A Continent in Crisis

Africa and Globalization

by Sunday Dare

Dollars and Sense magazine, July/August 2001

From the oil fields of the Niger Delta in Nigeria, to the diamond and copper fields of Sierra Leone, Angola, and Liberia, to the rich mineral deposits of the Great Lakes region, to the mountain ranges, plains and tourist havens of the East African countries, the continent of Africa is undoubtedly blessed.

From these blessings, however, much sorrow has flowed. During the colonial era, most Africans did not benefit from the continent's resources. African economies were geared toward cultivating raw materials for export, and roads, health care, and other infrastructure were available only in areas where those materials were produced. The end of colonialism unleashed struggles for political control, social emancipation, and access to resources - struggles that, in turn, have degenerated into conflicts and internecine wars. Retarded in their development, unbridled in their lust for power, steeped in official corruption, chaotic in their political engineering, many African states are now sprinting toward total collapse.

Much of the blame for Africa's spiral of violence belongs to generations of opportunistic and venal African leaders, who have done little to develop their societies and emancipate their peoples. But the expansion of corporate dominance has accentuated the steady descent into near economic strangulation and political chaos. Many transnational corporations (TNCs) have acted as economic predators in Africa, gobbling up national resources, distortlng national economic policies, exploiting and changing labor relations, committing environmental despoliation, violating sovereignties, and manipulating governments and the media. In order to ensure uninterrupted access to resources, TNCs have also supported repressive African leaders, warlords, and guerrilla fighters, thus serving as catalysts for lethal conflict and impeding prospects for development and peace.

TNCs AND THE AFRICAN STATE

In the post-colonial period, many African leaders have exerted dictatorial control over their societies. Through their undemocratic policies, they have spread dissatisfaction among the people, which has manifested over time in nationalistic feelings and even popular rebellions. These political tensions, in turn, have generated fierce conflicts over resource control.

In response to these conflicts, many African governments have embraced collaboration with TNCs and other foreign investors. Lacking the technological capacity to harness massive reserves of oil, gold, diamonds, and cobalt, these leaders grant licenses to foreign corporations to operate in their domain, and then appropriate the resulting revenue to maintain themselves in power. For example, both the late General Sani Abacha of Nigeria and the late Mobutu Sese Seko of Zaire looted hundreds of millions of dollars in government funds derived from corporate revenue, stashed the money in private foreign accounts, and used it for political patronage and to silence political opponents.

In turn, these authoritarian governments have stifled economic growth. Frequent changes in leadership through coups d'etat have made it impracticable to implement development plans. Each new government comes in with a new set of policies that often undermines earlier progress by previous governments. Also, many African leaders have used revenue to reward political pals with bogus contracts for white-elephant projects that contribute nothing to development. In the late 1990s, for example, President Daniel Arap Moi of Kenya built an airport - which handles almost no traffic - in his own hometown of Eldoret. And of course, money used as handouts to members of the ruling elite and to fight political opposition is money not spent on development.

After decades of economic mismanagement and political gangsterism, most African societies are in terrible shape. African unemployment rates are at crisis levels, with over 65% of college graduates out of jobs. Because manufacturing is at a low ebb, unskilled workers suffer a similar fate. Wages are also low. According to the United Nations Development Report, the average unskilled worker earns about 55 cents daily, while the average white-collar employee brings home a monthly check of between $50 and $120. Many African societies are characterized by minimal opportunities for education and self-development, collapsed infrastructure, and a debilitating debt burden.

These conditions have made the continent even more susceptible to international financial control. Typically TNCs seek out societies with low production costs, poor working conditions, and abundant and easily exploitable resources, where profits can be maximized and repatriated without legal constraints. The icing, of course, is a political leadership that is weak, corrupt, and ready to cut deals. TNCs make huge investments in countries that meet those criteria, and many African countries fit the bill.

ECONOMIC EXPLOITATION IN AFRICA

The sheer growth of TNCs in recent decades has had profound consequences for Africa. The average growth rate of TNCs is three times that of the most advanced industrial countries. Of the 100 biggest economies in the world, more than half are corporations. TNCs hold enormous power to transform the world political economy, and Africa's vast resources, cheap labor, huge population, and expanding markets are crucial to their plans.

The globalization optimists maintain that global capital has served as a dynamic engine of growth, opening the window for diverse opportunities in terms of goods and services, creating employment, and boosting government revenues. This has been true in a few cases. In South Africa and Nigeria, for example, gold mining and oil companies respectively have brought new technology. attracted subsidiary industries, and made it possible for indigenous personnel to acquire skills.

However, any such benefits are far outweighed by activities that deplete local resources, stifle local or indigenous industry, and subvert the fragile democratic process. Africa is still confined to the role it played in the industrial revolution(s) that preceded globalization. Its raw materials are still being depleted without generating development.

In addition, the continent's increasing dependence on imported capital and consumer goods and services has left various sectors of the domestic economy comatose. African markets are specially targeted as dumping grounds for new and second-hand goods. Because of stiff competition from these products, infant manufacturing established earlier in Africa has quickly withered away. For example, imports of used clothing from the United States are threatening to destroy Kenya's domestic textile industry.

Finally, as soon as the TNCs have African economies firmly in their grip, they deploy funds and patronage to manipulate the media and influence government policies. Governments, in turn, grant them carte blanche to sidestep labor and environmental laws.

Other global institutions have contributed to the deregulation of African economies. The Generalized Agreement on Tariffs and Trade, the World Trade Organization, and the International Monetary Fund (IMF) all promote increased liberalization of international trade. The IMF's structural adjustment programs (SAPs) require African states to freeze wages, devalue currency, remove public subsidies, and impose other austerity measures, which have brought about even greater unemployment and under-utilization of productive capacity. These policies have caused considerable turmoil in Africa. In the early 1980s, Uganda was rocked by weeks of demonstrations, as industrial workers and students took to the streets to denounce President Milton Obote's IMF-imposed economic program. In 1990, Matthew Kerokou of the Benin Republic in West Africa was swept out of power in a wave of anti-SAP riots.

CORPORATIONS AND LETHAL CONFLICT

At the advent of the new millennium, Africa is hurting badly. Most parts of the continent are embroiled in independence wars, ethnic conflicts, violent wars for political and resource control, and cross-border conflicts. In a recent study of armed conflicts around the world, the University of Maryland's Center for International Development and Conflict Management found that 33 countries were at high risk for instability. Of these, 20 were in Africa.

In their quest to unravel the forces generating conflict in Africa, human-rights groups are closely scrutinizing TNCs. TNCs are not always responsible for the genesis of the crisis. But some of the deadliest conflicts that litter Africa's political landscape, at least in the last decade, can definitely be traced to the expansion and domination of TNCs.

This is especially true in extractive states where resources with global appeal, value, and markets are found. While the state's interest in generating revenue from these resources coincides with that of the TNCs, the latter's interest in maximizing profits conflicts with the welfare of the citizens. Thus, the state is caught between protecting a vital source of revenue, and defending the rights and privileges of its citizens. Too often, the state, in order to ensure an ongoing flow of revenue, sides with the TNCs against the citizens.

For example, the oil-producing Niger Delta region is perpetually at war with the government and oil corporations. For decades, successive Nigerian governments have been beholden to the TNCs that possess the technology, technical expertise, and capital to exploit the country's oil. The exploitation has resulted in serious environmental damage, developmental neglect, human-rights abuses, economic oppression, and inequitable resource allocation. These abuses, and the need for redress, are at the heart of the conflict. In recent months, calls for secession by the oil-yielding region have grown louder. As other parts of the country caught up in oil politics fight to defend their interests, the drums of war continue to beat.

TNCs have played a major role in the Nigerian conflict. They gave their unalloyed support to the brutal military regimes of Generals Ibrahim Babangida and Sani Abacha. Under Abacha, Ken Saro-Wiwa and eight other activists were hanged for crusading against the government and the oil companies. Officials at Royal Dutch Shell, which dominates the lucrative Nigerian oil industry, admitted in a press statement that the company could have stopped the hangings if it had so desired. Shell executives also confessed publicly to purchasing arms for the Nigerian State Police, who have attacked community residents and picketers. Also, in 1998, oil giant Chevron used its own helicopter to carry Nigerian soldiers, who stormed Parambe, an oil-yielding community, and killed several protesters.

In Angola, meanwhile, the global trade in diamonds - widely known as "blood diamonds" or "conflict diamonds" because of their lethal consequences - has helped to perpetuate more than 20 years of civil war. With revenue from the illegal mining and sale of rough diamonds, the UNITA rebels, led by Jonas Savimbi, have been able to purchase and stockpile ammunition to prolong the war. Though fully aware of this, a number of corporations - such as American Mineral Fields (AMF), Oryx, and the world's leading diamond company, De Beers - continue to do business in the war-torn territory, where more than half a million citizens have been killed.

Also, Jean-Raymond Boulle, AMF's principal shareholder, is known to have invested millions of dollars in support of corrupt African governments and rebel leaders in order to secure juicy mineral contracts. The late Congolese leader Laurent Kabila used Boulle's jet and funds to prosecute his war against Mobutu of Zaire. When Kabila came to power in 1997, AMF secured exploration rights to 600 million pounds of cobalt and three billion pounds of copper, among other deals.

Similarly, the Foday Sankoh-led Revolutionary United Front (RUF) in Sierra Leone derives most of the funds it has used to unleash terror and mayhem on the country's people from the international trade in conflict diamonds. The RUF continues to fight a war that has claimed more than 80,000 lives, with no end in sight. According to the U.S. State Department, revenue from rough and uncut diamonds mined in conflict areas forms a large percentage of the commodity's over $50 billion in annual sales.

The conflicts that grip Africa can also be traced to a steady flow of arms. To safeguard their economic interests, Western corporations are procuring weapons and providing arms training in areas of conflict. Embattled African leaders, anxious to defend their own interests and protect their hold on power, readily grant contracts to private security armies run by TNCs. Since the early 1 990s, the growth of the corporate private security sector in Africa has been phenomenal. TNCs have become direct parties to conflicts by recruiting or hiring private security companies to help protect their installations, operations and staff. In the process, they have connived with governments and sometimes with rebels, whichever is most expedient, thereby instigating further conflict and perpetuating civil war.

For example, in 1995, Executive Outcome (EO), a private security company, arrived in Sierra Leone. The Sierra Leonean government paid EO almost $40 million in cash, along with mining concessions, to assist in its campaign against the RUF. The peace it secured did not last; rather, the country was plunged into deeper crisis. EO was also in Angola, training the national army and helping to recapture lucrative mineral fields. In 1993, the Angolan state oil company, Sonangol, contracted with EO to provide security for its installations against UNITA attacks. The Angolan government also signed a three-year, $40 million contract with EO to supply military hardware and training.

In addition, J. & S. Franklin, a British supplier of military equipment, won a contract to train the Sierra Leonean military using the notorious U.S.-based Gurkha Security Guards. The Guards have carried out a series of military attacks in various mining areas to protect the activities of TNCs. J. & S. Franklin has also won supply contracts with several other African governments engaged in conflicts.

Clearly, where minerals abound, TNCs find the lure irresistible. They accrue substantial profits from diamonds, which are sold in wedding rings, bracelets, and necklaces all over Europe and the United States. TNCs also profit enormously from cobalt, a vital raw material for the manufacture of jet fighters. The unbridled lust for excessive gain has deadened the senses of corporate giants like De Beers, Royal Dutch Shell, Chevron, AMF, and others to the damaging impact of their activities.

OUT OF THE LABYRINTH

Because of the twin problems of rogue leadership and the exploitative tendencies of TNCs, Africa is caught between a rock and a hard place. As the history of conflicts in Africa shows, the extraction of mineral resources creates and reinforces government corruption, which easily begets repressive societies. As would be expected, poverty, unemployment, and insecurity spread, while social services decay. This leaves the citizens more prone to take up arms and fight in oil, diamond, and copper wars, as the conflicts in Sierra Leone, Angola, Nigeria, Sudan, Liberia, and the Great Lakes region all attest.

How can Africa wrench itself from itself and curb the rampaging TNCs? In response to corporations' bad behavior, and their brazen disregard for the political stability and economic viability of the states in which they operate, international human-rights organizations have tried to establish mechanisms of accountability.

The key, however, is action by Africans on their own behalf. Their options for ending the circle of violence and economic exploitation are few but practicable. Africa needs a new generation of leaders to define and pursue a dynamic political and economic agenda. The African states must renegotiate their terms of trade in the international marketplace. Diverse groups must achieve a sense of national pride and internal cohesiveness, in order to create an atmosphere conducive to implementing development programs. As long as the resources have not yet been depleted, there is still hope of rising again for a continent that has tarried for too long in the labyrinth.

Sundoy Dare is a Nigerian journalist and Rockefeller Fellow at Dollars & Sense.

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