AAfrica Day (May 25) has its roots in African Freedom Day, declared by the first Congress of Independent African States in 1958 “to symbolize the determination of the African people to free themselves from foreign domination and exploitation”.
Our history of corporatized slavery through the Dutch East India Company, corporatized imperialism through the British South Africa Company, the symbiotic relationship of corporations with the apartheid state and the entanglement of foreign corporations in state capture makes us acutely aware that the face of this exploitation has too often been a private corporation.
The African challenge with regard to foreign investment and business operations in Africa is still systemic. Trade and investment patterns remain largely extractive, with the continent’s largest investments based on the expatriation of corporate profits as well as African mineral or agricultural resources to be transformed into valuable commodities elsewhere.
Furthermore, the continent is rife with fragile entrepreneurs whose very business model is based on corrupt access to resources, weak enforcement of environmental regulations and denial of labour, community and indigenous rights. Any developmental impact of the presence of these corporate activities is incidental; and all too often there is a net negative impact on human security.
For example, the Bojanala mines in the heart of South Africa’s platinum belt extract 50% of the platinum produced in the world. However, Bojanala’s unemployment rate is 48.7% and the Gini coefficient is 0.62; less than 20% of homes have piped water and less than a third of adults have completed high school. Bojanala’s crime rate is the highest of the North West Province sub-regions. For the local municipality of Rustenburg, the murder rate in 2016 was around 36 per 100,000 people – comparable to South Sudan, and higher than Colombia, the Central African Republic and Yemen, all countries plagued by a armed conflict.
Moreover, foreign companies — arrogantly or ignorantly — ignore social conflicts and even armed violence linked to their operations. Rio Tinto ceased operations last year in response to violence in Richards Bay, but notably failed to point out that the company was contributing to community conflict by establishing few meaningful links between major industry and community development. local businesses, and having a limited, if any, community. consultation and participation in the planning of its initiatives.
When Total suspended its natural gas project in Mozambique, it did not explain how its own actions – including the marginalization of community voices, the militarization of responses to social risk and the exacerbation of regional and political fault lines – directly contributed to the escalation of the conflict leading to thousands of deaths. and approximately one million displaced persons.
Historically, the response of African liberation movements to the corporate dynamics they saw repeating themselves endlessly across the continent was a call for socialism. Contemporary voices are also calling for the nationalization of key industries both to reduce corporate harm and to increase Africa’s development from African resources.
It is not necessary to jump into the socialism versus capitalism debate to recognize the truth of their basic premise: that the structures of our economy – including notably the large corporations that are largely responsive to foreign interests – are badly broken and in need of fundamental reform.
If we take as a starting point that the private society that Africa needs has not yet been invented, perhaps we can make significant progress. We can work to ensure that those who thrive in Africa are for Africa too – and will therefore be significantly different from the landscape we see today.
First, business for Africa will avoid the easy profits of extraction; rather, they will create opportunities in the real economy that directly address the needs of poor, vulnerable and marginalized groups at scale. Given that around 80% of Africans find their livelihoods in the informal economy, particularly as smallholders or subsistence farmers, this will require a shift away from bank-dear “megaprojects” towards inclusive value chains.
At the same time, businesses for Africa will be proud to bring valuable products to the world. We will see fewer primary products and raw materials exported. We will see a West African chocolate champion competing with Nestlé; a South African auto parts champion to compete with German companies that now process African platinum into catalytic converters; and much more.
Businesses for Africa will also be strengths and examples of good governance. They will refrain from lobbying or negotiating with public entities outside of transparent and inclusive processes; they will make stakeholders decision makers in corporate processes of public importance such as ESG assessments, risk mitigation planning and impact monitoring; and they will submit to accessible and binding dispute resolution processes and redress mechanisms managed by independent third parties.
Finally, the company in Africa, for Africa will also be responsible for all its responsibilities. Today, a CEO cannot ignore repayments to his project finance lender claiming that the company is somehow “moving” in that direction. In Africa’s future, the failure to deliver human security and human development will have the same consequences as the failure to meet financial targets.
We should not naively assume that the companies that currently dominate the African continent will agree with this agenda. After all, they have adapted over decades, if not centuries, to be optimally profitable under the status quo.
However, we must remember that corporations are not a force of nature, but rather creatures of law and politics. A combination of smart regulation, fostering the emergence of new private sector players, alliances with forward-thinking development banks and international partners, and community and civil society engagement can bring Changes.
It can make business in Africa, for Africa, “a concrete manifestation of the pan-African will for unity, self-determination, freedom, progress and collective prosperity” as aspired in the Agenda 2063 of the African Union. DM