Africa getting more impoverished
ABRAND new World Bank report, “The Changing Wealth of Nations 2018”, offers evidence of how much poorer Africa is becoming thanks to rampant minerals, oil and gas extraction.
Yet its policies and practices remain oriented to enforcing foreign loan repayments and transnational corporate (TNC) profit repatriation, thus maintaining the looting.
Central to its “natural capital accounting,” the bank uses an “Adjusted Net Savings” (ANS) measure for changes in economic, ecological and educational wealth. This is surely preferable to “Gross National Income” (GNI, a minor variant of Gross Domestic Product), which fails to consider depletion of non-renewable natural resources and pollution (not to mention unpaid women’s and community work).
In its latest world survey (with 19902015 data), the bank concludes that sub-Saharan Africa loses roughly $100 billion of ANS annually because it is “the only region with periods of negative levels — averaging negative 3 percent 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 ANS in the region.”
The bank asks; “How does sub-Saharan Africa compare to other regions? Not favourably.” Contrary to pernicious “Africa Rising” mythology, the ANS decline for sub-Saharan Africa was worst from 2001-2009 and 2013-2015.
Other regions of the world scored strongly positive ANS increases, in the 5-25 percent range.
Richer, resource-intensive countries such as Australia, Canada and Norway have positive ANS resource outcomes partly because their TNCs return profits to home-based shareholders.
Africa’s smash-and-grab “development policies” aiming to attract Foreign Direct Investment have, even the bank suggests, now become counter-productive:
“Especially for resource-rich countries, the depletion of natural resources is often not compensated for by other investments. The warnings provided by negative ANS in many countries and in the region as a whole should not be ignored.”
Such warnings - including the 2012 Gaborone Declaration by 10 African governments - are indeed being mainly ignored, and for a simple reason, the bank hints:
“The (ANS) measure remains very important, especially in resource-rich countries. It helps in advocating for investments toward diversification to promote exports and sectoral growth outside the resource sector.”
Africa desperately needs diversification, but governments of resourcecursed
countries are instead excessively influenced by TNCs’ intent on extraction. Even within the bank, such bias is evident, as the case of Zambia shows.
Zambia’s missing copper Last year, the bank appointed Zambia the main pilot country study within the project “Wealth Accounting and Valuation of Ecosystem Services” (WAVES).
Zambian forests, wetlands, farmland and water resources were considered the “priority accounts.”
Conspicuously missing was copper, the main component of Zambia’s natural wealth. Was copper neglected in WAVES because such accounting would show a substantial net loss?
One bank estimate of copper’s annual contribution to Zambia’s declining mineral wealth a decade ago put it at a huge 19,8 percent of GNI.
Were such data widely discussed, it might compel a rethink in Zambia’s desperate privatisation of mines and export of unprocessed ore.
Naturally, most World Bank staff work not in Zambians’ interests, but on behalf of other international banks and TNCs. This compels them to squeeze Zambia’s scarce foreign exchange: first, so TNCs can take profits home and second, so Lusaka repays loans no matter how unaffordable and no matter how corrupt the borrowing government.
Repayment is now especially difficult given that the kwacha declined from a level around one to the US$ in the 1990s to around five to the US$ from 2003-2015, to the 9-12/US$ range since.
From 2002-08, the Zambian government led by Levy Mwanamasa (19482008) came under severe pressure from the World Bank to sell the most valuable state assets to repay older loans, including those taken out by his corrupt predecessor, Frederick Chiluba (19432011). That debt should have been repudiated and cancelled.
Even then, when selling Africa’s largest copper mine at Konkola, Mwanamasa should have ensured at least $400 million went into Zambia’s treasury. But the buyer, Vedanta chief executive Anil Agarwal, laughed wickedly when bragging to a 2014 investment conference in Bangalore, India, that he tricked Mwanawasa into accepting only $25 million.
“It’s been nine years and since then every year it is giving us a minimum of $500 million to $1 billion.” (Agarwal is now in the process of buying Anglo American’s South African mining assets, having purchased 20 percent of the firm in 2016-17.)
Against the looting of Africa: topdown or bottom-up?
Zambia is not alone. The bank reports that from 1990-2015, many African countries suffered massive ANS shrinkage (a process termed “dissaving”as a polite substitute for “looting”), including Angola (68 percent), the Republic of the Congo (49 percent) and Equatorial Guinea (39 percent).
As commodity prices peaked in the 2007-2014 super-cycle period, resource depletion was the major factor for Africa’s wealth shrinkage.
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