Globalization in Africa 9781626371057

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Globalization in Africa

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Globalization in Africa Recolonization or Renaissance?

Pádraig Carmody

b o u l d e r l o n d o n

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Published in the United States of America in 2010 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2010 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data Carmody, Pádraig Risteard. Globalization in Africa : recolonization or renaissance? / by Pádraig Carmody. p. cm. Includes bibliographical references and index. ISBN 978-1-58826-740-5 (hardcover : alk. paper) 1. Natural resources—Political aspects—Africa. 2. Africa—Strategic aspects. 3. Globalization—Africa. 4. Africa—Economic conditions—1960– I. Title. HC800.Z65C37 2010 303.48’26—dc22 2010018932 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5 4 3 2 1

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For my teachers

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Contents

List of Illustrations Acknowledgments

ix xi

1

Introduction

1

2

Chinese and US Interests in Africa with Francis Owusu

11

3

The Commodity Boom

33

4

The Scramble for Oil: Insights from Chad and Sudan

63

Overcoming the Resource Curse: The Zambian Case

85

5 6

The Mobile Phone Revolution

109

7

Global Turbulence and African Growth

129

List of Acronyms References Index About the Book

145 147 187 196

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Illustrations

Figures 2.1

Sudan’s Oil Production and Consumption, 1998–2008

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3.1

Imports from Africa

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3.2

Primary Commodity Prices

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3.3

Geographical Distribution of Africa’s Exports to Asia

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3.4

The Impact of China on the Terms of Trade for Sub-Saharan Economies

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4.1

Selected Rebel Movements, 2007 and 2008

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5.1

Incidence of Poverty by Province, 2004 and 2006

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6.1

Mobile Phone Subscription and Penetration in Africa

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6.2

Gross National Income per Capita

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6.3

Mobile Phone Subscribers

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Table 5.1

Average GDP Growth in Zambia

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Acknowledgments

Thanks to Eric Sheppard, Bill Moseley, Elisabetta Linton, Francis Owusu, Anna Davies, James Sidaway, Ian Taylor, Mark Graham, Howard Stein, Mat Coleman, Jim Glassman; to the book and journal referees for World Development, Political Geography, Geography Compass, and Lynne Rienner Publishers for their insightful comments; and to Ian Taylor and Andy Storey for providing suggestions on papers to read and for helpful conversations. Many thanks also to Sheila McMorrow for producing the maps. I would also like to acknowledge my colleagues at Trinity College Dublin and St. Patrick’s College, Dublin City University, for their collegiality and support. It is a privilege to work with you. Any errors are, of course, mine. Parts of this work were supported by the St. Patrick’s College Research Fund, Trinity College Dublin, and National Geographic Society/Waitt Foundation, whose financial assistance is gratefully acknowledged. My sincere thanks go also to all of the interviewees in Zambia for their time and insights. —Pádraig Carmody

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1 Introduction

There are two dominant discourses on development in Africa: Africa as a region that has been bypassed by the globalization of the world economy and, alternatively, Africa as a region that has actively suffered from it. According to the well-known economist Jeffrey Sachs, “when the preconditions of basic infrastructure (roads, power and ports) and human capital (health and education) are in place, markets are powerful engines of development. Without these preconditions, markets can cruelly bypass large parts of the world, leaving them impoverished and suffering without respite” (2005, 3). The second perspective argues that exploitation and corruption are at the heart of the continent’s problems. “Africa is poor, ultimately, because its economy and society have been ravaged by international capital and local elites who are often propped up by foreign powers” (Bond, 2006, 1). Irrespective of which of these positions is correct, for much of the past thirty years Africa has commonly been considered the world’s greatest developmental failure, plagued by economic decline, corruption, acquired immunodeficiency syndrome (AIDS), environmental degradation, and conflict. While the overgeneralized nature of this Afro-pessimist discourse is problematic, the extent of economic decline of much of the continent cannot be denied. More recently, however, some investment houses, such as Goldman Sachs, as well as academics have written reports and books about “Africa rising” (e.g., Mahajan, 2008). According to one Novartis executive, “it may be at this moment in time we are coming to a kind of inflection point in the development of Africa” (Mahajan, 2008, 11). Others enthuse about the 1

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Globalization in Africa

continent’s potential economic transformation, with the filmmaker Carol Pineau arguing that the South Africans brag that if you drive a Hummer, you’re driving a car made in Africa. Ditto if you drive a BMW with the steering wheel on the right-hand side. The next time you fly on a Boeing aircraft, look out the window and you’ll see engines with parts made in South Africa. But that country isn’t alone. I’ve seen factories in Lesotho that produce Gap and Old Navy clothing, car parts manufactured in Botswana and call centers in Kenya and Uganda. (“Africa Shines,” 2008)

Yet others argue that “growth in Sub-Saharan Africa in the next 30–40 years will be driven by what we have termed the ‘Big 5’—Angola, DRC [Democratic Republic of Congo], Kenya, Nigeria and South Africa—markets with a collective balance between resource strength, macro-economic stability and vast human capital and growth potential” (Africa Frontier Advisory, 2008, 1). For other authors, it is Nigeria, Egypt, Kenya, and South Africa (the NEKS) that will be the drivers of growth on the continent in the future (Mahajan, 2008). From 2000 until the global economic recession began to take hold in 2008, the number of conflicts on the continent declined, rates of economic growth improved, and poverty, depending on how it is defined, may have decreased for the first time in decades. Per capita income rose by 11 percent in Africa from 1995 to 2005 (Arbache and Page, 2007), although the distribution of growth is uneven because Africa has the highest levels of consumption inequality in the world (White et al., 2000). What explains these changed conditions? Some authors attribute faster economic growth and a fall in the proportion of people living in absolute poverty from the mid-1990s to 2005 to the delayed payoff of neoliberal economic reforms on the continent (Arbache et al., 2008). However, my contention in this book is different. I argue that the current round of economic restructuring in the early years of the new millennium in Africa is shaped by other social processes operating at a variety of scales, and changes to the nature of globalization on the continent itself. I examine how Africa’s mode of integration into the global economy over the past decade has changed, and the political, social, and economic ramifications of this. Although a highly contested term, globalization is often defined as the increased interconnectedness between places in terms of trade, investment, and information flows in particular. We are often told in popular media that the world now has a globalized economy, as if it

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Introduction

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had reached an end point of evolution. However, globalization is a set of social practices that undergo constant renovation and reinvention, making it a particularly interesting topic of study. As the noted historian Frederick Cooper (2001) argues, Africa has a long history of interconnection with other parts of the world, which far predates the current round of global economic restructuring in the twenty-first century. Others contend that globalization in Africa is merely a historical extension of exploitative relations with the outside world (Bond, 2006). As a result of its historical mode of insertion into the global economy, Africa is both central and peripheral. It is central as a supplier of raw materials; however, this position in the global division of labor has led to marginalization of African economies because prices for primary commodities have tended to fall relative to manufactured goods. The entire formal economy of sub-Saharan Africa, excluding South Africa, is equivalent in size to that of Belgium or Texas. Globalization in Africa, to date, has been particularly extractive in terms of outward flows of wealth and resources; however, it is also undergoing constant evolution. The nature of globalization in Africa has evolved significantly, particularly in the past decade, as a result of the rise of China and the global technological revolution. A growing body of academic work in past years has focused on the rising role of Chinese trade and investment in Africa. The increased involvement of the Chinese state and other actors in Africa is driven by increasing global resource scarcity (Klare, 2008), the state-mandated “go-out policy” for Chinese companies, and the extension of Chinese business networks intra- and extraregionally that has recursively promoted globalization (Yeung, 2000).1 However, much of the work on China in Africa is curiously silent on debates about globalization, despite its being a significant feature of it. This may reflect an implicit Eurocentrism, where the processes of globalization are only perceived to originate in the West. However the “rise of China” in Africa, through the intensification of economic and ideational flows and migration, should be seen as an evolution of globalization on the continent rather than separate from it. The scale of increased interactions between China and Africa is breathtaking. Chinese trade with Africa grew an astonishing 45.1 percent in 2008 alone to US$107 billion2 (Centre for Chinese Studies, 2009). China is now the continent’s second-largest trading partner, after the United States, and its single largest source of imports. As the global economy grew in the first decade of the twentyfirst century, increased demand for resources from Asia in particular

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has had substantial impacts on Africa’s economies. From 2000 to 2003, China accounted for the vast bulk of increased global demand for aluminum (76 percent), steel (95 percent), nickel (99 percent), and copper (100 percent) (Kaplinsky, 2005). As many African economies are natural-resource based, the continent hosted eight of the world’s top twenty fastest growing economies in the world in 2007 (Abiola, 2007). Much of the recent increased economic interest in Africa in the early years of the new millennium is driven by the fact that the continent holds “42% of the world’s share of bauxite; 38% of its uranium; 42% of the world’s reserves of gold; 73% of its platinum; 88% of diamonds. The continent also has enormous reserves of non-ferrous metals, like chromite (44%), manganese (82%), vanadium (95%) and cobalt (55%)” (R. Bush, 2008, 361). The United States and China also source an increasing proportion of their oil imports from Africa: 19 percent and 31 percent respectively, making Africa of far greater strategic importance for the latter country (Taylor, 2009). Around 60 percent of what Africa exports to China is oil (Breslin, 2007) and increased Chinese interest in accessing African oil is largely driven by the fact that, with the possible exception of Iran, it is strategically “locked out” of the Middle East by the United States and other Western powers (H. Lee and Shalmon, 2008). Globalization is certainly not bypassing Africa anymore, if it ever did. However, the “new interregionalism” between Asia and Africa, based on increased trade, investment, and migration, has altered the nature of globalization on the continent. The evolving spatiotemporality of globalization has also had other impacts. While some once theorized that Africa was a “black hole of informational capitalism,” the global technological revolution has swept over the continent through the wide-scale adoption of mobile phones. Many of these phones are, of course, manufactured in Asia.3 China is now the world’s largest producer of mobile phones, and its massive productive capacity, with consequent pressure on prices, has made mobile phones more accessible for Africans. Thus, the rise of China and the spread of the information technology revolution to Africa are not empirically distinct events, but interconnected axes of the wider process of globalization generated, mediated, and promoted through state, corporate, and other social structures. Africa is also integrated into the global mobile phone value chain through the precious metal coltan, without which most modern information and communication technologies (ICTs) would not work. In addition to traditional resource extraction, globalization in Africa has other new axes

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such as “supermarketization” (Reardon et al., 2003), as South African supermarkets, in particular, spread throughout the continent. Do the rise of China and other Asian powers in Africa and the “democratization” of globalization through the spread of ICTs in Africa then portend an end to the “resource curse” on the continent, where resource-rich countries often stagnate economically and are more prone to conflict? Higher economic growth generally seems to be associated with a reduction of conflict but, for certain strategic minerals in particular places, this has not been the case. The renewal of conflict in the eastern Democratic Republic of Congo (DRC) is associated with price movements for coltan, as I discuss in Chapter 6. Also the discovery and development of oil fields are associated with renewed conflict in Sudan and Chad. In contrast to other literature on the subject, I argue that the resource curse is actually a mode of governance in Africa. This mode of governance is based on an implicit transnational contract of extraversion between domestic political elites in Africa and Western or Eastern governments and transnational corporations. The exact impacts of resource extraction are mediated through local sociopolitical formations, however, in a nondeterministic way. But all countries have been affected by another axis of globalization recently: the global economic and financial crisis beginning in 2007. According to the president of the World Bank, as a result of the global financial crisis “we have seen the dark side of global connectedness” (Beesley, 2008, 19). Whereas the analysts at the investment firm Goldman Sachs developed the hypothesis of “decoupling”—that the emerging major markets of Brazil, Russia, India, and China (BRICs)4 could grow at a sustained higher rate than the postindustrial countries, particularly the United States—the South African minister of finance uses the term somewhat differently. He speaks of the potential dangers of “decoupling, derailment and abandonment,” as some estimates suggest that net financial inflows into emerging markets will fall from $929 billion in 2007 to $165 billion in 2009 (“South Africa’s Economy: Tough Times Ahead,” 2009). As the region’s largest economy, accounting for about a third of economic output, South Africa is more tightly linked economically to the outside world. The South African rand lost 30 percent of its value against the dollar in the latter part of 2008 (“Africa’s Economy,” 2008). China is heavily export dependent and, as the US economy contracted, up to 10,000 factories closed in the span of a few weeks in the latter part of 2008 in the Pearl River Delta region of China, which

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accounts for 36 percent of the country’s exports (Coonan, 2008). This in turn has affected Africa because the price of oil fell from a peak of almost $150 a barrel in mid-2008 to less than $40 a barrel, dramatically reducing revenues for African petro-states, although prices recovered somewhat in 2009.5 This fall in the price of oil has affected other commodities, such as copper, whose price fell by 65 percent from mid- to late 2008 (Herbst and Mills, 2009), affecting Zambia and the DRC in particular. However, as the Chinese economic stimulus package took effect and Chinese companies began to stockpile copper, the price recovered somewhat in 2009. In part, this stockpiling was driven by the Chinese desire to spend US dollars as that currency depreciated. Thus, despite its marginality in the global economy, Africa has not been unaffected by the current global economic slowdown. These effects have varied, however. Economic growth for the continent as a whole was predicted to slow to 3.25 percent in 2009 by the International Monetary Fund (IMF). Nonetheless, the Economist Intelligence Unit (2008) predicted that seven of the top ten fastest growing economies in 2009 would be in sub-Saharan Africa (Malawi, Angola, Ethiopia, Congo-Brazzaville, Djibouti, Tanzania, and Gambia). I discuss the reasons for this in Chapter 3. While the global financial crisis has affected inflows of foreign direct investment, major Western investors, such as Lonrho and Rio Tinto, and Chinese state-owned corporations continue to look for new investment opportunities on the continent (M. Creamer, 2008). Indeed the global financial crisis has not marked a decisive downturn in commodity prices, which can only go higher as global resource scarcity begins to truly bite, but may mark the beginning of a hegemonic transition from the United States to China. Given the energy and resource intensity of Chinese growth, this has important implications for Africa. As commodity prices rise substantially again as the global economy stabilizes and starts to grow, what kinds of patterns and potentialities does this portend for Africa? In this book, I explore the geographically varied nature and impacts of recent economic growth in Africa since 2000 through literature review and empirical research to understand historical continuities and differences. Africa has experienced different types and phases of “extractive globalization” from slavery to neoliberalism. But the current conjuncture, while containing elements of “resource colonialism,” also has longer-term potential for poverty reduction if African states can be restructured to more effectively coordinate their responses to increased demands for their natural resources and sow resource rents over the longer term. As I

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discuss in Chapter 7, some valuable lessons may be learned from certain Latin American countries in this regard. In Chapter 2, which I coauthored with Francis Owusu, we explore the impacts of the fact that African trade is reorienting from the Global North to the Global East. China is now Africa’s secondlargest trading partner after the United States. At the same time, the United States has increased its strategic engagement with Africa significantly since the terrorist attacks of September 11, 2001. As a consequence of this, the continent has moved center stage in global oil and security politics. We investigate the nature of Chinese and US investment and trade in Africa, look at the ways in which these governments view the continent, and explore the economic and political impacts of enhanced geoeconomic competition between the West and the East. We find that trends in the new millennium are reworking the colonial trade structure, strengthening some authoritarian states, and fueling regionally specific conflicts. In Chapter 3, I investigate the impacts of the “triangulation effect” from the United States and China on African economies. I provide the theoretical lens through which to explore the recent economic growth episode on the continent starting in the mid-1990s. In particular, I construct an argument that there was a “new scalar alignment” of global factors such as debt relief, higher commodity prices, and Asian investment, with regional and national factors such as the regional reintegration of the South African economy also playing a role. I posit that the new alignment offers developmental potential over the longer term if commodity rents can be effectively captured and sown for structural transformation. However, resource extraction, to date, has been associated with conflict in Africa. In Chapter 4, I deal with the restructuring of governance on the continent resulting from the increased global demand for resources. Many authors have noted the existence of a resource curse, whereby states with abundant resources are meant to have slower economic growth and other problems (e.g., Sachs and Warner, 2001). This curse is meant to manifest itself from macroeconomic distortions to poor governance. However, African petro-states and mineral-based economies, such as Chad and Sudan, have since 2000 exhibited rapid rates of economic growth. Since 2000 there have been a number of high-profile initiatives centered on improving governance on the continent, such as the Chad-Cameroon oil pipeline, which was meant to result in the channeling of rents into “priority” poverty alleviation sectors. Instead the development of this pipeline, along with another one in neighboring

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Sudan, has been associated with conflict and the creation of a “geopolitical fracture zone.” I explore the reasons behind this, and impacts of this in Chapter 4. In Chapter 5, which is based on my primary fieldwork in Zambia, I explore the impacts of the growth episode since the turn of the century in that country. China is now the world’s largest consumer of copper and, as a major producer, Zambia has received substantial Chinese investment in the industry. The price of copper rose sevenfold from 2001 to 2006 and this has also stimulated new exploration, increased mining, and generated a variety of multiplier effects throughout the Zambian economy. The Chinese government is also involved in setting up a high-tech industrial zone in Zambia. I seek to assess whether or not greater Chinese involvement represents a transition from relations of dependence to a new era of cooperation among developing countries or a reconstituted hegemony, resulting in enclave-led growth. Increasing investment by multinational resource companies in Africa is one aspect of globalization, and increased Chinese migration to the continent is another. In Chapter 6, I move to explore yet another axis of globalization that has received considerable attention in both popular and academic writing since 2000: the penetration of mobile phones on the continent. Africa is now the fastest-growing market for mobile phones in the world, at an estimated growth rate of over 60 percent a year. Many of these phones are in fact produced in China; hence, the rise of China in Africa cannot be dissociated from the broader rise of China and the fact that that country is now the world’s leading exporter of high-tech products. Imports of mobile phones are one type of counterflow to exports of natural resources from Africa. Less expensive and more accessible telephony can help to overcome infrastructural deficits, cut out middlemen, and open up new opportunities and services for small- and medium-sized enterprises such as e-business and mobile banking. I explore the hypothesis of transformation by examining the way in which Africa is inserted in the global mobile phone value chain and the uses to which the technology is put on the continent. The global economy has since 2008 experienced a slowdown, the speed of which has taken most commentators and academics by surprise. These global recessionary tendencies also have had contradictory impacts on African economies. For example, gold and some other hard commodities have come to be seen by many investors as safe havens for capital in the context of global falls in stock markets, driving prices higher to the benefit of African gold producers. In the final chapter of this book, I explore the impacts of the global slowdown on Africa and

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ask whether the new interregionalism that has been forged with Asia is sufficiently dynamic and propulsive for African economies to weather global economic turbulence. I also examine the political economy of changing the resource curse to a blessing. I then assess the long-term historical implications for African economies and prospects for the future. While investigating the environmental and economic impacts of recent Chinese trade and investment, I seek to explore whether or not the realignment of differently scaled social processes opens up the possibility of a poverty-reducing “developmental regime” for the continent or whether the global financial crisis of the 2000s and subsequent economic slowdown will derail potential progress.

Notes 1. The precise mode of China’s insertion into the global political economy, and how its political economy has been shaped by this, is superbly described by Breslin (2007). 2. Monetary amounts are given in US dollars. 3. But they are often designed elsewhere, meaning that they form integrated global commodity chains linking three or more continents. 4. Some include South Africa, making this grouping the BRICS. 5. Although there is really no one price for oil. Doba crude from Chad trades at a substantial discount to West Texas oil because it is more viscous, for example.

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2 Chinese and US Interests in Africa with Francis Owusu There is now no denying that Africa has become a sought-after continent in a short space of time, thanks to its strategic importance. Today Africa really matters. —European Union Commissioner for Development (P. Holden, 2009, 128) When elephants fight, the grass gets trampled. —African proverb

As noted in Chapter 1, Africa has risen in strategic importance for major world powers in recent years. In part, this has been driven by the economic rise of China. For the first time since the era of the slave trade, African trade, arguably, is reorienting from the Global North to the Global East (Clapham, 2005). Due largely to Chinese and US oil investment, and Chinese demand for minerals, Africa registered 5.2 percent economic growth in 2005, its fastest rate ever (Pan, 2006). Subsequent years saw even faster economic growth, before falling back after 2008. Some now write of a “New Scramble for Africa” (see contributions in Southall and Melber, 2009, xix). This new scramble includes both established powers such as the United States, and emergent ones such as Brazil (see Ribeiro, 2009). However, it is China’s level of engagement with the continent that has increased most dramatically. Indeed, according to Tony Blair (2008), over the course of the past few years, China has gone from a “standing start” to being the most influential

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country on the continent. When talking about “China in Africa,” it is important to remember that there are many different Chinese actors, many of which are not subject to state control and have competing interests (Taylor, 2009), although the lines between public and private in China are often gray (Breslin, 2009). From tourism in Sierra Leone, to bike factories in Ghana and oil refineries in Sudan, Chinese investment in Africa is rising. From 2000 to 2005, Chinese trade with Africa more than tripled (French, 2005), growing even more quickly thereafter. Whereas China only accounted for 7 percent of African imports in 2003, imports from Africa grew an astounding 87 percent in 2004 alone (US Department of Commerce, 2005; “Friend or Forager?” 2006). More than 60 percent of African timber exports are now destined for East Asia, and 25 percent of China’s oil supplies now come from the Gulf of Guinea (Melville and Owen, 2005; Servant, 2005). China launched Nigeria’s first space satellite and, by the end of 2005, China overtook the UK as Africa’s third-largest trading partner (Wilson, 2005; Hilsum, 2005). It is now second only to the United States. Embarrassingly, however, the Nigerian space satellite malfunctioned and had to be written off, raising renewed fears about the quality of Chinese products and infrastructure projects on the continent. At the same time, the level of US engagement with Africa has increased significantly, especially since the September 11 terrorist attacks. For instance, US trade with Africa increased by 37 percent in 2004 (US Department of Commerce, 2005), and the amount of oil coming from West Africa to the United States now exceeds that from Saudi Arabia. The United States now trades more with Africa than with Russia and the former Eastern bloc combined (African Development Bank, 2003). In sum, Chinese and US trade and investment strategies have moved Africa to the center stage in global oil and security politics. What does the enhanced geoeconomic competition between the West and the East portend for the continent? Will this new scramble for Africa strengthen authoritarian states and fuel direct conflict, or open up space for alternative policy paradigms? In this chapter, I investigate the implications of Chinese and US investment and trade strategies for Africa. I begin by exploring Chinese interest and involvement on the continent since 2000. Next, we move to describe the Chinese geoeconomic strategy for the continent, and the advantages it brings to resource competition with the United States. I then explore the economic and political impacts of Chinese investment and trade with Africa. Finally, I examine the

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impacts of increased US oil investment on the continent and the stepped-up security assistance, with which this is associated. According to Michael Klare (2005), increased competition for scarce resources led to a revival of geopolitics in the first decade of the twenty-first century. Geopolitics, as a field, involves studying the way in which space shapes international relations. However, geopolitics, in addition to being a field of academic study, is a set of practices through which states attempt to project influence over other state spaces. These practices of high geopolitics are in turn informed by popular understandings of international relations or “popular geopolitics” that are shaped through media imaginaries, for example (see Mawdsley, 2008). Rather than taking categories such as nation-states for granted, the relatively new field of critical geopolitics examines the way in which such ideas and practices are constructed through discourses. However, it is arguably geoeconomics that is now most important in determining Africa’s relations with the rest of the world. Some consider geoeconomics a subfield of geopolitics. However, there is an argument to be made that, because globalization has resulted in the functional integration of dispersed economic activities (Dicken, 1998), it should be considered as a somewhat distinct field of study. Whereas geopolitics focuses our attention on the way in which states seek to aggregate and project their power in order to increase it, the geoeconomics optic pushes us to examine the ways in which relative economic power structures international relations (Agnew and Corbridge, 1995) and impacts people’s livelihoods. As global resource scarcity (particularly of fossil fuels) looms, geoeconomics will increasingly be about how to secure access to natural resources to ensure economic stability and growth, and thereby secure and enhance national state power in the international system. China’s economic power is in the ascendant, and this is particularly manifest in Africa, where even relatively modest foreign investment (in global terms) acquires great significance given the small size of African economies. This then has substantial implications for African development. However, increased Chinese and US involvement, in particular, also has wider implications for international relations and development. As Sarah Raine notes, “the continent has become the arena in which the powers of Asia and the West can test each other’s intentions and establish the opportunities and limits of cooperation, whether in the context of peacekeeping, the search for markets or securing natural resources” (2009, 9). We now will examine the nature of Chinese and then US engagement.

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Resource Colonialist and Anti-imperialist? Chinese Interests and Involvement in Africa China’s desire to become a global economic powerhouse and a counterweight to US hegemony in the international system is now clear. The expansion of the Chinese economy in the early years of the new century accounted for 25 percent of all global economic growth (Ellis, 2005). And by some estimates, at purchasing power parity, the Chinese economy will be as great as that of the United States in 2015 (“Does Your Strategy to Target 45% of Global GDP,” 2006). This phenomenal economic growth has increased the country’s demand for resources, especially oil. In 2003, China surpassed Japan as the world’s second-largest oil consumer and, accounted for 40 percent of total global growth in oil demand (Pan, 2006). China’s demand for oil increases by 1 percent for every percentage increase in its gross domestic product (GDP) versus 0.4 percent for the Organisation for Economic Co-operation and Development (OECD) countries, whose economies are heavily biased toward services (Dumas and Choyleva, 2006). The search for resources to fuel China’s phenomenal economic growth and the need to find markets for its products requires a global geopolitical and economic strategy as well as the formation of new alliances. Whereas the United States to some extent can rely on its market power, combined with securitization of the market (Obi, 2005) as an aspirant hegemon, China must use other strategies. While China can outbid India in aid-for-oil deals in Africa, it has identified the United States as “a major threat to its energy security,” according to Erica Strecker Downs (Beri, 2005, 387). How does Africa rank in the Chinese state’s geopolitical code through which it assesses the importance of external places and entities (Kraxberger, 2005)? What types of policies are the Chinese pursuing in Africa? Although China has become a major player in terms of foreign direct investment (FDI) in Africa, the region is not the major destination of Chinese global investment. For instance, in 2004, Latin America, Asia, and Europe accounted for 94 percent of Chinese FDI flows. In 2003, 77 percent of all Chinese foreign investment outside of Asia went to Latin America (Ellis, 2005). However, because of the relatively small amount of global FDI that Africa receives, Chinese investment has a much larger footprint than that suggested by the proportions.1 China’s demand for industrial resources is huge, but Africa has the potential to substantially meet this demand because it is three times larger than China and rich in resources (Carroll, 2006a). Chinese con-

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sumption of copper had, until the global economic slowdown of 2008, been growing at a rate of 17 percent a year as well as consumption of zinc at 15 percent and nickel at 20 percent (Ellis, 2005). China is now the world’s largest consumer of copper, the price of which rose from US$1,319 per tonne in 2001 to $8,800 in 2006 (“From Accelerator to Brake,” 2005; “Mining in Zambia,” 2006). It is no wonder that Chinese companies have invested $170 million in the copper industry in Zambia (Lyman, 2005), which resulted in the reopening of the Chambishi mine that had closed in 1988 and employs 2,000 people (Carroll, 2006a). While the neoliberal policies promoted by the Western-controlled international financial institutions (IFIs) compounded the continent’s economic problems (see Mkandawire, 2005), Chinese investment partially, and unevenly, reversed their deflationary bias. This has come with a harsh labor regime, however. For example, workers in the Chineseowned Collum mine in Zambia reportedly never got a day off (Dixon, 2006) until this was brought to the attention of the authorities.

China’s Geoeconomic Strategy for Africa States are comprised of sets of practices and social relations, rather than unified actors. Nonetheless, the policies of developmental states, such as China, are marked by coherence, given the overriding goal of economic growth and structural transformation (Önis, 1991). Unlike the different branches of the US government involved in relief, energy procurement, or defense, which view Africa largely as a site of humanitarian intervention, resource extraction, and security threat respectively, the Chinese state appears to look at Africa as a strategic-economic space. This geopolitical code reflects the challenges of economic transformation for China versus international system maintenance for the United States. Although I address these issues in this book, additional empirical studies of sectors, firms, countries, regimes, and household strategies will be needed in order to shed light on the complexity, specificity, and experimental nature of Chinese involvement on the continent. Nonetheless, the following emergent elements of China’s geoeconomic strategy in Africa can be identified: (1) to ensure access to critical natural resources, particularly oil and natural gas, to maintain the country’s economic growth; (2) to recycle its massive foreign exchange (forex) reserves into profitable investments overseas; (3) associated with both (1) and (2), to facilitate the development of Chinese multinational cor-

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porations; (4) to find markets for the products of Chinese industry; (5) to develop African agriculture to provide nonfood agriculturals to supply Chinese industry and consumers, and also food products for China’s burgeoning cities; and (6) to source knowledge workers in Africa to support Chinese economic transformation.2 Different African countries have different resource geographies (from oil to beaches) and macroeconomic stability, and they consequently play different roles in the emerging division of labor with China. Nonetheless, there is coherence between the different elements of economic engagement that are not driven by a coherent plan, but by structural imperatives. For example, export-oriented industrialization in China has generated a forex reserve, some of which must be recycled overseas. There are also geopolitical elements to China’s Africa strategy, although these are increasingly subordinate to geoeconomics. However, geopolitics and economics come together in the Chinese idea of “asymmetric power” projection, where China uses its economic competitive advantages against the United States, without direct conflict— its “peaceful rise” (Ramo, 2004, 6). The seeking out of assured sources of supply is part of China’s strategy to transform itself into a global power and ensure access in a context of increasing scarcity. Particularly, since September 11 and with war in the Middle East, China has diversified its oil supplies (Pan, 2006; Servant, 2005). For instance, China is constructing vertically integrated supply networks for critical commodities, particularly oil (Ellis, 2005), to lock up barrels at source for the Chinese market through the stateowned Chinese National Petroleum Company (CNPC) and other companies. This oil at below world market price is then used to fuel China’s export-oriented industrialization (Alden, 2005a). Africa is seen as a profitable place for investments to recycle China’s forex reserves. Weak demand in Africa can be countered by China, both onshore and offshore, through tourism, for example. Since China liberalized external tourism in 2003, sixteen African countries have been officially designated tourist destinations to reward friendly African governments (Diqing and Ye, 2006). The Chinese have invested $200 million in a resort complex in Sierra Leone, designed for their tourists (“China’s Big Investment,” 2005), for example. As explained by the manager of the Bintumani Hotel in Sierra Leone, which is run by the state-owned Beijing Urban Construction Group, “high risk brings high return” (Hilsum, 2005). There is less competition in Africa than in Europe or the United States in terms of investment, and Chinese companies can reduce

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their risks by keeping overhead low. For example, all imports for the refurbishment of the hotel came from China. Chinese aid to Africa in the new century is concentrated in the productive sectors of physical infrastructure, industry, and agriculture. When President Zhiang Zeming visited Nigeria, he concluded deals on Chinese assistance in developing the country’s light weapons industry, oil refinery construction, power plants, and possible Chinese rehabilitation of the rail system in deals totaling up to $7 billion (African Oil Policy Initiative Group, 2001; Lyman, 2005). China is also involved in rail, road, and fiber optic cable construction in Angola (Marks, 2006). In many ways, therefore, China’s aid and investment in Africa is reminiscent of earlier colonial investments to ensure access to raw materials. According to China’s vice-minister of foreign affairs, Li Zhaoxing, China would make “agriculture a key area of co-operation [with Africa] in coming years” (Muekalia, 2004, 10). However, this is not necessarily due to altruism, as industrialization and urbanization in China have meant that the area devoted to arable cultivation in China is dropping by 1.4 percent a year (Muekalia, 2004). For instance, the roads for the 2 million cars sold in China in 2003 meant paving over an area equal to 100,000 football fields (L. Brown, 2004). In Zimbabwe, the Chinese are taking over land reappropriated from white farmers and growing the crops that they need. Tobacco is now shipped directly to China as payment in kind for loans to staterun companies (Hilsum, 2006). In Zambia, Chinese-run farms supply the capital city, Lusaka, with its vegetables. Chinese investment in African agriculture is occurring at a time when US and World Bank aid to agriculture in Africa is falling—it dropped by 90 percent in the 1990s—in favor of health and education (Whitman, 2006). However, the global financial crisis has brought about a renewed emphasis on smallholder agriculture by Western donors.

A Benevolent Hegemon? Chinese Soft Power in Africa When President Zeming visited Africa in 1996, he put forward five guiding principles for Chinese-African relations: “sincere friendship, equality, solidarity and cooperation, common development and being oriented to the future” (Ministry of Foreign Affairs of the People’s Republic of China, 2002). This “soft power”3 rhetoric resonates on the continent given China’s history of “disinterested” cooperation and lingering suspicion of former colonial powers and,

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by association, the United States, which is often thought to be a neocolonial power on the continent. Current Chinese engagement with Africa since the 1990s builds on previous foundations. China had substantial preexisting political capital in Africa, with 62 percent of China’s overseas development assistance (ODA) going to Africa from 1956 to 1987 (Taylor, 1998). This aid was largely the result of a previous round of global geopolitical competition with the Soviet Union for influence in the region (Meredith, 2005). When Western aid to Africa was dramatically cut back at the end of the Cold War in the 1990s (Donini, 1995), the Chinese assiduously courted the continent, largely for diplomatic reasons (R. J. Payne and Veney, 1998; Yu, 1988). According to the magazine Chinafrica, after the collapse of the Soviet bloc, China expressed the hope that the “vast number of Third World countries [will] surely unite with and stand behind China like numerous ‘ants’ keeping the ‘elephant’ from harm’s way” (Taylor, 1998, 459). China also has had significant goodwill in Africa, dating back to the antiapartheid struggle. When the Rhodesian government unilaterally declared independence from Great Britain in 1965, the Chinese took on the high-profile project of building the Tanzania-Zambia (TanZam) railroad (Clapham, 1996). Since 1963, 15,000 Chinese physicians working in fourtyseven African countries have treated 180 million cases of HIV/AIDS, among other diseases (Marks, 2006). The Chinese have set aside a special fund to support investment and joint ventures by their companies in Africa, and accept payment in kind to reduce financial burdens and help increase exports to China. China also cancelled $10 billion worth of bilateral African debt ahead of the Group of Eight major industrial countries (Melville and Owen, 2005). More importantly, Chinese involvement in Africa has steered away from “white elephants” and is often based on appropriate technology that is more suited to African factor endowments. An example of such projects is the Friendship Textile Mill in Dar es Salaam, Tanzania (James, 2002). Compared to a joint venture with the French firm Sodefra in Mwanza, this Chinese-built mill used twice as much labor per tonne produced, and only 40 percent of the capital, while producing more cheaply (Coulson, 1982). However, increased import competition from Asia has led to the closure of a Chinese-Zambian joint venture, which I discuss later in Chapter 5. According to China’s minister counsellor, Liang Guixan, the “Chinese model” of development that is currently on offer is based on “sophisticated technology appropriate to African countries’ low cost

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and expertise in poverty alleviation and SMME [small, micro and medium-sized enterprise] development” (2005). It has eschewed outright privatization and other elements of the Washington Consensus (Adésínà, 2006). The Chinese African Human Resources Development Fund pays for 10,000 Africans annually to train in Beijing (Servant, 2005). However, in addition to being an act of goodwill on the part of China, these knowledge workers are expected to contribute to China’s economic transformation (Thompson, 2004). Moreover, students who return to Africa speak fluent Mandarin and act as business intermediaries for Chinese companies.4 The Beijing Program for China-Africa Cooperation in Economic and Social Development noted that “globalization currently presents more challenges and risks than opportunities to the vast number of developing countries and therefore express their determination to strengthen the existing co-operation between China and African countries in all fields” (South African Department of Foreign Affairs, 2000). It also talks about the “unjust and inequitable world order” implying that China and Africa should position themselves toward the “establishment of the new world order which will advance their needs and interests” (Muekalia, 2004). Chinese and African leaders at a 2003 trade summit agreed to build political and economic ties to counter Western dominance and improve the position of poor countries (Efande, 2003). This is seen to be a way of deflecting US hegemonism. Moreover, China’s own experience of dependence makes it possible for it to make reference to things like structural imbalances in trade relations. This represents a revival of the philosophy of third worldism, with China playing the lead role, but this time with the material resources to back it up. A Chinese official in Africa argued that “economic rights” are the main priority of developing nations and take precedence over personal, individual rights as conceptualized in “the West” (Taylor, 1998). Indeed, according to the Beijing Review, the view among some senior Chinese officials is that “multi-party politics fuels social turmoil, ethnic conflicts and civil wars” (Taylor, 1998, 453). China also sees the human rights discourse as a tool of Western neoimperialism (Taylor, 2004). This is a particularly attractive philosophy for incumbent African political elites, and is helped by its plausibility. The idealist wing of the neoconservative movement in the United States believes that democracy can be spread by force. Paul Wolfowitz, former head of the World Bank who is associated with this belief, argues that democracy promotion and US interests coincide (Kiely,

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2005).5 A US State Department official put it more bluntly in relation to democracy promotion: the United States has a need to “clothe . . . security concerns in moralistic language. . . . The democracy agenda, in short, is a kind of legitimacy cover for our more basic strategic objectives” (Hearn, 2000, 817). Because of state involvement, Chinese companies are better positioned to take short-term losses for long-term gains. For instance, the representative of China’s state-owned construction company in Ethiopia revealed that he was instructed to bid low on tenders, without regard to profit, and China’s largest telecom manufacturer gifted equipment to Telkom Kenya (Lyman, 2005). However, China is merely “following a very traditional path established by Europe, Japan and the United States: offering poor countries comprehensive and exploitative trade deals combined with aid” (Pan, 2006). Chinese companies also have other competitive advantages in that they are often willing to pay bribes and under-the-counter signing bonuses (Catholic Relief Services, 2003). While this was standard practice in the past, Western companies are now more open to loss of reputation and are under pressure to sign on to the Extractive Industries Transparency Initiative, initially promoted by Tony Blair, and the Publish What You Pay campaign supported by George Soros. Corruption scandals involving Western oil companies in Africa nonetheless continue (Leigh, 2005). On the other hand, Chinese companies regard this as part of the cost of doing business in Africa and do not attach moral connotations to it (Dobler, 2008a). One Chinese company manager noted, “When you have a little problem you pay money, when you have a big problem you consult the [Chinese] government.” 6

Free-Trade Imperialism or South-South Cooperation? The Economic Impacts of China In some policy circles in the United States, the rise of China and a new questioning of “free” trade are linked. A study for the US Army War College on the Chinese influence in Latin America argues that “in previous decades, dependence on Western capital was a key vehicle for forcing Latin American nations to accept neoliberal economic policies and free trade, limiting the degree to which they could buy social peace with state institutions and government largesse” (Ellis, 2005, 29–30). However, China is now seen to be creating a “neoimperialistic dynamic in the hemisphere” (Ellis, 2005, 9), and by displacing domestic manu-

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facturers through imports, possibly deepening class disparities and corruption. This represents a shift toward realism and structuralism, and away from normative neoclassical economics in some US policy circles. With respect to Latin America, Chinese officials have told their counterparts to let manufacturing industry die and concentrate on primary commodity exports (Harvey, 2005). The ability to introduce countervailing antidumping measures is circumscribed by many countries’ desire to grant China a market economy status under World Trade Organization (WTO) agreements, in order to maintain their access to the Chinese market. However, Latin American countries have also been successful in negotiating voluntary export restraints with China, enabling them to enjoy a continuing trade surplus. Again, this shows China’s long-term concern with resource supply rather than short-term market expansion. The same kinds of competitive displacement pressure are at play in Africa as in Latin America, although with per capita incomes 90 percent lower, the results are even more devastating there. Creating industrial employment is central to improved security prospects in Africa (Rotberg, 2005), and to democracy promotion. The development of an autonomous civil society, with its own material base in the labor movement and private sector in the West, have historically held the state accountable, although the exact meaning and content of African “democracy” is context specific and subject to negotiation (Bradley, 2005). Africa has since the 1990s been hit with a Chinese “textile tsunami” (“Chinese Textile ‘Tsunami,’” 2004). The number of companies registered in Botswana doubled over the past few years; many of these are Chinese import trading companies (Botha, 2004). Out of every one hundred T-shirts imported to South Africa, eighty are from China (Lyman, 2005). This has resulted in a double whammy because African industry is undermined by Chinese import competition at the same time that the phasing out of the Agreement on Textiles and Clothing7 in 2005 means the value of preferences under the US African Growth and Opportunity Act (AGOA) are undermined for the continent (Lyman, 2005). Textile and clothing exports account for 99.14 percent of Lesotho’s export earnings (Adaba, 2005); however, more than ten clothing factories closed there in 2005, with a loss of 10,000 jobs. South Africa’s clothing exports to the United States fell from $26 million in the first quarter of 2004 to $12 million for the first quarter of 2005, with 30,000 people losing their jobs (“Chinese Textile ‘Tsunami,’” 2004). In the Muslim Kano and Kaduna areas of Nigeria, imports devastated the local textile and consumer goods industries

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(Lyman, 2005). The Nigerian textile and clothing workers union estimated 350,000 direct job losses as a result of Chinese import competition and 1.5 million indirectly over the past five years (Marks, 2006), although others have disputed the veracity of these figures. African trade union officials estimate that 250,000 jobs in the textile and clothing industries have been lost due to Chinese import penetration, roughly the same number as created by the AGOA (Marks, 2006; Gibbon, 2003). While the implementation of “safeguard” restrictions on the import of textiles and clothing from China into the United States and Europe as a result of the massive surge in imports brought a temporary respite for some African textile industries, these will be definitively phased out in the 2010s in order to conform to obligations under the World Trade Organization agreements. The reorientation of trade from manufactures to oil is evidenced by the fact that Angola and Chad surpassed Lesotho in 2004 as exporters to the United States (US Department of Commerce, 2005). The increased emphasis on oil and mineral extraction is resulting in a relative technological downgrading of Africa’s economies (Economist Intelligence Unit, 2002). The imposition of temporary restrictions on Chinese textiles entering the United States and European Union (EU) markets have provided some respite because Chinese textile manufacturers are again investing in Africa, in the short term, as a way around this (Pan, 2006). For example, all the textile factories that had closed in Lesotho have now been reopened (IRIN, 2006a). However, under the WTO agreements, the ability to use “safeguard actions” to provide relief from import surges largely expired in 2008, and will completely end in 2013 (Gibbon and Ponte, 2005). The Chinese have noted that “the fundamental reason for the increase in Chinese textile and clothing imports [into Africa] is the high demand for Chinese goods” (Guixan, 2005). However, critics of Chinese policy in Africa argue that it represents a new neocolonialism, disguised as South-South cooperation. As Moletsi Mbeki argues, “we sell them raw materials and they sell us manufactured goods with a predictable result—an unfavorable trade balance against South Africa” (Servant, 2005). South Africa accounts for more than 20 percent of total Chinese trade with Africa; this more than doubled over a six-year period (“Chinese Vice President Calls for ‘Win-Win,’” 2004). China and South Africa are negotiating a free-trade deal, and the Chinese have expressed support for the New Partnership for African Development

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(NEPAD) and South Africa’s regional integration efforts (“China, S. Africa to Launch Free Trade Talks,” 2004). This may seem paradoxical, as does the fact that China sends election observers to Africa (“Friend or Forager?” 2006), but the fact is that both the Chinese and South Africans favor regional economic integration over the governance procedures of NEPAD.8 The solution put forward to the Chinese competitive threat by Trevor Manuel, South Africa’s former minister for finance, is for South African industry to identify new niche markets and improve its competitiveness to gain access to the Chinese market (Guixan, 2005). The economic adviser to South Africa’s president also saw China and India consuming many South African–produced services (T. Creamer, 2005). However, in 2005 the Chinese, ostensibly in order to ease the pressure on African countries, introduced export tariffs on 148 lines of textile and clothing and prohibited additional investment domestically in twentyeight categories of textile investment (Guixan, 2005). This was probably in response to threatened safeguard measures in Africa and elsewhere, and also to prevent overheating of the domestic economy, as booming industries may drive higher wage growth and hence inflation. They also lowered the import tariffs on textiles entering China to 11.4 percent on the basis of WTO commitments and, at South Africa’s urging, abolished tariffs on 190 goods imported from twenty-five African countries (Bartholomew, 2005). This was subsequently raised to 440 products (Marks, 2007). It was part of an effort to expand and balance bilateral trade, while optimizing, from China’s point of view, a neocolonial trade structure (“China’s Africa Policy,” 2006). Beijing uses economic liberalization strategically to grant duty-free early harvest arrangements for African and Southeast Asian states to the Chinese market as a means to offset the market’s polarizing tendencies (Glosny, 2007). However, China also warned the South Africans that “unfair and discriminative restrictions” would never be accepted by China (Lyman, 2005). China’s WTO entry has thereby served to lock in global market access for its export-oriented industrialization. Thus while there may have been some potential for pro-poor employment growth in South Africa, in the export-oriented fruit and vegetable subsectors in particular (Jenkins and Edwards, 2005), the growth of China may further exacerbate income inequality there and reinforce the previous capital intensive growth path. As Neva Seidman Makgetla, an economist for the Congress of South African Trade Unions, argues, “There’s no question that for upper classes it’s a boon. . . . The problem is any lower-class South Africans would rather have a job” (Timberg, 2006).

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As of the turn of the millennium, only 13 percent of black South Africans were employed in the formal sector of the economy compared to 34 percent in 1970 (Terreblanche, 2002), although there was some employment growth in 2005–2006 before the onset of recession, mostly in agriculture (IRIN, 2006b). Chinese business networks were important in the industrial transformation of Mauritius but, in the absence of substantial Chinese migration and supportive policy environments, such networks have had a negligible impact elsewhere in Africa (Bräutigam, 2003). However, because some Chinese manufacturing and service sector investments are also taking place to serve local markets, this is changing (see Carmody and Hampwaye, 2010). In Ghana, the price of an imported mountain bike from China fell from $67 to $25 over a two-year period (“Is the Wakening Giant a Monster?” 2003). While the domestic profit margin on Chinese bike production is thin, or even negative in some cases, the margin in Africa is about 10 percent (Kynge, 2006). Indeed, the Chinese company Lifan can sell bikes in Nigeria for around US$750 (6,000 renminbi in 2005)—double what it gets for them in China. Moreover, Ghana has now overtaken China in per capita consumption of bikes (ITDP, 2005), and a Chinese company has started production there. For the UN Conference on Trade and Development (UNCTAD), Chinese bicycle investment is an example of a matured industry being offshored to create locational advantages. “Once abroad, Chinese TNCs [transnational corporations] begin to acquire advantages related to ‘transnationality’—confidence in, and knowledge of, operating in a foreign environment” (UNCTAD, 2003, 6). As of 2005, there were 647 Chinese state-owned enterprises operating in Africa (Wilson, 2005), subsequently rising to at least 800 in 2007. Thus, Chinese investment in Africa can be seen as part of the go global policy to turn Chinese companies into TNCs and to create a paradigm of globalization favorable to China.

Leviathans Unbound? The Impact of Chinese Involvement on African State Restructuring Whereas the neoliberal model promoted by the United States sought to embed, constrain, legitimate, enable, and empower African states along different dimensions, the Chinese merely seek to enable and empower them (see Carmody, 2007). This is attractive to African state elites, par-

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ticularly those subject to Western sanctions. Meanwhile, Chinese companies benefit from the lack of competition from Western rivals in these countries (Marks, 2006). As the Sudanese minister of energy and mining explained, “the Chinese are very nice. They don’t have anything to do with politics or problems. Things move smoothly, successfully” (Marks, 2006). Some argue that African states are attracted to Chinese investment because they can offer a “complete package” of state oil and infrastructure that the United States cannot. According to Princeton Lyman, Sudan is a good illustration of African leaders’ attraction to such a package: China supplies “money, technical expertise, and the influence in such bodies as the UN Security Council to protect the host country from international sanctions” (Bartholomew, 2005). Thirteen of the fifteen most important foreign companies operating in Sudan are Chinese (Servant, 2005), and Chinese companies are reported to have purchased 75 percent of Sudan’s ivory (Bond, 2006). Despite conflict in Darfur and the east of the country, FDI into Sudan rose 40 percent in 2005 (Bolin, 2006). In return, Sudan supplies China with about 7 percent of its oil imports (“China’s Oil Ties to Sudan,” 2004; see Figure 2.1). However, Sudan’s importance is broader, given its potential as a base for Chinese oil operations in the rest of Africa (Ho, 2004). Sudan is now the third-largest producer of oil in Africa after Nigeria and Angola (US Energy Information Administration, 2006), and its continued oil exports will be facilitated by a Chinese-built hydroelectric dam that will double the country’s electricity-generating capacity (Crilly, 2005). Sixty percent of Sudanese oil is exported to China, and the oil refinery in Sudan was the first that the Chinese built overseas. Debt service payments to China for the pipeline have priority over all others, such as to the World Bank and the IMF. Chinese companies have also built three small-arms factories in Khartoum and sold weapons to the Sudanese regime. Supplying the Sudanese government with jet fighters allows it to protect the oil fields in the south, where the Chinese have substantial interests (Taylor, 2004). Indeed, during the north-south civil war, government troops used the CNPC facility to launch attacks and dislodge southerners in the vicinity of the new oil fields. China also sees Africa as a growth market for arms exports, and uses this to support client regimes. For instance, despite Zimbabwe’s economic meltdown, China sold twelve supersonic fighter jets to the Zimbabwean government in late 2004 and more again in 2006. China also shipped $1 billion worth of arms to both Ethiopia and Eritrea during the 1998–2000 war (Muekalia, 2004). However, the United

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Source: US Energy Information Administration. (2009). “Sudan: Oil Statistics.” Available at www.eia.doe.gov/cabs/Sudan/Oil.html.

States also provides support to autocratic regimes in Pakistan, Saudi Arabia, Egypt, and Ethiopia (Pan, 2006). With respect to human rights in Sudan, a Chinese official at the Ministry of Trade noted that “we import from every source we can get oil from” and, in the words of the deputy foreign minister, “business is business” (French, 2004).9 China’s Africa policy specifically states that it will increase its assistance to African nations with “no political strings attached” (“China’s Africa Policy,” 2006). Such a position has led to assertions that China has no values, but only interests (Taylor, 2004). In an era of globalized capital markets, there are costs to such an approach, however. While the absence of a formal, independent civil society and free press in China frees companies from reputational risk domestically, the flotation of the CNPC on the New York Stock Exchange had to be withdrawn and refashioned because of negative publicity over what the proceeds might be used to do in Sudan. After this debacle, China refused to veto Sudanese government officials being referred to the International Criminal Court for crimes against humanity over their actions in Darfur (Crilly, 2005). In Zimbabwe, the links between Robert Mugabe’s Zimbabwe African National Union (ZANU) and China were forged during the liberation struggle (Lyman, 2005). At a 2003 trade summit, as part of

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his “Look East” strategy, Mugabe urged African countries to turn their back on the West and focus on relations with China, which “respected African countries” (Lyman, 2005). When Mugabe visited Beijing, the Chinese premier said he hoped that Zimbabwe would offer “conveniences” to Chinese companies (“Premier: Zimbabwe Is China’s Key Partner,” 2005). According to a Zimbabwean official source, complaints by some Chinese businessmen that local traders were hurting their business were part of the reason for the abominable Operation Murambatsvina (“Drive Out Trash”) in 2005. President Mugabe is reported to have “pledged to protect the Chinese shop owners after the [vice president comrade “Spillblood” Joyce Mujuru] informed him of their problems” (Bartholomew, 2005, 2). This operation to destroy the informal economy left 700,000 people homeless and living in unplanned settlements. Meanwhile, the Chinese now own 70 percent of Zimbabwe’s electricity generation capacity, with stakes in the Hwange and Kariba power plants. In addition, it was illegal to say zhing zhong (poor quality Chinese goods) in Zimbabwe and university students now learn Mandarin (Carroll, 2006a). It remains to be seen how the new power-sharing agreement between ZANU and the Movement for Democratic Change will affect Zimbabwe’s political economy. In sum, whereas the United States likes to portray Zimbabwe and Sudan as failed states, ruling elites’ authority has been strengthened by Chinese involvement. However, by supporting repressive governments, Beijing may undermine the political stability required for long-term economic links (Taylor, 2004). The Chinese are also rekindling relations with other highly corrupt former leftist regimes such as Angola. In Angola, the IMF estimates $1 billion to $5 billion of oil revenue is stolen or “evaporated” every year (Luft, 2003), while half of Angolan children continue to be malnourished (A. O’Connor, 2004). Yet the Export-Import Bank of China (China Eximbank) provided the country with a line of credit of $2 billion to rebuild its infrastructure as part of an oil deal (Servant, 2005). China’s state-owned oil companies and British Petroleum have a joint venture in the country, and Angola is now China’s largest supplier of oil in some years (Lyman, 2005; “China in Africa,” 2006). Part of the Chinese loan to Angola reportedly went to fund propaganda for the government’s reelection campaign. However, Chinese pressure apparently forced the resignation of Mendes de Campos Van Dunem as secretary to the Angolan Council of Ministers; thus, the Chinese do insist on some accountability. The loan agreement allows

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Angolan businesses to bid on subcontracts for 30 percent of projects, but the remaining 70 percent goes directly to Chinese companies, perhaps employing Chinese labor (Alden, 2005b). Such tightly “tied debt” deals, where loans are tied to contracts with Chinese companies, may undermine Western debt cancellation to the continent (Phillips, 2006). The rise of China and, until 2008, a booming global economy, which led to higher oil prices, gave some African governments more bargaining power with Western countries and IFIs (Moore, 2005). An example of this is the changes to the Chadian petroleum law to allow greater government discretion over oil revenue expenditure (World Bank, 2005a), which led to the suspension of World Bank loans that was quickly followed by Chad’s recognizing Beijing over Taipei. Thus, the structural power that Western countries have been able to indirectly exercise over African governments through the IFIs is being undermined by their oil dependence; yet another example of Western “hegemony unraveling” (Arrighi, 2005, 23).10 The Chinese, however, will have to import 60 percent of their energy, which makes them especially dependent on the goodwill of oil suppliers. Whereas the initial response of African states to September 11 was “bandwagoning” with the United States, “balancing” using China as a counterweight is now an increasingly attractive strategy (Krahmann, 2005). Even those countries that do not have valuable economic resources have gained power from China’s increased presence in Africa. When the EU and other donors suspended aid to the Central African Republic, demanding that the government restore constitutional order, “Beijing stepped in, bankrolling the entire civil service” (Mailer, 2005). Access to Chadian oil fields may be most efficiently conducted through the Central African Republic’s border region. The Ethiopian government, which has been criticized because of election irregularities and shooting of demonstrators, has called China its “most reliable [trading] partner” (Council on Foreign Relations, 2005, 39). Even autocrats in countries where Western oil companies are dominant, such as President Teodoro Obiang in Equatorial Guinea, have called China their most important “development partner” (“Friend or Forager?” 2006, 15).11 Oil revenues have strengthened the authoritarian rule of Obiang, who has been in power for over twenty-five years. In this, the poor benefit little, if at all, with the Equatoguinean government spending 1.2 percent of its budget on health from 1997 to 2002. Meanwhile, gray market and criminal activity have proliferated under the ruling family (Wood, 2004).

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Equatorial Guinea has effectively resisted IMF advice and intrusion since 1995. Thus, oil may reinforce rentier states12 and political monocultures. Rather than being outlier rogue states, countries such as Zimbabwe and Sudan fit into a broader trend of authoritarian strengthening across the continent. This will be discussed in more detail in relation to Chad and Sudan specifically in Chapter 4.

From Indirect Rule and Apathetic Hegemony to Panopticism? US Interests and Involvement in Africa For much of the 1990s, the United States favored a policy of benign neglect toward Africa, with a reliance on the IFIs for market opening and to provide its corporations access to resources. This changed with September 11 and war in the Middle East, which boosted the imperative of diversifying oil supplies (Klare, 2005). It takes only two weeks for oil from West Africa to reach the East coast of the United States versus six weeks from the Middle East. And West African oil does not pass through the choke points of the Suez Canal or Sumed pipeline. The imperative of assuring security of African oil supplies against potential terrorist disruption also now looms large, with the United States deploying a panopticon strategy to see into terrorist networks through the use of satellite technology and forensic accounting (Gill, 2003). More recently, the limits of the panopticism led the United States to establish a military base in Djibouti in 2003. However, the main aim on the continent is to guard against resentment at foreign troop presence—to make the US military footprint so small that it is not noticeable (M. Hirsch and Bartholet, 2006)—a strategy that has backfired subsequently in Somalia (see Brigaldino, 2006). Rather new military programs have been set up with oil-rich allies such as Angola and Nigeria, who receive free arms under the Pentagon’s Excess Defense Articles Program (Klare and Volman, 2006a). The increased military assistance to governments on the continent is barely noted in the US media (Barnes, 2005), which tends to present US involvement in Africa as more benign and developmental than that of China. According to some scholars, such as Terry Karl, the United States cannot effectively exploit oil deposits in a context of weak political and economic institutions because it may provoke violence and unrest, calling forth repression (African Oil Policy Initiative Group, 2001, 12). However, US oil investment is strengthening authoritarian

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states such as Idriss Déby’s Chad, where the constitution was altered in 2006 to allow him to run for a “third” term (Gary and Reisch, 2005). The Collège du Contrôlle was meant to exercise oversight over Chadian oil revenue for priority poverty alleviation expenditures, but the president appointed his brother-in-law to it and interfered with the selection of civil society members. Oil exploitation in Africa does not always translate into economic growth. A study by Richard Auty found that, “from 1970 to 1993, resource-poor countries grew four times more rapidly than resourcerich countries—despite the fact that they had half of the savings. The greater the dependence on oil and mineral resources the worse the performance was” (Gary and Reisch, 2005, 5). Poverty is increasing in Chad despite oil revenue, some of which has been used for arms purchases, and geopolitically infused conflict is spilling over from Sudan (“The Danger of War Spilling Over,” 2006). While Manuel Castells (1998, 161) conceives of much of Africa as a “black hole of informational capitalism” structurally excluded from global accumulation, African territory is now being reconfigured as a “space between” inclusion and exclusion, reflective of the broader dialectics of globalization. As James Ferguson (2006, 14) notes, global investment does not flow but “hops,” linking the oilrich enclave of Cabinda in Angola with centers of Western capital, for example, to the exclusion of other parts of the country. Rents generated from enclaves let governments bypass their populations, and militate against the construction of tax or social contracts, which are key sources of state accountability (D. K. Leonard and Strauss, 2003; Centre for the Future State, 2005). Western policymakers and policy shapers undertake two different types of cognitive mapping of globalization and governance in Africa. One type is the local or continental resource map. As oil executive and subsequently US vice president Dick Cheney put it, “you’ve got to go where the oil is. I don’t think about it [political volatility] very much” (Bruno and Valette, 2001). This cognitive map echoes the French colonial distinction between utile (useful) and l’Afrique inutile (not useful) Africa. On the other hand, Robert Cooper, EU foreign policy adviser, talks of “pre-modern” states that must be “contained” (2003, 16). And Thomas Barnett of the US Naval War College writes of “gap states” between the “functioning core” of the global system to the north and south, where poverty and insecurity reign (Barnes, 2005, 10). The connection between the maps of poor national governance and conflict and those of resource extraction is often not made.

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In keeping with previous US policy and in Mackindrian fashion, Jendayi Frazer, former US assistant secretary of state for Africa, identified South Africa, Nigeria, Kenya, and Ethiopia as “keys” to the different regions of the subcontinent (Hills, 2006, 636). Some of these anchor or gateway states for US influence overlap with ones where China enjoys the greatest military cooperation, particularly Ethiopia and Nigeria (Klare and Volman, 2006a). However, Sudan and Zimbabwe also arguably are anchor states for China on the continent, covering different resources and regions, although the Chinese government increasingly distanced itself from these two rogue states during the 2000s. Between them, South Africa and Zimbabwe contain 90 percent of the world’s chromium reserves, and a $1.3 billion energy deal between China and Zimbabwe exchanged chromium for energy investment (“Zimbabwe Signs China Energy Deal,” 2006). Such investments and trade deals undoubtedly contributed to economic growth in sub-Saharan Africa. However, they did not in Zimbabwe, which has the world’s fastest contracting economy and, until the phasing out of the national currency in favor of foreign ones, inflation in the sextillions of percent (10 with 21 zeros after it).13 In the next chapter I assess the reasons behind, and the significance of, subSaharan Africa’s economic growth revival in the 2000s in particular.

Notes 1. The total FDI inflow to Africa was $18 billion in 2004, which represented only 3 percent of global FDI flow. 2. I thank Dick Peet for suggesting the need to elaborate the elements of this strategy. 3. “Soft power” is a somewhat Gramscian conception of power, based on attraction, affinity, persuasion, and emulation (Nye, 2002). 4. Field notes, Lusaka, Zambia, August 11, 2009. 5. On becoming World Bank president, Wolfowitz declared corruption “the greatest evil since communism” and blocked loans to several “wayward” African states. While commendable, this further alienated African elites, increasing China’s attractiveness as an alternative source of finance (“Just Saying No,” 2006). 6. Chinese company manager interviewed by the author, Lusaka, Zambia, August 8, 2009 (interview translated by Enoch Sakala). 7. The successor to the Multi-Fibre Arrangement. 8. This is evidenced by their mutual support of Zimbabwean president Mugabe (Taylor, 2005a). The Chinese reportedly sent jamming equipment to the Zimbabwean government to prevent independent radio stations from broadcasting during the 2005 election (Marks, 2006).

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9. However, the Chinese position became more nuanced as the 2000s progressed (see Carmody and Taylor, 2010). 10. Jessica Einhorn (2006), a former managing director of the World Bank, has depicted her former employer as a dying institution. 11. The three largest players in Equatorial Guinea in oil are US: ExxonMobil, Amerada Hess, and Marathon Oil. 12. On Nigeria, see Omeje (2005). 13. A sextillion is 10 to the power of 21 or 36, depending on whether UK or US definitions are used, which probably made little difference to the people of Zimbabwe, which scrapped its domestic currency in 2009.

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3 The Commodity Boom

The previous chapter provided a broad overview of Chinese and US involvement in Africa. This chapter focuses more tightly on the economic impacts of that involvement. Since the 1970s, development geographers and political economists have been concerned with the nature, construction, and impact of globalization in Africa south of the Sahara. In particular, they have explored the ways in which people and places have experienced “adverse differential incorporation” into the global economy (R. Bush, 2007, 3). However, increasing interconnectedness between places (globalization) is a contradictory process, generating inclusion and exclusion simultaneously, rather than being a fixed end state. Thus, it also presents opportunities for African economies, such as better global market access (Stiglitz, 2005).

From Lost Continent to Revival? In the wake of the debt crisis of the 1970s, and consequent austerity programs sponsored by the World Bank and IMF, the 1980s and 1990s were the “lost decades” for development in much of Africa. Much of the continent appeared to be becoming part of the fourth world, unworthy even of exploitation by global capital (Castells, 1998). Poverty increased and the economic base of the continent declined, with small (in terms of population) though significant exceptions such as Botswana and Mauritius. For example, GDP per capita for sub-Saharan Africa, excluding the “economic giants” of South Africa and Nigeria, 33

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fell 2.1 percent in 1980 and 2.3 percent in 1990 (World Bank, 2006a). In part, this had to do with price reductions for primary commodities, which are Africa’s main exports. According to UNCTAD (Bond, 2005), if the terms of trade (prices for imports vs. exports) had stayed the same for Africa from 1980 to 2000, the continent would have had twice the share of global trade that it did and average incomes would have been 50 percent higher. In some cases, economic decline was associated with outbreaks of political instability and civil war, as in a context of acute poverty, where people have little to lose; the opportunity cost of involvement in rebellions is near zero (Soludo and Ogbu, 2004). In ethnically divided societies with contracting economies, competition over resource rents may be particularly acute. The first decade of the twenty-first century was different, however, given the cyclical nature and evolving spatiotemporality of globalization. The technologically and institutionally dynamic nature of globalized capitalism creates new alignments between differently scaled social processes, changing the nature of incorporation and opening up and closing down development possibilities for particular places. The geographical boundaries and social nature of inclusion and exclusion are constantly reproduced, but also dynamic. The number of civil wars on the continent has declined since 2002 (Human Security Centre, 2005), with seemingly intractable conflicts ending, or at least being substantially brought under control, in Sierra Leone and Liberia (Frazer, 2006), notwithstanding that a new genocidal conflict began in Darfur in Sudan. Also, economic growth dramatically revived on the continent. In 2007, Africa hosted seven of the world’s top twenty fastest-growing economies (“Africa’s Top 100 Banks,” 2007). For example, based on increased oil prices and production, Equatorial Guinea’s economy grew at over 20 percent p.a. from 1996 to 2005 (Broadman, 2007a), and there are now thirteen middle-income countries in sub-Saharan Africa (Ndulu et al., 2007). Overall growth was 6.9 percent for sub-Saharan Africa in 2007 according to the IMF (2008), just shy of the 7 percent that some international plans argued was necessary for sustainable poverty reduction (NEPAD, 2001).1 Indeed, the World Bank claimed that “the region’s higher economic performance is not transitory but is rather a structural break from the past” (2006a, 2). Furthermore, “Africa and the Millennium Development Goals” (United Nations, 2007) shows that, for the first time in decades, poverty in sub-Saharan Africa declined from 45.9 percent in 1999 to 41.1 percent in 2007, although the cal-

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culation and meaning of these statistics is open to interpretation and dispute (Pogge, 2002; Kaplinsky, 2005; Kiely, 2007) and the number of people living in absolute poverty continued to rise. As noted in Chapter 2, much economic growth in Africa in the early years of the new millennium has been driven by the impacts of Asian, particularly Chinese and Indian, trade and investment, and US demand for oil (see Figure 3.1), with China taking in roughly five times more African exports than India (Broadman, 2007b). However, there are questions about whether the extant and emerging economic superpowers’ increased involvement on the continent will merely reinvigorate and reinscribe the colonial mineral and cash crop export economy, or whether they might build transformative development partnerships with the continent (Alden, 2007). In other words, does their increasing engagement portend an “African renaissance,” or is it consonant with previous rounds of economic restructuring that will ultimately exacerbate environmental degradation and deepen impoverishment? One of the problems with capitalist development in Africa has been the long-lived exploitative links or “intransitive articulation”

Figure 3.1

Imports from Africa (including cost, insurance, and freight)

120,000

100,000

80,000

60,000

40,000

20,000

0

Source: International Monetary Fund. (2009). “Direction of Trade Statistics.”

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between it and other peasant modes of production on the continent (Lonsdale, 1981, 182). In the 1980s, such was the extent of economic decline that many peasant farmers sought to delink themselves from capitalist trade relations and the exploitations of the state, engaging in a “silent revolution” by concentrating on subsistence farming (Cheru, 1989, 1). However, the revival of economic growth and rising commodity prices, until the temporary drop in 2008, suggest a deepening of commodity relations on the continent. And when combined with largescale Chinese infrastructural investment, this arguably constitutes a round of restructuring (Lovering, 1989) on the continent, although the outcome of this process is, as yet, indeterminate. In this chapter, I seek to interrogate the drivers and dimensions of Africa’s growth episode in the new millennium. In particular, I explore whether the new scalar alignment, over the longer term, enables the creation of a poverty-reducing “developmental regime” for the continent (Pempel, 1999, 137). For sustainable development to take place, constraints at different scales must be unlocked.2 In this context, I focus on the impact of Chinese involvement because China is the country with the most rapidly growing presence on the continent. I begin by discussing the impacts of Asian trade and investment on the continent, noting the complementary nature of the two regional economies. In the next section, I discuss other global factors in Africa’s economic growth, particularly higher global economic growth in the first decade of the twenty-first century, the associated and ongoing technological revolution, and the impacts of multilateral debt relief. In the subsequent sections, I discuss the impacts of South Africa’s reintegration into the continental economy and changes in national governance. The growth recovery was heavily resource driven and, in the final section, I discuss the environmental and economic impacts of the commodity boom, followed by a discussion of the impacts on manufacturing.

The New Interregionalism: The Asian Connection During the 1990s and first decade of the twenty-first century, much was written about the need for deeper regional integration in order to renegotiate Africa’s engagement with the global economy (e.g., Mittelman, 2000). However, Africa’s growth dynamic is increasingly driven by Asia: the most dynamic pole of the world economy as African and Asian growth rates have converged (Ndulu et al., 2007).

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Many Asian economies have industrialized and have transitioned from colonial-style exporters of raw materials to resource importers. China is now the world’s largest consumer of oil and copper, for example (Lemos and Ribeiro, 2007). The explosive growth of the Chinese economy, at 10 percent a year for the past thirty years, has sent reverberations around the world. At this growth rate, an economy doubles in size in just over seven years and, with a population of 1.3 billion people, this creates a massive demand for resources. Some local examples of how China’s demand for resources has been felt worldwide include the theft of manhole covers from streets around the world during 2004, 24,000 of them in Beijing itself when the price of steel more than doubled during that year (Muir, 2004; Shinan, 2005), and the fact that slag heaps outside mines in South Africa were themselves being mined when mineral prices rose (“Reclaiming One of SA’s Largest Slag Heaps,” 2004). There have been dramatic increases in FDI and trade between China and Africa. Asia now takes 27 percent of African exports, compared to 14 percent in 2000, whereas the EU share of African exports halved from 2000 to 2005 (Broadman, 2007a). Africa and China are also increasingly linked through networks of hundreds of thousands of African traders living in China and vice versa (Alden, 2007). Given the scale of its impact, China’s role in Africa is now the primary issue of concern in Africa’s international relations (Taylor, 2006b; see also Mawdsley, 2008). As noted earlier in Chapter 2, there are over 800 state-owned Chinese companies invested in Africa, and China is intent on creating a paradigm of globalization favorable to it that merges state and market mechanisms (Ramo, 2004; Alden, 2007). Because many Chinese oil companies, for example, are state owned and subsidized, they can take a long-term strategic approach to business planning rather than be subject to the imperative and disciplinary effect of quarterly stock market returns. Consequently, the Chinese model of globalization is in contradistinction to the Anglo-American approach of minimal state involvement in the economy. However, Western companies often receive implicit subsidies from their governments via export credit guarantees and tied aid, which contribute substantially to indebtedness in Africa (Hertz, 2004). Chinese interest in Africa has been heavily concentrated in the oil sector, with Nigeria, Angola, and Sudan as major exporters. Chinese imports of African oil and gas grew over 50 percent per annum from 1994 to 2003 (Rocha, 2007). Indeed, oil investment now represents

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over 50 percent of FDI into the continent, mostly into Nigeria and Sudan (Watts, 2006; World Bank, 2006a). However, perhaps the most important effects of China’s growth were indirect (Broadman, 2007a), by driving up commodity prices, Africa’s main exports, globally (see Figure 3.2). Until the global economic contraction of 2008, Asia acted as the “locomotive” for the global economy because it imported more from developed economies, which then grew and imported more from Africa (Jenkins and Edwards, 2006). Oil prices were also affected by supply constrictions resulting from the war in Iraq, the country with the world’s second-largest reserve of oil (Klare, 2005). Also, “peak oil” looms, when more than half of the world’s reserves will be exhausted but the global economy expands in the future, so prices will inevitably rise again. Some refer to the growth dynamic of global capitalism in the context of finite natural resources as generating an “ecological contradiction” (M. O’Connor, 1994, 12). This contradiction finds geographical expression in the plundering, or what David Harvey (2003, 137) refers to as the “accumulation by dispossession,” of African resources and environments to fuel economic

Figure 3.2

Primary Commodity Prices

Source: International Monetary Fund. (2009). “Indices of Primary Commodity Prices, 1999–2009.” Available at www.imf.org/external/np/res/commod/table1a.pdf (accessed July 28, 2009). Note: 2005 = 100 in terms of US dollars.

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growth elsewhere. This is facilitated, for example, by planes taking food from Africa to feed Europe while bringing arms in exchange (Sauper, 2006). Primary commodities represent around 80 percent of sub-Saharan Africa’s merchandise or commodity exports (Siddiqi, 2007a). Indeed, in 2006 energy and metals accounted for 75 percent of Africa’s total exports (Siddiqi, 2007b). This export profile is leading to a regionalization of trade with Asia, with eastern Africa primarily supplying agricultural goods, central and southern Africa supplying minerals, and the Sahel and West Africa supplying oil (see Figure 3.3). As prices rose least for agricultural products, the economy of East Africa grew more slowly until 2008. Malawi, which then recognized Taipei over Beijing and whose main export is tobacco, saw its economy grow by just 2.6 percent in 2005 (World Bank, 2007).3,4 But it was one of the fastest-growing economies in the world in 2009 because it benefited from the reduction in oil prices and its switching of diplomatic recognition to Beijing. East Africa was the only one of five subregions in the subcontinent to record a negative trade balance in 2004, equivalent to 12.3 percent of GDP, whereas central and West Africa recorded trade surpluses of 19.7 percent and 12.9 percent, respectively (OECD and AfDB, 2006). Commodity prices were predicted to remain high for the foreseeable future because China and India continue to grow (Zafar, 2007). However, as some predicted, prices have now fallen dramatically as a result of the global economic slowdown (Dumas and Choyleva, 2006; Wehrfritz, 2007), although they are still much higher than in 2000.

The Global Context and Africa’s Growth: Growth, Technology, and Debt Relief “Unequal trade” (de Janvry, 1981, 9) has long bedeviled African economies as prices for primary commodities have tended to fall and prices for higher value manufactured products have tended to rise, leading to both trade and debt traps. However, in recent decades “there is a significant category of manufactures, particularly those in which China participates, in which prices appear to be falling” (Kaplinsky, 2006a, 49). Thus, African countries may gain from lower import prices for manufactures, although this undermines the long-term development of technological capabilities in the sector by undercutting domestic producers (Kaplinsky, 2009). Thus the structure of

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Globalization in Africa Geographical Distribution of Africa’s Exports to Asia

Source: Data from Broadman. (2007). Africa’s Silk Road: China and India’s New Economic Frontier. Washington, DC: World Bank.

Asian growth, combined with the power of major global buyers, such as the world’s largest company—Walmart—that engages in “cost down” and “cross-costing”5 and has annual sales bigger than the economy of sub-Saharan Africa (Stiglitz, 2006), may be inducing a secular or longer-term reversal in the terms of trade between primary and secondary products (Kaplinsky, 2005; 2006a). In the 1990s, Ankie Hoogvelt (1997) characterized the global economic system’s geography as one of “imploding capitalism” because capital flows and trade were largely confined to the rich countries and developing East Asia. However, partly as a result of increased demand for natural resources, the system is now once again

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becoming more geographically extensive. While still miniscule in relative terms, Africa’s share of global FDI has risen to 1.8 percent, attracting absolute amounts roughly three times what they were per year in the 1990s (Broadman, 2007a; Voltairenet, 2007). These developments are related to long cycles of boom and bust in the global economy, based on developments in technology (see Knox and Agnew, 1998), with China now the world’s largest exporter of hightech products (McCormack, 2006). However, the diversification of FDI and trade flows is also driven by other economic and political imperatives. For example, larger homes and more sport utility vehicles in the United States have driven energy consumption higher, as have Internet server farms, each of which may use the same amount of power as all the homes in a city such as Honolulu (C/NET, 2001). Partly as a result, the United States is also eager to diversify oil supplies away from reliance on the Middle East to Africa and Central Asia (Carmody, 2005). Much of Africa’s growth in this century has been driven by oil: by energy usage for consumption in the United States and increased demand from productive uses in China. According to USITC, 93 percent of sub-Saharan Africa’s exports to the United States, excluding South Africa, were energy products, mostly oil, in 2006.6 While some see the geography of African oil economics as equivalent to a new form of “triangular trade,” similar to slavery, between the United States, Africa, and Europe (see Rowell, Marriot, and Stockman, 2005), the triangulation effect on African economies would appear to be more between the United States and China. Indeed, it may be possible to speak of a new “global growth triangle,” once the global economy revives, with Africa supplying resources, China’s manufacturing capability, and the consumptive power of the United States, partly based on the seigniorage afforded by the dollar still being the primary global reserve currency. For example, Angola is now China’s largest supplier of oil (Alden, 2007) and the United States is its main export market (see Figure 3.4). These arrangements find institutional expression in the Africa-China-US trilateral dialogue (Council on Foreign Relations, 2007). Of course, this growth triangle also operated in reverse during the global economic slowdown of 2008. As the US economy went into recession, Chinese growth slowed, commodity prices fell dramatically, and African growth was affected. The globalized economy is dependent on territorially fixed forms of resource extraction, generating resistance and conflict (Omeje, 2005). The extractive social relations and problems that the high-tech

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Globalization in Africa The Impact of China on the Terms of Trade for Sub-Saharan Economies

Source: Data from Zafar, A. (2007). “The Growing Relationship Between China and Sub-Saharan Africa: Macroeconomic, Trade, Investment and Aid Links.” World Bank Research Observer 22 (1): 103–130. Reproduced by permission from Oxford University Press.

oil platforms dotting Africa’s coastline bring with them are captured by their local moniker of “mosquitoes” (Shaxson, 2007, 6). However, as Kransberg’s first law states, technology is neither good nor bad; it depends on the uses to which it is put (i.e., the social relations in which technology is embedded matter). The ongoing global technological revolution is having other important impacts on Africa. Backwardness can sometimes be advantageous if it creates opportunities for technological leapfrogging. As latecomers, institutions and capital are not locked in to older tech-

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nologies, enabling quicker uptake and diffusion of new ones (see Okpaku, 2006). Mobile phone penetration rates have risen dramatically on the continent, transforming the way in which much business is conducted, through mobile phone banking, for example. The world’s largest mobile phone maker, Nokia, sees Asia and Africa as the key growth markets in the next ten years (Unstrung, 2007). In fact, Africa has the fastest-growing mobile phone market in the world, growing 66 percent in 2005 alone, and now has a total of 250 million subscribers on the continent, up from 10 million in 2000, despite the fact that communication costs are five times higher in relative terms than in developed countries (Gillwald, 2005; RNCOS, 2006; “Africa’s Leap over Landlines,” 2007). Peasant farmers benefit from this technology because they are able to call ahead to find out where to get the best prices for their products (James, 2002; Von Braun and Torero, 2006), although the poverty reduction potential of ICT usage should not be exaggerated (Moloney, 2007; Duncombe, 2007). In many countries in Africa, mobile phone companies are among the largest companies and taxpayers (“Mobile Telecoms,” 2006). However, one of the largest indigenous mobile phone companies, Celtel, was bought by a Kuwaiti company during 2007, repeating a historical tendency for successful indigenous businesses to be taken over by foreign capital. These developments are discussed in more detail in Chapter 6. The development of new fiber-optic cables linking Africa to other continents has also dramatically reduced the costs of international phone calls and Internet access and opened up new economic activities. Eighty thousand people are now employed in South Africa in call centers (Benner, 2006), along with others in Ghana. This will enable many African countries to transcend the colonial legacy where phone calls, even between neighboring countries, had to be routed through Paris or London, dramatically raising costs. Interestingly, some US oil companies’ phones in Equatorial Guinea are in the Texas calling code area, making a call outside the oil compounds international (Maass, 2009). If increasing ICT usage may be considered one of the positive flows of globalization, Africa has experienced many of the negative flows, such as debt and resource extraction. However, recently the global social justice movement has been successful in securing substantial debt relief for heavily indebted African countries. In 1996 subSaharan Africa’s external debt was equivalent to 104 percent of GDP, making it the most heavily indebted region of the world in relative

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terms (Carmody, 2001). But this has fallen to 51 percent in 2004, and to 22 percent in 2008 (IMF, 2008). Debt relief is tied to neoliberal free-market reforms that have been associated with increased poverty and inequality in the past, and certain types of debt, such as that incurred under export guarantee schemes, is not included in the Multilateral Debt Relief Initiative (Stein, 2007). However, those countries that are able to escape the debt trap can potentially invest in infrastructure and human capital upgrading, which can contribute to economic growth along with increased (though recently erratic) aid levels. For example, because user fees for primary school have been abolished in many countries as part of their Poverty Reduction Strategy Papers (PRSPs),7 enrollment rose from 56 percent in 1999 to 64 percent in 2004 in sub-Saharan Africa (Stein, 2007). However, higher enrollments from this “liberalization of education” have put pressure on educational systems throughout Africa, with quality often suffering as a result. In Malawi “60% of the public resources at this level are used on children who drop out before finishing primary or on children repeating a year” (World Bank, 2004a, 7). Additionally, debt levels may again rise quickly as countries in the region attempt fiscal stimuli to ward off the effects of the global economic slowdown. There is also concern about Chinese loans to African governments that are off the books. In addition to these factors operating at a global level, the reintegration of the South African economy into the region has had substantial impacts.

Bestriding the Continent Like a Colossus or a Lilliputian? South Africa’s Regional Economic Impact Those who have traveled in sub-Saharan Africa in the past decade will have noticed a transformation in the appearance of the built environment. Mobile phone companies now paint their outlets and surrounding buildings in bright colors to advertise their wares. Two of the most visible of these companies in Africa have been the South African–based or associated Mobile Telephone Networks (MTN) and Vodacom. The bright yellow colors of MTN outlets are visible in some of the most remote parts of the continent, such as western Uganda.8 Nigeria and South Africa are, by far, the two largest economies in sub-Saharan Africa, with the latter more than three times larger than the former (calculated from World Bank, 2006b). The growth and reintegration of South Africa’s economy into its subregion and the

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subcontinent after the fall of apartheid has had important economic impacts. The strong growth of the South African economy, which accounts for over a third of sub-Saharan Africa’s GDP, until the global financial crisis has also had a regional multiplier (Keet, 2006; see A. Hirsch, 2005, for a discussion). As noted in Chapter 2, for the first time in decades South Africa created substantial numbers of jobs in the mid2000s: over half a million, mostly in horticulture (IRIN, 2006b). However, much growth has been based on the minerals-energy complex (Fine and Rustomjee, 1996, 1). Nonetheless, the fact that there is a growing regional market in southern Africa, and that many countries in the region have reduced tariffs far below their WTO commitments, has made it an attractive base of operations for some Asian companies (Hentz, 2005). Africa generates almost the same volume of foreign direct investment within the continent as Latin America, despite per capita incomes being ten times lower. South African companies are the third-largest foreign investors in Africa, after France and, somewhat surprisingly, the Netherlands, although it is the headquarters of companies like Shell Oil (Frynas and Paulo, 2007). For example, South African investment, particularly in the multibillion-dollar aluminum plant in Mozambique—Mozal—is largely responsible for that country’s having an average 8 percent economic growth rate per year from the late 1990s to the late 2000s (Lockwood, 2005; Kaminski, 2007). Although high rates of growth are easier off a low base, GDP per capita is still only US$320, and poverty continues to worsen in the north of the country (Hanlon, 2004). While some authors see these investment flows as a form of destructive regional integration, the picture is more complex than that (Kenny and Mather, 2008). The South African state has promoted regional integration in southern Africa through spatial development initiatives and development corridors. The impacts of the nature, design, and governance that have been explored elsewhere are not the focus here (e.g., Jourdan, 1998). However, it is important to note that these developments have promoted a hub (South Africa) and spoke (the region) approach that is reminiscent of the apartheid constellation of Southern African states (Hentz, 2005). However, the fact that some of South Africa’s largest companies have relocated their headquarters to London and Dubai is complicating this picture (Carmody, 2007; Dowden, 2008). In 2000, the New York Times noted that there was a “new scramble for Africa” taking place (Swarns, 2000). However, in contrast to the

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first scramble undertaken during the nineteenth century, this time it was being conducted not by external powers, but by South African companies. This happened for a variety of reasons. South African capital had been bottled up in South Africa during the era of apartheid by both international sanctions and strict exchange controls by the South African state to prevent capital flight. Also, with the accession to power of a coalition led by the African National Congress, the government there initially relaxed exchange controls for investment into the sub-Saharan region to promote intraregional trade and investment, and as a first step toward more wide-ranging liberalization of the capital account (see Carmody, 2007). Additionally, the opening up of regional economies as a result of the structural adjustment programs of the World Bank and the IMF made regional destinations more receptive to inward direct investment from South Africa. This liberalization resulted in what some have referred to as a “Great Trek North” by South African–based capital (Tleane, 2006). The opening up of the region to South African investment was closely tied to the idea of an African renaissance, promoted by the former president of South Africa, Thabo Mbeki (Landsberg, 2004). This idea was later to find institutional expression in the development of NEPAD, which was initially developed in discussions between Tony Blair and Mbeki (Porteous, 2008). The scale of investment by South African capital in regional economies has been substantial. But has it resulted in a transformation of the regional economy? South African investment in the region has been heavily concentrated in mining, with some limited beneficiation; finance; retailing; and mobile phones and media. Some might not view this as problematic since one of the foundations of the African renaissance was that “Africa’s mineral wealth, natural resources and agricultural potential can sustain the economic development we so desperately need” (Okumu, 2002, 146). However, South Africa has not really been an origin for the global production networks that are integrating some other regions of the developing world, such as Southeast Asia, into global “network trade” (Broadman, 2007a, ix). While South Africa is a world leader in some areas of manufacturing (e.g., mining equipment), these are not, for the most part, labor intensive and are therefore not subject to strategies of regional decentralization in order to reduce labor costs. Furthermore, as “elements of the supply chain are migrating to China as manufacturers of intermediaries move closer to markets and final assemblers,” this regional division of labor in subSaharan Africa is likely to solidify (Yusuf et al., 2007, 41).

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Rather, most South African investment in the region can be characterized as forming part of regional extraction networks (RENs) in order to fuel the growth of South African–based companies and, indirectly, the South African economy. However, this type of investment has been controversial and, consequently in order to promote their social licenses to operate, companies have also adopted strategies of regional sourcing and embedding. South African investment has resulted in a new form of integration of African economies that is different from, but shares similarities to, earlier forms of integration under colonialism. The new technologies of globalization, such as mobile phones, mean that forms of integration are necessarily different from that of colonialism. However, colonialism did make use of technologies such as the telegraph that allowed near instantaneous connection and communication, with the Colonial Office in London receiving 10,000 telegrams a year by 1900 (Gann and Duignan, 1978). Rather, South African investment has concentrated in areas where there are growing local and national market niches (mobile phones and retailing) and resource extraction. This has resulted in a new form of regional economic thin integration or “thintegration,” where regional production of manufactures and high value–added services remains concentrated in South Africa. There are, of course, exceptions to this such as Mozal, the massive aluminum smelter in Mozambique, which was substantially built with South African capital. This is, however, an enclave investment because, although it has helped to generate fast economic growth in Mozambique, there are few linkages to the domestic economy that might propel wider economic transformation (see Lockwood, 2005). According to Fredrik Söderbaum (2004, 182), “available evidence suggests that the most important purpose of the MDC [Maputo Development Corridor] was not to create jobs and generate social development, but to use Mozal as a showcase that ‘megaprojects can be viably undertaken in Mozambique—increasing the profile and credit rating of the region” (BusinessMap, 2000, 37). The economic revival of sub-Saharan Africa, in part facilitated by South African investment, has also made the region a more attractive destination for inward investment from other regions. However, South Africa’s mercantilist policies toward the region have arguably contributed to problems in the further development of regional manufacturing industry, if not outright deindustrialization. For example, delegates to a Southern African Development Community conference felt that South Africa was “too defensive and protective” in trade negotiations,

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and that its giving duty rebates to exporters was “killing off other economies in the regions” (Bond, 2006, 130). The nonrenewal of the trade agreement with Zimbabwe was a particular cause for concern among manufacturers there in the mid-1990s (Carmody, 2001). One of the objectives of structural adjustment policies was to open African economies up to inflows of foreign portfolio investment, which would enable them to access investment resources from overseas (Chang, 2008). Consequently, during the course of the 1990s and the first decade of the twenty-first century, new stock markets were set up across the continent, with ten new markets opening since 1989 (Moss, 2007). Several South African companies have listings on exchanges in Namibia, Zimbabwe, Botswana, Malawi, and Zambia, enabling them to draw capital from the region. While in theory regional companies can also dual list on the Johannesburg Stock Exchange, enabling them to draw on capital from South Africa, in reality the underdevelopment of regional capital means that this is rarely the case. For example, while there are twenty-one companies that are listed on both the Johannesburg Stock Exchange and the Namibian Stock Exchange, there are only two African companies from outside of South Africa listed there (JSE, 2009). Both of these are Zimbabweanbased companies: the British International Cable Company, Central African Cables (BICC CAFCA) and Hwange Collieries. One company has its primary stock listing on both the Johannesburg Stock Exchange and in Nigeria: Oando PLC, an oil trading company. The South African government has been active in brokering peace accords, some would argue, in part, in order to open up commercial opportunities for its companies. Allied to the peace settlement in the DRC, in which South Africa played a leading role, former president Mbeki claimed that a $10 billion deal on trade and investment had been done with the government and that $4 billion worth of World Bank tenders had been garnered for South African companies (Nest, 2006; Bond, 2006). In manufactures, South African companies are now often being competitively displaced by Asian ones in the region. There are also cases where South African companies are being outbid on mineral exploration rights by Chinese companies. Nonetheless, they remain important actors. To some extent, distinctions based on national ownership are becoming moot as Chinese investors are taking out major stakes in South African companies (Southey, 2006). However, the South African impact will likely diminish in relative terms compared to China’s because its economy is less than a tenth in size and grow-

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ing only half as fast (calculated from IMF, 2007). South African halfyear exports to China rose 195 percent in 2007 (Hazelhurst, 2007). Nonetheless, the South African government remains influential and spearheaded NEPAD, which seeks to improve governance on the continent in exchange for more favorable international relationships with the developed countries (see Taylor, 2005a). Whereas South African value-added products were mostly not competitive on world markets in the initial years after apartheid, they did have a competitive edge in the region (Söderbaum, 2004). South African retailers now dominate southern Africa and supermarketization may mean that small-scale farmers will not have outlets for their products (see Humphrey, 2007, for a discussion). In the Zambian supermarkets, almost all of the processed products are imported from South Africa, and even some fresh ones like eggs.9 Thus, while the South African government and major companies have succeeded in integrating the southern African region economically, the nature of this integration is problematic. The World Bank consistently argues that Africa needs to be integrated into the global economy because it has been bypassed by globalization. This argument for unmediated integration into the global economy is captured in the title of Chapter 9 of the 2009 World Development Report, which is titled “Winners Without Borders: Integrating Poor Countries with World Markets,” much of which is focused on sub-Saharan Africa (World Bank, 2009b). That chapter presents distance from world markets as a major impediment to development. However, as has been extensively detailed elsewhere, it is not that Africa is not integrated into the global economy (Bond, 2006). Indeed, it is integral as a supplier of raw materials (Moseley and Gray, 2008). Most African countries have high export-to-GDP ratios, for example. Rather, it is the nature of their integration into the regional and global economies that has often led to problems. The terms of integration inherited from colonialism and the failure of most import-substitution policy regimes in sub-Saharan Africa has resulted in increasing levels of poverty across much of the continent over the past few decades. “Adverse differential incorporation” (R. Bush, 2007, 3), with a focus on natural resource and agricultural raw material exports, led to marginalization for much of the continent’s population, which increased South African investment in the region has largely failed to reverse. This is because most South African investment into sub-Saharan Africa is concentrated in areas with low linkage and multiplier effects, and limited technological spillovers.

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National Factors: Good Governance The World Bank (Mkandawire, 2005) attributes much of Africa’s improved economic performance in the first decade of the twenty-first century to better governance or management of public affairs. In 2002, the African Union estimated that the continent lost up to a quarter of its economy to corruption per year, much of this leaking out in illegal capital flight abroad (“Corruption Costs Africa Billions,” 2002). An oftquoted statistic is that 40 percent of Africa’s private wealth is held overseas (Collier, 2007). The international donor community has conveniently emphasized national governance as the principal challenge facing Africa (an internalist explanation for underdevelopment), rather than factors such as unfair trade and agricultural dumping of subsidized products (a form of global governance), in which they are implicated. Consequently, the international donor community has been supportive of NEPAD as a mechanism to improve governance. Governance is fundamentally about power and how it is exercised. Donor-promoted “good governance” seeks to normalize and embed the neoliberal accumulation regime on the continent by disciplining the state so that it cannot interfere in the market (Carmody, 2007). However, governance can be good only if it is democratic, so there can be no singular definition (Mkandawire, 2007). Nonetheless, macroeconomic governance has seen some improvement in the first decade of the twenty-first century, with inflation averaging only 8 percent a year on the continent (Voltairenet, 2007), making productive investment more attractive. Zimbabwe was an outlier with inflation in the sextillions of percent until foreign currency trading was legalized. Shoppers raced ahead of store clerks changing prices in supermarkets when there were things available to buy. A World Bank (2007) study also found that there have been significant reductions in corruption in Africa. In part, this has been driven by disaffection among local voters who have voted in new governments, as in Kenya in 2002. The president there from 2002, Moi Kibaki, was a vice-president under the previous administration, and some supporters from his ethnic group noted that it was now their “turn to eat” from the state coffers, as captured in Wamwere’s book (2003, 74). Subsequently, the British ambassador accused the new government of “eating like gluttons” and “vomiting on our shoes” (Russell, 2004). The unwillingness of the government to accept the election result in 2008 led to widespread violence.

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In another mixed example, although previously a military dictator, former Nigerian president Olusegun Obasanjo, who was elected in 1999, was instrumental in setting up an Economic Crimes Commission. A notable and successful banking reform was also undertaken. However, when the finance minister’s anticorruption drive threatened to upset the apple cart prior to the 2007 election, she was transferred to the Foreign Ministry and ultimately forced to resign. Thus, neopatrimonialism represents a type of social equilibrium (Van de Walle, 2001), although it is increasingly under challenge in Africa. According to Christopher Clapham (Naidu, 2006), one reason that China’s model of engagement with Africa in the first decade of the twenty-first century without political strings attached has achieved its objective is precisely that it fits with older models of state patrimonialism. However, Robert Copson notes that China has interests in improving African state efficiency, if not accountability, as “corrupt regimes and failing states are not going to be able to maintain Chinese-built infrastructure or repay loans” (2007, 143).

New Wine in Old Bottles? Impacts of the Commodity Boom There are a number of factors that contributed to Africa’s economic growth episode; chief among these is the commodity boom. The World Bank’s chief economist, John Page, has noted that one of the features of Africa is the great diversity of economic performance across countries. Others refer to a “two speed Africa” (Goldstein, 2006). From the mid-1990s, sixteen countries in sub-Saharan Africa have seen average economic growth over 4.5 percent, whereas the thirteen slowest-growing economies have averaged only 1.3 percent (World Bank, 2006b). Consequently, the standard deviation of average annual growth in sub-Saharan Africa doubled from 2 percent for the 1980s to 4 percent for the early years of the 2000s. In large measure, this was driven by differing resource endowments (Zafar, 2007), with the fastest-growing economies in Africa being petro-states. Copper production in Zambia more than doubled from 2000 to 2007, as the price rose almost sevenfold before falling back (“From Accelerator to Brake,” 2005; “Mining in Zambia,” 2006; Siddiqi, 2007b). Sixty-four percent of Zambia’s exports are the minerals copper and cobalt, which co-occur (CSO, 2007). Much of the new investment,

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including a huge new copper smelter, is being undertaken by Chinese companies (Mulenga, 2006). While the new jobs and economic growth created by the revival of the industry are to be welcomed, there are a number of concerns. The industry is characterized by a harsh labor regime and wages are low, with workers at the Chambishi mine in Zambia reportedly paid $45 a month (Sautman and Hairong, 2006). Safety standards are also poor, as an explosion that killed dozens of workers in a dynamite factory at the mine in 2005 demonstrated. Also, because copper is a nonrenewable resource, there are concerns about the sustainability of the industry. Indeed, a report for the World Bank (Bond, 2006) found that, if the costs of depletion were included, Africa is being impoverished by the emphasis on natural resource exports. As discussed in more detail later in Chapter 5, the people of Zambia are seeing few benefits from their natural resources. Under the auspices of the World Bank and the IMF, in order to attract foreign investors during the privatization of the copper industry in the late 1990s, the government’s royalty fee was set at 0.6 percent. This meant that the country’s resources were essentially being given away for free, just before the commodity price boom began (see Kaunda, 2002, for a discussion of the privatization). While the power balance shifted somewhat during the commodity boom and there was scope to renegotiate contracts, as Liberian president Ellen Shirlaff Johnson has done for iron ore deposits with the Indian company Mittal (Alden, 2007), many governments remain leery of disturbing investor confidence. However, concerns over corruption have also led to cancellation of some contracts in the DRC, for example (“Who Benefits from the Minerals?” 2007). Collier (2007) discounts the impacts of the resource boom as short lived. Previous “stop-go growth” dependent on changing conditions in the global economy has not been conducive to poverty reduction (Amoako, 2003). A serious economic impact of the resource boom was that many African economies experienced “Dutch disease.” When export receipts go up, hard currency such as dollars become more plentiful and, consequently, less of the local currency is required to buy them. The impact of this is to make imports cheaper and exports of manufactures and other price-sensitive goods less competitive, reinforcing dependence on resource exports. During Gabon’s oil boom in the 1980s, 96 percent of food was imported (Ghazvinian, 2007). While two-thirds of Gabon’s population lives on less than a dollar a day, the capital Libreville is more expensive than London or New York, and per head is the world’s leading consumer of champagne (Shaxson, 2007).

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The appreciation of the Zambian currency put pressure on the horticulture sector, which was meant to help diversify the economy (Voltairenet, 2007). While horticulture exports continue to grow in some countries, accounting for 65 percent of all of Kenya’s exports to the EU, there are problems associated with it because it often is undertaken on large estates, exacerbating class inequality. In Kenya, thirteen companies account for 90 percent of the country’s fresh vegetable exports (Broadman, 2007a), although horticultural development has sometimes been associated with absolute poverty reduction (see English, Jaffee, and Okello, 2006). Nonetheless, horticultural estates may monopolize water supplies, to the detriment of local small-scale farmers (Vidal, 2006).10 Also, some nontraditional exports are capital rather than labor intensive in Africa, such as aquaculture that uses automated fish-feeding systems (Mytelka, 2003). Africa’s reliance on primary commodity exports is problematic because of the potential for price instability, the lack of linkage effects in local economies, the lack of technological dynamism, and the environmental impacts. Extensive oil and mineral deposits also have often been associated with conflict—the resource curse. Some research suggests that countries rich in resources have a 23 percent chance of experiencing conflict in any given five-year period whereas, for countries without resources, the figure is 0.5 percent (Collier and Bannon, 2003; see also Le Billon, 2007, for a discussion). In some cases, the “plunder economy” (Cramer, 2006, 40), which was put in place during slavery and colonialism, is being reinforced.

Environmental and Sociopolitical Impacts of the Resource Boom There were severe environmental impacts from the resource boom, and they are likely to occur again once global economic growth revives. China imports almost half of Gabon’s total forest exports, much of which is illegally harvested (Chan-Fishel, 2007). The deforestation process under way in Mozambique is referred to as the “Chinese takeaway” (Chan-Fishel, 2007). While China’s economic growth is heavily metal intensive, its growing furniture industry is also creating a shortage of wood around the world (Kaplinsky, 2009). In 1998 the Yangtze River flooded, causing 2,500 deaths and billions of dollars in damage (Taylor, 2007a). After this, logging of old-growth forests was banned, requiring China to source more of its lumber requirements overseas in Southeast

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Asia and Africa. China is now second only to the United States in wood imports. This massively increased demand for lumber led some African countries, such as Liberia, to ban lumber exports, although illegal logging to supply the Chinese market continues. Gabon alone supplies 13 percent of China’s tropical log imports (“China’s Log Imports Fall 19%,” 2008), and 87.9 percent of Sierra Leone’s exports to China in 2008 were unprocessed wood (Raine, 2009). Increased sourcing of lumber overseas can be seen as China’s attempt to construct its own “green wall” against adverse environmental impacts of rapid growth by claiming access to other countries’ resources, a form of resource sovereignty or colonialism. However, China’s ability to protect itself against global environmental problems, such as global warming, is now severely constrained, particularly because Chinese greenhouse gas emissions have increased to the point where they are now the largest in the world (Kaplinsky, 2009). In Gabon, the Chinese state-owned oil company Sinopec prospected in one of that country’s nature reserves. This apparently involved mass pollution, carving roads through the forest and dynamiting parts of a park (Taylor, 2007a). There is a process of deviation amplification involved in this because the construction of new roads by Chinese companies (e.g., in Gabon) opens up previously pristine forests for logging and reduces the amount of carbon dioxide they can absorb (Sharife, 2009). Despite the precious natural resources that they represent, the vast majority of Gabon’s logs are exported unprocessed, meaning value is added primarily in other economies (increasingly, China). According to Peter Bosshard, “China’s strategy is to access resources that have so far not been exploited because they are considered insignificant in size, geographically too remote or politically risky by Western companies” (2008, 1). This policy compounds the environmental risk because these projects are often in ecologically fragile regions. Interestingly, the new ruler of Gabon, Ali Bonga Ondimba, who came to power in 2009 after the death of his father, has a personal assistant who is Chinese.11 A Chinese ship is reported to have docked in Mozambique with 4 tons of shark fins, leading to accusations of resource colonialism. According to some estimates, China is consuming 14 percent of the world’s ecological resources and is overshooting its own biological carrying capacity by 100 percent (Blignaut, 2007). In some cases, there is a risk of regional species extinction, with 90 percent of southern Africa’s abalone shellfish harvested in the past few years (Alden,

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2007). There are also major concerns in Mozambique about the proposed Chinese-funded $2.3 billion Mphanda Nkuwa dam, particularly given the country’s seismic risk when it recorded a 7.5 earthquake on the Richter scale in 2006 (Lemos and Ribeiro, 2007). The Chinese-funded Merowe dam in Sudan will have a 174-kilometerlong reservoir and displace 70,000 people to desert locations from the fertile Nile Valley (Bosshard, 2008). Consequently, there have been a series of environmental conflicts associated with Chinese investment. In Sudan, protestors over the Merowe dam have been killed. In 2006 the guerrilla group, the Movement for the Emancipation of the Niger Delta, issued an explicit warning for Chinese companies to stay away and detonated bombs in the delta (Obi, 2007). The devastating environmental impacts of oil production, spillages, and gas flaring in this region have been extensively detailed (Kashi and Watts, 2008). One and one-half million tons of oil have been spilled there in the past fifty years (Ghazvinian, 2007). Increased poverty and environmental degradation in the delta are implicated in conflict there, which claims roughly 1,000 lives a year. Kidnapping and ransoming of expatriate oil workers in the delta is so rife that many have personal bodyguards, with one bar frequented by expatriates having coasters that read, “Eat a lot. Fat people are harder to kidnap” (Ghazvinian, 2007, 80). In June 2007, seventy-four people were killed on an attack on a Chinese oil field in Ethiopia (Powell, 2007). In response to perceived lower environmental standards by Chinese companies, the president of the European Investment Bank argues that IFIs should reduce their own standards in order to compete (Bosshard, 2008). China has also introduced new regulations for foreign investment that require companies to meet domestic, but not international, environmental standards. The environmental consequences of China’s rapid industrialization are well known. China is the world’s largest emitter of sulfur dioxide (K. S. Gallagher, 2009) and, consequently, “30 per cent of China has acid rain; 75 per cent of lakes are polluted and rivers are contaminated or pumped dry; and nearly 700 million people drink water contaminated with animal and human waste” (M. Leonard, 2008, 41). According to some African politicians, such as South Africa’s former deputy president Mlambo-Ngcuka, this provides an opportunity for Africa. “China needs to send some of its polluting industries elsewhere because it is choking on them . . . we have the capacity to manage emissions and want to regulate that agreement” (Bosshard, 2008, 3). A field visit to the multimillion-dollar Chinese-built copper smelter in the new Zambia-

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China Cooperation Zone revealed extensive air pollution.12 In addition, the Indian-owned Konkola Copper Mine (KCM) in Zambia polluted one of the rivers in Copperbelt Province (Carmody, 2009). An environmental assessment notes that “the contamination from this latter plant area is, at least periodically, very severe, with pH sometimes as low as 2.2 being experienced in the South Uchi stream [which flows into the Kafue River]” (ZCCM-IH, 2005). Chinese companies typically pay little attention to the environmental impacts of their investments. As Johnny Sahr, Sierra Leone’s ambassador to China, explains, “they just come and do it. We don’t start to hold meetings about environmental impact assessments and human rights and bad governance and good governance” (“China’s Big Investment,” 2005). Western corporations are also substantial polluters, however, with Shell Oil fined $1.5 billion for pollution of the Niger Delta in 2006 (Carroll, 2006b). Thus, Chinese practices in Africa represent business as usual, rather than a radical break with the past (Klare and Volman, 2006a). In response to pressure, however, the Chinese state has also been promoting the idea of corporate social responsibility for its companies that operate overseas. For example, the Nine Principles on Encouraging and Standardising Foreign Investment issued by the State Council in October 2007, in addition to calling for improved policy coordination and better supervision of SOEs [state-owned enterprises], also specified that firms should comply with local laws, protect the environment, accelerate personnel training and improve safety training, and preserve a good corporate issue and reputation. (Raine, 2009, 102–103)

Resource rents available from oil tend to discourage the development of a social or tax contract with citizens, and state accountability, because revenues are instead available to state elites from extractive enclave economies (D. K. Leonard and Strauss, 2003). New possibilities for corruption are opened up in resource-rich states and Dutch disease may increase poverty and narrow the economic base (Gary and Reisch, 2005). The reinforcement of rentier petro-states makes economic and social development more difficult and exacerbates class inequalities. It is possible to buy a $7,000 candelabra in Angola’s new $35 million shopping mall while 70 percent of the country lives below the poverty line (Perry, 2007). In Nigeria, where hundreds of billions of dollars worth of oil have been pumped since the 1950s, 85 percent of revenues accrue to only 1 percent of the population (Watts, 2006).

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Oil booms also seem to exacerbate spatial inequality within countries. While the genocide proceeds in Darfur, Sudan’s economy boomed and a new 1,500-acre office, duplex, and golf course complex was being built in the capital, Khartoum (“Glittering Towers in a War Zone,” 2006). Chinese support for Sudan’s government in order to retain access to oil has been well documented (see Askouri, 2007).

Impacts of the Resource Boom on African Manufacturing Traditionally, manufacturing has been central to economic transformation as a seedbed of productivity increases exports and innovation. The increased emphasis on oil and other mineral extraction, and the competitive displacement of much manufacturing as a result of reduced import barriers and appreciating currencies, is resulting in a technological downgrading of African economies (Economist Intelligence Unit, 2002). However, economic growth also opens up potential for manufacturing development. As domestic demand rose, some new export opportunities opened up. Kenya created 5,500 new jobs in manufacturing in 2005 while certain branches such as leather and footwear declined, largely as a result of Chinese imports (Central Bureau of Statistics, Government of Kenya, 2007). “Countries producing goods highly demanded by China (e.g. some minerals) may see export growth; those exporting products in competition with its output (such as clothing) will see exports fall, while countries importing those goods will gain from lower prices” (Stevens and Kennan, 2006, 33). China is now the “workshop of the world,” with 70 percent of the world’s photocopiers and 80 percent of its artificial Christmas trees produced in the Pearl River delta (Kaplinsky, 2005, 193). It combines low labor costs with advanced infrastructure and skills and a “market Stalinist” state (Henderson, 1993, 86), intent on maintaining Communist Party rule through a combination of economic growth and force. For example, it leads the world in executions, sometimes using “execution buses” (“China Moves from Bullets to Mobile Execution Vans,” 2005). Most of the world’s mobile phones are produced in China. It accounts for 80 percent to 90 percent of the world’s production of soft toys and microwaves and one town—Qiatou or “Button and Zip Town”—produces 60 percent of the world’s buttons and most zippers (Carroll, 2006a). But half the toy manufacturers have reportedly gone

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bust as a result of the global slowdown. In part, this is because India banned all imports of Chinese toys for six months, as a protectionist measure as a result of the global economic crisis (Moore, 2009). In a context where African economies have been liberalized in the past twenty years, under the auspices of World Bank and IMF programs, Chinese competition has exerted severe pressure on African manufacturers. As noted in Chapter 2, some speak of a Chinese textile tsunami sweeping over the continent. In South Africa, 86 percent of clothing imports are from China (Van de Looy, 2006), and most of those who have lost their jobs are women (Kaplinsky, 2006b). Many of the new jobs created in mines and infrastructure projects are for men. Competitive displacement from Asian imports is partly because of the poor capabilities in the sector. For example, all of Africa in 2002, excluding South Africa, had only 0.1 percent of the world’s International Standards Organization 9000 certificates (Lall, 2005). These certificates show quality management, a virtual prerequisite for potential exporters. However, the average productivity of Zambian firms is only one-quarter that of Chinese firms (Arnold and Mattoo, 2007). A research group at the Institute of Development Studies in Sussex and Open University in the UK has begun to systematize the impacts of what they call the “Asian drivers” (China and India) on low-income economies around the world. Robin Jenkins and Christopher Edwards (2006) calculate an export similarity index for African countries and China and India. Based on the standard industrial tariff classification (SITC), the country facing the greatest competition in Africa in international markets with China is Lesotho, where 89.1 percent of its exports (almost exclusively clothing) fall into categories in which China also exports. As noted in Chapter 2, Lesotho’s vulnerability to this competition was demonstrated in early 2005 when the Agreement on Textiles and Clothing, which succeeded the Multi-Fibre Arrangement and set quotas on textile and clothing imports around the world, was phased out and the Basotho textile industry was devastated. Nonetheless, according to Broadman, there is new investment forthcoming: The vast majority of Chinese and Indian FDI inflows to Africa over the past decade have been largely concentrated in the extractive industries. Because such investments are typically capital intensive, they have engendered limited domestic employment creation. However, in the last few years Chinese and Indian FDI in Africa has begun to diversify into many other sectors, including apparel, agro processing, power generation, road construction, tourism and telecommunications, among others. (2007a, 12)

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Higher economic growth offers the potential of some limited linkage and multiplier effects in nontradables, such as heavy mining equipment, which is “naturally protected” by high transportation costs, and in services such as construction or mobile phone repair.13 Debt relief and improved tax revenues also mean that governments have more money to invest in infrastructure and education and health, stimulating both direct job creation and wider benefits for economies. Also as tax revenues improve, government procurement stimulates some new investment in manufacturing FDI. The Indian company Tata opened a bus and truck assembly plant in Zambia in 2006, the output of which will be mostly purchased by the government (“President Mwanawasa Commissions,” 2006). The growth of Asian economies also opened up potential for increased manufactured exports, mostly lower value-added basic manufactures such as aluminum, iron, and steel. Exports of manufactures from Africa to China quadrupled from 1990 to 2004 to over $800 million (Broadman, 2007a). However, manufactured exports are still relatively small compared even to the amount of services (largely tourism) that Africa “exports”—$22 billion in 2004. The number of Chinese tourists in Africa doubled from 2004 to 2005. Broadman (2007a, 2) argues that Chinese and Indian FDI in manufacturing is propelling African producers into “cutting edge multinational corporate networks.” Thus, he posits that Africa is being integrated into global value or commodity chains originating in China and India, and that this “network trade” will facilitate the continent’s breaking out of its traditional static comparative advantage in raw material and natural resource–intensive exports (2007a, ix). Another way to put this is that Africa is experiencing “deep” rather than “shallow trade integration,” which is where only the volume, price, and direction, rather than the structure, of trade changes (Schmitz, 2006, 55). This is in sharp contrast to the arguments of P. Gibbon and S. Ponte (2005) who argue that Africa is “trading down” in global value chains. Overall, while some local market-serving investment in manufacturing is taking place in food processing and vehicle assembly,14 for example, by Asian companies in Africa, on the back of stronger economic growth, the competitive displacement pressures on African manufacturing arising from Asian imports are strong. Consequently, it is Asian and Western economies and actors that continue to capture many of the benefits of African economic growth. Chinese “economic cooperation zones” hosting small- and mediumsized enterprises, such as the one in Sierra Leone, have a class impact in

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that the indigenous business class remains underdeveloped (Himbara, 1994). In Kenya, 75 percent of manufacturing is owned by the 175,000strong Indian population (Soludo and Ogbu, 2004). Chinese companies can under-price local rivals because they pay a 3 percent interest rate on their loans in the textile and clothing industry versus roughly 15 percent for businesses in the Common Market of Eastern and Southern Africa (COMESA) region (Kaplinsky, McCormick, and Morris, 2006). In Osikango, Namibia, Chinese traders sell a carton of 300 shoes for $100 (Kaplinsky, McCormick, and Morris, 2006), with which no local producer can hope to compete. “Even in Angola’s war-torn region of Huambo, five Chinese retailers have, since their arrival in 2000, managed to carve out a position that has effectively closed down established suppliers and retailers” (Alden, 2005a, 157). Thus, the gains from both trade and production are largely kept within ethnic business networks, rather than diffusing through local populations. Infrastructure is a key constraint on manufacturing development in Africa. Forty percent of Africans live in countries that are landlocked (Broadman, 2007a). One Chinese firm in South Africa finds that sending products to Angola is as expensive as shipping them to China. While there are major infrastructure projects being put in place across the continent, Chinese companies often import up to 70 percent of their labor from China to work on these, reducing the impact on unemployment in African countries (Rocha, 2006). However, the fact that China’s $1.9 trillion of foreign exchange reserves may now be used for overseas investment projects opens up great potential for infrastructural transformation in Africa such as the recent multibillion-dollar road and rail for debt package for the DRC (Alden, 2007; “Who Benefits from the Minerals?” 2007).15 In the next chapter, I turn to a discussion of the impacts of the scramble for oil on the conflict in Chad and Sudan.

Notes 1. Although per capita growth is considerably less impressive, given that Africa has the highest rate of population growth in the world. 2. Perhaps, this is analogous to the unlocking of the cryptex in The Da Vinci Code. This may occur through a concurrence of changes in patterns of global capital accumulation and through purposive public action. 3. In part, this may also be because of suspected collusion between the two main multinational tobacco-buying firms in the country to keep prices down. Anxious to maintain its diplomatic support at the UN, Taiwan has recently announced that it will buy tobacco directly from Malawi, cutting out

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the middlemen (Afriquenligne, 2007). Malawi still later diplomatically recognized Beijing over Taiwan. 4. Field notes, Lilongwe, Malawi, March 16, 2007. 5. Cost down is where suppliers are expected to reduce their prices, year-on-year. Cross-costing is where buyers source quotes from different suppliers, putting them in competition with each other. 6. H. Stein, personal communication, July 9, 2007. 7. These supplanted World Bank and IMF structural adjustment programs in 1999. 8. Field notes, Mount Muhavura, December 16, 2008. 9. Field notes, Lusaka, Zambia, January 3, 2007. 10. Tesco introduced stickers on its products showing the number of air miles they had traveled so that consumers could not buy them if they wished to be environmentally friendly. However, the UK secretary for international development has noted Kenyan flowers use only 20 percent of the energy that Dutch flowers do, including transportation, because they are not grown in heated greenhouses. 11. The new president is the son of longtime dictator Omar Bonga. 12. Field notes, August 16, 2009. 13. Managers of Indo-Zambian Bank interviewed by the author, Lusaka, Zambia, April 1, 2007; see also Kaplinsky (2008). 14. Given high labor productivity, South Africa has established itself as a major exporter of cars, including the recent commissioning of a General Motors Hummer assembly plant to serve the African, European, and Asian market—the first of its kind outside the United States. 15. For comparison, US foreign exchange reserves stand at about $68 billion, or 5.2 percent of Chinese reserves.

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4 The Scramble for Oil: Insights from Chad and Sudan The new scramble for Africa has affected governance on the continent. There is now a literature on this second scramble (Okeke, 2008; Southall and Melber, 2009) that includes consideration of less significant players such as Brazil. But the focus of this chapter, in keeping with the rest of the book, is on the role of major world and regional powers in Africa. I noted in the previous chapter that, according to the World Bank, there have been some improvements in governance on the subcontinent. However, it is often noted that Africa is affected by the resource curse. How is this curse socially constructed? In contrast to other literature on the subject, in this chapter, I argue that the resource curse is actually a mode of governance, which is socially constructed and revised. It is a reflection of Africa’s contemporary mode of politicoeconomic integration into the global system, although it does not always manifest because the ways in which resource extraction occurs are mediated by local institutions and social formations. I explore these issues through a case study. As the core of the global economy has grown and become more integrated, Northern countries increasingly share sovereignty horizontally; in part, to achieve access to natural resources. Their collective power is then projected into the Global South to ensure vertical sovereignty sharing and continued resource extraction, giving sovereignty a global cruciform structure. The resulting uneven development is associated with problems of poverty and resource competi-

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tion and conflict (the resource curse). The supposed solution to these problems that is often presented by donors is better national, and also global, governance: the creation of a governance matrix prescribing and proscribing sets of actions by particular actors. Matrix governance attempts to regularize social interactions to achieve poverty reduction but, by promoting a continuing emphasis on natural resource exports in Africa, it contributes to the problems that it seeks to address. And in some cases, it is implicated in violent conflict. The contradictions of this form of global governance then recreate the conditions for its own perpetuation. In this chapter, I explore this issue through a focus on the new scramble for African oil that utilizes a case study of Sudan and the neighboring ChadCameroon pipeline. Increased Chinese and US interest in African resources, particularly oil, has been highlighted in Chapters 2 and 3. However, Africa at the start of the twenty-first century attracts both positive and negative interest from world powers: positive interest in unlocking its oil and mineral wealth, and negative interest in containing unwanted flows of globalization (HIV, refugees, piracy, etc.). There is a contradiction inherent in this because natural resource–based capital accumulation, or accumulation in the primary sector of the economy, often tends to be more conflictual and, consequently, is implicated in the generation of negative flows to the international system (see Bond, 2006). This contradiction and the geopolitical imperatives of engagement and containment that stem from it have resulted in the restructuring of governance on the continent. The “adverse differential incorporation” (R. Bush, 2007, 6) of Africa into the global economy requires variegated strategies of governance. In this chapter, I seek to explore the nature and contradictions of globalized governance as played out in Africa, and to assess its implications for human and state security through an examination of the geopolitics of oil in Darfur in Sudan, and in relation to the Chad- Cameroon pipeline that is an elaborate scheme aimed at reducing poverty. However, the opening of this pipeline and another in neighboring Sudan have been associated with conflict. This provides a lens through which to view the ways different places are differentially “glocally” governed. In contrast to much of the extant literature, I posit that authoritarian states and the resource curse in Africa can be viewed as particular forms of glocalized governance involving coordination between domestically based and transnational actors.

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Globalization and Cruciform Sovereignty As the triadic economies of Europe, North America, and East Asia have grown, they have become more integrated through trade and investment flows. This has had a number of impacts. Economic globalization and growth have led “to a relentless expansion in the demand for raw materials, expected resource shortages, and contested resource ownership” (Le Billon, 2004, 4). In particular, certain raw materials such as oil and coltan are necessary for industrial production in the developed countries so that they have become issues of national security, leading to the “economization of international security affairs” (Klare, 2001, 10, emphasis in original). While some have cast doubt on the necessity for a spatiotemporal fix under post-Fordism given the increased importance of nonspecific assets (Cerny, 2006), at the “front of the pipeline” a spatial resource fix is still required. That is, as industrial countries’ demand for natural resources outstrips what is available from their national territories, their politicoecological footprint is globally extended. This has given rise to the imperative to further project Northern resource sovereignty southward. The average command over the human and natural resources of the inhabitants of the core of the global economy over the resources of sub-Saharan Africa is approximately sixty times more than the other way around (A. Payne, 2005). Globalization of economy has created the imperative of greater coordination, or global governance among states and other actors (see Soederberg, 2006, for a discussion). Some definitions of governance hold that what distinguishes it from government as a mode of rule is that it involves the coordination of networks of actors. There is a merger of forms of capital and powerful state sovereignty that Hardt and Negri (2000, 3) refer to as “empire.” This synthesis is instantiated in IFIs, such as the World Bank, in which the United States is the only country to have veto power and, in order to protect its bond rating, the Bank must promote market-friendly policies. Cruciform sovereignty 1 is a new pattern of suprasovereignty (Dalby, 2005) related to economic restructuring under globalization. Horizontal sovereignty sharing among Northern countries takes place through institutions such as the North Atlantic Treaty Organization, which treats an attack on one member as an attack on all, or the EU, which is the world’s largest overseas aid donor. The core countries of the global economy share sovereignty in a horizontal fashion; that is, all members give up some of their sovereignty to participate. However,

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there are also other forms of sovereignty-pooling among Northern countries, such as the coordination of spending of tax revenues on overseas assistance through “common pool” resources, for example (World Bank, 2000, 247). In the vertical model of sovereignty sharing between Global North and the Global South, while developing countries give away some of their sovereignty, their collective power (Harvey, 2003) is not enhanced because donors give only aid, rather than sharing their sovereignty. Consequently, when Northern suprasovereignty is projected southward into the developing world, it appears as a form of Kautskian “ultraimperialism” for Southern populations (Radice, 2005, 96). It is a kind of “sovereign excess” of Northern countries reflected in the weak sovereignty of Southern states (Sidaway, 2003, 345). According to Stephen Krasner, “for policy purposes it would be best to refer to [vertically] shared sovereignty as ‘partnerships.’ This would more easily let policymakers engage in organized hypocrisy, that is, saying one thing and doing another” (2004, 108). 2 In this instance, the ideology of cosmopolitanism can easily lead to justifications of the exercise of power by dominant states (Kiely, 2005). When Northern power is projected southward, it also assumes a matrix structure, where the actions of developing country states are to be constrained by governance and other conditionalities, and errant social forces by military coercion.

Governing Exclusion, Coercing Consent: The Matrix Governance is a contested term, with no singular definition (Stein, 2008). For the World Bank, it is “the process and institutions through which decisions are made and authority in a country is exercised” (Riddell, 2007, 375). Former UN Secretary-General Kofi Annan argues that “the key to Africa’s progress is good governance and fair rules for the global economy” (2007, 5). As it is used in policy circles then, good governance is about the regularization and institutionalization of social interactions along publicly articulated and broadly accepted lines to achieve desired outcomes for the common good. However, the fact that the push for good governance has been donor led suggests that this a transnational, rather than a national, project as implied in the World Bank definition. Governance then relates to the ways in which authority is exercised through states in coordination with other social forces. It is a globalized phenomenon that plays out

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differentially across national spaces, depending on preexisting conditions as well as international networks and relations. According to the former president of the World Bank, James Wolfensohn, “the existence of the matrix is not a clandestine attempt on the part of the Bank to dominate the international development arena . . . the matrix is open to all” (Cammack, 2002, 36). The matrix alluded to by Wolfensohn is a grid for governance based on the development of what the World Bank considers appropriate regulatory institutions, legal environments, and the adoption of so-called “market friendly” policies. Good or matrix governance seeks to establish and coordinate networks of actors to regularize the chaotic flows and relations of globalization: to establish a mode of regulation for the neoliberal regime of accumulation in the underdeveloping world. This articulation of hierarchical forms of matrix governance is to be undergirded or reinforced by another: market governance (Harrison, 2005). States are to adopt policies that are market conforming and enhancing, which will provide the policy matrix to allow the private sector to flourish: a “matrix state” (Martinez, 1999, 12). Governments in Africa are “required to adjust to ‘economic reality’ and ‘market discipline’ in order to stimulate exports and promote foreign investment” (Geda and Shimeles, 2007, 319). For example, the World Bank drafted a template for mining laws that has been refined and adopted by dozens of African countries (Y. Graham, 2007). Transparency in this instance means that domestic society, transnational capital, and aid donors are able to see through the architecture and workings of national governance. These social forces can then pressure for revision. For example, Angela Dzata and Winifred Nweke argue in relation to Nigeria’s regulatory framework that “global competition is on the rise and only the economies that take technology and run with it will win the race. As global competition for foreign capital continues, each competing market needs to transform its accounting information systems to accommodate economic changes” (2001, 169). At the top, the matrix of global governance contains both carrots (aid) and sticks (military intervention), merging US hard power and European soft power (Nye, 2002; C. Brown and Ainley, 2005). Increased donor coordination in the form of PRSPs adopted by the World Bank in 1999 is one form of horizontal sovereignty-pooling to achieve a governance matrix. The base of the matrix is to be anchored through the participation of domestic civil society in the design of PRSPs.3 As World Bank economist Brian Levy puts it, “the intent is to alter the incentives of political leaders by reshaping state

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institutional arrangements in ways that require them to increasingly respond to a broad array of civic pressures for performance and not simply to the elites who have benefited from the status quo” (2004, 18). Wolfensohn argues that, in today’s global economy, it is “the totality of change in a country that matters” (Slater, 2004, 106, emphasis in original). While some erstwhile critics of IFIs, such as Fantu Cheru, argue that “countrywide participation in PRSPs represents a paradigm shift from ineffective donor-led, conditionality-driven partnership to a system that puts the recipient country in the driving seat” (2006, 364), many others are less sanguine because the addition of governance concerns in PRSPs arguably represents a strengthening of conditionality. In this new governance structure, states are to enforce security and societal consent, to normalize society. They would do this through a process of engagement with civil society in PRSPs and through the increased provision of public goods. In turn, states are to be embedded, constrained, and normalized by domestic society and the society of states in the form of donor and peer review coordination (Carmody, 2007). African states, in an attempt to attract more investment and aid, also have sought to collaboratively matricize governance from “the side” through the African Peer Review Mechanism of NEPAD (see Taylor, 2005a). In essence, NEPAD is a bargain between the developed countries and African countries, whereby the latter agree to govern themselves better in exchange for more aid, investment, and market access (Moss, 2007). This is a reflection of the structural power of capital and major world powers. Indeed, as noted earlier in Chapter 3, the ideas behind NEPAD were developed by the former South African president, Thabo Mbeki, in consultation with the former British prime minister, Tony Blair (Porteous, 2008). The African Peer Review Mechanism of NEPAD brings together a panel of eminent people who review governance and democracy conditions in the country. Although, the fact that Sudan acceded to the peer review mechanism while there was a government-sponsored genocide ongoing in the west of the country might cause some to doubt its standards and, consequently, its impacts (“Sudan Joins the African Peer Review Mechanism,” 2006). The cruciform structure of global sovereignty found further institutional expression in the Paris Declaration of 2005, which aimed to achieve greater donor coordination, thereby eliminating some inefficiencies and overlap in aid delivery (Hyden, 2008), and also strengthen collective donor power. A consortium of nongovernmental organi-

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zations (NGOs) has noted that donor harmonization actually reduces policy space for recipient states by making aid conditional on reforms demanded by the World Bank and the IMF (Glennie, 2008). This southward projection of Northern power is justified on the basis of poor governance and lack of commitment to neoliberal economic reform, and dovetails with private sector imperatives. According to Thomas Barnett (2005, 109), the global “core” should do everything it can to integrate Africa more fully into the global economy. Or, in the words of former US vice president Dick Cheney, “God didn’t see fit to put oil under democratic countries” and “you just go where the oil is” (Bruno and Valette, 2001). The great powers have shown increasing interest in African oil in the new millennium and some speak of a new scramble for Africa. How has this affected matrix governance on the continent?

Governance Curses? Resources and the Transnational Contract of Extraversion in Africa As noted in Chapter 2, Western and Asian interest in African oil has increased dramatically (Klare and Volman, 2006a). Attendant on this, security concerns have also come to the fore in major and new economic power interest on the continent. That is, how can large-scale point resources, particularly oil, be extracted with minimum disruption and cost? The answer is by securitizing sites socially and militarily to facilitate flows. This has important governance implications. Governance is shaped by socioeconomic structures and, particularly in Africa, by its mode of insertion into the global economy. In many resource-rich countries, state elites can access resources from enclaves, with little accountability. And consequently, they do not need to develop a tax bargain with citizens. Poor governance is often identified by a lack of transparency and accountability. This opens space for corruption, followed in some idealized accounts by economic contraction and societal discontent, which may become violent. This is what Levy (2004, 35) terms “neopatrimonialism’s downward spiral.” However, Söderbaum (2007) argues that neoliberal reform in Africa has deepened corruption as the retrenchment of the state meant that officeholders sought out other resource flows. The key to breaking the vicious circle of poor governance is often seen to be the creation of tax or social contracts between citizens and the state (Centre for the Future State, 2005). However, this somewhat ideal-

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istic and voluntaristic conception runs up against the hard edge of existing social relations. In particular, this social disarticulation is merely a symptom of sectoral disarticulation and natural resource–based and enclave economies (de Janvry, 1981; D. K. Leonard and Strauss, 2003). The neoliberal model in Africa seeks a night watchman state, abstracted from extant social relations, to oversee the orderly export, as opposed to forceful plunder, of the continent’s resources. “The bifurcated causal logic here is thus resource extraction [plus] good governance [equals] poverty reduction while resource extraction [plus] bad governance [equals] poverty exacerbation” (Pegg, 2006, 20). However, according to Mushtaq H. Khan, paring down the state to a corruption-free rump that somehow provides law and order in a poor and conflict-torn economy and that restricts itself to providing primary education and some essential infrastructure may be suggesting a blueprint that both is impossible to achieve (in its law and order objective) and will doom the poorest countries to at best a moderate economic performance. (2002, 17)

While D. Clarke argues that “conditions of poverty in oil domains typically owe more to Africa’s medievalism, its structures and place in globalisation, along with the failures of state policies, than corporate investment from oil players” (2008, 539–540), this neglects how investment structures Africa’s place in globalization. Consequently, poor governance cannot be causally isolated to national spaces because it is the dialectical interaction between site and situational characteristics that shapes outcomes. Even neoliberal “poster children” such as Uganda and Rwanda have engaged in resource conflicts in the DRC to fuel their own economic growth (Porteous, 2008) and, perhaps more critically, regime survival (J. Clark, 2002).4 As George Soros argues, The ownership of natural resources is an attribute of sovereignty. . . . Foreign oil and mining companies need to obtain concessions to exploit natural resources. They can obtain them only from the rulers of the countries, but the rulers are not the principals. They are the agents of the people. The rulers get their rewards from the companies, not from the people whose interests they are supposed to safeguard. They have much greater incentives to remain in power than the rulers of resource-poor countries and they have greater financial means at their disposal. That is why resource-rich countries are less democratic and often fall into the hands of repressive rulers. . . . The no-holds-barred hunt for natural resources continues unabated. (2007, xii–xiii)

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Bayart (2000) refers to a “strategy of extraversion” by African state elites. Extraversion refers not just to the exportation of natural resource wealth, with some estimates suggesting in the mid-1990s that half of Angola and Mozambique’s resources left through extralegal channels (Nordstrom, 2003). It also refers to the expatriation of profits from them, with 40 percent of Africa’s private wealth held overseas (Collier, 2007), making for a particularly extractive form of geographically grounded globalization. A World Bank employee in Zambia noted, in reference to economic restructuring there facilitated by economic liberalization, that “everything [wealth and resources] is going out.”5 Because point natural resources are fixed, TNCs have a particular incentive to remain on good terms with local elites who serve as gatekeepers. According to Chris Brown, “copper companies go where copper is, oil companies where oil is and so on—which means that these corporations do not usually have relocation as an easy business strategy, which, in turn means they have an incentive to preserve good relations with local political elites” (2005, 157). This implicit transnational contract of extraversion enables state elites to bargain resource sovereignty for rents, some of which can then be redistributed through patrimonial networks domestically to undergird consent, or at least limited, social allegiance. TNCs provide the technological infrastructure for resource extraction in return for profit shares, and state elites can siphon off a proportion of natural resource rents in return: territorial for technological access in a win-win game. While states can provide access to resources through their international sovereignty, enforcing domestic sovereignty and security can be made more difficult by this bargain. In the Nigerian case, for example, it has been argued in relation to the new liquid natural gas strategic business unit of the Nigerian National Petroleum Company that it “may develop strategic alliances with Shell, Agip, and Elf that offer it the opportunity to benefit from their experiences and technology, while these companies have the assurance of continued supply” (Anyansi-Archibong and Archibong, 2001, 157). However, as poverty has deepened in the Niger Delta, guerrilla groups have been effective in disrupting supply in the region (see Watts, 2007), a case of structural violence begetting direct violence. Consequently, the transnational contract is unstable, along with other elements of the resource curse, which is of course socially constructed and a blessing for some.6 Much has been written about the resource curse and its dimensions have been well described (see Auty, 2001; Basedau, 2005; Le Billon,

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2004, 2007). However, site characteristics (particularly resources) are often overplayed as causative, a kind of resource fetishism abstracted from their social construction. According to Ray Bush, a resource curse is better understood as the consequence of the way in which class and social forces have been shaped, and in turn shape state development policy. That policy has often become structured by the politics of spoils, corruption, war and ethnic conflict, but is not in any a priori way necessarily linked to resource endowment. (2007, 124)

Definitionally, resources provide a means to an end (Basedau, 2005). In some cases, the end is great wealth for transnationalizing elites. The precise balance of power between different parties to the transnational contract of extraversion has varied over time, depending on oil prices and ideological formations (see, e.g., Biersteker, 1987). In recent decades, as a result of agency problems, “full privatizations . . . have been marked by some of the worst abuses, with governments getting the worst deal (e.g. payments as a value of oil)” (Stiglitz, 2006, 44). In the first year of its contract with ExxonMobil, the government of Equatorial Guinea received only 12 percent of the value of its oil (Klein, 2005). However, this proportion was sufficient to provide untold riches to the ruling family, prompting a congressional investigation in the United States into money that had been offshored there (see, e.g., Frynas, 2004; Wood, 2004). Rather than freezing the US$700 million that the Obiang family had put in US bank accounts, given its geostrategic interests in the country, the George W. Bush administration returned the money to them (Muna, 2008). While there are shocking statistics, such as the fact that Papua New Guineans typically receive only 5 percent of the value of their lumber when it is sold in the developed world (Stiglitz, 2006), domestically based elites in the developing world grease the links of these extractive commodity chains in order to receive rewards from them. The resource curse can then be conceptualized as a mode of governance as domestic elites exercise authority over resources and are enriched, in partnership with transnational companies, but the majority are immiserized. Because most African currencies are not internationally accepted, natural resources become the substitute hard currency to administer countries, buy arms, and repress dissent (Nordstrom, 2007). In other words, they are the source of sovereignty: a colonial foundational legacy. This social configuration is associated with political instability and conflict. While there are well-governed states in

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Africa, such as Botswana, that are integrated into the global economy, the inability of most African states to oversee industrial transformation is functional to the international economic system because it allows the “vent for surplus” of resources (Mehmet, 1999, 44). Given Botswana’s experience of successful resource management, World Bank reports argue that there may be a governance, as opposed to a resource, curse (Pegg, 2006). Through a series of econometric regressions, the World Bank and the IMF have identified corruption as a cause of underdevelopment (Khan, 2002). However, given that they are not of the same strategic-industrial significance, Botswana’s diamonds have attracted less interest from external and regional powers than coltan or oil in other countries. Indeed, external interest and intervention are part of the resource curse. As Terry Lynn Karl put it in relation to petro-states, The exceptional value of their leading commodity has meant unusually high levels of external intervention in shaping their affairs and capturing their resources by dominant states and foreign private interests. On the other hand, petro-states are even less subject to the types of internal countervailing pressures that helped to produce bureaucratically efficacious, authoritative, liberal and ultimately democratic states elsewhere precisely because they are relieved of the burden of having to tax their own subjects. (2007, 262, emphasis in original)

As shown above, the contemporary disorder in Africa is structured by a variety of key social relationships. These social relationships are coordinated through different mechanisms: interstate, state, market, civil society, and community. Different actors have different types and levels of power, and interactions between them are governed by both norms and coercion. Thus, we can think of this structure as a kind of multidimensional social matrix, undergoing constant revision. Formalized social interactions are part of the “visible” matrix of the public sphere. However, there are also governance relations that are discursively obscured—a different meaning of the matrix; a kind of parallel social reality from the publicly enacted “stage play” by both African elites and “external” actors (Lockwood, 2005, 58). Major powers are willing to ignore democratic abuses in resource producers such as the fact that, in the most recent Nigerian elections, there were less than 20 percent of the required number of ballots and these were mainly distributed to governing party strongholds (Hattingh, 2007). The transnational contract of extraversion, despite multiple renegotia-

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tions, has remained long lived, particularly as it fits with the theory of comparative advantage.

The Matrix Reloaded: Violent Governance and Militarization in Africa The evolution of a new multilateral aid regime was disrupted by both structure (the rise of China) and conjuncture (September 11). In the wake of 9/11, “failed states” are increasingly seen by Western powers as “free trade zones of the underworld,” where terrorists can operate outside of international law and norms (Abrahamsen, 2005, 66). Additionally, after 9/11 the United States, and also China, became eager to diversify their oil supplies away from the Middle East. The new structural architecture of matrix governance contains within it a novel blend of securitized foundations, panopticism, and modified aid regime (see Gill, 2003). The precise point at which the resources-security-humanitarianism triangle of Western power, and its proxies, inserts itself varies historically and geographically. For example, because Somalia lacked substantial natural resources, it could be tolerated by the international system as an “economy without state,” as the title of Peter Little’s (2003) book puts it, for much of the 1990s and early 2000s, until an Islamic movement there threatened to assert a harsh new order, prompting Ethiopian and US military intervention (Copson, 2007). The resulting clash between alternative visions of social order has in turn generated further disorder and Africa’s worst humanitarian crisis, with up to 3 million people starving and the conflict largely precluding humanitarian relief (Samatar, 2007; Warlords Next Door, 2008). The hijacking of a Saudi oil tanker by Somali pirates drove the price of oil up 2 percent in November 2008 (Howden, 2008). If governance is the way in which authority in a country is exercised, military coercion for errant social forces is another axis of this. US military spending in Africa doubled from $296 million in 1998– 2001 to $597 million in 2002–2005 (Yi-Chong, 2008). The further militarization of Africa is tied to increased US interest in African oil as a result of supply disruptions in the Middle East, China’s rising role on the continent, and the “youth bulge” in developing countries, which it is also argued presents the United States with increased resource competition (Alden, 2007; Clonan, 2008). Paradoxically, this militarization of Africa is proceeding under the auspices of “peace.” President George W. Bush noted on his tour to

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Africa in 2008 in relation to the new African Command (AFRICOM) at the Pentagon: “We’re still working on what exactly it’ll be, but it will be a humanitarian mission, training in peace and security, conflict resolution. . . . It’s a new concept and we want to get it right” (Geldof, 2008, 22). Some suggest that AFRICOM was set up to ward off Chinese energy competition on the continent, with a US general noting that the Pentagon would feel “uneasy” if the Chinese had developed a similar military command structure in Africa (Dowden, 2008, 508). The construction of disorder is key to continued resource extraction in Africa. While the US State Department’s list of terrorist groups in Africa is relatively scant (Owusu, 2007), in some cases US military intervention, as in the Sahel between oil-rich North and West Africa, has called them forth (see Kennan, 2007), justifying further intervention. Chamers Johnson (2000, 1) defines blowback as unintended negative repercussions of policies for their instigators. However, by dialectically allowing for deeper engagement in the affairs of other countries, blowback can also be functional. I now turn to a regional case study of matrix governance in order to explore its contradictions.

The Geopolitics of Poverty Reduction and Conflict in Africa: The Chad-Cameroon and Sudanese Oil Pipelines There is a long history of transborder conflict involving Chad, Sudan, the Central African Republic, and Libya (see Burr and Collins, 1989, for an account). It is important to note that both Chad’s current and previous presidents came to power via Darfur and that there was wider international rivalry involved. Indeed, some argue that these countries, with the exception of Libya, have been in a constant state of crisis in the postindependence era, constituting a “crisis-complex” (Berg, 2008; see also Giroux, Lanz, and Sguaitamatti, 2009). However, there are new dimensions to the transborder zone of conflict that has reemerged between Sudan and Chad in the first decade of the twentyfirst century. Paradoxically, it is partly the result of an elaborate scheme to reduce poverty, thereby demonstrating the contradictions of matrix governance. According to Bahgat, “competition between Washington, Beijing and Brussels over Africa’s energy resources should not be seen in zero-sum terms. The underlying and inescapable

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fact is that the development of the continent’s oil resources would contribute to overall stability in global oil markets—a shared goal by both consumers and producers” (2007, 1). While there is competition over specific resources in specific places, both China and the West have a shared common and general interest in the continued exportation of Africa’s resources. Even in Sudan, European companies are involved in the construction of the largest Chinese-financed construction project in Africa, the Merowe dam, which will double Sudan’s power supply and thereby facilitate continued energy exports (Jok, 2007; Sautman and Hairong, 2008). However, in specific locales, competition is acute. The conflict in Darfur in Sudan is often presented as being a largely local one between pastoralists and settled farmers over access to water and land. According to Jok, “the region has been experiencing turmoil for some time due to droughts and scarcity of resources” (2007, 21), along with other factors. However, the conflict in Sudan and neighboring Chad is multiscalar (local, national, and global) and is best viewed, in part, as a proxy conflict between the Western powers and China over access to oil. The countries of the Horn of Africa have many of the features of a regional security complex, displaying high levels of security interdependence (Healy, 2008). While both Chad and Sudan have had long-running civil wars between the north and south, the axes of conflict have now become transborder and have largely shifted to east and west,7 a merged form of civil and shadow interstate war, with the two states sponsoring rebel groups in the other’s territory. The weak claim to territorial integrity and control, juridical as opposed to empirical sovereignty, means that this area is now a “binational transborder space” (Robinson, 2003, 281) characterized by a multitude of non-state-sanctioned flows of people (refugees and rebels) and goods. The new conflict zone is at a fault line of geopolitical and economic influence where east (Chinese-backed Sudan) meets west (Westernbacked Chad). Both Sudan and Chad have constructed and opened oil pipelines oriented respectively to the east and the west, in 1999 and 2003 respectively, and in between lies a new “geopolitical fracture zone” (Anderson, 1996, 18). The conflict in Sudan is being largely fueled by resentment over the distribution of oil rents, and the availability of oil money to buy arms. In Darfur, conflict is partly the result of environmental scarcity as nomads and settled communities dispute for scarce resources (particularly land) in the context of recurrent catastrophic droughts since

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the 1980s that are perhaps associated with oil burning and climate change (Belloni, 2007). While the history of the conflict in Darfur has long roots, it is also, in part, the outcome of a particular form of regionalized “petro-Islamism” that has emerged in Sudan (Prunier, 2006, 43). According to Stephen Butcher, the people of Darfur have seen numerous droughts, waves of divisive identity politics from inside and outside Sudan, asymmetrical militarization of the populace, undermining of local politics and justice courts, systematic neglect from the State, a lack of representation in the North-South peace talks, and no share in the economic concessions on oil revenue and political power. (2008, 1)

The rebellion, which began in Darfur in 2003 against the government and later spread to the east of the country, was partly based on resentment of large-scale and long-term regional exclusion. The spark that ignited the oil flame was exclusion from the revenue-sharing agreement between the north and the south of Sudan, which were to divide oil revenues between them under the outline peace agreement (Jok, 2007) to the exclusion of the west and east of the country. As Abdullahi Osman El-Tom suggests, “the current Darfur armed insurgency is central to grass-root struggles for a fairer division of national resources” (2007, 227). The Chinese government has been heavily criticized for selling arms to the Sudanese government, although it may view it in part as an insurance policy for the estimated $20 billion of Chinese investment in that country. The other side of the geopolitical fracture zone is in neighboring Chad. The Chad-Cameroon pipeline is Africa’s largest ever private construction project, with a price tag of $3.5 billion, and it began operation in 2003 (the year in which the Darfur conflict ignited). It is based on a consortium of three oil companies (ExxonMobil, ChevronTexaco, and Petronas), and the World Bank and European Investment Bank. It was meant to be an example of intertemporal and multilevel governance for poverty reduction, with elaborate mechanisms for transparency and monitoring of oil revenues ranging from national oversight committees to international advisory groups (see Calderisi, 2007, for a fuller description). However, partly because of problems associated with oil wealth, Sudan and Chad come out in forty-fifth and forty-sixth places, respectively, out of forty-eight on the Mo Ibrahim Governance Index of Africa (“African Governance,” 2007).

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The energy to enable the buzz in industrial districts in rich countries and the knowledge pipelines extending out from them (Bathelt, Malmberg, and Maskell, 2004) are partly fueled by oil coming from these areas. However, the buzz directly associated with these oil pipelines in Chad and Sudan is the sound of helicopter gunships, and the deafening sound of flow stations.8 Meanwhile, the ExxonMobil oil facility in Chad, by itself, produces six times more electricity than the entire rest of the country. “In the oil-producing region, the stark contrast between the well lit oil facilities and the darkened neighboring towns and villages cannot fail to ignite passions” (Pegg, 2006, 18). This is one of the sites where the contradiction that the globalized economy is dependent on territorially fixed resource extraction grounds (Omeje, 2005). According to Francis Fukuyama, the most striking recent example of shared sovereignty is the ChadCameroon gas [sic] pipeline, in which the government of Chad agreed to put expected energy revenues from natural gas into a trust fund to be administered by the World Bank and other international trustees. Chad in effect agreed with the international community that it could not be trusted to use its own energy revenues properly and needed external help to avoid being dragged into the morass of corruption and rent-seeking. (2006, 179–180)

While Harrison (2005) conceptualizes sovereignty as a frontier rather than a boundary, the World Bank intervention in Chad might more accurately be represented as sovereignty piercing, rather than sharing. However, the problems with this externally driven, one-way vertical model of shared sovereignty quickly became evident (see Kojucharov, 2007). A signing bonus from the oil companies was partly used by the government of Chad to purchase arms. Then, the president appointed his brother-in-law to the oversight committee and the law governing revenue expenditure was rewritten. Indeed, the Chadian government had previously “created forty-three phantom NGOs and activist groups in an effort to groom a friendly civil society representative for the committee” (Ghazvinian, 2007, 255). In return for breach of the agreement, the World Bank suspended its loans to Chad and froze the Future Generations Fund, which was held offshore (Copson, 2007). In part, this renegotiation could be seen as an example of state building because Chad redressed the balance of power between it and the oil companies to raise the amount of revenue it received from 7 per-

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cent, in its initial contracts, in comparison to the 90 percent of revenues going to “more experienced and capable petro-states” (Karl, 2007, 262). The Chadian state is anxious to capture increased tax revenue from the project because President Idriss Déby threatened to eject Petronas and Chevron if they failed to pay taxes that he claimed were owed, although a tax holiday had previously been agreed on. Prior to that, the government had received less than fifty cents on the barrel to spend as it wished (Ghazvinian, 2007). Eventually, a new face-saving accommodation, which allowed for greater government discretionary spending, was reached between Chad and the World Bank (Frynas and Paulo, 2007). Natural resource fixity allows some bargaining power for poor peripheral states in their dealings with TNCs and IFIs, particularly in the case of oil. Thus, the geographical fixing in space of the pipeline, the extent of sunk costs, and the juridical concept of territorial sovereignty enabled a renegotiation of the contract of extraversion to the benefit of the Chadian ruling elite, and President Déby’s princely sovereignty in particular. Stephen Krasner’s argument that the lesson of the Chad-Cameroon pipeline is that creating “potent shared sovereignty institutions” in weak states is difficult (2004, 113) perhaps indicates a preference for a greater reliance on military force. The increased spending on arms from the renegotiation did not stop rebels from Sudan nearly toppling Déby in early 2008. While the new French president Nicolas Sarkosy was supposedly opposed to the old policy of Françafrique (backing friendly dictators), he eventually did give military assistance to Déby after rebels reached the presidential compound and nearly overthrew him in 2008 (see Figure 4.1). According to The Economist, this was because “Mr. Déby’s demise would probably mean a freer hand for Sudan in eastern Chad and the ravaged Sudanese region of Darfur” (“A Regime Saved for the Moment,” 2008, 43). There have also been reports of Chinese support for these rebels and, according to Massey and May (2009, 234), the Chinese government’s “Holy Grail” is to have another oil pipeline running from Chad to the Red Sea. The French-led UN peacekeeping force in Chad is ostensibly to protect refugees from neighboring Chad but, according to Gerard Prunier, “Idriss Déby is hanging on to power by the skin of his teeth but he is likely to hang on only as long as Paris and Brussels continue to support him under some kind of pseudo-humanitarian facesaving dispensation” (Storey, 2008, 12). A Chadian-sponsored rebel invasion of Sudan also reached the outskirts of Khartoum in 2008 (see Figure 4.1).

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Figure 4.1

Selected Rebel Movements, 2007 and 2008

Map by Sheila McMorrow.

According to the French general who chairs the EU’s military committee and who has overseen the deployment of troops to Chad, “letting some parts of the world, particularly Africa fall into a permanent cycle of violence has consequences for Europeans” (Smyth, 2008, 12). Thus, humanitarianism is, in part, an axis of the matrix control strategy to contain disorder and chaos from spilling over to the developed world (Belloni, 2007). The contemporary blowback for Westerners results from the fact that, as another French general, Octave Meynier, said of Europeans in 1911 somewhat hyperbolically, “to open markets for their trade in Africa they have stamped out the last vestiges of African civilization” (Dunkley, 2004, 72) giving rise in parts of Africa to a “plunder economy” (Cramer, 2006, 40). The lure of oil revenue undoubtedly has contributed to rebel attempts to dislodge Presidents Déby and Omar al-Bashir in Sudan from power. Indeed, some of the rebel groups in Chad are led by Déby’s own uncles. In this way, oil has both strengthened Chad’s sovereignty by providing state resources and undermined it by encouraging violent resource competition. As the most important traded commodity in the world, oil congeals the contradictions of globalization as expressed in the restructuring of sovereignty.

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The Matrix Unloaded? China’s Governance Impact The uneven development of the global capitalist economy throws up new power centers, particularly China, that seek both to influence the shape of the global governance matrix and, in geographically specific cases, to support exceptions to it in the name of realpolitik. The rise of China and increasing South-South globalization could potentially undermine the cruciform structure of global sovereignty by bolstering the principle of noninterference in internal affairs (Taylor, 2004). China’s involvement in Africa is giving greater autonomy to incumbent rulers to engage in balancing between major powers. Déby in Chad recognized China in 2006 and has been feted in Beijing, with Chadian flags flown in Tiananmen Square during his visit (Taylor, 2009). China’s rise also potentially challenges the other basis of orthodox global governance: the rule of the market over the individual and household. According to Joshua Cooper Ramo, the Beijing Consensus rejects the theory of comparative advantage in favor of a focus on developing countries adopting leading-edge technologies to “create change that moves faster than the problems that change creates” (A. Payne, 2005, 98). This economic-philosophical war of position challenge to neoliberal hegemony could lay the groundwork for China’s eventual supersession of the United States as the world’s dominant superpower because its activist, empowered, and antidemocratic state is attractive to many incumbent developing world political elites. However, while China is in geoeconomic competition with Western powers in Africa to gain “sovereign control over stable supplies of primary goods” (Rotberg, 2008, 2), its companies often sign joint ventures with them and the extent to which Western and Chinese capital are empirically distinct social forces is consequently somewhat open to question. China also has interests in resource extraction, so the overall parameters of governance—in ensuring this continues—remain in place. The Chinese state has shown itself to be eager to project itself as a responsible power. It has announced that it will cooperate with the World Bank (“China’s Africa Policy,” 2006), for example, and there is a new US-China-Africa Trilateral Dialogue. Indeed, as of 2008, the chief economist at the World Bank is Chinese. Thus, China is in the process of being absorbed institutionally into the global core. As George B. Ayittey notes, “if Africans give their problems to a foreigner to solve he will do so to his advantage” (2005, 422, emphasis in origi-

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nal), generating incentives for coordination among the major powers: a further iteration of the transnational contract of extraversion. Giovanni Arrighi (2007, 175) refers to China’s governance influence in the developing world as “domination without hegemony.” Others have referred to this as flexigemony, where Chinese state and company actors work through extant institutions and state-society formations to achieve access to resources and markets (Carmody and Taylor, 2010). Rather than seeking a societal transformation, which is unlikely to be achieved in any event, the Chinese focus on two core aims: natural resource exports and expansion of recognition for the one China policy. There are, of course, other subsidiary motivations and dimensions to Chinese geoeconomics and geopolitical strategy in Africa, which have been described elsewhere (Carmody and Owusu, 2007). The key elements of Chinese flexigemony in Africa might be summarized as follows: • In line with the global regime of flexible accumulation (Harvey, 1989) and Beijing’s go global or go-out policy for its companies announced in 2003, it prioritizes the economic over political and security concerns. • It uses a combination of economic, political, and military levers in flexible strategic combinations to ensure continued raw material supplies. • It does not use direct military force to secure interests, but rather proxy subcontracting and the use of direct economic power. • It is domestic and international sovereignty strengthening for partner states; that is to say it is not normalizing, but works through extant institutions and diverse state-society formations. • It is reinforced by frequent high-level state visits as a form of public diplomacy and to build interstate trust in line with the state-articulated five principles for peaceful coexistence (political coming out, as a compliment to economic going out). Through time, will flexigemony give way to Chinese imperialism and hegemony? There are many definitions of hegemony and imperialism (see, e.g., contributions in Owen and Sutcliffe, 1972). There are different definitions of imperialism, one of which is “the creation and maintenance of an unequal economic, cultural and territorial relationship, usu-

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ally between states and often in the form of an empire, based on domination and subordination” (Johnson, 2000, 375). Hegemony may be defined as dominance or in the Gramscian schema as “coercion informed by consent” (Carmody, 2005, 98). For the moment, China does not seek to control African countries or to use force to open up markets and investment opportunities for its state capital. In part, this is based on the articulated state philosophy of “never become a leader,” in order to avoid attracting the wrath of the hegemon (Carmody and Taylor, 2010). However, according to Ruizhuang, Chinese leaders’ repeated pledge not to pursue hegemony even when China gets powerful is worthless. It runs right against the grain of historical materialism still part of the official dogma in China that holds that material basis determines the superstructure . . . and against the essence of realism of international relations that holds that the power position of a nation constrains its external behavior. (2009, 228)

In the next chapter, I turn to a case study of the impact of the Asian drivers, in particular, the impact of China on Zambia. Notes 1. The structure of governance might more accurately be described as forming a T shape; however, cruciform is preferred as a metaphor because it evokes both the ongoing expansion of Europe and the suffering that is associated with this. 2. The language of “partnership” has, of course, already been extensively deployed in the field of overseas development assistance (see Gould, 2005). 3. There is insufficient space here to deal in detail with the mechanics of PRSPs. This is examined in Craig and Porter (2006). 4. The relationship between resource extraction and conflict is evidenced by the fact that, while refugees fled from the conflict in eastern Congo into western Uganda, commerce continued with a steady stream of sealed trucks full of timber and other natural resources (presumably) also crossing the border (field notes, Kisoro, Uganda, December 16, 2008). 5. World Bank employee interviewed by the author, Lusaka, Zambia, January 9, 2007. 6. Le Billon draws a useful analytical distinction between (1) the resource curse, which results in economic underperformance and a weakening of government institutions; (2) resource conflicts, which occur when “grievances, conflicts, and violence associated with resource control and exploitation increase the risk of onset of larger armed conflicts;” and (3) conflict resources, which is where resources provide “financial opportunities motivating belligerents and financially sustaining armed conflicts” (2008, 347).

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7. Although the north-south conflict in Sudan reignited in 2008 around the town of Abeyi on the oil-rich border between northern and southern Sudan, southern Sudanese nationalism has been growing and is expressed through events such as beauty pageants, where the bodies of young women serve as icons for “the nation” (see Faria, 2008, 1). 8. Helicopter gunships have been used in Sudan as weapons for population displacement to areas under government control, thereby denying rebels civilian support and also opening up government control of international aid (aid farming) (Jok, 2007, 178).

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5 Overcoming the Resource Curse: The Zambian Case China’s growing involvement in Africa has attracted substantial popular and media interest. While China’s “march into Africa” is often greeted with fear and disapproval in the West (see Mawdsley, 2008), African commentators have tended to be more positive (see Akomolafe, 2006). There is now also an extensive and growing academic literature on the nature of China’s and other Asian countries’ increasing involvement in Africa (for overviews, see Alden, Large, and de Oliveira, 2008; Kitissou, 2007; Guerroro and Manji, 2008; Goldstein et al., 2006; Naidu, 2008; Carmody and Owusu, 2007). Additionally, important conceptual frameworks, noted in Chapter 3, have been developed to assess the impact of the large, fast-growing, Asian driver economies of China and India on sub-Saharan Africa through the channels of trade, investment, and governance, among others (Kaplinsky and Messner, 2008). However, the impacts of the Asian drivers have often been examined in isolation, whereas it is the interaction of a country among global, regional, and national factors and forces, the distinctive scalar alignment described in Chapter 3, that will determine economic outcomes in particular places. Taking a multiscalar approach in this chapter, I explore the reasons behind, and impacts of, the recent growth episode in Zambia from 2003 to 2008 to determine whether the country has transcended the resource curse. While the Asian drivers have had important impacts on growth and employment in Zambia, new European and South African investment has frequently been overlooked in the literature, but is also of substantial importance. Nonetheless, the Chinese government has had a more 85

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developed geoeconomic strategy in Zambia, offering potential for enhanced developmental outcomes. Although Asian investment in Zambia has been contentious for environmental and labor standards reasons, the Chinese government has been conscious of its companies’ social licenses to operate and, consequently, has shown its commitment to economic diversification through two new manufacturing special economic zones in the country. As a result, while the poverty elasticity of growth has been low, reproducing an extractive form of globalization, South-South cooperation and higher copper prices in the future do offer potential for substantial poverty reduction if more of the country’s mineral wealth can be retained and productively invested domestically. Examples of where this has occurred in other contexts are provided in the final chapter of this book. The nature of the Zambian state retains its critical importance. I begin this chapter by outlining the Zambian economic structure and context, focusing on the impacts of World Bank and IMF structural adjustment programs in the 1990s and the reasons behind the revival of economic growth in that country in the first decade of the new century. I then discuss the nature and impacts of contemporary Chinese investment in Zambia. Next, I discuss regional factors, particularly the impacts of South African investment, Zimbabwe, and the DRC. In the penultimate section, I assess national class processes and the nature of the state. I conclude with a discussion of future prospects.

The Zambian Context At independence in 1964, Zambia appeared to have a strong economy, with the highest per capita income in Southern Africa, primarily based on mining (CSO, 2006a). However, the global recession, declining copper prices (the economy’s export staple), the oil price shocks of the 1970s, and the particular statist development model subsequently threw the economy into crisis (see Karmiloff, 1990). This was followed in the 1990s by an immiserizing period of structural adjustment under the tutelage of the World Bank and IMF (see Chakaodza, 1993). The impacts of trade liberalization and monetary tightening during the 1990s were deindustrializing (Muuka, 1997). In particular, the decontrol of the economy facilitated the importation of salaula (secondhand clothes), a significant source of urban employment for women traders. The number of textile manufacturing firms fell from more than 140 in 1991 to just 8 in 2002 (Situmbeko and Zulu, 2004).

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This was associated with informalization, or the increasing commoditization of labor. In 1996, 78 percent of people defined as employed worked in the informal sector, including agriculture (Seshamani, 2002), with an associated high rate of poverty. In 1998, poverty was estimated at 83 percent for rural areas and 56 percent in urban areas (“Macroeconomic Objectives,” 2006), but using the World Bank’s dollar a day poverty line, instead of the government’s, 85 percent of the population was living in poverty (S. Moyo, 2006). In 1955, British per capita GDP was seven times higher than Zambia’s; whereas by the early years of the new millennium, it was twenty-eight times higher (N. Ferguson, 2003) and average incomes were half those at independence. By 1997, Zambia was the only country for which data is available out of seventy-nine that had a lower Human Development Index than in 1975 (Mphuka, 2002). The World Bank (2004b) also estimates that HIV/AIDS is reducing economic growth by about 1 percent a year and increasing poverty substantially. Agriculture, forestry, and fisheries account for 73 percent of employment in Zambia (CSO, 2006a). There is a trimodal structure of large commercial farms, small-scale commercial farmers, and a large peasant sector. Large commercial farms produce most of the country’s agricultural exports, 80 percent of the country’s milk, 75 percent of wheat, and 70 percent of soybeans and poultry (World Bank, 2003a). However, smallholders work around two-thirds of the agricultural land. While manufacturing and agriculture are important, the fall of the Zambian economy and its resurrection are intimately tied to the fate of global copper prices. At independence, Zambia was the world’s third-largest producer of copper; now, it is twelfth (Metal Prices, 2007). Initially, high copper prices financed a statist formal economy, so that by 1991 more than three-quarters of GDP came from stateowned enterprises (Thurlow and Wobst, 2006). Whereas savings were equivalent to 35 percent of Zambian GDP in 1975, they are only roughly 18 percent now (Ndulu et al., 2007), although the efficiency with which these savings were deployed was a major issue (see Ayittey, 2005). The Zambia Consolidated Copper Mine (which underwent a difficult privatization in 2000, followed by subsequent withdrawal of the main investor, Anglo-American Corporation) at the time by itself accounted for 10 percent of GDP and 75 percent of export earnings (R. Bush, 2007). Copper and copper products, along with the associated mineral cobalt, account for almost 80 percent of exports (CSO, 2007). Through linkage effects, mining heavily influences outcomes in other sectors,

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despite the fact that it now accounts directly for only 6 percent to 9 percent of Zambian GDP and around 10 percent of formal employment (World Bank, 2004b). There is only one copper cable company in the country: the US-owned Zamefa, which increased its exports 82 percent in US dollars from 2000 to 2005 (Zambia High Commission, 2006a). “The decline in mining leading up to the 1990s and subsequent reforms caused the collapse of the country’s industrial core and worsened urban poverty” (Thurlow and Wobst, 2006, 622). However, there has been a significant change in fortunes for the Zambian economy because, since 1999, it has enjoyed renewed growth. From 2002 to 2005, GDP growth averaged 4.7 percent p.a., more than double what it had been in the previous four years (Republic of Zambia, 2006a). This exceeded the target of 4 percent set in the government’s World Bank–inspired PRSP. In marked contrast to the stagnation of the 1990s, growth was projected by the IMF to increase from 5.3 percent in 2007 to 6.3 percent in 2008 (IMF, 2008) (see Table 5.1). Formal sector employment also increased by 5 percent in 2005, after an almost continuous decline from a peak in 1992 (CSO, 2006b). However, critical questions remain about the nature, sustainability, quality, and distribution of economic growth in Zambia. Higher prices for metals including a fivefold increase in the price of copper from US $1500 a tonne in 2002 to US $7700 a tonne in 2006, improved Zambia’s economic growth by 2 percentage points (Larry Elliot, Guardian 10 May, 2006). . . . We shall see that this optimism is misplaced. It is nevertheless in keeping with Western deception that resources can and will, if only carefully managed, reward companies, satisfy Western consumers and deliver growth to producer states. (R. Bush, 2007, 115)

Table 5.1 Prestructural Adjustment (1980–1991) 1.1%

Average GDP Growth in Zambia (in percentage of constant prices) Structural Adjustment Era (1992–2002) 0.7%

Asian Driver– Led Growth Phase (2003–2008) 5.6%

Source: Calculated from International Monetary Fund. (2008). World Economic Outlook Database. Available at www.imf.org/external/pubs/ft/weo/2008/01/weodata/ index.aspx (accessed July 28, 2009). The figure used for 2008 in calculations is based on an estimate.

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Nonetheless, foreign investment and recapitalization in mining in particular meant that investment rose to 27.1 percent of GDP in 2003 (Republic of Zambia, 2004), close to East Asian levels. Also while copper led the economic recovery, it was relatively broad based with manufacturing and tourism growing at 5.1 percent and 6.5 percent p.a., respectively, from 2002 to 2005 (Republic of Zambia, 2006a). Thus, the contemporary conjuncture is significant and, in this chapter, I explore the growth episode of 2003–2008 by examining the interaction between different scaled social processes to interrogate whether or not the new scalar alignment, involving greater Afro-Asian interregionalism, combined with regional economic and domestic class processes enable the creation of a poverty-reducing “developmental regime” (Pempel, 1999, 137).

Asian Drivers and the Zambian Economy As noted in Chapter 2, China is particularly interested in oil and mineral resources to fuel its burgeoning economy as well as investing in infrastructure. Because China’s US$1.3 trillion of foreign exchange reserves may now be used for overseas investment projects, this opens up potential for infrastructural transformation in Africa (Alden, 2007), while facilitating the exportation of raw materials and importation of manufactured goods reminiscent of the colonial era. By 2008 the Chinese government had announced loans totaling $13.5 billion for the DRC. These are for infrastructure and mining operations and are securitized against copper and cobalt reserves (Kaplinsky and Farooki, 2008). Chinese companies are initiating large-scale copper and cobalt mining and processing operations in Katanga Province of the DRC, which neighbors Zambia (Chan-Fishel, 2007). Chinese infrastructural development is more attuned to African conditions, unlike Western ones. For example, in Zambia, Swedish consultants designed the roads for snow conditions (Chan, 2007). China Eximbank provided a $600 million dollar loan to Zambia for infrastructure in 2003 (Kaplinsky and Farooki, 2008) and, according to a development assistance official, “the Chinese still want the infrastructure contracts because they are still profitable because of the sheer scale at which they operate.”1 Additionally, the Chinese government is supportive of open regional integration in southern Africa, particularly, as interregional trade still only accounts for 7 percent of the total trade of COMESA members (COMESA, 2005).

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The Chembe bridge project between Zambia and the DRC is to be constructed by a Chinese company (Republic of Zambia, 2006b). Chinese oil and gas companies have invested in twenty-seven projects in fourteen countries across the continent (Fitzgerald, 2007). However, China’s trade with and investment in Zambia have received less attention, despite its having the nineteenth-largest stock of Chinese foreign direct investment in the world and the third-largest in Africa (UNCTAD, 2007; Kragelund, 2007; see Kragelund, 2008, for a more detailed discussion of investment flows). China is now the world’s largest consumer of copper (“From Accelerator to Brake,” 2005) and, consequently, it is particularly eager to secure access to this resource. In Zambia, this has included purchases of mines and the construction of a $200 million copper smelter (Mulenga, 2006). Chambishi copper mine, which was purchased and reopened by the China Non-Ferrous Metal Industries Corporation in 1998, was China’s first overseas nonferrous mine (Taylor, 2006a). The Chinese have also invested in coal mining in Kafue in Zambia, where the minister of Southern Province wept after she saw working conditions (Mwanawina, 2008). And another new Chinese copper mine, with an investment of $100 million was opened in Kitwe in late 2007, creating another 1,500 jobs (“China Opens Another Copper Mine,” 2007). According to figures from the Chinese Center for Investment Promotion, there are now a total of 200 Chinese companies active in Zambia (Bastholm and Kragelund, 2007). Another US$3.5 billion mining project was also being mooted in 2009. Zambian exports to China rose seventeenfold as a percentage share from 2002 to 2006, to account for 3.5 percent of the total. However, it should be remembered that, between 2002 and 2006, China accounted for only 2 percent of Zambian exports, less than a fifth of what was exported to the main destination, Switzerland (CSO, 2007). During that period Switzerland’s share grew from 3 percent to 20.3 percent, as Mopani and Luanshya Copper Mines were largely Swiss owned (CSO, 2007; STRATFOR, 2007). Thus, the most important effects, up until the global economic slowdown, of China’s growth have been indirect, by driving up global copper prices, Zambia’s main export (Broadman, 2007a). When Luanshya was closed as a result of the global slowdown, it was purchased by a Chinese company. The Chinese presence is also growing rapidly along other dimensions, however. The 2007–2009 Chinese Action Plan for Africa includes debt write-offs for low-income African countries as well as the establishment of three to five economic cooperation zones on the continent

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(Mulenga, 2007). China canceled Zambia’s bilateral debt in 2007 and announced $800 million in new investment, largely for a “special trade and economic zone” in the northern Copperbelt Province town of Chambishi: “the first of its kind in Africa” (P. Davies, 2007, 56). The Chinese government is of course sensitive to the negative impact of its manufactured exports on SSA’s [sub-Saharan Africa’s] industrial sector, and announced a series of initiatives designed to promote African industry. For example, in 2006 it publicised a planned investment package of $300m in Zambia, to include $100m in a “high-tech” economic zone manufacturing TV’s, mobile phones and other electronic items. (Kaplinsky, 2008, 7)

This is to have the Chambishi copper smelter at its core to form a “production chain . . . to boost light industry and the sectors of construction materials, household appliances, pharmacy and food processing” (People’s Republic of China, 2007). This follows a pattern previously established by Japan. “Japan is dependent on imports for the vast majority of the oil, natural gas and nonferrous metals, such as copper and nickel, which we consume, and which underpin our economic activities” (Kakefuda, 2007). Natural resource access can be achieved through consent or force. From the late 1980s onward, trade with Japan, mostly in copper, recorded a “marked cumulative . . . surplus in Zambia’s favor . . . reiterating the focus on resource diplomacy at all levels in the Southern African region” (Sharp, 2003, 112). Helping Zambia reinvigorate its moribund manufacturing sector is one way to achieve access to resources through consent. Japan has been involved with the development of export processing zones (EPZs) in Zambia under the Tokyo International Conference on African Development (TICAD). According to a University of Zambia academic, at the moment there are three [EPZs] . . . Livingstone, Kabwe and Ndola. In Livingstone most industry shut up but the infrastructure is still there. . . . The government doesn’t pinpoint sub-sectors that it wants to attract to the EPZ’s. TICAD is interested in promoting basic manufacturing such as textiles and finished copper ore products.2

However, the new Chinese “Multi-Facility Economic Zones . . . will replace the Export Processing Zones, as special industrial zones for both export-oriented and domestic-oriented industries” (Fundanga, 2006, 4). These new zones are meant to create 6,000 new jobs

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(Muneku and Koyi, 2007). Although the new zones are considered to be high-tech, there would appear to be relatively little evidence of that in Zambia at the moment3 (“Country File: Zambia,” 2007). There also has been substantial Indian investment in Zambia in mining and other sectors. “Zambia ha[s] been declared a major investment destination under the Tata Group expansion programme in Africa” (Republic of Zambia, 2006c), with investments in the agricultural sector and in hydropower. However, a manager at the IndoZambian Bank noted that “I don’t see assembly lines,”4 although there has been some foreign investment in the production of juices that compete with local companies such as Manzi (Fick, 2006). Tata has also opened a new bus and truck assembly plant in Ndola (“President Mwanawasa Commissions,” 2006), although according to a World Bank economist, this project would not have taken place without government incentives and government will be the major buyer of the few hundred buses and trucks assembled each year.5 A report for the UK Department for International Development found that Chinese companies employ relatively more local workers, as opposed to importing them from China, in Zambia and Tanzania when compared to Angola and Sierra Leone (P. Davies, 2007). Asian investment has, however, been highly controversial. Wages are low, with temporary workers at the Chambishi mine paid as low as $52 a month in 2007 (Muneku and Koyi, 2007). Furthermore, in 2005, forty-nine people were killed in an explosion at the explosives factory at the mine. These issues, when combined with the fact that workers at a Chinese-owned coal mine never got a day off, as noted in Chapter 2, generated labor unrest and political opposition, in addition to the temporary closure of the mine (Dixon, 2006). In another incident, six workers were shot by police at the mine during protests for better working conditions (Chimangeni, 2007). There have since been numerous anti-Chinese riots and strikes at Chinese facilities, echoing events in Zambia’s colonial past (D. Blair, 2006; Campbell, 1944). Poor labor standards and rights have been a feature of domestic Chinese industrialization and it is highly unlikely that Asian countries would give up their search for strategic minerals “in regard for the lives of poor and distant Africans” (Jok, 2007, 196). Copperbelt Province and Lusaka, where Chinese traders are much in evidence, voted heavily for the opposition in the 2006 elections, despite these being the areas of the country that have seen the most dramatic reduction in poverty (see Figure 5.1). The opposition had tapped into anti-Chinese sentiment, prompting the Chinese ambassador to

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threaten to break diplomatic relations if they won, in violation of the stated principle of noninterference (Taylor, 2004). The opposition leader Michael Sata had threatened to recognize Taiwan if elected. Although China brought growing investment to Copperbelt Province, as Ross notes, “if the mine operates as an enclave, and the regional government has no taxing authority, then a booming minerals sector may have little or no impact on the region’s living standards” (2007, 245). However, Copperbelt Province saw significant poverty reduction between 2004 and 2006, so these disturbances can be viewed as forms of resistance to unfair exploitation of labor and resources. And they suggest the continued importance of a nationalist register in Zambian politics. Copper mining has also been associated with environmental degradation such as the KCM pollution of the Kafue River (Sichalwe, 2007). The sustainability of copper mining is also open to question because newly opened mines have a life span of only forty years (“Kalyalya Calls for Broader Economy,” 2006). Oil and gas deposits were also discovered in Zambia in 2006 (Republic of Zambia, 2006d), but this often has not translated into poverty reduction.

Figure 5.1

Incidence of Poverty by Province, 2004 and 2006

90 2004

2006

80

70

Percentage

60

50

40

30

20

10

0 Central

Copperbelt

Eastern

Luapula

Lusaka

Northern

North Western

Southern

Source: Data from Central Statistics Office. (2007). Monthly Digest of Statistics. Available at www.zamstats.gov.zm.

Western (after CSO, 2007)

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According to an International Labour Organization official, a lot of Zambia’s urban economy is trading driven. 6 Indeed, Kenyan and Ethiopian airlines had put on special deals for traders to India, where they could pay for 40 kilograms of excess baggage. However, “a lot of local traders got a ‘kick in the teeth’ at the last Lusaka trade show because the Chinese were selling the same goods at a quarter or a tenth the price that the local traders were.”7 There has been resentment at the leasing of Lusaka’s Kamwala market to Chinese management for sixtyfive years (Larmer and Fraser, 2007). According to one Zambian trader, “ever since the Chinese came in, things have gotten worse for us. In the past we were doing fine” (Chimangeni, 2007). Concern over the growing number of Chinese traders, in particular, has prompted some policy changes. According to one interview respondent, “the government made the minimum investment [for residency] half a million US dollars because some people were claiming to be investors but in fact weren’t, and were just exploiting the economy”8 by engaging in trading or setting up small businesses, such as restaurants, which some feel should be reserved for Zambians. In reality, the requirement remained just $50,000 (Zambia High Commission, 2006b), but tax breaks below half a million dollars of investment were eliminated. As economic conditions in Zambia have improved, there has been some increased demand for new clothing.9 However, national statistics show a continued decline in the share of GDP accounted for by the textile and leather industries up to 2005 (CSO, 2006a). According to one trader, much of the new clothing purchased is made in China, rather than salaula (Chimangeni, 2007). Used clothes and rag imports fell from $13 million in 2001 to $9 million per annum in 2003–2005 (UNCTAD/WTO, 2008). And in 2007, the Zambia-China Mulungushi Textile Joint Venture with the Chinese state was closed down (McGreal, 2007). It could not compete with Asian imports.10 This was the largest textile factory in Zambia, producing 17 million meters of fabric a year in addition to 100,000 pieces of clothing as well as employing 1,000 people directly and around 5,000 cotton growers indirectly (Taylor, 2006a). Non-copper-based tradable manufactures have thus been subject to competitive displacement in large part because, as noted in Chapter 3, the average productivity of Zambian firms is only onequarter that of Chinese firms (Arnold and Mattoo, 2007). In addition, they face other handicaps such as the fact that their indirect costs for energy and transport account for 22 percent of gross value added, more than twice what they pay in labor costs. Trade unions in Zambia

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also note that the electrical subsector has been hard hit by imports. However, cheap wage goods, or goods commonly bought by workers, may be an economic benefit to Zambia as well as a cost because they may reduce wage pressures in other sectors, making them more competitive (Kaplinsky, 2008). Asian investors have also shown substantial interest in agricultural investment in Zambia. While Zambia’s population is only onehundredth that of India’s, it is one-third the size and the country is using only 14 percent of its cultivable land (Seshamani, 2002; Arnold and Mattoo, 2007). While in agricultural trade India imports mostly fruit and vegetables and China tobacco and cotton from Africa, the allocation of land to Chinese investors around the capital of Lusaka to supply it with fresh produce has generated tension within Zambia11 (Mooney, 2005; FAO, 2007). Consequently, the Zambian government has been eager to assure Chinese investors that their property rights will be respected and in 2007 launched demolition campaigns against squatters (“Zambia Gives Illegal Land Developers Ultimatum,” 2007; FreshPlaza, 2007).

Regional Factors: South Africa, the DRC, and the “Zimbabwe Dividend” While Chinese and Indian investment and trade have had substantial impacts on Zambia, so too did the revival and regional reintegration of the South African economy. From 1999 to 2001, the share of imports coming from the Southern African Development Community (mostly South Africa) increased from 32.6 percent to 69.7 percent, and the share of exports going to it rose from 3.5 percent to 18 percent (World Bank, 2004b). 12 South Africa and the DRC were Zambia’s main markets for nontraditional exports in 2005 (Republic of Zambia, 2006a). The developed manufacturing sector in South Africa means that it records a substantial trade surplus with Zambia. The main imports from South Africa are fertilizers and motor vehicles (CSO, 2006b). Asymmetric trade has been facilitated, in particular, by the penetration of the Zambian market by South African–based retailers, such as Shoprite, which has over 1,000 shops across the continent (Fundanga, 2003). In 2003, Shoprite had eighteen retail outlets in Zambia plus others for fast food and so forth (Muneku, 2003). These companies can serve as powerful engines of intra-African trade. However, they also

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tend to import South African products, subjecting domestic producers to severe competitive displacement pressures. Mostly South African expatriate managers in Shoprite are paid almost ten times more than local Zambian managers, and the chain makes extensive use of casualized (temporary) labor (Muneku, 2003). There have been reports of temporary workers being paid only $5 for forty-five-hour work weeks (Union Network International, 2005). However, these companies are also mindful of their social license to operate. Thus, while many Zambian small farmers initially found it difficult to meet stringent quality standards arising from supermarketization, Shoprite put an assistance program in place and now 90 percent to 95 percent of its fresh produce is sourced in Zambia, although most processed goods sold are still South African (Mattoo and Payton, 2007). Increased foreign ownership of the economy as a result of privatization in the 1990s resulted in private sector monopolies because the Competition Commission was set up well into the process in only 1998.13 Already by the mid-1990s, Zambian-made products such as munkoyo (sweet beer) were “fighting an uphill battle against Coca Cola and other foreign beverages in their home markets” (Kamuwanga, 1995, 170). Although Zambia Breweries is touted as a “successfully privatised company” (Zambia High Commission, 2006b, 7), according to a World Bank official the new owner (South African BreweriesMiller) now produces clear and opaque beer and soft drinks in Zambia and has 60 percent to 70 percent of the Zambian market, displacing local producers. “Now all you can get in Zambia is Coke, Fanta or Sprite, that’s it. . . . The socialists were right about TNCs [monopolizing markets] in the 1970s. They weren’t just dreaming it up.”14 While the Zambian government has been welcoming to South African investment, there has also been some regional competition. There was tension between the Zambian and South African governments over the division of the economic dividend from peace in the DRC (Nest, 2006). However, relative peace and reconstruction in the DRC have opened up export opportunities for some Zambian-based companies, such as Chilanga Cement, owned by the French company Lafarge.15 Zambia also now exports sugar and some processed foods to the DRC and Rwanda, and since 2001 there have been improved farm yields because the government now gives inputs to small farmers at 40 percent of cost price. Economic collapses and even famines can be profitable for some social groups. Zimbabwe has the dubious distinction of having the world’s fastest-contracting economy. However, the ruling ZANU elites

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managed to insulate themselves and even profit from the economic crisis in that country, as those with access to foreign exchange were able to resell it on the black market. Inflation was in the millions of percent in 2008. However, for Zambia, this has resulted in a “Zimbabwe dividend.”16 Over one hundred white commercial tobacco and dairy farmers who were dispossessed of their land in Zimbabwe have reestablished operations there (Lafraniere, 2004). In some cases, the farms have been reestablished with loans from international banks and US companies such as the Universal Leaf Tobacco Company. Zambian production of tobacco increased threefold from 2000 to 2004 (SAIIA, 2004). There are other elements to this dividend. As Zimbabwe’s political economy has deteriorated, tourists (with the partial exception of those from China) have shunned it in favor of other regional destinations, with many tourists visiting Victoria Falls choosing to stay on the Zambian side (Wines, 2004). Tourist arrivals to Zambia rose by 32 percent from 2001 to 2005 (calculated from CSO, 2006b), although this also relates to Zambia’s accession to the Chinese Approved Destination Status in 2004 (Republic of Zambia, 2006e). Sun International has built two new hotels in Livingstone, employing 350 permanent workers and a further 500 or so contract workers (Mattoo and Payton, 2007). However, the largest single group of tourists in Zambia, accounting for over 40 percent of total arrivals, are those coming for business purposes, largely from within the southern African region and for mining (Republic of Zambia, 2006a).17 Also some multinational companies, such as Dunlop, which had left Zambia for the larger market of Zimbabwe after economic liberalization, have now returned18 and the scope for Zambian exports of some food and manufactures to Zimbabwe has also increased (Chibamba, 2007).

“Dead Capital Come to Life”: Liberalization, Domestic Class Formation, and Foreign Ownership in the Zambian Economy According to a former deputy minister of mines, “Letting go of the mines was like giving up sovereignty. Many of us resisted attempts to privatize the mines as doing so took away the only leverage government had over our important public resource and placed them in the hands of foreigners who would do as they pleased” (Simutanyi, 2007, 8). New capital was vital for their survival, with recapitalization of $2 billion needed in 1996 to avoid “complete collapse”

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(Kaunda, 2002, 32). The World Bank had been particularly eager to ensure privatization, granting supplemental credits to ensure it after the unexpected withdrawal of Anglo-American Corporation in the early 2000s to guard against the “resumption of state subsidization of this important component of the Zambian economy” (2003b, 10). The privatization of the Zambian mining industry was also marked by allegations of corruption, and put pressure on the treasury as a result of the “huge tax concessions” given to new owners (Ndulu et al., 2007, 52). Subsequent to these, the World Bank calculated that the mining sector enjoys a marginal effective tax rate of approximately 0 percent (Fraser and Lungu, 2007). In 2006, corporate tax accounted for the equivalent of only 5 percent of income and other taxes (Muyeba, 2008). If the mines had remained in state ownership, revenues from the resource boom would have accrued to the government, thereby avoiding Dutch disease effects that have also reduced public revenues from other sources such as trade taxes (Bova, 2008; Weeks, 2008). Given the dominance of the public sector in the economy prior to liberalization, the development of a local stock exchange and privatization were related. According to Joseph Chikolwa, when the Zambian stock exchange was set up in 1994 there were only 700 investors, but as of 2006 there were over 30,000, the majority of whom were Zambian (Cronin, 2006). Thus, the class structure of growth is important. According to a manager at the Indo-Zambian bank, “there is a growing up-liftment of the middle class” as in India, “where it drives the economy,” partly to do with privatization.19 This was echoed by an official of the International Labour Organization who claimed that, since the economic liberalization began in 1991, “de Soto’s dead capital has come alive.”20 In particular, he argued that civil servants had been able to buy their formerly government-owned houses and turn them into small businesses, lodges, or offices and find somewhere else to live. Thus, it is not the excluded that are seeing their incomes rise as a result of this redefinition of property rights, but elements of what Issa Shivji (1976, 63) termed the “bureaucratic bourgeoisie” who are now engaged in “straddling” between the private and the public sectors as part of their livelihood strategies. However, according to a development assistance official, “the evidence would suggest that economic growth is not trickling down. . . . The benefits of economic growth are going to a small middle class.”21

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Indeed, the government’s most recent National Development Plan, launched in 2006, notes that “the persistently high income poverty observed in 2004 is in sharp contrast to the rapid acceleration in economic growth experienced since 1999” (Republic of Zambia, 2006e, 30). Again, in part, this is an outcome of the privatization process of the 1990s. In terms of which sectors of the economy grew, managers at the Indo-Zambian Bank note that “the sector which has had very high growth is construction—offices, houses, etc. . . . Trading also doing well . . . creating demand for warehousing.”22 As interest rates came down, there was particularly buoyant demand for housing since people see it as an asset, speaking to its dual role as both an investment and consumption good. The governor of the Bank of Zambia notes that the growth expansion of the early years of the new millennium was “largely due to the expansion in construction, driven by a robust demand for housing as well as large scale investment, which has led to a marked pick-up in mineral production, particularly of copper” (Fundanga, 2006, 1). Despite increased cement production capacity, such as that by Zambezi Portland Cement and Lafarge, and Chilanga Cement, which increased production by 85 percent from 2001 and is building a new $100 million plant, cement is also being imported into the region from China and India (“Chilanga Cement in Multi Million Dollar Plant,” 2007; “Lafarge Confirms,” 2007). The shift to the production of nontradables, such as construction, is also a noted feature of Dutch disease. Loans to the wholesale and retail sectors are the Indo-Zambian Bank’s single-largest loan group, accounting for 30 percent of total credit, and profits at the bank increased by 122 percent from 2004–2005 to 2005–2006 (Indo-Zambian Bank, 2006). Thus, other developments in the economy more than offset the impact on profits of the decline in interest rates on government securities, with yields on twenty-four-month bonds declining 35 percent from October 2005 to March 2006 alone (calculated from Indo-Zambian Bank, 2006).23 This was a positive sign for the economy because loans to government were reduced in favor of financial intermediation to the private sector. However, since liberalization, the banking sector is foreign dominated, with foreign banks accounting for over two-thirds of total assets, loans, and deposits (Mattoo and Payton, 2007). Thus, domestic capitalist class reformation is related to foreign direct investment, as some niches are opened up for a domestic rentier class while the “commanding heights” of the economy are retransnationalized in terms of ownership.

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On the other hand, according to the policy analyst for the Zambia Business Forum, The local business sector is shrinking. There are very few indigenous companies. . . . It is impossible to get money from banks if you are a local business and then the cost of it. If they give it to you it is often short-term financing for one year at high interest rate. Imports have been coming in since 1990 . . . living with it now. Most industries have closed . . . [but there is a] need to be competitive. . . . China flooding the market like crazy. . . . Construction and mining are booming. The boom in mining is affecting the whole country. . . . [There are] new nickel mines . . . [but] copper [is] dominating again . . . [and this is adversely] affecting NTE’s [nontraditional exports] like agriculture, especially cut flowers.24

As a result of the Dutch disease impacts of the copper boom, there were an estimated 2,000 job losses in horticulture (Bova, 2008). Furthermore, medium-sized firms in Zambia are disadvantaged by the fact that they pay an average of 37 percent interest per year on their loans while large firms pay just over 20 percent (Arnold and Mattoo, 2007). In relation to other sectors: Manufacturing has not picked up so far to that extent, except agrobased industries which are beginning to grow . . . juices, fruits and fruit processing. Local manufacturers can’t compete. China can send sofas much cheaper because of economies of scale. Local mattress manufacturers are doing well. Soaps doing well, cooking oil, sugar. Also in the Copperbelt some mining suppliers. . . . Services are gradually growing. Cell phone repair is doing well.25

The demand for phone repair is driven by the fact that mobile phone usage is growing rapidly in Zambia, with the Kuwaiti company Zain (previously Celtel) taking out a loan of $105 million to upgrade its network (Kaswende, 2007). Zain increased its number of subscribers by 159.4 percent in 2005 (Republic of Zambia, 2006a). Greater ICT usage and casualization of labor, where workers are employed on a daily or short-term contract basis, are two sides of “flexible accumulation” in Zambia (Harvey, 1989, 124). An official at the International Labour Organization noted that “casualization is a symptom of globalization,”26 as short-term contracts become common in Zambia. In particular he noted, “Chinese and Indian employers are not demonstrating that they want to observe the law of the land,” and sometimes use labor brokers who are then technically the formal employers. Legal compliance has now improved

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somewhat though as a way of diffusing popular discontent (Alden, 2007). Even more disturbing, an International Labour Organization official noted that, while GDP growth had been good in previous years, the flip side of this was an increase in child labor, with the number of children employed increasing from 600,000 at the beginning of the century to 900,000 in 2007. This labor is often hidden because people accept it and, consequently, it is “culturally assimilated.”27 While the majority of people in Zambia have seen few of the benefits of the buoyant economic growth of the early years of the new century, this has not been the case for multinational mining companies. The ten largest companies control about 70 percent of global production for bauxite, copper, and tin and have recorded dramatically increased profits during the commodity boom (R. Bush, 2007). The Canadian company First Quantum (2007), with operations in Zambia, the DRC, and Mauritania, saw its profits rise by 8,280 percent, from $5 million in 2003 to $414 million in 2006. On the other hand, for small-scale pick and shovel gemstone miners in Zambia, “the mining diversification fund, a subsidised commercial loan facility provided by the European Investment Bank continued to be out of reach for most of the indigenous small-scale miners, mainly for lack of appropriate collateral” (Republic of Zambia, 2004, 3–4). Meanwhile, wages for formal sector Zambian miners remain low, a source of considerable discontent in Copperbelt Province. Although the nature of deposits and other factors also influence costs, an ad for KCM, the largest copper producer in Zambia with substantial Indian investment, reads that it is “gearing up to become a world class low cost copper producer” (Zambia High Commission, 2006b, 5, emphasis added). Vedanta, which owns KCM, recouped the $25 million it paid for the mine in its first three months of operation (Larmer and Fraser, 2007; for a case study of KCM, see Dymond, 2007). Foreign investment is also important in agroprocessing, which accounts for approximately 84 percent of manufacturing output; that is five times more than the next largest group, textiles and clothing (World Bank, 2004b). Most of the agroprocessing involves the staple, maize meal. One of the other main food processing companies in the country since privatization, Parmalat, is a subsidiary of an Italian company and imports much of its inputs, such as juice concentrates (“Parmalat Cries for Tax Revision,” 2007). And cotton ginning is dominated by multinational companies such as Dunavant of the United States. Nonetheless, some local companies in Zambia are engaged in economic diversification. For example, Zambeef, which

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raises cattle and also chickens, also now has fast-food outlets and processes cowhides into industrial shoes (“Zambeef Goes into Milk Product Exports,” 2006). However, this company was started by Irish expatriates. Increased foreign ownership has been associated with deepening dualism in the economy. The number of rural bank branches declined by 15 percent in the past decade “as the benefits expected from an open, private, and largely foreign-owned banking system have not so far materialized and access to banking services is low and unequal,” with only 8 percent of the population holding a bank account (de Luna Martinez, 2007, 155; Arnold and Mattoo, 2007). Meanwhile, the number of branches in urban areas increased by 16 percent. Regional disarticulation is further evidenced by the fact that, while international air transport to and from Zambia grew at 7 percent a year from 1995 to 2004, domestic air transport declined by an average of 5 percent a year (Mattoo and Payton, 2007). Poverty is rising in Eastern Province, Western Province, Northern Province, and Southern Province (see Figure 5.1). According to Crispin Matenga (2004), the Zambian government realized the catalytic role that the tourism sector could play in development in 1996, when it accounted for 17.7 percent of the national economy. There is also a substantial employment multiplier, with one job created for every seven tourists. However, a stronger currency reduces the attractiveness of Zambia as a destination for tourists and the demise of Zambian Airways means there are no longer direct flights to India, for example (Riaz, 2006). Also, its potential may be exaggerated by the statistics. As noted earlier in this chapter, many arrivals are for business purposes. Furthermore, in Livingstone National Park, which is Zambia’s main tourist attraction, 50 percent of hotels, 72 percent of lodges, and 76 percent of tourist activity operators are either fully or partially foreign owned (Arnold and Mattoo, 2007). According to the World Bank, official wealth is being externalized from the country—“everything is going out.”28 This is reminiscent of the colonial period during which “mining profits were never invested locally on a significant scale, being regularly ‘stripped’ by a combination of colonial and international interests” (Fincham, 1980, 298). This externalization of wealth not only relates to multinational profits, but also to domestic savings. “At 8 percent, the ratio of private sector credit to GDP in Zambia is one of the lowest in Sub-Saharan Africa. In recent years commercial banks have preferred to invest in banks abroad and in government debt,” with these asset classes

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accounting for half of their total (World Bank, 2004b, ix). Thus, there would appear to be a “quadruple alliance” among the Chinese and Zambian states, TNCs, and fractions of local capital in favor of dependent development (P. Evans, 1979), a particular kind of transnational contract of extroversion. However, in many cases the new compradors (traders) are Chinese.

Back to the Future? M. Mpande argues that the Zambian economy represents an extreme form of dualism because copper mining is “an ‘enclave industry’ which has produced for the benefit of other economies” (1992, 278). The growth of the Zambian economy in the 2000s was heavily based on natural resource exports, trading, construction, and agriculture. As such, it conforms to a pattern of “enclave-led growth” (Peet, 2007, 157). Some new jobs are being created for men in mining such as the 1,300 jobs created by the opening of the Kansanshi mine in Solwezi in 2005. However, while copper output will soon equal or exceed the 1970s peak, labor absorption will be lower as more efficient techniques are used (Fundanga, 2006). Some manufacturing subsectors, such as agroprocessing, have grown and niche markets have also been opened up, for example, for articulated truck trailers (Bank of Zambia, 2004). The wood and wood products and cement subsectors have also seen relatively rapid growth that is linked to construction (Republic of Zambia, 2006a). However, other subsectors, particularly the potentially labor absorptive textile and clothing industries, have been hard hit by import competition from Asia. Increased Chinese trade and investment, and associated inflows of foreign portfolio investment and new aid disbursements associated with the attainment of the Highly Indebted Poor Country completion point, resulted in a dramatic appreciation of the Zambian currency by 35 percent against the US dollar in 2005 (calculated from XE Datafeed, 2008). This had mixed effects on the economy because it made imports of capital goods cheaper, so there was capital restocking.29 However, currency appreciation made exporting more difficult. The Real Effective Exchange Rate rose in 2005, giving a “47.6 percent erosion of Zambia’s international competitiveness,” militating against export diversification (Republic of Zambia, 2006a, 21). “The rising share of agriculture in GDP experienced during the 1990s has reversed

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in recent years in line with renewed mining production” (Thurlow and Wobst, 2006, 618). The share of nontraditional exports in total earnings declined from 39 percent in 2002 to 25.7 percent in 2005 (Republic of Zambia, 2006e), largely as a result of growing metal exports. Also, a stronger currency makes imports cheaper, resulting in the reduction of the trade surplus and future mineral-led growth will be resource constrained (i.e., the supply of natural resources that can be mined is finite). Debt relief has also had an impact on the Zambian economy and may potentially open up more policy space (K. P. Gallagher, 2005). Zambia’s external debt fell from $7.1 billion in 2004 to around $500 million at the end of 2006 (Zambia High Commission, 2006b; Liswaniso, 2006). According to the International Labour Organization, “the savings from debt relief are being channelled into poverty reducing programs, as well as into investment in the social sectors” (2007, 1). However, the impacts of this should not be overstated because much of this debt relief is financed by cuts in aid (Bond, 2006). Some of the additional resources made available by debt relief can be invested in infrastructure, with potential crowding in effects for private investors. Also, debt relief means smaller government budget deficits, which may no longer need to be monetized, resulting in reductions in inflation. In Zambia, inflation is now at around 10 percent, partly as a result of currency appreciation that made imports cheaper and also assisted by a reduction in money supply growth, which fell from 30.3 percent in 2004 to just 0.4 percent in 2005 (Republic of Zambia, 2006a). Additionally, rising agricultural production has helped lower inflation (Economist Intelligence Unit, 2007). Furthermore, the more buoyant economy meant that tax revenues improved and, despite its low rate, the mineral royalty tax brought in almost ten times more than projected in 2005 because concessions for foreign investors expired. According to the Living Conditions Monitoring Survey of 2004, poverty fell from 73 percent in 1998 to 64 percent in 2004 (Republic of Zambia, 2006e; CSO, 2007). However, the Fifth National Development Plan notes that The improved economic performance since 1999 has not significantly reduced poverty. One explanation for the weak growth/poverty relationship is that recent growth has been concentrated in mining, wholesale and retail trade and construction, which are mostly urban based and capital intensive. These sectors have not generated sufficient employment due to weak linkages with the rest of the economy. If the country continues on such a growth path, it is projected

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that headcount poverty will only marginally decline to 62.3 percent by 2010 from 68.0 percent in 2004. (Republic of Zambia, 2006e, 34)

Consequently, Thurlow and Wobst argue that Poverty reduction will therefore remain gradual if the current structure of growth is maintained . . . sustained growth between 7.1% and 8.7% is needed to halve poverty by 2015. Such high growth has not been achieved in Zambia’s recorded history. This suggests that the country’s national development strategy should not only focus on accelerating growth but also on increasing the participation of the poor in the growth process (i.e., making growth more pro-poor). (2006, 617, emphasis in original)

In contemporary Zambia, there is substantial debate about the direction of economic policy. Will increased Chinese influence open up greater policy space for more pragmatic economic policymaking and pro-poor (labor absorptive) growth? “Zambia has a very good track record in implementing its macroeconomic reform program . . . which has to be matched by a similar performance in the private sector” (World Bank, n.d., 28). However, according to an official at the Ministry of Finance, after the Fourth National Development Plan “faith was placed in the market, but it didn’t really work. We have a weak private sector, so there were discussions of a return to central planning.”30 World Bank researchers are concerned about the sustainability of neoliberal economic reform, with several privatizations in telecommunications, electricity, and insurance deferred (Mattoo and Payton, 2007). Rather than developing a secondgeneration PRSP, the government released a Fifth National Development Plan in 2007. Although some raise concerns that “the NDP [National Development Plan] is heavily concentrated on growth and employment, which is fine . . . but will the growth be pro-poor?”31 According to Neo Simutanyi, “there is now a growing demand for the re-nationalisation of the mines, increasing mine taxes and condemnation of the new mine owners’ treatment of workers, including their poor safety and environmental record” (2007, 2). In the 2007 budget, the government increased the mineral royalty tax from 0.6 percent to 3 percent. It also subsequently introduced a windfall tax on mining, but this was later done away with in early 2009 when the global economic slowdown hit. This proved to be poor timing because copper prices rose to over $6,000 a tonne again later in 2009. While renationalization appears unlikely, a Commission on Law and

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Integrated National Development has been proposed that would see a fundamental restructuring of the economy, passed by parliament, to meet the basic needs of all Zambians (Seidman and Seidman, 2005). China and India are inducing a secular reversal in the terms of trade between primary products and low-tech manufacturing since prices for the former have risen, despite some retrenchment as a result of the global economic slowdown of 2008, and those for wage goods, like clothing, have fallen (Kaplinsky, 2005). This will be reinforced over the longer term by increasing resource scarcity globally. Thus, the new scalar alignment of debt relief, Asian and South African growth, and better national governance open up the possibility of a developmental regime. A key challenge for the Zambian state will be to capture and sow mineral rents for structural transformation through coordination among African countries (Kaplinsky and Farooki, 2008). Diversification and fiscal planning could be enhanced through a more managed exchange rate regime (Weeks, 2008) and an employment-targeted program of industrialization (Pollin et al., 2007), where subsidies are targeted at labor absorptive sectors with established competitive advantages. This will entail the construction of more advanced industrial capabilities and a developmental state (Kaplinsky, 2005; Lall, 2005), perhaps in partnership with the Chinese as part of a genuine partnership or “grand bargain” (Castenedas, 1993, 427). Elements of this are already in place including Chinese debt relief, self-restriction of textile exports, import liberalization from Africa, tax incentives for Chinese companies to locate in Africa, and the multifacility economic zones. As labor costs rise in China, there may be an opportunity to capture new investment in labor-intensive manufacturing, although this may not happen for quite some time given the huge size of China’s reserve army of labor. Will China be willing to help develop more advanced industrial capabilities in potential competitors, and why should the Zambian state behave in developmental fashion (Harrison, 2002)? Social struggles around the state, as site of national development planning versus resource extraction, will be the key to answering this question. The labor movement has been a key source of democratic accountability in industrial societies and the creation of a social wage. Its reinvigoration in the context of renewed, but dependent, capitalist development in Zambia may contribute to this too. I will return to these issues in more detail in the concluding chapter. In the next chapter, I turn to another axis of renewed dependent development in Africa: the mobile phone revolution.

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Notes 1. Development assistance official interviewed by the author, Lusaka, Zambia, January 5, 2007. 2. University of Zambia academic interviewed by the author, Lusaka, Zambia, January 9, 2007. 3. Field notes, Zambia-China Cooperation Zone, August 10, 2009. 4. Indo-Zambian Bank manager interviewed by the author, Lusaka, Zambia, January 4, 2007. 5. World Bank economist interviewed by the author, Lusaka, Zambia, January 10, 2007. 6. International Labour Organization official interviewed by the author, Lusaka, Zambia, January 8, 2007. 7. Ibid. 8. Managers of the Indo-Zambian Bank interviewed by the author, Lusaka, Zambia, January 4, 2007. 9. World Bank official interviewed by the author, Lusaka, Zambia, January 10, 2007. 10. University of Zambia economist interviewed by the author, Lusaka, Zambia, January 9, 2007. 11. Taxi driver interviewed by the author, Lusaka, Zambia, January 3, 2007. 12. Although some of the imports may be re-exports from China and other origins. 13. World Bank official interviewed by the author, Lusaka, Zambia, January 10, 2007. 14. World Bank economist interviewed by the author, Lusaka, Zambia, January 10, 2007. 15. University of Zambia academic interviewed by the author, Lusaka, Zambia, January 9, 2007. 16. World Bank official interviewed by the author, Lusaka, Zambia, January 10, 2007. 17. World Bank official interviewed by the author, Lusaka, Zambia, January 10, 2007. 18. University of Zambia academic interviewed by the author, Lusaka, Zambia, January 9, 2007. 19. Indo-Zambian Bank manager interviewed by the author, Lusaka, Zambia, January 4, 2007. 20. The reference here is to de Soto (2000), who argues that global poverty is largely the result of people not having legal, individually appropriable title to land and houses in shantytowns that could then be used as collateral to take out loans and start small businesses. 21. Development assistance official interviewed by the author, Lusaka, Zambia, January 5, 2007. 22. Indo-Zambian Bank manager interviewed by the author, Lusaka, Zambia, January 4, 2007. 23. This reduction in interest rates exceeded the reduction in consumer price inflation, which fell from 21 percent in 2004 to 18 percent in 2005 and 2006 (CIA, 2008).

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24. Zambia Business Forum policy analyst interviewed by the author, Lusaka, Zambia, January 10, 2007. 25. Managers of the Indo-Zambian Bank interviewed by the author, Lusaka, Zambia, January 4, 2007. 26. International Labour Organization official interviewed by the author, Lusaka, Zambia, January 8, 2007. 27. Ibid. 28. World Bank economist interviewed by the author, Lusaka, Zambia, January 10, 2007. 29. World Bank official interviewed by the author, Lusaka, Zambia, January 10, 2007. 30. Ministry of Finance official interviewed by the author, Lusaka, Zambia, January 10, 2007. 31. Development assistance official interviewed by the author, Lusaka, Zambia, January 5, 2007.

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6 The Mobile Phone Revolution

As noted in Chapter 3, one of the most significant economic trends in Africa in the new millennium has been the rapid adoption of mobile phone technology. This is a part of the ongoing process of globalization, with many of these phones being designed in the United States and Europe, and assembled in China with some of the raw material sourced from Africa. As such, mobile phone production fits in with the patterns of triangulation discussed earlier. While they are often treated in isolation from globalization and the rise of China, these phenomena are interrelated. Much has been written about the impacts of ICT in Africa and its transformational socioeconomic potential. The penetration of mobile phones has been particularly marked since 2000. In this chapter, I seek to interrogate the hypothesis of transformation by examining the ways in which Africa is integrated into the global mobile phone value chain, and the uses to which this technology is put on the continent. While mobile phones are having significant and sometimes welfare-enhancing impacts, their use is also embedded in existing relations of social support, resource extraction, and conflict. Consequently, their impacts are dialectical; that is, they facilitate change, but also reinforce existing power relations. Because Africa is still primarily a user, rather than a producer or creator of ICT, this represents a form of thintegration (thin integration) into the global economy, which does not fundamentally alter the continent’s dependent position.

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The impact of these developments in ICT in Africa, in terms of both ICT development (increased infrastructure and access) and ICT for development (adoption of ICT applications), has been to advance the process of development itself, in terms of ICT for development. The result of this duality of sector transformation has been itself dually vast. On the one hand it has facilitated the delivery of services such as education, health, better governance (on the part of both leadership and governed), enterprise and business development, as well as their overall contribution to socioeconomic well-being (especially poverty reduction), political stability and self-actualization. (Okpaku, 2006, 153)

Writing in the late 1990s, Manuel Castells characterizes subSaharan Africa as a “black hole of informational capitalism” (1998, 95). At that time, there were more telephone landlines in Manhattan or Tokyo than in all of sub-Saharan Africa. For Castells, this “technological dependency and technological underdevelopment, in a period of accelerated technological change in the rest of the world [made] it literally impossible for Africa to compete internationally either in manufacturing or in advanced services” (1998, 95). However “gloomy predictions of the impending Fourth World of structurally irrelevant ‘black holes of informational capitalism’ (Castells 1998) did not anticipate the privatization of the telecommunications industry (Nielinger 2004) across much of the African continent,” and its consequences (Molony, 2007, 68). From 2000 to 2007, Africa was the fastest-growing mobile phone market in the world as the number of subscribers rose from 10 million to 250 million, with a 66 percent growth rate in 2005 alone (RNCOS, 2006; “Africa’s Leap over Landlines,” 2007; ITU, 2007). This aggregate figure disguised even faster growth in some markets. Nigeria had a compound annual growth rate in its mobile market of almost 150 percent during 2002–2004 (Africa Telecom News, 2008). By the end of 2007, mobile penetration in South Africa reached approximately 84 percent, and it is projected that there will be 560 million mobile phone subscribers on the continent by 2012 (Africa Telecom News, 2008). Will this development fundamentally alter the nature of globalization in Africa, or does the new landscape of mobile telephony simply represent an overlay on existing economic structures, a form of thintegration? Globalization is often defined as increased interconnectedness between places. The creation of a global economy characterized by “network trade” (Broadman, 2007a, ix), “deep integration” (D. Evans, Kaplinsky, and Robinson, 2006, 12), and information exchange is

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often presented in mainstream accounts as a benign phenomenon that enables the connection of the disconnected in the developing world. However, social and economic networks are not flat, but structured by hierarchy, as the actors involved have different types and levels of power. Consequently, uneven development continues to shape the evolution of the global economy. The arrival of the information technology revolution in Africa is one aspect of globalization on the continent. What is its significance? Does the rapid spread of ICTs in Africa represent a transformative moment in Africa’s economic history, or are previous power relations merely being partially modified, but reinscribed, by the information revolution that has swept over the continent in the early years of the new millennium? What are the different nodes in the global value chains of mobile phones, and where is Africa inserted into these? What are the power relations in the networks and webs created by ICT usage, and do these alter patterns of extractive globalization that have characterized Africa’s relations with other parts of the world for the past several centuries (Bond, 2006)? In this chapter, I seek to interrogate these questions by drawing insights from global value and commodity chain analysis and critical ICT studies to assess the transformational potential of mobile phone technology on the continent.

The Information Revolution and the Mobile Value Chain The potential of information and communication technology for development (ICT4D) is often related to the increased importance of the global knowledge economy, or what Peter Evans calls “bit driven growth” (2005, 209). For some, the revolutionary aspect of ICTs is that they decouple information from their physical repository, allowing for wide-scale nonrival knowledge diffusion that can contribute to innovative capacity (Wolf, 2001). Some go further and argue that the Internet, for example, represents not just a new form of communication, but instead a new form of societal organization (M. Graham, 2008). Increasingly it is argued that, as a matter of urgency, Africa must compete in the global information economy. For example, the “Africa Competitiveness Report” argues that ICTs are vital to success in today’s globalized economy (Toure, 2007). Likewise, Levi Obijiofor (2009, 32) argues there is a “strong link” between the adoption of new technologies and the development of countries and communities.

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Consequently, in mainstream accounts, ICT is often presented as an unambiguous positive flow of globalization: a harbinger of integration into the global economy of the “borderless” world (Ohmae, 1995, 1). However, there is a particular vision and ontology that undergirds such conceptualizations, which neglects the importance of the differential geography of research and development, production, raw material extraction, and the cultural adoption and adaptation of ICTs. ICTs can be broken down into distinctive value chains that contain pecuniary and nonpecuniary elements. Different places are integrated into the global mobile phone industry in very different ways. Much of the research and design takes place in the rich world whereas China concentrates on assembly as well as design development capability. Africa supplies the precious metal coltan, necessary for many ICTs to function, and serves as a fast-growing market for mobiles. There is then a global, but mobile, division of labor in the industry comprised of hard networks, involving flows of physical commodities, and soft networks of social interaction and information exchange. Elements of the latter are prerequisites to the former. China is now the world’s largest producer of mobile phones, accounting for over 40 percent of world production in 2006 (Imai and Jingming, 2007). The industry is dominated globally by a handful of transnational corporations such as Motorola, Nokia, and Samsung (one from each of the three triad regions of North American, Europe, and East Asia). Nokia, by itself, accounts for 40 percent of global sales (Corbett, 2008). However, there are also fifty Chinese handset makers, which account for over half of domestic market sales in that country. These companies use independent design houses to develop their mobile handsets and sometimes produce phones for the African market. One academic estimates that up to 20 percent of sub-Saharan Africa’s phones pass through one housing complex in Hong Kong called Chungking Mansions (Shadbolt, 2009), many of which are retrofitted (fakes). Ya’u (2005) argues that, apart from a few assembly plants and some efforts at software production, Africa imports all of its ICT needs.1 Little of the research and development that goes into the making of mobile phones takes place in Africa, and what research does appear to take place is based in South Africa and around functionality, rather than innovation per se (van Biljon et al., 2007).2 Demand for mobile phones in Africa continues to grow strongly because, despite the global economic slowdown, sub-Saharan Africa’s economy grew in 2009, although slowly, at below 1 percent

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of GDP per capita (World Bank, 2010). Economic growth, combined with the even more rapid growth in demand for mobile phones, has prompted some companies to set up assembly operations on the continent. For example, the Malaysian company M-mobiles is setting up a mobile phone assembly plant in Mozambique that will assemble between 50,000 and 70,000 mobile phones a month (Telecoms, 2008a), and is building another plant in Lusaka. On a smaller scale, Link Technologies from China has set up a plant in Rwanda to assemble 200 mobile phones a day (Telecoms, 2008b). After being redesigned by a Chinese company, these mobile phones can be programmed in the national language, Kinyarwanda. The South Korean company LG is also planning to set up a plant in Kenya, and the introduction of television broadcasts to mobiles by Black Star TV has spurred an investment to assemble mobile phones that can receive the service by a Korean manufacturer in Ghana (Aftafori, 2007). The Chinese company ZTE is setting up a new plant in Ethiopia, given a shortage of mobile phones during the first decade of the new century. In part, this may have been a quid pro quo after ZTE was awarded the contract to expand Ethiopia’s mobile phone network (“China’s ZTE Gets Contract,” 2003). There have also been closures, however, paradoxically associated with corporate social responsibility. In Nigeria, ZTE closed its mobile assembly plant because it could not compete on price with other companies. According to Malakata (2007), in most African countries, Nokia and Motorola phones are priced from US$40 while the least expensive ZTE phone is $100. As part of the Emerging Market Handset Initiative of the Global System Mobile (GSM) to bring cheap mobile phones to the developing world, Motorola now sells handsets for as little as $21 in Kenya, for example.3 In this way, major Western corporations are using corporate social responsibility to undercut rivals (Ponte, Richey, and Baab, 2008). Even at these reduced prices, however, new mobile phone sellers face competition from secondhand mobile phones imported from Europe and other rich countries as well as semilegal Chinese producers. Margaret Lee recounts the following example provided to her by a Ugandan trader: A Ugandan trader will go to China and tell a Chinese cell phone company that they want them to make a phone that they can sell in Uganda for 10,000 shillings (approximately US $5). The Chinese company designs it to look like a Nokia cell phone. A special symbol which is hard to see, is put on the phone to prevent Nokia from suing the company. The phone is put on the market in Uganda and

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sells for 10,000 shillings. Since it looks like a Nokia phone, people buy it thinking they are actually getting such a phone. The phone might last four months. Since it is not from Nokia, the consumer has no recourse to ask for a replacement. (2007, 36)

Africa is integrated then as a consumer and, in some places, assembler of mobile phones. However, it is also connected through, and to, this technology in other ways.

Mobile Africa and the Coltan Connection In addition to the information revolution, the mobile phone value chain has also been associated with other revolutions, violence, and forced migrations in Africa. The war in the DRC from 1998 to 2003 and the ongoing conflict in the east of that country are partly a resource war over control of the precious metal coltan, which serves as an important component of mobile phones and other new ICTs. According to the Tantalum-Niobium Study Centre, coltan is an abbreviation for colombite-tantalite from which the precious metals colombium and tantalum are extracted (Tegera et al., 2002). Tantalum is twice as dense as steel and can capture and release an electrical charge, which makes it vital for capacitors in portable miniaturized electronic equipment such as mobile phones (Hayes and Burge, n.d.). Eighty percent of known tantalite reserves are in the DRC. Two days after the new government of Laurent Kabila in the DRC moved to nationalize the main coltan mining company in 1998, the rebellion to overthrow him began, with the support of the directors of the company that was being expropriated. The war in the DRC brought in numerous African armies and was partly fueled by coltan (Nest, 2006). In 2000, prices for coltan spiked tenfold, largely as a result of the launch of the Sony PlayStation 2 console and new mobile handsets. Much of the coltan in eastern Congo is mined in two World Heritage sites: Kahuzi-Biega National Park and Okapi Wildlife Reserve (World Conservation Union, 2001). Outside of these, unregulated coltan mining destabilized hillsides, leading to landslides and damaging future agricultural potential. Half of the land that was seized for unplanned artisanal coltan mining cannot now be used for agriculture (Tegera et al., 2002; Nest, 2006). The resource pull effect has also been in evidence (Basedau, 2005). According to a coltan miner in the DRC,

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“we think that agricultural activities are a good thing, but we cannot see ourselves taking them up again in the short term because we earn much more money from coltan. However we are thinking of investing coltan money in agriculture and cattle once peace returns” (Tegera et al., 2002). Wildlife has also been affected. “‘I’m not in favour of killing gorillas,’ says Dick Rosen, CEO of AVX a tantalum capacitor maker in Myrtle Beach, S.C. but ‘we don’t have an idea where [the metal] comes from. There’s no way to tell. I don’t know how to control it,’ he says” (Essick, n.d.). As British member of Parliament Oona King noted, “kids in Congo are being sent down into mines to die so that kids in Europe and America can kill imaginary aliens in their living rooms” (C. Bush and Seeds, 2008, 1) or text each other. When the price of coltan fell dramatically in 2001, rebels in eastern Congo were forced to look for other sources of revenue and the war appeared to end in 2003 (“Falling Coltan Prices,” 2001). However, problems with the Australian coltan supply chain, which accounts for 41 percent of global production, again led to rapidly rising prices. The spot price for tantalum ore rose approximately 30 percent from 2007 to 2008 (Vetter, 2008), and was implicated in the return to large-scale conflict in the eastern DRC (John Prendergast interviewed on CNN Daily Show, April 24, 2008). However, the Rwandan government arrested the warlord responsible for the renewed violence, Laurent Nkunda, whom it had previously supported, in an attempt to gain favor with the incoming Barack Obama administration in the United States (Erlinder, 2009). While a Conflict Coltan and Cassiterite Act was introduced in the US Congress to prohibit the importation of these minerals from the DRC if any rebel groups would benefit from their sale, this may simply lead to geographical substitution effects as coltan mined in the DRC is rerouted to other markets. In any event, according to a British journalist, 80 percent of the DRC’s coltan is sent to Australia for processing (C. Bush and Seeds, 2008). The growth in demand for mobile phones in Africa may then be implicated in the resumption of largescale conflict in the DRC. Diamonds have also been associated with conflict in Africa (Le Billon, 2008), and Africa undoubtedly supplies many of the diamonds for encrusted mobile phones that are sold to the wealthy in the rich countries. One vendor of these said that “buying an Athem luxury phone is also an alternative way of investment in diamonds. The phone by itself might not be of considerable value but the diamonds

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encrusted on the phones are” (Athem phones, 2010). However, this vendor notes that the diamonds used are certified “conflict free.” Even if they are conflict free, however, the conditions under which artisanal and formal miners work are often extremely dangerous and highly exploitative while paying poverty wages (Hilson, 2006). I now turn to the extent and usage of mobile phones in Africa and the question of whether they can help reduce, rather than reproduce, poverty.

Mobile Phone Penetration, Usage, and Social Impacts in Africa The number of phone subscriptions per 100 people constitutes the subscription penetration rate. It is also possible to measure the penetration rate based on the number of phones per head of population, with some rich countries recording rates in excess of 100 percent. By the end of 2007, there were 280.7 million cell phone subscribers in Africa (Africa Telecom News, 2008), with roughly one mobile phone for every three people on the continent (see Figure 6.1). In terms of access, one estimate suggests that 97 percent of people in Tanzania have access to a mobile phone; that is, they live under the “footprint” of a mobile phone (James and Versteeg, 2007, 117). This is not necessarily to suggest that they use one on a regular basis, but rather that they could access one if they had to through mobile phone kiosks, for example.4 In Ethiopia, subscriber identity module (SIM) cards can be rented (Adam, 2005). There is, however, a highly uneven geography to mobile phone usage and penetration with subscription rates ranging from over 70 percent in Reunion to under 1 percent in Burundi (Vodafone, 2005), roughly mirroring the distribution of wealth on the continent (see Figures 6.2 and 6.3). However, there are significant differences in penetration rates that cannot be accounted for by per capita income. For example, Morocco has a penetration rate twice as high as Namibia, with only half of the gross national income (GNI) per capita and despite the fact that Namibia was the first country in Africa to have built a digital network (James, 2002). World Bank researchers attribute this to better collaboration between the state and the private sector in Morocco and different regulatory environments (Bhavnani et al., 2008). However, they neglect the fact that distribution of income may also play an important role. Namibia has the world’s highest level of income inequality, with a Gini coefficient of 70.7, whereas Morocco’s is only 39.8 (World Bank, 2006b; Progressive Policy Institute, 2006).

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Mobile Phone Subscription and Penetration in Africa

Source: Telecomsmarketresearch. (2009). Africa Mobile Factbook 2008. Blycroft Ltd. Available at www.ametw.com/Factbook_form.html. Accessed April 4, 2010. Reproduced by permission of Blycroft Ltd.

Given the capital cost implied in buying a mobile phone, there are more subscribers than there are phones in Africa (see Figure 6.1). This is because sometimes people buy SIM cards that they use in other people’s phones. In Botswana, over 60 percent of phone owners share phones with their family members, 44 percent with friends, and 20 percent with neighbors, but only 2 percent of people charge for this “service” (Sebusang et al., 2005; James and Versteeg, 2007). This suggests that, in addition to instrumental functions, mobile phones are also used and shared on the basis of ubuntu (nonpecuniary utility). Multicountry studies across Africa have shown that mobile phones are used primarily to maintain social networks, although they are also used to maintain weak links to business associates (Miller et al., 2005; Souter et al., 2005; Molony, 2007). According to Don Slater and Janet Kwami (2005), mobiles are used to manage local embedded reciprocities. Rather than being used to connect to the “global economy,” the majority of calls in Ghana, for example, are “used to maintain family relations” (Hahn and Kibora, 2008, 90).

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Figure 6.2

Gross National Income per Capita

over 450 percent 300–450 percent 150–300 percent 50–150 percent 0–50 percent

Sources: Map by Sheila McMorrow. Data from World Bank. (2006b). Africa Development Indicators 2006: From Promises to Results. Washington, DC: World Bank. Note: GNI per capita expressed as a percentage of the all-Africa average.

Adoption may also represent part of a defensive livelihood strategy, given widespread poverty and the importance of extended family networks (Rettie, 2008). Due to the relatively high cost per unit of time, people on low incomes in Africa use mobile phones differently than people in highincome countries, by “beeping” or “flashing,” for example. This is where someone calls someone else, but hangs up before the call is answered to avoid call charges. Often it signifies that someone should call back, but the number of rings may also serve as a type of code such as two rings meaning “pick me up.” “Flashing involves a clear and

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Mobile Phone Subscribers

Percentage of subscribers over 80 percent 60–80 percent 40–60 percent 20–40 percent 0–20 percent

Sources: Map by Sheila McMorrow. Data from Telecomsmarketresearch. (2009). Africa Mobile Factbook 2008. Blycroft Ltd. Available at http://www.ametw.com/Factbook_form.html. Accessed April 4, 2010.

much discussed economic rationality, designed to win the fierce battle to keep a mobile in permanent operation. But this battle itself indicates the great importance attached to staying connected by mobile, and this importance we would argue is tied to the costs of maintaining, managing and expanding already existing social networks” (Slater and Kwami, 2005, 10). Respondents to a survey noted “mobile phones bring poverty” as a result of the high costs of ownership (Diga, 2007), and some people substitute mobile phone usage for consumption of food and clothing. In South Africa, respondents to another survey spent an average of 10

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percent to 15 percent of their income on mobile phones (Samuel et al., 2005). Despite the relatively high cost, the disadvantages of not being in the network would seem to outweigh the costs. For some, having a mobile phone may be the least bad option. This logic reflects the importance of the extended family in livelihood strategies in adverse economic circumstances. Donner (2005) found in his survey that there was no salient causal effect between people having mobiles and their families being more prosperous, suggesting the importance of other reasons for adoption. Another reason why the rural population feels the imperative to adopt mobile phones . . . is related to [the] notion of being already subjected to the violence of social change and globalisation (social change, disinterest of young people to make their living in the village) and its benefits (direct communication over distance) leads to the local perception that adopting the new technology is an imperative. Therefore access to mobile communication is felt as a peremptory necessity, if rural people are not ready to accept that the decomposition of their identities and social structure will accelerate. (Hahn and Kibora, 2008, 103)

Mobile phones make people feel more important and connected. For yet others, they are a tool to enhance and manage their livelihood and relationships. In a sense, they instantiate the contradiction between hierarchization and the desire to offset it. The very lack of socioeconomic opportunities up the occupational ladder or through emigration for much of sub-Saharan Africa’s population is offset by the social mobility offered by cell phones. It represents a form of high-tech connection to the global information society and domestic social peers, which may serve to legitimate unequal globalization. The mobile phone then achieves its value through not only its functional utility, but as signifier of inclusion and development for populations that are excluded. In Burkina Faso, “using this technology is locally perceived merely as a tool for keeping up with global trends, rather than reducing poverty” (Hahn and Kibora, 2008, 88).5 While some argue ICTs connect elites in Africa more closely to their counterparts in the rich world, they may be of dubious use to poverty reduction (Obijiofor, 2009). ICTs are implicated in further and new forms of social stratification between the information rich and poor. Rather than leading to spatial and social homogenization, new ICTs create geographies and social topologies of “enablement and constraint” (M. Graham, 2008, 772). That is to say ICTs allow

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for certain space-transcending activities to be undertaken while being influenced by the agent’s position in physical space (M. Graham, 2008). ICTs are then implicated in new bordering practices, where participants in the information technology revolution are included within the virtual world or information economy and society while others are excluded. Indeed, some go so far as to argue that they are helping to constitute a new class. The ownership of, or access to, a mobile phone and having business cards displaying the phone number applies more to the selfemployed—those who (Lugalla 1997; Seekings 2003) at the lower end of the informal-sector spectrum who lack social capital and to whom mobile phones are unlikely to feature in their list of priorities. Indeed, the stratified ownership of mobile phones along these lines is a good indicator of what is now perhaps the biggest split in employment in many developing economies. No longer the formalinformal dichotomy, it is increasingly the split between the stratum of employers and middlemen (mostly using mobile phones), and a stratum of employers, apprentices, family laborers and marginalowner operators (generally not using a mobile phone), who constitute a majority “informal proletariat.” (Molony, 2008a, 187)

Even for those with access to mobiles, necessity is the mother of invention and Africa has been associated with some of the most innovative uses of mobile phones. African mobile phone services have dramatically affected my life as well. In the small Kenyan town where I live, I can pay for my taxi rides and even groceries through my mobile (impossible in Boston and most places in the West). I have Wi-Fi throughout my house thanks to the new GRPS/EDGE data services ubiquitous throughout the country and priced at 7 MB per one US dollar— more than 10 times cheaper than my mobile data service in the States. (Eagle, 2007, 15)

Kenyans are repurposing mobile phones to take the place of other infrastructure they lack, ranging from MP3 players to credit cards. The Kenya Agricultural Commodity Exchange sends farmers up-todate commodity information via text message. Tradenet takes this idea further and connects sellers and buyers in 380 markets around the continent by mobile phones (Crisscrossed, 2007). The Kenyan company Safaricom, which is 35 percent owned by Vodafone, became the first company in the world to provide a money transfer service by mobile (Rice, 2007). Mobile banking (m-banking), where

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accounts can be transacted on and purchases made over a mobile phone, has also become popular in a number of African countries (Yarney, 2007). And m-learning, where education is delivered via mobile phone, is also an emerging area.

Economic and Business Impacts of Mobile Phones Large-scale claims for the transformative economic impacts of mobile phones are sometimes made. Below are two examples: ICTs can enhance enterprise performance through indirect cost savings such as labor costs and increased labor productivity, and direct cost reduction of firm’s input such as information costs. On top of these short-run impacts of ICT adoption in the production process, the use of ICTs in the transaction process can foster input and output market expansion. However, in the long run, ICT may have an even bigger impact as it can completely restructure the production process and transaction methods, increase flexibility and improve outputs. (Chowdhury and Wolf, 2003, 2) There is some evidence that mobile phones raise long-term growth rates, that their impact is twice as big in developing nations as in developed ones, and that an extra ten phones per 100 people in a typical developing country increases GDP growth by 0.6% points. (James and Versteeg, 2007)

There are signs that small- and medium-sized businesses in Africa have taken up mobile phones with enthusiasm and vigor. Donner (2005) in his survey of thirty-one microenterprises and small enterprises found that there were two perspectives on mobile phone adoption. One saw the mobile phone as a device for pursuing instrumental business goals and functions whereas others saw it as satisfying intrinsic emotional needs. Small businesses may also adopt mobile phones without seeing their utility, for fear of the disadvantage that not having them may entail (Wolf, 2001). Consequently, they may be used in both offensive and defensive business strategies. Mobile phones offer advantages to businesses, particularly because they are a vector of what are termed “network externalities.” The value of a network increases with more participants (Chowdhury, 2006). Networks allow small businesses to access new customers (Donner, 2007) and grant economies of time, for example, by substituting for time-consuming trips. There is danger, however, that use of ICTs by

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larger firms can expose small- and medium-sized enterprises to greater competitive pressure, with which they may not be able to cope. Mobile phones also offer numerous economic advantages to workers and the self-employed in Africa. For example, casual laborers can leave their phone numbers with potential employers rather than having to wait and see if a job materializes. These economies of time may enable them to engage in other economic activities in the meantime and thereby supplement their income (Best, 1990). Fisherpeople can call ahead to local markets to see where they will get the best price when they land their catch (Coyle, 2005). However, in some cases, market information is not sufficient to redress the balance of power between small farmers and traders. In other instances, traders can use their positions as suppliers of credit to get farmers to sell their produce only to them (Molony, 2008b). In reference to the adoption of mobile phones by microentrepreneurs in Africa, it has been noted that, “even if the majority of micro enterprises are not sources of phenomenal growth, any gains in productivity, profitability, and even basic stability are of the utmost importance to the livelihoods of the households involved” (Donner, 2007, 4). However, is there a fallacy of composition here? Might the use of ICTs merely enable some businesses to capture business from other microenterprises and small-scale enterprises rather than grow the economy per se? Mobile phones can reduce transaction costs and allow export markets to be accessed. One survey of South African small- and medium-sized enterprises found most companies consider that mobile phones contribute substantially to regional market expansion, more than other ICTs (Wolf, 2001). This is echoed in another study in Tanzania where the majority of firms responding to a survey consider cell phones to be the most significant contributor to regional market expansion (Song and Mueller-Falcke, 2006). Yet another study found a positive relationship between mobile telecoms and the ability to attract foreign direct investment, although causality remains unproven (Williams, 2005). ICT can additionally provide coordination economies for small- and medium-sized enterprises through umbrella groups such as cooperatives and associations (Song and Mueller-Falcke, 2006). Duncombe’s (2007) research suggests that ICT applications may bring only marginal poverty reduction, but may be effective if they are used to build a broader range of social and political assets. That

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is, microenterprises need to build social capital and trust in local networks more than they need to access new information through ICTs.6 Cell phone kiosks, repair shops, and unlocking or decoding services also offer small business opportunities. And mobile phone companies are often some of the largest corporate taxpayers. However, the amount of ICT capital invested by small- and medium-sized enterprises in East Africa seems not to be associated with higher productivity. Chowdhury and Wolf attempt to explain this counterintuitive result by arguing that “a certain threshold of ICT investment may be needed to make it effective, and that this threshold might not have been reached in SMEs in the case of East Africa” (2003, 16). Bollou and Ngwenyama (2008) found that the adoption of ICT was associated with a one-off increase in productivity, followed by falling rates of growth as economies of scale have not been realized in West Africa. Nonetheless, “bridging the digital divide” represents a substantial business opportunity, with the World Bank estimating that mobile phone companies have invested $25 billion on the continent (“Mobile Telecoms: Out of Africa,” 2006). When Nigeria opened its GSM licenses to bidding in 2001, only one local company put in a bid, and had to forfeit because it was unable to raise the required funds. For mobile phone companies, Africa represents a frontier market where higher risks may bring higher returns. Consequently, according to some, many African countries have found themselves “saddled with a new monopoly: foreign investors” (Ya’u, 2004, 19). There are also large indigenous mobile phone companies such as MTN from South Africa, Orascom from Egypt, and Celtel, which was started by a Sudanese but subsequently sold to a Kuwaiti company and rebranded as Zain. In fact, most mobile phone operators are homegrown because multinational investors have preferred to operate in the initially more lucrative Asian and Latin American markets (Africa Telecom News, 2008). In 2005, the seven largest mobile phone companies accounted for over half of mobile subscribers (Toure, 2007), with MTN accounting for 26 percent of the total (calculated from Africa Telecom News, 2008). From the above discussion, it is clear that mobile phone usage by itself is not fundamentally altering Africa’s dependent position in the global economy because much of the research and development for this and other more production-enhancing technologies continues to take place in the rich world. Indeed, there is recognition perhaps from somewhat surprising quarters that, cumulatively, technology is widening the rich-poor gap globally. For example, according to the IMF, “the main factor driving the recent increase in inequality across coun-

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tries has been technological progress . . . supporting the view that new technology, in both advanced and developing countries, increases the premium on skills and substitutes for relatively low-skill inputs” (Jaumotte et al., 2007). While neoliberal economists increasingly acknowledge the geographically uneven impact of technological development and diffusion, in some cases this assumes almost farcical proportions, with William Easterly claiming that “seventy-five percent of Africa’s current income lag relative to Europe can be statistically explained by the technology lag in 1500” (Clarke, 2008, 52). This technological determinism is also evidenced in studies of mobile phone usage in Africa. For example, one study argues that “for the average country, with a mobile penetration rate of 7.84 phones per 100 population in 2002, the coefficient of 0.075 on the transformed mobile penetration variable implies that a doubling of mobile penetration would lead to a 10 percent rise in output, holding all else constant” (Waverman et al., 2005, 16, emphasis in original). However, all else cannot be held constant because the information revolution is only one dimension of increasing “time-space compression” associated with globalization (Harvey, 1982, xxi).

Globalization, Mobiles, and African Society: M-perialism? “As altruistic as the benefits are for mobile telephony, the ancillary benefits for corporations and stakeholders to developing rural regions of sub-Saharan Africa are to place conduit devices in the hands of as many potential customers as possible. Does this seem ethical?” (Raiti, 2006, 4). According to Kransberg’s first law, technology is neither inherently good nor bad; it depends on the uses to which it is put. For example, in the war in Somalia in the early 1990s, clansmen used cell phones that the US military was unable to tap (Kaldor, 1999). One group that routinely abducts child soldiers, the Lord’s Resistance Army, which has been fighting a guerrilla war in Uganda, used a cease-fire in 2008 to reorganize itself and purchase 150 satellite phones with money meant to aid communication during the peace talks (Crilly, 2008). For exponents of the ICT revolution, poor countries can catch up with richer ones through the adoption of these technologies so as to close the digital divide. In this schema, a spatial difference is present-

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ed as a temporal one as globalization and increased interconnectedness will allow for catch-up (Cox, 1998; M. Graham, 2008). However, how equal are the terms of digital integration, and to what extent is the digital merely a reflection of other more deep-seated economic divides? According to neoliberal theorists, if we can all achieve copresence in the same marketplaces, whether real or virtual, the result is a positive sum game. ICTs then, in the borderless world, help eliminate market failures and erase uneven economic geographies. However, this negates the many other factors that contribute to uneven development; particularly, political pressures for asymmetric integration and cumulative economic advantages. The new fiber-optic cables, such as Africa One and South Atlantic 3 (SAT3),7 that reduce costs of bandwidth for external Internet and mobile phone connection are mainly owned by European and US companies. In 2002, it was estimated that African Internet service providers were paying $1 billion a year for connectivity to these bandwidth providers. Indeed the discourse around these fiber-optic cables draws on a colonial imaginary. The SAT3 website (SAT3/WASC/ SAFE, 2010) notes that History tells us that in the space of twelve years, three Portuguese sailors unlocked the secret routes of Africa by finding a sea passage to the East via the Cape of Good Hope. On the third attempt, Vasco de Gama, finally reached India from Lisbon in 1498 after a voyage lasting almost a year. He succeeded because of a chance meeting with an Arab pilot named Ibn Majib. Majib guided De Gama from the East Coast of Africa to West Coast of India, giving the Portuguese an alternative spice route and a monopoly on east trade. Today, in the space of just over ten years, submarine fibre optic cables have become the modern vessels for trade and communications between international markets and the African continent. . . . Now, five hundred years after De Gama’s trail-blazing journey, a new submarine cable system has been established which closely follows the navigators route from Portugal, down the West Coast of Africa, around the Fairest Cape and finally landing in the East at India and Malaysia.

SAT3 was launched in Senegal in 2002 but, even with this new fiber-optic cable, the total available fiber bandwidth for the whole country is less than 1.2 gigabits a second, one-tenth that of a university such as Harvard in the United States (Juma and Moyer, 2008). The question remains whether this represents a more favorable integration of Africa into the global economy, or whether it is merely

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reinscribing the continent’s dependent insertion into the global division of labor. This is important because this project is “expected to access 90% of Africa’s existing sub-Saharan telephone market in which 72% of the sub-Saharan population lives” (Malcolm, 2006). What Watts (1997, 249) terms “appropriationism” is highly evident in relation to mobile phones in titles of reports such as “The Next Four Billion” by the World Resources Institute and the International Finance Corporation of the World Bank (Bhavnani et al., 2008). Phone companies, such as Nokia, even hire anthropologists to study how people use their mobile phones in the developing world (Corbett, 2008). This is perhaps not surprising, given the relative market saturation in the developed world. By 2006, 68 percent of mobile phone subscribers were already in the developing world. According to Y. Ya’u, “globalisation is not only enabled by ICTs but . . . the level of connectivity of a country determines to a large degree the possibility of its benefiting from the globalisation process” (2005, 100). For him, in Africa this development represents a new form of imperialism represented by knowledge dependence. This knowledge dependence takes many forms. Clare Mercer argues that “the idea that the Internet [or mobile phones] should be used as a developmental tool across Africa is only plausible if it is taken as axiomatic that Africa is devoid of the information and knowledge necessary for development” (2005, 254). For example, according to World Bank researchers, mobile phones can also help the rural poor overcome “ignorance of income-earning or market opportunities” and may help in establishing new small businesses in sectors such as prostitution (Bhavnani et al., 2008, 3). Africa’s integration into the global information economy is characterized by a missing top and middle. The continent provides raw materials, associated with conflict, and consumes mobile phones and engages in some limited low-tech assembly operations. The high value-added activities in the chain take place elsewhere. These activities and the use of mobile phones then represent a form of thintegration into the global economy. It is not that Africa is excluded from the process of globalization; indeed, it is integral to it as a supplier of raw materials (Moseley and Gray, 2008). Use of mobile phones, by itself, does not change this context. Are there then pro-poor modes of technical integration into the global economy (James, 2002)? Can, as the former Secretary-General of the UN, Kofi Annan (2002) put it, digital bridges be built? Perhaps they can, but the key questions involve where they are developed and

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built, what kind of traffic crosses them, and the direction of the flow. This is structured by previous social relations and rounds of economic incorporation and marginalization in Africa. What now are the prospects for the future?

Notes 1. There is, however, an incipient computer hardware industry based on the production of “clones” in Otigba in Nigeria, for example (OyelaranOyeyinka, 2006). 2. Nonetheless, there is substantial, but latent, potential for the development of high-tech industries through the African telecommunication firms (Marcelle, 2003). 3. Field notes, Nairobi, Kenya, December 9, 2008. 4. These kiosks can be relatively lucrative for their owners, bringing in a reported $75 per kiosk per day in one case in Gabarone, Botswana (Okpaku, 2006). 5. Similarly, for Internet users in Tanzania, one of its main functions is as a marker of modernity (Mercer, 2005). 6. The fact that analogue still accounts for 40 percent of the total means that call completion rates are low and faults per mobile line are high, raising costs for small businesses (Ya’u, 2006). In Zambia, the government-owned company maintains a monopoly on the gateway for international calls, making them much more expensive than they would be otherwise and depriving companies of revenue that might be invested in network expansion (Arnold, Guermazi, and Mattoo, 2007). 7. The full acronym of this cable is SAT3/WASC/SAFE. It has thirty-six member countries, in addition to telecommunications operators and other international investors.

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7 Global Turbulence and African Growth I have to confess that I am not one of those who are easily taken in by the report attributed to Merrill Lynch, which declares our economy to be the safest in the world. As far as I know, our alleged safety derives from the paradox of marginality—to the simple fact that we are not deeply hooked into the global digital economy. It is foolhardy to behave like the proverbial ostrich when Rome is on fire and when the embers of financial contagion have been unleashed everywhere. —Obadiah Mailafia (2009) While developed countries are experiencing some of the sharpest contractions, households in developing countries are much more vulnerable and likely to experience acute negative consequences in the short- and long-term. —World Bank (2009a, 1)

Since mid-2008, the global economy has entered a period of profound turbulence, if not recession and potentially depression. It is often noted that this crisis has it origins in the United States, in particular, in the practices of subprime mortgage lending and the bundling and trading of complex financial derivatives from these mortgages. Others argue, however, that, while lax regulatory oversight and inappropriate policy decisions may have played a part in the making of the crisis, its origins are structural and reflect a generalized problem of overaccumulation of capital in the global economy (Harvey, 2005). The extent and depth of these global financial and economic crises are unknown; however, it is worthwhile to explore the impacts of the crisis with respect to the future prospects for subSaharan Africa. 129

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In times of economic turbulence, international investors tend to exhibit extreme risk aversion. This takes both geographical and physical expression. They tend to divest from weaker to stronger economies, with the United States recording increased capital inflows, and to invest in hard commodities that tend to hold or increase their value in times of economic uncertainty, particularly gold and other precious metals. Africa contains some of the world’s largest gold producers and, consequently, the impacts on the continent are not predetermined. Economic growth fell to just above 1 percent for Africa in 2009, below population growth, but the IMF and other agencies are predicting a rapid recovery in subsequent years (the so-called V-shaped recovery) (Burke, 2009). This seems likely as many primary commodity prices rebounded strongly in early 2010, largely driven by increased demand from China in particular. As noted in Chapter 1, the relative lack of depth of most African financial markets provided a certain level of insulation for the continent; that is, except for South Africa, which with its “relatively sophisticated and open economy is exposing the country to the full wrath of the global crisis” (“South Africa’s Economy,” 2009, 45). South Africa, whose economic performance is highly significant because its economy accounts for a third of regional economic output, fell into recession in 2009. This is despite the fact that South Africa is one of the world’s largest gold producers, and the price of gold has increased dramatically as investors engaged in a “flight to safety” during the global financial crisis. Gold prices hit record highs (in dollar terms) in October 2009 as the dollar depreciated. What then are the channels through which Africa’s economy is being affected by the current global crisis, and what are the impacts on Asian investment and trade links with the continent likely to be? Isabella Massa and Dirk W. te Velde (2008) identify two types of channels through which the continent was affected by the global credit crunch: financial and real. The financial channels included flows into the sixteen regional stock markets, bank lending, and foreign direct investment. The real channels they identify are remittances, import and export volumes, terms of trade, and aid. In terms of interbank flows, international claims (claims that are denominated in international currency) account for only 7 percent of the total in Africa (Massa and te Velde, 2008). In part, this is a legacy of the debt crisis that occurred when private bank lending to subSaharan Africa evaporated in the early 1980s. African governments will now, in the short-term at least, find it increasingly difficult to raise

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money on international capital markets; government bond issuances in foreign currency halted in 2008. This is the issue that the former South African minister of finance, Trevor Manuel, identified as involuntary “decoupling” taking place on the continent (Weber, 2009). Prior to this, the South African government had used its good bond rating to underwrite an infrastructure investment fund for sub-Saharan Africa (Moyo, 2009). However, those countries with low debt levels are able to engage in a fiscal expansion to offset the effects of the global contraction. South Africa itself now faces a real-financial contradiction. While the South African Reserve Bank cut interest rates by 1 percent in early 2009, the governor, Tito Mboweni, argues that he would have liked to have cut rates by a further percentage point. However, this could not be done because South Africa needs to maintain high real interest rates to attract foreign portfolio investment to fund its current account deficit (te Velde, 2008), which was running at about 8 percent of GDP in 2008 (Hanson, 2008). However, the substantial progress made in reducing inflation in the region in the past decade will allow those countries with low inflation and better trade positions to use monetary policy to dampen the impacts of the crisis (Osakwe, 2008). Another risk on the financial side is that foreign banks will start to withdraw funds from sub-Saharan Africa in order to finance losses at home, although the continuing existence of exchange controls in some countries will somewhat mitigate this risk (Osakwe, 2008). Twenty-four percent of foreign banks in sub-Saharan Africa are from South Africa, with 26 percent from the UK and 17 percent from France (Massa and te Velde, 2008). Even limited withdrawals, however, could have significant impacts given the small size of African economies (Mushi, 2008). On the other hand, as noted in Chapter 1, some of the fastestgrowing economies in the world in 2009 were countries such as Malawi and Tanzania, which as net oil importers benefited from price declines. They had previously faced terms of trade shocks of up to the equivalent of 5 percent of GDP, largely as a result of oil price increases (te Velde, 2008). As a result of increases in the price of oil and food in particular, Ethiopia has an inflation rate of 60 percent, and this will now be mitigated by falling prices for these commodities (Hanson, 2008). Lower interest rates in the rich countries, which feed through to African debt repayments, combined with lower food prices, may also contribute to poverty reduction in some countries in Africa. Oil exporters and other monoeconomies, such as Zambia, that are dependent on a single commodity that saw dramatic reductions in price

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were also adversely affected by the crisis. In November 2008, the Canadian mining company First Quantum laid off 286 workers at its mine in Zambia, and other closures and projects have been put on hold. Reportedly 100 small-scale Chinese mine operators closed their operations in Zambia in 2008 and 2009 as the copper price declined by 65 percent (Herbst and Mills, 2009). Because the kwacha is a commodity currency, it fell by three-quarters of its value in just forty-five days from November to December 2008, but subsequently recovered as the copper price rose again. There are also other real channels at work. Another reason that sub-Saharan African growth partially decoupled from rich world growth has to do with the changing structure of their economies, with services playing an increasingly important role. Because many of these services are nontraded, they are better able to withstand international competition (te Velde, 2008). For example, in South Africa services now account for over 60 percent of GDP and, although it went into recession, it was not as severe as some of the contractions taking place in other parts of the world (Abedian, 2008). Tourism to Africa grew rapidly in the 2000s, and there is some debate as to what impacts the global downturn will have. Some argue that Westerners will increasingly choose cheap vacations (Meegan, 2008), whereas others argue that Africa is already cheaper than many other destinations and will consequently benefit. Remittance flows to sub-Saharan Africa increased from US$1.17 billion in 1995 to $19 billion in 2007. However, as a result of the global financial crisis, remittance flows to Kenya fell 38 percent year on year to August 2008 (Massa and te Velde, 2008). Some countries, such as Lesotho, where remittances account for almost 30 percent of GDP will be affected even worse than Kenya. Flows of inward foreign direct investment from overseas also fell in 2009 from their record highs in 2008 (UNCTAD, 2009). One issue that has not been dealt with in the literature on the global financial crisis and Africa is capital flight. Capital flight and outward remittances are estimated in excess of $20 billion annually (Ndikumana and Boyce, 2008). “Yet people often forget that these flows are largely confined to the richest 2 percent of the population, and they happen because most Organisation for Economic Co-operation and Development (OECD) governments and their economies welcome such flows with no accountability” (Martin, 2005, 218). Rapid economic growth accompanied by rising investment rates may have attracted some of this flight capital back to the region but, because the continent is now

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extremely open, it may exit again. Attracting back and retaining flight capital is crucial for Africa’s long-term economic recovery and development (Taylor, 2005b). According to Patrick Bond, financing for the Millennium Development Goals has gone “up in smoke” as a result of the global crisis (“How Aid Works,” 2009, 5). There are, however, some new initiatives, such as the Infrastructure Crisis Facility of the World Bank, that will provide financing for infrastructure projects that are privately financed, but were distressed and consequently in danger of not going ahead. However, this facility is run by the International Financial Corporation of the World Bank, so it operates on a loan instead of a grant basis.

Impacts of the Crisis on Asian Aid, Trade, and Investment The rise of China is a world-changing event that may be slowed down, but not stopped, by the financial crisis of 2008–2009 as its economy continues to grow. Consequently, the level of interaction between China and Africa will also continue to grow. Ten times as many Chinese entrepreneurs migrated to Africa in 2006 as in 2003 (Arrighi, 2007) and, while the pace of migration may moderate, it seems unlikely to be reversed. The active promotion of emigration by Chinese government authorities may be related to the consistently rising rate of unemployment in that country (Breslin, 2009), rapid rates of economic growth notwithstanding. China is emerging, as Robert Mugabe would say, as an “alternative global power point in Africa” (Eisenman, 2007, 51), and it may yet seek to dominate African states. Its economic rise affects not only flows of investment, but also consumption in Africa, as China and other countries emerge as “nodal points for commodity flows, often completely independent of colonial structures” (Dobler, 2008b, 410). According to the head of the largest multinational bank, the Nigerian-based Ecobank, “Africa is where China was twenty years ago” (“Ecobank’s Arnold Ekpe,” 2008, 18). Others argue that China is bringing its development model to Africa by setting up special economic zones around the continent (M. J. Davies, 2008). However, the context is very different because Africa’s economy is already highly liberalized, unlike China’s. Consequently, there is much more limited scope in the contemporary regime to engage in strategic industrial

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policy interventions in order to develop infant industries and foster learning by doing. Rather, there is a danger that African countries will be trapped in a mercantilist cycle with China, exporting raw materials and importing manufactures (Kurlantzick, 2007). How will the global financial crisis impact Asian trade and investment on the continent specifically? According to a World Bank staff member, China was confident that it would deliver on its aid package to sub-Saharan Africa and loans are still being agreed, with Angola securing an additional $1 billion loan in 2009 (China Economic Review, 2009). Additionally Chinese firms are still investing in Africa, with 49 percent of Air Tanzania sold to a Chinese company (allafrica.com, 2008). In Liberia, China Union has signed a $2.6 billion contract to develop the Bong iron ore deposit (Africa-Asia Confidential, 2009). The Chinese government still has to recycle its huge foreign exchange reserves, and the global financial crisis provided an ideal buying opportunity. Paradoxically perhaps, the likely impact of the crisis will be to further deepen and entrench African economic relations with Asia over the Northern countries. Indeed, the president of the African Export-Import Bank argues that one of the ways for African countries to insulate themselves from the effects of the global financial crisis is to diversify their exports toward these markets (“Global Financial Crisis,” 2008). Thus, the crisis may serve to further reorient African economies toward the still relatively fast-growing countries of East and South Asia. However, it also presents an opportunity for Westerncontrolled IFIs to reassert their dominance on the continent. For example, as part of a new assistance deal with the DRC, the IMF has insisted that previously closed loan agreements with China be reopened and reexamined.

The United States, China, and Prospects for African Development Globalization will create an even wider gap between regional winners and losers than exists today. Its evolution will be rocky, marked by chronic volatility and a widening economic divide . . . deepening economic stagnation, political instability, and cultural alienation. It will foster political, ethnic, ideological and religious extremism; along with the violence that often accompanies it. (CIA, 2000)

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Will this dystopic vision by the US Central Intelligence Agency be realized in Africa, or does the current conjuncture as of 2010 open up space over the longer term for more progressive alternatives? According to Princeton Lyman (2005), both the United States and Europe could still win influence on the continent by opening their markets to African agricultural products. However, agriculture may not provide the same rents as oil and natural resource extraction to elites. Eliminating agricultural dumping by developed countries would have only a marginal impact on Africa’s development prospects (Lockwood, 2005). Indeed, partial reductions in agricultural subsidies will damage the continent, in the short term, by making food imports more expensive (Giblin and Matthews, 2005). Poor market access to the EU or United States also is not the problem. Even before the EU’s Everything but Arms initiative, about 97 percent of Africa’s exports to Europe entered with a 1 percent tariff or less (Lockwood, 2005). The problems that hinder exports are largely on the supply side, including the inability to export due to poor skills, organizational systems, and infrastructure, and Africa’s overdependence on unprocessed primary commodities (e.g., tea and coffee) whose value has tended to fall through time. African economies need to diversify away from these commodities into more skill-intensive and higher value-added manufactured exports. While many of Africa’s economies experienced recovery in macroeconomic aggregates in the early part of the 2000s, the impact of this should not be exaggerated. The average size of an African country’s economy is around the size of a town of 60,000 people in the rich world (World Bank, 2000). Africa’s average economic output per person is lower now than it was thirty years ago and, consequently, there is substantial potential for catch-up growth even to get back to that level (AfDB, 2006). In spite of the relatively rapid economic growth, the social fabric in many African countries is badly tattered as a result of decades of economic stagnation. In the early 1990s, children under five years old in sub-Saharan Africa were nineteen times more likely to die than their counterparts in the rich countries. By 2003, they were twentysix times more likely to die (Kirby, 2006). Africa’s economic recovery in the 2000s was driven by the confluence of regional and global factors, particularly the interaction and externalization of the South African, Chinese, and US economies because they are increasingly dependent on the resources and markets of other countries for their growth. However, as other countries’ economies in the region are shaped by imperatives originating else-

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where, economic recovery has remained shallow and largely confined to reinvigorating the colonial trade structure. A key question for any future and more broad-based economic recovery will be whether the continent can attract back African flight and human capital, essential to sustained economic recovery (Taylor, 2005b). As Paul Collier, formerly of the World Bank, concludes in relation to the impacts of globalization on the world’s poorest countries, “trade is more likely to lock them into natural resource dependence than to open new opportunities, and the international mobility of capital and skilled workers is more likely to bleed them of their scanty capital and talent than to provide an engine of growth” (2007, 175). The loss of financial and human capital co-occurs as investment and learning-bydoing opportunities are missed (Boyce and Ndikumana, 2008). In 1999 there were more than 30,000 Africans with PhDs living outside the continent (Ya’u, 2006), and 130,000 university graduates leave the continent each year (S. Moyo, 2006). While they are educated using taxpayers’ money, there are more Malawian physicians in Birmingham in the UK than there are left in Malawi (Royal African Society, 2005). On the other hand, the 100,000 US dollar millionaires on the continent keep much of their assets overseas (Taylor, 2005b). The indications on capital reinvestment in Africa are not promising. Investment as a percentage of GDP remains stuck at around 20 percent and productivity remains low (IMF, 2007; Ndulu et al., 2007). This contrasts with China where gross fixed capital formation accounts for over 40 percent of nominal GDP (Qin et al., 2006). Thus, Africa’s growth cycle in the 2000s is particularly resource rather than investment or innovation driven and, consequently, its sustainability is open to question. This has long-term negative implications for poverty, in the absence of substantial economic diversification. While the impacts of the commodity boom were nationally and regionally differentiated, it was very environmentally and relatively capital intensive, so it did not lead to dramatic and sustainable reductions in unemployment and poverty as investment was not employment intensive. Such poverty reduction as did take place is now likely to be reversed by volatile commodity prices in the short to medium term. Nonetheless, in the context of increasing global resource scarcity the new scramble is likely to continue. The challenge for Africa is to move up the value chain, into manufacturing production and higher value-added services, to create substantial numbers of higher paying jobs while also taking advantage of opportunities in other sectors (Söderbom and Teal, 2003). There is also

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a need to decouple economic growth from massive environmental degradation and provide resources to deal with other challenges such as HIV/AIDS, which has been described as running Adam Smith in reverse in the worst affected countries (de Waal, 2006; see also Pollin et al., 2007). In the short term, two potential areas where there is substantial scope for the development of indigenous manufacturing are in agroprocessing, which may be labor intensive, and mineral beneficiation (Cramer, 1999). For example, even though Mali is the world’s fifth-largest cotton producer, it processes only 2 percent of its crop locally (Siddiqi, 2007a). However, in the medium term, the focus should be on a widening of industrialization beyond these subsectors. Some World Bank studies are confident that “Africa Can Compete!” in manufacturing (Biggs et al., 1996). But studies for the UN Industrial Development Organization have found that, even if Africans work for free in the sector, African manufacturing would still not be competitive with China, largely because of poor transportation infrastructure and the added costs that implies (Harris, 2003). 1 For Africa’s least-developed, landlocked countries, transport and insurance costs for exports are over 30 percent of their value (Goldstein, 2006). Chinese infrastructural investment assumes acute significance in this context. Peter Gibbon and Stefano Ponte (2005) argue that any real improvement of Africa’s position in global value chains will have to rely in the first instance on FDI and then on the resuscitation of African state capacities. How then might these objectives be achieved? Is there a postneoliberal development regime in prospect? Elements of the US state are aware of the dangers that neoliberal globalization poses to national security. However, the focus, particularly since the terrorist attacks on New York and Washington of September 11, 2001, is on trying to coercively contain its contradictions (Gill, 2003)— a strategy that is failing, as evidenced by the proliferation of guerrilla groups such as the Movement for the Emancipation of the Niger Delta in Nigeria, and their increasing ability to disrupt oil supplies. Nigeria’s oil exports to the United States declined from 842,000 barrels per day in 2001 to 567,000 barrels per day in 2002 (Widdershover, 2003), fostering reliance on other West African producers such as Angola, which, according to some estimates, supplies the United States with nearly 9 percent of its oil (Sidaway, 2003). There is debate among US officials over the effects of China’s advances into Africa in general, and oil exploitation in particular. One group is particularly concerned about China “locking up barrels at source” and constricting global oil supply (Bartholomew, 2005).

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Others minimize the threat, arguing that the Chinese presence in Africa is insufficient to work contrary to US interests (Wilson, 2005). According to this latter view, China’s engagement in Africa should be seen as an opportunity for the United States and the international community because China maintains friendly relations with most African nations, particularly nations with which the United States has limited contact or diplomatic leverage, such as Libya and Sudan. The Council on Foreign Relations treads a middle ground arguing that “to compete more effectively with China, the United States must provide more encouragement and support to well-performing African states, develop innovative means for U.S. companies to compete, give high-level attention to Africa and engage China on those practices that conflict with U.S. interests” (2005, 24). Princeton Lyman (2005) also argues for win-win situations in Africa and insists that it will not be possible to limit Chinese influence. The United States is a somewhat more normative power (Manners, 2002) than China, with a developed civil society exerting pressure for conformity with civil and political human rights norms (but see also Mandel, 2004). Nonetheless, it operates on the basis of realpolitik. Increasingly, close cooperation between Khartoum and Western intelligence agencies in the war on terror may be blocking prosecution of war crimes in Darfur, for example (“Sudan: Oddest Bedfellows,” 2006). There is already evidence of US interest in cooperating with China in relation to Africa, with Jendayi Frazer visiting China in 2006. However, if China wishes to promote peace in Africa, it will have to curb its own arms industry (Alden, 2005b), and it might also sign up to a code of conduct along the lines of NEPAD and the EU. Enhanced international cooperation will be needed to deliver on the promises of improved governance and economic transformation of NEPAD. The Chinese case shows the necessity of the state for structural transformation. Much of Africa is locked in a vicious circle of weak state capacity for economic transformation, and lagging capital inflows and outward leakage, with up to 40 percent of the continent’s private wealth held overseas (Mkandawire, 2005). There is a need to create developmental democracies in Africa (Mkandawire and Soludo, 1999). The question is how the international community might create incentives for this to happen. There are a variety of dimensions to the construction of this type of state in Africa. The commodity boom of the early twenty-first century opened up the possibility of using extra tax revenues for pro-poor initiatives (Southern African Regional Poverty Network, 2005), as in

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South Africa (Hirsch, 2005). However, this will not result in structural transformation of economies by itself, but rather “new changes in sameness” in Africa’s external dependence (Obi, 2005, 41). While neoliberalism seeks to apply the law of supply and demand to society, this is dysfunctional because people are not commodities. Rather, a social logic must be infused into the global market. For example, popular participation and the implementation of basic or minimum income guarantees, perhaps funded by taxes on airplane travel globally, could be useful components in building a social contract.2 While Africa has experienced many of the negative flows of globalization, such as competitive displacement of manufacturing through trade, massive capital flight,3 and debt, it has had few of the positive flows of FDI in manufacturing or ICT.4 Economic and political transformation could be facilitated by the deepening of a transregional product cycle, as in the case of bicycles discussed earlier in Chapter 2, particularly as China moves out of labor-intensive assembly operation in the next ten to twenty years. Peter Gibbon and Stefano Ponte conclude that, “as China itself becomes more economically mature, the prospects for Africa to build on [its manufacturing] experience are reasonably promising” (2005, 203). BMW South Africa, which produces all of the world’s three series range of BMWs, has shipped millions of dollars of components to its Chinese affiliate (Matshego, 2004).5 And a major study for the World Bank found that Asian investments in apparel, food processing, and other subsectors were “propelling African trade into cutting-edge multinational corporate networks” (Broadman, 2007a, 2). Manufacturing growth could be greatly facilitated through increased aid investment in the development of African transnational systems of innovation (see Muchie, Gammeltoft, and Lundvall, 2003). While Mathew Lockwood (2005) advocates for “negative tariffs” or import subsidies for African manufactures into the developed countries, this may be difficult to sell politically given the global extension of the law of value.6 An alternative approach is offered by David Craig and Doug Porter (2006) who argue that the range of concessions that the Chinese government offers to its businesses to set up in Africa and other areas that it considers strategic could be adopted by other donors and extended to encompass poverty-reducing objectives. There may also be potential in areas that still are substantially nonmarket. Internationally, government procurement in the developed world involving such things as paper to police uniforms from African manufacturers, for example, may have an important catalytic role to

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play. Such an incentive would create competition and deliver efficiency, and thereby be compatible, in the medium term, with the law of value. While the widespread revival of economic growth in Africa in the early part of this century was potentially progressive in its impacts, it has largely been confined to enclaves, and upper classes and state elites. Also, while the international community has played a vital role in ending wars in Liberia, Sierra Leone, and the DRC, among others, oil investment has fueled local conflict and made many states less accountable to their populations. A key challenge is to shift African states from an authoritarian or patrimonial mode to a developmental one. Perhaps this would not be seen to be in the interests of either the United States or China because these states would then keep their own resources, rather than placing them on the international market. Given the general underdevelopment of the continent, Africa is the only region of the world where net oil output is predicted by the US government to grow substantially faster than consumption—by 91 percent compared to 35 percent, respectively, from 2001 to 2025 (Klare, 2005). However, there is a price to be paid by the international community for the contemporary setup. Greater Chinese influence may, however, allow for more pragmatism in economic policymaking. As Joseph Stiglitz noted, “China extended the scope of competition without privatizing state-owned enterprises. . . . Chinese policymakers not only eschewed a strategy of outright privatization, they also failed to incorporate other elements of the (orthodox) Washington Consensus”7 (1998, 22). China is now an alternative source of loans to the World Bank and the IMF. Thus, the pace at which economic liberalization is proceeding on the continent has slowed (Economist Intelligence Unit, 2006). Is there then more policy space (K. P. Gallagher, 2005, 10) for domestic innovation or just a different master? A report for the European Parliament asks whether China “will become the world’s first industrial superpower without having to resort to colonial practices” given domestic “overcapacity, saturation of the domestic market [and] the need for raw materials” (Holslag et al., 2007, 52)? However, Chinese involvement in Africa involves many different motivations and dimensions (Alden, 2007). But as China joins the core of the global economy, it is increasingly participating in the structures of global matrix governance. Matrix governance in resource-rich states attempts to rectify the “ungovernability” (Watts, 2007, 637) generated by resource extraction. It seeks to regularize the chaotic flows and relations of globaliza-

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tion and allow for transparency in the allocation of domestically produced social surplus plus aid captured by the government for social investment, while also allowing for the outflow of resources and the rents that accompany it. However, this project is contradictory if we see poverty as a relational, rather than an absolute, phenomenon. By opening up states to global market competition, a particular kind of bioeconomics is enacted, whereby everyone is to be connected to the webs of the global labor and commodity markets. It is a kind of ubuntu in reverse, based not on solidarity, but on upward flows of social surplus. Then matrix governance can be seen as an effort to control the problems produced by poverty, to create a global poverty regime where it is managed rather than eliminated (Nicholls, 2003). However, in this book I have shown that its contradictions, at least in the case of the Chad-Cameroon pipeline and in Sudan, have actually strengthened authoritarian states and fueled conflict. This unstable configuration of Northern resource extraction leading to conflict in Africa must be renegotiated if order, justice, peace, and economics are to exist in a condition of dynamic equilibrium (Zacarias, 2003). But what social forces in Africa and elsewhere will carry this project? The nature of the African state assumes critical importance in this regard. Africa contains immense national resource wealth. The mineral reserves of the Congo are estimated at $24 trillion, which is more than the combined size of the US and European economies. This offers latent potential for economic transformation if the resource curse can be overcome and rents sewn for structural transformation (M. C. Lee, 2006). This would seem to require two conditions: (1) greater policy space in the international system, and creative use of such space as it exists (K. P. Gallagher, 2005); and (2) the transformation of African states from a neopatrimonial to developmental mode. The problem is that Chinese involvement in African states has thus far seemed to strengthen authoritarian and patrimonial tendencies (Taylor, 2007b). This is consistent with the further development and deepening of the transnational contract of extroversion. The increasing dependence of African economies on natural resources fits into the historical continuum of extractive globalization that has characterized the continent’s engagement with the outside world (Bond, 2006). What is required is effective innovation management, the institution of strategic trade and industrial policies, and the reconstruction of African states so that they will have the autonomy (from donors, in particular) and capacity to implement them (Soludo and Ogbu, 2004; Kaplinsky, 2005). How to capitalize on the window

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of opportunity offered by economic growth is the key challenge for donors, African populations, and policymakers. As labor costs rise in China over the longer term, this may spark further outward flows of investment in manufacturing, some of which may ground in Africa. This may in turn revivify the domestic labor movement, which may serve as a source of constraint on state power. However, this causal chain has a number of links, each of which would have to be built for this to happen. According to Giovanni Arrighi, the social and ecological contradictions of China’s own growth have led to a major reorientation toward greater sustainability and social equity. And if this is projected internationally, “China will be in a position to contribute decisively to the emergence of a commonwealth of civilizations truly respectful of cultural differences” (2007, 389). However, as China becomes the world’s largest economy, the ongoing need for a resource fix will negate this possibility. The expansion of the core of the global economy will necessitate ongoing resource colonialism and the further revision and enactment of global governance. Consequently, cruciform sovereignty and matrix governance are likely to remain long lived, despite the shifting center of gravity of the world economy to the East. Developmental states have historically emerged from two sources: internal and external. In East Asia, the threat of external invasion prompted states to seek industrial transformation to build up their defensive capabilities. In China, the source has been more internal as Communist Party rule increasingly came to be seen as dependent on improvements in general living conditions. Neither of these conditions appear to be in place in most African countries as yet. Consequently, the third path to development, the development of autonomous civil society that can serve as a source of countervailing power to the state, would seem to be more promising. However, as yet civil society is weak and co-opted in most African countries (Carmody, 2007). Sustainable poverty-reducing integration into the global economy will require appropriate institutions, social capabilities, technologies, and infrastructures. As things stand, few African countries would appear to have the class structures and institutions to effectively capture and sow oil and mineral rents for structural transformation. However, lessons can be learned from Latin America, in both capitalist and socialist contexts. Venezuela reduced its poverty rate from 55.1 percent in 2003 to 30.4 percent at the end of 2006 (Weisbrot and Sandoval, 2007), partly as a result of increased formal sector employment. Poverty reduction was even more pronounced if the greatly expanded access to healthcare

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and education is taken into account. While some have cast doubt on the sustainability of poverty reduction once the oil price declined, the Venezuelan government undertook its planning in 2007 based on oil prices of $29 a barrel versus the $60.20 actually achieved. Nonetheless, while the manufacturing sector grew, this was not sufficient to launch a serious diversification away from oil dependence. This will require a more coordinated and effective industrial strategy and better exchange rate management to reduce periodic currency appreciation. Chile provides another example of a country that has made substantial progress in poverty reduction. Strong economic growth, combined with well-directed social programs, reduced the poverty rate by half from 1987 to 1998 (World Bank, 2002). By the late 1990s, the number of people living in extreme poverty was around 4 percent of the population, although the particular growth model that was pursued there resulted in rapid increases in inequality, casting some doubt on the sustainability of absolute poverty reduction. Nonetheless, prudent macroeconomic management enabled Chile to accumulate substantial reserves that have been used partially to offset the impacts of the global economic slowdown. The underdevelopment of domestic capital and labor in Africa has serious consequences for governance because it is these social forces that have historically held the state accountable in industrial societies (see Carmody, 2007). However, there is some local business development taking place (Fick, 2006), and trade unions are mobilizing in some countries, such as Zambia, around exploitative labor conditions and practices. The last great commodity boom after the Second World War was associated with the development of organized labor and local business, which were instrumental in throwing off the shackles of an unaccountable colonialism (Sender and Smith, 1986). They may yet contribute to a new second liberation. The impacts of globalization and increased Asian involvement in Africa have been dialectical—in promoting change, but also reembedding dependence. We now have a better sense of the macroeconomic and political impacts of increased Asian involvement in Africa, and there have been studies about how the Chinese are received in Africa (e.g., Sylvanus, 2008; Negi, 2008). But to date, there has been little work on the everyday geographies, local spaces, individual experiences, and household strategies of Africans and how these are being reconfigured. Thus, the African question remains largely unanswered. Some argue that, because China has an Africa strategy, Africa needs a China strategy. This speaks to the long-standing debate in social sci-

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ence about the relative role and importance of social structures versus agency. Alexander Wendt (1999, xiii) has largely transcended this debate by arguing the case for a “structural idealism;” that is, that agents create structures through ideas. This history is as yet unwritten. Through their ideas, Africans, in collaboration and in conflict with others, will continue to write it.

Notes 1. There are, of course, many exceptions to this generalization (see Gibbon, 2002). 2. The French government has already introduced this solidarity tax to fund primary health care interventions. 3. In fact, the continent is a net creditor to the rest of the world (Boyce and Ndikumana, 2001). 4. Although, this is changing with the profusion of mobile phones: over 82 million on the continent at last count and fiber-optic cables ringing the continent that have allowed for call centers to be set up in South Africa and Ghana. In South Africa, over 80,000 people are now employed in this industry (Benner, 2006). 5. South African conglomerates have also invested in beer and zinc production in China. 6. “In general terms, the law of value suggests that more time will be spent on producing commodities whose market price is above their price of production” (Jessop, 2002, 17). It is being used here in a double sense, in also referring to the dominance of the ideology of consumer sovereignty and the “right” to source the cheapest and best commodities from anywhere in the world. This approach would stand the Singapore issues in the WTO on their head and rather than forcing developing countries to open up government procurement to foreign companies, would allow their companies access to government markets in the developed world. 7. Free-market reforms promoted by the IMF and the World Bank.

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AFRICOM AGOA AIDS BICC CAFCA BRICs CNPC COMESA DRC EPZ EU FDI forex GDP GNI GSM ICT ICT4D IFIs IMF KCM MDC MTN NEKS NEPAD

African Command, US African Growth and Opportunity Act acquired immunodeficiency syndrome British International Cable Company, Central African Cables Brazil, Russia, India, and China Chinese National Petroleum Company Common Market of Eastern and Southern Africa Democratic Republic of Congo export processing zone European Union foreign direct investment foreign exchange gross domestic product gross national income Global System Mobile information and communication technology information and communication technology for development international financial institutions International Monetary Fund Koncola Copper Mine Maputo Development Corridor Mobile Telephone Networks Nigeria, Egypt, Kenya, South Africa New Partnership for African Development 145

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NGOs ODA OECD PRSPs RENs SAT3 SIM SITC TanZam TICAD TNCs UNCTAD WTO ZANU ZTE

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nongovernmental organizations overseas development assistance Organisation for Economic Co-operation and Development Poverty Reduction Strategy Papers Regional Extraction Networks South Atlantic 3 subscriber identity module standard industrial tariff classification Tanzania-Zambia (railroad) Tokyo International Conference on African Development transnational corporations UN Conference on Trade and Development World Trade Organization Zimbabwe African National Union Zhong Xing Telecommunication Equipment Company

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Accountability, 69 Accumulation by dispossession, 38–39 Adverse differential incorporation, 33, 64 African National Congress, 46 African Peer Review Mechanism of NEPAD, 68 AFRICOM, 75 Agreement on Textiles and Clothing, 58 Agriculture: agroprocessing, 101–102, 137; Asian investment in Zambian, 95; China’s geoeconomic strategy for Africa, 16–17; coltan mining and, 114–115; commoditization of labor, 87; geographical distribution of Africa’s exports to Asia, 40(fig.); repurposing mobile phones, 121; US and Europe opening markets, 135; Zambia’s economic performance, 100, 103–104 Agroprocessing, 101–102, 137 Aid: China’s ODA, 18; combining exploitative trade deals with, 20; conditionality, 69; global economic crisis threatening, 133–134; manufacturing growth, 139; sectors receiving aid from China, 17 Air Tanzania, 134 Air transport, 102 Aluminum, 45, 47 Anchor states, 31 Angola: Chinese oil infrastructures deal, 27–28; Chinese oil interests, 37–38; conflict oil, 41, 137; global economic crisis affecting aid, 134 Annan, Kofi, 66, 127 Antidumping measures, 21

Apartheid, 18, 45 Appropriationism, 127 Arms trade, 25–26, 77–79, 138 Asia: driving low-income economies, 58; driving Zambia’s economy, 89–95; geographical distribution of Africa’s exports, 40(fig.); impact of global economic crisis on aid, trade, and investment, 133–134; regional integration driving economic growth, 36–37. See also China Asymmetric power projection, 16 Asymmetric trade, 95 Auto industry, 61(n14), 139 Banking sector: credit crisis, 130–131; foreign ownership, 102–103; repurposing mobile phones, 121–122; Zambia’s construction expansion, 99 Barnett, Thomas, 30 al-Bashir, Omar, 80 Beeping (mobile phones), 118–119 Beijing Consensus, 81 Beijing Program for China-Africa Cooperation in Economic and Social Development, 19 Bicycles, 139 Big 5. See Angola; Democratic Republic of the Congo; Kenya; Nigeria; South Africa Bike production, 12, 24 Binational transborder space, 76 Bit driven growth, 111 Black Star TV, 113 Blair, Tony, 11–12, 20, 46, 68 Blowback, 75, 80

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BMW, 139 Botswana: Chinese trade, 21; governance curse, 73; mobile phone sharing, 117 Breweries, 96 Bureaucratic bourgeoisie, 98 Bush, George W., 74–75 Bush, Ray, 72 Bush Administration, 72 Business sector: Zambia’s local business contraction, 100 Call centers, 43, 144(n4) Cameroon: Chad-Cameroon oil pipeline, 75–80 Capital flight, 132–133, 136 Capital reinvestment, 136 Casualization of labor, 100–101 Celtel, 43, 124 Central African Republic, 28–29, 75; Chinese aid packages, 28 Chad: Chad-Cameroon oil pipeline, 75–80; China’s impact on governance, 81; Chinese influence on petroleum law, 28; economic growth, 7; resource extraction affecting conflict, 5; US interests strengthening authoritarianism, 30 Chambe bridge project, 90 Chambishi copper mine, 90–91 Cheney, Dick, 30, 69 ChevronTexaco, 77, 79 Chilanga Cement, 95 Child labor: Zambia, 101 Child mortality rate, 135 Chile: poverty reduction, 143 China: African interests, 14; African state restructuring, 24–29; Africa’s growing importance in global trade, 11–12; capital reinvestment, 136; copper industry, 52; deforestation in Mozambique, 53–54; economic impact of Africa strategy, 20–24; geoeconomic strategy for Africa, 15–17; geoeconomics and resource scarcity, 13; global economy fluctuations, 5–6, 41–42, 133–134; global impact of economic growth, 37; governance impact, 81–83; impact on terms of trade, 42(fig.); impacts of the resource boom on African manufacturing, 57; increasing control of oil supplies, 137–138; increasing numbers of traders, 94; industrialization consequences, 55–56; infrastructure investment, 89–90; infrastructure superiority in manufacturing, 137; investment in Sudan, 77; IT production, 8; labor casualization, 100–101; manufacturing

prices, 39–40; military assistance to Chad, 79; mobile phone production, 112–114; neopatrimonialism, 51; oil imports, 4; poverty reduction and transborder security, 75–76; privatization, 140; rising role in global trade, 3–4; social and ecological contradictions of economic expansion, 142; soft power in Africa, 17–20; South African mineral exploration, 48–49; US interest in cooperation with, 138; Zambia’s economic performance, 103–104, 106; Zambia’s high-tech zone, 8. See also Asia China Eximbank, 89 Chinese Action Plan for Africa, 90–91 Chinese African Human Resources Development Fund, 19 Chinese National Petroleum Company (CNPC), 16, 25–26 Chungking Mansions, 112 CIA (Central Intelligence Agency), 134–135 Class: domestic class formation, 89, 98–99; economic growth favoring upper classes, 140; ICT creating a new class, 121; indigenous business class, 60; rentier petro-states exacerbating inequalities, 56; resource curse, 53, 71; structural transformation, 142 Clothing imports. See Textiles Coal: China’s investment in infrastructure, 90 Cobalt, 51 Colonialism, 47, 54–55 Coltan, 4, 112, 114–115 COMESA, 89 Commodities: China driving prices, 38; environmental and sociopolitical impact of the resource boom, 51–57; investment during economic turbulence, 130; primary commodity prices, 38(fig.); Zambian mining, 101. See also specific commodities Conflict: Chad-Cameroon and Sudanese oil pipeline, 75–80; economic growth reflecting decline of, 34; failure of neoliberal policies to address security, 137; matrix governance contributing to, 64; mobile phone use during, 125; mobile phone value chains, 114; Niger delta violence, 55; oil investment fueling conflict, 140; resource, curse, resource conflict, and conflict resources, 83(n6); resource extraction and, 5, 83(n4) Conflict Coltan and Cassiterite Act, 115 Conflict diamonds, 115–116 Conflict resources, 55, 83(n6), 115–116

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Congo. See Democratic Republic of the Congo Construction industry: Zambia, 99 Construction of disorder, 75 Cooper, Robert, 30 Copper, 6, 15, 51–52, 87–89, 99–100, 132 Copperbelt Province, 92–93 Corporate social responsibility, 56, 113 Corruption: combining exploitative trade deals with aid, 20; good governance and, 50–51; neoliberal reform deepening, 69; privatizing Zambia’s mines, 98; as root cause of Africa’s economic and social problems, 1 Cost down, 40, 61(n5) Council on Foreign Relations, 138 Credit crisis, 130–131 Crisis-complex, 75 Cross-costing, 40, 61(n5) Cruciform sovereignty, 65–66, 83(n1), 142 Currency: resources as, 72; Zambia’s, 53, 103–104 Darfur, 25–26, 34, 64, 75–77, 79, 138 Debt crisis, 130–131 Debt relief, 43–44, 90–91, 104, 106 Déby, Idriss, 30, 79–81 Decoupling, 5–6, 131 Deep integration, 110–111 Democracy promotion, 19–20 Democratic Republic of Congo (DRC): China’s investment in infrastructure, 89; coltan price, 5; conflict and mobile phones value chains, 114–115; conflict and resource extraction, 83(n4); global economic crisis affecting, 134; Zambian-South African trade asymmetry, 96 Dependence: globalization reembedding, 136, 143–144; technological, 109–110, 126–127 Development: constraints for sustainable development, 36; corruption and, 73; ICT role in, 110–112, 122–125; lost decades, 33–34 Diamonds, 73, 115–116 Djibouti: US military interests, 29 Donor coordination, 67–69 DRC. See Democratic Republic of Congo Dual economy: Zambia, 103–104 Dumping, agricultural, 21, 50, 135 Dutch disease, 52, 98–100 Ecological contradiction, 38–39 Economic collapse, profiting from, 96–97 Economic cooperation zones, 56, 59–60, 90–91

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Economic crisis. See Global economic crisis Economic growth: benefiting Zambia’s middle class, 98–99; commodities boom contributing to, 51–53, 57–60; debt trap, 44; decline and revival, 33–36; economic crisis and, 131; elites benefiting from, 140; factors driving, 2, 35; mobile phone production, 113, 122–125; reflecting good governance, 50–51; regional integration, 36–39; resource availability and, 30; resources fueling China’s, 14; subSaharan Africa, 6; sustainability and robustness, 135–136; US and China affecting, 11; Zambia, 88, 99, 103–104 Economic structures, Zambia, 86–87 Economy without state, 74 Education and training: China’s knowledge workers, 19; human capital flight, 136; resource scarcity, 44 Egypt, 2, 124 Elections: anti-Chinese sentiment, 92–93; Nigerian irregularities, 73 Electricity, 78 Emerging Market Handset Initiative of the Global System Mobile, 113 Energy industry: China’s interest in, 27; global economy fluctuations, 41–42; Merowe dam, 76 Environmental issues: Chinese investment in Zambia, 86; coltan mining, 114–115; copper mining, 93–94; decoupling economic growth from, 137; resource boom, 53–57 Equatorial Guinea, 43, 72 Eritrea: China’s arms exports, 25 Ethics of mobile phone market exploitation, 125–126 Ethiopia: China’s arms exports, 25; exploitative trade deals, 20; global economic crisis, 131; mobile phone production, 113; traders, 94 European Investment Bank, 77, 101 European Union (EU): Chinese import competition, 22; horizontal sovereignty, 65; opening agricultural markets, 135 Exploitation, economic, 1, 3 Export markets, access to, 135 Export processing zones, 90–92 Export tariffs, 23 Export-oriented industrialization, 16 External interest and intervention, 71–74 Externalization of wealth, 102, 136 Extractive globalization, 6. See also Mining; Oil industry

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Extractive industries: Asian presence in South Africa, 48–49; China’s increasing demand for raw materials, 4–5, 15; Zambian copper, 87–88 Extractive Industries Transparency Initiative, 20 Extraversion strategy, 71–74, 79 ExxonMobil, 72, 77 Failed states, 74 Family networks, 117–118, 120 FDI: impact of global economic crisis on aid, trade, and investment, 133–134 Fiber-optic cables, 43, 126–127 Financial channels of credit crisis, 130–132 First Quantum, 132 Fisheries, 87 Fixity, resource, 79 Flashing (mobile phones), 118–119 Flexigemony, 82 Flow stations, 78 Foreign direct investment (FDI): African flows mirroring global economy fluctuations, 41; African total flows, 31(n1); agroprocessing, 101–102; China’s concentration of, 37; China’s investment in infrastructure and metals, 90–91; China’s new regulations, 55; Chinese investment in Zambia’s copper, 51–52; contraction after global crisis, 132; destinations of China’s, 14; global financial crisis affecting, 6; increasing technological dependence, 126–127; mobile telecoms’ use in attraction, 123–124; South African companies, 45–47 Foreign exchange (forex) reserves, 15–17, 61(n15), 89, 97, 134 Forestry, 87 France: military assistance to Chad, 79–80 Frazer, Jendayi, 31 Friendship Textile Mill, 18 Future Generations Fund, 78 Gabon: Dutch disease, 52; lumber exports, 54 GDP (gross domestic product), 33–34, 88(table), 101 Geoeconomics, 13, 15–17 Geography, resource, 16 Geography of mobile phone penetration, 116 Geopolitical fracture zone, 8 Geopolitics, 13, 16 Ghana: call centers, 43; Chinese bike production, 24; mobile phone usage, 117 Global economic crisis: Asian aid, trade, and investment, 133–134; global

connectedness and, 5–6; interregionalism, 8–9, 45; linking conflict to, 2; manufacturing industry, 57–60; origins of and impact of, 129–132 Global economy, 39–44, 49 Global knowledge economy, 111 Globalization: Chinese model, 37–38; cruciform sovereignty, 65–66; defining, 2–3; evolving nature of Africa’s, 3; information exchange characterizing, 110–111 Gold, 8–9, 130 Governance: aid conditionality, 69; China’s influence on matrix governance, 81–83; Chinese interests influencing, 24–29; cruciform sovereignty, 65–66, 83(n1); defining, 66–67; economic growth reflecting, 50–51; globalized, 64–65; market, 67; resource curse, 7, 63–64, 72–73; resource extraction affecting conflict, 5; shifting to a developmental mode, 140; US interests influencing, 30. See also Matrix governance Gross national income per capita, 118(fig.) Guerrilla groups, 71, 125, 137 Health care, 18 Hegemony, 82–83 Helicopter gunships, 78, 84(n8) HIV/AIDS, 18, 87, 137 Horizontal sovereignty, 65–66 Horticulture exports, 53, 61(n10), 100 Human capital, 1, 136 Human Development Index, 87 Human rights, China’s indifference to, 26 Humanitarian aid, 74, 79–80 ICT. See Information and communication technology Imperialism: defining, 82–83; ICT development as, 127 Imploding capitalism, 40–41 Import subsidies, 139 Import tariffs, 23 Income inequality: globalization increasing, 134–135; gross national income per capita, 118(fig.); ICT increasing, 124–125; mobile phone penetration, 116 India: Chinese trade policy, 23; mining investment, 92; Zambia’s economic growth, 106 Inflation, 50, 97, 104, 131 Informalization, 87 Information and communication technology (ICT): Africa’s integration into, 4–5; information exchange characterizing

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globalization, 110–111; as positive flow of globalization, 111–112; poverty reduction, 43. See also Mobile phones Information and communication technology for development (ICT4D), 111 Infrastructure: China’s investment in, 89–90; China’s oil and infrastructure investment package, 25, 27–29; constraining manufacturing, 60; global economic crisis threatening initiatives, 133; global poverty reduction, 142–143; hindering productivity and competitiveness in manufacturing, 137; as prerequisite to market development, 1; Zambia’s debt relief funding, 104 Infrastructure Crisis Facility, 133 Innovation, mobile phones, 121 Instability, political, 72–73 Integration, regional and global, 48–49 Interest rates, 131 International Monetary Fund (IMF). See World Bank/IMF International Standards Organization 9000 certificates, 58 Internet, 111, 126, 128(n5) Interregionalism, 8–9, 95 Intransitive articulation, 35–36 Investment, 85, 136. See also Foreign direct investment Iraq war: oil prices, 38 Japan, 91 Jobs: call centers, 43; Chinese import competition, 22, 24; South Africa’s growth, 45. See also Labor force Johnson, Ellen Sirleaf, 52 Kabila, Laurent, 114 Kahuzi-Biega National Park, 114 KCM copper, 101 Kenya: driving Africa’s economic growth, 2; election violence, 50; horticulture industry, 61(n10); manufacturing, 57; remittance flows contraction, 132; repurposing mobile phones, 121; traders, 94 Kibaki, Moi, 50 King, Oona, 115 Knowledge workers, 16, 19 Konkola Copper Mine (KCM), 56 Kuwait: mobile phone market, 124 Labor conditions and standards: Zambia’s mining industry, 15, 52, 86, 105 Labor force: call centers, 144(n4); casualization of, 100–101; China’s geoeconomics strategy for Africa, 16;

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China’s labor pool, 92; Chinese-African joint ventures, 18; economic impact of mobile phones, 122–123; Zambia’s commoditization, 87; Zambia’s dual economy, 103. See also Jobs Labor movement: Zambia, 106 Latin America: China trade policy, 21; China’s FDI flows, 14; poverty reduction, 142–143 Law of value, 139, 144(n6) Lesotho, 22, 58, 132 Li Zhaoxing, 17 Liang Guixan, 18–19 Liberalization, economic, 46–47, 98 Liberia, 34, 54, 134 Link Technologies, 113 Living Conditions Monitoring Survey, 104 Livingstone National Park, Zambia, 102 Loans, 99–100 Lord’s Resistance Army, 125 Lumber, 53–54, 72 Malawi: diplomatic ties to China and Taiwan, 39, 60(n3); economic growth in the face of economic crisis, 131; human capital flight, 136; resource use on education, 44 Mali: agroprocessing, 137 Manuel, Trevor, 131 Manufacturing: Chinese import competition, 21–22; impacts of the resource boom on African manufacturing, 57–60; increasing positive flows of globalization, 139–140; Indian investment, 92; mobile phone production, 112; need for expansion, 136–137; South Africa, 46, 95; Zambia’s dual economy, 103; Zambia’s economic performance, 86–87, 100; Zambia’s textiles industry, 94 Manufacturing industry, 21 Maputo Development Corridor, 47 Market access, 135 Market expansion for mobile phones, 123 Market governance, 67 Matrix governance, 64, 67–69, 73–80, 140–142 Mbeki, Thabo, 46, 68 Mboweni, Tito, 131 Mercantilist policies, 47–48 Merowe dam, 55, 76 Metals: Asian economies driving manufactured exports, 59; China’s increasing demand for, 4–5, 15; coltan, 114–115; coltan for ICTs, 112; economic turbulence driving demand, 130 Meynier, Octave, 80

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Microenterprises, 122–124 Middle class, Zambia’s, 98 Migration, global economic crisis and, 133 Militarization and violent governance, 74–75 Military spending, 74 Millennium Development Goals, 133 Mineral beneficiation, 137 Mineral wealth: China’s increasing demand for, 4–5; geographical distribution of Africa’s exports to Asia, 40(fig.); value of and dependence on, 141–142. See also Metals; Mining; Oil industry Mining industry: coltan and conflict, 114–115; global economic crisis, 132, 134; labor conditions and safety, 92; South African investment, 46–47; Zambia’s dual economy, 103; Zambia’s economic performance, 101; Zambia’s potential renationalization, 105–106; Zambia’s privatization, 97–98 Mo Ibrahim Governance Index of Africa, 77 Mobile phones: Africa’s market growth, 8; Africa’s thintegration into the global economy, 125–128; call centers, 43, 144(n4); Chinese production, 57–58; economic and business impact, 122–125; penetration, usage, and social impact, 116–122; penetration rates, 43; social impact, 120–121; South Africa’s industry, 44; subscribers by country, 119(fig.); subscription and penetration, 117(fig.); Zambia’s economic performance, 100 Mobile Telephone Networks (MTN), 44, 124 Morocco: mobile phone penetration, 116 Motorola, 113 Movement for the Emancipation of the Niger Delta, 55, 137 Mozal, 47 Mozambique: China’s resource colonialism, 54–55; deforestation, 53–54; mobile phone production, 113; South African investment, 47 Mphanda Nkuwa dam, 55 Mugabe, Robert, 26–27, 31(n8) Multi-Facility Economics Zones, 91–92 Multilateral Debt Relief Initiative, 44 Multinational corporations: China’s geoeconomics strategy for Africa, 15–16 Murambatsvina, Operation, 27 Namibia, 60, 116 Nationalization: DRC’s coltan, 114; Zambia’s mines, 105–106. See also Privatization Natural gas: strategic business relations, 71 Negative tariffs, 139 NEKS. See Egypt; Kenya; Nigeria

Neoclassical economics, 21 Neocolonialism, 22–23 Neoliberal reforms: affecting security, 69–70; commodification of people, 139; debt relief and, 44; economic growth and, 2; Zambia, 105 Neopatrimonialism, 51, 69–70 NEPAD (New Partnership for African Development), 22–23, 46, 49–50, 68 Network externalities, 122–123 Network trade, 110–111 Networks, business, 24, 46 New scramble, 45–46 Niger delta, 55–56 Nigeria: China’s FDI, 38; Chinese aid, 17; Chinese import competition, 21–22; Chinese oil interests, 37; corruption reduction measures, 51; election irregularities, 73; failure of neoliberal policies to address security, 137; income inequality, 56; matrix of global governance, 67; mobile phone market, 110, 113, 124; regional economic growth, 44–45; space satellite, 12; strategic alliances with petroleum companies, 71 9/11, 7, 12, 28–29 Nkunda, Laurent, 115 Nokia, 43, 112–114, 127 Nontradeables, 99 North Atlantic Treaty Organization: horizontal sovereignty, 65 North-south conflict and nationalism, 84(n8) Obama administration, 115 Obasanjo, Olusegun, 51 Obiang, Teodoro, 28–29 Oil imports, 4 Oil industry: Chad-Cameroon pipeline, 7–8, 75–80; China’s Africa strategy, 16; China’s environmental damage in Gabon, 54; China’s increasing demand, 14; China’s oil and infrastructure investment package, 25, 27–29; demand driving economic growth, 35; failure of neoliberal policies to address security, 137–138; geographical distribution of Africa’s exports to Asia, 40(fig.); global economic crisis, 6, 131–132; governance and militarization, 74; increasing China and US imports, 12; merging state and market mechanisms, 37; Niger delta conflict, 55; profit expatriation, 72; Sudan’s production and consumption, 26(fig.); US-African trade and security policy, 29–30

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Okapi Wildlife Reserve, 114 Ondimba, Ali Bonga, 54 Orascom, 124 Organization for Economic Cooperation and Development (OECD), 14 Overseas development assistance (ODA), 18 Papua New Guinea, 72 Paris Declaration (2005), 68–69 Parmalat, 101 Partnership, 83(n2) Patrimonialism, 71 Peace accords, South Africa brokering, 48 Peak oil, 38 Penetration rate, mobile phones, 110, 116–117 Per capita income, 2 Petro-Islamism, 77 Petronas, 77, 79 Pineau, Carol, 2 Pipelines, oil, 75–80 Pirates, 74 Plunder economy, 80 Poor governance, 69–70 Popular geopolitics, 13 Poverty: commoditization of Zambia’s labor, 87–88; decline and increase, 2, 34–35; foreign ownership deepening, 102; mobile phones as causes of, 119–120; Niger delta, 55; resource availability and, 30; sustainability of economic growth, 136–137; Zambia’s economic performance and, 104–105; Zambia’s incidence of poverty by province, 93(fig.); Zambia’s privatization, 99 Poverty reduction: Chad-Cameroon and Sudanese oil pipeline, 75–80; ChadCameroon pipeline, 7–8, 64–65; China’s investment in copper mining, 93; global interconnectedness, 141–143; long-term potential, 6–7; mobile phones’ value in, 43, 123–124; resource extraction and good governance, 70–74; surplus tax revenues funding pro-poor initiatives, 138–139; Zambia’s economic performance, 104 Poverty Reduction Strategy Papers (PRSPs), 44, 67–68 Primary commodities, 39 Privatization: China’s failure to incorporate, 140; extraversion following from, 72; foreign goods monopolies, 96; Zambian mines, 87–88, 97–98 Profits, expatriation of, 71–72, 102 Publish What You Pay, 20

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Qiatou, China, 57–58 Real channels of credit crisis, 130–132 Recession, 129–130. See also Global economic crisis Regional extraction networks (RENs), 47 Regional integration, 44–49 Remittance flows, 132 Resource curse, 7, 63–64, 71–72, 83(n6), 141–142 Resource pull effect, 114–115 Resource scarcity, 13, 76 Resource wealth: China’s demand, 14; China’s geoeconomics strategy for Africa, 15; conflict and, 83(n4); copper industry, 52; global scarcity driving China’s involvement, 3–4; governance and extraversion, 69–70; governance and poverty reduction, 70–74; matrix governance regularizing, 140–141; resource boom affecting manufacturing industry, 57–60; resource colonialism, 6; resource conflict, 83(n6). See also Metals; Mining industry; Oil industry Revenue. See Taxation and revenue Riots, 92 Risk aversion, 130 Rosen, Dick, 115 Rwanda: mobile phone production, 113; resource conflicts, 70 Safaricom, 121 Safeguard restrictions on textiles imports, 22–23 Safety: China’s labor pool, 92 Salaula (secondhand clothes), 86, 94 Sarkosy, Nicolas, 79 SAT3, 126–127, 128(n7) Scalar alignment of economic factors, 7, 36, 85, 89, 106 Scaled social processes, 89 Scramble for Africa, 11 Security: American oil interests, 29; democracy promotion, 19–20; economization of, 65; enhanced east-west competition, 12; failure of neoliberal policies, 137; governance and extraversion, 69–70; Horn of Africa, 76; violence and militarization, 74 Service delivery, 110 Service sector, economic contraction in, 132 Shadow interstate war, 76 Shell Oil, 56 Shoprite, 95–96 Sierra Leone: Chinese tourism development, 16–17; conflict, 34; lumber exports, 54

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SIM cards, 116 Sinopec, 54 Slag mining, 37 Small, micro and medium-sized enterprise (SMME) development, 19, 122–125 Social contracts, 69–70 Social forces: resource curse, 72 Social networks, 111, 117–120 Social relationships structuring disorder, 73 Soft power, China’s, 14–17, 31(n3) Somalia, 74, 125 Sony PlayStation 2, 114 Soros, George, 20, 70 South Africa: auto industry, 61(n14); call centers, 43, 144(n4); China’s Africa trade policy, 21–23; decoupling, 131; global economic crisis, 5, 130–131; manufacturing growth, 1309; mobile phone market, 119–120, 124; regional economic growth, 44–49; slag mining, 37; supermarketization, 5; Zambia’s trade relations, 95–96 Southern African Development Community, 95 Sovereignty: Chad-Cameroon pipeline as shared sovereignty, 78; cruciform, 65–66, 83(n1), 142; resources as source of, 72–73; suprasovereignty, 65–66 Space satellite, 12 Special economic zones, 133 Species extinction, 54–55 Stock exchange, 48, 98 Stratification, social, 120–121 Strikes, 92 Structural adjustment programs, 48, 86–88 Structural idealism, 144 Structural transformations, 138–139 Subscription, mobile phones, 119(fig.) Sudan: aid farming, 84(n8); ChadCameroon and Sudanese oil pipeline, 75–80; China’s dam construction, 55; China’s FDI, 38; China’s oil and infrastructure investment package, 25; Chinese oil interests, 37–38; conflict, 34; economic growth, 7; governance peer review, 68; human rights, 26; income inequality, 57; mobile phone market, 124; north-south conflict and nationalism, 84(n7); oil production and consumption, 26(fig.); resource extraction affecting conflict, 5 Supermarketization, 5, 95–96 Superpower, China as, 81 Suprasovereignty, 65–66 Surplus resources, 73 Switzerland: copper investment, 90

Taiwan, 39, 60(n3), 93 Tanzania: economic growth in the face of economic crisis, 131; mobile phone use, 116, 123 Tanzania-Zambia (TanZam) railroad, 18 Tariffs, import-export, 23 Tata Group, 92 Taxation and revenue: Chad capturing pipeline revenue, 79; Darfur conflict stemming from exclusion, 77; surplus tax revenues funding pro-poor initiatives, 138–139; tax breaks for investors, 94, 98; tax contracts, 69–70 Technological leapfrogging, 42–43 Technology: China’s geoeconomic competition, 81; China’s role in producing, 4, 7–58; colonialism and, 47; economic dependence, 126–127; global economy fluctuations, 41–42; global poverty reduction, 142–143; increasing the rich-poor gap, 124–125. See also Mobile phones Terrorism, 7, 12, 28–29, 74 Tesco, 61(n10) Textile tsunami, 21 Textiles industry: Chinese imports, 21–23, 58; geographical distribution of Africa’s exports to Asia, 40(fig.); Zambia, 86, 94 Thintegration, 47, 109, 127 TICAD, 91 Tied debt deals, 27–28 Timber: increasing China and US imports, 12 Tobacco exports, 39, 60(n3) Tourism, 16; economic contraction and, 132; Zambia’s decline, 102; Zimbabwe’s economic crisis, 97 Toys, 57–58 Trade: Asian interregionalism, 37; China’s impact on terms of trade, 42(fig.); China’s increasing imports from Africa, 12; demand driving economic growth, 35; geographical distribution of Africa’s exports to Asia, 40(fig.); impact of global economic crisis on aid, trade, and investment, 133–134; import figures, 35(fig.); primary commodities, 38–39; unequal, 39–44 Trade unions, 143 Transnational corporations (TNCs): extraversion strategy, 71; mobile phone production, 112; monopolizing Zambian markets, 96 Transparency, 69 Transport infrastructure, 137 Transregional product cycle, 139 Triangulation effect, 7

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Ubuntu (nonpecuniary utility), 117, 141 Uganda: mobile phone production, 113; mobile phone use during conflict, 125; resource conflicts, 70 UN Conference on Trade and Development (UNCTAD), 24 Unequal trade, 39 United States: arms exports, 25–26; China’s supersession of as superpower, 81; Chinese import competition, 21–22; coltan import controls, 115; democracy promotion, 19–20; failure of neoliberal policies to address security, 137; forex reserve, 61(n15); global economy fluctuations, 41; increasing trade engagement, 12; military intervention, 74; oil imports, 4; opening agricultural markets, 135; origins of economic crisis, 129–130; protecting offshore funds, 72; supporting Africa’s economies while limiting China’s influence, 138; threatening China’s energy security, 14; trade and security policy, 29–31; triangular effect with China, 7 US African Growth and Opportunity Act (AGOA), 21–22 Value chains: Africa’s expansion into production and services, 136–137; ICTs, 112; mobile phones, 114 Value-added activities, 127 Value-added products, 49 Van Dunem, Mendes de Campos, 27 Vedanta, 101 Venezuela: poverty reduction, 142–143 Vertical sovereignty, 66 Violence. See Conflict Vodacom, 44 Vodafone, 121 V-shaped recovery, 130 Wages: South African labor, 95–96; Zambian miners, 101 Walmart, 40 Wealth, expatriation of, 102, 136 Wolfensohn, James, 67–68 Wolfowitz, Paul, 19–20, 31(n5)

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Women: Zambian textiles, 86 World Bank/IMF, 58, 77–79; China as funding source, 140; China’s cooperation with, 81; defining governance, 66–67; global economic crisis affecting, 134; privatizing Zambia’s mines, 98; Zambian structural adjustment, 86–88 World Development Report, 49 World Heritage sites, 114 World Trade Organization (WTO): safeguard restrictions on textiles imports, 22–24 Zain, 124 Zambeef, 101–102 Zambia: Asian economic drivers, 89–95; China’s agriculture investment, 17; China’s infrastructure investment, 90–91; China’s metals demand, 15; commodity boom, 51–52; development and poverty reduction plans, 105; dual economy, 103–104; Dutch disease, 99–100; economic and structural context, 86; economic growth, 8; export processing zones, 91–92; global economic crisis, 131–132; government control of ICT, 128(n6); incidence of poverty by province, 93(fig.); Indian investment, 92; industrial pollution, 56; profiting from Zimbabwe’s crisis, 97; South Africa’s regional economic integration, 49; South Africa’s trade relations, 95; textiles industry, 94–95; trade unions, 143 Zambia-China Cooperation Zone, 55–56 Zambia-China Mulungushi Textile Joint Venture, 94 Zamefa, 88 Zhiang Zeming, 17 Zimbabwe: China’s agriculture investment, 17; China’s arms exports, 25; China’s trade policy, 26–27; economic contraction, 31; foreign portfolio investment, 48; inflation, 50; profiting from economic collapse, 96–97

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About the Book

Is globalization good for Africa? Pádraig Carmody explores the evolving nature and impact of globalization throughout the continent as China, the United States, and other economic powers exert their influence. Drawing especially on the cases of Chad, Sudan, and Zambia, Carmody considers whether the resource curse that has for so long plagued Africa can become a blessing. He also evaluates the impact of the information technology revolution and the recent global economic slowdown. In the context of carefully articulated historical dynamics, he provocatively assesses the new role of Africa in the global economy. Pádraig Carmody is lecturer in geography at Trinity College, Dublin.

He is author of Neoliberalism, Civil Society and Security in Africa.

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