Introduction
Over the past two decades, two contrasting views of Africa's position in the world economy have succeeded each other in the rhetoric of global elites.1 In the late 1990s Africa was said to be marginalised by globalisation, a thesis which rested on a supposed decline in the African continent's share of world trade and foreign direct investment (FDI) flows. A decade later, Africa had supposedly made a seamless transition to become an ‘emerging’ continent, one of the regions imminently capable of serving as a driver of global economic growth. This optimistic vision is based largely on the average level of growth in a number of African economies in recent years and on the hypothesis that from this would begin to emerge a ‘new’ middle class.
The aim of this paper is to discuss the validity of this new perception of Africa's position in the global economy. By critically re-evaluating existing empirical data, the author will attempt to show that the emergence thesis is superficial and does not take into account the current nature of economic growth in Africa as well as the cost it implies in terms of net income payments to the rest of the world.
The myth of an emerging Africa
At the end of the twentieth century, the dominant discourse was of an Africa marginalised by globalisation, but by the early twenty-first century Africa had made a seamless transition to the status of emerging continent. No longer was the search afoot for explanations of the ‘tragedy of African growth’ (Artadi and Sala-I-Martin 2003) or the significance of the ‘African dummy’ variable (Jerven 2011; Collier and Gunning 1999). The international press could now characterise Africa as the new Asia (‘How Africa is Becoming the New Asia’, Newsweek, 18 February 2010), or the hopeful continent (‘The Hopeful Continent: Africa Rising’, The Economist, 3 December 2011). In consultancy firm literature, the countries of Africa are described as ‘Lions on the Move’ (McKinsey Global Institute 2010). In 2000, the World Bank questioned whether Africa was capable of meeting the development challenge of the twenty-first century. In 2004, it responded in the affirmative: Yes, Africa Can (World Bank 2000; 2004). ‘Africa has made a good start,’ confirms a recent report issued by the French senate, explicitly entitled Africa Is Our Future. ‘Today it is an Africa fully integrated with globalisation that we [France] must address’ (Lorgeoux and Bockel 2013). The title of a work co-authored by Jean-Michel Severino, former vice-president of the World Bank and former director of the French Development Agency, sums up this view: ‘Africa's Moment’ is coming (Severino and Ray 2011).
This glowing portrait of Africa's position in the global economic system is a very significant historical event. For the first time in five centuries, a different image of Africa seems to be emerging: one of modernity, economic dynamism and progress. This perception of an emerging Africa is underpinned by three types of argument.
Firstly, Africa's assets and potential: the scale of its assets makes Africa at present the region with the greatest economic potential. In demographic terms, its population is expected to grow and is synonymous with an abundant labour force. Coupled with rapid urbanisation, this also implies needs to be met in terms of consumption, infrastructure and various services: all ‘markets’ coveted by the global private sector. Other assets include Africa's abundant natural resources which include, for example, 60% of the world's uncultivated arable land (McKinsey Global Institute 2010).
Next comes the increasing purchasing power of Africans. At the top of the income scale, the continent has a constantly growing number of dollar millionaires, meaning that an increasing number of Africans now dispose of sums that allow them to invest in Africa and the rest of the world. Between 2008 and 2012, the continent's number of ‘High Net Worth Individuals’ grew from 95,000 to slightly under 140,000, one of the world's highest rates of growth. The category of ‘High Net Worth Individuals’ consists of ‘those with US$1 million or more in investable assets’ (Capgemini and RBC Wealth Management 2013, 3). In the middle of the income scale, the African middle class has supposedly boomed over the past three decades – a thesis championed principally by the African Development Bank (AfDB) in a publication which has since had considerable influence (AfDB 2011). The AfDB defines the middle class in absolute rather than relative terms: daily per capita consumption between 2 and 20 dollars, measured in terms of purchasing power parity. Thus defined, the African middle class grew from 115 million in 1980 (26.2.% of the total population) to 313 million in 2010 (34.3% of the total population), in demographic terms giving Africa a middle class close to those of China and India. However, this approach can be viewed with some scepticism as it is based on a broad definition of ‘middle class’ which includes some objectively vulnerable, if not indeed impoverished, social groups. The AfDB itself notes that 60% of this middle class, or what it refers to as the ‘floating class’ (some 180 million people) remain vulnerable and at risk of poverty. It could also be argued that a better definition of the middle class would have sought to consider the type of jobs held by the majority of workers.
Finally comes economic growth, the main argument underpinning the emerging Africa discourse. Although the end of the first decade of the twenty-first century was fairly catastrophic for the countries of the capitalist centre, the African continent overall was one of the best-performing regions between 2000 and 2010. Over this period, the average annual rate of growth in GDP increased by: 8% and more for 6 countries; between 8 and 6% for 9 countries; between 6 and 4% for 15 countries; between 4 and 3% for 7 countries; between 3 and 2% for 9 countries; less than 2% for 3 countries (see Table 1).
| 8% and over | Between 8 and 6% | Between 6 and 4% |
|---|---|---|
| % | % | % |
| Equatorial Guinea (14.8) | Mozambique (7.8) | Ghana (5.8) |
| Angola (11.3) | Uganda (7.4) | Zambia (5.6) |
| Chad (10.7) | Liberia (7.1) | Mauritania (5) |
| Nigeria (8.9) | Tanzania (7) | Democratic Republic of Congo (4.9) |
| Ethiopia (8.4) | Cape Verde (6.4) | Morocco (4.9) |
| Rwanda (8) | Sierra Leone (6.3) | Egypt (4.8) |
| Sudan (6.3) | Congo (Republic) (4.6) | |
| Burkina Faso (6) | Niger (4.6) | |
| Mali (6) | Namibia (4.5) | |
| Tunisia (4.5) | ||
| Central African Republic (4.4) | ||
| Kenya (4.1) | ||
| Lesotho (4.1) | ||
| Senegal (4.1) | ||
| Algeria (4) | ||
| Between 4 and 3% | Between 3 and 2% | Under 2% |
| % | % | % |
| Benin (3.9) | Malawi (2.8) | Côte d'Ivoire (1.1) |
| Botswana (3.8) | Guinea (2.6) | Eritrea (0.9) |
| Gambia (3.8) | Madagascar (2.6) | Zimbabwe (–4.9) |
| Mauritius (3.8) | Guinea–Bissau (2.5) | |
| South Africa (3.5) | Swaziland (2.3) | |
| Burundi (3.3) | Togo (2.2) | |
| Cameroon (3.3) | Comoros (2) | |
| Gabon (2) | ||
| Seychelles (2) |
Source: author's calculations, based on World Bank development indicators.
Globally, most of the countries attaining the highest levels of growth over the last decade can be found in Africa, and according to the forecasts of the International Monetary Fund (2013), these trends seem set to continue over the next decade. This final argument will now be examined in more detail below.
On the nature of economic growth in Africa
Arguing solely from average rates of growth is often a mistake where Africa is concerned because it reveals nothing about the robustness (i.e. long-term durability) or nature (i.e. the underlying dynamic) of that growth. Unfortunately, economists have become accustomed to arguing in just these terms, consequently ignoring the specific features of accumulation in Africa. The principal characteristic of economic growth in Africa is not its weakness but rather its volatility, its lack of long-term resilience. Empirically speaking, the continent has experienced numerous spikes in growth (Imam and Salinas 2008; Hausmann et al. 2005; see also Pritchett 2000). In general, however, these are followed by periods of marked economic downturn due largely to war, the vagaries of climate, and global economic trends (terms of trade, movements of capital, interest rate on debt etc.). These various sources of vulnerability often explain the dialectical nature of economic growth in many African economies, where years of growth can be cancelled out immediately by years of contraction. The economic history of Africa over the past 50 years has thus been one of alternating periods of growth and contraction. The extreme variability of economic growth rates displays not only the low resilience levels of African economies but also their potential dynamism.
From this standpoint, the key question is to identify the dynamic underlying the economic growth of the last decade. Are African countries engaged in a long-term accumulation dynamic or just making up lost ground? Self-evidently, the kind of economic growth that follows decades of stagnation or decline is qualitatively different to that preceded by decades of acceleration. Take, for example, the cases of Chad and Botswana. Over the last decade, Chad's GDP grew by an average annual rate of 10.7%, while Botswana fared no better than 3.8%, placing it below the likes of Democratic Republic of Congo, Zambia, Liberia, Niger, Ethiopia and Sierra Leone, none of these role models in this regard. However, it would be a mistake to judge Chad's economic performance as superior to that of Botswana for one simple reason: Chad's growth followed four virtually ‘lost decades’ between 1960 and 2000, while Botswana was one of the best global performers over the same period. It is the African success story.
Any comparison of GDP growth rates in Africa that fails to allow for the broader growth dynamic is thus of limited value. In contexts where growth is dialectical in character, it is an error to hypothesise emergence on the basis of high average growth rates (whether calculated for an individual country or at the regional or continental level). Moreover, comparisons between Africa's average growth rate and those of other regions are also flawed as they are founded on the implicit and erroneous assumption of a qualitative homogeneity in the underlying growth dynamic.
Three separate growth dynamics will be identified below: reconstruction, stabilisation and accumulation. The reconstruction dynamic covers countries that in 2010 were yet to surpass a level of GDP per capita which peaked prior to the decade 2000–10, i.e. countries which have experienced a long-term decline in economic performance. Like other countries affected by acute political instability, Sierra Leone is in this situation. Although its GDP per capita grew by some 3% between 2000 and 2010, it has still not reached the peak set in the 1980s.
The stabilisation dynamic covers countries whose level of GDP per capita peaked during the period 2000–10, but whose average annual GDP per capita growth rate failed to reach 1.5% throughout the period observed (i.e. the first year when an estimate of GDP per capita is available and 2010). For example, Namibia's statistical history began with the World Bank World Development Indicators in 1980. Its GDP per capita grew on average by 3.1% per annum during the period 2000–10 and also peaked during this decade, but at a level lower than that potentially obtainable had Namibia enjoyed average annual growth in GDP per capita between 1980 and 2010 of 1.5%, a reasonable marker of average long-term global economic performance.2 Namibia's economic level thus remains inferior to that expected of an economy that, from the same starting point, achieved average annual growth in GDP per capita of 1.5% between 1980 and 2010. As any rate below 1.5% indicates under-performance by comparison with a global average situated approximately at the level of the rich nations of the capitalist centre, Namibia, like other countries within a stabilisation dynamic, is arguably witnessing a widening of the gap between it and the richer nations.
Finally, the accumulation dynamic covers countries whose GDP per capita peaked in the decade 2000–10 and which also recorded average annual growth in GDP per capita in excess of 1.5.% throughout the observed period.
To introduce greater structural coherence into this typology of growth dynamics, it is also vital to classify countries by economic development level. This allows a distinction to be drawn between countries which share a common growth dynamic but began from very different points of departure. It also allows one to better locate the income group where a country experiencing an accumulation dynamic is tending, or converging.3 The World Bank, for example, divides developing countries into four income groups: ‘low-income’ (gross national income per capita below US$1,036), ‘lower-middle-income’ (GNI per capita between US$1,036 and US$4,085), ‘upper-middle-income’ (GNI per capita between US$4,086 and US$12,615) and ‘high-income’ (GNI per capita above US$12,616).
The argument that will be developed here is that Africa's recent economic growth belongs largely within a reconstruction or a stabilisation dynamic, a thesis which may seem obvious given that between 1980 and 2000 a number of African countries were paying the price of the structural adjustment programmes and associated political instabilities. Those countries which lost ground then are now making up for lost time rather than heading towards ‘emergence’.
The thesis is demonstrated in Table 2. Note that the aim here is to present a possible alternative reading of the statistics normally deployed to support the argument for Africa's emergence. The unreliability of African production statistics demands that the figures themselves be used with caution.4 Table 2 summarises the nature of economic growth in 49 African countries between 2000 and 2010: 19 were in a reconstruction dynamic; 16 in a stabilisation dynamic; and 14 in an accumulation dynamic.5 In terms of economic weight, the 19 countries in reconstruction represent 9.4% of total GDP for the sample as a whole, the 16 in stabilisation represent 58.9%, while those in accumulation represent 31.7%.
| Accumulation | Stabilisation | Reconstruction: countries which have not yet reattained their highest per capita GDP level reached in the … | |||
|---|---|---|---|---|---|
| 1990s | 1980s | 1970s | 1960s | ||
| High-income countries (gross national income per capita higher than or equal to US$12,616) | |||||
| Equatorial Guinea* | |||||
| Upper-middle-income countries (gross national income per capita between US$4,086 and US$12,615) | |||||
| Angola* | South Africa | Gabon | |||
| Botswana | Algeria | ||||
| Mauritius | Namibia | ||||
| Seychelles | |||||
| Tunisia | |||||
| Lower-middle-income countries (gross national income per capita between US$1,036 and US$4,085) | |||||
| Cape Verde | Ghana | Cameroon | Côte d'Ivoire | Senegal* | |
| Egypt | Nigeria | Congo (Rep.) | Mauritania* | Zambia* | |
| Morocco | Sudan* | ||||
| Lesotho* | |||||
| Swaziland | |||||
| Low-income countries (gross national income per capita lower than US$1,036) | |||||
| Mozambique* | Benin* | Burundi* | Comoros* | Liberia* | Niger* |
| Tanzania* | Burkina Faso* | Eritrea* | Sierra Leone* | Madagascar* | |
| Uganda* | Chad* | Guinea–Bissau* | Togo* | Central African Republic* | |
| Ethiopia* | Democratic Republic of Congo* | ||||
| Gambia* | Zimbabwe* | ||||
| Guinea* | |||||
| Kenya | |||||
| Malawi* | |||||
| Mali* | |||||
| Rwanda* |
* Countries classified as LDCs.
Source: author's calculations, based on World Bank development indicators.
Of the 31 least developed countries (LDCs) studied here, only 6 are in an accumulation dynamic and 10 in a stabilisation dynamic. The 15 LDCs whose economic growth rate places them in a reconstruction dynamic are distributed as follows: 3 have yet to match a peak level of GDP per capita reached in the 1990s; 3, a peak set in the 1980s; 6, a peak set in the 1970s; and 3, a peak set in the 1960s.
The period from 2000 to 2010 has been the best in African economic history when assessed in terms of average economic growth rates. Yet, despite a certain euphoria, it is important to specify that this particular form of economic growth is largely oriented towards reconstruction and stabilisation. As soon as the argument is presented in terms of growth dynamics as well growth rates, it becomes clear that the discourse of an emerging Africa currently remains more conjecture than confirmed trend. Most African countries are still trying to reach or overtake a historic economic level or one attainable if their performance over recent decades had matched the global average. They are not yet at the stage of targeting the economic level of the so-called emerging countries. The majority still face a long, indeed a very long, road ahead.
This assertion finds further support in the ongoing failure of this recent economic growth to set the continent on a path to structural transformation. In contrast with Asia's newly industrialised countries, recent economic growth in Africa is derived above all from its extractive industries. In a recent report (2013), the IMF attempted to counter the argument that attributes the newly recovered dynamism of African economies to favourable commodity prices by stressing that 8 of the 12 best-performing African nations in terms of economic growth rates between 1995 and 2010 are low-income countries with – until now – very few natural resources. This group – including Burkina Faso, Ethiopia, Mozambique, Rwanda, Tanzania and Uganda – outperformed the average growth rate of their oil-producing counterparts over the period. However, even in these six latter countries, where economic growth has not been driven by the export of primary products, the manufacturing sector has not had a significant role to play, its average annual contribution to economic growth over the period 1995–2010 ranging from 0.32% (Ethiopia) to 1.19% (Mozambique) (IMF 2013, 34). Economic growth without any structural transformation of the economy (and thus any large-scale creation of good jobs): that sums up the present state of the continent (Rodrik 2013; African Center for Economic Transformation 2013).
The cost of economic growth in Africa
If Africa's recent economic growth should be viewed largely within a reconstruction and stabilisation dynamic, it has also been achieved at great cost. To finance their economic development, African countries pay an increasingly heavy tribute to the rest of the world, the above-cited IMF report (2013) noting that most African countries have experienced an erosion of their current account position since the 2008 world financial crisis. This trend calls into question the financial and social sustainability of a growth that does not create many jobs and tends above all to benefit foreign direct investment.
On this point, the discourse of emergence is evidently reductive, tending to pass over in silence the significant level of revenue transfer from Africa to the rest of the world. In principle, a marginalised continent would be unattractive to business, while an emerging continent would exercise greater control over the surplus created by its economy. In practice, however, it is impossible to deduce that African economies have gained greater sovereignty and become less dependent on the rest of the world. It may even be argued that their recent dynamism is based on a revived and increased dependence. During the last decade Africa made its greatest ever contribution in terms of illicit financial flows and net income payments. Studies have shown that illicit capital outflows increased over that period, particularly in oil-exporting countries, which experienced significant losses. Estimates suggest that at least US$205 billion were lost to the continent over the period 2005–10, or a quarter of the estimated value of total illicit financial flows between 1970 and 2010 (Boyce and Ndikumana 2012; see also AfDB and GFI 2013). Studies of illicit financial flows suggest that Africa is a net creditor – a net exporter of capital – vis-à-vis the rest of the world. The following discussion will show in a more modest way that Africa is also, in balance-of-payments terminology, a net exporter of income and more precisely that a growing share of the economic surplus generated during the last decade tended to be captured by foreign direct investment. To support this assertion, two indicators will be used: (i) net income from abroad and (ii) primary income from foreign direct investment.
Net income payments to the rest of the world
The current account is made up of three components: (i) the balance of goods and services; (ii) the income balance; (iii) the current transfer balance. The second of these components measures net income from abroad, officially defined as the difference between gross domestic product (GDP) and gross national income (GNI). Net income from abroad includes three types of income (European Commission et al. 2009):
Employee compensations to foreign non-resident workers (debit) and employee compensations received by resident workers (credit). Note that income transfers from migrants and immigrants settled for a year or more are recorded in the current transfer balance.
Investment returns (foreign direct investment, portfolio investment, other investments); income paid by residents to non-residents and vice versa. Reinvested profits are registered as debits but also appear as credits in the capital account.
Returns on other investments: for example, bank interest paid or received.
In a context of increasingly globalised production, the income balance acquires fundamental importance, particularly for peripheral countries of the capitalist system, due to the predominance of extractive industries and/or the increasing penetration of foreign capital. As Todaro and Smith emphasise (2006, 63):
Although mining and plantation enclaves are gradually disappearing they are often being replaced by ‘manufacturing export enclaves’ (personal computer assembly, shoe and toy manufacture, etc.) as a result of the economic penetrations of multinational corporations. The distinction therefore, between gross domestic product (GDP), which is a measure of the value of output generated within defined geographic boundaries, and gross national income (GNI), which measures the income actually earned by nationals of that country, becomes extremely important. To the extent that the export sector, or for that matter any sector of the economy, is foreign-owned and operated, GDP will be that much higher than GNI, and a few of the benefits of trade will actually accrue to LDC nationals.
With the proliferation of multinational corporations and increasing foreign ownership of companies in a wide range of countries, aggregate statistics for LDC export earnings (and indeed, GDP) may mask the fact that LDC nationals, especially those in lower income brackets, may not benefit at all from these earnings. The inter-and intra-industry trade that is being carried out may look like trade between rich and poor nations. But in reality such trade is being conducted between rich nations and other nationals of rich nations operating in developing countries!
In Africa, sadly, mining enclaves continue to play an important role. However, this in no way detracts from the relevance of the comments made by these two authors.
Given the limitations of existing data, it is hard to identify with confidence the trend of net income payments from Africa to the rest of the world. Individual updates to national accounts can produce marked changes from one year to the next, and the estimates provided by the World Bank World Development Indicators do not seem particularly reliable for periods prior to the 2000s. For the continent of Africa overall, the estimates for net income payments to the rest of the world represented in the database, as updated in mid December 2013, describe a trend palpably different from that shown by previous estimates. The trends now described for the 1980s and 1990s seem to lack coherence, showing an income balance in virtual equilibrium over the period 1960–2000, with a sudden spike in the years 2000–2010 (see Table 3). By contrast, the estimates available prior to the update seem more coherent, describing a gradually deteriorating income balance over the whole of the observed period, the average contribution to GDP of net income payments from Africa to the rest of the world increasing from 2.7% in the 1960s to 5.3%.6
| 1960s | 1970s | 1980s | 1990s | 2000s | |
|---|---|---|---|---|---|
| Regional groupings | |||||
| Sub-Saharan Africa (total) | –0.9 | –0.9 | 0.1 | 0.8 | 5.4 |
| Latin America and Caribbean (total) | 1.8 | 1.9 | 4.8 | 3.3 | 3.6 |
| Middle East and North Africa (developing countries) | 4.9 | 2.9 | |||
| East Asia and Pacific (developing countries) | 1.9 | 2.3 | 4 | 1.9 | 1.3 |
| Middle East and North Africa (total) | 0.6 | –1.4 | –4.9 | –1.3 | 1.3 |
| South Asia | 2 | 0.5 | –0.5 | 0.6 | 0.2 |
| Euro zone | –0.4 | –0.2 | 0.3 | 0.5 | 0.2 |
| East Asia and Pacific (total) | 2.2 | 0.7 | 0.9 | –0.2 | –0.4 |
| OECD member states | 2.1 | 0.4 | 0.7 | 0.5 | –0.5 |
| OECD rich member states | 2.2 | 0.4 | 0.6 | 0.4 | –0.6 |
| North America | 0.1 | 0.1 | 0.5 | 0.8 | –0.8 |
| Sample of Asian economies | |||||
| Thailand | 0.1 | 0.3 | 1.4 | 2.1 | 3.7 |
| India | 0.6 | 0.3 | 0.5 | 1.2 | 0.8 |
| China | 0 | 0 | –0.1 | 0.7 | 0.5 |
| Japan | 0.6 | 0 | –0.3 | –1.1 | –2.3 |
Note: a minus sign denotes that the country is a net income recipient.
Source: author's calculations, based on World Bank development indicators.
Whatever the case, one point is clear: Africa currently is the region with the highest net income payments to GDP ratio. The average for the African continent over the last decade hovered around 5%, while comparative figures for the same period stand at 0.5% for China, 0.7% for India, –0.6% for the high-income OECD countries, and –2.3% for Japan. In other words, rich countries and emerging countries have been net receivers of income (or at least have suffered no significant imbalance in this area), while poor countries have been net exporters of income (see Table 3). An examination of the amounts involved provides an even clearer illustration of this point.
Table 4 cumulates at current values net income payments by regional group for the period 2000–10. The rich OECD countries have received over US$2,000 billion in net income payments from the rest of the world, an average of just over US$200 billion per annum, with the United States and Japan the chief beneficiaries.7 The leading net exporters of income are the Middle East/North Africa and Latin America/Caribbean regions. The Sub-Saharan African region paid a cumulative total of US$406 billion to the rest of the world over this decade, an average of US$40 billion per annum. In comparative terms, sub-Saharan Africa's net income payments are almost three times those of the euro zone and five times greater than those of China or India. In itself, this is a significant indication of the asymmetries of globalisation: Africa as a region creates little value abroad and/or repatriates little income, while foreign investors are tending to accumulate an increasing number of assets in Africa. Indeed, net income transfers to the rest of the world are an increasingly heavy burden on the continental economy, increasing in line with economic growth and illustrating the cost of a growth model based, as demonstrated, on foreign direct investment.
| Regional groupings | 2000–2010 (US\) billions) |
|---|---|
| Middle East and North Africa (developing countries) | 1492.3 |
| Latin America and Caribbean (total) | 1210.1 |
| East Asia and Pacific (developing countries) | 435.5 |
| Sub-Saharan Africa (total) | 405.7 |
| Middle East and North Africa (total) | 255.5 |
| Euro zone | 137.7 |
| South Asia | 11 |
| East Asia and Pacific (total) | –503.6 |
| North America | –1211.9 |
| OECD member states | –1797.3 |
| OECD rich member states | –2090.1 |
| Sample of Asian economies | |
| Thailand | 82.1 |
| India | 80.8 |
| China | 79 |
| Japan | –1189 |
Note: a minus sign denotes that the country is a net income recipient.
Source: author's calculations, based on World Bank development indicators.
This image of Africa as a region which is a net exporter of income is further confirmed by examining countries individually (see Table 5). During the last decade, net income payments amounted on average to 48% of GDP in an oil-exporting nation like Equatorial Guinea, perhaps explaining the following enigma: Equatorial Guinea is the richest country in Africa in terms of GDP per capita (richer than a country like Greece in purchasing power parity terms), yet it still ranks as among the least developed countries! While Equatorial Guinea is undoubtedly an extreme example, a similar trend is apparent among other oil-exporting nations (Congo, Angola, Gabon, Nigeria and Sudan), and among other countries rich in natural resources (Liberia, Democratic Republic of Congo, Guinea, Côte d'Ivoire etc.). Even African beacons of economic growth like Botswana and the Seychelles are not immune from this tendency: they, too, have become net exporters of income.
| Country | 1960s % | 1970s % | 1980s % | 1990s % | 2000s % |
|---|---|---|---|---|---|
| Equatorial Guinea | 13.4 | 47.9 | |||
| Congo (Rep.) | 1.7 | 4 | 6.8 | 24.8 | 29.3 |
| Liberia | –3 | –7.9 | 7.3 | 22.7 | |
| Chad | 0.5 | –0.6 | –0.3 | 0.6 | 20.9 |
| Angola | 10.9 | 27.7 | 13.7 | ||
| Gabon | 5.1 | 7.4 | 7.7 | 12.4 | 12.4 |
| Nigeria | 2 | 3.6 | 4.5 | 9.5 | 9.2 |
| Guinea | 3.3 | 7.5 | |||
| Zambia | 7.7 | 6 | 10.1 | 7.6 | 7.1 |
| Botswana | –10.4 | –0.9 | 5.5 | 0.8 | 7 |
| Sudan | 0.2 | 0.8 | 3.1 | 7.2 | 7 |
| DRC | 1.5 | 0.7 | 4.4 | 8.5 | 6.9 |
| Uganda | 1.2 | 0.7 | 1.2 | 1.2 | 6.2 |
| Seychelles | 0.4 | 2.6 | 3.8 | 3.1 | 5.7 |
| Guinea–Bissau | 1.5 | 6.2 | 5.5 | ||
| Mozambique | 2.9 | 6.5 | 5.4 | ||
| Zimbabwe | 2.9 | 1.4 | 2.5 | 4.3 | 5.4 |
| Côte d'Ivoire | 2.4 | 3.6 | 8.5 | 9.7 | 5 |
| Tunisia | 2.3 | 3.7 | 4 | 4.7 | 4.6 |
| Togo | 0.6 | 1.7 | 4.3 | 2.4 | 4.5 |
| Mali | 0.6 | 1.7 | 1.2 | 4.3 | |
| Gambia | 0.8 | 3.2 | 3.2 | 3.9 | |
| Cameroon | 11.6 | 5 | 5.5 | 3.3 | |
| Algeria | –4.2 | 1.5 | 2.8 | 4.4 | 2.8 |
| Cape Verde | 1.7 | 0.3 | 2.5 | ||
| Sierra Leone | –0.5 | 2.4 | 3.9 | 6.8 | 2.5 |
| South Africa | 3.8 | 3.8 | 4 | 2.4 | 2.5 |
| Morocco | 0.1 | 0.9 | 3.8 | 3.6 | 2 |
| Ghana | 1.6 | 0.9 | 1.4 | 2 | 1.5 |
| Malawi | 2.5 | 1.7 | 5.3 | 2.4 | 1.5 |
| Madagascar | 2 | 0.4 | 3.9 | 3.8 | 1.3 |
| Senegal | 2.4 | 3.9 | 2.5 | 1.3 | |
| Tanzania | 2.7 | 1.2 | |||
| Burundi | 3.2 | 2.7 | 1.3 | 1.2 | 1 |
| Rwanda | 0 | 0.4 | 0.1 | 0.6 | 1 |
| Central African Republic | 0.5 | 0.6 | 1.2 | 1.6 | 0.8 |
| Benin | 0.3 | 0.2 | 1.5 | 1.8 | 0.6 |
| Kenya | 2.8 | 3 | 3.4 | 3.3 | 0.6 |
| Niger | 0.2 | 0.7 | 2.2 | 1.7 | 0.6 |
| Ethiopia | 0.8 | 0.4 | |||
| Namibia | 10.4 | –2 | 0.4 | ||
| Burkina Faso | –0.4 | 0.6 | 0.4 | 0.3 | 0.3 |
| Comoros | 0.3 | –0.3 | 0.2 | ||
| Mauritius | 3.1 | 0.4 | –0.4 | ||
| Swaziland | 13.9 | 11.5 | –5 | –0.7 | |
| Egypt | 0.42 | 2.31 | 5.7 | 0.1 | –0.8 |
| Mauritania | 6.2 | 5.7 | 6.9 | 2.2 | –1.4 |
| Lesotho | –57.2 | –87.9 | –45.4 | –35.8 |
Notes: a minus sign indicates that the country is a net revenue recipient; where no figure is given, this refers to decades where the data do not exist or are incomplete.
Source: author's calculations, based on World Bank development indicators.
The 1980s, coinciding with the adoption of structural adjustment plans, marked a significant turning point for most African countries, with payments to the rest of the world tending to increase. By promoting economic ‘openness’, neoliberal adjustment policies, including policies to reform the ‘business environment’, made African countries even more profitable for a type of foreign investment oriented towards the extractive industries and motivated by short-term profit.
Primary income on foreign direct investment
Between 1980 and 2000, debt repayment was the major transfer mechanism from the African continent to the rest of the world, a role since then increasingly played by the payment of FDI returns. World Development Indicators include estimates of primary income on foreign direct investment.8 This article will focus on the decade 2000–10, which offers data from a larger sample of African countries. Note also that this decade was distinctive for several reasons: (i) GDP per capita recorded its highest level of growth in real terms in Africa's recent history; (ii) FDI inflows increased significantly; (iii) countries which export primary products, particularly oil exporters, enjoyed favourable terms of trade; (iv) many poor countries saw their multilateral debt cancelled in whole or in part.
The most significant finding is that the level of primary income on FDI recorded in the statistics is enormous. For this period, and a sample of 39 countries (including 31 countries with a complete data set), the cumulative total of primary income on FDI amounts to US$325 billion at current values (see Table 6), almost equivalent to FDI inflows.
| Country | Revenue from FDI (US\) millions) |
|---|---|
| Nigeria | 85,734 |
| South Africa | 51,015 |
| Angola | 48,968 |
| Algeria (2004–2010) | 34,138 |
| Sudan (2002–2010) | 18,461 |
| Tunisia | 11,312 |
| Egypt | 10,937 |
| Botswana | 8628 |
| Morocco | 8445 |
| Congo, Republic of (2000–2007) | 6792 |
| Zambia | 6497 |
| Mauritius | 5268 |
| Côte d'Ivoire | 4629 |
| Gabon (2000–2005) | 2812 |
| Mali | 2607 |
| Mozambique | 2565 |
| Tanzania | 2292 |
| Cameroon | 1944 |
| Uganda | 1840 |
| Lesotho | 1820 |
| Swaziland | 1760 |
| Ghana | 1584 |
| Senegal | 1287 |
| Malawi | 773 |
| Kenya | 586 |
| Togo | 424 |
| Sierra Leone | 398 |
| Guinea (2000–2003; 2007–2010) | 290 |
| Benin | 241 |
| Niger | 213 |
| Ethiopia | 210 |
| Gambia (2003–2010) | 206 |
| Cape Verde | 201 |
| Madagascar (2000–2005) | 198 |
| Seychelles | 162 |
| Burkina Faso | 161 |
| Liberia (2004–2010) | 70 |
| Rwanda | 60 |
| Djibouti | 59 |
| Total | 325,587 |
Note: dates in parentheses next to country names indicate the reference periods for which data are available and on which the figure is based.
Source: author's calculations, based on World Bank development indicators.
Secondly, 51% of the income generated by foreign direct investments over the decade as a whole was produced in the years 2008–10. This is partly explained by the hike in oil prices during this period, such that the oil sector was the most profitable one for FDI. Between 2008 and 2010, Sudan paid US$7.4 billion in returns on foreign direct investment, Angola US$26.8 million and Nigeria US$52 million. In other words, in this one short period, profit from FDI in these three oil-exporting nations amounted to nearly US$30 billion, equivalent to the whole of Kenya's nominal GDP in 2008 and 4.6 times greater than the nominal GDP of Benin in the same year.
Thirdly, primary income on FDI appears to represent the largest element of the income payments made by African economies to the rest of the world. In 2010, for example, this share represented between 49% and 98% in 26 of the 37 countries for which data exists. This applies in particular to leading African economic powerhouses like South Africa, Nigeria, Egypt, Angola, Algeria etc. (see Table 7).
| Country | 2005 % | 2006 % | 2007 % | 2008 % | 2009 % | 2010 % |
|---|---|---|---|---|---|---|
| Algeria | 84.2 | 89.3 | 95.9 | 97.1 | 97.1 | 97.8 |
| Lesotho | 83.6 | 96 | 82.6 | 92 | 93.4 | 97.7 |
| Nigeria | 82.7 | 89.1 | 91.2 | 97.6 | 98.1 | 97.7 |
| Zambia | 75.9 | 93.3 | 96.9 | 94.2 | 62.6 | 95 |
| Sudan | 72.4 | 91.2 | 93.6 | 100 | 93.7 | 93.7 |
| Swaziland | 47.3 | 73.4 | 73.7 | 83.4 | 85.3 | 91.6 |
| Angola | 84 | 83.5 | 88.4 | 93.2 | 88.1 | 91.5 |
| Malawi | 64 | 70.4 | 83 | 92.7 | 83.9 | 90.1 |
| Mauritius | 22.2 | 27.2 | 15.2 | 25.4 | 48.4 | 88.5 |
| Mali | 69.3 | 76.8 | 72.2 | 78.8 | 85.2 | 81.9 |
| Egypt | 44.3 | 50.2 | 52.8 | 38.3 | 68.5 | 81.7 |
| Sierra Leone | 73.2 | 52.5 | 82.5 | 82.2 | 83.1 | 78.7 |
| Tanzania | 73.1 | 24.5 | 79.3 | 72.9 | 74.5 | 75 |
| Botswana | 82.1 | 80.1 | 85.1 | 94.4 | 76.5 | 73.3 |
| Tunisia | 53.6 | 56.3 | 65.4 | 70.2 | 68.2 | 70.4 |
| Morocco | 55.4 | 54.9 | 53.4 | 52.8 | 72.4 | 68.5 |
| Ghana | 40.9 | 45.6 | 74.9 | –62.5 | 68.8 | 62.3 |
| Cape Verde | 20.6 | 40.5 | 47.9 | 50.5 | 39.7 | 59.9 |
| Uganda | 67.5 | 80 | 77 | 63.9 | 59.1 | 57.8 |
| Togo | 58.4 | 64.2 | 48.1 | 53.5 | 47.5 | 54.5 |
| Benin | 20.9 | 27.4 | 61.5 | 52.5 | 41.5 | 53.3 |
| South Africa | 45.1 | 43.1 | 51.8 | 53.3 | 50.9 | 51.9 |
| Gambia | 75.6 | 77.5 | 71.8 | 90.7 | 59.3 | 51.2 |
| Cameroon | 43.4 | 2.6 | 68 | 41.7 | 71.6 | 49.9 |
| Côte d'Ivoire | 43.7 | 52.7 | 51.7 | 51 | 49.4 | 49.7 |
| Ethiopia | 44.7 | 62.5 | 49 | 46.7 | 40.9 | 49 |
| Djibouti | 52.6 | 49.6 | 37.6 | 39.2 | 42.8 | 44.2 |
| Mozambique | 61.9 | 59.3 | 70.5 | 68.2 | 56.2 | 43.3 |
| Senegal | 58.3 | 51.9 | 51.3 | 52.5 | 43.1 | 37.9 |
| Guinea–Bissau | 1.8 | 28.3 | 36.4 | |||
| Burkina Faso | 11.5 | 11.7 | 17.1 | 42.9 | 37.4 | 26.9 |
| Kenya | 19.2 | 23 | 40.7 | 23.5 | 28.4 | 20.7 |
| Niger | 44.9 | 30.7 | 47.2 | 41.8 | 65.4 | 16 |
| Rwanda | 11.1 | 7.1 | 18 | 25.9 | 9 | 6.4 |
| Liberia | 4.5 | 8.4 | 8.3 | 13.2 | 4 | 1.2 |
| Guinea | 43.5 | 14 | 46 | 0.3 | ||
| Seychelles | 40.7 | 46.9 | 21.1 | 28.3 | 13.3 | –61.7 |
| Burundi | 10.2 | 25.2 | 32.9 | |||
| Congo (Rep.) | 81.3 | 79.1 | 86.5 | |||
| Gabon | 76.9 | |||||
| Madagascar | 36.9 |
Notes: where no figure is given, there are no data for the year; estimates for total income payments are only available from 2005 onwards.
Source: author's calculations, based on World Bank development indicators.
Finally, the rate of profit on FDI in Africa doubled during the period 2000–10. From an average of some 5.9%, it peaked in 2008 at 15.8% before falling back in 2010 to 12.2%, making Africa undoubtedly the most profitable region in the world at the present time (see Table 8). In 2011, the global rate of profit on FDI was 7.2%: 4.8% in developed countries and 8.4% in the developing world (UNCTAD 2013). Table 8 shows that, for the period 2000–10, 24 of 40 African countries recorded an average rate of profit on FDI higher than 7%. In some countries, the average rate of profit was enormous: 77% in Botswana, 51% in Lesotho and Algeria, 36% in Angola and Mali! Moreover, these are average rates of profit, calculated for an entire decade and measured on a national scale. It is therefore probable that the rates of profit achieved in some years and some sectors – for example, the extractive industries – were quite simply monstrous. In Angola, in 2008, for example, the average rate of profit reached 110% (see Table 8)! In summary, as far as existing data on FDI stocks and primary income on FDI are to be believed, in some African countries foreign capital has moved beyond the stage of ‘eagerness’ to flirt dangerously with ‘positive audacity’.
| Country | 2000 % | 2001 % | 2002 % | 2003 % | 2004 % | 2005 % | 2006% | 2007 % | 2008 % | 2009 % | 2010 % | Average % |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Botswana | 40.9 | 21.4 | 79.8 | 99.3 | 101 | 119.2 | 129 | 116 | 108 | 18 | 16.4 | 77.3 |
| Algeria | 72.1 | 69.6 | 50.2 | 48.1 | 37.8 | 26.9 | 50.8 | |||||
| Lesotho | 21.8 | 26.4 | 25.5 | 30.9 | 34.9 | 58.6 | 174 | 93.1 | 16.8 | 20.7 | 56.5 | 50.8 |
| Angola | 12.3 | 10.2 | 9.4 | 10 | 15.4 | 26.6 | 43.6 | 62.4 | 110 | 43.8 | 55.9 | 36.3 |
| Mali | 42.1 | 82 | 61.9 | 19.9 | 21.1 | 23.4 | 27.3 | 27.1 | 33.6 | 32.1 | 20.9 | 35.6 |
| Mauritius | 1.5 | 0.7 | 1.5 | 3.3 | 1.8 | 4.3 | 10.3 | 8.3 | 11.3 | 11.1 | 221 | 25 |
| Congo | 25.8 | 19.2 | 28.3 | 17.2 | 24.2 | 35.4 | 26.2 | 22.1 | 24.8 | |||
| Senegal | 24.1 | 27.4 | 41.5 | 30.2 | 17.2 | 43.3 | 29.7 | 21.5 | 17.7 | 10.8 | 8.3 | 24.7 |
| Swaziland | 12.1 | 6.5 | 25.7 | 11.4 | 10.6 | 5.1 | 20.7 | 18.6 | 35.3 | 52.2 | 45 | 22.1 |
| Sudan | 27.2 | 26.8 | 24.3 | 14.9 | 18.3 | 16 | 26 | 15.2 | 14.9 | 20.4 | ||
| Nigeria | 9.9 | 8.2 | 7.4 | 11.8 | 8.9 | 9 | 20 | 38.1 | 41 | 30.1 | 35 | 19.9 |
| Madagascar | 2.1 | 27 | 40.2 | 14.4 | 8.1 | 15.1 | 17.8 | |||||
| Togo | 25.7 | 22.1 | 10 | 10.4 | 24.2 | 22.4 | 19 | 11.3 | 11.6 | 8.6 | 12.4 | 16.2 |
| Burkina Faso | 14.1 | 21.4 | 47.4 | 28.8 | 17.3 | 10.8 | 5.8 | 3.1 | 8.6 | 7.7 | 5.7 | 15.5 |
| Malawi | 4.4 | 3.7 | 5.2 | 13.6 | 12.2 | 8.2 | 8.9 | 9.3 | 15.8 | 10.2 | 15.9 | 9.8 |
| Guinea–Bissau | 1.7 | 0.4 | 0.1 | 2.1 | 38.1 | 14.8 | 9.5 | |||||
| Côte d'Ivoire | 12.9 | 10.6 | 9.5 | 8.8 | 8 | 7.9 | 9.7 | 9 | 8.9 | 8.4 | 7.9 | 9.2 |
| Zambia | 1.8 | 1.1 | 2.8 | 1 | 5.4 | 8.8 | 19.7 | 22.8 | 17.6 | 3.1 | 13.8 | 8.9 |
| Sierra Leone | 0.7 | 0.2 | 0.7 | 3.1 | 9.4 | 12.2 | 7.2 | 22.9 | 13.8 | 10.2 | 12.2 | 8.4 |
| Niger | 4.6 | –5.6 | 4.2 | 12.5 | 16.3 | 19.5 | 9.6 | 12.9 | 5.2 | 8.2 | 1 | 8 |
| Burundi | 0.9 | 3.1 | 10 | 14.1 | 4.5 | 14.1 | 7.8 | |||||
| Mozambique | 0 | 1.5 | 1.6 | 2.1 | 7.2 | 11.2 | 17.4 | 18.4 | 15.5 | 5.8 | 4.6 | 7.8 |
| Uganda | 2.6 | 7.4 | 5.9 | 6.6 | 14.6 | 11 | 10.6 | 8.5 | 6.5 | 5.4 | 3.4 | 7.5 |
| Guinea | 3.3 | 17.3 | 0.4 | 23.5 | 6 | 1.1 | 5.7 | 0 | 7.2 | |||
| South Africa | 4.9 | 7.8 | 6.6 | 8.3 | 5.8 | 6 | 5.8 | 8.7 | 9 | 5.7 | 4.6 | 6.7 |
| Gambia | 7.4 | 7.1 | 7.7 | 8.1 | 8 | 7.7 | 1.9 | 1.8 | 6.2 | |||
| Cameroon | 2.7 | 3.3 | 4.5 | 5.1 | 7 | 10.2 | 0.3 | 12.4 | 5.1 | 12.2 | 3.9 | 6.1 |
| Benin | –0.5 | 0.1 | 7.2 | 11 | 5.4 | 3.3 | 4.4 | 11.2 | 5.1 | 4.6 | 8 | 5.4 |
| Djibouti | 10.8 | 10.3 | 9.7 | 11 | 7.4 | 4.5 | 2.4 | 1 | 0.8 | 0.8 | 0.8 | 5.4 |
| Rwanda | 5.4 | 6 | 0.6 | 9.2 | 4.5 | 6.5 | 4.4 | 8.6 | 7.4 | 1.4 | 0.9 | 5 |
| Tunisia | 4.1 | 4.2 | 3.7 | 3.6 | 4 | 5.5 | 5.1 | 6.3 | 7.2 | 5.3 | 5.3 | 4.9 |
| Tanzania | 0.6 | 8.6 | 2.3 | 3.5 | 4.7 | 7.6 | 0.5 | 5.7 | 4.9 | 4.6 | 4.3 | 4.3 |
| Ghana | 1.1 | 1.1 | 3.9 | 3.5 | 4.9 | 4.6 | 3.9 | 11.1 | –2 | 8.1 | 4.5 | 4.1 |
| Kenya | 3.3 | 5.2 | 7.9 | 3.2 | 2.9 | 3.2 | 3.4 | 8.1 | 2.7 | 2.9 | 2.8 | 4.1 |
| Morocco | 3.1 | 3.9 | 4.1 | 4.1 | 3.6 | 2.9 | 2.7 | 2.1 | 2.1 | 4.3 | 3.3 | 3.3 |
| Cape Verde | 3 | 0.7 | 1.8 | 1.1 | 1.2 | 3.2 | 5.4 | 4.2 | 4.3 | 2.5 | 4.9 | 2.9 |
| Seychelles | 1.6 | 2.1 | 8.1 | 3.9 | 2.4 | 2.7 | 2.9 | 0.2 | 0.2 | 0 | –0.1 | 2.2 |
| Egypt | 0.5 | 0.1 | 0.4 | 0.2 | 0.2 | 2.5 | 2.7 | 2.3 | 1.2 | 3.3 | 7.5 | 1.9 |
| Ethiopia | 1.1 | 1 | 0.8 | 0.9 | 1.2 | 0.8 | 0.8 | 0.5 | 0.5 | 0.5 | 0.9 | 0.8 |
| Liberia | 0.2 | 0.2 | 0.4 | 0.4 | 0.5 | 0.1 | 0 | 0.3 | ||||
| Total sample | 5.9 | 6.1 | 6.6 | 7.6 | 7.3 | 10.7 | 12.1 | 14.5 | 15.8 | 11 | 12.2 | 10 |
| Restricted sample* | 5.7 | 6.1 | 6.1 | 7.2 | 6.7 | 7.8 | 9.6 | 13.2 | 14.9 | 10.3 | 12.3 | 9.1 |
* The restricted sample excludes countries for which data are incomplete for the period (Algeria, Burundi, Congo, Gambia, Guinea, Guinea–Bissau, Liberia, Madagascar and Sudan).
Note: where no figure is given, this refers to years where the data do not exist.
Source: author's calculations, based on World Bank development indicators (primary income on FDI) and UNCTAD online database (FDI stock). The rate of profit is calculated by the formula: (2 x primary income on FDI in Year t) / (FDI stock in Year t – 1 + FDI stock in Year t).
Conclusion
During the last three neoliberal decades, African economies have become more liberalised. Since the 2000s, they have also recorded higher rates of economic growth. Do these tendencies imply that liberalisation caused higher economic performance or even that the African continent is on the path to emergence? The answer given here is different from the dominant and optimistic narrative which posits Africa as an emerging continent.
As a result of government moves towards liberalisation, the African continent as a whole became more accessible to foreign goods as well as investment from the rest of the world. This being said, the significance of these practical achievements must not be exaggerated. In fact, it would be erroneous to think that the levels of economic growth seen in a number of African countries since the 2000s are rooted in the ‘structural reforms’ associated with previous adjustment plans. Although progress of a sort was made regarding ‘governance’, current economic dynamism was essentially stimulated by a global economic environment favourable to primary products. Indeed, it could be argued that once the structural adjustment programmes had revealed their shortcomings, it did not take much to kick-start growth. In the view of this paper, ‘structural reforms’ exerted a greater impact on patterns of distribution than on the size of the economic surplus created.
Since the 2000s, Africa's growth profile has been increasingly less ‘democratic’, both in its failure to create decent jobs and its tendency to confer the greatest benefit on a tiny number of foreign investors and members of Africa's politico-economic elites. The African Development Bank, which played a major part in structuring the discourse of emergence, was careful to remark in its study of the emerging African middle class that ‘inequality of income in Africa remains very high. About 100,000 Africans had a net worth of US$800 billion in 2008, or about 60% of Africa's GDP or 80% of sub-Saharan Africa's’ (AfDB 2011, 3). Emergence rhetoric tends hence to camouflage the unprecedented scale of the phenomenon of accumulation by dispossession experienced by most of the continent.
Far from providing grounds for optimism, the current situation should remind African governments to consider the dangers of an economic model based on an advanced level of dispossession that deprives them of their instruments of sovereignty and of the economic resources necessary to create a decent standard of living for their citizens (Bush 2013). Drawing on Samir Amin's distinction between ‘emerging societies’ and ‘emerging markets’,9 it could be argued that the realisation of Africa's enormous economic potential in a manner beneficial to the majority of Africans depends on the capacity of its governments to lead their countries from the status of ‘emerging markets’ to that of ‘emerging societies’. The necessity of such a transition appears to be the backdrop to a number of social movements increasingly marking the political life of the continent (Manji and Ekine 2011).