The World Banks role in the sys­tem­atic loot­ing of Africa

Zambian Business Times - - FRONT PAGE -

A NEW WORLD BANK re­port, The Chang­ing Wealth of Na­tions 2018, doc­u­ments Africa’s im­pov­er­ish­ment by ram­pant min­er­als, oil and gas ex­trac­tion. Yet the bank en­forces the for­eign loan re­pay­ments and trans-na­tional cor­po­rate profit repa­tri­a­tion that sus­tain the loot­ing.

A new World Bank re­ports doc­u­ments the con­ti­nent’s im­pov­er­ish­ment by ram­pant min­er­als, oil and gas ex­trac­tion — but the bank en­forces poli­cies that feed it

A NEW WORLD BANK re­port, The Chang­ing Wealth of Na­tions 2018, doc­u­ments Africa’s im­pov­er­ish­ment by ram­pant min­er­als, oil and gas ex­trac­tion. Yet the bank en­forces the for­eign loan re­pay­ments and trans-na­tional cor­po­rate profit repa­tri­a­tion that sus­tain the loot­ing.

Us­ing "nat­u­ral cap­i­tal ac­count­ing", the bank de­rives "ad­justed net sav­ings", to bet­ter mea­sure eco­nomic, eco­log­i­cal and ed­u­ca­tional wealth. This is prefer­able to "gross na­tional in­come" (GNI), a mi­nor vari­ant of gross do­mes­tic prod­uct (GDP). GNI fails to con­sider de­ple­tion of non-re­new­able nat­u­ral re­sources and pol­lu­tion, not to men­tion un­paid women’s and com­mu­nity work.

The bank con­cludes that Sub-Sa­ha­ran Africa loses about $100bn worth of ad­justed net sav­ings an­nu­ally. It is "the only re­gion with pe­ri­ods of neg­a­tive lev­els — av­er­ag­ing neg­a­tive 3% of GNI over the past decade — sug­gest­ing that its devel­op­ment poli­cies are not yet suf­fi­ciently pro­mot­ing sus­tain­able eco­nomic growth … Clearly, nat­u­ral re­source de­ple­tion is one of the key driv­ers of neg­a­tive ad­justed net sav­ings in the re­gion."

The bank asks, "How does Sub-Sa­ha­ran Africa com­pare to other re­gions?" And an­swers, "Not favourably." Con­trary to the "Africa Ris­ing" mythol­ogy, the ad­justed net sav­ings de­cline was worst here from 2001-09.

At­tract­ing for­eign di­rect in­vest­ment in min­ing is counter-pro­duc­tive. The bank con­cedes, "Es­pe­cially for re­source-rich coun­tries, the de­ple­tion of nat­u­ral re­sources is of­ten not com­pen­sated for by other in­vest­ments. The warn­ings pro­vided by neg­a­tive ad­justed net sav­ings in many coun­tries and in the re­gion as a whole should not be ig­nored."

But warn­ings such as the 2012 Gaborone Dec­la­ra­tion by 10 African lead­ers are mainly ig­nored. There is a sim­ple rea­son, re­lated to power. "The ad­justed net sav­ings mea­sure re­mains very im­por­tant, es­pe­cially in re­source-rich coun­tries. It helps in ad­vo­cat­ing for in­vest­ments to­ward di­ver­si­fi­ca­tion," the bank notes, "out­side the re­source sec­tor."Africa des­per­ately needs di­ver­si­fi­ca­tion from min­ing, but gov­ern­ments re­main in­flu­enced by trans-na­tional cor­po­ra­tion’s in­tent on ex­trac­tion. Even within the World Bank such bias is ev­i­dent, as the case of Zam­bia shows.

Zam­bia’s miss­ing cop­per

Last year, Zam­bia be­came a pilot study within the bank’s wealth ac­count­ing and val­u­a­tion of ecosys­tem ser­vices pro­ject. Forests, wet­lands, farm­land and wa­ter re­sources were con­sid­ered "pri­or­ity ac­counts". Con­spic­u­ously miss­ing was cop­per, the main com­po­nent of Zam­bia’s nat­u­ral wealth.

Was cop­per ne­glected be­cause such ac­count­ing would show a sub­stan­tial net loss? A decade ago, one World Bank es­ti­mate of cop­per’s an­nual con­tri­bu­tion to Zam­bia’s de­clin­ing min­eral wealth was 20% of GNI. Dis­cussing such data might com­pel Zam­bians to re­think their eco­nomic strat­egy.

Bank staff work not in Zam­bians’ in­ter­ests, but on be­half of other in­ter­na­tional banks and trans-na­tional cor­po­ra­tions. From 2002-08, Zam­bia’s pres­i­dent Levy Mwanawasa came un­der se­vere pri­vati­sa­tion pres­sure from the World Bank so as to re­pay older loans, in­clud­ing those taken out by his cor­rupt pre­de­ces­sor, Fred­er­ick Chiluba. That debt should have been re­pu­di­ated and can­celled.

When pri­vatis­ing Africa’s largest cop­per mine, Konkola, Mwanawasa should have re­ceived $400m for Zam­bia’s trea­sury. But the buyer, Vedanta CEO Anil Agar­wal, bragged to a 2014 in­vest­ment con­fer­ence in Ban­ga­lore how he tricked Mwanawasa into ac­cept­ing only $25m. "It’s been nine years and, since then, ev­ery year it is giv­ing us a min­i­mum of $500m to $1bn."

Top-down or bot­tom-up?

From 1990-2015 many African coun­tries suf­fered mas­sive shrink­age in ad­justed net sav­ings, in­clud­ing An­gola (68% of its wealth), the Repub­lic of the Congo (49%) and Equa­to­rial Guinea (39%).

There are two ways to ad­dress trans-na­tional cor­po­ra­tions’ cap­ture of African min­eral wealth: bot­tom-up through di­rect ac­tion to block ex­trac­tion, or top-down through re­forms. The lat­ter is ex­em­pli­fied by the African Union’s 2009 al­ter­na­tive min­ing vi­sion (AMV).

It pro­claims, "Ar­guably the most im­por­tant ve­hi­cle for build­ing lo­cal cap­i­tal are the for­eign re­source in­vestors — trans-na­tional cor­po­ra­tions — who have the req­ui­site cap­i­tal, skills and ex­per­tise."

South African ac­tivist Chris Rut­ledge op­posed this neo-lib­eral logic in a 2017 Ac­tionAid re­port ti­tled, The AMV: Are we repack­ag­ing a colo­nial par­a­digm? "By ramp­ing up models of max­i­mum ex­trac­tion, the AMV once again stands in di­rect op­po­si­tion to our own pri­or­i­ties to en­sure re­silient liveli­hoods and se­cur­ing cli­mate jus­tice. And it does not ad­dress the struc­tural causes of struc­tural vi­o­lence ex­pe­ri­enced by women, girls and af­fected com­mu­ni­ties," it says.

Per­haps com­mu­nity-based op­po­si­tion is more ef­fec­tive. Ac­cord­ing to the Bench Marks Foun­da­tion, in a pam­phlet pre­pared for the civil so­ci­ety Al­ter­na­tive Min­ing Ind­aba (AMI) in Cape Town this week, "In­tractable con­flicts of in­ter­est pre­vail with on­go­ing in­ter­rup­tions to min­ing op­er­a­tions. Re­sis­tance to min­ing op­er­a­tions is steadily on the in­crease along with the as­so­ci­ated con­flict."

The AMI’s chal­lenge is to em­brace com­mu­nity re­sis­tance, nei­ther re­treat­ing into nar­row NGO si­los nor ig­nor­ing min­ing’s ad­verse im­pact on en­ergy se­cu­rity, cli­mate and re­source de­ple­tion.

In 2015, when all new mines were val­ued at $80bn, An­glo Amer­i­can CEO Mark Cu­ti­fani con­ceded, "There’s some­thing like $25bn worth of projects tied up or stopped" by crit­ics.

Africa des­per­ately needs di­ver­si­fi­ca­tion from min­ing, but gov­ern­ments re­main in­flu­enced by trans-na­tional cor­po­ra­tion’s in­tent on ex­trac­tion

Mean­while, the World Bank still at­tracts in­tense protest. Women from Marikana’s slums, or­gan­ised as Sikhala Sonke, re­main dis­gusted by the bank’s $150m fi­nanc­ing com­mit­ment to Lon­min. From 2007-12, the bank con­sid­ered the com­pany its "best case" for com­mu­nity in­vest­ment — un­til the po­lice mas­sacre of 34 work­ers there dur­ing a wild­cat strike. (World Bank pres­i­dent Jim Yong-kim even vis­ited Jo­han­nes­burg two weeks af­ter that, but didn’t dare men­tion, much less visit, his min­ing stake.)

The bank’s other lo­cal op­er­a­tions in­cluded gen­er­ous cred­its to the apartheid regime; re­lent­less pro­mo­tion of neo-lib­eral ide­ol­ogy af­ter 1990; a cor­rupt $3.75bn Eskom loan in 2010 (the largest-ever World Bank pro­ject loan, which funds the world’s most pol­lut­ing coal-fired power plant); and lead-share­holder in­vest­ments in the Cash Pay­mas­ter Ser­vices-Net1 rip-offs of SA’s 11-mil­lion poor­est cit­i­zens that re­ceive so­cial grants.

In spite of rev­e­la­tions about trans-na­tional cor­po­ra­tion ex­ploita­tion in The Chang­ing Wealth of Na­tions 2018, an in­creas­ingly schiz­o­phrenic World Bank is a spon­sor of this week’s African Min­ing Ind­aba at Cape Town’s con­ven­tion cen­tre.

Each year, it’s the place to break bread and sip fine lo­cal wines (though per­haps not wa­ter in this cli­mate-cat­a­strophic city) with the world’s most ag­gres­sive min­ing bosses and al­lied African po­lit­i­cal elites, con­fer­ring jovially about how to am­plify the loot­ing.

• Bond teaches po­lit­i­cal econ­omy at the Wits School of Gov­er­nance. He is the au­thor of Un­even Zim­babwe: A Study of Fi­nance, Devel­op­ment and Un­der­de­vel­op­ment, and co-au­thor of Zim­babwe’s Plunge: Ex­hausted Na­tion­al­ism, Ne­olib­er­al­ism and the Search for So­cial Jus­tice. Wash­ing­ton, D.C., and was the se­cu­rity lead for IBM’s global en­ergy and util­i­ties busi­ness. Fol­low Andy on Twit­ter @andy­bochman.

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