Africa - Still A Basket Case, The Plundering Of African & Still No Economic Empowerment

Africa–Still A Basket Case

2014 September 17

By: Rob Meltzer

At the summit of African leaders in Washington this summer, Barry stressed two themes: 1. 50 years after de-colonialization, Africa is no longer a basket case of failed nations, but rather a thriving and future part of the global economy, fully able to stand upon its own two feet and take its place in the community of nations. 2. China is beating the United States at getting in on the ground floor of this gold mine, and we need to rush to protect American interests in this exploding new economic tiger.

Well, what a difference a few months make. Barry has basically proclaimed that Africa is still a basket case, incapable of dealing with its own problems. And, once again, Africa needs the great white father to ride in and save the day. How ironic that this time the great white father is a Muslim from Kenya [Barack Hussein Obama], and that the Chinese are nowhere to be seen, and even Europe seems to be quite hands off in this new mess.

There is no doubt that Africa is a developing part of our global economy–as consumers of textiles and shiny trinkets. But Africa still can’t seem to produce leaders, stable countries or a working economic system that is resistant to challenge. The Ebola crisis was not a crisis earlier this summer, but became one because these African nations, who have supposedly been the beneficiaries of billions of dollars of Chinese infrastructure improvements still can’t deal with a medical situation.

This is not our problem. This is a time for Africa to deal with its own problems. Its time for Africa to produce its own leaders and its own visionaries, and that category doesn’t include the group that simply came to Washington this summer, begging bowl in hand. How nice that Barry, having solved our health care problems here, is now going to fix Africa. And Barry, who can’t bring together Republicans and Democrats in Washington is going to solve the divide between Ukrainians and Russians, or Shia and Sunni.

The United States is fast becoming a basket case in its own right under Barry. And now he forces us to ask this question: where are we going, and are we in this hand basket?

After being freed from colonial rule, foreign businesses are still exploiting Black people. After 1600 years of foreign domination, Africans still have not learned how to organize or empower themselves and manage their own countries.

The Plunder of Africa

How Everybody Holds the Continent Back

By Howard W. French -Review Essay July/August 2015 Issue

Discussions about the fate of Africa have long had a cyclical quality. That is especially the case when it comes to the question of how to explain the region’s persistent underdevelop-ment. At times, the dominant view has stressed the importance of centuries of exploitation by outsiders, from the distant past all the way to the present. Scholars such as the economist William Easterly, for example, have argued that even now, the effects of the African slave trade can be measured on the continent, with areas that experienced intensive slaving still showing greater instability, a lack of social trust, and lower growth. Others observers have focused on different external factors, such as the support that powerful countries offered corrupt African dictatorships during the Cold War and the structural-adjustment policies imposed by Western-led institutions in the 1980s—which, some argue, favored disinvestment in national education, health care, and other vital services.

At other times, a consensus has formed around arguments that pin the blame on poor African leadership in the decades since most of the continent achieved independence in the 1960s. According to this view, the outside world has been generous to Africa, providing substantial aid in recent decades, leaving no excuse for the continent’s debility. There’s little wrong with African countries that an end to the corruption and thievery of their leaders wouldn’t fix, voices from this camp say. Western media coverage of Africa has tended to provide fodder for that argument, highlighting the shortcomings and excesses of the region’s leaders while saying little about the influence of powerful international institutions and corporations.

It’s easy to understand why: Africa’s supply of incompetent or colorful villains has been so plentiful over the years, and reading about them is perversely comforting for many Westerners who, like audiences everywhere, would rather not dwell on their own complicity in the world’s problems. Reading about African villains is perversely comforting for many Westerners who, like audiences everywhere, would rather not dwell on their own complicity in the world’s problems.

One of the many strengths of Tom Burgis’ The Looting Machine is the way it avoids falling firmly into either camp in this long-running debate. Burgis, who writes about Africa for the Financial Times, brings the tools of an investigative reporter and the sensibility of a foreign correspondent to his story, narrating scenes of graft in the swamps of Nigeria’s oil-producing coastal delta region and in the lush mining country of the eastern Democratic Republic of the Congo, while also sniffing out corruption in the lobbies of Hong Kong skyscrapers, where shell corporations engineer murky deals that earn huge sums of money for a host of shady international players. Although Burgis’ emphasis is ultimately on Africa’s exploitation by outsiders, he never loses sight of local culprits.

GIMME THE LOOT

Sure signs that Burgis is no knee-jerk apologist for African elites arrive early in the book, beginning with his fascinating and lengthy account of “the Futungo,” a shadowy clique of Angolan insiders who he claims control their country’s immense oil wealth, personally profiting from it and also using it to keep a repressive ruling regime in power. The country’s leader, José Eduardo dos Santos, has been president since 1979, and in 2013, Forbes magazine identified his daughter, Isabel, as Africa’s first female billionaire. “When the International Monetary Fund [IMF] examined Angola’s national accounts in 2011,”

Burgis writes, it found that between 2007 and 2010, “$32 billion had gone missing, a sum greater than the gross domestic product of each of forty-three African countries and equivalent to one in every four dollars that the Angolan economy generates annually.” Meanwhile, according to Burgis, even though the country is at peace, in 2013 the Angolan government spent 18 percent of its budget on the Futungo-dominated military and police forces that prop up dos Santos’ rule—almost 40 percent more than it spends on health and education combined. 

Those who tend to blame Africa’s woes on elite thievery seize on such examples with relish. But Burgis tells a much fuller story. Angola’s leaders may seem more clever and perhaps possess more agency than other African regimes—and indeed, other African states seem to be eagerly adopting the Angolan model. But the regime relies on the complicity of a number of actors in the international system—and the willful ignorance of many others—to facilitate the dispossession of the Angolan people: Western governments, which remain largely mute about governance in Angola; major banks; big oil companies; weapons dealers; and even the IMF.

They provide the political cover, the capital, and the technology necessary to extract oil from the country’s rich offshore wells and have facilitated the concealment (and overseas investment) of enormous sums of money on behalf of a small cabal of Angolans and their foreign enablers. Because Angola’s primary resource, oil, is deemed so important to the global economy, and because its production is so lucrative for others, Angola is rarely pressed to account for how it uses its profits, much less over questions of democracy or human rights. Burgis shows how even the IMF, after uncovering the $32 billion theft, docilely reverted to its role as a facilitator of the regime’s dubious economic programs.

For those who insist that foreign aid to Africa compensates for the role that rich countries, big businesses, and international organizations play in plundering the continent’s resource wealth, Burgis has a ready rejoinder. “In 2010,” he writes, “fuel and mineral exports from Africa were worth $333 billion, more than seven times the value of the aid that went in the opposite direction.” And African countries generally receive only a small fraction of the value that their extractive industries produce, at least relative to the sums that states in other parts of the world earn from their resources.

As Burgis reveals, that is because multilateral financial institutions, led by the World Bank and its International Finance Corporation (IFC), often put intense pressure on African countries to accept tiny royalties on the sales of their natural resources, warning them that otherwise, they will be labeled as “resource nationalists” and shunned by foreign investors. “The result,” Burgis writes, “is like an inverted auction, in which poor countries compete to sell the family silver at the lowest price.”

Meanwhile, oil, gas, and mining giants employ crafty tax-avoidance strategies, severely understating the value of their assets in African countries and assigning the bulk of their income to subsidiaries in tax havens such as Bermuda, the Cayman Islands, and the Marshall Islands. Some Western governments tolerate and even defend such arrangements, which increase the profits of Western companies and major multinational firms. But these tax dodges further shrink the proceeds that African states earn from their resources.

According to Burgis, in Zambia, one of the world’s top copper producers, major mining companies pay lower tax rates than the country’s poor miners themselves. Partly as a result, he reports, in 2011, “only 2.4 percent of the $10 billion of revenues from exports of Zambian copper accrued to the government.” Ghana, a major gold producer, fared slightly better, with foreign mining companies paying seven percent of the revenue they earned in taxes—still a tiny amount, Burgis points out, “compared with the 45 to 65 percent that the IMF estimates to be the global average effective tax rate in mining.”

A RACE TO THE BOTTOM

African countries’ unequal relationships with powerful international financial organizations and large multinational firms help explain the “resource curse” so frequently lamented in discussions of the continent’s economies. Rather than issuing from some mysterious invisible force, the curse is to a large degree the product of greed and the disparities in leverage between rich and poor—and its effects are undeniable. Burgis quotes a 2004 internal IFC review that found that between 1960 and 2000, “poor countries that were rich in natural resources grew two to three times more slowly than those that were not.” Without exception, the IFC found, “every country that borrowed from the World Bank did worse the more it depended on extractive industries.”

A case in point is the arid, Sahelian country of Niger, which for decades has served as a major supplier of uranium to France, its former colonial master. According to Burgis, the French company Areva pays tiny royalties for Niger’s uranium—an estimated 5.5 percent of its market value. And the details of the company’s contracts with Niger’s government are not publicly disclosed. Reflecting on this situation during an interview with Burgis, China’s ambassador to Niger adopts a posture of moral outrage, proclaiming that Niger’s “direct receipts from uranium are more or less equivalent to those from the export of onions.”

Rather than issuing from some mysterious invisible force, the "resource curse" is to a large degree the product of greed and the disparities in leverage between rich and poor. This is a telling exchange, since many Africans believed that Chinese investment and influence on the continent would offer a way to lift the resource curse. Many greeted the arrival of the Chinese as big economic players in the region, which began in the mid-1990s, with great enthusiasm—especially the leaders of states whose economies depend heavily on minerals. China’s share of the global consumption of refined metals rose from five percent in the early 1990s to 45 percent in 2010; its oil consumption increased fivefold during the same period. In 2002, Chinese trade with Africa was worth $13 billion; a mere decade later, that figure had soared to $180 billion, three times the value of U.S. trade with  the continent.

The hope was that with China directly competing with Africa’s economic partners in the West, African countries would win better terms for themselves. But as Burgis makes painfully clear, what has happened more often is a race to the bottom, in which Chinese firms focus their attention on African countries that face sharp credit restrictions or economic boycotts from the West, owing to coups d’état or human rights abuses. In many such countries, including Angola, the Democratic Republic of the Congo, and Guinea, the Chinese have extended easy financing to governments, crafting secretive deals that reward Chinese investors with even more lopsided terms than Western governments and firms tend to enjoy.

“Access to easy Chinese loans might have looked like a chance for African governments to reassert sovereignty after decades of hectoring by the [World] Bank, the IMF, and Western donors,” Burgis writes, but, “like a credit card issued with no credit check, it also removed a source of pressure for sensible economic management.” In addition to this, critics point out that Chinese companies frequently bring in their own workers from China, providing little employment for Africans and few opportunities for Africans to master new skills and technologies. [Source: Foreign Affairs - 3/11/16] - {Click Here To Visit Website}

Our People Still

Have No Economic Empowerment

Africa's Economic Growth

Failing to Stimulate Development and jobs

UN fears poverty and inequality could be exacerbated by cessation of US-led quantitative easing programmes.

Economic growth in Africa is expected to accelerate to 4.7% this year and 5% in 2015, but the advance is failing to translate into job creation and the broad-based development needed to reduce high poverty and rising inequality rates in many countries, the UN has said. Although its world economic situation and prospects 2014 report is generally upbeat about the continent, it warns that a global economic slowdown is likely to have a significant negative impact on Africa's performance. And like the World Bank, the UN is worried about the risks associated with a possible bumpy exit from quantitative easing programs by the US Federal Reserve that have pumped money into the global economy.

"Our forecast is made in the context of many uncertainties and risks coming from possible missteps as well as non-economic factors that could stymie growth," Shamshad Akhtar, UN assistant secretary for economic development, said. The main worry is that a tapering or phasing out of quantitative easing could lead to a global surge in long-term interest rates, a fall in stock markets and a sharp decline in capital inflows to emerging economies. "These first-round shocks in international financial markets could transmit quickly to developed and developing economies," the UN warned.

West Africa should continue to enjoy the strongest growth on the continent, with an anticipated increase from 6.7% in 2013 to 6.9% this year. The region will continue to attract investment in oil and minerals, especially in Burkina Faso, Ghana, Guinea, Liberia, Niger, Nigeria and Sierra Leone. East Africa is also expected to experience robust growth, increasing from 6% last year to 6.4% in 2014. Growth will benefit from increased consumer spending in Kenya, higher consumption and investment in natural gas in Tanzania, a rise in activity in construction, transport, telecommunications, as well as exploration and construction in the burgeoning oil industry in Uganda.

Ethiopia will remain a strong performer, but GDP growth is expected to dip this year, from 6.9% in 2013 to 6.5%. In the south of the continent, growth is projected to increase from 3.6% to 4.2%, mainly because of declining labour unrest, increased investments and rising mineral outputs in South Africa. Foreign investment is likely to rise owing to huge coal deposits and offshore gas discoveries in Mozambique and increased oil output in Angola. Foreign investors are likely to be attracted to Zambia's copper sector and uranium mining in Namibia.

Economic growth will be weakest in north Africa, a region racked by political instability, particularly in Egypt, Libya and Tunisia. Growth in the region is expected to rise from 2.3% in 2013 to 3.3%; central Africa's growth is predicted to accelerate to 4.8% in 2014 from 2.4%. The report notes that Africa's recent growth has been driven by commodity production and exports, but remains far below the continent's potential. Meaningful job creation is weak and growth is not tackling high poverty and rising inequality in many countries.

"The informal sector is still large and opportunities remain limited for many seeking to enter the labour market, as seen by high youth unemployment rates and wide gender disparities in earnings," the report adds. "Continual pressure on labour markets from a steady stream of new entrants due to population growth has meant that even solid GDP growth rates have not been sufficient to make measurable impacts."

The UN attributes weak job creation to a heavy dependence on minerals and agriculture, but says growth in other sectors such as telecommunications, financial services, transport and construction in countries such as Ghana, Kenya and Nigeria is helping to improve the situation. Political unrest continues to pose a significant threat to economic activity in several countries including Central African Republic, the Democratic Republic of the Congo, Somalia and South Sudan. Meanwhile, the reliance on agriculture leaves many countries prone to weather-related shocks. [Source: The Guardian - 3/11/16] - {Click Here To Visit Website}