Is it really time for Africa? Prospects for Africa’s Inclusive Transformation

Dear Friends,

Good day. I have all along written about all sorts of interesting subjects (well from my perspective) but today I have decided to share and discuss with you what you may consider a technical issue- the problem of illicit financial flows. It is my hope that I do not lose you, but I think it’s essential to share on this issue. In part two I will focus on a possibilities of a new development compact that is based on already existing conversations taking place across the continent.

Regards,

Tendai

Is it really time for Africa?
Prospects for Africa’s Inclusive Transformation
Part One

It is conservatively estimated that Africa loses approximately US$50 billion annually through Illicit Financial Flows (IFFs). The AU/ECA’s High Level Panel on Illicit Financial Flows report and other studies argue that Africa has lost in excess of US$1 trillion through IFFs in the last 50 years- an amount similar to the Official Development Assistance that has been poured into Africa over the same period.

Many, including ourselves at TrustAfrica, have always been suspicious of the over dramatized narrative of ‘Africa Rising’ especially as it mostly uses Gross Domestic Product (GDP) as the measure of growth. Other Human Development indicators such as Gross National Income (GNI), access to affordable health care, education, and decent jobs are rarely a part of the ongoing optimism surrounding Africa. Whilst GDP growth has indeed been above an average of 5% for most of Africa- rarely do we get studies that pay significant attention into the structural organization of African economies and the manner in which the continent is inserted into global financial circuits especially the extent to which the commanding heights of the economy are dominated by multi-nationals whose primary mission is to extract maximum value for their shareholders who are mostly in jurisdictions outside of Africa and also the fact that very limited value addition takes place on the continent. The current growth cycle (although slowing down) is driven largely by a global commodity super cycle fed by resource hungry China and India. Others have also identified the major leaps in the telecommunications industry as explaining the growth. Enterprises engaged in the production and trade of the commodities (mining and agricultural) are large multinationals mostly domiciled outside of Africa and in most cases enjoy tax holidays, revenue repatriation arrangements and relaxed labour laws- the hallmarks of an investor friendly policy mix. Revenue repatriation agreements allow companies to officially remint their revenues to the head office- this practice is NOT part of IFF but provides a necessary background.

Beyond the benefits cited above these large companies in mining and agriculture are the drivers of illicit financial flows. They mostly work closely with a corruptible African political elite. According to the AU/ECA report the most common practices include trade mispricing entailing under-invoicing of exports to allow for significant amounts of foreign currency to be lodged outside of the country of origin of the goods being exports, exaggeration of import values to again allow foreign currency in the company’s FCAs to be used for purchasing of capital goods and general tax avoidance schemes. The actual IFF processes are very complex in nature and please visit http://mgafrica.com/article/2015-06-24-africa-the-billions-that-got-away-ebook for a more detailed expose on how these resources are being siphoned off- except to restate that Africa loses approximately US$50 billion per year. Please note that currently only 8 out of 54 countries have a GDP above US$50b- which makes this matter even more serious.

The conversation on IFFs is probably ten years late- we are reaching the end of the commodity super cycle which has been the reason behind the dynamic growth which we have commonly referred to ‘Africa Rising’ We actually risk having very little to show for the huge exports of commodities since the turn of the century. We should have been quicker to pick this up. Unfortunately, we are nowhere close to poverty reduction despite the positive economic growth and also the often-cited statistic about mobile phone penetration- as if that addresses material consumption needs. What we have instead witnessed is the widening of the gap between the very few rich and the many poor. Interestingly there is a huge focus on the growing middle class instead of also the equally if not faster growth of groups living on less than a dollar a day at the Bottom of the Pyramid (BoP).

Human development, inclusive of access to quality health provision, education, jobs and decent standards of living remains an unattainable goal for many on the continent. The benefits of the current growth cycle have mostly been limited to those at the top of the income distribution and has been highly unequal. The number of Africans perishing in the Mediterranean trying to cross over into Europe in search of greener pastures continues to grow every year. We have also learnt that we need approximately US$50billion annually to fund infrastructural projects in a context of stagnating of declining Official Development Assistance (ODA).

The AU’s Agenda 2063 singles out improved domestic resource mobilization as a key pillar for Africa’s sustainable and inclusive development. It is in this light that we at TrustAfrica alongside our friends and partners within civil society are calling for a new development compact underpinned by values of transparency, accountability and equity. We are working towards collecting a million signatures against an opaque global economic system that accommodates IFFs. Africa cannot afford to lose another single dollar through IFFs. It is morally reprehensible for economic actors to continue engaging in these harmful practices at the expense of the continent’s future. We have to create sufficient public anger and an outcry for the immediate end of these practices. Our governments and regional processes should play their part in ensuring that adequate mechanisms and laws are fast tracked to ensure compliance with the new thinking- Africa (especially her youth) deserves better!

Introduction to the Commons 4 Development

Oral tradition has it that every society had its place of meeting- it was either the big Msasa tree in the middle of the African village or the City Gate if you were in the ancient Greece or even Israel-the concern and focus of these forums was to create solutions together in a consensual manner. This is where the idea of the physical commons originates- land used collectively. However, with development and individualisation- the ideal of a common space has also dissipated- our production, accumulation and consumption is now individually organised. I am not about to propose that we go back into that mode of collective production but rather I am proposing to appropriate the concept of the commons and to re-integrate a new common- this blog site- for all of us- who care and are enthusiastic about contributing towards Africa’s development- this is our space.

I propose that we think outside of the usual framing of the questions/constraints and instead see opportunities for pioneering thoughts/ideas for the transformation of our Africa. I am not naive about the complexity of development- but if we do not try to simplify it- I can assure you we will not even get started. Let’s try to break it into sizeable chunks- what can I do as an individual, what can my immediate community do and also what can my generation do. I believe there is a lot that we can do. I invite you to be a part of what I am loosely referring to as the coalition of the willing (CoW). In my first blog entry I discuss a variety of issues that demonstrate the extent to which we have not necessarily exercised ownership over the challenges that we face and also in crafting our own solutions-I am anxious for feedback before we talk about the ‘switch’ idea.

Let’s talk!!!


What If?

Its 6:12am on Saturday (20.10.2012) and I am climbing Mt Ngomakurira, approximately 27km North East of Harare and I keep on asking myself where did this madness come from. The mountain is mostly a steep granite dome and I am literally climbing using both my legs and hands. This is very unlike me- a couch potato of note,  I always drive within the speed limit, double check that the doors and gates are locked before going to bed (to the point of irritation), pay bills on time, only spend what is budgeted for-the cautious one you would say and definitely not an adrenalin junkie. However I decide then, when I realise that there is no going back except up, to learn the broader lessons of why I am on this hike.

The first lesson- we (myself and the rest of humanity) can climb any mountain no matter how steep if there is no other way. The second lesson- we all have our mountains to climb-it’s better to know yours and begin preparing to overcome it. When I reach the peak (definitely a scene to behold) – I have a new inspiration which I will call for the purpose of this entry- What if? Like Martin Luther King Jnr I dare say that I have been to the mountain top and I have seen the promised land and I will briefly discuss a different daring approach to overcoming Africa’s (in particular Zimbabwe challenges) in a conversational way[1] and will obviously simplify certain discussions which may infuriate colleagues in academia but please bear with me-maybe it’s the antidote we all need!

What if development-lets for now say entailing the movement from the bottom to the top (literally like climbing a steep mountain) is seemingly insurmountable but can be done based on willpower  expressed as desire to identify and overcome the odds stacked against us- taking the challenge head on.  A colleague who has been a working as a consultant on development for close to two decades said the majority of us Africans have a challenge of ownership-that is we do not exercise ownership over the problem (especially the reasons behind it) and also have no ownership over the solution. In other words the problem of Africa’s poverty or under-development for instance is due to colonialism, Structural Adjustment Programmes (SAPs), skewed trade patterns, inadequate aid ( I agree to all these) but never about our ineptitude, inefficiencies, corruption and weak systems of administration. At a solutions level- the problem is with the half-baked solutions prescribed for us in the form of ESAP, aid based interventions, inconsistencies of Foreign Direct Investment (FDI) and the list goes on- but the bottom line is we are not the problem and we are not yet a part of the solution. In my country (beloved Zimbabwe) the problem is ‘foreign imposed illegal sanctions’ (just listen to the news on radio and the rhetoric from the politicians!). It sounds like if sanctions were removed today there will be an overnight success in an every area of our lives- even the streets will be without litter!

What if we start by looking closely at what Michael Jackson called the ‘man in the mirror’- ourselves! Let me build my case by looking at an example of a typical individual who has fallen on hard times due to a combination of factors like our beloved continent. The most likely course of action from such an individual includes a trip to the prophet from the Vapositori sect and also the few evangelicals (have you noticed how the prophets have grown in number- am not sure if the nation of Israel ever had such a large number of prophets at any single time) or seek help from a close relative/neighbor. I want to focus on the visit to the prophet[2] for a bit. When one consults  with these spiritual sage he/she is told that the problem does not lie with the individual but it’s (in many cases) due to jealous relatives who do not want he/she to succeed (some go as far as naming the individuals concerned and you can imagine the animosity that arises). Thus the problem is not due to lack of planning, discipline, avoiding excesses such as wasting money on alcohol, need for integrity and honesty, etc on the individual’s part but it’s an external curse and the solution does not require behavioral change. The solution mostly has to do with the process of ‘kushandirwa’- literally translated to mean ‘to be worked on’ –cleansing and reversal of the ‘curse’. If the situation has not changed after a certain period one moves to the next ‘better’ prophet based on recommendations from others. The need for ownership of the problem and the solution does not come into play. The cycle continues until well into old age and the same problems of irresponsibility are passed onto the next generation-what have we learnt?

What if we owned the problem? What if we agreed on the fact that for every problem such as poverty, food insecurity, etc that we face as society the problem could be us and also the solution should come from us. Surely 50+ years after independence Africa should be in a better place than where we find ourselves especially if we consider the fact that countries such as South Korea and Singapore which received independence at the same time with Ghana were in a worse state of poverty than many African countries including Ghana. I hear you say cold war dynamics and context, maybe, but please do not discredit their agency in the form of defining a vision and pursuing it through ingenuity and also yes playing one super power against the other. Who said Africans should not use the same tricks for their development-rather we used them for regime perpetuation. What if we agreed to the fact that we (collectively) have wasted time and need to, for the sake of the next generation, unlearn certain habits, take ownership and get on with the business of development at a quicker pace?

What if we started by owning up that we have also been a huge part of the problem all along? Herbst and Mills in Africa’s 3rd Liberation argue that this indeed is [potentially] Africa’s moment if only we could move away from a redistribution mentality towards growth. Redistribution is not entirely a bad process- it potentially contributes towards building an equitable base for growth but remember potential is that unrealized capacity/energy. Countries such as Malaysia, Taiwan and South Korea built their fast growing economies after a massive redistribution of land. We need to move to the next phase of growth by deliberately growing the size of the cake and not the vulture like approaches where we circle on any entity that seems to still have life in it and pontificate on how it needs to be indigenously owned.  Yes let’s own it but also remember nurture it to grow – the current cake was never meant to serve all of us- it was part of the enclave economy. Currently growth, in my native Zimbabwe, seems to be an after thought- it will happen once we have taken over the commanding heights of the economy.

What if we focus on growth based solutions? Where shall we start-maybe by designing workable inclusive and equitable growth strategies? How about improving food availability as our priority for the next 5 years across the continent? I think its criminal that in a continent of such land abundance millions still go to bed hungry-maybe that’s why people don’t take us seriously. Achieving food security for all should be the lowest policy demand in our countries and from a practice perspective it is the lowest hanging fruit if we are properly organised.  Surely farming is a centuries’ old business in the continent and it’s definitely not rocket science- we do not need external expertise to teach us to farm. BUT yields have been declining since the 1990s, fertiliser and treated seed usage have decreased across the continent- is it a race back to the dark ages? What if our governments followed the example of Malawi under Bingu wa Mutharika and intervened through subsidies and extension support? If Malawi can increase its yields by over 200% in a space of 4 agricultural seasons- what would happen if all of Africa followed the same example-just imagine.  A colleague once said that, ‘you cannot begin to address the national question before the food question’. Failure to come up with improved agricultural systems that contribute towards food security is an indictment on the present leadership and is wickedness of the highest order.

What if we followed the path of least resistance[3] in terms of addressing the higher order development questions?  Related to this question is agreeing to the obvious fact that the state has not been a reliable partner for development in Africa. Rather it has been used as an instrument of accumulation by the governing class. What if national entrepreneurship is the missing link to Africa’s development?  Rarely has this group been engaged as a partner with development obligations. I have been following the ‘Against All Odds’ series on TV and through it I have learnt how African entrepreneurs have and are struggling to become established-and it is their persistence or grit if you will call it that is needed in all our transformation process. Their exclusion from the national development discourse has left the terrain poorer because of the missing insights-from their struggles. Furthermore, beyond engaging them there is need to find ways of developing entrepreneurship in Africa. Currently entrepreneurship takes on many dimensions but the majority exists in the informal sector-what if all we needed (at least for now) was to facilitate the conversion of at least 30% of these informal entrepreneurs into formal enterprises employing at least 10 people at a time through a process of picking and supporting winners? What if these are the simple solutions that we need to devote energy towards rather than the polarizing party based politics currently dominant within our polities.  I could literally go on developing the scenarios but the point is we have made development to be such a complex phenomenon and in the end we are so paralysed by the BUTs to every situation and we do nothing about it except analyse and dismiss every new idea[4]. Only in Africa do you find such a pessimistic narrative which destroys the possibility of a ‘can do’ mentality-we are so smart in showing how it cannot be done. Whilst in other cultures innovation and progress are coded even in their everyday language- proverbs such as ‘a pathway is created by walking on it several times’ serve to encourage persistence, perseverance and above all embarking on a new path rather than staying on the old road travelled by others.

What if all we need is a mindset shift? In May 2012 I taught at a Church business school on a series that I entitled ‘Chinja Mnyathi’ loosely translated it means changing the mindset. The series was focused at exploring opportunities that exist at what is popularly referred to as the Bottom of the Pyramid (BOP)-essentially those who live on less than US$2 a day. The core message of the series was that there is need to rethink business approaches in markets associated with poverty- those that used to be seen as a welfare segment have a capacity to demand certain products if they are priced and packaged right. Traditionally this segment has been seen as not capable to demand and consume business solutions and products but lessons from Asia (especially India and Bangladesh) have shown that the same category of people has an apetite for properly priced insurance, banking services, food products, etc. If they are good for business they surely have a narrative around the politics and public goods that they want. In the same manner that the business community is being encouraged to re-think their approaches there is need for the development and political community to also re-think citizen engagement[5].

Finally what if we agreed that poverty and underdevelopment was our problem- what we would do? I know the magnitude of the problem and the obligation thereof is intimidating and it’s tempting to, ostrich like bury our heads in the sand- hoping that we are hidden and the problem will somehow go away. Let me give an example of this denialism. Mawoko ane Tsitsi (Hands of Mercy) is a small NGO that was established in 2005 to serve the needs of single women living with HIV/AIDS in the low income areas of Harare.  The organisation has since its inception distributed nutritional supplements to infants whose mothers cannot breast feed and also ensuring that HIV/AIDS positive women have access to ARVs through partner organisations. The impact of these simple interventions has been very apparent in terms of avoiding cases of malnutrition and also ensuring access to ARVs. However the NGO is on the brink of closure due to lack of resources. The organisation has since inception received financial assistance from contributions made by churches in the UK. The current economic decline in Europe has contributed towards the shrinking of giving within the churches. In the meantime Zimbabwe’s economy has been recovering (albeit slowly)- just take a look at the new luxury vehicles on the roads, the construction of double storey homes in the leafy suburbs and the proliferation of shops selling imported luxury items[6].  There is a steady emergence of a black middle class engaged either in business or in professional services. Yet we are about to allow an NGO that is taking care of our relatives and neighbours to close down –am I my brother’s keeper or it’s the responsibility of a stranger somewhere? A very close friend of mine based in the UK-recently visited home and in a discussion, he told me that he is disappointed by the International NGOs operating in Zimbabwe because they have not made a dent on poverty in his area. NGOs are weak- fair enough- but for us to go to the extent of abdicating our responsibilities in developing our own communities and waiting for NGOs is the irresponsibility of the highest order –me thinks. I made that very clear to my friend.  Isn’t it true that the majority of overseas universities are thriving due to significant financial support from their alumni? Where are the alumni from African universities? What if we took ownership of our own communities and institutions rather than expecting someone else from distant lands to ‘develop us’ and when they speak into our affairs- its donor meddling. What if we also showed up with the little, we can mobilise and began a new movement of African philanthropy?

In conclusion- how are we different from the individual described above- haven’t we moved from one potential donor or investor to the other- with our begging bowl- and when the situation did not change, we moved to the next potential partner-with no clarity of what we really want. There is more to ‘what if’ but the core message is let’s not be comfortable with the tried and tested path- there could just be another way. I have been to the mountain top; I believe I have seen the Promised Land, and it belongs to the willing- what I will call the Coalition of the Willing (CoW) those who will not rest until we have seen a different Africa. It is there and at the least it requires us to change our mindsets and embrace the challenge head on, disentangle ourselves from the constraints of theory, forge and create new paths and partnerships of equality. What if it’s the mandate of this generation?

In the next piece I will look at what a close colleague has called the switch idea- literally what will it take to realise what others have called Africa’s time- surely it wasn’t just about us hosting a World Cup. Others have called it the next frontier of investment- but what exactly are we doing as Africans besides leasing/selling our land, signing mining deals. I don’t mean to be negative but the good stories should not be the outliers but should be the mainstream. I hope to capture some of the good stories as well-just to show that it can be done!!! At least an African is saying these things so we can’t say- ‘it’s racist’- so long everybody!

[1] For a more scholarly debate on the topics raised in this entry please look out for our forthcoming Murisa & Chikweche; Zimbabwe: The Decade Ahead, Challenges and Prospects- A Multidisciplinary Learning Process

[2] A recent study by UNICEF has shown that the Vapositori sect in Zimbabwe (a fusion between African tradition and a certain form of Old Testament Judaism) has grown to an extent that at least a third of the population belongs to the sect or have consulted prophets from the sect.

[3] Again something I learnt vividly during the climb to the mountain. There are visible ‘pathways’ on the granite which one is tempted to use-but that is the path of least resistance for water flowing from the top and to my dismay its very slippery-the moral- do not follow already established paths but develop your own.

[4] See for instance how pro-poor microfinance has been given all sorts of negative terms by Africa’s intelligentsia.

[5] Paulo Freire’s Pedagogue of the Oppressed maybe a good start for unlearning old habits and taking on the new.

[6] There are at least 6 Apple and Samsung shops in Harare alone and South African retail giants, Edgars, Pick N Pay, Spar and Shoprite have increased the number of their stores.