The Draining of Africa's Wealth

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An excerpt:

The draining of Africa’s wealth

by Patrick Bond and Lee Sustar

January 21, 2007

Socialist Worker

PATRICK BOND is a political economist and activist at the University of KwaZulu Natal in South Africa. He is the author of numerous books on Africa, most recently, Looting Africa: The Economics of Exploitation. He spoke to Socialist Worker’s LEE SUSTAR about imperialism and resistance in Africa today.

WHAT ARE the dynamics of the looting of Africa?

LET’S START with the process by which the new imperialism relies on the extraction of resources at ever-cheaper prices.

We are in a confused period, because since 2002, commodity prices--minerals, energy and even cash crops--have been on the rise. But many people will agree that it’s a small upturn in a commodity-price cycle that since the 1970s has been on a dramatic decline. It’s that sense in which multinational corporate power, and fealty to that power by African elites, has reached unprecedented peaks now.

This has become so extreme that even the World Bank has recognized that there’s no basis for economic development from the extraction of resources under the present regime. A little-known World Bank report, Where is the Wealth of Nations? which was published on the Web site this year, has even acknowledged the wealth drainage.

For example, in Gabon, Gross Domestic Product (GDP) per capita in 2002 was $3,370, which is fairly high because of oil wealth. But net savings per capita is negative $1,183. That’s the most extreme case. But the pattern is true of virtually all of the African resource-extractive economies. The two most intensive cases, by the way, Angola and the Democratic Republic of Congo (DRC), aren’t even listed because they don’t have enough data.

There you see the process of extraction of Africa’s wealth without reinvestment. This is combined with capital flight by African elites--as well one other factor, the incredibly high GINI coefficient [a statistical measure of social inequality]. These countries are really the worst in the world for inequality, for relative capital flight, and for the extraction of resources without reinvestment.

In those respects, Sudan is a more extreme version, but still part of the overall process by which multinational capital doesn’t flow into Africa, but skips from one site of mineral extraction to another. That’s the way Africa finds itself integrated.

There are two other factors to be mentioned. One is U.S. imperialism, and the other is the China factor.

With U.S. imperialism, we’ve also had South African subimperialism, and the U.S. and South Africa--notwithstanding a few rhetorical differences now and again--are operating fairly coherently in setting up the structures to drain Africa. One of them is the New Partnership for Africa’s Development--NEPAD--which the U.S. State Department has called philosophically spot on, because it amplifies the neoliberal project.

Former U.S. Secretary of Defense Donald Rumsfeld announced last year that there would be a new Africa command. Until recently, Africa has been patrolled by the Mediterranean command, the southern command of Europe.

The other factor, China, is critical because of the new trade regime, with China entering the WTO. There used to be a sort of smallish benefit for manufacturing in Africa because of the U.S. Africa Growth and Opportunity Act (AGOA), which allowed a few countries, Lesotho for example, to export a little bit of manufacturing, especially clothing textiles into the United States.

That’s now history, and the big story is the destruction of virtually all of Africa’s clothing and textile capacity through the imports. It extends to footwear and electronics in a variety of sectors. The Chinese import wave has simply destroyed much of Africa’s capacity.

WHAT IS the Chinese government’s policy in Africa?

THE RELATIONSHIP seems to be one of opportunistic patronage.

Last year, the Chinese government advanced a $200 million loan to the Zimbabwe government. This came more or less exactly a year after Zimbabwe turned down a $500 million loan from the South African government because of reported conditions that might have opened up more space for opposition and engagement with the regime. In addition, it would have entailed more liberalization of Zimbabwe’s economy vis à vis South Africa’s.

What the Chinese have done, we don’t know in detail. But it is comparable to another arrangement that was made in 2005, in which China bailed out the Angolan government, which, although it’s got very strong oil revenues, urgently needed $2 billion.

It was going to the International Monetary Fund, and the IMF had a variety of conditions. The Chinese made the loan, presumably at or near the same interest rate--I don’t have those details--but without those conditions.

And likewise in Sudan, there’s plenty of Chinese infrastructure investment to support oil extraction--in the range $8 billion, I’ve heard.

In these three cases, plus many more we’re now familiar with in terms of details, Chinese relationships with repressive regimes in Africa seem to be growing, and seem to be occurring without any leverage for progressives, who somehow want to condition those relationships.

Just to illustrate: The grassroots movement in Zimbabwe is calling for smart sanctions against Robert Mugabe. The South African relationship with Zimbabwe is also terribly important, because so much of the material resources and ideological support for the Mugabe regime can be found in official South Africa.

In Zimbabwe, there was terrible torture of trade unionists in September, arrests of women activists, and beatings and continuing repression. It’s really important to amplify the voice of progressives in Zimbabwe to get international solidarity up and running. Pambazuka, the leading African progressive Web site, has come out with a major publication on China, Africa and alternatives from below, rather than the elite, patronage-based systems that seem to have solidified from above.