With a net annual deficit of $41.3 bil., it is time to rethink the terms of trade.. theft of #Africa*ns’ wealth
Nowadays the issue of migration has captured the eyes and ears of European countries. It has been the main topic in every electoral debate; it has also forced a shift in their foreign policies. Voices echoed calling for a new strategy aiming at Africa’s economic development. On this issue, the German Ambassador, Andreas Zimmer, stated in his speech on Germany’s Reunification Day held in Asmara on October 24th that the year 2017 is Africa’s year by making the continent a priority.
At the end of 2016, the German Chancellor, Angela Merkel, called for the “Marshall Plan with Africa”. An interesting approach that Germany is pushing forward aiming at bringing to an end the exploitation of the continent’s rich potential. The plan, initiated by Germany implies more investment rather than official development assistance. Creating a Marshall Plan with the continent for the purpose of stopping the ongoing exploitation of the continent is a matter of debate. As this topic intrigued me, let’s see today if such an approach is in any way different and possible in shifting the actual “perplexing situation” of the continent, as put by President Isaias Afwerki in his recent interview regarding the African continent.
To start with, what is a Marshall Plan? Looking back into history, Marshall Plan for European economic recovery was implemented in rebuilding a war-torn Europe after World War II at Bretton Woods, United States, in addition to finding a strategy to ensure that the Great Depression of the 1930s wouldn’t be repeated. Under the lead of the US, three Bretton Woods’ financial institutions were created. The International Monetary Fund (IMF), the International Bank for Reconstruction and Development – the actual World Bank- and the General Agreement on Tariffs and Trade (GATT) were signed in Bretton Woods. In line with it, Europe came at the centre of the US attention not only to rebuild the war-torn continent but to also curb the Soviet’s threat of spreading communism. The Marshall Plan came into play in 1947. Massive financial aid was injected into Europe allowing the US to set conditions, i.e. gold standard replaced by dollar standard. Europe, and especially Germany, was able to rebuild the country quickly and reenergize the economy while the US hegemony was at its peak.
Starting in 1950’s many African countries started to gain their independence. A period filled with euphoria, hope and political activism calling for Pan-African unity ensued. Lumumba, Sankara, Nkrumah are among the forefathers of Pan- Africanism. They called for an African path towards development designed by Africans with a strong focus on ensuring social services including education and health. Exporting goods, trading with other continents reflected the first few years of independence. According to Jonathan Glennie (2008), in his book entitled, The Trouble with Aid: Why Less could Mean More for Africa, newly independent African states had a per capita income growing at 36% during the period of 1960- 1980. “Between 1960 and 1975 nine of the world’s fifty best-performing countries were in Africa” (Glennie 2008:10).
However, by the late 1970s, situation started to change with the end to convertibility of dollar to gold at $35 per ounce (Woods 2006:328). Currencies started to float, economic recession started to hit and it was the beginning of the end of the Bretton Woods system. Western countries signed trading agreement calling for more protectionism on agricultural products among others commodities. Africa, on its side, was the primary victim of such changes with less favourable agreement of trade; many were pushed towards borrowing money from financial institutions. Africa didn’t enjoy a Marshall Plan type of economic recovery as Europe but instead harsh conditionality imposed by the IMF and the World Bank as a result of which the continent continues to suffer today. Forcing newly independent countries to open up to international trade, cutting expenses on social services, depending on heavy imports of goods have led to conflicts and deepened crisis, and poverty. African states were heavily dependent on those institutions supposedly there to help but instead created neo-colonial relations.
The policies imposed on the continent in the 1970s and the 1980s continue to impact on today’s state of affairs. In the 1990s, many called for more aid to help “poor Africa”. Sending more money and more money was the motto. Charity groups and non-governmental organizations (NGOs) started to rise dramatically. Building schools or helping an orphanage was the trend. According to a research by Mark Curtis et al. (2017:2), Honest Accounts 2017: How the World Profits from Africa’s Wealth, the continent received $161.1 billion in 2015 in the form of loans, remittances and aid whereas about $203 billion was taken away from the continent mainly by corporations, illegal movement of money or expenses imposed by international agreement such as climate change. In addition to these alarming figures, Honest Accounts 2017 shows that “about $29 billion a year is being stolen from Africa in illegal logging, fishing and trade in wildlife/plants”. With a net annual deficit of $41.3 billion a year, it is time to rethink the terms of trade and how to drastically shift the ongoing theft of Africans’ wealth. Many voices in Africa are calling for reform and changes in economic relations between Africa and the rest of the world. Would a Marshall Plan with Africa be a solution to this ongoing exploitation?
The idea is quite interesting and intriguing at the same time. Is it really about boosting development efforts of the continent? Or is it more about curbing the current issue of migration? In fact, Ambassador Andreas said, in his speech last Tuesday, that there are about 20 million youth entering Africa’s labour market each year and face unemployment. Probably the current security concerns are also pushing Europe to find solution through cooperation. But Europe should look at African states as partners and understand the characteristics and contextual framework of each African state rather than treating the continent as if it was one country.
Further, globalization has created a system of interconnectedness where movement of people and information are eased. Media outlets are selling the living dream in Europe or elsewhere while showing hungry African children to the others. Globalization has also impacted security; terrorism and civil unrest are not now confined to the poor but are at the doorsteps of OECD countries combined with high influx of migration, creating sentiments of protectionism, extremist ideas and xenophobia. Therefore, is the concern more about curbing those problems? Or about finding a solution to the current issue of the continent’s 793 million people who live in poverty (AfDB 2003)? As Andrew Green (2017) also wrote in his article Germany’s Marshall Plan with Africa, the plan comes at a critical juncture as the African continent is expected to increase dramatically its population by 2050.
The fact that Eritrea’s independence, which was fought for and won, came way after the independence of most African countries. It allowed Eritrea to analyse and shape its policies by learning from its African counterparts on do’s and don’ts. As a result, the country focuses on internal development by respecting the phases of modernization, i.e. engaging the people, providing health and education services nationwide, prioritizing agriculture and food security among others. These were barely existent in many African policies due to the conditions of lending imposed on them which included liberalizing the economy and privatising social services.
Hence, the continent, despite its sufficient resources to feed its own population, continues to be a continent in despair. Calling for cooperation in developing job opportunities, vocational training and social services are on the agenda of policy makers. Injecting money for economic development under a Marshall Plan is probably the continuity of previous policies, creating further dependency as, to some extent, Europe still remains to be towards the US. The Marshall Plan with Africa may look partnering rather than assisting the continent, but it is most likely that it will serve the interests of the developed world.
Cooperation through know-how, technology and investment are the best approach while putting a strong focus on youth development. However, all the goodwill of cooperation would need to be reformed by starting from an inter-state approach. African states should own their destiny rather than waiting on external forces to teach them on best practices. Africa has the potential of becoming the greatest continent, but the key instrument towards it is political will and shifting the mentality of “gaining power at all cost” towards “partnering for development”. It is only then that relations with Europe and other parts of the world would become beneficial to African states and dismantle the enduring system of exploitation.