How everybody holds Africa back (2)

RATHER than issuing from some mysterious invisible force, the “resource curse” is to a large degree the product of greed and the disparities in leverage between rich and poor.

This is a telling exchange, since many Africans believed that Chinese investment and influence on the continent would offer a way to lift the resource curse.

Many greeted the arrival of the Chinese as big economic players in the region, which began in the mid-1990s, with great enthusiasm – especially the leaders of states whose economies depend heavily on minerals.

China’s share of the global consumption of refined metals rose from five per cent in the early 1990s to 45 per cent in 2010; its oil consumption increased fivefold during the same period.

In 2002, Chinese trade with Africa was worth $13 billion; a mere decade later, that figure had soared to $180 billion, three times the value of U.S. trade with the continent.

The hope was that with China directly competing with Africa’s economic partners in the West, African countries would win better terms for themselves.

But as Burgis makes painfully clear, what has happened more often is a race to the bottom, in which Chinese firms focus their attention on African countries that face sharp credit restrictions or economic boycotts from the West, owing to coups d’état or human rights abuses.

In many such countries, including Angola, the Democratic Republic of the Congo, and Guinea, the Chinese have extended easy financing to governments, crafting secretive deals that reward Chinese investors with even more lopsided terms than Western governments and firms tend to enjoy.

Access to easy Chinese loans might have looked like a chance for African governments to reassert sovereignty after decades of hectoring by the [World] Bank, the IMF, and Western donors,” Burgis writes, but, “like a credit card issued with no credit check, it also removed a source of pressure for sensible economic management.”

In addition to this, critics point out that Chinese companies frequently bring in their own workers from China, providing little employment for Africans and few opportunities for Africans to master new skills and technologies.

Some of Burgis’ strongest work follows the deal making of a shadowy Hong Kong-based outfit called the 88 Queensway Group, which was founded by a man sometimes known as Sam Pa, whose background is reportedly in Chinese intelligence.

By tracing a complex web of corporate relations, Burgis shows how Pa’s group has put together lucrative deals in one African country after another, since starting seemingly from scratch in Angola during the early phases of China’s push into Africa.

In Burgis’ telling, one mission of Pa’s 88 Queensway Group and its associated companies, including China Sonangol and the China International Fund, seems to be offering the Chinese government plausible deniability when it comes to major transactions and contracts with some of Africa’s most corrupt and violent regimes.

But some African elite at the receiving end of Pa’s entreaties have been left with little doubt that dealing with Queensway would in fact put them in contact with the highest levels of the Chinese state.

Mahmoud Thiam served as the minister of mines in Guinea under President Moussa Dadis Camara, a junta leader who faced international outrage after his forces opened fire on a peaceful opposition rally in September 2009, killing at least 150 and gang-raping many who tried to flee the assault.

In 2009, Thiam travelled to China at Queensway’s invitation and later told Burgis about being whisked around Beijing by Pa’s associates. “If they were not a government entity, they definitely had strong backing and strong ties,” Thiam recalled. “The level of clearances they had to do things that are difficult in China, the facility they had in getting people to see us [and] the military motorcade gave us the impression that they were strongly connected.”

In the case of Guinea and other places, Burgis reports that Queensway was able to provide tens of millions of dollars to African governments on short notice, with virtually no strings attached, sometimes to help bail out leaders presiding over economic crises and sometimes merely to prove the company’s bona fides.

In the hands of a less astute observer, Pa could come off as something like a Bond villain. But Burgis rightly reminds readers that it hardly takes a conniving mastermind to profit off the inequities and shortcomings of African political systems. “If it weren’t him, it would be someone else,” as a U.S. congressional researcher puts it to Burgis.

The researcher adds that even if Pa’s operation were shut down, “the system is still there: these investors can still form a company without saying who they are, they can still anchor their business in a country that is not concerned about investors’ behaviour overseas, and, sadly, there’s no shortage of resource-rich fragile states on which these investors can prey.”

Loss prevention By showing how “the looting machine” is operated by people and institutions both inside and outside Africa, Burgis transcends the tired binary debate about the root causes of the continent’s misery.

But if the problem is as complex as he makes it out to be, with avarice flowing from so many different sources, how can ordinary Africans – and African elite intent on leading more just, prosperous, and equitable societies – improve their prospects?
 For Africans, the answer lies in large part in insisting on more open and accountable government.

Although the outside world has taken little notice, democracy has spread significantly around the continent in the last two decades, and although conflicts grab the headlines, evidence suggests that war and other forms of large-scale violence have declined during this same period.

Stronger civil societies and regular, free, and fair elections would prevent leaders such as Angola’s dos Santos from perpetuating their rule for decades and might allow more responsive elite to put Africa’s resources in the service of more equitable development strategies.

Washington should expand its efforts to prevent illicit financial flows, reducing the amount of revenue that African countries lose owing to tax havens.

For the outside world, the priority should be getting foreign powers, including China, to agree on more stringent measures to combat corrupt business practices.

The U.S. Treasury Department is cracking down on foreign banks that enable Americans to evade taxes; Washington should expand its efforts to prevent illicit financial flows involving other countries as well, reducing the amount of revenue that African countries lose owing to tax havens.

Finally, as Burgis’ book strongly implies (although does not explicitly argue), international financial institutions such as the World Bank and the IMF must be made much more accountable.

In Africa, that would mean publicly measuring their programmes’ performance in terms of their impact on economic growth. Over the years, such institutions have demanded rigorous compliance from their poorest clients while never holding their own performance or the soundness of their advice up to public scrutiny.

The internal IFC review Burgis cites made the same point more than a decade ago. But its findings were largely ignored as the World Bank continued to promote extractive industries in Africa even when they contributed nothing to development.

Today, with Africans seeking to cross the Mediterranean Sea by the thousands to escape misery, a simple recommendation from that review is perhaps more pertinent than ever: World Bank and IFC staff should be rewarded not simply for allocating money to projects but for demonstrably reducing poverty.

After all, whatever the causes of African poverty, any efforts to address it will fail if they are blind to their own effects. • Concluded. • This Review Essay of the book The Plunder of Africa is published in the July-August Issue of Foreign Affairs magazine.



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