jump to navigation

VICE: POST-COLONIAL COLONIALISM: The West Extorts Way More Money from Africa Than It Gives in Aid June 16, 2017

Posted by OromianEconomist in Uncategorized.
Tags: , , , , , , , , , , , , , , ,
add a comment
Many decades after the official end of the western empires in Africa, the continent is still being sucked dry by a cartel made up of small local elites, multi-national companies and foreign governments. The money given to Africa to help its so-called “development” is referred to as “aid”, when in fact it should be seen as a form of reparations for a history of colonisation and ongoing domination that has left the African people almost as far from economic and social justice as they were when the European empires packed up and left in the years following the end of the Second World War.
POST-COLONIAL COLONIALISM
The West Extorts Way More Money from Africa Than It Gives in Aid
By OSCAR RICKETT, VICE, Jun 15 2017

We should be putting our western guilt to good use and pressuring government to regulate “investment” in the continent.

The world’s second-largest continent, Africa, is still defined in the western media in just two principle ways.

The more “woke” understanding of Africa is the idea of “Africa Rising”, which is defined by images of young people on bustling streets speaking on mobile phones. “Africa Rising” stories tend to focus on smart entrepreneurs doing something tech-related in massive urban centres like Lagos, Nairobi or Cape Town. They promote an image of the continent that is considered modern and future-focused. These stories are often, as the Kenyan journalist Parselelo Kantai once put it to me, “insidious little fictions manufactured by global corporate finance”.

The other main narrative is the more familiar one: hapless Africa, the tragic continent that can only continue to survive with the help of aid money provided to it by outsiders. This is the narrative of Live Aid and Bono, the story told to us immediately after news reports of famine and unrest in places that, we are made to believe, just can’t get by without western charity.

Given these two themes, it would seem unlikely that more money is taken out of the 47 countries that form what is commonly called “Sub-Saharan Africa” than is put back in. Yet, British and African campaign groups, including Global Justice Now, released a report this month which found that, in 2015, much more money was taken out of Africa in the form of illegal extraction of natural resources, tax avoidance and spiralling interest on debt repayments than was “given” to the continent in the form of aid and grants.

The report, entitled Honest Accounts 2017 , finds that the countries of Africa are “collectively net creditors to the rest of the world, to the tune of $41.3 billion [£32.2 billion] in 2015”.

Rather than Africa being a hapless continent dependent on the rest of the world, it is the exploited continent whose natural resources are enriching a local and global elite at the expense of the vast majority of its citizens, and whose governments can do little about the illegal syphoning of revenue into tax havens.

According to War on Want, 101 (mostly British) companies listed on the London Stock Exchange control an identified $1.05 trillion (£820 billion) worth of resources in Africa in just five commodities: oil, gold, diamonds, coal and platinum. Twenty-five of those companies are incorporated in tax havens.

While African countries receive around $19 billion (£14 billion) in aid in the form of grants, $68 billion (£53 billion) is taken out in capital flight. The main culprits are multinational corporations and corrupt officials with their large infrastructure of lawyers, bankers, accountants and financial advisors skilled in tax dodging.

The main device used is transfer pricing. By overpricing imports and under-pricing exports on customs documents, companies and individuals can move money to tax havens. This means that multi-national companies deliberately misreport the value of their imports or exports in order to reduce the tax they have to pay on them. Furthermore, these same companies repatriate $32 billion (£25 billion) in profits made in Africa to their home countries every year. Money made on the continent of Africa, then, is returned to enrich those outside of Africa.

The report goes on to say that African governments paid out $18 billion (£14 billion) in debt interest and principal payments in 2015. Though they received $32.8 billion (£25.6 billion) in loans, the overall level of debt is rising rapidly, and loans often lock African governments into even more debt: private lenders, the report notes, “are encouraged to act irresponsibly because when debt crises arise, the IMF, World Bank and other institutions lend more money, which enables the high interest to private lenders to be paid, whilst the debt keeps growing”. Ghana is losing 30 percent of its government revenue to debt repayments. Private lenders benefit, while ordinary Africans suffer.

Illegal logging, fishing and the trade in wildlife and plants are also hurting Africa, with an estimated $29 billion (£22.6 billion) a year being stolen from the continent through these practices. Climate change is hitting the continent particularly badly; though of course the extractive and industrial practices that led to climate change were a phenomenon of non-African countries.

As Bernard Adaba, policy analyst with ISODEC in Ghana, says: “‘Development’ is a lost cause in Africa while we are haemorrhaging billions every year to extractive industries, western tax havens and illegal logging and fishing. Some serious structural changes need to be made to promote economic policies that enable African countries to best serve the needs of their people rather than simply being cash cows for western corporations and governments.”

Many decades after the official end of the western empires in Africa, the continent is still being sucked dry by a cartel made up of small local elites, multi-national companies and foreign governments. The money given to Africa to help its so-called “development” is referred to as “aid”, when in fact it should be seen as a form of reparations for a history of colonisation and ongoing domination that has left the African people almost as far from economic and social justice as they were when the European empires packed up and left in the years following the end of the Second World War.

Recognising the troubling role western governments and companies play in the impoverishment of Africa could serve as a beginning to reverse this process. The Honest Accounts report proposes a number of steps that can be taken to help reverse the flow of money out of Africa, including putting less faith in the extractives industry, enabling transparent and responsible lending and regulating the investment that corporations bring in to African countries.

Tax havens are a key issue, one that was recognised in Labour’s election manifesto, which said that the “current global tax system is deeply unjust”. Jeremy Corbyn’s party promises to “act decisively on tax havens”, which play a key role in allowing vast sums of money to be taken out of Africa. The UK enablesthis wealth extraction to take place and sits at the head of a vast network of tax havens.

Finally, there is the need for more public recognition of what is going on. This is not about stoking up western guilt; it is about identifying the causes behind rising inequality in Africa and elsewhere, and about correcting a lazy media narrative that patronises and insults Africans while keeping everyone in a state of ignorance. The truth is this: Africa is still being plundered. It is time western governments and the western media stopped pretending otherwise.

 

 

Deforestation and Malaria – What’s the Relationship Between the Two? June 16, 2017

Posted by OromianEconomist in Uncategorized.
Tags: , , ,
add a comment

Africa: Deforestation and Malaria – What’s the Relationship Between the Two?

 By Kelly Austin, Lehigh University, The Conversation

Despite being a preventable and curable disease, malaria continues to affect people in 91 countries. In 2015 alone there were 212 million cases and about 430,000 deaths. Sub-Saharan Africa carries a disproportionately large burden with 90% of malaria cases and 92% of deaths from the disease.

Malaria is a very old parasitic disease. It is transmitted to humans through the bite of the female Anopheles mosquitoes. Not all types of Anopheles mosquitoes like the same conditions but, in general, standing water, increasing temperatures and sunlight are favourable to most malaria-carrying species. This explains why, for a long time, infection has been linked to environmental conditions.

Despite this link, little research has been done on what makes certain areas more conducive to malaria-carrying mosquitoes. My new study of 67 less-developed, malaria-endemic nations is an attempt to fill this gap. It shows a link between deforestation and increasing malaria rates across developing nations.

Linking forest loss to malaria

The goal was to establish whether there was an identifiable link between forest loss and malaria prevalence rates across countries. Previous studies show evidence of a link between forest loss and mosquito populations or malaria parasite levels. In Kenya, for example, one study in the highlands found that living on land without trees led to increased risk of contracting malaria. But there was a lack of research on whether this was a general trend or whether these findings were isolated to certain settings, influenced by nuances of the local ecology.

I used data on forest cover from the Food and Agriculture Organisation, and malaria prevalence rates from the World Health Organisation at the national level. My research found that even when controlling for other known factors, like health care provision and latitude, nations that experience more forest loss tend to have higher rates of malaria.

 In addition to making this broad link, the findings confirms research that shows deforestation isn’t a natural phenomenon, but is caused by human activities. The study found that rural population pressures, such as firewood collection for fuel, and specialisation in agriculture, are key to rural forest loss in malaria-endemic nations.

Deforestation increases the incidents of malaria because it creates several favourable conditions for the Anopheles mosquito. These include:

Pools of water being exposed to sunlight. This increases temperatures, promoting more ideal breeding grounds. Creating ditches and puddles which are more likely to pool less acidic water. This is more conducive to Anopheles larvae development.

Reducing the absorption of water – primary growth forests tend to be heavily shaded with thick debris on the ground. This absorbs water and often leaves any standing water acidic, and creating “tree bowls” where stumps are left behind and gather pool water.

 Solutions lie with people

Since people cause the loss of trees, it’s crucial to emphasise the human drivers when looking for solutions. For example, changes in agricultural practices should be pursued, such as leaving some trees and practicing more shade or mixed cultivation. This could replace plantation agriculture which involves clear-cutting forests and could help mitigate some of the harmful effects.

Malaria remains a leading cause of death and a threat to health in many countries across the Global South. There have been major improvements in malaria prevention, diagnosis, and treatment over the last several decades. But changes to the natural environment increase the scope and severity of the risk. It’s within the power of governments – and people – to ensure that this doesn’t happen by implementing or mandating more sustainable forest management.

Disclosure statement

Kelly Austin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Read the original article on The Conversation Africa.

FT: Ethiopia’s mythical manufacturing boom: The sector shrinks in importance despite heavy Chinese investment June 16, 2017

Posted by OromianEconomist in Uncategorized.
Tags: , , , , , ,
1 comment so far

Ethiopia: “There’s been a brilliant PR campaign on its part to sell a story that does not really exist.”

‘Yet the data show that manufacturing now accounts for a smaller slice of Ethiopia’s economy than at almost any point since the early 1980s.In 2015, the sector accounted for just 4.1 per cent of Ethiopia’s gross value added, well below the peak of 7.8 per cent in 1997, according to data from the World Bank, as the second chart shows. Moreover, manufacturing accounts for a smaller share of Ethiopia’s economy than that of virtually any other country in sub-Saharan Africa.

South Africa, Kenya, Ivory Coast, Cameroon, Benin, Malawi, Mozambique and even Zimbabwe all generate at least 10 per cent of their gross value-added from manufacturing, with the likes of Nigeria and Uganda not far behind, as the third chart shows. Across sub-Saharan Africa as a whole, 10.6 per cent of continental GVA emanates from the sector, according to the World Bank, raising the question as to why Ethiopia is seen as one of the few African nations to have made a go of manufacturing.

“Ethiopia has the smallest manufacturing share of any of the African countries we look at,” says Charles Robertson, chief economist at Renaissance Capital, a Moscow-based investment bank with a focus on emerging markets. “There’s been a brilliant PR campaign on its part to sell a story that does not really exist.”

John Ashbourne, Africa economist at Capital Economics, a consultancy, adds: “Media coverage of Ethiopia’s manufacturing sector sometimes exaggerates its economic importance. A close look at the country’s economy shows that it is much more similar to its African peers than leaders in Addis Ababa would like to admit.”

Despite the hype, Ethiopia exported just $44m worth of shoes in 2015, for example, 0.25 per cent of those exported by Vietnam and less than the footwear exports of the cordwaining powerhouse that is El Salvador. The east African state’s entire exports of clothing and textiles are worth just a tenth of its coffee exports.’ FT

Ethiopia’s mythical manufacturing boom

The sector shrinks in importance despite heavy Chinese investment

by: Steve Johnson,  FT, 15 June 2017

Ethiopia’s success in attracting foreign manufacturers is often held up as a beacon of hope that sub-Saharan Africa, by far the poorest region on the planet, can follow the well-trodden development model that has allowed the rest of the world to become richer.

Industrialisation has largely been the key to development elsewhere, allowing relatively unproductive subsistence agricultural workers to be absorbed by a rapidly growing manufacturing sector boasting far higher productivity.

With China now slewing off lower valued-added manufacturing jobs in sectors such as textiles and basic electronics as wages rise rapidly in the Middle Kingdom, low-wage Africa has long been seen as a potential rival to the likes of Bangladesh and Vietnam for such jobs, as suggested by the first chart.

While this has yet to happen on any meaningful scale — the continent accounts for just 1 per cent of global manufacturing output — Ethiopia has won plaudits for attracting Chinese, Turkish and US investment into garment and shoe factories, notably from Chinese shoemaker Huajian Group, which employs 4,000 people in an industrial park outside Addis Ababa, the capital.

This had led to the country being described as a regional manufacturing powerhouse. Yet the data show that manufacturing now accounts for a smaller slice of Ethiopia’s economy than at almost any point since the early 1980s.

In 2015, the sector accounted for just 4.1 per cent of Ethiopia’s gross value added, well below the peak of 7.8 per cent in 1997, according to data from the World Bank, as the second chart shows.

Moreover, manufacturing accounts for a smaller share of Ethiopia’s economy than that of virtually any other country in sub-Saharan Africa.

South Africa, Kenya, Ivory Coast, Cameroon, Benin, Malawi, Mozambique and even Zimbabwe all generate at least 10 per cent of their gross value-added from manufacturing, with the likes of Nigeria and Uganda not far behind, as the third chart shows.

Across sub-Saharan Africa as a whole, 10.6 per cent of continental GVA emanates from the sector, according to the World Bank, raising the question as to why Ethiopia is seen as one of the few African nations to have made a go of manufacturing.

“Ethiopia has the smallest manufacturing share of any of the African countries we look at,” says Charles Robertson, chief economist at Renaissance Capital, a Moscow-based investment bank with a focus on emerging markets. “There’s been a brilliant PR campaign on its part to sell a story that does not really exist.”

John Ashbourne, Africa economist at Capital Economics, a consultancy, adds: “Media coverage of Ethiopia’s manufacturing sector sometimes exaggerates its economic importance. A close look at the country’s economy shows that it is much more similar to its African peers than leaders in Addis Ababa would like to admit.”

Despite the hype, Ethiopia exported just $44m worth of shoes in 2015, for example, 0.25 per cent of those exported by Vietnam and less than the footwear exports of the cordwaining powerhouse that is El Salvador. The east African state’s entire exports of clothing and textiles are worth just a tenth of its coffee exports.

Slightly more charitably, Mr Ashbourne does suggest that part of the “Ethiopia story” is that it has been more successful than many of its regional peers in attracting investment from “big brand names” from overseas.

Moreover, while in some African states a fair chunk of manufacturing activity may be a byproduct of those countries’ primary sectors (eg oil refining in Nigeria, processing and packaging of agricultural products in Kenya), Ethiopia is instead producing “relatively high quality goods that are exported”.

“It’s being pulled into these global supply chains, which is not common across Africa and is impressive. Exports have risen sharply, [Ethiopian manufacturing] does employ more people than it used to,” Mr Ashbourne adds, even if job growth since the turn of the century has been faster in areas such as construction, mining, transport and the public sector.

Mr Robertson believes it is Ethiopia’s close links to China that has captured the world’s interest. This extends beyond investments such as that of Huajian and China’s funding of a $4.2bn, 470-mile rail line from Addis Ababa to the port of Djibouti, which opened this year.

More fundamentally, Ethiopia is following the state-led, investment-heavy development model so successfully blazed by China

“What has captured the interest is this comparison with China,” says Mr Robertson. Whereas most African countries are pursuing a private sector-led development model, “Ethiopia has adopted the five-year plan, top-down approach that we have seen in China,” which focuses on rolling out infrastructure such as electricity provision first, then developing light manufacturing, followed by heavy industry.

“People are saying China has grown for 30 years at a very fast pace with a top-down programme. Ethiopia has grown very fast for 10 years [around 11 per cent a year] with a top-down programme. [People] are jumping to the conclusion that Ethiopia is following [in terms of manufacturing growth] when it’s really not,” he adds.

Ethiopia’s rapid economic growth since 2004 does, though, raise the question as to whether other sub-Saharan states, with their private sector-led, bottom-up development models, could or should follow its lead.

Mr Robertson, for one, does not believe the likes of Nigeria would be well suited to the Ethiopian approach. Firstly, Ethiopia can manage a state-led process because it has a strong bureaucracy, something that is lacking in much of Africa but has developed in Ethiopia because the country “has a long history of relatively stable government dating back to 1270,” Mr Robertson says.

Secondly, Nigerians are wealthier than Ethiopians and are used to far more freedom than a government-led, top-down economic model would permit, he argues.

“It is being used as an example in Nigeria but I don’t think it will fit. [Nigerians] are too democratic, too free, too opinionated. Ethiopia has had this regime in place for 30 years and it’s working and they have shown a commitment to relatively low corruption.

“In Ethiopia nobody has anything. Nigerians are three times richer and I just can’t see them being put into the communist box. Ghana, Senegal and Kenya have all moved beyond that stage.”