The New Scramble for Africa

Pádraig Carmody

• Publisher: Polity
• Year: 2017
• ISBN:
  9781509507115
• Edition: 2
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

Once marginalized in the world economy, Africa today is a major global supplier of crucial raw materials like oil, uranium and coltan. China's part in this story has loomed particularly large in recent years, and the American military footprint on the continent has also expanded. But a new scramble for resources, markets and territory is now taking place in Africa involving not just state, but non state-actors, including Islamic fundamentalist and other rebel groups.

The second edition of Pádraig Carmody's popular book explores the dynamics of the new scramble for African resources, markets, and territory and the impact of current investment and competition on people, the environment, and political and economic development on the continent. Fully revised and updated throughout, its chapters explore old and new economic power interests in Africa; oil, minerals, timber, biofuels, land, food and fisheries; and the nature and impacts of Asian and South African investment in manufacturing and other sectors.

The New Scramble for Africa will be essential reading for students of African studies, international relations and resource politics, as well as anyone interested in current affairs.

1
The New Scramble, Geography and Development

As the global economy continues to grow while natural resources remain fixed, there is a long-term imperative for industrial and industrializing countries to open up new long-term sources of raw material supply. The rise of China is particularly significant in this regard, given its voracious demand, as are the other so-called ‘Asian Driver’ economies, such as India. China's economic growth has been phenomenal since it began its economic reforms in the late 1970s, averaging 10 per cent a year – its more recent economic slowdown notwithstanding. A 10 per cent economic growth rate gives a doubling time of seven years, and the move from it being an oil exporter to an oil importer in the mid-1990s gave rise to the need for China to source this commodity around the world. Despite a media clamour about its slowdown, China's economy is still growing quickly, officially at approximately 7 per cent a year in 2015, giving a doubling time of roughly ten years, although some private-sector analysts argue the real growth rate was lower.

As noted earlier, there are substantial differences between the first scramble for Africa in the nineteenth century and the current one. According to Satgar (2009, p. 37), ‘the nature of rivalry today is not inter-imperialist but global. This is observable on the African continent in various sectors as transnational capital scrambles to capture resources to meet the needs of global capitalism.’ However, transnational corporations’ (TNCs’) home-country governments also play an increasingly important role in support of ‘their’ companies, and major powers have interests in Africa outside of direct economic ones as well, particularly in relation to security.

Talk of the ‘new scramble for Africa’ may serve to reinforce popular images of Africans as passive and powerless, which are now very far from accurate, particularly as regards government leaders who found their power strengthened, at least until the end of the commodity super-cycle in 2014/15. African governments now act as gatekeepers for resources and often hold shares in companies undertaking their exploitation. Consequently, access to resources is now often based on bargaining relationships, rather than the brute force that characterized the colonial period. This is leading to novel reconfigurations of politics, power and the economic geography of the continent, although there are still similarities with the first scramble.

According to Okeke (2008, p. 194), ‘just like the first scramble, the second scramble is clearly more beneficial to the main actors – that is, the private foreign corporations and their home governments – than to African governments and people’. However, as will be discussed below, the rewards for African elites can be very substantial, even if the proportionate rewards to international corporations are bigger in certain cases. Thus, the current relations must be characterized as post-imperial ones, in which national elites, depending on the commodity in question and the stage of the cycle, have substantial power in their bargaining with external actors. The extent to which this new configuration will lead to substantial poverty reduction on the continent, however, is questionable.

The paradox of plenty, or ‘resource curse’ – that Africa is mineral-rich, but the poorest and most conflicted continent in the world – was noted earlier. Africa has about 30 per cent of the world's mineral reserves. However, these resources have typically only benefited elites in Africa in partnership with foreign interests and external powers. Continuing resource scarcity is leading to deepening levels of investment and interconnection of Africa with the global economy: a new period of evolution in the globalization of the continent. The scale of increased economic interconnection (globalization) between Africa and elsewhere can be demonstrated by a simple graph of exports from Africa to some of the world's major economic powers (figure 1). The vast majority of increased exports to the United States were of oil, although these have now fallen dramatically as a result of the shale oil and gas ‘revolution’ in the US. What does the increasing globalization of the continent mean for its peoples?

Figure 1 Imports from Africa in millions of US dollars (including cost, insurance and freight)
Source: IMF (2015)

Globalization is often defined as increased interconnectedness between places. The creation of a global economy characterized by ‘network trade’ – whereby components from around the world go into final products – ‘deep integration’ – whereby different countries harmonize their laws and regulations in relation to trade and investment – and increased information exchange is often presented in mainstream accounts as a benign phenomenon which 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, both growth and uneven development continue to shape the evolution of the global economy and of Africa. The new scramble for Africa represents a deepening of the process of globalization on the continent, which is reshaping its geography. The recent ‘global’ financial crisis, however, represented a setback for the process of economic globalization.

According to the IMF, the global economy contracted by 0.8 per cent in 2009. Nonetheless, Africa continued, and continues – for the moment at least – to host some of the fastest-growing economies in the world, giving rise to an often problematic ‘Africa Rising’ discourse.

As a whole, SSA had an economic growth rate of 5.6 per cent in 2008. This fell to 1.6 per cent in 2009, but resumed its upward trajectory afterwards, largely based on a recovery in primary commodity prices. A report by the Economist Corporate Network (Economist 2015b) predicted that Africa would be the fastest-growing economic region in the world in 2015. In fact, it was predicted to host nine of the top twenty fastest-growing economies in the world that year. However, the end of the commodity super-cycle is likely to reduce this economic growth substantially in the short term, even if resource scarcity, population growth and other factors begin to put upward pressure on commodity prices again in the medium-to-longer term. The nature and quality of current economic growth is also important. As this book will show, it is based primarily on investment and trade in raw materials and mineral exploitation and exports, and as a result is reinscribing Africa's previous, unfavourable relations with the international system.

As noted earlier, more than 40 per cent of SSA live on less than the equivalent of what US$1.90 a day would buy in the United States. Recently, there has been a substantial debate about the causes of African underdevelopment, with some ascribing it to Africa's ‘natural geographic disadvantages’. However, the deepening of the process of globalization on the continent is reconfiguring its socio-economic geography and, selectively, linking it more closely to other places. In order to understand the nature of African underdevelopment and how it is being reconfigured by globalization, it is worthwhile examining the relationship between geography and development.

Geography and Development in Africa

In the last 25 years, we find that the bottom half of world income earners seems to have gained something in relation to the top half…but the bottom 10 per cent have lost seriously in comparison to the top 10 per cent.

(Sutcliffe 2007, p. 71)

At the root of Africa's impoverishment, in our view, lies its extraordinarily disadvantageous geography, which has helped to shape the nature of African societies and Africa's interactions with the rest of the world.

(Bloom and Sachs 1998, p. 4)

Some of the most well-known recent explanations for Africa's underdevelopment are linked to its physical geography. For some, Africa is a victim of its geography, with many landlocked countries, far from world markets and with a particularly dangerous type of mosquito. For the well-known Oxford economist Paul Collier, and Jeffrey Sachs in his earlier work, internal geography or site characteristics are most important. Africa is ‘cursed’ by its resources, and by many countries having ‘bad neighbours’. According to Jeffrey Sachs (2008, p. 50), ‘The challenge now is that extreme poverty is concentrated in the toughest places: landlocked, tropical, drought-prone, malaria-ridden, and off the world's main trade routes. It is no accident that today's poorest places have been the last to catch the wave of globalisation. They have the most difficulty in getting on the ladder of development.’ This reading is also reiterated in his most recent book; however, it should be noted that landlockedness is a social construction, which afflicts African countries because of the way in which they were divided up by the colonial powers. India, while big in size, is not landlocked because of its different colonial history.

In Jeffrey Sachs’ reading, Africa is by-passed by globalization because: ‘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’ (Sachs 2005, p. 3). For Jeffrey Sachs, the free market of a ‘laissez faire’ (literally ‘let do’) approach to African development is a ‘murderous’ one, and there needs to be massive public investment so that Africa can take advantage of the opportunities of globalization (Sachs 2010). The levelling effects of the global free market are countered by ‘natural’ geographic disadvantages which can be overcome by infrastructural and other public goods investments, some of which may now be provided by China in particular.

As noted above, for Paul Collier (2009), Africa is cursed by its resources, and many countries are situated in ‘bad neighbourhoods’. These themes were also taken up in the 2009 World Development Report, Reshaping Economic Geography (World Bank 2009). A central theme of this report is that there is a need to integrate Africa more fully into the global economy through a reduction of ‘distance’ from world markets.

What these influential accounts share is an emphasis on what geographers call first nature geography – or the natural geography of coastlines, mountains and physical distance. While not denying that landlocked states may face particular challenges, these accounts neglect the way in which ‘distance’ from world markets has been created. Why is Chicago central while Kigali, the capital of Rwanda, is peripheral to global flows of investment and trade? Only by taking a historical approach which examines the interactions between the past and the present can we understand the ongoing construction of African underdevelopment.

Some recent mainstream approaches to African development have been critiqued as environmentally deterministic and lacking historical perspective. While more recent work by some mainstream economists now analyses the social construction and political economy of the resource curse, ‘bad neighbourhoods’ and the environment (Humphreys, Sachs and Stiglitz 2007), this is where mainstream work is generally weakest.

Geography, particularly socio-economic geography, is largely socially constructed, rather than being a natural artefact. While it may be uneconomic to grow bananas in Britain, it does not follow that steel should not be made in Senegal or Singapore. Resource dependency and lack of value addition in Africa are central to the continent's underdevelopment.

In the economics literature, there has been a substantial debate about whether it is institutions or geography which most determine (Africa's) economic development. However, this misses an important point – institutions are geography. According to noted political theorist Raymond Duvall, institutions are structured sets of practices informed by shared sets of meanings and understandings. These practices occur in particular places and hence create socio-economic geographies. Consequently, rather than the resource curse being a ‘natural’ condition, it can be conceptualized as a mode of governance which involves coordination between domestic and transnational elites to secure access to resource revenues or rents. Because of the inequality and exclusion associated with this bargain, instability and conflict often arise in Africa and elsewhere.

While the developed world, in general, experienced continued economic growth from 1980 to 2000, average incomes in SSA, despite its rich resources, declined by about 15 per cent (Weisbrot, Baker and Rosnick 2007). The manifest failure of Africa to develop economically despite the implementation of market-led reforms across the continent has led to a new focus in mainstream work on the ‘new economic geography’ to explain the continent's underdevelopment. This new economic geography often uses sophisticated mathematical models, but its core ideas can be easily explained, and, while they seem intuitive, they are misleading.

Paul Krugman won a Nobel Prize in 2008 for his work on how economies of scale, whereby bigger factories are more efficient, can lead to uneven development (Krugman 1991), a fact long known to economic geographers, whereas Jared Diamond, initially trained as a biologist, in his work has argued that initial environmental conditions explain developmental divergence across continents (Diamond 1997). These two strands of work have recently been brought together by other economists and development institutions to explain Africa's general developmental failure. However, this chapter argues that current explanations for African underdevelopment by some economists and the World Bank have a number of critical flaws, as they are largely ahistorical and neglect the global politics of power and inequali...