A Continent in Crisis
Africa and Globalization
by Sunday Dare
Dollars and Sense magazine, July/August 2001
From the oil fields of the Niger Delta in Nigeria, to the
diamond and copper fields of Sierra Leone, Angola, and Liberia,
to the rich mineral deposits of the Great Lakes region, to the
mountain ranges, plains and tourist havens of the East African
countries, the continent of Africa is undoubtedly blessed.
From these blessings, however, much sorrow has flowed. During
the colonial era, most Africans did not benefit from the continent's
resources. African economies were geared toward cultivating raw
materials for export, and roads, health care, and other infrastructure
were available only in areas where those materials were produced.
The end of colonialism unleashed struggles for political control,
social emancipation, and access to resources - struggles that,
in turn, have degenerated into conflicts and internecine wars.
Retarded in their development, unbridled in their lust for power,
steeped in official corruption, chaotic in their political engineering,
many African states are now sprinting toward total collapse.
Much of the blame for Africa's spiral of violence belongs
to generations of opportunistic and venal African leaders, who
have done little to develop their societies and emancipate their
peoples. But the expansion of corporate dominance has accentuated
the steady descent into near economic strangulation and political
chaos. Many transnational corporations (TNCs) have acted as economic
predators in Africa, gobbling up national resources, distortlng
national economic policies, exploiting and changing labor relations,
committing environmental despoliation, violating sovereignties,
and manipulating governments and the media. In order to ensure
uninterrupted access to resources, TNCs have also supported repressive
African leaders, warlords, and guerrilla fighters, thus serving
as catalysts for lethal conflict and impeding prospects for development
TNCs AND THE AFRICAN STATE
In the post-colonial period, many African leaders have exerted
dictatorial control over their societies. Through their undemocratic
policies, they have spread dissatisfaction among the people, which
has manifested over time in nationalistic feelings and even popular
rebellions. These political tensions, in turn, have generated
fierce conflicts over resource control.
In response to these conflicts, many African governments have
embraced collaboration with TNCs and other foreign investors.
Lacking the technological capacity to harness massive reserves
of oil, gold, diamonds, and cobalt, these leaders grant licenses
to foreign corporations to operate in their domain, and then appropriate
the resulting revenue to maintain themselves in power. For example,
both the late General Sani Abacha of Nigeria and the late Mobutu
Sese Seko of Zaire looted hundreds of millions of dollars in government
funds derived from corporate revenue, stashed the money in private
foreign accounts, and used it for political patronage and to silence
In turn, these authoritarian governments have stifled economic
growth. Frequent changes in leadership through coups d'etat have
made it impracticable to implement development plans. Each new
government comes in with a new set of policies that often undermines
earlier progress by previous governments. Also, many African leaders
have used revenue to reward political pals with bogus contracts
for white-elephant projects that contribute nothing to development.
In the late 1990s, for example, President Daniel Arap Moi of Kenya
built an airport - which handles almost no traffic - in his own
hometown of Eldoret. And of course, money used as handouts to
members of the ruling elite and to fight political opposition
is money not spent on development.
After decades of economic mismanagement and political gangsterism,
most African societies are in terrible shape. African unemployment
rates are at crisis levels, with over 65% of college graduates
out of jobs. Because manufacturing is at a low ebb, unskilled
workers suffer a similar fate. Wages are also low. According to
the United Nations Development Report, the average unskilled worker
earns about 55 cents daily, while the average white-collar employee
brings home a monthly check of between $50 and $120. Many African
societies are characterized by minimal opportunities for education
and self-development, collapsed infrastructure, and a debilitating
These conditions have made the continent even more susceptible
to international financial control. Typically TNCs seek out societies
with low production costs, poor working conditions, and abundant
and easily exploitable resources, where profits can be maximized
and repatriated without legal constraints. The icing, of course,
is a political leadership that is weak, corrupt, and ready to
cut deals. TNCs make huge investments in countries that meet those
criteria, and many African countries fit the bill.
ECONOMIC EXPLOITATION IN AFRICA
The sheer growth of TNCs in recent decades has had profound
consequences for Africa. The average growth rate of TNCs is three
times that of the most advanced industrial countries. Of the 100
biggest economies in the world, more than half are corporations.
TNCs hold enormous power to transform the world political economy,
and Africa's vast resources, cheap labor, huge population, and
expanding markets are crucial to their plans.
The globalization optimists maintain that global capital has
served as a dynamic engine of growth, opening the window for diverse
opportunities in terms of goods and services, creating employment,
and boosting government revenues. This has been true in a few
cases. In South Africa and Nigeria, for example, gold mining and
oil companies respectively have brought new technology. attracted
subsidiary industries, and made it possible for indigenous personnel
to acquire skills.
However, any such benefits are far outweighed by activities
that deplete local resources, stifle local or indigenous industry,
and subvert the fragile democratic process. Africa is still confined
to the role it played in the industrial revolution(s) that preceded
globalization. Its raw materials are still being depleted without
In addition, the continent's increasing dependence on imported
capital and consumer goods and services has left various sectors
of the domestic economy comatose. African markets are specially
targeted as dumping grounds for new and second-hand goods. Because
of stiff competition from these products, infant manufacturing
established earlier in Africa has quickly withered away. For example,
imports of used clothing from the United States are threatening
to destroy Kenya's domestic textile industry.
Finally, as soon as the TNCs have African economies firmly
in their grip, they deploy funds and patronage to manipulate the
media and influence government policies. Governments, in turn,
grant them carte blanche to sidestep labor and environmental laws.
Other global institutions have contributed to the deregulation
of African economies. The Generalized Agreement on Tariffs and
Trade, the World Trade Organization, and the International Monetary
Fund (IMF) all promote increased liberalization of international
trade. The IMF's structural adjustment programs (SAPs) require
African states to freeze wages, devalue currency, remove public
subsidies, and impose other austerity measures, which have brought
about even greater unemployment and under-utilization of productive
capacity. These policies have caused considerable turmoil in Africa.
In the early 1980s, Uganda was rocked by weeks of demonstrations,
as industrial workers and students took to the streets to denounce
President Milton Obote's IMF-imposed economic program. In 1990,
Matthew Kerokou of the Benin Republic in West Africa was swept
out of power in a wave of anti-SAP riots.
CORPORATIONS AND LETHAL CONFLICT
At the advent of the new millennium, Africa is hurting badly.
Most parts of the continent are embroiled in independence wars,
ethnic conflicts, violent wars for political and resource control,
and cross-border conflicts. In a recent study of armed conflicts
around the world, the University of Maryland's Center for International
Development and Conflict Management found that 33 countries were
at high risk for instability. Of these, 20 were in Africa.
In their quest to unravel the forces generating conflict in
Africa, human-rights groups are closely scrutinizing TNCs. TNCs
are not always responsible for the genesis of the crisis. But
some of the deadliest conflicts that litter Africa's political
landscape, at least in the last decade, can definitely be traced
to the expansion and domination of TNCs.
This is especially true in extractive states where resources
with global appeal, value, and markets are found. While the state's
interest in generating revenue from these resources coincides
with that of the TNCs, the latter's interest in maximizing profits
conflicts with the welfare of the citizens. Thus, the state is
caught between protecting a vital source of revenue, and defending
the rights and privileges of its citizens. Too often, the state,
in order to ensure an ongoing flow of revenue, sides with the
TNCs against the citizens.
For example, the oil-producing Niger Delta region is perpetually
at war with the government and oil corporations. For decades,
successive Nigerian governments have been beholden to the TNCs
that possess the technology, technical expertise, and capital
to exploit the country's oil. The exploitation has resulted in
serious environmental damage, developmental neglect, human-rights
abuses, economic oppression, and inequitable resource allocation.
These abuses, and the need for redress, are at the heart of the
conflict. In recent months, calls for secession by the oil-yielding
region have grown louder. As other parts of the country caught
up in oil politics fight to defend their interests, the drums
of war continue to beat.
TNCs have played a major role in the Nigerian conflict. They
gave their unalloyed support to the brutal military regimes of
Generals Ibrahim Babangida and Sani Abacha. Under Abacha, Ken
Saro-Wiwa and eight other activists were hanged for crusading
against the government and the oil companies. Officials at Royal
Dutch Shell, which dominates the lucrative Nigerian oil industry,
admitted in a press statement that the company could have stopped
the hangings if it had so desired. Shell executives also confessed
publicly to purchasing arms for the Nigerian State Police, who
have attacked community residents and picketers. Also, in 1998,
oil giant Chevron used its own helicopter to carry Nigerian soldiers,
who stormed Parambe, an oil-yielding community, and killed several
In Angola, meanwhile, the global trade in diamonds - widely
known as "blood diamonds" or "conflict diamonds"
because of their lethal consequences - has helped to perpetuate
more than 20 years of civil war. With revenue from the illegal
mining and sale of rough diamonds, the UNITA rebels, led by Jonas
Savimbi, have been able to purchase and stockpile ammunition to
prolong the war. Though fully aware of this, a number of corporations
- such as American Mineral Fields (AMF), Oryx, and the world's
leading diamond company, De Beers - continue to do business in
the war-torn territory, where more than half a million citizens
have been killed.
Also, Jean-Raymond Boulle, AMF's principal shareholder, is
known to have invested millions of dollars in support of corrupt
African governments and rebel leaders in order to secure juicy
mineral contracts. The late Congolese leader Laurent Kabila used
Boulle's jet and funds to prosecute his war against Mobutu of
Zaire. When Kabila came to power in 1997, AMF secured exploration
rights to 600 million pounds of cobalt and three billion pounds
of copper, among other deals.
Similarly, the Foday Sankoh-led Revolutionary United Front
(RUF) in Sierra Leone derives most of the funds it has used to
unleash terror and mayhem on the country's people from the international
trade in conflict diamonds. The RUF continues to fight a war that
has claimed more than 80,000 lives, with no end in sight. According
to the U.S. State Department, revenue from rough and uncut diamonds
mined in conflict areas forms a large percentage of the commodity's
over $50 billion in annual sales.
The conflicts that grip Africa can also be traced to a steady
flow of arms. To safeguard their economic interests, Western corporations
are procuring weapons and providing arms training in areas of
conflict. Embattled African leaders, anxious to defend their own
interests and protect their hold on power, readily grant contracts
to private security armies run by TNCs. Since the early 1 990s,
the growth of the corporate private security sector in Africa
has been phenomenal. TNCs have become direct parties to conflicts
by recruiting or hiring private security companies to help protect
their installations, operations and staff. In the process, they
have connived with governments and sometimes with rebels, whichever
is most expedient, thereby instigating further conflict and perpetuating
For example, in 1995, Executive Outcome (EO), a private security
company, arrived in Sierra Leone. The Sierra Leonean government
paid EO almost $40 million in cash, along with mining concessions,
to assist in its campaign against the RUF. The peace it secured
did not last; rather, the country was plunged into deeper crisis.
EO was also in Angola, training the national army and helping
to recapture lucrative mineral fields. In 1993, the Angolan state
oil company, Sonangol, contracted with EO to provide security
for its installations against UNITA attacks. The Angolan government
also signed a three-year, $40 million contract with EO to supply
military hardware and training.
In addition, J. & S. Franklin, a British supplier of military
equipment, won a contract to train the Sierra Leonean military
using the notorious U.S.-based Gurkha Security Guards. The Guards
have carried out a series of military attacks in various mining
areas to protect the activities of TNCs. J. & S. Franklin
has also won supply contracts with several other African governments
engaged in conflicts.
Clearly, where minerals abound, TNCs find the lure irresistible.
They accrue substantial profits from diamonds, which are sold
in wedding rings, bracelets, and necklaces all over Europe and
the United States. TNCs also profit enormously from cobalt, a
vital raw material for the manufacture of jet fighters. The unbridled
lust for excessive gain has deadened the senses of corporate giants
like De Beers, Royal Dutch Shell, Chevron, AMF, and others to
the damaging impact of their activities.
OUT OF THE LABYRINTH
Because of the twin problems of rogue leadership and the exploitative
tendencies of TNCs, Africa is caught between a rock and a hard
place. As the history of conflicts in Africa shows, the extraction
of mineral resources creates and reinforces government corruption,
which easily begets repressive societies. As would be expected,
poverty, unemployment, and insecurity spread, while social services
decay. This leaves the citizens more prone to take up arms and
fight in oil, diamond, and copper wars, as the conflicts in Sierra
Leone, Angola, Nigeria, Sudan, Liberia, and the Great Lakes region
How can Africa wrench itself from itself and curb the rampaging
TNCs? In response to corporations' bad behavior, and their brazen
disregard for the political stability and economic viability of
the states in which they operate, international human-rights organizations
have tried to establish mechanisms of accountability.
The key, however, is action by Africans on their own behalf.
Their options for ending the circle of violence and economic exploitation
are few but practicable. Africa needs a new generation of leaders
to define and pursue a dynamic political and economic agenda.
The African states must renegotiate their terms of trade in the
international marketplace. Diverse groups must achieve a sense
of national pride and internal cohesiveness, in order to create
an atmosphere conducive to implementing development programs.
As long as the resources have not yet been depleted, there is
still hope of rising again for a continent that has tarried for
too long in the labyrinth.
Sundoy Dare is a Nigerian journalist and Rockefeller Fellow
at Dollars & Sense.