Resource Extraction and African Underdevelopment*
Patrick Bond
Introduction: Looting Africa
Unequal trade and investment relationships are nothing new for Africa, although
in recent months the world’s attention has been drawn to the continent’s plight as
never before. However, in contrast to the strategy implied by some high-profile anti-
poverty campaigners, Africa’s deepening integration into the world economy has
typically generated not wealth but the outflow of wealth. There is new evidence
available to demonstrate this conclusively at a time when the current global-scale
fusion of neoliberalism and neoconservatism consolidates.
In fact, the deeper power relations that keep Africa down (and, simultaneously,
African elites shored up) should have been obvious to the world during 2005. It was a
year in which numerous events were lined up to ostensibly help liberate Africa from
poverty and powerlessness, to provide relief from crushing debt loads, to double aid,
and to establish a ‘‘development round’’ of trade:
The mobilization of NGO-driven citizens’ campaigns like Britain’s ‘‘Make Poverty
History’’ and the Johannesburg-based ‘‘Global Call to Action Against Poverty’’
(throughout 2005);
Tony Blair’s Commission for Africa (February);
The main creditor countries’ debt relief proposal (June);
A tour of Africa by the new World Bank president, Paul Wolfowitz (June);
The G8 Gleneagles debt and aid commitments (July);
The Live 8 consciousness-raising concerts (July);
*A longer version of the argument will appear under the title Looting Africa: The Economics of Exploitation
(London: Zed Books, 2006). My greatest appreciation goes to Joel Kovel for support during political struggles
at the University of KwaZulu-Natal in early 2006, and for extremely helpful editorial advice.
ISSN 1045-5752 print=ISSN 1548-3290 online=06=020005-21
# 2006 The Center for Political Ecology
DOI: 10.1080=10455750600704430
The United Nations’ Millennium Development Goals review (September);
The return to Nigeria of monies looted by Sani Abacha that had been deposited in
Swiss bank accounts (September);
The IMF/World Bank annual meeting addressing debt and Third World ‘‘voice’’
A large debt relief package for Nigeria (October); and
The deal done at the World Trade Organization’s ministerial summit in Hong
Kong (December).
These all revealed global-elite hypocrisy and power relations which remained
impervious to advocacy, solidarity and democratization. At best, partial critiques of
imperial power emerged amidst the cacophony of all-white rock concerts and
political grandstanding. At worst, polite public discourse tactfully avoided capital’s
blustering violence, from Nigeria’s oil-soaked Delta to Northeastern Congo’s gold
mines to Botswana’s diamond finds to Sudan’s killing fields. Most of the London
charity NGO strategies ensured that core issue areas*debt, aid, trade and
investment*would be addressed in only the most superficial ways. The 2005
events also revealed the limits of celebrity-chasing tactics aimed at intra-elite
persuasion rather than pressure. Tragically, the actual conditions faced by most
people on the continent continued to deteriorate.
Today, Africa is still getting progressively poorer, with per capita incomes in
many countries below those of the 1950s 60s era of independence. If we consider
even the most banal measure of poverty, most Sub-Saharan African countries suffered
an increase in the percentage of people with an income of less than $1/day during the
1980s and 1990s, the World Bank itself concedes.
Women are the main victims of
systemic poverty and inequality, whether in productive circuits of capital (increas-
ingly subject to sweatshop conditions) or in the ‘‘sphere of reproduction’’ of
households and labor markets, where much primitive accumulation occurs through
unequal gender power relations. There are many ways, Dzodzi Tsikata and Joanna
Kerr have shown, that markets and mainstream economic policy ‘‘perpetuate
women’s subordination.’’
In particular, the denial of Africans’ access to food, medicines, energy and even
water is a common reflection of neoliberal dominance in social policy, as people who
World Bank, World Development Report 2006: Equity and Development (Washington: World Bank, 2005a),
p. 66. For a critique of the $/day measure, see Sanjay Reddy, ‘‘Counting the Poor: The Truth about World
Poverty Statistics,’’ in L. Panitch and C. Leys (eds.), Telling the Truth: Socialist Register 2006 (London: Merlin
Press and New York: Monthly Review Press, 2005).
Dzodzi Tsikata and Joanna Kerr, Demanding Dignity: Women Confronting Economic Reforms in Africa (Ottawa:
The North-South Institute and Accra: Third World Network-Africa, 2002).
are surplus to capitalism’s labor power requirements find that they had better fend
for themselves*or simply die. Even in relatively prosperous South Africa, an early
death for millions*disproportionately women*was the outcome of state and
employer reaction to the AIDS epidemic, with cost-benefit analyses demonstrating to
the state and capital that keeping most of the country’s five to six million HIV-
positive people alive through patented medicines cost more than the people were
The decimated social wage is one indicator of Africa’s amplified under-
development in recent years. In the pages that follow, however, we focus on the
material processes of Africa’s underdevelopment via trade and extractive-oriented
investment, largely through the depletion of natural resources. This is an area of
research that has already helped catalyze the ecological debt and reparations
movement, and that has sufficient intellectual standing to be the basis of a recent
World Bank study, Where is the Wealth of Nations. (A similar critique could be
levelled against financial processes, showing how the June 2005 G7 Finance
Ministers’ debt relief deal perpetuates rather than ends debt peonage.
The story is not new, of course. We can never afford ourselves the luxury of
forgetting the historical legacy of a continent looted: trade by force dating back
centuries; slavery that uprooted around 12 million Africans; land grabs; vicious
taxation schemes; precious metals spirited away; the appropriation of antiquities to
the British Museum and other trophy rooms; the 19
century emergence of racist
ideologies to justify colonialism; the 1884 85 carve-up of Africa into dysfunctional
territories in a Berlin negotiating room; the construction of settler-colonial and
extractive-colonial systems*of which apartheid, the German occupation of
Namibia, the Portuguese colonies and King Leopold’s Belgian Congo were perhaps
only the most blatant*often based upon tearing black migrant workers from rural
areas (leaving women vastly increased responsibilities as a consequence); Cold War
battlegrounds*proxies for U.S./U.S.S.R. conflicts*filled with millions of corpses;
the post-Cold War terrain of unipolar power; other wars catalyzed by mineral
searches and offshoot violence such as witnessed in blood diamonds and other
precious metals and minerals, like coltan (the cell phone ingredient found in the
eastern Democratic Republic of the Congo); poacher-stripped swathes of East,
Central and Southern Africa now devoid of rhinos and elephants whose ivory became
ornamental material or aphrodisiac in the Middle East and East Asia; societies used as
guinea pigs in the latest corporate pharmaceutical test; and the list could continue.
In the case of the vast Johannesburg/London conglomerate Anglo American Corporation, the cut-off for saving
workers in 2001 was 12 percent. The lowest paid 88 percent of employees were more cheaply dismissed once
unable to work, with replacements found amongst South Africa’s 42 percent unemployed reserve army of labor,
according to an internal study reported by the Financial Times . For more, see Patrick Bond, Elite Transition:
From Apartheid to Neoliberalism in South Africa (Pietermaritzburg: University of KwaZulu-Natal Press, 2005),
Afterword to the 2nd edition.
One of the strongest recent overviews of African debt is Gavin Capps, ‘‘Redesigning the Debt Trap,’’
International Socialism, 107, 2005; see also Bond, 2006, op. cit ., Chapter Three.
As is also abundantly clear, Africa also suffers from systemic cultural and
ideological misrepresentation by the North. International mass media images of
Africans were nearly uniformly negative during the recent period. It was from West
Africa that the neoconservative, neoMalthusian writer Robert Kaplan described for
his frightened U.S. audience a future defined in terms of ‘‘disease, overpopulation,
unprovoked crime, scarcity of resources, refugee migrations, the increasing erosion of
nation-states and international borders, and the empowerment of private armies,
security firms, and international drug cartels.’’
As the ‘‘dark continent,’’ Africa has
typically been painted with broad-brush strokes as a place of heathen and uncivilized
people, as savage and superstitious, as tribalistic and nepotistic. David Wiley has
shown how Western media coverage is crisis-driven, based upon parachute
journalism, amplified by an entertainment media which ‘‘perpetuates negative
images of helpless primitives, happy-go-lucky buffoons, evil pagans. The media
glorify colonialism/European intervention. Currently, Africa is represented as a place
of endemic violence and brutal but ignorant dictators.’’ Add to this the ‘‘animal-
ization of Africa via legions of nature shows on Africa that present Africa as being
devoid of humans,’’ enhanced by an ‘‘advertising industry that has built and
exploited (and thereby perpetuated) simplistic stereotypes of Africa.’’
Thus it was
disgusting but logical, perhaps, that African people were settled into a theme village
at an Austrian zoo in June 2005, their huts placed next to monkey cages in scenes
reminiscent of 19
century exhibitions. In an explanatory letter, zoo director Barbara
Jantschke denied that this was ‘‘a mistake’’ because ‘‘I think the Augsburg zoo is
exactly the right place to communicate an atmosphere of the exotic.’’
The picture is not entirely negative, for there has been a slight upturn in the
terms of trade for African countries thanks to higher commodity prices associated
with East Asian demand. But this should not disguise the profoundly unequal and
unfair system of export-led growth, which has impoverished Africans in many ways.
Ironically, the World Bank’s ecological economists have conceded as much in their
calculations of natural resource depletion: petroleum, other subsoil mineral assets,
timber resources, nontimber forest resources, protected areas, cropland and pasture-
land. As we explore below, the Bank calculates that the more its comparative
advantage in resources is pursued, much of Africa grows poorer, not wealthier.
However, trade liberalization’s damage is not limited to the primary product
export drive with all its adverse implications. In addition, African elites have lifted
protective tariffs excessively rapidly, leading to the premature deaths of infant
industries and manufacturing jobs, as well as a decline in state customs revenue. As a
result, Christian Aid reports: ‘‘Trade liberalization has cost Sub-Saharan Africa $272
billion over the past 20 years ...Overall, local producers are selling less than they
Robert Kaplan, ‘‘The Coming Anarchy,’’ Atlantic Monthly , 273, 1994, p. 46.
Charles Hawley, ‘‘African Village Accused of Putting Humans on Display,’’ Spiegel Online , June 9, 2005,
online at:,1518,359799,00.html.
were before trade was liberalized.’’
Comparing African countries according to
whether there was rapid or slow trade liberalization from 1987 99, Christian Aid
found a close correlation between trade openness and worsening poverty. One reason
was falling commodity prices in the 1980s and 1990s.
Commodity Export Dependency and Falling Terms of Trade
The most important myth of neoliberal economics is that production for export
inexorably creates prosperity. In reality, ‘‘unequal exchange’’ in trade*including the
rising African trade deficit with South Africa *is another route for the extraction of
superprofits from Africa. The continent’s share of world trade declined over the past
quarter century, but the volume of exports increased. ‘‘Marginalization’’ of Africa
occurred, hence, not because of insufficient integration, but because other areas of
the world*especially East Asia*moved to the export of manufactured goods, while
Africa’s industrial potential declined thanks to excessive deregulation associated with
structural adjustment.
Overall, primary exports of natural resources accounted for nearly 80 percent of
African exports in 2000, compared to 31 percent for all developing countries and 16
percent for the advanced capitalist economies. According to the UN Conference on
Trade and Development, in 2003, a dozen African countries were dependent upon a
single commodity for exports, including crude petroleum (Angola 92 percent, Congo
57 percent, Gabon 70 percent, Nigeria 96 percent and Equatorial Guinea 91
percent); copper (Zambia 52 percent); diamonds (Botswana 91 percent); coffee
(Burundi 76 percent, Ethiopia 62 percent, Uganda 83 percent), tobacco (Malawi 59
percent) and uranium (Niger 59 percent).
Excluding South Africa, the vast majority
(63 percent) of Sub-Saharan exports in recent years have been petroleum-related,
largely from Nigeria, Angola and other countries in the Gulf of Guinea. The next
largest category of exports from the subcontinent (and not including South Africa) is
food and live animals (17 percent).
High levels of price volatility and downward
price trends for many natural resources are not the only problems associated with
dependence on primary product exports. Minerals production, for example, is highly
capital-intensive, offers low incentives for educational investments, and provides a
greater danger of intervention by parasitical rentiers.
More than two-thirds of Africa’s trade is with developed countries, although
beginning in 1990, China’s share rose from 2 percent to 9 percent. This process has
attracted growing controversy over geopolitics as Chinese loans and investments have
Christian Aid, ‘‘The Economics of Failure: The Real Cost of ‘Free’ Trade for Poor Countries,’’ briefing paper,
June 2005, online at:
Cited in Oxfam, ‘‘Africa and the Doha Round: Fighting to Keep Development Alive,’’ Oxfam Briefing Paper
80, 2005, p. 21.
Commission for Africa, Our Common Future (London: Commission for Africa, 2005), p. 250.
propped up corrupt regimes from Sudan to Zimbabwe to Angola. Deindustrializa-
tion is also a profound threat to African industry. Nigeria lost 350,000 jobs directly
(and 1.5 million indirectly) due to Chinese competition from 2000 to 2005.
Lesotho’s garment industry collapsed when the Africa Growth and Opportunity Act
benefits evaporated in 2005 once China joined the WTO.
But the main damage remains the long-term decline in primary product price
trends. As Michael Barrett Brown explains: ‘‘The value added in making up
manufactured goods has been greatly increased compared with the raw material
required; synthetics continue to replace natural products in textiles, shoes and rubber
goods; and the elasticity of demand for agricultural products (the proportion of extra
incomes spent on food and beverages) has been steadily falling.’’ Notwithstanding
the 2002 05 price increases*especially oil, rubber and copper thanks to Chinese
import demand*the value of coffee, tea and cotton exports many African countries
rely upon continues to stagnate or fall. Falling prices for most cash crops pushed
Africa’s agricultural export value down from $15 billion in 1987 to $13 billion in
2000, notwithstanding greater volumes of exports.
In historical terms, the prices of primary commodities (other than fuels) have
risen and fallen according to a deeper rhythm. Exporters of primary commodities, for
example, fared particularly badly when financiers were most powerful. The cycle for an
exporting country typically begins with falling commodity prices, then leads to rising
foreign debt, dramatic increases in interest rates, a desperate intensification of exports
which lowers prices yet further, and bankruptcy. Using 1970 as a base index year of
100, from 1900 to 1915 the prices of commodities rose from 130 to 190 and then fell
dramatically to 90 in 1919. From a low point of 85 in 1930 as the Great Depression
Table 1. Commodity Price Declines, 1980 2001
Product, Unit
Cafe (Robusta) cents/kg
Cocoa cents/kg
Groundnut oil dollars/ton
Palm oil dollars/ton
Soya dollars/ton
Sugar cents/kg
Cotton cents/kg
Copper dollars/ton
Lead cents/kg
Source: E. Touissant, Your Money or Your Life (Chicago: Haymarket Books, 2005), p.157.
John Chiahemen, ‘‘Africa Fears ‘Tsunami’ of Cheap Chinese Imports,’’ Reuters , December 18, 2005.
Michael Barratt-Brown, ‘‘Africa’s Trade Today,’’ paper for the Review of African Political Economy and
CODESRIA 30th Anniversary Conference, Wortley Hall, Sheffield, May 27, 2004. See also M. Barratt-Brown
and Pauline Tiffen, Short Changed: Africa and World Trade (London: Pluto Press, 1992).
began, the commodity price index rose mainly during World War II to 135, as
demand for raw materials proved strong and shipping difficulties created supply-side
problems. Prices fell during the subsequent globalization process until 1968 (to 95 on
the index), but soared to 142 at the peak of a commodity boom in 1973 when oil and
minerals*especially gold*temporarily soared. The subsequent fall in commodity
prices took the index down steadily, well below 40 by the late 1990s.
Commodity prices were extremely volatile in key sectors affecting Africa. Gold
rose from $35/ounce in 1971 to $850/ounce in 1981 but then crashed to as low as
$250 by the late 1990s. The 2002 05 minor boom in some commodity prices
reflected strong Chinese import demand and the East Asian recovery from the 1997
98 depression in four key countries; from a very low base in early 2002, the prices of
agricultural products rose 80 percent and metals/minerals doubled. Perhaps most
spectacularly, the rise of the oil price from $11/barrel to $70/barrel from 1998 2005
meant that price volatility did indeed assist a few countries. But the soaring price of
energy came at the expense of most of Africa, which imports oil.
A related problem is the northern agricultural subsidy system, which is worth
several hundred billion dollars a year, whether for domestic market stabilization (in
an earlier era) or export promotion. Overproductive European, U.S. and Japanese
agro-industrial corporations exploit African markets in the form of dumped grains
and foodstuffs. Rarely examined, however, are the differential impacts of subsidies,
especially when associated with glutted global agricultural markets. This is a general
problem associated with export-led growth, but it is particularly acute in the farming
sector because of uneven access to state subsidies.
In addition to the lopsided playing field created by northern subsidies, the Third
World has seen its productive potential drastically reduced as trade liberalization has
decimated many local industries, including domestic farming. In the process, as
Branco Milanovic notes, rapid trade-related integration caused growing social
Those who benefited most include the import/export firms, trans-
port/shipping companies, plantations and large-scale commercial farmers, the mining
sector, financiers (who gain greater security than in the case of produce designed for
the domestic market), consumers of imported goods, and politicians and bureaucrats
who are tapped into the commercial/financial circuits.
Agricultural subsidies are merely one aspect of growing rural inequality. Farm
subsidies today mainly reflect agro-corporate campaign contributions and the
importance of rural voting blocs in advanced capitalist countries. (In the 1930s,
the first generation of U.S. farm subsidies instead reflected the dangers of agricultural
´ Leon and Raphael Soto, ‘‘Structural Breaks and Long-term Trends in Commodity Prices,’’ Journal of
International Development, 9, 1997, p. 350.
Branco Milanovic, ‘‘Can We Discern the Effect of Globalization on Income Distribution. Evidence from
Household Budget Surveys,’’ World Bank Policy Research Working Paper 2876, 2002.
overproduction to society and ecology, for the ‘‘dust bowl’’ phenomenon in the
Midwest emerged when many family farmers simply left their failing lands fallow
after markets were glutted.)
The power of the agro-corporate lobby is substantial and getting stronger. The
UN Development Program found that agricultural subsidies had risen 15 percent
between the late 1980s and 2004, from $243 billion to $279 billion (a figure
Vandana Shiva considers a vast underestimate), with Japan (56 percent) the most
subsidy-intensive in relation to the total value of agricultural production, compared
to the E.U. (33 percent) and U.S. (18 percent).
Unlike earlier periods when farming was smaller-scale and atomized, advanced
capitalist countries’ agricultural subsidies today overwhelmingly benefit large agro-
corporate producers. Subsidies in the E.U.’s fifteen major countries are even more
unequally distributed than in the U.S., with beneficiaries in Britain including Queen
Elizabeth II ($1.31 million), Prince Charles ($480,000) and Britain’s richest man,
the Duke of Westminster ($1.13 million).
Studies of the Gini coefficients (which
measure income inequality) of northern agriculture subsidy recipients, as reported by
the UNDP, confirm that large farming corporations benefit far more than do small
farmers. In 2001, the E.U. 15’s Gini coefficient was 78 and the U.S. coefficient was
67, both far higher than income distribution in the world’s most unequal
Were political power relations to change, a massive redirection of
subsidies to small, lower-income, family farmers in the North would be more
equitable and could have the effect of moving agricultural production towards more
organic (and less petroleum-intensive) farming.
A detailed debate regularly occurs over whether subsidies are ‘‘trade-distorting.’’
If they represent export subsidies or price supports, these subsidies belong in what the
WTO terms an ‘‘Amber Box,’’ targeted for elimination. Export subsidies of $7.5
billion in 1995 were reduced, as a result, to $3 billion by 2001. Formerly trade-
distorting subsidies were reformed by the E.U., with the new aim of limiting
production of crops (farmers are paid to simply leave land fallow), and are hence
‘‘Green Box’’*not subject to cuts. The U.S. government proposed that the large
counter-cyclical payments it makes to U.S. cotton producers when the price declines
should not be considered amber, even though the WTO itself agreed with Brazilian
complaints that the subsidies still distort trade by increasing U.S. output and
lowering world prices. Generally, the complexity associated with the subsidy regimes
United Nations Development Program, Human Development Report 2005 , 2005, p. 129.
Devinder Sharma, ‘‘Farm Subsidies: The Report Card,’’ ZNet commentary, November 27, 2005. Sharma
argues that in response, ‘‘Developing countries should ask for: agricultural subsidies to be classified under two
categories: one which benefits small farmers and the remaining which goes to agribusiness companies and the
big farmers/landowners; and since less than 20 percent of the $1 billion farm subsidy being doled out every day
genuinely benefits small farmers, the remaining 80 percent of the subsidies need to be outright scrapped before
proceeding any further on agriculture negotiations.’’
United Nations Development Program, 2005, op. cit. , p. 130.
reflects Northern capacity to maintain their subsidies but continually dress them up
in new language.
What impact would the removal of northern agricultural subsidies have in Africa.
Explicit agro-export subsidies, which account for less than 1 percent of the total and
are mainly provided by the E.U., will finally cease in 2013, thanks to concessions at
the Hong Kong WTO summit. (Implicit E.U. export subsidies worth 55 billion euros
will continue, however.) This reform aside, the most important debate is over whether
substantive reductions would genuinely benefit African peasants.
One problem is that power relations prevailing in the world agricultural markets
allow huge cartels to handle shipping and distribution, and they usually gain the first
round of benefits when prices change. A second problem is that local land ownership
patterns typically emphasize plantation-based export agriculture, with the danger that
further cash crop incentives will crowd out land used for food cropping by peasants.
No reliable studies exist to make definitive statements. There are, indeed, African
heads of state in food-importing countries who advocate continuing E.U. agricultural
subsidies for a third reason, because lower crop prices reduce their own costs of
feeding their citizenry.
In sum, twocrucial questions associated with subsidies and agricultural exports are
typicallyelided by neoliberal economists and other pro-trade campaigners: which forces
in Northern societies benefit from subsidies that promote export-orientation, in both
the short- and long-term.; and, which forces in Southern societies would win andlose in
the event exports are lifted. Furthermore, the crucial strategic question is whether self-
reliant development strategies*which were the necessary (ifinsufficient) condition for
most industrialization in the past*can be applied if low-income exporting countries
remain mired in the commodity trap. The same points must be raised again below with
respect to Africa’s mineral exports, where depletion of nonrenewable resources drains
the wealth of future generations. But a final reflection of trade-related power relations
was also unveiled in Hong Kong, as India and Brazil structurally shifted their location
from an alliance with 110 Third World countries, to the core of the ‘‘Five Interested
Parties’’ (joining the U.S., E.U. and Australia) which cut the final deal.
Investment, Production and Exploitation
In recent years, Africa has not been overwhelmed by interest from foreign
corporate suitors. During the early 1970s, roughly a third of all foreign direct
investment (FDI) to the Third World went to Sub-Saharan African countries,
Devinder Sharma, ‘‘Much Ado about Nothing,’’ ZNet Commentary, December 24, 2005.
Walden Bello, ‘‘The Meaning of Hong Kong: Brazil and India Join the Big Boys’ Club,’’ unpublished paper,
Bangkok, Focus on the Global South, 2005. Bello particularly blames Brazilian foreign minister Celso Amorim
and Indian commerce minister Kamal Nath.
especially apartheid South Africa. By the 1990s, that statistic had dropped to 5percent.
Aside from oil field exploitation, the only other substantive foreign investments over
the last decade have been in South Africa, for the partial privatization of the state
telecommunications agency and for the expansion of automotive-sector branch plant
activity within global assembly lines. In 2005, there were large acquisitions of local
firms by Barclays and Vodaphone amounting to more than $10 billion, with an
anticipated increase in local profit outflow to London alongside the foreign exchange
gained by the former owners. Thus, these inflows were by far offset by South Africa’s
own outflows of foreign direct investment in the forms of relocation of the largest
Johannesburg corporations’ financial headquarters to London, which in turn distorted
the Africa FDI data, not to mention the repatriation of dividends and profits as well as
payments of patent and royalty fees to transnational corporations.
One of the most careful analysts of foreign corporate domination of African
economies, UN Research Institute for Social Development director Thandika
Mkandawire, recently studied African economies’ ‘‘maladjustment’’ and concluded,
‘‘Little FDI has gone into the manufacturing industry. As for investment in mining,
it is not drawn to African countries by macroeconomic policy changes, as is often
suggested, but by the prospects of better world prices, changes in attitudes towards
national ownership and sector specific incentives.’’ Moreover, 14 percent of FDI was
‘‘driven by acquisitions facilitated by the increased pace of privatization to buy up
existing plants that are being sold, usually under ‘fire sale’ conditions.’’ What little
new manufacturing investment occurred was typically ‘‘for expansion of existing
capacities, especially in industries enjoying natural monopolies (e.g. beverages,
cement, furniture). Such expansion may have been stimulated by the spurt of growth
that caused much euphoria, and that is now fading away.’’
The critique of foreign investors in Africa must now extend beyond the E.U., U.S.
and Japan, to China. For example, the Chinese National Petroleum Corporation
(CNPC) and two other large Chinese oil firms are active in seventeen African
countries. One is Sudan where $2 billion of oil investments are underway,
notwithstanding the Darfur genocide. This deal is already responsible for 5 percent
of China’s import requirements, along with Chinese-financed development of a home-
grown Sudanese military capacity. (Arms sales to Robert Mugabe are also dubious.)
FDI and Resource Depletion
Mining houses have been central to looting Africa for at least a century and a
half, and the depletion of minerals and other non-renewable natural resources have
Thandika Mkandawire, ‘‘Maladjusted African Economies and Globalization,’’ Africa Development, 30, 1 2,
2005, p. 6.
Ben Schiller, ‘‘The China Model of Development,’’ online at:
china/china_development_3136.jsp, December 20, 2005.
had extremely negative consequences. The oil sector*the most brazen case, with its
profit and dividend outflows often lubricated by corruption*illustrates this most
clearly. As demonstrated by the Open Society-backed campaign, ‘‘Publish What You
Pay,’’ elites in Africa’s oil producing countries*Angola, Chad, Congo, Equatorial
Guinea, Gabon, Nigeria and Sudan*are amongst the world’s least transparent.
Nigeria, demands by the Ogoni people relate not only to the massive destruction of
their Delta habitat, but also to the looting of their natural wealth by Big Oil.
Diverse forces in society have moved away from considering oil merely a matter of
private property, to be negotiated between corporations and governments, as was the
case during much of the 20
century. Instead, these forces now treat oil as part of a
general ‘‘commons’’ of a national society’s natural resource base.
From a September
2005 conference in Johannesburg organized by the South African NGO ground-
Work, delegates petitioned the World Petroleum Congress:
At every point in the fossil fuel production chain where your members ‘‘add value’’
and make profit, ordinary people, workers and their environments are assaulted and
impoverished. Where oil is drilled, pumped, processed and used, in Africa as
elsewhere, ecological systems have been trashed, peoples’ livelihoods have been
destroyed, and their democratic aspirations and their rights and cultures trampled.
In a remarkable essay, ‘‘Seeing Like an Oil Company,’’ anthropologist James
Ferguson argues that ‘‘capital ‘hops’ over ‘unusable Africa,’ alighting only in mineral-
rich enclaves that are starkly disconnected from their national societies. The result is
not the formation of standardized national grids, but the emergence of huge areas of
the continent that are effectively ‘off the grid.’’’ In the process, Ferguson says, there
emerges ‘‘a frightening sort of political-economic model for regions that combine
mineral wealth with political intractability,’’ ranging from African oil zones to
occupied Iraq. The model includes protection of capital by ‘‘private military
companies’’ (e.g., in Baghdad, Blackwater, Erinys and Global Risk Strategies), and
protection of the ‘‘Big Man’’ leader (e.g., Paul Bremer, John Negroponte) ‘‘not by
his own national army but, instead, by hired guns.’’
The bottom line is enhanced
profit for international capital and despotism for the citizenry.
Remarkably, this latest stage in the disintegration wrought by capital is being
registered within that center of accumulation, the World Bank, which has begun to
measure some of its costs. This opens upon a potentially fruitful phase of
Sam Olukoya, ‘‘Environmental Justice from the Niger Delta to the World Conference Against Racism,’’
CorpWatch , August 30, 2001, online at
George Caffentzis, ‘‘The Petroleum Commons: Local, Islamic and Global,’’ The Progress Report , 2004, online
James Ferguson, ‘‘Seeing Like an Oil Company: Space, Security and Global Capital in Neoliberal Africa,’’
American Anthropologist , 107, 3, 2005, p. 381.
environmental accounting in which the depletion of natural resources plus associated
negative externalities*such as the social devastation caused by mining operations*
can now begin to be taken seriously as a way of envisioning a global commons. That
entails at least a rough accounting of the costs associated with tearing resources from
the ground, forests and fisheries, even as we continue to recognize that many aspects
of valuation*human life’s worth, indigenous people’s traditions and culture, and
aesthetics of the natural environment*are impossible to quantify.
Accounting for Nature
With its 2005 study, Where is the Wealth of Nations., the World Bank has begun
to address the question of resource depletion, using the methodology of correcting
bias in GDP wealth accounting.
Not surprisingly, this is nowhere near as expansive
as parallel efforts by groups such as San Francisco-based Redefining Progress.
There, statisticians subtract from GDP the cost of crime and family breakdown; add
household and volunteer work; correct for income distribution (rewarding equality);
subtract resource depletion; subtract pollution; subtract long-term environmental
damage (climate change, nuclear waste generation); add opportunities for increased
leisure time; factor in lifespan of consumer durables and public infrastructure; and
subtract vulnerability upon foreign assets. Using this approach and accounting for
natural resource depletion, pollution and the other factors that, in the aggregate,
comprise the onset of the era marked by neoliberalism, globalization and the
ecological crisis, Redefining Progress finds that global welfare began declining in
absolute terms during the mid-1970s (see Figure 1).
Indeed, as Michael Goldman brilliantly demonstrates, the Bank’s ‘‘green
neoliberal project’’ fuses ‘‘neocolonial conservationist ideas of enclosure and
preservation and neoliberal notions of market value and optimal resource allocation.’’
It does so in order to make ‘‘particular natures and natural resource-dependent
communities legible, accountable and available to foreign investors introdu-
cing new cultural and scientific logics for interpreting qualities of the state’s
Despite this overarching function, the Bank’s tentative approach to
valuation of depleted natural resources is a step forward in recognizing that extractive
investments may not contribute to net welfare and indeed may cause national savings
and wealth to actually shrink along with their better known qualitative manifesta-
The Bank’s first-cut method subtracts from the existing rate of savings factors
such as fixed capital depreciation and depletion of natural resources and pollution,
World Bank, Where is the Wealth of Nations. Measuring Capital for the 21st Century (Washington: World
Bank, 2005b).
Michael Goldman, Imperial Nature (New Haven: Yale University Press, 2005), p. 184.
but then it adds investments in education (defined as annual expenditure). The result
in most African countries dependent upon primary products is a net negative rate of
national savings to Gross National Income (GNI). These effects are made to appear
less severe by a number of methodological dodges. Thus, in making estimates about
the decline in a country’s wealth due to energy, mineral or forest-related depletion,
the World Bank adopts a minimalist definition based upon international pricing (not
potential future values when scarcity becomes a more crucial factor, especially in the
oil industry). Moreover, the Bank does not fully calculate damages done to the local
environment, to workers’ health and safety, and especially to women in communities
around mines. And the Bank’s use of average*not marginal*cost resource rents
also underestimates the depletion costs. In particular, the attempt to generate a
‘‘genuine savings’’ calculation requires adjusting net national savings to account for
resource depletion. The Bank suggests the following steps:
From gross national saving the consumption of fixed capital is subtracted to give
the traditional indicator of saving: net national savings. The value of damages
from pollutants is subtracted. The pollutants carbon dioxide and particulate
matter are included. The value of natural resource depletion is subtracted. Energy,
metals and mineral and net forest depletion are included. Current operating
expenditures on education are added to net national saving to adjust for
investments in human capital.
Figure 1. Global GDP versus a Genuine Progress Indicator, 1950 2003. Source:
World Bank, 2005b, op. cit., p. 39.
Naturally, given oil extraction, the Middle East region (including North Africa)
has the world’s most serious problem of net negative gross national income and
savings under this methodology. But Sub-Saharan Africa is second worst, and for
several years during the early 1990s witnessed net negative GNP for the continent
once extraction of natural resources was factored in. Indeed, for every percentage
point increase in a country’s extractive-resource dependency, that country’s potential
GDP declines by 9 percent (as against the real GDP recorded), according to the
African countries with the combined highest resource dependence and
lowest capital accumulation included Nigeria, Zambia, Mauritania, Gabon, Congo,
Algeria and South Africa. In comparing the potential for capital accumulation*i.e.,
were resource rents not simply extracted (and exported) and resources depleted*on
the one hand and, on the other, the actual measure of capital accumulation, Bank
researchers discovered that:
In many cases the differences are huge. Nigeria, a major oil exporter, could have
had a year 2000 stock of produced capital five times higher than the actual stock.
Moreover, if these investments had taken place, oil would play a much smaller
role in the Nigerian economy today, with likely beneficial impacts on policies
affecting other sectors of the economy.
A more nuanced breakdown of a country’s estimated ‘‘tangible wealth’’ is
required to capture not just obvious oil-related depletion and rent outflows, but also
other subsoil assets, timber resources, nontimber forest resources, protected areas,
cropland and pastureland. The ‘‘produced capital’’ normally captured in GDP
accounting is added to the tangible wealth. In the case of Ghana, shown in Table 2,
that amounted to $2,022 per capita in 2000. The same year, the Gross National
Saving of Ghana was $40 per capita and education spending was $7. These figures
require downward adjustment to account for the consumption of fixed capital ($19),
as well as the depletion of wealth in the form of stored energy ($0), minerals ($4) and
net forest assets ($8). In Ghana, the adjusted net saving was $16 per capita in 2000.
But given population growth of 1.7 percent, the country’s wealth actually shrunk by
$18 per capita in 2000.
How much of this exploitation is based on transnational capital’s extractive
power. In the case of Ghana, $12 of the $18 decline in 2000 could be attributed to
minerals and forest-related depletions, a large proportion of which now leaves
The largest indigenous (and black-owned) mining firm in Africa, Ashanti,
was recently bought by AngloGold, so it is safe to assume that an increasing amount
of Ghana’s wealth flows out of the country, leaving net negative per capita tangible
wealth. Other mining houses active in Africa which once had their roots here*
Lonrho, Anglo, DeBeers, Gencor/Billiton*are also now based off-shore.
Ibid., p. 55.
Ibid .
Ibid., pp. 64 65.
Ghana was an interesting example given that it has often played the role of World
Bank poster child country. Other African countries whose economies are primary
product dependent fare much worse, according to the Bank’s methodology. Gabon’s
citizens lost $2,241 each in 2000, as oil companies rapidly depleted the country’s
tangible wealth. The Republic of the Congo (
$727), Nigeria (
$210), Cameroon
$152), Mauritania (
$147) and Coˆte d’Ivoire (
$100) are other African countries
whose people each lost at least $100 in tangible national wealth in 2000 alone. (Angola
would certainly rank high amongst these, were data available for the Bank’s analysis.) A
few sparsely populated countries did benefit, according to the tangible wealth measure,
including the Seychelles (
$904), Botswana (
$814) and Namibia (
$140), but the
great majority of Africans saw their wealth depleted.
(See Table 3.)
In part, minerals depletion and associated pollution costs are a function of
expanded foreign direct investment. Even in South Africa, with a 150-year-old
organic mining-based bourgeoisie, mineral depletion today disproportionately
benefits overseas mining houses (especially given that some of the largest
Johannesburg firms relisted their primary share residences to London after 1994).
In addition, CO
emissions plus a great deal of other pollution (especially SO
) are
largely the result of energy consumption by metals smelters owned by large
multinational corporations (e.g., Mittal Steel, BHP Billiton and the Anglo group).
Any assessment of FDI, especially in oil and resource rich countries, must henceforth
take into account its contribution to the net negative impact on national wealth,
including the depletion and degradation of the resource base. Ironically, given the
source of leadership at the World Bank (Paul Wolfowitz of the U.S. petro-military
complex), the Bank’s new accounting of genuine savings is a helpful innovation.
Taking the methodology forward in order to correct biases and rigorously estimating
an Africa-wide extraction measure in order to better account for the way extractive
FDI generates net negative welfare/savings still remain as important exercises.
Table 2. Adjustment to Ghana’s 2000 Savings Rate Based Upon Tangible Wealth and Resource
Depletion (per capita $)
Tangible wealth
Adjusted net saving
Subsoil assets $65
Gross National Saving $40
Timber resources $290
Education expenditure $7
Nontimber forest resources $76
Consumption fixed capital $-19
Protected areas $7
Energy depletion $0
Cropland $855
Mineral depletion $-4
Pastureland $43
Net forest depletion $-8
Produced capital $686
Total tangible wealth $2022
Adjusted net saving $16
Population growth 1.7 percent
Change in wealth per capita $-18
Source: World Bank, Where is the Wealth of Nations., pp. 64 65.
Ibid., p. 66.
There are many other modes of surplus and resource extraction through FDI,
some of which involve straightforward swindling. For example, corporate failure to
pay taxes and state failure to collect them is a point stressed by Lawrence Cockcroft
of Transparency International:
Most African countries operate some form of tax break for new investors, with
varying degrees of generosity. In fact such incentive schemes are frequently
deceptive in that the real deal is being done in spite of them and alongside them,
Table 3. African Countries’ Adjusted National Wealth and ‘‘Savings Gaps,’’ 2000
Income per
capita ($)
growth rate
Adjusted net
saving per capita
Change in wealth
per capita ($)
Burkina Faso
Cape Verde
Rep of Congo
Coˆte d’Ivoire
The Gambia
South Africa
Source: World Bank, Where is the Wealth of Nations. , p. 66.
with a key cabinet minister or official coming to an alternative arrangement which
may well guarantee an offshore payment for the individual in question as well as a
‘‘tax holiday’’ for the company concerned.
Official statistics have never properly picked up the durable problem of transfer
pricing, whereby foreign investors misinvoice inputs drawn from abroad. Companies
cheat Third World countries on tax revenues by artificially inflating their imported
input prices so as to claim lower net income. It is only possible to guess the vast scale
of the problem on the basis of case studies. The Oxford Institute of Energy Studies
estimated that in 1994, 14 percent of the total value of exported oil ‘‘was not
accounted for in national trade figures as a result of various forms of transfer pricing
and smuggling.’’
According to a 1999 United Nations Conference on Trade and
Development survey on income shifting as part of transfer pricing:
Of the developing countries with sufficient evidence to make an assessment, 61
percent estimated that their own transnational corporations (TNCs) were
engaging in income shifting, and 70 percent deemed it a significant problem.
The income-shifting behavior of foreign-based TNCs was also appraised. Eighty-
four percent of the developing countries felt that the affiliates they hosted shifted
income to their parent companies to avoid tax liabilities, and 87 percent viewed
the problem as significant.
Another kind of corporate financial transfer aimed at exploiting weak African
countries is the fee that headquarters charge for patent and copyright fees on
technology agreements. Such payments, according to Yash Tandon, are augmented
by management and consultancy fees, as well as other Northern corporate support
mechanisms that drain the Third World. For the year 2000, Tandon listed export
revenue denied the South because of northern protectionism that amounted to more
than $30 billion for non-agricultural products.
Production, Transport and the Ecological Debt
Most of the systems of unequal exchange have been identified (aside from labor,
which is considered below), although the ecological implications have not been. In an
indirect manner, such that victims are not aware of the process, Northern investors
also exploit Africa in their consumption of the global commons, particularly the
earth’s clean air. During the early 1990s, the idea of the North’s ecological debt to
the South began gaining currency in Latin America thanks to NGOs, environmen-
Lawrence Cockcroft, ‘‘Corruption as a Threat to Corporate Behavior and the Rule of Law,’’ Transparency
International, 2001, p. 2.
Cited in Cockcroft, ibid .
UN Conference on Trade and Development, ‘‘Transfer Pricing,’’ 1999, p. 167.
talists and politicians (including Fidel Castro of Cuba and Virgilio Barco of
Colombia). According to Joan Marti
The notion of an ecological debt is not particularly radical. Think of the
environmental liabilities incurred by firms (under the United States Superfund
legislation), or of the engineering field called ‘‘restoration ecology,’’ or the
proposals by the Swedish government in the early 1990s to calculate the country’s
environmental debt. Ecologically unequal exchange is one of the reasons for the
claim of the Ecological Debt. The second reason for this claim is the
disproportionate use of Environmental Space by the rich countries.
In the first category, Marti
´nez-Alier lists:
Unpaid costs of reproduction or maintenance or sustainable management of the
renewable resources that have been exported;
Actualized costs of the future lack of availability of destroyed natural resources; and
Compensation for, or the costs of reparation (unpaid), of the local damages
produced by exports (for example, the sulphur dioxide of copper smelters, the mine
tailings, the harms to health from flower exports, the pollution of water by mining),
or the actualized value of irreversible damage;
(Unpaid) amount corresponding to the commercial use of information and
knowledge on genetic resources, when they have been appropriated gratis (e.g.,
‘‘biopiracy’’). For agricultural genetic resources, the basis for such a claim already
exists under the FAO’s Farmers’ Rights.
In the second, he cites ‘‘lack of payment for environmental services or for the
disproportionate use of Environmental Space’’:
(Unpaid) reparation costs or compensation for the impacts caused by imports of
solid or liquid toxic waste;
(Unpaid) costs of free disposal of gas residues (carbon dioxide, CFCs, etc),
assuming equal rights to sinks and reservoirs.
Joan Marti
´nez-Alier, ‘‘Marxism, Social Metabolism and Ecologically Unequal Exchange,’’ paper presented at
Lund University Conference on World Systems Theory and the Environment, September 19 22, 2003.
´nez-Alier elaborates with examples of ecological debt that are never factored into standard trade and
investment regimes: ‘‘nutrients in exports including virtual water ... the oil and minerals no longer available,
the biodiversity destroyed. This is a difficult figure to compute, for several reasons. Figures on the reserves,
estimation of the technological obsolescence because of substitution, and a decision on the rate of discount are
needed in the case of minerals or oil. For biodiversity, knowledge of what is being destroyed would be needed.’’
Some of these cases are considered in the discussion above concerning depletion of natural resources. See also
These aspects of ecological debt defy easy measurement. Each part of the ecological
balance sheet is highly contested, and information is imperfect. As Marti
shows in other work, tropical rainforests used for wood exports have an extraordinary
past we will never know and ongoing biodiversity whose destruction we cannot begin
to value. However, he acknowledges, ‘‘although it is not possible to make an exact
accounting, it is necessary to establish the principal categories [of ecological debt] and
certain orders of magnitude in order to stimulate discussion.’’
The sums involved are potentially vast. Vandana Shiva and Yash Tandon
estimate that biopiracy of ‘‘wild seed varieties have contributed some $66 billion
annually to the U.S. economy.’’
Moreover, in the case of CO
emissions, according
to Marti
´nez-Alier, ‘‘a total annual subsidy of $75 billion is forthcoming from South
to North.’’
Excess use of the planet’s CO
absorption capacity is merely one of the
many ways that the South is being exploited by the North on the ecological front.
Africans are most exploited in this regard, because non-industrialized economics have
not begun to utilize more than a small fraction of what should be due under any fair
framework of global resource allocation. The amounts involved would easily cover
debt repayments.
A final way in which Africa’s wealth is depleted is via skilled labor migration.
This problem has become important, even if it is slightly mitigated by the inflow of
migrant remittance payments to families at home. Approximately 20,000 skilled
workers leave Africa each year. The World Bank’s estimate of the share of Africa’s
skilled workers with a tertiary education who emigrate is more than 15 percent*
higher than any other region. It is true that remittances from both skilled and
unskilled labor flow back to Africa as a result, and in some cases represent an
important contribution to GDP. But as the World Bank concedes, there are
extremely high transaction costs (sometimes 20 percent) imposed upon the small
sums that are transferred by migrants. For this reason, a great deal of migration-
related inflows to Africa have become informal in nature, via black market systems,
and in turn, once the flows reach their home destination, further problems often
The progressive position on migration has always been to maintain support for
the ‘‘globalization of people’’ (while opposing the ‘‘globalization of capital’’) and in
the process to oppose border controls and arduous immigration restrictions, as well
as all forms of xenophobia. In October 2005, North Africans were expelled from the
Moroccan-Spanish border at Granada by lethal force, and the supposedly progressive
Zapatero regime announced it would build the equivalent of Israel’s notorious
Joan Marti
´nez-Alier, ‘‘Ecological Debt* External Debt,’’ Quito, Accio´n Ecolo´gica , 1998.
´nez-Alier cites J.K. Parikh, ‘‘Joint Implementation and the North and South Cooperation for Climate
Change,’’ International Environmental Affairs , 7, 1, 1995.
Sarah Bracking, ‘‘Sending Money Home: Are Remittances Always Beneficial to Those Who Stay Behind.,’’
Journal of International Development , 15, 2003, p. 633.
apartheid wall at the border. It was, according to Slavoj Zizek, just another symptom
of Fortress Europe:
A couple of years ago, an ominous decision of the E.U. passed almost unnoticed:
a plan to establish an all-European border police force to secure the isolation of
the Union territory, so as to prevent the influx of the immigrants. This is the truth
of globalization: the construction of new walls safeguarding the prosperous
Europe from a flood of immigrants ...
The segregation of the people is the reality of economic globalization. This new
racism of the developed world is in a way much more brutal than the previous
one. Its implicit legitimization is neither naturalist (the ‘‘natural’ superiority of the
developed West) nor culturalist (we in the West also want to preserve our cultural
identity). Rather, it’s an unabashed economic egotism *the fundamental divide
is the one between those included into the sphere of (relative) economic
prosperity and those excluded from it.
According to Yash Tandon and the UN Development Program, there is a substantial
‘‘loss of revenue on account of blockage on the free movement of people,’’ which
they estimated to amount to at least $25 billion annually during the 1980s. But
setting such numbers aside, it is also important to recognize an important basis for
superexploitation within patriarchal power relations in migration and many other
forms of North-South power. Since it is women who disproportionately remain, and
women who are radically disempowered across Africa, this enables the manifold
processes discussed above*debt/finance, trade, investment and labor migration*to
be maintained at inordinately high rates of exploitation.
Conclusion: From Looting to Liberation
The looting of Africa dates back many centuries and may be traced to the point
at which value transfers began via appropriation of slave labor, antiquities, precious
metals and raw materials. Unfair terms of trade were soon amplified by colonial and
neocolonial relations. These processes often amounted to a kind of ongoing
‘‘primitive accumulation,’’ by which capital of Northern countries grew by virtue
of looting Africa. This was not a once-off set of problems, solved by the
independence struggles of the 1950s through the 1990s. In recent decades, wealth
extraction through imperialist relations has intensified, and some of the same kinds
of primitive looting tactics are now once again evident. Moreover, key causes of
Africa’s underdevelopment since the early 1980s can also be identified within the
framework of neoliberal (free market) policies adopted nearly universally across the
Slavoj Zizek, ‘‘The Subject Supposed to Loot and Rape: Reality and Fantasy in New Orleans,’’ In These
Times , October 20, 2005.
continent and indeed the world, in part thanks to the emergence of local allies of the
North within African states.
The mainstream impression*e.g., Tony Blair’s Africa Commission*is
mistaken when citing what appears as a vast inflow of aid, since more than 60
percent*so-called ‘‘phantom aid’’*is redirected backwards to the donors or
otherwise misses the mark in various ways. Instead of a sustainable level of debt
service payments, as claimed by those supporting the elites’ limited debt relief
schemes, Africa’s net financial accounts went negative during the 1990s. And
although remittances from the African Diaspora now fund a limited amount of
capital accumulation, capital flight is far greater. At more than $10 billion a year
since the early 1970s, collectively, the citizens of Nigeria, the Ivory Coast, the DRC,
Angola and Zambia have been especially vulnerable to the overseas drain of their
national wealth. In addition to the lifting of exchange controls, a major factor during
the late 1990s was financial deregulation. In South Africa, for example, financial
liberalization included the relisting from Johannesburg to London of the primary
share-issuing residence of the largest South African firms.
In response, progressive African activists and allied intellectuals should be
increasingly capable of building upon their citizenries’ profound skepticism of ruling
elites. According to Afrobarometer polls and the World Values Survey, ‘‘Africans care
about equity and public action to reduce poverty. They are less comfortable with
wide wealth differentials, and have a strong commitment to political equality. About
75 percent of the respondents agree that African governments are doing too little for
people trapped in poverty.’’
The challenge will be to establish not only alternative
conceptions of poverty and inequality so that the broader structural processes of
accumulation by dispossession are clear*but also a different approach to public
policy and politics.
Those conceptions are not limited to a set of policy reforms (though such can be
provided whenever necessary, drawing upon real experiences in history and across the
contemporary world). Most importantly, the solution to the looting of Africa is to be
found in the self-activity of progressive Africans themselves, in their campaigns and
declarations, their struggles*sometimes victorious, but still mainly frustrated*and
their hunger for an Africa that can finally throw off the chains of an exploitative
world economy and a power elite who treat the continent without respect.
Cited in World Bank, ‘‘Meeting the Challenge of Africa’s Development: A World Bank Group Action Plan,’’
Africa Region, 2005, p. 5.