Who Determines The Development Agenda In Africa?
The answer naturally ought to be Africans but unfortunately that is not always the case. My central argument is that the political process in Africa and therefore the African development process has been hijacked by what has been termed the Transnational Capitalist Class (TCC). As a prelude, I will provide an overview of the TCC, nature of African politics and round up by using two African countries namely Congo and The Republic of Tanzania to show the way in which the Transnational Capitalist Class has influenced domestic politics and therefore the development agenda.
The Transnational Capitalist Class (TCC): Definition and Evolution
The TCC refers to a group of capitalists that owns the leading worldwide means of production as embodied principally in the Trans National Corporations (TNC’s) and Private Financial Institutions (PFI’s). This group is surrounded by the elites and the bureaucratic staff of the Intergovernmental Institutions (II’s) such as the World Bank, the International Monetary Fund (IMF), the World Trade Organisation (WTO) and the United Nations (UN). On this background, it is obvious that the Transnational Capitalist Class is the most powerful formation operating in the global political economy. In essence, it is a conglomeration of the finance-capital oligarchies of the richest countries brought together by their common goal of capital expansion motivated by the search for new markets. A thorough understanding of this class can be facilitated by a reference to Lenin’s theory of imperialism within which its foundations are alluded to.
Lenin called imperialism a special stage in the evolution of capitalism where monopolies had developed on a large scale in chief capitalist countries. His theory argued that with the intensification of production and the subsequent competition amongst capitalists, weaker enterprises were swallowed by larger and more competitive ones leading to a gradual concentration of capital in the hands of a few capitalists thereby creating monopolies. By 1900, this had taken place in all advanced capitalist countries, but in particular Germany and the United States of America. From that point on, the intense relations that existed between industrialists and bankers graduated to a higher level when the banking system that controlled all forms of finance expressed an interest in keeping industries in the form of trusts and cartels.
This led to the concept of finance capital born from the fusion of the banking and industrial sectors in their common support for monopoly capitalism. The best illustration of the merger of banks with industry was the rising number of directorships in entrepreneurial concerns held by directors of banks. Evidence in this regard was submitted by Emile Burns in his 1982 book “Introduction to Marxism” by showing that in 1870, the directors of the banks which later became the “Big-Five” and the Bank of England held 157 other directorships; in 1913 they held 329; in 1939 they held 1 150. In the fourth stage, capital as opposed to commodities was exported through the Trans National Corporations (TNC’s). This was undertaken by the finance-capital groups of advanced capitalist countries such as Britain, France, Italy and Germany.
Key Members of the Transnational Capitalist Class (TCC)
As a physical expression of global capitalist monopoly, the TCC is patronised by the global financial and political elite. Though its origin is in the first world, we also have it in the Third World countries because courtesy of the neo-liberal crusade, these countries have now embraced capitalism and as a result some have also passed through the stages of capitalist development submitted by Lenin. For example, the dominant class in Chile is tied to big business and large-scale ownership of land. By virtue of this, it is not a threat to imperialism but its bulwark. The existence of fragments of the TCC in the Third World is further verified by the fact that there have been corporations from the Third World present in Fortunes 500 lists from the first year a list of large corporations from outside the USA was produced even though the list was dominated by First World corporations. For example, in 1957 to 1960, there were only two, in 1970 they were eight, 1980 registered 39, and in 1985 they were 55 and kept on dropping in number until in 2001 there were 32 TNC’s from the Third World listed on the Fortunes 500. Examples of some of these TNC’s are; Codelco Mining from Chile; Iron and Steel from South Africa; PDVSA (Venezuelan state Petroleum Company) and Zimco mining and food (Zambia). It is therefore logical to conclude that even some rich Third World citizens are part of the Transnational Capitalist Class.
Domestic Politics In Africa: Influence of the TCC
It is common knowledge that prior to the advent of colonialism and the subsequent struggle for political emancipation, all Africans paid allegiance to traditional authority which acquired its status through ascription rather than elections. However, with the advent of colonialism and the resultant dismantling of traditional authority, public opinion was determined by the impact of colonial administration on the different sections of the territory’s population and because of the exposure to modern education and therefore the propensity to embrace the modern approach of effecting political change, political parties were formed. Since the motive of political activity was to unseat the colonial administration and that the colonial administrators had accepted their imminent fate as the anti-colonial movement gathered strength, less radical political leaders were corrupted into toeing the imperial line with the promise that their political parties would be assisted to ascend to political power. However, this has not been a basket case for all Third World political parties that emancipated their countries from direct foreign occupation. Relevant examples include ZANU-PF in Zimbabwe, the African National Congress (ANC) in the Republic of South Africa (RSA), the Democratic Party of Côte d’Ivoire (PDCI) and, Frente de Libertacao de Mocambique (FRELIMO). I cannot say the same about the Basotho National Party (BNP) in my country.
In the context of the Third World which is renowned for being beleaguered by an ever proliferating range of challenges, politics revolve around poverty and is mainly dominated by the pursuit of power so as to become a government. In the simplest terms, politics refers to the process of intense debates among inhabitants of a geographical entity aroused by the occurrence of a phenomenon that affects most if not all inhabitants. The rationale behind the purposive engagement of people in issues of national significance is to ascend to power in national politics. The main vice of African politics is its neglect of politics as public life and conflict resolution aspects. This is corroborated by the fact that shrewd African politicians use the populist ticket to attain political power but refrain from delivering their promises on inception into office but instead enrich themselves with state funds. Examples in support of this abound in the third world for instance; Nkrumah in Ghana, Kenyatta in Kenya; Obote in Uganda and; Kaunda in Zambia. The magnitude at which African politicians deviate from their popular promises lend credence to an observation that national political elites are part of the Transnational Capitalist Class (TCC) and therefore continuously manipulate the poor around poverty to stay in power. In some cases, political leaders are installed by powerful foreign business concerns through the covert funding of their political campaigns while in some cases such as in Chile; they remove an uncooperative leader to install their puppet. Who does not see an imperialist hand in the ouster of Morsi?
Influence of the TCC In Africa
Transnational Corporations which are the physical representation of the TCC claim that their aid to the developing nations of Africa is to help development. This is however contradicted by their interest to remain economic giants so as to enjoy business profits. It therefore becomes clear that aid is a weapon used to entice African countries to accept the TNC’s business existence and also to stabilize the dependency of the recipients and the dictatorship of the donors (TNC’s). This was given weight by a Chairman of the defunct Organization for African Unity (OAU) Dr. Siaka Steven in 1981 when he said that “the economic aids given by these developed nations are more of a dehydrating agent than an economic advancement catalyst. The strings attached to most of the aids given to African nations and the interests charged are an imperialist noose on the neck of Africa and a double gain for the donors”.
The Congo Free State, Katanga and the TNC’s: A Preamble to the Congo Chaos
In 1960 when the Congo was granted independence, there were already very large and powerful companies operating within its boundaries and closely aligned to Belgium. For example, during its control by King Leopold, there was a bunch of companies such as the Baron Empain Banking Group, Société Générale de Belgique (SGB), Campagnie du Kasai and Anglo Belgian India-Rubber Company (ABIR). Other companies established under Leopold included the Compagnie des Charmins de fer du Congo Supérieur aux Grands Lacs (CFL), Société Internationale Forestiére et Miniére (Forminiére); and the Compagnie du Chemin de fer du Bas-Congo au Katanga (BCK). Within Congo is a province named Katanga and it is of great significance to the history of the Congo because of it mineral wealth.
Katanga Province is part of the central African copper-belt which is a seat of 34 percent of the worlds Cobalt reserve and 10 percent of the world’s Copper reserves. Leopold was only able to gain control of this area in 1891 after a Belgian expeditionary force defeated and killed a native trader named Msiri who had conquered the Arab slave traders by 1856 and set up a kingdom there. The Arab slave traders had in turn previously hijacked Katanga from the Luba Empire that was founded by the legendary chiefs Mkongolo, Ilunga and Kalala there in the 1400’s. It was after this capture that Leopold extended the Congo Free State hegemony southwards to cover the entire present day Katanga province which by then had no significance in terms of economic wealth, except for rubber and ivory that was obtained through forced labor. The first discovery of minerals in Katanga in the form of copper was made in 1892 as part of a mission sponsored by the Compagnie du Katanga. Compagnie du Katanga was a subsidiary of a larger company called Compagnie du Congo pour le Commerce et I’industrie (CCCI) which was the first company to be granted a concession to begin prospecting for minerals.
A further addition to Katanga’s network of mining companies was made in 1900 when Leopold and CCCI formed a joint venture company called Comité Spécial du Katanga (CSK) which was mandated with the administration of Katanga and its minerals. Six years later, the largest corporation in Katanga’s mining sector Union Minière du Haut-Katanga (United Mines of Upper Katanga, UMHK) was formed and began to extract copper in 1911. By 1928 UMHK was producing about 7 percent of the world’s total copper production. By the 1950s, copper production from the Katanga mines neared about 250,000 tons, thus placing Congo among the four largest world producers. In the same period, UMHK registered profits of between 2.5 and 4.5 million Belgian francs a year. Due to its control of the exploitation of all the minerals: cobalt, copper, tin, Uranium and zinc in Katanga, UMHK dominated the political, social and economic affairs of the province and continued to do so even after independence. In the context of Transnational Capitalism which is part of my argument, UMHK was an agent of the internationalisation of Congo’s wealth that signaled the effective political influence that transnational organizations were to exert on the future of the country.
The Calamity of Independence: Role of Transnational Capital
Congo obtained its “independence” on June 30, 1960 and has never been independent ever since. As confusing as this may sound, a close inspection of Congo’s politics reveals just that. Before the proclamation of independence, Congo’s political party landscape was occupied by political parties: Alliance des Bakongo (ABAKO); Mouvement National Congolais (MNC) and Conakat belonging to three natives, Joseph Kasa-Vubu, Patrice Lumumba and Moishe Tshombe, respectively. Patrice Lumumba’s MNC had captured most of the seats in the pre-independence elections in May and thereby proceeded to form a government in which he became Congo’s first prime minister. Joseph Kasa-Vubu became the nation’s first ceremonial president.
However, Lumumba’s government was never able to exert any authority on the newly independent Congo courtesy of the Belgian bourgeoisie that had developed the Katanga mining empire which embarked on a strategic destabilisation programme. In an attempt to prevent loss on Katanga‘s mineral wealth, the European bourgeoisie recruited Tshombe after which through the UMHK paid 1.25 billion Francs into his account. The reason was that even though his party, Conakat had lost the elections its politics was influenced by the European settler ideology which favored Katanga’s secession from Congo. Moishe Tshombe then proclaimed Katanga’s secession on July 11 which was followed by violent chaos to which Lumumba and Kasa-Vubu responded by appealing for the United Nations intervention. The destabilization of Lumumba’s government was the West’s ultimate attempt to destroy the country’s authentic independent development. Through its mercenaries, the European bourgeoisie arrested Lumumba and transferred him to Lubumbashi where he was assaulted by Conakat leaders and later executed and his body dissolved in acid. After the secession ended, Tshombe went on vacation to Spain only to come back to Congo in 1964 as Congo’s prime minister. Big business in the form of the Belgian and American Finance-Capital oligarchies had successfully interfered in the internal affairs of Lumumba’s government to create a scenario in which he was replaced by their puppet.
The United Republic of Tanzania: From Socialism to Capitalism
Consequent to the scramble for Africa of the 1880’s, Tanganyika which is the present day Tanzania was taken by Germany in 1891. Among the native rebellions opposing German rule was the famous Maji Maji uprising in which many people died because local leaders believed that magic water from a specific spring would protect them against bullets. As a result, the Tanganyika uprising was brutally crushed by German troops the aftermath of which was that villages were burned, crops ruined and cattle stolen. Following Germany’s loss Tanganyika was mandated to the British in 1918 which then embarked on an enclave kind of development beginning with the expansion of Dar es Salaam and then the extension of the railway to Mwanza on Lake Victoria. As a response to the observation that wealth was drawn out of Tanganyika, Julius Nyerere formed the Tanganyika African National Union (TANU) with the objective of national liberalization. In 1961 Tanganyika became independent under the presidency of Julius Nyerere who immediately created an act of Union between Tanganyika and Zanzibar, creating the newly renamed United Republic of Tanzania.
Following independence in 1961 the government concentrated on the Africanisation of the public sector and measures to stimulate economic growth and through the First Five-Year Plan (1964–69) the government emphasised two goals, rapid economic growth and self-sufficiency in middle- and high-level personnel. The economy remained fairly open and due to the mild import substitution policy that relied on private investors, per capita incomes grew by 2 per cent per year, the highest rate of any period in independent Tanzania. In addition, Capital formation increased steadily between 1963 and 1967 which was also a period of macroeconomic stability with mostly low inflation and a satisfactory balance of payments. However, due to the government’s dissatisfaction with increasing inequalities and the industrial growth and inflow of external resources that failed to meet expectations, Nyerere felt that a new strategy was necessary to speed up development. Consequently the government left the cautious course pursued during the first period after independence and launched the strategy of “African socialism” that was institutionalized by the Arusha Declaration in 1967.
This declaration was a watershed in Tanzanian political and economic history which saw the government taking control of economy with the objective of reducing the external dependence which was considered to be too high. The Arusha Declaration puts agriculture at the centre of the national economy and introduces a program of ‘villagisation’ meaning the moving of peasant families into cooperative villages where they could supposedly work together more productively. As part of this noble venture and due to the resistance it met, villages were burned and people forced to relocate to collective farms which greatly disrupted agricultural efficiency and output. This therefore turned Tanzania from a nation of sustenance farmers into a nation of starving collective farmers. By the early 1970s, the government had consolidated its hold on most parts of formal economic activity. Banking and large portions of the industrial sector had been nationalised, the bulk of international trade and private retail trade had been confined to state agencies, and market prices had largely been replaced by administered prices. In order to facilitate this, Mwalimu used the Preventive Detention Act first to suppress trade unions and then to lock up any opponents when he wanted. People disappeared and total numbers were never published, but victims are estimated at thousands.
The government’s monopolisation of all economic sectors made it the largest employer in the country thereby creating an environment ripe for corruption which subsequently led to the demise of Tanzania. This corruption was born from the subsequent multiplication of bureaucratic procedures which citizens avoided by offering huge bribes to officials. The resultant decline in state revenue led to a cumulative increment of tax rates which eventually damaged the economy because enormous amounts of public funds were misappropriated and put to unproductive use by corrupt officials. Inevitably the economy collapsed mid-1979 when corruption had reached epidemic proportions due to the low levels of salary in government. It was at that juncture that Nyerere decided to resign from politics and became one of only 9 African presidents to resign from the presidency after which Mywinyi was elected into power. This political change was accompanied by the desertion of African socialism as Tanzania gradually embraced neo-liberalism. However, Human Development Indexes have fallen and poverty indicators have risen. Tanzania is one of the poorest countries in the world.
Embracing the Policy of Liberalisation: Influence of the Transnational Capitalist Class (TCC)
In a similar fashion to many African countries in the eighties (80’s), development policy in Tanzania was tailored by the World Bank (WB) and the International Monetary Fund (IMF) as two of the most powerful institutions controlled and thereby serving the interests of the TCC. Due to a rising budget deficit caused by financial mismanagement and the resultant 1983 withdrawal of most donors who had previously been attracted by the egalitarian principles set out in the Arusha Declaration, support for the Tanzanian socialist experiment declined. Unlike President Nyerere who vetoed an IMF Structural Adjustment Programme (SAP) which included 15 per cent currency devaluation and adopting his National Economic Survival Programme in 1981–82, Mywinyi accepted the reform package. As a result, the reform period effectively began in 1986 and included a broad range of policies aimed at liberalizing internal and external trade, unifying the exchange rate, reviving exports, stimulating domestic saving, and restoring fiscal sustainability. Due to liberalization, transnational corporations (TNCs) invaded Tanzania’s mining sector and the justification provided by the IMF was that they (TNC’s) were capable of playing a key part in the development of Tanzania’s large untapped mineral resources.
TNC’s and the Extraction of Tanzania’s Mineral Wealth: Development or Plunder
As part of the SAP’s, the policy and legal framework became highly attractive for Foreign Direct Investment (FDI) therefore increasing the volume of investment, technology transfer and export revenue but being less positive in terms of contributions to growth and reduced poverty. This led to the public’s disillusionment with the mining policy after the realization that TNCs benefit disproportionately from mining revenue.
Tanzania’s Mining Policy: Loopholes Meant to Foster Profiteering by the TNC
Tanzania has an open, investment friendly environment with adequate standards of investor treatment and protection and is a result of economic reforms and restructuring efforts (SAP’s) undertaken by the Government between the 1980s and 1990s. These reforms marked a clear shift in favor of private sector development and market-oriented economic management whereby the role of government has been redefined from that of owning and operating mines to that of only providing policy guidelines, stimulating private investment and providing support for investment. Overall investment activities are governed by the New Investment Policy of Tanzania launched in 1996 and was followed shortly by Tanzania Investment Act 1997 which in turn gave birth to the Mineral Policy of Tanzania, 1997. The first loophole of this policy is that in conjunction with the Immigration Act 1995 and Financial Laws Act 1997 it assigns the management and administration of the Tanzanian Investment Centre to expatriates who through its provisions can automatically employ five other non Tanzanians and additional expatriates can be requested from Tanzania Investment Centre if the need is felt by the investor. Secondly, the policy does not have binding legal requirements on how mining revenue should be shared between the investor, the central government, local government and local communities.
Due to the mining policy’s statement that there is no legal obligation for the State to participate in either mining ventures or requirement for local equity, there lacks a clear and adequate revenue-sharing mechanism. It is therefore estimated that revenues to Government from FDI mining operations are a small (1.2%) share of total government annual domestic revenue. In addition, the philanthropic contribution to the local communities in the form of Corporate Social Responsibility (CSR) is negligible due to the absence of policy pronouncements making it obligatory. Because of the profitability both to the mining TNC’s and the Tanzanian bureaucrats of this weakness, there have not been any specific efforts to introduce laws and policies meant to improve distribution of mining revenues. Instead greater policy priority is placed on attracting foreign TNCs to the mining industry.
Thirdly, Under Section 21 of the 1997 Tanzanian Investment Act, FDI projects with a certificate of investment are guaranteed unconditional transferability of FDI-related payments abroad through any authorized dealer bank in freely convertible currency. This in essence allows TNC’s to repatriate all profits to their mother countries. The fourth and most potent weakness of Tanzania’s Mining Policy is that it prioritizes treating foreign investors on par with domestic investors. On the basis of economies of scale, this is grossly unfair to small local TNC’s because size matters when accessing or qualifying for lucrative fiscal incentives. Compared to the foreign TNCs, domestic corporations are far smaller in terms of value and as a result fail to qualify for such incentives.
In conclusion, the control of politics and thereby governance of the Third World lies with Europe and North America. This is demonstrated by the tremendous influence that their respective finance-capital groups which together form a powerful conglomerate called the Transnational Capitalist Class (TCC) and whose goal is crystallized by the operations of the Transnational Corporation (TNC), have in domestic African politics, governance and development. Assisted by its financial might and motivated by the vested interests in different African countries, the TCC has demonstrated the ability to influence development policy either through direct involvement in regime change or by subtle tactics of its most potent tools, the International Financial Institutions (IFI’s). In this regard, the cases of both Democratic Republic of Congo and the Republic of Tanzania are vivid examples.
It is therefore logical to conclude that Africa does have good leaders who are perfectly capable of rationally leading their countries but who however have and continue to be sabotaged by the TCC. As a result, it is untrue that Lumumba was incapable of healing the wounds that had been inflicted upon the Congolese by Leopold and unifying them under the banner of nationalism. In the same vein, a closer inspection of the 1979 collapse of the Tanzanian economy was not so much the failure of socialism as a way of life but the victory of the TCC in creating institutional barriers for an ideology from which it stood to gain less.