By Moeletsi Mbeki
WHY are most Africans in sub-Saharan Africa poor and why are they getting poorer while most people in the rest of the world are becoming better off? The World Bank and the International Mon
etary Fund who have become sub-Saharan Africa’s fairy godmother and godfather respectively, every year churn out statistics that tell the same tale – Africans are poor and in many instances have fallen so far down it is difficult to imagine them getting poorer.
With poverty and growing impoverishment go conflicts over scarce and shrinking resources. Hence sub-Saharan Africa’s never ending cycle of violent conflicts. In its seminal study, Can African Claim the 21st Century?
the World Bank made the following observations about sub-Saharan Africa: “Despite gains in the second half of the 1990s, sub-Saharan Africa enters the 21st century with many of the world’s poorest countries. Average per capita income is lower than at the end of the 1960s. Incomes, assets, and access to essential services are unequally distributed. And the region contains a growing share of the world’s absolute poor, who have little power to influence the allocation of resources.”
The World Bank’s observations are corroborated by other researchers. The prestigious (US) National Bureau of Economic Research summarised the living conditions of Africans as follows: “Thirty six percent of the region’s population lives in economies that in 1995 had not regained the per capita income levels first achieved before 1960. Another 6% are below levels first achieved by 1970, 41% below 1980 levels and 11% below 1990 levels. Only 35 million people reside in nations that had higher incomes in 1995 than they had ever reached before.”
All modern schools of political thought, from Karl Marx and Vladimir Lenin on the left to Friedrich Hayek and Milton Friedman on the right are agreed on at least one thing – the private sector is the driver of modern economic development.
In a quest for greater security and comfort, the theory goes, private individuals and their households are driven to seek more and more material wealth. This process in turn compels these private individuals to produce more and more and exchange what they produce with other individuals who are also seeking greater security and comfort. The sum total of these acts of production, exchange and consumption constitute the modern capitalist economy. The capitalist economy is therefore inherently driven to produce more and more so that its denizens may get greater and greater security and comfort.
For the private individuals to produce more and better, they must generate savings that they plough back into the production process as new and improved techniques, processes and products. This enables these private individuals to constantly produce more products, better products and more diverse products that are capable of exchange with other private individuals who are doing the same.
This is the inexorable logic of capital accumulation. The more you produce the more you must produce, the cheaper you must produce and the better products you must produce because if you do not, others who are seeking greater security and comfort will displace you in the marketplace and you will therefore suffer reduced security and comfort. The key words of this system are therefore production, exchange, markets, savings, improved techniques (research and development), medium of exchange (money), and economic growth.
Africans are today experiencing the opposite – less security and comfort and in many instance they face hunger, homelessness, threats of violence and actual violence, and starvation on a daily basis.
Africa however has arguably one of the largest private sectors in the world today. Most Africans live and work in private households that populate the African countryside. Theoretically, if we refer to the model described above, Africa should be a hive of economic activity and growth driven by the logic of these private individuals and households attempting to maximise their security and comfort. What has gone wrong?
In the model described above the underlying assumption is that private individuals are free to pursue their search for security and comfort and they therefore own and control the means of achieving their objectives. They are assumed to be free to exchange what they produce without let or hindrance and that where they are able to make savings, they are free to plough them back in improved techniques or in other investment avenues as they may wish.
This is not the case with the private sector in sub-Saharan Africa. Africa’s private sector is predominantly made up of peasants and secondly, of subsidiaries of foreign-owned multinational corporations. Neither of these two groups has the complete freedom to operate in the market place because they are both politically dominated by others – non-producers who control the state.
Herein lies the weakness of the private sector in Africa that explains its inability to become the engine of economic development. Africa’s private sector lacks political power and is therefore not free to operate to maximise its objectives. Above all, it is not free to decide what happens to its savings. Let us start with the situation of Africa’s peasants.
According to Marx, peasants are not able to form an independent political force that can represent their interests; they are therefore open to exploitation by other social groups that dominate them politically.
“In so far as there is merely a local interconnection among these small-holding peasants, and the identity of their interests begets no community, no national bond and no political organisation among them, they do not form a class. They are consequently incapable of enforcing their class interests in their own name, whether through a parliament or through a convention. They cannot represent themselves, they must be represented.”
But who represents the interests of the peasants in Africa today? The answer is nobody. The one African politician who claims to act in the interests of peasants, Zimbabwe’s Robert Mugabe, has reduced the once proud and almost self-sufficient Zimbabwean peasants to paupers who now have to be fed by the United Nations’ World Food Programme. Africa’s peasants are therefore prey to the forces that have the ability to form political organisations and therefore control the state. The way that peasants are preyed upon by the controllers of the state – the political elite – has been studied extensively not least by the World Bank itself.
Fundamentally, the political elite uses its control of the state to extract the surplus or savings that if the peasant were free to retain they would have invested in improving their production techniques or to diversify into other economic activities.
Through marketing boards, taxation systems and the like, the political elite diverts these savings to finance its own consumption and the strengthening of the repressive instruments of the state. A great deal of what Africa’s political elites consume and what the African state consumes, is however not produced locally but is rather imported. Elite and state consumption therefore does not create a significant market for African producers but instead acts as a major drain of national savings that would otherwise have gone into productive investment in Africa.
This is the secret to Africa’s growing impoverishment despite its large private sector. The more the African political elites consolidate their power, the more they strengthen their hold over the state, the more the peasants are likely to become poorer, and the more the African economies are likely to regress or at best, to mark time.
When the colonialists retreated from the 1950s onwards, colonial subsidiaries such as former joint stock companies and multinationals lost their key protector, the colonial state. Before long they, like the peasants, fell prey to the appetites and whims of the new African political elites who controlled the newly independent African states. The lucky ones were nationalised and their owners were therefore paid compensation; the not so lucky ones were “privatised”. Many survived as best they could through corrupting the new elite or finding ways of ingratiating themselves with the new masters.
What has been most striking about the political elites in sub-Saharan Africa has been their aversion to becoming involved in industry whether manufacturing or mining. The private sector in these industries is therefore still dominated by foreign-owned companies with parastatals increasingly playing a minor role.
A recent study by the World Bank shows that the most productive companies in, for example Nigeria, are those owned by multinational corporations or by non-African industrialists – Indians, Chinese, Lebanese etc. All these owners are easy targets as they are not represented within the political elites. In common with the peasants, they are therefore subjected to all sorts of official and unofficial taxes ranging from backhanders for factory inspectors and customs officials through to artificially high electricity tariffs, arbitrary municipal rates and the like.
This is another way that the African political elite contributes to fostering Africa’s underdevelopment. By obstructing the operations of industry and diverting a large part of its profit to elite consumption, Africa’s manufacturing industries are unable to grow and therefore to create employment for all grades of workers.
While South Africa is ruled by a political elite that has much the same roots and characteristics as most of the political elites in the rest of sub-Saharan Africa, its room for manoeuvre is enormously constrained by the fact that it does not have a passive peasantry to exploit. Instead it is surrounded by a dynamic private sector that is owned by South African citizens whose rights are entrenched constitutionally and are enforceable by the propertied classes themselves through the franchise; through the judiciary; and through the independent mass media that sees itself as the watchdog over the rights of citizens.
Secondly, the political elite in South Africa was compelled in the struggle against apartheid to enter into alliances with the black urban working class. South Africa’s urban working class is existentially the opposite of peasant smallholders in that it is organised into independent social movements, especially trade unions, which articulate and represent its interests. Central to the interests of the black working class and private sector owners is job creation for the former and profit maximisation for the latter. Both these major social and political forces thus have a common interest to promote economic growth and therefore to minimise the private consumption of the political elite.
It is this that makes South Africa different from the rest of the region and that accounts for its ability to grow its economy while the economies of the rest of sub-Saharan Africa are stymied by the dead weight of political elite consumption.
If sub-Saharan Africa is to develop, it needs a new type of democracy, a kind that will empower not just the political elite but sub-Saharan Africa’s private sector producers as well. In the first instance, it is necessary that peasants must become the real owners of their primary asset, land. This is the only way that there can be land improvements in sub-Saharan Africa instead of what is happening at present, that is, rampant deforestation and accelerating desertification. This means freehold must be introduced and the so-called communal land tenure system which in reality is state land ownership, must be abolished.
Secondly, peasant producers must gain direct access to world markets without the political elite, through state corporations, acting as the go-between. Another important innovation that is needed are new financial institutions that are independent of the political elite that will address the financial needs of not just peasants but also other small to medium-scale producers.
This is where foreign donors could play a more constructive role than they are doing at present through their current efforts to sustain the political elites and African states with budgetary support and the like. Donors could support these independent institutions by providing the expertise to manage them and to some extent help shield them from predators.
* Moeletsi Mbeki is deputy chairman of the South African Institute of International Affairs. This is an edited version of an address given to the London Business School.