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BW Businessworld

Always Time For Africa

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Most people are puzzled as to why many nations are making a beeline for Africa. This incisive book answers this rather well and is a useful read for bureaucrats in foreign affairs, industry and commerce as well as entrepreneurs, political watchers, think tanks, NGOs and civil citizens.

Africa's shocking natural resource exploitation by collusion with its authoritarian regimes (read despots), its cruel globalisation vulnerabilities and horrifying economic misery form the core of The New Scramble For Africa. Had AFRICA been an acronym rather than a continent it might have denoted "A Frantic Race for Internationally Crucial Assets" (oil, timber, fish, uranium, gold, coltan metal, diamonds and land for growing biofuel) thereby aptly summing up its ironies and sorrows. Historically Africa has witnessed two frenzied scrambles: The first one between UK, France and Germany which lasted from 1894 (Congress of Berlin) till the end of World War II in 1949 and was colonial. The second aka "new scramble" has been going on between the whole world since 1949 when African colonies became independent. In both scrambles the ravage was focused primarily upon Africa's natural resources rather than the exploitation of its miniscule market of 1.02 billion people, across 54 nations, where the small elite is frightfully rich and the large masses are frighteningly poor. Africa's despots traitorously partner its resource extraction to fatten their own offshore wallets and sustain their regime survival by enriching other nations, while impoverishing and immiserating Africa. Obviously they are high on greed, focused on self-survival and low on patriotism.

What Makes This Book Special
The incisive analysis and path breaking expose owes itself to a highly intelligent author with a refreshingly different profile — an Irishman who is a political geographer (a relatively new discipline) rather than a Brit or American who is an economist. He is far less prone to hype, tripe or party line than others. Being Irish gives him a ringside view of UK's omissions and commissions, with a lower bias-quotient than a Brit and independent thinking of the Irish. He brings the fresh perspectives of a political geographer, highlights the self contradictions of World Bank and IMF reports, showcases the double standards of the WTO and distills strategic differences in the foreign policy of US-UK, France, Brazil, Russia, India, China and South Africa.

A Political Geographer's Deeper Insights
World Bank and IMF reports on Africa are cruelly self-contradictory, unabashedly self-serving to the US and  Europe and terribly unfair to Africa. They blames the continent's economic underdevelopment upon eight factors — predominant landlockedness, being away from main global seaways, excessive dependency upon raw material exports, recurring drought, lack of value addition, prevalent deadly malaria, hostile neighbours and a tropical climate. On all counts, the rest of the world, rather than Africa, carries the larger share of the blame. Excessive landlockedness (40 per cent of population and 36 per cent of nations) was colonially created by the UK and France to over divide the African continent for the sake of sustained regime survival and easier exploitation of natural resources. Therefore, cruel international politics are to blame for Africa's bad geography rather than Africa's bad geography carrying the blame for cruel international politics. The result: Far too many nations are economically undersized and too far away from the coastline. Being away from main global seaways is invalid criticism since it has never ever stopped erstwhile imperial powers, modern nations or multinationals from ravaging Africa and shipping off the spoils. Excessive drought and tropical climate is a meteorological and riparian challenge that many rain-deficient nations have chosen to successfully tackle for themselves but not for Africa. Excessive dependency upon raw material exports and the resultant lack of value addition is due to the arm twisted ravage of Africa's primary commodities rather than anything else.

When Malaria (rather than AIDS) causes far more children to die why is funding for Malaria prevention lesser than AIDS prevention? Why is more effort made on AIDS education rather than condom distribution? Shockingly huge stocks of condoms remain undistributed. Very often realpolitick is really cruel. Unjustifiably more people have died. A morbid explanation: More deaths conveniently mean higher per capita income, lesser poverty, smaller domestic labour force, lower unemployment, reduced expenditure in education, labour welfare and food, reduced number of coups, easier and longer regime survival for the despots as also fatter offshore wallets for them. Could this be the real reason behind the realpolitick?.
 
The 'hostile neighbours syndrome' needs to be understood in perspective. Ironically, the poorest African nations — read Sub Saharan Africa (SSA) — are also contiguously resource rich, despotic, income skewed and subsistently poor. SSA often had higher economic growth percentages than even China and India since exports of their primary commodities sometimes exceed 50 per cent of their Gross Domestic Product (GDP). Whenever the world prices of these commodities rise, the local economy thrives, despots fatten their offshore wallets and political coups increase in numbers, severity and bloodiness; as is the case in Democratic Republic of Congo (erstwhile Zaire), Sudan, Ethiopia and Eritrea. Whenever world commodity prices fall, rebellions in Africa reduce owing to lesser money to fund rebellions, consequently local economies get cash strapped, despots seek more aid (soft loans, grants and debt repayment waivers) and rue the fact that temporarily they could not fatten their offshore wallets as much as during boom times. At these times the World Bank, IMF and WTO set tougher preconditions for aid. The party line is "to integrate Africa all the more into the global economy" which is a polite way of asking impoverished Africa to lower its tariff barriers still further. Africa already has the world's lowest average tariff barriers of just 10 per cent? So much for Africa's integrating into the global economy. Touché.

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The same WTO looks the other way when France patents its chemical compounds (biopiracy) for Congo's Brazzaville Berry in 150 countries (the berry in its natural form is several hundred times sweeter than sugar), China indulges in fish piracy by trespassing into Special Economic Zones (SEZ) and coastal waters belonging to other nations or when Europe disposes toxic wastes into Somalian waters just because at $ 2.50 per ton of toxic waste dumped in Somalian waters it is 100 times cheaper than having to dispose European toxic waste in Europe at $ 250 per ton. The result: Displaced poverty stricken patriotic Somalian fishermen became pirates to rob back their livelihood from their robbers. Whenever Somalian piracy does well the impoverished Somalian economy performs better. In a case of twisted irony Somalians rate the irate pirate as an economic saviour in Somalia. So who is to blame — Somalia or Europe?. A large segment of Africa's miners are underpaid 12 year olds. Most of Africa's soldiers are gun slinging children. Yet the International Labour Organization (ILO) a wing of the United Nations (UN) is ineffectual. Does the UN find it more profitable to send peacekeeping forces to Congo, Sudan and Zambia rather than oppose abysmally low industrial wages? It becomes imperative to examine foreign policy differences of the US-UK, France, Brazil, Russia, India, China and South Africa.

Shrewd Foreign Policy Differences
The strategic differences between the Africa policy followed by the US-UK, individual BRIC nations, France and South Africa are best understood by examining defence spending and foreign exchange reserves. Both are expressible as a ratio where the sequence is US:B:R:I:C:Rest of World:World Total (wherein the total is always 100).The defence spend ratio is 44:2:3:2:7:42:100 while the foreign reserves ratio is totally different at 1:3:4:2:26:100. The US, militarily, globally outspends combined BRIC (Brazil-India-Russia-China) and also rest of the world. It has the least foreign exchange reserves, yet is the largest importer from Africa, comparatively uses more military might than others (although much lesser than it does in other continents), actively supports despots or rebels in a manner optimal to resource extraction and offers hegemonic facilities i.e. opens up its domestic market with nil duty to African products. No nation chooses to take on the US militarily in Africa or elsewhere. Even so, America's military is wafer thin in Africa compared to its presence in other continents. The Pentagon finds maintaining military presence in Africa relatively cost-ineffective and politically risky owing to rampant malaria, perennial political instability, teeming terrorism, seething crime and growing Chinese diaspora. The US is cagey of keeping Chinese migrants in check since 67 per cent of America's debt is funded by China. The UK primarily rides piggyback on the US since it is ideologically closest to it and is the world's largest defence spender after the US, China and France.
 
While America globally spends 6 times more than China in defence, China globally has 26 times more foreign exchange reserves than the US. So China flexes financial muscles. Its largest forex outflow is in investment, followed by aid (and aid waivers) and lastly injection of Chinese workers into Africa. The Result: Significant labour displacement, insignificant local skill upgradation, moderate job creation, 70 per cent of aid going back to China in terms of construction contracts all of which naturally leads to chronically abundant unrest and violence. Chinese factories depend totally upon despot support rather than worker support. Unlike Western powers, China does not interfere with the politics or the governance of the despots or spout democracy. Despots feel more comfortable with China while citizens and working class do not. China has its vulnerabilities too. Its joint-venture factories in Africa lack the export competitiveness of Chinese factories in China, faces frequent downsizing and many factories got closed. China has a low credibility quotient on quality and is seen as one who does not bring in high technology as promised. Turkey and India enjoy excellent credibility on quality parameters across a slew of product categories. India especially has a fail-safe image in technology whereas China does not; for instance, the failure of Chinese satellite in Nigeria in 2007 proved deeply embarassing.

France tries to cozy up to African despots by playing down its colonial past; projecting itself as an independent nation which is contrarian to European Union (EU) rather than as an EU member. It has linked erstwhile colonies of West Africa to French Franc. 90 per cent of Air France's profitable routes are to Africa and until recently Africa region contributed to bulk of Air France's profits. In spite of all this the going is rather tough and competitive. India and Brazil have a clean, credible and friendly foreign policy slate with Africa. Both are equally import dependent on African crude in spite of Brazil having far higher domestic oil reserves than India. Brazil tries to increase exports of machinery to SSA. India has focused hugely on Kenya and Zambia for bilateral trade and has attracted a lot of foreign investment from Mauritius into India into tourism and infrastructure. India is doing well in steel, telecom and IT industries. In financial terms India has shrewdly ensured that per $ of investment in Africa, India displaces far lesser labour than China. So while China has poured more bucks into Africa, Indian investments have earned more bang for its buck. This has earned India credibility as a true development partner in Africa. Russia is the odd one out. It is primarily an arms exporter to Africa, is self sufficient in oil and gas and has professed no other strategic interest in this continent.

South Africa finds itself eternally vulnerable and always unforgiven by African nations. African despots have neither forgiven South Africa for its long apartheid past nor its eternally non-despotic government. Till 1994 Africa suffered sanctions and was not allowed to expand its international economic footprint in a sizeable manner. Despots just do not feel comfortable with South Africa. Among all continents Africa has the largest proportion of mobile phones versus total telephone lines. South Africa has the largest market share of this business. 50 per cent of global profits of many companies from South Africa come from Africa region. South Africa has a trade surplus in bilateral trade with Africa. Even so the rest of Africa has neither forgiven South Africa its history nor have Africa's despots forgiven it for its non-despotic political structure. As a result, South Africa does not achieve as big a league as its aspirations.   
   
To sum up, once in a rare while a great book comes along. This is one such book. If like most other people you were puzzled as to why most nations are making a beeline for Africa, after reading this book you would remain puzzled no longer.

Author's Details:
Padraig Carmody is senior lecturer in development geography at Trinity College Dublin. He holds a PhD in geography from the University of Minnesota. He has worked as a policy and research analyst for the Combat Poverty Agency in 2002-03. His research centres on the political economy of globalisation in Africa.

Kumar is a retail consultant in Chennai

(This story was published in Businessworld Issue Dated 19-03-2012)