By Isobel Frye
The dream of Africa Rising often seems to be a delusion rather than a realistic goal.
With the regular battering of natural disasters seemingly intent on wiping out pockets of success, global markets hostile to African goods, gross inequalities and poverty and conflicts that seem to be self perpetuating, the future for African children looks far from positive.
But if we reach beyond and above the global narrative of Africa failing, and begin to build things that are about us, for us, we may begin to see a brighter, bolder vision for the continent.
The 2021 edition of the UN Economic Commission for Africa’s Economic Report on Africa launched in June this year estimates that the direct and indirect impacts of the global Covid-19 pandemic “reversed more than two decades of poverty reduction on the continent”.
The most affected are people who operate mainly in the informal economy, mostly women, people living with disabilities, refugees and displaced people. The report notes that the GDP of the continent shrank by 3.2% in 2020 as trade and free movement of goods and people were severely affected by diverse national lockdowns.
Hanan Morsy, deputy executive secretary ECA, said at the launch of the report that the extreme vulnerabilities to exogenous shocks as unrelated to African countries – like the Ukraine war – calls for the increased roll-out of social policies and safety nets.
And the terrible damage wrought by the increased natural disasters, exacerbated by climate change to life and property, devastates.
Quite a different conclusion, however, was reached by the World Bank Group’s Accelerating Poverty Reduction in Africa report. Published pre-Covid in 2019, the report notes three African vulnerabilities: a lack of domestic revenues, exclusion from markets and a dependency on commodities.
The report rather coyly brushes over that a solution to Africa’s poverty cannot lie in increasing the taxes of the “non-poor”, or imposing “implausible natural resource revenues”.
What is interesting is that the report manages to shoe- horn reference to “direct dividend payments” of natural resource revenues directly to citizens, like the Alaskan basic income dividend to residents from their oil revenues.
But having mentioned this option, the report then states that this is not something that can be done other, than theoretically, in Africa.
The report’s preferred policy solutions are fourfold: impose birth control (or “accelerate the fertilisation transition”) to reduced population growth; leverage food production by taking yield to scale; mitigate vulnerabilities by introducing some private sector insurance products; and, finally improve the problem of lack of finance by tightening legislation to prevent illicit financial flows of profits, look to ODA inflows, and improve government spend of what local taxes can be raised.
So instead of taxing the wealthy and multinational (mining) corporations or MNCs, the authors propose the above four policy steps.
Looking back over 2022, four areas of vulnerability across the continent come to mind; the “four Cs”.
- Climate change
- Commodity dependency
- Colonial extractive legacy issues, and,
In considering the increased vulnerability to climate change catastrophe, it is positive to note the success at COP 27 at not only advancing the adaptive and mitigation agenda, but the “loss and damage” commitments by which developed countries committed to give assistance to developing countries hit hard by the adverse effects of climate change.
Of course, this is no acknowledgement of liability for causation of damage, and the assistance is limited to technical assistance rather than loss of income or full restitution to ex-ante levels, but it does open the door for causality arguments that might lead to real compensation if there is a future shift in the balance of power.
The dependency on commodities is rather ironic, as the “scramble for Africa” was a scramble for these commodities by mercantile colonial powers to begin with.
However, while illicit financial flows through activities like base profit shifting and transfer pricing should be better policed, there could be an introduction of specific taxes to penalise the export of non-beneficiated raw materials by mining companies that prospect and mine in Africa.
This means charging a premium unless the MNC created some level of local production and manufacture to beneficiate the materials before shipping them off to other countries to perform the same task.
That would develop a manufacturing base and bring employment, financial investment and a host of secondary economic activities in the countries of origin of global commodities.
More governments could also establish sovereign wealth funds to capture commodity price windfalls.
The legacies of colonial extraction, or predatory behaviours, continue to dominate the unequal trade relations between Africa and the north. A solution is emerging in the growing coherency in organising trade and development regional blocs in Africa, between African countries and also other developing regions.
As food becomes increasingly scarce, how Africa prices and to whom countries sell could be used collectively for more beneficial terms of trade. And the Africa Free Trade Agreement Act is an idea that has already begun to advance some of these suggested gains.
And finally, conflict. The north delights in pointing out the existence of fragile states and unconstitutional regimes changes in Africa, without ever conceding the role of foreign agencies, such as the CIA, in political coups, foreign funding for insurrection and foreign mercenaries, such as Mark Thatcher, operating on African soil.
The fact is that conflict is bad for people, for women and children and families, for development and fundamental freedoms. At the heart of conflict is often a fear of scarcity that is manipulated by those seeking power.
To establish decent permanent income security through social protection scheme, funded possibly in part by the proposed non- beneficiation extractive tax, by ODA which should be seen as northern reparations and by taxing domestic elite wealth.
These schemes will, in years to come, become largely self-funding as the generational developmental dividends pay off. The first step in this direction has already been taken with the development of the African Commission’s Draft Charter on Social Protection and Social Security, which currently is seeking ratification states.
During his talk at the launch on December 13 of the Final Report on Basic Income Security (including the feasibility of a Basic Income Grant), commissioned by the Department of Social Development and the ILO, chief author Professor Alex van den Heever remarked that if Sweden, the bastion of stability and prosperity, didn’t have as redistributive a social security system as they did, Swedish inequality would lie close to the levels of inequality in South Africa.
The Swedish system was introduced just over 100 years ago when the country was facing poverty and starvation, forcing families to emigrate to survive, many to the USA.
Isobel Frye is the Executive Director of the Social Policy Initiative.