Africa Development, Vol. XXXVII, No. 4, 2012, pp. 179 – 196
© Council for the
Development of Social Science Research in Africa, 2012
(ISSN 0850-3907)
Africa’s
Developmental Impasse: Some
Perspectives
and Recommendations
Demba Moussa Dembele*
Abstract
Africa is
among the “poorest” regions of the world. The reality is that
Africa is
not poor but rather impoverished. This impoverishment dates back to the dawn of
capitalism when slavery was one of the key elements of capitalism’s “original
accumulation”, as demonstrated par Karl Marx
in The Capital.
Colonial
administration replaced slavery as from the 19th Century
with the occupation of Africa by Western powers. This has led to a systematic
looting of its natural resources and the exploitation of its cheap labour which
served to industrialise Western countries.
Thus,
slavery and colonisation constituted the main causes of Africa’s impoverishment.
With its accession to independence from the 1960s, one may have thought that
looting Africa would have come to an end and its development stepped up. It was
the contrary that occurred because in many countries, foreign domination had
been reinforced in connivance with the new African leaders.
The failure
of the neo-colonial management of African countries was illustrated by the
external debt crisis which started from the end of the 1970s and led to the
World Bank and IMF’s intervention. These institutions forced upon African
countries the notoriously sad adjustment programmes which contributed to
worsening the crisis in their economies, taking poverty to an unprecedented
level. The international financial crisis that occurred in 2008 illustrated the
failure of market fundamentalism of which adjustment programmes are the
forerunners. This crisis which has shaken the very bases of the capitalistic
system affords African leaders and thinkers the opportunity to break loose of
the neoliberal yoke and explore a development path that is more in tune with
Africa. The author underscores that such a path should be non-capitalistic
because the heavy toll that Africa has paid since the birth of capitalism until
now is a proof that the capitalistic development model is bound to fail.
* ARCADE, Dakar, Senegal. Email: dembuss@hotmail.com
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Socialism is the most appropriate development option because
it can reconcile economic efficiency, wealth redistribution, social justice and
democracy.
Résumé
Le continent
africain fait partie des régions les plus « pauvres » du monde. La réalité est
que l’Afrique n’est pas pauvre mais appauvrie. Cet appauvrissement remonte à
l’aube du capitalisme quand l’esclavage fut un des principaux éléments de «
l’accumulation primitive » du capitalisme, comme l’a montré Karl Marx dans Le Capital.
La colonisation se substitua à l’esclavage à partir du
19e siècle avec l’occupation du continent par les puissances occidentales. Elle
entraîna un pillage systématique des ressources naturelles et l’exploitation de
la main d’œuvre à bon marché au service de l’industrialisation des pays occidentaux.
Ainsi donc,
l’esclavage et la colonisation constituent-ils les sources principales de
l’appauvrissement de l’Afrique. On aurait pu penser que les indépendances à
partir des années 1960 mettraient fin au pillage de l’Afrique et la
propulseraient sur la voie du développement. Au contraire, dans beaucoup de
pays la domination étrangère avait été renforcée avec la complicité des
nouveaux dirigeants africains.
L’échec de
la gestion néocoloniale des pays africains fut illustré par la crise de la
dette extérieure à partir de la fin des années 1970 qui entraina l’intervention
de la Banque mondiale et du FMI. Ces institutions imposèrent les programmes
d’ajustement de triste mémoire qui ont contribué à aggraver la crise des
économies africaines engendrant ainsi un niveau de pauvreté sans précédent.
La crise
financière internationale qui a éclaté en 2008 a illustré la faillite du fondamentalisme
de marché dont les programmes d’ajustement sont les précurseurs. Cette crise
qui a remis en cause les fondements mêmes du système capitaliste offre une
occasion aux dirigeants et penseurs africains de sortir du carcan néolibéral et
d’explorer une voie de développement qui soit propre à l’Afrique. L’auteur
souligne que cette voie doit être non capitaliste car le lourd tribut que
l’Afrique a payé depuis la naissance du capitalisme jusqu’à nos jours montre
que la voie capitaliste de développement est vouée à l’échec.
Le
socialisme est l’alternative de développement la plus appropriée parce qu’il
peut allier efficacité économique, redistribution des richesses, justice sociale
et démocratie.
Introduction
According to the
United Nations Conference on Trade and Development
(UNCTAD, 2010),
there are 33 African countries classified as Least Developed Countries (LDCs).1
These countries are characterised by economic
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vulnerability, weak human development, and
low income. This, to a large extent, explains why many African countries are at
the bottom of the Human
Development Index (HDI2011) developed by
the United Nations Development Programme (UNDP).
It is a fact that Africa remains a continent that is
developmentally in arrears despite its great amount of resources –
minerals, petroleum, arable land,
agricultural resources, maritime resources, etc. – and formidable human potential,
especially vibrant youth eager to contribute to building a prosperous
continent. The present situation is such that, despite its great wealth
potential, there is much discontent among the masses on the African continent.
In this paper, I propose to analyse the present weak economic performance of
Africa, and then make recommendations as to how the present impasse could be
overcome. At present, Africa is victim to its recent historical past and to a
set of forces both exogenous and endogenous arrayed against it. Sources of Africa’s Economic Underdevelopment
Africa is not poor, as the mainstream
discourse tends to stress ad nauseam. It
has been impoverished through centuries of slavery and colonization. In his
monumental work, Capital, Marx has
shown the heavy price paid by Africa to what he calls the ‘primitive
accumulation’ of capital in the early days of capitalist accumulation (Marx
1977: 915). With the huge amount of economic surpluses garnered from the
Atlantic Trade, investments were made in new technologies that increased
capitalist productivity. Thus, commercial capitalism eventually gave way to
industrial capitalism. But the cost to Africa was the cruel exploitation of
African labour. With the falling off of the demand for captive labour and the
increased need for raw materials for the quickly developing engine of
industrial capitalism, the global colonization of resource-rich lands became
the new project for European economic and military powers. Hence the scramble
for Africa that culminated with the Berlin Conference of 1885 that divided up
Africa.
When formal independence was granted to African countries
in the 1960s, hopes were high that with independence, the long period of
economic exploitation would come to an end, and Africa would then be on the
path towards economic growth and development. Socialism as a model of
development was popular in those days, with the Soviet Union, China and Cuba
serving as possible models. This was the basis for the socialist experiments in
places like Ghana under President Kwame Nkrumah and Tanzania under President Julius
Nyerere.
But the withdrawal of the European powers was only
strategic. They left behind minefields of problems that were set during
colonial times. One of
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these problems was the
unbalanced treatment of Africa’s ethnic groups.
Another was the
birth of new classes that were nurtured on the shallow materialism encouraged
by capitalist production. Frantz Fanon (1963) noted in his Wretched of the Earth that the pitfalls of independence included
the birth of greedy comprador classes narrowly founded on the dubious principle
of ethnicity that threatened to derail the independence project. Well, they
have succeeded so far.
A major reason for Africa’s meagre economic progress is
that most African countries are run indirectly from the West by way of the willing
complicity of Africa’s comprador bourgeois classes who facilitate the looting
of the continent’s resources by Western and other multinationals in exchange
for paybacks that are used up mainly in consumption. In this context,, the
loans contracted by African governments at high interest rates were mainly used
for consumption at the expense of investment that would boost economic growth
and development. This led to the external crisis of the 1970s that gave way to
the intervention of the International Monetary Fund (IMF) and World Bank that
imposed the punishing Structural Adjustment Programmes (SAPs) of the 1980s, all
tailor-made for an entrapped continent.
The prescient Fanon, in his The Wretched of the Earth (1963), candidly summed up the situation
of the new comprador bourgeoisie domination of the nation in the context of a
centre-periphery dependency relation between the neo-colonial powers and their
ex-colonies. This situation is at the source of the individualistic
rent-seeking and corruption that quickly engulfed Africa’s new neo-colonial
nations. This tenuous situation was held firmly in place by the new armies and
police trained to protect the interests of the new bourgeoisie and its
metropolitan patrons. This local military power was often reinforced by the
ex-colonising power maintaining troops in the new nation. This has been
standard practice of France with several of its erstwhile colonies until this
very day. On the above topic, Fanon (1963:172) writes:
In these poor underdeveloped countries, where
the rule is that the greatest wealth is surrounded by the greatest poverty, the
army and the police constitute the pillars of the regime; an army and a police
force (another rule which must not be forgotten) which are advised by foreign
experts. The strength of the police force and the power of the army are
proportionate to the stagnation in which the rest of the nation is sunk. By
dint of yearly loans, concessions are snatched up by foreigners; scandals are
numerous, ministers grow rich, their wives doll themselves up, the members of
parliament feather their nests and there is not a single soul down to the
simple policeman or the customs officer who does not join in the great process
of corruption….The opposition becomes more aggressive and the people catch on
to its propaganda. From now on their hostility to the bourgeoisie is plainly
visible. 183
Colonization and the Capitalist Division of
Labour
The colonization of African countries
by European powers in the 19th century sealed the fate of the
continent for centuries to come. In addition to the plunder of its resources,
its citizens were transformed into cheap labour for colonial companies. The
capitalist division of labour, which made Africa a provider of raw materials
for industrialized countries, has persisted until today with more than
two-thirds of Africa’s exports comprising raw materials and semi-processed
goods (UNCTAD 2003). This pattern of development has contributed to the
continent’s impoverishment. It has accentuated African countries’ external
dependence and led to the debt crisis of the late 1970s
and early 1980s, which opened the door to
the intervention of the International Monetary Fund (IMF) and the World Bank.
The Perennial Commodity Dependence
It was thought that the independence
of the 1960s would spell the end of the commodity dependence model and bring
significant economic and social changes for the benefit of the African people.
But in most countries, the economic structures and institutions inherited from
colonisation were kept intact and the relationships with former colonial powers
remained unchanged. As a result, there was little economic transformation that
could have improved the lives of Africa’s citizens (ECA 2011). The lack of
economic transformation means tremendous losses of wealth and employment
opportunities for millions of Africans, especially for the young people.
Commodity dependence is one of the main reasons for the
economic vulnerability of African countries to external shocks. First, the
exports of many countries depend on a few commodities. This dependence is
measured by the export concentration index, which increased by 80 per cent
between
1995 and 2006 as a result of trade
liberalisation imposed by the International Monetary Fund (IMF) and the World
Bank (UNCTAD 2008). Second, commodity dependence also means a high degree of
dependence on external markets, as measured by the export-to-gross domestic
product (GDP) ratio, which doubled from 26 per cent in 1995 to 51 per cent in
2007. For the group of least developed countries, the ratio more than doubled,
rising from 17 per cent to 45 per cent over the same period.2
The economic vulnerability to external shocks played
an important role in the debt crisis of the 1970s and 1980s, which again led to
the intervention of the International Monetary Fund (IMF) and the World Bank.
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The Costs of IMF and World Bank Intervention
This intervention
led to the imposition of the now discredited Structural Adjustment Programmes
(SAPs), which aggravated the economic and social crisis of African countries.
Trade liberalisation has been one of the main features of the international
financial institutions (IFIs) prescriptions. It was founded on the assumption
that African countries’ economies were too inwardlooking and laden with
protectionist measures, especially for state-owned companies. This explains, as
the interventionist argument goes, their lack of competitiveness and the
accumulation of deficits that increased the burden on public finances and led
to the public debt crisis.
As a way of correction, the IFIs
imposed sweeping trade liberalisation based on an export-oriented model, which
was reinforced in the mid-1990s when the World Trade Organisation (WTO) was set
up. One of the main goals of trade liberalisation was to boost exports in order
to gain the foreign exchange needed to repay the external debt. This explains
why priority was given to cash crops at the expense of food production for
local consumption. As a result, food production continued to fall resulting in
rising external food dependence.
One of the features of trade
liberalisation was the removal of protection for the domestic industry. This
has had devastating effects on African domestic industries, most of which
collapsed under unfair competition from heavily subsidised products from OECD
(Organisation for Economic Cooperation and Development) countries. As a result,
unemployment reached unprecedented levels, contributing to the spread of
poverty on a massive scale.
Indeed, the costs of trade
policies imposed by the IFIs have been staggering. According to Christian Aid
(2005), African countries lost more than 270 billion dollars over two decades
of structural adjustment. To illustrate these losses by concrete examples, the
report pointed out that a country like Ghana had lost some 10 billion dollars
over a 15-year period. This loss was equivalent to a work stoppage by the whole
country for 18 months. Trade liberalisation goes hand-in-hand with financial
liberalisation, which exacerbated capital flight and tax evasions, instead of
‘attracting’ more capital flows in the form of foreign direct investments.
Several sources have documented the staggering amount of capital flight since
the 1970s. One study indicates that the level of capital flight from Africa had
been underestimated. It said that cumulative capital flight over the 1970-2004
period for a group of 40 African countries amounted to 420 billion dollars at
2004 prices. The study added that if one takes into account accumulated
interest on this figure, the cumulative capital flight would amount to a huge
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607 billion dollars. This figure was 400
billion dollars higher than these countries’ outstanding debt at the end of
2004 (Boyce and Ndikumana 2008).
A study on LDCs commissioned by the UNDP and
released during the UN Fourth Conference on LDCs in Istanbul in May 2011,
indicates a staggering capital flight from the ‘poorest’ countries in the
world. It shows that between 1990 and 2008 the 48 ‘poorest’ countries lost
nearly 200 billion dollars.
African countries accounted for about
70 per cent of those outflows.3 Mispricing
is the leading factor behind capital flight, accounting for 65 to 70 per cent
of all illicit outflows. This is another reason why trade liberalization has
been devastating for African countries.
One of the objectives of financial liberalisation is to
help African countries attract foreign direct investments (FDIs). To achieve
this goal, African countries were advised to provide tax holidays, enact
special laws to protect private property, to push for labour market
‘flexibility’, that is, the possibility for private investors to lay off
workers at will, in the name of competitiveness, lower wages, and social
standards.
But tax holidays tend to exacerbate capital shortage
in African countries. A report by the Tax Justice Network Africa (TJNA)4
indicates that for the past 25 years, tax revenues in most African countries
have not even achieved the low target of 15 per cent of GDP, compared to
developed countries’ average of 35 per cent. The report places the blame mostly
on the incapacity of African governments to enforce tax collection and on the
tax avoidance schemes by foreign investors.
Social and Political Costs of Structural
Adjustment
The combined effects of trade and
financial liberalisation have been the spread of poverty in many African
countries. The Poverty Reduction Strategy Papers(PRSPs) are a recognition of
the disastrous impact of these policies. UNCTAD indicates that in African LDCs,
60 per cent of the population live on less than 1.25 dollars a day, while 88
per cent live on less than 2 dollars a day (UNCTAD 2010). The economic impact
of this is sheer strangulation for the vast majority of Africa’s citizens given
that a large proportion of the
items consumed in Africa are imported from
the West and Asia.
Overall, the economic and social costs of structural
adjustment policies (SAPs) are staggering. These policies are responsible for
the explosion of poverty, social dislocation, increased gender and social
discrimination, weaker states, and so forth (Dembele 2004). As a result, the
international financial institutions (IFIs) have now only one agenda for
Africa: ‘poverty reduction’. The word ‘development’ has been banned from their
vocabulary. The celebration of ‘high’ growth rates is accompanied by a steady
deterioration in human development indicators, illustrated by high levels of
unemployment, declining
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incomes, poor
educational and health systems, deterioration of public services as a result of
lower public investments, and privatisation imposed by the IFIs.
At the political level, vicious
attacks against state-led development, the dismantling of the public sector,
budget austerity, and civil service downsizing have combined to weaken or even
destroy several states. The so-called ‘failed states’ are a direct outcome of
discredited neoliberal policies imposed on
African countries
for more than three decades.
As a result, democratic institutions have been marginalised
in policy formulation and implementation. Democracy has lost its meaning and
politics has lost credibility. This explains to a large extent why elections
have become an empty shell and a formal exercise for professional politicians
who make false promises on economic and social issues they are unable to
deliver, due to conditionalities imposed by IFIs. But the comprador national
bourgeoisies are comfortable with this unfortunate situation for the reasons
that Fanon so tellingly gave: ‘Its
innermost vocation seems to be to keep in the running and to be part of the
racket’ (Fanon 1963:150).
Toward A Non-Capitalist Development
All of the above
demonstrates that genuine autonomous development for Africa is not possible
within the existing neo-colonial capitalist system. The experience of the last
50 years supports this claim. The current crisis of global capitalism and the
exacerbation of contradictions between the global South that seeks its own
emancipation, and the imperialist Triad,5 determined to
preserve its monopolies and hegemony through the militarisation of the planet,
make it more difficult and even illusory for African countries to contemplate
development within the existing capitalist system (Amin 2010). Therefore,
ending Africa’s impoverishment and improving the lives of its citizens requires
breaking with the dominant paradigm whose main pillars are now being challenged
by even some of its erstwhile leading proponents.6 This is a
reflection of the crisis of legitimacy of global capitalism, ‘a crisis of
civilization’, because it is putting into question all the values promoted by capitalism,
such as, democracy, politics, human rights, freedom, and so forth.
So, it is time now for Africa to
free itself from the influence of neoliberal thinking and the shackles of the
International Monetary Fund (IMF) and World Bank. It is time for African
countries to take decisive steps toward an alternative development by moving
away from the commodity dependence model and the vicious circle of the
international division of labour inherited from colonization.
An interesting work was initiated in this
regard in Southern Africa a few years ago (Kanyenze et al 2006). Initiated by
the leading trade unions in that region, with the collaboration of leading
thinkers and activists, the ‘Alternatives to Neoliberalism in Southern Africa’
(ANSA) aims to challenge the mainstream
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discourse on development and propose an
alternative development framework in Southern Africa. ANSA is an important
contribution to the struggle to promote a new discourse on development in
Africa, away from the failed and discredited neoliberal paradigm. The proposals
below are another contribution to that struggle, which aims to reclaim Africa’s
sovereignty over its own development.
Reverse Discredited Neoliberal Policies
One of the important steps in that
regard is to challenge and reject the failed policies advocated by the IFIs.
Thus African countries should restore capital controls and reverse
liberalization of their capital accounts, two policies that opened the door to
speculative capital flows, tax evasion, and increased capital flight. Several
recent reports support capital controls as a policy tool to mitigate the impact
of external shocks and strengthen sovereignty over macroeconomic policies. Even
the IMF has now acknowledged the usefulness of capital controls under certain
circumstances (Ostry et al. 2010).
Another step toward reversing neoliberal policies is
to end trade liberalisation as an instrument of the export-led growth model and
restore protection for strategic sectors and companies, especially food
producers in domestic markets. In
the name of ‘free trade’ and ‘comparative advantage’
African countries were forced to accept
sweeping trade liberalisation that has been very costly in economic and social
terms. As shown in previous chapters, trade liberalization has increased
Africa’s external dependence, destroyed domestic industries and accelerated
deindustrialisation. While African countries were requested to accept at face
value the virtues of ‘free trade’, OECD countries were providing huge
agricultural subsidies and erecting disguised and open protectionist policies
to the detriment of African exports. Still in the name of ‘comparative
advantage’, African countries were forced to give priority to cash crops at the
expense of food production. The food crisis and Africa’s great dependence on
food imports illustrate once again that the IFIs have successfully cajoled
African countries into adopting policies that are detrimental to their
fundamental interests. After aggravating Africa’s food dependence following the
liberaliation of the agricultural sector, the IMF and World Bank are now
offering loans to African countries to purchase food from Western countries. As
a result, there is increased debt burden and food dependence for many African
countries.
The vicious attacks against the stateby the same
institutionshavetranslated into the destruction of the public sector through
the privatisation of stateowned enterprises in the name of ‘private sector
development’ and
‘efficiency’. In several
countries, there were even ‘ministries of privatisation’
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whose main mission
was to sell off some of the most profitable public assets with little positive
returns for their countries. In fact, privatisation translated into massive job
losses and social exclusion. It can be easily argued that there is evident
correlation between the aggravation of poverty and the growing foreign control
of public assets.
Thus, privatisation can be seen as
a form of robbery of the national patrimony –including strategic sectors –
through the transfer to foreign control of assets built up throughout years of
sacrifices by the people. Therefore, reversing privatisation is necessary in
order to restore people’s sovereignty over their resources. It is time for
African countries to put back into public and collective hands the control of
key sectors and natural resources. No genuine development is possible without
control of a nation’s wealth.
So Africa should learn from the lessons given by developed
countries, including the United States, during the financial crisis. They have
been nationalising banks and financial institutions in order to save them from
collapse. But more importantly, African countries should learn from the
examples of other Southern countries, like those of South America, where
governments are now taking control of assets and natural resources that were
sold off to foreign companies. The defense of public and collective ownership
is an important component of the struggle against the neoliberal ideology.
Build Developmental and Democratic States
Reversing
privatisation and defending public ownership can be possible only with an
active intervention of the state. Proponents of such intervention have been
vindicated by the high economic and social costs of laissez-faire policies and the resurgence of state intervention in
developed countries. In Africa, there is a strong correlation between state
retrenchment, poverty and social exclusion. The national security of a country
requires a strong and active state. In fragile nations, state intervention is indispensable
to the process of nation-building.
African social movements have said
that the policy of ‘minimal state’ advocated by the IFIs was a heresy. Now,
some institutions seem to have come to the same conclusion, as illustrated by
the 2011 ECA report stressing the indispensable role of the State in economic
transformation. In fact, experiences from Asia and Latin America show that the
economic and social progress achieved in those regions was made possible by the
existence of an active state, often referred to as the developmental state.
African countries need to build such states that would combine economic
efficiency, social progress, and democracy.
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Promote Industrialisation and Domestic-led
Growth
One of the pillars of economic
transformation is industrialisation. As indicated earlier, one of the main
sources of Africa’s impoverishment is its commodity dependence and the low
level of economic transformation. So, the critical challenge for Africa is to
shift to a different development model, with industrialisation as one of its
key components. Africa must transform domestically its raw materials and
commodities for two main reasons. First, this would add value and create wealth
that would remain on the continent. Second, transforming raw materials
domestically would increase job opportunities for Africans, especially for the
young people whose high unemployment rate is one of the main sources of social
and political unrest.
However, a credible industrialisation strategy should be
envisaged at the regional level. Indeed, past experiences have demonstrated
that industrialisation within small countries has little chance of succeeding.
Small domestic markets were one of the main factors behind the failure of the
import-substitution strategies of the 1960s and 1970s. It is even more
difficult now to imagine a successful industrialisation at the national level,
except for a very few countries.
Economic transformation would create the right
conditions for a viable domestic market, which would make it possible to shift
to a domestic demandled growth strategy as opposed to the export-led growth
strategy advocated by the international financial institutions and which has
accentuated Africa’s commodity dependence.
Mobilising Resources for its Development
Reclaiming its
sovereign right to design its own policies goes with efforts to raise resources
internally and shoulder a greater part of the resources needed to finance its
development. The AfDB Report (2008) rightly claims that ‘The continent needs to boost domestic resource
mobilization - through financial and fiscal instruments- to support growth and
investment. Addressing these issues require strategic interventions at various
levels’.
Financing Africa’s development has
been one of the most intractable issues since independence. The excessive
influence of the IFIs, the dependence on external ‘aid’ and the external debt
crisis are all inked to the inability of
African countries to mobilise resources for
their development. Structural adjustment programmes have reinforced African
countries’ dependence on external financing, both on public and private
sources. But the financial crisis has accentuated the crisis of external aid as
illustrated by the downward trend of ‘official development assistance’ (ODA).
Indeed, real resource transfer from official development assistance had been
declining owing to a number of factors, including the gap between commitments
and actual
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delivery, the inclusion of
‘debt relief’ and emergency assistance in the nominal figures announced by
‘donors’.
Even the commitment made in July 2005 in
Gleneagles with much fanfare to double ‘aid’ to Africa by 2010 has not been
fulfilled. According to the
Development Assistance Committee (DAC), the
2005 pledge to bring aid levels to $48 billion in 2010 fell short by $21
billion.7
In addition, the external debt
crisis has had the effect of drying up official lending from traditional
lenders. This prompted IFIs to recommend resorting to private capital in the
form of foreign direct investments (FDIs). But as indicated in previous
chapters, this comes with a high price, by forcing African countries to engage
in a race to the bottom by accepting low wages and social standards for their
citizens, by providing tax holidays and low income tax rates for corporations,
all of which tend to aggravate capital shortage.
So the African experience shows
that dependence on external financing is a dead end. After more than half a
century, African countries must come to grips with the reality that they should
first and foremost count on their own resources to finance their own
development. This means that theyshould pay more attention to measures aimed at
mobilising more effectively domestic resources through progressive fiscal and
monetary policies. This is among the key recommendations made by the UN
Conference on Financing for Development (FfD), held in Mexico in 2002.
To achieve this goal, the role of
the state is indispensable. UNCTAD and other institutions have urged African
countries to build developmental states. In its report, UNCTAD insists on the
need to reorganise African states in order to make them genuine instruments of
development, by helping African governments improve tax collection, formalize
the informal sector; stop capital flight, make more productive use of
remittances from African expatriates, and adopt effective measures to
repatriate resources held abroad (UNCTAD 2007).
Improving domestic resource mobilisation
implies imposing capital controls to limit tax evasions and capital flight,
limiting tax exemptions for corporations and shutting down tax loopholes to
limit the siphoning of domestic savings, and enforcing more effectively income
taxation on foreign investors. According to a study by Christian Aid (2005),
potential losses for lack of enforcement are estimated at $160 billion a year.
In addition, African LDCs should shut down all the loopholes through which
resources are siphoned off. More resources should be raised on corporate income
and higher taxation should be applied to high-income groups. By contrast, the
scope of indirect taxes, like value-added tax (VAT), which penalize lowincome
groups, should be restricted in order to limit its negative impact.
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Another important instrument for a greater domestic
resource mobilization for long-term investments is the restoration of
development banks which had been eliminated by the reforms introduced by
structural adjustment programmes. Likewise, the creation of regional currencies
may be an important instrument for a greater resource mobilisation as they
contribute to preventing domestic savings from moving abroad. They also provide
a greater autonomy in the formulation and implementation of economic policies.
Still, in trying to
mobilise more resources for their development, African countries should demand
compensations from Western financial institutions for their complicity in tax
evasion and capital flight.
Moreover, Africa must fight for the repatriation of
stolen wealth kept in Western banks. The struggle for the repatriation of
stolen wealth has gained momentum at the international level and in Africa. In
2007, an initiative for the stolen assets recovery (STAR) was launched by the
World Bank and the United Nations. Its mission is to prevent the laundering of
products from illicit activities and accelerate the restitution of stolen
assets. But so far, its action has had a limited impact.
In Africa, the African Union Commission and the AfDB have
now joined civil society organisations in calling for the repatriation of
stolen wealth. In 2005, the Commission for Africa, put together by then British
Prime Minister Tony Blair, issued a report exposing the complicity of the
Western financial system in the illicit transfer of wealth from Africa to
Western countries. The Commission estimated that wealth at more than half of
the continent’s external debt. Therefore, African countries should seek justice
by demanding that Western governments and financial institutions cooperate with
them in their efforts to retrieve that wealth for their development.
Strengthening South-South Cooperation
South-South cooperation has become
a growing source of financing for African and other developing countries.
Already, a great number of African countries are turning more and more to
leading countries from the South, like China, India, Brazil, Iran, Venezuela,
etc, for loans and direct investments. According to figures published by
Chinese sources, trade between Africa and China was estimated at $120 billion
for the first eleven months of 2011.
South-South foreign direct investments (FDIs) accounted for
14 per cent of all FDIs in 2008 while South-South trade accounted for 16.4 per
cent of the 14 trillion dollars of world trade in 2007. South-South trade rose
from $600 billion in 1995 to $3.14 trillion in 2008. An increasing part of
South-South trade is in manufactured goods. In development finance, more than
two-thirds of loans made by other Southern countries are on a concessional
basis.8
192
In its 2010 report on the Least
Developed Countries (LDCs), UNCTAD has indicated that emerging southern
economies are now the major export markets for LDCs, absorbing more than half
of their exports. Since 1996, more than half of LDCs’ imports come from the
South. In 2007-2008 it was
62 per cent of
their imports. Between 1990/1991 and 2007/2008, 66 per cent of the growth
expansion in LDCs’ external trade was due to countries from the South.
South-South relations provide greater opportunities for geographical
diversification of trade, investments, financial flows and technology transfer
(UNCTAD 2010).
From the above, one can see that
South-South cooperation has become a major feature of international economic
and financial relations and can play an important role in the paradigm shift.
Indeed, closer South-South relations could be an important component of the
strategy aimed at challenging the dominant paradigm.
Developing closer economic and financial
ties with the rest of the South will help Africa strengthen the policy space it
needs to weaken the influence of ‘traditional partners’, including the
international financial institutions.
Exploring Innovative Sources of Financing
African countries
should strongly support initiatives aimed at exploring innovative sources of
financing for development. Among these sources is the Tobin tax or
international currency transaction tax (ICTT).The exploration of ‘innovative
sources of finance’ is explicitly mentioned in the Monterrey Consensus on
financing for development and was highlighted in the ‘2007
Report of the UN
Secretary-General on the follow-up to, and implementation of, the outcome of
the International Conference on Financing for Development (FfD).
The importance attached to this
issue has led the UN Secretary-General to create the new role of Special Representative on Innovative Finance,
appointing former French Minister of Foreign Affairs, Philippe Douste-Blazy, to
the position. Examples ofinnovative
instruments include nationally-collected and internationally-disbursed
aviation levies, such as those financing UNITAID (United Nations International
Taxation for Aid), as well as a range of wellresearched initiatives to derive
revenue from sectors including off-shore centres, luxury goods, extractive
industries, and banking. Various financial
transaction levies, for example, including stocks, bonds and currency are
simple and inexpensive to implement due to the electronic automation of these
markets, and would yield billions of dollars annually. According to the United
Nations University report published in October 2007, levies on currency
transactions alone have the potential of raising $33 billion annually.
193
Guarantee of Free Access to Basic Social
Services for Citizens
One of the reasons why privatisation should
be reversed and the State should play an active role is to uphold the right of
all citizens, especially for the poor, to free access to basic social services.
Under international law, states are required to respect, protect and fulfil
human rights as a matter of priority in their public and economic policies.
This is why over the last few years, several institutions and civil society
organisations have increasingly promoted the need to respond to the multiple
crises (food, economic, financial, etc.) from a rights-based approach in order
to protect vulnerable groups and prevent the imposition of harsh policies,
similar to SAPs. They argue that international instruments promoting economic,
social and cultural rights should be evoked to protect people’s basic rights,
such as right to clean water, safe food,
health, education, and so forth (Better Aid 2010).
The rights-based approach has gained more
credibility and international attention after the United Nations adopted in
July 2010 a Resolution, with the support of 122 countries, including several
Western countries, stating that access to safe drinking water and sanitation
should be considered as a ‘human right
that is essential for the full enjoyment of life and all human rights’.9
Socialism as Alternative
The political dimension of the
paradigm shift is a real democratisation of African societies, with the building
of truly democratic institutions and the rise of an enlightened and democratic
leadership capable to implement policies that reflect the fundamental
aspirations of the African people. Sovereignty over development policies means
the restitution to the African people of the right to participate in the
formulation of economic development policies that affect their lives.
In that regard, African social movements have an
important role to play in the design and implementation of public policies.
Over the last two decades or so, African social movements, including research
institutions, have become among the main actors on all issues relating to
Africa’s development, both in the African context and at the international
level. They have made significant contributions in several areas involving
economic and social policies, and democracy and human rights. .
Therefore, labour unions, peasant organisations,
women’s associations, youth organisations, grassroots associations as well as
non-governmental organisations (NGOs) should be taken seriously as
interlocutors in the debate on the continent’s development, including on
democracy and human rights. All of this is to be situated within the context of
socialism which is, in my opinion, a system that can combine economic
efficiency, social progress, individual
194
and collective freedom, and democracy. The
goal is that the African people democratically control and manage their
productive enterprises for maximum welfare for all. Democratically managed
economic surpluses will be used for the betterment of all lives in education,
health and general welfare. What all this means is that there can be no
socialism without genuine democracy for workers and all others. This, of
course, isanathema to hegemonic neoliberal capitalism in all its dimensions.
The way forward is for the people of Africa to wrest control of their
governments from the hands of those politicians and governments that mock
democracy as abject servants of international capital for which they receive
only crumbs and their people nothing.
This zero-sum game for the benefit of the West that fuels Africa’s discontent
must be reversed.
Conclusion
Africa’s dismal
economic situation and perennial social and political instability are
inextricably linked to its impoverishment since the dawn of capitalism. Africa
has paid a heavy price to western industrialisation. Since independence,
African countries have experienced a host of models and strategies, most of
which were inspired from abroad, the latest being the neoliberal model. All
these models, within the capitalist system, have only contributed to a further
impoverishment of African countries.
Despite the high costs of their policies and the growing
defiance to them across the continent, the international financial institutions
are still trying to retain their influence on Africa’s development. The latest
example is the World Bank’s ‘new strategy’ for Africa (WB 2011). African
leaders and policy makers should not be distracted by this ‘strategy’ that has
nothing ‘new’ but is a recycling and repackaging of old and failed policies
that led African countries to the current economic and social impasse.10
Now that the capitalist system is
in deep crisis and being challenged even in its birthplace, African governments
and policy makers should make bold and courageous moves to reclaim their
countries’ sovereignty over their
development.
Recovering the control over its own resources, exercising fully its right to
development; trusting its own peoples, these are some of the steps toward
building a prosperous, democratic and stable Africa.
Given the heavy price paid by
Africa and its people for the birth and development of capitalism, it is argued
that a prosperous and democratic Africa cannot be envisaged within the
capitalist system. Therefore, the above policies should be understood as a
transition to an autonomous development outside the capitalist system. In our
opinion, the ultimate goal of that transition
195
should be socialism, because it is a system
that can reconcile economic efficiency, protection of the environment, social
justice, democracy, freedom and the defence of human dignity.
Notes
1.
The number of African LDCs is now 34 following the
birth of South Sudan in July 2011.
2.
Figures given at UNCTAD’s Public Symposium on ‘The
Global Economic Crisis and Development-The Way Forward’, Geneva, 18 & 19
May 2009.
3.
See, ‘Illicit Financial Flows from the Least Developed
Nations; 1990-2008’, in Global Financial
Integrity, Global Financial Integrity.
4.
‘Tax Us If You Can – Why Africa Should Stand up for
Tax Justice’.
5.
A word coined by Samir Amin, which is composed of the
United States, Europe and Japan. The instruments of the imperialist triad
include the US Armed Forces, the NATO Alliance, the international financial
institutions (IFM & World Bank), the WTO and the Western mainstream media.
6.
See, in particular World Bank’s President, Robert
Zoellick, speech at Georgetown University (Washington, DC) in September 2010,
titled ‘Democratizing Development Economics’.
7.
Eurodad, ‘Missing
the targets: EU aid falls short of promises’, Statement
8.
UN-LDC IV, Harnessing
the Positive Contribution of South-South Cooperation for Least Developed
Countries’ Development. Background Paper, New Delhi (India), 18-19 February
2011.
9.
United Nations,’ Draft Resolution’, July 2010.
10. The World
Bank has always tried to regain some credibility with African policy makers and
leaders whenever it feels that its policies are being challenged or rejected in
Africa. One remembers the Berg Report in 1981 titled ‘Accelerated Development
in Sub-Saharan Africa: An Agenda for Action’ following the publication of the
Lagos Plan of Action (LPA) in 1980 by the ECA and the Organization of African
Unity (OAU). Then, when the same ECA published the Alternative Framework to
Structural Adjustment Programmes in 1989, which exposed the disastrous effects
of SAPs, the World Bank came up that same year with another report titled
‘Sub-Saharan Africa: From the Crisis to Sustainable Growth. A Long Term Study’.
All these examples show that the World Bank is determined to preserve its
influence on Africa’s development and prevent autonomous thinking on the part
of
African economic planners.
It is up to the latter to meet the challenge and tell this institution what it
really is: an instrument of a failed and discredited paradigm in the service of
global capitalism.
196
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