Category Archives: development

"The Scramble for Africa and the Marginalization of African Capitalism"

“The Scramble for Africa and the Marginalization of African Capitalism” in A New Scramble for Africa?: Imperialism, Investment and Development (2009)

Roger Southall of the University of Witwatersrand and Alex Comninos, a researcher in South Africa make quite a compelling argument about the role of African capitalism in fostering development. They take issue with the perspective of the state as the primary vehicle for development, stating that African capitalists have tended to receive the brunt of criticisms and suspicion, mainly because they were threats to the state for power. Post-colonial elites that emerged were primarily through state employment rather than the private sector. “The emergent bougeoisie, managerial rather than capitalist, was therefore from this perspective pursuing rent rather than profit….” (358). They use Colin Ley’s argument in support of the development and further strengthening of indigenous capitalists, but argue that even in post-colonial Kenya, indigenous capitalists were “subordinate and auxiliary” to multinational capital. Others argue that Indian Kenyans were the largest contributors to Kenya’s capital growth while indigenous capitalists remained overly state-dependent.

The authors write: “Parastatals increased in number and scope, invading economic territory previously dominated by colonial companies, and were able to pose a more significant challenge to multinationals than weak national capitalist classes (Tangri 1999).” Aid and debt only served to strengthen the state. Later insistence upon the privatization of the state increased dependence on foreign direct investments. “The outcome was not a significant diminution of African economic sovereignty, but the adjustment of states to a comprador role on behalf of global capital by providing physical security and access to local resources and markets (Amin 1990)” (357). Privatization meant further bloating politicians and state bureaucrats and further prevention of creating a dynamic African capitalist class.

However, as the authors point out, there is great hope in the future. The hope lies in the new generation of African entrepreneurs. Most of these members are business persons, relatively young (20s to 40s), and trained in US and Europe. Seventy percent owned firms in the service sector and 16 percent owned manufacturing firms. They are interested in economic and political reforms and embrace “profits not profiteering”.

The authors emphasize the importance of black empowerment companies backed by the government. The telecommunications sector, they argue, is where indigenous capitalist firms have been thriving and will continue to expand. I believe that Chinese telecommunication firms may prove to be a vehicle of entrepreneurial, innovative activities for the next generation of Zambians. The authors attribute the success of the telecommunications sector to four factors:

1) “the exploitation of market opportunity at the right time by a number of African venture capitalists, albeit backed by a combination of state, private and multinational capital”
2) “dismal state of fixed line and telecommunications infrastructure in Africa, largely dominated by state-owned utility companies”
3) “liberalization and privatization of the telephone market, allowing for private sector expansion that bypassed incumbent fixed line operators and”
4) “the availability of rapidly advancing telecommunications technology”

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India’s Engagements in Africa

Sanusha Naidu’s informative article in A Scramble for Africa delineates deepening involvement in resource extraction, entrepreneurial activities, diplomatic initiatives and strategic alliances.

According to Naidu, India is expected by 2030 to become the world’s third largest consumer of energy, surpassing Japan and Russia. Africa, particularly Nigeria, supplies 11 percent of India’s oil demands. Much of India’s involvement in Africa has been overshadowed by the Chinese, but it is quite apparent from Naidu’s discussion that it is a key player. For example, India’s national oil corporations are dispersed throughout the continent. In Cote d’Ivoire, a conglomerate of various Indian companies have invested over $1 billion. In Nigeria, the National Thermal Power Corporation has invested $1.7 billion, the Indian Oil Corporation $3.5 billion in oil refinery and $2 to $4 billion in liquefied natural gas plant and oil refinery. In Sudan, Videocon Group has invested $100 million.

Indian companies have also become involved in uranium exploration. Naidu mentions that in 2007, the government of Niger provided 23 permits to 3 Canadian firms, 3 British firms and an Indian company named Taurian Resources to excavate uranium in the country. In total, the firms invested $55 million.

In 2008, the outcome of an India-Africa summit included agreements that outlined commitments by the Indian government to provide $500 million in development projects across Africa in the next five years, creating an India-Africa peace corps dedicated to development projects, and doubling trade from $25 t0 $50 billion by 2011. Indian companies have assumed a significant presence in Zambia, with Vendanta Resources investing $750 million in copper mining. The Tata group also operates widely on the continent, committing to $800 million renovation of the Taj Pamodji Hotel in Lusaka, a vehicle assembly plant in Zambia, construction of a $12 million instant coffee processing plant in Uganda and more projects in Ghana, Mozambique, Malawi, Namibia, South Africa and Tanzania.

Naidu argues that the Indian government is strategically presenting itself as an advocate of Africa with comparable presence to China with a similar aim of exploiting Africa’s resources for its own economic development.

Where we stand — anthropologists, the economy, and agency

I welcome Fredrik Barth’s call for anthropologists to “document the inequities that are produced and assert our influence in opposition to the destruction of welfare and lives” and “develop the models of culture and economy” that will allow us to ensure no one is excluded from the promising vision of progress (Barth 1996:242).

Barth situates this argument in critiques of economists. He alludes to a “global trend” of marginalization due to policies that tout the free market as a panacea for social problems. Though Barth neglects to provide examples grounded in history, he does point to specific patterns of displacement in South Korea and India, where the populations have been removed and replaced by the establishment of high-rise buildings and the pressures by the World Bank to compel the Egyptian economy in the 1990s to eradicate food subsidies. Urging anthropologists to challenge this general ideology of free-trade and laissez-faire which Barth says is encapsulated in the highly recommended book called Government by the market by Peter Self, he aligns himself with the likes of Yan Hairong, Emanuela Guano, Judy Whitehead and Aradhana Sharma, Philippe Bourgois, and Paul Farmer, among other anthropologists, who have examined the negative effects of market-driven policies.

Such injustice is exemplified in an intriguing yet tragic example presented by Barth, taken from Erik Jansen’s research on the effects of policies and institutions on the fishing industry around Lake Victoria. In the 1960s and 1970s, fishing was a booming industry, marketed to consumers in the lake area. It was also part and parcel of a collaborative effort involving 50,000 fishermen who used 12,000 boats to make money from fishing and women living in surrounding villages engaged in processing and trading. In the 1980s, external businesses and multinational corporations based in Europe entered the local market and set up processing factories near the lake and exported fish to Europe, the Middle East, Japan and the US. New players enter the arena, including absentee boat owners, factory managers, government finance ministries, elite investors, international banks and traders, and “insatiable” foreign consumers. Local poverty has increased and although the fishermen work in smaller numbers, they work longer hours and are far removed from “exercising ‘their role as participants in shaping public policy through market processes'” (Barth 236). Furthermore, the “global” market has displaced the “regional” market, rendering many ex-fishermen and locals suffering from poverty to pick the morsels off of Nile perch skeletons for food.

The detrimental effects of policies relying primarily on market processes animates Barth’s call to anthropologists to analyze the collusion of complex institutions, policies, inequalities and notions of change. He maintains that using “agency” and “resistance” glosses over the “gross emerging inequities of global economies,” leaving them “uncommented and analyzed,” the outcome of “[painting] ourselves into a theoretical corner where all we can do is celebrate rather pathetic cases of symbolic protests” (Barth 239). His emphasis is on making models that counter economic ones — models that show how co-operation and competition among groups and individuals unravel, and trace the changing impact of the fishing industry on the domestic household and family relationships. Barth uses the example of the caught- fish turned money-wage to illustrate the importance of human lives often overlooked by economists. Whereas the caught-fish forced the husband-fisherman to share his earnings with his family, the money-wage allows him to spend his earnings on beer. The ramifications of economic policies on people’s lives are apparent. Ultimately, Barth emphasizes, anthropologists can make a difference by challenging old models by analyzing their outcomes, making new models and theory and recommend policies that take into account the interdependence of lives, social relations and macro-processes of politics and economy.