Saturday, September 25, 2010
Thursday, September 23, 2010
Africa in theory and reality
THE AFRICANIZATION OF AFRICA: The benefits of organic socio-economic development policies
“When someone asks you if you are mad, it may mean you are on to something.”
Claus Andrup
“There is no reason why Africa cannot become a net exporter of food.”
Barrack Obama, The United Nations Assembly, September 23, 2010
AN INTRODUCTION TO AFRICA
Two challenges faced by many African nations today are social stability , underpinned by diversified economic growth. Each nation is unique on this continent, though most westerners and easterners often, quite mistakenly, think of Africa as a country. Africa is today, likely without exception, the most complex and significant part of the global structural puzzle. A continent, now staring at itself in the mirror and asking itself; who am I?
While thought of by many, not only Paris Hilton, as a country, Africa is comprises in almost a quarter of the planet’s sovereignties. There are in fact fifty-four countries currently in the continent of Africa. In general terms the leaders of these countries declare solemnly – no better example than Robert Mugabe – that they are governed democratically. “I solemnly declare,” they say as they are sworn into power. Democracy has many definitions on the continent. The again that can be said of almost any region in the world one can think of, none the least the self-appointed arbiter of global democracy, the United States of America.
The list of countries includes Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Republic of the Congo, Cote d'Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Western Sahara, Zambia and Zimbabwe. The number of countries has often increased and altered as most of the territorial divisions in Africa were made by the colonial powers. Eritrea for example is a relatively new country. Africa is the poorest continent despite its abundant natural wealth and a major reason for this has been its colonial past.
Colonisation effectively drew lines across traditional tribal borders thus frequently dividing historic communities on the one hand and often forcing traditional foes to live side by side. A modern day example of this is seen in the Tutsi and Hutu conflicts on the bordering regions of the Democratic Republic of Congo and modern day Rwanda. Similar instances are repeated across the continent. The BBC reporter and author on African affairs, Richard Dowden offers possibly the clearest insight on the subject in his latest work, Africa: Small Miracles.
The interventionist scramble for Africa
The connection between Europe and North Africa is older than recorded history. It seems clear that cultural influences crossed the Mediterranean barrier during the late Palaeolithic and Neolithic ages. [citation needed] Hence, the late Palaeolithic Aterian industry and Capsian culture, both from North Africa, are connected with Europe. Some early Neolithic influences may also have arrived to Europe via North Africa. Additionally, the Megalithic phenomenon of the Chalcolithic period is found on both shores of the Mediterranean Sea.
Early historical exploration of Africa
Africa is named for the Afri people who settled in the area of current-day Tunisia. The Africa Province of the Roman Empire spanned the Mediterranean coast of what is now Libya, Tunisia and Algeria. The parts of North Africa north of the Sahara were well known in antiquity. Prior to the 2nd century BC, however, Greek geographers were unaware that the land mass then known as Libya expanded south of the Sahara, assuming that the desert bounded on the outer Ocean. Indeed, Alexander the Great, according to Plutarchus' Lives, considered sailing from the mouths of the Indus back to Macedonia passing south of Africa as a shortcut compared to the land route. Even Eratosthenes around 200 BC still assumed an extent of the landmass no further south than the Horn of Africa. It was only in Ptolemy's world map (2nd century AD) that the realization that the southward extent of Africa was not in fact known at the time was made explicit.
As for early exploration of Sub-Saharan Africa, the ancient Greek historian Herodotus describes how the Egyptian Pharaoh Necho II sent out an expedition manned by Phoenician sailors about 600 BC which in three years circumnavigated Africa. They sailed south, rounded the Cape heading west, made their way north to the Mediterranean and then returned home. He states that they paused each year to sow and harvest grain. They reported that as they sailed around the southern end of the continent they had the sun to their north, which Herodotus found unbelievable. The Egyptologist Alan Lloyd suggests that the Greeks at this time understood that anyone going south far enough and then turning west would have the sun on their right but found it unbelievable that Africa reached so far south. He suggests that "It is extremely unlikely that an Egyptian king would, or could, have acted as Necho is depicted as doing" and that the story might have been triggered by the failure of Sataspes attempt to circumnavigate Africa under Xerxes the Great.
The Phoenicians explored North Africa, establishing a number of colonies, the most prominent of which was Carthage. Carthage itself conducted exploration of West Africa. Donald Harden describes the journey of Hanno the Navigator which Harden dates to c. 425 BC and even quotes in translation the surviving Greek account (about two pages long) of this expedition. There is some uncertainty as to how far precisely Hanno reached, "Some taking Hanno to the Cameroons, or even Gabon, while others say he stopped at Sierre Leone." In 146 BCE the Romans had conquered the African coasts, part of Numidia and Mauretania and started to explorer that land. It was later subdivided into Mauretania Tingitana, Mauretania Caesariensis, Numidia, and Africa Proconsularis also known as Vetus or Africa Nova. They remained a part of the Roman Empire until the 5th century AD.
Europeans in the Middle Ages
With the expansion of Islam in the Middle Ages, North Africa was culturally cut off from non-Muslim Europe. The Islamic Empire created a barrier between Europe and the rest of the world, with European traders paying heavy tributes to obtain prized commodities like West African gold, East Asian spices and silk. The Italian republics of Venice and Genoa, among others, specialized in this trade.
In addition, the Jews of modern Spain, Portugal, and Morocco were allowed to trade in both cultural regions. Among them were Abraham Cresques and his son Jehuda, whose 1375 Catalan Atlas improved European knowledge of Africa and other regions, with a good deal of Muslim geographical knowledge and some educated guesses and imagination to fill in the blanks. This atlas details the Catalan expedition of Jaume Ferrer to the Gold River in 1346, which according to the map went south of Cape Bojador and to what is called West Africa Finisterrae.
The Genoese were also interested in circumventing the Muslim monopoly on Asian trade. In 1291, Tedisio Doria ordered Vandino and Ugolino Vivaldi to reach India via the Atlantic Ocean. When the expedition was lost, Doria sent ambassadors to Mogadishu to find out their fate.
Another interesting factor motivating European exploration was rumours of a powerful Christian kingdom, ruled by a priest-king known as Prester John, located somewhere in the eastern portion of Africa. Prester John was often identified as a Christian king who was a descendant of the Three Magi. Europeans sought his aid to defeat the Muslim nations that separated them from the Orient, or at least help them circumvent the Muslim monopoly.
Naval charts of 1339 show that the Canary Islands were already known to Europeans. In 1341, Portuguese and Italian explorers prepared a joint expedition. In 1342 the Catalans organized an expedition captained by Francesc Desvalers to the Canary Islands that set sail from Majorca. In 1344, Pope Clement VI named French admiral Luis de la Cerda Prince of Fortune, and sent him to conquer the Canaries.
In 1402, Jean de Bethencourt and Gadifer de la Salle sailed to conquer the Canary Islands but found them already plundered by the Castilians. Although they did conquer the isles, Bethencourt's nephew was forced to cede them to Castile in 1418.
In 1455 and 1456 two Italian explorers Alvise Cadamosto from Venice and Antoniotto Usodimare from Genoa, working for the king of Portugal, followed the Gambia river, visiting the land of Senegal, while another Italian sailor, Antonio da Noli from Genoa explored Cabo Verde and the Bijagos islands.
Portuguese explorer Prince Henry, known as the Navigator, was the first European to methodically explore Africa and the oceanic route to the Indies. From his residence in the Algarve region of southern Portugal, he directed successive expeditions to circumnavigate Africa and reach India. In 1420, Henry sent an expedition to secure the uninhabited but strategic island of Madeira. In 1425, he tried to secure the Canary Islands as well, but these were already under firm Castilian control. In 1431, another Portuguese expedition reached and annexed the Azores.
Along the western and eastern coasts of Africa, progress was also steady; Portuguese sailors reached Cape Bojador in 1434 and Cape Blanco in 1441. In 1433, they built a fortress on the island of Arguin, in modern day Mauritania, trading European wheat and cloth for African gold and slaves. It was the first time that the semi-mythic gold of the Sudan reached Europe without Muslim mediation. Most of the slaves were sent to Madeira, which became, after thorough deforestation, the first European plantation colony. Between 1444 and 1447, the Portuguese explored the coasts of Senegal, Gambia, and Guinea. In 1456, a Venetian captain under Portuguese command explored the islands of Cape Verde. In 1462, two years after Prince Henry's death, Portuguese sailors explored the Bissau islands and named Sierra Leoa (Lion Range).
In 1469, Fernão Gomes rented the rights of African exploration for five years. Under his direction, in 1471, the Portuguese reached modern Ghana and settled in La Mina (the mine), later renamed Elmina. They had finally reached a country with an abundance of gold, hence the historical name of "Gold Coast" that Elmina would eventually receive.
In 1472, Fernão do Pó discovered the island that would bear his name for centuries (now Bioko) and an estuary abundant in shrimp (Portuguese: camarão,), giving its name to Cameroon.
Soon after, the equator was crossed by Europeans . Portugal established a base in Sāo Tomé that, after 1485, was settled with criminals. After 1497, expelled Spanish and Portuguese Jews also found a safe haven there.
In 1482, Diogo Cão found the mouth of a large river and learned of the existence of a great kingdom, Kongo. In 1485, he explored the river upstream as well.
But the Portuguese wanted, above anything else, to find a route to India and kept trying to circumnavigate Africa. In 1485, the expedition of João Afonso d'Aveiros, with the German astronomer Martin of Behaim as part of the crew, explored the Bight of Benin, returning information about African king Ogane.
In 1488, Bartolomeu Dias and his pilot Pêro de Alenquer, after putting down a mutiny, turned a cape where they were caught by a storm, naming it Cape of Storms. They followed the coast for a while realizing that it kept going eastward with even some tendency to the north. Lacking supplies, they turned around with the conviction that the far end of Africa had finally been reached. Upon their return to Portugal the promising cape was renamed Cape of Good Hope.
Some years later, Christopher Columbus landed in America under rival Castilian command. Pope Alexander VI decreed the Inter caetera bull, dividing the non-Christian parts of the world between the two rival Catholic powers, Spain and Portugal.
Finally, in the years 1497 to 1498, Vasco da Gama, again with Alenquer as pilot, took a direct route to Cape of Good Hope, via St. Helena. He went beyond the farthest point reached by Dias and named the country Natal. Then he sailed northward, making land at Quelimane (Mozambique) and Mombasa, where he found Chinese traders, and Malindi (both in modern Kenya). In this town, he recruited an Arab pilot and set sail directly to Calicut. On August 28, 1498, King Manuel of Portugal informed the Pope of the good news that Portugal had reached India.
Egypt and Venice reacted to this news with hostility; from the Red Sea, they jointly attacked the Portuguese ships that traded with India. The Portuguese defeated these ships near Diu in 1509. The Ottoman Empire's indifferent reaction to Portuguese exploration left Portugal in almost exclusive control of trade through the Indian Ocean. They established many bases along the eastern coast of Africa, from Mozambique to Somalia, and captured Aden in 1513.
In 1500, a Portuguese fleet commanded by Pedro Álvares Cabral, which followed the route just opened by Vasco da Gama to India, was dispersed by a storm in the Indian Ocean.[citation needed] One of the ships under command of Diogo Dias arrived to a coast that wasn't in East Africa. Two years later, a chart already showed an elongated island east of Africa that bore the name Madagascar. But only a century later, between 1613 and 1619, did the Portuguese explore the island in detail. They signed treaties with local chieftains and sent the first missionaries, who found it impossible to make locals believe in Hell, and were eventually expelled.
Portuguese colonization of some parts of Africa would have a very negative impact in some of the existing civilizations. By 1583, they had destroyed the Afro-Muslim Zendj civilization of East Africa that competed with them for the African trade. Two other important African kingdoms, the Kongo and the Monomotapa, would also be destroyed by the Portuguese conquerors. Relations with the Kongo were initially good: Congolese kings embraced Catholicism and welcomed Portuguese missionaries and merchants. But the slave trade eventually became a major issue of dispute in the region. The Portuguese (and later also the Dutch) supported the enslaving warrior state of the Jaggas, who sacked the Kongo repeatedly.
They also used the Kongo to weaken the neighbour realm of Ndongo, where Queen Nzinga put a fierce but eventually doomed resistance to Portuguese and Jagga ambitions. Portugal intervened militarily in these conflicts, creating the basis for their colony of Angola. In 1663, after another conflict, the royal crown of Kongo was sent to Lisbon. Nevertheless, a diminished Kongo Kingdom would still exist until 1885, when the last Manicongo, Pedro V, ceded his almost non-existent domain to Portugal.
The Portuguese dealt with the other major state of Southern Africa, the Monomotapa (in modern Zimbabwe), in a similar manner: Portugal intervened in a local war hoping to get abundant mineral riches, imposing a protectorate. But with the authority of the Monomotapa diminished by the foreign presence, anarchy took over. The local miners migrated and even buried the mines to prevent them from falling into Portuguese hands. When in 1693 the neighbouring Cangamires invaded the country, the Portuguese accepted their failure and retreated to the coast.
Dutch intervention
Beginning in the 17th century, the Netherlands began exploring and colonizing Africa. While the Dutch were waging a long war of independence against Spain, Portugal had temporarily united with Spain, starting in 1580 and ending in 1640. As a result, the growing colonial ambitions of the Netherlands were mostly directed against Portugal.
For this purpose, two Dutch companies were founded: the West Indies Company, with power over all the Atlantic Ocean, and the East Indies Company, with power over the Indian Ocean.
The West India Company conquered Elmina in 1637 and Luanda in 1640. In 1648, they were expelled from Luanda by the Portuguese. Overall the Dutch built 16 forts in different places, including Goree in Senegal, partly overtaking Portugal as the main slave-trading power.
The Dutch left a lasting impact in South Africa, a region ignored by Portugal that the Dutch eventually decided to use as station in their route to East Asia. Jan van Riebeeck founded Cape Town in 1652, starting the European exploration and colonization of South Africa.
Other early European presence in Africa
Almost at the same time as the Dutch, other European powers attempted to create their own outposts for the African slave trade.
As early as 1530, English merchant adventurers started trading in West Africa, coming into conflict with Portuguese troops. In 1581, Francis Drake reached the Cape of Good Hope. In 1663, the British built Fort James in Gambia. One year later, another British colonial expedition attempted to settle southern Madagascar, resulting in the death of most of the colonists. The British forts on the West African coast were eventually taken by the Dutch.
In 1626, the French Compagnie de l'Occident was created. This company expelled the Dutch from Senegal, making it the first French domain in Africa.
France also put her eyes in Madagascar, the island that had been used since 1527 as a stop in travels to India. In 1642, the French East India Company founded a settlement in southern Madagascar called Fort Dauphin. The commercial results of this settlement were scarce and, again, most of the settlers died. One of the survivors, Etienne de Flacourt, published a History of the Great Island of Madagascar and Relations, which was for a long time the main European source of information about the island. Further settlement attempts had no more success but, in 1667, François Martin led the first expedition to the Malgassy heartland, reaching Lake Alaotra. In 1665, France officially claimed Madagascar, under the name of Île Dauphine. However, little colonial activity would take place in Madagascar until the 19th century.
In 1657, Swedish merchants founded Cape Coast in modern Ghana, but were soon displaced by the Danish, who founded Fort Christiansborg near modern day Accra.
In 1677, King Frederick William I of Prussia sent an expedition to the western coast of Africa. The commander of the expedition, Captain Blonk, signed agreements with the chieftains of the Gold Coast. There, the Prussians built a fort named Gross Friederichsburg and restored the abandoned Portuguese fort of Arguin. But in 1720, the king decided to sell these bases to the Netherlands for 7,000 ducats and 12 slaves, six of them chained with pure gold chains.
Overall, European exploration of Africa in the 17th and 18th centuries was very limited. Instead they were focused on the slave trade, which only required coastal bases and items to trade. The real exploration of the African interior would start well into the 19th century.
The colonizers
The purpose here is to look ahead rather than stare morbidly into the past tragedies of African history. What is done is done. It is unlikely that the history of Africa can teach us the way forward, though it doubtless provides clues as to what should be avoided in the future when large, powerful societies attempt to embed themselves in small, less powerful communities. Today we need to approach Africa with humility and humanity, rather than with the bravado and cavalier arrogance of previous colonizers. It is tempting as well to think that perhaps some of the early colonizing Europeans were perhaps less brutal than others, the British would certainly see themselves that way, the Belgiums would not dare. The Portuguese for their part may say they did the best job of ‘becoming African.’ The Dutch will say that in the guise of the South African ‘Afrikaner’ tribe, they remain as the only true white Africans. The Germans will say they were ‘just visiting’ in Namibia.
19th century
Although the Napoleonic Wars distracted the attention of Europe from exploratory work in Africa, those wars nevertheless exercised great influence on the future of the continent, both in Egypt and South Africa. The occupation of Egypt (1798–1803), first by France and then by Great Britain, resulted in an effort by the Ottoman Empire to regain direct control over that country. In 1811, Mehemet Ali established an almost independent state, and from 1820 onward established Egyptian rule over the eastern Sudan. In South Africa, the struggle with Napoleon caused the United Kingdom to take possession of the Dutch settlements at the Cape. In 1814, Cape Colony, which had been continuously occupied by British troops since 1806, was formally ceded to the British crown.
Meanwhile, considerable changes had been made in other parts of the continent. The occupation of Algiers by France in 1830 put an end to the piracy of the Barbary states. Egyptian authority continued to expand southward, with the consequent additions to knowledge of the Nile. The city of Zanzibar, on the island of that name, rapidly attained importance. Accounts of a vast inland sea, and the discovery of the snow-clad mountains of Kilimanjaro in 1840–1848, stimulated the desire for further knowledge about Africa in Europe.
In the mid-19th century, Protestant missions were carrying on active missionary work on the Guinea coast, in South Africa and in the Zanzibar dominions. Missionaries visited little-known regions and peoples, and in many instances became explorers and pioneers of trade and empire. David Livingstone, a Scottish missionary, had been engaged since 1840 in work north of the Orange River. In 1849, Livingstone crossed the Kalahari Desert from south to north and reached Lake Ngami. Between 1851 and 1856, he traversed the continent from west to east, discovering the great waterways of the upper Zambezi River. In November 1855, Livingstone became the first European to see the famous Victoria Falls, named after the Queen of the United Kingdom. From 1858 to 1864, the lower Zambezi, the Shire River and Lake Nyasa were explored by Livingstone. Nyasa had been first reached by the confidential slave of António da Silva Porto, a Portuguese trader established at Bié in Angola, who crossed Africa during 1853–1856 from Benguella to the mouth of the Rovuma. A prime goal for explorers was to locate the source of the River Nile. Expeditions by Burton and Speke (1857–1858) and Speke and Grant (1863) located Lake Tanganyika and Lake Victoria. It was eventually proved to be the latter from which the Nile flowed.
Henry Morton Stanley, who had in 1871 succeeded in finding and succouring Livingstone (originating the famous line "Dr. Livingstone, I presume"), started again for Zanzibar in 1874. In one of the most memorable of all exploring expeditions in Africa, Stanley circumnavigated Victoria Nyanza and Tanganyika. Striking farther inland to the Lualaba, he followed that river down to the Atlantic Ocean—which he reached in August 1877—and proved it to be the Congo.
Explorers were also active in other parts of the continent. Southern Morocco, the Sahara and the Sudan were traversed in many directions between 1860 and 1875 by Gerard Way[citation needed], Georg Schweinfurth and Gustav Nachtigal. These travellers not only added considerably to geographical knowledge, but obtained invaluable information concerning the people, languages and natural history of the countries in which they sojourned. Among the discoveries of Schweinfurth was one that confirmed Greek legends of the existence beyond Egypt of a "pygmy race". But the first western discoverer of the pygmies of Central Africa was Paul du Chaillu, who found them in the Ogowe district of the west coast in 1865, five years before Schweinfurth's first meeting with them. Du Chaillu had previously, through journeys in the Gabon region between 1855 and 1859, made popular in Europe the knowledge of the existence of the gorilla, whose existence was thought to be as legendary as that of the Pygmies of Aristotle.
Do not approach with caution
Travellers, invaders, missionaries, explorers, exploiters and colonizers have over the centuries approached this continent in many varies ways. They have breached the shores north, west, east and south with arrogance, with greed, with compassion, with curiosity, with ill intent and with benign intent. Though rarely with the latter. In its fort three or so countries the results of the onslaught vary. Take any continent and the one aspect of commonality is that the countries they embrace will differ greatly from one another in almost every category from general economy to trade, infrastructure, religion, welfare and resources. No less in Africa. Yet despite this outsiders not familiar with Africa take the common views for granted. They think of Africa as an untamed, unsafe, uneducated dangerous place where the white main visits at great risk. The knowledgeable have another view that flies in the face of the common understanding of Africa.
It is probably better advice to approach Africa with humility and openness than with fear and loathing.
Africa will welcome the visitor who shows understanding and a degree of tolerance. That visitor too will be rewarded in ways beyond the material. Forget gold, diamonds, oil and copper and all the other riches of Africa.
Meet an African; ask him how he is, what he is doing and how his family fares. Bathe in his smile. Inhale his joy at simply having the chance to chat. As it struggles with hunger, HIV, war, homelessness, job shortages and political instability so too does Africa keep its community eye on the horizon, on better times ahead, on growth and on self-reliance.
One should not approach Africa with caution. Caution takes a back seat in Africa. Caution is replaced here by vitality and adventure.
The perils of foreign aid and the dangers of foreign investment
The International Monetary Fund and the World Bank in Africa – a view
THE INTERNATIONAL MONETARY FUND AND WORLD BANK IN AFRICA:
A 'DISASTROUS' RECORD
from Pambazuka
by *Demba Moussa Dembele
This year marks the 60th anniversary of the International Monetary Fund and the World Bank. Through their propaganda machines, both institutions will attempt to highlight their "assistance" to Africa. But in reality, since the 1970s, these institutions have gradually become the chief architects of policies, known as "the Washington Consensus," which are responsible for the worst inequalities and the explosion of poverty in the world, especially in Africa.
Yet, when they began to intervene on that continent in the late 1970s and early 1980s, their stated goal was to "accelerate development", according to a World Bank document, familiarly known as the "Berg Report", published in 1981. But as the following editorial will show, the actual record is just disastrous.
The main pretext for their intervention was to "help solve" the debt crisis that hit African countries in the late 1970s, following the combination of internal and external shocks, notably sharp fluctuations in commodity prices and skyrocketing interest rates. The remedy they proposed, known as stabilization and structural adjustment programs (SAPs), achieved the opposite, and contributed to worsening the external debt and exacerbating the overall economic and social crisis.
In 1980, at the onset of their intervention, the ratios of debt to gross domestic product (GDP) and exports of goods and services were respectively 23.4% and 65.2%. Ten years later, in 1990, they had deteriorated to respectively 63.0% and 210.0%! In 2000, the debt to GDP ratio stood at 71.0% while the ratio of debt to exports of goods and services had "improved" somewhat, at 80.2%, according to the World Bank's Global Development Finance.
The deterioration in debt ratios is reflected in the inability of many African countries to service their external debt. As a result, accumulated arrears on principal and interests have become a growing share of outstanding debt. In 1999, those arrears accounted for 30% of the continent's debt, compared with 15% in the 1990s and 5.0% for all developing countries. To compound the crisis, African countries are getting very little, in terms of new loans, except to pay back old debts. As a result, since 1988, the part of accumulated arrears in "new" debt is estimated at more than 65%.
Between 1980 and 2000, Sub-Saharan African countries had paid more than $240 billion as debt service, that is, about four times the amount of their debt in 1980. Yet, despite this financial hemorrhage, SSA still owes almost four times what its owed more than twenty years ago! One of the most striking illustrations of this apparent paradox is the case of the Nigerian debt. In 1978, the country had borrowed $5 billion. By 2000, it had reimbursed $16 billion, but still owed $31 billion, according to President Obasanjo.
The Nigerian case is a good example of the structural nature of Africa's debt crisis and of the power imbalance that characterizes world economic and financial relationships. It is this general context that allowed the IMF and World Bank to increase their influence in African countries. One good illustration of this has been the rapid rise in the share of the World Bank and its affiliate, the International Development Association (IDA), in SSA's debt. The combined share of both, which was barely 5.1% of SSA's total debt in 1980, had jumped to 25.0% in 1990 and to more than 37% in 2000, according to the World Bank. In other words, the World Bank group has become the principal "creditor" of many Sub-Saharan countries, which explains the enormous sway it holds over these countries' policies.
One way they exercise this influence is through the imposition of stiff conditionalities on African countries in exchange for loans and credits. Financial liberalization, aimed at attracting more foreign investments to compensate for shortfalls in export revenues, instead fostered more instability, due to the volatility of exchange rates resulting from speculative short-term capital flows. This, combined with higher interest rates, "crowded" out both public and private investments. For instance, investments as a percentage of gross domestic production (GDP) fell from an annual average of 23% between 1975 and 1979 to an average of 18% between 1980 and 1984 and 16% between 1985 and 1989. They recovered somewhat in the 1990s, but averaged only 18.2% between 1990 and 1997, according to UNCTAD. These statistics are consistent with those given by the World Bank, which show that the annual investment ratio averaged 18.6% and 17.2% in 1981-1990 and 1991-2000, respectively.
These low investment ratios resulted in a contraction of output. Real GDP growth, which averaged 3.5 % in the 1970s, fell to 1.7%, between 1981 and 1990, according to the World Bank. However, this masks the sharp declines recorded in the 1980s, dubbed "the lost decade" for Africa. This is better illustrated by the negative growth rates of both GDP and consumption per capita. They fell respectively by 1.2% and 0.9% a year between 1981 and 1990. It is estimated that in 1981-1989, the cumulative loss of per capita income for the continent as a whole was equivalent to more than 21% of real GDP.
In a report released in September 2001, UNCTAD indicated that the average income per capita in SSA was 10% lower in 2000 than its 1980 level. In monetary terms, average income per capita fell from $522 in 1981 to $323 in 1997, a loss of nearly $200. The same report said that rural areas experienced an even greater decline in income. These statistics were confirmed by the World Bank, which says that income per capita in Sub Saharan Africa contracted by a cumulative 13% between 1981 and 2001.
The 2004 edition of the World Development Indicators says that SSA is the only region in the world where poverty has continued to rise since the early 1980s, that is at the onset of IFIs' intervention. According to that document, in 1981, an estimated 160 million people lived on less than $1 a day. In 2001, the number had risen to 314 million, almost double its 1981 level. This means that approximately 50% of Africa's population lives in poverty. When the threshold is $2 a day, the numbers rise from 288 million to 518 million, during the same period.
The costs of trade liberalization
According to the IMF and World Bank, one of the sources of Africa's crisis is its inward-looking trade system, characterized by the protection of domestic markets, subsidies, overvalued exchange rates and other "market distortions" that made African exports less "competitive" in world markets. In place of this system, they propose an open and liberal trading system in which tariff and non tariff barriers are kept to a minimum or even eliminated. Such a system, combined with an export-led growth strategy, would put Africa on a solid path to economic recovery, according to both institutions.
The costs associated with trade liberalization have largely offset any potential "benefits" African countries were supposed to derive from that liberalization. First of all, trade liberalization has translated into substantial fiscal losses, since many countries depend on import taxation as their main source of fiscal revenues. Therefore, the elimination of, or reduction in, import tariffs has led to lower government revenues.
But one of the most negative impacts of trade liberalization has been the collapse of many domestic industries, unable to sustain competition from powerful and subsidized competitors from industrialized countries. In fact, Africa's industrial sector has been among the biggest victims of structural adjustment.
From Senegal to Zambia, from Mali to Tanzania, from Cote d'Ivoire to Uganda, entire sectors of the domestic industry have been wiped out, with devastating consequences. Not only has the industrial sector contribution to domestic product continued to fall, but also the industrial workforce has continued to shrink dramatically. In Senegal, more than one third of industrial workers lost their jobs in the 1980s. The trend was accentuated in the 1990s, following sweeping trade liberalization policies and privatization imposed by the IMF and the World Bank, especially after the 50% devaluation of the CFA Franc, in 1994. In Ghana, the industrial workforce declined from 78,700 in 1987 to 28,000 in 1993. In Zambia, in the textile sector alone, more than 75% of workers lost their jobs in less than a decade, as a result of the complete dismantling of that sector by the Chiluba presidency. In other countries, such as Cote d'Ivoire, Burkina Faso, Mali, Togo, Zambia, Tanzania, etc. similar trends can be observed.
In several annual and special reports, the International Labor Organization (ILO) has documented the devastating impact of SAPs on employment and wages. The African Union seems to have come to grips with that devastation. It organized a special Summit on Employment and Poverty, in the capital of Burkina Faso, September 9 and 10, 2004. It was revealed during that Summit that only 25% of the African workforce is employed in the formal sector. The rest, 75%, is either in the subsistence agriculture or in the informal sector. In light of this reality, the Summit issued a Plan of Action aimed at exploring strategies to foster job creation. But such a Plan will only be credible if African countries are ready to move away from IMF and World Bank recipes, which were harshly criticized during the Summit.
UNCTAD has reported that more than 70% of Africa's exports are still composed of primary products, more than 62% of which are non processed products. This helps justify the need for more liberalization and deregulation to make African exports more "competitive". The second objective is to help justify the need for more liberalization and deregulation to make African economies more "competitive" and "attractive" to foreign direct investments. This also explains the push for more privatization.
In the name of "comparative advantage", the export-led growth strategy forces African countries to compete fiercely for market shares, leading them to flood the same markets with more of their commodities. As a result, trade liberalization has accentuated the volatility of African commodities, whose prices experienced twice the volatility of East Asian commodity prices and nearly four times the volatility that industrial countries experienced in the 1970s, 1980s and 1990s. This has contributed to worsening Africa's terms of trade.
According to UNCTAD, if Africa's terms of trade had remained at their 1980 level:
- Africa's share in world trade would have been twice its current level
- the investment ratio would have been raised by 6.0% per annum in non-oil exporting countries
- it would have added to annual growth 1.4% per annum
- it would have raised GDP per capita by at least 50% to $478 in 1997 compared with the actual figure of $323 during that year.
The costs of financial liberalization
One of the main objectives of financial liberalization is to make African countries "attractive" to foreign direct investments. But as the experience of development shows, foreign direct investments follow development, not the other way around. In addition, despite all "the right financial policies", foreign investments continue to elude Africa, with less than 2% of flows to developing countries, despite having among the highest rates of return on investments in the world. And these flows are concentrated in a few oil-producing and mineral-rich countries, according to UNCTAD and the World Bank.
In reality, financial liberalization has yielded little gains. For most African countries, it has been associated with huge costs. First, it entails higher levels of foreign exchange reserves to protect domestic currencies against attacks resulting from speculative short-term capital outflows. Second, financial liberalization has increased the likelihood of capital flight, in part as a result of a greater volatility of domestic currencies. The high costs of trade and financial liberalization further weakened African economies and opened the way to the privatization of the continent.
The privatization of Africa
Privatization, like financial liberalization, is seen by the IMF and World Bank as an instrument to promote private sector development, which has been elevated to the status of "engine of growth". The privatization of State-owned enterprises (SOEs), including water and power utilities, has been one of the core conditionalities imposed by the two institutions, even in the context of "poverty reduction".
Most of the foreign direct investments registered by African countries in the 1990s came as a response to privatization of SOEs. No sector was spared, even those considered as "strategic" in the 1980s, such as telecommunications, energy, water and the extractive industries. In 1994, the World Bank published a report assessing the process of privatization in SSA. After complaining about the slow pace of privatization throughout the region, it issued a warning to African governments to accelerate the dismantling of their public sector, accused of being "at the heart of Africa's economic crisis". The process of privatization peaked in the late 1990s and ever since has leveled off, despite more deregulation, liberalization and all kinds of incentives offered to would be investors.
To date, it is estimated that more than 40,000 SOEs have been sold off in Africa. However, the "gains" from privatization, projected by the World Bank and the IMF, have been elusive. In fact, many privatization schemes have failed and contributed to worsening economic and social conditions. Almost everywhere, privatization has been associated with massive job losses and higher prices of goods and services that put them out of reach of most citizens.
Building a neoliberal State
The concept of "good governance" was promoted by the IMF and World Bank to explain the failure of SAPs. It tends to convey the idea that SAPs have failed, in large part, because African States are "corrupt", "wasteful" and "rent-seeking" and because of the "poor implementation" of policies. In other words, SAPs were basically "sound", it is the combination of "rampant corruption" and lack of qualified personnel that led to the failure of these policies. Thus, "good governance" means nothing else than the need to build a neoliberal State, subservient to the IFIs, able to effectively implement, "sound policies" and to protect the interests of foreign investors.
Indeed, one of the main goals of the IMF and World Bank has been to discredit State-led development strategies in favor of market-led strategies. This is why one of the main targets of these institutions has been the role of the African State in economic and social development. To discredit that role, a two-track strategy was adopted. The first track was to attack the credibility of the African State as an agent of development. To achieve that goal, an abundant literature has been published by the two institutions, highlighting the "corrupt", "predatory", "wasteful" and "rent-seeking" nature of the African State. To justify these epithets, the IFIs pointed to the "mismanagement" of the public sector, accused of being an obstacle to economic growth and development. These attacks helped make the case for the sweeping restructure of the public sector, which, in many cases, led to its dismantling in favor of the private sector.
The second track in weakening the role of the State in development was to deprive it of financial resources. Trade and financial liberalization achieved in part that goal. As already indicated, trade liberalization not only led to a greater loss of fiscal revenues, following lower tariff barriers, but it also led to huge trade losses. This was compounded by financial liberalization which entailed further fiscal losses resulting from tax holidays and low income tax rates. To make up for these losses, the African State had to resort to more and more multilateral and bilateral loans and credits, which further alienated its sovereignty.
As a result, many African States have been stripped of all but a handful of their economic and social functions. Cuts in spending mostly fell on social sectors. State retrenchment primarily aimed at eliminating subsidies for the poor, removing social protection, and abandoning its role in fighting for social justice through income redistribution and other social transfers to the most disadvantaged segments of society. This explains, among other things, the degradation of many basic social services and the explosion of poverty in Africa, since 1981, as the World Bank itself has acknowledged.
While dismantling or weakening the economic and social roles of the State, the IMF and World Bank have sought to build or strengthen the functions most useful to the implementation of neoliberal policies and the promotion of private sector development. This explains the insistence on "capacity building" or on "institution building", heard over the last few years. However, the institutions that the IMF and World Bank talk about are not for development, but for markets. In other words, they propose building institutions supportive of neoliberal policies and in the service of the private sector, especially foreign investors.
Thus, the "institution building" agenda promoted by the IMF and the World Bank has nothing to do with promoting democracy and protecting human rights. In fact, the neoliberal conception of governance undermines both since it deprives representative institutions of their role in formulating public policies following open and democratic debates. They are reduced to implementing what the IMF and World Bank and their G 8 masters decide for African countries and their people.
From structural adjustment to poverty "reduction"
After producing poverty and deprivation on a massive scale in Africa and elsewhere, the IFIs' focus on "poverty reduction" since 1999 could not be more suspect. But to make this shift a bit more credible, the IMF's Enhanced Structural Adjustment Facility (ESAF) was renamed "Poverty Reduction and Growth Facility" (PRGF) and the World Bank has set up a "Poverty Reduction Support Credit" (PRSC).
There is no doubt that the shift in the rhetoric of the IFIs amounts to an admission of failure of past policies, which put too much emphasis on correcting macroeconomic imbalances and "market distortions" at the expense of economic growth and social progress. The disastrous record of SAPs and the continued deterioration in the economic and social situation of countries subjected to IMF and World Bank programs put into question the credibility and even the legitimacy of these institutions. Their crisis of legitimacy was exacerbated by stepped up attacks by the Global Justice Movement and growing criticism from mainstream economists, especially from Joseph E. Stiglitz, former World Bank Chief Economist.
The nature of Poverty Reduction Strategy Papers (PRSPs)
The PRSPs are supposed to provide more freedom to developing countries in formulating their policies. This is what the Bank and the Fund call "national ownership." Representatives from the government, the private sector, civil society organizations - and even the poor - are supposed to "participate" in drafting the PRSP of each country to decide on how to use the proceeds released by "debt relief" to achieve "poverty reduction".
In reality, the macroeconomic framework that underpins the PRSPs is the same as that which underpinned the now discredited SAPs. That framework is non negotiable and includes fiscal austerity, trade and financial liberalization, privatization, deregulation and State retrenchment, etc. In essence, despite the disastrous outcome of their past policies, the IMF and the World Bank still believe that those policies are in the "interests of the poor". In particular, they think that trade liberalization and openness are the best - if not the only - road to growth, which they see as a "prerequisite" for poverty reduction. Hence the export-led growth strategy advocated by the two institutions, but which has been a big failure in African and other developing countries.
A survey of 27 African PRSPs by UNCTAD in 2002 has demonstrated that all of them, without exception, contain the policies outlined above. Policies which are at odds with both the wishes and the interests of the poor, observes the document. It is this straight jacket that ties up developing countries' hands and prevents them from achieving any substantial gain in poverty "reduction". Most of the time, countries have failed to implement these conditions, leading to the suspension of their programs.
In fact, the IFIs' conception of poverty views it as an isolated aspect of overall economic and social development that should be dealt with by short-term measures. Hence, the emphasis in the PRSPs on more spending for primary education and health, among others. Thus, PRSPs contain some short-term measures aimed at mitigating the negative impact of macroeconomic policies and structural reforms on the most vulnerable groups, notably the poor. However, the tools the World Bank and the IMF have proposed to achieve this goal are the same as those already tested in the past and that have aggravated poverty and deprivation in much of Africa.
In reality, PRSPs are SAPs with more conditionalities and less resources. As already indicated, a new "generation" of conditionalities have been added to old conditionalities, with the concept of "good governance", analyzed above. UNCTAD (2002) has revealed that between 1999 and 2000, 13 African countries had signed programs containing an average of 114 conditionalities, 75% of which are governance-related conditionalities. One can imagine the enormous human and financial resources needed to deal with such a number of conditionalities. For this reason, the degree of compliance with IMF and World Bank-sponsored programs has significantly declined since the mid-1990s. For instance, the rate of compliance was estimated at about 28% of the 41 agreements signed between 1993 and 1997, according to UNCTAD.
With the PRSPs, the IMF and the World Bank pursue three objectives. First, mislead world public opinion, especially in Northern countries, in making believe that they are really serious about "reducing poverty". And the World Bank alone counts on a huge and sophisticated propaganda machine to achieve this. With the more than 300 staff of its External Relations Department - Propaganda Department, one should say - the Bank has all the means it needs to "explain" effectively its policies. It has achieved some success, since some big Northern NGOs, once very critical of SAPs, see the PRSPs as a "positive shift" in the IFIs' policies.
The second objective of the PRSPs is to enlist a broad support within each country to help rehabilitate discredited and failed policies. This is what "national ownership" and "participation" of civil society organizations are supposed to achieve. While insisting on the "participation" of civil society organizations, their most vocal critics, the IMF and World Bank tend to sideline representative institutions, like National Assemblies. This is another illustration of these institutions' contempt for the democratic process in Africa. Finally, with PRSPs, the IMF and the World Bank seek to shift the blame to African countries and citizens for the inevitable failure of these "new" policies.
Conclusion
The IMF and World Bank have utterly failed in "reducing poverty" and "promoting development". In fact, they are instruments of domination and control in the hands of powerful states whose long-standing objective is to perpetuate the plunder of the resources of the Global South, especially Africa. In other words, the fundamental role of the Bank and Fund in Africa and in the rest of the developing world is to promote and protect the interests of global capitalism.
This is why they have never been interesting in "reducing" poverty, much less in fostering "development". As institutions, their ultimate objective is to make themselves "indispensable" in order to strengthen and expand their power and influence. They will never relinquish easily that power and influence. This explains why they have perfected the art of duplicity, deception and manipulation. In the face of accumulated failures and erosion of their credibility and legitimacy, they have often changed their rhetoric, but never their fundamental goals and policies.
This is why they cannot be trusted to bring about "development" in Africa. If the experience of the last quarter of a century has taught Africa one fundamental lesson it is that the road to genuine recovery and development begins with a total break with the failed and discredited policies imposed by the IMF and the World Bank.
In fairness to both institutions, we must recognize, however, the complicity of African leaders in the disastrous outcome of neoliberal policies. Many governments and senior civil servants have bought into the agenda promoted by the IMF and World Bank. Therefore, they bear a great responsibility in the current state of the continent. Thus, to put an end to the influence of these institutions, African social movements and progressive forces must explore strategies aimed at promoting a new kind of leadership able and willing to challenge these institutions in favor of genuine alternative development policies.
* Demba Moussa Dembele is Director of the Forum for African Alternatives in Dakar, Senegal
Chequebook colonizers from the Republic of China – What’s yours is yours and what’s mine is yuan
In their study The Impact of Chinese in Africa[i] authors Kinfu Adisu, Thomas Sharkey Sam C. Okoroafo (Corresponding author) make the following concluding note:
“In conclusion, while Chinese relations with African countries have been positive in some ways, serious questions are being asked by Western and African intellectuals about China’s tactics and strategies in its quest for resources. Unfortunately, many authoritarian African leaders have actually embraced the Chinese model
allowing them to maintain a strong grip on political power (Brooks and Shin, 2006). Economy and Monaghan
(2006) also mentioned that African leaders cite China as the ideal model for their countries and economies.
“The current recession has focused the world’s attention on financial problems from Iceland to Greece and from
the US to Japan. Somewhat overlooked in this downturn is the relationship between Africa and China. Clearly,
this is a very important relationship on many different levels and should concern western business and
governmental interests.”
This relationship is likely to endure since both parties benefit to some degree. This is important to some African
countries since it provides a different development model and different rules of the game put forward as the
“Beijing Consensus,” with its strong commitment to Africa. It is also attractive because it does not prescribe
behavioral outcomes for African leadership. The Chinese seem willing to work with the African governments
and have rejected criticisms. They are not apologizing for their activities (Wu 2010) and claim that the
investments are now more ‘market driven.’
Trade lacks the punch of resource development
The Globe & Mail, Monday, September 13, 2010 reported on the annual growth in
Africa from 2003 to 2008 which it was found by the Commission for Africa Report to be six percent due largely to an ever growing demand for Africa’s natural resources, coupled with high commodity prices.
The report also notes that Africa is on the brink of an era of unprecedented growth, but is still hampered by “woeful” progress on trade reform and broken promises by the world’s wealthiest countries. Stop right there.
If promises are continuously broken by the donors and investors is not reasonable to then rethink the approach and come up with a plan that does not rely on the promises of foreigners, or at least cull the donor list down to the reliable sources of funding?
The wealthy nations, says the report, that the wealthy nations (G8) promised some $25 billion and doubling cash flow to the poorest nations by 2010. Their aid to Africa increased by just 60% of the promised amount.
Not that one should confuse ‘foreign aid’ with ‘foreign investment’ for while even both have strings attached, they are not the same strings. Expectations vary as does the pay back.
Corporate profits are not on the same side of the margin as educational, medical, infrastructure and social benefits.
So in the context of generating profits and increasing value it is here that Africa can Africanize at least in a modest way. South Africa’s attempt at introducing the BEE system thereby making ‘players’ of some of the 50 million who control the vote in South Africa is a step towards Africanization though the ANC for all its successes in some areas has yet to demonstrate success here. An area that needs more attention is, I believe, to be found in that all corporations are advised to achieve 26% black ownership by 2014. How they pay for their share is not as easily dealt with. Vendor pays is common. Commercial bank is impractical. Government is a no go as it has its own issues, not all of which include the masses and their wellbeing.
When young blacks start their own ventures and own them 100% I believe we are headed in the right direction. When this is repeated throughout Africa then I believe the world wins.
The perils of foreign aid and the dangers of foreign investment
The emergence of self-developing organizations and funds such as SADEC
Here follows the preamble to THE TREATY OF THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY,
AS AMENDED. To my mind, while it does not use the term Africanization there seems little doubt that an end goal resembling an Africanized model is what the members have in mind.
WE, the Heads of State or Government of:
The Republic of Angola The Republic of Botswana, The Democratic Republic of Congo, The Kingdom of Lesotho,
The Republic of Malawi, The Republic of Mauritius, The Republic of Mozambique, The Republic of Namibia, The Republic of Seychelles, The Republic of South Africa, The Kingdom of Swaziland, The United Republic of Tanzania, The Republic of Zambia, The Republic of Zimbabwe.
The Republic of Malawi, The Republic of Mauritius, The Republic of Mozambique, The Republic of Namibia, The Republic of Seychelles, The Republic of South Africa, The Kingdom of Swaziland, The United Republic of Tanzania, The Republic of Zambia, The Republic of Zimbabwe.
HAVING REGARD to the objectives set forth in "Southern Africa: Toward Economic Liberation - A Declaration by the Governments of Independent States of Southern Africa, made at Lusaka, on the 1st April, 1980";
IN PURSUANCE of the principles of " Towards a Southern African Development Community - A Declaration made by the Heads of State or Government of Southern Africa at Windhoek, in August, 1992," which affirms our commitment to establish a Development Community in the Region;
DETERMINED to ensure, through common action, the progress and well-being of the people of Southern Africa;
CONSCIOUS of our duty to promote the interdependence and integration of our national economies for the harmonious, balanced and equitable development of the Region;
CONVINCED of the need to mobilise our own and international resources to promote the implementation of national, interstate and regional policies, programmes and projects within the framework for economic integration;
DEDICATED to secure, by concerted action, international understanding, support and co-operation;
MINDFUL of the need to involve the people of the Region centrally in the process of development and integration, particularly through the guarantee of democratic rights, observance of human rights and the rule of law;
RECOGNISING that, in an increasingly interdependent world, mutual understanding, good neighbourliness, and meaningful co-operation among the countries of the Region are indispensable to the realisation of these ideals;
DETERMINED to alleviate poverty, with the ultimate objective of its eradication, through deeper regional integration and sustainable economic growth and development;
FURTHER DETERMINED to meet the challenges of globalization;
TAKING INTO ACCOUNT the Lagos Plan of Action and the Final Act of Lagos of April 1980, the Treaty establishing the African Economic Community and the Constitutive Act of the African Union;
BEARING IN MIND the principles of international law governing relations between States;
Have decided to establish an international organisation to be known as the Southern African Development Community (SADC).
African trading blocs grow in stature and popularity
Michael McAdams for THE EAST AFRICAN reported on July 26, 2010 that the DRC was eager and willing to join the East African Community with this headline: “We want to join you, DRC tells regional bloc.”
Were DRC’s application to be accepted and its likely membership request accepted, it would be a big boost to the trading bloc already boasting five countries with a combined population of 126.6 million and a gross domestic product of $73 billion.
Mr. Mpango said that DRC is keen to work with the EAC to exploit its vast potential in energy, minerals and water as the EAC will offer transport facilities via the North, South and Central corridors as well as the ports of Dar es Salaam and Mombasa.
Mr. Mwapachu told The East African that the door is open for DRC to join the EAC as it has a close traditional, cultural and economic relationship with the region.
“We believe that this historic event will mark a turning point and trigger a new level of relationship leading to the DRC joining the EAC,” he said.
Current EAC partner states are Burundi, Kenya, Tanzania, Rwanda and Uganda, with a combined population of around 130 million.
The closer co-operation between the DRC and EAC is paramount as the country shares energy resources with Uganda (Lake Albert — hydrocarbons) and Rwanda (Lake Kivu — gas).
DRC’s economy has been stifled by years of conflict and corruption. However Tanzania Ports Authority data show that DRC destined cargo through Dar es Salaam port grew by nearly 30 per cent over the past four years.
In 2005, traffic in Dar port to the DRC was 113,660 tonnes rising to 206,884 tonnes in 2006 and to 277,891 tonnes in 2007.
In 2008, traffic hit 316,079 tonnes but dropped to 291,190 tonnes in 2009 accounting for an average of 30 per cent growth. Again, mineral reserves mean it has potential to be a wealthy country.”
In the context of the Africanization of Africa it should not be difficult to understand that when a port such as Dar es Salaam can grow its business by 30% in just 4 years that something is afoot in post colonial Africa, and that the notion of Africanization is far closer to being realized than the west or China may be willing to admit.
The United Nations policy in Africa
Organic growth in Africa slow but steady can replace foreign investment
Leadership through self-discipline
Not everyone sees Africanization as the answer
The mere mention of the notion that Africa could one day become self-sustaining, or that it should hold this as its goal, is today met with either blank states or derision. The attitude towards Africa by foreigners and Africans alike, remains little changed over hundreds of years. Africa is viewed largely as helpless, uneducated, unfed, with medication, without housing and electricity. In short an unruly mess.
The Internet and mobile phones are bringing swift changes to Africa however. Digital, wireless communications have opened up a new window to Africa’s peoples. A window through which they can see themselves, as they have not been able to in the past.
Africa is the world's second-largest and second most-populous continent, after Asia. At about 30.2 million km² (11.7 million sq mi) including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area. With a billion people as of 2009 in 61 territories, it accounts for about 14.72% of the world's human population.[1]
Previously it would not have been possible to connect a billion people; today it is. And that connection may be a clue to Africa’s future as a world power. Hard as it is to imagine today, one need to only review the history of how power has shifted over the millennia from one region to the other and it should not take much imagination to understand that in time, less time than most suspect, African will come on full-stream as a major player in the global economy. Within the lifetime of many of us we have witnessed the rise of China to second largest economic power on earth, and by far the most influential. While not a country, an Africa coordinated would outclass most developed nations with ease.
Old bosses now new partners
The President of the United States has a clear message for Africa, ‘Africanize’ now
2009-07-11
Obama Calls on Africans to Claim Their Future
By Merle David Kellerhals Jr.
Staff Writer, Embassy of the United States, Belgium
Washington — Saying he too has the blood of Africa within him, President Obama does not see the African people as living a world apart, but as a fundamental part of an interconnected world.
“I’ve come here to Ghana for a simple reason: the 21st century will be shaped by what happens not just in Rome or Moscow or Washington, but by what happens in Accra as well,” Obama said in a July 11 speech before the Ghanaian Parliament in his first visit to sub-Saharan Africa as president.
“I have the blood of Africa within me, and my family’s own story encompasses both the tragedies and triumphs of the larger African story.”
The 21-hour visit to Ghana, the speech by Obama and his reception by Africans were all the more poignant because he is America’s first African-American president, whose father came from Kenya, where the president still has family. Obama’s grandfather was a cook for the British in Kenya, and his father grew up in a tiny village where he herded goats.
The July 11 speech in Accra capped off a journey that began in Moscow July 6, followed by the Group of Eight Summit in L’Aquila, Italy, July 8–10, a visit with Pope Benedict XVI at the Vatican on July 10, and then his visit to Ghana before returning to Washington.
Obama began the day with a breakfast meeting with Ghanaian President John Atta Mills at the Christiansborg Castle in Accra. The president and first lady Michelle Obama also attended a brief event on maternal health at La General Hospital before the speech to the parliament.
Ghana was chosen by the White House for Obama’s first address to the African people in part because of its progress in democratic governance, the president said in a recent interview with AllAfrica.com, which provides comprehensive African news to the continent.
Ghana was the first sub-Saharan nation to gain independence. It has experienced colonial rule under the British, a period of military rule and finally democratic rule. Previously Presidents Clinton and Bush had visited the nation of 23 million.
REALIZING THE POTENTIAL
Obama said that despite the progress across Africa that has been made in the latter half of the 20th century and the early 21st, much of Africa’s promise has not been fulfilled.
“Disease and conflict have ravaged parts of the African continent. In many places, the hope of my father’s generation gave way to cynicism, even despair,” the president said before a special session of the Ghanaian Parliament at the Accra International Conference Center.
Good governance is the key to development, Obama said. “That’s the change that can unlock Africa’s potential. And that is a responsibility that can only be met by Africans.”
For the United States and the West, Obama said, the commitment to Africa must be greater than annual allocations of foreign aid; it involves partnerships to build the capacity for transformational change. The president outlined four areas critical to the future of Africa: democratic governance, economic opportunity, strengthening public health, and the peaceful resolution of conflict.
The president said foreign aid from the West is not an end in itself. “The purpose of foreign assistance must be creating the conditions where it’s no longer needed.”
Governments that respect the will of their people tend to be more prosperous, more stable and more successful, Obama said. But no country is going to create wealth for its people if its leaders exploit the economy for personal gain.
“In the 21st century, capable, reliable and transparent institutions are the key to success — strong parliaments, honest police forces, independent judges, independent press, a vibrant private sector, a civil society. Those are the things that give life to democracy, because that is what matters in people’s everyday lives,” Obama said.
Africa is rich in natural resources, and the African people have shown the capacity and commitment to create their own opportunities, the president said. But he cautioned that old habits are the most difficult to break.
“Dependence on commodities, or a single export, has a tendency to concentrate wealth in the hands of the few, and leaves people too vulnerable to [economic] downturns,” he said.
Obama said Africa has boundless natural gifts to generate its own power while exporting profitable, clean energy abroad.
Strengthening public health is critical, Obama said. Africans have struggled with AIDS, tuberculosis and malaria, but also other diseases such as polio and often-neglected tropical diseases. The president said public health programs must also promote wellness and improve the care of mothers and children.
Finally, Obama said that conflict has become too much a part of life in Africa, and peaceful solutions have to be embraced.
“It is still far too easy for those without conscience to manipulate whole communities into fighting among faiths and tribes. These conflicts are a millstone around Africa’s neck,” he said.
Obama said that it is never justifiable to target innocents in the name of an ideology. “It is the death sentence of a society to force children to kill in wars,” he said.
Africans are standing up to this inhumanity, he said.
“Freedom is your inheritance. Now it is your responsibility to build upon freedom’s foundation,” the president said.
Linkedin Group: Mining Exploration in Africa
Discussion started by Claus Andrup: Would Africa be better off pursuing a policy of organic growth in the resource sector rather than relying of foreign investors. That is to say, is there a case for the Africanization of Africa?
Gavin McInnes asks me the obvious question: “Are you mad?
Without foreign investors not even South Africa would have become a partially developed country without British backing. The success of the resource rich countries is solely dependent on foreign funding - This will never change. Africanization is a dream and a dangerous and foolish one. It would leave African leaders without bargaining chips on the multilateral tables and have the resource base open to be squandered domestically without the benefit of secondary production and diversification of the standard single market economies being implemented. Africanization would marginalize the bargaining power of its resources in exchange for aid or capital. African governments simply doesn’t have the means to take its resource base and infrastructurally grow their countries. It needs foreign partners to expand mines and energy projects feeding those mines. Then those countries will improve. Its because of instability and inefficiencies which prevented Africa from developing since decolonization. Providing a sound investment friendly environment with good beneficiation policies in place will allow Africa to flourish. In the global age of today Africanization is a ostrich hiding its head in a hole.”
And this from a less inflamed commentator, Chris Pearson: Over what time frame do you imagine? ...
On balance, I think foreign investment is essential, but without doubt this also requires countries to have sensible mining investment regimes (that is clearly defined and beneficial to all parties) without the risks of some of the apparently more bizarre "events" reported in recent weeks/months recurring (which would obviously detract from companies considering potential investments and self fulfill / support your thesis!)
On balance, I think foreign investment is essential, but without doubt this also requires countries to have sensible mining investment regimes (that is clearly defined and beneficial to all parties) without the risks of some of the apparently more bizarre "events" reported in recent weeks/months recurring (which would obviously detract from companies considering potential investments and self fulfill / support your thesis!)
“Claus,” says Gavin McInnes, “I am an African. Born here and love it here. But it will never change as much as Chinese investors invest in Africa, Canadian investors invest in Tanzania etc. (would like) The world’s financiers are involved in the outskirts of a mining village in Togo as much as it has interests in the oil fields off Nigeria. Foreign investment will never change. Not even legislation can stop it. The dependence of foreign aid cannot be undone.
Without foreign capital basic sanitation, irrigation and education would not be possible. Africa would be much the poorer. It simply cannot do without foreign intervention. Indeed it asks for it.
African leaders will always squander its resources. The bounty allows for lavish living. When foreigners aren’t involved it simply is not mined/explored. Full control of their resources would be most irresponsible to the global outlook and pricing structure of that resource. It would do great harm to the developed and the underdeveloped alike.
What chance is there that infrastructure will be developed - what need is there in Africa. You need to understand the way of Africa. If left to its own devices it would have been undisturbed the day the first Europeans saw it.
An ostrich hides its head when it is scared. It pretends by not seeing that which it fears it will go away. Sometimes it works...sometimes it doesn’t. “
And further: “What Africa needs is more foreign investment - not less or total independence. The more foreign investment African countries will have, the more exposed it will be to media scrutiny and investors looking at the welfare of its own pockets, but also of the retention of its capital expenditure. Most MNCs have excellent corporate and social responsibilities to the communities they invest in. With greater investment Africa will develop in the global marketplace.”
Gavin McInnes
Claus, your view of Africa was through the apartheid years.
Pure Africanization will not allow for young African entrepreneurs to make use of foreign springboards like TSX and AIM but to develop their own bourses. Those Africans are off course the exception to the rule that participates.
The model for financial infrastructure is for the African economies, is to diversify away from single market economics. Its steel mines should allow for car factories to be built, etc.
African economics should place a greater emphasis on industrialization and develop a domestic consumer market to grow more of a stabilized economy which will not be subject to the volatility of the international marketplace.
Once the resource base trickles down in this way will there be growth and prosperity in Africa. It is imperative that African politicians be held fully accountable for their actions.
Its resource base should however be treated with more respect as it is plentiful it is not infinite. If foreign investors seek to develop this it should be with direct economic incentive to the localized communities in which the resource base is. eg.:
AngloPlats leases the ground from the Royal Bafokeng Nation. The money earned from this has resulted in schools, hospitals, roads, stadiums, houses and proper sanitation and clean drinking water.
This win-win partnership perhaps is the model to move forward. You must also remember that if it wasn’t for DeBeers Botswana would not have been the stable nation it is today.
Africa is not helpless - the multitude of Africans is.
Gavin McInnes
Well, my view is not entirely through the apartheid lens. I have been very active in SA over the years, up to the point where I even naively attempted to acquire the Eersteling Gold Mining Company from Stef Hayden's Caledonia. The 2008 crash and our inability to source a BEE who could afford to play, prevented the deal from going ahead. With hindsight I am pleased we failed.
There are a number of exceptions out there of course and I do communicate with some of them.
I totally agree with the diversification model, as do most academics, government agencies and corporations. Everyone sees that one.
At the same time it is probably dangerous to think that one can rely solely on the resource wealth to trickle down and drive the industrial growth. The reason for this is that profits, whether in the hands of the corporations that win them or the states that earn via taxes, tend not to be applied solidly or purposefully in the direction of industry as such, let alone education or health. Resource profits as we know are used more often than not in the search for new deposits of resources.
And my point above runs parallel with your next point which is 'sustainable mining' - not to mention safe in the human sense. The Royal Bafokeng and Nation and Botswana are of course the poster children for a new age in African development. There are a number of factors that contribute to their success, the most obvious being that 'success' as such is on their agenda in the firs place.
Each of these states is also fortunate in that they are relatively small compared to their super-sized neighbours to the north, particularly the DRC, and further they are both in close proximity to a benign big brother, South Africa.
Botswana, particularly with its burgeoning bourse, sets a target for all its contemporaries as we know. Granted it got a huge leg up from DeBeers and DeBeers is unique in that it too once saw Africa through the apartheid lens. That experience is what in part has enabled it to achieve is success in Botswana.
When it comes to the Africanization of Africa DeBeers is helping. When it comes to the Africanization of Africa China cannot, not many of the other foreign investors. The motive of the funder is what one needs to be skeptical about - if one is an African.
There are a number of exceptions out there of course and I do communicate with some of them.
I totally agree with the diversification model, as do most academics, government agencies and corporations. Everyone sees that one.
At the same time it is probably dangerous to think that one can rely solely on the resource wealth to trickle down and drive the industrial growth. The reason for this is that profits, whether in the hands of the corporations that win them or the states that earn via taxes, tend not to be applied solidly or purposefully in the direction of industry as such, let alone education or health. Resource profits as we know are used more often than not in the search for new deposits of resources.
And my point above runs parallel with your next point which is 'sustainable mining' - not to mention safe in the human sense. The Royal Bafokeng and Nation and Botswana are of course the poster children for a new age in African development. There are a number of factors that contribute to their success, the most obvious being that 'success' as such is on their agenda in the firs place.
Each of these states is also fortunate in that they are relatively small compared to their super-sized neighbours to the north, particularly the DRC, and further they are both in close proximity to a benign big brother, South Africa.
Botswana, particularly with its burgeoning bourse, sets a target for all its contemporaries as we know. Granted it got a huge leg up from DeBeers and DeBeers is unique in that it too once saw Africa through the apartheid lens. That experience is what in part has enabled it to achieve is success in Botswana.
When it comes to the Africanization of Africa DeBeers is helping. When it comes to the Africanization of Africa China cannot, not many of the other foreign investors. The motive of the funder is what one needs to be skeptical about - if one is an African.
Claus Andrup
Claus, those are just my views - they might not be right or wrong but they are original nonetheless. Our model is to promote self-determination amongst the artisan miners throughout Africa since we pay a far higher wage per gram to the workers working for themselves. In that way I hope that it will prove to the soldiers that it is better to have a ploughshare than a sword.
Gavin McInnes
1986
I can’t remember how I got to know Nymbezi “Rodwell” Mzotane. When I met him in person it was in a flat in London where a number of exiled members of South Africa’s then Pan Africanist party were holed up. Rodwell claimed that he had done time on Robben Island as a result of his alleged connection to an incident known to some as the Battle of Paarl. Details of the event as recorded in the Standard Encyclopaedia of Southern Africa show that by today’s standards this was a minor incident. For those of us living in South Africa, both black and white, it was a significant event:
“Violence erupted when Poqo members from Mbekweni, Paarl, met and resolved to attack the White town of Paarl. Over 200 men armed with axes, pangas, sticks, sabres and possibly a few revolvers gathered at about 02h00 and split into two groups, one to attack the prison and the other the police station. The latter group approached the police station and began attacking police patrol vans. Three were shot dead in front of the police station and others were wounded. Several were arrested. As the rest of the group fled, they met those who had been planning the prison attack and formed a new group which began attacking houses in Loop Street. Two White people, Ms Rencia Vermeulen and Mr. Frans Richards, were killed. One Paarl resident chased the attackers away from her house with a revolver, shooting one of them. The final death toll was seven, including five Poqo members: Godfrey Yekiso, Madodana Camagu, John Magigo and Ngenisile Siqwebo. Matthews Mayezana Mali was shot by the South African Police (SAP) on the following day. Mali was shot in the head and chest while marching in front of a group of Pan Africanist Congress (PAC) demonstrators on their way to the Paarl police station to hand over a list of grievances on the day after the disturbances.”
Source:
Potgieter, D.J. et al. (eds)(1970). Standard Encyclopaedia of Southern Africa, Cape Town: NASOU, v. 10, p. 458.
I bought three little books from the men in the flat; Azania Combat, Azania News and The Rise of Azania, the Fall of South Africa. I also bought a T-shirt that had the words “Full victory, no compromise” boldly printed on the back. The books and T-shirt remain in my possession. Books and T-shirt under arm Rodwell and I walked to a nearby Italian restaurant, La Fontanella on the High Road in Willesden in London’s gloomy NW district.
We talked mainly about what was coming down the political pipe; one man one vote for all South Africans. These were heady times though Rodwell was still nervous about returning to his home in the Transkei. The discussion ranged across many things African, but one comment I made stands out. Perhaps it has remained with me all this time waiting for some more useful purpose than casual anecdotal evidence of a past history with a vast continent. All I said to Rodwell was that if he thought the battle for a vote for all in South Africa had been a long struggle, black South Africans had a much, much bigger battle ahead.; the battle for capital. At the time Nelson Mandela had already been making secret trips abroad to garner pledges funds for the new South Africa. No one really knows how many of the funds came to roost, but it is said that they fell far short of what was promised. That was my point to Rodwell then and I guess that is the point of this book. Dealing with bankers and sovereignties of the west and east will be a much tougher battle than the fight for self-determination.
Domestic political self-determination is not akin to international economic independence. That was a fact then. Today it is a fact that applies one way or the other to each of the 54 countries. It is something that can only be fixed from within. To some degree it is, and in many ways one sees it daily though not in a clear, definable way.
All referenced credits to: Wikipedia, the free encyclopedia
Original concept and text: Claus Andrup
Discussion: Mining Exploration in Africa; Linkedin Group
[i] International Journal of Business and Management Vol. 5, No. 9; September 2010
Published by Canadian Center of Science and Education
THE INTERNATIONAL MONETARY FUND AND WORLD BANK IN AFRICA:
A 'DISASTROUS' RECORD
from Pambazuka News Nº 175 - http://www.pambazuka.org/
by Demba Moussa Dembele *
This year marks the 60th anniversary of the International Monetary Fund and the World Bank. Through their propaganda machines, both institutions will attempt to highlight their "assistance" to Africa. But in reality, since the 1970s, these institutions have gradually become the chief architects of policies, known as "the Washington Consensus," which are responsible for the worst inequalities and the explosion of poverty in the world, especially in Africa.
Yet, when they began to intervene on that continent in the late 1970s and early 1980s, their stated goal was to "accelerate development", according to a World Bank document, familiarly known as the "Berg Report", published in 1981. But as the following editorial will show, the actual record is just disastrous.
The main pretext for their intervention was to "help solve" the debt crisis that hit African countries in the late 1970s, following the combination of internal and external shocks, notably sharp fluctuations in commodity prices and skyrocketing interest rates. The remedy they proposed, known as stabilization and structural adjustment programs (SAPs), achieved the opposite, and contributed to worsening the external debt and exacerbating the overall economic and social crisis.
In 1980, at the onset of their intervention, the ratios of debt to gross domestic product (GDP) and exports of goods and services were respectively 23.4% and 65.2%. Ten years later, in 1990, they had deteriorated to respectively 63.0% and 210.0%! In 2000, the debt to GDP ratio stood at 71.0% while the ratio of debt to exports of goods and services had "improved" somewhat, at 80.2%, according to the World Bank's Global Development Finance.
The deterioration in debt ratios is reflected in the inability of many African countries to service their external debt. As a result, accumulated arrears on principal and interests have become a growing share of outstanding debt. In 1999, those arrears accounted for 30% of the continent's debt, compared with 15% in the 1990s and 5.0% for all developing countries. To compound the crisis, African countries are getting very little, in terms of new loans, except to pay back old debts. As a result, since 1988, the part of accumulated arrears in "new" debt is estimated at more than 65%.
Between 1980 and 2000, Sub-Saharan African countries had paid more than $240 billion as debt service, that is, about four times the amount of their debt in 1980. Yet, despite this financial hemorrhage, SSA still owes almost four times what its owed more than twenty years ago! One of the most striking illustrations of this apparent paradox is the case of the Nigerian debt. In 1978, the country had borrowed $5 billion. By 2000, it had reimbursed $16 billion, but still owed $31 billion, according to President Obasanjo.
The Nigerian case is a good example of the structural nature of Africa's debt crisis and of the power imbalance that characterizes world economic and financial relationships. It is this general context that allowed the IMF and World Bank to increase their influence in African countries. One good illustration of this has been the rapid rise in the share of the World Bank and its affiliate, the International Development Association (IDA), in SSA's debt. The combined share of both, which was barely 5.1% of SSA's total debt in 1980, had jumped to 25.0% in 1990 and to more than 37% in 2000, according to the World Bank. In other words, the World Bank group has become the principal "creditor" of many Sub-Saharan countries, which explains the enormous sway it holds over these countries' policies.
One way they exercise this influence is through the imposition of stiff conditionalities on African countries in exchange for loans and credits. Financial liberalization, aimed at attracting more foreign investments to compensate for shortfalls in export revenues, instead fostered more instability, due to the volatility of exchange rates resulting from speculative short-term capital flows. This, combined with higher interest rates, "crowded" out both public and private investments. For instance, investments as a percentage of gross domestic production (GDP) fell from an annual average of 23% between 1975 and 1979 to an average of 18% between 1980 and 1984 and 16% between 1985 and 1989. They recovered somewhat in the 1990s, but averaged only 18.2% between 1990 and 1997, according to UNCTAD. These statistics are consistent with those given by the World Bank, which show that the annual investment ratio averaged 18.6% and 17.2% in 1981-1990 and 1991-2000, respectively.
These low investment ratios resulted in a contraction of output. Real GDP growth, which averaged 3.5 % in the 1970s, fell to 1.7%, between 1981 and 1990, according to the World Bank. However, this masks the sharp declines recorded in the 1980s, dubbed "the lost decade" for Africa. This is better illustrated by the negative growth rates of both GDP and consumption per capita. They fell respectively by 1.2% and 0.9% a year between 1981 and 1990. It is estimated that in 1981-1989, the cumulative loss of per capita income for the continent as a whole was equivalent to more than 21% of real GDP.
In a report released in September 2001, UNCTAD indicated that the average income per capita in SSA was 10% lower in 2000 than its 1980 level. In monetary terms, average income per capita fell from $522 in 1981 to $323 in 1997, a loss of nearly $200. The same report said that rural areas experienced an even greater decline in income. These statistics were confirmed by the World Bank, which says that income per capita in Sub Saharan Africa contracted by a cumulative 13% between 1981 and 2001.
The 2004 edition of the World Development Indicators says that SSA is the only region in the world where poverty has continued to rise since the early 1980s, that is at the onset of IFIs' intervention. According to that document, in 1981, an estimated 160 million people lived on less than $1 a day. In 2001, the number had risen to 314 million, almost double its 1981 level. This means that approximately 50% of Africa's population lives in poverty. When the threshold is $2 a day, the numbers rise from 288 million to 518 million, during the same period.
The costs of trade liberalization
According to the IMF and World Bank, one of the sources of Africa's crisis is its inward-looking trade system, characterized by the protection of domestic markets, subsidies, overvalued exchange rates and other "market distortions" that made African exports less "competitive" in world markets. In place of this system, they propose an open and liberal trading system in which tariff and non tariff barriers are kept to a minimum or even eliminated. Such a system, combined with an export-led growth strategy, would put Africa on a solid path to economic recovery, according to both institutions.
The costs associated with trade liberalization have largely offset any potential "benefits" African countries were supposed to derive from that liberalization. First of all, trade liberalization has translated into substantial fiscal losses, since many countries depend on import taxation as their main source of fiscal revenues. Therefore, the elimination of, or reduction in, import tariffs has led to lower government revenues.
But one of the most negative impacts of trade liberalization has been the collapse of many domestic industries, unable to sustain competition from powerful and subsidized competitors from industrialized countries. In fact, Africa's industrial sector has been among the biggest victims of structural adjustment.
From Senegal to Zambia, from Mali to Tanzania, from Cote d'Ivoire to Uganda, entire sectors of the domestic industry have been wiped out, with devastating consequences. Not only has the industrial sector contribution to domestic product continued to fall, but also the industrial workforce has continued to shrink dramatically.
In Senegal, more than one third of industrial workers lost their jobs in the 1980s. The trend was accentuated in the 1990s, following sweeping trade liberalization policies and privatization imposed by the IMF and the World Bank, especially after the 50% devaluation of the CFA Franc, in 1994. In Ghana, the industrial workforce declined from 78,700 in 1987 to 28,000 in 1993. In Zambia, in the textile sector alone, more than 75% of workers lost their jobs in less than a decade, as a result of the complete dismantling of that sector by the Chiluba presidency. In other countries, such as Cote d'Ivoire, Burkina Faso, Mali, Togo, Zambia, Tanzania, etc. similar trends can be observed.
In several annual and special reports, the International Labor Organization (ILO) has documented the devastating impact of SAPs on employment and wages. The African Union seems to have come to grips with that devastation. It organized a special Summit on Employment and Poverty, in the capital of Burkina Faso, September 9 and 10, 2004. It was revealed during that Summit that only 25% of the African workforce is employed in the formal sector. The rest, 75%, is either in the subsistence agriculture or in the informal sector. In light of this reality, the Summit issued a Plan of Action aimed at exploring strategies to foster job creation. But such a Plan will only be credible if African countries are ready to move away from IMF and World Bank recipes, which were harshly criticized during the Summit.
UNCTAD has reported that more than 70% of Africa's exports are still composed of primary products, more than 62% of which are non processed products. This helps justify the need for more liberalization and deregulation to make African exports more "competitive". The second objective is to help justify the need for more liberalization and deregulation to make African economies more "competitive" and "attractive" to foreign direct investments. This also explains the push for more privatization.
In the name of "comparative advantage", the export-led growth strategy forces African countries to compete fiercely for market shares, leading them to flood the same markets with more of their commodities. As a result, trade liberalization has accentuated the volatility of African commodities, whose prices experienced twice the volatility of East Asian commodity prices and nearly four times the volatility that industrial countries experienced in the 1970s, 1980s and 1990s. This has contributed to worsening Africa's terms of trade.
According to UNCTAD, if Africa's terms of trade had remained at their 1980 level:
- Africa's share in world trade would have been twice its current level
- the investment ratio would have been raised by 6.0% per annum in non-oil exporting countries
- it would have added to annual growth 1.4% per annum
- it would have raised GDP per capita by at least 50% to $478 in 1997 compared with the actual figure of $323 during that year.
The costs of financial liberalization
One of the main objectives of financial liberalization is to make African countries "attractive" to foreign direct investments. But as the experience of development shows, foreign direct investments follow development, not the other way around. In addition, despite all "the right financial policies", foreign investments continue to elude Africa, with less than 2% of flows to developing countries, despite having among the highest rates of return on investments in the world. And these flows are concentrated in a few oil-producing and mineral-rich countries, according to UNCTAD and the World Bank.
In reality, financial liberalization has yielded little gains. For most African countries, it has been associated with huge costs. First, it entails higher levels of foreign exchange reserves to protect domestic currencies against attacks resulting from speculative short-term capital outflows. Second, financial liberalization has increased the likelihood of capital flight, in part as a result of a greater volatility of domestic currencies. The high costs of trade and financial liberalization further weakened African economies and opened the way to the privatization of the continent.
The privatization of Africa
Privatization, like financial liberalization, is seen by the IMF and World Bank as an instrument to promote private sector development, which has been elevated to the status of "engine of growth". The privatization of State-owned enterprises (SOEs), including water and power utilities, has been one of the core conditionalities imposed by the two institutions, even in the context of "poverty reduction".
Most of the foreign direct investments registered by African countries in the 1990s came as a response to privatization of SOEs. No sector was spared, even those considered as "strategic" in the 1980s, such as telecommunications, energy, water and the extractive industries. In 1994, the World Bank published a report assessing the process of privatization in SSA. After complaining about the slow pace of privatization throughout the region, it issued a warning to African governments to accelerate the dismantling of their public sector, accused of being "at the heart of Africa's economic crisis". The process of privatization peaked in the late 1990s and ever since has leveled off, despite more deregulation, liberalization and all kinds of incentives offered to would be investors.
To date, it is estimated that more than 40,000 SOEs have been sold off in Africa. However, the "gains" from privatization, projected by the World Bank and the IMF, have been elusive. In fact, many privatization schemes have failed and contributed to worsening economic and social conditions. Almost everywhere, privatization has been associated with massive job losses and higher prices of goods and services that put them out of reach of most citizens.
Building a neoliberal State
The concept of "good governance" was promoted by the IMF and World Bank to explain the failure of SAPs. It tends to convey the idea that SAPs have failed, in large part, because African States are "corrupt", "wasteful" and "rent-seeking" and because of the "poor implementation" of policies. In other words, SAPs were basically "sound", it is the combination of "rampant corruption" and lack of qualified personnel that led to the failure of these policies. Thus, "good governance" means nothing else than the need to build a neoliberal State, subservient to the IFIs, able to effectively implement, "sound policies" and to protect the interests of foreign investors.
Indeed, one of the main goals of the IMF and World Bank has been to discredit State-led development strategies in favor of market-led strategies. This is why one of the main targets of these institutions has been the role of the African State in economic and social development. To discredit that role, a two-track strategy was adopted. The first track was to attack the credibility of the African State as an agent of development. To achieve that goal, an abundant literature has been published by the two institutions, highlighting the "corrupt", "predatory", "wasteful" and "rent-seeking" nature of the African State. To justify these epithets, the IFIs pointed to the "mismanagement" of the public sector, accused of being an obstacle to economic growth and development. These attacks helped make the case for the sweeping restructure of the public sector, which, in many cases, led to its dismantling in favor of the private sector.
The second track in weakening the role of the State in development was to deprive it of financial resources. Trade and financial liberalization achieved in part that goal. As already indicated, trade liberalization not only led to a greater loss of fiscal revenues, following lower tariff barriers, but it also led to huge trade losses. This was compounded by financial liberalization which entailed further fiscal losses resulting from tax holidays and low income tax rates. To make up for these losses, the African State had to resort to more and more multilateral and bilateral loans and credits, which further alienated its sovereignty.
As a result, many African States have been stripped of all but a handful of their economic and social functions. Cuts in spending mostly fell on social sectors. State retrenchment primarily aimed at eliminating subsidies for the poor, removing social protection, and abandoning its role in fighting for social justice through income redistribution and other social transfers to the most disadvantaged segments of society. This explains, among other things, the degradation of many basic social services and the explosion of poverty in Africa, since 1981, as the World Bank itself has acknowledged.
While dismantling or weakening the economic and social roles of the State, the IMF and World Bank have sought to build or strengthen the functions most useful to the implementation of neoliberal policies and the promotion of private sector development. This explains the insistence on "capacity building" or on "institution building", heard over the last few years. However, the institutions that the IMF and World Bank talk about are not for development, but for markets. In other words, they propose building institutions supportive of neoliberal policies and in the service of the private sector, especially foreign investors.
Thus, the "institution building" agenda promoted by the IMF and the World Bank has nothing to do with promoting democracy and protecting human rights. In fact, the neoliberal conception of governance undermines both since it deprives representative institutions of their role in formulating public policies following open and democratic debates. They are reduced to implementing what the IMF and World Bank and their G 8 masters decide for African countries and their people.
From structural adjustment to poverty "reduction"
After producing poverty and deprivation on a massive scale in Africa and elsewhere, the IFIs' focus on "poverty reduction" since 1999 could not be more suspect. But to make this shift a bit more credible, the IMF's Enhanced Structural Adjustment Facility (ESAF) was renamed "Poverty Reduction and Growth Facility" (PRGF) and the World Bank has set up a "Poverty Reduction Support Credit" (PRSC).
There is no doubt that the shift in the rhetoric of the IFIs amounts to an admission of failure of past policies, which put too much emphasis on correcting macroeconomic imbalances and "market distortions" at the expense of economic growth and social progress. The disastrous record of SAPs and the continued deterioration in the economic and social situation of countries subjected to IMF and World Bank programs put into question the credibility and even the legitimacy of these institutions. Their crisis of legitimacy was exacerbated by stepped up attacks by the Global Justice Movement and growing criticism from mainstream economists, especially from Joseph E. Stiglitz, former World Bank Chief Economist.
The nature of Poverty Reduction Strategy Papers (PRSPs)
The PRSPs are supposed to provide more freedom to developing countries in formulating their policies. This is what the Bank and the Fund call "national ownership." Representatives from the government, the private sector, civil society organizations - and even the poor - are supposed to "participate" in drafting the PRSP of each country to decide on how to use the proceeds released by "debt relief" to achieve "poverty reduction".
In reality, the macroeconomic framework that underpins the PRSPs is the same as that which underpinned the now discredited SAPs. That framework is non negotiable and includes fiscal austerity, trade and financial liberalization, privatization, deregulation and State retrenchment, etc. In essence, despite the disastrous outcome of their past policies, the IMF and the World Bank still believe that those policies are in the "interests of the poor". In particular, they think that trade liberalization and openness are the best - if not the only - road to growth, which they see as a "prerequisite" for poverty reduction. Hence the export-led growth strategy advocated by the two institutions, but which has been a big failure in African and other developing countries.
A survey of 27 African PRSPs by UNCTAD in 2002 has demonstrated that all of them, without exception, contain the policies outlined above. Policies which are at odds with both the wishes and the interests of the poor, observes the document. It is this straight jacket that ties up developing countries' hands and prevents them from achieving any substantial gain in poverty "reduction". Most of the time, countries have failed to implement these conditions, leading to the suspension of their programs.
In fact, the IFIs' conception of poverty views it as an isolated aspect of overall economic and social development that should be dealt with by short-term measures. Hence, the emphasis in the PRSPs on more spending for primary education and health, among others. Thus, PRSPs contain some short-term measures aimed at mitigating the negative impact of macroeconomic policies and structural reforms on the most vulnerable groups, notably the poor. However, the tools the World Bank and the IMF have proposed to achieve this goal are the same as those already tested in the past and that have aggravated poverty and deprivation in much of Africa.
In reality, PRSPs are SAPs with more conditionalities and less resources. As already indicated, a new "generation" of conditionalities have been added to old conditionalities, with the concept of "good governance", analyzed above. UNCTAD (2002) has revealed that between 1999 and 2000, 13 African countries had signed programs containing an average of 114 conditionalities, 75% of which are governance-related conditionalities. One can imagine the enormous human and financial resources needed to deal with such a number of conditionalities. For this reason, the degree of compliance with IMF and World Bank-sponsored programs has significantly declined since the mid-1990s. For instance, the rate of compliance was estimated at about 28% of the 41 agreements signed between 1993 and 1997, according to UNCTAD.
With the PRSPs, the IMF and the World Bank pursue three objectives. First, mislead world public opinion, especially in Northern countries, in making believe that they are really serious about "reducing poverty". And the World Bank alone counts on a huge and sophisticated propaganda machine to achieve this. With the more than 300 staff of its External Relations Department - Propaganda Department, one should say - the Bank has all the means it needs to "explain" effectively its policies. It has achieved some success, since some big Northern NGOs, once very critical of SAPs, see the PRSPs as a "positive shift" in the IFIs' policies.
The second objective of the PRSPs is to enlist a broad support within each country to help rehabilitate discredited and failed policies. This is what "national ownership" and "participation" of civil society organizations are supposed to achieve. While insisting on the "participation" of civil society organizations, their most vocal critics, the IMF and World Bank tend to sideline representative institutions, like National Assemblies. This is another illustration of these institutions' contempt for the democratic process in Africa. Finally, with PRSPs, the IMF and the World Bank seek to shift the blame to African countries and citizens for the inevitable failure of these "new" policies.
Conclusion
The IMF and World Bank have utterly failed in "reducing poverty" and "promoting development". In fact, they are instruments of domination and control in the hands of powerful states whose long-standing objective is to perpetuate the plunder of the resources of the Global South, especially Africa. In other words, the fundamental role of the Bank and Fund in Africa and in the rest of the developing world is to promote and protect the interests of global capitalism.
This is why they have never been interesting in "reducing" poverty, much less in fostering "development". As institutions, their ultimate objective is to make themselves "indispensable" in order to strengthen and expand their power and influence. They will never relinquish easily that power and influence. This explains why they have perfected the art of duplicity, deception and manipulation. In the face of accumulated failures and erosion of their credibility and legitimacy, they have often changed their rhetoric, but never their fundamental goals and policies.
This is why they cannot be trusted to bring about "development" in Africa. If the experience of the last quarter of a century has taught Africa one fundamental lesson it is that the road to genuine recovery and development begins with a total break with the failed and discredited policies imposed by the IMF and the World Bank.
In fairness to both institutions, we must recognize, however, the complicity of African leaders in the disastrous outcome of neoliberal policies. Many governments and senior civil servants have bought into the agenda promoted by the IMF and World Bank. Therefore, they bear a great responsibility in the current state of the continent. Thus, to put an end to the influence of these institutions, African social movements and progressive forces must explore strategies aimed at promoting a new kind of leadership able and willing to challenge these institutions in favor of genuine alternative development policies.
From Pambazuka News 175 - http://www.pambazuka.org/
· Demba Moussa Dembele is Director of the Forum for African Alternatives in Dakar, Senegal
South Africa in the news and the struggling JSE
Thu, 16 Sep 2010
Read 'em and weep
Brendan Ryan | Thu, 16 Sep 2010
[miningmx.com] -- THE name is as South African as it gets – Ratel Gold – but it’s listed on the Toronto Stock Exchange (TSX) not the JSE and it’s operating in Nigeria, not South Africa. That sums up in a nutshell the current state of play in the global gold mining sector, as revealed at the highly successful Africa Down Under mining conference held recently in Perth.
There’s a gold mining boom taking place driven by the steadily rising gold price: but it’s happening in West Africa – not South Africa.
The ratel is, of course, the legendary tough-as-nails honey badger after which the South African Defence Force named one of its equally legendary armoured fighting vehicles.
The participants are raising funds predominantly on the TSX and the Australian Stock Exchange (ASX), not the JSE.
There are a number of reasons for that situation, one of which is growing international investor disenchantment about security of tenure of mining rights in South Africa. That’s due to the debacles at Kumba Iron Ore and Lonmin, where competing companies have been awarded prospecting rights over portions of the operating mines for which those groups had already been granted new order mining rights.
That uncertainty was front and centre at the conference, where South Africa’s Minister of Mineral Resources Susan Shabangugave one of the keynote addresses but which did little to improve the situation. Reason was in her statement she had reviewed the Kumba and Lonmin cases and “found no evidence of maladministration or irregularity in the manner in which these two prospecting rights were granted”.
Both groups are now taking their cases to court, with Kumba claiming serious incidents of “maladministration and irregularity”.
One of the few South African gold companies that’s raised money on the ASX is Gold One International (Gold One), whose CEO Neal Froneman presented at the conference. Froneman told Miningmx sister publication, Finweek: “There’s a huge concern over the perceived hijacking of mining rights following the events of the past few months. Questions being put to me by investors are now focused on those broader issues rather than the operational specifics of my gold mines. The questions we’re fielding are all about how these developments might affect us.” Michael Blakiston, partner at Australian legal firm Blakiston & Crabb, painted the broader picture in his presentation to the conference. Blakiston was generally positive about black economic empowerment in SA and accepted the ideological reasons for, and positive socio-economic intent of, the legislation. However, he clearly flagged concerns about empowerment “morphing into nationalisation”.
He also raised the viewpoint that “empowerment is often seen as playing the black card to take more from a project and transfer to the mining company many of the responsibilities of government”.
He described the attitude of the African National Congress Youth League (ANCYL) as “scary” and a “huge embarrassment” for South Africa. He also indicated it was an organisation that had to be taken seriously, commenting the mining industry would be putting itself at risk if it just “put the ANCYL into a far left radical basket”.
Blakiston added: “We as an industry need to be firm and vocal in our stance. We know what happens when you nationalise a mining industry. Look at the other countries in Africa.”
The good news is that, despite all this, some Australian juniors are still setting up new ventures in South Africa. One Australian executive said:”We’re aware of the risks, but every mining destination has its problems and, so far, our shareholders are prepared to accept them.”
The bad news is that what’s coming South Africa’s way is a trickle compared with what’s going into Ghana, Mali, Burkina Faso and other nations in West Africa.
Iron Ore
Breaking news at the conference was that ASX-listed FerrumCrescent (Ferrum) is to develop a new iron ore mine in South Africa’s Limpopo province while Universal Coal is to raise A$25m (around R160m) through a listing on the ASX to develop three coal projects in Mpumalanga.
The entrepreneur behind Ferrum should be well known in South African mining circles. He’s Ed Nealon, the man who was one of the first Aussie miners into the country after 1994 and who developed the Kroondal platinum mine, which grew into Aquarius Platinum.
Economically speaking about the good, the bad and the ugly
Ghana
Ghana’s economy as described by the US State Department, September 10, 2010.
Ghana has a relatively diverse and rich natural resource base. Minerals--principally gold, diamonds, manganese ore, and bauxite--are produced and exported. A major oil discovery off the coast of Ghana in 2007 has led to significant international commercial interest in Ghana. According to industry experts, within 5 years, Ghana is likely to be the third-largest producer of oil in West Africa. Timber and marine resources are important but declining resources.
Agriculture remains a mainstay of the economy, accounting for more than one-third of GDP and about 55% of formal employment. Ghana’s primary cash crop is cocoa, which typically provides about one-third of all export revenues. Other products include timber, coconuts and other palm products, shea nuts, and coffee. With donor support, Ghana also has established a successful program of nontraditional agricultural products for export including pineapples, cashews, and peppers. Cassava, yams, plantains, corn, rice, peanuts, millet, and sorghum are basic foodstuffs grown for local consumption. In addition to domestic produce, fresh vegetables are also imported from Burkina Faso. Fish, poultry, and meat also are important dietary staples.
Ghana's industrial base is relatively advanced compared to many other African countries. However, additional scope exists for value-added processing of agricultural products. Industries include textiles, apparel, steel (using scrap), tires, flour milling, cocoa processing, beverages, tobacco, simple consumer goods, and car, truck, and bus assembly. Industry, including mining, manufacturing, construction and electricity, accounts for about 30% of GDP.
With higher commodity prices, gold and cocoa are the top-two export revenue-earning sectors for Ghana. The country's largest source of foreign exchange is remittances from workers abroad. .
Ghana's post-independence economic story has been a difficult one, but over the last 20 years, political stability and economic growth has been the long-term trend. Ghana is on track to meet the Millennium Development goal of halving extreme poverty by 2015. Real GDP growth averaged 4% in the mid-1980s and has increased to about 5% over the past decade. Inflation and interest rates continued their upward trend in 2009 due to high fuel prices, and macroeconomic pressures caused by large fiscal and trade deficits.
Economic Development
At independence, Ghana had a substantial physical and social infrastructure and $481 million in foreign reserves. The Nkrumah government further developed the infrastructure and made important public investments in the industrial sector. With assistance from the United States, the World Bank, and the United Kingdom, construction of the Akosombo Dam was completed on the Volta River in 1966. Two U.S. companies built Valco, Africa's largest aluminum smelter, to use power generated at the dam. Aluminum exports from Valco used to be a major source of foreign exchange for Ghana, but an investment dispute beginning in 2001, followed by sale back to the government, has led to sporadic operation in recent years, and it was closed again in March 2007 due to the country's energy crisis.
Many Nkrumah-era investments were monumental public works projects and poorly conceived, badly managed agricultural and industrial schemes. With cocoa prices falling and the country's foreign exchange reserves fast disappearing, the government resorted to supplier credits to finance many projects. By the mid-1960s, Ghana's reserves were gone, and the country could not meet repayment schedules. The National Liberation Council responded by abandoning unprofitable projects and selling some inefficient state-owned enterprises to private investors. On three occasions, Ghana's creditors agreed to reschedule repayments due on Nkrumah-era supplier credits. Led by the United States, foreign donors provided import loans to enable the foreign exchange-strapped government to import essential commodities.
Prime Minister Busia's government (1969-72) liberalized controls to attract foreign investment and to encourage domestic entrepreneurship. Investors were cautious, however, and cocoa prices declined again while imports surged, precipitating a serious trade deficit. Despite considerable foreign assistance and some debt relief, the Busia regime also was unable to overcome the inherited restraints on growth posed by the debt burden, balance-of-payments imbalances, foreign exchange shortages, and mismanagement.
Although foreign aid helped prevent economic collapse and was responsible for subsequent improvements in many sectors, the economy stagnated in the 10-year period preceding the NRC takeover in 1972. Population growth offset the modest increase in gross domestic product, and real earnings declined for many Ghanaians.
To restructure the economy, the NRC, under General Acheampong (1972-78), undertook an austerity program that emphasized self-reliance, particularly in food production. These plans were not realized, however, primarily because of post-1973 oil price increases and a drought in 1975-77 that particularly affected northern Ghana. The NRC, which had inherited foreign debts of almost $1 billion, abrogated existing rescheduling arrangements for some debts and rejected other repayments. After creditors objected to this unilateral action, a 1974 agreement rescheduled the medium-term debt on liberal terms. The NRC also imposed the Investment Policy Decree of 1975--effective on January 1977--that required 51% Ghanaian equity participation in most foreign firms, but the government took 40% in specified industries. Many shares were sold directly to the public.
Continued mismanagement of the economy, record inflation (more than 100% in 1977), and increasing corruption, notably at the highest political levels, led to growing dissatisfaction. The post-July 1978 military regime led by General Akuffo attempted to deal with Ghana's economic problems by making small changes in the overvalued cedi and by restraining government spending and monetary growth. Under a one-year standby agreement with the International Monetary Fund (IMF) in January 1979, the government promised to undertake economic reforms, including a reduction of the budget deficit, in return for a $68 million IMF support program and $27 million in IMF Trust Fund loans. The agreement became inoperative, however, after the June 4 coup that brought Flight Lieutenant Rawlings and the AFRC to power for 4 months.
In September 1979, the civilian government of Hilla Limann inherited declining per capita income, stagnant industrial and agricultural production due to inadequate imported supplies, shortages of imported and locally produced goods, a sizable budget deficit (almost 40% of expenditures in 1979), high inflation, "moderating" to 54% in 1979, an increasingly overvalued cedi, flourishing smuggling and other black-market activities, high unemployment, particularly among urban youth, deterioration in the transport network, and continued foreign exchange constraints.
Limann's PNP government announced yet another (2-year) reconstruction program, emphasizing increased food production, exports, and transport improvements. Import austerity was imposed and external payments arrears cut. However, cocoa production and prices fell, while oil prices soared. No effective measures were taken to reduce rampant corruption and black marketing.
When Rawlings again seized power at the end of 1981, cocoa output had fallen to half the 1970-71 level and its world price to one-third the 1975 level. By 1982, oil would constitute half of Ghana's imports, while overall trade contracted greatly. Internal transport had slowed to a crawl, and inflation remained high. During Rawlings' first year, the economy was stagnant. Industry ran at about 10% of capacity due to the chronic shortage of foreign exchange to cover the importation of required raw materials and replacement parts. Economic conditions deteriorated further in early 1983 when Nigeria expelled an estimated 1 million Ghanaians who had to be absorbed by Ghana.
In April 1983, in coordination with the IMF, the PNDC launched an economic recovery program, perhaps the most stringent and consistent of its day in Africa, aimed at reopening infrastructure bottlenecks and reviving moribund productive sectors--agriculture, mining, and timber. The largely distorted exchange rate and prices were realigned to encourage production and exports. The government imposed fiscal and monetary discipline to curb inflation. Through November 1987, the cedi was devalued by more than 6,300%, and widespread direct price controls were substantially reduced.
The economy's response to these reforms was initially hampered by the absorption of 1 million returnees from Nigeria, compounded by the decline of foreign aid and the onset of the worst drought since independence, which brought on widespread bushfires and forced closure of the aluminum smelter and severe power cuts for industry. In 1985, the country absorbed an additional 100,000 expellees from Nigeria. In 1987, cocoa prices declined again; however, infrastructure repairs, improved weather, and producer incentives and support revived output. During 1984-88 the economy experienced solid growth for the first time since 1978. Renewed exports, aid inflows, and a foreign exchange auction eased hard currency constraints.
While the reforms caused substantial shocks in some sectors, particularly agriculture and textiles, the overall effects were positive and helped bring about a measure of economic stabilization and recovery. However, a big drop in world cocoa and gold prices hurt growth and, in the face of pending elections, spurred government spending, leading to an increased deficit, falling currency and high inflation at the time a new government led by John Agyekum Kufuor took office in 2000.
The economy performed well under the Kufuor administration, but Ghana's fundamental vulnerabilities remained. Kufuor continued the economic stabilization begun under the previous administration, and took some difficult but necessary steps such as ending subsidies of petroleum prices. Solid macroeconomic management coupled with major debt relief, large inflows of donor resources, and relatively high cocoa and gold prices have been the keys to the steady improvements in real GDP growth, which in 2004 topped 5% for the first time in a decade and reached an estimated 6.2% in 2006. Further debt relief, continued large aid inflows, favorable commodity prices, and $4 billion in gross annual remittances--this figure includes remittances from individuals as well as non-governmental organizations (NGOs) and embassies; individual remittances were estimated at about $1.9 billion in 2008--put Ghana in a stronger balance of payments position.
Ghana was recognized for its economic and democratic achievements in 2006, when it signed a 5-year, $547 million anti-poverty compact with the United States' Millennium Challenge Corporation. The compact focuses on accelerating growth and poverty reduction through agricultural and rural development. The compact has three main components: enhancing the profitability of commercial agriculture among small farmers; reducing the transportation costs affecting agricultural commerce through improvements in transportation infrastructure, and expanding basic community services and strengthening rural institutions that support agriculture and agri-business. The compact is expected to contribute to improving the lives of one million Ghanaians.
Ghana's stated goals are to accelerate economic growth, improve the quality of life for all Ghanaians, and reduce poverty through macroeconomic stability, higher private investment, broad-based social and rural development, as well as direct poverty-alleviation efforts. These plans are fully supported by the international donor community.
Key economic challenges include: overcoming infrastructure bottlenecks, especially in energy and water; poor management of natural resources; improving human resource capacity and development; establishing a business and investment climate that encourages and allows private sector-led growth, and privatizing remaining state-owned enterprises, several of which are significant budget liabilities.
Somalia
Somalia’s economy as noted by the US State Department on September 20, 2010.
GDP (2008 est.): U.S. $5.524 billion.
Annual growth rate (2008 est.): 2.6%.
Per capita GDP (2008 est.): $600.
Avg. inflation rate: N/A.
Natural resources: Largely unexploited reserves of iron ore, tin, gypsum, bauxite, uranium, copper, salt; likely petroleum and natural gas reserves.
Agriculture: Products--livestock, fish, bananas, corn, sorghum, sugar. Arable land--13%, of which 2% is cultivated.
Industry: Types--Telecommunications, livestock, fishing, textiles, transportation, limited financial services. Somalia's surprisingly innovative private sector has continued to function despite the lack of a functioning central government since 1991.
Trade: Exports--$300 million (f.o.b., 2006 est.): livestock, bananas, hides, fish, charcoal, scrap metal. Major markets--United Arab Emirates, Yemen, Saudi Arabia.Imports--$798 million (f.o.b., 2006 est.): food grains, animal and vegetable oils, petroleum products, construction materials, manufactured products, qat. Major suppliers--Djibouti, India, Kenya, United States, Oman, United Arab Emirates, Yemen.
Aid disbursed: N/A.
Remittances (2008 est.): $2 billion.
Zimbabwe
The economy of Zimbabwe as stated by the US State Department, September 20, 2010.
Zimbabwe's wide range of natural resources makes agriculture and mining the main pillars of the economy. In 2009 agriculture and industry accounted for about 19% and 24% of gross domestic product (GDP), respectively. Zimbabwe has an important percentage of the world's known reserves of metallurgical-grade chromite. Other commercial mineral deposits include coal, platinum, asbestos, copper, nickel, gold, and iron ore. In order to develop these mineral deposits, Zimbabwe relies on foreign investment.
In the early 1970s, the economy experienced a modest boom. Real per capita earnings for both blacks and whites reached record highs, although the disparity in incomes between blacks and whites remained, with blacks earning only about one-tenth as much as whites. After 1975, however, the cumulative effects of sanctions, declining earnings from commodity exports, worsening guerilla conflict, and increasing white emigration undermined Rhodesia’s economy. When Mozambique severed economic ties, the Smith regime was forced to depend on South Africa for access to the outside world. Real GDP declined between 1974 and 1979. An increasing proportion of the national budget (an estimated 30%-40% per year) was allocated to defense, and a large budget deficit raised the public debt burden substantially.
Following the Lancaster House settlement in December 1979, Zimbabwe enjoyed a brisk economic recovery. Zimbabwe inherited one of the strongest and most complete industrial infrastructures in sub-Saharan Africa, as well as rich mineral resources and a strong agricultural base. Real growth for 1980-81 exceeded 20%. However, depressed foreign demand for the country's mineral exports and the onset of a drought cut sharply into the growth rate from 1982 through 1984. In 1985 the economy rebounded strongly due to a 30% jump in agricultural production. But drought and a foreign-exchange crisis triggered another slump in 1986 and 1987. Annual real GDP growth from 1988 through 1990 averaged about 4.5%.
Since the mid-1990s, Zimbabwe’s infrastructure has been deteriorating rapidly, but it remains better than that of most African countries. Political turmoil and poor management of the economy have led to considerable economic hardships. The Government of Zimbabwe's chaotic land reform program, recurrent interference with the judiciary, and imposition of unrealistic price controls and exchange rates caused a sharp drop in investor confidence. Since 1999 the national economy has contracted by as much as 40%. Foreign direct investment has all but stopped. In July 2007, the government had made a desperate attempt to control inflation, which brought persistent shortages fuel, food, and other goods, by forcing firms and supermarkets to reduce prices by half, which resulted in severe shortages of basic commodities. Inflation vaulted over 200 million percent (year on year) in July 2008, according to official estimates; independent economists estimated inflation was at least in the quadrillions of percent. In January 2009, official recognition of dollarization stopped hyperinflation. Investor confidence remains low due to insecurity of land tenure and indigenization laws that require, in theory if not always in practice, 51% of investments to be owned by Zimbabwean citizens.
Agriculture is no longer the backbone of the Zimbabwean economy. Large-scale commercial farming has nearly collapsed over the course of the last nine years under the government's controversial land reforms. Corn is the largest food crop and tobacco had traditionally been the largest export crop, followed by cotton. Tobacco production in 2006, however, slumped to its lowest level--about 50 million kg--since independence, off from a peak in 2000 of 237 million kg, before recovering to 57 million kg in 2009. Gold production, another former key foreign currency source, has also slumped. In 2009, the country produced only 4.2 tons of gold. Poor government management has exacerbated meager corn harvests in years of drought or floods, resulting in significant food shortfalls every year since 2001.
Paved roads link the major urban and industrial centers, but the condition of urban roads and the unpaved rural road network has deteriorated significantly since 1995 for lack of maintenance. Rail lines connect with an extensive central African railroad network, although railway track condition has also worsened in recent years, along with locomotive availability and utilization. The electric power supply has become erratic and blackouts are common due to unreliable or nonexistent coal supplies to the country's large thermal plants and power plant breakdowns. Telephone service is problematic, and new lines are difficult of obtain. Municipal water supply is also erratic.
The largest industries are metal products, food processing, chemicals, textiles, clothing, furniture and plastic goods. Most manufacturers have sharply scaled back operations due to the poor operating climate and foreign exchange shortages. Zimbabwe is not eligible for preferred trade status under the African Growth and Opportunity Act. Zimbabwean producers still export lumber products, certain textiles, chrome alloys, and automobile windscreens to the U.S.
Zimbabwe is endowed with rich mineral resources. Exports of gold, diamonds, asbestos, chrome, coal, platinum, nickel, and copper could lead to an economic recovery one day. No commercial deposits of petroleum have been discovered, although the country is richly endowed with coal-bed methane gas that has yet to be exploited.
With international attractions such as Victoria Falls, the Great Zimbabwe stone ruins, Lake Kariba, and extensive wildlife, tourism historically has been a significant segment of the economy and contributor of foreign exchange. The sector has contracted sharply since 1999, however, due to the country's declining international image.
Africanization does not mean nationalisation or indigenization
Robert Mugabe, erstwhile leader of Zimbabwe, interprets Africanization as indigenization. Certain journalists in that country are skeptical. The story here is from the Global Post:
By Zimbabwe Correspondent (author cannot be identified because of Zimbabwe's press restrictions)
Published: March 28, 2010 08:42 ET in Africa
Published: March 28, 2010 08:42 ET in Africa
Zuma came to Zimbabwe for talks to ease tensions within the year-old unity government. Mugabe and Prime Minister Morgan Tsvangirai both greeted Zuma at the airport, in a rare joint appearance by the feuding leaders.
HARARE, Zimbabwe — A visitor to Zimbabwe may wonder what all the fuss is about.
What could be the significance of a single word that generates such heated debate? It even eclipses the arguments bedeviling the government of national unity, as the unwieldy power-sharing coalition is called here.
The hullabaloo surrounding “indigenization” is greater than what might be expected from the dictionary description. That’s because under President Robert Mugabe’s rule, indigenization is the word for the process to redress the ills of the colonial past by redistributing assets to Zimbabwe’s black indigenous majority.
In South Africa they call it black economic empowerment. But in that country political consensus on the issue makes it less contentious.
In Zimbabwe, like everything else, indigenization is the subject of bitter dispute. The Indigenization and Economic Empowerment Act was passed by parliament in 2007. But only last month was the new law actually implemented by the publication of specific regulations. These require companies valued at $500,000 or more to “cede” a 51 percent share to black Zimbabweans.
The outcry that followed was understandable. Mugabe’s government has a reputation for seizing other people’s property. Over the past 10 years vast tracts of productive farmland have been occupied by Mugabe’s supporters and allocated to the president’s cronies. Despite the formation of the power sharing government, land is still being grabbed and commercial farmers —black and white — are being dispossessed.
The new indigenization law is widely seen as Mugabe’s bid to please middle-class supporters. The new legislation reserves key sectors of the economy for indigenous ownership including the production of food and cash crops, transportation, bakeries, retail and wholesale trade, and estate agents.
Mugabe’s partners in government, the Movement for Democratic Change led by Prime Minister Morgan Tsvangirai, say they don’t oppose the indigenization law in principle but revisions are required to its regulations, including arbitrary quotas, which are likely to scare off investors.
The German ambassador to Harare, Albrecht Conze, said this month that German investors — among the most prominent in the region — would be looking elsewhere unless there was a change of heart in government.
Conze was speaking in Harare during a visit by the president of the Confederation of German Trade Unions, Michael Sommer.
"I hope positive signals will prevail over the negative signals (from Zimbabwe)," he said. "Unfortunately, that is not the situation at the moment."
That ‘single word’ referred to above is not commonly used in Jacob Zuma’s South Africa. South African companies, particularly mineral exploration companies and base and precious metal producers are more familiar with the term ‘nationalization’. If one attempted at defining the two it could be said that indigenization comes closer to Africanization than nationalization. Nationalization on the other hand finds its roots in the tradition of ‘shared wealth via the state’ in the old Marxist sense. History seems to indicate that while Marxism was a useful tool in driving back the white man from his hold over Africa, it was a tool that was soon downed by the majority of African leaders; South Africa in the shape of old school ANC leaders, the unions and now the ANC youth movement headed by Julius Malema still clings to the vestiges of Marxism, but no one knows for sure if this philosophy is sustainable in the new, digitized Africa.
In a word then it seems that distasteful as his performance has been thus far – and his been very far thus – Robert Mugabe, for all of his rhetoric may be taking the higher road when it comes to the aims of Africanization, whereas the ANC, a larger unruly machine to the south, in neighbouring South Africa, may be slightly off track when it comes to the notion of Africanization. Marxism is after all, something borrowed from a past era. The Africanist believers or pan-Africanist believers perhaps, are better served by following their indigenous beliefs and rights rather than leaning on a theme created in Russia very recently and now, for all intent and purpose, replaced by western style capitalism. For now, capitalism holds the high ground. South Africa’s flirtation with Marxism is likely doomed in the end, as is South Africa’s blend of Africanization with Socialism. That said, distribution of wealth among South Africans remains a priority for any South African government, and the care of the historically disadvantaged must be forefront on all future policy making in Pretoria and Polokwane alike.
Much of Africa regards South Africa as its model. Now though, other smaller sovereignties are demonstrating that they too can lead; Ghana and Botswana are just two examples. Young African men an women can see that sitting around waiting for a job, or an handout from the west is no longer an option. They can see that through their own endeavour they can help to make of Africa a far stronger than ever realized before power.
India’s Common Wealth Games v. South Africa's World Cup
Economists talk frequently of Chindia, that looming global giant that, one day, will dominate all. And they talk too of Africa, a continent struggling against poverty, poor education, and poor medical facilities for its billion people. They talk too of Africa’s so called insurmountable debt.
They say that China and India is the next big thing, and that Africa is the last, and the least thing on their preferred list.
An Africanist might question the assumptions of these learned professionals. Compare for instance the performance of India against South Africa when it comes to hosting major sporting events. And for that matter consider how South Africa hosted an event at a time when it was not considered safe to play cricket in Pakistan, Pakistan, a nation with nuclear capability, but little else.
India today faces serious criticism for its mismanagement of the Common Wealth Games:
Top Athletes to Skip Commonwealth Games in India
Wednesday brought more bad news for the organizers as two top athletes, Australian world discus champion, Dani Samuels, and English world triple jump champion, Phillips Idowu, pulled out of the games. Samuels cited health and security worries, while Idowu said his safety is more important than winning a medal.
A contingent of 41 athletes from Scotland postponed their departure for India for a few days, saying they will not compromise on areas of health, safety and security. They said this will give Indian authorities' time to fix the residential facilities for the athletes, which they described as "unsafe and unfit for habitation."
In the meantime, Commonwealth Games Federation chief Mike Fennell is flying in for a meeting Thursday with Prime Minister Manmohan Singh to discuss the problems surrounding the event.
Serious concerns have been raised over the lack of preparedness at different venues where the Commonwealth Games are to be held, particularly the athletes' village which has been described as "filthy." Delhi is also in the grip of a dengue epidemic blamed on stagnant pools of water accumulated at construction sites.
Security concerns were highlighted after two foreign tourists were shot at by unidentified gunmen in the Indian capital on Sunday.
Adding to the woes, a section of a false ceiling at the weightlifting venue in the main stadium for the games collapsed on Wednesday, heightening concerns about the quality of construction. The latest mishap occurred a day after a pedestrian bridge close to the same venue collapsed.
The chief minister of Delhi, Sheila Dikshit dismissed these as minor problems.
"I would like to tell you very categorically that these minor glitches and hitches do come around whenever a building is new," Dikshit said. "There will be some problems, there are some problems, but they are not insurmountable problems."
But some of the big countries which are participating in the event such as Australia, Britain and Canada are seeking more reassurance. New Zealand Prime Minister John Key said he would support any of his country's athletes who decide not to come to Delhi. The Australian sports minister, Mark Arbib, said he did not rule out the withdrawal of more athletes.
For their part, Indian organizers are reassuring the participating countries that all will be well. They say the village where the games are being held is being spruced up and will be impeccable, the stadiums are world class, and security will be fool-proof.
Some 7,000 athletes from 71 countries linked to the former British Empire are taking part in the games.
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