Permanent Recession: Homophobia’s Hefty Economic Pricetag

After a successful Christmas dinner at Justine’s beautifully appointed apartment in the Northeastern Chinese city of Tianjin, the stark realities of such dinners set in. The South African’s house sees a ragtag team of expats in China who have been away for far too long, the reasons behind their long absences mostly forgotten. But for Justine and her LGBTQIA+ guests, the reason is ever-present.

Having lived in East Asia for the better part of 20 years, the occasional presence of family members from South Africa reminds Justine of what was at the heart of her departure. “I love Africa, but Africa doesn’t love me.” Like many highly educated and upwardly mobile LGBTQIA+ individuals from the Global South, Justine felt pushed out by her country and has chosen to remain away, unable to reconcile rampant homophobia and a desire to live openly and authentically.

These individuals also choose to invest their hard-earned money into systems they feel are more accepting of them, and only return home under duress. It is the sign of a greater malaise that many are yet to fully contend with.

Discrimination against gender and sexual minorities prompting their exodus abroad or their choice to go underground, as innocuous as they may seem to larger Global South societies, do come at a universal cost.

The cold hard fact is, homophobia is expensive!

Dollars and Sense

Far from the psychological toll it takes on those who it directly affects, including those who perpetrate and perpetuate it, and its detrimental effects on social harmony and national cohesion, homophobia has real financial costs to communities and nations around the world. From regions in much of the West known for their “conservative” stances on same-sex relationships and failure to provide legal protection against discrimination based on sexual orientation, to the 65 countries and jurisdictions around the world that have outlawed consensual same-sex acts between adults, much financial potential is being lost in the name of homophobia.

Many of the regions that stand to lose financially in the foreseeable future due to the outright criminalization of gender and sexual minority rights are found in the Global South, and many of them are also among some of the poorest countries in the world. African leaders, while seemingly fully aware of the more immediate cost of pursuing anti-LGBT agendas, have declared that financial losses are a small price to pay to safeguard so-called African morality.

Leaders like Burundian President Évariste Ndayishimiye and Ugandan President Yoweri Museveni, have criticized Western powers who condition the aid extended to many countries on LGBTQIA+ rights, and others like them have dared Western nations to withdraw said aid if they refused to accept the homophobia perpetuated in those states in the name of African culture and religious observance.

After Uganda’s anti-LGBTQIA+ law was signed in May 2023, the World Bank announced that it would halt all future loans to the country, with World Bank President David Malpass criticizing the law as an “affront to the values of the World Bank.” USAID also warned that the law would “directly impede our ability to provide effective USAID assistance” while announcing that it would reassess its future engagement with the East African country. As expected, Museveni issued a strongman statement declaring that Uganda would not submit to pressure from foreign institutions “to want to coerce us into abandoning our faith, culture, principles, and sovereignty, using money. They really underestimate all Africans.”

However, behind Museveni’s claim that, if need be, Uganda can turn to other sources for funding, are the hidden costs of homophobia in Uganda, and in the rest of the world that remain unrecognized in many of the pro- and anti-LGBTQIA+ discussions in Global South countries.

A 2014 report by the World Bank titled The Economic Cost of Homophobia and the Exclusion of LGBT People: A Case Study of India, put into startling perspective, the cost of the continued discrimination of gender and sexual minorities in India. It estimated that an average of 0.7-1.7 percent of India’s GDP was lost annually due to homophobia, at a conservative estimate of $1.9 billion to $30.8 billion a year.

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Due to factors like violence and harassment in school, which lead to poor education outcomes for LGBTQIA+ individuals, and workplace discrimination, the report estimated that LGBTQIA+ workers in India, making up a total of 0.6 to 3.8 percent of the country’s workforce, suffered as much as 10 percent wage loss, amounting to as much as $1.25 billion. Other poor health outcomes that largely affect gender and sexual minorities including HIV disparity, depression, and suicide, were estimated to cost the South Asian country $683 million, $8.8 billion, and $13.7 billion respectively.

The report was published four years before the Indian Supreme Court finally struck down Section 377 of the Indian constitution that criminalized same-sex activities. The 2018 ruling, much like the 2009 one that was overturned in 2013, brought new hope to the country’s gender and sexual minorities who expected to gain more protections under the law and embarked on seeking marriage equality since, a fight that was met with failure when the Indian Supreme Court ruled against legalizing same-sex marriage.   

Even with this victory and wider acceptance in society – minus the legalization of same-sex marriage – one would be forgiven to think that such a policy shift has gone a long way to address some of the glaring and expensive issues. Not so, according to an article published by the India Times that highlighted the rising issue of “gay brain drain” in which many Indian professionals are opting to leave the country to find more acceptance abroad. Those interviewed for the article expressed reticence about leaving India but felt as though “India wants me to leave.” 

An engineer who spoke on condition of anonymity said, “Being in a place where I could truly be myself as a gay individual meant the world to me. The freedom to love who I love without judgment was a huge factor in my decision,” when speaking of his decision to move to the US in January 2022. “I couldn’t live my life as a gay man with complete freedom in India. It’s tough when you can’t be your authentic self without worrying about judgment or discrimination. I wanted to find a place where I could express myself openly and embrace my identity without any limitations.”

The India Times article noted that even though the Indian Constitution “denies discrimination, …it’s about time this permeates into the legal framework and civil society” if the country hopes to retain the brilliant minds fleeing the country because of their sexuality. Likewise, many LGBTQIA+ professionals in much of sub-Saharan Africa choose to leave for Europe or North America in search of acceptance and community.

Cumulative Losses

Similar losses have also been estimated in the case of other Global South countries, including a potential $730 million for the Philippines, $42 million to $105 million in lost earnings for Kenya according to research conducted by Open for Business researchers, and $317 million in annual losses to the South African economy due to LGBTQIA+-wage discrimination and unemployment.

Also, like India, Kenya, and South Africa incurred significant annual costs from LGBTQIA+-related health disparities, including depression, HIV prevalence, and suicide, at $1 billion and $3 billion – $19.5 billion, respectively. The losses do not end there.

A Time article highlighted how Malaysia, where Homosexuality is criminalized, was gearing itself up for losses directly incurred from the country’s anti-LGBTQIA+ policy. Following an on-stage same-sex kiss shared between The 1975 lead singer Matty Healy and his bandmate, the Malaysian government moved to cancel the Good Vibes Festival. The premature shutdown of the festival was not only expected to directly affect hundreds of business vendors in the Malaysian capital of Kuala Lumpur but would also mean that other international acts would overlook Malaysia as a tour destination, potentially losing the country millions of dollars in potential future earnings.

Malaysia is a microcosm of foreign investment, whether overt or covert being dictated by the quality of human rights laws in a particular country or jurisdiction. According to a report by Open for Business, countries that have decriminalized homosexuality have 4.5 times higher rates of foreign direct investment compared to those that haven’t. When Uganda passed its anti-LGBT law in May 2023, the business coalition warned that the law “would undermine Uganda’s attractiveness as a place to do business and invest.”

Potential tourist destinations also get a smaller piece of the tourism revenue pie, as travelers opt for ‘safer’ and more inclusive destinations. The Caribbean, a survey by Open for Business found, lost up to 18 percent of potential tourists from the US, UK, and Canada, and stands to lose up to $689 million over the next three years, due to anti-LGBT laws and homophobia. Kenya, another popular tourist destination, is estimated to lose up to $140 million in tourism revenue, as a majority of LGBT travelers and as much as 20 percent of non-LGBT travelers avoid countries where homosexuality is criminalized.

In the book The Economic Case for LGBT Equality – Why Fair and Equal Treatment Benefits Us All, M.V. Lee Badgett lays out how gender and sexual minorities are structurally and therefore financially disenfranchised in the world. In the case of gender and sexual minorities, “…research indicates that every country is a “developing country” when it comes to enacting rights for LGBT people and in taking action to make LGBT people’s lives better.”

Even in countries considered safe havens by sexual and gender minority migrants and refugees from the Global South in much of the West, LGBTQIA+ people still face institutional and structural impediments to reaching their full economic potential. In countries like the US, Badgett notes, many of these structural forms of inequality go beyond sexual orientation and gender identity, also affecting different racial groups. “Partly because of those well-known economists [Gary Becker and Barbara Bergmann], the presumed relationship between equity and efficiency has reversed in the twenty-first century. Now many economists worry that it’s inequality that threatens our economic capacity,” Badgett notes.

Increasingly, especially in the current climate in which moral arguments for the recognition of the full humanity and rights of gender and sexual minorities fail, an economic case, especially in Global South countries might be a much more effective advocacy tool. “International socialization” as explained by Omar G. Encarnación in his book Out in The Periphery- Latin America’s Gay Rights Revolution, and how it contributed to many countries creating LGBTQIA+ bulwarks despite religious and cultural opposition to the same, has fallen out of favor.

African leaders who see “the process by which developing nations are induced into accepting human rights norms and practices” as Western nannyism, are willing to suffer the financial consequences, all despite proclaiming the need for domestic financial self-reliance. Electorates in these countries, however, must understand in cold hard cash terms just how much of their own comfort and development they are forfeiting in aligning with homophobic leadership and rhetoric, if we hope to see any practical progress in combatting homophobia.   

_{Photos: Unsplash}