September 12, 2016
Margaret C. Lee Visiting Professor
Institute for Global Dialogue UNISA
Good afternoon! It is indeed an honor to be asked to speak to you today. I have traveled the world and spoken to many groups, but I can truly say this is the greatest honor of all, to be asked to present some of my research to COSATU.
It is you, COSATU, who ultimately brought the wicked apartheid regime down. And it is you that I have long respected more than any other group in the liberation struggle. I want to especially thank Zanele for this invitation. It is with great humility that I address you and truly hope that something that I say resonates with some of you as you deliberate over how you should plan to deal with the changing dynamics of the global economy.
The topic of my talk is “The 21st Century Scramble for Africa: Implications and the Way Forward.” Why the “21st Century Scramble for Africa?” Because, as you deliberate today about the development of a strategy for the issues confronting South Africa and this continent, it is very important to understand the problem. How you define the problem will have everything to do with how you try to solve the problem. My late Uncle, Dr. Jacob Carruthers, who was an activist and brilliant scholar, told people in his lectures that you must study your enemy in order to know what you must do. I am not here today to tell you who your enemy might be; that you have to determine for yourself. My task is only to attempt to provide a framework for you to ask the appropriate questions that will help move you forward amidst the changing dynamics of the global economy.
The scramble for Africa’s natural resources and access to her markets is nothing new. South Africans, of all people, understand this very well. But at this moment in history the level of the scramble for such resources and access to Africa’s markets is being compared by some, including myself, to what transpired before and during colonial rule. On this issue Tom Burgis, in his book, The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, quotes a Nigerian academic as follows:
The colonial powers set up a machine to extract resources. When they left, it passed to the leaders, like DNA. In so many places the military took over to capture the rent. It is incredibly difficult to change that structure. The foreign partners remain with their collaborators. It’s like a virus, transmitted from the colonial regime to the postindependence rulers. And these extractors, they are the opposite of a society that is governed for the commonwealth, for the public good (p. 233).
Burgis goes on to remind us that the model for the looting of Africa is Cecil Rhodes, who came to Africa during the scramble for Africa’s diamonds in the 1870’s. He became a small-‐time digger and rose to be the “lord of the diamond trade.” He created De Beers and following the discovery of gold, he established Gold Field of South Africa. To this day the legacy of Cecil Rhodes lives on as De Beers is still ranked as among the biggest gold mining enterprises with mines that stretch from Australia to Peru (Ibid).
Today we have Cecil Rhode’s Ghost in the form of a Chinese name Sam Pa and the 88 Queensway group out of Hong Kong. Sam Pa is a conduit for the Chinese Government and private entities to loot the mines and oil of Africa from Angola to the Congo and Nigeria; wherever Africa’s oil and mineral wealth exists. And it doesn’t’ stop there. Amidst all the poverty and starvation in Angola, as an example, when loans are given for “so called” development by the Chinese, the agreements stipulate that 70% of all contracts must go to Chinese companies and all equipment used must be imported from China. Yes, the Chinese are building roads, railways, and transport corridors in Africa, which is making a great contribution to the continent. But these efforts are not turning into permanent jobs and industrialization that Africa needs in order to become competitive in the global economy in the 21st century. In a moment I will speak briefly about what industrialization in the 21st century looks like. But have no illusions, the continent does have the capacity to become competitive in the global economy. Ask your leaders why this has not already occurred. Unlike the 19th Century Scramble for Africa, the current scramble is occurring with the complicit support of African leaders. Without their approval, the scramble could not happen. Ask your leaders what was done with the US $333 billion the continent received in 2010 as a result of the export of Africa’s fuel and minerals to the world. This US $333 billion represents more than seven times the amount of aid that was donated to this continent in 2010 (Burgis: 6). Africa is the wealthiest continent in the world, but one would not know it with the level of poverty that exists. Why does Bill Gates have to send chickens to Africans in rural areas to help poor women to produce a source of protein for their families vis-‐à-‐vis eggs being laid from the chickens when in 2010 Africa made US $333 billion from exports of fuel and minerals?
In my most recent book I traveled to South Africa, Lesotho, Ghana, Tanzania, Kenya, Uganda, Zambia, and China to understand what was happening to the informal sector in Africa. I had noticed for sometime that at least 95% of the goods in the markets were from China. How could this be? So I set out to find out the answer to this question. My intuition told me that it was not possible for the Chinese on their own to import into Africa such huge amounts of cheap Chinese goods. So I started my journey in Guangzhou, China, where you have hundreds of African traders who export to Africa Chinese goods at the request of informal traders. Also, many African traders go to Guangzhou on their own to buy goods. While on the one hand such goods have allowed many Africans for the first time to own products that here to fore they could not afford, on the other it has caused serious deindustrialization in many countries. Factories that were fully functional have closed. African traders now complain that they cannot compete with the even cheaper Chinese goods that are brought in by Chinese who have invaded this continent. Where are those African traders now? To my absolute amazement, I even saw a Chinese trader in Katlehong Township, which has been my home in South Africa for 25 years.
Many throughout the continent survive by working in the informal market. How can the governments of Africa allow over one million Chinese to invade the continent and take over the means by which most Africans outside of South Africa survive? And trust me, many more are coming. The Chinese government has allegedly indicated it wants at least 3 million Chinese to move to Africa.
In South Africa we all remember Bruma Lake, the flea market where informal traders from this country and all over the continent sold their goods. Bruma Lake is no more nor is the mall that was across the street. The Chinese have taken over both places and the informal traders, where are they?
Although I have many stories I could tell, the situation at the Namibia/Angola border town of Oshikango is one of the saddest because the Town Council has allowed Chinese to buy all the prime land as you walk across the border from Angola to Namibia. You can only see Chinese shops for at least the first two kilometers in the town of Oshikango. The Chinese who have migrated to this town were to have each started some kind of industry in the area so that the town could become industrialized and jobs created. Not one such industry exists and the African traders have been forced to move out of Oshikango. This is because it is too expensive to rent shops from the Chinese. Oshikango is a free trade zone so the Chinese pay no duties to the Namibian government for the goods they import into the area. The Angolans are the primary customers of the Chinese and they must pay in US dollars for the goods they purchase. The local traders, including white South Africans, who have been able to maintain shops in Oshikango far from the border, cannot compete with these Chinese who control the economy and have made this border town their home. The African workers who work in the Chinese shops are paid such low wages that they barely cover their transport cost to and from work. Most have to work six days (some seven) with no benefits and are constantly being called out of their name, such as Nigger and Monkey. Most don’t have a lunch break and come to work as an alternative to staying at home. This is a special place for me because I almost got arrested for inquiring about the status of the Chinese, some of whom, by the way, are laundering money with the Chinese from South Africa (Lee 2014: Chapter 3).
The looting and deindustrialization of Africa goes way beyond the Chinese. There are so many governments, companies, and individuals, including Africans from other countries who are looting in the in the DRC, that we could spend several days talking about this subject. The timber industry in Central Africa and Mozambique is being destroyed by different actors. African leaders, and in some cases traditional leaders, are selling or leasing their land to Europeans, Chinese, people from the Middle East, Turkey, the United States, and many others, to grow food that is exported out of Africa to feed their populations while people around them are starving. Many of these same people have been dispossessed of their land for farming by their invaders. What is wrong with this picture? What is wrong with African leaders for allowing this to happen?
If you pick up the August/ September issue of the magazine New African you will find an article by Ross Hemingway entitled, “UK’s new scramble for Africa.” Hemmingway notes that
We are witnessing a new “scramble for Africa” as companies seek to control the continent’s valuable resources and cash at the expense of people and the planet. A new War on Want report reveals that as many as 101 companies listed on the London Stock exchange have mining operations in Africa. Combined, these companies now control resources of oil, coal, gold, diamonds, gas, etc. worth in excess of US $ 1 trillion (18).
Again I ask the question, how is this happening? Why are the majority of Africans so poor at the expense of the looting of the continent’s vast resources? The problem is huge and therefore it becomes really challenging to figure out a solution to Africa’s inability to bust out of the global periphery when fundamentally the continent continues to be owned by external actors.
Before my time is up, let me turn to the specific issue that I was asked to lay the foundation for further discussion today and that is the European Partnership Agreements (EPAs). This relates to the scramble for Africa’s markets. The history of the Europeans maintaining control of Africa’s resources and markets vis-‐à-‐vis formal trade agreements dates back to the creation of the Treaty of Rome in 1957. I will not bore you with the details of this history. But over the years the EU has maintained special relations with Africa and for twenty years under what was called the Lomé Conventions, the majority of African goods entered the EU market duty free. There were also special protocols, such as the beef and veal protocol and the sugar protocol that allowed several nations in this region to export to the EU market tons of these goods duty free. Around 1996 the special relationship with EU’s African, Caribbean and Pacific Partners (ACP) was deemed to be illegal by the World Trade Organization (which is controlled by the US and the EU). The solution for the EU was to recolonize the continent and create regions in which they would eventually force free trade agreements. Similar to the Berlin Conference of 1884-‐85, the Europeans basically created new boundaries for Africa with a view to creating Economic Partnership Agreements, again officially known as EPAs but in fact are Free Trade Agreements (FTAs). Initially there were to be three regions of Africa. After SADC and COMESA refused to become the third region, the EU was forced to accept what we term the SADC minus EPA, which in the final analysis, included South Africa, Namibia, Botswana, Lesotho, Swaziland, and Mozambique. In essence SACU plus Mozambique. Other SADC countries joined what has become known as the East and Southern Africa EPA or the Central Africa EPA. There are now five EU EPA regions – West African, East Africa, Central Africa, Eastern and Southern Africa, and SADC.
These EPAs, based on the five regions identified by the EU, were to be signed and functional by January 1, 2008. There was no EPA signed at this point. Today, only two of the five regions have signed EPAs – the SADC minus region and that was in June of this year and West Africa which consists of ECOWAS (Economic Organization of West African States) countries. Why does the EU want these EPAs or FTAs? Fundamentally in order to continue to have access to Africa’s resources and markets with a view to remain competitive with the emerging global powers, including the BRIC countries (Brazil, Russia, India, China). Why do African countries not want the EPAs? Primarily because they are dangerous and will result in job losses, tariff losses, further deindustrialization, great competition with the EU in the area of services, the undermining of regional integration, to name a few reasons. The EU has severely threatened African countries of dire consequences if they don’t sign the EPAs.
The negotiations for the SADC minus EPA has created major divisions among the SACU countries; divisions that will likely be in place for some time to come. I will stop here and try to say a few words about the implications of what I have shared with you and one or two ideas about the way forward.
I think the implications are obvious: (1) The continent continues to be controlled by foreign actors and the leaders of the continent are complicit in this reality; (2) Although China and to some extent Brazil have contributed to much needed infrastructural development in Africa, the expectation that the BRIC (Brazil, Russia, Indian, China) countries would spearhead industrialization in Africa has not occurred and as a recent publication by Standard Bank on these countries notes, for them, “the thrill is gone,” quoting BB King; and (3) African industrialization and job creation will not come from external forces. It is time for Africans to really understand this and force your leaders to use the billions of US dollars that enter this continent annually to make Africans competitive within the global economy. This brings me to the Way Forward.
The Way Forward
Honestly, if Africa is going to industrialize and create jobs, a significant number of members of COSATU are going to have to be retained to deal with the skills that are relevant for the 21st century. There is no getting around this reality. Your leaders know this and you know this. You must force your leaders to allocate the necessary resources to make this happen. For example, you need to be trained to make computer parts/ and or computers. The technological market is moving so fast that you need to be able to make technological gadgets. People in the US and all over the developed world, for example, are constantly buying new “toys,” from TVs, to smart phones, to computers. In essence, whatever the new gadgets are on the market. If African countries can become centers producing these gadgets, you would be amazed at the level of job creation and industrialization that would occur on this continent. But there exists a great deal of competition for such jobs, so this will not be an easy undertaking, but it is an essential one. Both India and China are prime examples of this taking place.
The global economy has changed so much as evident by the diagram below entitled “Fragmented Global Value Chain: The World on a Plane.” Boeing, the US company that all of you knows builds airplanes, is currently working on its next plane – a Boeing 787. But the world is really building it.
Where is South Africa on this diagram? South Africa should be on this diagram? You and the rest of Africa must become part of the global value chain if you are to create jobs and enhance industrialization on this continent. The global economy is changing rapidly and you must get on the bandwagon if Africa is to bust out of the global periphery and become competitive in this global economy.
In the September 16, 2016 issue of The Mail and Guardian, there is an article entitled, “IBM calls on SA youth to pursue science and technology.” The article discusses the IBM lab recently established in Braamfontein, Johannesburg because of the “vibrant Innovation ecosystem” in the area. This is only the second such center in Africa. The other is in Kenya. Solomon Assefa, who was at the forefront of making decisions about expanding IBM’s network in Africa, identifies three focus areas of the lab. They include exploring the earth, data-‐driven healthcare, and digital urban ecosystems. Assefa further notes that
About a dozen projects are already under way, ranging from tuberculosis tracking, traffic optimization, wildfire risk assessment and even a partnership with Nasa to analyse millions of radio signals from outer space to detect terrestrial interference.
Researchers who work in the lab are encouraged to work very hard and creatively to get the projects out of the lab and into the world as soon as possible. It is hoped that new technologies will be developed, science will be advanced and the researchers will unearth discoveries. If this happens IBM will be successful in making a difference for South Africa, the continent, and the world.
How awesome South Africa and the continent would be if African leaders would make funds available to train the youth of the continent to pursue science and technology in labs similar to the one created by IBM. The continent would become closer to being able to compete in the global economy with the most developed countries in the world.
Assefa, Solomon 2016. “IBM calls on SA youth to pursue science and technology,” Mail and Guardian, September 16-‐22.
Burgis, Tom 2015. The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth. New York: Public Affairs.
Freemantle, Simon 2016. BRICS – Africa: The hype is gone, but much remains. Insight and Strategy, Standard Bank, June.
Hemingway, Ross 2016. “UK’s new scramble for Africa,” New African, August/September.
Lee, Margaret C. 2014. Africa’s World Trade: Informal Economies and Globalization from Below. London and New York: Zed Publishers; Uppsala, Sweden: The Nordic Africa Institute.