Africa needs fundamental change to heal its wound, not cosmetic policies, writes Charles Abugre
As the G8 summit draws nearer, dramatic and distressing images of Africa are appearing everywhere. These show emaciated and drooping bodies of women and children, dilapidated villages and shanty towns, and barefooted jalabiya-wearing nomads roaming forlornly across the dusty fields of Africa.
On the lighter side, excited African children are seen and heard singing and dancing to mainly white visitors who are coming to the rescue.
Thanks to the incredibly successful mobilisation by the Make Poverty History coalition, never before has Africa been so much in the public conscience in Britain. But as what?
Tony Blair’s imagery of Africa is that of a scar on the conscience of the rich world. A scar is the ugly tissue left after a wound has healed or healing. It acts as a reminder of a past, painful experience.
If the sight of it pains you, look away, or otherwise use make-up to improve the aesthetic look of the body part in which it sits.
There are some that feel strongly that the imagery of Africa presented, and the justification that the pundits make for action under the Make Poverty History agenda, is one of making over an otherwise ugly, disturbing blemish. This is also an unwelcome reminder of the past.
My eight year old daughter, who has not been back to Ghana in three years, asked me, “Why are all Africans so poor and miserable?” Her conscience has clearly been touched.
I do not suggest that MPH’s agenda of debt cancellation, more and better aid, and trade justice is driven by make-over objectives. I believe that for the majority in the MPH coalition, it is about redressing injustice. If it is, then imagery and analysis matters.
My image of Africa is of a beautiful, welcoming and sharing person bearing a gaping and bleeding wound that threatens her or his happiness and life.
Africa’s wound is old, historically rooted and still festering. There are scars around its edges suggesting partial but superficial healing.
The wound is constantly poked both by external objects and by Africa itself. As a result, it is still being gashed.
Stopping the bleeding is a first aid priority to protect life, before healing is possible.
To heal, we must get the diagnosis right, recognise the age of the wound, how it was caused and what continues to make it worse.
Africa is presented as a continent with insufficient resources to feed itself, to treat itself, to exchange abroad and to pay its debt. This is true.
But did you know that over the past 30 years Africa has been a net capital exporter, a creditor — transferring more capital abroad than it received in aid loans and foreign direct investment?
Some estimates suggest that Africa’s accumulated stock of capital transferred abroad between 1970 and 2000 amounted to over $280 billion through balance of payment financing, debt servicing, official reserves held abroad and trade mis-invoicing.
Debt, a phenomenon of the 1980s, brought about by the International Monetary Fund (IMF), World Bank and rich countries imposing structural adjustment programmes, was particularly debilitating.
Some estimates suggest that of every $1 received in loans, 80 cents went right back out the same year in debt servicing. The remaining 20 cents will induce outflows equivalent to about a further 40 cents.
Debt became a means of inducing capital flight and sucking out more resources than were originally provided.
It was also an instrument for making African countries implement policies prescribed by rich countries against the will of many African people.
That is why many in the Jubilee South debt cancellation movement see debt as a justice charity issue.
Africa bled and continues to bleed from two further mechanisms — tax avoidance and competition, and import penetration.
A favourite policy of the aid providers over the past 20 years has been to encourage poor countries to reduce tax obligations on foreign investors.
Consequently, across Africa governments offered mining companies tax holidays ranging from 20 to 35 years.
Ghana’s Anglo-Ashanti will not pay tax for over 25 years. In addition, the company is allowed to hold as much as 80 percent of foreign exchange earned abroad in its own accounts.
Add in widespread mis-invoicing practices and the amount of legitimate revenue lost to Africa runs to hundreds of billions of dollars.
Much of this capital ends up in tax havens, escaping tax that would benefit even the economies of the rich countries where these companies originate.
The Tax Justice Network suggests that the capital held by tax havens, a large part of which is from developing countries, exceeds $11 trillion. If the returns on this capital were to be taxed at an average of 30 percent, it would generate over $250 billion.
This is more than double what rich countries are called upon to provide in aid.
Losses from declining terms of trade have been regularly documented by United Nations Conference on Trade and Development, often amounting annually to tens of billions of dollars.
What has not been estimated until recently are the losses that African countries have incurred by opening up their markets.
They were made to cut down their rates of protection three times as fast as the countries of the Organisation for Economic Coordination and Development.
This has left the continent too open and too dependant, with an ever declining share of international trade.
Christian Aid recently calculated that over the past two decades Africa lost more than $270 billion from the negative growth effects of trade liberalisation.
This amount more than matches the accumulated value of grants, loans and foreign investment into the continent.
To stop the bleeding, we should stop pushing African countries to reduce taxation on foreign companies, especially in the area of natural resources and financial services.
We should address the issue of commodity pricing and commodity terms of trade and we should tighten the rules regulating the operation of companies to tackle trade mis-invoicing.
Finally we should stop encouraging or forcing African countries to open up their markets even further.
We need to make it clear to the G8 that Africa’s markets are too open and that we probably need to reverse the situation, especially in manufacturing and for some agricultural products, to have any chance of recovering.
We must oppose any trade rules based on even the most minimalist form of reciprocity in market access.
The media answer to the cause of Africa’s poverty is bad governance, by which is meant either corruption or the lack of visionary or caring leadership.
All these are a part of the problem, but it goes deeper than that. Africa has not lacked in visionary leadership and its leaders have not always been corrupt.
Kwame Nkrumah of Ghana and Patrice Lumumba of the Congo were notable visionaries.
These, and other, leaders became victims of Cold War reprisals.
Did you know that in the first ten years of Africa’s independence, 27 leaders were removed by military coups and other violent means?
Most of the coups were orchestrated by Western intelligence. Removing leaders by coups became implanted early in Africa’s post colonial experience.
The current crisis of governance is rooted not simply in corruption but in the increasing irrelevance of the state to citizens.
In the first 20 years of independence the relevance of the African state was clear to its citizens.
It built unity around a nationalist project, delivered improvements in well-being through investing in health education and production.
The continent experienced its greatest economic and social progress in the 1960s and 1970s, before the intervention of structural adjustment programmes.
Economic growth in sub-Saharan Africa averaged 2.4 percent in the 1960s and 4 percent in the 1970s.
In the post structural adjustment period it averaged 1.4 percent in the 1980s and 2.1 percent in the 1990s. The move away from state intervention has led to massive inequality, exclusion and conflict.
Rapid market opening has exacerbated these contradictions by displacing basic local production.
To address governance, governments have to first be relevant to the aspirations of its poorest.
This means getting taxes from the rich and investing them in economic and social development.
It means not only building roads and ports, but also providing teachers, public services, price and storage support to producers. It also means investment and research and development to help promote science in the interest of production.
Budget tracking and transparency is useful only in the context of citizens seeking to defend resources for themselves.
The state must rediscover its purpose in Africa. Such a state will look completely different from what the IMF, the World Bank and Britain’s Department for International Devolopment have in mind.
It might look quite similar to what it was in the 1960s and 1970s. We have the lessons of China and India to go by now.
This new form of state and accountability cannot happen when aid agencies and powerful governments direct and dominate decision making in Africa.
Aid directed governance leads to reverse or de facto accountability where governments are accountable to donors rather than their own citizens.
That is why we should oppose conditionalities on aid, including governance conditionality. They either don’t work, as the World Bank’s own evaluation department found, or they dominate and override domestic politics.
This is the same as neo-colonialism, as Kwame Nkrumah called it.
Charles Abugre is currently the head of policy and advocacy at Christian Aid. He has been a development activist in Ghana and many parts of Africa and Asia. He writes in a personal capacity.