"Nepad and Globalisation" Alternative Information & Development Centre (AIDC) South Africa

Alternative Information & Development Centre
South Africa

Nepad and Globalisation: Some Initial Thoughts
Presentation to the Trade Strategy Group Workshop

Nepad has successfully been put on the international agenda by Presidents Thabo Mbeki, Abdelaziz Bouteflika and Olusegun Obasanjo with the support of key leaders in the West, not least James Wolfensohn at the World Bank, Tony Blair, and Canadian Prime Minister, Chrietien.

In fact NEPAD will dominate discussions on Africa at the G7/8 conference in Canada, and is cited in the draft WSSD document to be adopted during the Summit in Johannesburg in August / September. There was also reference to NEPAD in the official declaration emanating from the UN conference on Financing for Development

In other words there is a concerted effort to mobilise international support for NEPAD whilst many are still uncertain about civil society's stance in relation to NEPAD

Set against the considerable support NEPAD enjoys amongst Western governments is the concern of our friends and allies in the North feel at NEPAD's endorsement of neo-liberal / Washington consensus perspectives. They urgently need to hear the voice of popular organisations from Africa and particularly from South Africa. Otherwise their critical positions become tenuous in the light of such charges as, "Who are you to criticize the positions of legitimate African leaders and governments?"

This all points to a difficult atmosphere being created regarding criticism of NEPAD. There is a sense that if one criticises it, one is letting the side down – by obstructing African development and prosperity. NEPAD is being showcased as the only game in town – there is no alternative and this is the best chance Africa has.

However, the fundamental role of NGOs and popular organisations is to be critical and to ensure the interests and views of grassroots people are represented and considered seriously. NGOs and popular organisations have a responsibility to develop alternatives to the mainstream and must not shy away for fear of offending the political elite from subjecting NEPAD to critical review.

NEPAD is a development plan that claims to promote sustainable and self development. It seeks to liberate Africa from its history of underdevelopment, poverty, war and corruption. To overcome the backlog of underdevelopment NEPAD calculates and builds a plan around achieving an annual growth rate of 7 % for the next 15 years and securing financing of $64 bn per year to accomplish its development goals.

These resources will go into a series of key projects aimed at stimulating regional and integrated development, building economies of scale and harmonisation of industries on a continental basis. Various incentives are offered African countries to get them to endorse and comply with NEPAD's objectives and principles. NEPAD is "marketed" as an African plan aimed at ensuring Africa takes the lead in ensuring compliance with democratic governance, peace building, respect for human rights and sound economic policies that will provide confidence to investors.

NEPAD seeks to promote sustainable, people-centred development. A fundamental component of such a development plan ought to be the role of civil society in formulating such a plan, particularly given the experience of grassroots movements in developing strategies to deal with the enduring history of underdevelopment on the continent. Considering the important role the South African government has played in drafting NEPAD it is at once curious and yet also not surprising that there has been no consultation with, never mind participation of, civil society in formulating NEPAD. Curious in the sense that the ANC's development plan, the Reconstruction and Development Programme, was developed by popular movements strategically just prior to the holding of democratic elections in early 1994. Less surprising when one recalls how South Africa's home-grown stabilisation programme, GEAR (Growth, Employment and Reconstruction), was formulated by a few men behind closed doors without consultation or participation from civil society. The same dynamic seems to be involved in relation to the formulation of NEPAD. NEPAD tellingly South Africa's own evolution away from sustainable development to neo-liberalism.

It has largely been drafted by a few ‘technicians' linked to South Africa's Department of Finance, officials from other African governments that have played a leading role in NEPAD, together with some World Bank officials. It is a document produced from above, devoid of any popular consultation and participation.

Yet it is a well-established principle, even in mainstream development theory, that for development policies to have any hope of success they ought to involve the people in whose name they are being proposed. The only groups that have been consulted around NEPAD have been government finance and business leaders at the World Economic Forum, G7 leaders and other Western heads of state.

In its opening objectives NEPAD highlights the need to empower women. Yet this is almost the only reference to women throughout the document. Gender is a critical aspect of development, especially sustainable development. One cannot just look at development from the perspective of economic growth in isolation from the other fundamental building blocks of development, like health care, education, and economic opportunities for women. One could expect that had women been consulted a much greater gender perspective would have been rooted in the document. Similarly, had workers been consulted much of the trickle-down economics, so fundamental to NEPAD, would have been questioned.

The document is directed towards an international audience, especially Western donors. The overarching aim of NEPAD is to gain the confidence of the so-called international community to ensure they invest resources in the continent. However, one would expect that a new partnership for African development would primarily be orientated towards Africa's long suffering population that has borne the brunt of colonial and neo-colonial domination, underdevelopment, mismanagement, wars and gross human rights violations.

In this sense the document stands in contradiction to the fine sounding words of Chapter 2, paragraph 27: "Africans must not be wards of benevolent guardians; rather they must be the architects of their own sustained upliftment". The document is full of such resounding phrases which attempt to deflect from an essentially obsequious standpoint of trying to please Northern donors.

In essence, the document is an attempt to negotiate with Northern powers the terms of Africa's integration into the world economy without challenging the systemic and structural dynamics by which globalisation has further marginalized and created polarization within Africa, both within individual African countries and between them.

As a development plan for Africa, its central concern with economic growth and the potential for the "exploitation" of Africa's resources fails to locate the problem of "development" in a much broader context that is people-centred, participatory and based on people's own efforts.

The weak state is highlighted as one of the major constraints to sustainable development. The document correctly notes a number of important factors that have led to the present catastrophic situation in our continent: colonialism, the Cold War, Africa's place in the international economic system and the policies pursued since independence. Yet the document does not make the point that attempts to overcome the legacy of colonialism-- by promoting appropriate and sustainable development strategies of empowerment through investment in education, health, infrastructure, industrialization and the development of a manufacturing sector-- were actively undermined by the policies of the former colonial powers, who did not wish to see their investments and influence being replaced by African interests. Interest in Africa's abundance of cheap raw materials and labour did not end with independence. The continued influence and domination of Africa by the West that is the chief reason why Africa has not been able to overcome the legacy and distortions of colonialism.

While it is important to recognise that there is much Africa can do to address problems of democracy, war, corruption, etc., it is important to recognise that the continued domination of Africa by Western imperialism creates the context for the long litany of corruption, misrule, civil war and human rights violations that has characterized modern African history. The document avoids any socio-economic explanation for the failure of development post independence. Clearly the machinations of an Idi Amin or a Mabuto cannot be accounted for by neo-colonialism, however it does explain the environment that can produce such dictators. Without making this type of analysis we are left with irrational, and at worst racial, explanations for Africa's current situation that doom Africa to perpetual and permanent darkness.

It is from the absence of such an analysis of neo-colonialism that leads the "architects" of NEPAD to paint a picture of globalisation as a benign technical, immutable and value free phenomena. NEPAD is underpinned by an unquestioning acceptance of globalisation and neo-liberal Washington Consensus policies. These policies have been challenged and rejected by hundreds of thousands of demonstrators all around the world in a rapidly growing dynamic, especially after the Seattle Anti WTO demonstrations of November 1999 which led to the formation of the World Social Forum – a space where alternative development strategies can be pursued.

Of course it has not only been intellectuals and activists from the anti-globalisation movement that have been at the forefront of this critique. Even voices originating from the World Bank, i.e. Joseph Stiglitz, Ravi Kanbur and others have questioned the World Bank / IMF / WTO insistence on the benefits of austerity, trade liberalisation and privatisation measures underlying the neo-liberal orthodoxy.

The removal of barriers allowing for the internationalisation of production and trade and the global integration of finance has facilitated the massive concentration of wealth in a smaller number of transnational corporations based in the North and expanded foreign direct investment and trade in the major centres of the North (USA, European Union and Japan).

This surge of liberalisation, privatisation and deregulation (collectively known as the globalisation process) is not the outcome of a revolution in information and communication technologies, as averred by NEPAD, but is rather the result of policies promoted by powerful Northern-controlled institutions, such as the G7, IMF, World Bank and WTO.

The advantage of a technical and technological analysis of globalisation such as presented in the NEPAD document is that it is apolitical and therefore not confrontational to the major driving forces of the process. It avoids having to pit African leaders against their "Western Donors" whether in the IMF, World Bank, WTO or in the USA, European Union, etc.

Against this backdrop NEPAD asserts that globalisation or the economic revolution as it prefers to call it "could provide both the context and the means for Africa's rejuvenation". Yet the experience of Africa indicates the exact opposite: that integration into the world economy, greater openness, economic liberalisation, deregulation and privatisation has led to higher levels of poverty, unemployment and inequality. This has been the legacy of implementing IMF / World Bank Structural Adjustment Policies over the last 20 years.

The case of South Africa is instructive. Integration into the world economy through the adoption of the Gear macro-economic policy has led to higher levels of poverty to the extent that South Africa has overtaken Brazil as the most unequal country in the world. Since its adoption more than 1 million workers have lost their jobs. Under globalisation South Africa has suffered three financial crises in which the South African currency has lost more than half its values against foreign currencies. (specify these?)

It is true that NEPAD calls for improving the terms of Africa's reintegration into the world economy. However, short of appealing to the leaders of the global institutions, no strategy is developed towards ensuring changes to the inequitable status quo. The response of the G7 leaders and of the IMF and World Bank to the huge international movement for debt cancellation is not encouraging. In spite of mass mobilisations, calls from the Pope and other prominent international figures, less than 2% of indebted poor countries has been "forgiven". Appeals do not work when trying to achieve structural changes to the workings of the global economy. Those driving the economy prefer to use pleas coming from those worst affected to promise "relief" if further "economic reforms" are undertaken to facilitate globalisation.

Experience with the heavily indebted poor country initiative (HIPC) and the Poverty Reduction Strategy Papers of the G7 and the IMF and World Bank bear this analysis out. These initiatives promise debt relief on condition that countries undertake cycles of further structural adjustment, neo-liberalism, etc. Yet once they have completed this process, such is the devastation caused by these neo-liberal policies, these countries are more indebted, more fragile and more dependent than ever.

Moreover the unfolding of the negotiations in the WTO demonstrate that the leaders of the Northern industrialised countries do not feel predisposed to sacrifice any of their privileges out of concern for Africa. On the contrary, they are constantly under pressure from their corporations to extract more concessions from the developing world in the international economic forums to ensure profitability. Global recession, the aftermath of 11 September, is unlikely to create greater charitable attitudes and proposals

More importantly, a sober examination of whether the concerns of African leaders are receiving a sympathetic hearing in the major international capitals of the world would have to take into account how, in the WTO, their views are systematically ignored and marginalised, especially in relation to TRIPS, TRIMS, investment, GATS, agriculture, information and communication technology.

The re-negotiation of the Lome Agreement, the so-called Cotonou Agreement, the European Union Free Trade Agreement with post-apartheid South Africa is further evidence that African and South – South solidarity is more likely to deliver results than pleading with the drivers of globalisation.

Africa's response to globalisation and the "increased mobility of capital" is to be more competitive – to be more attractive, according to NEPAD. It is in this context that processes, structures and mechanisms must be put in place to reduce risk-taking by the private sector. To this end the following initiatives are proposed: Democracy and Political Governance Initiative and the Economic and Corporate Governance Initiative.

NEPAD reflects the perspectives and language of the World Bank anti-corruption and good governance initiative through which they wish to ensure an enabling environment for private sector investment. While, no one wishes to deny that it is imperative that anti-corruption campaigns are undertaken, they are less likely to succeed if they based on a false analysis of the problem. It is important to recognise that culpability does not rest with Africa alone. Corruption is systematically promoted by foreign transnational corporations who want to get access to African resources and assets. Most recently this has been seen in the World Bank sponsored Lesotho Highlands Dam project where contracting corporations offered massive bribes in order to secure tenders, contracts and the like.

In the absence of a diversified industrial economy, as long as the postcolonial state remains the main route to wealth formation we will find an impulse by African politicians to use high office as a means to wealth accumulation and Western corporations will collaborate in this process, cementing new ties of compradorism.

NEPAD identifies the private sector and more particularly foreign investment as the driving force of development. This leads the authors, just as in GEAR, to emphasise the need to create a favourable climate for investment. Or, to quote NEPAD:

To attract foreign investment, measures will be put in place to ensure investors' capital is secure. This will be achieved by implementing investment agreements that remove obligations on investors and liberalise capital flows. The result will be to treat foreign investors on the same terms as domestic investors, denying opportunities to strengthen the domestic national market. The impact will be similar to trade liberalisation which has facilitated the easier penetration of foreign good in African countries at the expense of the local market, where local industries have been displaced, leading to de-industrialisation. Another likely impact will be continued and ongoing financial crises as pressures mount on balance of payments and foreign currency reserves.

Although privatisation has already been a key component of SAPs in Africa, further privatisation, especially in the service sector, is envisaged. This will be promoted through public-private-partnerships (PPPs). The aim is to attract investment into municipal services and infrastructure provision such as water, energy, sewage, telecommunications, transport etc. It is questionable whether the effect of these partnerships would be to reduce government expenditure in these areas and so free up state investment for other key areas such as job creation, health, education and social welfare. Private capital normally demands continued support, subsidisation and other incentives to invest. However, the impact on consumers could be severe, exacerbating poverty and inequality as PPPs are accompanied by profit-making measures such as cost recovery programmes, retrenchments, casualisation and other labour saving devices.

Accumulating the necessary resources for NEPAD's implementation ($64 bn p/a) depends on stimulating investment in the first instance, obtaining greater levels of debt relief, increased flows of Official Development Aid and greater access to Western markets. This is at the heart of the partnership concept of NEPAD and highlights the document's internal contradiction. Obtaining debt cancellation, greater access to Western markets and higher levels of aid require Africa to placate its Western donors. We have seen that, in respect of debt cancellation and trade access, Northern economies have not been over generous to say the least. On the contrary they have done much to thwart Africa's legitimate demands for debt cancellation and trade access. A more combative stance by African heads of state risks the jeopardising the partnership underlying NEPAD. It was probably threats by Northern countries of pulling the plug on NEPAD that persuaded Obasanjo and Mbeki to agree to Zimbabwe's expulsion from the Commonwealth, shortly after the flawed Zimbabwe Presidential elections.

Resourcing NEPAD has been discussed in the context of the Marshall Plan developed by the USA after WW II to assist with Europe's reconstruction. Massive investment in the form of new loans, productive investment in infrastructure development, factories etc. is mitigated not only by Africa's basket case image but is fundamentally affected by economic and related geo-political interests.

Currently the world economy is experiencing a global recession that has led to the further contraction of investment. Since the 1973 oil crisis the world economy has been experiencing an ongoing crisis of over-accumulation and overproduction. This has shaped the nature of investment, which is predominantly speculative as opposed to productive investment. Fidel Castro noted during his speech to the UN Financing For Development Conference that "for every dollar that goes into trade, over one hundred ends up in speculative operations completely disconnected from the real economy." Competing for foreign direct investment are the industrialised economies that draw more than 80% of FDI, Asia with more than 10% and Latin America with around 5%. Africa accounts for less than 2% of FDI inflows. It is unlikely that Africa is going to experience a sudden boost of FDI under the conditions mentioned above, certainly not sufficient to begin to address its development backlogs.

In geopolitical terms Africa is just not a priority for the majority of Northern countries and even less so after the Cold War. The Middle East, Asia, especially China and parts of Latin America are priority concerns for US and European foreign policy.

Equally unlikely is the projected 15 years of sustained economic growth of 7% or more as modelled into the Nepad plan. Such high levels of growth have only occurred in a very specific historical context, namely during the post Second World War economic boom. There is no indication that a new sustained growth path has been reached for the world economy. On the contrary, recession in the USA, melt-down in Argentina and other middle income countries, economic contraction in Japan, sluggish economic performance in Europe suggest a sustained slowdown in the world economy which will affect Africa as it seeks greater levels of integration into the world economy.

An alternative, sustainable and appropriate development strategy thus begins with inward-oriented development based on political, social and economic integration in Africa. Minimising the destabilising impact of increased competition can only occur through political processes that focus on addressing unequal and uneven development in Africa. This would require going back to some of the basic teachings of Africa's great anti-colonial leaders such as Fanon, Rodney, Nkrumah, Nyerere, etc. Building on the Lagos Plan of Africa, African Alternatives to Structural Adjustment and other African development plans it could be possible to put together an African People's Consensus capable of challenging the failed Washington Consensus that stands as an obstacle to Africa's development aspirations.

Nepad: Fiction or Fantasy? Peter Vale, Senior Professor at the School of Government and Professor of Social Theory, University of the Western Cape