Introduction     Economic    Government    Religion    Education    Family

Final Thoughts         Works Cited            About the Author

ECONOMIC INSTITUTION

         ....Those who are busy doing the urgent things rarely have time for the important things,
that is, to think out implications of their activity. 
Denis Goulet and Michael Hudson, The Myth of Aid

        Consider that when the European countries, Japan, and US emerged as nation-states, they did not compete in a globalized marketplace.  "During the development process, they protected and promoted their young industries and copied each others' technology" (Ankomah and Bazid, 15). Today, most industrialized nations already produce computers, cars, refrigerators, pens, lipstick, etc.  How should African countries now catch up? 

          So, this is the dilemma: Southern African countries as well as other developing economies must compete against the dominant, well established ones.  High-income countries account for 80% of the world's GDP, 82% of its export markets, and 68% of direct foreign investment (Thompson, 19).  How should African countries now catch up?  For the rich "Commonwealth" block (Great Britain, Australia, Canada, and New Zealand) dominate between 75% and 90% of all African metal and mineral output and refining, with "almost all the mining companies headquartered in Britain, Canada, South Africa or Australia.  Naming 27 of these companies recently, the American Almanac revealed that at least one of them -- a giant in South Africa -- controls one-quarter of all of Africa's raw material output. 'Since Africa has little manufacturing or infrastructure, this places the life-or-death existence of most African nations, including the export earnings of several nations, in the cartel's hands,' said the Almanac" (Commonwealth: Whose Wealth?).

          What could Africa produce that other nations want?  They cannot rely on safaris to totally support them, after all.  What they've had, unfortunately, is a large supply of excess labor and natural resources.  "...All of the underdeveloped countries are today at the mercy of the power of [global corporations]," according to Oswaldo de Rivero, former Peruvian diplomat and ambassador to the United Nations and author of The Myth of Development.  "[Yet,] Africa has not attracted short-term speculative capital.  On the contrary, its status as exporter of practically nothing but raw materials and basic commodities has been reinforced by [IMF and World Bank] Structural Adjustment Programmes [which require further reductions in subsidized medical care, free education, etc., to its citizens] ... Africa has entered the new millennium as a continent full of dysfunctional national economies out of synch with the global economy" (Ankomah and Bazid, 14-15). (To "read more about it," that is, about growing African poverty, click here.)  

        Let's examine Africa's main non-oil exports:                

        What's wrong with this picture?  Obviously, these countries are weakly competitive, competing as they do in a sluggish world market for primary commodities (world exports of these products has declined 56% since 1980 levels).  The result?  Escalating external debt and increasing marginalization of Africa.  

        You may be aware that, in 2001, George Bush requested $50B (a figure which also included the costs of increased security) to reconstruct Iraq which hosts a population of 24 million.  UN assessment of the top six African nations most likely to benefit from reconstruction -- including Uganda and Senegal -- came in at $9B for a population of 180 million.  But where is the will to provide such funding? (Note: The war has now exceeded costs of $400 billion.)

          Now, I presume, you begin to appreciate the challenges of building an economy in a globalized marketplace while simultaneously facing deteriorating family and uneven political structures (much less the AIDS pandemic).  Yet somehow these young countries must forge ahead.   

ECONOMIC COLONIALISM (Review text, p. 176)

    While Kenya is not a southern African nation, it provides a clear example of how "present-day imperialism" works:  That is, global markets most benefit the most prosperous nations.  Let's examine why.

    Yearly, Kenya produces about 300,000 tons of tea and earns some US$440 million on tea exports.  The bad news is that a large portion of this tea goes in bulk form to richer nations where it is processed and packaged before exporting it back to Africa for local consumption ..."We want Americans to consume Kenya tea as Kenya tea and not as English breakfast tea," complains Kenya's Minister of Trade.

    You see, Kenyan companies generally do not have the resources or capital to build processing plants, and they face punitive tariffs for selling value-added tea to many rich countries. So they only have significant access to bulk-tea markets, though some claim that processing tea at home could reap Kenyans up to ten times what they now receive for raw tea leaves.  Meanwhile, the world is producing more tea than it consumes, driving prices down.

     During the 1980s and early 90s, coffee comprised more than 40% of Kenya's export earnings but just 7% by 2003.  Coffee prices have dropped, due in part to competitors' strategy of dumping tons of cheaper grade coffee onto the world market -- more than 50 nations now produce coffee.  (Again, what can African nations competitively produce that other nations will want?)

     While blame and root causes are debatable and complex, what's clear -- and this is the main point here -- is that Kenyans are not the real beneficiaries of their produce ... Just as under colonialism, outside interests are able to extract the wealth of Kenya's industry and, try as they might, Kenyans have too many disadvantages to compete globally.

"We are back where we started.  Sending raw materials out, bringing cheap manufactured goods in.   This isn't progress. It's colonialism."  Wilfred Collins Wonani, head of the Chamber of Commerce, in Kabwe, Zambia, where a Chinese company once manufactured cloth but now experts only raw cotton.

    When it comes to poor countries, their experience with globalization is not one of fair trade, diminished tariffs, and free movement of goods and services.  Rather, globalization means the rich countries with strong economies do as they wish, and the poor countries suffer what they must ... From the perspective of the poor nations, globalization as it currently exists is nothing less than a policy of economy tyranny (Kramer, 72-75).

          Botswana was in the enviable position of discovering a major diamond pipe in the 1970s which gave impetus to the country's export performance.  The pipe has exceeded all expectations, yielding 9M carats annually by the end of the 1980s (Joyce, 19-20).  While mining and agriculture are primary economic industries, serious efforts to diversify have been attempted. 

          Jointly, South Africans and the Botswana government have built two large malls in the capital of Gabarone.  Botswana has actually built the malls while South African business owners have purchased the store space from them.  Here's the dilemma, however:  The benefactors of this set-up are the white South Africans, neither the black South Africans nor the Batswana themselves.  Enriched by years of apartheid, white Africans emerged with the capital to invest elsewhere.  Such joint ventures have actually sucked money from Botswana rather than pumped it in (Raditladi).

          After independence (1966), most important jobs in Botswana were held by foreigners (Raditladi).  Perhaps not much has changed.  The "informal sector" is still a highly important sector of the southern African economy.  Stanley Mnisi, the manager of our passenger transport in Swaziland, said his mother supported -- and educated --  her nine children by selling mangos at local stands earlier in the year, then using a portion of the proceeds to buy sweet potato seeds.  Then, she'd informally sell sweet potatoes later on.  Family after family in southern Africa relies on this informal market to maintain themselves at a subsistence level.  

          To increase employment opportunities for its citizens, Botswana developed a Financial Assistance Program wherein the government paid companies to come in to start up.  They were allowed five years of assistance before the companies had to be self-sufficient.  Instead, five years hence, owners skipped the country.  Consequently, today Botswana hopes to "grow" it own companies -- for example, women poultry and textile producers -- though a slow process indeed (Raditladi).  

          Fortunately for its citizens, Botswana has taken a fairly socialistic approach toward moneymaking.  So while DeBeers controls its diamond production, it doesn't do so without contributing greatly to Botswana's social programs.  Thus, unlike its neighbors, has Botswana been able to provide a full-blown program of AIDS treatment for its citizens, develop free clean water and electrical systems, and create subsidized housing, something few other African nations could consider doing.  

Swaziland:  

          Swaziland, ruled by a monarchy, is another matter entirely.  Headed by polygamous King Mswati III (who once stated, "Democracy is not good for us"), Swaziland has an "exploding number of unhappy subjects who have been protesting [the king's] increasingly autocratic rule" ("Swaziland, a Ruler...").  Like his predecessors, the king (and thus his subjects) supports many wives.  Unlike his predecessors, however, these wives live in modern homes and drive BMWs and their children attend schools abroad, all a costly venture.  

          So, how does King Mswati III afford such luxury?  The Chinese, for one, have actually built a palace for the king.  (Now, according to one Town Council member, the King is being courted by the Libyans as well.)  In return, the king turns a blind eye to conditions within Chinese-owned factories in Swaziland.  The Chinese hire women for R400 -- $50 -- a month.  If anyone is suspected of trying to organize workers, she's immediately fired.  Even then, many are fired for no discernable reason after six months or so.  The king is completely oblivious to the situation despite the laments of the Nhlangano Town Council.  

          In Swaziland, where political parties are banned and being critical of the king in print can land journalists in jail, it's not surprising that problems go unaddressed (Director, Media Institute).  "A $900,000 proposal for emergency aid has languished for months; a $500,000 proposal to upgrade the royal fleet of cars was swiftly approved.  The government has no irrigation projects for maize -- only for sugar plantations controlled by the king.  Rural farmers have no way to finance their own irrigation projects because the king holds title to their land ... [The] government has stopped giving away seed to farmers.  One is not even sure the king is aware of the seriousness of the situation (25% of all subjects are now at risk of starvation).  When US Ambassador James McGee showed the king photographs of hungry Swazis, the king responded, 'Oh, that's nice'" (Grunwald).

South Africa:  

            Unlike Botswana and Swaziland, South Africa already had a modern economy -- for the South African whites -- at the end of apartheid (1994).  The challenge now is to bring black South Africans into this success story.  "The racial profile of South Africa's formal business continues to resemble that of pre-1994.  To date, the process of Black Economic Empowerment (BEE), whilst largely creating an emergent black business elite, has failed to generate far-reaching economic employment at the grassroots level" ("Free but Still...", 16).

Poverty ... has been exacerbated by the unequal distribution of resources in South African society.  The inability of individuals, households or entire communities to command sufficient resources to satisfy an acceptable minimum standard of living underpins poverty.  The number of South Africans living in poverty is estimated to reach anywhere between 45 and 55 percent (20-28 million) and is not confined to any one race group.  However, it is concentrated among blacks, particularly Africans: 61% of Africans and 38% of coloureds are poor, compared with 5% of Indians and 1% of whites.

Statistics show that poverty in South Africa is critically linked to the labour market, which has failed to deliver opportunities for a majority of black people to access employment opportunities.  In 1999 38% of African households or 3.1 million people were estimated to be "workerless" (having no employed people) ("Free but Still...," 16-17).  

With very limited resources to assist, the government has to rely on local ingenuity to create opportunity.  Currently, only 6% of the national budget is appropriated to education, a percentage unlikely to increase given financial constraints (16% of the budget goes to servicing foreign debt) (Panel Presentation).

The City of uMhlathuze (incorporating the former Richard's Bay and Mtunzini) has tried to work around the limitations of government funding by sending a clear message to businesses to be "socially responsible" if they hope to locate there.  So rather than the abusive labor situation developing in Swaziland, these employers fund schools, health clinics, housing and more: Without public transportation, for example, they're expected to transport workers to and from the job.  As such, Snyman van Straaten, chief marketing officer for the area, implied that uMhlathuze develops partnerships with those corporations willing to aid not just their own "bottom lines" but that of their communities as well.

Yes, like Swaziland, South African cities face growing shantytowns as rural people without resources move in.  Unlike Swaziland, however, uMhlathuze is trying to control how closely shanties are built.  In return for adhering to restrictions, the city tires to insure a water spigot at no charge for every 20 people in the area.  Nonetheless, living conditions are not good, obviously.    

Like the US, South Africa has implemented Affirmative Action so that management positions and business ownership can reflect the local demographic ratio of black to white.  As in the US, this hasn't been attempted without animosity.  Essentially, in Richard's Bay, company after company has replaced white managers with black -- even with black managers wholly unqualified to take over.  Yes, such employment policies led to business inefficiencies, at least in the short run, as many learned their duties on the job, often trained by the very people they were replacing (van Straaten). And, yet, as in the US, if such shake-ups did not occur, the status quo would endure indefinitely.  (This status quo is evident in both Botswana and Swaziland where white South Africans have relocated to start businesses.  The nicest restaurants in town -- the nicest sections of the cities-- are dominated not with black but with white faces.)  

It is against this political and socio-economic backdrop that [South African] President Mbeki has effectively placed BEE [Black Economic Empowerment] at the centre of economic growth.  Its central objectives will be to redress the imbalances of the past by transferring ownership and management of South Africa's business sector to the majority of its people.  This would in turn serve to deracialise business, redistribute income and wealth and fight systemic poverty within black communities.  As the government shifts in 2003 towards defined strategies that will spur domestic growth, the success or otherwise of BEE raises a number of hard questions regarding the proposed new legislative framework and what it should entail ("Free but Still...," 17).

          In short, tensions in South Africa are palpable.  Can this country forge ahead to establish racial equity or will it explode -- that is the situation the world anxiously awaits.  

ABOUT PROVIDING ADDITIONAL FOREIGN AID

        Strange as it may sound, the net flow of wealth appears to move from poor countries to wealthy countries.  Isbister notes that in 1981, there was a "net positive flow of funds from the rich countries to the third world of $42.6 billion; by 1988, there was a net reverse flow from the poor countries to the rich of $32.5 billion, most of the shift occurring because of debt servicing (179).  Countries like Denmark, the Netherlands, and Sweden provide 0.8 percent of their national income for economic development of the "third world" while other countries in Europe contribute about .22% and the US less than .1%.  Considering our national income, this contribution is more in absolute dollars but certainly not in comparative percentage terms (Isbister, 219).  In this context, an argument can easily be made -- as Tony Blair attempted to do at this year's G8 Summit -- that if the international community spent as much money to prevent massive violations of human rights and genocide as it does to intervene militarily, intervention would not have to be too little too late.

No, nothing is simple.  

 Introduction     Economic    Government    Religion    Education    Family

Final Thoughts         Works Cited            About the Author