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The Looting Machine Accelerates, or a Better Life for Africans?


World Economics
14 May 2019
                        

There are two very different views on current prospects for Africa. First there is widespread agreement that companies and countries (particularly China and Russia) have become very interested in Africa of late.

The Financial Times noted late last year “Of the world's top 10 fastest-growing economies this year according to the World Bank, six are in Africa..." In November 2018 a McKinsey paper “Africa's overlooked business revolution”, referred to Africa as “one of the 21st Century's great growth opportunities”. The Economist and others have recently written about "The New Scramble for Africa".

On the other hand Tom Burgis, an FT writer and author of the extraordinary book "The Looting Machine" notes ; "where once treaties signed at gunpoint dispossessed Africa's inhabitants of their land, gold and diamonds, today phalanxes of lawyers representing oil and mineral companies ...impose miserly terms on African Governments and employ tax dodges to bleed profit from destitute nations".

Whist some progress may be being made in terms of better governance (for example the ousting of Zuma in South Africa), it may not be quite as rapid as some of the headlines would suggest. The interest may be more focused on securing rights to mineral wealth, as in colonial times, than in helping Africa escape the resource curse that has bedeviled progress for so long.

Some of the evidence cited about growth in Africa is clearly exaggerated. The GDP data on which some of the enthusiasm is based is without doubt extremely unreliable. To take one example: the suggestion that Cote d'Ivoire GDP has been growing at a very healthy 6%+. The World Economics Data Quality Rankings show that the quality of official data from Cote d'Ivoire (and in most other African countries) is significantly flawed. Cote d'Ivoire GDP data is currently built on a base year of 2009; SNA's (UN National Accounts Standards) relating to 1993 (things were very different 26 years ago); a large unrecorded Informal economy; significant levels of corruption and too few resources to produce accurate GDP data. The Cote d'Ivoire GDP data is classed in the Data Quality Ratings as very poor - listed in 125th place out of 154 countries. To base conclusions that the Cote d'Ivoire economy is growing rapidly on such shaky foundations is giving greater credence to the data than is deserved.

The GDP numbers can be put in some perspective by looking at the daily reality of life in Cote d'Ivoire, which doesn't appear to have changed in recent years in the way that might be expected had economic growth really been zipping along at 6%+ . Things may even be getting worse for some, despite the claimed GDP growth rates. 

Here is an account of daily life from our correspondent, who has lived and worked in Cote d'Ivoire for several years: 

While I and my colleagues are paid good salaries, even by European standards, most families in the Cote d’Ivoire have perilously low incomes and virtually no long-term savings. I can’t prove it with statistics but I estimate that I am earning in a month what an average working adult in Abidjan earns in four years. We are the equivalent of Premier League footballers to Abidjan’s working class, which is stalled in poverty and condemned to live in a different world with only occasional contact with the shatter-proof bubble of the rich. 

This is made terrifyingly obvious by revelations of the financial impact of illness on the poor. Sudden healthcare costs, for example for a relative suffering from long-term illness, or treatment for injuries following a car accident, or even just a dental bill for a tooth extraction, can ruin the lives of whole families. 

Health insurance here is dominated by international companies, accessible only to expatriates, the very rich, and a minority of those in permanent employment. This is why most tooth extractions are by pliers and most medication involves boiling plants, roots or flowers according to traditional recipes. 

Most families’ first healthcare recourse is to the potions and remedies of healers and others whose home made products often heal, albeit more slowly, than the manufactured pill or potion of the all-encompassing multinational company. There are local and natural cures for many ailments and conditions from diarrhoea and malaria to arthritis and cancer, sometimes based on original and fresh versions of the same herbs used, mixed, sold, and intellectually “owned” by multinationals. 

The average family, including uncles, aunts, cousins, nieces, nephews, step-children and step-parents, normally together discuss and deal with any major costs arising, and seek assistance from those in the family with money, if such exist. This is why the small proportion of Africans who have money to spend should not always be assumed to have plenty to spare. Their wealthy-healthy status means that they are often the sole providers of funds when anyone in their family needs help. 

Africans are natural sharers and givers, and spare money is used first for close relatives in need. However, this is changing as free market values replace those of religion, morality, family, and community. Money from benefactors is reducing. This is crucial, as Africans themselves contribute more money to their continent’s economic development than all the development aid from the world put together. This is through millions of transfers of small change from the huge African diaspora working and living around the world. This can make all the difference between family survival and starvation.

But the public hospitals of Abidjan indicate the dereliction and decline in community solidarity. They do not treat people without the money to pay the bills, so the entrance halls and approach ways to hospitals are often peopled by seriously ill and dying men, women and children unable to enter for more applied treatment. Their hands are outstretched for the miracle of being given money for the care they need. For some, their traditional benefactors are no longer assisting with their small change contributions. 

As a consequence I am told that poverty is now increasing fast amongst the already severely poor across Africa as wealthier family scions increasingly decide that they need not be bound by family ties.


Conclusion

The New Scramble for Africa may well result in benefits for major corporations, and for China, Russia and others in terms of access to scarce resources, arms sales and political influence at the UN and elsewhere, but may not have resulted as yet in much change in the standard of life of the ordinary citizen. Whilst there are obvious big differences between countries in Africa, and broad generalisations covering such a vast geographical area and population are likely to be wrong, on balance we fear the Tom Burgis view of life in Africa may still be the more correct interpretation. We hope we are wrong...