Africa rising: what’s left of the good news?

The abrupt slowdown in the growth of the Chinese economy, along with economic crises in western imperialist countries, has put the brakes on the new scramble for Africa. Largely driven by raw material exports, the growth has been lopsided, fuelling inequality and class polarisation. LIV SHANGE looks at the processes taking place.

Over the past ten years or so, Africa hype has been a popular pastime among bourgeois economists and analysts. ‘The good news’ has been highlighted. Out with the old stereotypes of war, hunger and misery. In with fresh spin about the growing trade, economy, population, the reach of new technology and, not to be forgotten, the growing profits to be made off Africa’s vast mineral wealth – from oil, gold, platinum, copper and coltan (which provides minerals used in electronic goods), for example. Having imposed ‘structural adjustment programmes’ on African economies in the 1980s and 1990s, big business based in the US and Europe, joined by its Asian counterparts, was now free to exploit these riches.

With profitable investment opportunities a scarcity in the world as a whole, Africa became a dream destination for many capitalists, in particular those prepared to take a gamble for quick returns. Driven by China’s voracious appetite for raw materials, Africa was to be the new centre for world trade which, in turn, would not only lift its people out of poverty, but would pull the global economy out of its recessionary malaise. About a year ago, however, the new scramble for Africa hit the brakes abruptly following the dramatic slowdown in China’s economic growth. What remains of the good news now?

The theory behind the Africa craze is that growing economies and growing populations, in particular urban populations, will create a broad ‘middle class’ which will lift Africa into a virtuous circle of ever-increasing wealth. In 2011, the African Development Bank found that a third of Africa’s population belonged to the ‘middle class’, with incomes between $2 to $20 a day (albeit with the overwhelming majority of these between $2-4 a day). These were the people who could do more than just live hand-to-mouth. They could buy the commodities which the corporations of the old colonial powers so badly needed to sell. A broad ‘consumer class’ in Africa would answer big businesses’ chase for growth markets.

The good news also suited the ruling politicians. In South Africa, this ‘middle class’ grew by 250% between 2004 and 2012, according to the Unilever Institute. Just before the global financial crisis erupted in 2008 the buying power of the black middle class had surpassed that of its white counterpart. According to the self-serving definition used by the African National Congress (ANC) government, everyone with an income between R1,400 ($85) and R10,000 ($605) a month is ‘middle class’. In other words, it included the mineworkers of Marikana who fought for better wages to escape living in tin shacks without electricity, water and sanitation.

A more credible study undertaken by the Pew Institute in 2015 defined 6% of Africa’s population as middle-income earners. The study showed that the most acute poverty had been somewhat ameliorated in countries like Nigeria but, far from creating a consumer class, the category that grew the most was ‘low-income earners’. According to the United Nations’ (UN) latest major population forecast, today’s 1.2 billion people in Africa are expected to have boomed to four billion by 2100 – 39% of the projected total of just over eleven billion people on the planet. While the population is decreasing in most western countries, and China’s population growth looks set to flatten out, the UN estimates an average 2.55% population growth for Africa over the past five years. A majority of the continent’s people are children and youth.

To some enthusiasts, this on its own shows that Africa stands on the threshold of a new, prosperous era. Africa’s turn at the demographic transition has arrived – from a society with high birth and death rates, and high poverty levels, to one with greater wealth where people live longer and also, in time, have fewer children. Demographers first observed this transition in Europe, then in North and South America. Now, some say, it is near completion in Asia and just about to begin in Africa.

For those who depend on selling commodities at ever-increasing rates, the Africa craze would grow along with the population forecasts. For socialists, who prepare for the decisive struggles of the future, the world’s shifting population balance is interesting for entirely different reasons. Economic growth and increased wealth do not automatically follow from population growth. Which direction developments in Africa will take will be determined by the outcomes of the class struggle in the decades ahead. Capitalism today is no force that will lift all boats but will expand in Africa through the pillage of human and natural resources.

Africa’s riches

The big carrot dangling in front of China, the US and the European imperialists in their new scramble for Africa consists of the continent’s enormous natural resources. The China-driven commodities boom meant that countries such as Nigeria, Ghana and Angola could earn vast sums from the export of oil. Zambia’s copper, South Africa’s platinum and gold, the Democratic Republic of Congo's (DRC) coltan and many more minerals, were churned out of the ground at record speed. During the ten years up to 2011, the exports from Africa south of the Sahara more than quadrupled, reaching $457 billion. Nearly 90% of the export revenues came from the sale of basically unrefined raw materials.

Nigeria is instructive as to the contradictory nature of the African growth miracle: an economy which is among the world’s largest exporters of oil yet imports around 80% of its own fuel needs. Ethiopia has "the highest rate of GDP growth in the world", but 90% of its people live in what the UN defines as ‘multi-dimensional poverty’. Right now, 15 million of them risk starvation as the country is suffering drought.

With the breakneck speed of growth of the Chinese economy subsiding, at the same time as the oil price has fallen by more than half over the past 18 months, the effects on the raw materials exporters of Africa are dramatic. According to the World Bank, the combined GDP growth of Africa south of the Sahara reached only 3.7% in 2015. That is the lowest level since 2008. In 2014 it came to 4.6%. The World Bank also notes that the structural imbalances in the African economy remain. The flood of growth absorbed vast riches out of Africa. As the tide is now going out it leaves behind more devastation than prosperity.

Angola in 2013 funded 70% of its government budget directly through oil exports. In 2015, this was down to 37%, even as the state’s budget was cut by 26%. Alongside the austerity, shortages of basic foods such as rice and flour are appearing and unemployment is rising. Likewise in Zambia, the fall in the price of copper to the lowest level in six years spells crisis. In the DRC, mining companies are shutting down or mothballing mines, such as the huge Katanga mine. In South Africa, hundreds of thousands of jobs in the mining, metal and manufacturing industries are threatened. Yet another boom has passed the workers and poor of Africa by.

China’s trade with Africa is said to have grown by 30% annually over the past decade. By 2009, China had overtaken the US as Africa’s largest trading partner. Even though China’s imports of African raw materials have decreased dramatically, Chinese corporations maintain certain investments on the continent, for example in mining, oil and gas extraction, the construction of dams, roads, power stations and hospitals. Such projects serve multiple purposes for the Chinese capitalists and the regime.

On the one hand, infrastructure is needed to enable the effective extraction of Africa’s resources. On the other hand, such investments, particularly in construction, offer an outlet for investment when the home ground is losing speed. The projects are largely financed through Chinese loans, which have been seen as guaranteed by the Chinese central bank. Large infrastructure projects are often China’s contribution in trade agreements with African states.

Contrary to what is often claimed by African regimes, the ties with China do not offer the great majority any ‘progressive’ advantages. They are of the same extractive and exploitative nature as when the financier is European or American. Rather, Chinese employers have made a name for themselves as the worst taskmasters. Also, the manufactured goods that are imported from China often hit local production hard, as in the case of steel, or even wiped it out, as with textiles in some countries.

Growing indebtedness

The US Federal Reserve’s December interest rate hike was anxiously anticipated by ‘emerging markets’, not least in Africa. The worry is that, with the dollar increasing in value, capital could be led away from these countries. Africa’s enormous trade deficit is financed largely through credits and speculation denominated in US dollars. This could see dollar-dependent economies starved of capital, and governments could fail to pay their bills. This is far off for most, but some governments, such as Angola’s, are already forced to engage in some serious juggling to keep up with their debts. Higher interest rates could also be devastating for the African states which are already struggling to maintain their dollar debts.

As export incomes have plummeted, several African governments have taken large loans. Credit ratings agency Fitch expects the combined sovereign debt of the countries south of the Sahara to have risen by 38% since 2013. A record number of government bonds were issued in 2014. Much of the new borrowing is simply to service the interest on old loans. The Angolan currency, the kwanza, fell 30% against the dollar last year. Ghana and Zambia have been forced to appeal to the International Monetary Fund (IMF) for assistance. The much-celebrated debt cancellations of 2005 are in many cases close to being undone. For example, Ghana’s debt stands at 73% of GDP, not far from the 86% before its debt ‘amnesty’. Part of the deal was that any subsequent loans would be handled entirely by ‘the market’.

The financial advisers nevertheless assure their clients that the sound fundamentals for investing in Africa remain intact, with enticing medium-term prospects for the patient capitalist. While the new scramble for Africa has hit a setback, big business and its governments are set to expand in Africa, in the longer term. Capitalist expansion, however, does not mechanically equal social development and increasing wealth. What is interesting is that, although the boom in raw materials exports has not led to any take-off of industrialisation in Africa, it has sharpened class contradictions.

More and more people now live in cities – their share is expected to reach 56% by 2050. Large-scale land grabs by big business also leave growing numbers of subsistence farmers with no other recourse than to struggle. And the continuing Chinese interest in exploiting Africa could mean a certain establishment of industry. In other words, the working class could be strengthened in number and social weight.

Since 1990, the number of people who live in ‘extreme poverty’ has grown by over 100 million in Africa, according to a study presented by the World Bank last October – a smaller share of a larger population (43% today compared to 56% then). It is remarkable, however, that no decisive improvements have been made in the last decade when things have supposedly been going so well. The World Bank predicts that an ever-increasing share of the world’s poorest will be concentrated in Africa in the future.

Good news includes a sharp fall in infant mortality south of the Sahara: from 142 to 99 per 1,000 new-borns since 2010. The struggle for women’s liberation has an important role to play, with increased levels of education for girls and increasing access to contraception. The World Bank also notes that the adult literacy level has grown by 4% and average life expectancy by six years. Other indicators of social development which are often celebrated include the decreasing incidence of fatal diseases such as malaria. Here, the introduction of simple means – impregnated mosquito nets – are said to explain the fall in new reported cases in Africa by 40% since the year 2000. Today, on average 192 new cases are reported for every 1,000 people.

Read differently, about a fifth of Africa’s population can still count on being struck by this debilitating illness, despite the simple means that could make it history, if only the resources for them were in the hands of those with an interest to do so. The bad news is that the conclusion of the World Bank’s survey over a comprehensive set of progress factors is that the levels of improvement are now generally losing momentum. Much of the progress has no relation to the recent economic growth, but can rather be attributed to the legacy of bygone reforms.

Progress driven by struggle

Unlike the impression you may get from the recent converts to the Africa hype, the continent did not just tumble into the world of ‘emerging’ markets from nowhere. Boosted by the strong growth in the global economy during the post-second world war boom, several liberated African countries in the 1960s and 1970s carried out ambitious reform programmes in education, healthcare, agriculture and industry.

The Stalinist bloc supported regimes such as Ethiopia, Angola and Mozambique, while the imperialist powers backed up market-friendly dictatorships like apartheid South Africa and Zaire (now the DRC). A few states were able to balance between the two cold war blocs. During this period, dramatic improvements in literacy and public health were achieved, despite ongoing wars and starvation catastrophes. But during the 1980s and 1990s, the debt crisis, followed by the aftermath of the collapse of the Stalinist Soviet Union, meant that these limited gains were largely laid to ruins.

The IMF and the World Bank imposed structural adjustment programmes – mass privatisation and austerity, deregulation – and other market adaptation programmes. Everything, from education to clean water, would now become commodities subject to competition. The industry that had been established to combat colonial inheritances, such as dependence on raw materials exports and huge trade deficits, began to disappear. These have not recovered despite the recent boom. Between 1980 and 2013, the contribution of manufacturing to the combined GDP of Africa shrank from 12% to 11% (while growing by 16% in Asia).

Africa today has the lowest manufacturing share of economic growth among all ‘emerging markets’ – thrown back firmly into its old role as the evergreen source of raw materials. Thus, thanks to the devastation wrought by the ‘reforms’ – wielded, in reality, by the forces of counter-revolution – the multinational corporations were given a second opportunity at primitive accumulation. A hundred years after the first scramble for Africa, a second edition once again allowed established and aspiring imperialists to effectively loot the continent. Capitalism was able to revive by sucking the lifeblood out of Africa.

The inherent contradictions of capitalism have ensured that the last quarter of a century of economic growth in Africa has not benefitted the majority of Africans. The World Bank study confirms the ‘resource curse’ that has long been observed in Africa: the richer a country is in minerals, oil, etc, the poorer the majority of its people. The study found that in resource-rich countries, on average, life expectancy was four-and-a-half years shorter, while malnutrition and illiteracy were higher.

Dynamic combinations

Clearly, what ‘human development’ progress has been made during Africa’s ‘rise’ has been achieved despite of, and not thanks to, the capitalist expansion on the continent. Where developments have leapt forward, innovation has been pushed from below and later taken up by big business to increase its influence. For instance, the spread of mobile phones and linked services such as cell-phone banking is a global development which was initiated in Africa, jumping over several stages in banking which other parts of the world have been through. The innovativeness and creativity of the workers and poor of Africa is a strong force which, under capitalism, is overwhelmingly consumed by the struggle for mere survival.

Socialists cannot be content that now, ‘only’ one in ten African new-borns die before they turn one year, or that 40% of those who live longer are malnourished. There is no reason to tolerate these crimes against humanity at all – hunger, the lack of clean water, or death from curable and manageable diseases such as malaria, TB and HIV. In a socialist world, these could be done away with rapidly. With all the decisive resources of society – the mines, banks, manufacturing, agricultural and pharmaceutical industries – owned in common, those involved in production and those in need of the products could plan democratically how to end exploitation, degradation, division and oppression. We could urgently set about the reconstruction of society in line with the needs of humans and nature.

The pillage and looting of Africa, through slavery, colonialism and neo-colonialism, has been a key condition for the very existence of the capitalist system. The capitalism which has in recent years dug itself deeper down into African soil is one characterised by decay: ever more frequently recurring crises, widening inequality, and prospects for permanent misery for the working class everywhere. The structural adjustment programmes which were first tested in Africa and Latin America are now imposed closer to the heartland of imperialism, for example, in Ireland and Greece. But where capitalism sinks its roots, it also digs its own grave.