Opinion: Invisible colonialism in Africa
Africa continues to suffer from invisible colonialism in the form of the extraordinary control of the continent, from banking, the coffee trade, land grabs and mining.
article, Yusuf Serunkuma gives his take on how Africans have failed to
see these forms of foreign control as ‘colonial,’ in which former colonizers
have continued the pillage of the continent
With all the evidence in our midst—foreign monopolies in mining, banking, coffee trade, humongous profit expropriation, policy double-standards, direct foreign aggression such as foreign capital land grabs, and violent aggression as witnessed in Somalia and Libya, endless captive debt and so-called aid—why have Africans failed to stage committed resistance [intellectual, cultural or even military] against the ongoing pillage? Most of this championed through the Structural Adjustment Programs (SAPs) whose ruins on the continent have been acknowledged as visible everywhere, why have Africans refused to resist this pillage with their lives as their grandparents’ resisted colonies and protectorates? Asked differently: how did “former” colonizers so successfully and quickly manage to re-colonize newly independent states—as early as just 30 years after independence—that is, re-monopolize cash and food crop trade, and continue the aggressive violent extraction of Africa’s natural resources without attracting the ire of Africans? Or why have Africans failed to see structural adjustment as ‘colonial adjustment,’ as new ways in which yesterday’s colonizers returned to continue the pillage of the continent? By demonstrating that structural adjustment programs – with examples in banking, coffee trade, and mining – actually embody and display all the ugly features of the past colonial projects, this long-read argues that (a) the technocratization of pillage has so successfully disguised the exploitative nature of the power relations giving it a hue of benevolence and mutually observable interests. Africa’s eternal colonizers took off their khaki uniforms for suits, and replaced missionaries with diplomats who, instead of chanting Christianity and civilization, are now vending democracy, human rights, and free market economics. (b) Reminiscent of the colonialism of old, in addition to violent and structural enforcement, new colonialism has conscripted both willing and unsuspecting compradors across the continent. These have been organised into sophisticated elite networks and are more handsomely [directly and indirectly] remunerated than the earlier group of compradors. These range from heads of states, mid-level politicians, and senior public servants. Others include Europeanised folks in the NGO and civil society sectors whose cosmetic work on the African continent simply benefits the workers than their claimed target groups. Against technocratization and conscription of compradors including local elites, it is common to find expectedly “woke folks” in the west—activists, journalists and scholars—not simply dismissive of the colonial nature of structural adjustment programs, but also ignorant of the facts to the point that they are unaware of their own conscription to a newer and uglier version of colonial control. In an earlier essay on roape.net, I have called these folks, ‘the new intellectuals of empire.’ Thus, this clearly more lethal wave of colonialism remains invisible – with several fancy names – and has thus failed in generate the ire from Africans, and sympathy from genuine hearts in Europe and North America for whom colonization of the continent continues in their name.
Most profitable banks in the world
There are 24 commercial banks in Uganda. In the year 2019, the aggregate net-after-tax profit for those banks was USH807.5 billion (about $215m). Of the 24 banks, only three are locally owned. That is, with over 50 percent local shareholding: Centenary Bank, Housing Finance, and Post Bank. Of these three, only Centenary has noticeable visibility in the market; the other two are very minor players with limited visibility. With the remaining 21 owned mostly by South African and British, often white capitalists, that humongous amount of profit money leaves Uganda every year. Profit expropriation is easy in Uganda with the 2020 estimates showing that USH528 billion (about, $144m) left the country. This is 72 per cent of banking, net-after-tax profits that live the country annually. Picture this: a story published by The Economist in 2020 – with closer focus on Uganda – noted that “Africa’s banks are the most profitable in the world while also being the least effective.” With interest rates ranging between 12-30%, these banks, The Economist noted, make over 17% returns on equity for shareholders. So, what type of businesspersons borrow, thrive and pay off these loans – in an economy as small as $36 billion? In truth, what The Economist did not say was that these inefficient banks were actually, in many ways, a bunch of thieves, disguised as bankers. The trick is, the lender lends while fully aware that you’ll not make any success with the borrowed monies, instead, the bank will keep you in a cycle of debt while they take all of your labours and any profits in the interests. But most importantly, they are looking at your collateral, which they will also take. Because no one borrows money at that interest rate, invests it and repays their loans back—and also makes profit to thrive as a business. Only thieves or friends of government – not paying taxes or working on government tenders – can actually make a profit on such exorbitant interest rates. Sadly, these bankers are not embarrassed to reproduce colonialist stereotypes as justification for the interest rates. Citing the World Bank, The Economist reported that, “Interest rates also price in risk. Assessing borrowers is hard when they often lack credit histories. Chasing up bad loans is a struggle.” Why do honest borrowers incur costs for unfounded colonialist mistrust that bankers have about them? Can you imagine even in the year of the pandemic – where there was literally no economic activity – these banks together collected USH874 billion (about $239m), which meant their net-after-tax increased by 6.9%! How did they make this money? Through a more technocratized form of exploitation, where, with lengthy labyrinth of contracts and ideologies, the guilt of exploitation is sadly passed onto the exploited as s/he hands over their land, property, sweat and entire livelihood chastening themselves for their bad luck and poor business acumen. The Kenyan central bank tried resisting this nonsense. In 2020, The Economist reported, Kenya tried capping commercial-loan rates at four percentage points, which was above the central bank’s policy rate. But “the move backfired. Bankers slashed credit to small businesses, reasoning that the rewards of lending no longer matched the risks.” But the exorbitant interest rates actually keep many small businesses away from even approaching these banks in the first place. To appreciate the deep-seated racism and deceptiveness of these high interest explanations, you need to know that in Uganda, for example, the present banks have worked tirelessly to make sure than no native bank opens and thrives. In 2018, the Auditor General of the government of Uganda, in a confidential report to parliament noted that the central bank of Uganda had in the past three decades closed and sold assets of seven banks – all of them locally owned – with neither guidelines nor minutes: these banks include Teefe Bank (closed, 1993), International Credit Bank Ltd (closed, 1998), Greenland Bank (closed, 1999), The Co-operative Bank (closed, 1999), National Bank of Commerce (closed, 2012), Global Trust Bank (closed 2014) and Crane Bank Ltd (2016). And here is the kicker: Nile Rivers Acquisition, an offshore company based in Mauritius bought assets of five of the closed banks at 93 per cent discount using the British law. Never mind that these assets, mortgages and loans were based on Ugandan soil, and there was no indication whatsoever that the Ugandan laws could not handle the said transactions. One would then ask: what enraged Bank of Uganda to close these banks for sport? Why did locally owned commercial banks become criminalised to the point of being closed without due procedure? The answers to these questions cannot be reduced to individuals at the Bank of Uganda or the government of President Museveni (although these persons are responsible to a degree especially for their comprador character). But the colonialism of structural adjustment, which coerced African political leaders into selling government assets to foreign capitalists—because these recently decolonised countries had no local capitalists—offshoring them and hiding their profits from public scrutiny, before moving this stolen wealth to the bustle of London and Paris. Indeed, if colonialism was about syphoning Africa’s resources, this has continued uninterrupted, as former colonisers learned exploiting without direct administration!
Creaming Africa’s Coffee
Uganda ranks as one of the world’s leading producers of coffee producing over 5 million bags [each of 60kgs] of beans in the year 2019. Coffee remains a major foreign exchange earner in Uganda bringing USH1.8 trillion, that is, $494m in the financial year 2019-2020. This made it Uganda’s number one forex earner. But while these figures look awesome, the money, despite being counted in Uganda, does not end in the hands of Ugandans farmers and businessmen. But rather traders and big conglomerates in the UK, Switzerland and Germany among others. The Ugandan, Ethiopian, Kenyan coffee farmer remains as exploited as his grandparents during the colonial period. Political economists, Jörg Wiegratz (2016) and Karin Wedig (2019) have documented the quagmire in which the local farmers are trapped after structural Adjustment in the late 1980. Using terms such as “fraud,” “cheating,” “theft,” “deception” as empirical tools, Wiegratz has showed the farmer as an endangered species cheated for sport by middlemen in the absence of powerful negotiating unit which were once provided by cooperatives. With majority coffee farmers being rural and often uneducated small-scale folks, the cooperative often negotiated prices on their behalf. Dismantled by free markets, they are cheated with impunity. While Wedig disagrees that cooperatives were ever dismantled – focusing on recently created dilutions of cooperatives such as Gumutindo – she too, acknowledges the conditioning limits in which both farmers and the present cooperatives operate. I came of age after SAPs (structural adjustment programs) had just been imposed onto the continent, and cooperatives were dying out across Uganda. But I vividly recall coffee growers’ unions—a local extension of cooperatives—spread across the countryside helping local farmers thrive. The colonial government had, specifically, favoured Indian monopolists, and had worked so hard to make sure farmers remained disunited and lacked a single bargaining voice. This barrier had been successfully dismantled with the enactment of the Coffee Industry Ordinance in 1952. This allowed Native cooperatives to thrive having been denied operational licenses since 1908 which saw many natives die fighting to cooperate. Local Growers’ Unions had village offices, big storage facilities, and cemented yards where farmers collectively dried their coffee beans. Small scale farmers using mostly family labour would harvest their coffee, and use a bicycle or carry it on their heads to the nearest grower’s union yards and stores. The prices had been fixed for the benefit of the farmer. Since Uganda Coffee Marketing Board (UCMB) had negotiated the price for the beans, there were no middlemen to cheat the farmers, and prices never depended on seasons. If they did, the UCMB would pass the message down the chain. Over and above negotiating good prices, the cooperatives and growers’ unions ensured that farmers received additional services, including farm equipment, training, seedlings and veterinary support. During bad weather, storage facilities were offered. Lorries branded, “FOR EXPORT” or “COOPERATIVES” often traversed villages collecting farmer’s produce. The Uganda Commercial Bank (UCB) offered big and small loans to farmers—alongside grower’s unions—to help them meet their immediate needs including sustaining their families and paying school fees, medical bills. Can you imagine UCB was giving farmers up to 90 per cent of capital costs to cooperatives to buy ginneries of their own? The 1950s-1980s were good times before structural adjustment took hold. Together, the farmers were enabled with a voice to demand representation at the national stage. Then structural adjustment came and crushed this down. Presently, with the dismantling of nationally supported and bottom-up cooperatives, coffee farmers do not have any locally-invested voice on the international market, as UCMB did. Prices are determined by the so-called market forces of “demand and supply”—and all their fetishized violence. When the books say $490m were earned in a particular year, over 60 per cent of that money ends in the pocket of local barons and British and Indian middle-men. These middle-men have also set up shops and farms in Uganda and are, sadly, part of the local count. African Business reported that the biggest players include, “Kyagalanyi Coffee…which later became Volcafe group, the coffee division of ED&F Man, a commodities trader headquartered in London. Other big players include a subsidiary of Sucafina, a Swiss trading firm, and Olam, a commodities giant from Singapore.” Others include Neumann Gruppe with farms and large tracts of land in Mubende district in the central region, and Twin Trading, which is a UK coffee trading company. These use their local offices to earn money—audited as earned by Ugandans—but quickly returned to Europe – just as colonialism did. But there is more: if Ugandan coffee ever fetched $490m into the Ugandan economy—which ends in UK and German companies with local offices in Uganda—the same beans brought $3.4 billion into the Swiss or Germany economy. In a ground-breaking essay, Angers Elsby showed us how a bag coffee grown in Uganda, Ethiopia or Ivory Coast, Europe earns from the same bag seven times more. Elsby has written that, “between 2000 and 2010, Ethiopia, Uganda and Cote D’Ivoire received an average of $138, $71 and $68 per bag of coffee exported, respectively. Switzerland, Europe’s most profitable coffee re-exporter, earned over $700 per bag.” And this is not because African countries are unable to “add value” but rather that the politics of assessing value addition are inherently flawed to favour western multinationals. Elsby notes that policies implemented by European states during the 1980s and 1990s – accompanying structural adjustment – “dramatically restructured global commodity markets in their favor of Europe and artificially inflated the international competitiveness of their commodity trading and processing industries”. In truth, this so-called competitiveness, Elsby demonstrates, does not stand much on value-additional claims but rather “value capture” by Europe, a thing entirely dependent on political or state power. Not economics. Value capture, and claims of value addition is the new language of exploitation. But what more value would be there beyond making the bean available, beyond farming this bean?
From Leopold II to King Gertler
In his seminal book, King Leopold’s Ghost: A Story of Greed, Terror and Heroism in Colonial Africa, Adam Hochschild tells the story of an official, Edmund Dene Morel from shipping company Elder Dempster which was based in Liverpool. Morel championed the campaigns to end the late phases of slave trade under King Leopold II, something he followed up on by sheer intuition and instinct. It was about 1897, when, on one of his occasional supervisory trips at the Belgian port of Antwerp, Edmund Morel noticed something unsettling about the ships loading and unloading goods to and from the Congo: At the docks of the big port of Antwerp he sees his company’s ships arriving filled to the hatch covers with valuable cargoes of rubber and ivory. But when they cast off their hawsers to steam back to the Congo, while military bands play on the pier and eager young men in uniform line the ships’ rails, what they carry is mostly army officers, firearms, and ammunition. There is no trade going on here. Little or nothing is being exchanged for the rubber and ivory. As Morel watches these riches streaming to Europe with almost no goods being sent to Africa to pay for them, he realizes that there can be only one explanation for their source: slave labor. Indeed, there was slave trade, and Morel would go on to champion a major human rights movement against King Leopold II in the years that followed. Among the other activists that Morel inspired was the well-known satirist and novelist Mark Twain. In one of his epistles, Mark Twain noted that when he participated in the anti-slave movement that Morel had inspired, “in the Congo, a practice [Slave trade] had taken eight to ten million lives.” Reading this figure, Hochschild was startled: He noted: Statistics about mass murder are often hard to prove. But if this number turned out to be even half as high… the Congo would have been one of the major killing grounds of modern times. Why were these deaths not mentioned in the standard litany of our century’s horrors? There are three things I want to highlight from this section of the story of King Leopold II and his crimes in Congo. The first is that if he ever returned anything to the Congo for the rubber and ivory he pillaged, it was weapons and soldiers. Not more goods. Secondly, his actions directly led to millions of deaths as Mark Twain noted. If they were not directly killed and maimed as punishment for not fulfilling the quotas of wild rubber demanded, they died from the conditions that the Leopold enterprise put in place. Conservative estimates have put the numbers at 10 million people. The third point, and perhaps most important for this essay, is that the template that Leopold used has never been thrown away. It has simply been revised over the successive years, to become more disguised but it remains as lethal as before. To make that case more succinctly, I will tell the story of Leopold’s later replacement: King Dan Gertler. Considered the richest or one of the richest men in Israel, Dan Gertler’s empire has been built off Congolese natural resources and like Leopold, leaving many dead bodies in his wake. With monopolistic rights over almost all the mining sites in the Democratic Republic Congo, Gertler is the absolute embodiment of the colonialism of the so-called free-markets – that were ushered in by structural adjustment. Gertler enjoys near-monopoly rights in Congo’s diamond, copper, cobalt and gold trade, which he attained only dubiously. Recently, western media was awash with his corruption scandals, in which he allegedly gave out $100m of bribes to acquire this monopoly status. Interestingly, the script involves direct voices and footprints of the American presidents from George W. Bush, Barack Obama, Donald Trump, and now Joseph Biden. Sadly, not narrativized as colonialism, but in the beautiful language as a contention over a “trading licence.” The state of Israel appears only on the side-lines. But why would the story of a single businessman – interacting in a free market economy – directly implicate presidents and states? Because there are no businessmen of this size without the violence of their states. These license scandals notwithstanding, in 2020, Bloomberg reported that Gertler would be getting richer over his Congolese possessions after entering trade agreements with Tesla’s Elon Musk. Having reached the DRC in 1997, the BBC reported, Gertler’s breakthrough came during the 2000 civil war in DR Congo which “risked ending Kabila’s reign as suddenly as it had begun.” Arguably with the support of the Israel government, “Gertler promised millions of dollars and, according to a United Nations report, access to arms.” Emphasis added. In the spirit of states propping their capitalist exploiters of the African wild—disguised as individuals on free trade projects—this access to arms would only be guaranteed by his state. Gertler delivered on his promise of arms according to a UN report cited in the New York Times. In return, Gertler “received a monopoly on DR Congo’s substantial diamond exports,” and “diamonds would be exchanged for money, weapons and military training.” The mention of military training should signal us to the ways in which state-driven, war-driven capitalism reproduces itself: works with the state. No wonder, when Laurent Kabila was assassinated in 2001, Gertler had “gained the trust of the younger Kabila” who went on to become president, and with him, Gertler was guaranteed more success. Just 47 years of age, Gertler is believed to the richest man in Israel with major investments across Tel-Aviv – not Kinshasa. King Leopold built Belgium through his proceeds from Kongo – not Kongo. The BBC story continues that with bribes estimated to be over $100m, “Companies controlled by Mr Gertler started sweeping up licences for mineral deposits all over the country.” Not to eat alone, Gertler helped other capitalist exploiters “like Swiss commodities trader Glencore and New York hedge fund company Och-Ziff Capital Management.” These acquired control over mining sites, and the pillage continued. It is estimated that DR Congo has lost $1.36 bn in these shady deals. Presently, there are Blue Helmets in DR Congo, and continued violence in different parts of the country directly connected to the ways in which minerals are mined in the region. The difference here is that while King Leopold II would be directly called out, under Gertler’s regime, it is individual Congolese held responsible for killing each other. Gertler is deftly hidden. For those unfamiliar with the new wave of colonialist-capitalist control, it is easy to put the two Kabila presidencies on the spot for being corrupt and allowing foreign pillage. It is also easy to seek to hold Gertler as individually accountable. This would be barely scratching the surface. These men are beneficiaries and servants of a ‘regime of truth’ that was set in motion by the International Monetary Fund and the World Bank. Under the language of free market economies, former and new colonisers work in the background—outsourcing individual businessmen whom they can discard once things turn sour. In addition to quietly manipulating and supporting conflicts, they return as defenders of human rights, and seek to prosecute perpetrators – to do all of this they have conscripted an army of journalists and scholars, returned as donors and aid-givers, and turned the political class into compradors accessing entire economies through simple, technocratized routes (development, aid, human rights, democracy, etc.) In the Congo, the Gertler pillage is technocratized and no one ever questions how a white foreigner owns monopoly rights over natural resources in a war-ridden country. Instead, the situation is captured and debated in technicalities and legalese of courts judgments, licenses or sanctions, and does not involve dismantling this out-rightly colonial empire.
Structural Adjustment as Colonial Adjustment
In a recently published book, Less is More: How Degrowth will Save the World, Jason Hickel tells the story of Structural Adjustment in rivetingly precise details: after independence in the 1950s and 1960s, Hickel writes, newly independent governments rolled out progressive policies to rebuild their economies. They used taxes and subsidies “to protect their domestic industries, improve labor standards and raising workers’ wages. They also invested in public health and education.” Hickel continues that “all of this was meant to reverse the extractive policies of colonialism and improve human welfare – and it was working.” The effect of this was that “average incomes in the global South grew at 3.2% per year in the 1960s and 1970s” which in effect, improved the quality of life in these countries. As this happened, former colonizers were not pleased at all. These breakthroughs in formerly colonized places had meant, Hickel notes, “losing access to cheap labor, raw materials and captive markets that they had enjoyed under colonialism.” They had to intervene. For about 25 years, they schemed and planned on how to reverse the tide. Using their control over the World Bank and the IMF, they imposed structural adjustment programs across Latin America, Africa and parts of Asia. Forcefully, SAPs “liberalized the economies of the global South, tearing down protective tariffs and capital controls, cutting wages and environmental laws, slashing social spending and privatizing public goods – all to break open profitable new frontiers for foreign capital and restore access to cheap labor and resources,” Hickel concludes. To make the argument that parastatals and cooperatives – mining companies, transport systems, farmer’s support systems, value addition chains, hotels, etcetera – were not working, Wiegratz (2016) has noted that World Bank (i.e. it’s advisors/experts) had to forge evidence: according to a key source from inside the state machinery in Uganda, “cooperatives were forced to sell their business to the private sectors” through manufactured bank statements that declared them indebted and unsustainable: “accountants were sent into cooperatives to check their books… made sure the cooperatives were on a loss on paper: cooperatives were told, you have to sell to cancel your debt [that was created on paper in the first place]. Also, cooperatives were not regarded credit worthy by respective banks” (2016: 99). It did not matter that almost all African economists and ministers of finances had argued that African economies were too small to be left on their own (i.e., without protective barriers, state subsidies, trade deals politics etc.). There were no businessmen rich enough to buy, take loans (at +20 per cent interest), and run entire railway lines or hotel chains. We had just emerged from colonialism. It meant – with global market fictions – that, rich, mostly white men from Europe and North America, propped by their governments would come and buy the very things they had once taken by force and looted. In truth, after decades of independence, the loot continues – but in a more technocratized form and expert driven and less violent than before. This is the story of Dan Gertler, ED&F Man London, Sucafina, Switzerland, Olam Group, Singapore, Neumann Gruppe, from Germany and Twin Trading from the UK.
Conclusion: scramble without partition
If the 1885 Berlin Conference meant that Europe would grind Africa down after sharing it amongst themselves—which also often meant fighting over each other’s share—the 1980s Structural Adjustment project meant that the lions had finally agreed to eat their prey without fighting over it. There was no reason to split it into small units of influence anymore. They could eat all at once, and everybody was welcome to the dining table, exclusively designed, meticulously calculated, legally and forcefully protected for dinners in Europe and North America. Hickel has written that in Europe and North America, “…fully half of the total materials they consume are extracted from poorer countries and generally under unequal and exploitative conditions. The Coltan in your smartphones comes from mines in the Congo. The lithium in your electric car batteries comes from the mountains of Bolivia. The cotton in your bedsheets comes from plantations in Egypt… the vast majority of materials consumed in the south ultimately originate from the South itself even if they are recycled through multinational value chains” (2020: 112). How does one ensure that these supplies keep coming? Beyond the legalese of SAPs, Sierra Leonian-German activist, Mallence Bart-Williams has added that this also involves “systematically destabilising the wealthiest African nations and their systems, and all that backed by huge PR campaigns” while at the same feigning endless benevolence to the Africans through aid—under the flashing lights of cameras—but stealing much more under the shadows. One might say, that one of the most binding lessons of the Second World War, and the Cold War, was the uselessness of fighting over helpless prey – or prey that can easily be sedated or manipulated into subservience. The lions realised there was no need for outright violence over the prey. This eating-together approach is more tactical, subtle, disguised, and even welcome among sections of the prey, as it does not arouse any animosity from the prey itself. In truth, it is this subtlety, technocratization, legalese, conscription of local politicians/elites that Africans masses remain blinded from the colonial continuities despite the enormity of scale.
This article was first published in the Review of African political Economy (ROAPE).