Read this article in:
5 May, 2010Africa: The political economy of Africa has taken another dark turn staggering under the three crises of economy, food and climate. These three crises are interdependent and find their origin in the current system of accumulation and plundering of resources by large transnational corporations. Developing a response to any of these crises can not be done in isolation to the others and hoping to be rescued by the Global North is a strategy that has historically delivered little more than empty promises. Industrialisation, decent work and strong trade unions ensuring fair production and fair trade are prerequisites to addressing poverty in Africa and averting a deepening humanitarian disaster.
We meet in 2010 at yet another turning point in history. 2010 means that it is 10 years since the millennium declaration. It is 5 years after the Gleneagles G8 summit.
Peak oil prices were reached and we have seen the doubling of the price of fats, food oils and grain through 2008. It is a short time since the financial crisis that has already translated into a global economic recession in the real economy. It is a few short months since the latest (COP 15) failure in Copenhagen to comprehensively address the climate disaster that confronts us all. The Doha round of trade negotiations also enters its 10th year. It is the year of the first world cup in Africa.
In essence three crises confront us, economy, food and climate and all serve to aggravate the plight of the poor. All three find their origin in the current capitalist mode of accumulation and all three serve to worsen the situation of the working and unemployed poor. This is reflected in more recent appraisals of the Millennium Development Goals which in many categories see a negative reversal in sluggish positive trends for sub Saharan Africa.
As we all know Africa is not one homogenous whole and many differences exist at a country and sub regional level. Similarly crises such as recession and climate change will have different impacts in different places. We need to always remain sensitive to these differences in how we strategise and plan. Having said that, it is useful to sometimes generalise to provide an overview and context. The following points I will raise are done with this in mind rather than an attempt to simplify the complex tapestry of Africa.
It is useful that we consider the two issues of industrialisation and climate change together in our regional conference as they are mutually linked and to strategise one in the absence of the other would be a strategic blunder. More so, both issues of industrialisation and climate are underwritten by issues of energy and access to energy. I would suggest therefore that as we consider these issues we bear in mind the implications (both limiting and enabling) that energy has for our debates. By analysing the underlying dynamic of energy and relations of production that surround it I suggest that it provide the opportunity to see industrialisation as a means to the end of development and not an end in itself. It is after all this false logic that has allowed the preoccupation with GDP to perversely define a development paradigm that has brought the entire world to the brink of destruction.
The Political/Economy
Starting from the GDP obsession it is noteworthy that in the five years prior to 2009 Africa achieved GDP growth rates in excess of 5% on average. Net oil exporters faired better than net oil importers and this division between African countries continues. This growth however translated into relatively little social development. Even before the trilogy of crises is considered, many countries in sub-Saharan Africa were not going to even come close to the poverty goals entailed in the Millennium Development Goals. Even more alarming, some of these countries have poverty rates that are substantially higher than the average and they risk being completely marginalised. Thus growth in GDP does not equal development.
The Financial Crisis that is Now an Economic Crisis
The collapse of capitalist accumulation sparked by the financial crisis has had a more devastating impact in Africa than anywhere else according to the World Bank Chief economist for Africa.
In addition to facing a sharp drop in growth (from 5 percent in 2008 to 1.7 percent in 2009), throwing 7-10 million more Africans into poverty, and leading to the deaths of 30-50,000 additional infants before their first birthday. That's in just over a year. These factors compound over time. When there is a contraction in GDP the poor and therefore development are the first to suffer.
Growth in OECD countries has contracted significantly for 2009 and is predicted to be flat for 2010. Africa grew 1.7% for 2009. Oil exporters did better than oil importers but GDP was substantially down for all. Even though Africa does not enjoy a significant part of world trade, it is significant to note that world trade is expected to contract by 13% in 2009 which would make it the first decline in world trade in 60 years.
Finance or rather the lack of it will play a key role in the impact of the crisis in Africa as governments will find it hard to find financial resources to finance deficits, much needed infrastructural development and trade. Despite it being commonly acknowledged that Sub Saharan Africa will endure the worst impacts of the global recession, Africa had nothing to do with precipitating the crisis, as this is the result of energy contestation and financial sector liberalisation in rich countries. Whilst Africa must bear the consequences, Africa has no representation on the G20 financial stability board.
From 2007 to 2009 the proportion of employed people living below $1.25 per day in Sub Saharan Africa increased from 58-64%. The plight of the working poor is getting worse.
Commodity prices have dropped significantly and this is always devastating to economies reliant on exports of raw materials as opposed to beneficiated products. This lesson alone Africa has had to repeatedly learn with every contradiction induced crisis in the global capitalist accumulation regime.
Inflation has been rising and there were 28 countries with inflation above 10% in 2008 probably more last year. A lot of this is linked to food and fuel. This is not the good kind of inflation that is an inevitable headache of growth but the kind that simply erodes the spending power of the poor whilst income opportunities contract.
Flows of FDI to Africa contracted by 10% in 2008 and will have contracted further in 2009.
Whilst African countries are attempting to minimise the combined impact of the crises, initiatives are constrained by lack of adequate resources and policy space to sustain such attempts. Protectionist measures around agriculture of the north and broken promises around ODA further constrain this space.
Food and agriculture
Despite the MDG to halve those suffering from hunger the number of people who suffer from hunger increased from 28% in 2006 to 30% in 2009. Food prices dropped in the developed world in 2008/9 but remained high in developing economies such as Nigeria, Brazil and China
Africa is the only region in the world where per capita food production has fallen in the last 30 years. This is particularly concerning given the impact that climate change will have on agricultural production and food sources such as fresh water fish. If African attempts at adaptation to climate change are to have any real positive impact agriculture will need significant bolstering in terms of strategy, technology and support. It could be argued that at this moment this is probably the most significant priority in simple terms to preserve many lives.
Governance
Governance remains a clear problem in many parts of Africa and the NEPAD peer review process is moving painstakingly slowly. The small improvements that have been made in this area are now threatened as with any economic contraction so too the opportunities of patronage contract suggesting an upswing in conflict.
According to Transparency International data for 2008, corruption remains a serious challenge for the continent and progress in combating it remains mixed. In 2008 the number of countries listed in the world top quartile rose to three (Botswana, Cape Verde and Mauritius) compared to two in 2007 (Botswana and South Africa).There might have been 4 in 2008 had the score for South Africa not slipped below 5. In 2008, 10 countries were in the second quartile (as in 2007), while 22 were in the third and 18 in the lowest, compared to 20 and 20 respectively in 2007. Although some countries improved their performance, it is clear that transparency and good governance remain elusive, with 36 countries still scoring less than 3, indicating that corruption is perceived as rampant.
Conflicts
Some countries continue to face particularly serious problems -- including the humanitarian catastrophe in the Darfur region of Sudan, Zimbabwe and DRC though somewhat stabilized is still a cause for concern. Conflicts and political unrest in Guinea, Guinea Bissau, Equatorial Guinea, Madagascar Somalia, Nigeria, Algeria, Chad, Burundi are all likely to further impede economic progress. There are signs of hope from Kenya. Not all conflicts should be seen as equal in reason or outcome however the outcome for those caught in conflicts is invariably the same.
There have been over 9 million refugees and internally displaced people from conflicts in Africa. According to the author of stealth conflicts between 1990 and 2007 88% of global conflict death tolls are attributable to Africa.
Trade
EPA negotiations with the EU continue to threaten and damage regional cooperation. The EU is attempting to redefine trading blocs through the negotiations and creating divisions amongst them while holding out aid as a carrot. E.g Zimbabwe and Zambia have been swayed to negotiate under the East and Southern Africa EPA configuration. EU negotiations with individual countries have had a divisive effect and the general African position in reaching a better settlement with the EU has suffered as a result. This approach is also to the detriment of trade relations with emerging economies. Some countries have given into the strong arm tactics of the provisional EPA negotiations while others still resist. It seems that the approach is more about opening markets for European companies than about development.
There is still very limited intra regional trade in Africa only constituting some 13% of total trade. It is both a symptom and effect of limited regional integration and of unequal relations of power with the West. The EU and US are still the largest export destination (some 61%) but there has been a marked trade growth with India, China and to a lesser extent Brazil signalling something of a relief of the stranglehold of trade with developed nations. Similar patterns are observable in terms of FDI.
Sino African relations have strengthened considerably and in general the argument remains that whilst there is potential to break the Washington Consensus in these relations it will be important that Africa exports more than raw materials.
Southern Africa is confronted by a power crisis and attempts at regional partnerships have so far achieved little. This year saw the destabilisation of Westcor, the joint initiative to develop hydro power in the DRC between five countries in the region and BHP Billiton stepping in to offer co-development in order to power a new smelter. Is this a sign of things to come in the power sector?
Millennium Development Goals
In September of 2000, world leaders gathered for a summit meeting at the United Nations headquarters in New York and once again, riled against global poverty and economic injustice. However, what made this summit different is that every leader agreed on a common vision for a better future -- a world with less poverty, less hunger, equal opportunities for women, better access to education and health services.
The results of the MDGs for Sub Saharan Africa have been unconvincing at best. Whilst a few countries have made some progress on some of the measures, it is by in large acknowledged that overall little progress has been made and more recent trends indicate a worsening of the situation.
ODA
Most of the increase in ODA since 2000 has been limited to a handful of post-conflict countries, including Iraq and Afghanistan. In contrast, many of the poorest nations in Africa have seen very little increase in aid.
Pledges were made in 2005 at the EU and at the Gleneagles G8 Summits to more than double ODA to Africa to about $54 billion a year by 2010. Measured in current US dollars, this commitment is equivalent to at least US$62 billion. Rich-country support to domestic agriculture stood at $372 billion in 2006 more than three times the ODA that they provided to developing countries. Aid flows climbed from a low in 1997, until 2005 and in the wake of Gleneagles in fact dropped in 2006 and 2007.$7.6 Billion in additional ODA to Africa (in 2004 prices) was programmed into DAC donor spending plans at end-of 2008.
Many African countries have upheld their side of the Monterrey Consensus, by continuing with economic and political reforms and by focusing budgets on MDG-related social expenditures. But the scaled-up ODA promised by G8 donors has not materialized.
The goal of 0.7% of developed country GNI as ODA has been around for over 20 years. Recently these countries congratulated themselves on reaching 0.3% again after many years well below this level.
It must be added that I do not make these points on the absence of aid and broken promises out of a belief that aid itself is the answer to the problems faced by Africa. Indeed there is a convincing body of thought that argues that aid ensnares the elite, props up bad leaders and generally creates dependency. Finance is however an unavoidable necessity and more is helpful where we are able to ensure accountability. Yet aid is hap hazard and disjointed which completely undermines the idea of planning long term strategic and targeted spending to meet social goals. The same will be true if climate dollars ever do flow.
Climate Change
17 years of engagement around climate change have not delivered very much at all. The recent debacle in Copenhagen that saw a loose accord, walkouts, dissenting countries and backroom deals cannot be defined as a consensus. A deal it seems is still a long way off and power exchanges do little to redress the climate debt that has been accrued over the epoch of industrialisation. There is a proposal for climate debt payment to be made to Africa but we must ask ourselves; can we really depend on climate debt payments to finance development in Africa, given that the same countries that would pay these debts have not followed through on ODA commitments?
Africa needs to face the fact that we are on our own to address development. And unless Africa develops herself by the time the worst impacts of climate change are realized we will still be standing with bowl in hand waiting for the a bankrupt capitalist system to save us. We are in a war against poverty and disease but the answer simply cannot be more of the same medicine that made us ill in the first place. The moral high ground is there for the taking. Energy sector developments that are environmentally conserving are there for the taking. We have two strategic benefits at this point. We are going to be getting more sunshine than most other places on earth and we hardly have any energy infrastructure in place (other than South Africa) that would be made redundant by a rapid change. Africa could lead the world out of the economic/climate crisis by implementing in our region the kind of economic system that places people at the centre and uses energy that acknowledges the fundamental link between us and our environment to drive this system.