A recently released World Bank report shows that the wealth of sub-Saharan Africa has been steadily declining over the past several decades, as transnational corporations extract mineral wealth without adequately compensating the region, says economist Patrick Bond
SHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore. A recently released World Bank report titled, Changing Wealth of Nations, show that the wealth of sub-Saharan Africa has been rapidly declining over the past several decades. As a matter of fact, the region has been losing an average of 100 billion dollars per year between 1990 and the year 2015. The main reason for this loss is that transnational corporations are extracting mineral wealth and that Africa is not receiving a comparable value to compensate for this extraction.
Joining us to discuss this World Bank report on the wealth of nations is Patrick Bond. Patrick is a professor of political economy at Wits University in South Africa. He is the co-editor of Bricks, an anti-capitalist critique and the co-author of South Africa – The Present as History. He recently wrote an analysis of the World Bank report titled, New Evidence of Africa’s Systematic Looting. Welcome back, Patrick.
PATRICK BOND: Thanks Sharmini.
SHARMINI PERIES: This bank report focuses on what is known as adjusted net savings or ANS. Tell us what this measure exactly is and why this is useful for measuring a country’s wealth.
PATRICK BOND: Sharmini, this adjusted net savings is an improvement over gross domestic product. The GDP is what most bourgeois economists will first turn to say this is the output of the goods and the services, and that’s the health of the economy. What we all know is that if you don’t count unpaid women’s labor, if you don’t count pollution, crime and the effects of crime and social breakdown, all of those things, you’re not getting anywhere near the real social welfare. And one of the most important parts of the adjusted net savings is to say, “How much are we depleting our natural resources,” which they call natural capital in the bourgeois-ication of these concepts. It’s natural capital, human capital, our education that they’re measuring.
Once you do those calculations, this continent, Africa, is really much more clearly a victim of Northern and let’s be frank, also BRICS, Brazil, Russia, India, China, South Africa exploitation, which is extracting those resources without reinvestment, which, in turn would then create some potential for a capitalist economy to accumulate locally.
Instead, we’re having a full disaccumulation or a political economist would call this unequal ecological exchange. The greatest African political economist, Samir Amin, who’s going strong at age 86, I was with him last month in Dakar, he’s always talked about the value transfers and the labor transfers, but there’s also a natural transfer and a gender transfer in this natural transfer. But now, we can begin to handle on, and as you say, at least 100 billion dollars per year. That’s a very conservative estimate with some caveats, is leaving this continent without requisite reinvestment.
SHARMINI PERIES: So, then, when does ANS measure show for sub-Saharan Africa in particular?
PATRICK BOND: Well, what has been showing, particularly because the World Bank studied adjusted net savings by changing this GDP to incorporate the decline in the wear and tear in machine, the productive capital plus the increase in human capital through education, the decline in welfare through pollution, and then, finally, the decline, which is the biggest decline, sometimes 20 percent of gross income every year because of the extraction of these resources.
They began this process when a man called Herman Daly, the real guru of ecological economics, told them they’re not measuring properly. And there’s a small unit, it’s called Waves and it handles all sorts of adjustments of national accounts, although, in a somewhat biased way, they can’t quite come to grips with the implications of this analysis. But since the early 2000s, this has been a fairly serious endeavor and the new report is maybe most devastating because efforts to call Africa a fast growing, Africa rising, are now in tatters because it’s now clear that, as commodity prices peaked in the commodity super cycle, 2002 before the big 2015 crash, that’s when we saw most of the extraction and that’s the natural capital decline.
It’s like our wealth has been ripped out without the transnational corporations putting anything back. And we now that partly because there’s illicit financial flows, they take all sorts of tax dodges and miss invoicing that allow them to move money abroad. But now, this is the first time we’re really getting a sense, I hope, in a more generic way, that NGOs and campaigners and anti-extraction groups on the ground can work with, that it’s not economically viable to continue extracting from Africa. Prior reports occurred during the great Africa rising myth with high commodity prices.
Now that commodity prices are lower, the transnationals are extracting even faster in many cases just to make up for volume what they’ve lost in price because of the lower commodity prices. That’s the most dangerous period and the most resistance is now being observed across the continent in all manner of protest against extraction.
SHARMINI PERIES: Patrick, I mentioned that the region loses 100 billion dollars on average per year. Tell us how this takes place.
PATRICK BOND: Well, it takes place when a corporation, usually it’s western and now, increasingly, the BRICS corporations, will extract the raw materials. They do very little processing in the continent. So, the raw minerals, the petroleum, the gas is extracted and exported. Africa, then, typically imports the products of those.
Crucially, unlike say in Norway or Australia or Canada with lots of resources, the corporations are not headquartered here on this continent. Unlike those countries where the shareholders or in Norway’s case, the state, will recycle the profits and put it into education, for example in Norway or corporates in Canada and Australia will have local shareholders benefiting.
Africans aren’t benefiting, and this is one of the crucial reasons that, in the last week, we’ve had two major conferences in Cape Town. The African Mining Indaba of the big corporates and their state allies, and the Alternative Mining Indaba, which is the NGOs. And what they’ve been asking, the NGOs especially, “Can’t we have more transparency? Can’t we have more free prior and informed consent?” In other words, the communities affected having a small role in this.
I think what we’re not beginning to ask is, even if you have transparency and free prior and informed consent and maybe some corporate social responsibility, is that enough? Because these mines and these petroleum rigs are taking these resources out. And they’ve made an argument that they bring in capital, they provide jobs and they have foreign exchange earnings for the country. And yet, what the World Bank has inadvertently acknowledged is that that’s far less than the value of the wealth, the present value of all of that, those natural resources that are just vacuumed out.
I should add, by the way, the 100 billion, the three percent of Africa’s gross income that’s being vacuumed out, is conservative and that ignores platinum and diamonds, those two crucial commodities, especially from this country and this region. It also ignores North Africa. The World Bank likes to have sub-Saharan Africa as one category and North Africa, the Middle East and North Africa, as another. So, you put it together, I would reckon it’s in the 150 billion dollar range.
Now, this is on top of a net 43 billion dollars that goes out even after aid and loans and new foreign investment and remittances come in. The outflow that Global Justice Now, Christian Aid and some of the other agencies have been looking at the last few years, Mark Curtis especially, analyzing this 43 billion net. Well, I’m suggesting we should now be adding to this, the 100 plus billion, from the resource transfer. So, unequal ecological exchange becomes one of the crucial ways to say, “The north and the BRICS, this is not just west versus the south. Now, we have also Chinese, Indian, Brazilian companies, South African companies, ripping off the continent.”
And it seems to me this is an important moment to say because Johannesburg is hosting the next BRICS summit in July, and it’s an important moment to say that the imperialist and the sub-imperialist extraction should be resisted and we should be giving more attention to those who are stopping as much as they can. About 80 billion dollars of new mining goes on every year and, at any one point, about 25 billion according to the Anglo American corporations. Chief executive Mark Cutifani is now stopped by social resistance.
So, there is a map of this called Environmental Justice Atlas, EJAtlas.org and it seems to me we should all be paying more attention to those forces that are trying to slow this looting process.
SHARMINI PERIES: Patrick, it looks like the World Bank has made an important analysis of the problem of declining wealth in Africa but what about its own policies in the region? Do you think they take that into account in terms of this kind of impact it’s having in the region?
PATRICK BOND: This is a terribly important question because it raises a dilemma for those who would like to do full cost accounting under that assumption that that would promote an ecological modernization. That’s the framing that they would use, but, in fact, it creates schizophrenia. Here’s why.
The World Bank has a general objective, which is export led growth and it’s particularly to raise hard currency from very poor countries to repay the profit streams for these multinational corporations and the banks who need their loans repaid, not in kwacha from Zambia or rand from South Africa, but in US dollars or euros. And that’s where this contradiction screams out.
And, I’ll give you one example, which is Zambia, because when the World Bank tries its natural capital accounting, suggested net savings measure, it goes to a place like Zambia where a huge amount of the exports, 97 percent in some years, is copper. But when they’re doing the studies of the natural capital of Zambia, it’s very convenient that they leave out copper. In other words, they’re ignoring specifically, in this particular case, the most extreme perhaps, that the extraction of copper leaves Zambia much poorer, about 20 percent of gross national income according to their earlier accounts.
But in their pilot work that just started last year, they look at all manner of other aspects of natural capital, forests, wetlands, crop land, but they ignore copper. So, I think this is part of a dilemma for World Bank staff who make loans that basically work against the logic of their own internal analysis, which is that the more extraction occurs of minerals like copper, petroleum, and gas, the poorer Africa gets. The World Bank can’t allow that logic to leak into it’s lending function where it tries to promote export led growth through extraction of primary commodities.
SHARMINI PERIES: Alright, Patrick, so what needs to be done to remedy the problem of declining wealth and unfairly compensating for mineral extraction?
PATRICK BOND: Well, it’s such a great dilemma because there are many out there who would like to reform the system and to make it more transparent and more fair, and fair trade, publish what you pay, and extractive industry transparency initiative. There are some of the framings of a reform agenda that would make mining more socially and environmentally responsible.
I don’t think that’s possible. I think what this analysis, even inadvertently from the World Bank itself suggests, is that the most appropriate way to address the outflow of wealth is to resist. There may be, in the future, some governments that will actually reinvest proceeds properly, but right now we’re having transnationals, usually with governments in tow, extracting the wealth.
And, often, as in this country, terrible resource curses emerge. Our new president coming in very soon, Cyril Ramaphosa, proved that conclusively and the lawmen instance as a shareholder where he emailed and requested more or less for a massacre by demanding that the police treat a wild cat strike as, as he put it, “dastardly criminal.”
And it’s that relationship between corporates and governments and, in this case, the top political figure in the country coming in, that to me, suggests more attention to resistance to those communities, women’s group, labor, who are demanding a slowing of that extraction process so that, in some cases, we have various ones here, the Niger Delta is the most spectacular, that they actually leave the resources underground because, at this point, to take them out is a net loss.
SHARMINI PERIES: Patrick, we’ll make sure that we submit both your article raising some of these questions and this interview as well to the World Bank and see if they could respond to you.
PATRICK BOND: Very good. They normally will ignore the internal logic when it works against their corporate agenda, which is, as I say, extract at any cost.
SHARMINI PERIES: Alright, Patrick. I thank you so much for joining us today.
PATRICK BOND: Thank you very much.
SHARMINI PERIES: And thank you for joining us here on The Real News Network.