How Europe underdevelops Africa and how some fight back

26 June 2008 by Patrick Bond


In early June, the British-Dutch firm Shell Oil – one of Rodney’s targets - was instructed to depart from the Ogoniland region within the Niger Delta, where in 1995 Shell officials were responsible for the execution of Ken Saro-Wiwa by Nigerian dictator Sani Abacha. After decades of abuse, women protesters, local NGOs and the Movement for the Survival of the Ogoni People (MOSOP) gave Shell the shove. France’s Total appears next in line, in part because of additional pressure from the Movement for the Emancipation of the Niger Delta.

Across the continent, exploitation by other European capitalists and politicians has become so extreme that something has to break. Although it was six months ago that the European Union’s ultramanipulative trade negotiator, Peter Mandelson, cajoled 18 weak African leaderships — including crisis-ridden Cote d’Ivoire, neoliberal Ghana and numerous frightened agro-exporting countries — into the trap of signing interim “Economic Partnership Agreements” (EPAs), a backlash is now growing.

An Addis Ababa conference from June 9-11 brought officials from the African Union and a few African states together with critical academics and scholar-activists allied to the Council for the Development of Social Science Research (CODESRIA). It’s extremely rare to find genuine coincidence of interests, and even possible strategic agreement, between these camps.

“We can’t continue to deal with incompetent, weak, corrupt, supine governments,” explained Dot Keet of the Alternative Information and Development Centre in Cape Town. “But these are not factors of the same order of magnitude. The domination of African countries by neocolonialism and the subordinate stance by African governments are not the same. We must be clear where the main driving force comes from: outside Africa. We have to tackle the source.”

The conference host, CODESRIA director Adebayo Olukoshi, provided a visionary strategy in the spirit of Nkrumah, calling for a united Africa. Pretoria-based Nigerian academic Omano Edigheji insisted on this happening “in the context of transformative social policies” in the leading countries, in contrast to the Washington Consensus. Added Zambian trade union leader Austin Muneku, “This should be integration from below, by the people and their organisations, not from above by elites.”

From above, many African elites have succumbed to what Olukoshi terms trade-balkanisation, following the lead set by colonial pigs in the 1884-85 Berlin conference that so irrationally carved up the continent. Since 2002, the EPAs have supplanted the agenda of the gridlocked World Trade Organisation WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

, just as bilateral trade deals with the US, China and Brazil are also now commonplace.

A united Europe deals with individual African countries in an especially pernicious way, because aside from free trade in goods, Mandelson last October hinted at other invasive EPA conditions that will decimate national sovereignty: “Our objective remains to conclude comprehensive, full economic partnership agreements. These agreements have a WTO-compatible goods agreement at their core, but also cover other issues.”

Those other “Singapore” issues (named after the site of a 1996 WTO summit) include investment protection (so future policies don’t hamper corporate profits), competition policy (to break local large firms up) and government procurement (to end programmes like South Africa’s affirmative action). These were removed from the WTO by African negotiators during the Cancun summit in 2003, but have re-emerged through EPA bilaterals.

Says Zimbabwean anti-EPA campaigner Nancy Kachingwe, “These are not trade agreements, they’re structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/
programmes. It’s about policy and all sorts of other controls, and the impacts are the same.”

Europeans’ regular abuses of donor power include threats of trade preference withdrawal if EPAs are not signed. European capital has made its own needs clear: not only access to cheap commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. , as was enjoyed under the Lomé Convention, but also unrestricted African market access, protection from potential restrictive public policies, and a buffer from Chinese competition.

According to Gyekye Tanoh of Third World Network in Accra, “The key thing for Mandelson is to gain exclusive preferential market access. Europe is gaining 80% of our markets in exchange for what is effectively just 2% of theirs.”

Already, says Tanoh, “The effect of trade liberalisation on African agriculture is a disaster, with only one sector anticipated to grow: agro-processing. That’s the one that most easily invites European capital to scale up investments in joint ventures. Agricultural output would only increase by 1%, our studies show. But the big contradiction is in the export of cash crops, at a time of severe pressure on food products.”

African farmers’ ability to sell on the local market will be undercut by rapid trade liberalisation that opens the way to surges of cheap, often subsidised imports. Women are most adversely affected.

As Walter Rodney observed, “It is typical of underdeveloped economies that they do not — or are not allowed to — concentrate on those sectors of the economy which in turn will generate growth and raise production to a new level altogether, and there are very few ties between one sector and another so that, say, agriculture and industry could react beneficially on each other.”

Earlier allegedly “developmental trade” strategies, such as the EU’s “Everything But Arms” deal, haven’t worked, because of strict rules of origin and serious supply-side constraints. There is simply no capacity in African firms to penetrate Europe given this continent’s small production runs and high transport costs.

As Keet suggested, it therefore may be time to question trade itself — not merely the mythical “export-led growth” shibboleth — in part because climate change will soon invoke hefty taxes on ships (whose dirty bunker oil sends vast amounts of CO2 into the atmosphere). Yet EPAs will require an even greater African investment in port infrastructure and other management costs necessary to facilitate trade.

Added Senegalese scholar Cherif Salif Sy, “Most of Africa has an electricity crisis, and yet to get economies of scale for European agro-processing companies if they locate in Dakar, they require vast amounts of electricity. And they come with the power to demand a lower price, which puts much more stress on our grid and causes the price to go up for local buyers, and the supply to be redirected.”

African firms cannot compete in this sector, as they lack the brand names, skills and marketing structures that European companies enjoy. The same firms have also no access to EU support in the forms of straight subsidies, tax incentives, research and development funding or concessional credit.

As a result, African countries face unreliable provision of public utilities (electricity and water); poor public infrastructure (run down roads and railways); rapidly fluctuating exchange rates and high inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. ; labour productivity problems arising from poor education, health and housing provision; vulnerable market institutions (such as immature financial systems); and poorly-functioning legal frameworks. The EU has no interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in reversing such fundamental structural economic challenges.

From early on, African civil society movements – especially the African Trade Network - called on elites to halt the negotiations.

But it has not been easy to develop a strong coalition, as Third World Network director Yao Graham concedes: “Unions have been too syndicalist, while our justice movements have been exhausted fighting structural adjustment. The local private sector has been absent. But in some regions, like West Africa, agricultural producers have been well organised and opposed to EPAs. Links to the Caribbean are weak. But we are working behind enemy lines with progressive allies in Europe, including within the Brussels parliament.”

Graham points to the surprising resistance to EPAs from the South African government, especially deputy trade minister Rob Davies – in the wake of the 2004 departure for another ministry by former trade minister Alec Erwin (so effective a free trader that he was once endorsed for WTO director in Foreign Policy journal).

Nigeria is another crucial state, one which is publicly pro-EPA but nevertheless slowed the process down and refused Mandelson’s pressure to sign an interim deal.

According to Graham, “It should be possible to shrink the EPA agenda to nonreciprocal market access to goods, and no more. This we can win in coming months.”

His colleague Tanoh says that inspiration comes to the campaigners from Korea: “The Seoul government is backing down – and cabinet has resigned - when protesters attacked US beef imports, and they reversed their trade deal.”

African social movements will have to strengthen considerably to have that degree of influence on elites. “Can a corrupt government represent you when it negotiates with outside actors?” asks Nairobi-based pan-Africanist intellectual Tajudeen Abdul Raheem. “In most cases their negotiating position is aimed at maximising their personal or familial interests.”

Hence, remarks Bernard Founou-Tchuigoua of the World Forum for Alternatives in Dakar, “In these agreements there is inherent corruption, in their very substance. We don’t want these.”

Rodney might agree, as he criticised “the minority in Africa which serves as the transmission line between the metropolitan capitalists and the dependencies in Africa ... The presence of a group of African sell-outs is part of the definition of underdevelopment. Any diagnosis of underdevelopment in Africa will reveal not just low per capita income and protein deficiencies, but also the gentlemen who dance in Abidjan, Accra and Kinshasa when music is played in Paris, London and New York.” (And now, with EPAs and the WTO, add Brussels and Geneva.)

But because Mandelson is squeezing so hard, he may be single-handedly breaking the links between elites. Led by Senegalese and Malian politicians, most of the African officials at the conference agreed with the left intelligentsia that dangers now arise of: - regional disintegration (due to EU bilateral negotiations and subregional blocs) and internecine race-to-the-bottom competition:

- Threats of not only deindustrialisation but further EU penetration of the African services sector;

- Increasing social polarisation (including along gender lines), and the rise of parasitical classes; and

- Much greater gains for some sectors of the capitalist class: owners of plantations, mines and oil fields; commercial circuits of capital; and financial institutions.

Even Botswana’s former (conservative) president, Festus Mogae, admitted in 2004, “We are somewhat apprehensive towards EPAs despite the EU assurances. We fear that our economies will not be able to withstand the pressures associated with liberalisation.”

Moving from fear to confidence in rejecting the EU won’t be easy. But a step was taken by Nigerian president Umaru Musa Yar’Adua during his Cape Town visit last week, unilaterally announcing the end of Shell’s hell in Ogoniland: “There is a total loss of confidence between Shell and the Ogoni people. So, another operator acceptable to the Ogonis will take over.”

In Paris, Total’s Christophe de Margerie reacted: “We have people who work over there ... who are unfortunately more and more often subjected to major aggressions (or being) kidnapped. We are asking ourselves the question (about whether to follow Shell).”

MOSOP held a victory march in Port Harcourt, and its information officer, Bari-ara Kpalap, thanked Yar’Adua, yet also promised more agitation in the Niger Delta “until the government took more practical and sincere steps to genuinely address the problems of the area”. As all agreed, booting European exploiters was the necessary first step.

*Patrick Bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. directs the University of KwaZulu Natal Centre for Civil Society in Durban, where Richard Kamidza is doing a doctoral degree.



Patrick Bond

is professor of political economy at the Wits University School of Governance in Johannesburg and co-editor of BRICS: An anti-capitalist critique (published by Haymarket, Pluto, Jacana and Aakar).

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