early 2000s.
Since then, African HNWIs have resorted to metropolitan lawyers,Footnote 66 bankers, accountants, management consultants, lobbyists, real estate agents and public relations experts for help in managing their interests. This assistance goes beyond managing the financial resources of their clients (often through money laundering) to include reputational enhancement and political influence, which in some cases may extend to philanthropic donations to institutions such as museums, think tanks and universities, political party financing and influence peddling. Such service provision is often strictly legal and enabled by light (self-)regulation by professional bodies. Yet even when the law is broken, this rarely entails personal costs for those involved, establishing incentive structures that firmly encourage these practices (Platt Reference Platt2015: 201). The examples and spread of such practices are considerable, from PR company Bell Pottinger producing South African disinformation campaigns around ‘white monopoly capital’ for its clients the Gupta family;Footnote 67 to McKinsey, the Boston Consulting Group and PWC establishing close relationships with both the Angolan state and Isabel dos Santos's private interests;Footnote 68 or the Paris PR and media for hire at the service of Denis Sassou Nguesso's and the Bongo family's regimes.Footnote 69
Language and historical links explain some preferences for service hubs: Angolan oligarchs’ initial choice of Lisbon as their prime offshore location; the continuing role of Paris for Francophone Africa and London for countries such as Nigeria. However, as explained below, the geography of service provision is now radically diversified. Anglophone service provision is the common denominator of the current myriad locations likely to service African HNWIs, including in Asian financial centres, as discussed below. Likewise, if some smaller service providers or locations may specialise in African business, the top operators in every segment are engaged with a cosmopolitan range of customers, with African HNWIs inserted in global circuits shared with other elites. Their class status as lucrative clients who are part of a global ‘super-rich’ or ‘transnational wealth elite’ (Fernandez et al. Reference Fernandez, Hofman and Aalbers2016), rather than their African-ness, is determinant for these relationships.
Enough data exist to show that such multifarious forms of service provision amount to some of today's most consequential international connections, especially for authoritarian states whose power is at least partly established in the international sphere (see especially Cooley & Heathershaw Reference Cooley and Heathershaw2017, and also Soares de Oliveira Reference Soares de Oliveira2015).Footnote 70 Indeed, a forthcoming paper (Cooley et al. Reference Cooley, Heathershaw and Soares de OliveiraForthcoming) theorises this for-profit global support structure for authoritarian states as transnational uncivil society networks (TUSN). More generally, the role of facilitators shows the importance of transnational links for global corruption and the inappropriateness of speaking in terms of individual countries: ‘When it comes to grand corruption, it makes more sense to speak of corrupt networks rather than corrupt countries’ (Sharman & Cooley Reference Sharman and Cooley2017: 746), in a collaborative pattern that transcends the internal-external divide. However, research on these networks in the African context is embryonic. Approaches such as Harrington's study of private wealth managers (Reference Harrington2016), among others, provide inspiration for the sort of work that remains to be done. As much else discussed in this article, a study of professional enablers would be vital for a full understanding of political economy dynamics pertaining to Africa. It should also provide lessons for understanding the metropolitan capitalisms of which such service provision has become an integral part.
African elites and the offshore world
‘Perhaps the most under-researched area of the offshore political economy’, noted Jason Sharman (Reference Sharman2010), ‘relates to the consumers of offshore services, a gaping hole in our knowledge’. This generally remains the case today, but perhaps nowhere more so than in Africa, where the literature is practically non-existent.Footnote 71 There is no doubt that Africans made a belated arrival to the by then fully formed offshore world, though once again, exceptions such as Nigeria and a number of oil-rich countries stand out as much earlier presences. At the turn of the century, however, Africa's integration in financial globalisation and the global commodity boom allowed for the broader diffusion of knowledge about ‘offshore techniques’ (Palan Reference Palan2005: 185) amongst African elites (taken here to mean those HNWI and families with extensive transnational links). After the crisis years of the late 20th century, this amounted to a remarkable expansion of opportunities both for HNWIs as transnational individuals and for regimes seeking sustenance through international links.
For well-positioned individuals in Africa, the offshore turn afforded the many political, economic and lifestyle options available to elites the world over. This includes the acquisition of foreign passports,Footnote 72 the possession of foreign real estate and bank accounts through the concealment of beneficial ownership, and the perpetuation of family wealth through the use of trusts.Footnote 73 One of the key motivations why HNWIs and corporations in industrial economies resort to offshore strategies– the avoidance of taxation – is also a major reason for their use by foreign corporations in Africa. However, this seems much less relevant for HNWIs in the African context, as elites in most African states face little pressure to pay taxes. While there is little research on this subject, it is more plausible that African elites act primarily on account of perceptions of domestic political risk.Footnote 74 Domestic capitalists may fear expropriation while politicians worry about retaliation from successors. An additional line of explanation is that African HNWIs may be engaging in a form of institutional arbitrage, ‘reducing transaction costs by accessing efficient institutions unavailable at home’ such as functioning courts and professional financial services in foreign locations.Footnote 75 The fact that some of these individuals are partly responsible for the domestic conditions they seek to avoid is but one of the ironies of offshore engagement.
Beyond allowing the preservation and oftentimes the legitimation of wealth extracted from home countries, the offshore world accomplishes something else for those African HNWIs who use it. Perhaps for the first time, it affords them a form of radical liberation: the enjoyment of fully mobile lives as global ‘super-rich’ (Beaverstock et al. Reference Beaverstock, Hubbard and Short2004) across different geographies released from the stigma and poverty of their home base. A consummate example of such a global trajectory scarcely possible a generation ago is that of the globetrotting Isabel dos Santos, until recently Africa's richest woman and daughter of Angola's former president José Eduardo dos Santos, whose worldwide interests have been mapped out by the International Consortium of Investigative Journalists’ Luanda LeaksFootnote 76 and earlier investigative efforts by Rafael Marques de Morais. Many other investigations, such as the Biens mal acquis investigation in France,Footnote 77 the ICIJ's Panama Papers and several efforts by the Organized Crime and Corruption Reporting Project (OCCRP),Footnote 78 have outlined the actions and interests of wealthy and politically connected Africans, especially from resource-rich states such as South Africa, Congo Brazzaville, Mozambique and Equatorial Guinea as these extend to tax havens and major financial centres in the West and in Asia.Footnote 79 A Carnegie Endowment investigation which one hopes will inspire similar research studies political economy linkages centred on Dubai.Footnote 80
These international links do not mean that African governing elites have become rootless through the mechanisms of the offshore world, for their success often remains harnessed to the sovereignty of the state (and most often, its natural resources and aid flows) that they control and profit from. It is also clear that while they can be sanctioned once they leave power (this was notably the case of the Dos Santos and Abacha families in Angola and Nigeria), incumbency protects officials and their cohorts from worldwide legal troubles or efforts at asset recovery.Footnote 81 As mentioned above, offshore links are vital for the survival and consolidation strategies of regimes (Cooley & Heathershaw Reference Cooley and Heathershaw2017). It is also apparent that in African countries with strong militaries, the security sector has major economic interests in defence procurement, the extractive industries and even its own associated corporate sector (what the Pakistani political scientist Ayesha Siddiqua calls ‘milbus’, i.e. the military's internal economy that is hidden from public view and not recorded in the defence budget) with mostly unresearched offshore links.Footnote 82
However, the terrain in which offshore links meet the political economy of regimes, dominant political parties, armed forces and electoral competition is scarcely explored in African political science.Footnote 83 The impact of offshore on elite domestic choices is similarly under-studied, but arguably holds major consequences for state building and institutional development. By enabling capital flight, access to functioning institutions abroad and HNWIs living in different geographies where they can enjoy world class leisure, consumption, schooling and healthcare,Footnote 84 the offshore world allows the opting out of some forms of public goods provision at home. It may also perpetuate elite incentives for weakening the rule of law, property rights and the quality of institutions at home (Moore Reference Moore and Reuter2012: 474–5).
In line with much of the work by investigators, activists and scholars in this field, this discussion emphasises actor strategies that hold negative consequences for African development. Yet the expansion of Africa's financial links has also given rise to a class of younger transnational African professionals, especially in the financial sector. Often educated abroad, with experiences in international banking and/or epistemic communities (central banking, finance ministries, IFIs), these talented professionals can now be found in African public and private financial institutions, in every major global financial centre, and increasingly in top financial institutions, including those not African-owned (for now, primarily western and multilateral rather than East Asian, South Asian or Middle Eastern). For these African professionals, the opening of the global economy over the last generation has been a source of extraordinary personal opportunity. They are amongst the winners of the offshore economy. Can African economies reap long-term benefits from the success of this professional group? Can the rise of internationalised African bourgeoisies weaken the stranglehold of authoritarian regimes at home?Footnote 85 Or will their talents prove productive elsewhere in the world economy? The closer study of such professional communities, important in its own right, may instil some ambivalence in the sometimes over-categorical views of Africa's dealings with the offshore world.
An offshore turn to Asia
Until about a decade ago, Africa's engagement with the offshore world mostly occurred through a variety of onshore financial hubs and offshore financial centres in OECD states and British Overseas Territories. Since then, diversification towards Asian financial centres is noticeable and fits the wider pattern of increased Asian–African economic relations. However, most research on the political economy of Asian–African relations focuses on trade, FDI, sovereign debt and ODA, with barely any work on the offshore dimension.
The significance of Dubai is a partial exception. The pioneering work of scholars such as Roland Marchal (Reference Marchal1997) shed early light on Dubai's growing importance for Africa, and a small but robust tradition of research on East Africa/Horn of Africa relations with the Gulf has long tracked the role of informal finance and transfer systems, contraband and the gold trade. Still, the expansion of Dubai–Africa relations to include not just traditional Emirati partners in Africa but strong links to most African countries is still under-researched, despite Dubai's harbouring the interests of a pan-African array of PEPs verging from former Presidents Kabila of DRC,Footnote 86 Abdoulaye Wade of Senegal and Zuma of South Africa (as well as his allies the Gupta family), to Angola's Isabel dos Santos and numerous Nigerian politicians such as former Minister of Petroleum Dan Etete, among many others.
The cases of Singapore and Hong Kong have received much less scrutiny, the latter primarily on account of Chinese protection (Platt Reference Platt2015: 64; the same applies to Macao SAR, of course). This has prevented Hong Kong's offshore links from being more loudly exposed by organisations such as the OECD. The world's third largest financial centre and major hub for the wealth management industry, Hong Kong is a key base for the offshore renminbi trade and conduit for Chinese investors in Africa (as well as a conduit for Mainland capital's access to the offshore world).Footnote 87 It has hosted secretive investment vehicles such as the Queensway Group, an equity group with connections to Chinese intelligence and a major presence in Angolan, Zimbabwean and Guinean extractive industries.Footnote 88 For its part, Singapore brings together a world-class but lightly regulated financial sector with a strong presence of commodity traders (backed by trade finance) with African links. Through its Global Trader Programme (Hoong Reference Hoong2012: 51), Singapore managed to attract many erstwhile Switzerland-based traders keen to avoid reform in the sector.
The trend towards the ‘Asianising’ of Africa's offshore engagement owes to three factors.Footnote 89 The first is the increased regulatory burden in more traditional financial centres. From multiple Caribbean jurisdictions to the Channel Islands and from Switzerland to Liechtenstein, the nature of the offshore system may not be changing radically, but a rhetorical shift away from secrecy, a much greater degree of investigative scrutiny and genuine legal changes have rerouted some African capital flows into more opaque locations. International businesses active in Africa such as commodity traders have also reacted to bad press in places such as Geneva by decamping to light-regulation Dubai and Singapore. Second, by moving to new financial centres, African oligarchs still encounter English-speaking professional classes, and in many cases the same facilitators discussed above that work for them in London, Paris, Zurich and other traditional centres. Dubai, Hong Kong and Singapore feature the same top-range banks, legal firms, commodity traders, management consultants and all-purpose advisers that African clients would find in western locations. All three have strong historical as well as present-day links to the City of London. In short, the new Asian settings feature world-class service provision, in places committed to a much greater degree of discretion than is increasingly the case in western financial centres.
The third factor is the proactive role Asian governments have thus far played in attracting new global business away from traditional hubs such as Switzerland (Damgaard et al. Reference Damgaard, Elkjaer and Johannesen2018: 53). As Erie (Reference Erie2020) explains in a study of Asia's new legal hubs, governments promise world-class infrastructure and service provision as well as political stability and the rule of law.Footnote 90 Crucially, they also provide the necessary light regulation, low taxation and secrecy. The rule of law is a more credible offering in Singapore and, until recently, Hong Kong, than in Dubai. Yet the autocratic nature of Dubai's government is offset by the autonomy of the courts in the Dubai International Financial Centre as well as the emirate's unique receptivity to characters and types of money flow (especially gold and cash) often shunned by other financial centres.Footnote 91 There is, in sum, a diversification of African offshore links to Asian financial centres which should be the subject of further research.
TAKING RESEARCH ON AFRICA AND THE OFFSHORE WORLD FURTHER
This exploratory article has argued that offshore is a central dimension for understanding Africa's position in the global political economy as well as significant aspects of the internal politics of African states. The continent's fundamentally extractive, natural resource-based economies remain in place and establish a strong undertow of continuity that must not be underestimated. Nonetheless, I argue that Africa's links to the offshore world inaugurated a new phase in its extraverted relationship with the global economy, establishing new flows and structures, diversified patterns of international relations, changes to state-society relations, more options for elites, all across more heterogeneous geographies than ever before. The article's key goal is not to put forward a new theory of ‘Africa in the world’ but simply to highlight the empirical and analytical gaps resulting from the scarcity of scholarly work in this field. The article also seeks to encourage a research agenda that produces, first, new knowledge about matters of which we currently have only a partial grasp and second, a theoretical understanding of the importance of the offshore world for both Africa and its place within contemporary capitalism.
In regard to the last point, the systemic position of Africa needs to be clarified. It is tempting for scholars to revise the widespread marginalisation of Africa in global narratives by recasting the continent as central to global offshore dynamics. This may be so in other contexts, but it is harder to substantiate when discussing financial globalisation and especially its offshore dimension. Offshore originated in the strategies of OECD states, corporations, wealthy individuals and financial sectors and long thrived in the West and in Asia. The offshore centres’ flow of capital and business continues to emanate disproportionately from developed and middle-income economies. Africa remains a residual provider of offshore services and only belatedly attached itself to the offshore world as a noteworthy client pool at the turn of the century, when its reengagement with the international financial system fully resumed. The regulation and curtailment of offshore world practices, a complex and frustrating enterprise even for powerful states (about which, it has already been noted in the first section, they have been ambivalent anyway), is especially hard for African states to enact, despite some stirrings of collective action through organisations such as the African Union (UNECA 2015) and especially through the courageous work of African investigative journalists and activists.Footnote 92 The advent of the offshore world and its global spread is therefore a process in which the outside has had more impact on Africa than the other way around.
However, that offshore is a systemic development that Africa did not initiate does not mean that it passively endures its impact. Examples of African offshore engagement going back many decades were already mentioned, especially by entrepreneurial groups with external links, the elites of resource-rich states, and those with strong metropolitan connections (Francophone networks are the forerunners in many ways). The political economy of civil wars after the end of the Cold War also showed sophisticated transnational elite networks extending from resource extraction sites in conflict zones to the industrial states. Nonetheless, the better economic context after the turn of the century and the robust reconnection to the global financial system enabled a much more widespread engagement by African elites with the offshore world. Notions of African agency that emphasise the positive and the emancipatory may be inadequate here, but there is no doubt that empowered African actors have become adept at securing political and economic success through the new relationships,Footnote 93 mechanisms and possibilities offered by the offshore world.
How can we advance knowledge and analysis of Africa's links to the offshore world? The article contends that experts of African politics, political economy and international relations, with their sophisticated political understanding of different African societies, are uniquely placed to do so in a manner that technical experts of finance or generalist/global observers of offshore dynamics (their own vital insights notwithstanding) cannot match. As mentioned earlier, vital research on IFFs and their mechanisms has been the starting point for much research on these issues. This is partly because such flows are at least in theory quantifiable (though data are scarce and older data barely exist), whereas other dimensions of offshore are even more elusive. Moreover, IFFs provide robust evidence of the harmful character of offshore for African development: the relevance of this body of research for NGOs, IOs and development agencies advocating for reform is incontrovertible. While this must continue to be a major area of work, this article argues that there are many other areas, five of which were highlighted in the third section, that deserve the attention of IR, IPE and political science scholars.
A starting point for such a research agenda is the acknowledgement of how little we know and therefore of the need for empirical work. A recognition of the trailblazing research of investigative journalists and advocacy groups and the systematic aggregation of currently dispersed work, virtually all of it outside academia, are important first steps. Equally vital is the generation of new data regarding the five key themes outlined in the third section that will allow for a more precise understanding of these realities. Exemplary instances of this include Global Witness's work on the estimated 87,000 properties in England and Wales held through anonymous companies registered in tax havens,Footnote 94 whose beneficial owners are often PEPs, the invaluable investigative work of the ICIJ and its members, and the Carnegie Endowment for International Peace's investigation of Dubai's global linkages (Page & Vittori Reference Page and Vittori2020). The difficulties of access to secretive professional and political actors of the offshore world and of data collection in this field are considerable, as is the risk of libel suits by HNWIs and their facilitators, especially in the UK. Yet an emphasis on confidential and hard-to-get data underestimates the opportunities afforded to researchers by publicly available or more easily obtainable information.Footnote 95 This is the case of the insights to be gleaned from legal (both civil and criminal) cases or the large data sets resulting from major leaks and subsequently made publicly available by organisations such as the ICIJ.Footnote 96 Whichever data-gathering strategy is chosen, the unearthing of more empirical facts about Africa's links with the offshore world is an essential step.
While matters of methodology deserve a detailed treatment that goes beyond the scope of this article, it should be noted that this research agenda calls for an all-encompassing sense of the possibilities of social science.Footnote 97 The impressive examples of non-Africa academic work on the offshore world quoted throughout the article should provide inspiration for ways to pursue this multifaceted agenda. Ethnographic work based on long-term access to foreign enablers and African HNWIs is necessary, and so is the use of large-N approaches and survey instruments. Their ethical framing needs careful consideration but field experiments are one of many promising approaches, as evidenced in Findley et al.'s (Reference Findley, Nielson and Sharman2014) agenda-setting volume, Global Shell Games. There is also ample ground for research collaborations between investigative journalists and academics (Prelec et al. Reference Prelec, Michel and Mayne2022). Finally, any consideration of research strategies needs to take place in the context of offshore as an ‘endlessly shifting ecosystem’ (Shaxson Reference Shaxson2011: 22): this scholarly endeavour necessitates rigour, imagination and dynamism to keep up with its fast-evolving subject.
As this article sketched its subject on a vast canvas, a cautionary note is in order. Beyond highlighting the major development for Africa that is the offshore world, it is evident that Africa's involvements are the subject of variation and unevenness of outcomes. This variance should be the primary focus of future research. Legacies verging from different resource endowments and colonial histories to institutional capabilities mean that the impacts of offshore are dissimilar and have contrasting levels of magnitude in each state, sub-region and economic sector. The overwhelming consensus by the policymakers, activists, investigators and scholars working on this is that the impact of offshore is detrimental for broad-based development on the continent. Without contradicting this assessment, my goal has been to simply highlight that the offshore world is consequential for Africa and therefore worthy of closer study. In this regard, an approach that seeks out the specificity or even uniqueness of each trajectory will be more illuminating than one that subsumes complexity into a homogeneous account of pillage and extraction.
