African Political Economy in the Twenty-First Century: Theories, Perspectives, and Issues 1666930350, 9781666930351

Table of contents :
Cover
Title
Untitled
Contents
Figures and Tables
Foreword
Preface
Acknowledgements
Introduction
Ontological, Epistemological and Theoretical Issues
International Political Economy
Theories of International Trade
Transcending Neo-functionalism
Dependency and Development Question in Africa
Africa and the Purveyors of Global Political Economy
Africa and the World Bank
African Development Bank and the Dynamics of African Political Economy
Group of Seven (G7) and Development Trajectories in Africa
Multilateralism, Integration and Trade System in Africa
Regional Integration and Economic Growth in North Africa
Regionalism and Regional Integration in East Africa
‌‌African Continental Free Trade Agreement (AfCFTA)‌‌ and Regional Integration in Africa
International Trade, South-South Cooperation and African Integration
Liberalism and Protectionism in International Trade
International Trade Wars and Decline in Economic Diplomacy
International Trade Policies and Politics of Food Security in Africa
International Finance and Development Issues in Africa
Washington Consensus, North-South Relations and African Development
International Financial Flows and Development in Africa
Political Economy of Foreign Direct Investments in Africa
Political Economy of Aid and Official Development Assistance in Sub-Saharan Africa
Africa and International Philanthropy
Debts, Extraction and Predation
Index
About the Editors and Contributors

Citation preview

African Political Economy in the Twenty-First Century

Africa: Past, Present And Prospects

Series Editors:

Toyin Falola, University of Texas, Austin, Texas; and Olajumoke Yacob-Haliso, Brandeis University, Waltham, Massachusetts This series collates and curates studies of Africa in its multivalent local, regional and global contexts. It aims fundamentally to capture in one series historical, contemporary and multidisciplinary studies which analyse the dynamics of the African predicament from deeply theoretical perspectives while marshalling empirical data to describe, explain and predict trends in continuities and change in Africa and in African studies. The books published in this series represents the multiplicity of voices, local and global, in relation to African futures. It not only represents diversity but also provides a platform for convergence of outstanding research that will enliven debates about the future of Africa, while also advancing theory and informing policymaking. Preference is given to studies that deliberately link the past with the present and advances knowledge about various African nations by extending the range, breadth, depth, types and sources of data and information existing and emerging about these countries. Recent and Forthcoming Titles African Political Economy in the Twenty-First Century: Theories, Perspectives, and Issues, edited by Emeka C. Iloh, Ernest T. Aniche, and Stephen N. Azom Citizenship and the Diaspora in the Digital Age: Farooq Kperogi and the Virtual Community, by Toyin Falola History, Identity and the Bukusu-Bagisu Relations on the Kenya and Uganda Border, by Peter Wafula Wekesa Identity Transformation and Politicization in Africa: Shifting Mobilization, edited by Toyin Falola and Céline A. Jacquemin Guerrilla Radios in Southern Africa: Broadcasters, Technology, Propaganda Wars, and the Armed Struggle, edited by Sekibakiba Peter Lekgoathi, Tshepo Moloi, and Alda Romão Saúte Saíde Copper King in Central Africa: Corporate Organization, Labor Relations, and Profitability of Zambia’s Rhokana Corporation, by Hyden Munene Rethinking Institutions, Processes and Development in Africa, edited by Ernest Toochi Aniche and Toyin Falola

African Political Economy in the Twenty-First Century Theories, Perspectives, and Issues Edited by Emeka C. Iloh, Ernest T. Aniche, and Stephen N. Azom

Foreword by Kelechi A. Kalu

LEXINGTON BOOKS

Lanham • Boulder • New York • London

Published by Lexington Books An imprint of The Rowman & Littlefield Publishing Group, Inc. 4501 Forbes Boulevard, Suite 200, Lanham, Maryland 20706 www​.rowman​.com 86-90 Paul Street, London EC2A 4NE Copyright © 2023 by The Rowman & Littlefield Publishing Group, Inc. All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the publisher, except by a reviewer who may quote passages in a review. British Library Cataloguing in Publication Information Available Library of Congress Cataloging-in-Publication Data Names: Iloh, Emeka C., 1979– editor. | Aniche, Ernest Toochi, 1978– editor. | Azom, Stephen N. (Stephen Nnaemeka), 1975– editor. Title: African political economy in the twenty-first century : theories, perspectives, and issues / edited by Emeka C. Iloh, Ernest T. Aniche, and Stephen N. Azom ; foreword by Kelechi A. Kalu. Other titles: Africa: past, present & prospects. Description: Lanham, [Maryland] : Lexington Books, 2023. | Series: Africa: past, present & prospects | Includes bibliographical references and index. | Summary: “Contributes to the debate concerning the future of the political economy of African development by addressing the important question of how African countries can strategically approach global political economy at multilateral, continental, and regional levels in view of North-South versus South-South configurations”—Provided by publisher. Identifiers: LCCN 2023020106 (print) | LCCN 2023020107 (ebook) | ISBN 9781666930351 (cloth) | ISBN 9781666930368 (epub) Subjects: LCSH: Economic development—Africa—21st century. | Regional planning— Africa. | Africa—Economic policy—21st century. | Africa—Politics and government— 21st century. Classification: LCC HC800 .A56853 2023  (print) | LCC HC800  (ebook) | DDC 338.960905—dc23/eng/20230626 LC record available at https://lccn.loc.gov/2023020106 LC ebook record available at https://lccn.loc.gov/2023020107 The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992.

To erudite Professors Humphrey Assisi Asobie, Okechukwu Ibeanu, Ogban Ogban-Iyam and Aloysius-Michaels Okolie, for their mentorship and the intellectual insights we gained from them as their students.

Contents

Figures and Tables

xi

Foreword xiii Kelechi A. Kalu Preface xix Acknowledgements xxi Introduction: Africa and the International Political Economy: Reflections on the Dynamics of Multilateralism in the Twenty-First Century Emeka C. Iloh, Ernest Toochi Aniche and Stephen Nnaemeka Azom PART I: ONTOLOGICAL, EPISTEMOLOGICAL AND THEORETICAL ISSUES

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Chapter 1: International Political Economy: Concepts, Theories and Thematic Ramifications Al Chukwuma Okoli and Dominic Degraft Arthur Chapter 2: Theories of International Trade: Perspectives from Africa Denis Nfor Yuni Chapter 3: Transcending Neo-functionalism: Toward a New Theory of Regional Integration in Africa Ernest Toochi Aniche, Okechukwu Richard Oji and Victor H. Mlambo Chapter 4: Dependency and Development Question in Africa Ademola Azeez and Segun Oshewolo

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19 37

55

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Contents

PART II: AFRICA AND THE PURVEYORS OF GLOBAL POLITICAL ECONOMY

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Chapter 5: Africa and the World Bank: An Environmental Perspective 91 Olawari D. J. Egbe Chapter 6: African Development Bank and the Dynamics of African Political Economy Stephen Nnaemeka Azom and Moses Etila Shaibu

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Chapter 7: Group of Seven (G7) and Development Trajectories in Africa 123 Gafar Idowu Ayodeji and Iseoluwa Raphael Olayinka PART III: MULTILATERALISM, INTEGRATION AND TRADE SYSTEM IN AFRICA Chapter 8: Regional Integration and Economic Growth in North Africa: Resilience or Fading Agenda? Jude Odigbo, Remi Chukwudi Okeke and Chigozie Joseph Nebeife Chapter 9: Regionalism and Regional Integration in East Africa: Contradictions and Challenges Nzube Aguchukwu Chukwuma and Emmanuel Chukwunonye Ojukwu Chapter‌‌ 10: ‌‌African Continental Free Trade Agreement (AfCFTA)‌‌ and Regional Integration in Africa: Issues and Prospects Queeneth Odichi Ekeocha, Patrick Nwabueze Ubru, Chukwuemeka Vincent Muoneke and Emeka C. Iloh

141 143

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Chapter 11: International Trade, South–South Cooperation and African Integration Kenechukwu Udoka Udibe

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Chapter 12: Liberalism and Protectionism in International Trade: Options for African Political Economy Sunday Orinya

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Chapter 13: International Trade Wars and Decline in Economic Diplomacy: Should Africa Really Be Worried? Ifeanyi P. Maduechesi

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Contents

Chapter 14: International Trade Policies and Politics of Food Security in Africa Emeka C. Iloh, Clement Okonkwo and Nnabuike Christopher Anikwudike PART IV: INTERNATIONAL FINANCE AND DEVELOPMENT ISSUES IN AFRICA Chapter 15: Washington Consensus, North–South Relations and African Development Andre Ben-Moses Akuche and Goddy U. Osimen

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257 259

Chapter 16: International Financial Flows and Development in Africa 275 Felix Aja Elechi and Kennedy Chibuike Ohazuruike Chapter 17: Political Economy of Foreign Direct Investments in Africa: Critical Reflections Jerry Mathekga

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‌‌Chapter 18: Political Economy of Aid and Official Development Assistance in Sub-Saharan Africa Olabode Agunbiade

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Chapter 19: Africa and International Philanthropy: The Good, the Bad and the Ugly Toyin Cotties Adetiba

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Chapter 20: Debts, Extraction and Predation: Defacing the New Foreign Regimes of Indebtedness in Kenya Stephen Mutie

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Index

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About the Editors and Contributors



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Figures and Tables

FIGURES 1.1. Politics-Economics Nexus in International Relations

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2.1. Illustration of Heckscher-Ohlin Theory before and after Trade

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13.1. Trade Balances by Regions

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13.2. Sub-Saharan African Gross Domestic Product Growth

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20.1. Graphic Representation of the Problematic Loans Intake According to Profession/Occupation

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TABLES 1.1. The Underlying Conceptual Assumptions of Contemporary International Political Economy Thinking

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1.2. Genealogy of International Political Economy: The Old, the New and the Current

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1.3. Theoretical Foundations of International Political Economy

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2.1. Gains from Trade Based on Absolute Cost Advantage

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2.2. Gains from Trade Based on Competitive Cost Advantage

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6.1. Regional Member Countries of the African Development Bank, Dates of Accession, Total Votes and Percentage of Voting Powers (March 2022) 113

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Figures and Tables

6.2. Non-Regional Member Countries of the African Development Bank, Dates of Accession, Total Votes and Percentage of Voting Powers (March 2022) 115 8.1. Progress in the Implementation and Status of Agreements

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9.1. Status of the Abuja Treaty of Regional Economic Communities

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9.2. East Africa Export and Import in the Region, Africa and the Rest of the World, 2010 to 2017 (in per cent)

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9.3. Ranking Scores of Fifteen East Africa Countries’ Dimensions of Regional Integration

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13.1. Summary of Sub-Saharan Africa Trade for 2018

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18.1. Aid Dependence in Percentage of Gross National Income 2018, Top Ten Sub-Saharan Africa Countries

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19.1. Types of Philanthropists, Their Donations and Their Recipients in Africa

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19.2. Gates Foundation Agricultural Grants by Type of Grantee, 2003 to 2021

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20.1. Accessible Population in Terms of Age and Gender in Selected Three Settlements in Nairobi County

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Foreword Kelechi A. Kalu

Political economy is a field of study where scholars seek to explain how political power shapes economic outcomes and how economic forces constrain political action. Thus, at the national level, a theory of political economy is judged by how well it explains the interaction of politics and economics at the national level. At the international level, political economy is mainly concerned with the interactions among international actors such as states, global corporations and international organisations. In that respect, analysts tend to examine particular states and national markets to understand how domestic forces influence international action, and vice versa. As a continent with fifty-four different countries and economies, in what context should the idea of African political economy make analytical sense? During the mercantilist period, especially before the end of the eighteenth century, European states’ successful pursuit of power and wealth was measured by the quantity of gold and silver in their national vaults. Intellectuals and policymakers from Jean-Baptiste Colbert to Alexander Hamilton advocated for direct state interventions in economic activities to maximise tax collections. Using the various perspectives from their contributions, different states were able to pry open foreign markets for exports while restricting imports into their own markets as a competitive strategy to increase military might. According to Jacob Viner (1948), strong government intervention into economic activities during mercantilism was ‘a doctrine of extensive state regulation of economic activity in the interest of the national economy.’ It was extensive state economic interests that established European state-sponsored businesses like the United African Company, Unilever and the Royal Dutch Company in various regions of Africa in search of silver, gold, diamonds and other valuable economic goods to enhance the power of their home governments in Britain, the Netherlands, France and other countries. xiii

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The political realism of that period, evident in the works of individuals like Thucydides, Machiavelli and Thomas Hobbes, informed European states’ behaviour and engagements with various African communities, starting with slavery and continuing to colonisation. European mercantilist states pursued their national interests with utter disregard for the peoples and territories in the African continent. For them, it was both important and necessary for public authority to translate individual interests into a universal good, enabling the mercantilists and colonisers to determine what they needed and how it was produced and exported back to Europe, without the legitimate consent of indigenous African governments and institutions. Unrestrained domestically, and having partitioned the territory of Africa among themselves, European states’ extensive foreign intervention in various African regions’ economic activities took the form of national economic consolidation. Consequently, according to the dictates of the authoritarian colonial representatives of European metropolitan governments in Africa, it was justifiable to stifle competition in controlled areas and impose discriminatory taxation on local African communities. And, since the mercantilist states interpreted a state’s balance of trade as a central element of the international balance of power, the practice was defined internationally as protectionism against competition by rival colonial powers. Thus, in the resulting zero-sum game, Europeans, for example, the Belgians in the Congo, the British in Nigeria and Kenya and the French in Senegal and Algeria, hibernated conscience in protecting their national economies at the expense of indigenous African communities. For European states, mercantilism was economic nationalism, which was challenged by the British moral economist Adam Smith. In his The Causes of the Wealth of Nations, published in 1776, Smith argued that the state’s interest would not be maximised with policies of intervention and protectionism. That perspective laid the foundation for the emergence of economic liberalism and the modern capitalist economic system. He contended that the ‘invisible hand’ of the market naturally ensures that the pursuit of self-interest will lead to the public good and that a free-functioning market without government intervention will ultimately maximise efficiency and prosperity. Writing before the industrial revolution fully took off, Smith was of the view that even though political realities exist, economic logic is different from the political, and the latter must not hamper the former. While Smith argued that gains from free trade are largely based on absolute advantage, a British political economist, David Ricardo, argued that even if a country has no absolute advantage, it can still derive gains from trade. According to Ricardo, since the market will be self-correcting, free trade based on comparative advantage will benefit all nations. Further, if all countries specialise and trade, then economic prosperity will be diffused across the world. Thus, if liberal economic principles

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consistently guide a state’s economic policies, every state can and will find a niche and benefit from free trade. However, based on the Heckscher-Ohlin free trade model, which takes a country’s basic economic characteristics into account—for a given economic production activity—the principle of comparative advantage assumes that state A should produce and export goods to state B, if it can produce such goods at lower unit costs, and import goods from state B if such goods have higher costs of production for state A. The Heckscher-Ohlin model considers local material and human resources and includes such factors of production as land, labour (mostly unskilled labour), capital (mostly investable capital—equipment, machinery and the financial resources that are important for acquiring and financing them) and, lastly, human capital, by which the model assumes skilled labour—trained and paid for through investment in education. For contributors to this volume, African Political Economy in the Twenty-First Century, such considerations are important for contemporary African countries. To be sure, while countries like Nigeria, Kenya and South Africa do not possess infinite cultivatable land, unskilled labour, skilled, technically competent and educated labour, and a high stock of investable capital for purposes of acquiring equipment and types of machinery, the strategic decisions to combine available resources will determine the extent to which a country or a group of countries can enhance their comparative advantage to produce what the market demands and can afford to pay. Consequently, the Heckscher-Ohlin model/theory would predict that a country with a large labour force and farmlands (i.e. many African countries) would produce and export agricultural goods because it has a comparative advantage in the production and export of agricultural products to other less labour- and land-endowed countries. Given that many contemporary African countries were created out of colonial European states’ pursuit of wealth programmes, understanding the extent to which postcolonial states in Africa can engage productively in the international political-economic system whose rules were in place before those states became independent nations is a worthy intellectual pursuit. Thus, as many of the contributors in African Political Economy in the TwentyFirst Century suggest, understanding why, despite abundant land and labour, African countries continue to suffer devastating trade imbalances against other regions of the world requires clearer policy articulations that will enable decision-makers of African states to effectively protect their states and citizens. The liberalisation of economic activities that external entities like the International Monetary Fund (IMF) and states like Britain and the United States have prescribed to African countries have not served the interests of African states and peoples. Those prescriptions are devoid of the logic of

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comparative advantage theory, which suggests that producing and exporting goods for which a country has lower per-unit costs and importing goods produced by others with lower costs of production. The idea here is for African states to use administrative rules to protect segments of their economies and markets that need protection, and to open their markets to countries and businesses that reciprocate with them. Thus, importing goods, including agricultural products, and exporting mainly commodity goods is not a recipe for viable economic growth and industrialisation for African states. Trading among African states, which is currently less than 15 per cent of their total trade volume, should be a priority to enhance collective bargaining with the likes of the European Union. And, to the extent that non-economic constraints like trade barriers exist, then the trade is unlikely to achieve its expected efficiency and optimal benefits for the countries involved. For example, given abundant labour and arable land in Africa, one would expect African countries to have a comparative advantage in agricultural goods. This means that African countries should be able to produce agricultural goods at lower costs, feed themselves and export the surplus to European and Asian countries. Conversely, with lower availability of land and higher labour costs for European states, European countries should be importing agricultural products from African countries. And, in return, African countries will import machinery and other goods that European countries produce at lower costs per unit production. Yet, and currently, that scenario does not reflect the reality of international trade between African countries and European, American and Asian countries. For example, trade negotiations on agricultural products were excluded from the General Agreement on Tariffs and Trade (GATT), because domestic farmers in the United States sought and received protection against external competition. Similar to the protections that the US farmers continue to receive, the European countries also collectively protect their farmers against external competition within the framework of the Common Agricultural Programme of the European Union. Those protections extend to other areas of the international economy. For example, import-competing manufacturers in the United States, the European Union and Japan have consistently lobbied and received protections against international competition in the areas of steel and textile manufacturing. This means that there is nothing free about free trade; most economic activities—domestically and internationally—are political. The editors of and contributors to the African Political Economy in the Twenty-First Century are well positioned within various African countries and institutions to take up the challenge of examining the extent to which ongoing scholarship on Africa’s political economy is aligned with, (1) existing scholarship and practice of International Political Economy, (2) the place

Foreword

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of African countries in the global political economy and (3) the extent to which regional political and economic arrangements of power are meeting the economic needs and growth of different African populations. This volume also explores ideas on the areas of strategic trade policies in Africa that need strengthening to enable effective participation and competition by African states in the international system. Other issues and questions examined in this book include the roles of the new Africa Continental Free Trade Area (AfCFTA) in advancing African political economy against the backdrop of African countries that have served as a dumping ground for goods produced from North America, Europe and Asia. Equally important is the issue of collective strategies for trade negotiations rather than official development assistance that have failed in their efforts to support development projects in Africa, and bilateral loans, especially with China whose accumulation and growing unpaid debts carry significant and negative consequences for the sovereignty of many African countries. African Political Economy in the Twenty-First Century is a necessary addition in African classrooms and on various policymakers’ desks across the continent.

Preface

In the scramble for Africa, the continent was partitioned into specific spheres of influence in the Berlin Conference (1884–1885) among the various European powers. This partitioning and its consequent fragmentation of African economies have continued to haunt Africa many years after colonialism. Thus, beginning from the second half of the twentieth century (the immediate postcolonial era), a wide-ranging debate has opened on the future of African development and the content, nature and character of its political economy, especially as it concerns its web of relationships in the international political and economic system. Two decades into the twenty-first century, the debate still rages on, and is likely to continue for a long time. The global political economy has created two sets of participants: those at the core or centre and those who hover around the periphery. Africa leads the pack of the latter. Despite its enormous potentials and expectations to play an increasing role in the international political and economic system, Africa has an economy merely the size of the British and French economies, which rank sixth and seventh in the world. Though Africa’s gross domestic product (GDP) is the second fastest growing GDP in the world since 2000, many indices of development and growth are not encouraging, with a preponderance of extreme poverty, mounting public debts and other indices of underdevelopment in the continent. In fact, these poor human development indices underscore Africa’s weak position in international political economy. The available economic indices have also shown that debt crisis is deepening in most African states, especially in sub-Saharan Africa (SSA), where sixteen countries are classified as having either a high risk of debt distress or being in debt distress. The remaining nineteen low-income and developing countries have low to moderate debt vulnerabilities. The limited scope of intra-African trade and the fact that the continent accounts for a very poor share of global trade is a further indication of the limited impact of Africa on global political economy. Africa plays only a marginal role in world trade such that a large proportion of the goods presently sold in Africa come from xix

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 Preface

countries outside the continent. Commodities and natural resources continue to dominate Africa’s export basket, and the continent’s participation in the global value chain has been minimal. After more than five decades of modern regionalism, African economies are still structurally weak, fragmented, nonindustrialised and undiversified such that they trade more with others (China, the European Union, the United Kingdom and the United States) than with themselves. As a result, the economies are externally dictated by international financial and trading institutions, structurally dependent and vertically integrated to the more industrialised economies of the West and now China. This has metamorphosed into the new scramble for Africa. Among other pertinent issues, the chapter contributors have tried to address the place of Africa in the light of this new scramble for her resources and the emerging trade wars between the world’s two main economic hegemons (United States and China). This book is not meant to be an end of discussion as the discussion continues on the unending debate concerning African political economy or political economy of Africa. This book will, rather, provoke more scholarly debate, stimulate discussions and deepen conversation around African political economy. To address some of these issues, this book is thus structured into four main parts of twenty chapters. The first part is built around ontological, epistemological and theoretical issues. The second part deals with issues surrounding Africa and her relationships with the purveyors of global political economy. The third part discusses multilateralism, integration and trade systems in Africa. The fourth and last part interrogates international finance and development issues in Africa. This book will serve as useful reading and research material for undergraduate students, (post)graduate students and postdoctoral researchers in the field of international political economy and African studies.

Acknowledgements

The editors wish to acknowledge the contributors to this book for their patience and perseverance. The process took a rather long period, and they painstakingly continued to revise their chapters till the standards set by the publisher were met. In a special way, we thank Dr Kelechi Kalu for agreeing to write the foreword. We also appreciate our colleagues in our respective institutions for the numerous insights we gained from them. In a special way, we acknowledge the patience and understanding of our spouses, Mrs Ndidi Bernadine Iloh, Mrs Josephine Ebele Aniche and Mrs Veronica Ngozi Azom, during the period of editing this book. We also appreciate our children, for allowing us the time and space needed to work on the book. God bless you all for us. Finally, we give all glory to God for the wisdom, knowledge and strength that enabled this book.

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Introduction Africa and the International Political Economy: Reflections on the Dynamics of Multilateralism in the Twenty-First Century Emeka C. Iloh, Ernest Toochi Aniche and Stephen Nnaemeka Azom

BACKGROUND: AFRICA AND THE GLOBAL POLITICAL ECONOMY Since the end of colonialism in the second half of the twentieth century, a wide-ranging debate has opened on the future of African development and the content, nature and character of its political economy, especially as it concerns its web of relationships in the international political and economic system. Two decades into the twenty-first century, the debate still rages on and is likely to continue for a long time. The global political economy has created two sets of participants: those at the core or centre and those who hover around the periphery. Africa leads the pack of the latter. Despite its enormous potentials and expectations to play an increasing role in the international political and economic system, Africa, with an estimated population of 1.2 billion and a combined gross domestic product (GDP) of $2.5 billion, has an economy merely the size of the British and French economies, which rank sixth and seventh in the world (Stout 2020). Though Africa’s GDP has been growing by 4.6 per cent annually since 2000, which makes it the second fastest in the world (African Union (AU) and Organisation for Economic Co-operation and Development (OECD) 2019), many indices of development and growth are not encouraging, indicating a weak position in international 1

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Emeka C. Iloh, Ernest Toochi Aniche and Stephen Nnaemeka Azom

political economy, with a preponderance of extreme poverty, mounting public debts and other indices of underdevelopment. Firstly, in its 2020 edition of African Economic Outlook, the African Development Bank (AfDB) notes that public and publicly guaranteed debt levels are high and rising in most African economies, with the median ratio of government debt-to-GDP climbing more than 56 per cent in 2018, up from 38 per cent ten years earlier. Thus, debt crisis is deepening in most African states, especially in sub-Saharan Africa (SSA), where sixteen countries are classified as having either a high risk of debt distress or being in debt distress. The remaining nineteen low-income and developing countries have low to moderate debt vulnerabilities (IMF 2019). Secondly, the limited scope of intra-African trade, which at 15 per cent compares unfavourably with Europe (67 per cent), Asia (58 per cent), North America (48 per cent) and Latin America (20 per cent) (Afreximbank 2018), and the fact that the continent accounts for less than 3 per cent of world trade (United Nations Conference on Trade and Development (UNCTAD) 2018a), is a further indication of the limited impact of Africa on global political economy. As Schmieg (2016) puts it, Africa plays only a marginal role in world trade; yet, for Africa, world trade plays a major role. A large proportion of the goods presently sold in Africa come from countries outside the continent. Commodities and natural resources continue to dominate Africa’s export basket, and the continent’s participation in the global value chain has been minimal. Thirdly, regional integration efforts in the continent have not also yielded the desired results. Many regional integration agreements have been signed by African countries, with several overlapping memberships, yet the continent remains at best, a fragmented region. It is expected that the African Continental Free Trade Area (AfCFTA) agreement signed in Kigali, Rwanda, in 2018, will perform the twin magic of strengthening regional integration in Africa as well as increasing intra-continental trade, by creating a continental single market with free movement of labour and capital—a major bane of African political economy. Fourthly, even development assistance that comes from partners abroad has been criticised for being used to promote the economic interests of donors and to influence the foreign policies of recipient countries, prompting this assistance from developed countries to become increasingly viewed with scepticism (Onyekwena and Ekeruche 2019). In the contemporary international political and economic system, a second phase of the Cold War has begun—between the United States and China. This second phase is characterised not by arms race, nuclear weapons proliferation and proxy wars, as was the case between 1945 and 1989. It is characterised by tariff wars, economic nationalism and the re-emergence of mercantilist ideas and practices. As these big players and other states try to strangle their competitors through economic coercion and espionage with the aim to fight off

Introduction

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their rivals (Farrell and Newman 2020), there are concerns in some quarters that future trade wars would be more intense as an aftermath of the current COVID-19 pandemic (Tempest et al. 2020). Given the prevailing political and economic dynamics, the pertinent question is: How does Africa play an active role in this emergent global economic war and assert itself as a major stakeholder, and not merely playing peripheral roles and living on the fringes of Western capitalism and hegemony, and, now, Chinese supremacy? In other words, where does the emergent configuration of global political economy leave Africa? Many scholars have proposed that African, nay, developing countries, should depend less on their traditional economic allies in Europe and North America and probably look towards China, an emerging economic power. Running to China does not also solve Africa’s problem. As Sun (2019) has noted, what China offers Africa is not a blank cheque or a guaranteed result. Neither is the Chinese financing free nor altruistic. Relations between China and Africa have been gathering pace over the years, especially in the areas of aid, foreign direct investment and, more worrisome, loans, which have contributed to the increasing debt profile of many African countries. How do these multilateral financing options impact Africa’s development in the twenty-first century? AFRICA’S DEVELOPMENT TRAJECTORIES IN THE TWENTY-FIRST CENTURY African economies are heavily dependent on diverse international supports and external capital flows to overcome their macroeconomic challenges. As regards the SSA, the major components of inflows are foreign direct investment (FDI), foreign aid and remittance inflows (Cilliers 2021). Despite these external flows, indices of development in the continent are not particularly encouraging. More fundamentally, African economies have remained weak and highly vulnerable to the vagaries of international political economy, amid dwindling prices of raw materials, recession and now the COVID-19 pandemic, with the attendant glacial pace of progress, rapid increase in capital outflows, debt overhang and the possibility of immense potentials of the continent remaining unrealised. Prior to the COVID-19 crisis, three large external shocks—the 2008–12 European Sovereign Financial Crisis, the 2011–12 European Sovereign Debt Crisis and the dwindled international oil prices of 2014 – had coalesced to reshape the composition and magnitude of financial inflows in the continent (Calderon et al. 2019). All these shed some light on reasons why financial inflows from loans, aids and investments have failed to deliver long-term growth and poverty reduction in Africa.

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Foreign aid is one of the main components of capital inflow into Africa. Globally, African countries, particularly the SSA, have historically remained the highest receipts of aid from donor countries. Between 1960 and 2018, for instance, no less than US$2.4 trillion in aid was disbursed to African countries by the international community, ahead of Asia and the Middle East; the other two regions that have historically received large amounts of aid (Cilliers 2021). One pertinent question that keeps arising over the years is: What is the impact of foreign aid on Africa’s economy? Although the link between foreign aid and economic growth has elicited mixed reactions, there is near unanimity, however, that Africa’s aid-dependent economic model has made many governments see aid as a source of income. Among others, this misallocation of resources, corruption and bad governance ipso facto limits Africa’s ability to maximally utilise opportunities provided by the global economy. In fact, with foreign aid, Africa has developed a culture of dependency and paternalism rather than partnership. Aside from foreign aid, FDI is another major component of capital inflow into Africa. Unlike foreign aid, however, the inflows of FDI into Africa have been significantly constrained by the resources cycle, which is in a downturn at present. For example, while global stocks of FDI increased from US$20.3 trillion in 2010 to US$33.5 trillion in 2017, Africa merely attracted US$598 billion and US$867 billion in 2010 and 2017, respectively (UNCTAD 2018b). It is therefore particularly disheartening to note that whereas FDI brings enormous benefits to host countries, African countries have received relatively low levels of inward investment. The Arab Spring, declining oil prices and COVID-19 crisis, among other factors, account for the decline in FDI flows to Africa (Cilliers 2021). Worst still, FDI inflows into Africa have been into extractive industries. The implication is that the inflow of FDI has failed its target of significantly reducing poverty. Hence, Africa and SSA in particular, are still home to extreme poverty (World Bank 2020a). Meanwhile, the recourse to external financing has unfortunately contributed to the rising levels of public debt in many African countries. As has been pointed out above, no fewer than half of low-income economies domiciled in SSA were already in debt distress (IMF 2020), before the outbreak of the COVID-19 pandemic. The impact of the pandemic has compounded the debt situation in SSA by rendering about 34 per cent of the countries highly vulnerable to debt crisis (World Bank 2020b). The foregoing explication boldly reveals that attempts by “big development” to develop Africa through aid, loan and FDI, among others, have yielded meagre returns. In apparent realisation of this, African leaders in recent years have exhibited greater efforts to exercise ownership in pursuing their development efforts. These efforts, evident in the African Union’s Agenda 2063, and in the Kagame Report on African Union (AU) institutional

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reform, share a quest to identify, prioritise and spearhead an endogenous development effort on the continent. While this bold step is commendable, it is pertinent to note that Africa will still need a reasonable quantum of donor supports in order to make that destiny a prosperous one. What is important therefore is how Africa will employ donor resources to achieve this lofty target. Aftermath: Multilateralism, Integration and Trade Systems in Africa Although states regularly adopt bilateralism and unilateralism as tools of foreign policy, multilateralism has remained the core of the liberal world order that emerged at the end of World War II (Morgan, Bapat and Kobayashi 2014). Multilater­al diplomacy offers better opportunities for dealing with complex global challenges. It is a mechanism to get other countries to share common interest of providing public goods and a common burden of avoiding chronic risks. Decisive progress often appears possible only when many state actors and non-state actors (NSAs) work together in broad coalitions with a view to fostering commitment to common values (Maull 2020). Indeed, some transnational issues such as climate change are inherently multilateral and cannot be effectively managed without the help of other countries. The same is true of infectious diseases such as COVID-19 pandemic, the stability of global financial markets, the international trade system, the proliferation of weapons of mass destruction, international crime syndicates and transnational terrorism (Nye 2002; UN 2020). All these issues underscore the need for multilateral mechanisms, international cooperation and renewed drive for collective action. With respect to Africa, the drive for multilateral mechanisms has remained one of the logical and enduring outcomes of partitioning of the continent among the European powers and the attendant fragmentation of its economies, markets and trade. The thrusts of the immediate postindependence Pan-Africanist economic and political integration were, therefore, to unite the continent, decolonise the continent, achieve collective self-reliance, curtail neocolonialism, secure the continent, ensure peace, enlarge the market, encourage intra-regional trade and attain development (Wallerstein 1967; Thompson 1969; Ake 1981). The more radical elements among the then– African leaders like Kwame Nkrumah and Julius Nyerere emphasised the need to unite various blocs (Brazzaville, Casablanca and Monrovia blocs) into united states of Africa or Africa continental government with unified defence command (Aniche 2020), while their more moderate counterparts advocated for gradual process. A compromise resolution eventually led to the establishment of the Organisation of African Unity (OAU) in 1963. The OAU became

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the rallying point through which African states were able to decolonise Africa but was not so successful in uniting Africa towards eliminating neocolonial influences, attaining collective self-reliance, ensuring good governance, promoting peace and confronting developmental challenges (Mistry 2000). However, the need to fast-track African integration in the second decade of independence to overcome these challenges led to the 1979 Monrovia Strategy, the 1980 Lagos Plan of Action (LPA) and the 1981 Final Act of Lagos (FAL) under the auspices of United Nations Economic Commission for Africa (UNECA) (Adedeji 1983; Benachenhon 1983; Asante 1991). These initiatives were meant to strengthen the existing multilateral regional trade agreements (RTAs), such as the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC), while encouraging formation of new ones (Browne and Cummings 1984; Adedeji 1991; Ravenhill 1996). The 1991 Abuja Treaty, which was ratified in 1994, resulted in the establishment of the African Economic Community (AEC) to oversee the existing regional economic communities (RECs), such as the ECOWAS, the SADC, the Economic Community of Central African States (ECCAS), the Arab Maghreb Union (AMU/UMA) and the Intergovernmental Authority on Development (IGAD) (Aniche 2020). The treaty set out six main goals to be achieved in six stages. These include: the creation of regional blocs in regions where such do not yet exist, to be completed in 1999; the strengthening of intra-REC integration and interREC harmonisation, to be completed in 2007; the establishing of a free trade area (FTA) and customs union (CU) or common external tariff (CET) in each regional bloc, to be completed in 2017; the establishing of a continent-wide CU/CET and, also, a FTA to be completed in 2019; the formation of a continent-wide African Common Market (ACM) or single market (SM), to be completed in 2023; and the instituting of a continent-wide economic and monetary union (MU) as well as a CU/CET and parliament (political union (PU)), to be completed in 2028. Unfortunately, these six stages of accomplishing the goals of Africa integration were not implemented effectively. But it was able to create regional blocs in regions where such do not yet exist. These were the Community of Sahel-Saharan States (CENSAD), the Common Market for Eastern and Southern Africa (COMESA) and the new East African Community (EAC). It was also able to partially implement the fourth stage and, thus, accomplish the goal of a continent-wide FTA called AfCFTA in 2019 (Aniche 2020). Following from the treaty of 1991 and reforming of OAU into African Union (AU) in 2002, therefore, the twenty-first multilateral African trade systems still revolves around eight main pillars of regional economic integration. How the newly established AfCFTA will be mainstreamed in the twenty-first multilateral African trade systems amidst these eight RECs remains to be

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seen. However, the African multilateral trade regime based on AfCFTA will be essentially driven by rule of origin to withstand the threats of bilateral and multilateral extra-regional trade agreements such as African Growth and Opportunity Act (AGOA) and EU-Africa Partnership tending to deepen the fragmentation of African economies, markets and trade (Aniche 2020). A number of economic- and trade-related, as well as political and security, factors have combined to ensure that African economies remain fragmented and development remain a mirage despite several decades of regional economic integration and multilateral trade agreements (Nnoli 1985; Aworawo 2016). The economic- and trade-related factors have combined to engender low intra-African trade and Africa’s low share in world exports. The specifically trade-related constraints include inadequate trade infrastructure and supply-side constraints, poor trade finance and trade information, lack of export diversification, differences in trade regimes, restrictive customs procedures and tariff and non-tariff barriers. While the wider economic challenges include structural dependence and vertical integration. because the production and export structures of most African economies are limited to primary products for which demand is externally oriented (Aniche and Ukaegbu 2016). Other economic factors include multiple membership, bureaucratic and technical inefficiency, weak economic institutions, limited productive capacity, lack of factor market integration, inadequate focus on internal market issues, poorly developed financial markets, lack of investment finance, paucity of credit, adverse activities of multinational corporations (MNCs), disparity in market size and development, monopolisation of economic benefits and internally vertical linkages of weaker African economies to regional economic hegemons (Taylor 2003; Qobo 2007; Aniche 2020). Furthermore, a number of political, security and economic factors have combined to ensure that Africa remains politically disunited, divided, disintegrated, conflictual and insecure. Some of these political and security factors include historical and colonial bonds, neocolonial ties, politico-ideological differences, fear of domination, unwillingness of some African leaders to surrender their sovereignty, externally political and diplomatic linkages, and intractable civil strife and refugee crises (Ake 1981; Antwi-Danso 2009). As regards the economic factor, the triumph of the neoliberal ideology, anchored on market fundamentalism, has resulted in a paradigm shift in mainstream academia and in international policy circles since the 1980s, with attendant capitalist reforms, contradictions and crises. All these have combined to produce and inflate a plethora of hurtful socioeconomic outcomes, evident in rising poverty, unemployment, social inequality and deterioration of income distribution (Rotarou and Sakellariou 2017). This raises a serious concern regarding the appropriate developmental strategy for the underdeveloped

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states of the African continent. The rolling out of neoliberal policies by the purveyors of capitalism in order to unleash the potential of market forces in the developmental process has transformed the relationship among the trio of the market, civil society and the state in favour of the former. Thus, the logics of unrestrained market capitalism, wild and reckless state apparatus as well as hostile international environment altogether produce inimical consequences that not only deepen Africa’s developmental crisis but also ensure that Africa remains permanently at the backwaters of the global economic architecture (Osimiri 2013; Gatwiri, Amboko and Okolla 2020). The above-stated issues raise various interesting questions: How can international political economy be contextualised within the African scholarship? What kind of relationships exists between African countries and the purveyors of global political economy? Are the regional arrangements in Africa living up to expectations? What areas need strengthening and how can they function optimally and compete favourably in the international system? What roles can the new AfCFTA play to fast-track this? To what extent has the global trading system helped to improve Africa’s economy? Under what terms should African countries continue to participate in the prevailing multilateral trading system? In what ways can the current US–China trade war affect Africa? How does the perennial debt crisis erode Africa’s sovereignty? Under what terms should African states accept foreign loans, aids, FDIs and official development assistance (ODA)? These issues and many more have been usefully engaged and interrogated by the contributors to this book. THE ORGANISATION OF THIS BOOK This book has twenty chapters, grouped into four broad parts. Part I contains the first four chapters built around ontological, epistemological and theoretical issues. Part II deals with issues surrounding Africa and her relationships with the purveyors of global political economy. It contains chapters 5 to 7. Part III discusses multilateralism, integration and trade systems in Africa. Chapters 8 to 14 are contained in Part III. In Part IV, international finance and development issues in Africa are interrogated. It contains chapters 15 to 20. In chapter 1, Chukwuma Okoli and Dominic Arthur undertake a rigorous conceptual exposition of the nature, scope and theoretical foundations of international political economy (IPE), maintaining an intersectionalist standpoint that privileges the interplay of politics and economics in today’s global system. They submit that any meaningful conception of IPE should comprehend the gamut of prevailing and emerging nexuses that underpin contemporary state–market relations at the international level. Denis Yuni, in chapter 2, considers the theories of international trade from an African perspective. He

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posits that international trade theories have spanned over two centuries during which it has evolved in design, context and scope. He approaches these theories from historical and contextual perspectives and orchestrates their evolution over time as well as their relevance in contemporary times. In chapter 3, Ernest Aniche, Richard Oji and Victor Mlambo posit that the neo-functional approaches to African integration have shown to be inadequate, lacking in explanatory value and analytical utility. This is buttressed by the fact that African economies remain fragmented, and its economies are still structurally weak, non-industrialised and undiversified, despite decades of regionalism. They propose post-neo-functionalism as an alternative theoretical approach for African regionalism. In chapter 4, Ademola Azeez and Segun Oshewolo interrogate the question of dependency and development in Africa. They explain Africa’s crisis of development relying on the valuable insights offered by dependency theory and note that though the usage of dependency theory in social science literature may have waned, its explanatory power in contemporary times is not in doubt. According to them, while the theory could yet be refined to accommodate new trends and changes in the international system, the central tenets of the theory are major points of departure and reference for those seeking to understand and reconfigure the current international system. The authors posit that to break away from the exploitative dependent relationships with the dominant states, the peripheral states of Africa must begin to invest in building developmental states that will be responsive to local needs. In chapter 5, Olawari Egbe assesses the environmental blindness of the World Bank policies and their impacts in Africa. He argues that on account of the policies of the World Bank in Africa a number of discomforts have befallen the continent and her peoples. One of such is the Bank’s sponsoring of Transnational Corporations into commercial logging where a variety of quality African woods are depleted and sold. In chapter 6, Stephen Azom and Moses Shaibu take a look at the African Development Bank and the dynamics of African political economy. They argue that the AfDB faces a paradox at exactly the time when it could have a major catalytic impact on Africa’s development path. They further highlight the environmental, operational, institutional and political constraints that not only alter its patterns of decision-making but also affect the ability of state participants to agree to and support coherent policies. Gafar Ayodeji and Raphael Olayinka, in chapter 7, assess the Group of Seven’s (G7’s) development commitments in Africa and the attendant challenges preventing it from achieving these goals. They note that the G7’s development pronouncements in terms of promotion of responsible governance and economic growth, peace and security, and aid resources appear not to have made much progress

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towards Africa’s development. They submit that the embedded contradictions in the G7 neoliberal policy agenda seem to have compounded these commitments. In chapter 8, Jude Odigbo, Remi Okeke and Joseph Nebeife explore the extent to which the existing regional blocs in North Africa have engendered development and collective good among member states. They go further to offer an expository discourse on the place of regional cooperation among countries of North Africa, and note that in spite of the existence of regional bodies in North Africa, the region has been poorly integrated economically. Nzube Chukwuma and Emmanuel Ojukwu posit, in chapter 9, that despite some initiatives and economic growth in East Africa, the region’s regional integration agenda has generated both external and internal downside dilemma. They argue that besides the challenges of overlapping membership and the weak economic base, the rising debt profiles of East African countries and the vagaries of climate change are creating reverse effects in the resurgence of regionalism discourse. In chapter 10, Queeneth Ekeocha, Patrick Ubru, Chukwuemeka Muoneke and Emeka Iloh examine the nexus between the AfCFTA and regional integration in Africa, especially on the former’s impacts on the latter. They posit that AfCFTA will improve the well-being of the citizens in all African countries through job creation, more engagement in the global value-chain, economies of scale and high-value manufactured products. Kenechukwu Udibe examines the implications of international trade and South–South cooperation on African integration in chapter 11. His central thesis is that the participation of the South in the international trade regime has not translated to substantial economic improvement of countries located within its hemisphere. He further analyses the lopsided nature of North–South trade relations as a background to the emergence of South–South cooperation. Sunday Orinya, in chapter 12, examines the issues of liberalism and protectionism in international trade. He posits that liberalisation and protectionism are two major responses to challenges posed by international trade. He argues that Africa cannot achieve its developmental objectives through wholesale adoption of the neoliberal policy of trade liberalisation in the face of the current mercantilist posturing of advanced industrialist countries. In chapter 13, Ifeanyi Maduechesi examines the impact of international trade wars on Africa. He compares the global impact of the trade wars of 1980s and 1990s between United States and Japan to the current trade war between the United States and China in terms of how they affect the global economy and non– key actors in the conflict, particularly the emerging economies such as Africa. He argues that as trade wars shift towards technological dominance, Africa appears to be an onlooker given the predominance of primary goods and raw material in its export.

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In chapter 14, Emeka Iloh, Clement Okonkwo and Chris Anikwudike examine the nexus between international trade policies and food security in Africa. They note that food security governance has become a complex system of often overlapping or contradictory policies and regulations, rules and practices, to the extent that national governments no longer have uncontested prerogatives over agricultural production. International actors such as the World Trade Organisation (WTO) are now showing increasing interests in issues of food security. The authors argue that through some international trade policies being championed by the WTO, the global trading system has intensified food security crisis in Africa, thereby undermining food security in the continent. Andre Akuche and Goddy Osimen interrogate the nexus between Washington Consensus, South–South relations and African development in chapter 15. They posit that this relationship has instituted a situation of dependence of the South on the North for survival. They further contend that the issue of economic development which is tied to the overdependence on aids and loans, as well as the politics of exchange rate through currency devaluation, has constantly rubbished any prospects for Africa’s development. Akuche and Osimen are of the view that the ‘dollarization’ of Africa’s economy under the dollar hegemony regime should be reviewed while autochthonous economic solutions be considered as the viable option for Africa’s development. In chapter 16, Felix Elechi and Kennedy Ohazuruike consider the importance of international finance for developing states such as those in Africa. They opine that major capital flows to Africa in form of foreign direct investment, official development assistance (ODA), trade, foreign portfolio investment, loans and so forth have increased considerably since 1980. However, these forms of financial assistance are attached to excessive conditionalities, which have in turn retarded the development process in the continent. Thus, despite these huge financial flows, African states are still saddled with institutional weakness, fragile and failed states, corruption among the leadership, poor governance, low GDP, public-private partnership (PPP), poor infrastructure, debt overhang/huge debt servicing, civil strife, macroeconomic instability, slow economic growth and small domestic markets, burdensome regulations and so on. Chapter 17, by Jerry Mathekga, critically reflects on the political economy of foreign direct investments (FDIs) in Africa. The author notes that in a bid to mitigate entrenched poverty and reduce the high and growing inequality between the rich and poor in the continent, African states have opened the continent to Asia, the United States and Europe for inflow of foreign direct investments. He argues that within the globalisation context, this is inevitable. However, he posits that Africa’s open-door policy to FDIs should set up their own conditions that address Africa’s challenges.

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In chapter 18, Olabode Agunbiade interrogates the political economy of aids and official development assistance in sub-Saharan Africa. He argues that while foreign assistance in the form of aids and ODA are not necessarily harmful economic support policies, the actual delivery and implementation encounter significant difficulties in SSA countries. He further notes that these forms of foreign assistance are not usually targeted at needy sectors, but worse is that they discourage local production and technological progress, perpetuate foreign economic dominance and interfere with local political systems. He opines that SSA countries should accept foreign finance assistance to fund only projects that are development oriented. In chapter 19, Toyin Adetiba examines the implications of foreign philanthropy in Africa. He notes that, in the last two decades, Africa has witnessed high profile philanthropic gestures from foreign donors to reduce social problems such as poverty, disease and food insecurity. He argues that philanthropy is politically, economically and ideologically motivated to optimise the interests of the giver-states and at the same time altruistic-driven to ease the deplorable conditions of the receiver-states. However, given the beggary status of Africa and economic self-interest that drive the international political economy, philanthropy in Africa is driven more by the former than the latter. Thus, philanthropy has remained an instrument of hegemony by which the giver-nations sustained their control over the economies of African states. Chapter 20, by Stephen Mutie, interrogates the nexus between Fanonian ‘fall of nationalist consciousness’ as portrayed by the Kenyan elite and digitisation of indebtedness through smart phone loans. He argues that Kenya’s indebtedness is mostly an exercise of control on a population whose autonomy would become a threat to the Kenyan politician and destabilise the global economic normativity. He advocates that the blatant exploitation by extracting financial gains from Kenya through smart phone loans can be cured through proper legislation and implementation. CONCLUSION Amidst these daunting challenges as have been carefully interrogated by these contributors, Africa cannot afford to fall into what Maull (2017) termed ‘autism’ in international relations, that is, withdrawal from the outside world into one’s own, internal world. As a matter of fact, the continent must continue to embrace multilateralism, which appears to be an almost indispensable form of international diplomacy (Maull 2020). In a global system characterised by the dictum of ‘survival of the fittest,’ Africa’s multilateral engagements, in particular with the super political and economic powers, must be calculative and strategic. Rather than the continued wholesale adoption of

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Western prescriptions, efforts should be geared towards encouraging more of South–South cooperation, as well as strengthening existing ties among countries within the continent. Thus, an important question for African countries is how to strategically and tactically approach global political economy at multilateral, continental and regional levels, and, in North–South versus South–South configurations, to effectively manipulate global forces to her advantages and by so-doing advance domestic, regional and continental development objectives. However, the dominant method adopted in the various chapters of this book is desktop studies involving historical, documentary, descriptive and qualitative research. The emphasis is on the use of secondary data from official documents to achieve the objectives of various chapters of this volume. This book is essentially historical, analytical, descriptive and qualitative. The contributors suggest or recommend several feasible theoretical alternatives and practical policy options irrespective of their methodological bias, theoretical orientations and perspectival leanings. Therefore, this book will no doubt most likely to trigger scholarly debate on African political economy or political economy of Africa and, perhaps, beyond. REFERENCES Adedeji, Adebayo. 1983. The Evolution of the Monrovia Strategy and the Lagos Plan of Action: A Regional Approach to Economic Decolonization. New York: United Nations. ———. 1991. Preparing Africa for the Twenty-First Century: Agenda for the 1990s. Addis Ababa: Economic Community for Africa (ECA). African Development Bank (AfDB). 2020. African Economic Outlook 2020: Developing Africa’s Workforce for the Future. Abidjan: AfDB. African Export-Import Bank (Afreximbank). 2018. African Trade Report 2018: Cairo: Afreximbank. African Union Commission (AUC) / Organisation for Economic Co-operation and Development (OECD). 2019. Africa’s Development Dynamics 2019: Achieving Productive Transformation. Addis Ababa, Ethiopia: AUC; Paris, France: OECD Publishing. Ake, Claude. 1981. A Political Economy of Africa. Ibadan, Nigeria: Longman. Aniche, Ernest T. 2020. ‘From Pan-Africanism to African Regionalism: A Chronicle.’ African Studies 79 (1): 70–87. https:​//​doi​.org​/10​.1080​/00020184​.2020​.1740974. Aniche, Ernest T., and Victor E. Ukaegbu. 2016. ‘Structural Dependence, Vertical Integration and Regional Economic Cooperation in Africa: A Study of Southern African Development Community.’ Africa Review 8 (2): 108–19.

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Antwi-Danso, Vladimir. 2009. ‘Regionalism and Regional Integration: Prospects and Challenges.’ In Ghana in Search of Regional Integration Agenda. Accra: Friedrich-Ebert-Stiftung. Asante, Samuel K. B. 1991. African Development: Adebayo Adedeji’s Alternative Strategies. Ibadan: Spectrum. Aworawo, Friday. 2016. ‘Regional Integration and Development in Africa: Between the Rock and a Hard Place.’ Journal of International Studies 12: 19–30. Benachenhon, A. 1983. ‘South-South Co-operation: The Lagos Plan of Action and Africa’s Independence.’ Africa Development 3 (4): 1–13. Browne, Robert R., and Robert Cummings. 1984. The Lagos Plan of Action vs the Berg Report: Contemporary Issues in African Economic Development. Washington, DC: Howard University Press. Calderon, C. Punam Chuhan-Pole, and Megumi Kubola. 2019. ‘Capital Inflows to Sub-Saharan Africa: On a Different Path.’ Let’s Talk Development, 21 August 2019. https:​//​blogs​.worldbank​.org​/developmenttalk​/capital​-inflows​-sub​-saharan​ -africa​-different​-path. Cilliers Jakkie. 2021. ‘Aid, Remittances and Foreign Direct Investment.’ In The Future of Africa, edited by Jakkie Cilliers, 331–53. London: Palgrave Macmillan. https:​//​doi​.org​/10​.1007​/978​-3​-030​-46590​-2​_14. Farrell, Henry, and Abraham Newman. 2020. ‘Chained to Globalization: Why it’s too late to Decouple.’ Foreign Affairs, 10 December 2020. https:​//​www​ .foreignaffairs​ . com ​ / articles ​ / united ​ - states ​ / 2019 ​ - 12 ​ - 10 ​ / chained ​ - globalization​ ?utm​_medium​=newsletters​&utm​_source​=twofa​&utm​_content​=20191220​&utm​ _campaign​=TWOFA​%20122019​%20Chained​%20to​%20Globalization​&utm​_term​ =FA​%20This​%20Week​%20​-​%20112017. Gatwiri, Kathomi, Julians Amboko and Darius Okolla. 2020. ‘The Implications of Neoliberalism on African Economies, Health Outcomes and Wellbeing: A Conceptual Argument.’ Social Theory and Health 18 (1): 86–101. International Monetary Fund (IMF). 2019. Regional Economic Outlook: Sub-Saharan Africa Recovery amid Elevated Uncertainty. Washington, DC: IMF. ———. 2020. Regional Economic Outlook—Sub-Saharan Africa: A Different Road to Recovery. Washington, DC: IMF Maull, Hanns W. 2017. ‘Autism in Foreign Policy.’ SWP Working Paper, no. 05, February. ———. 2020. ‘Multilateralism: Variants, Potential, Constraints and Conditions for Success.’ SWP Comment, 9 March 2020. Mistry, P. 2000. ‘Africa’s Record of Regional Economic Integration.’ African Affairs 99: 553–73. Morgan, T. Clifton, Navin Bapat, and Yoshibaru Kobayashi. 2014. ‘Threat and Imposition of Economic Sanctions 1945–2005: Updating the Ties Dataset.’ Conflict Management and Peace Science 31 (5): 541–58. Nnoli, Okwudiba. 1985. ‘External Constraints of Pan-African Economic Integration.’ In Economic Co-operation and Integration in Africa, edited by W. A. Ndongko Dakar: CODESRIA.

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Nye, Joseph. 2002. ‘Unilateralism vs. Multilateralism.’ Project Syndicate, 24 September 2002, https:​//​www​.project​-syndicate​.org​/commentary​/unilateralism​-vs​-​ -multilateralism​-2002​-09​?utm​_term​=​&utm. Onyekwena, Chukwuka, and Mma A. Ekeruche. 2019. ‘The Global South and Development Assistance.’ Brookings, 16 September 2019. https:​//​www​.brookings​ .edu​ / blog​ / africa​ - in​ - focus​ / 2019​ / 09​ / 16​ / the​ - global ​ - south ​ - and ​ - development​ -assistance ​ / ​ ? utm ​ _ source ​ = ECDPM+Newsletters+List ​ & utm ​ _ campaign​ =7a3f26542b​ - EMAIL ​ _ CAMPAIGN ​ _ 2019 ​ _ 09 ​ _ 05 ​ _ 08 ​ _ 48 ​ _ COPY ​ _ 01 ​ & utm ​ _ medium​=email​&utm​_term​=0​_f93a3dae14​-7a3f26542b​-388804105. Qobo, Mzukisi. 2007. The Challenges of Regional Integration in Africa in the Context of Globalisation and the Prospects for a United States of Africa. Pretoria: Institute for Security Studies (ISS) Paper, no. 145. Osimiri, Peter. 2013. ‘An Ethical Critique of Neoliberal Development in Africa.’ Covenant Journal of Politics and International Affairs (CUJPIA) 1 (1): 62–71. Ravenhill, John. 1996. ‘Collective Self-reliance or Collective Self-delusion: Is the Lagos Plan a Viable Alternative?’ In Africa in Economic Crisis, edited by J. Ravenhill, 88–107. London: Macmillan. Rotarou, Elena S., and Dikaios Sakellariou. 2017. ‘Neoliberal Reforms in Health Systems and the Construction of Long-Lasting Inequalities in Health Care: A Case Study from Chile.’ Health Policy 121 (5): 495–503. Schmieg, Evita. 2016. ‘Global Trade and African Countries: Free Trade Agreements, WTO and Regional Integration.’ Working Paper, no. 2016/02. German Institute for International and Security Affairs. Stout, Brian. 2020. ‘It’s Africa’s Turn to Leave the European Union.’ Foreign Policy, 10 February 2020. https:​//​foreignpolicy​.com​/2020​/02​/10​/african​-union​ -european​-union​-trade​/​?utm​_source​=ECDPM+Newsletters+List​&utm​_campaign​ =744305173c ​ - EMAIL​ _ CAMPAIGN​ _ 2019​ _ 09 ​ _ 05 ​ _ 08 ​ _ 48 ​ _ COPY ​ _ 01 ​ & utm​ _ medium​=email​&utm​_term​=0​_f93a3dae14​-744305173c​-388804105. Sun, Y. 2019. ‘China’s Changing Approach to Africa.’ Foresight Africa: Top Priorities for the Continent in 2019. Washington, DC: Brookings Institution. Taylor, Ian. 2003. ‘Globalisation and Regionalization in Africa: Reactions to Attempts at Neo-Liberal Regionalism.’ Review of International Political Economy 10 (2): 310–30. Tempest, Alastair, Tawanda Matema, Neuma Grobbelaar and Palesa Shipalana. 2020. ‘Renewed Urgency to Implement the African Continental Free Trade Area: How can Africa Prepare Now?’ South African Institute of International Affairs (SAIIA), 21 April 2020. https:​//​saiia​.org​.za​/research​/renewed​-urgency​-to​-implement​-the​ -african​-continental​-free​-trade​-area​-how​-can​-africa​-prepare​-for​-a​-post​-covid​-19​ -world​/. Thompson, V. Bakpetu. 1969. Africa and Unity. London: Longman. United Nations (UN). 2020. ‘Development Policy and Multilateralism after COVID-19.’ Committee for Development Policy, Policy Note. https:​//​www​ .un​.org​/development​/desa​/dpad​/wp​-content​/uploads​/sites​/45​/CDP​-Covid​-19​-and​ -Multilateralism​.pdf.

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United Nations Conference on Trade and Development (UNCTAD). 2018a. Regional Integration and Non-Tariff Measures in the Economic Community of West African States (ECOWAS). Geneva: United Nations. ———. 2018b. World Investment Report: Investment and New Industrial Policies. New York and Geneva: United Nations. https:​//​unctad​.org​/en​/PublicationsLibrary​ /wir2018​_en​.pdfand. Wallerstein, Immanuel. 1967. Africa: The Politics of Unity. New York: Random House. World Bank. 2020a. ‘Sub-Saharan Africa.’ Washington, DC: World Bank Group. https:​//​databank​.worldbank. org/data/download/poverty/33EF03BB9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_SSA. pdf. ———. 2020b. Africa’s Pulse: An Analysis of Issues Shaping Africa’s Economic Future, vol. 1. Washington, DC: World Bank Group.

PART I

Ontological, Epistemological and Theoretical Issues

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Chapter 1

International Political Economy Concepts, Theories and Thematic Ramifications Al Chukwuma Okoli and Dominic Degraft Arthur

Although the idea of international political economy (IPE) has been a common terminology in the disciplines of political science and international relations, and, accordingly, there has been a legion of scholarly works in that area, its meaning and allied ontological nuances have not been adequately elucidated. Beyond the conventional and simplistic understanding of IPE as the nexus between ‘the polity and the economy’ (Okoli 2001, 12), only little is known on its subject matter, conceptual assumptions, epistemological traditions as well as thematic ramifications. In accordance with the preceding standpoint, this chapter, therefore, seeks to conduct a rigorous conceptual exposition of IPE, maintaining an intersectional perspective on the dynamics and dialectical interplay of politics and economics in today’s global system. Importantly, the chapter posits that, since the politics-economics interface has become a normative standard in contemporary international relations, any meaningful conception of IPE should comprehend the gamut of prevailing and emerging nexuses that underpin state–market relations in the international system. This therefore entails events within the political and economic spheres as forces in dialectical unison and persistent interface, that is deep, complex, dynamic and, in all essences, sophisticated and complicated. Regarding this aim, the following research questions are proposed to guide this chapter. 1.  What is IPE? 2.  What is the nature and scope of its subject matter? 3.  What are its basic conceptual thrusts and assumptions? 19

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4.  How has it been conceptualised in the literature? 5.  What are its theoretical foundations? 6.  What are its thematic ramifications? 7.  And what is the implication of the above for theory and praxis? The remainder of this chapter is organised into several broad thematic areas. The chapter’s frame of reference focuses on the key variables underpinning IPE. This is followed by the scope and subject matter of IPE. The next section focuses on conceptions and theories imperatives, followed by a highlight of basic thematic areas of IPE. The last section presents the conclusion. The essence of this chapter is to leverage fresh insights that would add to the extant corpus of knowledge on the subject matter of IPE. Furthermore, the outcome of the discourse is anticipated to aid in edifying existing conceptions of IPE and contribute ultimately in re-clarifying ideas and nuances associated thereof. FRAME OF REFERENCE In order to have a shared understanding of the subject of discourse, it is germane to attempt a conceptual description and illustration of IPE. Among other things, this undertaking will help to situate the readers on the notions and nuances that underlie and embody IPE, both as a field of study and a field of practice. This is all the more important considering the complex nature of the subject matter of the field, which makes its comprehension often complicated, requiring some technical disambiguation. IPE embodies three conceptual categories: politics, economics and international relations. Illustratively, it could be depicted as an interface between two spheres of activity (the political and the economic) within an operational context, which is international relations (see figure 1.1). In figure 1.1, X represents the point of intersection between the forces of politics and economics. The point of intersection is not a simple linear or diagonal interface; rather, it represents a multiplicity of possible nexuses that contemporary international state–market condominiums could entail. Politics refers to the authoritative allocation of values (Easton 1965) while economics focuses on the rational appropriation and utilisation of resources. International relations denote the totality of relationships between and among nations, including the diverse interactions at the political, economic, cultural and scientific realms. Contemporary international relations bring together state and non-state actors in an instrumental relationship designed to advance some strategic ends that are largely related but not limited to power or capital. Within the domain of international relations, the political and economic

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Figure 1.1.  Politics-Economics Nexus in International Relations

spheres constantly but pertinently converge as well as diverge along the axis of strategic interests to determine the state and future of world affairs. The dynamics of contemporary international relations, immanently instantiated in the trends of globalisation and internationalisation, has made the politics-economics interface in that context both salient and enduring. The outcome is the dynamic and complex intertwinement of political and economic interests, processes and practices (Cohen 2008), which define and typify today’s world system. IPE studies international relations from a lens that does not only recognise but prioritise these developments. Historically, the disciplinary foundations of IPE have evolved dynamically from its remote origins in classical political economy and economic history. In effect, The discipline of International Political Economy (IPE) is one of the most recent entries into the curricular canon of International Relations (IR). While the term ‘political economy’ has of course a formidable intellectual pedigree, IPE scholars came to associate themselves with this new label only during the 1970s, when a group of political scientists defined IPE as an autonomous field of research apart from economics. The volume by Robert Keohane and Joseph Nye ‘Power and Interdependence’ (1977 [2001]) emblematically signaled the arrival of the new sub-discipline within International Relations. (Leiteritz 2005, 51)

By IPE is meant neither radical (Marxian) nor classical political economy. Although it is related to the mainstream both ontologically and epistemologically, IPE is an offshoot of international relations (table 1.1) that seeks to understand and explicate world affairs from the standpoint of inter-relationship between politics and economics. Scoping the essence and thrust of this inter-relationship, albeit at a conceptual level, is central to the

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Table 1.1. The Underlying Conceptual Assumptions of Contemporary International Political Economy Thinking Assumption/Proposition

Commentary

Economic events in one coun- The 2008 global financial meltdown had its origins in the credit crunch in the US mortgage market. try can have implications for This singular event had ramifying complications in other countries. countries across the world. Political events in one country The reunification of Germany was a major factor in the dramatic crash of the UK pound in 1992. can have economic implications for other countries. Economic events in one coun- The 1929 economic recession originating in the United States contributed to the fall of democratic try can have political impliregimes and the rise of authoritarianism (in the cations for another country. fashion of communism and fascism) across the world. The world’s oil crisis of the 1970s brought oil-rich Power in international relaand exporting countries such as Saudi Arabia, Iran tions can come from ecoand Iraq into international prominence (a case of nomic as well as military petrol-power, not military might). might. The Bretton Woods and allied institutions (IMF, World International political strucBank, WTO and GATT) have been serving the tures reflect (the logic and hegemonic and ideological interests of the United imperative) of economics. States and its allies; the institutions have been instrumental to the perpetration of capitalism as a global agenda under various guises of liberal economic designs. Source: Developed by the authors with information from Hough (2010, 2–3).

crux of this chapter. So, what then is the subject matter of IPE? And what are the underlying ideas? These questions are discussed in turn. THE SUBJECT MATTER AND CONCEPTUAL ASSUMPTIONS The subject matter of IPE is the interface between politics and economics within the context of international relations. It encompasses all aspects of the politics of international economy and, conversely, economics of international politics (Oatley 2019). It also embodies the multidimensional nexuses that exist between the political and economic forces in international relations. The politics-economics interface does not imply a simple and linear relationship. It is a dynamic relationship characterised by systemic interpenetration and mutual influence. In effect, IPE seeks to understand international relations from the structuralist-materialist perspective that emphasises the intersection and interaction between political and economic experiences. To be sure, focal

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issues in contemporary IPE are various and diverse. Prominent among them are: globalisation; state–market relations; multinational corporations; international finance/finance capital; international integration; monetary relations; international trade and investment; technology and skills transfer; economic diplomacy; trade diplomacy; war, foreign aid, and debt; economic recessions, health epidemics and pandemics; et cetera. In tandem with the above, several basic propositions underlie the prevailing thinking in IPE (see table 1.1). Technically, the aforementioned propositions indicate that the domains of political and economic activities in international relations are intricately interwoven. This perfectly agrees with our standpoint in this chapter. The conceptual assumptions of IPE have been so succinctly and vividly highlighted in a manner that left nothing to be gainsaid: 1.  That the political and economic domains cannot be separated in any real sense, and even doing so for analytical purposes has its perils. 2.  Political interaction is one of the means through which structures of the market are established and in turn transformed. 3.  That there is an intimate connection between domestic and international levels of analysis, and that the two cannot be meaningfully be separated off from one another. (Underhill 2000, 806)

SCOPE AND CONCEPTS OF IPE Primarily, the political economy is concerned with ‘the systematic inquiry into the nature and causes of the wealth of nations’ (McLean and McMillan 2003, 415). There are two broad perspectives to modern political economy: the liberal and the radical. Notwithstanding their epistemological and ideological divergences, both traditions of political economy are characterised by structuralist cum materialist ontology (cf. Ake 1981). Ideologically, while the liberal political economy seeks to rationalise and improve the state of the economy, the radical political economy seeks to interrogate and transcend the status quo. IPE focuses on the political economy of international relations by probing ‘the multiple interactions between politics and economics on the international level’ (Leiteritz 2005, 51). These diverse interactions have been accentuated by the internationalising and integrating tendencies inherent in globalisation, whereby domestic events in isolated countries may bear fundamental and ramifying implications for segments or the entirety of the international community (Hough 2010). Under this global order, the mutual embedment of

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the state and market systems is no longer a scholastic hypothesis; it has been vindicated as an empirical actuality. IPE, therefore, analyses the political aspects of economic relations and vice versa in international relations. The field is so disciplinarily cross-cutting and eclectic that it encompasses topical themes in the study and practice of international politics as well as economics in a holistic manner (Cohen 2008). This observation, though important, needs to be further situated because the erstwhile boundary between ‘the political’ and ‘the economic’ dimensions of international relations has been eroded by forces of globalisation. This is also true of the once salient divide between ‘the local’ and ‘the global.’ As such, considering the subject matter of IPE from the prism of politics–economics binaries may as well pose some conceptual ambiguities. Over the past five decades, IPE has evolved into a robust analytical category that seeks to understand and explain international relations about the gamut of interrelationships between the political and economic spheres. The significance of such interrelationships is fundamental and its dimensions are varied. Oftentimes economic considerations undergird major events in international relations, including facets of international conflicts and cooperation. In the same vein, virtually all foreign policy choices have economic undercurrent and implications (Roskin et al. 2010). This implies that proper appreciation of the logic of politics–economics nexus is germane to an effective understanding of contemporary international affairs. And this is where IPE finds its forte. IPE as it is known today is a product of evolutionary changes within the epistemology of mainstream international relations. It is an age-long development predating but culminating in the advent of globalisation in the 1990s. Table 1.2 gives useful insights into the historical trajectory of this development. THEORETICAL FOUNDATIONS OF IPE: MERCANTILISM, LIBERALISM AND MARXISM IPE has been theoretically oriented and amenable. Through the course of its emergence, it has evolved some analytical frameworks by which it seeks to anchor its analysis. The theories of IPE are not necessarily categories that were developed originally within and along with its exclusive traditions. Rather, they are constructs either adapted or derived from the extant cognate paradigms in an attempt to systematise the analytical process of IPE as well as gain logical insights into its analytical world. The theories are mercantilism, liberalism/neoliberalism and Marxism. These theories have influenced the scholarship on IPE in diverse ways over the years. They have played a crucial role in the making of IPE, giving it a characteristic epistemic and

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Table 1.2. Genealogy of International Political Economy: The Old, the New and the Current Era

Development(s)

1500 to 1780 1780 onwards 1815 to 1873

Age of mercantilism

1873 to 1945

1944 to 19454

Industrial Revolution Age of Liberalism • 1821 Great Britain adopts the gold standard • 1834 Zollverein—economic union between Germanic states which precipitated the creation of a unified Germany? 1846 Repeal of the Corn Laws—landmark British act of Parliament which reduced protectionism • 1860 Cobden–Chevalier Treaty—Franco–British agreement to free up bilateral trade • 1866 Latin Monetary Union—short-lived currency union based on the French Franc involving several south European countries • 1871 Germany adopts the gold standard Return of mercantilism • 1873–1896 The Long Depression • 1929 Great Depression • 1930 Smoot-Hawley Act—Highly protectionist law passed in the United States • 1931 Collapse of the Gold Standard International liberal economic order • 1944 Bretton Woods conference • 1947 GATT launched • 1971 Collapse of the Bretton Woods monetary system • 1971–1974 Oil Crisis • 1995 World Trade Organisation founded • 1997–1999 East Asian financial crisis • 2008–2010 Credit crunch global recession

Source: Developed by the authors with information from Hough (2010, 3).

epistemological complexion. Table 1.3 highlights the thrusts of these theories alongside their applications in contemporary IPE. CONTEMPORARY IPE: FROM POINT OF DEPARTURE TO POINT OF SYNTHESIS IPE is a dynamic genre of social science scholarship. It is characterised by ontological materialism, epistemological dynamism and methodological eclecticism. Its materialist orientation is a heritage from its background in the mainstream political economy. This orientation enables it to appreciate the saliency of economic/material conditions in its analytical processes.

Table 1.3. Theoretical Foundations of International Political Economy Theory

Basic Assumptions

Implications/Application

Nations should seek to Mercantilism was an economic maximise export and system of trade that spanned minimise imports to leverfrom the sixteenth century to the age economic growth and eighteenth century. prosperity. Contemporary Mercantilism was based on the idea themes in this regard that a nation’s wealth and power include restrictive tariff were best served by increasing regimes, trade wars, ecoexports and so involved increasing nomic protectionism and trade. so on. Under mercantilism, nations frequently engaged their military might to ensure local markets and supply sources were protected, to support the idea that a nation’s economic health heavily relied on its supply of capital. The economic prosperity of Liberalism/ Liberalism/neoliberalism is a policy nations is best advanced Neoliberalism model that seeks to transfer control under a global free marof economic factors to the private ket regime, where every sector from the public sector. state is a competitive It tends towards free market player. Relevant issues in capitalism and away from this respect include trade government spending, regulation multilateralism, economic and public ownership. diplomacy, economic Often identified in the 1980s with integration, transnationalthe conservative governments of ism, interdependence, Margaret Thatcher and Ronald free market reformism Reagan, neoliberalism has more and so on. recently been associated with so-called Third Way politics, which seeks a middle ground between the ideologies of the left and right. The global capitalist system Marxism Marxism is a social, political and is an exploitative struceconomic theory originated by ture that works in favour Karl Marx, which focuses on the of the industrial nations struggle between capitalists and the and against the interest working class. of the poor nations and Marx wrote that the power the world’s working-class relationships between capitalists people. Some thematic and workers were inherently concerns of this include exploitative and would inevitably imperialism/neo-imperialcreate class conflict. ism, economic isolation• He believed that this conflict ism, socialist/proletarian would ultimately lead to a revolurevolutions, world-system tion in which the working class analysis, dependency would overthrow the capitalist and (under)development, class and seize control of the centre-periphery relations economy. and so on. Mercantilism

Source: Authors’ compilation with selective insights from Kenton (2022).

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The dynamic epistemological characteristics of IPE makes it amenable to meta-theory as well as sundry paradigmatic orientations. In terms of methodology, IPE is characterised by methodical heterodoxy, which makes it adaptable to mixed methods without losing the virtues of systematisation and empiricism. IPE represents a para-disciplinary tradition, or, better put, a sub-discipline in contemporary political science. It draws significantly from comparative politics, international relations, international economics, and diplomatic history (Oatley 2019). But more legitimately, IPE seeks to offer objective insights into the structure and workings of government–market relations in the era of globalisation. An attempt to understand the nature and logic of IPE must recognise the peculiarity of the prevailing global order and how the dynamics of such a system are affecting international relations. Essentially, the contemporary international system is marked by globalisation and a host of internationalising tendencies allied to it. Under globalisation, there is an abiding trend of interconnectivity and interdependence within and across national boundaries. More importantly, there is a remarkable whittling down of the territoriality of the state, in addition to the enormous diffusion of ideas, practices, interests and processes on the international terrain. Along with these developments is the transformation of states from pro-nationalist to supra-nationalist organisms. In this context, there is an immense diffusion of local and international occurrences, much as there is an articulation of market and state systems under the regime of global capitalism. Here too, there is an organic interpenetration of state power and capital in such a manner politics and economics essentially linked and interdependent (Nitzan and Bichler 2009). The relationship between economics and politics, or between the economy and government, within the orbit of IPE is not a hypothetical permutation. It is an objective reality that the contemporary world system is replete with. A typical case in point could be found in the instance of the 2008 global financial crisis (cf. Okoli 2014). According to Roskin et al. (2011, 297): ‘The financial meltdown of 2008 illustrates the close connection between politics and the economy. Markets the world over hovered over the latest word from Washington: Would Congress bail out sagging Wall Street? Would government actions halt or reverse the credit shutdown? Even self-acclaimed conservatives such as Bush and McCain demanded a major government role.’ So, as far as IPE is concerned, the intertwinement of politics and economics is a matter of normative rule in the present era of international relations. Needless to say, that both spheres are structurally coterminous while the boundaries are rather fluid and diffused. It would, therefore, amount to analytical naivety to disregard this important problem in the contemporary international relations discourse. From the foregoing, it is evident that IPE is a broad concept covering the dynamic and multifaceted interactions between

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the government and the economy. It encompasses the unity and conflict of forces that underlie the politics-economics interface in contemporary international relations. The politics–economics nexus is evidenced in the dynamics of interests, institutions, processes and practices that are associated with the activities of states and non-state actors in the international system. Such interface derives its salience from the logic of globalisation, which has made it not only possible but also inevitable. To say the least, it should be reiterated at the risk of being tautological that the inter-relationship between politics and economics in the contemporary international system is both inevitable and inseparable. Even overt political occurrences often have hidden or disguised economic undercurrents and complications. Conversely, issues that are, ostensibly, economically exclusive often end up manifesting salient politico-strategic trappings and implications. The foregoing underscores the interpenetrability and inseparability of politics and economics in international relations. SELECT THEMES IN CONTEMPORARY IPE Contemporary IPE is an embodiment of themes and subjects that straddle the domains of development economics, economic history, international economic relations and international finance (cf. Allen 2011; Cohen 2016; Oatley 2019). They include international finance, international trade, globalisation, international development, multinational corporations, economic integration and economic liberalism. This segment x-rays the various aspects of IPE in an effort to further situate its multifarious thematic concerns. It is important to state that what is considered here may not necessarily be exhaustively compendious of the thematic ramifications of IPE. Suffice it to note that underlying motive is to highlight what could be rightly regarded as the basic traditional themes in contemporary IPE. International Finance International finance (IF) is one of the principal areas in IPE. Also referred to as international finance and monetary relations or international macroeconomics, IF is the study of monetary interrelations between two or more countries, focusing on areas such as foreign direct investment, international financial crisis, multinational corporations, external debt, international financial institutions and foreign exchange (Brosz and Frieden 2008; Araghi 2008). There is an intricate and functional linkage between economic and political interests in international finance. Hence, scholarship in the field assumes that

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it is impossible to meaningfully separate the international financial system from international politics (Kirshner 2003). An important area of interest in international finance is the Bretton Woods System (BWS). BWS was created at the Bretton Woods conference in 1944, where the forty participating countries agreed to establish a fixed exchange rate system in an effort to entrench a standardised international monetary exchange rate and policy regime (McLean and McMillan 2003). This was in line with the resolve of the comity of nations to stabilise the emerging the post–World War II international financial climate in a bid to reconstruct the world’s battered economy of the era. The Bretton Woods conference was instrumental to the evolution of the dominant international financial institutions that have continued to have a prominent role in the global economy. These institutions include the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, which metamorphosed into the World Bank (Broz and Frieden 2008). International Trade International trade refers to the exchange of goods and services between countries. It affords nations the opportunity to access goods and services that are either unavailable in their own countries, or are more domestically expensive. The significance of international trade was emphasised by pioneer political economists such as Adam Smith and David Ricardo (Leaner and Levinsohn 1995). These theorists recognised the importance of international trade as a means of augmenting domestic household and industrial consumptions as well as a way of fostering foreign exchange earnings. There are two approaches to international trade, namely free trade and protectionism. Free trade, otherwise known as laissez-faire, emphasises no restrictions on trade while protectionism seeks to regulate trade through a variety of import/export/forex controls. Free trade favours the position that the law of demand and supply is capable of auto-regulate the international market trade in a manner that ensures efficient production and exchange. Hence, nothing should be done to protect or regulate trade. On the other hand, protectionism holds that regulation of international trade is needed in order to ensure effective functioning of the international market. The purpose of such regulation is to control the market dynamics in a manner that forestalls inefficiencies which may impede the benefits of international trade. Protectionism is enforced through a variety of instruments, including tariffs, subsidies and quotas (O’Rourke and Taylor 2007). Traditionally, international trade is guided by the principle of comparative advantage, which holds that countries can mutually benefit by specialising and trading according to their own comparative advantages. In line with the

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theory, if countries recognise the economics of comparative advantage and its numerous benefits, they would do well to stop seeking to produce products that are less cost-effective to generate at home in preference to engaging in trade (Leaner and Levinsohn, 1995). In other words, it is more economically rational and profitable for countries to stay within the product-domains where they have marked comparative advantage in order to leverage and maximise balance of trade payoffs. International Development IPE is also concerned with international development or development economics, which seeks to explain how and why countries develop. International development, in this context, denotes the differing stages of societal progress and transformation measured by economic growth and human capital indices (Summer and Tribe 2008). This has formed the basis classifying nations as developed, developing or least developed. International development focuses on the processes of world’s development. It is interested in ascertaining what constitutes development, the conditions for development as well as the various paths (models) of development. It has come to refer to a distinct field of study, practice, industry and research. Scholarship in international development has focused closely on economic growth, human development, poverty alleviation, inequality and the like (Frieden and Martin 2003). There have been attempts to codify international development against some objective and measurable benchmarks over the years (United Nations (UN) 2015). Veritable examples include the Millennium Development Goals (2000 to 2015) and the Sustainable Development Goals (2015 to 2030). MDGs presented the international community with a framework for guiding and gauging her development efforts over time. Some analysts, however, have contended that the MDGs lacked the necessary ingredients required to undo the structures of poverty and inequality. The MDG were succeeded in 2015 by a seventeen-point agenda designated Sustainable Development Goals (SDGs). Benchmarked against 169 indicators, the SDGs focus on issues of climate change, economic inequality, democracy, poverty, and peace-building (Matikainen 2019). The SDGs were, in the main, predicated on MDGs; nonetheless, there are some salient differences between the two. This new global development framework stresses the need for collective action, thus enlisting the participation of multiple stakeholders towards boosting the sustainability of the goals (UN 2021).

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Globalisation Broadly, globalisation means the movement of financial products, goods, technology, information and jobs across national borders and cultures. In a narrower economic sense, it refers to the increasing interdependence and integration of nations, enabled by free trade. Globalisation describes the ‘transformation of the world into a global society, characterised by interconnectivity and inter-dependence’ of people and nations (Okoli and Atelhe 2018, 102). It is characterised by the dynamics and dialectics of spatial and temporal integration on the worldwide and regional scales. To say the least, globalisation is ‘a dynamic and complex phenomenon with multifaceted expressions in the realms of politics, economy, environment, and culture’ (Okoli and Atelhe 2018, 103). The impact of globalisation on nations and economies has been a matter of debate. Firms in developed countries can gain a competitive advantage through globalisation. Developing countries can also benefit from globalisation as they tend to present a more cost-effective work destination and therefore attract jobs. Unfortunately, the costs and benefits of the globalisation processes have not been necessarily equitably shared among nations. More advanced countries are in a better position to appropriate of the dividends of globalisation, often at the expense of the less developed ones. More worrisome is the fact that an adverse economic, ecological or political development in one locality may have a ripple effect on the rest of the world (Okoli and Atelhe 2012; Okoli 2017). For instance, an economic crisis in one country can create a domino effect elsewhere through its multiple trade partners. Economic Integration Economic integration is a framework for transnational economic collectivism, usually by way of reduction or elimination of trade barriers and the harmonisation of monetary and fiscal policies. The purpose of economic integration is to boost economic efficiency by reducing costs for both consumers and producers and to increase trade between the member countries. Also referred to as regional integration, economic integration is often undertaken by a bloc of countries within a contiguous regional area (Okoli and Atelhe 2021). The ultimate end of economic integration is to create the basis for incremental political coordination through harmonised trade, monetary and fiscal regimes. Scholars of economic integration have identified seven stages of economic integration (cf. Arguello 2000). They are as follows: preferential trading area, free trade area, customs union, common market, economic union, economic, monetary union, and complete economic integration. The final phase is a

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consummation of integration into a total monetary union of a considerable confederated nature. A typical example of a consummate monetary union is the European Union. The Economic Community of West African States (ECOWAS) has been on a precarious march towards a monetary union. Unfortunately, the progress has been stuck between a custom union and a common marked (Okoli and Atelhe 2021). In spite of its advantages, inward looking territorialist states may be inclined to oppose economic integration because of concerns pertaining to the question of sovereignty. Among the benefits of economic integration are reduction in the cost of trade, improved availability and diversity of goods and services, greater purchasing power, employment opportunities associated with trade liberalisation, market expansion, technology sharing and cross-border investment (cf. Learner and Levinsohn 1995). Allied to this set of benefits is the prospect of improved political relations among member countries as stronger economic ties will create an enablement for greater peace and stability. It must be noted, however, that in spite of its numerous benefits, economic integration has a number of costs—namely: diversion of trade and its possible harmful effects; erosion of national sovereignty as a result of associated obligations and undertakings and capital flights arising from employer/employment mobility and shifts (Okoli 2017). Multinational Corporations Multinational corporations (MNCs), otherwise known as transnational corporations, are firms that are registered and operate in more than one country concurrently. They are usually large firms that operate a chain of subsidiaries that are fully or partially owned in other countries. The subsidiaries are controlled from the company’s corporate headquarters, usually situated in the world’s highly industrialised centres (Okoli 2017). MNCs are seen as agents of both development and underdevelopment. It is posited that they bring about vertical and horizontal economies of scale by reducing costs that emanate from an expanded level of output and a consolidation of management in addition to increasing market share. MNCs enjoy the advantage of global mobility operational resources. In effect, their technical expertise, personnel and strategies can be transferred from country to country (Foley, Hines and Wessel 2021). MNCs have been criticised as being an agent of imperialism and dependency. They have been accused of exacerbating underdevelopment, especially in developing economies with a poor export base as their economic base that are particularly susceptible to external economic exploitation. There are also the issues of monopolistic tendencies, human-rights abuses, political and economic

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sabotage and disruption of indigenous growth and development prospects (McLean and McMillan 2003). CONCLUSION The contemporary international system is a diffused entity marked by a dynamic and interpenetrating linkage between the state and the market, the polity and the economy, as well as the political and the economic. The onset of globalisation has occasioned increased internationalisation, integration and interdependence among states and economies. There has been an enduring intersection and interaction between the forces of politics and economics in such a rapidly globalising world. IPE is concerned with the nature and dynamics of this state–market (politics–economics) relationship. IPE seeks to approach international relations from an intersectional standpoint that recognises not only the interdependence of politics and economics but also the unity and conflict of forces inherent in these spheres. Although such a linkage has often been mutually enabling and reinforcing, it has, nonetheless, also borne some fundamental trappings of tension and contradictions some instances. Understanding the ramifying dialectics of such relations is at the core of the subject matter of IPE. In this chapter, efforts have been made to explore the concept of IPE in an attempt to situate and clarify aspects of its contemporary nature and ramifications both as a field of study and a field of practice. Relying on textual and contextual exploration of relevant literature, this chapter undertook a rigorous exposition of IPE, from a standpoint that highlights the dynamic, and often dialectical, interplay of politics and economics in today’s global system. Viewing the politics/economics interface in terms of an intersection, interaction and interpenetration, this chapter posited that any meaningful conception of contemporary international relations should comprehend the gamut of prevailing and emerging nexuses that underpin state–market relations on the world stage. Besides, such understanding should also recognise the platitude that the political and economic spheres are essentially interwoven and inseparable. The implication is that events in such spheres cannot be meaningfully conjectured and understood in analytical isolation, one from another. REFERENCES Ake, Claude. 1981. A Political Economy of Africa. London: Longman. Allen, Robert Carson. 2011. Global Economic History: A Very Short Introduction. New York: Oxford University Press.

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Araghi, Farshad. 2008. ‘Political Economy of the Financial Crisis: A World-Historical Perspective.’ Economic and Political Weekly 43 (45): 30–32. Arguello, Ricardo. 2000. ‘Economic Integration: An Overview of Basic Economic Theory and other Related Issues.’ Serie documentos. Borradores de investigación, no. 3 (Mazo 2000). Broz, J. Lawrence, and Jeffry Alan Frieden. 2001. ‘The Political Economy of International Monetary Relations.’ Annual Review of Political Science 4 (1): 317–43. Brosz, J. Lawrence, and Jeffrey A. Frieden, eds. 2008. ‘The Political Economy of Exchange Rates.’ In The Oxford Handbook of Political Economy, edited by Donald A. Wittman and Barry R. Weingast, 587–98. Oxford: Oxford Academic. Cohen, Benjamin Jerry. 2008. International Political Economy: An Intellectual History. Princeton, NJ: Princeton University Press. Easton, David. 1965. A Systems Analysis of Political Life. New York: John Wiley & Sons. Foley, C. Fritz, James R. Hines Jr. and David Wessel, eds. 2021. Global Goliaths: Multinational Corporations in the 21st Century Economy. Washington, DC: Brookings Institution Press. Frieden, Jeffry, and Lisa Martin. 2003. ‘International Political Economy: Global and Domestic Interactions.’ In Political Science: The State of the Discipline, edited by Ira Katznelson and Helen V. Milner, 118–46. New York: W.W. Norton. Hough, Pete. 2010. ‘International Political Economy: Theory and History.’ In World Politics: International Relations and Globalization in the 21st Century, edited by Jeffry Haynes, Peter Hough, Malik Shahim and Lloyd Pettiford, 320–59. London: Routledge. Kenton, Will. 2022. ‘What Is Mercantilism?’ Investopedia, 25 September 2022. Investopia https:​//​www​.investopedia​.com​/terms​/m​/mercantilism​.asp. Kirshner, Jonathan. 2003. ‘Money Is Politics.’ Review of International Political Economy 10 (4): 645–60. Leamer, Edward, and James Levinsohn. 1995. ‘International Trade Theory: The Evidence.’ Handbook of International Economics 3: 1339–94. Leiteritz, Ralf Juan.2005. ‘International Political Economy: The State of the Art.’ Colombia International 62: 50–63. Matikainen, Oliver Albert. 2019. ‘Sustaining the One-Dimensional: An Ideology Critique of Agenda 2030 and the SDGs.’ MSc Thesis, Department of Earth Services, Uppsala University, Sweden. McLean, Ian, and Alistair McMillan, eds. 2003. Oxford Concise Dictionary of Politics. London: Oxford University Press. Nitzan, Jonathan, and Shimshon Bichler. 2009. Capital as Power: A Study of Order and Creorder. New York: Routledge. Oatley, Thomas. 2019. International Political Economy. Sixth edition. New York: Routledge. Okoli, Al Chukwuma. 2001. ‘The Political Economy of Intra-Party Opposition in Anambra State, 1999–2001.’ BSc Project submitted to the Department of Political Science, Nnamdi Azikiwe University, Awka. Nigeria.

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———. 2014. ‘The State and the Global Economic Meltdown: Challenges and Options of Crisis Management in Nigeria.’ In The State and the Global Economic Crisis, edited by M. Biereenu-Nnabugwu, 376–86. Iloran, Nigeria: Nigerian Political Science Association. ———. 2017. ‘Globalisation and Extractive Economy: A Study of Nigerian Petroleum Sector (589–608).’ In Readings in Globalization and Development in Africa, edited by U. A. Tar, M. E. U. Tedheke and E. B. Mijah, 589–608. Kaduna: Nigerian Defence Academy Press. Okoli, Al Chukwuma, and George Atelhe. 2012. ‘Reform and Ideology Complex in Nigeria: A Comparative Critique of SAP and NEEDS.’ KADSU Journal of Social Sciences 4, no. 1: 1–8. ———. 2018. ‘Globalisation and “Africanisation” of Contemporary African Popular Music.’ Journal of Sustainable Development in Africa 20 (3): 100–11. ———. 2021. ‘Africa and the Globalization Bargain: Towards a Collective Economic Sovereignty.’ Austral: Brazilian Journal of Strategy & International Relations 10 (19): 230–51. O’Rourke, Kevin Hjortshøj and Alan M. Taylor. 2007. ‘Democracy and Protectionism.’ The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson. Cambridge, MA: MIT Press. Roskin, Michael G., Robert L. Cord, James A. Medeiros and Walter S. Jones. 2010. Political Science: An Introduction. Eleventh edition. New York: Pearson Longman. Summer, Andy, and Michael Tribe, eds. 2008. International Development Studies: Theories and Methods in Research and Practice. Newbury Park: Sage. Underhill, Geoffrey Richard David. 2000. ‘State, Market, and an (Inter?) Discipline: Genealogy of Global Political Economy.’ International Affairs 76 (4): 805–24. United Nations. 2015. The Millennium Development Goals Report 2015. New York: United Nations. ———. 2021. The Millennium Development Goals Report 2021. New York. United Nations.

Chapter 2

Theories of International Trade Perspectives from Africa Denis Nfor Yuni

International trade theory is one of the oldest economic theoretical concepts. It was first postulated by Adam Smith in his 1776 book titled An Inquiry into the Nature and Causes of the Wealth of Nations. About forty-one years later, David Ricardo’s 1817 Principles of Political Economy and Taxation induced a paradigm shift on the theory of international trade. Adam Smith posited that economic prosperity could only be achieved, if a country recorded export surplus. And this could be done by growing the size of markets via division of labour and specialisation in the production of commodities. This should lead to cheaper production which becomes more competitive than in the importing country. David Ricardo consented to Adam Smith’s postulation of the importance of international trade, but differed in the production technologies which should be adopted in driving exports for economic prosperity. These views instigated politico-economic debates in the nineteenth and twentieth centuries with major publications from John Stuart Mill, Ricardo, Eli Heckscher, Bertil Ohlin, Paul Samuelson and several others. The Africa Agenda 2063 is a fifty-year plan with the vision of an integrated, prosperous and peaceful Africa driven by its own citizens, and has represented a dynamic force in the international arena between 2013 and 2063 (African Union Commission 2015). Conspicuous in this laudable plan is the Africa Continental Free Trade Area (AfCFTA), whose aim is to eliminate tariff and non-tariff barriers in view to deepen intra-Africa trade and invariably compete favourably in global trade. This long-term plan is a recognition of the role of international trade in improving economic prosperity as first recognised by Adam Smith. Nevertheless, it is important to review the 37

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theories on international trade with a contextual focus on Africa, with a view to position Agenda 2063 on concrete pillars as it concerns trade. Today, international trade theories are classifiable into two broad groups: the orthodox or classical country-based theories and the new or modern firm-based theories. The theories shall be discussed from a historical and contextual perspective, in order to demonstrate the evolution of the theories over time as well as their relevance in contemporary times. This chapter argues that existing theories were formulated and projected based on Western, parochial, Eurocentric experiences and perspectives. It is critical that the theories are understood in the African context in search of a suitable theoretical approach for African renaissance and development. This aligns with the ‘Africa solution to Africa problem’ of African Union (AU) Agenda 2063 and AfCFTA. CLASSICAL COUNTRY-BASED THEORIES This refers to those theories that align with the classical school of economic thoughts, and therefore promotes ideals such as free trade, division of labour, specialisation and so on. Five key classical country-based theories are discussed below. Mercantilist Theory Adam Smith is popularly recognised as the originator of international trade theories. However, literature shows the existence of the mercantilist theory of the 1600s. Several authors including Adam Smith attribute the origin of the Mercantilist system theory to Thomas Mun (1571–1641). However, most of the European economists between the sixteenth and eighteenth century are largely perceived as mercantilists. The mercantilist could be said to have been focused on explaining why nations should become prosperous, wealthy and powerful; wherein international trade and industry were considered very significant (Magnusson 2011). The mercantilist theory posits that the amount of gold, silver and precious metals a country had reflected its economic strength. It further posits that the world’s wealth was static and this explains why several European nations endeavoured to accrue the largest possible portion of this wealth by maximising their exports and employing import restrictions using tariffs (Kenton 2020). In trade, therefore, when a country or economy recorded a trade deficit, it was meant to pay the difference in gold. Adam Smith, David Hume, Dudley North and John Locke are believed to be the first critics of the mercantilist theory. Adam Smith perceived the

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mercantilist system as the commercial system wherein money was confused with wealth; Smith recognised that the majority of mercantilist writers were businessmen and government officials who wrote primarily about trade, shipping, effects of tax and protection of industries at the time, among others (Magnusson 2011). John Locke questioned the stability of money; pointing to the fact that wealth could be created by human labour and, hence, not fixed. And Hume critiqued the mercantilist idea of pursuing a constant positive balance of trade. In spite of the several criticisms of the mercantilist theory, it was only fundamentally replaced in 1776 with the advent of Adam Smith’s publication—The Wealth of Nations. While several authors posit that mercantilism is not relevant today, authors such as, Rodrik’s (2013) opines that mercantilism is still very much relevant and that its continuous conflict with liberalism is likely to be a major force shaping the future of the global economy. Nevertheless, offshoots of the mercantilist theory such as import restriction by levying tariffs have remained a key policy in international trade across several countries. Evidence of such import restrictions abound in developed and developing countries. In 2015, for example, the government of Nigeria banned rice imports across land borders and raised the tariff on rice imports through ports to 70 per cent (Amata 2022). The Zambian government banned the importation of fruits and vegetables in 2017; South Africa banned use of imported cement on government-funded projects in 2021; and more recently, in August 2022, Nigeria banned importation of SIM cards. While some import restrictions are primarily due to health reasons, security and environmental protection, the ones listed, as well as several others across the globe are aimed at encouraging local production and targeting a positive balance of trade. It is, however, worth noting that import restrictions generally lead to unhealthy reprisals that may undermine the initial objective of export promotion. For example, in 2020, China instituted tariffs of up to 218 per cent on Aussie wine imports in retaliation to Australia’s ban on Huawei (Burke 2021). Absolute Cost Advantage The classical theory of absolute cost advantage remains the first recognised theory of international trade. The theory is rationalised on the premise that, there is no need to produce a good or service if another country or economy can produce same with lower inputs, time or resources. In effect, Adam Smith submitted that for a country to grow, free trade should be practiced to increase exports and improve economic prosperity. He further stated that for such trade to be beneficial to both economies/countries, each economy or country should specialise in that good or service, which it will produce at

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cheaper cost or less resources. This implicitly means that Adam Smith recognised that countries or regions have geographical, socio-cultural, religious and structural, among other, dispositions that determines the cost of production of goods and services (causing it to differ from one place to another). Therefore, each country/economy should only produce goods and services in which they have such cost advantage over the trading partner. Beyond the individual gains from trade by the countries, Adam Smith argued that if trade was driven by absolute cost advantage, which resulted in specialisation, the gains from trade would also increase globally. The absolute cost advantage can be demonstrated using the example in table 2.1; wherein we assume that there exist only two trading countries in the universe, Nigeria and Cameroon, who trade on two goods—Irvingia (ogbono) and textiles. The illustration on table 2.1 suggests that, before trade, Nigeria gains forty from producing textiles and thirty units from producing ogbono, while Cameroon gains thirty units from producing textiles and forty units from producing ogbono. If Nigeria has absolute advantage in textiles and Cameroon has absolute advantage in ogbono, then specialisation in the goods in which they have absolute advantage in, alone, will generate ninety units as gains for each country. This implies that, in specialising only in the production of textiles for Nigeria, it gains fifty units and loses thirty. The reverse is the case when Cameroon specialises in ogbono. Interestingly, the world gains twenty units extra of textiles and ogbono when such trade is practiced. Hence all parties gain—Nigeria, Cameroon and the World. The major criticism of the absolute cost advantage theory is based on its assumptions as it implies that all countries have a product in which they have absolute cost advantage in, relative to trading partners. Meanwhile some countries might be better in producing both goods and the trading partner may not be better in any. This is particularly more difficult in developing countries where most firms are limited in most production inputs which would have aided the ‘obtained’ or ‘developed’ cost advantage in the production of certain goods. This leaves most of them to differ mostly in geographical features, Table 2.1. Gains from Trade Based on Absolute Cost Advantage Before Trade Country Nigeria Cameroon World Production

Textiles 40 30 70

After Trade

Irvingia Textiles (ogbono) 30 90 40 – 70 90

Source: Developed by the author.

Gains from Trade

Irvingia Textiles (ogbono) – +50 90 −30 90 +20

Irvingia (ogbono) −30 +50 +20

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which may likely not also occur because trade is usually across land borders with countries that share similar geographical features. Another criticism of the absolute cost advantage is that of the non-inclusion of the many other factors that influence trade between two countries such as transportation costs, exchange rates fluctuations and value addition via innovation, among others. And generally, it is perceived as simplistic, especially relative to the comparative cost advantage. Seretis and Tsaliki (2015) investigated the application of the absolute cost advantage in international trade in four countries: Greece, Spain, Finland and the Netherlands. Their findings are consistent with the view that productivity differences persist over the years, which is equivalent to saying that the absolute advantage in production does not change into comparative advantage. On the other hand, Boundi-Chraki and Perrotini-Hernández (2021) employed robust panel regression models to empirically show that the free movement of money capital and technical change in North American Free Trade Agreement (NAFTA) and the EU-28 strengthen the position of countries with absolute cost advantage in some manufacturing sectors and, therefore, weaken the positions of other countries between 2000 and 2014. Comparative Cost Advantage Propelled by the major criticism to Absolute cost advantage as mentioned in the previous section, Ricardo proposed the theory of comparative cost advantage. Comparative advantage introduced the aspect of relativity into the dynamics of trade rather than just the absolute advantage. A country is said to have comparative advantage over another when it can produce a good or service at a lower opportunity cost or with relatively higher efficiency than another, even when it may not be cheaper than that of the other country. Ricardo’s contribution therefore shows that, even if a country produces all goods less expensive than the other, trade could still take place if each country produces that good in which it has lower opportunity cost. Table 2.2. Gains from Trade Based on Competitive Cost Advantage Before Trade Country Nigeria Cameroon World Production

Textiles 40 30 70

After Trade

Irvingia Textiles (ogbono) 10 80 20 – 30 80

Source: Developed by the author.

Gains from Trade

Irvingia Textiles (ogbono) – +40 40 -30 40 +10

Irvingia (ogbono) −10 +20 +10

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Given two countries (Nigeria and Cameroon) involved in trade, comparative cost advantage could be illustrated on table 2.2. Again, we assume only these two countries exist and that they both sell Irvingia (ogbono) and textiles. If Nigeria produces one unit of ogbono, it has an opportunity cost of four (forty/ten) units of textiles. And for Cameroon to produce one unit of ogbono, it will have an opportunity cost of 1.5 (thirty/twenty) units textiles. This means that Cameroon has a comparative advantage in producing ogbono, given that it has a lower opportunity cost. Meanwhile, Nigeria has a comparative advantage in textiles with 0.25 (ten/forty units of ogbono) opportunity cost, relative to Cameroon whose opportunity cost is 0.667 (twenty/thirty) units of ogbono. If Nigeria and Cameroon now decide to specialise in the country in which they have comparative advantage in, trade gains will increase overall, from thirty to forty units of ogbono and seventy to eighty units of textiles. According to Pettinger (2020), major comparative cost advantages examples in the world today include: Saudi Arabia with oil, New Zealand with butter, the United States with soya beans, Japan with cars and so forth. Criticisms of the theory of comparative advantage abound. Firstly, countries may tend to specialise only in primary production because it has comparative advantage in it, hence not growing in the middle and long term. Secondly, trade may not necessarily lead to higher Pareto optimality. The example in table 2.2 shows that, though world or total production improved for both goods, Cameroon did not necessarily get better-off. As they gained twenty units of ogbono in specialising in ogbono but lost thirty units of textile. Lastly, countries tend to trade with countries that have closer geographical space or trade agreements (Tinbergen 1962, 330). Additionally, total cost is limited only to labour cost, its restrictiveness to two countries and commodities and only based on the supply side, as well as its unrealistic assumption of labour being homogenous, constant returns to scale, full employment and perfect mobility. Developing countries share a similar fate in comparative advantage theory as is the case with absolute cost advantage. The hypothetical example of trade above is a reflection of the reality of trade that exists between Nigeria and Cameroon. While value addition in the textile industry has improved over the decades in Nigeria, Cameroon has over several decades continued to sell ogbono in its primary primitive form (without value addition). And again, though developing countries in Africa may be able to establish which goods they have comparative advantage in, they are constrained to trade only with neighbouring countries even when they may ultimately not improve gains. This is primarily because of the poor infrastructure of road, rail and water ways that are meant to connect the African countries. Costinot and Donaldson (2012) employ agricultural data for seventeen crops in fifty-five countries to empirically validate Ricardo’s theory of

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comparative advantage. Stuart (2019) posits that African countries generally show comparative advantage in the export of aggregate primary goods, and because they are diversified within the broad category of exports, then ‘increased intra-African trade with current comparative advantage patterns is possible.’ This is valid to the extent that movements of goods are perfectly mobile (which is seldom the case in Africa) and that the diversity is specialised to appreciable standards. Heckscher-Ohlin Theory The Heckscher-Ohlin theory also known as the (H-O) model was propounded by Eli Heckscher in 1919, and later on, his student, Bertil Ohlin, contributed to it in 1933. They assumed that there exists perfect competition in both commodities and factor markets; technology, tastes and preferences of consumers are identical in both economies; production functions vary in factor intensities, there is constant returns to scale and perfect mobility of labour within nations but not between nations. The combined theory is an adjustment of the comparative advantage theory, wherein it considers relative efficiencies of factors of production as the rationale for specialisation and trade. The theory is built on the premise that countries differ in endowment; some are capital intensive in their operations and some are labour intensive. Therefore, countries with abundant capital and relatively limited/scarce labour will tend to export capital-intensive products and import labour-intensive products, while countries in which labour is relatively abundant and capital relatively limited/scarce will tend to export labour-intensive products and import capital-intensive products. Heckscher and Ohlin perceived the factor-price equalisation theorem as an econometric success, because the huge volumes of international trade in the late nineteenth

Figure 2.1.  Illustration of Heckscher-Ohlin Theory before and after Trade

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and early twentieth centuries agreed with the convergence of commodity and factor prices worldwide (Feenstra 2004; Leamer 1995, 77). We assume that there exist two nations, A and B, wherein A represents a capital-intensive country, producing paper, while B represents a labour-intensive country producing clothes. There exist only two countries producing only two goods. The Heckscher-Ohlin theory is illustrated graphically in figure 2.1 below. AA is a point on the production possibility frontier (PPF—which represents the maximum amount of goods and services an economy can produce, given fixed factors of production and fixed technology) for country A and AB is a point on the PPF for country B. Point AA involves more of capital and less of labour, while point AB involves more of labour and less of capital. Heckscher-Ohlin upholds that, if both countries specialise in producing goods in which they have relative factor efficiency in (that is; country A producing paper and country B producing clothes), then indifference curve will increase from indifference curve I to indifference curve II. Both nations therefore attain higher level of satisfaction at point E if they specialise based on relative factor efficiency. Heckscher-Ohlin’s contribution to trade theories has been largely appreciated in the literature as it sheds more light on the two previous theories with more realistic rationalisation. However, there exist two key criticisms to this theory. Firstly, the Leontief paradox, which is the assumption that abundance of a factor of production in a country, translates to it being cheap. Leontief empirically shows that, though the United States is a capital-endowed and labour-scarce nation, it imports a larger number of capital-intensive goods and exports more of labour-intensive goods (Leontief 1956). As is the case with the criticisms of previous theories, other criticisms are predicated on its real-life unrealistic assumptions of perfect competition, identical tastes and preferences, no transport costs, constant returns to scale and perfect mobility, among others. In linking trade and the distribution of income, within the context of the Hecksher-Ohlin theory and the convergence of relative prices, Krugman, Obstfeld and Melitz (2018, 122) assert that, ‘compared with the rest of the world, the United States is abundantly endowed with highly skilled labor while low-skilled labour is correspondingly scarce.’ They then inferred that international trade therefore has the ‘potential to make low-skilled workers in the United States worse-off; not just temporarily, but on a sustained basis,’ hence worsening inequality. If this assertion is to be snowballed to the world at large, considering it as one global economy as it is often described, then Africa who seem to be endowed with labour than capital, and also have more of low-skilled labour than high skilled labour, will be considerably disadvantaged in a digital global economy.

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MODERN FIRM-BASED THEORIES The classical theories discussed above have one thing in common; they are all country based. Modern firm-based theories explain international trade from the firm perspective, that is how firms can expand into another country and produce goods more efficiently than other firms. Country Similarity Theory Linder (1961) propounded the country similarity theory to explain the idea of intra-industry and global trade. He empirically analysed the Leontief paradox of factor abundance and cost and showed that trade is driven more by similar demand structures and not the differences in the supply side of production factors, as implied by Heckscher-Ohlin (Verter 2015). The country similarity theory therefore posits that countries with similar demand structures (such as location, culture, technological capability, developmental stage, political orientations and/or economic interests) can establish related industries and can therefore exchange differentiated products as trade. Assumptions of the country similarity theory are that countries who have same tastes and similar economic prosperity (per-capita income) can consume products with similar quality levels. This seem to be a paradigm shift from the classical traditional theories who perceive trade to be between countries with different absolute cost advantage, comparative cost advantage or factor intensities. However, the evidence of trade between countries with dissimilar religion, taste, cultures, technological capacity as well as politico-economic interests abound. A glaring example is that of the China–Africa trade that differ in all these qualities and also have different economic interests for trade. This is trade that is largely based on the necessity of capital goods such as technological appliances, for example. Not because China and Africa have similar technological level but because Africa needs this technology. Product Life Cycle Theory Five years after Linder’s country similarity theory, Vernon, in 1966, propounded the product life cycle theory to explain firm-based international trade. In response to the criticism of the H-O model, Vernon proposed five stages of the life cycle, as explained by Verter (2015): 1.  The introduction of a new product into the market.

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2.  Invention of product by other industrial countries as technology transfers from the innovating country. 3.  Maturity induces a fall in exports from the innovating country. 4.  Saturation occurs when sales or distribution of product(s) reach the peak position. 5.  Production declines in the innovator country and, therefore, innovating countries become net-importers of some products they formerly innovated and introduced to the market. Summarily, once a good is produced and introduced into the market, it is only a matter of time before other countries understand the mechanism and start producing the same, at probably cheaper and larger quantities, that the originating country of the product will have to now import from these countries. The idea of comparative advantage may change the dynamics of production in favour of other countries. The theory explains the product life cycle of the personal computer, telephones, printers and so on. It is, however, criticised for not being able to describe present trade patterns across the globe and the exception of luxury products, products from special skills and branded/differentiated products. Global Strategic Rivalry The global strategic rivalry theory’s origin is credited to Paul Krugman and Kelvin Lancaster for their publications in the 1980s. This theory illuminates how multinational companies strategically rival global competitors in the industry by gaining competitive advantage. Sustainable competitive advantage is gotten by instituting obstacles that prevent new entries into the market. Multinational companies prevent new entries into the market based on the following: 1.  Investing in research and development. 2.  Ownership of intellectual property rights. 3.  Specialised production and marketing processes (thanks to experience). 4.  Control of downstream sectors (raw materials and other inputs). 5.  Economies of scale and scope. Krugman and Lancaster proved that the production life cycle theory, as proposed by Vernon in 1966, may not hold if the firm upholds the strategies listed above to prevent new entries into the market.

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Porter’s National Competitive Advantage Porter (1990) contributed to the debate of trade theories by stating that innovation and upgrade are the key determinants for sustainable competitive advantage of companies. The theory proposes country- and firm-specific elements that sustain competitive advantage. 1.  Factor conditions: there exist basic and advanced factors necessary for the production of certain goods and services that could influence international trade outcome. Basic factors include natural resources, climate, geographical condition, land availability and quality, and so on. While, advanced factors include: research and development, skilled workers, ICT and market dynamics. 2.  Demand conditions: this refers to the size of the market in terms of the volume of demand a product gets. In agreement with the product life cycle, when a product is introduced into the market, there is need for a large and buoyant domestic market to boost income, expertise and capacity so as to facilitate exports, without which international competition will be slow. 3.  Related and supporting industries: collaboration is required between related or supporting countries across borders due to difficulty in mastering all aspects of the industry. Such collaboration will translate to increased exports with favourable competitive advantage. 4.  Firm strategy, structure and rivalry: refers to those features in a country that explains how companies are established, run and regulated. Porter opines that the ability to compete with local rivals could set companies on a path to attain same at the international scene. This could be through trainings, research and development, value addition, product differentiation and so on. In Porters postulation, government has a role to play in enabling the country-specific elements to favour companies in becoming exporters and not importers. Companies with a favourable disposition in these countries and firm specific-elements will have competitive advantage to export, while those without will import. Goyal (2020) opines that, other factors such as governments and legal actions can significantly drive competition and profitability, besides industry structure as proposed by Porter, and that the model is more deeply rooted in the industry-based view of modern-day strategic theory than the sustainability of competitive advantage.

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TRADE THEORIES IN THE AFRICAN CONTEXT Both classical (country-based) and modern (firm-based) theories were informed and formulated based on the economic realities at the time. The mercantilist theory was informed by the gold standards of the 1600s. Absolute cost advantage, comparative cost advantage and H-O theories defined the emergence of constituent countries or economies with the desire to define principles that guided trade between countries. Emergence of multinational companies set the pace for the theorisation of its functionality, cycle and enablers, now referred to as the firm-based theories. It is therefore evident that the assumptions, modus operandi and features explained in these theories were those of the advanced economies or multinational firms that constituted the trade-economics of the time. These multilateral firms were largely in developed countries, and so the theories had very little or no consideration for developing countries in Africa. We therefore examine some of the fundamental issues that may cause these theories not to be currently applicable in Africa and propose an African trade design to build intra-African trade and economic prosperity. Infrastructural Conditions It is an established fact that infrastructure related to production and trade is relatively low in African countries (UNCTD 2019; OECD and ACET 2020). This includes farm to market roads, production rail routes, industrial clusters/ sites, structured water ways and ports. Infrastructural conditions constitute one of the major enablers that give a country or economy comparative advantage in one way or another. However, when all countries seem to have very low infrastructural levels, they tend to produce similar goods—primary products. No doubt, the Office of the United States Trade Representative posits that trade is least within Africa (United States Trade Representative 2021). Firm-based theories are formulated with the assumption that there is some level of infrastructure countries are expected to have—that is, expansion to other countries by a firm is predicated on certain minimal infrastructure. Cross-country road or rail networks or water ways facilitate movement of goods and people at a cheap rate, thereby giving them global competitive advantage. This is, however, not the case with most African countries. Temperature and Soils The fact that most African countries share similar climatic and atmospheric conditions, plus the predominantly primary level of production being

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practiced, makes it even more difficult to have comparative advantage. About half of all African countries lie between ten degrees north and twenty degrees south of the equator; and about 80 per cent of African countries lie between twenty degrees north and twenty degrees south of the equator. This means that in agriculture, which is the mainstay of production in Africa, these countries share similar temperatures and to some extent can produce similar agricultural goods. Though African soils range widely from hard to soft, they are generally characterised as old (lacking volcanic rejuvenation), inappropriate for land-use and suffering from soil erosion (Eni 2012; Mitiku, Herweg and Stillhardt 2006). Empirical agricultural works across African countries share this as constraints to agricultural production and most governments are yet to have a robust approach to break out of this nest. The implication, however is that as long as African countries depend mostly on primary production such as agriculture, and share similar fate in agricultural indicators, then the power of comparative advantage is weakened and makes intra-African trade difficult. Institutional Frameworks Most African countries are plagued with poor institutional frameworks that make production or doing business in general extremely difficult. For indigenous firms to grow to multinationals, there is need for extra-ordinary institutional facilities and most importantly government support and patronage that sustains competition and increase market control. There are very few of such multinationals in Africa, with notable examples such as Dangote Cement and Zenith Bank. Most major African companies/industries forge their way through the challenges of doing business within Africa with little institutional enablers. Some of the challenges include: poor energy systems (World Economic Forum 2020 shows that, no SSA country scores up to 60 per cent in the Energy Transition Index results for system performance), lack of access to finance, high taxes, poor infrastructure, sub-optimal legal structures, unfavourable land tenancy policies, inefficient custom controls and so on. In the United States, for example, the Department of Agriculture’s Foreign Agriculture Service offers a variety of export marketing services to assist US agricultural exporters with finding customers overseas (United States Department of Agriculture 2021). Meanwhile, in China and most European countries, they have fully or partly state-owned firms that are politically/ diplomatically supported across borders to give access to new markets, raw materials, increased capital and tax wavers among other things. Such firms rise up to be major players in international trade, but this is hardly the case with firms in Africa.

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Low Capacity to Compete beyond the Continent The first three issues mentioned affect more of intra-African trade. Intra-African trade seems to be even more feasible despite the challenges. For African countries to break into intercontinental trade markets and compete with major trading nations like China, America, Germany, the Netherlands and Japan (five top exporting countries of 2019, according to World Trade Statistical Review 2020), they must first of all be able to compete favourably with other African countries. In fact, most African countries even struggle to sustain local production due to competition from the above-mentioned major trading nations. This is because major exporting countries enjoy economies of scale, advanced technology, high infrastructural capacity, advanced research and development, among other factors that makes it very difficult to compete with them. AFRICA TRADE DESIGN Mindful of the relatively low infrastructural capacity and inefficient institutional setup that limits comparative advantage between countries in terms of natural endowments and recognising the tendency to produce similar products at the same primary level of production, there is need for a conscious, strategic and systematic trade design for export products in Africa. This is based on the premise laid down by Adam Smith that, prosperity is triggered by trade. Porter (1990) further posits that, ‘National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, labour pool, interest rates, or its currency’s value, as classical economics insists. . . . Companies gain advantage against the world’s best competitors because of pressure and challenge.’ For there to be intra-Africa trade and, consequently, intercontinental trade, there is need for African countries to come together and map out export-product priorities for each country or region, in a bid to consciously create some sort of comparative advantage among the countries and use the limited resources to build infrastructures and institutions along specific value chain products per country/region in order to trigger intra-African trade. This is justified by the fact that, ‘in a world of increasing global competition, nations have become more, not less, important. As the basis of competition has shifted more and more to the creation and assimilation of knowledge, the role of the nation has grown’ (Porter 1990, n.p.). In addition, African governments must support promising industries based on merits (not founded on nepotism, ethnicity or favouritism—ills that plague most African countries) in terms of finance, infrastructure and even

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negotiating diplomatic deals that facilitate access to production inputs and markets for propelled growth. There has been several regional and world trade policies, programmes and agreements in the past. Some of them giving advantage to advanced countries, however, the Trade Facilitation Agreement of 2017 proposes to facilitate movement, clearance and release of goods across borders, as well as other measures for developing members. Nevertheless, there is need for an African trade design that positions African countries to align themselves properly within the global institutional framework of international trade. This trade design will determine what countries at subregional and regional levels produce for exports so as to build up huge economies of scale around streamlined value chains. This will be a way out of the vicious cycle of primary product export that currently obtains in most African countries. CONCLUSION Most African countries have enacted and implemented several policies/ programmes to improve trade since the trade liberalisation era of the 1980s. However, that appears to be the crux of the problem because there is no coordination at subregional or regional levels for what to produce, which value chains to follow or which trade market routes to exploit. A number of trade theories exist, which could be largely grouped into the orthodox or classical country-based theories and the new or modern firm-based theories. The orthodox theories include the mercantilists, absolute cost advantage, comparative cost advantage and the Heckscher-Ohlin theory. On the other hand, modern firm-based theories that were reviewed include: country similarity theory, product life cycle theory, global strategic rivalry and Porter’s national competitive advantage. These theories explain international trade from a Western perspective and seldom perceive it from the African perspective. Four key factors that impede the functionality of these in Africa include: infrastructural conditions, temperature and soils, institutional frameworks and low capacity to compete beyond the continent. This study therefore proposes that African countries come together and assign export-product priorities for each country or region in a bid to consciously create some sort of comparative advantage among the countries and channel the limited resources to streamlined products, while extending the market across country borders. The African Continental Free Trade Area agreement is no doubt a viable instrument to boost intra-African trade, however, it will perform suboptimally if such a trade design is not strategically built and implemented.

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REFERENCES African Union Commission (AUC). 2015. Agenda 2063: The Africa We Want. Addis Ababa: Strategic Planning, Monitoring, Evaluation and Resource Mobilisation. Amata. 2022. ‘Nigeria Still Imports Rice and the CBN is Aware but Have They Told President Buhari?’ Dataphyte, 19 January 2022. https:​//​www​.dataphyte​.com​/latest​ -reports​/agriculture​/nigeria​-still​-imports​-rice​-and​-the​-cbn​-is​-aware​-but​-have​-they​ -told​-president​-buhari​/. Boundi-Chraki, Fahd, and Ignacio Perrotini-Hernández. 2021. ‘Absolute Cost Advantage and Sectoral Competitiveness: Empirical Evidence from NAFTA and the European Union.’ Structural Change and Economic Dynamics, no. 59: 162–73. Burke, Helena. 2021. ‘Australia relies on China for 90 Per Cent of Solar Panel Imports.’ Gold Coast Bulletin, 25 November 2022. https:​//​www​.goldcoastbulletin​ .com​.au​/technology​/environment​/australia​-relies​-on​-china​-for​-90​-per​-cent​-of​-solar​ -panel​-imports​/news​-story​/57951fc326cf66a9a7e130dd47a10920. Costinot, Arnaud, and Dave Donaldson. 2012. ‘Ricardo’s Theory of Comparative Advantage: Old Idea, New Evidence.’ American Economic Review 102 (3): 453–58. Eni, Devalsam. 2012. ‘Effects of Land Degradation on Soil Fertility: A Case Study of Calabar South, Nigeria.’ In Environmental Land Use Planning, edited by Seth Appiah-Opoku, 21–34. Chicago: InTech. https:​//​www​.intechopen​.com​/books​/ environmental​-land​-use​-planning​/effects​-of​-land​-degradation​-on​-soil​-fertility​-a​ -case​-study​-of​-calabar​-south​-nigeria. Feenstra, R. C. 2004. Advanced International Trade: Theory and Evidence. Princeton, NJ: Princeton University Press. Goyal, Anchit. 2020. ‘A Critical Analysis of Porter’s 5 Forces Model of Competitive Advantage.’ Journal of Emerging Technologies and Innovative Research 7 (7): 149–52. Kenton, Will. 2020. ‘What is Mercantilism?’ Investopia, 25 September 2022. https:​//​ www​.investopedia​.com​/terms​/m​/mercantilism​.asp. Krugman, Paul, Maurice Obstfeld and Marc Melitz. 2018. International Trade: Theory and Policy. Eleventh edition. Hoboken, NJ: Pearson Education. Leamer, E. Edward. 1995. The Heckscher–Ohlin Model in Theory and Practice. Princeton Studies in International Finance. Princeton, NJ: Princeton University Press. Leontief, Wassily. 1956. ‘Factor Proportions and the Structure of American Trade: Further Theoretical and Empirical Analysis.’ Review of Economics and Statistics 38: 386–407. Linder, S. B. 1961. An Essay on Trade and Transformation. New York: John Wiley. Magnusson, Lars. 2011. ‘Mercantilism. An Interpretation.’ The Bulletin of the Institute for World Affairs 27: 13–24. Mitiku, Haile, Karl Herweg and Brigitta Stillhardt. 2006. Sustainable Land Management—A New Approach to Soil and Water Conservation in Ethiopia. Mekelle, Ethiopia: Land Resource Management and Environmental Protection Department, Mekelle University.

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Organisation for Economic Co-operation and Development (OECD) / African Centre for Economic Transformation (ACET). 2020. Quality Infrastructure in 21st Century Africa: Prioritising, Accelerating and Scaling up in the Context of Pida (2021–30). https:​//​www​.oecd​.org​/dev​/Africa​-Quality​-infrastructure​-21st​-century​ .pdf. Pettinger, T. 2020. ‘Definition of Comparative Advantage.’ EconomicsHelp.org https:​ //​www​.economicshelp​.org​/blog​/glossary​/comparative​-advantage​/. Porter, Michael E. 1990. ‘The Competitive Advantage of Nations.’ Harvard Business Review, March – 1990. https:​//​hbr​.org​/1990​/03​/the​-competitive​-advantage​-of​ -nations. Rodrik, Dani. 2013. ‘The New Mercantilist Challenge.’ Project Syndicate, 9 January 2013. http:​//​www​.projectsyndicate​.org​/commentary​/the​-return​-of​-mercantilism​-by​ -dani​-rodrik. Seretis, Stagios A., and Persefoni V. Tsaliki. 2015. ‘Absolute Advantage and International Trade: Evidence from Four Euro-zone Economies.’ Review of Radical Political Economics 48 (3): 1–14. https:​//​doi​.org​/10​.1177​/0486613415603160. Stuart, John. 2019. ‘Patterns of Comparative Advantage in Africa: Assessing Similarities and Differences.’ Tralac Trade Briefs, no. 14315. https:​//​www​.tralac​ .org​/news​/article​/14315. Tinbergen, Jan. 1962. Shaping the World Economy: Suggestions for an International Economic Policy. New York: The Twentieth Century Fund. United Nations Conference on Trade and Development (UNCTAD). 2019. Economic Development in Africa Report 2019: Made in Africa—Rules of Origin for Enhanced Intra-African Trade. Geneva: United Nations. https:​//​unctad​.org​/system​ /files​/official​-document​/edar2019​_en​_ch1​.pdf. United States Department of Agriculture. 2021. Foreign Agricultural Services. https:​ //​www​.fas​.usda​.gov​/index​.php. United State Trade Representative. 2021. Trade Is Key to Africa’s Economic Growth. https:​//​ustr​.gov​/about​-us​/policy​-offices​/press​-office​/blog​/trade​-key​-africa​%E2​%80​ %99s​-economic​-growth. Verter, Nahanga. 2015. ‘The Application of International Trade Theories to Agriculture.’ Mediterranean Journal of Social Sciences 6 (6 S4): https:​//​doi​.org​/10​ .5901​/mjss​.2015​.v6n6s4p209. World Economic Forum. 2020. Fostering Effective Energy Transition 2020 Edition. http:​//​www3​.weforum​.org​/docs​/WEF​_Fostering​_Effective​_Energy​_Transition​ _2020​_Edition​.pdf. World Trade Statistical Review. 2020. Chapter 2: Highlights of World Trade in 2019. https:​//​www​.wto​.org​/english​/res​_e​/statis​_e​/wts2020​_e​/wts2020chapter02​_e​.pdf.

Chapter 3

Transcending Neo-functionalism Toward a New Theory of Regional Integration in Africa Ernest Toochi Aniche, Okechukwu Richard Oji and Victor H. Mlambo

Modern African regionalism is geared towards collective self-reliance. It is also a strategic framework of economic transformation and development. It is grounded in the Pan-Africanist philosophical postulations of Kwame Nkrumah, Julius Nyerere and Nnamdi Azikiwe. Afro-optimists believe that African integration has made some gains despite slow progress with room for improvement (Aniche 2020a). Afro-pessimists point to the fact that African regionalism has suffered massive setbacks due to numerous obstacles (Aniche 2020b). Yet, after more than five decades of integration in Africa, African economies remain fragmented. African economies are still structurally weak, non-industrialised and undiversified such that they trade more with others than with themselves. Consequently, the economies are externally dictated by international financial and trading institutions, structurally dependent and vertically integrated to the developed economies of the West and now China (Kalu and Aniche 2020). Thus, African regionalism has neither been able to facilitate national and continental unity nor successful as a strategy of overcoming African security and developmental challenges. In this vein, Ake (1981) has noted that the goal of horizontally linking African economies to grow intra-African trade is challenging. He has attributed this difficulty to several factors especially the neocolonial ties of African states to their former colonialists, as well as political and ideological differences. This is compounded by export-oriented primary products of African countries, which have little demand within the regional group. This is because 55

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the capitalist penetration of African economies created strong affinities between the African economies and that of the colonising power. In addition to this, there is internal contradiction due to disparity in the size of economies and level of economic development among member states. This raises fear of domination by regional economic hegemons (Aniche and Ukaegbu 2016; Aniche 2022). These challenges still exist despite the recent establishment of African Continental Free Trade Area (AfCFTA) in 2019. The primary objective of this chapter within the general objective of this book is to unpack and deconstruct the theoretical narratives of neoliberal institutionalism. Primarily though not exclusively, to problematise the neo-functional approaches to integration in Africa in the search for a paradigm shift for African integration. This chapter further interrogates the explanatory value and analytical utility of neo-functionalism. The aim is to transcend the neo-functional rhetoric of the mainstream Western neoliberal theories of regional integration. To achieve these objectives, this chapter is structured into five main parts. The subsequent part involves the clarification and contextualising of key concepts. The next section conceives African regionalism as a critique of neoliberal institutionalism. This is followed by a section that tries to suggest a paradigm shift in African regionalism. The last section summarises the chapter and recommends the template for addressing the problems. CONCEPTUAL EXPLICATION AND CONTEXTUALISATION It is important to clarify and contextualise key concepts such as regional integration, regional cooperation as well differentiate regional integration in Africa or African integration as used in this chapter. Regional Integration or Regional Cooperation in Africa It is perhaps noteworthy to state here that ‘regional integration’ and ‘regional cooperation’ are so closely related that most scholars use two concepts interchangeably. Yet Tetteh (1998) and Sesay and Omotosho (2011), in their separate studies, argue that there are important differences between ‘integration’ and ‘cooperation.’ The latter is a much weaker and looser form of teamwork among sovereign states, and it is more issue specific than the former. For them, regional cooperation may be in areas such as information sharing, cultural exchange, education, health care, military, research and development (R&D) and science and technology (S&T). Also, cooperating states retain much of their political sovereignty and can opt out of the arrangement with

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relative ease, since it does not involve the creation of supranational institutions in the case of regional cooperation (Aniche, Alumona and Moyo 2021). Conversely, regional integration connotes more engaging and deeper processes, relationships, coordination and activities among the member states, which could eventually lead to the formation of a free trade area (FTA), common external tariff (CET), custom union (CU), common market (CM) or single market (SM), common currency (CC), monetary union (MU), economic union or even political union (PU) among the integrating states in the long term. FTA and CET/CU constitute trade regionalism or integration, CM/SM is market regionalism or integration and CC and MU constitute monetary regionalism or integration. A combination of these constitutes economic regionalism (economic union) while PU is political regionalism or integration. Another key component of regionalism or regional integration is security regionalism or integration (Aniche, Alumona and Moyo 2021). It is in this regard that Aniche, Alumona and Moyo (2021, 3) define regional cooperation as ‘a process by which states from the same region voluntarily decide to come together to cooperate in certain areas like economy, trade, culture, politics, law, and security leading to the establishment of regional international organisation.’ It is also considered as a process by which states within a particular region increase their interaction with regard to economic, trade, social, cultural, political and security issues (Haas 1968; Ginket 2003). Deutsch (1989), on the other hand, defines regional integration as ‘cooperation among political entities leading to the formation of a new centre and the creation of a sense of identity and an integrated community.’ To Haas (1971, 3), regional integration is ‘a tendency towards the voluntary creation of larger political units, each of which self-consciously eschews the use of force in the relations between the participating units and groups.’ From the above definitions, therefore, it is obvious that regional integration and regional cooperation are so intricately intertwined that it is too difficult to differentiate them. This is because cooperation may ultimately lead to integration, while integration cannot be possible without cooperation. So, while regional cooperation represents the initial stage of regional integration, conversely regional integration depicts the advance stage of regional cooperation. Thus, any attempt to separate the two may be an exercise in futility or in vain. It can only end in confusion leading to further complication to distinguish between the two. As a result, it can be tolerated and accommodated for contributors to use the two interchangeably in this book. A more general or alternative practice is to allow contributors to use ‘regionalism’ in place of the two.

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Regional Integration in Africa or African Integration It is also germane to distinguish between ‘regional integration in Africa’ and ‘African integration’ or ‘regionalism in Africa’ and ‘African regionalism.’ The former suggests that regionalism was institutive and, therefore, was imposed from outside by Arabs, Europeans and diaspora Africans. While the imperialistic purpose of Arabian and European integration of African territories and kingdoms was to colonise Africa as well as spread Islamic and Western values, respectively, the main objective of diaspora Pan-African integration was to unite and decolonise Africa. In contrast, the latter emanated from Africa and represents the first attempt by Africans to integrate their territories. In other words, while integration in Africa is institutive integration because it was imposed by non-Africans, African integration is constitutive integration because it was driven by Africans as currently driven by African leaders (Aniche, Alumona and Moyo 2021). From the foregoing, the current African integration is still state-driven, state-centric or top-bottom approach rather than the people-driven, man-centred, private-sector-led, market-driven or bottom-top strategy of integrating African businesses, finances and capital into conglomerates. Instead of fostering people-to-people integration, it only facilitates state-to-state cooperation, public sector–led integration or inter-governmental integration (Aniche 2020a). As a strategy, African regionalism is a means of achieving decolonisation, continental unity, collective self-reliance and economic transformation. It is also an agenda or approach for solving African security and developmental challenges. It is in this sense that it can also be referred to as African developmental regionalism. This why Benneh (2009) emphasised that economic cooperation at the regional and subregional levels has been an important feature of the economic development policies of African states which face numerous common challenges that can arguably be best dealt with collectively. Following from the above, therefore, there are multiple regional blocs in Africa known as regional economic communities (RECs), many of which have overlapping memberships. The RECs consist primarily of trade blocs and, in some cases, political and military cooperation. Most of these RECs form the ‘pillars’ of African Economic Community (AEC) as a fallout of 1991 Abuja Treaty. Some of these pillars also contain subgroups with tighter customs and/or monetary unions (Aniche 2020b). The RECs include the Community of Sahel-Saharan States (CENSAD); the Common Market for Eastern and Southern Africa (COMESA); the new East African Community (EAC); the Economic Community of Central African States (ECCAS); the Economic Community of West African States

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(ECOWAS); the Intergovernmental Authority on Development (IGAD); Southern African Development Community (SADC) and the Arab Maghreb Union (AMU/UMA formed in 1989 (Aniche and Ukaegbu 2016; Aniche 2020a)). As part of the process towards achieving development, the agreement to establish the African Continental Free Trade Area (AfCFTA) was ratified on 29 April 2019 and came into force or effect on 30 May 2019, exactly thirty days after ratification. The operational phase was launched on 7 July 2019, at an African Union (AU) summit in Niger (Aniche 2020a). UNPACKING NEOLIBERAL INSTITUTIONALISM: THE AFRICAN EXPERIENCE The poorly and ambivalently implemented prevailing neoliberal framework and neo-functional approach to integration in Africa constitute the main critique of neoliberal institutionalism. To be sure, the mainstream neoliberal institutionalist theories of regional integration and supranationalism (particularly neo-functionalism) are essentially theories of European integration. They are Eurocentric, Western and, thus, parochial. The political context of European Union (EU) is significantly at variance with African Union (AU). Even in the case of European integration, the explanatory value of neo-functionalism suffered a serious setback or shortcoming due to the unpredictable upsurge of nationalism in the EU. Even many of its proponents and exponents began to interrogate it (Hoffmann 1966; Nye 1968; Haas 1976; Keohane 1984; Tranholm-Mikkelsen 1991; Wheeler 2002; Schmitter 2003; Hettne 2005; Warleigh-Lack 2006; Aniche 2020c). One of the major dysfunctionalities of neo-functionalism is that it presumes that regional integration is a gradual and linear process making explanation of shortcomings difficult. This also undermines the ability of the theory to predict and prevent drawbacks in regional integration (Schmitter 1970; Keohane and Martin 1995; Moravcsik 1997; Haas 2001; Hettne 2002; 2003; Soderbaum 2003; Schmitter and Lefkofridi 2016; Aniche 2020d). A good example of this is the outcome of the Brexit Referendum of 23 June 2016, in which British citizens voted to leave EU. Brexit negated the three core mechanisms of neo-functionalism. More precisely, it shows that European integration just like its African counterpart has always been fundamentally state-driven despite supranational claims of neo-functionalism (Aniche 2020b). Therefore, due to defective implementation of neo-functionalism, African regionalism has been state-centric, institution-driven and top-down. Another of its defect is that neo-functionalism assumes that integration of states is an integration of equals rather than seeing it as integration of unequal. Put differently, it presumes that regional integration is relations

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of interdependence rather than relations of dependence. This suggests that neo-functionalism conceives regional cooperation as symmetrical integration rather than as asymmetrical integration. Therefore, the theory is not adequate for explaining dependence of African economies to Western economies and integration of dependence of the African states to another. It lacks the analytical utility for analysing the fact that structural dependence and vertical integration of African economies to developed economies trump horizontal integration of African economies. It is not analytical useful for understanding the reason why intra-African trade has been as low as 10 per cent or lowest when compared to other intra-regional trade, and why Africa accounts for about 4 per cent of the global trade (Aniche and Ukaegbu 2016; Aniche 2020b). The poor explanatory value of neo-functional theory is also demonstrated by the fact that African regionalism has failed as means of collective self-reliance. Neo-functionalism does not advance sufficient basis to explain the fact that after more than five decades, regional integration in Africa is yet to address African developmental challenges. It has no solution to some of the challenges militating against successful African integration such as politico-ideological differences, disparity in size of African economies, variation in development of African states, fear of economic and political domination, monopolisation of benefits, unwillingness of some African leaders to surrender their sovereignty, internally vertical linkages of weaker African economies to regional economic hegemons, intractable civil strife and the attendant refugee crises and internal displacements. The theoretical approach cannot suggest the panacea for overcoming some of the obstacles to African regionalism like adverse activities of multinational corporations (MNCs) and transnational corporations (TNCs) operating in Africa; neocolonial ties; export-oriented primary products of African states; externally historical, political, economic and vertical linkages of African economies to Western economies; and structural dependence of African economies on Western economies and now Chinese economy (Aniche 2021a). Consequently, neo-functional approach has not been able to enable African regionalism to overcome trade diversion, diverse trade regimes and restrictive customs procedures; administrative, bureaucratic and technical barriers; limited productive capacity; inadequate trade-related infrastructures, trade finance and trade information; lack of factor market integration; and insufficient focus on internal market issues (Aniche 2020a). Even the newly established AfCFTA is very unlikely to remedy these challenges and constraints (Aniche 2022). The neo-functional linear approach to integration to Africa predisposes African states to proceed by forming FTAs leading to customs unions, common markets and monetary union within predetermined timeframes. This

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trajectory or process is deceptively successful. This is because member states are still at different levels of compliance. When measured in terms of trade growth, poverty alleviation and the establishment of effective collective governance structures; the results have been rather modest. This top-down approach to regional integration fails to prioritise appropriate solution for the causes which, in the first instance, prevent intra-regional trade from growing. Each next step in the linear process brings additional and costly burdens in that moving from an FTA to a customs union requires joint policies on tariffs, harmonisation and coordination of domestic legal instruments. This further requires collective governance as well as institutions to manage the CET. This is difficult and costly given that some governments still rely on customs revenue thereby frequently invoking lack of capacity and sensitive national interests as justifications for derogations from legal obligations (Aniche 2021b). Furthermore, regarding highly sensitive matters such as trade terms and financial, investment, capital, economic and developmental issues as non-political form of cooperation is the greatest flaw of neo-functionalism. This is because these highly sensitive and contentious issues of trade, finance, investment, capital and economic development constitute serious national economic interests as related to vital issues of producing means of sustenance (Aniche and Ukaegbu 2016). TOWARDS A NEW PARADIGM OF AFRICAN REGIONALISM As stated above, all the hitherto existing theories of integration or neoliberal institutionalism are tailor-made for European integration and, therefore, not apt to explain the shortcomings of African integration. Afro-realists therefore argue that there is need to deconstruct them in the quest for a paradigm shift in African integration. This alternative theoretical approach to African integration is post-neo-functionalism (Aniche 2020b). Post-neo-functionalism is not a theory of nihilism—that is, it does not advocate the total dismantling of African regionalism. It only says that Africa is not yet ready for economic and political integration. Also, postneo-functionalism does not totally align itself with Marxism or neo-Marxist dependency theories that advocates delinking. However, at initial stage, postneo-functionalism may be nearer to protectionism, nationalism or mercantilism than Marxism and neo-Marxism and, still, remains distinct. Actually, post-neo-functionalism is a synthesis of neo-nationalism, post-nationalism and humanism. Therefore, post-neo-functionalism encompasses neo-nationalism, post-nationalism and humanism. This requires further explanation (Aniche 2021c).

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For example, neo-nationalism is a new form of nationalism mixed with protectionism. Therefore, neo-nationalism is a combination of political nationalism and economic nationalism. In other words, neo-nationalism is a resurgence of nationalism that characterised the struggle against colonialism. But now, neo-nationalism is geared towards the struggle against neo-colonialism, rentierism and dependency. Additionally, it is meant to enable Africa to tackle the prevalent, perennial, protracted and intractable conflicts that have rendered it a crisis-prone region (Aniche 2018). Therefore, there are two main elements of neo-nationalism—namely, modern political nationalism and economic nationalism. Political nationalism is predominantly the political sphere of neo-nationalism, while protectionism or economic nationalism, on the other hand, is the economic aspect. Modern political nationalism is targeted at facilitating national integration or national unity through nation-building and good governance in order to ameliorate internal conflicts in Africa. This entails solving the problems of ethnic chauvinism and religious bigotry as well as resolving national question of ethno-religious violence that pose enormous security challenges in Africa (Aniche 2021a). But good governance requires a detribalised leader with the political will to carry out effective national policies of nation inclusion, national integration, national unity and nation-building or even state-building. The point being made is that a country that cannot achieve unity and integration at the national level cannot logically pursue integration at the regional level because charity begins at home. But African leaders want their own charity to begin abroad. This is a clog in the wheel of African integration. Therefore, neo-nationalism aspect of post-neo-functionalism is advocating that integration should start at the national level (national integration) then gradually and naturally proceed to the regional level (regional integration) and probably ultimately move to the global level (global integration or globalisation) (Aniche 2021b). This suggests that modern political nationalism represents the first stage of the various stages of regional political integration in Africa. Economic nationalism, on the other hand, advocates for partial closure of the economy before opening up in future when the African states must have been industrialised or attained the level of competitive advantage with other economies. Strategic closure here means imposing tariff barriers or total ban on certain commodities that will be instrumental for African states to attain industrialisation and economic development. This entails protecting home industries against adverse competition from abroad (Aniche 2018). It should be noted that achieving industrialisation and national development through economic nationalism requires not just patriotic leaders but also emergence of developmental elites with political and economic will to enforce the

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mercantilist policies to replace the present crop of rentier, neo-patrimonial and predatory elites. The history of today’s industrialised countries shows that all of them including Britain, Germany and United States, and the newly industrialised countries (NICs) like China and Asian Tigers, have all at one point in their economic history practised protectionism before preaching free trade or liberalism. Therefore, economic nationalism should be targeted more on restricting free trade than on free movement of capital in terms of foreign direct investment. A country or a continent that climbed the ladder of industrialisation through regional integration is yet to be known (Aniche 2021c). The point being made is that African states are not yet ready for regional integration for the fact that they are being confronted by rentierism, mono-cultural economy and primary producing economy with appetite for imported goods. This is complicated by the fact the continent is devastated by internal armed conflicts like insurgency, separatism, insurrection, secessionism and terrorism. Most of European countries that adopted neo-functional approach to regional integration that resulted in EU have largely transcended problems of national unity, de-industrialisation and internal insecurity. But this is not the case with African states that are still confronted by national question. This coupled with fact that the continent is still battling with crisis of development and overwhelmed by centrifugal forces of sub-nationalism. There is indeed tension between sub-national centrifugal forces and supranational centripetal forces in Africa. As the balance tilts towards the former, the RECs in Africa are continuously threatened by disintegrative nationalism. As a result, they are confronted with the extraneous problem of intervening to resolve disputes, conflicts and crises arising from or within it. Consequently, the continent is distracted from focusing on the core task of regionalism. Some of these RECs have actually deviated from initial goals for which they were primarily established to pursue (Aniche 2018). So much effort is wasted and energy dissipated by regional bodies and member states in managing centrifugal forces of sub-nationalism. To this extent, they have not been able to harness the human resources of the people towards synergising them in transforming the numerous mineral resources that abound within their territories into manufactured products. The distraction arising from this constitute a clog in the wheel of industrialisation. It is this very fact that has continued to limit African states to export-oriented primary producers whose primary products are in very little demand within the regional group and which must be exported to industrialised countries of the West in unequal exchange with manufactured products imported from them. This has ensured that Africa with its enclave economy remains in the periphery of world politics and as well at the mercy of neocolonialism thwarting all

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efforts towards regional integration in Africa many years after independence (Aniche 2021b). Consequently, almost all the African states are operating at the same level of productive activities. This is the reason why there has been minimal progress in trade regionalism in Africa. Put simply, African economies as presently constituted have nothing to protect because the present situation reinforces international division of labour or relationships of dependence, rather than relationships of interdependence. As such, those who do not manufacture have nothing to protect (Aniche 2021a). This suggests that economic nationalism represents the first phase of different phases of regional economic integration in Africa. Therefore, both modern political and economic nationalism should constitute the first level of the various levels of regional economic and political integration in Africa. This means that both modern political and economic nationalism should be operated simultaneously or concurrently. In other words, post-neo-functional approach to regional integration in Africa suggests that there could be two or three levels of regional economic and political integration in Africa. The two-stage approach includes national and regional stages, while the three-stage approach involve national, subregional and regional phases. Africa is at liberty to choose any of these options to regional integration in economic and political spheres (Aniche 2022). But whatever option, the final stage should be aimed at increasing financial and administrative autonomy of regional institutions, particularly the former through creating sustainable fiscal means of deriving revenues such as direct and indirect tax rather than relying on unstable sources of revenues like collecting dues from member states. Through increasing fiscal and bureaucratic autonomy, the regional institutions may gradually and ultimately become autonomous of national institutions (i.e. governments of African states) (Aniche, Moyo and Nshimbi 2021). However, post-nationalism transcends nationalism. As one of the components of post-neo-functionalism, it advocates regional cooperation in matters of security at the onset of regional integration. This should be a short-term strategy for tackling the enormous security challenges in various states in Africa. The successes of ECOWAS and AU in peacekeeping in Africa are all good examples. The subregional and regional security organisation like ECOWAS Monitoring Group (ECOMOG) and African Peace and Security Architecture (APSA) should be repositioned, harmonised and strengthened to ensure regional peace and security (Aniche 2018; Aniche, Moyo and Nshimbi 2021). In other words, post-nationalism proposes that regional security cooperation should precede regional economic integration, and even regional integration in political sphere. This complements neo-nationalism insistent that

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Africa is not yet prepared for regional economic and political integration. This suggests that the region should proceed with national integration until such a time it is ready for regional integration in the areas of economy and politics (Aniche 2021c). In effect, regional security cooperation or security regionalism is a one-stage approach to regional integration. It is a one-level or a single-phase regional integration in security affairs (Aniche, Moyo and Nshimbi 2021; Aniche 2022). Finally, humanism is an aspect of post-neo-functionalism which advocates that once the continent is ready for integration in the matters of economy and politics, that such regional integration should not only be allowed to evolve naturally and gradually but should as well be humane, humanistic, man-centred, people-driven or private sector-led. This is in order to facilitate people-to-people integration and bottom-up integration rather than the current state-driven, state-centric, top-bottom integration, public sector-led integration or inter-governmental integration of neo-functionalism. The role of the government should only be to regulate or facilitate. In other words, the role of the states in African integration at this level should be facilitative. One of the merits of post-neo-functionalism is that it does not encourage artificial and fast-tracking of regional integration. The argument is that once African integration evolves naturally and gradually at its own pace, as driven by the African people and facilitated by the governments of African states, the incidence of multiple, duplicative and overlapping memberships and subgroupings would not arise (Aniche 2018). Moreover, post-neo-functionalism ultimately entails evolving a truly people-driven and human-centred regional integration involving the organised private sector (consisting of African businessmen and investors) beginning by facilitating free movement of goods, services, businesses, finances, capital, and investments. This private sector-led integration will require encouraging the African organised private sector (OPS) to merge their businesses. Some of these African businesses like Dangote Group, MTN, Glo, Shoprite, ECO Bank and Standard Bank are already transnational, subregional, intra-regional, regional and extra-regional. But more needs to be done to bring others on board as well as promote large-scale mergers as regional integration advances. There is also need to establish a single African stock market to facilitate transnational, subregional, intra-regional and regional mergers of African firms. In other words, more African businesses need to be encouraged to transnationally merge at the later stage of post-neo-functionalism (Aniche 2020a). Granted that these African businesses, finances, investments and capital are already integrating through transnational and intra-regional mergers. But not in a sufficient large-scale merging required to facilitate privatesector-driven cross-border business integration in the continent. This shows

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that more needs to be done to bring others on board as well as encourage a much larger-scale mergers (Aniche 2020a). This will enable them to compete favourably with non-African multinational and transnational corporations operating in the continent (Aniche, Moyo and Nshimbi 2021; Aniche 2021a). The aim will be to facilitate cross-border integration of African finance and industrial capitals to form big cartels, conglomerates and multinational and transnational African businesses. This will also enable African MNCs/TNCs to circumvent tariff barriers (TBs) and non-tariff barriers (NTBs) as basis for establishing a strong and a stable regional integration in Africa. Generally, the people-centred regionalism will also entail harmonising labour laws and migration policies in Africa to enable free movement of persons and labour at this phase of post-neo-functionalism. This should be driven by Organisation of African Trade Union Unity (OATUU). In addition, people-to people integration can be enhanced through cultural exchanges, games and sports, professional exchanges, educational linkages and decolonisation of knowledge and colonial borders (Aniche 2021c). This theoretical approach posits that regional economic integration should be championed by civil society organisations (CSOs) or non-state actors (NSAs) like African business persons and investors as well as labour unions. In this case, regional economic integration should be aimed at encouraging free movement of Africans and their businesses, investments, finances, capital and labour. By so doing, African businesses and firms become multinational and transnational enabling them to bypass both TBs and NTBs. It should be targeted at promoting large-scale merging or integration of African businesses, finances and capital into conglomerates and cartels to compete with non-African MNCs/TNCs intra-regionally and extra-regionally. This will naturally render TBs and NTBs within Africa useless and CET impotent. Logically, direct tax dependency will gradually replace tariff dependency in Africa (Aniche 2020a). This means that economic regionalism in Africa should not be integration of African economies or integration of economies of Africa per se. But rather it means that regional economic integration in Africa should foster integration of African businesses, firms, finances and capital into African MNCs/TNCs bringing them up to speed with their non-African counterparts. In this way, the regional MNCs/TNCs will garner the competitive leverage regionally and globally. Perhaps this is the point Soko (2007) was making when he argued that regionalisation trends should be market-induced integration which produces an economic regionalisation that is driven mainly by private actors. The role of government should mainly be in the areas of coordination, harmonisation, regulations, facilitations, implementation, enforcement and, more importantly, establishing regional security architecture to foster national and regional peace. This will ensure free movement of African businessmen,

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finances, capital and investment. This will create enabling environment for African businesses to flourish in the continent. This will also require establishment of African single currency, central bank, and monetary and currency union in the long run. Essentially, transcending neo-functionalism or adopting post-neo-functional approach will factor in the inputs of the OPS (not politicians), technocrats, entrepreneurs, organised labour and, generally, the CSOs into formulation of policies and drafting agreements (Aniche 2020a). For African trade regionalism to be private-sector-driven, it should involve gradual inclusion of the representatives of African MNCs/TNCs in apex decision-making organs of RECs and CFTA. They should be involved in critical decisions that affect them because free trade area and custom union are primarily meant for their businesses and for free movement of their goods and services, and free flow of investments and private capital. This can continue from trade regionalism (free trade area to customs union or common external tariff), market regionalism (single market or common market) and monetary regionalism (single currency or monetary union) with establishment of African Central Bank. A combination of these constitutes economic regionalism (economic union), and each of these should signal increasing representatives of the African MNCs/TNCs. This should, in tandem with Abuja Treaty, ultimately lead to political regionalism (political union) with highest law-making body (Parliament) constituted by representatives of the people (no longer businesses) from different constituencies (Aniche 2021a). The economic regionalism will facilitate visa-free and border-free Africa, while political regionalism will ensure borderless Africa. This provides the template or recipe for a more comprehensive approach to African regionalism. The onus is therefore on Africa to decolonise these colonial borders towards creating a border-free and borderless Africa. African states must sacrifice their sovereignty over their territories for the geophysical and geopolitical borders between member states to cease to be international borders. There is need to dismantle these geophysical and geopolitical borders which divide Africans into different geographical, territorial or physical spaces as citizens and foreigners or nationals and aliens. By so doing, the current Westphalian state system of nation-state will give way to regional supranationalism or a new state system called region-state. It is this new state system without internal (or mutual) borders that Africa must aspire to transcend if they want to deconstruct the colonial borders (Aniche 2022). To be sure, the humanistic aspect of post-neo-functional perspective of African integration is part of the last stage of regional integration in economic and political realms. In a two-stage approach to economic and political regionalism, it is an aspect of the second stage whereas under a three-stage strategy it should be part of the third phase of regional economic and political integration in Africa. Generally, it is perhaps pertinent to note at this juncture

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that post-neo-functionalism involves a one-stage regional security cooperation and two-stage or three-stage regional economic and political integration (Aniche 2020b). CONCLUSION This chapter has been able to achieve its primary objective and other related objectives. It was able to critique the theoretical narratives of neoliberal institutionalism. More specifically, it was able to unpack the neo-functional approaches to African integration in the quest for a new theory of African integration. In addition, it was able to interrogate the explanatory value and analytical utility of neo-functionalism. By so doing, it transcended the neo-functional rhetoric of the mainstream Western neoliberal theories of regional integration. This chapter therefore noted that there is the need to construct alternative theoretical approach to African regionalism by fundamentally unthinking and rethinking the path to regional integration in Africa as an enduring solution towards maximising its prospects and minimising its challenges. The fundamental thing to do is to initiate a continental integration that will be truly people-driven by involving the OPS (consisting of African businessmen and investors) and mainstreaming the organised labour in regional policymaking necessary for facilitating free movement of goods, services, capital, persons and investments. Ultimately, this will require encouraging Africans to integrate their businesses so as to facilitate trans-border integration of African finance and industrial capitals to form big cartels, conglomerates and multinational and transnational regional businesses as basis for establishing a strong and a stable regional integration in Africa. Regional economic integration should therefore be more of regional business integration than regional trade integration. Thus, while Afro-optimists rely on the idealistic neo-functional approach to change African narratives to no avail, the Afro-pessimists provide no realistic alternative theoretical approach to remedy Africa. But Afro-realists insist that the new theoretical approach to rescue African integration is post-neo-functionalism. Post-neo-functionalism is a humanistic approach to African integration which advocates for people-centred or human-centric or bottom-top integration rather than the top-down approach to integration, or state-centric or inter-governmental integration at initial stage of neofunctional approach to regional integration. African integration remains stalled at this top-down or state-centric stage of neo-functionalism. Indeed, this inter-governmental phase of neo-functionalism fetters African regionalism and development. As noted earlier, this is down to utopian supranational

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claims of neo-functionalism coupled with defective implementation of neofunctionalism in Africa. Therefore, post-neo-functional approach suggests that the regional integration should be people-driven or private-sector-led rather than state-driven or public-sector-led. It believes in gradualist approach which proceeds from national integration to regional integration and even beyond. This portends the only realistic template for increasing the autonomy of regional institutions that will ultimately oversee African integration. This will not only serve as the panacea for structural dependence and vertical integration of African economies to the economies of the highly industrialised West or even China but will also resolve the asymmetrical integration of African economies. By facilitating trade and business without borders, it will no longer be a case of intra-African trade rather it will become African domestic trade. REFERENCES Ake, Claude. 1981. A Political Economy of Africa. Ibadan, Nigeria: Longman. Aniche, Ernest T. 2018. ‘Post-neo-functionalism, Pan-Africanism and Regional Integration in Africa: Prospects and Challenges of the Proposed Tripartite Free Trade Area (T-FTA).’ In State and Development in Post-Independent Africa, edited S. O. Oloruntoba and V. Gumede, 155–74. Austin, TX: Pan-African University Press. ———. 2020a. ‘From Pan-Africanism to African Regionalism: A Chronicle.’ African Studies 79 (1): 70–87. https:​//​doi​.org​/10​.1080​/00020184​.2020​.1740974. ———. 2020b. ‘African Continental Free Trade Area and African Union Agenda 2063: The Roads to Addis Ababa and Kigali.’ Journal of Contemporary African Studies. https:​//​doi​.org​/10​.1080​/02589001​.2020​.1775184. ———. 2020c. ‘The Brexit: A Massive Setback for European Union and a Lesson for African Integration.’ Chinese Political Science Review 5 (1): 13–30. ———. 2020d. ‘Pan-Africanism and Regionalism in Africa: The Journey So Far.’ In Pan-Africanism, Regional Integration and Development in Africa, edited by S. O. Oloruntoba, 17–38. New York: Palgrave Macmillan. ———. 2021a. ‘Beyond Neo-functionalism: Africa in Search of a New Theory of Regional Integration.’ In Regionalism, Security, and Development in Africa, edited by E. T. Aniche, I. M. Alumona and I. Moyo, chapter 2. London: Routledge. ———. 2021b. ‘Institutions, Inequality and Crisis of Developmental Regionalism in Africa’ In Rethinking Institutions, Processes, and Development in Africa, edited by E. T. Aniche and T. Falola, 211–238. Lanham, MD: Rowman & Littlefield International. ———. 2021c. ‘Integration, Borders and Migration in West Africa: Lessons from European Schengen Area.’ In Intra-Africa Migrations: Reimaging Borders and Migration Management, edited by I. Moyo, J. Laine and C. Nshimbi, 140–56. London: Routledge.

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———. 2022. ‘Borders, Migration and Xenophobic Policies in West Africa: Contraventions of the ECOWAS Free Movement Protocol and the Ghana-Nigeria Conundrum.’ Africa Review 14 (1): 24–47, doi: https:​//​doi​.org​/10​.1163​/09744061​ -20220121. Aniche, Ernest T., and Victor E. Ukaegbu. 2016. ‘Structural Dependence, Vertical Integration and Regional Economic Cooperation in Africa: A Study of Southern African Development Community.’ Africa Review 8, no. 2: 108–19. Aniche, Ernest T., Ikenna M. Alumona and Inocent Moyo. 2021. Regionalism, Security, and Development in Africa. London: Routledge. Aniche, Ernest T., Inocent Moyo, and Chris C. Nshimbi. 2021. ‘Interrogating the Nexus between Irregular Migration and Insecurity along “Ungoverned” Border Spaces in West Africa.’ African Security Review 30 (3): 304–18. https:​//​doi​.org​/10​ .1080​/10246029​.2021​.1901753. Benneh, E. Y. 2009. ‘The Role of International Organisations and Donors in Complementing Ghana’s Integration Agenda in West Africa: Issues and Challenges.’ In Ghana in Search of Regional Integration Agenda, 175–98. Accra: Friedrich-Ebert-Stiftung. Deutsch, Karl W. 1989. The Analysis of International Relations. New Delhi, India: Prentice-Hall. Ginket, H. 2003. Integration and Globalisation in Africa. Mumbai: Maysoce Press. Haas, Ernst B. 1968. The Uniting of Europe. Stanford, CA: Stanford University Press. ———. 1971. ‘The Study of Regional Integration: Reflections on the Joy and Anguish of Pre-Theorizing.’ In Regional Integration: Theory and Research, edited L. N. Lindberg and S. A. Scheingold. Cambridge, MA: Harvard University Press. Haas, Ernst B. 1976. ‘Turbulent Fields and the Theory of Regional Integration.’ International Organisation 30 (2): 173–212. ———. 2001. ‘Does Constructivism Subsume Neo-functionalism?’ In The Social Construction of Europe, edited by T. Christiansen, K. E. Jørgensen and A. Wiener, 22–31. Thousand Oaks, CA: SAGE Publications. Hettne, Björn. 2002. ‘The Europeanisation of Europe: Endogenous and Exogenous Dimensions.’ Journal of European Integration 24 (4): 325–40. ———. 2003. ‘The New Regionalism Revisited.’ In Theories of New Regionalism: A Palgrave Reader, edited by F. Soderbaum and T. Shaw, 22–42. Basingstoke: Palgrave. ———. 2005. ‘Beyond the “New” Regionalism.’ New Political Economy 10 (4): 543–71. Hoffmann, Stanley. 1966. ‘Obstinate or Obsolete? The Fate of the Nation-state and the Case of Western Europe.’ Daedalus 95 (3): 862–915. Keohane, Robert O. 1984. After Hegemony: Power and Discord in the World Political Economy. Princeton, NJ: Princeton University Press. Keohane, Robert O., and Stanley Hoffmann. 1991. The New European Community: Decision-Making and Institutional Change. Boulder, CO: Westview Press. Keohane, Robert O., and Lisa L. Martin. 1995. ‘The Promise of Institutionalist Theory.’ International Security 20 (1): 39–51.

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Kalu, Kenneth, and Ernest T. Aniche. 2020. ‘China-African Economic Relation: A Double-Edged Sword for Africa.’ African Journal of Economic and Sustainable Development 7 (4): 374–90. DOI: 10.1504/AJESD.2020.10027708. Moravcsik, Andrew. 1997. ‘Taking Preferences Seriously: A Liberal Theory of International Politics.’ International Organisation 51: 513–53. Nye, Joseph. 1968. ‘Comparative Regional Integration: Concept and Measurement.’ International Organisation 22 (4): 855–80. Schmitter, Philippe C. 1970. ‘A Revised Theory of Regional Integration.’ International Organisation 24 (4): 836–68. Schmitter, Philippe C. 2003. ‘Neo-Neo-Functionalism.’ In European Integration Theory, edited by A. Wiener and T. Diez. Oxford: Oxford University Press. Schmitter, Philippe C., and Zoe Lefkofridi. 2016. ‘Neo-Functionalism as a Theory of Disintegration.’ Chinese Political Science Review 1: 1–29. Sesay, Amadu, and Moshood Omotosho. 2011. ‘The Politics of Regional Integration in West Africa.’ West Africa Civil Society Institute Series (WACSERIES) 2 (2): 1–36. Soderbaum, Fredrik. 2003. ‘Introduction: Theories of New Regionalism.’ In Theories of New Regionalism: A Palgrave Reader, edited by F. Soderbaum and T. Shaw, 1–21. Basingstoke: Palgrave. Soko, Mills. 2007. The Political Economy of Regional Integration in Southern Africa. Paris: Notre Europe. Tetteh, Hanna S. 1998. ‘Regional Integration as a Tool for Poverty Reduction in West Africa.’ In Regional Integration and Multilateral Cooperation in the Global Economy, edited by J. J. Teunissen, 221–29. Hague: Forum on Debt and Development (FONDAD). Tranholm-Mikkelsen, Jeppe. 1991. ‘Neo-Functionalism: Obstinate or Obsolete? A Reappraisal in the Light of the New Dynamism of the EC.’ Millennium: Journal of International Studies 20 (1): 1–22. Warleigh-Lack, Alex. 2006. ‘Towards a Conceptual Framework for Regionalisation: Bridging “New Regionalism” and “Integration Theory”.’ Review of International Political Economy 13 (5): 750–71. Wheeler, Stephen M. 2002. ‘The New Regionalism: Key Characteristics of an Emerging Movement.’ Journal of the American Planning Association 68 (3): 267–78.

Chapter 4

Dependency and Development Question in Africa Ademola Azeez and Segun Oshewolo

Events at the international level have revealed that Africa, in the twenty-first century, still occupies the same economic position that it has for the previous four centuries, where it provides raw materials and natural resources from its abundant endowments and supplies, and also provides large markets for manufactured and finished goods. The continent ‘has been a traditional overseas market destination for manufactured goods’ from Europe and the United States, and a number of new industrialising economies. Africa’s diverse natural resources and potentially large markets for manufactured goods therefore reasonably explain the interest of the industrialised economies and international capital in the continent (Bouchat 2010, 5). From history, the internationalisation of market capitalism ‘creates new markets and expand economic opportunities but it engenders economic dislocation and accentuates global inequalities and mass discontent.’ While the industrialised economies of the North are the biggest beneficiaries of the existing global economic and political structures, developing and dependent economies of Africa are subjected to chronic economic underdevelopment in contrast (Edoho 2011, 103). The continent is defined by mass poverty, debt crisis, worsening social indicators and poorly developed institutions, among many other pathologies (Ajayi and Oshewolo 2020; Taylor 2020). A concept that has emerged from Africa’s dependent status in the world economy is ‘entrapment.’ As explained by Ndlovu-Gatsheni (2020, 45), Entrapment as a concept speaks to two predicaments for Africa. At one level, it highlights an invidious position occupied by Africa within global coloniality, characterised by being simultaneously at the centre and at periphery of the modern world capitalist system. At another level, it underscores discursive 73

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entanglement of Africa in global colonial/imperial/capitalist matrices of power that sustains an asymmetrical global architecture and configuration of power, whereby even anti-systemic resistance and extra-structural agency are deeply shaped by the metaphysical/cognitive empire, long after the dismantling of the direct, physical empire.

This chapter attempts to explain Africa’s crisis of development relying on the valuable insights offered by dependency theory. While the usage of dependency theory in social science literature may have waned, its explanatory power in contemporary times is not in doubt. The theory yet represents an important intellectual framework for explaining current economic realities, particularly in the developing world (including Africa) (Cloud 2016). Global inequalities still define today’s international political economy. In this regard, Olukoshi (2017, 25) maintains that although our world has undergone notable changes, ‘old lines of inequality still remain broadly in place in spite of the advances made by China and East Asian countries, the emergence of new configuration such as the BRICS, and the relative decline in the influence of some erstwhile economic powerhouses such as Italy, Spain, and Portugal.’ The dependent states of the Global South still principally export raw materials and those that ‘have moved into manufacturing are often still in a dependent and subordinate relationship with the core countries’ (Kufakurinani et al. 2017, xi). Again, the division of the international system into centre-periphery still exists ‘in which the centre represents the Euro-North American civilisation and the periphery corresponds to the global south’ (Ndlovu-Gatsheni 2017, 35). While the theory could yet be refined to accommodate new trends and changes in the international system, the central tenets of the theory are major points of departure and reference for those seeking to understand and reconfigure the current international system (Kufakurinani et al. 2017). Furthermore, the African experience and position of marginality in the international political economy continue to validate the articulations of the dependency theory. The data for this work are generated through the secondary sources. These sources include books, journal articles, reports of key international organisations and internet materials. While the initial literature search led to a large collection of library and internet materials, some of these materials were later eliminated after a systematic review. Through keyword, abstract and full-text screening, the materials were carefully ranked, and the ones with the required historical and analytical depth on the subject of discussion were finally selected. The data generated were analysed using the technique of thematic analysis. This chapter is divided thematically into five sections. While this section represents the introductory piece, the second section revisits the foundations and central tenets of dependency theory. The third Section constructs

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a connection between dependency and Africa’s development contradictions, employing the analytical elements of international trade and debt payments. The fourth section articulates new development pathways for the continent of Africa, while the fifth section is the conclusion. DEPENDENCY THEORY REVISITED While dependency theory may have somewhat fallen out of favour among some development scholars, several core elements of the theory are still relevant today. As some of the leading proponents would want us to believe, the theory still has a strong explanatory power in relation to Africa’s development question. The modest effort in this section is to present the major arguments of dependency theory and then harps on its contemporary relevance. In terms of its evolution as a framework of analysis, dependency theory emerged following the proposition by Raul Prebisch—Argentine statesman, economist and director of the United Nations Economic Commission for Latin America (UNECLA)—towards the end of the 1950s. The theory, however, gained prominence in the two decades that followed (Romaniuk 2017; Munro 2018; Economics Online 2020; Eke and Ikechukwu 2013). The theory largely emerged in response to modernisation theory, which started in the West. Although dependency theory has a variety of perspectives, they are all opposed to modernisation theory’s ahistorical approach to development and criticise its failure to account for the importance of the role of global economic and political structures (Kufakurinani et al. 2017; Matunhu 2011; Namkoong 1999). Dependency theory attempts to explain economic underdevelopment by emphasising the constraints dictated by the global political and economic order (Munro 2018; Lea 2000; Enuka 2018). The proponents explain that the peripheral position of a country in the international political economy is a major explanation for underdevelopment. Usually, countries so characterised as underdeveloped primarily produce and supply cheap labour and raw materials on the world market to industrialised and advanced economies that possess the technological know-how to transform these raw materials into finished goods. The twist is that underdeveloped economies then depend fundamentally on the finished products purchased at high prices, depleting both their capital and productive capacity in the process—that is, this dependence has historically prevented developing nations from building the necessary institutions and infrastructure that would fully support their quest for industrialisation. The regrettable outcome of this economic order is the perpetuation of a world economy divided into a rich core and a poor periphery (Munro 2018; Gulalp 1998; Kabonga 2016; Crossman 2018). Dependency theory

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demonstrates that the economic condition of poor countries was not natural but a product of the exploitative historical relations with the dominant states, which ‘sowed the seeds of underdevelopment by siphoning natural and human resources’ (Ndlovu-Gatsheni 2017, 34). As a broad school that explains both development and underdevelopment in the international system, dependency theory has a number of defining attributes. Firstly, the international system is made up of two sets of states: core/dominant and periphery/dependent. For analytical purposes, rather than two sets of states, there is also the tendency to further divide states into four groups: centre of the centre, periphery of the centre, centre of the periphery, and periphery of the periphery. Secondly, the theory maintains that external forces play prominent roles in the economies of dependent/peripheral states. Thirdly, relationships between core and peripheral states are defined by strong historical dynamics with the assignment of roles that reinforce patterns of inequality (Romaniuk 2017; Ndlovu-Gatsheni 2020; Phiri 2020). Explaining the third defining attribute further, a key element of dependency theory is the recognition of the role of history (particularly the role of colonialism) in constructing and defining the positions of different states in international political economy. In the context of colonialism, industrialised colonial states expanded into the developing world and the result of the expansion was that the natural resources of dependent states were employed to support development in the core/dominant states through direct military and political control (Cloud 2016; Kufakurinani et al. 2017; Sanchez 2003). Following the collapse of colonialism, the process continued in the form of neocolonialism. The dominant states (which now roughly translates into the Global North) has continued to benefit from the extraction of wealth from the dependent countries of the global south. Thus, the underdevelopment of dependent states is not attributable to only internal policy failures but also the continued exploitation by the industrialised and dominant states. Through neocolonial relations, many underdeveloped countries are hugely indebted to dominant nations and also rely heavily on the importation of manufactured or finished goods while mainly exporting raw materials (Ndlovu-Gatsheni 2017; Kufakurinani et al. 2017; Cloud 2016). The poor countries of the periphery will continue to encounter developmental challenges ‘as long as they remain enslaved and exploited by the rich nations of the centre’ (Velasco 2002, 44). This is why, in its extreme form, dependency theory is rooted in the Marxist worldview that sees globalisation as a system of international finance and market capitalism characterised by the exploitation of labour and resources in dependent states. Arising from this articulation, a core tenet of dependency theory is the existence of a dominant world capitalist system defined by a division of labour between the dominant countries and marginalised periphery (Economics Online 2020; Kvangraven 2021).

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As earlier pointed out, although a broad school with unified arguments about the causes of underdevelopment in the dependent states, there are different perspectives/strands/flavours of dependency theory. For instance, Andre Gunder Franks’s thesis of the ‘development of underdevelopment’ explains that there is a connection between development in the dominant states and underdevelopment in the periphery. While the international political economy dominated by the core states produces development for them, it doles out misery to the dependent states of the Global South. If the dominant states achieve their development at the expense of the dependent states, an important option from these radical dependency theorists could be to delink from the world economy. However, delinking may not necessarily imply autarky. Cardoso and Faletto, and Peter Evans, who propose the thesis of ‘dependent development,’ are of the view that a modest measure of catch-up is achievable if the right policies are adopted (Velasco 2002; Kufakurinani et al. 2017; Arman and Ahmed 2021). According to the above milder version of dependency, both poor and rich countries could grow under international market capitalism, albeit disproportionately and unequally. Osvaldo Sunkel and Pedro Paz also belong to this milder strand of dependency theory (Velasco 2002; Kufakurinani et al. 2017). The above notwithstanding, the popular practice is to look at dependency theory from the structuralist and Marxist points of view. While ‘the structuralists study variations of development in the global arena and consider which kinds of policies would lead to more desirable paths,’ the Marxists ‘argue that it is almost impossible to escape the distortions and limitations of development in the periphery without constructing a socialist alternative’ (Evans, 2017, 27). Without a doubt, dependency theory is still very relevant for examining global inequalities in contemporary times (Kufakurinani et al. 2017). As correctly explained by Ndlovu-Gatsheni (2017, 35), ‘the explanatory power of dependency theory, instead of diminishing, has actually been appropriated and developed to construct other useful theoretical frameworks.’ Among these useful theoretical instruments are coloniality and decoloniality. Although coloniality locates the problems of poor countries in the full gamut of conditions arising from their imperial relations with the core countries, it also recognises the prominent role of internal dynamics in these unequal relations and ‘hierarchisation’ of human species (Ndlovu-Gatsheni 2017). Decoloniality relies heavily on the articulation of dependency theory in explaining the connivance of local elites—who took over form the departing colonialists—in the exploitation and underdevelopment of the poor countries. The local elites have not only served as conspirators in the sustenance of imperial and exploitative relations with the core countries, they have also reproduced ‘global tendencies of exploiting others, especially the peasants and workers for their own benefit.’ Decoloniality therefore ‘acknowledges

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the agency of the local elite’ in creating the condition of underdevelopment (Ndlovu-Gatsheni 2017, 35). The point being made is that while a number of theoretical instruments have emerged, many of these theories and approaches have only succeeded in harnessing the explanatory power of dependency theory and, thus, calling attention to its increasing relevance in the analysis of development and underdevelopment in the international system. DEPENDENCY AND DEVELOPMENT CONTRADICTIONS IN AFRICA From the preceding section, one could say that dependency theory has not lost its relevance today. The overwhelming majority of poor countries in the world are still located in the periphery (Global South). There is the continuing and increasing dependence of the dependent states on primary commodity exports, with vulnerability to trade related external shocks. Furthermore, ‘the magnitude of the illicit finances that flow out of the lesser developed countries, deepening domestic inequalities amidst an enduring overall north-south inequality . . . suggest that dependency theory is yet to be consigned to the dustbin of dead ideas’ (Olukoshi 2017, 25–26). With specific reference to the continent of Africa, Ndlovu-Gatsheni wonders: How can Africa, with the referents of poverty and underdevelopment, continue to finance the development of the core states of the industrialised North? This ugly situation can only be sufficiently explained by revisiting dependency theory, he explains. Dependency theory does not only allow ‘the understanding of the structural processes that produce contradictory effects in the centre and the periphery’ it also raises scientific awareness about how a resource-rich continent like Africa would remain poor and yet finance development in the core states of the industrialised North through different channels including endless debt payments (Ndlovu-Gatsheni 2017, 35). The effort in this section is to examine how international market capitalism and broad global economic and political structures, in the context of dependency theory, have kept Africa in a marginalised and underdeveloped position, in contemporary times. In doing this, the twin analytical elements are international trade and debt payments. Foreign Trade World trade is a major aspect of the international political economy that reveals the dependent position of the countries in the periphery, particularly Africa. Although the performance of Africa in world trade has somewhat improved since the 1990s, its share in world trade has remained small

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(Rudaheranwa and Brainerd 2010; Mebera 2019; Ajayi and Oshewolo 2013). From available data, the continent of Africa participates only marginally in international trade. In 2016, Africa’s share of world exports was just 2.4 per cent, with sub-Saharan Africa accounting for just 1.7 per cent (Schmieg 2016). In 2021, Africa’s share of international trade, on the average, amounted to a marginal 3 per cent of world imports and exports (World Trade Organisation (WTO) 2021). The total volume of trade from the continent to the rest of the world was in the average of $700 billion between 2015 and 2017. When compared with the other regions in the same period, Africa’s figure was only bigger than the figure for Oceania ($481 billion). The regions that dominated world trade during this period were Europe ($4,109 billion), America ($5,140 billion) and Asia ($6,801 billion) (UNCTAD, 2019). The data for 2019 reveal that the volumes of imports and exports by African countries were US$569 billion and US$462 billion, respectively. The leading players in Africa’s foreign trade include Algeria, Angola, Egypt, Libya, Morocco, Nigeria and South Africa. These countries were responsible for more than 60 per cent of the continent’s total trade in 2019 and an estimated 85 per cent of the region’s fuel exports in 2018 (WTO 2021). In line with the articulation of dependency theorists, Africa’s exports to the rest of the world are still dominantly composed of primary commodities, implying that the continent is largely considered as a major supplier of raw materials and natural resources, required to support and sustain economic growth in developed and new industrialised economies. A major defining attribute of Africa’s trade is that foreign direct investment in the continent is dominantly resource-seeking. This reinforces the primary commodity-dependent export profile of the continent (Rudaheranwa and Brainerd 2010; Ajayi and Oshewolo 2013; Yaqub 2013; Kola-Olusanya 2013). In a report by the World Trade Organisation (2021, 3), ‘the share of exports contributed by sub-Saharan Africa accounts for about 70 per cent of all African goods and services exports.’ North Africa contributes around a significant third of all goods and services trade, even though it is made up of five of Africa’s fifty-five countries. The continent’s major exports include fuel and mining products, manufactured goods and agricultural products. In terms of commercial services exports, Africa’s share has almost doubled. While the figure was US$57.7 billion in 2005, it rose significantly to about US$100 billion in 2019. The destinations for Africa’s exports include the European Union, North America, the new industrialised economies of China and India and intra-African markets (Rudaheranwa and Brainerd 2010; WTO 2021; Schmieg 2016). The trade architecture of Africa is not only defined principally by the exportation of raw materials and commercial services, the continent is also

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hugely dependent on imports (Olaopa et al. 2013; Nwozor 2013). Schmeig (2016, 2) observes that ‘two-thirds of sub-Saharan Africa’s imports are finished products, while fuel and agricultural products are also significant.’ This observation is consistent with the theoretical foundation of dependency. Available data suggest that in most parts of Africa, international trade (imports and exports) represent about 50 per cent of the gross domestic product (GDP). There is a great dependency on imports, suggesting that imports are not well balanced by accompanying exports. The strong import dependency of African economies is captured by the share of GDP that international trade accounts for (this is usually bigger than the GDP share of exports by a considerable margin). In Mozambique, for instance, while total foreign trade accounts for 96 per cent of GDP, exports only account for 26 per cent. In Rwanda, imports and exports shares of GDP are 45 per cent to 15 per cent. In Kenya, it is 50 per cent to 16 per cent. The situation in South Africa is 64 per cent to 31 per cent (Schmieg 2016; Verter 2017). In terms of why the core states have a greater market proportion in world trade, Verter (2017) explains that these countries and other newly industrialised economies possess better and advanced technological know-how, more manufacturing industries, greater access to finance and market than Africa. On the factors that hamper Africa’s ability, Rudaheranwa and Brainerd (2010) identify market access impediments, including tariff peaks, non-tariff barriers and rule of origin. These factors have continued to prevent Africa’s little opportunities from translating into meaningful benefits, and hamper real investment in infrastructure that support trade (such as energy and transportation), and also institutions that facilitate trade (such as standards and quality management). These impediments have not allowed the continent of Africa to generate exports in the quantities, value and quality required by the world market. The point must also be made that the volume of Africa’s trade is largely tied to external events. For illustrative purposes, African exports declined sharply following the 2008–9 financial crisis and dropped again in 2012 to 2016 in the aftermath of the decrease in oil prices and trade in mineral products. In addition, as a result of the COVID-19 pandemic, African exports have been adversely affected by the fall in demand from developed and emerging economies (WTO 2021). Debt Payments The international economic and political structures have continued to keep Africa in a dependent and subordinate relationship with the core/centre through endless debt payments (Ajayi and Oshewolo 2013; Olaopa et al. 2013). Currently, Africa’s fiscal crisis appears to be four-fold. Firstly, the continent is contending with high fiscal deficits. Secondly, Africa is subjected

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to a high cost of borrowing. Thirdly, there is currency depreciation in most of Africa, triggering a rise in inflation. Africa’s currency depreciation is attributable to falling commodity prices, capital flight and increasing local demand for foreign currencies, particularly the US dollar. Fourthly, there is a major problem of high debt-to-GDP (WTO 2021; Mabera 2019). The debt of the countries of sub-Saharan Africa has been on the increase. The figure rose to a record US$702 billion in 2020. This is by far the region’s biggest debt burden in ten years. The figure was around US$305 billion in 2010. About 90 per cent inflow came from multilateral institutions and the other 10 per cent from bilateral creditors. Multilateral institutions such as Inter-American Development Bank, Asian Development Bank and African Development Bank increased lending to sub-Saharan Africa in 2020 (Pandey 2021). Key efforts to expand revenues in African economies have unfortunately been counteracted and displaced by increasing debt service costs, which could be more than two-thirds of the expanded revenues obtained from 2010 to 2019 (OECD 2021; OECD/AUC/ATAF 2021). Available data suggest that the region may now have more debt than it can pay (Pandey 2021). As at 2016, more than twenty African countries had debt-to-GDP ratios of more than 60 per cent. This points to a level of debt unmanageability and difficulty making debt payments by these countries. A number of African countries (including Egypt, Djibouti, the Democratic Republic of the Congo (DRC), Cabo Verde and Angola) all have debt-to-GDP ratios more than 100 per cent. South Africa’s ratio increased to 63 per cent this year (2021), compared to the 2019 figure of 56.7 per cent. The situation in Mozambique is very worrisome. Its debt-to-GDP ratio now stands at 130 per cent, against the figure of 100 per cent in 2018 (WTO 2021). In terms of debt to gross national income (GNI) ratio, the figures are equally worrisome. A rising ratio implies that a region’s debt is increasing in relation to its income, and thus may have a low capacity to pay. Debt payments as a share or percentage of total income shows the extent to which debt service costs limit the capacity of government to finance domestic spending. Between 2015 and 2019, debt payments consumed a higher proportion of public revenues in the region (OECD, AUC and ATAF 2021). The region’s debt-to-GNI ratio increased to 43.7 per cent in 2020, from 23.4 per cent in 2011. In addition, the average debt-to-export ratio rose three times over ten years to 205 per cent in 2020 (Pandey 2021). The COVID-19 pandemic has clearly increased the vulnerability of sub-Saharan Africa. The pandemic has led to the region’s rising debt profile, as many countries expanded their borrowing plans. The reasons are clear. There was the need to protect lives and livelihoods through the introduction of fiscal stimulus packages to support individuals and businesses. Again, governments resorted to additional borrowing due to the fall in public revenues

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(traceable to the decline in economic activities and prices of primary commodities) (OECD, AUC and ATAF 2021). As a result, the region is currently in a dire economic situation. As reported by the International Monetary Fund (IMF), seven countries may soon be debt distressed. These countries include Mauritania, Kenya, Ghana, Chad, Cabo Verde, Cameroon and Burkina Faso. The same report identified the DRC as already debt distressed (OECD, AUC and ATAF 2021). Another worrisome dimension of Africa’s debt crisis is the increased exposure of countries to foreign exchange risk. For most countries in the region, majority of their debts are denominated in foreign currency. The problem is that this ‘creates a mismatch between the currency in which a country’s debt and interest payments are denominated and the country’s revenues, which are predominantly raised in national currency’ (OECD, AUC and ATAF 2021). WHAT DEVELOPMENT PATHWAYS FOR AFRICA? Following the articulations in this chapter, the effort here is to suggest development pathways for Africa that are consistent with the arguments of dependency theory. The thinking is that these pathways will promote inclusive sustainable development and collective self-reliance in the continent. Firstly, it is important for countries in the periphery to develop capabilities, means and standards that will allow them to participate centrally and productively in global rule-making, particularly through multilateral frameworks and platforms (Ajayi and Oshewolo 2013). This policy option aligns closely with the position of Peter Evans. As we have seen, the increasing economic power of bigger countries (China and Brazil, for instance) has made it impossible or difficult for the developed and industrialised economies to exercise a commanding control over global rule making processes. While these industrialising economies may not always act altruistically or represent the true interest of the entire dependent economies of the Global South, the fact that they are able to challenge the dominance and monopoly of the Global North in international rule making is a major source of hope. The countries of the periphery should begin to build capabilities and means (just like China and Brazil) that will allow them to contribute meaningfully to shaping and changing global rules in a way that reflects their aspirations and hopes, instead of merely aligning with the dominant wishes and interests of the global north (Evans 2017; Kufakurinani et al 2017; Sule-Kano 2020; Agbebi and Virtanen 2017). Secondly, although the internationalisation of capitalism and the resultant core-periphery relations cannot be ignored in explaining Africa’s underdevelopment, internal forces have also been complicit. As explained by Brautigam

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(2004, 255), ‘poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterise many African countries.’ As a result of the local dynamics, African governments parade institutions that cannot respond to the development demands of modern states. As correctly argued by Brautigam (2004, 256), ‘improving governance means building a better bureaucracy, increasing adherence to the rule of law, reducing corruption, and managing expenditure and revenue generation in a sustainable manner.’ In a similar vein, Vernengo (2017) explains that an important way to strengthen institutions is to build developmental states in the periphery. To break away from the exploitative dependent relationships with the dominant states, the peripheral states of Africa must begin to invest in building developmental states that will be responsive to local needs. Also, Amin (2017) notes that as the current arrangement continues to reduce the poor countries to subordinates, a very good way forwards could be to delink from the global capitalist system. However, Samir Amin’s idea of delinking does not necessarily approximate autarky. Delinking would allow the system to adjust to local needs, rather than the needs of the Global North. Delinking, in this context, also harps on the need to build national popular projects that are driven by a national democratic revolution (Amin 2017). CONCLUSION This chapter has demonstrated that the dependency theory is still very relevant in explaining Africa’s economic predicament and entrapment. While the theory is now used infrequently in the social science literature, its intellectual postulations still capture the economic realities in Africa today. For instance, the old contours of inequalities are still intact, and most countries of the Global South (including African countries) are still in a dependent and subordinate relationship with the highly developed and industrialised economies of the world (Farny 2016; Vengroff 1977). Using the analytical elements of foreign trade and debt payments, the chapter has examined how the current global economic and political structures have kept Africa in dependent position. In the area of trade, Africa’s share remains marginal. While Africa’s exports are principally composed of raw materials, the continent is hugely dependent on imports from the highly industrialised and industrialising economies. In terms of debt payments, obligations relating to debt servicing have continued to impose serious economic hardship on the countries in the region. In fact, the thinking is that because the continent may have now accumulated more debt than it can pay, its dependent and subordinate position in the

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world economy has been further deepened. This chapter has also suggested a number of development pathways for the continent. These pathways include the need to build capabilities that will allow African countries to participate effectively in global rule-making, the need to improve domestic governance in individual countries and collective governance through the framework of the African Union (AU), and the need to build developmental states that will be able to respond effectively to local needs and demands. REFERENCES Agbebi, Motolani, and Petri Virtanen. 2017. ‘Dependency Theory—A Conceptual Lens to Understand China’s Presence in Africa?’ Forum for Development Studies 44 (3): 429–51. Ajayi, Rotimi, and Segun Oshewolo. 2013. ‘Historicising the African Development Crisis.’ In Alternative Development Strategies in Africa. A Festschrift for Gabriel Olatunde Babalola, edited by A. O. Odukoya, 1–26. Lagos, Nigeria: Centre for Black and African Arts and Civilisation (CBAAC). ———. 2020. ‘African Development Strategies: Wither NEPAD?’ In The Palgrave Handbook of African Political Economy, edited by S. Oloruntoba and T. Falola, 503–17. London: Palgrave Macmillan. Amin, Samir. 2017. ‘A Dependency Pioneer.’ In Dialogues on Development, vol. 1, On Dependency, edited by U. Kufakurinani et al., 12–17. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). Arman, Saleh M., and Tazin Ahmed. 2021. ‘A Bibliometric Analysis on Dependency Theory.’ Journal of Community Positive Practices 21 (4): 98–115. Bouchat, Clarence J. 2010. Security and Stability in Africa: A Developmental Approach. Carlisle, PA: Strategic Studies Institute, US Army War College. Brautigam, Deborah A., and Stephen Knack. 2004. ‘Foreign Aid, Institutions, and Governance in Sub-Saharan Africa.’ Economic Development and Cultural Change 5 (2): 255–85. Cloud, D. 2016. ‘Dependency Theory in Sociology: Definitions and Examples.’ Study.com, 5 March 2016. https:​//​study​.com​/academy​/lessons​/dependency​-theory​ -in​-sociology​-definitions​-examples​.html. Crossman, A. 2018. ‘Dependency Theory: The Effect of Foreign Dependency between Nations.’ https:​//​www​.thoughtco​.com​/dependency​-theory​-definition​-3026251. Economics Online 2020. ‘Dependency Theory.’ Posted 27 January 2020. https:​//​www​ .economicsonline​.co​.uk​/global​_economics​/dependency​_theory​.html​/. Edoho, Felix M. 2011. ‘Globalisation and Marginalisation of Africa: Contextualisation of China-Africa Relations.’ Africa Today 58 (1): 103–24. Eke, Ikechukwu. 2013. ‘Dependency Theory and Africa’s Underdevelopment: A Paradigm Shift from Pseudo-Intellectualism—The Nigerian Perspective.’ International Journal of African and Asian Studies 1: 116–28.

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Enuka, Chuka. 2018. ‘Dependency Theory and Global Economic Imbalance: A Critique.’ UJAH: Unizik Journal of Arts and Humanities 19 (1): 130–48. Evans, Peter. 2017. ‘The Relevance of Dependent Development Then and Now.’ In Dialogues on Development, vol. 1, On Dependency, edited by U. Kufakurinani et al., 27–33. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). Farny, Elisabeth. 2016. ‘Dependency Theory: A Useful Tool for Analyzing Global Inequalities Today?’ E—International Relations, 23 November 2016, https:​//​www​ .e​-ir​.info​/pdf​/66616. Gulalp, Haldun. 1998. ‘The Eurocentrism of Dependency Theory and the Question of “Authenticity”: A View from Turkey.’ Third World Quarterly 19 (5): 951–61. Kabonga, Itai. 2016. ‘Dependency Theory and Donor Aid: A Critical Analysis.’ Afrikanus: Journal of Development Studies 46 (2): 29–39. Kola-Olusanya, Anthony. 2013. ‘Climate Change and Economic Crisis: Pathways for Adaptation in Sub-Saharan Africa.’ In Alternative Development Strategies in Africa. A Festschrift for Gabriel Olatunde Babalola, edited by A. O. Odukoya, 197–215. Lagos, Nigeria: Centre for Black and African Arts and Civilisation (CBAAC). Kufakurinani, Ushehwedu. Kvangraven, Ingrid H., Santanta, Frutuoso. and Styve, Maria D. 2017. ‘Introduction: Why Should We Discuss Dependency Theory Today?’ In Dialogues on Development, vol. 1, On Dependency, edited by U. Kufakurinani et al., vi–xi. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). Kvangraven, Ingrid H. 2021. ‘Beyond the Stereotype: Restating the Relevance of the Dependency Research Programme.’ Development and Change 52 (1): 76–112. Lea, David. 2000. ‘Dependency Theory and its Relevance to Problems of Development in Papua Guinea.’ Pacific Economic Bulletin 15 (2): 106–20. Mabera, Faith. 2019. A Round Up of Strategic Developments and Trends in Africa in 2019. Occasional paper 78. Pretoria, South Africa: Institute for Global Dialogue and University of South Africa (UNISA). Matunhu, J. 2011. ‘A Critique of Modernisation and Dependency Theories in Africa: Critical Assessment.’ African Journal of History and Culture 3 (5): 65–72. Munro, Andre. 2018. ‘Dependency Theory.’ Encyclopedia Britannica, 15 October. Accessed December 21, 2021. https:​//​www​.britannica​.com​/topic​/dependency​ -theory. Namkoong, Young. 1999. ‘Dependency Theory: Concepts, Classifications and Criticisms’ International Area Studies Review 2 (1): 121–50. Ndlovu-Gatsheni, Sabelo. 2017. ‘Wither Dependency Theory?’ In Dialogues on Development, vol. 1: On Dependency, edited by U. Kufakurinani et al., 34–41. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). ———. 2020. ‘Four Journeys of Capital and Their Consequences for Africa.’ In The Palgrave Handbook of African Political Economy, edited by S. Oloruntoba and T. Falola, 45–62. London: Palgrave Macmillan.

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Nwozor, Agaptus. 2013. ‘Africa’s Development Curtain and Afro-Asian Relations.’ In Alternative Development Strategies in Africa. A Festschrift for Gabriel Olatunde Babalola, edited by A.O. Odukoya, 275–99. Lagos, Nigeria: Centre for Black and African Arts and Civilisation (CBAAC). Organisation for Economic Co-operation and Development (OECD). 2021. Africa: The Rising Debt Burden Highlights the Need for Further Progress in Domestic Revenue Mobilisation. OECD/African Union Commission (AUC) / African Tax Administration Forum (ATAF). 2021. Revenue Statistics in Africa 2021. Paris: OECD Publishing. Olaopa, Olawale, Ufo Okeke-Uzodike, Willie Siyanbola and Suzanne Francis. 2013. ‘Science, Technology and Innovation (STI) Promotion: An Alternative and New Strategy for Youth Empowerment for Africa’s Development.’ In Alternative Development Strategies in Africa. A Festschrift for Gabriel Olatunde Babalola, edited by A. O. Odukoya, 155–96. Lagos, Nigeria: Centre for Black and African Arts and Civilisation (CBAAC). Olukoshi, Adebayo O. 2017. ‘Dependency Theory: Its Enduring Relevance.’ In Dialogues on Development, vol. 1, On Dependency, edited by U. Kufakurinani et al., 18–26. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). Pandey, Kiran. 2021. ‘Sub-Saharan Africa’s Debt Burden Increased to Record $702 Billion in 2020 – Highest in a Decade.’ DownToEarth, 14 October 2021. https:​//​www​.downtoearth​.org​.in​/news​/economy​/sub​-saharan​-africa​-s​-debt​-burden​ -increased​-to​-record​-702​-billion​-2020​-highest​-in​-a​-decade​-79703. Phiri, Madalitso Z. 2020. ‘History of Racial Capitalism in Africa: Violence, Ideology, and Practice.’ In The Palgrave Handbook of African Political Economy, edited by S. Oloruntoba and T. Falola, 63–82. London: Palgrave Macmillan. Romaniuk, Scott N. 2017. ‘Dependency Theory.’ In The SAGE Encyclopedia of War: Social Science Perspectives, edited by P. Joseph, 1–4. Thousand Oaks, CA: SAGE Publications. Rudaheranwa, N., and Brainerd, Y. 2010. ‘Africa’s Benefits and Challenges to Regional and International Trade.’ World Trade Organisation, September 16, 2010. Sanchez, Omar. 2003. ‘The Rise and Fall of the Dependency Movement: Does it Inform Underdevelopment Today?’ EIAL 14 (2): 31–50. Schmieg, Evita. 2016. ‘Global Trade and African Countries: Free Trade Agreements, WTO and Regional Integration.’ Working Paper RD EU / Europe 02. July. Berlin, Germany: Stiftung Wissenschaft und Politik / German Institute for International and Security Studies. Sule-Kano, Abdullahi. 2020. ‘African Political Economy and Its Transformation into Capitalism.’ In The Palgrave Handbook of African Political Economy, edited by S. Oloruntoba and T. Falola, 83–92. London: Palgrave Macmillan. Taylor, Ian. 2020. ‘The Political Economy of Africa.’ In The Palgrave Handbook of African Political Economy, edited by S. Oloruntoba and T. Falola, 93–114. London: Palgrave Macmillan. United Nations Conference on Trade and Development (UNCTAD). 2019. ‘Facts & Figures.’ Press Release. https:​//​unctad​.org​/press​-material​/facts​-figures​-0.

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Velasco, Andres. 2002. ‘Dependency Theory.’ Foreign Policy 133: 44–45. Vengroff, Richard. 1977. ‘Dependency, Development, and Inequality in Black Africa.’ African Studies 20 (2): 17–26. Vernengo, Matias. 2017. ‘Dependency Theory is Alive in Different Guises.’ In Dialogues on Development, v.ol. 1, On Dependency, edited by U. Kufakurinani et al., 86–92. New York: Economic Development Working Group of the Young Scholars Initiative (YSI) of the Institute for New Thinking (INET). Verter, Nahanga. 2017. ‘International Trade: The Position of Africa in Global Merchandise Trade.’ In Emerging Issues in Economics and Development, edited by Musa Jega Ibrahim. London: IntechOpen, https:​//​www​.intechopen​.com​/chapters​ /55353. World Trade Organisation (WTO). 2021. Strengthening Africa’s Capacity to Trade. Geneva, Switzerland: WTO. Yaqub, N. 2013. ‘Governance, Democracy and Development in Africa.’ In Alternative Development Strategies in Africa. A Festschrift for Gabriel Olatunde Babalola, edited by A. O. Odukoya, 49–72. Lagos, Nigeria: Centre for Black and African Arts and Civilisation (CBAAC).

PART II

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Chapter 5

Africa and the World Bank An Environmental Perspective Olawari D. J. Egbe

A central idea, subsumed in the following two questions runs through this chapter: If it is not for extractive purposes, deliberately and consciously undertaken on behalf of private, international capital such as transnational corporations (TNCs), why would the World Bank demonstrate such an avid interest in the environment and natural resources in Africa? And how has this interest impacted on the environment, small farmers and local communities in Africa? It is worthy to state from the outset that, coincidentally, the World Bank— being a worthy lender in the international political and economic relations of states (Ismi 2004)—has deliberately deployed its lending power to support projects that are of oil and gas domain either as fuel or as feedback (Payer 1982). This is because the policy of the Bank drastically shifted from hydro projects to thermal power plant projects that are mostly influenced by oil and gas interests (Payer 1982). Whereas the foregoing demonstrates the environmental interest of the World Bank, this institution and the environment ordinarily are strange bedfellows. Whereas, environment is not mentioned in the WB’s five Articles of Agreement (Ciorciari 2000), it has a mandate under the Articles of Agreement to promote economic development in its member states by granting loans for specific economic projects. It is in the financing of specific economic projects—wherever such projects are cited—that the environment is often adversely impacted. Whereas the Bank’s projects are development directed, the Bank has, as shown below, assisted in financing projects with profound impact on the environment and by extension human rights of indigenous peoples (van Genugten 2007; Sonkin 2020). Thus, there is an urgent need 91

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to establish the symbiosis between development and the environment—that both work in pari-passu (World Bank 1992). Whereas this nexus is undeniable, the environmental behaviour of the World Bank in the 1980s was rather callous, making it mandatory for intense protests and critiques to have amounted on the Bank from environmental nongovernmental organisations, public scrutiny and the Bank’s inside reformers (Ayres 1983; Rich 1985, 1994; Horberry 1985; Albert 2006). Consequently, the Bank made several pro-environment commitments. Firstly, the establishment of ‘A Permanent Independent Inspection Panel in 1993’ (Peet 2009, 157). Secondly, to adjust its image and thus modify its substantive policies. Thirdly, it realised that economic development or sustainable development cannot succeed without giving requisite attention to its effects on the environment because a reinforcing linkage exists between poverty and the environment degradation. Fourthly, it realised that both government and environmental nongovernmental agencies are conscious of the enormous roles playable by the Bank in the context of the environment (Shihata 1992; Mason 1995; World Bank 2001). Fifthly, the Bank set-up the global environment facility (GEF)—a 1991 multi-dollar green aid fund by Western governments to financing global environment protection (Young 2002). However, practice definitely makes the basic difference. Sadly, the verdict is that there is a huge gulf between theory and practice in the World Bank’s project financing (Fox and Brown 1998). By its operational conduct, it is apparent that the World Bank has a green frontage, while the behind is business as usual. Interestingly, many reforms such as the 1987 reorganisation, expansion of its environmental staff and the GEF itself did not satisfy the World Bank’s major unrelenting critics (Payer 1982; Rich 1994; Mallaby 2004; Peet 2009) and nongovernmental organisations (Int’l Rivers 2015). Worrisomely, the GEF’s governing council often acts oblivious to the antienvironmental priorities of the Bank’s proclivity for resource extraction and trade in natural resources (Young 2002). The Bank’s notoriety in anti-people environmental projects came to the lime-light in the ill-fated Polonoroeste and Sardar Sarovar Dam projects in Brazil and India, respectively (Gutner 2005; 2017). On account of this gulf, Africa’s environment has been adversely impacted (Shihata 1992). To make an objective contribution on this subject-matter requires a concerted understudy of the impacts of the World Bank’s financed projects on the environment. This chapter, thus, examines the policies, procedures and projects of the World Bank that have undermined the environment and peasant farmers that rely on the environment for their livelihoods. To do the foregoing, this chapter entirely adopts qualitive analysis, through the following subsections: Section two undertakes a brief historical survey of the World Bank pointing out the World Bank’s principal state actors, mission,

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vision, policies and so forth. Section three addresses itself to the main thrust of this chapter, which is on the survey of the key sectors the World Bank invests its funds. This chapter notes that, whereas the World Bank’s investments may have been well intentioned in moving the frontiers of development, several of the projects, however, adversely impact on the environment and local communities that rely on the environment for their sustainability. In particular, the section touches on such themes as African forests, dams, oil and gas extraction endeavours. Section four concludes the chapter; however, noting that the World Bank’s project-financing in Africa is blind towards environmental accountability. This oblivion demonstrated by the World Bank inflicts on peasant farmers untold sufferings such as forceful displacement, land degradation and deforestation. The conclusion further notes that the World Bank’s environmental blindness, which it exhibited in the 1980s through to the 1990s, however, with a short hiatus, has after all not changed in the 2000s and has since resumed dam project-financing in the continent that adversely undermines the environment, peasant communities and their livelihoods. HISTORICISING THE WORLD BANK The post-1945, World War II era (hereafter WWII), ushered in a new global economic order with the United States surviving as the dominant political, economic and military hegemon amidst an economic disorder. As the sole dominant power, the United States, with little or no resistance, imposed a system of its choice (Rogers et al. 2008). Hitherto, the United States and the United Kingdom negotiated a new world economic order which culminated in the 1944 Bretton Woods negotiations that established a new economic order referred to as the Bretton Woods System (BWS). The Bretton Woods owes its negotiations and emergence to Lord J. M. Keynes (United Kingdom) and Harry D. White (United States) (Adams 1991). Of the two dramatis personnel, it was the proposals put forward by Harry Dexter White that triumphed; a point which signaled the death of British hegemony and its replacement by the United States hegemony from 1944–45 onwards (Roberts 1995). Following this development, two world institutions were formed—the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD)—which alongside the International Finance Corporation (IFC) and the International Development Agency (hIDA) became known as the World Bank. Of these three, the IMF and the World Bank are institutionalised structures while the World Trade Organisation (WTO) is a regulatory mechanism for global trade. However, this so emerged economic order was dependent on

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neoclassical economic assumptions that greatly undermined environmental concerns; where all of these institutions have demonstrated environmental blindness that ‘assumes the market maximises social welfare and generally produces socially desirable levels of consumption of natural resources’ (Thomas 1992, 65). Thus, the IMF and the World Bank became technical agencies to facilitate the operations of the free market system; where the Bank provides huge sums of US$ for development projects including oil and gas activities in the Global South (Goodland 1990; Falola and Genova 2005). Whereas the Bank is called a bank, however, it is not. Instead, it comprises five financial agencies—the IBRD, the IDA, the IFC, the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID)—that jointly provide long-time loans to developing countries (O’Brien and Williams 2016). Operationally, the World Bank is organised as a cooperative, where the World Bank’s member states are its shareholders with solely for-profit motives. The United States stands out as its major shareholder (Falola and Genova 2005). This profit motivation runs superior to the World Bank’s mission statement: Our dream is a world free of poverty. To fight poverty with passion and professionalism for lasting results. To help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. To be an excellent institution able to attract, excite, and nurture diverse and committed staff with exceptional skills who know how to listen and learn. (World Bank 2005, ii)

At the dawn of decolonisation, the erstwhile colonies in Africa became the World Bank’s clients in granting long-term loans that helped to finance specific projects, the majority of which demonstrated a profound blindness to the environment but were heavily reliant on natural resource consumption. It is seventy-five years after WWII and, ever since, the World Bank has been on this environmentally hostile exercise. Whereas, the Bank is specifically not environmental, it is the basic institution that govern the world economy with implications on the environment and global natural resource governance and utilisation. For example, the World Bank’s Oil, Gas, Mining, and Chemicals Department (OGMCD), performs specific roles such as the development of natural resources and rendering of legal and technical advice on establishing and optimising oil and gas industry operations in the Global South (Falola and Genova 2005).

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THE WORLD BANK AND THE ENVIRONMENT IN AFRICA The World Bank stands out as the biggest and richest development finance institution into development support in the Global South. Whereas such an enormous wealth is never a crime, how has it been deployed? And specifically, what sort of projects mainly catch the fancy of the Bank in project finance? What specific interests are being promoted by the World Bank? In seeking answers to these questions, it is observed that the World Bank has promoted the interests of international capital—a mission it conveniently executes as an intermediary for the flow of funds, direct aid to oil and mining TNCs, and by means of projects finance alienate farmers of access and control over land, water and forests, albeit appropriate these resources for TNCs and their collaborative local elites (Payer 1982). Interestingly, the World Bank effortlessly executes the foregoing missions by several means including individual project finance. The World Bank often presents interesting statistics of the poor being lifted from poverty by its projects, however, the reality on the ground contradicts the Bank’s elaborate claims. What is commonplace instead is that, while the Bank’s projects impact very poor people, poverty is not alleviated and never gets abolished (Payer 1982). More so, what individual projects are usually of interest to the World Bank? While several individual-level projects are carried out by the World Bank, this chapter is chiefly concerned with the environment-related projects that bear fundamental immediacy on the environment and, by extension, the vulnerable (the poor) who suffer forceful displacement, starvation and land degradation due to: commercial agriculture, urbanisation-induced deforestation and commercial logging and its accompanying deforestation (for example, in Cameroon where a variety of quality African woods are avidly exploited for furniture in the Global North). This section discusses the most discernible sectors being financed by the World Bank in Africa that are anti-environment; pointing out in the process: (1) the burden of projects on the environment, the poor in Africa and the inability of the World Bank to marry its environmental commitments vis-àvis the reality, and (2) all of the Bank’s financed projects are elitist in intent, though often disguised as pro-people. Large Dams and Africa For purposes of hydroelectricity generation, the World Bank has gained notoriety in financing dam constructions globally (Abouharb 2012). It is notorious

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because the supposed beneficiaries of dam projects instead end up becoming the sufferers. Often, the beneficiaries are TNCs engaged in commercial logging and commercial agriculture, among other things. In the global South, the ill-fated Polonoroeste dam (Hecht and Cockburn 1990) and Sardar Sarovar dam projects in Brazil and India respectively caused the Bank to gain notoriety and attracted extensive criticisms from scholars, nongovernmental organisations and indigenous peoples. In each of the two dam projects, the accompanying human impact was said to be unbearable. Following these two incidents and others, the World Bank committed itself to not financing dam projects (Bosshard 2013); however, after a brief hiatus, it has since resumed sponsorship of large dams in the early 2000s—especially in sub-Saharan Africa (SSA)—areas the World Bank considers as having untapped potential (Int’l Rivers 2015). This fallout was the consequence of a criminal oversight over the salience of environmental impact assessment (EIA). Save for exceptional cases like the Aswan High Dam in Egypt (Fahim 1981; Tortajada et al. 2012; Scudder 2012), pre-project and post-project completion, EIAs are either never undertaken or shabbily undertaken to determine the economic and environmental implications of dams and the project’s impact on communities, regions and even countries within or downstream from the dam project (Ujah 2008; Zhang et al. 2015; Veilleux 2013; Scudder 2016; Negm and Abdel-Fattah 2019). It is commonplace; the Bank’s EIAs often fail to consider the physical and health implications of local peoples (Yumnam 2019). The Bank, acknowledging that there will be consequences of projects it finances, came up with operational directives on involuntary resettlement, such as compensation for losses accruing from replacement, support in course of resettlement and improvement in the living standards of affected persons (Shihata 1992). Regrettably, these guidelines are never followed. Instead, the Bank claims that its hitherto dam legacy is of the past. However, whereas the benefits accruing from the World Bank’s large hydro portfolio are overrated, the Bank’s antecedents in addressing environmental and social harms resulting from dam projects remain fundamentally flawed (Int’l Rivers 2015). In corroborating International Rivers (2015), the following Lesotho country case study illustrates the affluent as the beneficiaries of dams, whereas the discomforting aspects of dams (economic, environment and human rights of project) are borne by the poor. In Lesotho, Southern Africa, the Bank is funding the Lesotho Highlands Water Project (LHWP), which involves five dams (Hover 2001). Out of these five dams, one has since been completed while another has gone near completion. The political economy of these dams is that the Lesotho dams supply water to Gauteng Province, serving strategic areas as South Africa’s industrial heartland and Johannesburg’s suburbs are where South Africa’s wealthiest elites have their flamboyant

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homes. Obviously, the Lesotho waters are not for South Africa’s poor who have suffered water inequality since the apartheid era. Socially, the Lesotho dam projects have adversely impacted on rural highland communities, having lost land for peasant agriculture, grazing and natural water sources without adequate compensation (Thamae and Pottinger 2006). What is obvious from the foregoing country case studies is that dams heavily financed by the Bank have untold economic, environmental and social impacts, destroying forests and fisheries habitats. In fact, the Manibeli Declaration (European Rivers Network 1994) unequivocally noted that World Bank’s financed dams have ‘extensive negative environmental impacts, destroying forests, wetlands, fisheries, habitat for threatened and endangered species, and increasing the spread of waterborne diseases.’ However, the World Bank often behaves oblivious of human right violations such as to arbitrary arrests and attacks on peaceful demonstrators to projects, among other things, being committed by governments in course of implementing Bank-financed dams (Adams 1992; Scudder 1997; Sanchez 1999; Shiva 2008). African Forests The value of rain forests remains undisputed; especially in making contributions to the well-being of people, especially indigenous peoples in Africa (Myers 1992). However, this is not the worldview of forests by most banks in Africa including the World Bank where there is imminent danger of deforestation from the provision of finance to soft commodities companies such as logging of timber and the like (Silva 2020). The World Bank’s various projects (dams, mining, oil and gas), which it finances through TNCs, often presented as helping tropical countries to be richer, in actual practice cause deforestation and have a negative impact on their economies. Rather than paying royalties, rents and taxes, these TNCs are notorious for making profit for their owners and investors (Caldara 1991). The World Bank and forests in Africa are discussed here from two fronts. Firstly, the web of effects of the World Bank’s operations range from dams, logging and modern agriculture to the forests and peasant farmers. Established consequences of dams, logging and mechanised agriculture are the web of impacts on forests and peasant farmers (Vandermeer and Perfecto 1995). Where extensive dam operations are undertaken, the effects on the downstream communities, regions or countries are better imagined. A specific effect has always been the migration of dams impacting downstream communities or regions who, by dint of survival, often engage in slash-and-burn agriculture that triggers deforestation (Gutner 2005).

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Secondly, on account of insurmountable criticisms the World Bank faced from its formidable critics (Hecht and Cockburn 1990; Seabrook 1993), it undertook deliberate pro-environment policies and actions such as the guidelines on specific environment-related issues (Shihata 1992; Seymour and Dubash 2000). Whereas the World Bank’s 1991 forest policy and strategy (otherwise known as the logging ban), was well intended in prohibiting the Bank from financing commercial logging operations, the policy has had no immediate impact in slowing deforestation (Colchester and Lohmann 1993; Knudsen 2000; Sizer and Plouvier 2000; Chomitz 2007). The reality in African forests attests to the foregoing claim. For example, there is a global gang up against forests in the Global South, especially African forests (ERAction 2013). The United Nations Reducing Emissions from Deforestation and Forest Degradation (hereinafter UN-REDD) is an established culprit. The UN-REDD is an international mechanism that features prominently in the UN climate talks that is designed to provide compensation to governments, communities and indigenous peoples of Africa. Whereas REDD is superficially intended for ‘developing countries that are willing and able to reduce emissions from deforestation should be financially compensated for doing so. It involves simply trying to stop cutting down of forests or forest degradation thereby reducing the amount of CO2 that is released into the atmosphere’ (Iyke-Uwaka 2013, 4); however, in practical terms, it is rather ‘colonialism of forests because it allows Northern polluters to buy permits to pollute or “carbon credit” by promising not to cut down forests and plantations in the South’ (Iyke-Uwaka 2013, 4). In Nigeria, the Cross-River State government and the Federal Ministry of Environment, collaborating with the UNEP, the FAO and the UNDP, undertook to implement the UN’s REDD+ agenda where a million hectares of forested landmass are slated for grab under the UN-REDD. Rather than being taken on its face value, the scheme has since been described as a red herring and has attracted massive demonstrations in Cross River State with placards reading various inscriptions as: ‘Say no to REDD; Cut Your Emission Not REDD; Think Globally, Act Locally; Save Our Environment or go to Hell’ (Iyke-Uwaka 2013, 15). As it is in several other countries of the Global South, the huge footprints of the Bank writ large behind the UNREDD. As the UN-UN-REDD projects illustrate in the case of Cross River State, Nigeria, the Bank’s projects seemingly appearing environmentally friendly may, on the spot assessment, cause environmental degradation. This is the situation with the World Bank’s forestry projects, which often cause agitations where they were supposed to improve the environment but fail to do so (Gutner 2005). As a corollary to deforestation, forest mortality is equally worrisome (Manion 1981). Africa is particularly susceptible to intense forest dieback

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(Ciesla and Donaubauer 1994). While there is paucity of studies on tree mortality in Africa, the challenge is not inexistent but very widespread; the sum of which undermines the salience of trees (Carpenter and Wood 1952). For example, while commercial logging activities by TNCs have deforested pristine forests in Cameroon, extensive oil and gas explorations in the Niger Delta, Nigeria, has caused environmental degradation and loss of pristine forests and, as a consequence, ‘trees are dying . . . because temperatures are rising and drought is increasing, a trend that is likely to continue as greenhouse gases build up’ (Editorial 2020, 8). Tropical forests can only be saved if deforestation and global warming are combated to a standstill (Kolk 1996). The World Bank has not only been a close ally of TNCs (especially those into fossil fuels and logging activities) and America which is the world’s largest importer of tropical hardwood, but their principal financier as well (Bramble and Porter 1992); the totality of which bears direct impact on deforestation and global warming (Perman et al. 2003). The World Bank behaves the way it does ‘because of the industrialised countries’ uncritical support and because of its own iron-clad constitution, the World Bank faces little or no incentive to behave responsibly’ (Adams 1997, 163). Agriculture The peasant farmer in rural Africa is disinterested in political and social rights but interested in what sustains him daily. This is because political and social rights are not only alien but are of secondary importance. What is of primacy is daily survival (Ake 1994). A worrisome trend is that most farmers in rural Africa, for want of a better standard of living, abandon the rural life and farming in search of urban, menial jobs and do reside in the city slums. While this precariousness subsists for the peasant African farmer, the policies of the World Bank, the WTO, agribusiness corporations, and governments further exacerbate the situation (Shiva 2015). The Bank and a host of other development institutions have undertaken agricultural modernisation strategy as the antidote to this misery (Payer 1982). The agricultural modernisation strategy proposes that the Bank ensures intensive transfer of capital—fertilisers, pesticides, agricultural equipment, and construction materials—to aid soil productivity. In effect, peasant agriculture, small farmers and family farms became extinct and are replaced with commercial agriculture; albeit serving external interests (Williams 1992). Whereas this policy seems attractive and supportive of the small-scale farmer, it only amounts to window dressing. More so, there is an emergent challenge through the deliberate unequal distribution of modern inputs and techniques to ‘target’ groups. What is definitely lucid is that the Bank’s policies and projects have not terminated rural poverty or ensured an improvement

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of lives but all schemed efforts to appropriate African lands for production to service the markets of the Global North (Payer 1982). The recently introduced financialisation policy of food and agriculture by the Bank in Southern Africa, where peasant farmers are being evicted and landholdings confiscated without compensation, speaks volumes in this direction. The financialisation policy of food and agriculture is superlatively intended for development purposes—building of dams, roads, tourist centres—to satisfy elitist interests in Africa. In Southern Africa, there is an extensive land grab programme in the ‘villagilation’ programme. In Ethiopia’s Gambella Region, the indigenous people have suffered land alienation (HRW 2012a; 2012b). Those in Kenya and Zambia have suffered displacement without an adequate resettlement scheme (Couldrey and Morris 2002; Soroos 2014). Consequently, an unusual migration ensues that takes this form. First, a part of the evicted peasant farmers migrates to city slums whereas those staying on remain in perpetual servitude to their ‘new landlords.’ The effects of these policies on African small-scale farmers have resulted in usual discomforts with land grabs: displacement, migration, high price volatility and the expansion of climate-damaging industrial agriculture, among others (Sonkin 2020). It is even more worrisome that mechanised agriculture is for feeding people, but to plough back huge cash in a short period of time (Soil Association 2008). Thus, agricultural policies and external support for African agriculture are meaningless if farms do not have sovereignty over land, water, tools, storage and marketing (Lappe and Collins 1982; Thomas 1987). In the meantime, there are no such privileges for the small farmer in Africa, leaving the condition of a farmer with ‘too much shocks and too little therapy’ (Mallaby 2004, 267). Oil and Gas Extraction Abiding by the request of oil TNCs, the World Bank remained reluctant to fund oil and gas related projects (Payer 1982). Coincidentally, the World Bank has no hidden interest for oil and gas. The World Bank has a record of having financed projects that are interconnected with oil and gas extraction in various parts of Africa that have impacted adversely on the environment— oil and gas exploitation is an established cause of global warming and its vagaries in acute flooding, reduced water availability and decrease in crop yields, which aggravates hunger, displacement and environmental refugees (Kalin 2008). In Africa, several countries have had peculiarly unpleasant experiences with oil and gas projects under the auspices of the World Bank’s loan

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schemes. In Ghana, the hopes of the people in development expectancies were heralded with the discovery of offshore oil and gas. These expectations never came through as oil and gas found was instead considered a fiscal burden to the country due to unbearable debt crisis. This precarious situation was exacerbated by the appearance of the World Bank in Ghana’s gas development trajectory. While, the Sankofa offshore gas project was developed under a public-private partnership (PPP) arrangement, however, rather than an Eldorado, this gas development project has become a huge fiscal burden to Ghana. This is because with a subsisting take or pay clause, the Sankofa contract between Ghana and private sector investors, the Ghana National Petroleum Corporation (GNPC) must buy ‘90 percent of a predetermined quantity of gas produced, whether it is able to use it or not’ (Observer 2020, 5). In 2019, Ghana paid a whopping $250 million on account of lack of demand and paucity of requisite infrastructure to operate the Sankofa gas. Rather than being as a blissful project, the Sankofa project has received notable concerns: firstly, severe criticisms from the Ghanaian Civil Society Organisations (CSOs), and the African Centre for Energy Policy (ACEP) for being unfavourable to Ghana; and CSOs have indicated the risks in the Bank’s act of promoting PPPs in the Global South (Observer 2020). In addition, the World Bank is equally an investor in the 550 megawatts Takoradi 2 and 3 gas power plant in Ghana, which secures gas from the Sankofa offshore gas project. The World Bank, on account of scathing remarks as indicated above, promised not to invest or finance oil and gas projects going forward. However, the World Bank has never matched promise with practice. After a short hiatus, it has since resumed sponsorship of oil and gas operations. The foregoing four sub-themes examined the World Bank’s project-financing that adversely impacted the environment and caused heightened discomforts to land-dependent local peoples in Africa. The sub-themes indicated that several of the World Bank’s policies and practices simply amounted to criminality (Friedrichs and Friedrichs 2002). CONCLUSION This chapter made a detailed analysis of the World Bank’s project-financing in Africa without environmental accountability. Arising therefrom, Africans suffer enormous pains from forceful displacement, land degradation, and deforestation. This chapter has also submitted that the World Bank’s anti-environment policies, that received enormous attention and criticisms in the 1980s through the 1990s, have not changed to date. For example, the

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World Bank’s loan facilities still continuously help to finance energy-related projects such as oil and gas fields that adversely impact the environment and the human rights of land-dependent small farmers in Africa. This chapter recommends that whereas the World Bank remains a fundamental institution in the prevailing international economic order and has since become an overlord in Africa, an African variant such as a Global Investment Assistance Agency should be evolved to cater for the needs of Africa, however, one that is environmentally conscious. REFERENCES Abouharb, Rodwan M. 2012. ‘International Financial Institutions and Their Impacts on Human Rights: Current and Prospective Research.’ In Handbook of Human Rights, edited by Thomas Cushman, 455–65. New York: Routledge. Adams, Patricia. 1991. Odious Debts: Loose Lending, Corruption and the Third World’s Environmental Legacy. London: Earthscan. ———. 1992. ‘The World Bank and the IMF in Sub-Saharan Africa: Undermining Development and Environmental Sustainability.’ Journal of International Affairs 46 (1): 97–117. ———. 1997. ‘The World Bank’s Finances: An International Debt Crisis.’ In Globalisation and the South, edited by Caroline Thomas and P. Wilkin, 163–83. New York: St. Martin’s Press, Inc. Ake, Claude. 1994. Democratisation of Disempowerment in Africa. CASS Occasional Monograph. Ikeja: Malthouse Press Ltd. Albert, Michael. 2006. Realising Hope: Life Beyond Capitalism. New York: Zed Books. Ayres, Robert L. 1983. Banking on the Poor: The World Bank and World Poverty. Cambridge: MIT Press. Bosshard, Peter. 2013. ‘World Bank Returns to Big Dams.’ World Rivers Review, September 5, 2013. Bramble, Barbara J., and Porter Gareth. 1992. ‘Non-Governmental Organisations and the Making of United States International Environmental Policy.’ In The International Politics of the Environment: Actors, Interests and Institutions, edited byAndrew Hurrell and Benedict Kingsbury, 313–53. Oxford: Clarendon Press. Bretton Woods Observer. 2020. ‘Ghana’s Sankofa Gas Project Backed by World Bank Brings Fiscal Pain.’ Bretton Woods Project, April 7, 2020. Caldara, Anna Maria. 1991. Endangered Environments: Saving the Earth’s Vanishing Ecosystems. New York: Mallard Press. Carpenter, Harry A., Smith E. Paul, and George C. Wood. 1952. Our Environment: Its Relation to Us. Boston: Allyn & Bacon. Chomitz, Kenneth M., ed. 2007. At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in Tropical Forests. Washington, DC: The World Bank.

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Ciesla, William M., and Edwin Donaubauer. 1994. Decline and Dieback of Trees and Forests: A Global Overview. Rome: Food and Agriculture Organisation. Ciorciari, John D. 2000. ‘The Lawful Scope of Human Rights Criteria in World Bank Credit Decisions: An Interpretive Analysis of the IBRD and IDA Articles of Agreement.’ Cornell International Law Journal 33 (2): 331–71. Colchester, Marcus, and Larry Lohmann, eds. 1993. The Struggle for Land and the Fate of Forests. New York: Zed Books. Couldrey, Marion, and Tim Morris, eds. 2002. ‘Dilemmas of Development-Induced Displacement.’ Forced Migration Review: https:​//​www​.fmreview​.org​/sites​/fmr​/ files​/FMRdownloads​/en​/development​-induced​-displacement​.pdf. Editorial. 2020. ‘A Warning from the Forests of Africa and the Amazon: Carbon Analysis Suggests Faster Emissions Reductions are Needed.’ Nature 579: 7–8. ERAction. 2013. Global Gang Up Against Our Forests: The Untold Story of REDD. Benin City: ERAction. European Rivers Network. 1994. ‘Manibeli Declaration: Calling for a Moratorium on World Bank Funding of Large Dams.’ September 1994. https:​//​www​.google​.com​/ search​?client​=firefox​-b​-d​&q​=+Manibeli+Declaration. Fahim, Hussain M. 1981. Dams, People, and Development: The Aswan High Dam Case. New York: Pergamon Press. Falola, Toyin, and Ann Genova. 2005. The Politics of the Global Oil Industry: An Introduction. Westport, CT: Praeger. Fox, Jonathan A., and David L. Brown, eds. 1998. The Struggle for Accountability: The World Bank, NGOs and Grassroots Movements. Cambridge, MA: MIT Press. Friedrichs, David O., and Jessica Friedrichs, 2002. ‘The World Bank and Crimes of Globalization: A Case Study.’ Social Justice 29 (1 and 2): 13–36. Goodland, Robert J. A. 1990. ‘Environment and Development: Progress of the World Bank.’ The Geographical Journal 156 (2): 149–57. Gutner, Tamar. 2005. ‘World Bank Environmental Reform: Revisiting Lessons from Agency Theory.’ International Organisation 59 (3): 773–83. ———. 2017. International Organisations in World Politics. London: SAGE. Hecht, Susanna, and Alexander Cockburn. 1990. The Fate of the Forest: Developers, Destroyers, and Defenders of the Amazons. New York: The Penguin Group. Horberry, John. 1985. ‘The Accountability of Development Assistance Agencies: The Case of Environmental Policy.’ Ecology Law Quarterly 12 (4): 817–69. Horta, Korinna. 2016. ‘Rolling Back Protection.’ D+C Digital Monthly, 3 June 2015. https:​//​www​.dandc​.eu​/en​/article​/world​-bank​-plans​-dilute​-its​-social​-and​ -environmental​-standards. Hover, Ryan. 2001. Pipe Dreams: The World Bank’s Failed Efforts to Restore Lives and Livelihoods of Dam-Affected People in Lesotho. Berkeley, CA: International Rivers Network. Human Rights Watch. 2012a. Waiting Here for Death: Forced Displacement and ‘Villagization’ in Ethiopia’s Gambella Region. Washington, DC: Human Rights Watch. ———. 2012b. What Will Happen If Hunger Comes: Abuses Against the Indigenous Peoples of Ethiopia’s Lower Omo Valley. Washington, DC: Human Rights Watch.

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International Rivers. 2015. The World Bank and Dams, Part I, Lessons Not Learned. Berkeley, CA: International Rivers. Ismi, Asad. 2004. Impoverishing a Continent: The World Bank and the International Monetary Fund in Africa. Canadian Centre for policy Alternatives. Iyke-Uwaka, R. 2013. The Red Herring Called REDD. Benin City: ERAction. Kälin, Walter. 2008. ‘Displacement Caused by the Effects of Climate Change: Who will be Affected and What are the Gaps in the Normative Framework for their Protection?’ Brookings, 10 October 2008. Knudsen, Odin K. 2000. ‘The World Bank’s Forest Policy and Strategy.’ The International Forestry Review 2 (3): 169–70. Kolk, Ans. 1996. Forests in International Environmental Politics: International Organisations, NGOs, and the Brazilian Amazon. The Netherlands: International Books. Lappe, Frances Moore, and Joseph Collins. 1982. Food First. London: Abacus. Mallaby, Sebastian. 2004. The World’s Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations. New York: Penguin Books. Manion, Paul D. 1981. Tree Disease Concepts. Bergen County, NJ: Prentice Hall. Mason, Jocelyn T. 1995. Mainstreaming the Environment: The World Bank Group and the Environment Since the Rio Earth Summit, Fiscal Year 1995 Summary. Washington, DC: World Bank Group. Myers, Norman. 1992. ‘The Anatomy of Environmental Action: The Case of Tropical Deforestation.’ In The International Politics of the Environment: Actors, Interests and Institutions, edited by Andrew Hurrell and Benedict Kingsbury, 430–54. Oxford: Clarendon Press. Negm, Abdelazim M., and Sommer Abdel-Fattah. 2019. Great Ethiopian Renaissance Dam Versus Aswan High Dam: A View from Egypt. New York: Springer. O’Brien, Robert, and Marc Williams. 2016. Global Political Economy: Evolution and Dynamics. New York: Palgrave Macmillan. Payer, Cheryl. 1982. The World Bank: A Critical Analysis. New York: Monthly Review Press. Peet, Richard. 2009. Unholy Trinity: The International Monetary Fund, World Bank and World Trade Organisation. London: Zed Books Ltd. Perman, Roger, Ma Yue, McGilvray James, Maddison Davis and Common Michael. 2003. Natural Resource and Environmental Economics. Harlow: Pearson Education Ltd. Rich, Bruce. 1994. Mortgaging the Earth: The World Bank, Environmental Impoverishment and the Crisis of Development. Boson: Beacon Press. Rich, Bruce M. 1985. ‘The Multilateral Development Banks, Environmental Policy and the United States.’ Ecology Law Quarterly 12 (4): 681–745. Roberts, Susan M. 1995. ‘Global Regulation and Trans-State Organisation.’ In Geographies of Global Change: Remapping the World in the Late Twentieth Century, edited Ronald J. Johnston, Peter J. Taylor and Michael J. Watts, 8–126. Cambridge: Blackwell. Rogers, Peter P., Kazi F. Jalal and John A. Boyd. 2008. An Introduction to Sustainable Development. London: Earthscan.

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Sanchez, Raul M. 1999. ‘To the World Commission on Dams: Do Not Forget the Law, and Do Not Forget Human Rights-Lessons from the US-Mexico Border.’ Inter-American Law Review 30 (3): 629–57. Scudder, Thayer. 1997. ‘Social Impacts of Large Dam Projects.’ In Large Dams: Learning from the Past, Looking at the Future, Workshop Proceedings, edited by Tony Dorcey, Achim Steiner, Michael Acreman, and Brett Orlando, 41–68. Washington, DC: World Bank. ———. 2012. ‘Resettlement Outcomes of Large Dams.’ In Impacts of Large Dams: A Global Assessment, edited by Cecilia Tortajada, Dogan Altinbilek and Asit K. Biswas, 38–67. Berlin Heidelberg: Springer. ———. 2016. Aswan High Dam Resettlement of Egyptian Nubians. New York: Springer. Seabrook, Jeremy. 1993. Victims of Development: Resistance and Alternatives. New York: Verso. Seymour, Frances J., and Navroz K. Dubash. 2000. The Right Conditions: The World Bank, Structural Adjustment, and Forest Policy Reform. Washington, DC: World Resources Institute. Shihata, Ibrahim F. I. 1992. ‘The World Bank and the Environment: A Legal Perspective.’ Maryland Journal of International Law 16 (1): 1–42. Shiva, Vandana. 2008. Soil Not Oil: Environmental Justice in an Age of Climate Crisis. New York: South End Press. ———. 2015. Earth Democracy: Justice, Sustainability, and Peace. Berkeley, CA: North Atlantic Books. Silva, Marília Monteiro. 2020. Soft Commitments, Hard Lessons: An Analysis of the Soft Commodities Concept. The Netherlands: BankTrack. Sizer, Nigel, and Dominiek Plouvier, eds. 2000. Increased Investment and Trade by Transnational Logging Companies in Africa, the Caribbean, and the Pacific: Implications for the Sustainable Management of and Conservation of Tropical Forests. World Wide Fund for Nature–Belgium, World Resources Institute’s Forest Frontiers Initiative and World-Wide Fund for Nature–International. Soil Association. 2008. Soil, Not Oil: Putting Organic Farming Back at the Heart of International Development. Bristle: Soil Association. Sonkin, Flora. 2020. Recipe for Disaster: The International Monetary Fund and World Bank’s Role in the Financialisation of Food and Agriculture. London: Bretton Woods Project. Soroos, Marvin S. 2014. ‘Global Institutions and the Environment: An Evolutionary Perspective.’ In The Global Environment: Institutions, Law, and Policy, edited by Regina S. Axelrod, Stacy D. VanDever and David L. Downie, 24–47. Washington, DC: CQ Press. Thamae, Mabusetsa L., and Lori Pottinger, eds. 2006. On the Wrong Side of Development: Lessons Learned from the Lesotho Highlands Water Project. Lesotho: Transformation Resource Centre. Thomas, Caroline. 1987. In Search of Security: The Third World in International Relations Boulder, CO: Lynne Rienner Publishers Inc.

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———. 1992. The Environment in International Relations. London: The Royal Institute of International Affairs, RIIA. Tortajada, Cecilia, Dogan Altinbilek and Asit. K. Biswas, eds. 2012. Impacts of Large Dams: A Global Assessment. Berlin Heidelberg: Springer. Ujah, Oliver Chinedu. 2008. ‘Internal Displacement in Nigeria.’ Forced Migration Review 31 (October): 37. van Genugten, Willem 2003. ‘Tilburg Guiding Principles on World Bank, International Monetary Fund and Human Rights.’ In World Bank, International Monetary Fund, and Human Rights, edited by W. van Genugten, P. Hunt and S. Matthews, 247–55. Nijmegen: Wolf Legal Publishers. Vandermeer, John H., and Ivette Perfecto. 1995. Breakfast of Biodiversity: The Truth About Rain Forest Destruction. Oakland, CA: The Institute for Food and Development Policy. Veilleux, Jennifer C. 2013. ‘The Human Security Dimensions of Dam Development: The Grand Ethiopian Renaissance Dam.’ Global Dialogue 15 (2): 1–15. Williams, Gavin. 1992. ‘The World Bank, Population Control and the African Environment.’ South African Sociological Review 4 (2): 2–29. World Bank. 1992. World Development Report 1992: Development and the Environment. New York: Oxford University Press. ———. 2001. Making Sustainable Commitments: An Environment Strategy for the World Bank. Washington, DC: World Bank. ———. 2005. Voice for the World’s Poor: Selected Speeches and Writings of World Bank President James D. Wolfensohn, 1995–2005. Washington, DC: World Bank. Young, Zoe. 2002. A New World Order? The World Bank and the Politics of the Global Environment Facility. Sterling, VA: Pluto Press. Yumnam, Jiten. 2019. ‘Local Communities Oppose Planned Dam Construction Supported by World Bank in Manipur.’ Bretton Woods Observer (Winter): 6. Zhang, Ying, Paul Block, Michael Hammond and Andrew King. 2015. ‘Ethiopia’s Grand Renaissance Dam: Implications for Downstream Riparian Countries.’ Journal of Water Resources Planning and Management 141 (9): 1–10.

Chapter 6

African Development Bank and the Dynamics of African Political Economy Stephen Nnaemeka Azom and Moses Etila Shaibu

Since the outset of political independence in the second half of the twentieth century, the thrust of African political economy has basically focused on the appropriate strategy to facilitate structural transformation of the continent. Given its enormous potentials and desire to play a key role in international political and economic system, African countries have embraced regional integration as an important component of their development strategies (Hartzenberg 2011; Lavergne 1997). This is driven primarily by the need to overcome the enduring challenges attendant to small and fractioned economies working in isolation. In line with this logic, numerous Pan-African organisations have been working effectively with an agenda to foster and deepen political and economic cooperation and integration in Africa. Meanwhile, the desire to pursue regional economic integration of the continent dates back to 1958, when the Economic Community for Africa (ECA) was created by the Economic and Social Council of the United Nations (UN) as one of the major regional commissions of the world body. ECA was created to partner with other member states of the UN to work towards sustainable development in Africa by undertaking research and policy analysis and providing technical assistance with a view to enhancing and strengthening the functional capacity of institutions championing regional integration of numerous regional economic communities in Africa (United Nations Economic Commission for Africa (UNECA) n.d.). Amidst the rising poverty and worsening deplorable human conditions in the continent occasioned by negative economic conditions, a key concern of 107

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ECA has been to mitigate Africa’s development challenges so as to facilitate sustainable development and good governance and by so doing promote international cooperation and partnership for Africa’s development. Further to this, ECA, in the 1960s, had made strong recommendation for the establishment of vibrant subregional groupings in Africa to serve that purpose. Within the same period, that is, at the Conference of Independent African States held on 25 May 1963, thirty heads of state and government (out of the thirty-two independent African states, then) met and set up the Organisation of African Unity (OAU) to promote unity and solidarity among African States; to protect the sovereignty and territorial integrity of its member States; to organise and strengthen cooperation for development on the continent; and to encourage international cooperation as outlined by the United Nations (OAU 1963; AU n.d.). Also created, after an agreement was signed by twenty-three founding member states on 14 August 1963, in Khartoum, Sudan, was a regional financial institution, the African Development Bank (AfDB) Group. As a multilateral development finance institution, the AfDB Group was created as a response to the urgent need for deeper cooperation in investments of capital in projects that are likely to impact meaningfully on the economic and social development of the continent. The main objectives of the Bank, as a leading development institution in Africa, have been to source and effectively allocate resources for investments with a view to achieving sustainable development in member states. The Bank was also created to provide policy framework and technical assistance to drive the development efforts on the continent (AfDB n.d.). In 1982, membership of the Bank was opened to non-regional countries, when it became inevitable that additional means would be required to meaningfully finance socioeconomic development interests of its members through low-interest loans. Since then, the AfDB, with eighty-four member countries, has remained one of the largest providers of official development finance and non-concessional lending to Africa (AfDB 2013). However, five decades after its creation, Africa’s development credentials, characterised by chronic poverty, excruciating and rapidly increasing external debt, disoriented domestic economy and deficit of critical infrastructure, among others, remain discouraging and unsatisfactory, indicating a weak position in global political economy. Relying heavily on diverse international supports and external capital flows, African economies have remained highly weak and vulnerable to the dynamics of international political economy. Recently, the impacts of COVID-19 pandemic have added to this challenge by rendering about 34 per cent of the sub-Saharan African countries highly vulnerable to debt crisis (World Bank 2020). Hence, at no time are financial resources more highly needed to frontally address poor trade finance, infrastructure and supply-side constraints, structural deformities and

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vertical dependence characteristic of African political economy than now. Regrettably, the fifty-eight-year-old multilateral institution appears operationally overwhelmed by structural and institutional constraints at exactly the time when it could have a major catalytic impact on Africa’s development path. Against this backdrop, this chapter examines the environmental, institutional and political constraints that affect the ability of state participants to agree to and support coherent policies. It also reflects on how this ugly scenario affects African political economy. This chapter is structured as follows: ‘Theoretical Perspective,’ which provides theoretical understanding of structural and operational weaknesses of the AfDB vis-à-vis the challenges of African political economy: ‘African Development Bank: An Overview,’ provides a brief history of the origin, structure and membership of the AfDB; ‘African Development Bank and the Challenge of African Political Economy,’ which highlights the operational, environmental and structural constraints of the AfDB; and then the conclusion, which summaries the work. THEORETICAL PERSPECTIVE This study contributes to the ongoing intellectual discourse on the impacts of structure and operations of the AfDB on the dynamics of African political economy by adopting world-systems theory. The theory emerged out of and expanded upon dependency theory. Proposed by Immanuel Wallerstein in a paper titled ‘The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis,’ world-systems theory, unlike dependency theory, divides the world into tri-modal system or trinitarian structure consisting of the core, semi-periphery and periphery (Wallerstein 1974). World-systems theory posits that modern states are implanted within a wide-ranging politico-economic and legal frameworks called world-system. Therefore, world-system and not states should be the primary unit of social analysis. Put differently, the character of states and the dynamic forces operating around them cannot be properly understood without locating them within the world-system of capitalism in which they are embedded (Vela 2001). World-system refers to the inter-regional and transnational division of labour into core countries, semi-periphery countries and the periphery countries, while core countries are characterised by higher skill and capital-intensive production, the rest of the world are characterised by low-skill, labour-intensive production and extraction of raw materials. This has reinforced the dominance of the core countries (Chase-Dunn and Grimes 1995). One of the most distinguishing structures of the modern world-system is the power hierarchy between core and periphery nations. In the current global

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power distribution, technology is a key variable in determining the position countries occupy. Whereas advanced countries are the core, the less developed, weak and poor countries are in the periphery. The former dominate and exploit the latter that are structurally constrained to witness only the pattern of development that foster and sustain their subordinate status (Chase-Dunn and Grimes 1995). Based on unequal exchange characteristic of world-system, surplus is systematically transferred from high-tech-industrialised countries to less developed periphery countries (Goldfrank 2000). This process is a logical outcome of capital accumulation at a global scale, and the attendant appropriation of peripheral surplus. Regarding the political aspect of the world-system, Wallerstein observes that states are elements used by class forces of core countries to pursue their interests. In effect, there is an international class struggle undergirded by the current world-economy which is characterised by regular cyclical rhythms (Goldfrank 2000). The AFDB was formed by African countries to finance social and economic development in Africa. The admission, in 1982, of non-regional countries, mostly advanced capitalist states, to expand the resource base of the Bank in order to finance socioeconomic development of its regional member countries through low-interest loans has denied the African countries real control of the multilateral development institution formed to drive development in the continent. Although the AfDB is African in character, based on its operations, membership, leadership and geographical location, the sad reality, however, is that the structure of ownership of its capital stock, which ultimately determines the voting powers of member countries, does not and will not allow regional member countries, that are predominantly less developed periphery countries and characterised primarily by low-skill, labour-intensive production and extraction of raw materials, to assume real control. The prevailing structure of international political economy with its abiding trait of exploitation and capital accumulation therefore explains the predicament of regional member countries of the AfDB. The study is qualitative and analytical with data drawn from documentary evidence. The data generated were analysed using qualitative descriptive analysis based on logical deduction. AFRICAN DEVELOPMENT BANK: AN OVERVIEW The African Development Bank (AfDB) is one of the foremost development finance institutions in Africa. It came into being in Khartoum, Sudan, on 4 August 1963, where the then twenty-three newly independent African countries had converged to sign the agreement establishing the institution. Thereafter, the agreement came into force on 10 September 1964, when no

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fewer than twenty member countries subscribed to 65 per cent of the capital stock of the Bank, which was US$250 million then (AfDB 2013a). With its headquarters in Abidjan, Côte D’Ivoire, and only independent African countries qualified to be shareholders, the AfDB began operations with only ten staff members in July 1966. With this, the AfDB sorely relied on African countries for its capital resources, nineteen years after its establishment until 1982 when non-African countries were allowed to be shareholders. The AfDB is a multilateral development institution. It is made up three distinct institutions, namely: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). The ADF came into existence primarily to mitigate the two cardinal challenges of the AfDB, that is, the nature and terms of lending to the poorest countries, particularly to execute projects characterised by either long-term maturities or non-financial returns. These challenges became evident after the Bank had begun operations. The agreement signed in 1976 by the government of the Federal Republic of Nigeria and the Bank Group produced the last institution of the AfDB, the Nigeria Trust Fund (NTF). The Fund thereafter became operational after its establishing agreement was approved by the Board of Governors. The three institutions are collectively referred to as the African Development Bank (AfDB) Group, and it has remained one of the five salient global multilateral development banks (MDBs) (AfDB 2013; Ministry of Foreign Affairs of Denmark 2020). The AfDB was established to foster, support and accelerate, individually and collectively, the economic development and social progress of regional member countries, by supporting investment of capital (both public and private) in meaningful projects and programmes with a view to alleviate chronic poverty and improve deplorable living conditions in the continent (AfDB 2000). To this end, the strategic plan of the AfDB pursues two overarching objectives. One, to make growth inclusive by ensuring that more people, countries and regions have access to economic opportunities, without compromising the well-being of the vulnerable— In pursuit of the foregoing objectives, the AfDB mobilises resources from internal and external sources and effectively channels them both to sponsor investment and to provide technical assistance to member countries. It also generates additional resources by engaging in partnership with bilateral and multilateral development institutions, and the financial markets. Thus, the AfDB has remained one of the largest providers of official development finance and non-concessional lending to Africa. At present, the AfDB remains one of the major financiers of the [sustainable development goals] SDGs and Paris Climate Goals in Africa. (Ministry of Foreign Affairs of Denmark 2020)

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—and two, to facilitate sustainable growth by ensuring that Africa gradually transit to green growth (AfDB 2013a). Since 2006, the AfDB Group has attached greater importance on the following strategic areas: the private sector, investment in infrastructure; promoting higher education, technology and vocational training; and supporting economic and governance reforms, among others (AfDB 2013b). By investing massively in these areas, the AfDB provides supports to regional member countries. The AfDB has eighty-four member countries at present, comprising fifty-four African or regional member countries (RMCs) and twenty-seven non-African or non-regional member countries (NRMCs). (See tables 6.1 and 6.2.) In 2013, Turkey became the seventy-eighth member of the AfDB, while Luxembourg became the seventy-ninth member in 2014. In April 2015, South Sudan became the eightieth member. The Republic of Ireland became the eighty-first member of the AfDB on 24 April 2020. Countries from Europe, America and Asia primarily constitute the non-regional members of the AfDB. (See table 6.1.) As regards management and control, the board of governors of the AfDB is the highest decision-making body of the institution. Each of the member states has one representative. The board of governors meets annually to review the implementation of past programmes and policies, deliberate and adopt new policy issues, take major decisions about the institution’s strategic directions, governing bodies and leadership. Decision of the board of governors is arrived at by voting, and each member state’s vote is determined by its capital stock in the Bank. A two-thirds majority of member states is what the board of governors requires to take a decision (AfDB n.d.). The board of governors appoints a representative from their country to serve on the AfDB’s board of executive directors, which takes important decisions regarding loans and grants and what policies should guide the AfDB’s work. Like the board of governors, each member country is represented on the board of executive directors, but their monetary contributions to the AfDB determine their voting power and influence (AfDB 2011; Humphrey 2014). What this implies is that important decisions must require the cooperation and support of non-regional members. It makes sense, therefore, to argue that the governance structure of the AfDB has deprived the African states effective control of the multilateral development banks supposedly established to facilitate Africa’s development. This shall form the crux of our discussion in the next sub-section.

Countries

Algeria Angola Benin Botswana B. Faso Burundi Cameroon C. Verde C. African Chad Comoros Congo Côte d’Ivoire Djibouti

DRC Egypt Eritrea Eswatini Ethiopia Gabon Gambia Ghana Guinea G. Bissau

S/N

1 2 3 4 5 6 7 8 9 10 11 12 13 14

15 16 17 18 19 20 21 22 23 24

10/09/64 14/09/64 13/05/94 07/05/82 10/09/64 31/09/72 02/07/73 10/09/64 10/09/64 15/05/75

10/19/64 23/06/80 10/09/64 31/03/72 22/09/64 10/01/68 10/09/64 15/04/76 25/08/70 29/08/68 03/05/76 10/09/64 22/09/64 01/05/78

Dates of Accession

1,838 871,211 10,213 5,122 16,857 231,441 66,010 20,436 309,564 58,164

730,722 165,067 29,618 112,490 58,673 33,961 9,785 154,243 6,174 9,076 1,750 59,289 552,916 268,948

Total votes

0.013 6.055 0.071 0.036 0.117 1.609 0.459 0.142 2.152 0.404

5.079 1.147 0.206 0.782 0.408 0.236 0.068 1.072 0.043 0.063 0.012 0.412 3.843 1.869 42 43 44 45 46 47 48 49 50 51

28 29 30 31 32 33 34 35 36 37 38 39 40 41

Voting Powers in % S/N Liberia Libya Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda Sao Tome and Principe Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Tunisia

Countries

10/09/64 01/04/77 10/09/64 22/10/64 13/12/95 10/09/64 26/07/71 10/09/64 10/09/64 29/10/64

10/09/64 21/07/72 03/05/76 25/07/66 10/09/64 10/09/64 02/01/74 10/09/64 04/06/76 06/05/91 10/09/64 10/09/64 19/01/65 14/04/77

Dates of Accession

147,606 2,462 16,046 4,864 725,558 47,673 15,389 124,330 23,827 208,014

29,004 327,109 94,276 49,060 27,478 8,669 93,599 558,696 85,678 49,760 30,360 1,342,824 20,135 10,346

Total votes

1.026 0.017 0.112 0.034 5.043 0.331 0.107 0.864 0.166 1.446

0.202 2.274 0.655 0.341 0.191 0.060 0.651 3.883 0.596 0.346 0.211 9.333 0.140 0.072

Voting Powers in %

Table 6.1. Regional Member Countries of the African Development Bank, Dates of Accession, Total Votes and Percentage of Voting Powers (March 2022)

Eq. Guinea 30/06/75 Kenya 10/09/64 Lesotho 02/07/73 Regional Members Countries

1,503 205,697 13,568

Source: Compiled by the authors from AfDB (n.d.) and AfDB (2022).

25 26 27 Total

Table 6.1. (continued) 0.010 1.430 0.094

52 53 54

Uganda Zambia Zimbabwe

10/09/64 01/09/66 23/06/80

57,725 169,478 248,372 8,522,673

0.401 1.178 1.726 59.237

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Table 6.2. Non-Regional Member Countries of the African Development Bank, Dates of Accession, Total Votes and Percentage of Voting Powers (March 2022) S/N

Country

Dates of Accession

1 Argentina 2 Austria 3 Belgium 4 Brazil 5 Canada 6 China 7 Denmark 8 Finland 9 France 10 Germany 11 India 12 Ireland 13 Italy 14 Japan 15 Korea 16 Kuwait 17 Luxembourg 18 Netherlands 19 Norway 20 Portugal 21 Saudi Arabia 22 Spain 23 Sweden 24 Switzerland 25 Turkey 26 United Kingdom 27 United States Total Non-Regional Members

02/07/85 30/03/83 15/03/83 14/03/83 30/12/82 09/05/85 30/12/82 30/12/82 30/12/82 18/03/83 06/12/83 04/03/20 31/12/82 03/02/83 30/12/82 30/12/82 29/05/14 28/01/83 30/12/82 15/12/82 15/12/83 20/03/84 30/12/82 30/12/82 09/09/13 29/04/83 08/02/83

Total votes 12,441 64,070 94,173 22,416 551,979 172,681 167,209 70,082 534,273 593,949 41,475 114,685 345,470 781,020 69,000 64,070 29,998 126,614 168,787 34,806 28,155 153,875 223,944 209,260 56,866 257,752 875,651 5,864,701

Voting Powers in % 0.086 0.445 0.655 0.156 3.837 1.200 1.162 0.487 3.713 4.128 0.288 0.797 2.401 5.429 0.480 0.445 0.209 0.880 1.173 0.242 0.196 1.070 1.557 1.454 0.395 1.792 6.086 40.763

Source: Compiled by the authors from AfDB (n.d.) and AfDB (2022).

AFRICAN DEVELOPMENT BANK AND THE CHALLENGE OF AFRICAN POLITICAL ECONOMY The AfDB was established in 1964 primarily to foster and accelerate sustainable development in Africa. Initially, the Bank admitted only independent African countries as members. Unfortunately, independent African countries at the time could not muster adequate funds to improve the performance of the Bank. In addition to the Bank’s meager financial resources was the growing demand for investments from African countries (AfDB 2014). On account of these challenges, an idea was hatched that foreign investors be involved. Incidentally, this was the period Nigeria was emitting leadership potential. The Nigerian government thus became the only country that vehemently

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opposed the idea, insisting that, as a Development Bank for Africa, then, foreign national investors should stay out of it. Regrettably, other African countries remained unimpressed and unconvinced by Nigeria’s opposition (Ekekwe n.d.). Nigeria lost the argument and membership was opened to non-regional countries, though with serious implications for the future of African political economy. The admission of non-regional countries as members of the AfDB in 1982 no doubt provided the Bank with additional means to substantially finance economic and social development of its RMCs through low-interest loans. With a larger membership and an enhanced economic base, the Bank was not only richly endowed with immense expertise, undiluted credibility and managerial finesse of its international partners but also strategically structured and located to access financial markets (AfDB 2000; Humphrey 2014). However, all these did not come without a huge prize: the non-regional (non-African) member states of the Bank that paid the piper are now ensuring that the development and investment tunes played by the Bank are composed with notes written in Washington, Tokyo and Paris. This indeed is a sad reality, despite the pretenses that the AfDB is African in character based on its geographical location and ownership structure. The headquarters of the Bank is permanently in Africa, its development and investment operations are exclusively in Africa and its president is always an African. Beyond these facades, however, is the fact that the management and control of the Bank has eluded Africa due to the structure of ownership of the Bank’s capital stock, which determines voting powers. Of the top ten largest member countries of the African Development Bank by voting powers, four countries are non-regional members. Therefore, while the AfDB is borrower-dominant, its structural composition in terms of ownership of capital stock and voting powers inevitably affects its governance. A glance through the voting strength of member states based on ownership of the Bank’s capital stock indicates that the entire votes of the fifty-four regional member countries of the Bank was 8,522,673 (in March 2022). This translated to 59.237 per cent voting powers, while the total votes and percentage of voting powers of twenty-seven non-regional member countries within the same period stood at 5,864,701 and 40.763, respectively (see tables 6.1 and 6.2). The advantage regional member countries of the AFDB have in terms of membership has not significantly altered the structural composition of the Bank in terms of ownership of capital stock, which determines voting powers. The quantum of voting powers enjoyed by non-regional member countries of the AFDB has not allowed them to exercise some level of control over the operations of the Bank. This is quite evident despite that scholar like Birdsall (2018) and Simons (2020) would argue otherwise. The recent position of US president, Donald Trump, that the current AfDB president, Dr. Akinwumi

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Adesina, should face further inquiry after exoneration by the AfDB board’s Ethics Committee readily comes to mind (France-Presse 2020). Aside its structure, the operational environment of the AfDB, which is challenging in many ways, is another factor that impinges on its performance. Many African countries are underdeveloped, and this limits the ability of the AfDB to initiate and effectively execute development operations. For instance, of the thirty countries in the world currently experiencing significant violent conflicts, no fewer than fourteen are in Africa (Humphrey 2014). In fact, Nigeria, the Democratic Republic of the Congo (DRC) and Egypt, three of the countries where violent conflicts are rampant, are among the four most populous nations on the continent. The implication therefore is that the ongoing violent conflicts in these countries pose serious danger not only to the people but to the economy of the region also. Furthermore, African countries are exposed daily to alternative sources of external finance. These alternative sources are increasingly displacing the AfDB in some cases. For example, Chinese and Indian bilateral lenders, and to some reasonable extent, the Brazilian Development Bank, have remained very active and effective in Africa for several years. Furthermore, a number of subregional development banks, namely the East African Development Bank and the PTA Bank in Southeast Africa, among others, have ambitious expansion plans. External finance flows from these and other relevant sources are expected to increase steadily in the years to come (Financial Times 2014) These alternative sources of finance provide opportunities and choices to African countries that hitherto did not exist. All these are putting enormous competitive pressure on the AfDB. Indeed, there are now diverse choices for African countries in need of external finance. Based on their analysis of the prevailing circumstances, these countries may prefer other financers to the AfDB, given the prevailing challenges—notably, the absence of environmental or social safeguards that characterise the operations of the AfDB (Humphrey 2014). Another important factor in why some countries are disinclined to borrow from the AfDB is the Bank’s rigid and highly bureaucratic style of operation. Surprisingly, the Bank still operates as if other options for financing are unavailable to its borrowing clients. Alternative sources of external finance abound. As a result, governments and private firms willing and ready to work with the AfDB decline due to the lengthy delays and bureaucratic hurdles consistent with the operations of the Bank. Delays represent a significant opportunity cost, especially for projects with high economic and developmental impacts (Humphrey and Michaelowa 2013). Delay and slow procedures characterising the operations of the AfDB result primarily from the culture of risk aversion and process obsession attendant to mandates and controls determined and imposed by the Bank’s

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shareholders (Humphrey 2013; Gutner 2002). In the preceding years, the AfDB has evolved a litany of confusing and mystifying processes, procedures, policies and requirements that borrowers must con tend with in order to access bank services. For example, it took the Bank an average of three to five years to begin disbursement of funds to Nigeria after a loan agreement was approved. Altogether, it takes the Bank no fewer than twelve years to complete credit disbursement on a capital infrastructural project (Igwe and Onuegbu 2019). The cumulative effect of all these has made the AfDB an extremely slow multilateral finance institution. It is relevant to observe that based on the mandates of the shareholders, an AfDB project must undergo no fewer than twenty formal review and approval steps between the initial request for its approval and the period financing is granted. These steps include: • • • •

initial screening by the country economist; writing and approving the project brief; writing and approving the project identification report; writing and approving the project preparation report; writing and approving the project concept note; and • writing and approving the project appraisal report (AfDB 2013). However, although since 2011 the AFDB has revised its business processes to hasten the preparation, review stages and summary procedures for loans under US$200 million and other types of lower risk projects, on the one hand, and to accommodate a number of improvements regarding electronic document processing and some changes in the level of approval required for projects of different value, on the other (Humphrey 2014). By and large, the changes are somewhat minor and insignificant to meaningfully result in efficiency gains. Again, the lending operation of the AfDB Bank is often hamstrung by the structure of international financial market. More often than not, the AfDB encounters enormous difficulties in a bid to mobilise sufficient resources from the foreign market to fund its operations in member countries, especially project and non-project lending. The implication is that the Bank is unable to effectively and meaningfully fund its operations/activities. The logical outcome is that vital projects capable of driving meaningful development in Africa are unnecessarily delayed, poorly executed or completely abandoned. Igwe and Onuegbu aptly capture this scenario. According to them: the Bauchi-Gombe Rural Water Project signed in 2002 could not be completed in 2007 as agreed, and was abandoned due to the fact that the World Bank and the European Union stalled in their commitment to provide part of the required

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funding. The project ran into bad shape as the AfDB alone could not finance the entire cost of the project. The Nigeria-Benin Electricity Interconnection Project, also, suffered a similar fate. Since the AfDB signed for the project in 2002 with the European Bank, United States Agency for International Development and the Government of Norway as co-funders, only the bank had continued to provide its own funding for the multinational project. (2019)

The foregoing partly explains why several of the AfDB’s counterpart projects in member countries were not effectively executed. Given the foregoing constraints of the AfDB, the challenge of African countries is how to refocus the priorities of the Bank to comprehensively address the structural realities of Africa’s political economy. This is important because for the continent to embark on meaningful and sustainable development trajectory its agricultural sector must be transformed to enable the continent to exit the ignoble role of supplier of raw materials and importer of finished goods. The continent currently spends about $35 billion annually importing food. By 2025, the import bill will increase to $110 billion. Ivory Coast, for instance, will lose a billion dollars this year due to the collapse of cocoa price (Okojie 2016). At the other end of the cocoa value chain, the price of chocolate will at least hold steady, but the Ivorians will live with their loss. Following this argument, sustainable development will begin for Africa when it feeds itself and its agriculture creates value for it all along the value chain. CONCLUSION AND RECOMMENDATIONS Unlike other development finance institutions operating in Africa, the AfDB has a unique set of features that are peculiar to it. Although the AfDB’s financial position has weaknesses, nonetheless it has a solid equity capital bases that can sustain non-concessional development lending operations for many years to come. Furthermore, the multilateral character of the AfDB puts it in a better position to effectively and legitimately address core issues of development in member states. The outcome of this is that, unlike bilateral donors, the AfDB shrouds its operations more with technical character than amplifying its legitimacy in the eyes of recipients. This chapter has examined the constraints to structural and operational efficacy of the AfDB and their implications for African political economy. It observed that, as a leading development finance institution in Africa, the AFDB has immense potentials to support African countries, particularly those manifesting signs of stability, growth and human development, to tackle their existential challenges. This chapter noted that the AfDB could help these countries through project finance and knowledge transfer. It, however,

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revealed that at exactly the time when the fifty-eight-year-old multilateral institution could have a remarkable impact on Africa’s development trajectory, it grapples with operational, environmental, structural and political constraints which limit its efficacy and relevance. This chapter, thus, submits that the aforementioned constraints not only alter the Bank’s patterns of decision-making but also affect the ability of state participants to agree to and support coherent policies to address the structural deformities of African member states. In effect, the AfDB runs the risk of losing relevance to its members, particularly the middle-income nations. To properly position the AfDB to address the structural weaknesses of African states, this chapter has made a strong case for regional member states of the Bank to significantly increase their capital stock so as to enhance their voting powers. Furthermore, the business processes of the AfDB need to be comprehensively reviewed to hasten the process of loan request and approval. REFERENCES African Development Bank (AfDB). 2000. ‘The Contribution of African Development Bank to Economic Knowledge and Policy in Africa.’ Economic Research Papers, no. 58 ———. 2011. The AfDB in 10? Structure Resources Interventions Impact. https:​//​ www​.afdb​.org​/sites​/default​/files​/documents​/ publications/the_afdb_in_10.pdf. ———. 2013a. At the Center of Africa’s Transformation: Strategy for 2013–2022. https:​ / /​ w ww​ . afdb​ . org​ / fileadmin​ / uploads ​ / afdb ​ / Documents/ Policy-Documents/AfDB_Strategy_for_2013%E2%80%932022. ———. 2013b. AfDB in Brief. Tunis-Belvedere: African Development Bank Group. https:​//​www​.afdb​.org​/sites​/default​/ files/documents/publications/the_afdb_in_10. pdf. ———. 2019. Annual Report 2018. June 12, 2019. https:​//​www​.afdb​.org​/en​/ documents​/annual​-report​-2018. ———. 2014. Tracking Africa’s Progress in Figure. https:​//​www​.afdb​.org​/fileadmin​ /uploads​/afdb​/Documents​/Publications​/Tracking​_Africa​%E2​%80​%99s​_Progress​ _in​_Figures​.pdf. ——–. 2022. ‘African Development Bank Distribution of Voting Powers by Executive Director as at 31 March 2022.’ https:​//​www​.afdb​.org​/en​/Publications​/. ———. n.d. ‘Member Countries.’ https:​//​www​.afdb​.org​/en​/about​-us​/corporate​ -information​/members. African Union. n.d. ‘AU in a Nutshell.’ http:​//​www​.au​.int​/en​/ about/nutshell#sthash. 49alE8QD.dpuf. Birdsall, Nancy. 2018. ‘The Dilemma of the African Development Bank: Does Governance Matter for the Long-Run Financing of the MDBs?’ Center for Global Development Working Paper, no. 498.

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Chase-Dunn, Christopher, and Peter Grimes. 1995. ‘World-Systems Analysis.’ Annual Review of Sociology 21: 387–417. Ekekwe, Eme. n.d. ‘Where Facts Depend on Who Presents Them.’ WhatsApp, 17 May 2021. France, Presse. 2020. ‘African Development Bank: “No decision” Yet on Demands for Probe.’ https//​im​.media​.voltron​.voanews​.com​/. Goldfrank, Walter L. 2000. ‘Paradigm Regained? The Rules of Wallerstein’s World System Method.’ Journal of World-Systems Research 6 (2): 150–95. Gutner, Tamar. 2002. Banking on the Environment: Multilateral Development Banks and their Environmental Performance in Central and Eastern Europe. Cambridge, MA: MIT Press. Hartzenberg, Trudi. 2011. ‘Regional Integration in Africa.’ Staff Working Paper, no. ERSD-2011–14. Humphrey, Christopher. 2013. ‘The Business of Development: Borrowers, Shareholders and the Reshaping of Multilateral Lending.’ PhD Thesis, London School of Economics. ———. 2014. The African Development Bank: Ready to Face the Challenges of a Changing Africa? Stockholm: Elanders Sverige AB. Humphrey, Christopher, and Katharina Michaelowa. 2013. ‘Shopping for Development: Multilateral Lending, Shareholder Composition and Borrower Preferences.’ World Development 44 (4): 142–55. Igwe, Augustine Uche, and Festus Chibuike Onuegbu. 2019. ‘Rethinking the Challenges of a Multilateral Development Bank in African Society: The African Development Bank in Nigeria, 1986–2015.’ Unizik Journal of Arts and Humanities; UJAH 20 (2): 1–26. Lavergne, Real. 1997. ‘Introduction: Reflections on an Agenda for Regional Integration and Cooperation in West Africa.’ In Regional Integration and Cooperation in West Africa: A Multidimensional Perspective, edited by Real Lavergne, 1–28. Trenton, NJ: Africa World Press. Ministry of Foreign Affairs of Denmark. 2020. ‘Strategy for Denmark’s Engagement with the African Development Bank 2020–2024.’ https:​//​um​.dk › media › danida-en › organisation. Okojie, Julius. 2016. ‘Africa’s Food Import Bill to Reach $110bn by 2025- IITA.’ Businessday, 30 November 2016. Organisation of African Unity (OAU). 1963. ‘OAU Charter.’ Organisation of African Unity. https:​//​au​.int​/sites​/default​/files​/treaties​/7759​-file​-oau​_charter​_1963​.pdf. Runde, Daniel F. 2019 ‘The Role of the AfDB and the Future of Africa.’ Centre for Strategic and International Studies. Simons, Bright. 2020. ‘AfDB: The “Real” Geopolitics of the Adesina Affair.’ The Africanreport. https:​//​www​.theafricanreport​.com​/sections​/politics. United Nations Economic Commission for Africa. n.d. ‘Background.’ http:​//​www​ .uneca​.org​/index​.htm. Vela, Carlos Martínez. 2001. ‘World Systems Theory.’ https:​//​web​.mit​.edu​/esd​.83​/ www​/notebook​/WorldSystem​.pdf.

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Wallerstein, Immanuel. 1974. ‘The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis.’ Comparative Studies in Society and History 16 (4): 387–415. World Bank. 2020. Africa’s Pulse: An Analysis of Issues Shaping Africa’s Economic future, vol. 1. Washington, DC: World Bank Group.

Chapter 7

Group of Seven (G7) and Development Trajectories in Africa Gafar Idowu Ayodeji and Iseoluwa Raphael Olayinka

Based on many available sources and historical facts, Africa, to an appreciable extent, had experienced some level of development, politically and economically, before its contact with the European powers (Rodney 1973; Settles 1996; Heldring and Robinson 2018; Geda 2019). The advent of global capitalism and the subsequent colonialism arriving with subjugating and prevailing international political economy structure led to the incorporation of Africa’s developing economy into global capitalist system. Since this incorporation and the consequent disarticulation of its economy, Africa countries have continued to face various challenges of development with many failing exogenous plans and strategies. Part of the restorative initiatives by the contemporary major global capitalists was the formation of numerous international financial and development institutions of which Group of Seven (G7) is prominent. The G7 which comprises United States, United Kingdom, France, Germany, Italy, Canada, and Japan, over some decades, appeared have also initiated some plans and strategies towards Africa’s development which climaxed during its summit in Kananaskis, Canada with the adoption of Africa Action Plans in 2002 (United States Department of State 2002). What has unfolded before, during and after the summit in Canada till today appears that most African countries continue to accumulate foreign debts, struggle economically and majority of their citizens still face serious poverty challenge. This is in spite of the efforts that had been made through G7 backed global financial institutions such the World Bank and International Monetary Funds (IMF) to these challenges. However, 123

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the G7 continues to lay claim to their commitments and subsequent modest achievements towards Africa’s development in the last decades. Therefore, the current state of Africa’s development has raised posers regarding the extent to which the G7’s aforementioned developmental agenda has transformed the economic and social well-being of the Africa’s population. The chapter examines the extent of G7’s commitments to Africa, with a view to identifying impediments militating against these plans and commitments including possible ways to overcome them. The chapter adopted the theory of neoliberalism as an explanatory framework to examine the limitations to Africa’s development, despite several developmental agenda and global commitments. The German Freiberg School coined the word ‘neoliberalism,’ while trade liberalisation policy introduced by Pinochet’s administration of Chile and the economic policies associated with Thatcher and Reagan administration in the 1970s gave prominence to neoliberalism as replacement for modernisation and official approach to development in the 1980s (Kowalczyk 2019; Boas and Gans-Morse 2009). Thus, neoliberalism theory propagates laissez-faire or capitalist driven economy as one of the prerequisites for rapid economic growth and development of third world or developing nations. According to Harvey (2005, as cited in Lee 2016), neoliberalism is an economic practice which proposes that human wellbeing can be attained by reducing state intervention, promoting free markets and maximising individuals’ liberty. Thus, it is an economic theory and global conviction that supports maximisation of economic freedom for individuals and reduction of state intervention to the barest minimum, through free market capitalism, minimisation of government spending and regulations, privatisation and deregulation of public sector (Kenton 2020; Wikan 2015). One of the rationales often used to justify neoliberalism by its advocates is that big government spending and too much official development aids prevent economic and social development, while deregulation, privatisation, and lowering taxation are required to achieve economic growth (Thompson 2017). At the international level, the theory advocates the removal of government-imposed controls on cross-border flows of goods, capital, and individuals (Cohen and Centeno 2006, cited in Wikan 2015). As propagated by its Western advocates, the neoliberal approach to development was portrayed as an economic approach designed to minimise state’s involvement in the production process and service delivery, with a view to reducing the government spending and burden associated with governance to enhance multisectoral development. However, neoliberalism afterwards reflects the manifestation of political and economic adventurism in order to maintain global dominance in a globalised world with a proliferated national interest, political, economic and sociocultural ideology. In consonance with

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this position, Monbiot (2016) maintained that neoliberalism was not conceived as a self-serving racket but rapidly became one, with inequality in the distribution of wealth, smashing of trade unions, tax reductions, rising rents, privatisation and deregulation which degenerate into economic retrogression in the neoliberal era. As a corollary, Wikan (2015) insisted that neoliberalism is associated with the economic policies of Ronald Reagan in the United States and Margret Thatcher in the United Kingdom, most especially with the support of the duo for fiscal austerity, deregulation, free trade, privatisation and reduction in government. In the context of Africa’s development, the introduction of the SAP, PRSP and NDS that consecutively replaced centrally planned economy adopted by most African countries through several economic policies such import substitution, privatisation, deregulation, concessional loan, debt relief, foreign direct investment and public-private partnership continue to hinder economic growth owing to high budget and balance of payment deficits, low level of industralisation, capital flight, import of primary products, huge debt profile, infrastructural deficit, low GDP and poor agricultural development, among other things. Assessing the efficacy of the IMF and World Bank adjustments loans and growth, Ogbonna (2012, cited in Sulaiman, Migiron and Aluko 2014) argued that none of the top twenty recipients of the loan achieved reasonable growth and that the repeated lending policies failed to show favourable effects. Today, many developing nations are wallowing in poverty and debt, as a consequence of the policies of IMF and the World Bank, thereby increasing the rate at which developing countries depend on richer nations (Shah 2013). THEORETICAL FRAMEWORK The chapter adopted the theory of neoliberalism as an explanatory framework to examine the limitations to Africa’s development, despite several developmental agenda and global commitments. The German Freiberg School coined the word ‘neoliberalism,’ while trade liberalisation policy introduced by Pinochet’s administration of Chile and the economic policies associated with Thatcher and Reagan administration in the 1970s gave prominence to neoliberalism as replacement for modernisation and official approach to development in the 1980s (Kowalczyk 2019; Boas and Gans-Morse 2009). Thus, neoliberalism theory propagates laissez-faire or capitalist driven economy as one of the prerequisites for rapid economic growth and development of third world or developing nations. According to Harvey (2005, as cited in Lee 2016), neoliberalism is an economic practice which proposes that human wellbeing can be attained by

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reducing state intervention, promoting free markets and maximising individuals’ liberty. Thus, it is an economic theory and global conviction that supports maximisation of economic freedom for individuals and reduction of state intervention to the barest minimum, through free market capitalism, minimisation of government spending and regulations, privatisation and deregulation of public sector (Kenton 2020; Wikan 2015). One of the rationales often used to justify neoliberalism by its advocates is that big government spending and too much official development aids prevent economic and social development, while deregulation, privatisation and lowering taxation are required to achieve economic growth (Thompson 2017). At the international level, the theory advocates the removal of government-imposed controls on cross-border flows of goods, capital, and individuals (Cohen and Centeno 2006, cited in Wikan 2015). As propagated by its Western advocates, the neoliberal approach to development was portrayed as an economic approach designed to minimise state’s involvement in the production process and service delivery, with a view to reducing the government spending and burden associated with governance to enhance multi-sectoral development. However, neoliberalism afterwards reflects the manifestation of political and economic adventurism in order to maintain global dominance in a globalised world with a proliferated national interest, political, economic and sociocultural ideology. In consonance with this position, Monbiot (2016) maintained that neoliberalism was not conceived as a self-serving racket but rapidly became one, with inequality in the distribution of wealth, smashing of trade unions, tax reductions, rising rents, privatisation and deregulation which degenerate into economic retrogression in the neoliberal era. As a corollary, Wikan (2015) insisted that neoliberalism is associated with the economic policies of Ronald Reagan in the United States and Margret Thatcher in the United Kingdom, most especially with the support of the duo for fiscal austerity, deregulation, free trade, privatisation and reduction in government. In the context of Africa’s development, the introduction of the SAP, PRSP and NDS that consecutively replaced centrally planned economy adopted by most African countries through several economic policies such import substitution, privatisation, deregulation, concessional loan, debt relief, foreign direct investment, public-private partnership continue to hinder economic growth owing to high budget and balance of payment deficits, low level of industralisation, capital flight, import of primary products, huge debt profile, infrastructural deficit, low GDP, poor agricultural development among others. Assessing the efficacy of the IMF and World Bank adjustments loans and growth, Ogbonna (2012, cited in Sulaimon, Migiron, and Aluko 2014) argued that none of the top twenty recipients of the loan achieved reasonable growth and that the repeated lending policies failed to show favourable

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effects. Today, many developing nations are wallowing in poverty and debt, as a consequence of the policies of IMF and the World Bank, thereby increasing the rate at which developing countries depend on richer nations (Shah 2013). The neoliberal approach to development has been mainly criticised on the ground that it places an overwhelming emphasis on competition and free markets as causes of industrial success, although the degree of competition alone is insufficient to explain extremely successful episodes of industrial development (Onis 1995). AFRICA’S INCORPORATION INTO GLOBAL CAPITALISM AND THE STATE OF DEVELOPMENT Understanding the current state of Africa’s development requires critically an overview of Africa’s incorporation into global capitalism and the consequent endless efforts to overcome the pitiable state of development. Ascertaining the exact nomenclature and growth of capitalism as a paradigm within the global system often generates debate in the twenty-first century (Ross 2021). This is because, capitalism itself dangles between economic and political spheres, just as it is also entwined with both political and economic discourse and major events that transpired from antiquity till date (Lewis, n.d.; Brown, n.d.). However, the dominant position in the extant literature indicates that fully formed capitalism originated in Northwestern Europe, particularly in Great Britain and the Netherlands, in the sixteenth and seventeenth centuries. Capital accumulated in a number of ways, on a variety of scales, over the ages, became connected with a wide range of wealth and economic power concentrations. Capitalism gradually replaced feudalism as the world’s leading economic system (Castree, Kitchin and Rogers 2013). Global events and occurrences associated with economic adventurism and political expansionist quest of emerging economies paved way for the propagation and the spread of capitalism beyond Europe and other entities where it was deeply rooted. These global occurrences include imperialism, colonialism, World War I and II, the cold war and others accelerate the expansion of capitalism as a global political economic system (Sachs 1999). Evidently, the propagation of Western ideas and US expansionist objectives as espoused in Patrick’s submission came to manifestation. Firstly, the United States and its allies’ triumph over Soviet Union which paved way for the prevalence of Western democracies. Second, the adoption imports substitutions and export led growth strategies as economic recovery plan after the Second World War scarred Japan, Germany and other countries surrounding USSR and China (Robert 2008; 2010; Wang, n.d.). Thus, with the

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breakaway into seventeen countries, United States gained more allies and satellite states, became global consumer of last resort for the export goods of first in Germany, Japan, and later China’s and USSR former allies. By implication, the aforementioned political-economic reconfiguration, diplomatic regrouping, reminiscence of the Cold War and the orthodox rivalry significantly influenced the formation of G7. Most of the seven members of the Group were either a capitalist state or mixed economy deeply rooted in Western orientation. Different features of capitalism depict it to mean (1) an economic system of free market enterprise where private property dominates and there is freedom to sell and buy goods and services (2) a system where the profit drive overrides any other motives (3) taking root of capitalist relations and structures of productions (4) exploitation of one section of society by another (Chitonge 2017). Africa’s incorporation into global capitalism began in the sixteenth century, at the same time the steam engine was invented, allowing Europe to command the seas and oceans while also harnessing immense resources for industrial production. According to Rodney (1973), this was the time in global history when Europeans took the initiative to go to other areas of the globe to engage in trade. Europe invaded Africa via the Mediterranean Seas and the Atlantic Coast from North Africa, owing to stronger ships and armaments. Before Africa’s incorporation, no section of the human globe appeared to be better in terms of development and social control until the fifteenth century (Rodney 1973). Thus, before the arrival of the Europeans, Africa as a whole was undergoing some type of socio-economic development such that the continent had achieved great development in the fields of culture, technology, food production, commerce, political structure among others, in comparison to other regions of the globe (Rodney 1973; Austin 2010). However, as soon as Africa was dragged into the orbit of European capitalism, a severe distortion, dislocation, and restriction occurred in African societies’ developmental trajectory, thereby blocking and halting their path to autonomous development (Ajayi 2011). Thus, African economies were completely integrated into the global capitalism framework to perform supporting supplementary and unequal role, as evidenced by the global capitalist system’s prolonged recession in the early twenty-first century. Africa’s focus and path of real indigenous development were lost as a result of this merger. Little wonder that scholars such as André Gunder Frank (1967), Samir Amin (1974; 1976), Walter Rodney (1973) and Immanuel Wallerstein (1979) emphasised the inevitable logic of a capitalist world system, which eventually suffocates rather than liberates Africa via disarticulation (Ajayi 2011). The disarticulation of the African economy coincided with the blockade of Africa’s original economic path. The blocking and disarticulation were like

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inseparable Siamese twins, happening at the same time to stymie regional progress throughout the continent (Ajayi 2011). Africa’s economy is made up of commerce, industry, agriculture and human resources. Despite recent optimism about African economies (JICA Research Institute 2013), the continent’s economic record since political ‘independence’ has been nothing short of catastrophic. For nearly a century, the continent’s terms of trade have been deteriorating, external debt accumulated and bringing Africa close to insolvency by the 1990s. Its reliance on foreign aid and related flows has multiplied at a disturbing rate (worsened by unproductivity in exports) while levels of investment have been exceedingly low (Geda 2019). Thus, what has been unfolding on the continent in the past twenty decades could be described as a condition of economic growth without development (Ekpo 2016). The continent accounts for 3.7 per cent of global gross domestic product (GDP), with more than $100 billion infrastructural deficit, world’s fallow arable land, which were up to 60 per cent, and 6.19 per cent unemployment rate (Coleman 2020; O’Neill 2022; Wamkele, cited in Odutola 2020). This has consequently degenerated into high rate of poverty, and poor standard of living of most Africans. In spite of the purported economic growth witnessed throughout the continent, with over one-third of African countries posting 6 per cent or higher growth rates, and another 40 per cent growing between 4 per cent and 6 per cent per year (World Bank 2021). Between 2002 and 2019, the number of poor Africans increased from 233.5 million to 422 million people, with one-third of peoples of African below the global poverty line (below $1.90 daily income), while 70 per cent of the world poorest people live in Africa (Hamel, Tong and Hofer 2019). The continent still accounts for $100 billion infrastructural deficit, 60 per cent of world’s uncultivated arable land and 6.19 per cent unemployment rate (Coleman 2020; O’Neill 2022; Wamkele, cited in Odutola 2020). The foregoing scenario reflects the contemporary situation of the African continent who continues to struggle to ‘catch up’ with Europe and other developed countries in order to take after the emerging countries. But the problem is that whoever transmits a development also transmits a set of ideas, a way of thinking, special abilities, and a level of authority, which the recipient of imported development is compelled to follow in accordance with external demands (Du Pisani 2006). These have been exemplified in the coercive might of the Bretton Woods institutions and supported by the exploits and prescriptions of the G7.

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THE EMERGENCE OF GROUPS OF SEVEN (G7) IN THE GLOBAL POLITICAL ECONOMY AGENDA The Group of Seven (G7) was a relatively informal meeting of finance ministers from the United States, West Germany, France and the United Kingdom in the early 1970s. As the decade’s oil crisis intensified, US Treasury Secretary George Shultz believed that it would be prudent to coordinate macroeconomic actions with other major actors on the global arena. As a result, countries including Japan, Italy, and Canada were admitted to the group (Barry 2005). In the late 1970s, when the European Union became a major coordinator for the European single market, the president of the European Commission was asked to participate. In 1997, the newly devolved Russia was allowed to join the group mainly for political reason, thus changing the composition of the group to G8. However, Russia was expelled from the forum in 2014 for the annexation of Crimea (Webster 2019). Representatives from other countries in Africa such as South Africa, Nigeria, Algeria, Senegal, Mali, Egypt, Morocco, Ghana, Uganda, Ethiopia, Tanzania, Angola, Malawi, Guinea, Niger, Côte d’Ivoire, Tunisia and other regions. Indeed, international institutions like the IMF, World Bank, United Nations, World Trade Organisation and Organisation for Economic Co-operation and Development, among others, are frequently welcomed as guests at various G7’s summits and these bodies look towards G7 for direction in virtually all international decision-making (Barry 2005; Government of Canada 2020; Webster 2019). The G7 summit has continued to bring together the heads of government of each member state, as well as representatives from the European Union; additional high-ranking officials from the G7 and the European Union meet throughout the year (LeBlanc 2021). As of 2020, the G7 countries controlled a little more than half of worldwide net wealth ($418 trillion) (Credit Suisse Research Institute, 2021), 32 to 46 per cent of global GDP, and around 770 million people (France Diplomacy 2019) or 10 per cent of the world’s population. In global politics, the majority of members are major states with close economic, military and diplomatic ties. GROUP OF SEVEN (G7): DEVELOPMENT PLANS AND STRATEGIES OF ECONOMIC DEVELOPMENT Though existing on a treaty and without permanent secretariat or office, the G7 has since transformed into a formal intergovernmental political economy and high-profile forum for debating and coordinating solutions to important global concerns (LeBlanc 2021). As affirmed in the foregoing section, the

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G7 was founded to address economic and political issues ignited by the 1973 oil crisis, in which members of the Organisation of Petroleum Exporting Countries (OPEC), raised oil prices and stopped worldwide supply to countries regarded as supporting Israel in the Yom Kippur War (Al Jazeera 2017). Hence, it was formed majorly with the goal of facilitating joint macroeconomic actions in response to contemporary economic issues. As such, the group’s amorphous structure denotes its fluid development plans and strategies of economic development which also have implications for Africa’s political economy. In essence, aside from initial reactionary response to OPEC’s stance, different summits of the G7 have addressed global and specific issues bothering on African countries. Due to space constraint, major keys plans and commitments of G7 on Africa are highlighted below. Firstly, since the late 1990s, the G7 representatives have been working on African issues such as unpayable old cold war-era debts, infectious diseases, and later the Millennium Development Goals (SDGs). In terms of foreign debt cancellation, the group was at a period instrumental to sub-Saharan Africa’s foreign debt forgiveness having recognised it as a serious global economic issue (Emejulu 2019), which reached crisis proportions from 1980s through 2000 (Akokpari 2001). Secondly, the G7’s key engagements with Africa during that time period included debt, infectious diseases such as AIDS and malaria, transparency in the extractives sector, and overall enhanced aid quality and quantity (Drummond 2019). Thirdly, from peacekeeping to protecting the Congolese rainforest, there have been several initiatives to increase investment and trade flows, as well as focused regional efforts to focus on breaking the cycle of famine and drought in the Horn of Africa and Central Africa (Drummond 2019). Fourth, the group’s mandate has grown to include a wide range of worldwide concerns, including economics, energy security, trade, climate change, global health, gender equality and poverty as well as any other global issues that the G7 presidency decides to include on the agenda as they unfold (Al Jazeera 2017; LeBlanc 2021). Fifth, in tandem with the G7’s economic recovery plan owing to the adverse effects of the COVID-19 pandemic, it reaffirms its commitment to achieving the SDGs by 2030, including through support for the Addis Ababa Action Agenda (AAAA) and aligning financial flows with the SDGs and takes notice of the policy choices proposed as part of the Initiative on Financing for Development in the COVID-19 and beyond. Supporting sustainable growth in Africa will be a primary priority of the G7’s new strategic plan, as presented at the Carbis Bay Summit in the United Kingdom on 13 June 2021 (White House 2021).

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Sixth, the group has been at the forefront of assisting the Africa through financial aids. In line with G7 action plan to facilitate infrastructural development in Africa, between 2014 and 2018, the funding trend for infrastructural projects supported by the G7 has significantly increased from $75.4 billion to $100.8 billion with 20 per cent ($20.2 billion) an increase over the $19.4 billion average of the three previous years (Infrastructural Consortium for Africa 2018). Lastly, in the 2021 G7 Summit, it reiterates its pledge to increase cooperation on democracy support, including by strengthening the G7 Rapid Response Mechanism to counter foreign threats to democracy, such as disinformation; strengthen media freedom and ensure journalist protection; support freedom of religion or belief; condemn racism in all forms; address human rights abuses, such as the failure to protect civilians in conflict; and oppose the practice of arbitrary detention (White House 2021). Some of these plans and projects, it has been noted, have fallen by the wayside. Others, such as debt relief, AIDS prevention, and assistance quantity and quality issues, had their heyday during the G7-Africa track, which produced respectable results from 2005 until the financial crisis. In view of this, the next section highlights some of the impediments vis-à-vis the G7’s commitment towards Africa’s development. AN OVERVIEW OF IMPEDIMENTS TO REALISATION OF THE DEVELOPMENT COMMITMENTS TO AFRICA Not until recently, the available existing literature does depict per se the G7’s specific plans and strategies for Africa’s political economy and development, except to developing countries. However, a careful study of the G7’s implementation records reveal how members executed collective decisions have impacted on Africa’s development. To begin with, it has been observed that lack of continuity in the G7 plans and programmes affects its development commitments to Africa; once particular action was taken, it was usually difficult to sustain the commitment with no concrete plans to bring to completion. Hence, the G7’s commitments to Africa are not time-bound, clear, measurable and they are without independent monitoring mechanisms (Drummond 2019). This is owing to the fact that priorities and personnel of the G7 go along with the presidency. No wonder African leaders have endured with their continent being in and out of fashion on global agendas for a long time. Also, the logic of the G7’s policies and programmes is predicated on the existence of a capitalist dependency system which is susceptible to disorders. The external sector, which was founded during the colonial period and has scarcely altered since then, is one of the most important aspects of this

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structure. Hence, the growth and developmental policy issues (or syndromes) that follow are essentially the product of this framework. Many scholars blame colonialism, institutions and structures that they inherited from colonial contact for Africa’s dire state (Amin 1972; Onimode 1989; Thiboutot 2006; Geda 2019). Given the current state of affairs in Africa as a result of colonialism, indigenous economic structures lost a lot of their functions and autonomy when they were incorporated into the colonial capitalist state, which had the primary goal of extracting resources, both physical and human (Gutkind and Wallerstein, as cited in Thiboutot 2006). Thus, no matter G7’s plans and strategies towards its realisation of development commitment to Africa, the outcome will continue to be marginal. Secondly, the G7’s historical contribution to the pivotal cancellation of African debt cannot be downplayed. This in spite of the fact the forum supported world financial institutions, especially the IMF and World Bank, who were also instrumental to huge external debt accumulation and the subsequent debt servicing and rescheduling in Africa. A huge proportion of sub-Saharan Africa’s foreign debt, which is about 80 per cent, is payable to Western governments and multilateral financial and development institutions such as the IMF and the World Bank (Ojo 1994). According to Akokpari (2001), subSaharan Africa’s debt is caused by both domestic and foreign factors, which are exacerbated by the hostile global economy and adverse international financial institutions’ lending conditions. More importantly, Africa’s foreign debts and the adjustment to them, particularly in the form of IMF/World Bank structural adjustment or economic recovery programmes, have had devastating consequences (Onimode 1989). Furthermore, several sub-Saharan African governments contended that austerity programmes increase economic dependence on industrialised countries, limit national self-reliance, and lower the general quality of life in impoverished states (Thiboutot 2006, 100). Former Zambian President Kenneth Kaunda once condemned the IMF by asserting: ‘The IMF (structural adjustment) programme has been with us for close to twelve years now and we began to see nothing but a contraction of the economy, contracting, contracting. In the end, we were living to pay the IMF, nothing else! And we were not developing, the economy was not expanding, it was contracting’ (Meldrum 1987, as quoted in Thiboutot, 90). Hence, African governments were forced to cut domestic expenditures and lose control over expenditure priorities such as health care and agricultural subsidies under World Bank and IMF auspices. As a result, most nations in sub-Saharan Africa had a 25 per cent drop in per capita GDP (Colgan 2002, cited in Thiboutot 2006, 19). Thirdly, as observed, the impediments militating against the realisation of G7’s plans towards Africa’s development are mostly exogenous in nature though some endogenous factors are inclusive. The exogenous factors are

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institutional arrangement, global events and political happenings that significantly affect the operation of group. The institutional arrangements of the G7, its bureaucratic procedure and source of funding have significantly militated against the group’s developmental agenda and commitment towards Africa development. Unlike the United Nations and other international institutions, G7 is an informal institution without a Secretariat and Charter, while it also operates annual rotational presidency (Council on Foreign Relations 2019). This often affects prompt fulfilment of pledge made by member countries, consensual decision making, policy and leadership continuity, adoption of modalities for implementing the group’s plans and programme. Alluding to this position, Similarly, Badiane, Collins, Dimaranan and Ulimwengu (2018) while highlighting limitations against the efficacy of the New Alliance for Food Security and Nutrition (NAFSN), an affiliate organisation launched to by the G7 to address the problem of food insecurity and malnutrition in Africa through agricultural development, stated that individual development partner commitments were in line with country priorities outlined in their respective National Agricultural Investment Plans (NAIPS). Fourth, the foregoing has however generated criticisms and suspicions about the motive behind the group’s commitment to Africa’s development. Ochanja and Ogbaji (2008) argued that Africa’s contact with the West has been discouraging in terms ensuring tangible socioeconomic transformation. Instead, indigenous initiatives with neoliberalist agenda were either stifled or circumvented by G7 capitalist entrepreneurs; and in most cases replaced by unfavourable neoliberal conditions dictated by the World Bank and its sister agency like the IMF. According to Calderon, Chuhan-Pole and Kubota (2019), the major components of capital inflows for sub-Saharan Africa are foreign direct investment (FDI), foreign aid and remittance inflows. They stressed that from the periods 2000 to 2017, FDI represented on the average 3.4 per cent of GDP while foreign aid and remittances amounted to 3.3 and 2.3 per cent of GDP. In the twenty-first century, the region has become one of the world’s fastest-growing economies, but structural transformation remains elusive as the growth is propelled principally by primary exports-fossil fuel and unprocessed agricultural commodities forest products, among others (Ajakaiye and Afeikhena 2014) without the attendant development. Lastly, systemic and structural deficiencies associated with most African countries could be referred to as the endogenous which are also entangled with exogenous impediments. It is instructive to note that Africa’s political system, legal and institutional frameworks of most African countries which are foundational inheritances from colonialism have militated against several developmental agenda and commitment of various international organisations, despite myriad of reforms. For instance, despite various inspired neoliberal reforms facilitated by G7 to overcome pandemic corruption, ensure

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transparency and poverty, none has been able to achieve the desired results. Transparency International (2020; 2019) revealed that sub-Saharan Africa is the worst-performing region on the corruption perception index (CPI), with an average score of thirty-two, indicating no change over previous years; thereby incurring more than $50 billion loss annually to illicit financial flows. CONCLUDING REMARKS The chapter assessed G7’s efforts towards Africa’s development using qualitative approach. It rationalised that despite the group’s presumed commitments to Africa’s development, its initiatives in this direction appeared to be constrained by the imbued exigencies of global capitalism which form the bedrock of the G7’s plans and strategies. Thus, the G7 commitments continue to be hounded mostly by exogenous factors which have largely made African continent to experience growth without development. In essence, the faltering steps and trends towards making Africa’s development commitments a reality by the G7 over the years resulting to commitments’ deficits remain unresolved. This could be attributed to the embedded contradictions in the G7 neoliberal policy agenda which remains the bedrock of the commitments and that appears to have made these commitments ineffectual. This raised some concerns and doubts about the group’s commitments to Africa’s development given the observed embedded exogenous impediments. In another strand, in spite of the supposed G7’s overt lofty commitments to Africa’s development, the Africa’s unresolved endogenous challenges of poor leadership and governance, corruption, extreme poverty and inequality aggravated by coronavirus pandemic also portend ominous signs. It therefore recommended the expansion of Africa Action Plan that goes beyond debt relief, financial aid and FDI’s, by focusing on delinking strategy as espoused by Samir Amin via compelling the world economic system to adjust to African needs, rather than simply going along with having to unilaterally adjust to the needs of the core. Hence, the African countries cannot develop unless they try to delink from the current exploitative world system which would also rub off positively on curbing endogenous challenges. REFERENCES Ajakaiye, Olu, and Jerome Afeikhena. 2014. ‘Economic Development. The Experience of Sub-Saharan Africa.’ In International Development: Ideas, Experience, and Prospects, edited by Bruce Currie-Alder, Ravi Kanbur, David M. Malone, and Rohinton Medhorae, 732–49. Oxford: Oxford University Press.

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Ajayi, Tunde. 2011. ‘Africa’s Incorporation into the World Capitalist System: The Substantive Features and Issues.’ International Journal of Economic Development Research and Investment 2 (3): 102–8. Akokpari, John. K. 2001. ‘The Debt Crisis, the Global Economy and the Challenges of Development: Sub-Saharan Africa at the Crossroads.’ Journal of Social Development in Africa 16 (2): 147–70. https:​//​doi​.org​/10​.4314​/jsda​.v16i2​.23877. Ekpo, Akpan. A. 2016. ‘Growth without Development in West Africa: Is It a Paradox?’ In Advances in African Economic, Social, and Political Development Series: Accelerated Economic Growth in West Africa, edited by Diery Seck, 37–51. New York: Springer. Al Jazeera. 2017. ‘Seven Things You Need to Know About the G7.’ Al Jazeera, News Agencies, 26 May 2017. https:​//​www​.cbc​.ca​/news​/politics​/g7​-summit​-seven​-things​ -1​.4694608. Amin, Samir. 1972. ‘Underdevelopment and Dependence in Black Africa Origins and Contemporary Forms.’ Journal of Modern African Studies 10 (4): 503–24. ———. 1974. Accumulation on a World Scale: A Critique of the Theory of Development. Translated by Pearce Brian. New York: Monthly Review Press. ———. 1976. Unequal Development: An Essay on the Social Formations of Peripheral Capitalism. Translated by Brian Pearce. New York: Monthly Review Press. ———. 2010. The Law of Worldwide Value. New York: Monthly Review Press. Austin, Gareth. 2010. ‘African Economic Development and Colonial Legacies.’ International Development Policy (Revue Internationale de Politique de Développement) 1: 11–32. https:​//​doi​.org​/10​.4000​/poldev​.78. Badiane, Ousmane, Julian Collins, Betinna Dimaranan and John M. Ulimwengu. 2018. An Assessment of the New Alliance for Food Security and Nutrition: Synthesis Report. Dakar: African Growth & Development Policy Publication. Barry, Tom. 2015. ‘G8/G8 and Global Governance.’ Institute of Policy Studies. https:​ //​​.ips​-dc​.org​/g8g7​_and​_global​_governance​/. Boas, Taylor C, and Jordan Gans-Morse. 2009. ‘Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan.’ Studies in Comparative International Development 44 (2): 137–61. https:​//​doi​.org​/10​.1007​/s12116​-009​-9040​-5. Brown, Elizabeth A. Rash. n. d. ‘Feudalism.’ Encyclopedia Britannica. https:​//​www​ .britannica​.com​/topic​/feudalism. Calderon, César, Punam Chuhan-Pole and Megumi Kubota. 2019. ‘Capital Inflows to Sub-Saharan Africa: On a Different Path.’ The World Bank (blog). World Bank. 21 August 2019. https:​//​www​.blogs​.worldbank​.org​/developmenttalk​/capital​-inflows​ -sub​-saharan​-africa​-different​-path​/. Castree, Noel, Rob Kitchin and Alisdair Rogers. 2013. Capitalism: A Dictionary of Human Geography. Oxford: Oxford University Press. Chitonge, Horman. 2017. ‘Capitalism in Africa: The Old and the New Lyrics.’ The Review of African Political Economy (ROAPE), 1 March 2017. https:​//​roape​.net​ /2017​/01​/12​/capitalism​-africa​-old​-new​-lyrics​/. Coleman, Colin. 2020. ‘This Region will be Worth $5.6 Trillion within 5 Years—But only if it Accelerates its Policy Reforms.’ World Economic Forum. 11 February

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2020. https:​//​www​.weforum​.org​/agenda​/2020​/02​/africa​-global​-growth​-economics​ -worldwide​-gdp​/. Council on Foreign Relations. 2019. ‘The G7 and the Future of Multilateralism.’ https:​//​www​.cfr​.org​/backgrounder​/g7​-and​-future​-multilateralism. Credit Suisse Research Institute. (2021). Global Wealth Report 2021. https:​//​www​ .credit​-suisse​.com​/media​/assets​/corporate​/docs​/about​-us​/research​/publications​/ global​-wealth​-report​-2021​-en​.pdf. Decapua, Joe. 2012. ‘G8 Leaders Call on to Address Poverty.’ Voice of America, 3 May 2012. https:​//​www​.voanews​.com​/archive​/g8​-leaders​-called​-address​-hunger​ -poverty​/. Drummond, Jamie. 2019. ‘African and G7 Nations must Learn from the Success and Failures of their Past Leadership.’ The Africa Report, 14 June 2019. https:​//​www​ .theafricareport​.com​/14023​/african​-and​-g7​-nations​-must​-learn​-from​-the​-success​ -and​-failures​-of​-their​-past​-patnership​/amp​/. Dugger, Robert H. 2008. ‘Cold War Roots of US Economic Problems.’ The Globalist, 2 July 2008. https:​//​www​.theglobalist​.com​/cold​-war​-roots. Du Pisani, Jacobus A. 2006. ‘Sustainable Development—Historical Roots of the Concept.’ Environmental Sciences 3 (2): 83–96. https:​//​doi​.org​/10​.1080​ /15693430600688831. Emejulu, Daniel Akinmade. 2019. ‘What are the G20 and G7’s Priorities in Africa?’ Stears Business, 11 December 2019. https:​//​www​.stearsng​.com​/article​/what​-are​ -the​-g20​-and​-g7s​-priorities​-in​-africa. Encyclopaedia Britannica. n.d. ‘Mercantilism.’ In Encyclopaedia Britannica. https:​//​ www​.britannica​.com​/topic​/mercantilism. France Diplomacy. 2019. ‘The G7: Frequently Asked Questions.’ https:​ //​ www​ .diplomatie​.gouv​.fr​/en​/french​-foreign​-policy​/french​-g7​-presidency​-2019​/the​-g7​ -frequently​-asked​-questions​/. Geda, Alemayehu. 2019. The Historical Origin of the African Economic Crisis: From Colonialism to China. Newcastle upon Tyne: Cambridge Scholars Publishing. Government of Canada. 2020. Canada and the G7. Government of Canada. https:​//​ www​.international​.gc​.ca​/world​-monde​/internationlals. G7 UK. 2021. ‘What is the G7?’ https:​//​www​.g7uk​.org​/what​-is​-the​-g7​/. G8 Information Centre, University of Toronto. 2014. ‘G7/8 Ministerial Meetings and Documents.’ http:​//​www​.g8​.utoronto​.ca​/meetings​.html. Hamel, Kristofer, Baldwin Tong and Martin Hofer. 2019. ‘Poverty in Africa is now Falling-but Not Fast Enough.’ Brookings, 28 March 2019. https:​//​www​.brookings​ .edu​/blog​/future​-development​/2019​/03​/28​/poverty​-in​-africa​-is​-now​-falling​-enough​ /. Heldring, Leander, and James Robinson. 2018. ‘Colonialism and Economic Development in Africa.’ In The Oxford Handbook of the Politics of Development, edited by Carol Lancaster, and Nicolas Van de Walle, 295–327. Oxford: Oxford University Press. Infrastructural Consortium for Africa. 2018. Infrastructure Financing Trends in Africa. Abidjan: The Infrastructural Consortium for Africa.

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International Monetary Fund (IMF). 2016. ‘Poverty Reduction Strategy Papers (PRSP).’ International Monetary Fund. https:​//​www​.imf​.org​/external​/np​/prsp​/prsp​ .aspx. ———. 2021. Report for Selected Countries and Subjects. World Economic Outlook Database, April–October 2021. https:​//​www​.imf​.org​/en​/Publications​/SPROLLS​/ world​-economic​-outlook​-databases​#sort​=​%40imfdate​%20descending. JICA Research Institute. 2013. JICA Report: Development Challenges in Africa Towards 2050. https:​//​www​.jica​.go​.jp​/jica​-ri​/publication​/booksandreports​/ jrft3q00000029i2​-att​/TICAD​_Africa​_2050​_JICA​-RI​.pdf. Kenton, Will. 2020. ‘Neoliberalism.’ Investopedia, 24 July 2020. https:​//​www​ .investopedia​.com​/terms​/n​/neoliberalism​.asp. Kowalczyk, Anna. 2019. ‘Neoliberalism Created the Crisis in Chile.’ Jacobin, 11 September 2019. https:​//​www​.jacobinmag​.com​/2019​/11​/neoliberalism​-chile​ -uprising​-austerity​-protests​-pinera. LeBlanc, Paul. 2021. ‘What is the G7, and What Power Does It Hold?’ CNN Politics, 11 June 2021. https:​//​edition​.cnn​.com​/2021​/06​/11​/politics​/g7​-summit​-explainer​/ index​.html. Lee, Florence. 2016. ‘A Brief Review of Neoliberalism, by David Harvey.’ Inquires Journal Social Sciences, Art and Humanities 8 (2): 1. Lewis, Thomas. n.d. ‘Transatlantic Slave Trade.’ Encyclopedia Britannica. https:​//​ www​.britannica​.com​/topic​/transatlantic​-slave​-trade. Mendes, Ana Paula, Mário A. Bertella and Rudolph F. A. P. Teixeira. 2014. ‘Industrialization in Sub-Saharan Africa and Import Substitution Policy.’ Brazilian Journal of Political Economy 34 (1): 120–38. Ochanja, Ngara Christopher, and Ogoh Augustine Ogbaji, A.O. 2014. ‘The G8 and Development in Third World Countries in the 21st Century: The African Perspectives.’ International Affairs and Global Strategy 21: 23–32. Odutola, Abiola. 2020. ‘The Opportunities in Africa’s $100 Billion Infrastructure Deficit.’ Nairametrics, 12 June 2020. https:​//​nairametrics​.com​/2020​/06​/12​/the​ -opportunities​-in​-africas​-100​-billion​-infrastructure​-deficit​/. Ojo, Michael. O. 1994. ‘Africa’s Debt Burden in Historical Perspective.’ CBN Economic and Financial Review 32 (1): 95–111. O’Neill, Aaron. 2022. ‘Unemployment Rate in Selected World Regions between 2015 and 2020.’ Statista, 22 July 2022. https:​//​www​.s*tatista​.com​/statistics​/279790​/ unemloyment​-rate​-in​-selected​-world​-regions​/. Onimode, Bade. 1989. ‘Debt Crisis: Imperialism’s Silent War of Recolonisation in Africa.’ Journal of African Marxists 11: 8–23. Onis, Ziya. 1995. ‘The Limits of Neoliberalism: Toward a Reformulation of Development Theory.’ Journal of Economic Issues 29 (1): 97–119. https:​//​doi​.org​ /10​.1080​/00213 624. 1995.11505643. Organisation for Economic Cooperation and Development. 2012. Mapping Support for Africa’s Infrastructure Investment. Paris: OECD. Patrick, Iber. 2017. ‘Our Cold War World.’ The New Republic, 30 October 2017. https:​//​newrepublic​.com​/article​/144998​.​/cold​-war​-world​-new​-history​-redefines​ -conflicts​-true​-extent​-enduring​-costs.

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Rodney, Walter. 1973. How Europe Underdeveloped Africa. London: Bogle-L’Ouverture Publications. Ross, Sean. 2021. ‘What Role Does the Government Play in Capitalism?’ Investopedia, 22 July 2021. https:​//​www​.investopedia​.com​/ask​/answers​/040615​/what​-role​-does​ -government​-play​-capitalism​.asp hichte-g8.html. Sachs, Jeffrey D. 1999. ‘Twentieth-Century Political Economy: A Brief History of Global Capitalism.’ Oxford Review of Economic Policy 15 (4): 90–101. https:​//​doi​ .org​/10​.1093​/oxrep​/15​.4​.90. Settles, Joshua Dwayne. 1996. ‘The Impact of Colonialism on African Economic Development.’ Chancellor’s Honours Programme Projects. https:​//​trace​.tennessee​ .edu​/utk​_chanhonop roj/182. Shah, Anup. 2013. ‘Structural Adjustment—A Major Cause of Poverty.’ Global Issues, 24 March 2013. https:​//​www​.globalisssues​.org​/articles​/3​/structural​-adjustments​-a​ -major​-cause​-of​-poverty. Sulaiman, A. Luqman, Stephen O. Migiro and Adewale O. Aluko. 2014. ‘The Structural Adjustment Programme in Developing Economies: Pain or Gain? Evidence from Nigeria.’ Public and Municipal Finance 3 (2): 41–48. Thiboutot, O. Monika. 2006. ‘Cures to Stalled Development: Causes and Solutions to Economic Crisis in Sub-Saharan Africa.’ Master’s Diss., University of Central Florida. Thompson, Karl. 2017. ‘What is Neoliberalism?’ Revise Sociology, 10 September 2017. https:​//​revisesociology​.com​/2017​/09​/10​/what​-is​-neoliberalism​/. Transparency International. 2019. ‘Where are African’s Billion?’ Transparency International News, 11 July 2019. https:​//​transparency​.org​/en​/news​/where​-are​ -africas​-billions. Transparency International. 2021. ‘Corruption Perceptions Index, 2020 Report.’ https:​//​images​.transparencycdn​.org​/images​/CPI2020​_Report​_EN​_0802​-WEB​-1​ _2021​-02​-08​-103053​.pdf. United States Department of State. 2002. ‘G8 Action Plan Highlights.’ United States Department of State Archive, 27 June 2002. https:​//​2001​-2009​.state​.gov​/e​/eeb​/rls​/ othr​/11511​.htm. Wallerstein, Immanuel. 1979. The Capitalist World-Economy. New York and London: Cambridge University Press. Wang, Qiudong. n.d. ‘The Trend of Global Capitalism.’ University of Arizona. http:​//​ www​.math​.arizona​.edu​/​~dwang​/treaty3​.pdf. Webster, Julia. 2019. ‘What Does the G7 Stand For?’ Time News, 23 August 2019. https:​//​www​.time​.com​/5657375​/what​-is​-gf​/. White House. 2021. ‘Carbis Bay G7 Summit Communiqué.’ 13 June 2021. https:​ //​www​.whitehouse​.gov​/briefing​-room​/statements​-releases​/2021​/06​/13​/carbis​-bay​ -g7​-summit​-communique​/. Wikan, Vilde Skorpen. 2015. ‘What is “Neoliberalism” and How Does it Relate to Globalisation?’ E-International Relations, 21 March 2015. https:​//​www​.e​-ir​.info​ /2015​/03​/21​/what​-is​-neoliberalism​-and​-how​-does​-it​-relate​-to​-globalisation​/. World Bank. 2021. ‘Africa: Overview.’ https:​//​www​.worldbank​.org​/en​/region​/afr​/ overview​#1.

PART III

Multilateralism, Integration and Trade System in Africa

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Chapter 8

Regional Integration and Economic Growth in North Africa Resilience or Fading Agenda? Jude Odigbo, Remi Chukwudi Okeke and Chigozie Joseph Nebeife

The end of the Second World War in 1945 heralded both political and economic realignments among nations. Nations and regions began to establish new platforms as basis of relationship. Since then, global structural changes and political dynamics accompanying the post–World War events have continued to place regional cooperation as necessity, especially in the areas of free trade zones, specialised projects, unified policy frameworks and other areas of socioeconomic relations. In Africa, collective issues of unity, economic and structural gaps confronting the continent informed the need for the establishment of the Organisation of African Unity—now known as the African Union (AU)—in 1963. The AU has been striving to serve as a unifying force for the entire continent and struggling to ensure peace and stability amid diverse contestations in many African States. Thus, subregional groups in Africa also sprang up at different times with specific subregional mandates. For instance, the drive for regional integration led to the formation of the Arab Maghreb Union (AMU), the Common Market for Eastern and Southern Africa (COMESA), the Community of Sahel-Sahara States (CEN-SAD), the Economic Community of West African States (ECOWAS), the Economic Community of Central African States (ECCAS), the East African Community (EAC), the Southern African Development Community (SADC) and the Intergovernmental Authority on Development (IGAD). Others are AU–non-recognised groups such as the Mano River 143

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Union (MRU), the Southern African Customs Union (SACU) and the Indian Ocean Commission (IOC) (Nwanegbo, Odigbo and Udalla 2020). More specifically, the North African states signed into the AMU agreement in 1989 as a regional platform saddled with socioeconomic prosperity of the region. Additionally, in 2008, seventeen of the twenty-two members of the Arab League, including Libya, Morocco and Tunisia, agreed to establish the Greater Arab Free Trade Area (GAFTA) aiming at establishing a free trade area between Arab countries (Saadi 2017). Although, the GAFTA is a trans-continental organisation, it also increases and enhances the capacity of the member states to replicate external experiences of integration in North Africa. Earlier, CEN-SAD was established in 1998, which includes Libya, Morocco and Tunisia, among twenty other African countries, in the Northern half of the continent, while the Agadir Agreement was signed in 2004 and entered into force in 2007. The Agadir Agreement involves Morocco, Tunisia, Egypt and Jordan and aims to build on existing regional (EMP and GAFTA) and bilateral initiatives (Saadi 2017). In spite of the existence of aforementioned regional groupings in the North Africa which serve as a regional and transregional umbrella organisations saddled with the duty of repositioning socioeconomic prosperity in the Northern Africa, individual states or group of states in North Africa willingly enter into several bilateral and multilateral agreements to facilitate both individual and collective development aspirations in the region. At one end of the spectrum, stands Morocco, who signed its free trade agreement (FTA) with the United States in 2004 (Brunel and Hufbauer 2008). Following from the above, the existence of groupings, platforms and consistent efforts towards regional integration in the North Africa is therefore not in doubt. But what has remained to be seen is a functional integration process capable of transforming the North African region and an effective process that can reposition development trajectories of the region to be more robust and competitive. In fact, issues of structural inadequacies, political instability, Arab Spring—that orchestrated other forms of instability (Nwanegbo and Odigbo 2012)—vulnerability to oil and food price shocks and inefficiencies of public sectors have continued to stultify progress towards regional integration in North Africa. The drive to be admitted in regional organisations outside North Africa is also a problem. Though this may benefit a nation individually it may stultify collective good. For instance, Morocco’s application to join ECOWAS could be counterproductive to the implementation of the AMU mandate and so many other treaties alike. More importantly, we noted that one of the setbacks to integration in North Africa is the fact that some states have signed bilateral and multilateral agreements that hinder the implementation of existing ones. The focus of this chapter is to investigate the underlying contradictions of regional integration in North Africa to determine

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the extent it has undermined the realisation of sustainable economic growth in the North Africa with the aim to proffer suggestions that will re-energise integration process for development of the region. REGIONAL INTEGRATION AND ECONOMIC GROWTH: CONCEPTUAL PERSPECTIVE It is evident that most developing countries have progressively embraced integration as a key strategy for socioeconomic development, political relations and poverty reduction. This is attributable to the overall impact of globalisation which has necessitated regional economic integration across the globe (Schiff and Winters 2003). By integrating with neighbouring countries, larger economies, smaller and less developed countries become better positioned to participate in regional and global supply chains, thereby expanding their market access. Regional integration helps countries in attracting foreign direct investment flows, enhancing private sector activities and increasing economies of scale (World Bank 2013). Conceptually, regional integration portends that neighbouring countries are expected to harness their similar and different endowments and challenges for collective socioeconomic cum political development of a region. The overall essence is to tackle the twin challenges of unhealthy competition and insecurity by creating opportunities for development and economic growth. The adoption of regional integration results in mutual interdependence and development. In this regard, Kayizzi-Mugerwa, Anyanwu and Conceiçao (2014) note that regional integration serves a mechanism with considerable potential for driving more robust and equitable economic growth as well as promotes poverty and unemployment reduction. As a result, countries embrace regional integration arrangements to solve both different and similar problems. This is because regional integration creates larger economic spaces and allows for economy of scale that promotes efficiency, human capacity building and utilisation, as well as competitiveness and accelerated development. Indeed, dynamics of regional integration processes differ in various ways from region to region. Over all, the central thrust of regional integration revolves around the quest to promote economic development by eroding barriers to trade and business. Invariably, there are indications that regional integration typically aims to reduce import and export barriers, streamline customs procedures, promote investments in trans-border transport infrastructure and create favourable conditions for investors of the countries within the region. In some cases, it also involves broader market liberalisation measures such as strengthened protection of intellectual property rights,

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harmonisation of technical standards and government regulations on products and services to achieve sustainable economic growth. On the other hand, economic growth, just as many concepts in the social sciences, is devoid of a generally accepted definition. The assumption that there is a uniquely correct, or at least a uniquely appropriate, definition of economic growth openly invites a very fundamental type of criticism (Shearer 1961). This is because peculiarities in particular political environments may lead to surprising outcomes of what economic growth may offer a particular society or from what has been established. It presupposes that economic growth will have positive impacts on the well-being of the people. However, a condition where sustained economic growth provides different results in different societies actually nurtures different understandings of the concept to different people. In fact, in many African states, economic growth sometimes fails to translate into better living condition of the citizens. Following these dissimilar outcomes, theorists and scholars tend to see economic growth mainly as the entire gamut of annual national production and income derived therein, which enhances the welfare of people. Economic growth implies an annual increase of material production expressed in value, the rate of growth of gross domestic product (GDP) or national income (Ivic 2015). Earlier, Shearer (1961) argued that economic growth involves an outward movement in the production frontier, such that it is possible to produce more of some items without reducing the output of others (or more of all items simultaneously), and without resorting to abnormal pressures on the productive facilities. Essentially, integrated economies have better opportunities for collaboration and pursue a virtually unified policy that strategically improves the socioeconomic and material well-being of the people. The process of collaboration can also lift or rather energise other poor performing economies and enhance collective growth. Regional integration becomes a veritable instrument for regional economic good. Incidentally, economic growth in North Africa has not resulted in desirable economic gains. As can be seen, structural changes that can reposition the manufacturing sector to contribute meaningfully are still a major hindrance to integration. To date, North Africa still battles a growing rate of poverty and unemployment. For instance, in 2018, the unemployment rate in North Africa was about 12 per cent, with 30 per cent among young people, posing a threat to social stability (African Development Bank (AfDB) 2020). With poor technological development, increasing unemployment and poverty, it can therefore be stated that member states are yet to feel the positive impacts of regional integration in the North African region.

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THEORISING REGIONAL INTEGRATION This study has adopted liberal intergovernmentalism as its theoretical framework of analysis. While we are not oblivious to the interconnectedness and proximity of the North African region and other Middle East nations, it is our position that understanding the dynamics, phenomena of achievements and failures of integration in the North Africa will be better captured using liberal intergovernmentalism. The peculiarities of North Africa are germane in the entire gamut of regional integration in the region; hence, the adoption of liberal intergovernmentalism is critical to understanding these peculiarities. Liberal intergovernmentalism was developed by Andrew Moravcsik in the 1990s by fitting a liberal theory of state preferences and a neoliberal theory of international interdependence and institutions to earlier predominantly realist approaches (Schimmelfennig 2018). It is therefore not surprising that liberal intergovernmentalism has quickly established itself as the most elaborate version of intergovernmentalism (Schimmelfennig 2018). The theory is predicated on two basic assumptions. These assumptions are: 1.  That states are the critical actors in a context of international anarchy. That is, states seek to achieve goals primarily through integrated negotiation and bargaining rather than through a centralised authority that makes and enforces political decision. 2.  That states are purposive and at least boundedly rational. Rationalism is an individualist or agency assumptions actors calculate the utility of alternative courses of action and choose the one that satisfies their utility under the circumstances (Moravcsik and Schimmelfennig 2009, 65). Essentially, Schimmelfennig (2018) posits that governments use regional integration to maximise their national security and economic interests in the context of regional interdependence. In doing this, governments delegate authority to regional organisations to secure their bargaining outcomes but remain in control of regional organisations and the integration process (Schimmelfennig 2018). In a nutshell, liberal intergovernmentalism argues that national preferences are shaped by the economic interests of powerful domestic interest groups in a situation of international interdependence; substantive agreements reflect the constellation of national preferences and bargaining power; and the design of international institutions is a function of the kind and size of cooperation problems they are supposed to manage (Schimmelfennig 2018). Evidently, liberal intergovernmentalism espouses the underlining interest of states and the national states driving appetite to benefit from the

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reciprocally advantageous bargains embedded in integration. In fact, the rationale behind the establishment of AMU in the North African region is to utilise the platform and tap the benefits embedded in regional integration. Indeed, while this organisation is very fundamental to economic cooperation and sustainable economics, the extent to whichNorth Africa has gained from the formation and membership of the integrated grouping remains to be seen. Thus, since governments are driven by national security and economic interests in the process of integration, it is therefore obvious that domestic politics can determine state behaviour and eagerness to cooperate or not. Such domestic interest may perhaps scuttle the process of integration. As can be seen, power politics and diverse interest of member states has continued to hinder regionalism and economic gains within North Africa. It has stultified regional growth, and intra-regional trade has also remained low. For instance, the Doing Business index shows that the majority of North Africa countries are placed above the 110 index range, and this indicates that intra-trade business among them might be more difficult (cited in Saaid Ali 2018). He further noted that there is inadequate basic infrastructure such as energy, telecom and transport, including roads, airports, railways and ports, are critical elements of intra-regional trade and economic growth for North African countries. Infrastructural deficit is also undermining the region’s capacity to produce, as firms find it difficult to compete within the region and in Africa due to the high cost of production. Tariffs across national boundaries in North Africa are also not favourable. All these hitches have greatly challenged the success of regional integration in North Africa. In all, it is important to note that while member states have shown steadfast and resilience in the formation and sustenance of AMU as an umbrella of regional integration in the North Africa, diverse national interests and domestic politics that underlie protectionism have remained the greatest undoing of integration in North Africa. Indeed, since member states have adamantly preferred protection of the domestic economy, regional integration in North Africa will continue to flounder at least for the foreseeable future. REGIONAL INTEGRATION AND PROSPECTS AND CHALLENGES OF ECONOMIC GROWTH IN NORTH AFRICA Historically, integration among North African countries have focused more on Arab and Middle Eastern nations. However, it has been limited by intra-regional politics combined with strong bilateral interests in integrating with Europe and, more recently, a drive towards sub-Saharan Africa. Nevertheless, opportunities abound, but they need to be unlocked. Tunisia,

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Morocco and Egypt exhibit strong private sector development coupled with large financing needs, while Libya (prior to her Arab uprising) and Algeria feature a surplus of capital and represent a growing market for services and goods coming from within the region. Industries such as financial services, information technology and manufacturing account for a significant portion of North Africa’s GDP growth, and would greatly benefit from access to regional markets and labour pools. Thus, developing an integrated energy market is critical to unlocking the region’s full potential. Doing this will fast-track the process of linking the region to an integrated Mediterranean market for energy. In using the strengths of one country to compensate for a neighbour’s deficiency, regional integration in North Africa creates conditions for participants to better protect and exploit the shared wealth in natural resources. The rewards that would flow from greater regional integration across North Africa include increased economic activity, enhanced competitiveness, more effective use of resources and the stimulus to growth and development that could flow from a much-strengthened exchange of ideas, services, goods, finance and people. This suggests that regional integration could generate significant economic growth impetus and provide the region with a valve for social pressures that could enhance sustainable economic development across the region (Baldwin and Venables 1995; Longo and Sekkat 2001). It is therefore imperative to note that regional integration within North Africa is to focus on building markets, creating jobs, improving living standards and achieving sustainable economic growth. Regional integration can create more robust, competitive and diversified economies and attract and reward new sources of investment finance. Regional integration is highly relevant for North Africa; a region which has greatly benefitted from integration with Europe but is yet to take full advantage of cooperation among its members. Despite strong ties due to a common history, religion and language, the North African region remains poorly integrated. The economic cost of lack of integration is estimated to be around 2 to 3 per cent of the total GDP (Saadi 2017). Thus, development strategies in the six North African countries need to be accelerated, to reap the benefits of a more integrated region. Regional integration can contribute strongly to economic and social development in North African countries (Tunisia, Morocco, Algeria, Egypt, Libya and Mauritania) by increasing opportunities to achieve economies of scale, diversifying economic production, improving intra-regional and external trade, and improvement on policy implementation to strengthen competitiveness. Cumulative and indirect benefits from regional integration through deeper integration and reform in North African countries would be substantial.

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The diversity of endowments within North Africa represents an important opportunity for further development through integration. Tunisia, Morocco and Egypt have strong private sectors and diversified production bases, including booming services sectors, but have limited financial resources. Libya and Algeria have a surplus of capital and large markets for goods and services, as well as potential employment opportunities for migrants. The opportunities for mutual benefits through cross-border investment and trade between these two groups of countries are evident. Nevertheless, North African regional integration remains extremely limited. The level of intra-regional trade in North Africa has been the lowest of any region in the world and well below that achieved by other regional communities in Africa (Saadi 2017). Security concerns and a lack of political will have historically been key factors limiting regional integration in North Africa (Cernat 2001). The Algerian-Moroccan border closure since 1994 effectively splits the North Africa region into two geographically separate and difficult-to-link parts, as well as limits trade and investment initiatives between the two directly concerned countries and the transit of goods and services through their borders. Political support for regional integration in North Africa has been sporadic and often inconclusive, as evidenced by the poor track record in implementing various decisions and agreements. There is no single institutional architecture uniting the six North African countries. The AMU includes all six countries except Egypt, which belongs to the COMESA. The CEN-SAD includes all the countries except Algeria. AMU and CEN-SAD have developed gradual, long-term programmes to achieve full economic integration. However, these programmes are poorly reflected in national policies, and little progress has been made in ratifying regional agreements. By contrast, the six countries have much stronger ties with groupings belonging to other regions (Alvarez Coque and Sarris 2003). Despite the benefits of these overlapping trade agreements, they represent an important impediment to trade growth within the region as complex rules of origin arising from each of these agreements have increased transaction costs (Hoekman and Konan 2001). Financial institutions from within the region are establishing subsidiaries in other North African countries, while foreign companies are increasingly using the North Africa region as a base for further expansion (Balassa 1987). To achieve sustainable economic growth, regional integration in North Africa must focus on energy, climate change and the environment, the financial sector, trade facilitation and transport, human development and information and communication technology (Maruping 2005). These would enable North African countries to better protect and exploit their shared wealth in natural resources. Common efforts are necessary to protect water resources,

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which are becoming increasingly scarce and which are particularly vulnerable to climate change. Regional integration could also improve existing arrangements to prevent climate change and preserve the environment through strengthening regional cooperation, reducing barriers to market-based development of renewable energy and enhancing regional level capacity and targeted infrastructure investment for clean energy delivery (Venables 2003). Priorities include strengthening financial infrastructure, harmonising regulatory policies and removing market impediments to cross-border activities, particularly lifting the exchange controls between North African countries. Major progress can also be achieved through reducing the formal and informal trade barriers between North African countries. Regional cooperation in trade facilitation can be enhanced by adopting a regional approach to technical assistance. Cross-border commerce could also be supported by improving the condition of the regional road network to highway standards and strengthening port services that are plagued by inefficiencies, bureaucratic delays and the absence of a well-defined regulatory environment. Regional cooperation and integration efforts can be very useful in meeting the daunting challenges of addressing youth unemployment, adapting education systems to market demands and creating efficient social safety nets. As noted earlier, youth unemployment has risen to 30 per cent. In dealing with this, establishing regional manufacturing industries can create more jobs. In fact, regional integration could establish the large market required for firms to achieve efficient scale, support the harmonisation of technical standards and rules and facilitate the exchange of experience among the North African countries. REGIONAL INTEGRATION, TRADE AND GDP GROWTH IN NORTH AFRICA There is no doubt that regionalism can potentially paved the way for robust trade and investment within and outside specific region. The tendency to open trading space among regions and internally among member states of a particular region also provides greater opportunities for economic growth and development. For instance, integrated regions lower taxations and sometimes are mostly flexible in terms of conditions of trade with member states, thereby enhancing greater incentives and benefits among member states. Such flexibility enhances the ease of doing business and improves the economic fortunes of the member nations. However, North Africa’s regional integration process is limited and falls short of ambitions expressed by the countries through different treaties and agreements. It can also be considered delayed compared with developments in the rest of the continent (Mevel, de

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Alba and Oulmane 2016). According to them Mevel, de Alba and Oulmane (2016, 573): If we consider the most evident and simple indicator, intra-regional trade, the performance of the region remains low: intra-regional exports represented only 6% of total exports in 2014 and intra-regional imports are 5% of imports. Even the nature of the trade is not in favour of strengthening economic links through regional value chains. The structure of intra-sub regional trade shows a predominance of low value-added goods since the sub-region’s trade is mainly fuel (up to 43%) and other commodities (up to 18%). The growth pattern over time shows an increasing gap in terms of low value-added goods particularly fuels the share of which has been increasing in recent years from less than 30% of trade in 2010 to more than 43% in 2013.

Although regional economic community has an ambitious agenda and aims to organise an economically integrated space in the Arab Maghreb Union, set up common policies in all domains, it has, so far, been unsuccessful in implementing a deep regional integration process (Mevel, de Alba, and Oulmane 2016). In terms of trade, only Tunisia, Mauritania, Egypt and Morocco are North African countries that are full members of the World Trade Organisation (WTO). The remaining two are still in the observer-status category, and this also has implications on trade relations among them. One implication is that the North African region would not form a common front in engaging other regions and nations, in terms of trade dispute. On the other hand, it will also affect the volume of foreign direct investments, especially on non-member states. Obviously, the increasing trend of regional trade agreements over the last three decades has not translated into a successful regional integration in the North African region. Many of the North African countries belonged to virtually more than eight regional economic communities (RECs) in Africa and the Middle Eastern region. For instance, table 8.1 shows North African countries’ membership in different regional platforms and the implementation status of their agreement. Essentially, some states in North Africa are striving to enter into agreements with several regional economic communities. However, the responsibilities attached to the multi-membership overwhelm the states to the extent that they fail to realise the good intentions that drive its membership. Thus, multi-membership of regional economic groups requires tactfulness and conscious implementation of agreements. Saidi (2017) notes that this overlap has resulted in the dilution of human and technical resources, high administrative costs and inconsistencies between integration agendas. For instance, complex rules of origin are an obstacle to properly implementing the overlapping regional trade agreements that Morocco has signed, due to contradictory and,

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Regional Integration and Economic Growth in North Africa Table 8.1. Progress in the Implementation and Status of Agreements REC

Date of North African Free Customs Common Monetary Creation Member Countries Trade Area Union Market Union

AMU

1989

CEN-SAD

1998

COMESA

1994

ECOWAS

1975

Agadir Agreement Greater Arab Free Trade Area

2004

Euromed

1995

AFCFTA

2018

2005

Algeria, Libya, Morroco, Mauritania, Tunisia Egypt, Libya, Morroco, Mauritania, Tunisia Egypt, Libya, Tunisia Application under consideration, Algeria, Morocco, Mauritania, Tunisia Egypt, Morroco, Tunisia Algeria, Egypt, Libya, Morroco, Mauritania, Tunisia Algeria, Egypt, Libya, Morroco, Mauritania, Tunisia Algeria, Egypt, Libya, Morroco, Mauritania, Tunisia

✓

✓

✓

✓

✓

✓

✓

✓ ✓

✓

✓

Source: Adapted by the authors from AfDB (2020, x).

therefore, inapplicable rules and institutional problems associated with these rules (Saidi 2017). In this context, GAFTA rules may obstruct Morocco’s prospects of benefiting from the Euro-Mediterranean Partnership. Indeed, contradictions and complexities of implementing conflicting agreements have remained a major setback to regional integration in North Africa. It can therefore be stated that, in spite of the efforts to link the region with other regional economic groupings, regional integration in North Africa is still in shambles. The proliferation of regional integration platforms and the

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membership of the same are undermining the underlining reasons for establishing them. This is mainly because of the complex nature of treaties and the lack of institutional and administrative ‘will’ to implement agreements. Secondly, and perhaps more importantly, the political and business environment in North Africa is still enmeshed in instability. There are still perennial conflicts and violence, especially in Libya, and other businesses across borders are still risky. The environment does not seem to suggest that there will be benefit accruable from the multi-membership of regional economic groups in North Africa. For instance, apart from Morocco, who became the top-ranked economy in the North African region with a world ranking of fifty-third, other countries in North Africa are ranked lowest by the 2020 Doing Business ranking (World Bank 2020). Thus, this environment of uncertainty impacts negatively on the growth rate of the region’s GDP. Also, the Arab Spring of 2011–12 that orchestrated the debacle of some authoritarian regimes in the region impinged on the economic fortunes of the region. Some of the nations find it difficult to recover from the economic setbacks and political crisis that accompanied the uprising. Nearly a decade now, real GDP growth has been volatile for all the six countries, particularly Libya (AfDB 2020). The volatility of real GDP growth in the North African region is mainly due to the variation in international prices of hydrocarbons and minerals, as well as to a transition period, which was extremely long for some of the countries (Libya and Tunisia) and had considerable impact on their economic activity (AfDB 2020). As can be seen, sector contribution to the GDP differs among the six nations in North Africa. Historical attractions, nearness to sea and government investment in tourism and sea activities in Egypt, Morocco and Tunisia have continued to make tourism a major contributor to the GDP of these three countries. For instance, Cairo, Aswan and Luxor are major tourist destinations in Egypt. According to the African Development Bank (2020) the financial and telecommunications sectors have grown rapidly in almost all the countries in North Africa. The report further states that, in 2017, the two sectors accounted for 3.2 per cent of GDP in Algeria, 13.5 per cent in Mauritania, 14.4 per cent in Egypt, 16.2 per cent in Tunisia and 17.4 per cent in Morocco (AfDB 2020). However, these sectoral growths have no positive impact on the GDP growth of other North African states because of the region’s inability to integrate. While it is important to note that reasonable efforts have been made in the North African region with regards to trade and investment, extension of regional ties and multi-membership of the region to numerous regional economic platforms, such efforts are yet to deepen regional integration in the North African region because integration is being driven by states. In fact, governments in the North Africa assume major responsibilities on

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the pattern, processes and areas they wish to integrate. In other words, the failure of the AMU to facilitate successful regional integration and the poor implementation of integration agendas in the region is not unconnected to the diverse political interests of member states and the lackadaisical attitude that underlies their cooperation with the regional body. In fact, at the core of poor integration process in North Africa is domestic politics and general sociopolitical and economic uncertainties that have, over the years, engulfed the region. These hitches have stalled the transformation of the AMU from a mere regional body to a supranational institution capable of deepening regional integration in North Africa. REGIONAL INTEGRATION IN NORTH AFRICA: RESILIENCE OR DECLINING AGENDA? The process of regional integration in North Africa is hugely characterised by both resilient tendencies and failures. To date, successful integration appears very daunting. Evidently, there are abundant regional platforms aimed at fostering regional integration in North Africa. Also, several nations in the region have collectively and individually committed themselves to treaties, bilateral and multi-lateral agreements. These agreements are intended to create and enhance cooperation among nations. Generally, the argument on resilience is hinged on the capacity of an entity to restructure itself while retaining its core function, its ability to undertake said restructuring, and its capacity to adapt and absorb crisis in a hostile environment that underlines its resilience to exogenous disturbances (Hudson 2010). In fact, some countries in North Africa (excluding Mauritania) have pursued trade integration within the Arab League through the Greater Arab Free Trade Area (GAFTA), and North African countries have made intense efforts to integrate with the European market, initially through the Euro-Mediterranean Partnership (formerly known as the Barcelona Process) (Kolster, Matondo-Fundani and Santi 2012). These resilient efforts are designed and indeed devised to increase tendencies that would enhance the capacity of the member nations to absorb economic shocks or even recover earlier when affected by unforeseen economic challenges. Resilience in regional integration and in the context of economic growth in North Africa can be maximised through tactful implementation of a regional policy which emphasises regional integration. In doing this, removal of major obstacles to policy implementation and commitment of nations to treaties and agreements would be prioritised for effective regionalism. AMU reform is vital to play the critical role it was designed to carry out.

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The above is very important considering the fact that regional integration can enhance the capacity of the developing regions in Africa, especially North Africa, to avert the increasing vulnerability of states. Undoubtedly, virtually all African economies are vulnerable based on the fact that both individual states and regional economies are poorly diversified, the majority are dependent on primary commodities with precarious market prices. There is also the tendency to integrate domestic economy into the webs of capitalised developed economies with less capacity to compete favourably. For instance, Saadi (2017) insists that besides confining Maghrebi economies to low-skilled and labour-intensive activities, the polarisation in the direction of the European Union has resulted in promoting similarities in production and export structures among Maghreb countries, thereby undermining economic complementarities deemed necessary for a healthy and thriving regional integration. Incidentally, the last two decades have witnessed wavering foreign direct investment into North Africa with attendant adverse effects on national financial services sectors and a decreasing number of tourists and aid from developed countries. The impacts of Arab Spring in the region and coincidental financial crisis have orchestrated the decline of foreign direct investment in North Africa. Several governments in the region engaged in variety of reforms. These have included reducing GDP, removing fuel subsidies and replacing subsidies with cash transfers to protect the most vulnerable people; increasing tax revenues through higher value-added tax and luxury taxes (such as on tobacco); and reducing energy subsidies (North Africa Economic Outlook 2018). Thus, benefits from these reforms have been short-lived. The impacts of COVID-19 have practically reduced FDI inflows to North Africa. Presently, FDI inflows to North Africa have decreased by 11 per cent to $14 billion, with reduced inflows in all countries except Egypt, which has remained the largest FDI recipient in Africa in 2019, with inflows increasing by 11 per cent to $9 billion (UNCTAD 2020). All these trade barriers and low investments have contributed to the declining tendencies of regional integration in North Africa. Indeed, resilience in the North Africa region’s economic growth is hindered by instability, lethargic and poor implementation of regional trade liberalisation and several integration policies, as tariff and non‐tariff barriers to trade remain. These challenges have continued to deteriorate the prospect of regional integration in North Africa. More worrisome is the tendency of some states in North Africa to commit to agreements that undermine existing collective regional treaties. It is also important to note that the Arab Spring of 2010 had severe implications for growth and regional integration in North Africa. The COVID-19 pandemic of 2020 and political crises in some state, especially Libya and Egypt, undermined in no small-scale economic growth in the region.

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However, in the last two years, North Africa has bounced back. The region appears to have tactfully navigated several economic shocks, political tensions and uncertainties arising from the pandemic and poor leadership. Essentially, in North Africa, growth was buoyed by the easing of political tensions in Libya and the attendant lifting of the oil export blockade in late 2020, which, coupled with a positive oil price shock, was reflected in an unexpected large base effect expansion in the country’s GDP (Africa’s Economic Performance and Outlook, 2022). In fact, ‘Africa’s Economic Performance and Outlook’ (AfDB 2022) explains that the economic turnaround was highest in North Africa, with an estimated growth of 11.7 per cent in 2021. It further notes that North Africa’s strong recovery can be attributed largely to Libya, on the back of a strong rebound in oil sector activities, following the easing of a decade-long political impasse, which led to the lifting of the oil exports blockade in late 2020. Essentially, the global energy crisis occasioned by the Russian invasion of Ukraine has bolstered North Africa’s growth and has especially benefited nations like Libya and Algeria. CONCLUSION We reiterated the fact that this study interrogated the challenges and prospects of regional integration and sustainable economic growth in North Africa. This chapter argued that the multi-membership of regional organisations by states in North Africa accounts for the prevailing poor integration of the region. This chapter identified increasing vulnerability to external economic shocks, political instability and the inability of member states to implement conflicting treaties as major obstacles hindering resilient trajectories of regional integration and economic growth in North Africa. Based on this, North Africa should streamline regional integration platforms. The region has to evolve reforms that will address issues of administrative barriers and deficiencies of judicial systems’ protection of property rights to ensure that they do not continue to hinder business activities in the region. The aforementioned issues are very essential and can also assist in addressing the prevailing multiple legal and regulatory barriers in the MENA which tend to negatively impact investment in the North African region and affect regional integration. Indeed, there is need to reform the Arab Maghreb Union (AMU) to focus more on contemporary challenges of regional integration and growth in North Africa. This is because the failure of integration in the region is inextricably linked to the failure of the AMU to robustly empower member nations to succeed through integration. This chapter therefore recommended a paradigm shift from the prevailing multifarious engagements for regional integration in North Africa. It concluded that North Africa should adopt a

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transformative regional institution capable of changing the narratives of trade and investment and apply a more robust and holistic architecture for growth and development. REFERENCES African Development Bank (AfDB). 2020. ‘North Africa Regional Integration Strategy Paper.’ https:​//​www​.tralac​.org​/documents​/resources​/africa​/3652​-north​ -africa​-regional​-integration​-strategy​-paper​-2020​-2026​-afdb​/file​.html. ———. ‘Africa’s Economic Performance and Outlook.’ 2022. https:​//​www​.afdb​.org​/ sites​/default​/files​/2022​/05​/25​/aeo22​_chapter1​_eng​.pdf. Alvarez-Coque, Jose Maria and Alexander Sarris. 2003. Economic and Financial Dimensions of the Euro-Mediterranean Partnership. Oxfam-Commissioned Report, 6 March 2003. Balassa, Bauwen. 1987. ‘Economic Integration.’ In A Dictionary of Economics, edited by J. Eatwell, M. Milgate and P. Newman, 293–318. Tokyo: Macmillan Press. Baldwin, Richard, and Anthony Venables. 1995. ‘Regional Economic Integration.’ In Hand Book of International Economics, edited by G. Grossman and K. Rogoff, 64–87. Amsterdam: North-Holland Publishing. Brunel, Claire, and Gray Hufbauer. 2008. ‘Reviving Maghreb Integration: Recommendations.’ Policy Analyses in International Economics, no. 86. Cernat, Lucian. 2001. ‘Assessing Regional Trade Arrangements: Are South– South RTAs more Trade Diverting?’ Policy issues in International Trade and Commodities. Study Series no. 16, UNCTAD, United Nations. Hoekman, Bernard, and Denise Konan. 2001. ‘Deep Integration, Nondiscrimination, and Euro-Mediterranean Free Trade.’ Washington, DC: World Bank Policy Research Paper, no. 2130. Hudson, Richard. 2010. ‘Resilient Regions in an Uncertain World: Wishful Thinking or a Practical Reality?’ Cambridge Journal of Regions Economy and Society 3 (1): 11–25. Ivic, Mladen. 2015. ‘Economic Growth and Development.’ Journal of Process Management—New Technologies, International 3 (1): 55–62. Kayizzi-Mugerwa, Steve, John Anyanwun and Pedro Conceiçao. 2014. ‘Regional Integration in Africa: An introduction.’ African Development Review 26 (1): 1–6. Kolster Jacob, Nono Matondo-Fundani and Santi Emanuele. 2012. ‘Regional Integration in North Africa.’ In Unlocking North Africa’s Potential through Regional Integration, Challenges and Opportunities, edited by Emanuele Santi, Ben Romdhane and William Shaw, 19–20. Tunis-Belvedere, Tunisia: AfDB Group. Longo, Robert, and Khalid Sekkat. 2001. Obstacles to Expanding Intra-African Trade, no. 169. Paris: OECD Development Centre. Maruping, Likoebe. 2005. Challenges for Regional Integration in Sub-Saharan Africa: Macroeconomic Convergence and Monetary Coordination. The Hague, the Netherlands: FONDAD.

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Mevel, Simon, Moll de Alba Jaime and Nassim Oulmane. 2016. ‘Optimal Regional Integration in North Africa: Toward a Pro-Industrialization Policy.’ Journal of Economic Integration 31 (3): 84–103. Moravcsik, Andrew, and Frank Schimmelfennig. 2009. ‘Liberal Intergovernmentalism.’ In European Integration Theory, edited by A. Wiener and T. Diez, 67–87. Oxford: Oxford University Press. Nwanegbo, Jaja, and Jude Odigbo. 2012. ‘Appraisal of the Arab Spring and Democratization Project in the North Africa.’ ANSU Journal of Peace and Development Studies 1 (1): 130–41. Saadi, Mein. 2017. North Africa’s Trade Arrangements: Complementarities and Contradictions with the Continental Free Trade Area. Washington, DC: Friedrich Ebert Stiftung. Saaid, Ali. 2018. ‘Challenges Facing Intra-Regional Trade among North African Countries.’ International Research Journal of Finance and Economics 165: 31–45. Schiff, Maurice and Alam, Winters. 2003. Regional Integration and Development. Oxford: Oxford University Press. Schimmelfennig, Frank. 2018. ‘Regional Integration Theory.’ DOI: 10.1093/ acrefore/9780190228637.001.0001/acrefore-9780190228637-e. Shearer, Allison. 1961. ‘The Concept of Economic Growth.’ Kyklos 14 (4): 497–532. United Nations Conference on Trade and Development. 2020. ‘Investment Flows in Africa Set to Drop 25% to 40% in 2020.’ https:​//​unctad​.org​/news​/investment​-flows​ -africa​-set​-drop​-25​-402020​#:​​~:​text​=FDI​%20inflows​%20to​%20North​%20Africa​ ,by​%2011​%25​%20to​%20​%249​%20billion. Venables, Anthony. 2003. Winners and Losers from Regional Integration Agreements. Hoboken, NJ: Blackwell. World Bank. 2013. Africa Development Indicators 2012–2013. Washington, DC: World Bank Group. ———. 2020. Doing Business 2020: Comparing Business Regulation in 190 Economies. World Bank Group. https:​//​documents1​.worldbank​.org​/curated​ /en ​ / 688761571934946384​ / pdf​ / Doing​ - Business​ - 2020​ - Comparing​ - Business​ -Regulation​-in​-190​-Economies​.pdf.

Chapter 9

Regionalism and Regional Integration in East Africa Contradictions and Challenges Nzube Aguchukwu Chukwuma and Emmanuel Chukwunonye Ojukwu

The independence of African countries reinforced centuries of regionalism in Africa. As Aniche (2020) notes, African regionalism preceded European colonialism and predated European integration in three phases. The first phase occurred as early as the tenth century, the second phase during European colonialism in the late eighteenth and early nineteenth centuries, and the third phase began in the early twentieth century (Aniche 2020). Notably, during the third phase, beginning from 1900, the existence of economic and institutional initiatives such as the common market and custom arrangement between Kenya and Uganda (Masinde and Omolo 2017), the establishment of the West African Currency Board (WACB) in 1912, and other common currency and monetary unions (Narsey 2016) to facilitate integration. This third phase saw the formation of the oldest customs union known as the Southern African Customs Union (SACU) in 1910 and the East Africa Community (EAC) in 1917 (Dinka and Kennes 2007). Consequently, between 1906 and 1921, the Emmott Committee established the WACB and allowed the East African shilling currency in circulation in the 1940s after the region had used Indian silver rupees and coins as a store of value (Narsey 2016). Whereas the shilling became a strong currency and legal tender in the region, the customs union and currency of the earlier three states of the EAC, Kenya, Uganda and Tanganyika (now Tanzania) managed expected benefits and services from the railways, ports and air transport (Dinka and Kennes 2007). The overall pre-independence reinforcement 161

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hinges on regionalism’s historical progress in Africa, providing a useful model for undertaking a postindependence regional reinforcement development strategy that harmonises Africa’s development initiatives to solve its challenges. Thus, regional actors of independent African countries like Haile Selassie, Ahmed Sekou Toure and Kenneth Kaunda have identified the course for a renewal of regionalism as a top priority at independence. In that manner, regionalism encompasses efforts by a group of nation-states at all levels to enhance their economic, political, social or cultural interactions to tackle Africa’s developmental challenges (Lee 2002) through policies and projects that ensure cooperation and actualisation of development strategies (Agh 2010). We consider regional arrangements as strategic targets of plan policies and values initiated by states, integrated and coordinated by a supranational entity. Whereas the cooperation between the states and non-state actors promotes development strategies within and outside their geographical areas, these states negotiate and cede a certain degree of sovereignty to the supranational entity. In the five subregions of Africa, regional cooperation has thrived in East African countries as economic growth increased annually at 6.1 per cent in 2014, 6.2 per cent in 2015, 6.0 per cent in 2016, 6.0 per cent in 2017, 6.2 per cent in 2018 and 6.5 per cent in 2019 (Asprem 2017) and sustained economic records with an average growth performance estimated at 5.0 per cent in 2019 (African Development Bank (AfDB) 2020). As such, in the ‘Asmara Communique’ of East Africa, stakeholders have reiterated the commitment to continuing trade among the fourteen states in the region as a way to realise the dream of a prosperous East Africa in terms of infrastructure, energy sectors, regional trade and sustainable development of marine resources (Xinhua 2019). The fourteen states, excluding Burundi from the Central Africa region, are Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, the Seychelles, Somalia, South Sudan, Sudan, Tanzania and Uganda. These countries belong to six of eight recognised regional economic communities (RECs) in Africa, with our study focusing on EAC, COMESA and IGAD because of convergence of economic interests beneficial to members resulting in overlapping memberships. The six are the Common Market for Eastern and Southern Africa (COMESA), the Community of Sahel-Saharan States (CEN-SAD), the Economic Community of Central African States (ECCAS), the Southern Africa Development Community (SADC), the Intergovernmental Authority on Development (IGAD) and the EAC. However, despite East Africa’s regional economic growth, there is evidence of continued internal contradictions. Over the years, some internal contradictions are the weak export trade performance, the declining level of intra-regional trade, fluctuations in

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agricultural output, depreciation of local currencies and rising trade tensions between partners’ states of the region, among others. While the existing literature may have documented some of these, it has yet to yield broader insight into the East African region’s internal contradictions and challenges in Africa. Hence, this chapter attempts to identify the internal contradictions of East African regional arrangements. This study explores the internal contradiction with the help of the 2019 African Union Commission (AUC) report on African Regional Integration (ARI) and the framework for measurement known as the African Multidimensional Regional Integration Index (AMRII). This chapter ultimately provides workable solutions to address the internal challenges. INTERNAL CONTRADICTIONS OF REGIONAL INTEGRATION IN EAST AFRICA Given the times and realities of the Abuja Treaty of 1994, the 2019 AUC report on the ARI indicates that the eight RECs have made some progress (see table 9.1). However, their successes remain mixed, considering the slow progress in each stage achieved in harmonisation and implementation. These mixed results informed the African Union Commission Economic Affairs Department (CEAD) executive findings that insufficient funding, human capacity constraints, overlapping membership, weak implementation of critical aims and programmes, persistent conflicts, insecurity, infrastructure decay and a lack of focus and institutional alignments (CEAD 2019) undermine ARI. The AMRII and the AUC framework for measuring ARI used five dimensions: ‘trade integration,’ ‘productive,’ ‘macroeconomic,’ ‘infrastructure’ and ‘free movement of people.’ In the AMRII report, the EAC average ARI score stood at 0.537. Whereas its strongest dimension is the free movement of people, the weakest is the productive dimension. For IGAD, the ARI score stood at 0.438; the strongest dimension is the free movement of people, while the weakest is the productive dimension. COMESA, with an ARI average score of 0.367, has the trade dimension as the strongest and the weakest as the infrastructure dimension (AUC 2019, 24–25). COMESA’s robust trade integration was due to COMESA’s development and implementation of various integration programmes and robust free trade area (FTA) lunch in 2000 that has seen a growth in intra-COMESA trade from US$1.5 billion to US$10.3 billion in 2018 (Musengele and Kibiru 2020). The degree of FTA saw an increase in free trade, customs union, border management, non-tariff barriers to trade, and digital free trade and increased export value from US$77.8 billion in 2015 to US$106.1 billion in 2018 (Oiro 2020,

2000–2007

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ● ●

●

●

●

✓

●

✓ ✓

Regional (FTA)

●

✓ ✓ ✓ ✓ ✓ ✓

RECs Establishment Tariff and Non-Tariff and Barriers Consolidation

1994–1999

●

= in progress

✓ = achieved

Key:

Source: Developed by the authors with data from AUC (2019, 10).

EAC COMESA IGAD ECOWAS SADC ECCAS CEN-SAD AMU

RECs

✓

Regional Custom Union (CU) ✓

2008–2017

Table 9.1. Status of the Abuja Treaty of Regional Economic Communities

Continental Custom Union (CCU)

2008–2019 Continental Common Market (CM)

2020–2023

Pan-African Economic and Monetary Union

2024–2028

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1). However, low integration of hard and soft infrastructure and underdevelopment of manufacturing industries in the COMESA region has not yielded the much-needed drive to support tangible regional trade progress. The consensus is that the manufacturing industry in COMESA is underdeveloped and marred with many complexities (Owino and Oiro 2017), among which are poor infrastructures that affect production in the industrial sectors (AUC 2019), causing a significant increase in unemployment with no reduction in poverty. The low industrialisation level in nearly all COMESA member states makes the region lag behind its peers in global manufacturing value-added in GDP and manufacturing exports (Owino and Oiro 2017), supporting the claim of Rodrik (2006) about premature industrialisation in Africa. Although there have been completed hard infrastructures within COMESA, such as the Nairobi–Mombasa corridor and Djibouti–Addis Ababa railroad linked to Eswatini and the proposed soft infrastructure of Lake Victoria– Mediterranean Sea Navigation (shipping), Airspace Integration Project, ICT project and regional cybersecurity centre (AUC 2019). Given inter-state tensions among Egypt, Sudan and Ethiopia over the Grand Ethiopia Renaissance Dam (GERD) on the Blue Nile and the ongoing political instability in Ethiopia, the economic effect of the COVID-19 pandemic will further affect the capacity of the member states to plan, implement and maintain these robust infrastructure projects. While infrastructural decay has been a decade-long challenge in Africa, years of regional integration have been unable to close the gap. There is a general belief that the expansion and interconnected infrastructure network covering the surface and air transport, energy and digital network is necessary to realise the African regional agenda and single market among neighbouring states. The realisation is that basic infrastructural development, notably rural infrastructure and linkages, can offer complete and sustainable opportunities for East African countries, such as inclusive economic trade that provides rural farmers access to transport farm products, free movement and investment growth opportunities to create an environment for poverty reduction in regions. Apart from the infrastructure weakness of COMESA, there is a general belief that East Africa’s regional agenda aimed to improve regional economies of trade and investment. Given its historical record, it is evident that regional leaders across regions missed the opportunity of building productive capacities and infrastructure to drive home regional economic plans in Africa. The indication is that Africa lost the productive capacities that should have served as an accelerator for Africa to be a powerhouse of the export market rather than import-dependent, hence the dilemma of Africa’s modern regional integration.

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Although there was a renewed recognition in East Africa that productive integration in the region would remain elusive without at least a minimum level of the manufacturing and industrial sectors, particularly in industrialised sectors, it has a comparative advantage. There is a consensus that sectors like agriculture contribute a more significant per cent of gross domestic product (GDP) and workforce to East Africa and the continent of Africa with substantial mineral resources and cash crops that are sources of revenue that can catalyse industrialisation. Improving intra- and inter-regional trade necessary to boost regional integration means building the productive agriculture sector from the cash crops and maximising the benefit from extensive mineral resources. Nevertheless, industrialisation strategies have been integral to regional agreements in East Africa. The reality is that industrialisation can unleash the potential of East Africa from the traditional productive capacity into the modern industrial capacity. To solve the manufacturing and industrial sectors’ dilemma, EAC launched the East African Community Industrialisation Policy in 2012. The expected 2012 to 2032 EAC industrial policy is anchored on six priority sectors: agro-processing; iron-ore and other mineral processing; petro-chemicals and gas processing; fertilisers and agro-chemicals; pharmaceuticals; and energy and bio-fuels. With a regional comparative advantage in these sectors, the region intends to create employment, export revenue and economic growth. The COMESA industrial policy of 2017 to 2026 focuses on agro-processing, pharmaceuticals, chemicals, energy, textiles and garments, leather and leather products, and minerals. Whereas IGAD has no clear industrialisation framework like EAC and COMESA, the economic pillar of her regional strategy focuses on an industrial policy that will scale up industry activities in agro-processing, cotton, textiles, apparel and metal processing and fabrication. However, Mold (2015) asserts that in EAC, members agreed to implement the EAC Industrialisation Strategy of 2012. Yet, EAC has no way of implementing these industrial policies to achieve industrialisation due to its tiny budget and resources (Mold 2015). The tiny budget in financing the industrial and agriculture sectors in most EAC, COMESA and IGAD countries accounts for the ballooned external borrowing to service budget deficits. The AfDB (2021) report reveals that, between 2000 and 2019, eighteen African countries made debuts into international capital markets, notably London and Irish stock exchanges and issued more than 125 Eurobonds instruments valued at more than $155 billion. The scale of debt issuances to tackle soft and hard infrastructures, businesses and households, and the manufacturing and industrial sectors, explains the poor revenue generation in East African countries. In IGAD, the AfDB (2020) reports that Djibouti, Eritrea, Ethiopia, Somalia, South Sudan and

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Sudan face a challenging economic situation with heavy debt. For Djibouti, for instance, external debt was estimated at 102.9 per cent of its GDP in 2018, an upward debt trend from 97.4 per cent in 2017. South Sudan had 41.7 per cent of GDP in 2019 with an outstanding external debt of about $60 billion, an upward trend from $53.6 billion in 2016 to $56 billion in 2018. Ethiopia’s debt sustainability rating deteriorated to high risk in 2018. Eritrea is already at high risk of debt distress, with external debt at 64.4 per cent of GDP and total debt at 248.9 per cent of GDP in 2019 (AfDB 2020). Despite significant gain as one of East Africa’s most successful integration schemes, EAC’s unfolding debt profile appears unsustainable. Kenya’s debt-to-GDP ratio hit 61.6 per cent at the end of 2019 from 60.1 per cent in 2018. Burundi’s rate climbed to 63.5 per cent in 2019, from 58.4 in 2018. Rwanda’s debt touches 49.1 per cent from 40.7 per cent. Uganda increases from 41.4 per cent to 43.6 per cent, and Tanzania from 37.3 per cent to 37.7 per cent. EAC countries’ rising debt profiles have stoked fears over future capacity to meet repayment obligations (Anyanzwa 2019). Of the forty-five African countries presented in debt per cent of GDP for 2017, seven out of twelve countries that have surpassed the 55 per cent debt-to-GDP ratio set by the IMF are from East Africa (Onyekwena and Ekeruche 2019). Given the debt-to-GDP ratio of countries like Kenya, Ethiopia, Eritrea, South Sudan and Burundi, there are fears that this could bring the countries nearer to debt distress. The AfDB (2021) report lists these African countries’ top external creditors since 2015 as China (13 per cent), the World Bank International Development Association (12 per cent), the African Development Bank (7 per cent) and other multiple-lateral lenders (7 per cent). Also, top bilateral creditors China (13 per cent), the United States (4 per cent), France (2.9 per cent), Saudi Arabia (2.5 per cent) the United Kingdom (2.4 per cent), Germany (2 per cent), Japan (1.7 per cent), Kuwait (1.6 per cent), United Arab Emirates (1.5 per cent) and India (0.6 per cent) (AfDB 2021, 45). While the debt composition of most of these East African countries continues to shift between commercial creditors and bilateral creditors, the devil is in the details of the policies of debt inducement (PDI) from these lenders. The PDI are trade conditions and macroeconomic policies attached by creditors to grant loans and aid requests to these regions, including access to raw material extraction and the threat of cutting aid. Besides the PDI determining the terms of trade exchange and preferential trade agreements between lenders and East African countries wanting loans, the PDI have two core trajectories. The first trajectory is that countries and blocs in East Africa open their markets in return for access to loans that create trade deficits. The deficit is due to weak industrial capacity in these regions to compete in manufacturing and export with top lenders from Asia, the European Union, and the

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United States. So, preferential access to East Africa markets means lower intra-regional trade and a higher trade imbalance with creditors. The second trajectory is that the preferential access requires East African countries to cut tariffs for higher imports of finished goods from creditors countries, reducing East African governments’ capacity to generate revenue to invest in infrastructure and productivity sectors. The overall trajectory of revenue shortage means more external borrowing and the collapse of local productive capacity dominated by a large population, which hampers regional governments’ efforts to increase the intra-regional trade agenda. The reality is the weak productive dimension evidence in the intra- and inter-regional performance shown in table 9. 2. This table indicates that COMESA and IGAD member states’ intra-trade community trade, both export and import, accounted for only a small portion compared of the export and import of China, the United States and the European Union. There is a wide margin between ECA, COMESA, and IGAD export and import to Africa with the rest of the world. Notably COMESA has the lowest intra-and inter-regional trade (9 per cent:9 per cent and 8 per cent:5 per cent) compared to the highest exports and imports of COMESA to China, the United States, and the European Union (see table 9.2). The large scale of exports and imports trade surplus of EAC, COMESA and IGAD countries with top lenders undermine intra-regional trade agreements. For stance, the overall import within EAC countries stood at 17 per cent, while China stood at 14 per cent. While higher per cent exports from EAC, COMESA and IGAD are dominantly raw materials, energy-oil and chemicals, the imports comprised manufactured goods from China, the United States, the European Union and others, some of which are raw materials imported from East Africa. As an example, COMESA has a 9 per cent import share of intra-community trade compared to a higher 13 per cent with China. The same trade fate with member states of IGAD where 14 per cent import is less than 21 per cent import with China. When members of regional blocs have less intra-trade, a situation in which imports from member states are lesser than higher Table 9.2. East Africa Export and Import in the Region, Africa and the Rest of the World 2010 to 2017 (in per cent) RECs

IntraRegional

EAC COMESA IGAD

Ex. Imp. Ex. 20 17 5 9 9 12 14 14 21

China

US

EU

Africa

Imp. Ex. Imp. Ex. Imp. Ex. 14 4 5 31 19 18 13 4 5 37 38 8 21 3 3 16 16 12

Others Imp. Ex. 14 24 5 30 12 34

Imp. 31 29 34

Source: Developed by the authors with data from Publication Section Economic Commission for Africa (2019, 5).

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inter-regional trade, it means that besides the trajectories of poor infrastructure and weak industrial capacity, other negative internal contradictions of non-tariff barriers and macroeconomic uncertainty exist. To address negative macroeconomics, Uganda, Rwanda, Tanzania and Kenya have enhanced their tax regime on common external tariff (CET) on imports duties to promote local production, boost exports and generate revenues (Kiruga 2020). In EAC, partner states agreed to implement the Stays of Application measure on the EAC CET Act of 2004. With this EAC CET measure, specific imported raw materials and inputs not manufactured in each country get a lower tax rate. However, the Stays of Application on specific raw materials measure is contradictory because the raw materials as finished goods attract heavy duties and other tax charges within EAC. Other regions get higher duty rates imposed on raw materials and finished goods. The duties on finished products contradict EAC preferential tariff treatment, indicating a growing sign of protectionism among EAC members partly due to the fears of competition from neighbouring states. The implication is the blanket tariffs across all consumers’ goods imported into the region and the recurring issue of non-tariff barriers among members, which is a symptom of slow implementation of the common market agreements as key areas of concern in the AUC 2019 report. Arguably, the overall blanket tariffs, the weak infrastructural network and the productive integration endangered the prospect of not achieving macroeconomic stability. By macroeconomics, we mean the overall performance, behaviour and decision-making by governments of an economy’s entire structures in delivering economic growth. So, the convergence of macroeconomic policies within a regional bloc creates a healthy financial stabilisation that attracts investments. The EAC and COMESA have established certain macroeconomic convergence areas such as price stability, exchange rate stability and fiscal restraint by limiting government debt and deficits (Kuteesa 2012). However, unlike SADC, which limits debt borrowing and accumulation, EAC criteria remain open in controlling fiscal debt. Part of the discrepancies is institutional mechanisms and policy coordination, mainly in the state’s hands, forcing macroeconomic convergence to proceed in an environment prone to economic disruptions (Kuteesa 2012). A common characteristic of such an environment is a period of high inflation, public debt-to-GDP ratio crisis and high-budget deficits that require maintaining prudent management of natural resources export proceeds to avoid real exchange rate appreciation (McAuliffe, Saxena and Yabara 2014). Otherwise, such an environment dampens economic growth affecting the core setting of macroeconomic convergence, which is vital to fostering economic growth that will support the idea of regional adoption of a single currency (Drummond, Wajid and Williams 2014). Macroeconomic instability

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is inevitable in countries with a weak currency and convertibility challenges, and the annual inflation headlines in the monetary union, customs union and budgetary in East African countries (Matte 2019) remain detrimental to an economy as it increases macroeconomic uncertainty (Nyenyi, Amlega and Scholastica 2017). Macroeconomic uncertainty has positive and negative spillovers on the economic environment, with inflation instability as one key negative macroeconomic uncertainty. Positive macroeconomic uncertainty predicts an increase in future economic activity, and negative macroeconomic uncertainty forecasts a decline in economic growth and depressed asset prices (Segal, Shaliastovich and Yaron 2015). For instance, the Harmonised Consumer Price Indices (HCPIs) of COMESA indicate a negative macroeconomic inflation rate of 71.0 per cent. The registered inflation rate for ten member states in August 2020: Burundi (+11.0 per cent), Djibouti (0.1 per cent), Ethiopia (+4.2 per cent), Kenya (+5.9 per cent), Madagascar (+5.1 per cent), Mauritius (+3.5 per cent), Rwanda (+8.9 per cent), Seychelles (+0.6 per cent), Sudan (+173.3 per cent) and Uganda (+4.6 per cent). Between 2012 and 2019, the overall annual inflation rate instability increased for member states, which shows substantial negative macroeconomic uncertainty. To be certain, in 2012, overall HCPI stood at 13.4 per cent; in 2013, 10.9 per cent; in 2014, it increased to 12.8 per cent and, in 2015, it dropped to 10 per cent. In 2016, it increased to 12.9 per cent and an exponential increase to 25.1 per cent in 2017, dropping to 22 per cent in 2018 and 23.1 per cent in 2019 (HCPIs COMESA 2020). Negative macroeconomic behaviour like inflation, in return, leads to a decrease in the much-needed economic activity that can potentially affect intra- and inter-regional trade performance and macroeconomic performance of any regional bloc. The Horn Economic and Social Policy Institute (HESPI) reported that the macroeconomic performance of IGAD economies in the last fifteen years (2000–2015) was mixed, particularly in Kenya and Djibouti. While three countries performed better—namely, Ethiopia at 9.0 per cent, Sudan at 5.2 per cent and Uganda at 6.6 per cent—than the African average of 5.1, the performance of Kenya, 4.4 per cent, and Djibouti, 3.9 per cent, was worse than that of the African average (HESPI 2017). This performance reflected in the AUC 2019 report on East Africa shows that ten of the fifteen countries’ macroeconomic performance, including Kenya (0.337) and Djibouti (0.335), was below the African average (0.399). Also, on general regional integration performance, eight of the fifteen countries under COMESA, EAC and IGAD performed below the average (0.327). In Africa ranking, four of fifty-four countries, except for Sudan, with a score of 0.209 on productive integration, performed below average in all the five measuring dimensions of regional integration in Africa (see table 9.3).

0.203 0.350 0.394 0.287 0.161 0.444 0.424 0.296 0.434 0.393 0.147 0.303 0.228 0.312 0.376 0.327

Burundi Comoros Djibouti Ethiopia Eritrea Kenya Mauritius Madagascar Rwanda Seychelles South Sudan Somalia Sudan Tanzania Uganda Average

52 20 10 40 53 2 5 37 3 11 54 31 50 28 15 –

R

0.301 0.200 0.438 0.407 0.245 0.428 0.348 0.305 0.435 0.352 0.290 0.111 0.178 0.323 0.434 0.383

Trade 41 51 12 23 49 18 33 38 13 32 44 54 53 35 15 –

R 0.123 0.141 0.204 0.069 0.175 0.296 0.169 0.120 0.164 0.129 0.081 0.194 0.209 0.205 0.217 0.201

Productive

Source: Developed by the authors with data from AUC (2019, 34–35).

Overall Integration

East African Countries 44 39 21 52 28 7 32 46 33 42 49 24 19 20 18 –

R 0.379 0.410 0.335 0.482 0.270 0.337 0.633 0.352 0.570 0.347 0.023 0.362 0.289 0.422 0.322 0.399

Macroeconomics 31 29 39 10 50 38 2 34 4 36 54 32 47 27 42 –

R

Table 9.3. Ranking Scores of Fifteen East Africa Countries’ Dimensions of Regional Integration

0.091 0.166 0.152 0.316 0.040 0.415 0.487 0.126 0.184 0.531 0.009 0.047 0.141 0.197 0.162 0.220

Infrastructure 44 25 29 10 53 8 6 39 23 3 54 52 37 22 27 –

R

0.037 1.000 1.000 0.025 0.019 0.864 0.426 0.655 0.907 0.655 0.407 1.000 0.357 0.420 0.876 0.441

Free Movement

50 1 1 52 53 10 29 11 6 11 31 1 36 30 9 –

R

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Given all the five dimensions in table 9.3, the first (trade integration) saw Djibouti ranked twelfth as the highest performer with 0.438 scores, against fifty-fourth position, Somalia on 0.111. On the second (productive), Kenya is the top performer with 0.396. However, Kenya fell behind top performer Mauritius (0.633) and nine other countries by rank on the third dimension (macroeconomic). On the fourth (infrastructure), Seychelles was the top performer with 0.531 but performed below average on the first, second and third dimensions. On the fifth (free movement), the jointly ranked countries Somalia, Djibouti and Comoros as top performers with (1.000) above Africa’s average (0.441). However, Somalia performed below average in the remaining four dimensions, Djibouti performed below average in macroeconomic and infrastructure integration, and Comoros was above average only in macroeconomics. However, the International Organisation for Migration (IOM) regional report contained mixed results concerning free movement. In the report, out of the 744,113 movements observed for 2019, 96 per cent were tracked along the Eastern and the Horn of Africa routes, 2 per cent along the Northern route, and 2 per cent along the Southern Route (IOM 2020, 2). The implication support IGAD’s strongest dimension in the free movement of people from 437,432 Eastern route movement out of 744,113 total movements in 2018 to 468,234 movements tracked along the same route in 2019, which maintained an upward trend of 7 per cent. The tracked report identified countries with the largest proportion of the movements, with Djibouti (43 per cent), Somalia (15 per cent) and Ethiopia (13 per cent). For the Horn of Africa, the largest proportion originated in Ethiopia (49 per cent), Somalia (25 per cent), Sudan (10 per cent), Djibouti (6 per cent), Kenya (6 per cent) and Eritrea (1 per cent) (IOM 2020, 50). In general, the origins of the majority of movements were departing from Ethiopia (70 per cent), followed by Somalia (13 per cent) in 2019 and Ethiopia (97 per cent), next to Somalia (3 per cent) in 2018 (IOM 2020, 43). The report links some of the triggering factors of migration in East Africa as a combination of persistent insecurity and conflict, harsh climate conditions and socioeconomic factors (IOM 2020, 4). THE CHALLENGES OF REGIONAL INTEGRATION IN EAST AFRICA Members of the IGAD, COMESA and EAC face more regional conflict than integration prospects causing environmental stress and putting business and livelihood at risk as the states struggle to meet the overall functional capacity of the regional integration agenda. In East Africa, the anatomy of war

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and eruption of conflict, notably in the Horn of Africa and IGAD members and the division between Ethiopia, Sudan and Egypt during the construction of the Grand Ethiopian Renaissance Dam (GERD). Most of these eruptions are intra- and inter-ethnic, as evidenced in the Ethiopia war with its Tigray region. Others, such as terrorist attacks, secessionist movements and border skirmishes, have become a recurring challenge to regional integration and economic growth. However, Buzan and Waever (2003) offer a glimmer of hope on the deeper prospect of security response and integration against a lesser prospect of political and economic integrations in East Africa. Regional security formation in Africa is hinged on two factors. The first factor is the interplay between the anarchic structure and its balance-of-power consequences. The second factor is the pressures of local geographical proximity for security interaction in military, political, societal and environmental sectors. These factors make regional security interdependence inevitable during regionalism (Buzan and Waever 2003, 45–46). The inevitability informed the AU supported and promoted regional security efforts in the five subregions of Africa. In East Africa, the AU allowed proximity of security synergies of actors in solving insecurity challenges despite the controversy surrounding the East Africa Standby Brigade Coordination Mechanism (EASBRICOM) comprising the IGAD and the EAC countries (De Sousa 2013, 62). Amid conflicts, the increasing trade tariffs problem among regional rivalries, mainly in EAC and COMESA, have slowed down intra-imports and -exports, indicating a failure to regulate and enforce the agreements, which points to the peril of state-centric choice of regionalism that preserved states’ sovereignty above regional institutions and agreements. Yet, they appear to be continued rhetoric of enthusiasm for regionalism in Africa based on assumptions about how regional actors should behave in regional integration. The rhetoric of enthusiasm constitutes a strong response in the state-led asymmetric regional institutions in East Africa that breeds uncertainness among regional state actors. So, while regionalism became a response and a reactive chain to a liberal order dominance, in East Africa, regionalism is a continued disposition of not surrendering sovereignty to regional supranational institutions (Oloruntoba 2020). Another problem in East Africa is the vagaries of climate change that create a scarcity of agricultural products for regional trade and consumption and exert pressure on agriculture domains such as livestock and cash crops in the region. These challenges limit governments’ revenue sources and the millions of people’s capacity to produce, trade and access food in East Africa. Historically, East Africa has been the hardest hit by global climate change across Africa as the 2020 locust plagues were the worst in more than seventy years, with the most dangerous locust species that can devastate

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rural livelihood and agriculture exports (UN 2020). As the Food Security Information Network (FSIN) notes, the worst hit countries and the number of people are Ethiopia with 8.5 million, South Sudan with 6.5 million, Sudan with 5.5 million and Uganda with 1.4 million. Others are Somalia with 1.3 million, Kenya with 1.3 million, Tanzania with 1 million and Djibouti with 0.2 million, with the potential risk of high food insecurity (FSIN 2020) as the outbreak of desert locusts in these countries could spill over into more countries in the region (UN 2020). Undoubtedly, Tanzania, Kenya, Uganda, Burundi, Somalia, South Sudan and Ethiopia are a key supply of agricultural products of staple crops traded in East Africa, such as maize 33 per cent, wheat 12 per cent, dry beans 11 per cent, rice 14 per cent and sorghum 20 per cent, indicating a comparative advantage (FEWS NET 2021, 1). This Famine Early Warning System Network (FEWS NET) trade bulletin shows the volume of maize traded was 58 per cent against 72 per cent, which is 14 per cent lower than the previous 2020 and sorghum 21 per cent below the previous report. Nevertheless, rice and dry beans had higher traded per cent in East Africa blocs because of the comparative advantage that accounted for a higher supply of staple crops to ensure intra-regional exports and imports. This higher supply is due to relative peace, stable exchange rates, and the availability of hard currency in Uganda, Tanzania and South Sudan. However, the bulletin identified key causes for reducing these important staple crops for exports and consumption as high rainfall (floods), an upsurge of the desert locust and conflicts, among others, from the dominant supply countries in the region (FEWS NET 2021). Suffice to say that the substantial economic shock in regional economic communities heavily dependent on agriculture is the anticipated damages to crops and pastoral communities, leading to a drop in GDP growth, intra- and inter-regional trade and macroeconomic crises outside the additional impact of COVID-19. In such a manner, regional economies struggle to improve the market, increase production and untapped regional economic opportunities. The damaged of the locust outbreak to domestic crop production caused exchange rate depreciation and contributed to inflation in Ethiopia (Leonard 2020), given that Ethiopia’s major agricultural exports are coffee, maize and grains leading to economic disruption of exports and local consumption. The East African Business Council (EABC) reports that the agricultural sector contributes 29.1 per cent to the GDP in Tanzania: 65 per cent of raw materials to the industrial sector, 65 per cent of employment and 30 per cent of her export earnings are in danger of similar disruption. In Kenya, due to the diversified economy and the 25 per cent role of agriculture in her national GDP, 40 per cent to 50 per cent agricultural export and at least 56 per cent labour force, the locust infestation in coffee production and tea cultivation led to a drop in 1 per cent GDP 2020. In Uganda, with 20 per cent of agricultural

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products like sorghum, maize and coffee as the main export crop, the loss of production will significantly drag growth with the expectation of a budget deficit and a 5 per cent drop in GDP (EABC 2020, 11). As opinioned by Cullinan, the delicate climate explains households’ and communities’ food insecurity throughout East Africa as farmers battle huge hungry swarms of desert locusts. In Ethiopia alone, the desert locust destroyed nearly 800 square miles of cropland and more than 5,000 square miles of pasturelands (Cullinan 2020). In Kenya, the locust covers 2,400 square kilometres (about 930 square miles), almost Moscow’s size (Aljazeera 2020). The impacts of extreme drought in Ethiopia, Kenya and Somalia and greater incidence of rainfall in Kenya, Uganda, Sudan and Tanzania have wider ramifications in driving soaring prices in trade exports of livestock meat and milk. The implication is that the collusion of higher prices for staple cash crops scarcity and livestock markets will drive food insecurity and erode regional economic development gains. Although East Africa had no concrete integration approaches on 2020 desert locusts to address the situation. However, regional and states initiatives exist to curtail the overall impacts of climate change effects within their domain as several governments in the regions have responded, like Ethiopia and Somalia, with the immediate provision of food and cash transfer to households despite an estimated $70-million budget needed to step up aerial pesticide spraying (Aljazeera 2020). Historically, efforts to tackle desert locust control in East Africa dated to the East African Anti Locust Directorate (EAALD) in 1943, the Desert Locust Survey (DLS) establishment in 1948 and the Desert Locust Control in 1950. In 1962, Desert Locust Control Organisation for Eastern Africa (DLCOEA) came into operation to supersede the DLS and the DLC that maintained a regional approach in East Africa and other Gulf countries experiencing plague (Magor et al. 2007). Recently, regional institutional frameworks such as the 2009 Nairobi Declaration on the African Process for Combating Climate Change (AMCEN) and the Bamako Declaration on the Environment for Sustainable Development in 2010, including the COMESA objectives that urge countries affected to prepare national adaptation strategies. In addition, the COMESA-EAC-SADC integrated Climate Change Adaption and Mitigation in Eastern and Southern Africa programme to address the impacts of climate change in these regions. The tripartite five-year initiative commenced in 2010, and others initiatives strengthen economic and social resilience measures in agriculture, forestry and other land uses for present and future generations. Notably, the DLCOEA provided logistics such as equipment and personnel to gather intelligence on locust locations, movement, swarming habits and to supply bait. These measures and other insecticidal means use aircraft

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to conduct a vigorous operation to destroy hopper bands and the sensitisation of farmers and mobilisation of local agriculture units’ officials to curb the spread. Nonetheless, financial support is important, just like during DLCOEA when financial support for operations came from the UK government and contributions from the East African countries (Bellehu and Rainey 1979, 267). Recently, DLCOEA has relied on donor agencies from USAID and the Bureau for Humanitarian Assistance (BHA) for financial commitment as member states face a financial crisis in funding the organisation. Gifford notes that between 2003 and 2005, an estimated cost of $450 million was used to stop the desert locust plague in Africa, yet membership countries owe $8 million in debt, as countries have been unable to pay membership fees to combat the locust plague (Gifford 2020). This limited funding from DLCOEA countries hampers the fight against locusts in the region, which is why emergency funds from international agencies like the United Nations are crucial before locust maturation and breeding. CONCLUSION With centuries of regionalism in Africa, East African countries’ enthusiasm for regional integration and progress in EAC, COMESA and IGAD faced internal contradictions and challenges. The first contradiction looked at the weakness in infrastructure, which portrays the lack of synergies in regional linkages in interstate infrastructure among members of EAC, COMESA and IGAD. The second is the productive capacity due to poor industrialisation, worsening existing regional uncertainty to remove trade barriers and encouraging competition despite regional arrangements. In the overall two weaknesses, East African countries have been unable to utilise and transform their comparative advantage in agriculture and mineral resources to increase intraand inter-regional trade. The implication of the two-weakness cumulated to macroeconomic uncertainty indicator of inflation in EAC, COMESA and IGAD member states. The macroeconomic uncertainty has affected the intraand inter-trade regional export and import, macroeconomic performances of member states, high inflation and high debt-to-GDP ratio. At the same time, East African regionalism appears dwarfed by key issues even on the strongest dimensions of trade integration and free movement. With evidence of progress in trade integration through a common market, customs unions and common monetary policies, trade integration has struggled with intra-community trade tariffs. On the other hand, free movement has thrived based on intra- and inter-political instability in regional blocs, particularly in the IGAD region. Despite the contradictions, the region faced

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political instability, state-centric institutional arrangements and tariffs and climate change challenges. These challenges to regional states pose an unprecedented threat to the region’s intra-regional trade and food security. Arguably, with millions of livelihoods in the regions affected by the pandemic, worsening climate change and political instability, East Africa’s regional gains and agendas are likely to suffer setbacks. Given these internal contradictions and challenges, regional leaders should reconsider supranational institutions to deepen regional integration at the national level. Significantly, regional leaders should commit to improving and utilising comparative advantage in agriculture and mineral resources without fear of competition and loss of sovereignty to develop regional manufacturing and industrial sectors, a solid base to boost productive integration and reverse ongoing deindustrialisation. The comparative advantage is the first step to addressing traditional deficiencies of East African states and rediscovery the regional contribution to global value chains in the global market. At the same time, the AfDB should work with regional blocs to improve its infrastructure facilities to aid trade facilitation. The AfDB coordination will reduce the temptation by states to borrow and finance regional projects with conditions attached that influence the high volume of export and import trade with the developed countries. REFERENCES Aniche, Ernest Toochi. 2020. ‘Pan-Africanism and Regionalism in Africa: The Journey So Far.’ In Pan Africanism, Regional Integration and Development in Africa, edited by Samuel Oloruntoba, 17–38. New York: Palgrave Macmillan. Al Jazeera News. 2020. ‘East Africa Locust Outbreak Sparks Calls for International Help, Environment.’ 25 January 2020. https:​//​www​.aljazeera​.com​/news​/2020​/1​/25​/ east​-africa​-locust​-outbreak​-sparks​-calls​-for​-international​-help. Ágh, Attila. 2010. ‘Regionalisation as a Driving Force of EU Widening: Recovering from the EU “Carrot Crisis” in the “East”.’ Europe-Asia Studies 62 (8): 1239–66. Asprem Mads. 2017. ‘East Africa’s 6% pa Growth Continues: Ethiopia and Tanzania Lead African Growth Commodities Close to 10 Low and the Electricity Sector is Lagging.’ New Africa, 7 June 2017. https:​//​cupdf​.com​/document​/east​-africaas​-6​-pa​ -growth​-the​-world​-mckinsey​-global​-institute​-mgi​-published​.html​?page​=2. African Development Bank (AfDB). 2020. African Economic Outlook 2020: Developing Africa’s Workforce for the Future. Abidjan. African Development Bank Group. https:​//​www​.afdb​.org​/en​/documents​/african​-economic​-outlook​-2020. ———. 2021. African Economic Outlook 2021, From Debt Resolution to Growth: The Road Ahead for Africa. Abidjan. African Development Bank Group. https:​//​ www​.afdb​.org​/en​/documents​/african​-economic​-outlook​-2021.

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Food Security Information Network 2020. ‘Global Report on Food Crises: Joint Analysis for Better Decisions.’ https:​//​www​.fsinplatform​.org​/sites​/default​/files​/ resources​/files​/GRFC​_2020​_ONLINE​_200420​.pdf. Harmonised Consumer Price Indices: COMESA. 2020. ‘Macroeconomic Indicators.’ Monthly News Release, August 2020. https:​//​comstat​.comesa​.int​/mbsseae​/hcpi​ -comesa​-august​-2020. Horn Economic and Social Policy Institute. 2017. ‘Macroeconomic Performance of IGAD and the Implications for China’s Economic Slowdown.’ https:​//​www​.hespi​ .org​/wp​-content​/uploads​/2017​/07​/Macroeconomic​-Performance​-of​-IGAD​.pdf. International Organisation for Migration. 2020. A Region on the Move: 2019 Mobility Overview in the East and Horn of Africa and the Arab Peninsula. https:​ //​displacement​.iom​.int​/reports​/east​-and​-horn​-africa​-​%E2​%80​%94​-region​-move​-​ %E2​%80​%93​-2019​-mobility​-overview​-east​-and​-horn​-africa​-and​-arab. Kiruga, Morris. 2020. ‘East Africa Budgets: “An Optimistic Mix of Tax Waivers and Incentives”.’ The Africa Report, 18 June 2020. https:​//​www​.theafricareport​.com​ /30220​/east​-africa​-budgets​-an​-optimistic​-mix​-of​-tax​-waivers​-and​-incentives​/. Kuteesa, Annette. 2012. ‘East African Regional Integration: Challenges in Meeting the Convergence Criteria for Monetary Union.’ https:​ //​ ageconsearch​ .umn​ .edu​ / record​/148956​/files​/Series92​.pdf. Lee, Margaret. 2002. ‘Regionalism in Africa: A Part of the Problem or a Part of the Solution.’ Polis/RCSP/CPSR 9. Leonard, Jarmaine. 2020. ‘Locust Creates Additional Downside Risk for EAST African Sovereigns.’ Fitch Ratings, 11 June 2020. https:​//​www​.fitchratings​ .com​/research​/sovereigns​/locusts​-create​-additional​-downside​-risk​-for​-east​-african​ -sovereigns​-11​-06​-2020. Masinde, Wanyama, and Christopher Otieno Omolo. 2017. ‘The EAC Common Market.’ In East African Community Law: Institutional, Substantive and Comparative EU Aspects, edited by Ugirashebuja Emmanuel, Ruhangisa John, Ottervanger Tom and Cuyvers Armin, 285–92. Boston: Brill. Mc Auliffe, Catherine, Sweta C. Saxena and Masafumi Yabara. 2014 ‘Sustaining Growth in the East African Community.’ In The Quest for Regional Integration in the East African Community, edited by Drummond, Paulo, Kal Wajid and Oral Williams, 11–38. Washington, DC: International Monetary Fund. Musengele, Benedict, and Kibiru Jane. 2020. ‘How COMESA can Mitigate Negative Effect of COVID-19 Pandemic on Trade.’ COMESA Special Report. https:​//​www​ .comesa​.int​/wp​-content​/uploads​/2020​/07​/How​-COMESA​-can​-Mitigate​-Negative​ -Effects​-of​-COVID​-19​-on​-Trade​.​-1​.pdf. Matte, Rogers. 2019. ‘Original Paper Analysis of the East African Community Integration Process as an Opportunity for Uganda’s Medium-to-Long-Term Development.’ Economics, Law, Policy 2 (1): 12–54. Magor, J. I., Pietro N. Ceccato, H. M. Dobson, J. Pender and L. Ritchie. 2007. ‘Preparedness to Prevent Desert Locust Plagues in the Central Region: An Historical Review: Part I. Text.’ No. AGP/DL/TS/35, Food and Agricultural Organisation of the United Nations.

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Mold, Andrew. 2015. ‘Running Up That Hill? The Challenges of Industrialisation in the East African Community.’ Development 58 (4): 577–86. Narsey, Wadan. 2016.  British Imperialism and the Making of Colonial Currency Systems. New York: Palgrave Macmillan. Nyenyia, Nyongesa Destaings, Eunice Lubega Amlegab and Odhiambo Scholasticac. 2017. ‘The Relationship between Inflation and Economic Growth in East African Community Countries.’ Noble International Journal of Economics and Financial Research 2 (12): 152–62. Oiro, Manaseh. 2020. ‘Estimating COMESA’s Trade Potential in Africa: Optimising Export Opportunities in the AfCFTA.’ A paper prepared for the Seventh COMESA Annual Research Forum, June 2020. https:​//​www​.comesa​.int​/wp​-content​/uploads​ /2020​/10​/Boosting​-COMESA​-Trade​-in​-the​-AfCFTA3​.pdf. Oloruntoba, Samuel, ed. 2020. The Politics of Paternalism and Implications of Global Governance on Africa: A Critique of the Sustainable Development Goals. New York: Springer International Publishing. Onyekwena, Chukwuka, and Ekeruche Amara. 2019. ‘Is a Debt Crisis Looming in Africa?’ Brookings, 10 April 2019. https:​//​www​.brookings​.edu​/blog​/africa​-in​-focus​ /2019​/04​/10​/is​-a​-debt​-crisis​-looming​-in​-africa​/. Owino, Boniface, and Oiro Manaseh. 2017. ‘Trade in Services and Manufacturing Productivity in the COMESA Region.’ Key Issues in Regional Integration, vol. 5. https:​//​www​.comesa​.int​/wp​-content​/uploads​/2019​/01​/Key​-Issues​_research​-papers​ _19​_04​_17​.pdf. Rodrik, Dani. 2016. ‘Premature Deindustrialisation.’ Journal of Economic Growth 21 (1): 1–33. Segal, Gill, Ivan Shaliastovich and Amir Yaron. 2015. ‘Good and Bad Uncertainty: Macroeconomic and Financial Market Implications.’ Journal of Financial Economics 117 (2): 369–97. United Nations. 2020. ‘East Africa Locust Threatens Food Security Across the Sub-Region, alerts UN Agriculture Agency.’ Africa Renewal, 21 January 2020. https:​//​www​.un​.org​/africarenewal​/news​/east​-africa​-locusts​-threaten​-food​-security​ -across​-subregion​-alerts​-un​-agriculture​-agency. Xinhua News. 2019. ‘East African Policymakers Agree to Expedite Regional Economic Integration.’ Xinhua News, 9 November 2019. http:​//​www​.xinhuanet​ .com​/english​/2019​-11​/09​/c​_138542507​.htm.

Chapter‌‌ 10

‌‌African Continental Free Trade Agreement (AfCFTA)‌‌ and Regional Integration in Africa Issues and Prospects Queeneth Odichi Ekeocha, Patrick Nwabueze Ubru, Chukwuemeka Vincent Muoneke and Emeka C. Iloh

Africa’s regional integration initiative has taken the centre stage of the continent’s development agenda with the belief that it will structurally transform the region, create an opportunity for reforms that could boost economic productivity and further reduce poverty in the continent. The African Continental Free Trade Agreement (AfCFTA) is the latest in economic integration initiative in Africa established in 2018 by the African Union (AU). It is a free trade agreement which is expected to provide the much-needed stimulus for policy reforms and economic activities in Africa. Various studies state that the AfCFTA has the potentials to increase growth, raise welfare and stimulate industrialisation in Africa (World Bank 2020; AU 2018; United Nations Economic Commission for Africa (UNECA) 2018). AfCFTA is a policy framework that has the potentials to lift Africa from low trade volume through intra-trade in manufacturing and competitively integrate the region into the world economy. If AfCFTA is implemented, by 2035, about 30 million people will be lifted out of extreme poverty and 68 million people out of moderate poverty, the volume of total exports would increase by 29 per cent, intra-continental exports would increase by more than 81 per cent and exports to non-African countries would rise by 9 per cent (World Bank 2020). It could 181

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increase intra-African trade by 52 per cent by 2022 (Cazares 2018; UNECA 2018), thereby ensuring better harmonisation and trade liberalisation across the region, making the region more competitive. With the implementation of the agreement, trade facilitation and simplified customs procedures would drive $292 billion out of $450 billion in potential income gain (World Bank 2020). According to Munyati (2022), accelerating the implementation of AfCFTA would drive the long-term recovery and growth in the region. Deeper integration like AfCFTA no doubt would create jobs, boost income, catalyze investments and promote the regional supply chain. With the commitments of the African Union (AU) and majority of the African leaders towards AfCFTA, it is evident that economic integration at the continental level is indispensable in the region, and it is only such that could lift the continent out of decades of poverty, economic shocks and instabilities. Despite the regional integration efforts in Africa before the establishment of AfCFTA, the region has played marginal role in world trade as it accounts for only 3 per cent of world trade (UNCTAD 2019) with evidence of low export and low intra-regional trade. With Africa’s peripheral position in the world economy, African leaders believe that regional economic integration will yield the desired result in Africa’s development. This is the major reason why AfCFTA was established. The framework on which AfCFTA was established has the potential to make the region compete favourably in the international system, if implemented. It is important to note, however, that regional integration initiatives in Africa have recorded stories of failures, in some cases. The initiatives were faced with the challenges of inadequate implementation and serious overlapping of the agreements which negatively affected their goals (ECA, AUC and AfDB 2017). The continent has experienced several setbacks in the past in implementing myriad treaties, agreements and regional integration initiatives without desired results largely because of failed targeted deadlines, capacity constraints, ineffective governance and various political issues (Mbasiko 2018). There is evidence of weak commitment, and slow and difficult progress (Brenton and Hoffman 2019; UNDP 2011). Also, the region—especially small and weak countries in sub-Saharan Africa (SSA)—are facing certain trade infrastructure challenges which, if not addressed, have negative consequences on the outcome of the agreement. According to the Africa Development Bank (AfDB 2019), there is a total financing gap of $52 to $92 billion per year with a yearly estimate of financing requirements ranging from $130 to $170 billion, even with the significant increase in financial commitment in 2018. Thus, this chapter focuses on the potentials of AfCFTA in strengthening economic integration, especially intra-trade in Africa, and how to enlarge the



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region’s integration into the global value chain. But the question is: How can AfCFTA be implemented amidst the fragmented region, and how can equal benefits be achieved given certain structural challenges in some regions of Africa? This chapter concludes that, if implemented, AfCFTA remains a viable driving tool for policy reforms that can trigger economically productive activities in the region, among other positive outcomes. A BRIEF HISTORY OF ECONOMIC INTEGRATION IN AFRICA Regional integration in Africa, compared with other continents, is the oldest, as it came before the European colonialism in Africa (Aniche 2020a). Regional integration in Africa has its origin in the movement for self-actualisation in Africa (Pan-Africanism). According to Oloruntoba (2020) and Aniche (2020b), modern African regionalism stems from the Pan-Africanist ideological architecture laid by the likes of Kwame Nkruma and Nnamdi Azikiwe, among others. Pan-Africanism, which began around the start of the twentieth century (Sherwood 2012), represents the collection of African past events, the African way of life and everything the people of African have done, which is kept as a legacy, up to present day (Aniche 2020). Regional integration, otherwise seen as modern Pan-Africanism, symbolises a development framework or technique which will be used to actualise positive economic change in Africa (Oloruntoba 2020). It serves as a plan to decolonise Africa and make the continent economically independent (Aniche 2020). Modern Pan-Africanism is the outcome of the Manchester Conference in 1945, where the demands of the African independence movement were strongly stated. It was spearheaded by the Organisation of African Unity (OAU) and Economic Commission for Africa (ECA) to spike economic progress in Africa and also accepted as a political platform to take care of the power imbalances in the multinational system. In consequence, regional groups like ‘du l’Entente’ (for all francophone countries), the West African Common Market Scheme (proposed by Nnamdi Azikiwe) and the Union of African States started emerging as efforts to bring about unity in the subregions (Oloruntoba 2020). Between the 1950 and 1960s, regional integration was vigorously pursued and advocated for in Africa. The Lagos Plan of Action (LPA) is one of the integration initiatives in Africa which was proposed in 1980 by the OAU. It was mainly a development agenda in response to the economic crisis of the 1970s and was designed to be a long-term development initiative based on the self-reliant and self-sustaining development of Africa, state leadership in the process and integration of the continent (Carmen, Harrera and Monagas

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2015). This was, however, frustrated by the World Bank and was not implemented, because the strategy was to promote endogenous development rather than exogenous development and to use a structural adjustment approach (Carmen, Harrera and Monagas 2015). Further efforts to achieve economic independence resulted in the constitution of a united African economy known as the Economic Commission for Africa (ECA), which was divided into three areas (Hartzenberg 2011). These are the Economic Community of West African States (ECOWAS), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community of Central African States (ECCAS) and East African Community (EAC). The ECOWAS covered the West African region; COMESA covered the East and South areas while ECCAS covered the central region. The ECOWAS, which was established in 1975, predating the LPA, has made some regional integration initiatives through her ECOWAP (agricultural policy) and ECOWAS Trade Liberalisation System (ETLS) initiative. While ECOWAS aimed at encouraging the competitiveness of farmers in intra-regional and international markets, the ETLS was approved to create a free trade zone in West Africa (Hartzenberg 2011; Geda and Hussein 2015). So far, the free trade area in the ECOWAS region has been very slow, while the customs union is a work in progress. As their regional integration strategy, the COMESA adopted a developmental approach that covers market, industrialisation and infrastructure development. This is seen in the cross-border trade programmes for pro-poor trade facilitation rules and infrastructure to ease border crossing at selected border posts. The EAC bloc used the Northern Corridor Infrastructure Project (NCIP) as a vehicle for the regional integration programme. Through this initiative, the region recorded breakthroughs and successes in trade levels and investments, and revenue growth with the production and consumption of locally manufactured goods (Bichachi 2016). The Southern African Development Community (SADC), which was initiated in 1992, was not a market integration arrangement initially; rather, it engaged in cross-border sector-specific projects like regional development corridors and the Southern African Power Pool initiative for electricity in the region. The integration initiatives in SADC, which was a free trade area in 2008, a customs union in 2010, a common market in 2015, a monetary union in 2016 and the introduction of a single currency in 2018 is African’s integration dream (Hartzenberg 2011; Carmen, Harrera and Monagas 2015). In 2015, a twenty-six-country membership of the tripartite arrangement of free trade area with COMESA, EAC and SADC was established to deepen integration in the Southern and Eastern African regions. The objective is to contribute to the broader objective of the African Union in accelerating economic integration, achieving sustainable economic development and improving



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the quality of life of the people in the region. Within the African regional economic communities (RECs), the COMESA remains the largest Regional Trade Arrangement (RTA) in terms of numbers accounting for 21 per cent of total African exports in 2017 (World Trade Organisation (WTO) 2018). However, in terms of value, SADC ranks first among African RTAs representing 41 per cent of total African exports in 2017 while 50 per cent of total exports in ECOWAS constitute fuels and mining products (WTO 2018). Even with a low trade volume compared to other continents, Africa still has the highest number of regional integration schemes and initiatives (UNCTAD 2013; Erasmus 2018; Ekeocha and Iloh 2019). Regional integration in Africa started as a political agenda for self-actualisation, thus, it was not an economic initiative. This political ideology did not establish an economic framework for the continent to thrive economically, especially in the area of trade. For instance, the Lagos Plan of Action was a crisis response agenda, thus, it was not originally planned for economic development in the region. The Economic Commission for Africa was, in theory, an economic regional integration agenda that created a trade environment for the three zones (ECOWAS, COMESA and ECCAS) to operate. The integration initiatives in Africa could be termed unsuccessful because it did not increase intra-trade and welfare which are the primary objectives of any integration agenda. In 2018, the African leaders came together in Kigali to establish the AfCFTA, which is the largest free trade area in the world. It is landmark because it is the first attempt by African leaders to come together at the continental level to integrate in the areas of economy particularly on the issues of trade. THE IMPLICATIONS OF AFCFTA FOR AFRICA’S REGIONAL INTEGRATION AGENDA The AfCFTA is not only a free trade area but encompasses ambitions to proceed to a single unified continental customs area (UNECA and Trademark 2020). AfCFTA is the largest free trade area in the world since the creation of the WTO in 1995, encompassing fifty-four countries. The negotiations that established AfCFTA were launched in June 2015 by the heads of state and government of the AU at the Twenty-Sixth Ordinary Session. After ten rounds of negotiations, the signing of the agreement was concluded in Kigali, Rwanda, by forty-four African Union member states on 21 March 2018. The ratification threshold of twenty-two countries required to implement the agreement was reached in April 2019, though it is quite unprecedented in the history of the AU (World Bank 2020). The agreement entered into force in May 2019. So far, fifty-four countries have signed the agreement with the

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exception of Eritrea. As of 2022, thirty-six countries have ratified the agreement. The AfCFTA primarily seeks to reduce trade barriers among the different pillars of the economic communities in Africa. The agreement came into force when an African, Dr. Ngozi Okonjo-Iweala (the first woman), took the leadership of the WTO for the first time since its establishment. The objectives of AfCFTA include: progressively eliminate tariffs and non-tariff barriers to trade in goods; progressively liberalise trade in services; cooperate on investments, intellectual property rights and competition policy; cooperate on all trade-related areas; cooperate on all custom matters and the implementation of trade facilitation measures; establish a mechanism for the settlement of disputes concerning their rights and obligations; and establish and maintain an institutional framework for the implementation and administration of the AfCFTA (AU 2018; UNECA 2018). The AfCFTA also has seven priority areas which are policy, infrastructure, finance, information, market integration, increased productivity and trade facilitation. The agreement is expected to deliver economic development in Africa because, compared to the previous integration initiatives, AfCFTA is broader in scope and it is the first economic trade agreement that brought almost all African countries together. If the agreement is implemented, the desired economic result will be achieved in Africa. The AfCFTA projected Africa’s intra-regional trade integration to create a market of 1.2 billion people with a gross domestic product (GDP) of at least $3.4 trillion (UNECA 2018; Songwe 2019; World Bank 2020). The agreement pact aims to boost intra-African trade as the government commits to removing 90 per cent tariffs on goods produced with the continent and progressively liberalise trade-in service. This landmark agreement has implications for the increased volume of trade, market access, welfare benefits, high value-added job and technological specialisation through knowledge exchange (Ekeocha and Iloh 2020). AfCFTA pact has the potential to address Africa’s youth unemployment and poverty and reinvigorate Africa’s development (Gonzalez 2015; Kituyi 2019; Negeri 2018). According to ECA, AUC and AfDB (2017), AfCFTA is an instrument that will drive industrialisation, economic diversification and development in Africa and could promote the type of trade that produces sustainable growth in the region. These sources further stated that this framework has the tendencies to create jobs for youths in Africa and foster opportunities for nurturing businesses and entrepreneurs in the continent. The AfCFTA has potentials for industrial policy reform that would result in competitiveness and integration of the region into the global value chain. It could also increase trade volume and productivity both in existing and new products. Other benefits of AfCFTA include higher income arising from increased efficiency and productivity from improved resource allocation,



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higher cross-border investment flows and technology transfers (Abrego et al. 2020). The reason is because, unlike other regional integration packs, the scope of the agreement is larger and includes trade in goods and services, investment, intellectual property rights, competition policy (UNECA 2018) and possibly e-commerce (Songwe 2019). This implies that so many reforms would take place in these sectors and would likely bring about a positive multiplier effect. AfCFTA has positive implications for intra-regional trade in manufacturing. According to Kituyi (2019), the commodities sold within Africa by African countries have more value-added quality compared to what is sold to the rest of the world, which is mostly raw materials. The implication of this is that intra-African trade creates more industrial and value-added employment in the country of origin. The AfCFTA will reduce tariffs among member countries and cover policy areas such as trade facilitation, regulatory measures and technical trade barriers (Rampiar 2021). The World Bank (2020) report estimates that the implementation of AfCFTA would lead to an almost 10 per cent increase in wages with larger gains for unskilled workers and women. According to this report, also, AfCFTA would significantly boost African intra-regional trade in manufacturing as the volume of total exports would increase by almost 29 per cent, intra-continental export would increase by more than 81 per cent and exports to non-African countries would rise by 19 per cent, respectively. This would, no doubt, create economic opportunities and significantly reduce poverty. THE IMPLEMENTATION OF AFCFTA: ISSUES AND PROSPECTS Evidence shows that the various economic integration efforts in Africa faced certain challenges like poor and inadequate implementation (Valera 2005; Marcone 2015; Seid and Geda 2015) which resulted in the non-accomplishment of the goals and objectives for which they were set up. The same fear is envisaged with AfCFTA today as questions on the full implementation, as well as the benefit for all countries especially those in sub-Saharan Africa, are asked. This is because the geographic location of some countries naturally impairs their full benefits of trade. For instance, the fifteen landlocked countries in SSA experience high costs in doing business and trade transactions, especially in transporting goods and services. In some cases, the choice of governance and political commitment also contribute. The political will to deliver good governance and invest in development infrastructure is paramount. Unfortunately, most of the colonial infrastructure still exists in most SSA countries. For instance, the low per capita densities

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of rail and road transport infrastructure, which were colonially constructed to transport only primary products to the port, and the unconnected roads, rails and air networks in the region, pose a challenge to the benefits of the agreement. Transportation costs in Africa are still among the world’s highest; as the movement of a car from Japan to Abidjan costs less compared to shipping the same car from Addis Ababa to Abidjan, whichis more than three times the cost (World Bank 2020). This shows that intra-trade in Africa is more expensive than doing business with the rest of the world. Amidst these challenges, AfCFTA has recorded meaningful efforts and commitments in ensuring the full implementation of the framework. In early 2022, the signatories have agreed to rules of origin for 87.7 per cent (out of the 90 per cent) of the tariff lines (Munyati 2022). In addition, the framework supports trade facilitation and removal of all forms of trade barriers with huge infrastructure commitments made so far. There is a public– private collaboration forum known as the multi-stakeholder group headed by Paul Kagame, the president of Rwanda, with other stakeholders like Wamkele Mene (secretary general of AfCFTA), Jim Ovia (chairman of Zenith bank) and Patrice Motsepe (founder and executive chairman of African Rainbow Minerals), among others (Munyati 2022). It is expected that collaboration with the private sector would support the infrastructure investment needed for AfCFTA implementation. According to the NEPAD report (2020), AfCFTA has prospects for full implementation as progress has been recorded for the implementation but warned that the conditions for success are heavily dependent on the willingness of the individual member states and their leaders to take action. But as a way of commitment, $2.5 billion has been raised for the five regions in Africa (Central, Eastern, Northern, Southern and Western regions), as each region has allocated the sum of $500 million for AfCFTA (NEPAD 2020). The AfCFTA reform supports trade liberalisation in goods under the tariff line approach, which has relatively limited import liberalisation across different countries and regions (ECA and ATPC 2018). In terms of equal benefit for all African countries, some empirical studies suggest that the benefits of the implementation of AfCFTA will not be evenly distributed. The real income gains from the full implementation of AfCFTA could increase by 7 per cent by 2035 with the heterogeneity of impacts across countries and sectors (Daven 2020; World Bank 2020). According to this study, those predicted at the high-income gains of 14 per cent include Côte d’Ivoire and Zimbabwe, while those predicted with a low-income gain of only 2 per cent include Madagascar, Malawi and Mozambique. Other countries fall in between the two extreme groups. In the short-run also, the execution of the agreement could lead to the loss of tariff revenue for most countries (UNECA 2018; World Bank 2020). The revenues accrued from



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tariff would decline by less than 1.5 per cent for forty-nine out of fifty-four countries, and total tax revenues would decline by less than 0.3 per cent in fifty out of fifty-four countries (World Bank 2020). Regarding how AfCFTA can be mainstreamed amidst a fragmented region, the truth is that it looks difficult because of some bilateral and unilateral agreements most African countries have committed themselves to like the economic partnership agreement (EPAs), the African Growth and Opportunity Act (AGOA), and Everything But Arm (EBA), among others. Some of these agreements offer better opportunities than the ones within the region. For instance, the EPA AGOA provides eligible SSA countries with duty-free access to the United States market for more than six thousand products under the generalised system of preferences programme. EBA removes tariffs and quotas for all imports of goods except arms and ammunition coming into the European Union from least developed countries. However, in an effort to curtail this, the AU assembly has, since 2019, requested that African countries should not engage in new trade relations with any third part, and, if need be, inform the assembly with assurance that the African market will not be affected (Desta, Gerout and Macleod 2019). In addition, there should be a show of nationalism by all African countries towards Africa as a continent, and with this, they should shun and disengage any relation(s) that has relegated their position in the global system no matter the temporal benefit they get from such agreement(s). With the COVID-19 global pandemic, 39 million people fell into extreme poverty in 2020 and 2021 (Munyati 2022), and this, to an extent, hampered the implementation of AfCFTA. Most importantly in Africa, where the dependency on global supply is very high, the disruption caused by the pandemic made the region suffer more. For instance, the travel ban, border closers and uncertainties in exchange rates and tariffs generated a socioeconomic crisis at the critical stage of AfCFTA’s implementation. If AfCFTA is not well implemented, the region’s trade volume will remain low and there will be continued trading of African countries with other countries outside Africa, like China. While China continues to supply/export cheap manufactured goods to Africa, domestic industries in Africa are crowded out due to the high cost of production. Another implication is that the African economy, which is prone to external shocks due to its small size and undiversified nature, may receive more severe shocks due to unpredictable situations like the COVID-19 global pandemic.

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AFCFTA AND CHALLENGES OF REGIONAL INTEGRATION IN AFRICA Economic integration in Africa has a long tradition of both successes and failures (Hartzenberg 2011; Erasmus 2018). There is a record of poor implementation and low intra-trade in the region (Hartzenberg 2011; Seid and Geda 2015). The continent cannot trade within itself due to certain institutional challenges. For instance, in 2018, more than 80 per cent of Africa’s exports were destined for outside markets (mainly the European Union and America) while about 90 per cent of Africa’s imports are from other continents, despite being endowed with resources which are capable of providing her own import needs (Africa Renewal 2018). Part of this challenge can be traceable to the model of economic integration adopted by the RECs. The regional integration approach adopted in Africa focused mainly on removing trade barriers rather than on building productive capacities necessary for trade (UNCTAD 2013). This resulted in a low volume of intra-trade in Africa compared to other regional blocs (Carmen, Harrera and Monagas 2015). As of 2017, the share of intra-African export as a percentage of total African exports is 17 per cent compared to the levels in Europe which are 69 per cent, Asia 59 per cent and North America 31 per cent (UNCTAD 2019 and Songwe 2019). To further buttress this fact, UNCTAD (2019) reports that total trade from Africa to the rest of the world averaged US$760 in current prices between 2015 and 2017 compared with $4,109 billion from Europe, $5,140 billion from America and $6,801 billion from Asia (MacVenture Capital ND). According to Iloh (2018), African intra-trade in agricultural products is historically low, as 88 per cent of Africa’s total agricultural imports originated from outside the continent between 2004 and 2007. According to Kayizzi-Mugerwa et al. (2014), countries’ motivation and commitment to integration diminish if some of the countries benefit more from integration than others within the same regional bloc. In addition to these challenges, Valera (2005) summarises the challenges to include lack of national cohesion among the population, political instability and absence of internal stimuli to drive integration, while Marcone (2015) includes a lack of political will among the heads of state and an absence of historical ties and complex interdependence. Trade infrastructures have huge implications for the success of regional integration in Africa. Integrative infrastructure should be considered for intra-African trade (Kitigu 2018). Examples of such include the Cape Town– Cairo road being tarmacked up to Addis Ababa; the transmission of electricity infrastructures from Ethiopia to Djibouti, Sudan and Kenya; and the agreement on a regional railway network between Kenya, Djibouti, Ethiopia and



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Sudan (Ekeocha and Iloh 2019; Kitigu 2018). Most African countries, especially the ones from SSA, lack basic transportation and communication infrastructure for integration. This impairs cross-border investment opportunities and increases the cost of transportation between the members of the same regional bloc (ECA 2010; Carmen, Harrera and Monagas 2015). There is a lack of verse knowledge and means to institute and control a complex system of communication and land-line phone services as both are limited and unreliable, with inflated call rates for calls across the countries (Hartzenberg 2011). Non-tariff barriers (NTBs) are one of the main challenges of intra-trade in Africa. These barriers, such as quantitative import restrictions and government licenses, were used in the past by some African countries to restrict imports. For example, countries such as Burundi, Ethiopia, Madagascar, Sudan, the United Republic of Tanzania, Zambia, Nigeria, Ghana and Senegal, at one time or the other, adopted these barriers, mostly against fellow African countries with significant trade restrictions (UNCTAD 2008). These barriers, in many instances, have made it more expensive to export to fellow African countries than to export to the European Union and North America. Thus, some African countries prefer to export to countries outside Africa rather than to export to fellow African counties. Again, technical barriers to trade agreement also contribute to the challenges of successful integration in Africa. As traditional trade barriers like tariffs and quotas are fallen away, technical regulations that permit countries to bar certain products from being imported due to standards are cropping up. The argument behind the regulation (sanitary and phytosanitary (SPS) measures) is that human beings need to be protected from everyday food hazards. Thus, countries impose regulations that hinder products from entering into their countries from certain places. For some years, European countries banned fish from countries like Kenya, Tanzania and Mozambique, claiming that these countries do not meet sanitary standards (Mutume 2006). To achieve the stated aim of AfCFTA, NTBs have to be eliminated. The UNCTAD estimates that NTBs are at least three times more restrictive than regular custom duties (UNCTAD 2019) and their report suggests that African countries could gain $20 billion in GDP growth by addressing the barriers at the continental level. According to Ekeocha and Iloh (2019), the non-tariff barrier (NTB) is one of the main challenges of intra-trade in Africa. These barriers, such as quantitative import restrictions and government licenses, are being used by some African countries to restrict imports. Hasse (2013) notes that the disparities in custom structures between countries of the same regional bloc hinder regional trade and make harmonisation more difficult. These barriers contribute to the high cost associated with exports within the same regional bloc compared to other trading regions

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like Europe and America. Some of the NTBs that hinder regional trade in COMESA, EAC and SADC include customs methods, administrative conditions, technical measures and a lack of basic facilities (Carmen, Harrera and Monagas 2015; Saygili, Peters and Knebel 2018). Furthermore, Hartzenberg (2011) argues that cumbersome documentation requirements, stringent standards and inefficient road and rail networks cause time delays and increase the cost of intra-trade in Africa. Removing non-tariff barriers like complex rules of origin, poor logistics and transportation infrastructure could be four times more effective in boosting trade compared to tariff reduction (Bell and Lawless 2021). The issue of overlapping membership has been reported by many scholars (Iloh 2018; Geda and Seid 2015; Carmen, Harrera and Monagas 2015). Most of the countries in Africa belong to different regional memberships, which results in overlapping functions and bureaucratic structures, as well as the inefficient use of resources. This overlap affects the design of a common goal, as conflicting commitments to different regional processes affect the implementation of a coherent agenda for integration. Most of these countries fail to enact policies that are necessary for integration to occur (Geda and Seid 2015; Carmen, Harrera and Monagas 2015; Brenton and Hoffman 2019). CONCLUSION Before the establishment of AfCFTA, the regional integration initiatives in Africa lacked an economic framework upon which economic growth could thrive. They were more like a political agenda to uphold the legacy of Africa; thus, it was not ambitiously pursued. AfCFTA is the first economic regional integration framework with structural economic reforms which could trigger productive economic activities for human development in Africa. The implementation of the agreement has the potential to reposition Africa in the world economic system and further reduce poverty in the region. Even though there are imminent challenges, the agreement made provisions on how to address them; thus, AfCFTA is an opportunity for economic recovery and structural transformation in the continent. The contribution of this chapter, among others, is that the continent has never come together on economic issues (especially on trade) since the beginning of the regional integration journey in Africa. AfCFTA is the first platform that has brought all African leadership together. This shows that the framework is ambitious and a game-changer for Africa. The implementation of AfCFTA is likely to strengthen regional integration in Africa, and its implementation will positively re-position the region in the global economic system and significantly reduce poverty in the continent.



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POLICY RECOMMENDATIONS This study made the following policy recommendations: • All countries of Africa should show a strong commitment to the implementation of the AfCFTA agreement. The government should work with all the stakeholders like the private sector, donor agencies, international organisations, civil society groups and so forth to support national implementation especially as it regards the overlapping of RECs. • There is a need for political and regulatory reforms to align with the requirements of AfCFTA. So far, the number of ratifications shows that many country leaders will buy into the opportunities presented by AfCFTA and are ready for policy reforms. • Investment in trade infrastructure and communication systems should be made especially in SSA and landlocked countries. This can be achieved through public–private financing initiatives and working out modalities of attracting excess savings of rich countries (global savings glut) (AfDB 2018) to invest in Africa. • In the short-run, the implementation of AfCFTA will result in loss of tariff and jobs; therefore, the government should provide suitable safety nets for the welfare of t citizens within this period. This could be in the form of tax reduction, the offering of free education and providing training and empowerment programmes for women, among other things. • State parties should not take restrictions, such as those related to the COVID-19 pandemic, as an excuse for relaxing the implementation, because the gains outweigh those made by postponing the agreement. While the disease has come to stay, modalities on how to implement the agreement should be worked out while keeping to the rules against the spread of the disease. REFERENCES Abrego, Lizandro, Mario de Zamaroczy, Tunc Gursoy, Garth P. Nicholls, Hector Perez-Saiz and Jose-Nicolas Rosas. 2020. ‘The African Continental Free Trade Area: Potential Economic Impact and Challenges.’  https:​//​www​.imf​.org​/en​/ Publications​/Staff​-Discussion​-Notes​/Issues​/2020​/05​/13​/The​-African​-Continental​ -Free​-Trade​-Area​-Potential​-Economic​-Impact​-and​-Challenges​-46235. African Development Bank (AfDB). 2018. African Economic Outlook. https:​//​ www​.afdb​.org​/fileadmin​/uploads​/afdb​/Documents​/Publications​/2018AEO​/African​ _Economic​_Outlook​_2018​_​-​_EN​_Chapter4​.pdf.

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———. 2019. ‘Africa’s Infrastructure Financing Reaches an All-Time High in 2018, Surpassing $100 billion—ICA.’  https:​//​www​.afdb​.org​/en​/news​-and​-events​/press​ -releases​/africas​-infrastructure​-financing​-reaches​-all​-time​-high​-2018​-surpassing​ -100​-billion​-ica​-32728. Africa Renewal. 2020. ‘AfCFTA Implementation: Conditions for Success.’ United Nations. https:​//​www​.un​.org​/africarenewal​/news​/afcfta​-implementation​-conditions​ -succes. Aniche, Ernest Toochi. 2020a. ‘African Continental Free Trade Area and African Union Agenda 2063: The Roads to Addis Ababa and Kigali.’ Journal of Contemporary African Studies.  https:​//​doi​.org​/10​.1080​/02589001​.2020​.1775184. ———. 2020b. ‘From Pan-Africanism to African Regionalism: A Chronicle.’ African Studies 79 (1): 70–87. DOI:  https:​//​doi​.org​/10​.1080​/00020184​.2020​.1740974. Bell, Douglas, and Lawless Kyle. 2021. ‘How Free Trade Can Accelerate Africa’s COVID-19 Recovery.’ Ernest & Young Global Limited; EY. https:​//​www​.ey​.com​/ en​_gl​/public​-policy​/how​-free​-trade​-can​-accelerate​-africas​-covid​-19​-recovery. Bichachi, W. J. 2016. ‘Promoting South-South Cooperation through Regional Integration: The Experience and Lessons from the East African Community.’ Conference on South-South Cooperation organized by FIDC, RIS and NeST. 14 December 2015. http:​//​www​.worldbank​.org​/en​/news​/speech​/2015​/12​/14​/deepening​ -africanintegration​-intra​-africa​-trade​-fordevelopment​-and​-poverty​-reduction. Carmen, D, Wehbe Herrera, Serafin Corral and Maria Monagas. 2015. ‘The Challenges of Regional Integration in Sub-Saharan Africa: The Role of Economic Partnership Agreements.’ ARETHUSE Scientific Journal of Economics and Business Management, January. Cazares, Jesús. 2018. ‘The Africa Continental Free Trade Area: Benefits, Costs and Implications.’ Infomineo, 11 April 2018. https:​//​infomineo​.com​/africa​-continental​ -free​-trade​-area. Dalsen, Anton Van. 2020. ‘The African Continental Free Trade Area has been Established. What Now?’ Helen Suzman Foundation, 12 November 2020. https:​//​ hsf​.org​.za​/publications​/hsf​-briefs​/the​-african​-continental​-free​-trade​-area​-has​-been​ -established​-what​-now. Desta, Melaku, Guillaume Gérout and Jamie MacLeod. 2019. ‘Safeguarding the African Continental Free Trade Area from Externally-Imposed Threats of Fragmentation.’ Afrononics Law, 14 March 2019. https:​//​www​.afronomicslaw​ .org​ / 2019​ / 03​ / 14​ / safeguarding​ - the​ - african​ - continental ​ - free ​ - trade ​ - area from-externally-imposed-threats-of-fragmentation. Economic Community for Africa (ECA), African Union Commission (AUC) and African Development Bank (AfDB). 2017. Assessing Regional Integration in Africa VIII: Bringing the CFTA About. Addis Ababa: ECA. ———. 2010. Assessing Regional Integration in Africa: Enhancing Intra-African Trade. Addis Ababa: ECA. Ekeocha, Queeneth Odichi, and Emeka C. Iloh. 2019. ‘The Role of Intra-Regional African Trade in Promoting South-South Cooperation.’ Development Cooperation Review 2 (5): 29–40.



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Erasmus, G. 2018. ‘From the Tripartite to the Continental Free Trade Areas: Designs, Outcomes and Implications for African Trade and Integration.’ Netherlands Yearbook of International Law 37­. Geda, Alemayehu, and Edris Hussein Seid. 2015. ‘The Potential for Internal Trade and Regional Integration in Africa.’ Journal of African Trade 2: 19–50. Gonzalez, Anabel. 2015. ‘Intra-Africa Trade for Development and Poverty Reduction.’ Fourth China-WTO Accessions Roundtable: International Economic Cooperation and African Perspectives on the Future of the Multilateral Trading System, Nairobi, Kenya. http:​//​www​.worldbank​.org​/en​/news​/speech​/2015​/12​/14​/deepening​-african​ -integration​-intra​-africa​-trade​-for​-development​-and​-poverty​-reduction. Hartzenberg, Trudi. 2011. ‘Regional Integration in Africa.’ WTO Staff Working Paper, no. ERSD-2011–14. Geneva: World Trade Organisation (WTO). http:​//​dx​.doi​.org​ /10​.30875​/fad9df15​-en. Hasse, Karlsson. 2013. ‘Non-Tariff Barriers Choke African Trade: Africa in Fact.’ The Journal of Good Governance Africa 8, 5–8. Iloh, Emeka C. 2018. ‘Between Trade and Development: An Analysis of the Impacts of International Trade Policies on Africa’s Development.’ African Renaissance 15 (3): 67–85. Kayizzi-Mugerwa, Steve, John C. Anyanwu and Pedro Conceiçao. 2014. ‘Regional Integration in Africa: An Introduction.’ African Development Review 26 (1): 1–6. Kituyi, Mukhisa. 2016. ‘This African Trade Deal Could Improve Lives ACROSS the whole Continent.’ United Nations Conference on Trade and Development (UNCTAD) https:​//​www​.weforum​.org​/agenda​/2016​/05​/this​-african​-trade​-deal​ -could​-improve​-lives​-across​-the​-whole​-continent. MacVenture Capital. n.d. ‘Sote and Unlocking the Economic Potential of Africa— MaC VC.’ https:​//​macventurecapital​.com​/in​-the​-news​/sote​-and​-unlocking​-the​ -economic​-potential​-of​-africa​/. Marcone, Maria Rosaria. 2015. ‘Arethuse.’ Scientific Journal of Economics and Business Management 2 (2): 184. Mbakiso, Makhwade Magwape. 2018. ‘The AfCFTA and Trade Facilitation: Re-Arranging Continental Economic Integration.’ Legal Issues of Economic Integration 45 (4): 355–74. Munyati, Chido. 2022. ‘How Africa’s Free Trade Area is an Opportunity for Recovery and Development.’ World Economic Forum, 25 May 2022. https:​//​www​.weforum​ .org​/agenda​/2022​/05​/africa​-free​-trade​-recovery​-development​/. Mutume, Gumisai. 2006. ‘New Barriers Hinder African Trade.’ Africa Renewal, January 2006. https:​//​www​.un​.org​/africarenewal​/magazine​/january​-2006​/new​ -barriers​-hinder​-african​-trade. Negeri, Tere. 2018. ‘Africa’s Greatest Economic Opportunity: Trading with Itself.’ We Forum, 16 January 2018. https:​//​www​.weforum​.org​/agenda​/2018​/01​/why​-africas​ -best​-trading​-partner​-is​-itself​/. NEPAD. 2020. ‘AfCFTA Implementation: Conditions for Success.’ Africa Renewal, 13 February 2020. https:​//​www​.un​.org​/africarenewal​/news​/afcfta​-implementation​ -conditions​-success.

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Rampiar, Anup. 2021. ‘What is AfCFTA (African Continental Free Trade Area) and What It Means for South Africa.’ Shipping and Freight Resource, 8 January 2021. https:​//​www​.shippingandfreightresource​.com​/what​-is​-afcfta​-african​-continental​ -free​-trade​-area​-and​-what​-it​-means​-for​-south​-africa​/. Saygili, Meysut, Ralph Peters and Knebel Christian. 2018. ‘African Continental Free Trade Area: Challenges and Opportunities of Tariff Reductions.’ UNCTAD Research Paper, no. 15. Songwe, Vera. 2019. ‘Intra-African Trade: A Path to Economic Diversification and Inclusion.’ https:​//​www​.brookings​.edu​/research​/intra​-african​-trade​-apath​-to​ -economic​-diversification​-andinclusion​/. United Nations Conference on Trade and Development (UNCTAD). 2013. Economic Development in Africa. Report 2013. Intra-African Trade: Unlocking Private Sector Dynamism. Geneva: UNCTAD. ———. 2019. Made in Africa—Rules of Origin for Enhanced Intra-African Trade. Economic Development in Africa Report 2019. Geneva: UNCTAD. United Nations Development Programme (UNDP). 2011.  Regional Integration and Human Development: A Pathway for Africa. New York: UNDP. United Nations Economic Commission for Africa (UNECA). 2018. An Empirical Assessment of AfCFTA Modalities on Goods. Addis Ababa, Ethiopia: UNECA. United Nations Economic Commissions for Africa (UNECA) and TradeMark East Africa. 2020. Creating a Unified Regional Market: Towards the Implementation of the African Continental Free Trade Area in East Africa. Addis Ababa: Economic Commission for Africa. Varela, Hilda. 2005. ‘La Integración en la Región sur de África: Entre Utopía y Realismo Político.’ ESTUDIOS de Asia y África 40 (2): 290–340. World Bank. 2020. The African Continental Free Trade Area Economic and Distributional Effects. Washington, DC: World Bank Group. http:​//​documents1​ .worldbank​.org​/curated​/en​/216831595998182418​/text​/The​-African​-Continental​ -Free​-Trade​-Area​-Economic​-and​-Distributional​-Effects​.txt. World Trade Organisation (WTO). 2018. World Trade Statistical Review. https:​//​www​ .wto​.org​/english​/res​_e​/statis​_e​/wts2018​_e​/wts2018​_e​.pdf.

Chapter 11

International Trade, South– South Cooperation and African Integration Kenechukwu Udoka Udibe

Historically, the origin of international trade can be traced back to the fourteenth century (Bernstein 2008; Todaro 1989; Todaro and Smith 2006). The idea that international trade is the pivot of economic growth can be traced to Adam Smith’s The Wealth of Nations in 1776 (Abbas 2014). However, the fall of empires and colonies, and the emergence of the state system largely contributed to the present form and shape of international trade. This led to increase in the volume of trade across states. Consequently, the increased trade across states positively impacted the economic growth and development of those states (Osegbue 2008, cited in Ekesiobi et al. 2011). International trade deals with the buying and selling of goods and services, which transcends state boundaries (Black 2003). It is usually the sale and purchase of goods and services between two or more states (Whitehead 1980, cited in Ekesiobi et al. 2011). Prior to the establishment of the World Trade Organisation (WTO), various institutions have played pivotal role in the promotion of world trade. Prominent among them is the General Agreement on Tariffs and Trade (GATT), established as far back as 1947 to set out rules and regulations guiding world trade (Mazumder 2008). Series of negotiations were conducted by states under the auspices of GATT. The last of the negotiations, known as the Uruguay Round, brought an end to the era of GATT in 1994. The WTO is inexorably linked to the Uruguay Round, and it was established in 1995 to advance strategies that can enhance free trade across the globe.

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International trade has remained a subject of theoretical controversy. Several scholars have argued that it is beneficial to national growth, hence the need for increased openness of economies. To these scholars, international trade is an indispensable engine of growth, with the capacity to stimulate the economic development of states (Ekesiobi et al. 2011). However, to others, international trade creates imbalance in the international economic system, especially when it is without restrictions or control (Todaro and Smith 2006). Scholars in support of the latter view argue that the structure of the international trade regime is detrimental to the economy of developing states (Bernhardt 2014). It is for this reason that developing economies are exploited and plundered by developed states. This situation has been made worse by the existing asymmetrical relation in international trade (Todaro 1989; Sharer 1999). African states are not left out in the current lop-sidedness in international trade (Ekesiobi et al. 2011, 42). Owing to the economic imbalance between the North and South, and the need to restructure prevalent global power relations, advocacy among scholars for increasing trade relations across states in the South arose. This led to the emergence of South–South cooperation (SSC). The concept of South–South cooperation goes beyond the economic and political relations across states in the South. It also involves military, social, cultural and all forms of humanitarian aid and technical support existing across the South (Bergamaschi and Tickner 2017). The SSC came as a counter position to the hegemony of the North in the political and economic affairs of the world system, through the building-up of cordial relations in every area of their concerns (Murphy 2005). The centre-periphery relations between the North and South are gradually being replaced by a more balanced economic relation among countries of the South, which is expected to be more inclusive, collaborative and development-oriented in nature (Ofodile 2011). The essence of such collaborative effort among Southern states is to avail them the opportunity to speak with one credible, coherent voice in their dealings with the North. The history of the SSC can be traced back to the struggle for independence of Afro-Asian countries during the 1940s and in the Non-Aligned Movement (NAM), following the Bandung Conference of 1955 (Bergamaschi and Tickner 2017). The conference, which led to the formation of the NAM, played a remarkable role towards the emergence of the SSC (Gray and Gills 2016). The conference, which comprised the newly decolonised countries states, emphasised on economic and cultural cooperation, human rights and the promotion of world peace (Appadorai 1955, 232, in Gray and Gills 2016). The Southern states used the umbrella of the NAM to challenge the existing global inequality. At the same time, they attempted to reduce the politico-economic dependence of the South on the North (Braveboy-Wagner

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2009). The consciousness of the SSC created coalitions among Afro-Asian states, in order to end the existing imbalance between the North and South (Bergamaschi and Tickner 2017). Following the end of World War II, many less-developed countries (LDCs), particularly in Africa, adopted import substitution industrialisation (ISI) as a strategy for economic development. Most of those were countries whose exports were predominantly agricultural produce. The ISI strategy required increased importation of machinery and technology, which needed increased foreign exchange more than growth in export earnings. This led to balance of payment deficit in the LDCs. In the course of financing those deficits, the LDCs became subservient to the North. In an effort to contain the precarious economic situation, international financial institutions advised that those countries should embrace free trade. With such development, the LDCs eventually began to open up their economies, hence the introduction of liberalisation, deregulation and privatisation as economic reform measures (United Nations Conference on Trade and Development (UNCTAD) 2016). The opening up of the economies of African states resulted in decades of regional trade agreements in order to enhance the economic leverage of African states while trading with other states. Regional integration became expedient in Africa in order to enhance interstate trade. Eventually, the Organisation of African Union (OAU) was created in 1963. Consequently, the Lagos Plan of Action (LPA) was launched in 1980 to create a common market for Africa (Ismail 2016). Thereafter, the African Economic Community (AEC) was established in 1991 (Geda and Kibret 2008). It provided for a clearly defined route that led to the establishment of free trade areas (FTAs) in Africa. About eight regional economic communities (RECs) have been involved in the promotion of regional integration in Africa (Jung 2017). However, those regional economic arrangements have not been able to promote economic integration in Africa (Albert 2019). It was the inability of the RECs to promote regional integration in Africa that led to the establishment of the African Continental Free Trade Area (AfCFTA) in Kigali, Rwanda, on 21 March 2018. The AfCFTA, among other things, is expected to create a single market for goods and services for the economic integration of Africa (AfCFTA Agreement, Article 3 a and b). This chapter examines the link between international trade, South–South cooperation and African integration. Following this introduction, it is divided into the following sections: ‘Previous Studies on Trade Openness and the Economic Growth of Developing States’; ‘Theoretical Perspective’; ‘Global Trade Liberalisation and Its Impact on the Economies of the South’; ‘South– South Cooperation and African Integration’ and ‘Conclusion.’

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PREVIOUS STUDIES ON TRADE OPENNESS AND THE ECONOMIC GROWTH OF DEVELOPING STATES Trade openness and economic reform can be traced to the writings of Little et al. (1970) and Krueger (1974). However, the reform process commenced with the emergence of the Structural Adjustment Programmes (SAPs) and Stabilisation Programmes (SPs) of the Bretton Woods institutions (BWIs) in the early 1980s (Shafaeddin 2005, 3). Notably, the relationship between trade openness and economic growth of developing states has received the attention of scholars for so many decades. Still, there is no consensus on whether greater openness to trade stimulates economic growth. While some studies have shown that there is a long-run-positive relationship between trade openness and economic growth (Wacziarg and Welch 2003; Ben-David and Loewy 1998; Krueger 1978; Bhagwati 1978; Ciuriak 2005, cited in Biwott, Moyi and Khainga 2013), others have suggested that trade openness has a negative impact on the growth of low-income countries in the long run (Kim 2011; Were 2015; Tekin 2012; Malefane and Odhiambo 2018; Moyo and Khobai 2018). Several studies have reported the short-term and long-term relationship between trade openness and economic growth of states. It has been argued that openness in international trade enhances the economy of developing states (Wacziarg and Welch 2003; Ben-David and Loewy 1998). Again, trade openness enhances specialisation in sectors with economies of scale as it helps to improve efficiency and productivity in the long run (Krueger 1978; Bhagwati 1978). Similarly, scholars argue that trade liberalisation enhances the economies of developing states. They argue that developing states with a higher degree of trade openness have the chances of acquiring the latest technologies from advanced economies while doing business with them; and that such technological exchange boosts the economy of developing states (Grossman and Helpman 1991; Romer 1994). Trade openness also stimulates exports and leads to increased productivity in a state (Ciuriak 2005, in Biwott, Moyi, and Khainga 2013). According to Gries and Redlin (2012), trade openness has a long-run positive impact on the economic growth of states; but in the short run, its effect on low-income states is negative. Nonetheless, there are studies that have shown that trade openness has both a short-run and long-run negative effect on economic growth and development of a state (Malefane and Odhiambo 2018). Furthermore, trade openness has a long-run negative effect on economic growth (Hye and Lau 2015; Moyo and Khobai 2018). Therefore, one can infer from these arguments that there could be a positive relationship between openness in trade and the economic growth of a state in the long run. On the other hand, the relationship between trade

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openness and economic growth tends to be negative in the short run, especially in low-income countries. Several scholars have argued that trade openness may have adverse consequences on the economy of the South, as it tends not to enhance economic development of states in that area. In a study that examined the impact of trade liberalisation on poverty and inequality in Ethiopia, Kebede, Fekadu and Aredo (2012), it was observed that the overall output of the economy diminished, while poverty increased. However, it was revealed that the agricultural sector benefited from trade openness in the country. The study further revealed that there was an increase in the volume of imports, with a slight increase in exports. Francis Amoasah also examined the link between trade liberalisation and economic growth in three African states: Ghana, Nigeria and Cote d’Ivoire; and he found out that trade liberalisation did not lead to a significant increase in economic growth of the countries under survey, even though there was an increase in post-trade-liberalisation exports. They further observed that, due to trade liberalisation, increases in imports were dominated by increases in exports, and earnings from exports are usually affected by international price volatility (Amoasah 2018). Several studies have argued that trade liberalisation has led to increasing poverty, debt burden and income inequality in developing states, particularly in Africa (WTO 2011b; Frewen 2010, in Reddy 2011, 8691). With respect to trade liberalisation and poverty, studies by Yusuf, Malarvizhi and Khin (2013) and Ayinde (2013) have proven that trade liberalisation has led to increasing poverty in Nigeria. Using the autoregressive distributed lag (ARDL) model, the link that exists among trade liberalisation, income growth and poverty reduction in Nigeria between the periods of 1980 and 2011, was interrogated. The findings of the study revealed that trade liberalisation does not enhance poverty reduction in Nigeria (Yusuf, Malarvizhi and Khin 2013). In a similar vein, Ayinde (2013), employing the vector error correction model (VECM), carried a study for the periods of 1970 and 2008, and revealed that openness in trade led to increase in poverty within that period of time. He argued that for Nigeria to benefit from the benefits accruing to trade openness, good governance and stable macroeconomic policies should be in place. In a study on trade openness, employment, economic growth and poverty reduction in Pakistan for a period of 1971 to 2015, some scholars employed the error correction method (ECM) and discovered that there is a negative correlation between openness in trade and income growth in the industrial sector and labour force, as well as the rate of inflation in the country in the short term. However, they observed that trade liberalisation has a positive correlation with the growth of income in the agricultural sector. They further noted that trade openness had positive effects on the gross domestic product

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(GDP) of the country as it regards the labour force and inflation, with an opposite relationship with GDP in the long term (Ali, Kiani and Hafeez 2018). The relationship between trade liberalisation and debt burden in developing states has been a subject of controversy among scholars. Scholars have argued that one of the prerequisites that would help developing states to free themselves from debt burden is through trade liberalisation, which would promote their export capacity in a competitive international market. These set of scholars argue that trade liberalisation has the capacity to increase the resources of a state, thereby enhancing the chances of recovering from external debt shocks (Auboin 2004; Zakaria 2012). However, it has been observed that when the borders of the various developing states are opened simultaneously for foreign trade, thanks to trade liberalisation, it tends to reduce export prices because there would be surplus of similar products (Khattry and Rao 2002). When this happens, the terms of trade of the affected states would be worsened, and their revenues would be adversely affected due to reduced export revenues. Again, the introduction of trade liberalisation enhances the import capacity of most developing states to the detriment of its export base. This scenario creates an environment of trade deficit in developing states, and oftentimes, they resort to borrowing in an effort to address the problem posed by deficit in trade. To this end, one can say that trade liberalisation fosters debt burden in developing states (Zafar and Butt 2008). According to Baunsgaard and Keen (2005), for trade liberalisation to advance in developing economies, there is the need to ensure that export and import tariffs, which are the major sources of revenues for these countries, are gradually removed. The continuous decline in the economy of African states, despite its openness to international trade, points to the fact that trade liberalisation has not significantly impacted the economies of developing states. Trade openness positively impacts economic growth and development of the North, with negative effects in the South (Kim 2011). This position was re-echoed by another scholar who reveals that trade openness positively on the economy of developed and developing states, with an insignificant effect on the LDCs largely found in Africa (Were 2015). THEORETICAL PERSPECTIVE Dependency theory was adopted as the analytical framework in this study. Dependency is defined as the economic and political reliance of a state towards another (Dingson 2001, in Enuka 2018, 132). It creates a situation where the economies of certain states are conditioned by the development of another. It is the exploitation of the dominant state that subjects the dependant state to poverty and underdevelopment (Santos 1970, in Enuka 2018, 32).

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In situations of dependency, important economic decisions are made by the dominant states, and not by the dependant states (Offiong 1981). The philosophical analysis of scholars like Karl Marx on surplus value, imperialism and colonialism has continued to influence modern day dependency theorists. The theory, which was popularised by the likes of Andre Gunder Frank, Paul Baran, Samir Amin and Walter Rodney, among others, arose as an alternative to modernisation theory. Dependency theory explains the North–South disparity, and it argues that the world economy is characterised by unequal relations, which has created two economically distinct societies in the world—the North and South. The North is mainly engaged in industrial activities; whereas the South is engaged in agriculture, and also the chief producer of raw materials used for manufacturing goods in the North. It argues that the resources of the South continue to be plundered by the North through trade (Ferraro 2008). They see international trade is an extension of world capitalism, characterised by unequal exchange between the North and South. Hence, developing countries are entrapped in development challenges resulting from the lopsided world trade relations (Agbebi and Virtanen 2017). Therefore, for Southern economies to flourish, either the international economic system is transformed, or the South delinks from the North (Morvaridi and Hughes 2018, 871). The theorists argue that Southern economic woes are caused by her bitter historical experiences of slavery, imperialism, colonialism and neocolonialism (Gambo 1999). During slavery, African men and women were taken away from Africa, hence the continent suffered a massive loss of labour force. While Africans contributed to European development, Africa became underdeveloped (Offiong 1980). Following the Industrial Revolution in the North, the production of goods increased and slavery became unfashionable. The need for market outlets arose, and the search for markets paved way for imperialism and colonialism. This process integrated the South into the world economy (Enuka 2018). Regrettably, this has led to the dependence of the South on the North. The process of decolonisation ushered in neocolonialism as a means of ensuring that the South remains perpetually subservient to the North. Neocolonialism is a situation where, in principle, a state is sovereign and independent but, in practise, its political and economic system is determined by external powers (Nkrumah 1995). Under such scenarios, metropolitan power grants independence to its erstwhile colony but still dictates what happens in such a state. Neocolonialism is a more subtle form of control over the South by the North, which has continued to erode the independence of the former (Gambo 2001, in Enuka 2018). Neocolonialists use the comprador bourgeoisies to exploit the masses.

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Dependency theory is appropriate for this study as it explains the connection between development and underdevelopment under the world economy (Namkoong 1999). It argues that the capitalist expansionism of the North through the process of imperialism and colonialism led to its contact with the South. Hence, the South was forced to specialise on products which were exported as raw materials to the industries in Europe (Webster 1989, in Jack, Nkwocha and Boroh 2016, 207). This created unequal trade relations which favoured the North to the detriment of the South. The case of Africa is informative. When Europe came into Africa, it plundered its resources using African labour. It was through this process that African wealth was expatriated to Europe (Rodney 1972, in Matunhu 2011). Therefore, the conscription of the South into world capitalism through international trade largely accounts for its peripheral status in world economy (Udeala 2010). To this end, dependency theorists advocate for a restructured international economic order that can break the vicious cycle of dependency, underdevelopment and poverty that the South is entrapped into or, better still, establish a delink with the North. Also, the South is advised to devise an action plan that can alter the existing structural imbalance in world economy for a better pattern that is devoid of subordinate relations (Cedro 2015, 193). Removal of such encumbrances from international trade can position the South to speak and act from a position of strength in the world. GLOBAL TRADE LIBERALISATION AND ITS IMPACT ON THE ECONOMIES OF THE SOUTH Trade liberalisation is the removal of restrictions on the free exchange of goods across states. It is a move towards freeing trade restrictions through tariff reduction and other forms of encumbrances to trade across states. Over the years, the ever-increasing flow of goods and services across states has led to increased economic integration in the world (Lee 2005). The value of trade liberalisation is determined by the volume of trade compared with total output in a country (Edwards 1998). One method of ascertaining the level of a state’s integration in the global market is through trade liberalisation (Gwartney, Skipton and Lawson 2001). The central argument of the advocates of trade liberalisation is that it stimulates the growth and development of an economy (Dollar and Kraay 2007; Wolf 2007). Trade liberalisation and open market economy are neoliberal economic reforms aimed at accelerating economic development of states. These reforms gained momentum following the advocacy of international financial institutions (IFIs). These reforms were approached differently in the South. While some states in Asia ‘continued their own dynamic industrial and trade

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policies initiated in 1960s,’ these reforms were religiously adopted by most African states (Shafaeddin 2005; Ray 2006; WTO 2011a). Although international trade aids in the economic development of African states, it is important to understand that it is characterised by inequality. The lopsided trade relations between the North and South manifest in various forms. Firstly, the refusal by the United States and the European Union to reduce subsidies, particularly on agricultural products, is instructive. Eventually, when the United States and the European Union subsidies on agricultural products were reduced, it could not materialise into anything meaningful (Bown and McCullouch 2010, 34). Secondly, the South, especially African states, is reluctant to reduce barriers to their tariffs, as a relatively high proportion of their revenues are generated from tariffs. This is unlike what is obtained by the North, where only about 2 per cent of their revenue is generated from tariffs (Nieuwoudt 2007, cited in Reddy 2011). Thirdly, the North has alleged that the South, especially African states, violates intellectual property rights of foreign businesses. Fourthly, the protection of intellectual property rights of businesses from the North have had adverse effects on Southern states, which rely heavily on technologies from developed states (Shenkar and Luo 2008, 55). Although the WTO made provisions for the special and differential treatment which was expected to safeguard the interests of developing states, they later became disenchanted about it due to its ineffectuality. Again, technical assistance that was promised to the South was too little to enhance their economic capacity (Neumayer 1999, 592–93). It is obvious that Africa is still regarded as the poorest continent in the world, despite its natural and human resources endowment (Jobodwana 2006, 246). Furthermore, while developed states are busy preaching free trade, most of their economies were built up with tariffs and subsidies (Chang 2005). This suggests that there is a ‘double standard’ involved with the advocacies from developed countries on the virtues of free trade. SOUTH–SOUTH COOPERATION AND AFRICAN INTEGRATION The establishment of Non-Aligned Movement (NAM) in 1961 following the Bandung Conference in 1955 marked the beginning of South–South cooperation. The NAM was established to ensure that developing states abstain from any form of alliance with any of the two world superpowers. The idea of building relations based on the principles of non-interference in domestic affairs, peaceful coexistence and mutual interest of developing states was embraced by Africans (Asante 2018). Hence, various economic organisations were established at the regional and continental levels. All these efforts

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were aimed at containing the existing imbalance in the world economy, as well as at promoting an economic strategy capable of stimulating collective self-reliance for the socioeconomic development of Africa (Asante and Aidoo 2013). Understandably, the global economic recession and crisis of the 1970s had severe consequences for developing economies like Africa. With this, the neoliberalist approach was introduced as a panacea to solving the economic problems of states. Neoliberalist scholars argue that the dominance of state, rather than the market, impedes economic development. Hence, state-led development strategy was discredited (Arrighi 2002). However, despite the dominance of neoliberalism, coupled with the harsh effect of the various structural adjustment programmes (SAPs) on Africa, policymakers and scholars in the continent and other developing countries such as Brazil and China have continued their advocacy for South–South cooperation (Asante 2018, 263). Africa’s economy is also increasing gradually in terms of growth rate. It experienced an average growth rate of 4.6 per cent yearly between 2000 and 2016. It was higher than Latin America and the Caribbean, which were about 2.8 per cent, but lower than Asia, which was 7.2 per cent within the same period (AUC/OECD 2018). Such increase in African economy is based on its increased strategic trade partnerships with other Southern states. More so, Africa’s strategies towards economic diversification are getting better, while the prices of commodities are also increasing. However, asymmetric economic relations still exist between the North and South (Asante 2018). A wide gap still exists between economic growth and job creation in Africa. A large number of able-bodied men and women are still unemployed. Inequality is high, and people’s well-being has not improved alongside the economic growth rate (AUC/OECD 2018, 34). Africa, with about 14 per cent of the world population, still accounts for less than 3 per cent of the world’s GDP and about 3 per cent of foreign direct investment (Musa and Magai 2019, 123). This shows that Africa still occupies a very low status in the international market. Undoubtedly, regional agreements in Africa have failed in terms of harmonising the economic interest of Africans. Intra-regional economic integration export in Africa is not encouraging. This shows that trade liberalisation in Africa is still very poor (Jung 2017, 13). Owing to these challenges, African leaders thought it expedient to build an economic bloc that would enhance its ability to compete favourably in international trade. To this end, the African Continental Free Trade Agreement (AfCFTA) was formed with the motive of building a formidable economic integration in Africa (Afreximbank 2018, 15). It is hoped that if tariffs on 90 per cent of its products are eliminated, intra-African trade will advance significantly (Moremong 2019, 8).

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The AfCFTA can foster the economic development of Africa. It has been projected that the monetary value of intra-African exports would increase by $68.5 billion, while trade in industrial African goods rose by 53 per cent between 2010 and 2022 (Luke et al. 2017; UNECA 2016, in Parshotam 2018, 9). Again, the African manufacturing sector can experience a more robust continental free trade. The sector has the capacity to enhance the growth of small- and medium-scale enterprises (SMEs) in Africa. It can also create more employment in Africa (Akeyewale 2018; Adeola 2019). African leaders are expected to utilise the AfCFTA to diversify trade in the continent, given the price volatility of extractive commodities like oil and minerals, which it predominantly exports (AfCFTA n.d.). The platform of AfCFTA can reduce barriers that encumber intra-African trade to the barest minimum. It can also improve the industrial and manufacturing sector (Adetayo and Nnanke 2020). Therefore, African leaders’ proper utilisation of the AfCFTA platform has the capacity to advance economic integration in Africa and enhance the economic leverage of Africans in the international market. CONCLUSION This chapter examined the link between international trade, South–South cooperation and African integration. Studies reviewed show that there has been an age-long argument among scholars on the impact of trade openness on the economy of developing states. While some argue that there is a positive relationship between trade openness and the economic development of states in the South, others believe that trade openness has had adverse consequences on those states. The position of the latter scholars is in congruence with the argument in this chapter. It is evident that trade liberalisation enhances poverty, inequality and dependence on the North. It is for this reason that governments and relevant stakeholders in the South are making strenuous efforts to increase economic relations across developing states. Against this background, African states have been collaborating to deepen the continent’s economic unity. The number of RECs existing in Africa is a clear demonstration of the intention by governments of African states to integrate regional markets, promote intra-regional trade and harness the inherent potential in the economic cooperation of the South–South. It is therefore expected that such increasing rate of cooperation across the South should be properly utilised to bring about a restructured international trade landscape favourable to developing states. It is also crucial that African states harness the inherent potential in the African Continental Free Trade

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Agreement, in order to advance the continent’s economic integration and provide them the ability to speak and act with authority in the global market. REFERENCES Abbas, Shujaat. 2014. ‘Trade Liberalisation and its Economic Impact on Developing and Least Developed Countries.’ Journal of International Trade Law and Policy 13 (3): 215–21. Adeola, Onikoyi. 2019. ‘The Challenges and Benefits of African Continental Free Trade Area (AfCFTA).’ Tekedia, 20 July 2019. https:​//​www​.tekedia​.com​/the​ -challenges​-and​-benefits​-of​-african​-continental​-free​-trade​-area​-afcfta​/. Adetayo, Adetuyi, and Williams Nnanke. 2020. ‘Nigeria: Considerations for the Implementation of the African Continental Free Trade Area Agreement.’ Mondaq, 19 March 2020. https:​//​www​.mondaq​.com​/nigeria​/international​-trade​-investment​ /905002​/considerations​-for​-the​-implementation​-of​-the​-african​-continental​-free​ -trade​-area​-agreement. African Export-Import Bank (Afreximbank). 2018. Africa Trade Report. Cairo, Egypt: Afreximbank. African Union Commission (AUC) / Organisation for Economic Co-operation and Development (OECD). 2018. ‘Africa’s Integration into the Global Economy.’ In Africa’s Development Dynamics 2018: Growth, Jobs and Inequalities., Paris /Addis Ababa: AUC/OECD Publishing. Agbebi, Motolani, and Petri Virtanen. 2017. ‘Dependency Theory—A Conceptual Lens to Understand China’s Presence in Africa?’ Development Studies 44 (3): 429–51. Akeyewale, Rilwan. 2018. ‘Who are the Winners and Losers in Africa’s Continental Free Trade Area?’ World Economic Forum, 17 October 2018. https:​//​www​ .weforum​.org​/agenda​/2018​/10​/africa​-continental​-free​-trade​-afcfta​-sme​-business​/. Ali, Tariq Mahmood, Adiqa Kausar Kiani and Muhammad Hafeez. 2018. ‘Impact of Trade Liberalisation on Employment, Poverty Reduction and Economic Growth.’ Pakistan Economic Review 1 (2): 83–104. Amoasah, Francis. 2018. ‘Trade Liberalization and Economic Growth: A Study on Ghana, Nigeria and Cote d’Ivoire.’ FIW Working Paper, no. 188. Vienna: FIW Research Centre International Economics. Arrighi, Giovanni. 2002. ‘The African Crisis: World Systemic and Regional Aspects.’ New Left Review 15: 5–36. Asante, Richard. 2018. ‘China and Africa: Model of South-South Cooperation?’ China Quarterly of International Strategic Studies 4 (2): 259–79. Asante, Richard, and Kojo Opoku Aidoo. 2013. ‘Human Security in Africa.’ In Africa in Contemporary Perspective: A Textbook for Undergraduate Students, edited by Takyiwaa Manuh and Esi Sutherland-Addy, 248–65. Accra: Sub-Saharan Publishers. Ayinde, Taofeek Olusola. 2013. ‘Trade Liberalization, Growth, and Poverty Reduction in Nigeria.’ Journal of Economics and Sustainable Development 4 (18): 93–106.

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Chapter 12

Liberalism and Protectionism in International Trade Options for African Political Economy Sunday Orinya

Since the emergence of nation states, international trade has demonstrated its resilience as an indispensable source of national wealth. It has remained a critical component of inter-state relations, especially in promoting economic growth, development and poverty reduction (International Monetary Fund (IMF) 2001). This salience of cross-border trade to national economic growth makes it an indispensable economic activity globally. International trade has witnessed astronomical growth with an increasing volume of goods and services moving across national boundaries since the beginning of the mercantile capitalist system in the sixteenth century. The emergence of trade regulating bodies such as the General Agreement on Tariffs and Trade (GATT) in 1947 and the World Trade Organisation (WTO) in 1994 owe their relevance to the need to regulate the conduct of international trade. Curiously, the major mandate of GATT and its successor, the WTO, has been to ensure the establishment of free market order in global trade. The elevation of free market, a liberal orthodoxy, to global best practice by the WTO has been facilitated with the assumption of a link between free market and national economic development. Nations are enjoined to open their borders to the free movement of goods and services as a condition for growth and development. This admonition is at variance with the reality of the need for developing countries to impose specific restrictions on the movement of goods and services as a way of protecting local industries. The debate between liberalists and protectionists in international trade is agelong. Since Adam Smith’s cerebral work, The Wealth of Nations, in 1776, 213

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the rejection of protectionism and the enthronement of liberalism has been at the core of the advocacy championed by industrially advanced countries. The resultant schism between the two dominant trade policies reflects the division of opinion between industrialised and non-industrialised countries. While developed Western capitalist countries favour the liberal practice of free trade, less developed nations tend to prefer restricted trade. At the end of the Cold War, it was generally believed that the triumph of liberalism had, by extension, ended the debate over open and closed economies. Consequently, market-directed capitalism became the dominant paradigm following the demise of central-planning regimes (Fukuyama 1992; Greenspan 2001). The raging trade war between the United States and China may have again resurrected the debate between free and restricted trade policies. Once again, the canonisation of liberalism has been called into question with the resort to protectionist trade policies by the United States and China, her largest trade partner. The trade dispute between the two nations has resulted in unilateral actions by the United States, an acclaimed leading voice in liberal advocacy, and China, the biggest exporter in the world. This action by the two leading exporters not only undermines the powers of the World Trade Organisation (WTO) but also serves as a reminder that the forces of demand and supply are not operating independently but, rather, are guided by politics and power (Hoogvelt 2001). This chapter is a contribution to the ongoing debate on the place of developing countries, especially Africa, in international trade. It seeks to achieve its objective through a process of interrogation of the underlying principles and practices of liberalism and protectionism. This chapter is discussed in five sections. The first is this introduction, followed by the second, which is an attempt to conceptualise international trade. The third section is an interrogation of trajectories of liberalism and protectionism in international trade, while the fourth, titled ‘Protectionism or Liberalism?: Africa and International Trade,’ examines the dilemma of policy choice open to Africa by the two trade mechanisms. The fifth section is the conclusion. CONCEPTUALISING INTERNATIONAL TRADE The simple image that trade conjures in the mind is that of the exchange of goods and services at a given price through the process of buying and selling. This practice has remained an integral part of human activity for ages, owing largely to its economic benefits. History shows that, at almost every stage of development, mankind has demonstrated tremendous interest in the practice of exchanging what they have to get what they need (Amin 1976; Adejo 2003).

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Trade is a daily process that man engages in to facilitate access to their needs through the exchange of goods and services. The value of the item to be exchanged is usually denominated price, which is a critical element in trade. In modern times, currency plays a central role as a medium of exchange. That is to say that the worth of a commodity is quantified in the value of currency. Owing to the development of capitalism, trade has grown exponentially over time, from local inter-personal transaction to a global activity encompassing a wide range of goods and services across many nations, otherwise called international trade (Frank 1978; Hoogvelt 2001). The history of international trade is traced to activities of middlemen and trade intermediaries who traded in agricultural produce from the city of Uruk in Mesopotamia, more than 5,200 years ago (Ridley 2010). With a population in excess of fifty thousand people, Uruk is said to probably be the first city in the world and was made prosperous by its relatively sophisticated irrigation technology that ensured abundant agricultural production. This trade pattern across city borders, which was promoted by middlemen, evolved over time into international trade with the emergence of nation-states. Scholars have constructed the stages of capitalist development in a slightly different fashion. Frank (1978, 9) distinguishes (1) mercantilist, (2) developed (acheve) capitalist (post industrial revolution, pre-monopolist) and (3) imperialism. Hoogvelt (2001, 17), identifies four stages of development: (1) mercantile phase, (2) colonial period, (3) neocolonial period and (4) postimperialism. Friedman’s (2005) seminal work identifies three epochs of what he calls capitalist globalisation: 1492 to 1800, 1800 to 2000 and 2000 to the present day. He explains that the first stage was a period when nations dominated global expansion, the second was led by multinational companies and the third was/is driven by technology. THEORETICAL EXPLICATION OF INTERNATIONAL TRADE Beyond the facile nature of international trade, it has incrementally assumed a complex character, which is governed by theories, strategies and national policy formulation. This complexity finds expression not only in the conflicting explanations of international trade practice but also in the different strategies adopted by nations to serve their interest. This evolution is expressed in the diverse theories, ranging from classical to modern; country-based to firm-based, that have been formulated over time to explain the nature and character of international trade. The dynamic nature of international trade has also given rise to the proliferation of theories giving different interpretations to the mechanism of global

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trade at different stages. Three international trade theories—mercantilism, David Ricardo’s theory of comparative advantage and global strategic rivalry theory provide the necessary background in understanding liberalism and protectionism. The need to examine mercantilism is justified by its pioneering effort in the development of international trade theory and its bold advocacy for protectionism. Ricardo’s theory of comparative advantage is under discussion here because it has assumed status as the ‘underlying ethic for liberal political economy’ (Watson 2017, 259). Without a mention of Smith’s theory of absolute advantage, which is the forerunner of laissez-faire doctrine of capitalism, it would be difficult to put international trade in proper context as Smith’s work provides the basic principles that underlie liberal trade theories. Mercantilism as an international trade theory was a dominant trade practice at the emergence of nation-states in the seventeenth and eighteenth centuries. In its bare form, it advocates for state intervention through encouragement of acquisition of national wealth by promoting export and discouraging import through a strategy of protectionism. It believes that a nation’s wealth is determined by the quantity of gold and silver in its treasury and as such a nation needs to earn more through export and spend less on import in a perpetual struggle to attain trade surplus. Mercantilism was influenced by the struggle for dominance by the emerging states in a political economy that believed in ‘the striving after political power through economic means’ (Hoogvelt 2001, 3). A more encompassing definition of the concept is given by Heywood (2007, 453) who sees mercantilism as ‘A school of economic thought that emphasised the state’s role in managing international trade and guaranteeing prosperity.’ This definition takes cognizance of state intervention in regulating export and import. The theory of mercantilism, which is a precursor to other international trade theories, still enjoys the admiration of developing countries. It contends that protectionism is necessary and, in fact, inherent in international trade, owing to competition for limited wealth in an anarchical global system. International trade is thus seen from the perspective of national interest, which nations always consider as superior to any other factor. The pragmatic nature of mercantilism theory apparently portrays it as an economic version of realism with its predilection for national interest. This attribute is manifestly stated in its position that the role of the state in the practice of international trade is to create wealth by ensuring that a nation’s export is in excess of import. It is in this sense that mercantilists contend that it is unwise to allow a veritable source of national wealth like cross-border trade to be determined by the vagaries of the forces of demand and supply. It is this standpoint that other classical theorists such as Adam Smith and David Ricardo have disagreed with in their theories.

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Smith’s theory of absolute advantage was the first attempt to challenge the principles in which mercantilism was built by attacking state intervention and advocating for free market or laissez-faire. He argues that the role of government should be limited to creating conducive conditions for the production and exchange of goods and services and, as such, allows goods to flow across borders naturally according to the forces of demand and supply. He contends that the free market system would benefit every nation if they specialise in the production of goods, in which they have absolute advantage, and trade in them with other countries. According to him, nations produce more efficiently by specialising in the production of goods that they have absolute advantage and enjoy the benefit of trade. It is based on a lower marginal cost of production of a specific good. When countries specialise in the production of goods over which they have absolute advantage, they become more efficient as their workforce would gain more skill in their task. Countries would enjoy the benefit of international trade with specialisation and increased efficiency leading to exchange of goods across borders. Smith demonstrates this hypothetically by stating that, if country A could produce a good faster and cheaper (or both) than country B, then country A has advantage and can focus on specialising on producing that good. Similarly, if country B is better at producing another good, it can focus on specialisation as well. Through specialisation, countries generate more efficiencies by producing better and faster. Differing from the national wealth determinism of mercantilism theory, Smith focuses on the standard of living of the people. David Ricardo’s comparative advantage theory is an endorsement of Smith’s liberal ideology on trade. He did not depart from Smith’s advocacy for free trade. In fact, Ricardo reinforced the defence of laissez-faire as propagated by Smith with little modification. Ricardo’s theory argues that countries should specialise in the production of a good that they enjoy comparative advantage in terms of opportunity cost believing that the practice would foreclose restriction on international trade and make resources to move from high-cost products and increase productivity. However, Ricardo differs from Smith’s absolute advantage and instead postulates the theory of comparative advantage to explain international trade. This is because Smith’s theory of absolute advantage does not sufficiently address the critical issue of cost in international trade. It is merely seen as ‘a limited case of more general basis for international trade’ as it does not sufficiently capture the essence of cost in production (Hiscox 2014, 1104). This is much expressed in a statement that: It is quite as important to the happiness of mankind that our enjoyments should be increased by the better distribution of labor, by each country, producing those

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commodities, for which by its situation, its climate, and its other natural or artificial advantages, it is adapted, and by their exchanging them for the commodities of other countries, as that they should be augmented by a rise in the rate of profits. (cf. Watson 2017, 260)

The statement clearly underscores Ricardo’s commitment to liberalism as a market idea that makes nations efficient and international trade beneficial to all. The views canvassed in his theory of comparative advantage are ‘responsible for enduring argument on free trade’ (Crane and Amawi 1997, 57). The idea of specialisation as a strategy that enhances international trade and the belief in unrestricted flow of goods and services across borders (liberalism) are views shared by both Smith and Ricardo. It is in recognition of their contribution to liberalism that they are credited with the establishment of the central concept of classical liberalism (Goddard, Cronin and Dash 2003, 33). The second phase of capitalist expansion (globalisation) was driven by the increasing role and influence of multinational corporations (MNCs) in international trade (Friedman 2005). This necessitated the emergence of modern international trade theories, otherwise called firm-based theories. The new theories became necessary to explain how the role of non-state entities impactinternational trade flows as occasioned by strategic rivalry between MNCs. This became imperative due to the inadequacy of the classical country-based theories to explain how international trade functions in an era dominated by non-state actors. In a world exemplified by the possibility to ‘produce a product anywhere, using resources from anywhere, by a company located anywhere, to be sold anywhere’ (cited in Naisbitt 1994, 19), state-based theories would prove incapable in offering explanations. One of the towering theories in the category of firm-based theories is the global strategic rivalry theory of international trade, which was developed in the 1980s (Krugman 1979, 469–79; Lancaster 1980, 151–75). It is important to note here that it is also a liberal theory. By examining the impact on trade flows resulting from global strategic rivalry among MNCs, the theory posits that in order to remain viable, firms should exploit their competitive advantage globally and try to keep it sustainable. It argues that if firms struggle to develop some sustainable competitive advantage, they can use it to dominate the global market place. Using the concept of barriers to entry, the theory outlined five obstacles, which new firms need to overcome when trying to enter an industry or new market. The strategies include research and development, ownership of intellectual property rights, achieving economies of scale, unique business process or methods as well as extensive experience in the industry and the control of resources and favourable access to raw materials. In practice, it means

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individual companies leveraging their strengths and neutralising those of their competitors. The underlying assumption of this theory is that MNCs and not the states have become the major actors in international trade in the new era of globalisation. This is in agreement with well-established liberal tradition that the role of the state should be limited to providing a good environment for businesses to thrive. Consequently, it is the activities of these corporations that impact trade flows. The capacity of MNCs to operate in this global marketplace will depend on how they navigate obstacles such as research and development, ownership of intellectual property rights, developing unique business process or method and so forth. The global strategy rivalry theory of international trade’s emphasis on strategy brings to the fore the competitive nature of international trade and the politics inherent in it. Most MNCs engaged in trading of goods and services have their homes in industrialised countries such as the United Kingdom, the United States, Canada, Japan, France China and so on. This means that African countries are mere marketplaces for the products of these corporations as their activities are controlled from their home states. Like other theories it offers a useful explanation in understanding the dynamics of trans-border trade in the era of globalisation. Its focus on MNCs underscores the increasing role of non-state actors in international trade. The takeover of the global trade arena by MNCs is expected. The volume of activities undertaken by them in global trade has increased tremendously over the years and has inexorably accounted for their role. A striking similarity of all the theories we have examined, except mercantilism, is that they seek to promote free trade and reject, in principle, any form of restriction on trade. It is only mercantilism that recommends state intervention by way of protecting local industries to ensure that a nation’s export exceeds import for the purpose of attaining trade surplus. The other theories support free trade with the belief that the invisible hand of demand and supply will deal kindly with nations and firms in their exchange of goods and services in which they have comparative advantage. Emanating from this medley of international trade theories are two manifestations of international trade practices: a recrudescence of protectionism amid canonisation of liberalism. Should the state in Africa play an interventionist role or allow the forces of demand and supply to determine movement of goods and services across borders, after all?

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LIBERALISM AND PROTECTIONISM IN INTERNATIONAL TRADE In an attempt to maximise their interest in international trade, countries resort to the use of one trade strategy or the other. Most industrialised countries have a preference for free trade, while less industrially developed countries choose to impose some forms of restrictions as a way of protecting their young industries and also to curb dumping. It should be noted that, in one way or the other, countries engage in the imposition of tariff and non-tariff policies for strategic reasons. International trade is a complex activity. The tendency to gain advantage in international trade has always necessitated the deployment of any of the two strategies of liberalism and protectionism by countries. The complexity of international trade seems to be deepening even as the competitive playing field for both industrial and emerging market nations is said to be levelling with individual entrepreneurs and companies becoming players in the global market space (Friedman 2005). Despite this assertion, there has been strident opposition by liberal apologists that free trade provides a level playing field for all nations. Instead of flattening world economy, liberalism has been creating uneven global space by benefiting technologically advanced countries at the expense of others. Several accounts on the development and emergence of capitalism as an economic system are unanimous that it was accompanied with outward expansion that gradually integrated the globe in a network of market exchanges (Amin 1977; Wallerstein 1979; Frank 1979; Ake 1981; Hoogvelt 2001). This global network of market exchanges, otherwise called international trade, first started with the mercantile phase of state control or protectionism followed by free market phase of non-state interference or liberalism. The recrudescence of protectionism in the era of free market globalisation speaks to the tenacity of volatility in the international trade arena. Protectionism and liberalism have for long been the determinants of the complexion of international trade. Restriction depicts state use of tariffs and non-tariff barriers as a means of restricting trade between countries. It is a primary character of the mercantile theory of trade by arguing that it is in the best interest of a nation to maintain trade surplus (Girma 2017). This is done through a process of protecting local industries by reducing imports and boosting exports. These mechanisms are also deployed in extreme cases of trade war between countries. While tariffs are direct taxes imposed on imports, quota involves physically limiting the number of goods and services coming into a country. The non-tariff barriers

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include subtle use of rules, regulations, voluntary export restraints (VERs), legislation and by exacting standards or specifications. States intervene in trade in different forms for strategic purposes. This usually becomes necessary to address trade imbalance, protect local industries, protect domestic employment, as a political pressure, to protect culture and to prevent dumping. It is important to note too that nations necessarily resort to protectionism as a weapon in a situation of trade war. The trade wars are usually fought by resorting to the open use of restrictive mechanisms, especially tariffs and quotas. The raging trade war between the United States and China is a typical example of how nations resort to the use of tariffs and quotas to gain advantage in international trade. The trade war was triggered by the US imposition of high tariffs on imported goods from China, its biggest trading partner, owing to trade deficit. China retaliated by imposing tariffs on imports from the United States. Liberalism operates in direct opposite of the principles of protectionism. It aims at breaking down international trade barriers. Its basic philosophy is anchored on the principle of comparative advantage and specialisation. Liberalism allows countries to have access to markets, by encouraging free movement of resources as well as goods and services across national boundaries. Under liberalism, market forces determine the flow of goods and services. It should be noted that the conflict between developing countries and advanced, industrially developed countries has been the denial of developing economies’ access to their market. It is to address this problem that the General Agreement on Tariffs and Trade (GATT) was signed in 1947. Since then, several talks have been held to address international trade issues relating to free movement of goods and services leading to the establishment of the World Trade Organisation in 1994. The Uruguay Round that produced the WTO includes other agreements covering a wide range of trade liberalisation measures. The WTO has become the forum through which liberal market rules are enforced through negotiations. The major disputes in international trade are mostly the outcome of dialectical tension between protectionism and liberalism. The dominance of these two mainstream ideologies of trans-border trade has its root in the emergence of classical theories of international trade between 1500 and 1800. Protectionism, as earlier mentioned in this chapter, originates from the mercantilist theory, which advocates state management of international trade. It is a primary characteristic of mercantilism that distinguishes it from other major theories of trade (Girma 2017). The protectionist character of mercantilism is attributable to its belief that the primary objective of the state is to ensure trade surplus and guarantee national wealth and stability by ensuring that export exceeds import (Grampp 1952). This element of national self-interest which mercantilism

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propagates (Sauda, Seithi and Chaudhuri 2016) endures even in the face of centuries of opposition from proponents of free trade. It is to the credit of mercantilism that many nations still resort to one form of restriction or the other in guiding international trade to their advantage. All over the world, the hitherto offensive interventionist character of mercantilism has become a new form of neo-mercantilism. Protectionist policies appear to have assumed a standard practice by even liberal nations in addressing trade deficits and economic crisis. PROTECTIONISM OR LIBERALISM?: AFRICA AND INTERNATIONAL TRADE To understand the dilemma that Africa faces in terms of choice between protectionism and liberalism demands a cursory look at its unsavoury history in international trade. Africa has been an integral part of international trade since the sixteenth century when it was incorporated into the mercantile capitalist system (Frank 1978). Since then, it has played specific role in transferring economic surplus to Western countries at every phase of dialectical development of capitalism as world system (Hoogvelt 2001, 15–25). Africa’s participation in the mercantile phase was exploitative and marked by transfer of economic surplus in the guise of trade exemplified by pillage of natural resources from Africa to Europe. As well argued by Hoogvelt (2001, 17), the situation in ‘this trading relationship was no more than a disguised form of looting and plundering of its resources, in which the Europeans were able to transfer the economic surplus of pre-industrial overseas communities back to Europe where it helped to pay for the industrial revolution.’ This exploitative trade relationship that started from the beginning of contact between Africa and Europe has endured over ages. Europe leveraged on their advantage in terms of skills, technology and access to finance capital to determine the terms of trade to their advantage. The consequence of this was that Africans were denied the benefits of the advantage that they hold in terms of abundant natural resources, favourable climatic condition and abundant labour force. However, the inequality that prevailed under this system provided the incentive for the direct takeover of Africa under the system of colonialism by Europeans using every form of brutality including physical assault and forceful disarticulation of the existing economic system. The colonial period marked the formal incorporation or integration of the economies of Africa to the global capitalist system. This era of colonially imposed international division of labour with strident advocacy for free market economy marked the emergence of liberalism. It is important to reiterate

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that liberalism is a character of laissez-faire economic theory, which was propounded in 1776 by Adam Smith. In practice, liberalism works on the principle or philosophy of non-interference. Its application in international trade, which was given tonic by the work of David Ricardo in 1817, relates to non-interference of the state in a system of equality in the movement of goods and services across national borders controlled only by the invisible hands of demand and supply. The liberal idea developed by the two Western scholars at a very critical period in the history of capitalism has remained dominant even after colonialism. Despite the stiff disapproval of liberalism by scholars and policymakers from the developing world (Amin 1977; Frank 1979; Wallerstein 1991), who argue that it does not benefit all, as it is claimed, multilateral institutions like the International Monetary Fund (IMF) and the World Bank have continued to impose it on the world. The postcolonial era of globalisation leveraging on developmentalism, technological rent and debt peonage has ensured that Africa and indeed the developing world remain disadvantaged in international trade transactions (Hoogvelt 2001). According to Stiglitz (2002, 59): Trade liberalization is supposed to enhance a country’s income by forcing resources from less productive uses to more productive uses; as economists would say, utilizing comparative advantage. But moving resources from low-productivity uses to zero productivity does not enrich a country, and this is what happened all too often under IMF programs. It is easy to destroy jobs, and this is often the immediate impact of trade liberalization as inefficient industries close down under pressure from international competition.

It is against this background that the debate over conflict between protectionism and liberalism is underpinned. The wholesale adoption of trade liberalisation, as prescribed by multilateral finance institutions, has not benefited Africa, as her percentage share of exports is negligible. For instance, in 2018, Africa accounts for a paltry 2 per cent of global services export (UNCTAD 2018). Africa’s dependence on the volatile primary commodity export (agricultural produce and mining) puts her at the mercy of the West, which determines the terms of trade. The industrialised countries obstruct free movement of agricultural commodities from Africa by imposing non-tariff restriction through the imposition of standards and specifications on imported items. Pressure from international competition arising from liberalisation has forced many local industries in Africa to close down leading to the destruction of jobs and the failure of development policies. It has compelled state intervention in terms of imposition of quotas and tariffs to navigate the labyrinth of obstacles stacked against them by imposed liberalisation. This has

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had little effect as the WTO insists on strict implementation of free market practices. It is not only African countries that have shown discomfiture with free trade practice and its failure to bring equal opportunity. The United States and the European Union have at one time or the other called on their governments to intervene in trade with other countries. While the United States complained of their markets being flooded ‘with trinkets and trousers, shirts and shoes’ the European Union called for restriction on booming textile imports from China as it is ‘causing irreparable harm’ to European producers (Newsweek 2005, 34). The open trade war since 2018 between the United States and China, the two largest economies in the world, is a clear indication that liberalisation can also make the rich cry. CONCLUSION International trade is very critical in national growth and development. In the past three decades globalisation has contributed to expansion of global trade with the gains being unfairly distributed. This chapter examines the role of protectionism and liberalism in international trade and the manner that they have shaped both in theory and practice the political economy of Africa. The two concepts provide a good ground for understanding the underlying politics of international trade and the critical issues of access and exclusion from the international market that confront Africa. The conclusion here is that adoption of any of the theories in isolation of the others will prove incapable of addressing the challenges that world trade imposes on African political economy. While protectionism is antithetical to the free movement of goods across borders, the gains of liberalism are unfairly distributed in favour of developed economies. The argument that trade liberalisation is a positive-sum game, which benefits every nation has also been flawed by Africa’s declining fortune in international trade. There is palpable disillusionment, especially by African countries, with the unequal access to international trade arising from stringent conditions imposed by multilateral trade organisation like the WTO. It tends to exclude African countries from the benefits of international trade by imposing stringent conditions that negate the very principle of liberal trade system, as they constitute barriers to international trade. The much-touted capacity of liberalisation to force resources to move from less productive uses to more productive uses has little impact on the economy of African countries. The failure of the WTO in December 1999 to provide an opportunity for all countries, especially developing countries, to review the framework, rules and effects of the multilateral trading system from the

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viewpoint of development and the interest of developing countries poses serious challenge. The option left for Africa political economy in the era of globalisation is the strengthening of intra-Africa trade through the platform of the African Continental Free Trade Agreement Area (AfCFTA). This option does not encourage protectionism nor reject liberalism. It is a trade area agreement that goes beyond traditional exchange in goods to include services. The AfCFTA agreement signed in March 2018, commits members to removal of tariff on 90 per cent of goods and progressively liberalise trade in services. The continental agreement has the capacity to increase access of African countries to the benefits of trade and eliminate the problem of exclusion at global level. It will stimulate market for intra-Africa food imports and will encourage investment in agriculture in the area of agricultural mechanisation and food processing. This will lead to growth, create jobs and reduce poverty. Full implementation of AfCFTA in terms of Protocol on Free Movement of Persons, Rights to Residence and Rights to Establishment and the Single Africa Air Transport Market (SAATM) has the potential of expanding and increasing the volume of economic activities as well as increasing access of member countries to international trade. REFERENCES Adejo, A. 2003. ‘The Root of Globalization: A Historical Review.’ Journal of Globalisation 1 (1). Ake, Claude. 1981. Political Economy of Africa. London: Longman Group Limited. Amin, Samir. 1977. Imperialism and Unequal Development. New York: Weekly Review Press. Crane, Gearge, and Abla Amawi. 1997. The Theoretical Evolution of International Political Economy: A Reader. Second edition. Oxford: Oxford University Press. Ernsberger, R. 2005. ‘The Big Squeeze.’ Newsweek, 30 May 2005, 34–38. Frank, Gunder A. 1978. Dependent Accumulation and Underdevelopment. London: The MacMillan. Girma, Mulugeta G. 2017. ‘International Trade Theories and its Trends.’ https:​//​www​ .researcgate​.net​/publication​/31221506. Goddard, Roe C., Patrick Cronin and Kishore Dash, eds. 2003. Political Economy: State-Market Relations in a Global Order. Second edition. Basingstoke Palgrave Macmillan. Greespan, Alan. 2001. ‘International Trade: Globalization vs. Protectionism.’ Vital Speeches of the Day 67 (13): 386–88. Heywood, Andrew. 2007. Politics. New York: Palgrave Macmillan.

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Hiscox, Michael J. 2014. ‘The Domestic Sources of Foreign Economic Policies.’ In Global Political Economy, fourth edition, edited by John Ravenhill, 74–105. Oxford: Oxford University Press. Hoogvelt, Ankie. 2001. Globalization and the Colonial World: The New Political Economy of Development. Basingstoke: Palgrave. Khor, Martin. 2001. Globalization and the South: Some Critical Issues. Ibadan, Nigeria: Spectrum Books Limited. Krugman, Paul R. 1979. ‘Increasing Returns, Monopolistic Competition, and International Trade.’ Journal of International Economics 9: 151–75. Lancaster, Kelvin. 1980. ‘Industry Trade under Perfect Monopolistic Completion.’ Journal of International Economics 10: 151–75. MacMillan, John, and Andrew Linklater, ed. 1995. Boundaries in Question: New Direction in International Relations. New York: Pinter Publishers. Palley, Thomas I. 2008. ‘Institutionalism and New Trade Theory: Rethinking Comparative Advantage and Trade Policy.’ Journal of Economic Issues 42 (1): 195–208. Ridley, Matthew. 2020. ‘Human: Why They Triumphed.’ Wall Street Journal, 22 May 2020. Sen, Sunanda. 2010. ‘International Trade Theory and Policy: A Review of the Literature.’ Annandale-On-Hudson, NY: Levy Economic Institute of Bard College, 653. Siddiqui, Kalim. 2018. ‘David Ricardo’s Comparative Advantage and Developing Countries: Myth and Reality.’ International Critical Thought 8 (3): 426–52. Smith, Adam. 1776. The Wealth of Nations. London: Penguin Books. Stiglitz, Joseph E. 2000. Globalization and its Discontents. London: Penguin Books. Wallerstein, Immanuel. 1979. The Capitalist World Economy. Cambridge, UK: Cambridge University. Watson, Matthew. 2017. ‘Historicising Ricardo’s Comparative Advantage Theory Challenging the Normative Foundations of Liberal International Political Economy.’ New Political Economy 8 (3): 257–72. Winters, A. L. 2000. ‘Trade Policy as Development Policy: Building on Fifty Years’ Experience.’ A paper presented at UNCTAD X High-level Round Table on Trade and Development: Directions for the Twenty-First Century.

Chapter 13

International Trade Wars and Decline in Economic Diplomacy Should Africa Really Be Worried? Ifeanyi P. Maduechesi

Since the establishment of the World Trade Organisation (WTO) in 1995, no major trade deal has been concluded among member countries. The Doha Round of trade agreements has been stalled owing to lack of consensus and veto power among the 164 member countries (Schmieg 2016). The inability to reach trade agreement at the global level has necessitated the increased bilateral and regional trade agreements among nations (Baldwin 2006). With the signing of the continental free trade agreement by more than forty-four African countries in 2018, Africa has since joined the bandwagon in the establishment of regional trade agreements (Kohnert 2018). In recent times, international trade agreements increasingly incorporate non-tariff regulations, such as technological services, investments, labour and environmental issues, as part of foreign policy (European Union (EU) 2018), a departure from the traditional norm of focusing on trade tariff rates. The increasing use of the non-tariff regulations in trade agreements, makes bilateral and multilateral trade negotiations cumbersome. The developed countries of the West are guilty of this development. In fact, for the United States of America, international trade is considered as a national security component and given such adequate attention at the highest levels of government (Khan 2019). It is this development that Higgott (2019) refers to as the securitisation and weaponisation of international economic policy. Despite the fact that the securitisation of economic and foreign policy has been the policy of the US government, the administration of President Trump may have taken it a notch higher, leading to an apparent decline of 227

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multilateralism in favour of direct bilateral trade negotiation and transactional economic relationships with trading partners. This was evident in the way the administration conducted their affairs when they took over government in 2017, including the decision to unilaterally withdraw from the Paris Climate Agreement and the Iran Nuclear Deal. This unilateralism was even more evident, and its impact felt with the US decision to veto the WTO appeal committee appointment, hindering the ability of the organisation to amicably settle trade disputes among nations leading to the escalation of trade conflicts (EU 2018). Given the heroic roles and diplomatic efforts of the past US governments in the establishment of the global institutions of economic diplomacy, it would seem very ironic that the same levels of efforts were deployed by the Trump administration to undermine such institutions under the ‘America First’ economic nationalist slogan. Multilateral institutions such as the United Nations and WTO have played major roles in promoting economic diplomacy, international trade and peaceful coexistence among nations. The WTO’s framework of single undertaking, for instance, ensured a compromise and adherence to disciplines between developed and developing member nations on issues such as intellectual property rights, services, agriculture, textiles and voluntary export restraints. In fact, the escalation of the US–China trade disputes could be attributed to the apparent disregard and undermining of the organs of the WTO. Trade tension between the United States of America and China is not new and has remained a recurring event in recent years. Between 2008 and 2019, the respective value of tariff war between the United States and China stood at US$436 and US$160 billion worth of imports (Ajami 2020). Within the same period, the United States launched about five investigations against China on issues bordering on intellectual property rights, unfair trade barriers and clean energy (Chong and Li 2019). The departure from the past conflicts was that previous trade disputes were resolved through the intervention and instrumentality of the WTO by negotiations and mutual respect. This is to say that by the time the trade war between the United States and China escalated, the WTO was already weakened and undermined. Hence the Trump administration’s unilateral imposition of tariff on Chinese imports and the retaliation by their Chinese counterpart became a cause for concern for the global community given that the capacity of the WTO to effectively mediate in the conflict was nonexistent. The weakness of the WTO was not the only concern of the global community; the size of the parties to the trade conflict added to the apprehension. At the time of the trade conflict, Cafruny (2018) reported that China and the United States of America controlled about 40 per cent of global gross domestic products (GDPs) or about US$30 trillion in absolute figures. The source of the apprehension was based on the projected negative

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impacts the persistence of the trade conflict would have on the global trade and global GDP, with the impact likely to be severe on the emerging markets of Asia and Africa. The reference to Africa in terms of the severity of the negative impacts of the trade conflict is because the continent has built less resilience against economic shocks on account of unfavourable trade relationships over the decades (Barrat Brown 2007). Africa’s involvement in international trade has always been hampered by the fragmented and limited scope of the intra-African market, which at 15 per cent compares unfavourably with Europe (67 per cent), Asia (58 per cent), North America (48 per cent) and Latin America (20 per cent) (Afreximbank 2018). The high transaction costs, decades of stagnant regional and continental integration, transportation infrastructure gaps and corresponding tariff and non-tariff barriers, constitute major challenges of African trade. In addition to these challenges is the over reliance and concentration of trade on the supply of raw materials and importation of finished and capital goods from other continents (Kohnert 2018). By implication, the substantial lack of trade within the continent and lack of value addition to the raw materials expose the continent to all manner of shocks, socioeconomic and political. TRADE WARS AND ECONOMIC DIPLOMACY Trade wars, according to Khan (2019), begin whenever a nation makes an attempt to protect its domestic industry by putting an extra tariff (a tax on home consumers not directly paid by the foreign country), or quota on imported goods. Trade war escalates when the second country retaliates in the same manner as the first country. Historical precedents of trade wars include the opium wars of 1839 between China and Great Britain, the Meline tariff war of 1871 between Italy and France, the Fodney-McCumber tariff war of 1922 between the United States and Europe as well as the Smoot-Hawley Act of 1930 which elicited retaliation from Canada and Europe (Annang 2020). The United States inadvertently provided a legal framework for trade wars through the Reciprocal Trade Agreement Act of 1934, which enabled US presidents to embark on trade negotiations, hence leading to trade disputes (EU 2018). It was the same Reciprocal Trade Agreement Act that provided the legal foundation for the US trade dispute with Japan in the 1980s under the Reagan administration. This same pattern was deployed by the Trump administration in the conduct of foreign policy and bilateral trade relations under the ‘America First’ economic nationalism, protectionism and mercantilist approach to foreign policy and trade negotiation. This similarity in approach in the conduct of trade between the Reagan and Trump

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administration may not surprising, given the presence of Robert Lightizer in both administrations. He serves as the deputy in the office of the United States Trade Representative (USTR) in Reagan’s administration, in the 1980s, and as USTR under Trump (Cafruny 2018). One of the main causes of trade wars identified by Chong and Li (2019) is the overlap of industrial structures and apparent trade deficits between countries. Trade deficit reduces investment and diminishes productivity growth in the deficit country; hence, according to Palley (2018), it is a major channel of deindustrialisation. The United States and Japan trade conflict was caused by the US trade deficit as a result of the auto industry, colour television, textiles and steel production. Similarly, the United States and China trade conflict started as a result of trade deficit estimated at US$363 billion in 2017 (Carvalho, Azevedo and Massuquetti 2019), but gradually escalated into a battle for technological dominance and economic supremacy (Higgot 2019). Issues such as the 5G network, artificial intelligence, intellectual property rights and currency manipulation were, however, identified as the real undercurrents and cause of the trade dispute. Economic Diplomacy The process of international economic decision-making is referred to as economic diplomacy. According to Kurtuluş Kara (2008), the focus of economic diplomacy is on the seamless interaction of a country’s domestic decision-making processes, with their conduct of external economic relations, and their international negotiations. Economic diplomacy also extends from a country’s foreign trade and external investments, financial flows, aids, bilateral and multilateral economic negotiations to technology exchanges. The global interdependence as championed by the comparative advantage theory means that trade relationships and economic integration will require some levels of diplomacy. This has become necessary as the world seeks a united front for tackling socioeconomic and political issues, which needs the daily activities of humanity irrespective of their current location (Annang 2020). Though economic interdependence has been the hallmark of nation and human existence, globalisation, particularly due to the advancement in information and communication technology, has raised the bar a little notch higher, and for that reason has been considered as the catalyst for the shift towards a more integrated and interdependent world economy, away from self-contained national economies. This interdependence encourages economic relationships and mutual respect, and also influences the right political climate for peace and security, through global trade and investments. This may have been the reason Montesquieu, in 1750, declared peace ‘as the natural effect of trade’ (Solomon, Polachek and Seiglie 2006).

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Trade and international diplomacy have been interlinked throughout history, even though a distinction has often divided ‘high foreign policy’ concerned with national security from ‘low foreign policy’ focused on secondary technocratic issues, such as international tariff rates (EU 2018). When countries began to ‘weaponise’ the trade policy as part of their foreign policy, trade policy took centre stage, tariff increases became subject of discussions among civil society organisations, human rights groups and the media. The nongovernmental organisations actively monitored and demonstrated civil society opinions on trade negotiations as they impact on the environment, human rights and the labour market. Hence, as emotions ran high and political interest took over, sound economic reasoning was relegated as a result (EU 2018). The rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation, generally (International Monetary Fund (IMF) 2020). This has taken a toll on general business confidence, investment decisions and global trade. These tensions and challenges in the past led to the established international economic order, constructed under the Bretton Woods institutions in the aftermath of Second World War (EU 2018). Institutions like the World Bank, International Monetary Fund (IMF) and General Agreement on Trade and Tariff (GATT/WTO) played key roles in economic diplomacy, helping to resolve geopolitical tensions and economic disputes. As the influence of the Bretton Wood institutions in providing financial stability in a globalised world was waning, the G7, G8 and, most recently, G20 were created, aimed to further strengthen international coordination of economic policy. The G20, for instance, is a symbol of internationalism based on the common belief of major nations that they belong to a global community with common interests in maintaining peace, mutual security, prosperity and economic integration. TRADE WARS AND DAVID RICARDO’S COMPARATIVE ADVANTAGE THEORY Free trade is rooted in the comparative advantage theory developed by David Ricardo. The theory is premised on the assumption of market efficiency, and the benefit derived by each country engaged in free trade through the expansion of their production possibility frontier (Qiu, Zhan and Wei 2019). Ricardo’s theory believes that when no trade barrier exists, welfare is maximised. The theory further states that countries must focus on producing goods in which they have a comparative advantage over others and import goods in which they have a relative disadvantage (Baskar 2018). Moving a step further on the work of Ricardo, Heckscher and Ohlin, as reported in Leamer (1995),

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emphasise the importance of factor endowments in the patterns of production and international trade, noting that all countries benefit from trade. Globalisation and changing world order have ensured that the world continues to evolve and, hence, it is becoming obvious that some of the principles and assumptions that underpinned the comparative advantage theory have begun to unravel. For instance, inter-industry trade, a concept based on the industrial comparative advantages or abundant endowments began to crumble as intra-industry trade continued to surge. Similarly, the Reciprocal Trade Agreement Act of 1934 of the United States became a legal instrument to initiate trade wars as a counterbalance for trade deficits, through the securitisation and weaponisation of foreign and economic policies. For example, this Act was deployed by the Bush administration in 2003 to coerce countries into participating in the ill-fated gulf war under a strategy based much on threat as on reward. The countries that supported United States and participated in the war were rewarded with free trade agreement with the United States government, an action referred to as ‘the coercive use of non-military instruments to alter adversary behaviour’ (Mahnken, Ross and Toshi 2018). On the other hand, countries that openly opposed the war were neither considered as friendly nor rewarded with any bilateral trade agreements. The current reality is that the wealthy countries, using the power of coercion, have demonstrated absolute advantage over their trading partners, particularly the developing countries of Africa. There was a clear case of the faceoff between the United States and Rwanda over secondhand clothing. The Rwandan government imposed import taxes on secondhand clothing, and the Trump administration threatened to end the trade support extended to some African countries such as Rwanda through Africa Growth and Opportunity Act (AGOA). This resort to absolute advantage by the wealthy countries is achieved through constant bilateral and regional trade agreements as opposed to multilateralism. In the case of the US–Japan trade conflict in the 1980s, the United States deployed its absolute advantage against Japan by tactically forcing Japan to set up automobile assembly plants in the United States as well as opening up its domestic market to US firms. The resultant effect from this ‘economic bullying’ was a loss-loss scenario for both countries. This was, in fact, more evident because, while the Japanese automakers suffered a revenue loss, the US economy suffered price increases and about sixty thousand job losses (Chong and Li 2019). Given the seeming resort to absolute advantage by the wealthy countries, the relevance of the comparative advantage theory to the new world economic order is therefore called to question. The continuous increase in services is one of the other factors that cast doubt on the continuous relevance of comparative advantage theory in modern era. Services as a component of international trade, currently constitute 70 per cent of global trade (Higgot

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2019). Other such factors include the free flow of data and ideas, and remote availability of digital services. In other words, the innovation going on in the information and communication technology space, has constantly shrunk the world to a global village and led to globalisation, outsourcing and offshoring of services. These and other factors may have reduced the relevance of comparative advantage theory in trade relations, a factor the United States and other advanced countries have exploited to their advantage. Therefore, as the multilateralism was gradually undermined by the actions of the Trump administration in the United States, comparative advantage may have given way for absolute advantage. ECONOMIC IMPACTS OF TRADE WARS, EVIDENCE FROM RELATED LITERATURE One of the greatest economic challenges of trade wars is the loss of welfare due to poor allocation of productive resources in the economies of the countries involved in the dispute. Khan (2019) reports that trade wars cost jobs in the long run, create disruption in the shipment of goods and consumables and hamper overall trade and growth of all countries involved. The above observation confirms the preponderance of evidence from literature which suggest that the major impacts of trade wars are borne by the main parties to the conflict, while impacts to the non-actors are considered minimal. This is in line with a study by Devarajan et al. (2018), in their analysis of the effect of the US and China trade war, which they estimate to be about $450 billion of global trade, representing about 13 per cent of US import of goods, and only about 2.5 per cent of global merchandise trade. In the case of the US trade war with China and Mexico, Bouet and Laborde (2018), as cited in Devarajan et al. (2018), discovered in the study that the welfare of the United States will not improve as a result of the trade war, and that the Chinese, Mexican and global economies will be harmed as a result. In the same vein, Zandi, Adam and Jeremy (2018) established that potential global trade wars will entail job and GDP losses in the United States. As the trade tensions raise global uncertainty and lead to depressed investments in developing countries, Rutherford, Bohringer and Balistreri (2018) estimate that the welfare costs of a trade war could be substantial, with losses concentrated in the United States and China, and small effects on other countries. Analysing the impact of the trade conflict between the United States and its neighbours, Robinson and Thierfelder (2018) argue that the North American Free Trade Agreement (NAFTA) trade war could result in greater negative economic impact to all three-member countries; with the United States facing the challenge of economic isolation in the global economy. Similar studies

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by Chepeliev, Tyner and Van der Mensbrugghe (2018) argued that retaliatory tariffs implemented by Canada and Mexico on US agricultural exports in response to US steel and aluminum tariffs will reverse the modest export gains from the newly negotiated US, Mexico and Canada Agreement. In contrast to the earlier assertion about the limited impact of trade wars beyond the protagonists, a study conducted by European Parliament (EU 2018) concluded that the impact of US–China trade dispute is not restricted to the two countries alone. Confirming this position is Kutlina-Dimitrova and Lakatos (2017), as cited in Devarajan et al. (2018). They examined the wide-ranging costs of potential increases in worldwide barriers to bound tariff rates and found that these could translate into an annual decline of global trade of 9 per cent more than was experienced during the global financial crisis of 2008–9. Freund et al. (2018) estimate that the income losses in developing countries for the United States–China trade conflict could range between 0.9 per cent for South Asia and 1.7 per cent for Europe and Central Asia. On the other hand, Carvalho et al. (2018) observed that for emerging countries like sub-Saharan Africa, that are not directly involved in the trade conflict, there could be gains in terms of the export of goods in sectors where these countries are competitive. This can be said of the steel markets in Egypt and South Africa as in 2017 (Kohnert 2018). Annang (2020) also observed that the effects of the China–US trade war on African economies will be insignificant. He further opined that rather than negative impacts, the trade war will create a market gap to be seized by the sub-Saharan African countries to ensure fairer bilateral trade relations with trade partners. EFFECTS OF TRADE WARS ON THE AFRICAN ECONOMY Trade plays a major role for Africa as significant proportion of goods sold in Africa is imported (Schmieg 2016). This is shown in table 13.1. China and the United States represent the first and third major trading partners with Africa, while Europe remains the second. China’s half-year 2019 total import and export volume with Africa was $101.86 billion, up 2.9 per cent year-on-year (Annang 2020), with about 90 per cent of export to China composed of commodities and natural resources. Hence the continent’s participation in the global value chain has been minimal. Table 13.1 gives a summary of Africa’s trade for 2018. The current US–China trade conflict was barely a year old before the advent of the coronavirus (COVID-19) pandemic. The ability of analysts to disaggregate the impacts of the trade conflicts and that of the pandemic to the

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International Trade Wars and Decline in Economic Diplomacy Table 13.1. Summary of Sub-Saharan African Trade for 2018 Export (US$ Million) Raw Materials Intermediate Goods Consumer Goods Capital Goods Total

Product Share (%)

Import (US$ Million)

Product Share (%)

147,933.00 69,205.00

52.49 24.55

32,592.00 57,573.00

11.92 21.06

46,075.00

16.35

103,532.00

37.88

17,621.00 280,834.00

6.25 99.64

25.92 193,722.92

4.56 75.42

Source: Author’s computation using data from https:​//​wits​.worldbank​.org​/countrysnapshot​/en​/SSF.

global and African economy may be difficulty in the short term. Prior to the COVID-19 pandemic, most of the analyses of the effects of the trade dispute on global economies were in the realm of predictions and estimates. Such prediction about the likely effects of the US–China trade conflict on African economies focused on the effects of the conflict on income streams and revenue, economic output and growth, as well as volume of exports. These predictions were based on expected effects of the trade war on commodity prices. For instance, the African Development Bank (AfDB), as reported by Cazares (2019), estimated that the US–China trade tensions could cause a 2.5 per cent reduction in GDP in resource-intensive African countries and a 1.9 per cent reduction for oil exporters by 2021. Similarly, the IMF research on Africa’s rising exposure to China concludes that a 1 per cent decline in China’s domestic investment growth will be associated with an average 0.6 per cent decline in African countries’ growth, with the extent of the impact likely to be more pronounced for resource-endowed nations, particularly the oil exporting ones among them. In the same vein, a decrease in demand from China as a result of the trade war with the United States is again predicted by Cazares (2019) to also reduce annual imports from Africa by $75.26 billion. China is Africa’s top trading partner and represented 12 per cent of total African exports during the past five years, with raw material representing about 90 per cent (Annang 2020) of the total exports from Africa to China. Gauging the Effects of the US–Japan Trade War on SubSaharan Africa In figure 13.1, the impacts of the US–Japan and US–China trade conflicts on sub-Saharan Africa, with respect to the trade balances and export are displayed. The early 1980s witnessed a global reduction in the export values, a trend equally observed among the sub-Saharan African countries leaving the

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Figure 13.1.  Trade Balances by Regions

trade deficit of the region unchanged. The value of African exports (in current terms) declined in the 1980s and rose by 3 percentage points in the 1990s (Ackay and Morrissey 2005). Similar decline was observed for Africa’s share of world merchandise trade in terms of exports and imports between 1990 and the year 2000. Trade deficit remained stable within the period on account of a decline of Africa’s share of merchandise export from 3 per cent in the 1990s to about 2.3 per cent by the year 2000 (Ackay and Morrissey 2005). Within the same period, Africa’s share of world merchandise imports also declined and while annual variability in the value of exports declined by 17 per cent in 1998, the value of imports had a negligible change throughout the 1980s, with a 4 per cent increase in the 1990s. The declines in the merchandise export within these periods were attributed to the decline in commodity prices which caused instability in the export earnings and acted as a disincentive to further investments (Newbold, Pfaffenzeller and Rayner 2005) (sector shares of export earnings are determined more by trends in world prices than changes in export volumes). Another noticeable challenge that negatively impacted the export earnings of sub-Saharan African countries was the narrow range of primary commodities for export. In the 1990s, about thirty-nine African countries were faced with this challenge due to their predominant dependence on export earnings from just two primary commodities. This means that countries in this category have limited threshold to absorb shocks due to commodity price volatility. The United Nations Conference on Trade and Development (UNCTAD) (1993) reported that these countries suffered huge income loss of about 2.6 per cent of sub-Saharan African GDP within the period. On the other count,

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countries with varied mix of manufactured goods and primary commodities in their export earnings, such as South Africa, were relatively protected from unstable export earnings (Ackay and Morrissey 2005). The decline in the commodity prices coincided with the period most African countries embarked on trade liberalisation in the 1980s, so the level of deficit witnessed at the time could be attributed to the decline in commodity prices coupled with the liberalisation of imports by most countries. Though there was no evidence that the decline in the commodity prices were the direct result of the US–Japan trade war (since the goods at the centre of the dispute were heavy industrial goods like automobiles and coloured television), the resultant effects on the commodity prices were however varied depending on the commodity. The countries exporting agricultural commodities suffered decline in export value and trade deficits as a result of weak and volatile world commodity prices, whereas the oil exporters fared reasonably better and maintained some levels of trade surplus. In terms of economic growth, figure 13.2 shows the pattern of economic growth of sub-Saharan Africa since 1960. The decline in economic growth in the 1980s is associated with the decline in merchandise shares of export and import in the period occasioned by the volatility of the commodity prices. This decline in prices affected investments, leading to trade liberalisation in the continent.

Figure 13.2.  Sub-Saharan African Gross Domestic Product Growth

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CONCLUSION Trade wars arise as a result of trade deficits and unilateral imposition of tariffs by countries against the export of other countries. Such conflicts generate both global and regional economic and political tensions and disruption of free flow and movement of international goods. The amount of disruptions is dependent on the size of economies involved in the dispute. The interconnectedness of global economies means that trade tensions will always occur among nations, particularly among the big economies. It was in anticipation of such tensions and conflicts that institutions of economic diplomacy such as WTO were created. Trade conflicts escalate when the instrumentality of the WTO at resolving the disputes are weakened, owing to the deployment of absolute advantage and economic nationalism by the wealthy countries. The unilateral imposition of tariffs is usually a ploy to bully, and a bargaining chip to force the other party to the negotiating table, as against the traditional and mediating roles of the multilateral institutions equipped with capacity for the quick resolution of such conflicts. With the advent of information and communication technology and artificial intelligence, trade relations have progressed from tangible goods to a higher proportion of intangibles, ranked to be about 70 per cent of all trade relations among countries. The high proportion of intangibles means the reduction of physical borders in trade relations among countries. In other words, the major issues in trade conflicts revolve around technological innovations such as artificial intelligence and intellectual property rights. The preponderance of evidence shows that the parties to the trade conflict are the direct victims of the consequences of the trade dispute in terms of inflation and job losses. The impacts on the non-actors to the conflict are considered minimal but are felt by countries with minimal shock-absorbing capacities such as countries in Africa. These impacts are considerable, based on the effect on the volatility of commodity prices. One such price volatility is felt in the oil industry, but such oil price shocks, which may still be attributed to other factors such as the effect of the global pandemic, in Africa have been largely insulated from the effect of the US–China trade conflict largely on account of the focus of the conflict on technological innovation, intellectual property rights and artificial intelligence. However, the absence of international economic order and multilateralism will impact Africa’s ability to achieve fair bilateral trade negotiation. Hence the impact on the economy may be negative given the important roles of trade as a percentage of their GDP.

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REFERENCES Ackah, C., and O. Morrissey. 2005. ‘Trade Policy and Performance in Sub-Saharan Africa Since the 1980s.’ University of Nottingham: Centre for Research in Economic Development and International Trade. African Export-Import Bank (Afreximbank). 2018. African Trade Report 2018: Boosting Intra-African Trade: Implications of the African Continental Free Trade Area Agreement. Cairo: Afreximbank. Ajami, A. R. 2020. ‘US–China Trade War: The Spillover Effect.’ Journal of Asia-Pacific Business 21 (1): 1–3. DOI: 10.1080/10599231.2020.1708227. Annang, E. 2020. ‘Impact of the US–China Trade War on Africa’s Economy: A Case Study on Sub-Saharan Africa.’ A thesis submitted to the University of Cassino and Southern Lazio and the Berlin School of Economics and Law. Baldwin, Richard. 2106. The Great Convergence: Information Technology and the New Globalisation. Cambridge, MA: Harvard University Press. Barratt Brown, M. 2007: ‘Fair Trade with Africa.’ Review of African Political Economy 112: 267–77. Baskar, B. 2018. ‘Trade Wars and Ricardo’s Theory of Comparative Advantage.’ BusinessLine on Campus (BLoC), 3 August 2018. https:​//​bloncampus​ .thehindubusinessline​.com​/news​-wrap​/politeco​/trade​-wars​-and​-ricardos​-theory​-of​ -comparative​-advantage​/article24595120​.ece. Bouët, A., and D. Laborde. 2018. ‘US Trade Wars in the Twenty-First Century with Emerging Countries: Make America and its Partners Lose Again.’ The World Economy 41 (9): 2276–319. Cafruny, A. 2018. ‘Global Trade War? Contradictions of US Trade Policy in the Trump Era.’ The Foundation for Development and Support of the Valdai Discussion Club. Carvalho, M. A. Azevedo, and A. Massuquetti. 2019. ‘Emerging Countries and the Effects of the Trade War between US and China.’ Economies 7 (45): https:​//​doi​.org​ /10​.3390​/economies7020045. Cazares, J. 2019). ‘Africa amidst the Trade War.’ Infomineo, 17 October 2019. https:​ //​infomineo​.com​/africa​-amidst​-the​-trade​-war​/. Chong, T. T., and X. Li. 2019. ‘Understanding China–US Trade War: Causes, Economic Impact, and the Worst-Case Scenario.’ Working Paper, no. 71. Lau Chor Tak Institute of Global Economics and Finance the Chinese University of Hong Kong. Devarajan, S., D.S. Go, C. Lakatos, S. Robinson and K. Thierfelder. 2018. ‘Traders’ Dilemma Developing Countries’ Response to Trade Disputes.’ Policy Research Working Paper, no. 8640. European Union (EU). 2018. ‘Protectionism and International Diplomacy.’ Directorate-General for External Policies Policy Department, EP/EXPO/B/A FET/2017/10 EN June 2018 – PE 603.874. Freund, C., M. Ferrantino, M. Maliszewska and M. Ruta. 2018. ‘Impacts on Global Trade and Income of Current Trade Disputes.’ Macroeconomics, Trade Investment (MTI) Practice Notes, July, no. 2. Washington, DC: World Bank.

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Higgott, R. 2019. ‘From Trade Diplomacy to Economic Warfare: The International Economic Policy of the Trump Administration.’ Working Paper, no. 10/2019. Elcano Royal Institute. International Monetary Fund (IMF). 2020. Regional Economic Outlook, October 2019, SubSaharan Africa. Khan, N. I. 2019. ‘Global Trade War and its Impact on Trade and Growth: War between USA, China and EU.’ International Journal of Innovative Technology and Exploring Engineering (IJITEE) 8 (8): 934–39. Kohnert, Dirk. 2018. ‘Just Peanuts? Trump’s Protective Tariffs and Their Impact on Africa.’ German Institute of Global and Area Studies.’ Electronic Journal. DOI: 10.2139/ssrn.3157328. Kurtuluş Kara, Y. 2008. ‘Trade as a Tool of Diplomacy and Global Security.’ A paper presented at Women in International Security (WIIS) Nineteenth Annual Summer Symposium for Graduate Students in International Affairs on 8–13 June 2008, at Georgetown University, Washington, DC. Kutlina-Dimitrova, Z., and Csilla Lakatos. 2017. ‘The Global Cost of Protectionism.’ Policy Research Working Paper, no. 8277. Washington, DC: World Bank. Mahnken, T., B. Ross, and Y. Toshi. 2018. Countering Comprehensive Coercion: Competitive Strategies Against Authoritarian Political Warfare. Washington, DC: Centre for Strategic and Budgetary Assessments. Leamer, E. E., 1995. ‘The Heckscher—Ohlin Model in Theory and Practice.’ Princeton Studies in International Finance. Princeton, NJ: International Finance Section, Department of Economics, Princeton University. Newbold, P., S. Pfaffenzeller, and A. Rayner. 2005. ‘How Well are Long-Run Commodity Price Series Characterised by Trend Components?’ Journal of International Development 17 (4): 479–94. Palley, T. 2018. ‘Globalization Checkmated? Political and Geopolitical Contradictions Coming Home to Roost.’ Political Economy Research Institute, Working Paper Series, no. 466, University of Massachusetts Amherst. Pilling, D. 2018. ‘America Must Allow Rwanda to Make its Own Choices.’ Financial Times, 20 June 2018. Polachek, Solomon W., and Carlos Seiglie. 2006. ‘Trade, Peace and Democracy: An Analysis of Dyadic Dispute.’ Institute for the Study of Labor Discussion Paper, no. 2170. http:​//​papers​.ssrn​.com​/sol3​/papers​.cfm​?abstract​_id​=915360. Qiu, L. D., C. Zhan and X. Wei. 2019. ‘An Analysis of the China–US Trade War through the Lens of the Trade Literature.’ Economic and Political Studies 7 (2): 148–68. https:​//​doi​.org​/10​.1080​/20954816​.2019​.1595329. Robinson, S., and K. Thierfelder. 2018. ‘NAFTA Collapse, Trade War and North American Disengagement.’ Journal of Policy Modeling 40: 614–35. Rutherford, T., C. Bohringer and E. Balistreri. 2018. ‘Quantifying Disruptive Trade Policies.’ Paper presented at Purdue University, GTAP Seminar Series, West Lafayette, IN. Schmieg, E. 2016. ‘Global Trade and African Countries Free Trade Agreements, WTO and Regional Integration.’ Working Paper Research Division EU/Europe

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Stiftung. Berlin: Wissenschaft und Politik German Institute for International and Security Affairs. United Nations Conference on Trade and Development (UNCTAD). 1999. Trade and Development Report 1999. Geneva: UNCTAD. Waever, Ole. 1995. ‘Securitization and Desecuritization.’ In On Security, edited by R. D. Lipschutz, 46–87. Columbia University Press, New York. Zandi, M., K. Adam and J. Cohn 2018. ‘Trump Trade War.’ Moody’s Analytics, July 2018.

Chapter 14

International Trade Policies and Politics of Food Security in Africa Emeka C. Iloh, Clement Okonkwo and Nnabuike Christopher Anikwudike

For the most of the twentieth century, food governance focused mainly on agricultural production, with states having uncontested prerogatives over its administration. But today, food has not only ceased to be in the sole hands of agricultural departments but has turned into a matter of international and national security. It has also ceased to be a sole prerogative of national governments and is presently witnessing an increasing presence and influence of international actors such as the Food and Agriculture Organisation (FAO) and its sister agencies. Civil society organisations (CSOs) and the scientific community have also started playing significant roles in food governance. The World Trade Organisation (WTO), through its Agreement on Agriculture, has equally been playing an increasing role in global food security governance, especially in agricultural production, processing, distribution and even consumption. Consequently, international food security governance has become a complex system of often overlapping or contradictory policies and regulations, rules and practices. Though issues of food security are analysed from the global, national, local and household or individual levels, hunger and malnutrition are manifested only at the individual level (Días-Bonilla and Ron 2010). International trade policies constitute a set of multilateral policies and agreements that govern and regulate international trade. They are aimed at allowing more free trade on a global basis, and they are based on multilateral negotiations (Iloh 2018). These trade policies are contracts, which bind governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and 243

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services, and exporters and importers conduct their business, while allowing governments to meet social and environmental objectives (WTO 2015). The WTO, which has a global mandate to oversee trade relations among countries of the world, has the responsibility of ensuring compliance in the implementation of international trade policies. The concept of food security first emerged in the mid-1970s following the 1972–73 global food crisis (United Nations 2015; Clapp 2015; FAO 2006). During the World Food Summit of 1974 that was convoked in response to the food crisis, food security was defined as ‘the availability at all times of adequate world food supplies of basic foodstuffs to sustain a steady expansion of food consumption and to offset fluctuation on production prices’ (Clapp 2015, 4). Since the Summit of 1974, there has been a continuous revision of the concept, according to the concerns of each period. According to Hailu (2010, 6–7): As the global concern during that time was the volume and stability of food supply, the definition adopted reflects this concern. Soon the concern shifted to ensuring access of food to all people . . . resulting in adoption of a new definition. In view of this shift, the FAO adopted a new definition in 1983 as such food security was defined as ‘ensuring that all people at all times have both physical and economic access to the basic food that they need.’ By the mid-1990s . . . the concern was also changed to making sufficient food with necessary nutritional value available for all. The issue of food safety as well as cultural preference have also been considered.

The addition of ‘accessibility’ to the definition of food security was influenced by Amartya Sen’s essay on the causes of famine, which showed that availability of food was not enough condition for eradication of hunger, except people have access to the food (United Nations 2015; Clapp 2015). It is this accessibility dimension that brought about the issue of trade to food security. During the 1996 World Food Summit, the definition of food security was expanded to incorporate nutrition and cultural dimensions. Thus, it was seen to exist ‘when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life’ (FAO 2006). However, the definition was modified in 2001 to include the social aspect of food security. Food security since then is seen as ‘when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life’ (Clapp 2015, 4; Hailu 2010, 7). This definition has become widely accepted. It features three important pillars which include availability, access and utilisation. In 2006, however, the FAO added a fourth pillar—stability (Clapp 2015).

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Astou (2015) has noted that there are basically three ways countries can achieve food security. These include domestic production, commercial food imports and food aid. These are what Stevens et al. (2001) describe as production entitlements (that is, food self-sufficiency), trade entitlements (that is, food self-reliance) and transfer entitlements (that is, food aid). Nation-states would naturally opt for food self-sufficiency (domestically producing a country’s food requirements) but only a few countries, if any, have what it takes to do so (Boonekamp 2015). Many countries, including those in Africa, feed their populations through food imports, facilitated by trade. Countries are at liberty to implement policies they deem necessary to ensure food security for their populations. However, these policies can distort international trade. So, too, can some international trade policies, which not only distort world trade but also intensify food insecurity in developing countries, including African countries. Some of these international trade policies, which include trade liberalisation policy and the sanitary and phytosanitary standards (SPS), and how they intensify food insecurity in Africa, are the concern of this chapter. The rest of this chapter is grouped into four sections. Following this introduction is a discussion on international food trade–related policies, followed by an examination of the nexus between international trade and food security. The next section examines the politics of international trade and food security in Africa, while the last section concludes the chapter. INTERNATIONAL FOOD TRADE–RELATED POLICIES There are several policies formulated around issues of food security governance, implemented by some international institutions and agencies in the agricultural and other related sectors. Since the WTO has begun playing a major role in the agricultural sector, because of the increasing importance of the sector in international trade, many trade-related policies have been formulated to govern multilateral trade in the sector. Some of these international trade-related policies in the agricultural sector undermine food security in developing countries, including Africa. Two such policies will be examined in this chapter, and they include the trade liberalisation of WTO’s Agreement on Agriculture (AoA) and the sanitary and phytosanitary standards (SPS). Trade Liberalisation Policy The trade liberalisation policy of the AoA has to do with the removal or reduction of restrictions or barriers on the free exchange of agricultural goods between and among countries. It includes the removal or reduction of tariff barriers, such as import duties and surcharges, and the total elimination of

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non-tariff barriers, such as quotas and licensing rules. The idea behind the policy is that the role of government in making decisions on resource allocation should be minimised, and the incentive structure should change in favour of exports through import liberalisation in order to follow an export promotion path instead of traditional import substitution (Iloh 2018). Trade liberalisation is a cardinal principle of the WTO, though its origin could be traced to the structural adjustment programmes (SAP) initiated by the World Bank and the International Monetary Fund (IMF) for African countries as a response to the economic crisis brought about by a global economic meltdown that followed the two oil crises of 1973 and 1979. As a panacea for these crises, the World Bank and the IMF recommended the full integration of developing countries into the capitalist development paradigm. In order to hasten this process of incorporation, countries, especially from Africa, were mandated to liberalise their economies, including their trade relations with the rest of the world. As a result of these structural adjustment programmes, agricultural policy in many developing countries (including Africa) was characterised by a high level of market openness (Iloh et al. 2020). Before this period, trade policies in most African countries were characterised by extensive state involvement in the economy, import substitution industrialisation (ISI) was then widely accepted as a viable policy package to help African countries achieve structural transformation and lessen their dependence on primary products. All these changed with the introduction of SAP, as African countries began the process of liberalising their economies. Trade liberalisation, therefore, did not start with the WTO. However, it gained momentum with the establishment of the global trading body, in 1995, and became one of the major policies that guide international trade, especially in agriculture (Iloh 2018). The three pillars of the WTO’s AoA are meant to liberalise trade in the sector. They are expansion of market access, reduction of domestic support and reduction of export subsidies. Sanitary and Phytosanitary Standards According to Foss (2004), countries had originally introduced conformity assessments to protect their populations from substandard and hazardous products. In no time however, these practices gradually became effective means of distorting international trade, as some countries began to use such requirements to establish new barriers to trade. In order to ensure that this does not hinder free flow of trade across borders, the WTO developed rules to guide such requirements. This was meant to provide uniform rules for all laws, regulations and requirements regarding how a product is produced, processed, stored and/or transported, to ensure that its import does not pose a risk

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to human, animal or plant health. This was how the sanitary and phytosanitary measures were introduced into international trade. Sanitary measures are meant to safeguard human and animal health, while phytosanitary measures are intended to protect plants. The SPS policy is also meant to prevent countries from using the measures to restrict trade. In other words, the measures should not be applied in such a manner that they would constitute a disguised obstacle to free flow of trade. So, though importing countries are to use the measures to checkmate substandard products from entering their markets (after providing scientific justification for their use) when necessary, they should not, however, use it to create unnecessary obstacles to trade and should not arbitrarily or unjustifiably discriminate between member countries where identical or similar conditions prevail. According to Odjo and Zaki (2020), because SPS measures are meant to protect humans and animals from risks associated with additives, contaminants and toxins in their food, they are mostly imposed on agricultural products. NEXUS BETWEEN INTERNATIONAL TRADE AND FOOD SECURITY There is a symbiotic relationship between international trade and food security. Díaz-Bonilla and Ron (2010) have tried to establish this relationship in different ways. Firstly, they posit that international trade policies influence global food availability (including food production and food import) at the national level. Secondly, trade policies affect the profits of food producers as well as food costs to consumers mainly as a result of their effect on global food prices. Thirdly, trade policies lead to lower or higher volatility in production, stocks and prices at the world and/or national levels for different commodities and markets. Iloh, Maduechesi and Muoneke (2021) have also noted that international trade can have substantial impact on food security. It can achieve this by connecting food producers to food consumers across countries, cushioning the negative impacts of occasional national food shortfalls and of increasing global food prices. In other words, food security within a region or among countries in a region could be enhanced if food producers trade across borders. In the absence of international trade, there would be high food prices in food-importing countries in their efforts to bring into equilibrium the national supply and demand, thereby worsening food security status in such countries. In the absence of international trade, also, there would be low food prices in food-exporting countries because of the inability to export surplus production (Brooks and Mathews 2013).

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Boonekamp (2015) has argued that though trade is not an end in itself in achieving food security, it is an essential element in doing so because it improves both food availability and food accessibility, two key aspects of food security which cannot be guaranteed by self-sufficiency strategy alone. Trade is, therefore, a kind of transmission belt, connecting the land of the plenty to the land of the few, and in doing so, increasing food availability. Since the FAO was created in 1945, there has been a global increase in both the quantity and quality of food consumed by the world inhabitants, leading Gillson and Fouad (2015, 6) to declare that ‘there is no global food shortage. The problem is local—or sometimes regional—and centres on moving food, often across borders, from areas of food surplus to areas of food deficit.’ Despite this increase in food production globally, hundreds of millions of people are still suffering from chronic undernourishment, especially in the developing world. The implication of this is that the extra food has not led to equitable distribution. So quantity is not the issue. The issue is getting the existing foods to where they are needed (Nwokedi, Iloh and Oghomitse 2018). International trade is the vehicle through which the food is redistributed from food-surplus countries to food-deficit countries. However, there is no consensus on the effects of international trade on food security. The United Nations (2015) posits that the relationship between trade and food security is highly contentious. Proponents of trade liberalisation argue that trade increases both availability and accessibility of food globally. On the other hand, critics contend that, in practice, the current trade narrative promises more than it can deliver, as it undermines rural development and agricultural production in developing countries, thereby creating more challenges to food security. Critics have, therefore, argued that food security should be prioritised above trade, such that countries can implement policies to promote food security irrespective of their implications for trade. It was in line with this thought that during the WTO ministerial meeting in Bali, Indonesia, in December 2013, developing countries pushed for their ability to pursue and implement domestic food security policies, even if they contravene international trade rules (Clapp 2015). Clapp (2015) further notes that the World Bank, the WTO the Organisation for Economic Co-operation and Development (OECD) and other industrialised countries who advocate for trade liberalisation in the agricultural sector are those who see trade as enhancing food security, while a number of developing countries, food sovereignty social movements and some civil society organisations (CSOs) who oppose trade liberalisation are those that see trade as a threat to food security.

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THE POLITICS OF TRADE AND FOOD SECURITY IN AFRICA Despite efforts by many African countries to ensure food security for their populations, about 22 per cent of the continent’s population is still food insecure, and another 20 per cent is suffering from malnutrition (Chidede, Mbakhwa and Sosuliwe 2020). It has been noted in this chapter that there are three elements that ensure the food security of a country: food self-sufficiency, food self-reliance and food aid. Food self-sufficiency strategy entails meeting the country’s food needs, or at least a substantial part of it, through domestic production, while the food self-reliance approach is when a country pursues an externally oriented trade regime with the intention of earning enough foreign exchange from its export of goods and services to finance its food requirements (Gayi 2006). Food aid is located within the donor–recipient matrix and is usually unreliable. Countries that depend on food aid to feed their populations are intrinsically food insecure since this depends on the will of the donors. Thus, Stevens et al. (2001) have noted that food insecure countries are those where both domestic food self-sufficiency and food selfreliance are problematic: agricultural production in the country is insufficient or too irregular to guarantee adequate food, and export revenue is too weak to give confidence that, irrespective of global market conditions, food could still be imported to make up for the shortfall in domestic production without upsetting other import dependent areas. Notwithstanding the importance of agriculture as a source of livelihood for more than half of Africa’s population (even though it represented only 11 per cent of the global agricultural gross national product (GDP) and 4 per cent of the global agricultural export (Bouët, Odjo and Saki 2020)), many of the countries in Africa are unable to ensure food security for their populations through domestic production. In other words, Africa’s growing demand for food has been met increasingly by importation from the international market, with its attendant mounting food import bills brought about by ever-rising global food prices (World Bank 2012). The implication of reliance on food importation for food security in the continent, which is facilitated by the system of free market exchange or trade liberalisation, is very severe. Though there are other factors that impinge on African countries’ ability to pursue food self-sufficiency programmes, an important factor is the unfair and unconscionable competition which African food producers face and which is a consequence of unbridled market openness. In contravention of global trading rules, the European Union and the United States continue to subsidise agricultural production and dump surpluses on world markets at artificially depressed prices while requiring developing countries (especially

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those in Africa) to open up their markets to ruinous and unfair competition from industrialised country producers (Gonzalez 2002). This results in the displacement of local food production in developing countries by cheap imported food, the increased dependence on food imports and the production of a decline in food self-sufficiency. The reliance on import to meet food requirements of a country has a major disadvantage, as was underscored by the 2008 surge in world food prices in which export restrictions by major agricultural/food suppliers triggered widespread food riots in Africa (Childs and Kiawu 2009). Export bans from some Asian countries such as India, for instance, also threatened the availability of rice imports to African countries at the peak of the food crisis (Staatz et al. 2008). A study done by Gonzalez (2002) in 1999 found that trade liberalisation intensified and sustained food trade deficit in Africa: an increase in food imports and an accompanying decline in food production. Thirteen years after this study, another study by the FAO (2012) also found that this trend has continued. Both studies showed that in the 1960s, when most African countries were gaining political independence, African countries were exporting more food to the rest of the world than they were importing. This trend continued till the 1970s when Africa’s food trade deficit started showing, and since then, the trend has continued at a much more alarming rate. In fact, between 2000 and 2009, nine African countries switched from being net agricultural exporters to being net agricultural importers (Valdés and Foster 2012). By 2007, the food trade deficit amounted to about US$22 billion, with total food imports by countries in the continent amounting to US$40 billion. African food imports peaked at almost US$50 billion in 2013 before coming down to US$39.7 billion in 2016 (Iloh et al. 2020). Gonzalez (2002) warns that countries that rely on export revenues to finance the importation of food could face severe dislocation when a drop in the world market price of key exports makes it difficult to purchase imported food. As food prices continue to rise, its macroeconomic effects continue to be severe on many countries in Africa (being net food importers) leading to a worsening balance of trade. In situations where these countries’ foreign exchange earnings or purchasing power are reduced as a result of unfavourable terms of trade, dependence on food importation could increase variability in food supplies, thereby creating conditions that threaten food security in the region. Sub-Saharan African countries have been particularly badly hit by declines in terms of trade, made worse by price fluctuations in its major exports (United Nations Conference on Trade and Development (UNCTAD) 2003). In a study done by the FAO in 1999 (cited in Gonzalez 2002), it was found that the market-liberalising structural adjustment programmes adversely affected food security in developing countries by exacerbating rural poverty and inequality. The study further found that the policy resulted in an

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increase in food imports and an accompanying decline in food production. These increases in food imports threatened key agricultural sectors in developing countries that were important for economic development, employment, food supply and poverty alleviation. In the final analysis, food security in Africa is threatened. The increased dependency on importation of food by many countries in Africa has a number of direct and indirect impacts on the realisation of food security in the continent. Firstly, producers and consumers are exposed to greater vulnerability both to commodity price fluctuations and to deteriorating terms of trade. This kind of situation limits the ability of countries that tremendously rely on world trade and imports to absorb external shocks, such as overproduction or harvest failures in other countries (De Schutter 2011). Secondly, depending on imports for food needs of the population exposes the domestic food-producing industries to danger of extinction through steep competition. Obviously, imported food staples are cheaper in price due largely to export subsidy and domestic supports they received from their home countries. When they are dumped in developing countries’ markets, people tend to patronise them more because they are not only cheaper but also urban consumers mostly tend to have a preference for them as they ‘suit’ their class and status. The irony of the situation is that the trade liberalisation narrative ignores the historical precedent in most developed countries of how agricultural trade protections facilitated development in the sector. Liberalisation of the agricultural sector was not the trajectory taken by industrialised countries to achieve agricultural development. Indeed, liberalisation policies only arrived after they have achieved industrialisation. Details of the extensive use of subsidies, policy supports and market protections by nearly all industrialised countries as part of their own economic development have been provided by Chang (2006). To sum this up, a former Human Rights Council Special Rapporteur on the right to food, Olivier De Schutter, advised that though not all countries have the capacity to meet their food requirements through domestic production, they should not rely excessively on international trade in the pursuit of food security. He warned that the short-term interest in procuring food from the international market should not lead such countries to abandon their long-term interest of building their capacity to produce the food they need in order to meet their consumption needs (De Schutter 2011). Food policies that rely so much on international markets do not always lead to optimal outcomes. A good example of this was the 2007–8 and 2010 global food crisis when the prices of imported food moved beyond the reach of many households in poor food-importing countries. This led to food riots in many African cities (Bricas, Tchamda and Mouton 2015).

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On the part of the sanitary and phytosanitary standards (SPS), though they are meant to ensure that goods that are exchanged across borders meet international standards, the measures have become an effective technical barrier to trade used by industrialised countries against agricultural products from developing countries. Thus, these measures not only work against the trade interests of African countries, they have also become a threat to food security in these countries that depend so much on the foreign exchange earned from export of these primary products to finance their food-import needs. According to Odjo and Zaki (2020), these SPS measures represent 53 per cent of the total number of non-tariff measures/barriers imposed on imports in the international market. SPS measures also affect a higher number of products than the other types of measures. On the average, 107 products are affected by SPS while forty-two and fifty-six products, respectively, are affected by export-related and other measures. This underscores the extent of impact of the policy on the exports of developing countries. Little wonder most African exporters see these assessment measures as the greatest impediments to trade as they reduce the market access of their products and affect the competitiveness of such products in the international market. According to Iloh (2018), a major problem that African countries face regarding the SPS is that their participation in the standardisation process is marginal. They lack both the capital and the personnel needed to institute an SPS framework that is internationally acceptable. Thus, they depend on the quality control measures carried out in laboratories abroad. Thus, the industrial countries and their needs dominate the standardisation organisations and processes. Iloh (2018) further provides some empirical evidence to show how the industrialised countries have hidden under the SPS policy to institute trade restrictions against agricultural products coming from Africa. For example, between 1997 and 1999, Kenya and some other countries around Lake Victoria faced a series of food-safety-related restrictions of their fish exports to EU markets. The EU had claimed there was cholera outbreak in some East African fish-exporting countries, as well as a detection of pesticide residue in fish from Lake Victoria. There were doubts as to the scientific justification of the measures imposed by the EU, as the WHO and the FAO had clearly indicated that there is no documented evidence of any case of cholera resulting from food imported from the cholera-affected areas. Though the ban from the EU was eventually lifted, it had a very negative effect upon the whole fishing community and all the families dependent upon the income from this trade. Mozambique faced further problems. Apart from fish, prawns are the most important export product from Mozambique. As early as 1994, the value of prawn exports exceeded agricultural exports (Foss 2004). Deep frozen prawns were not banned, since they were handled and frozen on-board large trawlers. However, prawns were only permitted to be exported to the EU

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subject to laboratory testing. But testing facilities were lacking in the country and this was a main constraint, thereby causing further depletion of foreign exchange earnings. Thus, the SPS policy inhibits the export of agricultural products (Africa’s main export earner) to developed countries’ markets and consequently reduces foreign exchange earnings of African countries. This undermines their capacity to use food self-reliance strategy to complement domestic food production in order to ensure food security in the continent. CONCLUSION AND RECOMMENDATIONS The chapter interrogated the impacts of some international trade policies on food security in Africa. The policies examined included trade liberalisation policy and sanitary and phytosanitary standards. The nexus between international trade and food security was equally established and the last section examined the impacts of the policies on food security in the continent. A strong link, therefore, exists between international trade policies and food security challenges in Africa, and the inability of the policies to address these challenges tends to reinforce the argument that these neoliberal policies are skewed in favour of developed member countries of the WTO more than developing countries. As a result, they work against the food security interests of African countries. Moreover, developed countries have refused to apply the same liberalisation policy they recommended for African countries, as agricultural production, a sector of export interest to Africa, remains heavily protected in industrialised countries’ markets, using SPS measures as excuse. We, therefore, conclude that overreliance on international trade for food security as being championed in liberal literature spells doom for African countries in the long run. For African states and other developing countries to ensure sustainable food security for their populations, a number of policy changes have to be put in place, both at the national and international levels. Firstly, they should be encouraged to use the safeguard measures such as the special safeguard mechanism (SSM) to insulate themselves from the volatile food price spikes in international markets. Secondly, despite international rules to the contrary, less developed countries such as those in Africa should be allowed to regulate the volume of food imports into their countries, to avoid dumping that could stifle domestic food producers out of business. Domestic supports enjoyed by food producers of developed countries that make dumping possible should be curtailed to the barest minimum. Thirdly, trade-distorting measures such as SPS that prevent developing countries from exporting to developed countries’ markets should be dismantled. This will enable developing countries to earn enough to support their food sufficiency needs. Fourthly, African countries

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should prioritise intra-regional food trade above food importation from industrialised countries. This not only reduces dumping but also ensures that food importation does not undermine domestic food production. Finally, international trade should be seen as just one of the tools for achieving food security, especially in developing countries such as in Africa. As such, food security measures should take precedence over trade rules and should be prioritised in such a way that international trade policies support food security rather than undermine them. The role of international trade should, therefore, be limited to complement a quest for greater food sufficiency. REFERENCES Astou, Dioume. 2015. ‘Food Imports as a Hindrance to Food Security and Sustainable Development: The Cases of Nigeria and Senegal.’ CUNY Academic Works. http:​//​ academicworks​.cuny​.edu​/cc​_etds​_theses​/554. Boonekamp, Clem. 2015. ‘Food Security and the World Trade Organisation.’ In Trade Policy and Food Security: Improving Access to Food in Developing Countries in the Wake of High World Prices, edited by I. Gillson and A. Fouad, 135–52. Washington, DC: The World Bank. Bouët, Antoine, Sunday P. Odjo and SChahir Saki. 2020. Africa Agriculture Trade Monitor 2020. Washington, DC: International Food Policy Research Institute (IFPRI). Bricas, Nicolas, Claude Tchamda and F. Mouton. 2015. ‘Are the Cities of Sub-Saharan Africa So Dependent on Food Imports?’ A Question of Development, no. 2. Paris: Agence française de développement. Brooks, Jonathan, and A. Mathews. 2013. ‘Agricultural Trade and Food Security: Choosing Between Trade and Non-Trade Policy Instruments.’ OECD Discussion Paper. Paris: Organisation for Economic Co-operation and Development (OECD). Chang, Ha-Joon. 2006. Kicking Away the Ladder: Development Strategy in Historical Perspective. London: Anthem Press. Chidede, Talkmore, Faith Mbakhwa and SKala Sosuliwe. 2020. ‘African Continental Free Trade Area: Agricultural Trade and Food Security.’ In Agriculture and Food Security in Africa, edited by Chidede et al., 92–117. Stellenbosch, South Africa: Trade Law Centre (Tralac). Childs, Nathan, and James Kiawu. 2009. Factors behind the Rise in Global Rice Prices in 2008. A Report of the Economic Research Service, RCS-09D01. Washington, DC: US Department of Agriculture. Clapp, Jennifer. 2015. ‘Food Security and International Trade: Unpacking Disputed Narratives.’ Background Paper Prepared for The State of Agricultural Commodity Markets 2015–16. Rome: Food and Agriculture Organisation (FAO). De Schutter, Olivier. 2011. ‘The World Trade Organisation and the Post-Global Food Crisis Agenda: Putting Food Security First in the International Trade System.’

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United Nations Human Rights Council Briefing Note 04. New York: United Nations Human Rights Council. Días-Bonilla, Eugenio, and Juan F. Ron. 2010. ‘Food Security, Price Volatility and Trade: Some Reflections for Developing Countries.’ ICTSD Issue Paper, no. 28. Geneva: International Centre for Trade and Sustainable Development (ICTSD). Food and Agriculture Organisation (FAO). 2006. ‘Food Security.’ FAO Policy Brief, Issue 2. Rome: FAO. ———. 2012. Why has Africa Become a Net Food Importer? Explaining Africa Agricultural and Food Trade Deficits. Rome: FAO. Foss, Ivar. 2004. Development of Trade in Africa: Promoting Exports through Quality and Product Safety. Stockholm: Swedish International Development Cooperation Agency (SIDA). Gayi, Samuel K. 2006. ‘Does the WTO Agreement on Agriculture Endanger Food Security in Sub-Saharan Africa?’ UNU-WIDER Research Paper, no. 2006/60. Helsinki: World Institute for Development Economics Research. Gillson, Ian, and Amir Fouad. 2015. Trade Policy and Food Security: Improving Access to Food in Developing Countries in the Wake of High World Prices. Washington, DC: World Bank. Gonsales, Carmen G. 2002. ‘Institutionalising Inequality: The WTO Agreement on Agriculture, Food Security, and Developing Countries.’ Columbia Journal of Environmental Law 27 (2): 433–90. Hailu, Martha B. 2010. ‘Food Security and Agricultural Trade Liberalisation.’ SIEL Working Paper, no. 2010/30. London: Society of International Economic Law. Iloh, Emeka C. 2018. ‘Between Trade and Development: An Analysis of the Impacts of International Trade Policies on Africa’s Development.’ African Renaissance 15 (3): 67–85. Iloh, Emeka C., Ifeanyi P. Maduechesi and Chukwuemeka V. Muoneke. 2021. ‘Trade Institutions, Trade Regimes and Challenges of Food Security in West Africa.’ In Rethinking Institutions, Processes and Development in Africa, edited by E. T. Aniche and T. Falola, 239–58. Lanham, MD: Rowman & Littlefield Publishers. Iloh, Emeka C., Ifeanyi P. Maduechesi, Francis C. Onyebukwa and Queeneth O. Ekeocha. 2020. ‘World Trade Organisation’s Trade Liberalisation Policy on Agriculture and Food Security in West Africa.’ Covenant University Journal of Politics and International Affairs 8 (1): 30–48. Nwokedi, Michael E., Emeka C. Iloh and Rueben O. Oghomitse. 2018. ‘Globalisation of Trade in Agriculture under the WTO Regime: Reflections on the Agreement on Agriculture and Food Security in West Africa.’ Journal of Alternative Perspectives in the Social Sciences 9 (4): 759–92. Odjo, Sunday P., and SChahir Saki. 2020. ‘Africa in Global Agricultural Trade.’ In Africa Agriculture Trade Monitor 2020, A. Bouët, S. P. Odjo and C. Saki, 18–40. Washington, DC: International Food Policy Research Institute (IFPRI). Staats, John M., Niama N. Dembélé, Valerie Kelly and Ramsiath Adjao. 2008. ‘Agricultural Globalisation in Reverse: The Impact of the Food Crisis in West Africa.’ Background paper prepared for the Geneva Trade and Development Forum, CransMontana, Switserland September 17–20, 2008.

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Stevens, Christopher, Romilly Greenhill, Jane Kennan and Stephen Devereux. 2001. The WTO Agreement on Agriculture and Food Security. London: Commonwealth Secretariat. United Nations. 2015. ‘The Relationship between Key Food Security Measures and Trade Rules.’ Report prepared for the Quaker United Nations Office Third Expert Consultation on a New Framework for Trade and Investment in Agriculture, 1–2 April 2015. United Nations Conference on Trade and Development (UNCTAD). 2003. Economic Development in Africa: Trade Performance and Commodity Dependence. New York: United Nations. Valdés, Alberto, and William Foster. 2012. ‘Net Food-Importing Developing Countries: Who They Are, and Policy Options for Global Price Volatility.’ ICTSD Programme on Agricultural Trade and Sustainable Development Issue Paper, no. 43. Geneva: International Centre for Trade and Sustainable Development. World Bank. 2012. Africa Can Help Feed Africa: Removing Barriers to Regional Trade in Food Staples. Washington, DC: The World Bank. World Trade Organisation (WTO). 2015. Understanding the WTO. Fifth edition. Geneva: WTO.

PART IV

International Finance and Development Issues in Africa

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Chapter 15

Washington Consensus, North–South Relations and African Development Andre Ben-Moses Akuche and Goddy U. Osimen

The aftermath of World War II in 1945 witnessed the dismantling of colonialism in the Global South that came with political independence between the 1960s and 1990s for most countries in the third world. Decolonisation had come not only with political independence but with high hopes for economic freedom and prosperity for the newly independent countries of Asia, Latin America and Africa, constituting the majority of the countries in the Global South. However, the North–South relations depicting the political economy intercourse between the wealthy industrialised world in the Northern Hemisphere dominated by the developed economies and the poverty ravaged economies of countries in the Southern Hemisphere consisting of the developing and underdeveloped economies remained unequally balanced (Hurt 2020). The ravaging debt crises coupled with political instability in the 1980s that bedeviled most countries in the Global South, especially African countries, had, to the rescue, the Washington Consensus. Commonly referred as the Brent Woods institutions, the Washington Consensus consist of the International Monetary Fund (IMF), the World Bank and, sometimes, the US Department of Treasury becomes one of the tripods of the Washington Consensus. These institutions are meant to help mitigate debt crises looming across the globe, especially in developing and underdeveloped countries. The IMF and the World Bank came up with economic blueprints for managing debt crises as well as global development policy frameworks, but the problem of debt crises and socioeconomic and political instability largely remain the bane of the third world countries, especially Africa, where 259

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development is hard to achieve in large scale. The Washington Consensus brought about a policy framework of stabilisation as well as structural adjustment programmes that offer loans and advise on loans through the recommended monetarist approach. Conversely, the issues of economic growth and development tied to poverty, and overdependence on aids and loans instead of equal trading opportunities, continue looming while the politics of exchange rate through currency devaluation has constantly rubbished any prospect for Africa’s development. Agbaenyi and Oddih (2012, 118) posit that there has been persistent North–South inequality, and factors responsible for it range from asymmetric trade relations and lack of technological transfer to overreliance on foreign aid. These issues have been of immense intellectual dispute within the international scholarship. Moreover, there exists a wide gulf between the North and the South in their dialogue towards achieving a meaningful reduction in this imbalance of socioeconomic prosperity leading to growth and development of developing or underdeveloped economies. From the forgoing, this chapter seeks to examine Africa’s developmental position through her relations with the Global North and the Brent Woods institutions under the Washington Consensus arrangement. The documentary method was employed as the method for data collection, while it utilised content analysis as its method of data analysis. This chapter has adopted the centre-periphery theory of structural imperialism by Johan Galtung as the suitable theoretical framework in explaining why Africa’s development is so much tied to its relations with the Global North through the Washington Consensus. AFRICA’S DEVELOPMENTAL TRAJECTORY: THE PROBLEMS WITHIN THE PROSPECTS During the 1960s, many African countries gained their independence. To raise living standards across the continent, African leaders adopted a development strategy that heavily relied on an extensive system of government interventions and controls for economic management purposes. Price controls, import licensing, foreign exchange restrictions, controls on bank credit and interest rates, taxation of the agricultural sector and the establishment of public enterprises in strategic sectors were the key economic management instruments (Pelizzo, Kinyond and Nwokora 2018). In sub-Saharan Africa (SSA), despite a modest increase in per capita income and robust export growth in the 1960s, economic performance deteriorated dramatically in the 1970s. The growth rates of real GDP and per capita income slowed, and the overall export volume trended downwards.

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In the 1960s, there was an increase in trade terms, followed by a decline in the 1970s (in the wake of a surge in oil prices). In the 1960s, the average growth rate in North Africa was lower than in SSA. However, in the 1970s, North Africa’s growth performance improved (Pelizzo, Kinyond and Nwokora 2018). Through international trade, sub-Saharan Africa’s sustained economic expansion throughout the new millennium increased the region’s wealth. The per capita gross domestic product rose from $503.8 in 2000 to $1,516.4 in 2016 (JICA Research Institute 2013). Africa’s growth has been primarily driven by resource booms, including oil in Nigeria, Angola, Democratic Republic of the Congo (DRC), Sudan and South Sudan, Equatorial Guinea, Gabon, Chad, Ghana and Cameroon; aluminum in South Africa; bauxite in Guinea; chromium in the DRC, Madagascar, South Africa and Zambia; cobalt in the DRC, Madagascar, South Africa and Zambia; iron ore in South Africa; and lead and lithium in Zimbabwe (Pelizzo, Kinyond and Nwokora 2018). The International Community’s Approach to Development and Developing Countries had started to shift, as indicated by the reduction of debt and the increase in international aid, which is why the economic fortunes of African economies began to improve from the early 1990s onwards. Without a doubt, Africa had more success stories after 1991 than it did between the early 1960s and the mid-1970s. Africa’s participation in international institutions has elevated her success stories above and beyond her development tales. This is because Africa’s success resulted from the interaction of numerous domestic and international factors. According to Sachs and McArthur (2005), cited in Pelizzo, Kinyond and Nwokora (2018), international trade orchestrated by the World Trade Organisation (WTO) placed several African nations on the pedestal of growth and development long before the adoption of the Millennium Development Goals (MDGs). The MDGs placed a significant emphasis on promoting development and reducing poverty; consequently, the international community altered its approach to development, developing countries and Africa in particular. The World Bank’s Making Adjustments Work for the Poor report from 1990 and its World Development report from that year were both entirely devoted to alleviating poverty based on developmental paradigm for less developed and developing countries. In addition, the 1992 Conference of Rio de Janeiro identified the requirements for achieving sustainable development with focus on international actions that should be taken to aid developing countries in their quest towards national development. Also, the unsustainable patterns of production and consumption were considered inimical to increasing growth and development. The reduction in these unsustainable patterns of production and consumption became the priority of international institutions affiliated to the Washington consensus—especially the World Bank and the IMF.

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Anand and Sen (1996), cited in Pelizzo, Kinyond and Nwokora (2018), state that the United Nations approved Agenda 21 at Rio de Janeiro in 1992, outlining what member states should undertake to ensure that their development is long-term and stable. Priorities include ensuring the safety of our air, water and soil; halting deforestation; bolstering the resilience of our ecosystems; fostering environmentally responsible farming practices; safeguarding our biological diversity; ensuring the security of our oceans and freshwater supplies; and ensuring the proper disposal of our (urban), ‘toxic’ and ‘radioactive’ waste. Later, in 1995, the UN and the United Nations Development Programme (UNDP) established the concept of social development at the World Summit for Social Development in Copenhagen, and in 1997, the UNDP suggested the concept of sustainable human development. According to Anand and Sen (2000), cited in Pelizzo, Kinyond and Nwokora (2018), human development is the essence of social development. Human development includes the growth of human capabilities, intergenerational parity and justice. According to the JICA Research Institute (2013), the duration of ‘growth spells’ shortens with inequality. Even the most fragile African nations can start growth surges that last for a few years at high rates. The capacity to maintain growth over an extended length of time is unusual. Only around two-thirds of growth periods in Africa survive more than ten years, compared to most periods in affluent nations and growing Asia. Inequality has increased in several nations over the previous ten years (2000–2010), but a sizable chunk of Africa countries has continued to endure extreme income and opportunity disparities for the majority of the past twenty years. About 57 per cent of the 220 million or more poor people in Africa in 2008 lived in just five nations: the DRC, Ethiopia, Madagascar, Nigeria and Tanzania. This has demonstrated that the majority of African nations did not achieve their Millennium Development Goal of reducing poverty by 2015 (JICA Research Institute 2013). The problems that characterise Africa’s development have been there for many years. For most of the decades, Africa faced numerous social, political and economic obstacles. Some of the endemic problems include abject poverty because of socioeconomic inequality, violence, underutilised agriculture, infrastructure, lack of access to credit facilities, social fragmentation, inadequate health care facilities and inadequate education; they are linked to illiteracy, a lack of proper institutions and exploitation by corrupt and brutal leaders. Furthermore, the negative effects of climate change, increasing water scarcity, biodiversity and ecosystem loss, desertification, low resilience to natural disasters and potential failure to achieve the MDGs have stalled development in the continent. There are unabated food and energy crises, limited benefits

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from globalisation, health security, trafficking and piracy, low penetration of information and communication technology (ICT) services, urbanisation and the need for better disaster response mechanisms. Since natural resources are crucial to the growth and development of Africa, it has become necessary that climate issues are addressed to mitigate negative impacts on natural resources. However, the effects of climate change have made it more difficult to achieve developmental objectives in the Africa. The continent continues to be impacted by climate change despite having low greenhouse gas (GHG) emissions, mostly because it has a limited potential to adapt (Economic Commission for Africa (ECA) 2011). Africa’s development trajectory is dramatically changing due to climate change. Another significant issue that needs to be addressed by nations is the ongoing loss of biodiversity. The main factors contributing to biodiversity loss include expanding agriculture, cutting down trees for fuel and charcoal, climate change and desertification. These obstacles prevent Africans from supporting the continent’s recovery and sustainable development. When these gaps are closed, youth will have access to a variety of opportunities, such as entrepreneurship, which will generate millions of jobs and solve the issue of youth employment. Africa’s potential rests in its rich soil, fish-rich waters and other water-natural resources that can aid in the development of its markets and inhabitants’ knowledge. Many African nations lack sufficient state-owned infrastructure facilities. These facilities should have resulted in an effective contribution to the government’s ability to generate income (ECA 2011). For Africa to prosper, energy security and other national resources are crucial. A lack of adequate legislative framework and social fragmentation continue to be major obstacles for investors. African nations should stop acting like economic serfs and work with developed nations to improve their policies and programmes. However, Africa does not need to overly depend on external help to ensure that countries within the continent experience exponential growth and development. This is because, if there is adequate security and political stability necessitated by quality leadership and good governance, the continent can move towards development faster than can be imagined. In 2022, security concerns in Africa became worse where there has been intra-state conflict, terrorism/separatist insurgency and unconstitutional changes in leadership. Mali, Sudan, Guinea, Cameroon, Libya and Nigeria are among the nations that have faced some worse insecurity situations. Insecurity is constantly challenging the prospects of development in the continent. Meanwhile, the overreliance on external influence through foreign aid and external loans to solve some of these lingering crises portends more danger against Africa’s development because the continent is being exploited by

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external influence rooted in neocolonialism with imperialistic apron strings also tied to China’s emergence as a global force. THEORETICAL EXPLANATION This study has adopted the centre-periphery theory of structural imperialism. The theory is a dependency theory suitable in the explanation of Africa’s stunted development that has depended so much on external economic influence. The centre-periphery theory of structural imperialism, as propounded by Johan Galtung, is one of the centre-periphery theories from the dependency theory which borrows from neo-Marxism, or the neo-Marxist idea rooted in the classical theory of imperialism, as propounded by Karl Marx. Neo-Marxism perceives of the developmental processes of societies, especially in the developing world or third world countries, from the perspective of exploitation and accumulation of exchange value in unequal economic relations anchored in domination and dependence. Dependency theory counters modernisation theory and sees economic relations between advanced capitalist societies and third world societies as that of Global North and Global South dichotomy, the development of the underdevelopment characterised by metropolitan countries and satellite countries, accumulation on a world scale by advanced capitalist societies characterised by an unequal development between advanced capitalist societies and their third world counterparts, as well as unequal relations between the centre (core) and the periphery. As a broad range of theories under the dependency theory, the centre-periphery theories may be described as the result of the spatial ‘broadening’ and theoretical ‘deepening’ of the dependencia position. The centre-periphery theories do not limit their analysis to the countries of Latin America. Instead, they claim to be more general and applicable to the whole of the third world. Centre-periphery theories emphasise the unequal and exploitative structural relationships that have developed between the different parts of the capitalist world system—that is, the centre and the periphery. They pay ample attention to the allegedly negative effects of the ties between the centre and the periphery on the latter. Proponents of the centre-periphery theory are scholars such as Andre Gunder Frank, Samir Amin, Johan Galtung and Giovanni Arrighi (Hout 1993, 6). In applying the centre-periphery theory of structural imperialism to this study, it is deduced here that the Global North is the centre while Africa is the periphery, and relations between these two regions are rather unequal –characterised by dominance and dependence in an interdependent world. Countries of the Global North have always dominated, in their relations, African countries in the international system.

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According to Galtung (1971, 81–82), ‘imperialism is a species in genus of a dominance and power relationships. Dominance relations and other collectives will not disappear, with the disappearance of imperialism; nor will the end to one type of imperialism (political or economic) guarantee the end to another type of imperialism (economic or cultural) for this reason, conflict of interest becomes a special case of conflict in general, as a situation where parties are pursuing incompatible goals.’ Countries of the Global North will always want Africa to remain tied to the world capitalist system characterised by their exploitation. The power relations of a dominant power in international politics, where countries from the Global North are regarded as the dominating superpowers, only attest to this fact that Africa is hugely dependent on the centre for its economic survival, despite the enormous resources available and capable of transforming Africa from third world to first world. The dollar hegemony which has pitched global foreign exchange for pricing of export commodity has rather made African countries so reliant on the prescriptions of the Washington Consensus reform policies because African economy is pro-consumption and having penchant for consuming everything produced from the Global North while feeding the world with raw materials dominated by external trade in commodity with fixed price determined by countries of the Global North. PERSPECTIVE ON THE HISTORY OF AFRICA’S TRADE RELATIONS WITH THE GLOBAL NORTH Historical facts regarding relations involving Africa and countries from the Global North reveals that ancient Egypt under the pharaohs traded with the Westerners. Other powerful empires such as Ghana, Mali and Songhai were all involved in symmetrical trade relations with countries from the Global North as their development was at par with their Western counterparts (Settles 1996). African empires had well-established political and economic systems that sustained their political administrations as the world respected and embraced Africa’s civilisation (Settles 1996). The wealth of these African nations or empires ‘was dependent largely on the trade in gold, but also on the levying of customs, taxes, booty from foreign expeditions, and fees associated with administrative offices’ (Settles 1996, n.p.). In the foregoing, it is logical to deduce that Africa was on the path of autochthonous development through her trade relations with the West, which would have been reckoned with in modern times if such pace of relationship had continued uninterrupted. However, the concomitance of transatlantic slave trade and colonialism that characterised Western imperialism altered

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Africa’s path towards desirable development (Rodney 1974). The African continent that had emerged in the aftermath of symmetrical trade relations with the Global North had its fair share of the inhumane acts of slavery and colonialism perpetrated by the gladiators of imperialism from the Northern Hemisphere (Fanon 1961; Rodney 1974). The onset relations between Africa and the advanced countries from the Global North were majorly characterised by economic exploitation through European imperialism (Mazrui 1969). So, it is a fact that ‘African resources have contributed to the economic development and political success of the Western powers’ in the Global North (Orbán 2015, 98). Furthermore, the internalisation of corruption within the sociopolitical and economic realm in most political systems of African states in modern times began to eat into the fabric of what sustainable development means to Africa. The legacies of imperialism manifesting through neocolonialism is another issue exacerbating Africa’s path towards sustainable development. Even though there is no denying the fact that Africa’s modern socioeconomic and political history cradles from European imperial system, the apron string of Western sociopolitical and cultural subjugation tied to Africa has led to economic dependence of African countries on countries from the Global North. NORTH–SOUTH RELATIONS: PATH TOWARDS AFRICA’S DEVELOPMENT? According to Orbán (2015, 99–100), the major countries of the European Union and the United States of America that constitute the Global North– Africa relations is ‘focused mainly on the promotion of democratic governance, human rights, and growth oriented economic policies, and has come to dominate international settings after the end of the Cold War. The post-bipolar ideological hegemony of Western values is achieved through the integration of third countries into a neoliberal international order through the export of American and European models of political and economic development, which universalises their unique historical experiences and represents them as a natural—and uncontested—process of evolution.’ The onset relationship that existed between the Western countries from the Global North and African countries from the Global South have been characterised by the history of human and economic exploitation. The consequences of the transatlantic slave trade and colonial experience in Africa had a devasting impact on the development of the continent, as what would have made Africa developed within its (human and natural) resources was exploited through slavery and colonialism by countries of the Global North

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in the previous millennium (Fischer 2012). Africa’s development, by now, would have been without doubt at par with those of the advanced countries in the Global North if it had not been truncated by the twin evil of economic exploitation and political subjugation for more than half of the previous millennium. Although Africa in the twenty-first century is free from the shackles of slavery and colonialism politically, the continent remains dwarfed in developmental strides. This is because certain socioeconomic factors such as domestic economic policies indicate induced distortions in prices of exported resources or commodities (Fischer 2012). Since Africa is one of the most important economic hubs for naturally endowed resources feeding raw materials to countries of the Global North, the distortions of prices in these resources or commodities in terms of external trade are grossly unbalanced. This circumstance has only led to overvalued exchange rates that have not favoured Africa. Meanwhile, in trying to inject meaningful economic policies for Africa’s sustainable development, reforms advocated by the Bretton Woods institutions or the Washington Consensus have included subsidies that have only led to artificially low agricultural commodity prices, high wage rates, low interest rates and subsidised agricultural input prices, which have introduced inefficiencies in resource allocation, worsening shortages and reducing economic output (Archibong, Sangafowa and Okonjo-Iweala 2021). Africa’s weak economic output cannot initiate sustainable development where there are unequal external trade relations with the Global North. PROSPECTS AND PITFALLS OF THE WASHINGTON CONSENSUS AND AFRICA’S DEVELOPMENT The Washington Consensus was an idea coined by John Williamson (an economist) in 1989, where he had proposed ten (10) market-oriented policies towards the improvement and viable performance of the economies of Latin American nations. John Williamson had coined the term ‘Washington Consensus’ because, the market-oriented reform policies were more common with Washington-based institutions such as the World Bank and the International Monetary Fund. The prospect of these market-oriented policy reforms are prescriptions that were intended to lead to trade liberalisation and investment while stimulating economic growth and development. The core of these policies is within fiscal discipline, reforms on domestic-market-oriented policies, liberalisation of trade and openness to investment. More so, the market-oriented reforms subsumed under the structural adjustment programme (SAP) serves as conditions for providing financial

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assistance to underdeveloped or developing economy as well as any country’s economy in crisis. In other words, the Washington Consensus had become a necessary global prescriptive economic tool for the development of countries of the Global South. The essence of SAP is to help proffer economic solutions for the stimulation of economic growth and development. Some of the outlined objectives include: to stimulate domestic production, diversify the economic base of a country’s economy and help in fiscal and balance of payments. Policy reforms under SAP are towards economic viability, reduction in the size of government expenditure, the improvement in the efficiency and enhancement of the growth potentials of an economy. As an international economic design for sustainable growth and development, the SAP policy was an internationally designed and endorsed economic reform package under the IMF, which suffered from a low degree of ownership and participation and has widespread public resistance. It is a neoliberal development strategy devised by international economics into the global market. One of the main objectives of SAP was therefore to purchase deregulation and privatisation leading to removal of subsides. Through the Washington Consensus, the SAP regime is supposed to bring about development, indicating wealth creation within economic sector activities that should benefit the lives of individuals and the overall economic interest of a country. Development, in this sense, should be seen as the reflection of the main goal of national policy towards the creation of wealth in a country’s economy, where capital accumulation stimulates the process of economic growth impacting the overall development within a country (Draper 2007). Africa’s quest towards development should not only come from external link to capital accumulation but also through a robust internal market allowing for economic growth made possible by the volume of financial transactions with competitive strong currency, impacting the economy positively within inward and outward foreign direct investment. This involves the provision of financial resources through the intermediation process for the financing of long-term project such as physical structures or infrastructures and other sectors as agriculture, solid minerals, manufacturing, health, educational services, banking and financial services, among other things (Kama 2012). However, Africa’s path towards development has largely been experimentally based on her reliance on the reform policies of the Washington Consensus. The reform economic policies advocated by the Washington Consensus, which serves as guides to economic policymaking that focuses mainly on fiscal discipline and privatisation policies, have proved difficult to implement, as most African countries seek to forcefully pursue all the prescribed reforms without recourse to those conditions that are inimical to trade and investment. Trade relations between Africa and the Global North have shown that these conditions that are inimical to trade and investment revolve

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mostly around currency devaluation and a fixed-price system on exported commodities that works in favour of the Global North. There have been few countries around the world attempting to completely apply the reforms advocated or prescribed by the Washington Consensus. The reason for this is that the reforms do not accommodate certain cultural and historical realities that will completely attract majority of the countries in dire need of economic development. The conflict that exists between the sociocultural/historical realities and the market-oriented reforms of the Washington Consensus lies in the fact that most developing countries (especially African countries) face the difficulty of trusting any other economic policy outside what is obtained in the dominant global political economic matrix of the present world economic order driven by capitalism. African countries’ reliance on the model of capitalism as an economic system has made them more dependent on external borrowing and economic aid from the Washington Consensus institutions. With this it has become a difficult option for most African countries addressing debts concerns inimical to economic growth and development. Most African countries cannot adequately harness the generation of cash for inflows trade, industry and agriculture reflective of the urban population, as they continue to depend on external help. Moreover, the Washington Consensus reforms adopted by African countries as a solution towards achieving sustainable development has not materialised in terms of viable development in the African continent. Fiscal discipline and the privatisation paradigm put forward by the Washington Consensus for developmental solution does not fit Africa’s cultural and historical antecedents for development (Archibong, Sangafowa and Okonjo-Iweala 2021). The Washington Consensus reform model focuses more on microeconomic solution and though macroeconomic policies stabilises economic growth; such growth has not sufficiently stimulated the course of privatisation beneficial to Africa’s development as one of the most advocated reform agenda of the Washington Consensus for Africa’s development. Hence, Africa’s experiment with the reform agenda as advocated by the Washington Consensus did partially address growth and development issues inimical to the development of most underdeveloped and developing countries in the Global South, especially African countries (Archibong, Sangafowa and Okonjo-Iweala 2021). As Africa continues to relate with the Global North in terms socioeconomic and political relations, there is the need to ensure that there is equal trade balance while she also looks inward and harnesses the enormous market potentials through robust intra-regional trade and less dependence on external loans from countries of the Global North. Imbalanced trade relations, the legacies of colonialism manifesting through neocolonialism under economic

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dependence on aid and loans by African countries remain the banes of Africa’s development (Atapattu and Senders 2010). ANALYTICS OF AFRICA, WASHINGTON CONSENSUS AND NORTH–SOUTH RELATIONS The new African states that emerged from colonial experience and were integrated into the existing global political economy have the understanding that the Bretton Woods and Washington Consensus structures have been created prior to their emergence as modern states in the international system and have no direct focus on their economic problems. So, it is only logical to assume that while their exit from colonial administration was politically unpalatable and economically unwise, detaching from their erstwhile colonial masters, ‘their voice was largely muted by voting arrangements that precluded a major role for them.’ However, these new states slowly demanded, consequently, to alter these existing realities (Bhagwati 1986). Another angle to consider when we talk about Africa’s development and its political and socioeconomic relations with the Global North is to look at the ideological perspectives of the global political economy towards underdeveloped and developing economies. For instance, the economic ideology of the Liberal International Economic Order has increasingly found itself at odds with the challenge of accelerated development that faced the leaders in many developing countries (Bhagwati 1986). The idea that developing countries may have that could help them develop may never materialise insofar there is a that existing trade relations with the more economically backward a nation is, the greater will he the compulsion for the state to intervene and manage. In the forgoing, the fact remains that those African countries that are always exploring trade relations benefit with developmental synchronisation have done so not minding whether there exist asymmetrical trade relations while relating with countries of the Global North. We can see that in the 1980s and throughout the 1990s African countries indeed embraced these external economic policies stemming from the Washington Consensus economic paradigm (Atapattu and Senders 2010). Even though per capita income declined as some African countries (such as Nigeria, Ethiopia, Senegal and Uganda) implemented the market-oriented reform between the 1980s and 1990s, there was positive impact on economic growth as the years after the millennium 2000s saw an increase in per capita real GDP (Agbaenyi and Oddih 2012). Some notable policies arising from poor economies symmetrical with market-oriented reforms from Washington Consensus economic ideology became the yardstick for economic development. Hence, economic the performance in most African economies became

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synonymous with the implementation of the Washington Consensus economic ideology, as more African countries that favour pro-poor economic policies sought to adopt market-oriented policies that allowed for fiscal discipline and openness of trade and investment attracting foreign direct investment (Agbaenyi and Oddih 2012). Some of the African countries that attempted to implement the market-oriented reforms under the structural adjustment programme (SAP) did so hurriedly in aligning their domestic policies with the idea of the privatisation of state-owned businesses, where they had not been circumspection of policy compatibility. This can result in institutional hiccups in terms of bureaucratic alignment that is favourable to trade liberalisation. For instance, this trend impacted market-oriented reforms that jeopardised the existing institutionalised domestic policies especially between the 1990s and the 1980s (Agbaenyi and Oddih 2012). Most government enterprises privatised during the 1990s and the 1980s barely survived years after they had been privatised. This was because the Washington Consensus paradigm consisted of certain cautions that were afterward misplaced in the initial policy design. The initial policy design had the caveat of capital account liberalisation, where privatisation is supposed to coincide with strict adherence to government regulations that allow for competitive markets in the economy (Agbaenyi and Oddih 2012). However, most African governments did not take this caution seriously on privatisation based on capital account liberalisation that should have allowed for the flow of capital accumulation in the private sector to drive investment. The business environment was, rather, dominated by those in government, and their relatives or friends, which made those investments survive under the government of the day; but, where they had been change in government, such businesses folded up. Furthermore, deregulations and pro-poor fiscal spending are more pronounced under the Washington Consensus framework. This allows for competition within the domestic business environment that will stimulate economic growth through public–private partnership where capital is to flow from pro-poor policy or expenditure under trade liberalisation and allow wider participation of individuals in private businesses. Notwithstanding, the encumbrances of external debt accumulation under the SAP regime became a weakening link that did not underpin development because most government institutions have been riddled with corruption and mismanagement of borrowed monies from the IMF and the World Bank.

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CONCLUSION Overreliance on export commodities and a lack of technological advancement are some of the major factors responsible for Africa’s lack of pace in development. Africa’s reliance on exports of commodities to countries of the Global North is ensuring that countries within Africa can generate the requisite foreign exchange for importing advanced manufacturing economies (Draper 2007, 7). This situation clearly shows that the trade relations existing between the Global North and Africa tilt in favour of the advanced countries of the European Union and the United States, who have benefitted more under the neoliberal economic system characterised by primitive accumulation of wealth through capitalism. Countries in Africa need supporting infrastructure such as physical, financial, institutional and technological infrastructures to be able to develop, but these infrastructures are inadequate because of the shortage of capital resource—especially money that can provide for the infrastructural development that can lead to the overall economic growth and development of African countries (Draper 2007, 7). Historical legacies of colonialism bequeathed on Africa by Western colonial powers did constrain the continent’s outlook on what development entails as infrastructure constructed under colonial administration was meant to service primary products for export purpose instead of building strong internal markets for competitive regional trade (Yaduma and Wasiq 2019). With this, most political leaders that replaced the colonial administration lack the foresight to bring about an alternative paradigm towards development but continue to rely on the mentality of European and American economic blueprints through the Washington framework in trying to proffer the needed solution. There is the need for an autochthonous developmental paradigm that lies far away from external dependence on loans and economic aid, which are purely monetarist approaches prescribed for Africa’s development by institutions of the Washington Consensus. An autochthonous developmental paradigm would mean that African countries can create strong intra-regional trade that will facilitate cash for inflows trade and help boost domestic industries and the agricultural sector that will have multiplier effect needed for economic growth and development. The politics of exchange rate through currency devaluation that has constantly rubbished any prospect for Africa’s development because of fixed pricing of exported commodity is a dilemma that needs to be addressed; if not, the dollar hegemony will continue to spell doom for African economies already tied to the capitalist scheme of global exploitation.

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RECOMMENDATIONS In the light of the above, this chapter recommends the following: 1.  African governments should look inward and harness their economic potential by being more involved in intra-regional trade with the African region. The essence of this is to help African countries diversify their economies, which have depended more on the exportation of commodity. 2.  The ‘dollarization’ of Africa’s economy under the dollar hegemony regime should be reviewed, while autochthonous economic solutions should be considered as viable options for Africa’s development. Having a strong unilateral currency in Africa could be a strong currency against the dollar in foreign exchange, just like the euro in the EU. This will help facilitate inward and outward foreign direct investment that will lead to economic growth and development. 3.  Africa should ensure it depends less on economic aid and loans from countries of the Global North, who use loans and economic aid to enslave Africa economically through debts accumulation. Repayment of these debts that accrue from loans constitute conditions that have made most African economies slaves to countries of the Global North, especially European countries and the United States. 4.  Corruption and mismanagement continue to eat deep into the fabric of economic sustainability in Africa. Most of the funds provided through the framework of the Washington Consensus framework are either diverted for private use or mismanaged by government officials. Strong anti-graft agencies should be enforced and given the necessary legal backing to promptly prosecute corrupt officials. This can help deter corrupt practices and mitigate widespread, corrupt practices inimical to growth and development in Africa. REFERENCES Agbaenyi, Alex Nnaemeka and Michael C. Oddih. 2012. ‘North-South Dialogue and Global Inequality: Meaning, Challenges and Prospects.’ Nnamdi Azikiwe Journal of Political Science 3 (1): 118–32. Archibong, Belinda, Brahima Sangafowa and Ngozi Okonjo-Iweala. 2021. ‘How Have the Washington Consensus Reforms affected Economic Performance in Sub-Saharan Africa?’ Brookings, 19 February 2021. https:​//​www​.brookings​.edu​ /blog​/africa​-in​-focus​/2021​/02​/19​/how​-have​-the​-washington​-consensus​-reforms​ -affected​-economic​-performance​-in​-sub​-saharan​-africa​/.

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Atapattu, Sumudu, and Michelle Toering Senders. 2010. ‘Development, Environment and Globalization: Perspectives from North and South. The Dichotomy between Developed and Developing Countries.’ McGill International Journal of Sustainable Development Law and Policy 2 (2): 83–90. Bhagwati, Jagdish. 1986. ‘Ideology and North-South Relation.’ World Development 14 (6): 767–74. Draper, Peter. 2007. ‘EU-Africa Trade Relations: The Political Economy of Economic Partnership Agreements.’ Jan Tumlir Policy Essays, no. 02/2007. Brussels: European Centre for International Political Economy (ECIPE). Economic Commission for Africa (ECA). 2011. New and Emerging Challenges in Africa Summary Report. Sustainable Development Goals Knowledge Platform. https:​//​sustainabledevelopment​.un​.org​/index​.php​?page​=view​&type​=400​&nr​=502​ &menu​=1515. Fanon, Frantz. 1961. The Wretched of the Earth. London: Penguin Books. Fischer, Karin. 2012. ‘North-South Relations.’ InterAmerican Wiki: Terms— Concepts—Critical Perspectives.  https:​//​uni​-bielefeld​.de​/einrichtungen​/cias​/wiki​/n​ /north​-south​-relations​.xml​. Galtung, Johan. 1971. ‘A Structural Theory of Imperialism.’ Journal of Peace Research 8 (2): 81–117. Hurt, Stephen R. 2020. ‘Wahington Consensus.’ Encyclopaedia Britannica. https:​//​ www​.britannica​.com​/topic​/Washington​-consensus. JICA Research Institute. 2013. ‘Development Challenges in Africa towards 2050.’ Centennial Group International. Kamar, B. 2012. ‘Financial Crises: The International Monetary Fund Institute for Capacity Development.’ Mazrui, Ali A. 1969. ‘European Exploration and Africa’s Self-Discovery.’ Journal of Modern African Studies 7 (4): 661–66. Orbán, Viktória. 2015. ‘The African Dimension of Globalization Tapping into the Backlash Against the Washington Consensus: Chinese Engagement in Africa.’ Journal of Globalization Studies 6 (2): 97–105. Rodney, Walter. 1974. How Europe Underdeveloped Africa. Washington, DC: Howard University Press. Riccardo, Pelizzo, Abel Kinyond and Zim Nwokora. 2018. Development in Africa. Thousand Oakes, CA: SAGE Publications. Settles, Joshua. 1969. ‘The Impact of Colonialism on African Economic Development.’ Chancellor’s Honors Program Projects. https:​//​trace​.tennessee​.edu​ /utk​_chanhonoproj​/182. Yaduma, Natina, and Wasiq Khan. 2019. ‘Intra-Regional Trade and African Economic Integration.’ In, The History of African Development: An Online Textbook for a New Generation of African Students and Teachers, edited by E. Frankema, E. Hillbom, U. Kufakurinani, and F. M. Selhausen, chapter 18. The Netherlands: African Economic History Network.

Chapter 16

International Financial Flows and Development in Africa Felix Aja Elechi and Kennedy Chibuike Ohazuruike

The importance of finance in aiding development cannot be underestimated. Finance, either gotten locally or internationally, affects the allocation of savings and improves productivity growth and technological innovation, as well as affects the rate of capital accumulation in the economy. International capital flows have become an increasingly significant source of investment in developing countries, indicating the high degree to which these countries have become integrated into the global economy and, thus, how exposed they are to any financial changes within the international system. Mainstream economists and international financial institutions posit that foreign investment in developing countries would benefit those countries by increasing the availability of capital and thereby have a positive impact on productivity and the general economic well-being of the host country. Therefore, foreign capital flows improve capital accumulation and technological diffusion, thus promoting economic growth and national development, especially within the African continent. Capital inflows are also believed to have played an important role in financing investment and addressing external deficits in many African countries. However, despite the continuous flow of international finances into Africa over the decades, available data or statistics reveal that Africa has received the smallest share of the global flow of international finances per region. The stringent conditionalities attached to the finances by donor countries and agencies, couple with corruption, mis-governance, illicit outflow of capital and conflicts that appear not to have an end in sight, have all contributed to stifling the proper utilisation of these finances to aid the achievement of sustainable development goals (SDG) in the continent, which was the original 275

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intention. In 2006, United Nations secretary general, Kofi Annan, reported that though foreign investments in Africa had increased by over 200 per cent over the last five years, the majority of them focused on the extraction of natural resources (Southall 2009, 10, cited in Mutambala 2017). These figures are hardly surprising, considering Africa’s biodiversity. The flow of capital in and out of Africa has only helped in retarding the development trajectory of Africa; despite the increase of capital inflow, Africa is still lagging behind other regions of the world in development due to the fact that the same capitals are being fritted out of Africa by corrupt public officials, foreign investors who repatriate their profit that should have been reinvested in Africa and through illicit outflow by criminal networks scattered all over Africa and beyond, thereby increasing the debt profile of many African countries. This chapter examines the rate of international financial flow to and from Africa through foreign direct investment (FDI) and illicit capital flight and how these have affected the sustainable development of Africa. We have utilised the exploratory research design, which is documentary in nature, while qualitative style of analysis has guided our discourse. The chapter is divided into seven sections: the current introduction; conceptual and theoretical review of related literature; theoretical framework; illicit financial flows from Africa; illicit financial flow and the challenges of sustainable development in Africa; strategies for African countries to benefit from international financial flow; and a conclusion and recommendations. CONCEPTUAL REVIEW OF RELATED LITERATURE International Financial Flows International financial flows play a central role in the international monetary system, as they, in good times, channel savings to the countries and regions of the world where they are most productive. In crisis times, they have the potential to disrupt the domestic financial systems of the most vulnerable countries and therefore constitute a key factor affecting global financial stability (Bussière, Schmidt and Valla 2016). In addition, financial inflows can play an important role in sustaining productive investment, in particular, in landlocked or non-resource-rich countries. Types of International Financial Flows Foreign Direct Investment (FDI) Foreign direct investment is defined as an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity

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in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor. FDI is expected to increase capital accumulation in the receiving country, boosting local businesses’ productivity by contracting and exposing them to healthy competition, technological transition and human capital increase, thereby increasing the exportation of goods (Awolusi and Adeyeye 2016). For Acha and Essien (2018), foreign direct investment is the category of international investment in which foreigners purchase sufficient stocks in a firm or in an enterprise resident in another country in order to secure profit and obtain significant management control or a lasting interest in that country. Balasubramanian et al. (2020) notes that FDI typically occurs when the parent company: 1.  Obtains sufficient common stock in a foreign company to assume voting control; 2.  Acquires or constructs new plants and equipment overseas; 3.  Shifts funds abroad to finance an expansion of its foreign subsidiary; or 4.  Reinvests earnings of the parent company’s foreign subsidiary in plant expansion. (Carbaugh 2002) Foreign Portfolio Equity Investment (FPI) Foreign portfolio investments are investments in another economy, which is referred to as the passive holdings of securities such as foreign stocks, bonds, depository receipts or other financial assets that are less than 10 per cent of voting stock. FPI can be equity, which includes shares, stocks, participation and similar documents that usually denote ownership of equity. Portfolio equity flows are direct purchases of shares in local stock markets by foreign investors. It is often easier to sell off the securities and pull out the foreign portfolio investment in a country than FDI, therefore it is said to be a volatile form of foreign capital inflow (Adeola 2017). Foreign Debt Flows Foreign debt flows include instruments such as debentures, bonds, money market, negotiable debt instruments and foreign bank deposits. Foreign or external debt flows are classified into long-term and short-term debt flows based on their initial maturity period for repayment. They attract debt-servicing charges owed to foreign debtors (Adeola 2017).

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Foreign Aid Foreign aid is an official grant or loan received by a country (mostly developing) for the promotion of economic development, wealth and growth. On average, ODA remains the most important source of external financing to fragile states. There are two major forms of foreign aid: Official Development Assistance (ODA) ODA is the aid given to developing countries for development purposes. It can be from bilateral donors or multilateral institutions. It consists of disbursements of loans made on concessional terms and grants by official agencies of members of a development assistance committee (DAC), by multilateral institutions and by non-DAC countries to promote economic development and welfare in countries and territories in the DAC list of ODA recipients (Adeola 2017). Official Aid Received This is the other type of aid given to a country to meet specific needs such as donations after a natural disaster, and aid for specific projects (Adeola 2017). Remittances Remittances refer to all transfers from abroad in cash or kind received in a country by residents or non-residents. Remittances are monies sent home by workers living abroad. It is an expanding source of external finance, which is a form of private capital that goes to individuals. The total remittances to a country are from three sources of funds, which are known as migrant remittances, compensation of employees and personal transfers. Illicit Financial Flows (IFFs) Illicit financial flows are defined as illegally earned, transferred or used resources moved from Africa to the rest of the world in violation of the laws. IFFs include tax evasion and avoidance by transnational corporations, money laundering and transfer of funds from bribery, corruption and criminal activities, trafficking in persons and human organs, trafficking of arms, drugs and narcotics, counterfeiting and so on. The World Bank, as cited by the African Union Commission (AUC 2019, 99), defines IFFs as; ‘money illegally earned, transferred or used that crosses borders.’ The term emerged in the 1990s and was initially associated with capital flight out of a country. If the capital movement breaks laws, regulations or global standards anywhere along the path of the international transaction, then it is classified as an IFF

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(AUC 2019). Illicit money is money that is illegally earned, transferred or utilised. Illicit financial flows are widespread and secretive by nature. A key challenge is that IFFs are difficult to identify and track. These criminal acts are promoted by a range of actors including criminal networks, private sectors and public officials, both domestic and international actors (Organisation for Economic Co-operation and Development (OECD) 2018). Sustainable Development (SD) The famous Bruntland report defines sustainable development (SD) as ‘development that meets the needs of the present without compromising the ability of the future generations to meet their own needs’ (cited in Adejumo, Efobi and Asongu 2020). The Organisation for Economic Co-operation and Development (OECD 2001) also defines SD as the development path along which the maximisation of human well-being for today’s generation does not lead to the decline in the well-being of the future generation. These definitions suggest that SD considers the needs of the current and future generations in tandem, and it is rooted in the pursuit of the welfare and well-being of the people in existence and the generation yet unborn (Adejumo, Efobi and Asongu 2020). Sustainable development is seen as a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development and institutional change are made to be consistent with present as well as future needs. It requires maintaining essential ecological processes and life support systems, preserving genetic diversity and ensuring a sustainable utilisation of species and ecosystems (Boon n.d.). THEORETICAL FRAMEWORK Our discourse on this chapter is anchored on the theory of the postcolonial state as propounded by Alavi (1979). Alavi (1979), in his analysis of the states of Pakistan and Bangladesh, provided an important starting point for analysis of the state in postcolonial societies. Alavi premised his argument on the historical specificity of postcolonial societies, which he noted as a specificity which arises from structural changes brought about by the colonial experience and alignment of classes and by the superstructures of political and administrative institutions which were established in that context and, secondly, from radical re-alignments of class forces which have been brought about in the postcolonial situation. In general, the propositions developed by Alavi, in his analysis of Pakistan and Bangladesh, prove most illuminating when applied to the African experience. Alavi argued further that the

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postcolonial state is overdeveloped in relation to the economic structure over which it presides in the sense that it is characterised by a strong relatively autonomous and military bureaucratic oligarchy. The people of Africa that emerged from centuries of slavery and a century of colonialism in what was termed ‘freedom from their colonial oppressors’ were captured and handed back to the same people that had subjugated them for centuries, through making Africa believe that it is only the movement of capital from developed countries, through FDI, FPI, ODA and so on, that Africa can be like them in terms of structural transformation, with the help of the African states—that is, a metamorphosis of the colonial state. The postcolonial states in Africa, due to their inherent weakness, have failed to properly utilise the international capital flow into Africa, and have, rather, enabled and facilitated the transfer of the same capital out of Africa through illicit capital flight, and this, in turn, has retarded the development of Africa. ILLICIT FINANCIAL FLOWS FROM AFRICA The main source of illicit financial outflow from Africa is corruption, which involve proceeds of bribery and theft by government officials; criminal proceeds generated through drug trafficking, racketeering, counterfeiting, commercial tax evasion, mainly through trade mispricing, and more. The massive outflow of funds from Africa through illicit means are facilitated by a shadowy global financial system comprised of tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing and money laundering techniques. African countries over the decades have had to shoulder a heavy debt burden created by foreign loans, corruption and mis-governance, on one hand, while sustained illicit outflows have turned the continent into a net creditor to the rest of the world, on the other hand (Ndikumana and Boyce 2011; Kar and Cartwright-Smith 2010). The impact of this structure and the funds it shifts out of Africa is staggering, as it drains hard currency reserves, heightens inflation, reduces tax collection, cancels investment and undermines free trade. It is now so widespread that Africa loses US$50 billion annually. However, this figure is well below reality due to the difficulty in obtaining reliable statistics and the secretive nature of such funds. Implausibly, Africa has been a net exporter of capital overall, despite growing poverty: its private assets held overseas exceed the continent’s foreign liabilities.

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ILLICIT FINANCIAL FLOW AND THE CHALLENGES OF SUSTAINABLE DEVELOPMENT IN AFRICA While the international development community often focuses on the amount of aid and investment that enters the African continent, the other part of the balance sheet (the funds exiting the continent) have often been overlooked. Between 1980 and 2018, sub-Saharan Africa (SSA) received nearly $2 trillion in FDI and ODA but emitted more than $1 trillion in illicit financial flows. These flows, illicitly acquired and channelled out of the continent, continue to pose a development challenge to the region, as they remove domestic resources which could have been crucial for the continent’s effort towards meeting the goals of sustainable development (Signé, Sow and Madden 2020). Illicit financial outflows have been found to have a strong and negative effect on investment rates, notably private investment. In addition to foregone investment, illicit financial flows are presently curtailing Africa’s savings rate. In fact, Janvier Nkurunziza refers to illicit financial outflows as a ‘dissaving’: this ‘dissaving’ effect is even stronger in African countries where savings and investments are strongly correlated and traditional sources of investment provide limited funding (Nkurunziza 2012, cited in Signé et al. 2020). The diversion of resources due to illicit financial outflows and the non-repatriation of these funds reduce the ‘maximum resources’ available to the countries of origin for the progressive realisation of economic, social and cultural rights which are some of the drivers of sustainable development goals. In other words, IFFs undermine the ability of states to comply with their obligation to devote the ‘maximum available resources’ to the realisation of human rights, particularly economic, social and cultural rights. IFFs constrain the achievement of SDG number 17.1, which calls for strengthening domestic resource mobilisation. They constitute a transfer of development finance resources from developing to developed countries and consequently exacerbate inequalities between countries, negatively affecting the prospects of SDG to reduce inequalities within and among countries. The loss of potential public funds through IFFs and the consequent reductions in public sector investments as well as the amplification of foreign debt burdens reduce and impair the capacity of the state to invest in social sectors vital to sustainable development, particularly health and education, or in human rights terms such as the rights to health and education. The top four emitters of illicit flows from Africa (South Africa, the Democratic Republic of the Congo (DRC), Ethiopia and Nigeria) emit more than 50 per cent of total IFFs from Africa. Among the top ten emitters of illicit

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flows, nine countries attribute a significant portion of total exports to natural resources: mining products in South Africa, the DRC, Botswana and Zambia, and oil and gas in Nigeria, the DRC, Angola, Sudan and Cameroon. Natural resources provide countries with opportunities to expand the volume of total trade, which is correlated with the volume of illicit financial flows. Studies also suggest that extractive industries are particularly prone to illicit financial flows (Signé et al. 2020). Illicit flows have a non-exhaustive list of drivers. In their study of trade mis-invoicing, Patnaik, Gupta and Shah (2012), cited in Signé et al. (2020), note that many factors affect mis-invoicing, which include capital account openness, political instability, corruption, differentials in interest rates, indebtedness and exchange rate regimes. The majority of illicit financial flows from Africa between 1980 and 2018 have been hosted in Europe and Central Asia or East Asia and Pacific regions; the volume of intra-African illicit flows is also large. As a percentage of global trade, however, illicit flows from Africa remains highest (Signé et al. 2020). Between 1980 and 2018, China hosted 16.6 per cent of all estimated illicit flows from sub-Saharan African countries, while the United States hosted 9.1 per cent, the United Kingdom 5.4 per cent and India 5.0 per cent. The majority of China’s illicit financial flows from Africa have occurred in recent years: 85 per cent of total illicit flows to China have taken place between 2010 and 2018 (Signé et al. 2020). Illicit financial flows have ‘a damaging effect’ on the ability of developing countries (of which Africa has the highest percentage) to mobilise their own financial resources for investment. The immediate impact of such illicit flows is a reduction in domestic public and private expenditure and investment, which means fewer jobs, hospitals and schools, fewer infrastructures and, ultimately, less development (OECD 2013). For Africa to overcome development challenges, they need to reduce or eliminate the illicit financial outflow from the continent. The major challenges in overcoming this illicit outflow appear to be the national and regional capacities being manifested through weak institutions. This is corroborated by a report of the AU/ECA (2015) which states inter alia: The ability of African countries to combat IFFs is seriously impeded by deficiencies in their capacities to track, stop and repatriate illicit financial outflows. This lack of capacity is reflected at various levels, such as the lack of accurate data and up-to-date information, inadequate understanding of the various mechanisms used, and absent or ineffective legislative, regulatory and institutional frameworks. (AU/ECA 2015, 17)

The few countries that have a relatively improved capacity have failed to utilise them mostly due to such staff shortages. While some countries where

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extensive institutional framework has been established to help address the challenges posed by illicit financial flows do not have encouraging results to show due to lack of resources, poor coordination among the various government agencies, undue political interference and lack of cooperation with the civil society organisations (AU/ECA 2015). By enhancing the capacity of the various institutions of governance and encouraging the emergence of viable civil society organisations who will though operate separately from the government agencies but must serve as a watch dog over the activities of the government agencies in order to help curtail illicit financial outflow from Africa. In addition, the shortage of staff can be remedied through investing and tapping into the pool of ‘knowledge economy’ which will definitely churn out well-developed human capital with the capacity to staff the various agencies and institutions so created by the government. STRATEGIES FOR AFRICAN COUNTRIES TO BENEFIT FROM INTERNATIONAL FINANCIAL FLOW Promotion of Good Governance Good governance is crucial for development to take place in Africa. The World Governance Indicators (WGI) project, which is found at www​ .govindicators​.org, identifies six core governance components: 1.  Voice and accountability 2.  Political stability and the absence of violence 3.  Government effectiveness 4.  Regulatory quality 5.  Rule of law 6.  Control of corruption. The six indicators of good governance are rare in most African countries, but they exist in a few countries such as Botswana, Mauritius, Senegal and Ghana. Good governance is a major means for promoting sustainable development, reducing poverty and maintaining peace. Countries with good governance are efficient in the delivery of public services. Good governance that is design to implement inclusive development policies and social programmes to attack poverty directly also helps in promoting rapid growth. Promoting good governance that is accountable, transparent, honest and participatory, that guarantees economic freedom—that is, the right of citizens to freely exchange goods and contract with each other in business—and that

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is based on secured property rights, including land rights, is crucial for the progress of all African countries. This is only possible by moving forward with constitutional reforms that place limits on government officials to prevent the abuse of power, guarantee economic freedoms and control the negative incentives that drive corruption. A clear legal delineation and separation of public political activities from private economic activities is necessary to reduce corruption (Asefa and Huang 2015). Curbing Corruption Corruption in African countries over the years has aided and abetted illicit financial outflows from Africa to other regions at the expense of the people of Africa. Its effects typically fall disproportionately on the poor who have no access to the resources of the land. The leaders who dominate the political and economic spaces have only succeeded in enriching themselves and their cronies at the expense of their country, who is left to pay the price of poverty, unemployment, high crime rates, bad governance and, in extremes situations, state failure. Corruption being one of the major banes of development in Africa, reinforces crises, failed governance, poverty and unemployment— which is one of the major instigators of crime and insecurity, especially in sub-Saharan Africa. Asefa and Huang (2015) note that the effective control of corruption is based on institutional and constitutional reforms to constrain the ability of state actors to intervene in private and market transactions. They argue that the government, in order to win the war against corruption, must change the incentives that are encouraging the menace; one way of doing so is to create a constitution with checks and balances and rule of law, where everyone is seen to be under the law including the enforcers of these laws. For Africa to successfully tackle this hydra-headed monster called corruption, there must be cooperation from the foreign governments where the proceeds of corruption are taken to, and other transnational organisations that can help checkmate the spread of corruption. Africa must reinvent the culture that has held the African society together in the past by holding their leaders accountable by learning to speak up and stand out in the fight against bad governance, which equally reinforces corruption. Effective and Inclusive Democratic Institutions ‘Democratic institutions’ are legal and constitutional entities that provide checks on power, such as a free press, an independent judiciary and competing parties loyal to the nation or its people, with term limits on key power holders. Amartya K. Sen, the Indian Nobel Laureate in development economics, cited in Asefa and Huang (2015), was correct when he noted that ‘no

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famine has historically taken place in a country with a free press’ (Sen 2006, 34). Effective and inclusive institutions provide ‘rules of the political and economic game’ of human interaction. They provide foundations of a market economy, including secured property and land rights, contract enforcement, economic coordination, restriction of coercive or fraudulent behaviour and provision of access to opportunities for the broad participation of citizens (Asefa and Huang 2015). African society has never run short of traditional institutions that create the environment for inclusiveness and development, but contact with foreign democratic institutions—their blending together with African traditional institutions—has ended up causing frictions among the African states. This has, in the long run, negatively impacted the process of democratic state building efforts in Africa. For instance, Ubuntu which is the African philosophy of ‘we-ism,’ which means ‘I am’ because ‘you are,’ has not been fully utilised by Africans in the effort to build an inclusive democratic state which will strive to carry everyone along. Because the various African states have been able to harness the potential embedded in the Ubuntu philosophy of inclusiveness internally, it becomes very difficult to move towards sociopolitical and economic integration—hence the failure of most efforts of the African states to unite and address the common challenge of underdevelopment, with its attendant manifestation in areas such as poverty, high mortality rates, unemployment, poor living standards, low gross domestic product (GDP), gross national product (GNP) and public-private partnership (PPP), low presence or near absence of critical infrastructure, poor and bad governance, corruption, ineffective leadership and weak markets. Improved Regional Trade and Industrialisation in Africa Africa is a marginal player in the global trade of goods. Total trade from Africa to the rest of the world averaged $760,463 million in current prices in the period between 2015 and 2017, compared with $481,081 million from Oceania, $4,109,131 million from Europe, $5,139,649 million from America and $6,801,474 million from Asia. Africa was adversely affected by the recession in 2008 and its aftermath, reflecting the high dependence of the region on trade with the rest of the world. Regional trade can help reduce the vulnerability of the continent to external forces. More concretely, the share of exports from Africa to the rest of the world ranged from 80 to 90 per cent between 2000 and 2017. Conversely, the share of intra-regional exports in total exports is lowest in Africa, compared with other regions, except Oceania. Intra-African exports were 16.6 per cent of total exports in 2017, compared with 68.1 per cent in Europe, 59.4 per cent in Asia, 55.0 per cent

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in America and 7.0 per cent in Oceania (United Nations Conference on Trade and Development (UNCTAD) 2019). Intra-African trade, defined as the average of intra-African exports and imports, hovered at around 15.2 per cent in the period of 2015 to 2017, while comparative figures for America, Asia, Europe and Oceania were, respectively, 47.4, 61.1, 67.1 and 7.2 per cent. There are eight regional economic communities in Africa, yet the share of intra-African trade remains low, at around 14.8 per cent in 2017. In 2016, intra-regional economic community trade was highest in the Southern African Development Community (SADC) ($34.7 billion), followed by the Community of Sahel-Saharan States (CEN–SAD) ($18.7 billion), the Economic Community of West African States (ECOWAS) ($11.4 billion), the Common Market for Eastern and Southern Africa (COMESA) ($10.7 billion), the Arab Maghreb Union (AMU) ($4.2 billion), East Africa Community (EAC) ($3.1 billion), the Intergovernmental Authority on Development (IGAD) ($2.5 billion) and the Economic Community of Central African States (ECCAS) ($0.8 billion). With regard to the 2016 share of intra-regional economic community trade, in total trade, there were deeper levels of integration in SADC (84.9 per cent), followed by COMESA (59.5 per cent), CEN–SAD (58.4 per cent), ECOWAS (56.7 per cent), AMU (51.8 per cent), IGAD (49.0 per cent), EAC (48.3 per cent) and ECCAS (17.7 per cent) (UNCTAD 2019). Africa’s manufacturing has failed to compete both globally and at the regional level, and has not contributed to structural transformation of Africa. Africa’s share of global manufacturing has fallen from about 3 per cent in 1970 to less than 2 per cent in 2013. The share of manufacturing in total African GDP has decreased slightly over the past four decades, and, at 10 per cent, is much lower in SSA than in other developing regions (Zamfir 2016). The African Union through Agenda 2063 envisions transforming the structure of African economies in order to create strong, robust and inclusive growth, generating jobs and opportunities for all. The entry into force and operation of the African Continental Free Trade Area (AfCFTA) in 2019 marks the strong commitment by African leaders towards productive transformation. Together with other Pan-African initiatives such as the Single African Air Transport Market and Africa’s single passport, these initiatives emphasise the importance of industrialisation for a sustainable economic transformation of Africa (AUC/OECD 2019). UNCTAD Secretary General Rebeca Grynspan, cited in the Economic Development in Africa report published by UNCTAD (2022) noted that: ‘Dependence on commodity exports has left African economies vulnerable to global shocks and hindered inclusive development for far too long.’ She further stated that Africa has enormous potential to break commodity dependence and ensure its effective integration into high-end global value chains: ‘By addressing barriers to trade in services, boosting relevant skills and

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improving access to innovative alternative financing, the region’s manufacturing productivity can be enhanced, driving Africa’s economic growth and structural transformation for many years to come.’ Export Diversification In March 2018, African countries signed a landmark trade agreement, the African Continental Free Trade Area Agreement (AfCFTA), which commits countries to remove tariffs on 90 per cent of goods, progressively liberalise trade in services and address a host of other non-tariff barriers. The major challenge to the treaty, like most treaties entered into by African countries remains implementation. If successfully implemented, the agreement will create a single African market of more than a billion consumers with a total GDP of more than $3 trillion. This will make Africa the largest free trade area in the world. Another challenge is the influence of former colonial masters on African states who are most likely to shift the attention of African states to them (the former colonial masters). Issues of security and conflict appear to have engulfed the continent, especially sub-Saharan Africa, which appears to have been overtaken by the Islamic Jihadist conflict being sponsored from outside the continent. Some resource-rich countries like Norway, Indonesia and Malaysia have demonstrated that it is possible to use natural resource wealth to diversify and support economic growth through export-led growth. However, in Africa, the story is different. In Africa, natural resource-based products have dominated exports for more than sixty years, but still, reliance on such products has not made her richer. One of the primary challenges facing Africa—especially her resource-rich economies—is how to diversify production beyond the natural resource sector (Songwe and Winkler 2012). It is believed that Africa can overcome some of its financial challenges if it decides to revise the trend of being an import-dependent economy to an export-driven one. This was contained in an Economic Development in Africa report published by UNCTAD (2022) where it argued that; African countries can diversify their economies through boosting exports of high-value services, expanding private businesses’ access to financial services, tapping into new financial technologies and implementing effective policies. Despite decades-long efforts to diversify, forty-five out of the continent’s fifty-four countries remain dependent on exports of primary products in the agricultural, mining and extractive industries. Dependence on a small range of exports results in risks related to the lack of diversification, therefore, increasing a weakness of country to international economic jolts. This has been the lot of Africa, which has, over the decades, maintained the export of primary products to other regions but end

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up buying the finished good made from the same raw material she exported at high prices, thereby fritting away the little gains she made exporting primary products. The purpose of diversification is to alleviate these threats, including instability and volatility in export retributions, which then exert opposing effects on development and growth, investment, employment planning, foreign exchange reserves, export capacity, inflation, capital flight and debt repayment (McNown, Sam and Goh 2018; Matezo, Makengo and Muhole 2021). Some of East Asian did observe tremendous and sustainable exports, just like other emerging countries like Chile, Tunisia, Botswana and Mauritius (Liu et al. 2018). Even fast-growing countries like China and Brazil that diversified their export relied on world markets (Liu et al. 2018). Export diversification allows firms in developing countries to expand their markets and profit from economies of scale. Furthermore, through exports, a country will create foreign exchange earnings, increase productivity and increase employment, promoting economic growth (Iizuka and Gebreeyesus 2017). Export divergence into nontraditional exports by African countries will most likely open up new occasions and new markets for businesses (Matezo, Makengo, and Muhole 2021). Export diversification can help Africa benefit more from integration into the global economy, as both global and regional markets offer new avenues for better growth. Domestic demand in Africa offers new opportunities for local companies, such as entrepreneurs and small- and medium-sized enterprises. CONCLUSION AND RECOMMENDATIONS Africa is a continent with great challenges, tremendous opportunities and unappreciated accomplishments. Despite important progress in some parts of Africa, the continent still suffers from a perception of risk that, in many cases, is greater than warranted. As a result, even those African countries that have made significant strides in improving their investment climates experienced difficulties in attracting substantial new investment. All these put together have instigated conflict in several parts of the continent and have made Africa to become the world’s soft underbelly for global terrorism. In addition, Africa has fallen behind the rest of the developing world in many dimensions of development with investors reaping higher returns in sub-Saharan Africa than in any other part of the world, yet international investment attracted by all of Africa’s fifty-three states is slightly less than the amount attracted by Singapore alone. This continued marginalisation constitutes a serious threat to Africa’s participation in the global economy.

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While African countries work to halt illicit financial flows before they exit the continent, the global community must also increase and improve repatriation efforts. A well-executed repatriation effort to bring back stolen financial funds to African countries should be accompanied by additional initiatives or mechanisms designed to deter illicit financial outflows in the first place. Without this financial haemorrhage, with proper management of her resources, Africa can do very well without ODA and still be able to initiate the structural transformation she so badly needs in order to meet most categories of the sustainable development goals. There is need for African countries to look inward, improve on their institutional weaknesses, and strengthen the regulatory capacity and develop a strong political will in order to overcome the development challenges that are, as a result of too much dependence on international finance. Also, there is need for African states to deepen regional integration to enhance the free movement of people, capital and services across borders. Furthermore, African countries should channel foreign financial inflows into activities strongly linked with the local economy in order to enhance growth and development. Finally, African states should free themselves from the shackles of neocolonialism through a process of political, economic and psychological (mental) liberation and transform the postcolonial states that emerged from colonialism using the African worldview of Ubuntu philosophy of ‘we-ism,’ to states that are indigenously modern and embedded with African culture and traditions that will capture the essence of unity among African states. REFERENCES Acha, Ikechukwu A., and Joseph M. Essien. 2018. ‘The Economic Growth Imperative of Foreign Portfolio Investment for Nigeria.’ Noble International Journal of Economics and Financial Research 3 (6): 71–77. Adejumo Oluwabunmi, Uchenna Efobi and Simplice Asongu. 2020. ‘Financing Sustainable Development in Africa: Taking Stock, and Looking Forward.’ European Xtramile Centre of African Studies (EXCAS) Working Paper, no. WP/20/071. Adeola Omolola, O. 2017. ‘Foreign Capital flows and Economic Growth in Selected Sub-Saharan African Economies.’ PhD Thesis, Stellenbosch University, South Africa. African Union Commission (AUC). 2019. Domestic Resource Mobilization: Fighting against Corruption and Illicit Financial Flows. Addis Ababa: AUC. AUC/OECD. 2018. Africa’s Development Dynamics 2018: Growth, Jobs and Inequalities, AUC, Addis Ababa/OECD Publishing, Paris. https:​//​doi​.org​/10​.1787​ /9789264302501​-en.

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———. 2019. Africa’s Development Dynamics 2019: Achieving Productive Transformation. Addis Ababa: African Union Commission. AUC/United Nations Economic Commission for Africa (UNECA). 2015. Illicit Financial Flow: Report of the High-Level Panel on Illicit Financial Flows from Africa. Addis Ababa: AUC/UNECA. Alavi, Hamza, 1972. ‘The State in Post-Colonial Societies: Pakistan and Bangladesh.’ New Left Review 1 (74): n.p. Asefa, Sisay, and Wei-Chiao Huang. 2015. ‘The Challenges of Good Governance and Leadership in Developing Countries: Cases from Africa and China.’ In The Political Economy of Good Governance, edited by Sisay Asefa and Wei-Chiao Huang, 131–53. Kalamazoo, MI: Upjohn Institute Press. Awolusi, Olawumi D., Olufemi P. Adeyeye and Theuns G. Pelser. 2017. ‘Foreign Direct Investment and Economic Growth in Africa: A Comparative Analysis.’ International Journal of Sustainable Economy 9 (3): 183–98. Balasubramanian, Sriram, Karim E. Aynaoui, Prakash Loungani, José A. Ocampo and Roxana Pedraglio. 2020. ‘IMF Advice on Capital Flows to Africa and the Middle East.’ IEO Background Paper. International Monetary Fund. Boon, Emmanuel Kwesi. n.d. ‘An Overview of Sustainable Development in Africa.’ Area Studies—Africa, vol 1. Paris / Oxford, UK: United Nations Educational, Scientific, and Cultural Organisation (UNESCO) / Encyclopedia of Life Support Systems (EOLOSS). Bussière, Matthieu, Julia Schmidt and Natacha Valla. 2016. ‘International Financial Flows in the New Normal: Key Patterns (and Why We Should Care).’ CEPII Policy Brief, no. 10, March 2016. Iyoha, Milton A. 2005. ‘Enhancing Africa’s Trade: From Marginalization to an Export-Led Approach to Development.’ Economic Research Working Paper, no. 77. African Development Bank. Kar, Dev, and Devon Cartwright-Smith. 2010. ‘Illicit Financial Flows from Africa: Hidden Resource for Development.’ Centre for International Policy. Matezo, Espoir L., Benjamin M. Makengo and Amantha M. Muhole. 2021. ‘The Influence of Export Diversification on Economic Growth: A Case of Southern African Development Community (SADC).’ American Journal of Industrial and Business Management 11: 829–45. https:​//​doi​.org​/10​.4236​/ajibm​.2021​.117051. Mutambala, Alice Biniti. 2017. ‘Development and Underdevelopment: An Examination of Land Grabbing in the DRC.’ Lund University, Department of Political Science, no. STVK-02. Ndikumana, Léonce, and James Boyce. 2011. ‘Capital Flight from Sub-Saharan Africa: Linkages with External Borrowing and Policy Options.’ International Review of Applied Economics 25 (2): 149–70. Organisation for Economic Co-operation and Development (OECD). 2013. ‘Measuring OECD Responses to Illicit Financial Flows.’ Issue Paper, DAC Senior Level Meeting, 3–4 April 2013, DCD/DAC(2013)13: 3. OECD/Food and Agriculture Organisation (FAO). 2016. ‘Agriculture in Sub-Saharan Africa: Prospects and Challenges for the Next Decade.’ In OECD-FAO Agricultural Outlook 2016–2025, edited by OECD, 59–95. Paris: OECD Publishing.

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Rice, Susan E. 2003. ‘Increasing Capital Flows to Africa.’ Emerging Markets Program Annual Symposium, Cornell University, Ithaca, NY. Rodney, Walter. 1972. How Europe Underdeveloped Africa. London: Bogle L’ouverture. Sen, Amartya K. 2006. Identity and Violence: The Illusion of Destiny. New York: Norton. Signé Landry, Mariama Sow and Payce Madden. 2020. ‘Illicit Financial Flows in Africa: Drivers, Destinations, and Policy Options.’ Brookings, 2 March 2020. Songwe, Vera, and Deborah Winkler. 2012. ‘Exports and Export Diversification in Sub-Saharan Africa: A Strategy for Post-Crisis Growth.’ Africa Growth Initiative Working Paper, no. 3. Washington, DC: The Brookings Institution. United Nations (UN). 2014. ‘Private Capital Flows: Foreign Direct Investment and Portfolio Investment.’ In Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty. New York: United Nations Organisation. ———. 2020. World Economic Situation and Prospects. New York: United Nations. Zamfir, Ionel. 2016. ‘Africa’s Economic Growth: Taking Off or Slowing Down?’ European Parliamentary Research Service (EPRS) Working Paper, no. PE 573.891.

Chapter 17

Political Economy of Foreign Direct Investments in Africa Critical Reflections Jerry Mathekga

After gaining independence and democracy, many African countries witnessed a radical appearance of neoliberalism shaped by the desire to attract foreign investments, grow the economy and create jobs. With the rise of globalisation, FDIs from Asian, American and European countries are pervasive across Africa. The United States of America and France are Africa’s largest investors. However, China and India have consistently been increasing investments in many African countries (Cheru and Obi 2010, 1–5). For example, in 2014, foreign domestic investment (FDI) from mainland China to Africa was US$32.35 billion, and there were three thousand companies operating in Africa in 2015 (Xiaoyang 2016, 109–10). Further, a 2022 report published by African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD) states that China and India are Africa’s largest trade partners (AUC and OECD 2022, 42). In 2020, both China and India account for 15 per cent and 6 per cent of Africa’s total exports, respectively (AUC and OECD 2022, 42). Africa exports eighty-four per cent of unprocessed resources and agricultural products to China and 72 per cent of unprocessed resources and agricultural goods to India (AUC and OECD 2022, 42). There is also growing intra-African investments, mainly from Egypt, Morocco, Nigeria and South Africa to other African countries. It is also important to mention that corruption—which involves bribery, embezzlement and fraud, state capture, money laundering and illicit flows—is also one of the challenges of the twenty-first century in Africa (Mbaku 2007, 293

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14–15; Hope 2017, 2–4; Hope 2020, 294–95). Corruption ‘drains resources away from expenditures on public goods and services that are necessary and required for sustainable development’ (Hope 2020, 294–95). Some African elites benefit from corrupt activities related to donors at the expense of the state and the public (Branch and Mampilly 2015, 74). This chapter aims to highlight that, in the context of neoliberalism and globalisation, Africa has seen a rise in FDIs from all corners of the world. FDIs have contributed to Africa’s economic growth, infrastructure development and job creation. However, FDI has, to some extent, affected domestic businesses; and it creates dualistic economic structures, which worsen income inequality. It has to be mentioned that a World Investment Report 2020 published by the United Nations Conference on Trade and Development (UNCTAD) predicts that FDI flows to Africa will be under severe pressure in 2020, and a bit beyond, because of the global coronavirus pandemic (UNCTAD 2020, 2). This chapter is organised into four sections: the first section is a brief contextual background. Section two discusses the theoretical anchor and FDI in Africa. Section three discusses FDIs and Africa: an appraisal, and a brief discussion on corruption. The final and fourth section is the conclusion. CONTEXTUAL BACKGROUND The economy of Africa, which consists of, among other things, agriculture, trade and human resources, continues to show signs of growth. Its real gross domestic product (GDP) was projected at 3.4 per cent in 2019, and it was predicted to increase to 3.9 per cent in 2020 and 4.1 per cent in 2021 (African Development Bank (AfDB) 2020, 1). Africa’s economic growth shows significant cross-regional and cross-country differences. East Africa is the continent’s fastest growing region with a projected average growth of 5.0 per cent in 2019; North Africa is second with a projected average growth of 4.1 per cent in 2019 (AfDB 2020, 1); West Africa is the third with an estimated average growth of 3.7 per cent in 2019; and Central Africa is the fourth fastest growing region with an estimated average growth of 3.2 per cent, followed by Southern Africa with an estimated growth of 1.2 per cent in 2019 (AfDB 2020, 1). Algeria, Egypt, Morocco, Nigeria and South Africa are Africa’s five largest economies. Together, their economies have grown at an average rate of 3.1 per cent when compared to 4.0 per cent of the continent (AfDB 2020, 1). However, Benin, Ethiopia, Ghana, Ivory Coast, Rwanda and Tanzania’s economies are growing faster (AfDB 2020, 1). Africa’s growth is driven by investments and exports as there is a gradual move from private consumption

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towards investment and exports (AfDB 2020, 1). Investments account for more than half of Africa’s growth, and private consumption accounts for less than one third (AfDB 2020). Despite Africa’s gradual economic growth, a third of African countries have at least achieved inclusive growth, and reduced poverty and inequality (AfDB 2020). Yet, poverty and inequality are still high in many African countries. According to the United Nations Research Institute for Social Development (UNRISD), both income and wealth inequalities are increasing and are today’s greatest challenges facing the world (UNRISD 2020). The gap between the poor and the rich continues to widen. As a result, the benefits of economic growth have been shared unequally across the world (World Bank 2018). According to a 2019 report by Oxfam, twenty-six people in the world own the same amount of wealth as the 3.8 billion people who make up the poorest half of the people (Oxfam 2019a). Poor people with lack of education are overwhelmingly located in rural areas (World Bank 2018). Men are the richest group in the world. For example, men own 50 per cent more of the total wealth than women (Oxfam 2019a). Inequalities are playing out spatially and access to basic services and social spaces are curtailed along racial, ethnic and gender lines (UNRISD 2020). In Africa, the continent remains plagued by unemployment, growing inequality and poverty (Oxfam 2019b). The gap between the rich and the poor in Africa is wider than in any other part of the world, except for Latin America (Adesina 2020, 1–2). For example, in the sub-Saharan Africa, the number of poor people has increased from 278 million in 1990 to 413 million in 2015 (World Bank 2018; Beegle and Christiaensen 2019, 33–35). Poverty in Zimbabwe has increased from 29 per cent in 2018 to 34 per cent in 2019, an increase from 4.7 to 5.7 million poor people (Chingono 2020). In North Africa, report finds that 9.5 million people were poor in 2013, and the number has increased to 18.6 million in 2015 (World Bank 2018). Beegle and Christiaensen (2019) point out that poverty in Africa is a combination of chronic and transitory factors, where about 60 per cent of Africa’s poor are chronically poor and about 40 per cent are in transitory poverty. Africa’s poor have weak access to good-quality public infrastructure and services, and limited voices in public policymaking (Beegle and Christiaensen 2019, 6). In Nigeria, poverty is high, and it has increased in the context of a growing economy. The benefits of an expanding economy have been enjoyed by a minority of people and bypassed the majority of the population. The number and the share of people living below the national poverty line increased from 69 million to 112 million in 2010, equivalent to 69 per cent of the population (Oxfam 2017). Women are the poor majority because of their lack of access to permanent decent jobs and they are disadvantaged by a number of traditional and sociocultural practices (Oxfam 2017; Oxfam 2019b). Between 2004 and

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2010, the number of millionaires in Nigeria has increased by approximately 44 per cent (Oxfam 2017). In Uganda, poverty increased from 35.9 per cent in 2012 to 41.6 per cent in 2016 (World Bank 2018). Inequality is high in Africa, and it poses a serious threat to Africa’s unity and stability. In sub-Saharan Africa, inequality has remained high from as far back as the 1960s to the late 2000s (Adesina 2020, 1–3). For example, Nigeria’s income inequality, as measured by the Gini index, increased from 40 per cent to 43 per cent in 2009 (Oxfam 2017). However, there are African countries with higher wealth Gini index, namely, South Africa with a Gini index of 84.0; Botswana’s Gini index is 81.7; Namibia’s Gini index is 81.6 and Nigeria’s Gini index is 81.4 (Adesina 2020). African countries have committed to implementing the 2030 agenda for sustainable development goals (SDGs) adopted by United Nations (UN) member states on 25 September 2015. The 2030 agenda for SDGs is mentioned here because it seeks to overcome inequalities within and between countries. The 2030 agenda for SDGs commits all states to be part of the global compact that does not leave any person behind when transforming the world to achieve a better and sustainable future for all (UNRISD 2016). For example, SDG1 speaks to no poverty and the pledge to reduce poverty by 2030; SDG10 speaks to the reduction of inequality; and SDG5 aims to tackle gender inequality and bring gender equality in the world (UN 2015). FOREIGN DIRECT INVESTMENT IN AFRICA Before discussing FDI in Africa, it is important to give a brief theoretical anchor characterising Africa. In the twenty-first century, the neoliberal economic order characterises many African countries. Neoliberalism can be defined as an idea in classical political economy that the economy functions best when there is very little or no state intervention, reflecting the idea of free market economics and individual freedom (Atama, Idemmili-Aronu and Ugwu 2016, 42–43; Bowsher 2019, 46). Key policies of neoliberalism include, among other, deregulations, commercialisation and privatisation of the public sector, restructuring labour processes and social welfare spending cuts (Harvey 2005, 2; van Driel 2003, 62–65). A British writer known for his political and environmental activism, George Monbiot, mentions that: Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that ‘the market’ delivers benefits that could never be achieved by planning. Attempts to limit competition are treated as inimical to

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liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. (Monbiot 2016, n.p.)

In sub-Saharan Africa, neoliberalism started in the 1980s when the International Monetary Fund (IMF) and the World Bank introduced a structural adjustment programme (Amupanda 2017, 109–10). For example, in South Africa, the move to neoliberalism privatisation started in the early 1980s under the National Party (NP) and the African National Congress (ANC) continued with the neoliberal policy with the adoption of an economic policy called Growth, Employment and Redistribution (GEAR policy) (van Driel 2003, 65; Hirsch 2005, 99; Habib and Valodia 2006, 232; Hausmann et al. 2022, 17). South Africa’s GEAR policy emphasised the need for market-led growth, fiscal and monetary discipline and boosting investor confidence (Luiz 2002, 596). GEAR policy, argues Nattrass (2014, 133), Alvaredo et al. (2018, 149) and Webster and Ludwig (2017, 171), positied that the most sustainable and effective way of improving employment and investment in South Africa was via a combination of investor-friendly policies, export promotion through trade liberalisation, a reduction in tax and the fiscal deficit, improved social and economic infrastructure, as well as some changes to South Africa’s labour laws (Luiz 2002, 596; Hirsch 2005, 99; Nattrass 2014, 133). The neoliberal economic order is still in place in many African countries and changing it is a continuous battle as different classes clash. In Namibia, there is a contestation that the economic order is a ‘mixed economy,’ but the economic order is neoliberal (Amupanda 2017, 110). Globalisation has also enabled a free flow of FDI. Globalisation is defined as international processes of interaction and combination among companies, people and governments of different nations, driven by advances in information technology, international trade and investment that make the world more integrated and interdependent (Hough 2007, 3). Traditionally, FDIs in Africa have been dominated by the European Union (EU) and the United States (Donou-Adonsou and Lim 2018). However, FDIs from China and India have increased over the past years (Cheru and Obi 2010; Donou-Adonsou and Lim 2018). In 2019, a report titled EY Africa Attractiveness Report, released by Ernst & Young (EY), revealed that the United States and France remain Africa’s single largest investors. The United States and the United Kingdom’s (UK) FDIs are in countries such as South Africa and other English-speaking African countries (EY Africa 2019). Most EU countries’ FDIs to Africa can be linked to the fact that some EU countries have strong colonial connections to African countries

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(Donou-Adonsou and Lim 2018). For example, France has a strong colonial connection with French-speaking African countries such as Cameroon, Senegal, the Ivory Coast and Mali (Donou-Adonsou and Lim 2018). There are also new FDIs into Africa from India and the United Arab Emirates (UAE), accounting for close to 34 per cent of total projects and more than 50 per cent of jobs created and capital investments (EY Africa 2019). According to the 2019 EY Africa attractiveness report, China, France, the United States, the UAE, and the UK are the five largest investors in Africa in terms of capital investments in millions of US$, and it is through their capital investments that new projects and jobs (in 1000s) were created between 2014 and 2018. The capital flows of China’s FDI to Africa was US$72,235 million, creating 259 new projects and 137,028 new jobs (EY Africa 2019). China was followed by France with a capital investment of US$34,172 million, creating 329 projects and 57,970 new jobs (EY 2019). The US capital FDI flows to Africa was US$30,855 million, creating 463 projects and 62,004 new jobs in Africa; followed by the UAE with capital investment of US$25,278 million, resulting in the creation of 189 new projects and 39,479 new jobs (EY Africa 2019). The UK’s capital investment was US$17,768 million, creating 286 projects and 40,949 new Jobs (EY Africa 2019). Other countries that had a substantial amount of capital investments in Africa between 2014 and 2018 are South Africa, Germany, Switzerland, India and Spain. South Africa is an African country that has invested US$10,185 million in Africa, creating 199 projects and 21,486 new jobs (EY Africa 2019). Germany’s capital investment in Africa was US$6,887 million, creating 180 new projects and 31,562 new jobs; followed by Switzerland with capital investment of US$6,432 million, creating 143 new projects and 13,363 new jobs (EY Africa 2009). India and Spain’s capital investment in Africa was US$5,403 million and US$4,389 million, respectively (EY Africa 2019). The capital investment from India created 134 new projects and 30,334 new jobs, and Spain’s capital investment created 119 projects and 13,837 new jobs (EY Africa 2019). It should be noted that not all African countries receive the same amount of FDIs in terms of the value of investments. According to the 2019 EY Africa attractiveness report, Egypt, Nigeria, South Africa, Morocco and Kenya are the top five recipients of more FDIs from countries outside Africa. Egypt received capital investment of US$12 million, creating ninety-one projects and 32,000 jobs (in 1,000s) (EY Africa 2019). In West Africa, Nigeria is a key destination for FDIs having received capital investment of US$8 million, creating sixty-five projects and 10,000 new jobs, and most of the investments are in telecoms, media and technology (TMT) (EY Africa 2019). South Africa received US$5 million, creating 110 projects and 12,000 new jobs; followed by Morocco, who received capital investment of US$5

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million, creating seventy-one projects and 15,000 new jobs (EY Africa 2019). Lastly, Kenya received capital investment US$2 million, creating sixty-four projects and 6,000 new jobs (EY Africa A2009). The 2019 EY Africa attractiveness report revealed that South Africa and Nigeria are Africa’s economic powerhouses, and they enjoy an economy worth $370 billion and $372 billion, respectively. This makes their economies larger as compared to Kenya, Ethiopia, Tanzania, Uganda and Rwanda, who enjoy an economy worth $88 billion, $79 billion, $58 billion, $29 billion and $10 billion, respectively (EY Africa 2019). There is also a growing intra-African investment. South Africa is the largest investor in African countries. In 2018, South African investors had a record of ten projects totalling $375 million in Nigeria. In Kenya, South Africa invested $190 million in capital across six projects in 2018 (EY Africa 2019). Egypt and Morocco are the largest investors in North Africa; Kenya and Nigeria are largest investors in East and West Africa (EY Africa 2019). There are big South African companies that are actively investing in new projects in African countries. These companies fall into three main categories: (1) is financial services such as the Standard Bank, First Rand Bank, Sanlam and Liberty Life; (2) telecommunications companies such as MTN; and (3) retailers such as Shoprite, Pick ’n Pay and Woolworths (Holmes 2013). The South African retail giant, Shoprite, has been successful in establishing itself in Africa, having 1,855 retail stores and creating thousands of jobs in African countries (excluding South Africa) in 2016 (Mathekga and Maciko 2018, 39–40). Pick ’n Pay has stores in Zimbabwe, Namibia, Zambia, Swaziland, Botswana and Lesotho (Mathekga and Maciko 2018, 39–40). Standard Bank is a South African bank with operations in seventeen African countries (Holmes 2013). In terms of economic sectors where FDIs take place, Taylor (2020) points out that over the period of 2006 to 2011 the bulk of FDI flows to Africa were directed towards investment in oil, coal, metal and the natural gas sectors, which accounted for 47 per cent of the total FDIs to Africa (Taylor 2020). The 2019 EY Africa attractiveness report indicates that other sectors— namely, transport and automotive, industrial products, real estate, hospitality, construction, financial services, TMT and the consumer products and retail (CPR) sectors—remain very strong in terms of FDIs. The CPR sector creates the most jobs, accounting for 80 per cent of all FDI services related jobs between 2014 and 2018. In 2018, TMT was the largest sector attracting FDI. FDI in TMT is driven by an increase in investment in technology and an increasing trend of global technology companies establishing their presence in Africa. The FDIs in CPR are driven by increased demand for Africa’s quickly urbanising population with increasing income levels (EY Africa 2019).

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FDIs from China, India, South Korea and Vietnam have increased over the past years (Cheru and Obi 2010, 1–5). China’s investment in Africa dates as far back as 1950s (Ayodele and Sotala 2014). China has financed many construction projects, provided aid to thirty African countries, promoted bilateral relations among African countries and assisted independence struggles between the 1960s and 1970s (Ayodele and Sotala 2014). According to the 2019 EY Africa attractiveness report, China is the single biggest contributor to FDIs, capital and jobs in Africa. China has invested in 293 FDI projects in Africa since 2005, totalling an investment of $66.4 billion and creating 130,750 jobs. In 2019, China invested $100 billion in Africa. China’s investment in Africa is driven by its ambition to access natural resources such as aluminium, copper, gas, precious metals, oil and other energy resources to support its growing economy; to provide markets for their goods and to provide a home for Chinese citizens to settle through emigration (Taylor 2016; Donou-Adonsou and Lim 2018). It is also a strategy to compete with the US and European countries, and achieve geopolitical power and influence in many African countries (Nkonde 2018). The privatisation of China’s public corporations, supported by China’s Exim Bank, has opted to look for new investment opportunities internationally in order to compete for their transaction from public corporations (Ayodele and Sotala 2014). China’s FDI in Africa is mainly in mining, construction, finance, services and manufacturing. In 2018, jobs created as a result of Chinese FDI projects reached an all-time high, more than double the number in 2015, which is above the United States. Some of the notable African countries where China’s FDI is present are Algeria, Angola, Kenya, Namibia, Nigeria, Sudan, South Africa and Zambia (Wegenast et al. 2019; Oya and Schaefer 2019). In 2012, the bulk of China’s FDIs in the above-mentioned African countries represented more than 50 per cent of the total investment in Africa (DonouAdonsou and Lim 2018). Zambia has a long relationship with China, dating as far back as 1964 (Nkonde 2018). In 2016, the trade relationship between Zambia and China was estimated at $2.6 billion (Nkonde 2018). Chinese investment in Zambia is around $4 billion; and Zambia is indebted to China a tune of $5 billion (Nkonde 2018). China is also South Africa’s single biggest investor and trading partner. In 2019, South Africa signed ninety-three strategic economic and trade deals with China (New Europe 2020). Worth more than $1.7 billion, the deals are aimed at boosting South Africa’s economic growth (New Europe 2020). China sees South Africa as a gateway to the rest of the African continent because South Africa has better infrastructure (New Europe 2020). Approximately 85 per cent of what China buys from South Africa is minerals and metals, and South Africa buys cheap manufactured goods

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from China (New Europe 2020). In Nigeria, the former Nigerian Central Bank Governor, Lamido Sanus, openly admitted in his article in the London Financial Times, March 2013, that ‘China takes our primary goods and sells us manufactured goods’ (cited in Nkonde 2018). There are around half a million Chinese nationals in South Africa, and the majority of them came to South Africa twenty years ago as economic migrants from mainland China (New Europe 2020). In Zambia, some Chinese immigrants have come through the Chinese public corporations as workers on construction projects and have not returned to China after their construction projects were completed (Nkonde 2018). There are thousands of Chinese people in Zambia who came to Zambia as traders, farmers, wholesalers, manufacturers, contractors, traders, importers and exporters, as well as criminals who want to seize immense economic opportunities (Nkonde 2018). Major Chinese public corporations, linked to China’s Communist Party, are operating in South Africa and Zambia (New Europe 2020; Nkonde 2018). One such company is the Chinese tech giant Huawei, which is responsible for developing South Africa’s 5G infrastructure (New Europe 2020). AFRICA AND FDIS: AN APPRAISAL FDIs have contributed to Africa’s infrastructure development, employment creation, market access, access to affordable manufactured goods and economic growth (Donou-Adonsou and Lim 2018). Another key benefit related to FDIs is in the area of technology transfer and skills development (Gui-Diby and Renard 2015). Technology transfers happens through the acquisition or licensing of technology and the movement of labour (Gui-Diby and Renard 2015). For example, upstream local companies that provide intermediate goods to multinational and domestic companies can have access to foreign technology from the multinationals through the training of its workers, the recruitment of former workers of multinational companies and a direct licensing/acquisition of technology (Gui-Diby and Renard 2015). Consequently, domestic companies are more likely to increase their productivity by buying improved inputs from upstream companies, hiring former workers of multinational companies and strengthening their research and development activities to improve the own products by imitating multinationals (Gui-Diby and Renard 2015). Chinese companies have financed and built many infrastructures such as ports, railways, telecom networks, airports and power stations. These massive infrastructure developments are at the back of massive loans and debts. For example, China’s infrastructure projects financing increased from $1

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billion in 2003 to $7 billion in 2006 (Ayodele and Sotala 2014). China has built a railway connecting Ethiopia’s capital city, Addis Ababa, to the Port of Djibouti with an investment of $4.5 billion (Tarrosy and Vörös 2018). Constructed between 2011 and 2016, the Addis Ababa–Djibouti railway is roughly 759 kilometres and is operated by China Civil Engineering Construction Corporation (CRCC) and China Railway Group (CREC) (Tarrosy and Vörös 2018). Both the CRCC and the CREC are responsible for the operation, maintenance of the railways and training of local people until 2023 (Tarrosy and Vörö, 2018). The Addis Ababa–Djibouti railway was financed by the Ethiopian government and a loan of $2.4–3 billion from China’s Exim Bank (Tarrosy and Vörös 2018). In Kenya, the Nairobi–Mombasa railway construction was 80 per cent financed by China. Opened on 31 May 2017, the Nairobi–Mombasa railway connects the largest Indian Ocean city of Mombasa with Kenya’s capital city, Nairobi (Yusuf 2020). FDIs have contributed to Africa’s employment creation. Oya and Schaefer’s (2019) work on Chinese Firms and Employment Dynamics in Africa shows that Chinese firms are making important contribution to job creation in Africa. Local labourers are gaining employment in Chinese firms in Africa. However, it should be noted that some jobs created by FDI, particularly FDI from China, are not decent and better paying for local workers. For example, Chinese-operated mines in countries such as Niger, Nigeria and Zambia have been accused of paying local labourers lower salaries (Wegenast et al. 2019). Another employment issue that causes discontent among local workers of the host countries is the issue of Chinese-operated mines employing Chinese employees in both skilled and unskilled positions. The Chinese companies are bringing in their own workers rather than employing as many local people as possible (Wegenast et al. 2019). Countries such as Angola, Zambia, Sudan, Ethiopia and Namibia are cases in point (Wegenast et al. 2019). This practice of Chinese companies bringing their own workforce from China does not create many jobs for the host countries; it compromises the up-skilling and training of local people, resulting in little economic spill-over (Wegenast et al. 2019). In Zambia’s Chifubu Market in Ndola, the Chinese are involved in SMEs such as street vending by selling clothes and a myriad of other items, thereby competing with Zambians and depriving the Zambians self-employment opportunities (Nkonde 2018). Again, Chinese multibillion-dollar projects have not benefited the Zambians. The Chinese government has invested in Zambia through its public corporations—namely, the Aviation Industry Corporation of China (AVIC), the Sino Hydro Corporation, China Jiangxi International and the China Henan Cooperation (Nkonde 2018).

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These companies have skilled and unskilled workers from China and have not formed joint ventures with the Zambians. The Zambians have not benefited through gaining access to quality employment opportunities, skills transfer, promotion of local businesses to supply inputs and/or render services needed by Chinese companies to support their operations (Nkonde 2018). Consequently, very few job opportunities for Zambians are created by these companies (Nkonde 2018). The Zambians working for Chinese companies are paid lower wages and work under poor conditions (Nkonde 2018). In 2005, fifty-two Zambian workers died at the Chambeshi Explosive Factory due to lax safety practices by the Chinese company (Nkonde 2018). FDIs are important to Africa; however, widespread corruption is a big issue facing Africa. African leaders who are entrusted to drive FDIs and socioeconomic development are increasingly involved in corruption (Lumumba 2014, 19–20). African countries—namely, Kenya, Mali, South Africa, and Nigeria—are embroiled in serious allegations of corruption, which hinders social, political and economic development, as well as affects the well-being of poor people (Branch and Mampilly 2015, 74; Oxfam 2017; Hope 2020). Approximately 50 per cent of Africa’s tax revenue and more than US$30 billion in annual aid is lost due to corruption (Hope 2020, 295). For example, Hope (2020) points out that Kenya’s 8 per cent of total government revenue, which is equal to US$0.9 billion, is lost every year because of corrupt activities (i.e. to trade mis-invoicing as an IFF activity). In South Africa, corruption costs the country US$2 billion per year, and as a result close to 76,000 are not created (Hope 2020, 295). Many South Africa’s state-owned enterprises (SOEs) have been hit hard by state capture and grand corruption, ranging from bribery between private individuals and some senior officials or executives in the SOEs, to irregular awarding of tenders or irregular outsourcing of services (Bhorat et al. 2017, 59; Mkhabela 2018, 127; Southall 2018, 29). Some of the SOEs hit hard by the grand corruption are South African Airways (SAA), Eskom, the Passenger Railway Agency of South Africa (PRASA), Transnet and Eskom, just to name the few (Salzwedel 2022, 134; Development Policy Research Unit (DPRU) 2021, 137; Zondo Commission Report 2022a, 10, 88, 94 and 196; and 2022b, 266). Despite having the largest economy, Nigeria is faced with social and economic challenges, ranging from, among others things, high unemployment, insecurity, poverty, low income, and poor spending on essential services such as health care and education (Abu and Staniewski 2019, 3059). Corruption is partly blamed for Nigeria’s social and economic problems (Abu and Staniewski 2019, 3059–60). For example, 4 per cent of Nigeria’s total government revenue, which is equal to US$2.2 billion, is lost through corrupt activities (Hope 2020, 295).

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CONCLUSION Africa is part of the global village and FDIs are inevitable. FDIs are necessary to help grow the economy, develop infrastructure, create jobs, transfer skills and technology. FDIs have not benefited many people, but few individuals. Therefore, there should be mutual benefits for both investors and host African countries. African should be well prepared to negotiate good deals which are in their national interest. African countries need to slow down or at least put a moratorium on foreign debt to avoid over indebtedness. FDIs should be examined, and only those that meet certain conditions—such as providing access to technology and skills transfer, creating decent employment opportunities, contributing to tax revenue collection and promoting the local economy—must be welcomed. Africa’s open-door policy for FDIs should have conditions that address the continent’s challenges; state-owned companies should be revitalised, not privatised. Economic cooperation and investment in education and health are vital and must be placed on the agenda to reduce poverty in Africa. Corruption must be fought in both the private and public sectors. African states (supported by political will and social mobilisation) should revitalise and strengthen state institutions to deal with corruption and any improper conduct in the public and private sectors. REFERENCES Abu, Nurudeen, and Marcin Waldemar Staniewski. 2019. ‘Determinants of Corruption in Nigeria: Evidence from Various Estimation Techniques.’ Economic Research Ekonomska Istraživanja 32 (1): 3058–82. DOI: 10.1080/1331677X.2019.1655467. Adesina, Jimi O. 2020. ‘Structural Change, Inequality, and Inclusive Development: Case of Sub-Saharan Africa.’ CODESRIA Bulletin Online 5: 1–7. https:​//​codesria​ .org​/IMG​/pdf​/​-300​.pdf. African Development Bank (AfDB). 2020. Africa Economic Outlook 2020. African Development Bank Group. African Union Commission (AUC) / Organisation for Economic Co-Operation and Development (OECD). 2022. Africa’s Development Dynamics 2022: Regional Value Chains for a Sustainable Recovery. Paris/Addis Ababa: AUC/OECD Publishing. https:​//​doi​.org​/10​.1787​/2e3b97fd​-en. Alvaredo, Facundo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman. 2018. World Inequality Report 2018. https:​//​wir2018​.wid​.world​/files​/ download​/wir2018​-full​-report​-english​.pdf. Amupanda, Job S. 2017. ‘Neo-Liberalism Masquerading as Mixed Economy? A Critical Analysis of Namibia’s Principle of Economic Order.’ Journal for Studies in Humanities and Social Studies 6 (1): 94 –118.

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Atama, C., N. Idemmili-Aronu and C. Ugwu. 2016. ‘Neoliberalism and Intervention in Africa: Myth of Underdifferentiation.’ Journal of Economics and Allied Research 1 (1): 42–52. Ayodele, Thompson, and Olusegun Sotala. 2014. ‘China in Africa: An Evaluation of Chinese Investment.’ Working Paper Series. Nigeria: Initiative for Public Policy Analysis (IPPA). Beegle, Kathleen, and Luc Christiaensen, eds. 2019. Accelerating Poverty Reduction in Africa. Washington, DC: World Bank. https:​//​doi​.org​/10​.1596​/978​-1​-4648​-1232​ -3. Bowsher, Josh. 2020. ‘The South African TRC as Neoliberal Reconciliation: Victim Subjectivities and the Synchronization of Affects.’ Social and Legal Studies 29 (1): 41–64. Branch, Adam, and Zachariah Mampilly. 2015. Africa Uprising: Popular Protest and Political Change. London: Zed Books Ltd. Cheru, Fantu, and Cyril Obi. 2010. ‘Introduction—Africa in the Twenty-First Century: Strategic and Development Challenges.’ In The Rise of China and India in Africa: Challenges, Opportunities, and Critical Interventions, edited by Fantu Cheru and Cyril Obi, 1–12. New York: Zeb Books. Chingono, Nyasha. 2020. ‘Zimbabwe Urged to Prioritise Children as Record Poverty Causes Food Shortages.’ The Guardian, 24 January 2020. https:​//​www​.theguardian​ .com​/global​-development​/2020​/jan​/24​/zimbabwe​-urged​-to​-prioritise​-children​ -as​ - record​ - poverty ​ - causes ​ - food ​ - shortages ​ # :​​ ~ : ​ t ext ​ = The ​ % 20World ​ % 20Bank​ %20estimates​%20that​,continue​%20to​%20rise​%20in​%202020. EY Africa. 2019. ‘How Can Bold Action Become Everyday Action?: EY Attractiveness Program Africa.’ September 2019. https:​//​assets​.ey​.com​/content​/dam​/ey​-sites​/ey​ -com​/en​_gl​/topics​/attractiveness​/ey​-africa​-attractiveness​-report​-2019​.pdf. Development Policy Research Unit (DPRU). 2021. ‘State Capture and the Economies of Corruption: The Case of Transnet.’ In Anatomy of State Capture, edited N. Callaghan, R. Foley and M. Swilling, 131–50. Cape Town, South Africa: African Sun Media, University of Stellenbosch. Donou-Adonsou, Ficawoyi, and Sokchea Lim. 2018. ‘On the Importance of Chinese Investment in Africa.’ Review of Development Finance 8: 63–73. https:​//​doi​.org​/10​ .1016​/j​.rdf​.2018​.05​.003. Gui-Diby, Steve Loris, and Mary-Francoise Renard. 2015. ‘Foreign Direct Investment Inflows and the Industrialisation of African Countries.’ World Development 74: 43–57. https:​//​doi​.org​/10​.1016​/j​.worlddev​.2015​.04​.005. Habib, Adam, and Imraan Valodia. 2006. ‘Reconstructing Social Movements in an Era of Globalisation.’ In Voices of Protest: Social Movements in Post-Apartheid South Africa, edited by Richard Ballard, Adam Habib and Imraan Valodia, chapter 11. Durban, South Africa: University of KwaZulu Natal Press. Harvey, D. (2005). A Brief History of Neoliberalism. New York: Oxford University Press. Hausmann, Ricardo, Federico Sturzenegger, Patricio Goldstein, Frank Muci and Douglas Barris. 2022. ‘Macroeconomic Risks after a Decade of Microeconomic

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‌‌Chapter 18

Political Economy of Aid and Official Development Assistance in Sub-Saharan Africa Olabode Agunbiade

Towards the middle of the last century, particularly in the immediate postcolonial period when most developing countries in Africa attained political independence, the issue of foreign aid and its role in promoting growth and development began to gain prominence in economic and development literature. Historically, foreign aid can be viewed as a product of World War II, when the European Recovery Programme (Marshall Plan) in the 1940s allowed massive transfers of financial resources from the United States to Europe. The main objective then was to rebuild the economy of Europe that was devastated by the war and to help restore prosperity in order to prevent European countries from becoming communist. On the attainment of political independence mostly in the 1960s, African countries gradually became beneficiaries of foreign aid, especially from donors that were formerly their colonial rulers. Sub-Saharan Africa (SSA) subsequently became a major destination of Western aid, such that some countries became practically aid dependent, since very large proportions of their imports, investments, income and government expenditures are accounted for by aid (Oya 2006). Most foreign aid donors aim at promoting poverty reduction, strengthening education, health and agricultural sectors, good governance and ensuring self-sustaining economic growth in the recipient economies (Lensink and White 2001). However, over the years, available evidence suggests that foreign aid is being motivated by an admixture of economic interests, altruism, historical ties and geo-strategic (imperialist) considerations (Asongu 2014). Donors, mostly from the Western capitalist world, offer foreign aid to 309

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developing countries in the form of grants and soft loans, especially after the emergence of dozens of nations following the decolonisation process, with certain pre-determined objectives (Asongu 2014). The major objective of this chapter is to assess how foreign aid and official development assistance (ODA) affect the social, economic and political conditions of countries in SSA. It is timely research that addresses a very important aspect of the relationship between developed and developing nations in the world. The methodology employed in this research is explanatory and qualitative in nature and relies on secondary data sourced from the existing literature and documentation available in periodicals, books, journals, magazines, directories, official publications and the internet. This chapter proceeds, in the following section, with definitions and conceptual clarifications of important issues. The theoretical underpinnings of foreign aid are discussed in the third section, while the fourth section is devoted to a review of empirical studies already undertaken on the subject. In section five, we discuss the direction of global foreign aid flows and the quantum. In section six, we identify the effect of foreign aid on recipient countries in sub-Sahara Africa, while in the final and seventh section, we present our conclusion and recommendations. DEFINITIONS AND CONCEPTS Foreign Aid Foreign aid (or foreign assistance) has been defined by Chukwuemeka, Okechuku and Okafor (2014) as financial flows, technical assistance and commodities that are (1) designed to promote economic development and welfare as their main objective (thus excluding aid for military or other non-development purposes), and (2) are provided as either grants or subsidised loans. Grants and subsidised loans are referred to as concessional financing, whereas loans that carry market or near-market terms (and therefore are not foreign aid) are non-concessional financing. Aid flows are further classified into three broad categories (Organisation for Economic Co-operation and Development (OECD) 2020b): 1.  Official development assistance (ODA), which is the largest, consisting of aid provided by donor governments to low- and middle-income countries. 2.  Official assistance (OA), which is aid provided by governments to richer countries with per capita incomes higher than approximately



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$9,005 (e.g. Bahamas, Cyprus, Israel and Singapore) and to countries that were formerly part of the Soviet Union or its satellites. 3.  Private voluntary assistance includes grants from nongovernment organisations, religious groups, charities, foundations and private companies. It should, however, be noted that when discussing foreign aid, most researchers are actually referring to ODA. Official Development Assistance (ODA) ODA has been defined as government aid that promotes and specifically targets the economic development and welfare of developing countries (OECD 2020a). It is the flow of official financing to the developing countries that is concessional in character—that is, grants and loans with at least a 25 per cent grant component (Alghamdi 2020). This definition excludes debt relief, technical assistance and other forms of aid. Certain bilateral aids are conditionally ‘tied’ in that they must be disbursed on goods and services from the donor country. This ‘tied’ aid amounts to subsidising Western manufacturers. Sub-Saharan Africa (SSA) SSA generally refers to the geographical and ethno-cultural area of the continent of Africa that lies south of the Sahara. There is, however, no clear-cut definition of countries in this subregion, as various organisations and agencies give different interpretations. As pointed out by The Economist (2019), whereas the World Bank includes the Arabic-speaking states of Mauritania and Sudan in SSA, the International Monetary Fund (IMF) does not, even though Mauritania is located mostly in the desert. The World Bank used to include both Djibouti and Somalia in sub-Saharan Africa, before moving Djibouti to the Middle East and North Africa in 2000. Meanwhile Eritrea, to the north of them both, is considered sub-Saharan (The Economist 2019). For the purpose of this chapter, we regard sub-Sahara African countries as those forty-six out of Africa’s fifty-four countries listed by the United Nations Development Programme (UNDP 2010) as ‘sub-Saharan,’ excluding Algeria, Djibouti, Egypt, Libya, Morocco, Somalia, Sudan and Tunisia. THEORETICAL UNDERPINNINGS OF FOREIGN AID Most foreign aid theories employed by scholars today are, in reality, variations of different growth and development theories. Classical economists

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like Adam Smith, Alfred Marshall and David Ricardo stressed that capital is an important determinant of growth and development. Economic growth theories suggest that foreign capital promotes economic growth by complementing limited domestic savings, which are inadequate to match planned investment required for growth rate consistent with the set target of an economy, usually referred to as savings gap (Chenery and Bruno 1962). The standard model used in estimating the effect of foreign aid on growth was put forward by Harrod (1948) and Domar (1947). The Harrod-Domar model shows that the main barrier to growth is the savings constraint. The most famous extension of the Harrod-Domar model is the ‘two-gap model’ of Chenery and Strout (1966) who built on earlier work by other development economists, such as Lewis (1955) and Rostow (1960). These economists stressed that an aid-financed increase in investment would promote a ‘take off into self-sustained growth’ for developing countries. Chenery and Strout (1966) illustrated how aid fills the savings and foreign exchange gaps through capital accumulation and investment. Bacha (1990) extended the two-gap model into ‘three-gap model’ to include the government’s fiscal position as another possible gap. However, the theoretical framework adopted for this chapter is the dependency theory that examines the sociopolitical and economic relationships that exist between the developed and developing countries. The dependency theorists are neo-Marxists who propounded their theories after Karl Marx by borrowing some of Marx’s arguments. The dependency school of thought was advocated by Latin America’s dependencia school during the 1960s. According to the theory, the cause of underdevelopment is the dependence of developed countries on industrialised countries, while internal factors of developing countries are considered irrelevant or seen as symptoms and consequences of dependency. EMPIRICAL STUDIES Extensive empirical studies abound on the effects of foreign aid on development or on some indicators of development in countries and regions around the world, especially in developing and some emerging economies. In spite of the extensive body of literature on the subject, there is yet no consensus on the impact of foreign aid on the political economic development of recipient nations. For our purpose, we segment aid effectiveness studies into three main strands:



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1. Foreign Aid Is Effective Burnside and Dollar (2000) studied the relationship that exists between foreign aid and the economy and per capita gross domestic product (GDP) growth. They utilised a panel of fifty-six nations from 1970 to 1993. They found out that there was a positive relationship between foreign aid and economic growth in developing countries that adopted sound fiscal, monetary and trade policies, but had no measurable effect in countries with severely distorted policy regimes. Adam, O’Connell, Buffie and Patillo (2009) studied the macroeconomic impact of foreign aid, but from a monetary perspective. They found out that foreign aid plays an inflation-stabilisation role by aligning domestic deficit financing with the demand for domestic base money, especially by avoiding seigniorage to cover government deficits. This results in higher domestic consumption as it keeps prices low and induces more investments. This finding showed that aid inflows may have positive outcomes on both nominal and real macroeconomic aspects when they are rightly used. Gomanee et al. (2005) examined how aid contributes to increasing aggregate welfare, measured by infant mortality and Human Development Index (HDI) in recipient countries. Their study was based on a sample of thirty-eight countries studied from 1980 to 1998, utilising fixed effects estimates to build a pro-poor expenditure index using regression analysis to derive the weighted value of each element in the pro-poor expenditure indicator. It was reported that aid inflows and pro-poor expenditure are associated with higher welfare at all quintiles—that is, they have greater direct impact on the HDI but an inversely proportional relationship with infant mortality. 2. Foreign Aid Is Not Effective Asiama and Quartey (2009) examined how development aid affected welfare variables in thirty-nine SSA nations from 1975 to 2003 and reported that aggregate bilateral aid may have a positive effect, but did not show any significant effect on human development. However, financial sector development aid, on the other hand, had a negative and significant effect on the human development indicator (specifically, on infant mortality rate). Akinbode and Bolarinwa (2020) used data for forty-seven SSA countries from 2000 to 2016 to study the effect of foreign aid on human development in SSA by employing the system-GMM approach, which is specifically applicable in this case. Their results revealed that foreign aid did not significantly affect human development in SSA, whereas, corruption was found to reduce HDI, while trade openness improved it. The non-significance of foreign aid should therefore be regarded as a serious issue because it implies that the

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objective of the donors of foreign aid, for which funds were released, were not being achieved. The study recommended effective framework for utilisation of foreign aid and reduction of corruption. Agunbiade and Mohammed (2018) conducted an empirical study to examine the impact of foreign aid on Nigeria’s economic development in order to identify its significance in the development process in Nigeria. Using secondary data in the form of time series data from 1986 to 2016 and employing the vector error correction method of data analysis, this study found out that foreign aid flow (FAF) has a positive relationship with the GDP both in the short and long-run, but is not strong enough to significantly create an impact on the economy. This could probably be attributed to the misappropriation of foreign aid funds as well as mismanagement and corruption, or the bulk of the funds being channeled to payment of public sector staff emoluments and other recurrent expenses instead of productive investment. 3. Yet to be Resolved Burnside and Dollar (2004) revisited the relationship between aid and growth using a new data set focusing on the 1990s. Their evidence supports the view that the impact of foreign aid depends on the quality of state institutions and policies. They employed an overall measure of institutions and policies popular in the empirical growth literature. The interaction of aid and institutional quality had a robust, positive relationship with growth that is strongest in instrumental variable regressions. Mankiw (1995) examined empirical models of one hundred nations for which data on economic performance over recent decades were available, and suggested that the results offer too few observations to allow scholars to discriminate among the many other factors that contribute to growth, notably including foreign aid. According to Mankiw, the empirical evidence from this body of research is simply too limited to enable analysts to reach strong conclusions. Based on this empirical review of the literature, we can summarise that foreign aid plays only a modest role in promoting economic development and improving human welfare. Other factors that may complement the efficiency of foreign aid include the quality of a developing country’s decision-making process, the quality of its leadership and the policies it pursues. DIRECTION OF GLOBAL FOREIGN AID FLOWS Africa is a resource-rich but extremely poor continent (Kwasi 2018). It is the second largest and second most populous continent on earth, containing



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an estimated population of 1.22 billion people as of 2016 (United Nations Economic Commission for Africa (UNECA) 2016). This is expected to rise to 1.34 billion by 2020 given its annual population growth rate of 2.7 per cent; more than twice as fast as South Asia (1.2 per cent) and Latin America (0.9 per cent) (The Economist 2020). Over the years, it appears as though several African countries became so dependent on aid such that without it, almost half of their yearly budgetary obligations cannot be fulfilled. For example, in 1992, aid was said to have accounted for 12.4 per cent of gross national product (GNP), more than 70 per cent of gross domestic savings and investments in sub-Saharan Africa and more than 50 per cent of all imports (Ampaw 2000). In 2003, Africa received 46 per cent of total foreign aid flows (OECD 2003). In 2007, the top ten donors—the United States, Japan, France, the United Kingdom, Germany, the Netherlands, Sweden, Italy, Norway and Denmark—and other donors from the international community committed to double the amount of foreign aid given to SSA to help them meet the Millennium Development Goals (MDGs) by 2010 (IMF 2009). Table 18.1 depicts the recent situation concerning aid dependence as a proportion of gross national income (GNI) in SSA countries. It also shows their fragility and vulnerability to external shocks. The trend of aid receipts among SSA countries also shows that in 2018, Ethiopia received US$4.7 billion, Nigeria US$3.7 billion, the Democratic Republic of the Congo (DRC) US$2.4 billion and Kenya US$2.4 billion (OECD 2018). Other high ODA recipient countries include Uganda, Tanzania, Mozambique, Burkina Faso, Cameroon, Niger, Rwanda and Mali, among others. They all received net ODA in excess of US$1 billion in 2018. According to the Organisation for Economic Co-operation and Development (OECD) statistics, West African Economic and Monetary Union (WAEMU) Table 18.1. Aid Dependence in Percentage of Gross National Income 2018, Top Ten Sub-Saharan Africa Countries S/N

Country

1 2 3 4 5 6 7 8 9 10

Central Africa Republic Liberia Malawi Burundi The Gambia Sierra Leone Mozambique Rwanda Guinea Bissau Sao Tome and Principe

Source: Computed by the author from World Bank (2018).

Aid Dependence in % of GNI 27.5 20.2 18.8 14.8 14.6 13.3 12.6 12.0 10.5 10.4

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countries received on average a net ODA flow of 15.12 per cent of their average GDP over the last three decades (OECD 2018). WAEMU includes the following Francophone countries: Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. A comparative analysis of the evolution of foreign aid volumes and tax revenues in WAEMU countries from 1985 to 2016 indicates that WAEMU countries are highly aid-dependent countries. So, on average, the tax revenue in percentage of GDP (12.1) is less than foreign aid in percentage of GDP (15.12). In some countries of this union, aid-to-GDP far exceeds their tax-revenue-to-GDP. This is the case of Guinea Bissau (5.08 against 33.03), Niger (11.18 against 26.01), Mali (11.23 against 14.02) and Burkina Faso (11.47 against 13.18). In contrary, in the other countries of the Union (Benin, Côte d’Ivoire, Senegal and Togo), even though tax revenues are higher than foreign aid, the latter remains an important source of financing (Bayale 2020). IMPACT ON RECIPIENT COUNTRIES IN SUB-SAHARA AFRICA Since 1990, the UNDP (1990) has been compiling the HDI of all countries in the world and publishing them in the annual Human Development Reports. The index considers the health, education and income in a given country to provide a measure of human development, which is comparable between countries and over time. The 2020 edition covered 189 countries of which fifty-three are African (UNDP 2020). After decades of receiving foreign aid and ODA, most sub-Saharan African nations are in the bottom two categories—medium human development and low human development. Nigeria falls in the last category of low human development. While foreign assistance in the form of aid and ODA are not necessarily harmful economic support policies, the actual delivery, implementation and impact encounter significant difficulties in SSA countries. Hence, their impact has not been fully felt. The following are some of the effects of foreign aid on SSA economy. Not Usually Targeted at Needy Sectors Most of the projects embarked upon with foreign exchange inflow from aid are usually directed at ‘white elephant’ projects that are not really necessary for the social, economic and political emancipation of the populace. It becomes more worrisome when these aids are tied, meaning procurement of resources will be from the donor countries. Birdsall (1996) argues that for higher economic growth of developing countries, it is essential that



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governments spend more money on improving public infrastructure in developing sectors, such as education, sanitation and health. Discourages Local Production and Technological Progress Foreign aid reduces the recipient nation’s competitiveness, culminating in the Dutch disease (a condition that reduces competitiveness of the manufacturing sector due to overabundance of foreign assistance) (Rajan and Subramanian 2005). This phenomenon seems to characterise the recent emergence of ‘new’ donors in Africa, notably China, which primarily aims at securing access to natural resources for its expanding manufacturing sector and establishing diplomatic allies to support its rise as a power in multilateral institutions (Alden, Large and Soares de Oliveira 2008). Engenders Forms of Corrupt Practices and RentSeeking Activities Akinbode and Bolarinwa (2020) in their work on the effect of foreign aid on human development stressed that the phenomenon of corruption is a serious ‘drag’ on development in SSA countries. No matter the volume of funds released to SSA in the form of foreign aid may be, the pervasive corruption, especially at government levels, inhibits its effectiveness. Moyo (2009) maintains that foreign aid has amplified dependency, poverty and corruption in Africa. Perpetuates Foreign Economic Dominance Much of aid’s failure is related to the institutions that structure its delivery. A phenomenon known as the Samaritan’s Dilemma spells out such perverse effects or ‘institutional distortions’ within the framework of these institutions that oversee the complex relationships between the key actors in the aid management system, and often produce a series of perverse incentives that promote inefficient and unsustainable outcomes (Gibson et al. 2005). Interference with Local Political Systems and Governance Structures One of the biggest pitfalls of current and past aid delivery systems is the erosion of the ability of the state to design policies and ensure an adequate provision of services, due to a series of negative externalities of aid delivery systems. Conventionally, the donor-recipient connection has been an

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asymmetric one involving a strong and a weak party, where political and economic structures of authority and exploitation provided little avenue for the latter to make a choice (Murshed and Khanaum 2014). Democratic regimes are more likely to integrate the conditionality of the aid extended and fulfil their sides of the agreements with donors (Kono and Montinola 2009). CONCLUSION AND RECOMMENDATIONS Conclusion This chapter concludes by maintaining that as of yet, there is no agreement regarding the impact of foreign aid and ODA on SSA countries’ political economy. However, given the quantum of foreign financial assistance that flowed to these countries in the last sixty years or so, there is no reason why poverty should not have been totally eradicated in SSA countries. The result is there for all to see as the majority of Sub-Saharan African countries (thirty-four out of forty-six countries) are still the least developed countries (LDCs) in the world (Cornelissen 2016). Furthermore, foreign aid provision still remains highly fragmented and lack coordination, thereby not optimising its benefits to recipients, since they need to transact with multiple donors and projects concurrently. Political incentives and political economic factors play important roles in the attitudes of governments in recipient countries, which invariably constrains the effectiveness of aid. When aid proceeds are not productively invested in order to be able to meet the future repayment obligations, they generate a debt burden that may be unsustainable for poor countries. Recommendations Need for SSA Countries to Improve their Local Technological Bases SSA countries should place more emphasis on technological development and industrial growth in an effort to broaden and strengthen their productive sectors to promote exportation and discourage too much importation. That way, any foreign aid will be properly utilised in a sustainable and productive manner. Ensure Appropriate Diversification of their Local Economies There is need for diversification and restructuring of SSA nations’ economies in order to boost agro-allied and industrial production by not developing



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only the primary extractive sectors. Furthermore, SSA countries should be encouraged to open up their economies to beneficial trade relationships with the external world, which would ensure significant economic development. Accept Foreign Funding Assistance to Finance only Projects that are Developmental Oriented There is need for foreign donors to show that they are providing foreign aid to truly assist underdeveloped countries in exiting poverty and improving their standard of living by ensuring that their financial assistance is directed at productive sectors. Recipient nations should endeavour to accept foreign aid which are channeled to fund projects and programmes with development orientation in order to facilitate economic growth and national development. Introduce and Strengthen Transparency and Anti-Corruption Institutions Measures to minimise corruption should be adopted, while an appropriate framework for effective utilisation of foreign aid is put in place, towards benefitting maximally from aid programmes. Promote Good Governance SSA nations should shun offers for foreign aid that will mortgage their sovereignties and destroy their self-development processes. It has been shown that improvement in governance contributes to the reduction of poverty levels and enhances economic growth. REFERENCES Adam, C. S., E. O’Connell, F. Buffie and C. Patillo. 2009. ‘Monetary Policy Rules for Managing Aid Surges in Africa.’ World Bank Economic Review 20 (2): 261–90. Agunbiade, O., and S. S. Mohammed. 2018. ‘Impact of Foreign Aid on the Economic Development of Nigeria: 1986–2016.’ Journal of Economics and Sustainable Development 9 (18): 69–80. Akinbode, S. O., and T. M. Bolarinwa. 2020. ‘Effect of Foreign Aid on Human Development in Sub-Saharan Africa: A System GMM Approach.’ South-Eastern Europe Journal of Economics 1: 19–38. Alden, C., D. Large, and R. Soares de Oliveira. 2008. China Returns to Africa. A Superpower and a Continent Embrace. London: C. Hurst & Co. Publishers. Alghamdi, M. A. 2020. ‘Does Foreign Aid Promote Growth? Evidence from Africa.’ Master’s Thesis submitted to the Graduate School of Eastern Illinois University, Charlston, IL. https:​//​thekeep​.eiu​.edu​/theses​/2513​/.

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Ampaw, A. 2002. ‘Aid and Development Paradigms in Africa: The Missing Equation for Human Security?’ In Where has Aid taken Africa: Re-Thinking Development, K. Karikari and Media Foundation for West Africa. Accra, Ghana: Media Foundation for West Africa. Asiama, J. P., and P. Quartey. 2009. ‘Foreign Aid and the Human Development Indicators in Sub-Saharan Africa.’ Journal of Developing Societies 25 (1): 57–83. Asongu, S. A. 2014. ‘The Questionable Economics of Development Assistance in Africa: Hot-Fresh Evidence, 1996–2010.’ The Review of Black Political Economy 41 (4): 455–80. Bacha, E. L. 1990. ‘A Three-Gap Model of Foreign Aid Transfers and the GDP Growth Rate in Developing Countries.’ Journal of Development Economics 32: 279–96. Bayale, N. 2020. ‘Foreign Aid and Fiscal Resources Mobilisation in WAEMU Countries: Ambiguous Effects and New Questions.’ African Journal of Economic Review 8 (2): 17–38. Birdsall, N. 1996. ‘Public Spending on Higher Education in Developing Countries: Too Much or Too Little?’ Economics of Education Review 15 (4): 407–19. Burnside, C., and D. Dollar. 2000. ‘Aid, Policies, and Growth.’ American Economic Review 90 (4): 847–68. ———. 2004. ‘Aid, Policies and Growth: Revisiting Evidence.’ Policy Research Working Paper, no. 3251. Washington, DC: World Bank. Chenery, H. B., and M. Bruno. 1962. ‘Development Alternatives in an Open Economy.’ Economic Journal 72 (1): 78–103. Chenery, H. B., and A. M. Strout. 1966. ‘Foreign Assistance and Economic Development.’ American Economic Review 56: 679–733. Chukwuemeka, E. E., O., E. Okechuku and U. Okafor. ‘2014. Foreign Aid to Nigeria and Domestic Obstacles: A Review of Anambra State Education Sector.’ Africa’s Public Service Delivery and Performance Review 2 (2). DOI: https:​//​doi​.org​/10​ .4102​/apsdpr​.v2i2​.52. Cornelissen, S. 2016. ‘Japan’s Official Development Assistance to Sub-Saharan Africa: Patterns, Dynamics, and Lessons.’ In: Japan’s Development Assistance, H. Kato, J. Page and Y. Shimomura, 149–65. London: Palgrave Macmillan. DOI: https:​//​doi​.org​/10​.1057​/9781137505385​_10. Domar, E. D. 1947. ‘Expansion and Employment.’ American Economic Review 37 (1): 34–55. Gibson, C. C., K. Andersson, E. Ostrom and S. Shivakumar. 2005. The Samaritan’s Dilemma: The Political Economy of Development Aid. Oxford: Oxford University Press. Gomanee, K., O. Morrissey, P. Mosley and, A. Verschoor. 2005. ‘Aid, Government Expenditure, and Aggregate Welfare.’ World Development 33 (3): 355–70. Harrod, R. F. 1948. Towards a Dynamic Economics. London: Macmillan. International Monetary Fund (IMF). 2009. International Financial Statistics. Washington, DC: IMF. Kono, D. Y., and G. R. Montinola. 2009. ‘Does Foreign Aid Support Autocrats, Democrats, or Both?’ The Journal of Politics 71 (2): 704–18.



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Chapter 19

Africa and International Philanthropy The Good, the Bad and the Ugly Toyin Cotties Adetiba

Most African states gained their political independence from the early 1960s, the oldest being Liberia, which gained its political independence in 1847. The youngest, South Sudan, became an independent state on 9 July 2011. However, the survival of most African states to date is still tied to the economic strength of the West. Across time and space, giving is motivated either by love or the need to promote the welfare of the needy, sometimes politically and ideologically motivated. Providing for and alleviating the socioeconomic woes of the underprivileged can be the motivating factor behind philanthropism. Thus, the pursuit of the path to achieving greater social sustainability and developmental purposes has led to an interest in the place of philanthropy within development discourses, motivated by the spirit of charity where the rich give to augment for the insufficiency of the poor. In the last two decades, Africa has witnessed an increase in the upsurge of high-profile philanthropic giving coming from foundations, individuals and (buoyant) governments predominantly directed into areas such as food security, health, poverty relief and education. These philanthropists can be classified into those who invest in specific projects for specific goals; philanthropists whose giving fit into the goals and values of the recipients (Thomson 2014). Debatably, it can be argued that the art of philanthropism is founded on the necessity of transferring (socioeconomic) resources from the rich to the poor. 323

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These philanthropic bodies are considered to have been established either with an altruistic mission or with a strategic pursuit of goals other than philanthropism. For example, Cohen, Küpçü and Khanna (2009) abnd Zunz (2004) argue that spending on social good frequently places the foundation’s name in the good books of the benevolent where the largesse of these philanthropists often erodes governments’ ability to stand up on their own, hence, a there is a bvicious cycle of dependence and too many voices calling the shots. Debatably, African states stand to be the world’s most destitute places in terms of socioeconomic and infrastructural development, with high levels of corruption, hence its dependency on the foreign donors. Thus, only a motley group of international charities and philanthropists stands between some dysfunctional states in Africa. The former colonial masters have always been at the forefront trying to sustain them but for profit that is hidden to the poor African states. However, this has been taken over by powerful global foundations perceived to be driving the hegemonic goals of the powerful Western world. Thus, making the philanthropists the new colonialists of the twenty-first century, whose philanthropists give clandestinely, disruptive and conceivably detrimental to the needed systemic change in Africa’s political economy. Drawing largely from carefully selected relevant published works, this chapter evaluates the involvement of philanthropists in Africa while answering the question of whether philanthropism is an instrument surreptitiously designed to pursue socioeconomic, political and ideological objectives related to hegemony in Africa. PHILANTHROPY, PHILANTHROCAPITALISM, HEGEMONY AND SOFT POWER EXPLAINED There are five modes of exchange that seem to have dominated the act of giving, these are economy of commerce involving market actors; the economy of obligation incorporating the state and nuclear family; the economy of fear, which is essentially about crime; the economy of affection, which focuses on the extended family; and the economy of volition reflecting voluntary giving by all role-players (Habib et al. 2008, 22). Thus, Bishop and Green (2010) explain that philanthropism is a means of reinvesting the gains of the rich in favour of the underprivileged, the use of business stratagems for the establishment of socioeconomic resources for the vulnerable and an answer to the failure of government in providing for its people. Across time and space there are lots of reasons that motivate giving. Mediavilla and Garcia-Arias (2019) believe that philanthropy can be linked to religion, moral beliefs or relating to a community, ethnic group, sustained

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by individual consciousness vis-à-vis contribution to the collective good and assisting those who are not benefiting from the (socioeconomic) system. Arguably, the motivation behind the social justice programmes of early charities is the need for the assistance of the underprivileged. Among the Jewish Christian and Muslim communities, for example, lies a long tradition of giving in the form of donations based on their religious beliefs geared towards supporting the well-being of the members of the community and their commitment to humanity. This is reinforced by the idea of Ubuntu, which is essentially about togetherness, and how all our actions have an impact on others and on society. Thus, involving in philanthropic activities locally is a form of social protection for many societies in Africa, underpinned by the promotion of peace, compliance with the law that guides such society, being kind-hearted with respect for life and the natural environment (Murenha and Chili 2011, 6). Conversely, philanthropism is guided by convention; where it is seen as a social and/or principle of belonging to a (local or global) community where giving is considered an act of selflessness. Philanthropism in Africa’s context can be linked to the principles of Pan-Africanism, where attention is paid to new socioeconomic initiatives at the continental level, such as Agenda 2063 encapsulated ‘A Prosperous Africa, based on inclusive growth and sustainable development.’ The notion of philanthropism in Africa is premised on solidarity, interconnectedness, interdependencies, reciprocity and mutuality. To Murenha and Chili (2011) the assumption that motivation is always one-dimensional in philanthropic giving is not always the reason for giving, hence the whim and the caprice to help, and the act of giving itself, could be informed by a combination of many reasons. Thus, a country that receives assistance from a well-developed country is assumed to be motivated by the need which is a product of poverty. As a result, receiving help from other donors or philanthropists is a function of need. It therefore means that the motivation and action behind philanthropism may be a difficult nut to crack. As mentioned above, these philanthropists (most of which are external to Africa) consist of those who invest in specific projects for specific goals (Bill Gates of the Gates Foundation); those whose giving fits into the goals and values of the recipients (Paul Brest of Hewlitt Foundation), institutions whose giving is meant to assist developing countries (United States Agency for International Development (USAID)). Founded by John F. Kennedy in 1961, USAID is an independent agency of the US government primarily responsible for running civilian foreign aid and development assistance. Notwithstanding the motivations behind philanthropic giving, philanthropism is a set of socioeconomic actions and practices that compensate for the limited socioeconomic capacity to generate resources from other international

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Table 19.1. Types of Philanthropists, Their Donations and Their Recipients in Africa Foundations

Activities

Bill & Melinda Gates Foundation

education, agriculture, research, health, gender equality, science and innovation

Hewlett Foundation

civil society organizations gender equity, health and legal empowerment education, health, conflict, peace and security and emergency (etc.) education

USAID

Walton Foundation

Donations

Recipients in Africa

$1,329,595,870 Nigeria, South Africa, Cote d’Ivoire, Mozambique, (there is an Mauritius, Senegal Ghana, additional $5 Uganda, Kenya and billion meant Ethiopia to be spent by the foundation in Africa between 2016 and 2021) $18,729,000 Burkina Faso, Kenya and Senegal

$7,795,032,375 Africa

$20,000,000 South Africa

Source: Created by the author from the official website of USAID; Seydi (2021); Bach (2018); Philanthropy News Digest (2021) and the official website of Hewlett Foundation.

donors for development. In a departure from the above, Morvaridi (2012) believe that the postmodern philanthropism model is somewhat different because it tilts towards increasing the issues of hegemonies over those of altruism. Nevertheless, this work believes that philanthropism can be argued as altruistic and strategic against the backdrop that philanthropism is hegemonic as alluded to by Mitchel and Sparke (2016) that a philanthropic act is an investment while using market transformations at the micro level to augment for the failures of the macro level and, hence, likening to an owner of an orchard who only gives the fruits and not the trees that produce the fruits (Bowman 2012). Philanthropism is, therefore, a set of ideological and predetermined socioeconomic actions and practices, encouraged by the global economic system as an instrument of foreign assistance that compensates for the limited socioeconomic capacity to generate resources from other international donors for development. Hence the argument that philanthropism is structured around the socioeconomic, political, ideological and cultural paradigms of the financier of philanthropic activities, observed by Oscar Wilde and echoed by Bowman (2012)

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that philanthropists have carefully and mawkishly positioned themselves to resolve the evils in poverty, nonetheless have not been able to provide the antidote to a disease called poverty; rather, they have succeeded in prolonging it instead of reconstructing the society on the basis that it will be impossible for poverty to thrive. McGoey (2012) further argued that within the concept of philanthropy vis-à-vis philanthropists’ activities in Africa, there is a treacherous change and, to some extent, philanthropism in Africa has been inoculated with the dynamism of capitalists venture thus transforming it into a socioeconomic mechanism designed to mobilise market forces while organising them around superficially resourceful models of management, as well as redirecting them towards projects with quantifiable goals and measurable results, and thus, philanthropism in Africa vis-à-vis the international donors is not only a question of exporting and transformation of socioeconomic system to poor African states but also a means of restructuring the activities of the philanthropists around the socioeconomic, political, ideological and cultural paradigms of the financier of philanthropic activities. In Africa, the subject of philanthropy is an area that is crowded with intrigues and, at times, evokes controversy and emotions, more often neglected unwillingly or willingly; hence, an avenue to engage with the theorisation of the phenomenon. The issues of philanthropy in Africa are deeper and more complicated than moving resources to Africans; they are more about the philosophies of power and the control of resources in the philanthropic world. The concept of philanthrocapitalism appeals to more than a single operation or connection, it is a systemic change, in the way big philanthropic organisations covertly replace that part of the government-controlled economy and reshape it to suit their business image and appearances, as well as their operations, where a huge sum of private capital is employed to solve socioeconomic problems while using business methods as well as legitimizing monopolistic acquisition in the name of a free market or attempting to fix the reputation of their country—like Jack Ma Foundation trying to stop the spread of the coronavirus and fix China’s reputation (Hatton 2020). Debatably, philanthropists work to spread their mode of business operation to the public sector while pretending to get the job done, advancing those socioeconomic needs that can only be met using business strategies. While traditional philanthropists see their giving as contributions towards supporting others (Kumashiro 2012, 15), philanthrocapitalists use their giving as a means of scheming their way into the community’s work, through which they prioritize their business. It thus means that their involvement somewhat affects public policy noticeably and predominantly in a situation where the community/country is desperately in need of their financial assistance.

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Preston (2011, 2) comments that the former CEO of the Gates Foundation, Jeffrey Raikes (2008–2014), remarks, ‘I prefer our approach where we’re either investing to create a return that will grow our endowment and give us more resources to be able to do our programmatic work, or we’re investing in our programmatic work without trying to set some goals regarding returns.’ In essence, the foundation would only invest where they can get returns. Thompson (2018, 53) argues that the ‘philanthro’ side of philanthrocapitalism refers to the supports that come from large, privately owned foundations that promote venture philanthropy. However, there is no change of ownership in this transaction, because it carries some conditions that must be followed as it is done in business practices under the pretense of efficiency and showing results based on selected measures by the foundations’ controlling transactions. Conceivably, philanthropy is a gift, not a right. Explaining this, Jung and Harrow (2015) argue that the former articulates the interest and passion of the giver, while the latter expresses a duty to do something or act in the interest of some people. Often gifts are discernible by adding conditions; although they are not intended to change the socioeconomic status quo of the recipient, the giver might expect something in return for its investments. Hence Thompson’s (2018) explanation that three principles guide the operations of philanthrocapitalists, the belief that financial wealth is the same thing as expertise in the area they want to put their money. Hence, trading on the socioeconomic gap between the haves and the have nots while building their wealth. Secondly, their unequivocal confusion of their self-interests with collective interests, where self-interest takes on a value within the socioeconomic programmes sponsored by these foundations, with little or no effort to incorporate the ruling self-interest into others. Thirdly, the promotion of their expertise over the principle of democracy in the name of efficiency, believing that any public institution administered by the government may likely be conservatively resistant to change, thus the need to bring in their expertise which invariably takes over the affairs of such institution. For example, philanthrocapitalist principles have placed a high premium on economies of scale for large-scale food production for profitability in Africa, while campaigning for harmonisation of the rules that guide agricultural production for greater efficiency both in distribution and labelling it free trade, thus exposing government institutions to privatisation (Thompson 2018, 56–59). This is in consonance with the argument put forward by GRAIN (2021) that the Gates Foundation has spent nearly $6 billion between 2003 and 2020 to improve agriculture in Africa; but while the foundation’s grant focuses on African farmers, they are heavily skewed to technologies developed by research centres and corporations in the North for poor farmers in the South,

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while completely ignoring the technology and biodiversity that these farmers already possess. Table 19.2 provides an overall picture of the Bill & Melinda Gates Foundation’s grants for agriculture that went to four big groupings: the Consortium Group on International Agricultural Research (CGIAR), AGRA (set up in 2006 by the Gates Foundation), AATF (pushing Green Revolution technology and GMOs into Africa) and several international organisations (World Bank, UN agencies etc.). The other half ended up with hundreds of research, development and policy organisations across the world. The Gates Foundation claims that 80 per cent of their grants are meant to serve African farmers. But of the funding to these hundreds of organisations, a staggering 82 per cent was channelled to groups based in North America and Europe, while less than 10 per cent went to Africa-based groups. As shown in table 19.2, almost 90 per cent of funding goes to groups in North American and Europe, while just 5 per cent is directly channeled to African nongovernmental organisations (NGOs). By interpretation, the Gates Foundation seems to have very little trust in African organisations serving African farmers. Thus, illustrating the point of where the priorities of the foundation lie. Therefore, parastatals are only visible in other sectors such as health, education, the offering of services to farmers who provides food while tapping into the remaining taxpayer money for their personal goals and the approval of leveraging others’ funds as smart investments by venture capitalists. A philanthrocapitalist foundation thus, offers a tied grant propelling a project in one direction, which tilts towards achieving a defined goal by the foundation in the guise of capacitating the public. In a nutshell, the philanthrocapitalist idea of transforming the socioeconomic system of poor African states is a guise to reduce peoples’ participation and to promote centralisation, as well as regulate the means of production and distribution through the sector of philanthropic foundations while indirectly restructuring and linking the socioeconomic activities of African states to the global market, where the philanthrocapitalists benefit at the expense of the vulnerable and poor African states. The globalisation of world economy no doubt has brought about extraordinary wealth, however, controlled by few states as well as few super-rich individuals, while inequality and absolute poverty have also increased significantly (Morvaridi 2012), particularly in Africa, thus opening the door for philanthropic work in the continent. Philanthropy is considered a phenomenon best captured by the concepts of solidarity and reciprocity that undergird inter-state relations. However, wealth does not equate with legitimacy or accountability (Hsu 2016, 636), thus casting aspersion on the sincerity of the

Table 19.2. Gates Foundation Agricultural Grants by Type of Grantee, 2003 to 2021 Agency Consortium Group on International Agricultural Research (CGIAR)

AGRA

Int’l Orgs. (UN, World Bank, etc.)

AATF (African Agricultural Technology Foundation)

Universities and National Research Centres

Amount Received Main Recipients $1,373,000,000 CGIAR (a consortium of fifteen international research centres set up to promote the Green Revolution across the world). IFPRI ($223 million), CIMMYT ($346 million), IRRI ($197 million), ICRISAT ($151 million), IITA ($166 million), ILRI ($74 million) and CIP ($91 million). Most of the grants are in the form of project support to each of the centres, with many focusing on developing new crop varieties. $638,000,000 AGRA got a total of twenty grants to support its core main issue areas: seeds, soils, markets and lobbying African governments to change policies and legislation. $601,000,000 World Bank—IBRD ($192 million); World Food Programme (WFP) ($99 million); UNDP ($54 million); FAO ($88 million) UN Foundation ($76 million) and World Bank ($70 million); WFP is supported to improve market opportunities for small farmers, UNDP to establish rural agro-enterprises in West Africa, and the support to FAO is mostly for statistical and policy work. $170,000,000 AATF pro–genetically modified organism (GMO) and pro-corporate research outfit based in Nairobi. The bulk of the Gates’ support is to develop GMO drought-resistant maize. It also gets support to raise awareness on agricultural biotechnology for improved understanding and appreciation, and to get legislation approved for allowing GMOs in African countries. $1,393,000,000 These funds goes to institutions such as Cornell, Michigan and Harvard in the United States, and Cambridge and Greenwich Universities in the United Kingdom. The work supported is a mix of basic agronomic, breeding and molecular research, as well as policy research. A lot of it includes genetic engineering. Michigan State University, for example, got $13 million to help African policymakers to make informed decisions on how to use biotechnology. Although most of the foundation’s grants are supposed to benefit Africa, barely 11 per cent of its grants to universities and research centres go directly to African universities and research institutions ($147 million in total, of which $30 million for the Uganda-based Regional University Forum set up by the Rockefeller Foundation).

Africa and International Philanthropy Agency Service Delivery Nongovernmental Organisations (NGOs)

Corporations

Total

331

Amount Received Main Recipients $1,446,000,000 Seen as agents to implement its work on the ground. They include both large development NGOs and foundations, and the activities supported tend to have a strong technology development angle or focus on policy and education work in line with the foundation’s philosophy. However, 70 per cent of these grants end up with US-based beneficiaries, and another 19 per cent in Europe. African NGOs get 4 per cent of the NGO grants ($73 million total, $36 million of which goes to South Africa and $13 million for Farm Concern International in Nairobi, with the mission of building marketled business models for small farmers). $244,000,000 Most of the grants are for specific technologies developed by the corporations in question. Major grantees include the World Cocoa Foundation ($31 million), a corporate outfit representing the world’s major food and cocoa processors, for improving marketing and production efficiency, and Zoetis (a Belgium based veterinary transnational – $14 million) for getting veterinary products to farmers. $5,865,000,000

Source: Developed by the author using data from GRAIN (2021).

philanthropists and whether they have the capability to deliver public goods based on their wealth. Top on the list of billionaires actively committed to giving and establishing philanthropic foundations are those from the Global North and the Global South. According to Morvaridi (2012), close to forty billionaires from the United States signed the ‘Giving Pledge’ in October 2010, where they all agreed to donate 50 per cent of their wealth to philanthropic foundations. Morvaridi stated that Bill Gates and Warren Buffet promised to donate $62 billion to poverty reduction objectives, while Azim Premji, from India, offered to commit $2 billion to an endowment fund for education. Recently the Jack Ma Foundation (owned by a Chinese businessman and the founder of the Alibaba Group) delivered medical supplies to Africa to assist the continent to combat COVID-19. Desai and Kharas (2008) comment that these philanthropists claimed to have developed a brand of philanthropism to fight poverty, but some their activities in the recipient states often betray their philanthropic claims.

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From the African context, what the continent is currently witnessing are new influential global movements whose ideas are initiated by individual capitalists motivated to do good as well as help the needy and poor African states. However, this type of philanthropy, in their ways of doing things, is strategic by surreptitiously pushing policymakers to implement their agenda through a network of philanthropic partnerships and its framework clearly tilted to push government policies to suit their programmes. GRAIN (2021) comments that while most of the Gates’ grants are aimed at pushing technological solutions, many are also oriented towards policy change. For example, Iowa State University got a grant to support the implementation of policy changes aimed at increasing the supply of new seeds to farmers in Africa. The World Economic Forum received a grant to support a policy platform for agriculture innovation and value chain development, whilst the African Centre for Economic Transformation got a grant to promote agricultural transformation in Africa aimed at policy reforms. In just over a decade, AGRA (Gates’ brainchild in Africa) has managed to move itself from nowhere right into the centre of agricultural policy discussions across the continent. Similarly, while resistance to GMOs in Africa remains high, the AATF is managing to get legislation adopted to accept GMOs, as seen most recently in Ghana. Globally, the world is currently witnessing a new influential global movement whose ideas are initiated by individual capitalists motivated to do good as well as help the underprivileged while striving to make the world and Africa a better place to live (Bishop and Green 2010). However, this type of philanthropy in their ways of doing things is strategic and innovative in that they only apply the principles and the secrets behind their huge business successes to philanthropism. Hence the question arises about whether or not they serve as instruments of the hegemonic power of the Western world, thus making scholars begin to seek to identify several kinds of motives among foundation donors. Driven by altruism, the utmost desire of philanthropy is to help improve the socioeconomic ills being experienced by the poor. Hence their committed to combating global poverty and from which they are not likely to benefit personally. Romney-Alexander (2007), however, believes that philanthropists are motivated by other motives, such as protecting or lauding the battered image of their country of origin. For example, it can be argued that Jack Ma’s philanthropic efforts in Africa, where he donated materials worth $144,200,000, is aimed at effectively improving China’s image after the spread of COVID19 around the world (Schmidt and Feng 2020). Debatably, this appears to be in line China’s diplomatic rules vis-à-vis choosing which countries should benefit from such donations. Hence Nye’s explanation of co-optive or soft power as when one country gets other countries to want what it wants in

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contrast with the hard or command power of ordering others to do what it wants, and it is characterised by the fact of setting the agenda of other countries, without using coercive means. To understand the distinction between charitable donations, such as Jack Ma’s philanthropic largesse to African states, and that of capitalist philanthropists, Sayer (2005) notes that charitable donations, though altruistic in nature, are made towards a specific project. Therefore, there could be a paradoxical tension between capitalist philanthropists’ commitment to philanthropic activities that help to ease ill socioeconomic conditions of the poor and their business activity. Often, the affected stakeholders are democratically undermined which has cast aspersion on their transparency. Hence the argument that they seek to offer an alternative that eventually promotes the hegemonic power of their mother country. This is because, to some extent, they all in one way or the other benefit from government protection, in terms of anti-competitive practices and lobbying for favourable legal treatment for their business methods, hence, McGoey (2015) submission that there is no such thing as a gift in today’s philanthrocapitalism. Following this, Gramsci (1971) sees philanthropism as an instrument of hegemony through which capitalists have been able to maintain their control of the international market, while cautiously sustaining the concentration of wealth in their hands and clandestinely using their donations to sustain the domination of policymaking by a few powerful elites. Hegemony, to Hoare and Nowell-Smith (1971) and Ikenberry (2006) is a set of (socioeconomic and political) processes where a group, class or state uses a combination of inducement and compulsion to attain support from other groups, classes or states while working towards achieving its values, interests and objectives. For the hegemonic power to establish its status, they usually penetrate the target society through aids, their cultural, intellectual, financial or their military, as a significant drive in socialising sociopolitical elements in the target state. For example, the United States has been able to establish its hegemonic status through the activities of USAID in Africa. However, it is important to point out that while there is a bargain struck between hegemonic forces and the target society, such bargain is usually pigeon-holed by an inequality of rewards. This is the position of African states vis-à-vis the activities of various philanthropic organisations in the continent. Hence, Karl and Katz (1987) assert that, through their philanthropic activities, foundations have succeeded in reinforcing capitalist hegemony. Ikenberry (2006) believes that Western hegemonic power was neither attempted nor constructed only on corporate power but rather a combination with Western’s socialisation capabilities exemplified by various kinds of often neglected but very influential non-state actors such as the intellectual

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class. Through research, the intellectual class has been made to serve the socioeconomic interests of the dominant class, while sustaining the capitalist society. Thus, these foundations have played a significant role in knowledge dissemination and ideas that eventually reinforce the capitalist market economy, while the intellectuals, through research institutions, to some extent, have helped to propagate the main concern of the philanthropists in the public domain using their various research activities, thus giving credence to capitalist philanthropy (Berman 1983; Morvaridi 2012). Consequently, the ideas that are constructed and disseminated by these research institutions to popularise philanthropic activities as poverty-reducing tools (in Africa), is tantamount to a continuation of cultural hegemony— where states institutions and the philanthropic organisations maintain their hegemonic status through ideological or cultural means, usually achieved through social institutions, allowing those in power to strongly influence the values, norms, ideas, expectations, worldviews and behavior of the rest of society (Cole 2020). It functions by framing the worldview of the capitalist social class who own and control the means of production, and the social and economic structures that embody it, as just, legitimate and designed for the benefit of all. Hence Cox’s (1996) conclusion that these global philanthropic institutions exemplify the rules which facilitate the expansion of hegemonic world orders, and they are the product of the hegemonic world order, who ideologically authenticate the standards of the world order where the elites are co-opted into the entire system in addition to enthralling counter-hegemonic ideas. CONCLUSION According to Moyo and Ramsamy (2014, 658), ‘a person is a person because of people or through other people.’ This statement explains the humanistic elements of African philosophy, an Afro-centric and Pan-Africanist in thought and practice. It engenders reciprocity enveloped in communalism of interdependency, sharing, oneness, loving, giving and a sense of a continuum of relationships. In other words, Africans see personhood as a process where one’s humanity is affirmed by acknowledging others’ humanity, as an essence of communality and interconnectedness which is the key building block of any society. From the social justice point of view, Brown (2012, 2) sees philanthropy as representing a grant-making philosophy that advocates principles of socioeconomic, and political justice and directs funding towards work that promotes the collective interest of disadvantaged or underrepresented groups.

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It therefore means that philanthropism can be altruistic driven to ease the deplorable conditions of the receiver states; notwithstanding, it is politically, economically and ideologically motivated to optimise the interests of the giver states. However, given the beggary status of Africa and economic self-interest that drives the international political economy, philanthropy in Africa is driven more by the latter than the former. Fundamental to this is the conviction that poverty in Africa is because of undemocratic and inequitable distribution of socioeconomic resources as well as access to political power. Hence the need to assist the disempowered groups without displacing their socioeconomic agencies, where philanthropists are convinced to give better attention to inequality, inequity and other manifestations of social injustices and their structural origins. However, there is a potential problem with the pluralistic approach of accepting all givers or foundations as philanthropists; this is because the conservative philanthropists may be the same agents as the perpetrators of the structural oppression. Sometimes corrupt institutions may be supported through funds that are generated in ways that exacerbate the structural inequalities of capitalism which produce the poverty that the philanthropists then seek to ameliorate. Thus, philanthropism constitutes a kind of Trojan Horse when trying to present itself as an instrument of development but is designed as an instrument of power, a financial element in the hands of philanthropists, an initiator of hegemonic homilies, an indirect substitute for public financing, which has contributed or still contributing to the process of marketisation, of African products with socioeconomic and political consequences. Mediavilla and Garcia-Arias (2019, 871) see philanthropism as a two-sided coin—it is luxuriant for generating ethical and political leader who has always remained freely metaphorically hegemonic and powerful actors who seem to be capable of solving socioeconomic and political problems they clandestinely defined. They take possession of the terms, transforming the discourses, visions and interests of elites into dominant ones because they have the greatest ability to garner the needed capital. The logical consequences of the design of these philanthropists, in this way, is hegemonic— with the capacity to influence the public sphere and control policies, and to gain an advantage over other actors. Notwithstanding, they have the potential to redistribute socioeconomic resources from the rich to the poor. This could be done by adopting a policy of funding work in disadvantaged communities with the aim of equalising the distribution of resources, thus, moving towards creating a fairer society while dealing with the damaging side effects of a market system. They are also opened to promoting innovation with reference to those working in science, research, the arts, health, social welfare and the environment. Mottiar (n.d., 5) argues that they have the capability to innovate because they are not pressured

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by accountability to constituents (as would be the case in the public sector) or to customers and shareholders (as would be the case in the private sector). Their ability to promote social, policy and practice change have somewhat promoted radical policy change and effected social change more imperceptibly through fostering recognition of new needs or giving voice to concerns, thus, expanding the participation and empowerment of people from marginalised communities. Observably, they have and continue to fund small-scale local projects which have then been taken up in the public and private sectors and replicated, apart from been instrumental to the way society and policymakers think about social issues and their solutions. In agreement with Ake (1998, 8), one can draw a line of distinction that it is the ordinary people of Africa who alone can make development sustainable, and development has not occurred until it is sustainable. The people make development sustainable only insofar as its content becomes an integral part of their lives. Therefore, the picture of philanthropy in Africa should be tilted towards more African institutions where African philanthropic foundations will be the basis for change in Africa. Ideally, the perception of philanthropy in Africa should be about Africa while imagining Africa as capable of deciding and managing its own socioeconomic and political destiny. Hence, the humanistic elements of these foundations in thought and practice as they engender reciprocity and envelopes a communalism of interdependency, sharing oneness, loving and giving. REFERENCES Ake, Claude. 1988. ‘Sustaining Development on the Indigenous.’ Paper prepared for the Long-Term Perspectives Study, World Bank, Special Economic Office, Africa Region, SEO AFRCE 0390, Washington, DC. Bach, Natasha. 2018, ‘Bill Gates is Pouring Another $1 Billion Into the Fight Against Malaria.’ Fortune, 18 April 2018. https:​//​fortune​.com​/2018​/04​/18​/bill​ -gates​-foundation​-malaria​/. Berman, H. Edward. 1983. The Influence of Carnegie, the Ford and Rockefeller Foundations on American Foreign Policy: The Ideology of Philanthropy. Albany: University of New York Press. Bishop, Mathew, and Green Michael. 2010. Philanthrocapitalism: How the Rich Can Save the World. London: Bloomsbury. Bowman, Andrew. 2012. ‘The Flip Side to Bill Gates’ Charity Billions.’ New Internationalist, 1 April 2012. https:​//​newint​.org​/features​/2012​/04​/01​/bill​-gates​ -charitable​-giving​-ethics. Brown, L. Alice. 2012. ‘Developing a Collective Framework and Agenda to Advance Social Justice Philanthropy in Africa and the Arab Region: A Convening.’ Presented at the Trust Africa, the Philanthropy for Social Justice and Peace Working Group

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and the African Grantmakers Network in collaboration with the Global Fund for Community Foundations and the Arab Foundations Forum. October 2012. Cohen, A. Michael Küpçü, M. Figueroa and Parag Khanna. 2009. ‘The New Colonialist.’ Foreign Policy 167: 74–79. Cole, L. Nicki. 2020. ‘What is Cultural Hegemony?’ Thought Co, 5 January 2020. https:​//​www​.thoughtco​.com​/cultural​-hegemony​-3026121. Cox, Robert. 1996. Approaches to World Order. Cambridge: Cambridge University Press. Creswell, W. John. 2003. Research Design: Qualitative, Quantitative and Mixed Methods Approach. Thousand Oaks, CA: SAGE Publications. GRAIN. 2021. ‘How the Gates Foundation is Driving the Food System, in the Wrong Direction.’ GRAIN, 17 June 2021. https:​//​grain​.org​/en​/article​/6690​-how​-the​-gates​ -foundation​-is​-driving​-the​-food​-system​-in​-the​-wrong​-direction. Gramsci, Antonio. 1971. Selections from the Prison Notebooks. New York: International Publisher. Habib, Adam, Brij Maharaj and Annsilla Nyar. 2008. ‘Giving, Development and Poverty Alleviation.’ In Giving and Solidarity: Resource Flows for Poverty Alleviation and Development in South Africa, edited by Adam Habib and Maharaj Brij, 17–44. Cape Town: HSRC Press. Hatton, Celia. 2020. ‘Jack Ma: The Billionaire Trying to Stop Coronavirus (and Fix China’s Reputation).’ BBC News Navigation, 26 April 2020. https:​//​www​.bbc​.com​ /news​/world​-asia​-china​-52325269. Hewlett Foundation. n.d. ‘African Population and Health Research Center. For Support of The Care Work and the Economy Africa Project.’ Hewlett Foundation., 2021. https:​//​hewlett​.org​/grants​/african​-population​-and​-health​-research​-center​-for​ -support​-of​-the​-care​-work​-and​-the​-economy​-africa​-project​/. Hoare, Quintin, and Geoffrey Nowell-Smith. 1971. Selections from the Prison Notebooks of Antonio Gramsci. London: Lawrence and Wishart. Hsu, Y. Jennifer. 2016. ‘No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy.’ Journal of Cultural Economy 9 (6): 634–36. https:​//​doi​.org​ /10​.1080​/17530350​.2016​.118765. Ikenberry, G. John. 2006. Liberal Order and Imperial Ambition. Cambridge: Polity Press. Jung, Tobias, and Jenny Harrow. 2015. ‘New Development: Philanthropy in Networked Governance-Treading with Care.’ Public Money and Management 35 (1): 47–52. Karl, D. Barry, and N. Stanley Katz. 1987. ‘Philanthropy, Patronage, Politics.’ Daedalus 116 (1): 1–40. Kumashiro, K. Kelvin. 2012. ‘When Billionaires Become Educational Experts.’ Academe 99 (3): 10–16. McGoey, Lindsey. 2012. ‘Philanthrocapitalism and its Critics.’ Poetics 40 (2): 185–99. ———. 2015. No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy. London: Verso Books.

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Mediavilla, Juanjo, and Jorge Garcia-Arias. 2019. ‘Philanthrocapitalism as a Neoliberal (Development Agenda) Artefact: Philanthropic Discourse and Hegemony in (Financing for) International Development.’ Globalizations 16 (6): 857–75. https:​//​doi​.org​/10​.1080​/14747731​.2018​.1560187. Mitchel, Katharyne, and Mathew Sparke. 2016. ‘The New Washington Consensus: Millennial Philanthropy and the Making of Global Market Subjects.’ Antipode 48 (3): 724–49. Morvaridi, Behrooz. 2012. ‘Capitalist Philanthropy and Hegemonic Partnerships.’ Third World Quarterly 33 (7): 1191–210. https:​//​doi​.org​/10​.1080​/01436597​.2012​ .691827. ———. 2016. ‘Does Sub-Saharan Africa Need Capitalist Philanthropy to Reduce Poverty and Achieve Food Security?’ Review of African Political Economy 43 (147): 151–59. http:​//​dx​.doi​.org​/10​.1080​/03056244​.2016​.1149807. Mottiar, Shauna. n.d. ‘Philanthropy and Development in Southern Africa: Philanthropy and Resource Governance.’ Southern Africa Trust. https:​//​africanphilanthropy​ .issuelab​.org​/resources​/21809​/21809​.pdf. Moyo, Bhenkikosi, and Katiana Ramsamy. 2014. ‘African Philanthropy, Pan-Africanism, and Africa’s Development.’ Development in Practice 24 (5–6): 656–71. Murenha, Anne, and Siphamandla Chili. 2011. ‘How and Why People Help Each Other: A Perspective from the Maphumulo Rural Community in KwaZulu-Natal.’ Young Researchers Philanthropy Initiative. Durban: Centre for Civil Society. http:​ //​ccs​.ukzn​.ac​.za​/files​/YRPI​%202​%20web​%20version​.PD. Nye, S. Joseph. 2011. ‘Power: Hard, Soft, and Smart.’ In The Encyclopedia of Peace Psychology, edited by Daniel J. Christie. Hoboken, NJ: Blackwell Publishing Ltd. Philanthropy News Digest. 2021. ‘Gates Foundation Commits $50 Million for Science and Innovation.’ Philanthropy News Digest, 10 November 2021. https:​ //​philanthropynewsdigest​.org​/news​/gates​-foundation​-commits​-50​-million​-for​ -science​-and​-innovation. Preston, Caroline. ‘Gates Fund’s CEO Outlines Giving Plans for 2011.’ The Chronicle of Philanthropy, 7 March 2011. https:​//​www​.philanthropy​.com​/article​/gates​-funds​ -ceo​-outlines​-giving​-plans​-for​-2011​/. Romney-Alexander, Debbie. 2007. ‘Payroll Giving in the UK: Incentives and Influences on Giving Behaviour.’ International Journal of Non-Profit and Voluntary Sector Marketing 7: 84–92. https:​//​doi​.org​/10​.1002​/nvsm​.169. Sayer, Andrew. 2005. ‘Class, Moral Worth and Recognition.’ Sociology 39 (5): 947–63. https:​//​doi​.org​/10​.1177​/0038038505058376. Seydi, O. Cheikh. 2021. ‘As COVID-19 Cases Surge, African Institutions Lead Response Efforts.’ Bill & Melinda Gates Foundation. https:​//​www​.gatesfoundation​ .org​/ideas​/articles​/covid19​-africa​-variant. Schmidt, Blake, and Venus Feng. 2020. ‘Ex-Alibaba Chair Helps Repair China’s Image by Donating Medical Supplies.’ The Detroit News, 8 April 2020. https:​ //​www​.detroitnews​.com​/story​/news​/world​/2020​/04​/08​/alibaba​-ceo​-jack​-ma​-repair​ -china​-image​/111527270​/.

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Thompson, B. Carol. 2014 ‘Philanthrocapitalism: Appropriation of Africa’s Genetic Wealth.’ Review of African Political Economy 41 (141): 389–405. https:​//​doi​.org​ /10​.1080​/03056244​.2014​.901946. Thompson, Carol. 2018. ‘Philanthrocapitalism: Rendering the Public Domain Obsolete?’ Third World Quarterl 39 (1): 51–67. https:​//​doi​.org​/10​.1080​/01436597​ .2017​.1357112. Zunz, Olivier. ‘Philanthropy as Creed: The Encounter between Past and Present. Review of Kathleen McCarthy, American Creed: Philanthropy and the Rise of Civil Society, 1700–1865, 2003.’ Reviews in American History 32 (4): 506–11.

Chapter 20

Debts, Extraction and Predation Defacing the New Foreign Regimes of Indebtedness in Kenya Stephen Mutie

While discussing African cinematic practice as a form of overcoming neocolonialism, Martin and Moorman (2015) argue that present vices like economic deprivation and disempowerment, escalating inequality and uneven cultural flows from the Global North to the South are echoed largely with remains of their colonial antecedents (Moorman 2015, 61–74). Benign slavery continues, illustratively agreeing with the main slogan in the Orwellian 1984 Animal Farm. But this seemingly acceptable normativity is clothed within the common ancient notion that the world-system, ‘conceived as any kind of ontological sets, geographically or politically, is an asymmetric reality’ (Galassi 2019, 35). The world’s economic asymmetries indicate that Africa, and in this case Kenya, does not, and may never, have the political force to express itself but through the mediation of Euro-American voices. These mediators from the North come, as this chapter aims to show, through many forms and faces. One likely face is through loans, especially smartphone digital loans through lending apps. These lending apps project and advance skewed narratives of digital financial inclusion as a development strategy for the populations excluded from the world’s development terrain: Kenyan youth and women. Poised as emancipatory, these smartphone lending apps favour ‘the expansion of the mobile money market in preference to contributing to substantive equality via a redistribution of the revenue and funding deriving from its development’ (Natile 2020, iv). This camouflaged imperialist practice turns Africa into a museum of acute poverty, hunger and corruption (Rahaman et al. 2017, 341

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9–16). This benign form of extraction, which is, I argue, a by-product of neocolonialism, is prevalent in twenty-first-century Africa and can be seen at the intersection of economic, politics and technology. In the guise of technological advancement, the Kenyan economic space has been controlled by invisible arms that have applied skewed financial tools as an arm to dominate the lives of the vulnerable groups: the youth and women. Sadly, as Kahura (2018) found out, many of these borrowers struggle to pay back their loans. Kahura 2018, as the survey by Microsave, a financial services consultancy, shows, 3.2 million borrowers have been blacklisted by the Credit Reference Bureau (CRB) in the last three years, 15 per cent of them for amounts of less than 200 Kenya shillings (approximately US$2). This listing means that the defaulter(s) is/are disallowed from borrowing or transacting with every financial entity, including the state. Furthermore, once listed, one has to repay the loan in full plus the accrued interest and a penalty of 2,200 Kenya shillings (approximately US$22) to clear their names. These punitive penalties imposed by government-licensed credit reference bureaus (CRBs) are reasons the Kenyan political class becomes implicated in the whole financial predatory practice. The main problem at the core of the present economic predation in Kenya is not threatening the financial growth for women and youth through CRB listing but, rather, the threat on the borrower’s reputation through the calculated commodification of his or her social capital. This is because the primary qualification for these loans is pegged on the applicant’s standing. In other words, although there is no paperwork or references or deposits as collateral, there is reputation as collateral. According to Kahura (2018), a reputational surety is reliant on such practices as how many times one makes calls and how often one transacts through a M-Pesa account. This is irrespective of all the relevant laws and regulations in Kenya, including the Data Protection Bill of 2019, ICT regulations and CBK Charter. This data, which is extremely important in this century, is mined through algorithms in these apps that compile personal data, for instance, on the borrower’s social capital—one’s social media activities, friends, family members and the sites one likes visiting, among other analytics. As this chapter will later show, this data will be used to threaten, blackmail and sometimes taint the image of the borrowers to his or her friends, family and colleagues. This type of data commodification turns the vulnerable groups into perpetual borrowers in a predatory online web managed by firms headquartered in the United States or Europe and propped and guarded jealously by the twenty-first-century Kenyan political middlemen. According to the latest joint survey by the central bank, Kenya National Bureau of Statistics and Financial Services Deepening-Kenya, there are at least sixty-two unregulated loan apps as of April 2019 in Kenya, a majority of whom offer loans that

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range from 500 Kenya shillings (US$5) to 70,000 Kenya shillings (US$700). This list excludes the apps from regulated institutions like banks and microfinance. The monthly interest rates on the loans start from 10 per cent to 20 per cent per loan taken. The high-interest rates and the failure to regulate these loans are among the reasons the political class becomes complicit in digital theft. The Kenyan political class, yoked in the Fanonian (1967) ‘fall of nationalist consciousness,’ has failed to see the need for data privacy law. This lack of regulation and with no oversight over how Kenyan consumers’ digital footprints are mined, stored or used, the Kenyan borrower wallows in a cycle of indebtedness within what Kevin Donovan and Emma Park (2019) call ‘Perpetual Debt in the Silicon Savannah.’ The political class, which is implicated within this neocolonial arithmetic, has allowed, through lousy legislation, infiltration into the capitalist market merchants. They use technology to create skewed market dynamism cunningly guised as empowerment. Within this arithmetic, the smartphone in Kenya has become a gateway to an economic sea full of online sharks whose aim is to impoverish an already indigent populace. But who owns these apps, and where are these firms located? Although some Kenyans have already gone into this fintech business, most of these firms are headquartered in Euro-American cities. For instance, Okash is headquartered in Ireland, while both Tala and Branch are headquartered in California. OPesa and OKash are backed by Chinese-owned Opera. Opera operates its lending business through OPay/OKash (Nigeria), OKash/OPesa (Kenya) and CashBean (India) Android apps. These lending apps flout the national and international standard policies guiding loan duration and repayment plans. They engage in predatory practices and Shylock-like credit offerings. Other firms like Zenka Finance Limited are headquartered in Nairobi and have mastered their act from these firms. METHODOLOGY This chapter has employed a descriptive survey research design. The research was conducted using questionnaires and focus group discussions to collect data on the uptake, repayment and overall experience of the mobile phone loanees in Nairobi’s three informal settlements. Nairobi County was preferred because it has the largest population, it is an urban centre and more cosmopolitan than other counties in Kenya. The population from which the sample was drawn consisted of both women and youth. Nairobi’s three informal settlement areas of interest were Gikomba, Githurai and Kayole, categorised as the three strata. The accessible population was 1,016 for both women and

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youth in the designated areas. Table 20.1 provides disaggregated statistics of the youth and women in these three informal settlements of the county. Sample Size and Sampling Procedure This chapter has employed a stratified sampling procedure—the study targeted respondents from three (3) settlements where the settlements were the strata. To determine the specific number of loanees to be selected from each settlement (stratum) (denoted by ni,i = 1,2,3), the researcher divided the total number of respondents in each settlement (denoted by Ni,I = 1,2,3) by the total number of respondents in the three settlements (denoted by N) then multiplied by the total sample size (denoted by n: forty-one respondents) required as shown in the equation below;

Where,

Simple random sampling was used to sample respondents in each stratum. The collected data were first examined and organised by the researcher. The data was coded then analysed by use of the statistical package for social sciences (SPSS) version 24.0. For quantitative data, the SPSS helped generate percentages, frequencies, means and graphs, organised so that a meaningful interpretation could be inferred from it at the analysis stage and interpreted accordingly. Table 20.1. Accessible Population in Terms of Age and Gender in Selected Three Settlements in Nairobi County Age

Youth

18 to 23 24 to 29 30 to 40 41 to 60 Above 60 Total Source: Developed by the author.

Women 111 179 45 56 31 422

Total 128 154 139 117 56 594

239 333 184 173 87 1,016

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CONCEPTUAL AND ANALYTICAL FRAMEWORK Locating itself within the dependency theoretical lens, the chapter argues that Kenya’s indebtedness is mostly an exercise of control on a population whose autonomy would become a threat to the Kenyan politician and destabilise the global economic normativity. Dependency theory is best situated in explaining Kenya’s indebtedness situation, especially within the digital spaces. Kenya’s continued underdevelopment is concomitant to two categories of influences: internal and external. The internal factors occur within the political laziness to enact laws that can protect the vulnerable Kenyan groups and their joining hands with the external online sharks in fleecing Kenyans. Emeh and Jeffry (2013) argue that internal factors keep alive external factors and consequently involve and merit more attention, hence the collaboration of African elites with the European elites to drain the continent. When keenly interrogated, the rising progress of internet connectivity in Kenya exemplifies the image of rail networks linking mines to ports. This connectivity essentially reflects how Africa’s newly sovereign states’ economies were designed principally towards servicing external demands for resources, facilitating Europe’s contemporaneousness while rendering the dream of modernisation ever more problematic to achieve for African countries themselves (Beresford 2016, 1–7). The lending apps are the means to the continuation of this capital extraction from the poor people. This is, of course, part of what Rodney (2012) eminently termed as the instituting of dependency connections between Europe and Africa, which would advance the former at the expense of the latter. A mixture of economic dependence, fragile state ability and divided societies invigorated the consolidation of gatekeeper states, which have regularly been mired in persistent economic and political crises (Cooper 2002; Ekeh 1975, 91–112). The elites, aiming to reproduce their economic and political power, sought to control the universally recognised sovereign government seat—which served as an entryway to resources that they could consequently redeploy at their preference to remain in power. Handling and nourishing a dense network of patron-client connections in this context was often vital for political survival and pervasive corruption, eliciting further aggravated economic underdevelopment. The analysis in this chapter does not, in any way, criminalise the capitalist investment in Kenya or underdeveloped countries, but my critique of these investments lies in their duplicitous nature. The argument is that economic drain continues to be an ongoing process in Africa since the colonial period. The Afro-euphoric narrative created within the Africa rising debate has stretched this financial drain from Africa a notch higher, prompting a critic like Khisa (2019) to ask: Whose Africa is rising? (304)

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DEFACING FOREIGN REGIMES OF INDEBTEDNESS IN KENYA The group selected to fill the questionnaires aged in the categories, eighteen to twenty-three, twenty-four to twenty-nine, thirty to forty, forty-one to sixty and above sixty earning a salary/wage scale of 0 to 10,000 Kenyan shillings (approximately US$0 to US$100); 10,000 to 30,000 Kenyan shillings (US$100 to US$300); 30,000 to 50,000 Kenyan shillings (US$300 to US$500); 50,000 to 100,000 Kenyan shillings (US$500 to US$1000); above 100,000 Kenyan shillings (above US$1000) each month. The respondents did not differentiate between regulated and unregulated digital loans. Therefore, this study sampled out Mshwari, Tala, Timiza, Okash, Branch and Fuliza. While Mshwari, Fuliza, offered by Safaricom, and Timiza, offered by Barclays (Absa), are regulated because they are offered by telecommunications and banking institutions respectively, in Tala, Branch, and Okash are unregulated and offered by international firms. The data collected showed that in the age bracket of between eighteen to twenty-three years’ cumulative frequency of the loans intake was 4.9 per cent, those at the twenty-four to twenty-nine years’ age bracket 46.3 per cent while those aged between thirty and forty years 34.1 per cent. Those between forty-one years and sixty years stood at 14.6 per cent. The age of twenty-four to twenty-nine seems to be the most affected, with 46.3 per cent by loans followed by thirty to forty years with 34.1 per cent. This implies that youth are the most affected by these loans. When it comes to gender, the males are the most affected. 75.6 per cent of the male respondents were affected. The percentage of the females affected was 24.4 per cent. Business people seem to take these kinds of loans more than any other occupation, followed by students and teachers with 19.5 per cent. From the graph above, shown in figure 20.1, the professions that are classified as white-collar jobs—for instance business people, lecturers, teachers, engineers and so on—even these ones, Kenyans are taking mobile loans in large percentages. However, the business people are the most affected by these loans. When it comes to how income relates to how people interact with the mobile loans, people earning between 10,000 Kenya shillings and 30,000 Kenya shillings are the most affected (39 per cent). The low-income earners seem to be the most affected by the loans, 39 and 22 per cent respectively. Benefiting from Poverty It is noteworthy that in Kenya today, poverty remains a pervasive national problem. The Poor in Kenya constitutes more than half of the total population.

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Figure 20.1.  Graphic Representation of the Problematic Loans Intake According to Profession/Occupation

In other words, at least one in every two Kenyans is living below the poverty line. Efforts fighting poverty in Kenya can be traced to Independence. The Sessional Paper no. 1 of 1965 detailed the government’s commitment to alleviating poverty with ignorance and disease. This policy has been propagated through long-term strategic plans, sessional papers, development plans and other policy documents. Yet poverty remains a significant problem, indicating that poverty alleviation initiatives have not succeeded. More and more Kenyans have fallen below the poverty line. Under this subsection, I would like to reiterate a point that I made earlier in the introduction: the political class in Kenya is implicated in the predation and the dynamics of wealth extraction from the poor masses. One pointer to this predation can be seen through the channel used, especially to reach the poor: Safaricom telecommunication company through M-Pesa. When a borrower is given the loan, of course, after the necessary deductions (facilitation fees/interest rates), the money is sent to his or her M-Pesa account. When withdrawing the money from M-Pesa, or paying utility bills from M-Pesa, there are other fees incurred. It is thus, legitimate to contend that the online sharks have been given a clean bill of health– a gateway to enslavement via Safaricom’s M-Pesa. But who owns M-Pesa? From its inception in 2007 to 2019, its intellectual property rights have been held by United Kingdom–based Vodafone. The UK-based company has all but determined M-Pesa’s future roadmap despite the bulk of the M-Pesa business being in Africa: the Democratic Republic of the Congo (DRC), Egypt, Ghana, Kenya, Lesotho, Mozambique and Tanzania ceding 1.5 billion Kenya shillings M-Pesa revenue due to royalties

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to the British firm, Vodafone. The government of Kenya also owns 35 per cent of the shares. It is, therefore, no wonder that other companies based in the UK and the United States have used M-Pesa as the conduit to fleece the vulnerable groups. The government also benefits, which is one reason why the political elite cannot hear the groans of vulnerable borrowers. Through M-Pesa, we also have MShwari and Fuliza, facilities provided by M-Pesa as loan facilities to its more than 37 million active customers. The people from whom the Kenyan smartphone loaners benefit most are what Frantz Fanon calls the Wretched of the Earth; those living a ‘wageless life’ (cited in Denning 2010). Online lenders are a reinvention of capitalist theft that describes an entirely new sophisticated form of neocolonial hold to susceptible populations in the third world. Wageless life has almost always been seen as a situation of lack, the space of exclusion: the unemployed, the informal (Denning 2010, 80). Although those who imbibe the smartphone loans aim to change their wageless condition. However, these loans make them sink deeper into poverty. The nature of the smartphone loans decentres livelihoods and portrays the true nature of life under a neocolonial capitalist hold. The loans are a testament of life under capitalism for, according to Manning (2010), capitalism begins not with the offer of work, but with the imperative to earn a living. Dispossession and expropriation, followed by the enforcement of money taxes and rent: such is the idyll of ‘free labour.’ The fetishism of the wage may well be the source of capitalist ideologies of freedom and equality, but the employment contract is not the founding moment. Type of Loan This study isolated Mswhari, Fuliza and Mfanisi in one category, then KCB Mpesa and Timiza in another, Tala, Zenka and Branch, Okash, Kashway and xpesa in yet another category. From the answers obtained from the respondents, most people take all the eleven types of loans with 70.7 per cent, followed by those who take telecommunication loans only with 19.5 per cent. This is followed by 4.9 per cent of those who take mobile app loans while bank app loan is the least with 2.4 per cent. Reason for Taking a Loan for the First Time The respondents’ leading question was: What prompted you to take the loan facility for the first time? The answers to this question were varied. However, the uptake of smartphone loans, as the answers reflected, showed a worrying trend in Kenya’s indebtedness. Irrespective of the high repayment interests, many newcomers in the world of loans were recorded. This is due, in part,

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to how frequently and intensively smartphones are used and that a large proportion of these loans customers use the phone for business purposes. While Donovan and Park (2018) have argued that Kenyans who operate within the frameworks of zero-balance economy or kadogo economy are the ones affected by the online sharks, this chapter found out that even the salaried Kenyans—teachers, lecturers, engineers, pastors and so on—are also victims of these online smartphone loans. This confirms that Kenya’s salaried workers, too, are part of the zero-balance economy. While a salary indeed reduces economic precarity, it is not enough for most employed people (Donovan and Park 2018, 1). At first, people seem to take a loan for basic needs with 31.7 per cent, followed by emergencies with 26.8 per cent. Therefore, most borrowers of these loans are in the vulnerable category who take loans to cater to basic needs, most of who said that food was the main reason they took the loans the first time. Even in the subsequent uptakes of the facilities was, for the same reason, basic needs, as shown in the following subsection. According to a 2018 digital credit appraisal, roughly 6 million people in Kenya have utilised at least one digital loan. This examination concluded that digital credit had become a principal source of credit in Kenya. Utilising a sample size of three thousand Kenyans, this survey revealed that digital credit charms younger customers, out of which 55 per cent are male and from Kenya’s metropolis. The study also concluded that, by far, the most common reason for taking a loan is to meet day-to-day needs. The finding that most borrowers take these punitive loans for basic needs goes against the politicians’ view that accuses youth of borrowing exclusively to gamble or ‘to feed their peer-driven lifestyle habits’ (Kahura 2018). General reasons for taking mobile loans seem to be basic need, with 39 per cent followed by payment of debts with 36.6 per cent. As seen earlier, most of those who take these loans are low-income earners who probably do not have enough for basics and have a lot of debts to settle. Some of these debts include repaying other lenders, as shown from the questionnaire explanations. A higher percentage of 80.5 per cent do not repay the loan even after the lenders communicate to them through short message service (SMS) and calls—the reason being lack of money. The reason for not paying back a loan after the communication or even being listed in CRB seems to be lack of money with 36.6 per cent followed by being threatened with 26.8 per cent and then the high rate of 14.6 per cent. One wonders why the lenders continue to give out their money when many borrowers do not repay because they lack money. This chapter argues that these lenders continue to give out these loans because they benefit a lot from the business. The loans that are repaid can extract sizable profits.

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Thriving in Indebtedness The leading question was, How many other times do you take this loan in three months? However, with their enticing antics, these loaners use a shylock-like behaviour to whip the poor into taking up more and more loans. Shylocks, also known as loan sharks, target people who need to borrow money and cannot access it from legal sources. At first, they might seem friendly, but borrowing money from them is never a good idea. Shylock loans are enticing because of the reduction in the number of application steps, and they are easily accessible to everyone, even if you do not have a great credit score. The risks, however, outweigh the benefits. Most people seem to take loans thrice in three months amounting to 39 per cent. It is estimated that they take a loan at least once each month from different loaners. This is irrespective of 80.5 per cent of them being listed in the CRB, as shown in the graph below: Most percentages of those who take these loans are listed in CRB with 80.5 per cent. These are mostly telecommunication and bank lenders. The other app mobile app lenders are not allowed to list in CRB due to their high interest rates, which is not recommended in Kenya. As already argued, studies like Microsave have shown that 3.2 million borrowers have been blacklisted by CRB in the last three years; 15 per cent of them have been listed for amounts of less than 200 Kenya shillings (approximately US$2). This listing means that the defaulter is stopped from borrowing from any financial entity, including the government. Furthermore, once listed, one has to repay the loan in full plus the accrued interest and a penalty of US$22 to clear their names. Modern-Day Slavery It becomes questionable why this vulnerable group continues to take these expensive loans. These Fintech loans carry high interest rates, yet people take up these loans. This chapter argues that this is modern-day slavery necessitated by the sugary, enticing and forceful marketing tactics by the owners of these apps singularly focused on those interested in instant cash. These loans’ enslaving tendencies are seen in the intersection of the inability of these loans to satisfy the needs of those who take them and the continual uptake of the same loans. The dependence is so strong that those enslaved still buy the lie of the empowerment/inclusion narrative. To the question, Does the loan facility satisfy your needs? The borrowers expressed dissension, citing high fees (facilitation fee) threats. The loans do not fulfil the borrower’s needs. Most percentages of those who take a loan argued that the facility did not satisfy them, yet they keep on borrowing. Most people are dissatisfied with the services of lenders, yet this does not stop them from taking the loan. This is slavery. Of the borrowers, 95 per cent

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did not repay their loans at the required time. This is because of two reasons, as the respondents argued: firstly, due to the poverty levels in the country, and secondly, because many of them feel that the loans do not help them. Ninety per cent of the borrowers were threatened by their loaners when they did not honour their repayment at the required time. The nature of the threats ranged from some getting reduced rates even after repaying to others being blackmailed through shame because their family members, their colleagues at their workplaces or their friends were called. Seventy-five per cent of the borrowers got reduced rates for repaying their loans late; 26 per cent of the borrowers were blackmailed because their family members, colleagues and friends were called; and 75.6 per cent were listed in CRBs as bad borrowers and therefore denied loans by other lenders. The continual uptake of these digital loans, even after threats, blackmail and increasing poverty levels, show how slavery continues its grip Kenya’s financial sector. What complicates issues, however, is the lure of inclusion and empowerment that accompanies these loans. Most of the borrowers feel that they have been excluded from the Africa rising narrative in Kenya, and they look at these loans as a panacea, helping them have financial freedom. The fintech industry targets the ordinary Kenyans who have been ‘disempowered.’ These companies contend that the aim is to empower the youth, women and the working poor. However, this turns out to be a modern form of slavery from online financial sharks who, as Donovan and Park (2019, 1) have argued, are ‘novel, a digitised form of slow violence that operates not so much through negotiated social relations, nor the threat of state enforcement, as through the accumulation of data, the commodification of reputation, and the instrumentalisation of sociality.’ The upsurge of digital over-indebtedness in Kenya marks the symbiotic relationship between faith in money to ease the lives of the poor and recognition by techno-capitalists that those same populations are the source of runaway profits. Unmistakably, in ‘rising Africa,’ there are winners and losers. The winners are arguably a tiny minority, considering that the vast majority of African citizens remain trapped in poverty and deprivation. Africa’s gullibility in blindly graduating foes to friends; they qualify to friends through the narrative of empowering the youth and women and their exploitative nature marrying with that of the African ruling elite. Global South perceptions are encapsulated in struggles for fundamental, economic, political and social transformation in an inequitable world (Pennycook and Makoni 2020). The principal point is that Western (and now the Chinese) growth and African underdevelopment should be appreciated as two sides of the same coin, rooted in the inheritances and survival of colonial manipulation and the erection of economies based purely on resource extraction.

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MUZZLING THE SUBALTERN THROUGH DEBT The Fintech industry is based on a neocolonial algorithm of capitalism configured to indebt the Global South and stall their economic and political independence. From this chapter’s findings, mobile lending apps roll out modern capitalism packaged in the neo-modernisation program of a digitised economy. As Timcke, 2021 opines: FinTech technologies, in their current configuration, perpetuate neo-colonial relations. Replacing direct military rule, neo-colonial relations can be understood as the coordinated exploitation of developing countries by advanced capitalist ones through their clout in international political economy. If such a claim at first appears like a stretch because it appears conspiratorial, it is worth recalling how European imperial and colonial practices were naturalised and normalised for most of modernity. (Timcke 2021, n.p.)

Scholars argue that debt trap diplomacy is a time bomb that could collapse a country’s entire economy. The argument is that mobile lending apps massively extract huge profits from the global south in the guise of financial empowerment and threaten the affected economies’ social, economic and political infrastructure. A good example is the Sri Lankan incident of 2017, where the Chinese took over the Hambantota port (Abdul-Aziz 2019). In this case of rundown debt, the mobile lending apps also threaten defaulters with harsh penalties that seemingly muzzle personal development amongst the poor in Africa. Therefore, the manner in which these mobile wallets operate only extends more poverty and misery instead of assisting the financial plight of the marginalised poor. Although the Kenya government has empowerment programs like the Uwezo fund that addresses financial accessibility to youth and women, its uptake has not attracted much interest. The main cause of low uptake of Uwezo Fund by the target minority groups like women is due to limited financial literacy skills amongst prospective beneficiaries. As noted by (Woche 2016), there is a lack of knowledge among the different groups regarding the administration of the Uwezo fund, the application procedures, and the effectiveness of the capacity-building program. This is one of the barriers related to institutional capacity. The consensus among all of the focus groups was that the application process is time-consuming, laborious, and expensive. The Uwezo fund limited access makes the techno-capitalists take advantage of the huge financial gaps that target the vulnerable (Woche 2016, 52). As revealed by Woche’s study, the Uwezo fund’s ineffectiveness is a way of silencing the subaltern through abstract empowerment, thus exposing the vulnerable poor to the mercy of online sharks who give out financial loans

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with huge interest. The predation of the subaltern thrives at the intersection of poverty, lack of financial literacy and techno-capitalism channelled through online credit platforms that operate with punitive measures that work against uplifting the living conditions of the borrowers. This opens a window of opportunity for FinTech firms to exploit the excluded minority at the base of the social-economic strata. According to Langley and Leyshon 2022, African FinTech economy growth is a result of platform capitalism’s distinctive platformisation processes. The rapid expansion of mobile wallets is aimed at remapping the capital markets of Africa by directly engaging the citizens since the governments are unable to facilitate credit incentives to their people due to the strained public debt. For instance, the amount of debt held by the Kenyan government rose from 8470.38 billion Kenya shillings or (US$71,356,362) in April of 2022 to 601,148,807.31 billion Kenya shillings in the month of May (Langley and Leyshon 2022). The pilling Kenyan public debt threatens the country’s stability, whose 17% of the population survives under US$1.90. Similarly, mobile lending platforms’ loan uptake is rising at an alarming rate. For instance, in 2019, Kenya’s Telecom giant Safaricom introduced Fuliza M-Pesa in January, a lending platform. The platform noted a lending of 1 billion Kenya shillings or US$8,424,600 in one week, and the lending total for the month was 6.2 billion Kenya shillings or US$52,232,520.00 (Karuitha 2019). Comparing the two borrowing trends both in public and private notifies a risk of debt trap. The global North also uses debt to impose its hegemonic control over the global south. Timcke 2021 avers that Desires to ‘bring Africa online’ in the 2000s had to confront stark realities born from both (i) the legacies of colonial infrastructure planned primarily to support resource extraction or settler communities, and (ii) the IMF imposed structural adjustment policies that slashed state maintenance budgets and social, economic, and political infrastructure. The FinTech industry, as fronted by the Western world and the Chinese, are metaphors of neocolonial tools that seek to dominate the subaltern economies. It is noteworthy that the two groups are of interest to the Global North predatory financial providers due to their large numbers and unemployment vulnerability. It is a second scramble and partition of the Global South that targets the financial gaps in developing countries like Kenya. In a cunning way, Western-controlled mobile lending apps work with the Kenyan political class to bleed out colossal profits from the subaltern. In a complex web of exploitation, these platforms engage in data harvesting from unsuspecting clients, contrary to international financial rules. While the digital economy liberalisation is often seen as a great step towards uplifting the lives of

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economically disempowered groups like women and the youth, it is unregulated and could lead to high levels of poverty. In this chapter, I have argued that mobile lending apps use the bait of easy access to money with huge interest rates that bleed out the country’s resources to the benefit of the foreign lending establishment. Mobile lending entrepreneurs use the digitalised market economy to keep close stabs on the subaltern by harvesting data which is used to spy on the citizenry and probably sold to third-party entities. The techno-capitalism rolled out in the Global South derails economic growth and development of the subalterns and thus widens the wealth gap between the Global North and the Global South. Therefore, the African youth and women are silenced, exploited and enslaved, producing wealth for the Global North. CONCLUSION This chapter has shown that Kenya’s indebtedness lies in the intersection of economic, politics and technology. Kenya’s Silicon Savannah narrative, pegged on technology development, has given rise to predation employing an extraction process within smartphone online space. Most smartphone apps are headquartered in Euro-American cities and hide behind the empowerment/inclusion narrative to impoverish Kenyans through predatory financial practices. These lending apps flout the national and international standard policies guiding loan duration and repayment plans. They engage in predatory practices and Shylock-like credit offerings. However, as the chapter has shown, they do this through the Kenyan political elite’s help. It is the inertia in the Kenyan postcolonial leadership that props these exploitative Western tendencies. This new form of dispossession by financialisation is the digital loans advanced by mobile phone lending apps installed in smartphones and telecommunication companies like Safaricom M-Pesa. Indebtedness and financial slavery to Kenya’s most vulnerable group, the group that mainly operates the zero-balance economy: the youth and the women. This vulnerable group is lured into accumulating massive amounts of digital loans, becoming slaves of financial predators who operate not so much through negotiated social relations or the threat of state enforcement as through the accumulation of data and the commodification of reputation. This chapter has discussed the debt trap as way of containing the Global South’s progression from a developing world to a developed world. The Western FinTech industry serves to extract and predate on the economies of Global South using technological apparatus that intrudes on the economic sovereignty of the African people. It is a continuation of colonial occupation;

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whereby financial independence is yet to be achieved in the Global South. It is imperative that government policy on curbing debt should be strengthened and financial literacy should be extended to the general population. The political class should initiate relevant legislation that stems out the intrusion by the financialised capitalism. RECOMMENDATIONS As argued in this chapter, postcolonial leadership inertia in Kenya has provided gateways to blatant exploitation by extracting financial gains from Kenya through smartphone loans. Therefore, Kenya’s financial indebtedness can be cured through proper legislation and implementation. The anatomy of Kenya’s economic problem can be fixed by reactivating the country’s political machine, positioning its economic terrain on equal footing in the socioeconomic and cultural conversation with the rest of the world. Therefore, this chapter recommends that Kenya should reassess and hold political leadership accountable for the implementation of necessary laws that protect the data of its population against (mis)use and exploitation from Western and internal exploiters. Incompetence in administration reflects the leadership culture where occupying leadership positions makes leaders superior and unaccountable to the people they lead. REFERENCES Beresford, Alexander. 2016. ‘Africa Rising?’ Review of African Political Economy 43 (147): 1–7. DOI: https:​//​doi​.org​/10​.1080​/03056244​.2016​.1149369. Cooper, Frederick. 2019. Africa Since 1940: The Past of the Present, vol. 13. Cambridge, UK: Cambridge University Press. Denning, Michael. 2010. ‘Wageless Life.’ NLR 66, November–December. Donovan, Kevin, and Emma Park. 2019. ‘Perpetual Debt in the Silicon Savannah.’ Boston Review, 20 September 2019. Ekeh, Peter, 1975. ‘Colonialism and the Two Publics in Africa: A Theoretical Statement.’ Comparative Studies in Society and History 17 (1): 91–112. Emeh, Ikechukwu Eke Jeffry. 2013. ‘Dependency Theory and Africa’s Underdevelopment: A Paradigm Shift from Pseudo-Intellectualism: The Nigerian perspective.’ International Journal of African and Asian Studies 1 (1): 16–128. Fanon, Frantz. 1967. The Wretched of the Earth. London: Penguin. Galassi, Gibert. 2019. ‘Discussing the Symmetry Principle: Towards a Realist Dialogue Inside Global STS Theory.’ Tapuya: Latin American Science, Technology and Society 2 (1): 32–41.

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Jafri, Juvaria. 2021. The Exclusionary Politics of Digital Financial Inclusion: Mobile Money, Gendered Walls. New York: Routledge, 585–88. Edited by Serena Natile. Kahura, Dauti. 2018. ‘Easy Come, Easy Go: The Online Borrowing Craze Among Kenyan Youth.’ The Elephant, 21 June 2018. https:​//​www​.theelephant​.info​/features​ /2018​/06​/21​/easy​-come​-easy​-go​-the​-online​-borrowing​-craze​-among​-kenyan​-youth​ /. Karuitha, John. 2019. ‘Why Fintech Could Push the Poor into a Debt Trap.’ https:​ //​www​.google​.com​/search​?q​=doi​%3A+10​.11648​%2Fj​.history​.20170501​.12​&oq​ =doi​%3A+10​.11648​%2Fj​.history​.20170501​.12​&gs​_lcrp​=EgZjaHJvbWUyBggAE EUYOTIGCAEQRRg60gEIMTE1MGowajSoAgCwAgA​&sourceid​=chrome​&ie​ =UTF​-8. Khisa, Moses. 2019. ‘Whose Africa is Rising?’ Review of African Political Economy 46 (160): 304–16. Langley, Paul, and Andrew Leyshon. 2022. ‘Neo-Colonial Credit: FinTech Platforms in Africa.’ Journal of Cultural Economy 15: 1–15. https:​//​doi​.org​/10​.1080​/17530350​ .2022​.2028652. Martin, Michael T., and Marissa Moorman. 2015. ‘The Civilising Mission of Globalisation: Technology, African Cinematic Practice and Overcoming Neocolonialism: A Conversation with Film-Maker Jean-Marie Teno.’ Third Text 29 (1–2): 61–74. Pennycook, Alastair, and Makoni Sinfree. 2020. Innovations and Challenges in Applied Linguistics from the Global South. London: Routledge. Rahaman, Shafiqur, Rawshan Yeazdani and Rashed Mahmud. 2017. ‘The Untold History of Neocolonialism in Africa (1960–2011).’ History Research 5 (1): 9–16. https:​//​www​.sciencepublishinggroup​.com​/journal​/paperinfo​?journalid​=205​&doi​ =10​.11648​/j​.history​.20170501​.12. Rodney, Walter. 2021. How Europe Underdeveloped Africa. Cape Town, Dakar, Nairobi. Timcke, Scott. 2021. ‘Kwame Nkrumah and Imperialist Finance in Africa Today.’ A Review of African Political Economy, 6 July 2021. https:​//​roape​.net​/2021​/07​/06​/ kwame​-nkrumah​-and​-imperialist​-finance​-in​-africa​-today​/. Trading Economics. 2022. ‘The Kenyan Government Debt.’ Trading Economics. https:​//​tradingeconomics​.com​/kenya​/government​-debt#. Woche, Nancy. 2016. ‘Barriers Faced by Women Groups in Accessing Uwezo Fund in Kikuyu Constituency, Kiambu County.’ PhD diss., University of Nairobi, Nairobi, Kenya. Yasar, Abudlaziz, 2019. ‘Is “Debt Trap Diplomacy” China’s Neocolonialist Tool in Africa?’ TRT World, n.d. https:​//​www​.trtworld​.com​/africa​/is​-debt​-trap​-diplomacy​ -china​-s​-neocolonialist​-tool​-in​-africa​-27672.

Index

absolute cost advantage, 39–40, 217, 232 Abuja Treaty, 6, 58, 67 actors, 5, 11, 173, 335 Africa, 1, 3–10, 12, 37–38, 45, 48, 50, 55–56, 58, 60, 64–67, 69, 73, 80, 91, 95, 98–100, 102, 116, 119, 123–24, 129, 132, 135, 154, 156–57, 165, 173–74, 176, 181, 183, 187, 190, 203, 205, 214, 222, 227, 232, 238, 243, 254, 270, 282, 293, 309, 323, 341 African, 4, 7–11, 13, 43, 48–49, 51, 55–56, 58–62, 64–69, 83, 95, 99, 107, 205–6, 259, 323, 341 African common market, 6 African Continental Free Trade Area, 2, 37, 51, 56, 59, 181, 199, 206–7, 225, 286–87 African Development Bank, 2, 9, 107– 11, 115–16, 146, 162, 235 African Economic Community, 6, 58, 199 African Economic Outlook, 2 African economies, 7, 9, 55–56, 60, 69, 206, 234–35, 270 African Growth and Opportunity Act, 7, 189, 232

African integration, 10, 55–56, 58, 60–62, 68, 197 African Multidimensional Regional Integration Index, 163 African National Congress, 297 African Peace and Security Architecture, 64 African political economy, 2, 13, 107, 109, 115, 213 African Regional Integration, 163 African regionalism, 9, 55–56, 58, 60–61, 67–68 African states, 6, 11, 55, 64–65 African trade, 48, 51 African Union, 1, 4, 38, 59, 84, 143, 182, 184–85, 286 African Union Agenda 2063, 4, 38 African Union Commission, 163, 293 Afro-optimist, 55, 68 Afro-pessimist, 55, 68 Afro-realist, 61, 68 Agadir Agreement, 144 Agenda 2063, 37–38, 286, 325 agriculture, 97, 99, 173–74, 203, 225, 246, 328–29 aid, 4, 8, 23, 124,126, 134, 177, 205, 249, 263, 270, 273, 278, 309, 311, 318 Amin, Samir, 128, 203, 264 357

358

Index

analytical, 13 approach, 13, 175, 184, 260, 328 Arab League, 144 Arab Maghreb Union, 6, 59, 143, 152, 157, 286 Arab Spring, 144, 154, 156 Asia, 11, 63, 229, 259, 286, 315 asymmetrical integration, 60, 69 Azikiwe, Nnamdi, 55, 183 barriers, 31 bilateralism, 5 bloc, 6, 174, 176–77 borders, 31, 41, 51, 67, 150, 218, 223, 252 Bretton Woods conference, 29 Bretton Woods institutions, 200, 231, 260 Bretton Woods System, 29, 93 Britain, 63, 127 business, 172, 186, 205, 253, 283, 327 Cameroon, 40, 42, 263, 315 capital, 3, 23, 27, 32, 44, 61, 66–68, 73, 91, 124, 126, 150, 222, 271, 275, 277, 280, 298–99, 335, 342 capital flight, 32, 280 capital inflow, 3, 275–77 capitalism, 8, 76–77, 82, 123, 127–28, 215, 222–23, 269, 352, 355 capitalist, 7, 56, 132, 204, 222, 264, 309 centre-periphery, 26, 198, 260, 264 Central Africa, 294 central bank, 67 China, 8, 10, 45, 49, 55, 63, 69, 74, 79, 82, 189, 214, 219, 221, 228, 230, 233–35, 264, 282, 293, 298, 300– 302, 317, 332 Chinese finance, 5 civil society organisations, 66, 101, 243, 248, 283 class, 26 climate change, 30, 131, 151, 173, 175, 177 Cold War, 127–28, 214, 266

colonialism, 1, 133, 161, 203, 222, 272, 342 common currency, 57 common external tariff, 6, 57, 169 common market, 6, 57, 67, 176 Common Market for Eastern and Southern Africa, 6, 58, 143, 162, 184, 286 Community of Sahel-Saharan States, 6, 58, 143, 162, 286 comparative advantage, 30, 41–43, 48–49, 51, 231 comparative cost advantage, 41, 51, 218 competitive advantage, 48, 177, 218 conflict, 24, 26, 28, 33, 39, 172, 230, 238 constitutive integration, 58 continent, 5, 8, 63, 73, 84, 129, 151, 186, 192, 249, 253 continental, 13, 50, 182, 207 cooperation, 24, 56–57, 64, 147–48, 207 corruption, 284–85, 294, 303, 317 COVID-19, 3–5, 80–81, 108, 156, 165, 174, 189, 193, 234, 331–32 crisis, 2, 8–9, 11, 28, 74, 82, 176, 183, 206, 251, 268, 345 currency, 11, 57, 67, 82, 169– 70, 260, 280 currency union, 67 customs union, 6, 32, 57, 61, 176 data, 13, 313, 344, 355 debt, 2, 10, 23, 75, 80–82, 167, 202, 271, 277, 304, 341, 352, 354 debt crisis, 2, 82 decolonize, 5–6, 58, 67 delink, 135 demand, 29, 299, 313 democracy, 30, 293 dependence, 11, 60, 64, 69, 73, 198, 207, 223, 236, 246, 250, 264, 270, 287, 312, 345, 350 dependency, 4, 9, 26, 74–78, 80, 82, 132, 202–3, 264, 312, 324, 345

Index

dependency theory, 9, 74–75, 77–78, 82, 202–4, 251, 264 deregulation, 124–26, 271 descriptive, 13 desktop studies, 13 devaluation, 11 developing countries, 31, 39, 48 development, 3–4, 7–11, 13, 21, 26, 28, 30, 32–33, 38, 47, 50, 55–56, 62, 73–74, 76, 78, 82, 101, 107–8, 110– 12, 119–20, 123–24, 129–30, 132, 135, 145, 149–51, 158, 162, 183–84, 202, 206, 213, 251, 259, 282, 301, 309, 318, 326, 341 development aid, 124 developmental, 6–8, 58, 60, 84, 132 developmental challenges, 6, 58, 60, 76 development economics, 28, 30 developmental process, 8 developmental state, 84 developmental strategy, 7 diaspora, 58 diplomacy, 5, 12, 23, 227, 229– 31, 238, 352 division of labour, 37, 64, 222 documentary, 13, 260 Doing Business, 148, 151, 154 East Africa, 161, 163, 165–68, 170, 173, 177 East African Business Council, 174 East African Community, 6, 58, 143, 161, 286 East African regionalism, 176 economic, 6–9, 12, 19–21, 23–24, 26–28, 30–33, 37, 55–57, 62, 64, 67–68, 73, 83, 91, 126, 129, 148, 150, 182–84, 192, 270, 342 economic aid, 273 Economic Community of Central African States, 6, 58, 143, 162, 184, 286 Economic Community of West African States, 6, 32, 58, 143, 184, 286 economic cooperation, 148

359

economic crisis, 183 economic development, 56, 111, 130, 145, 149, 201, 204, 207, 251, 272, 303, 310, 312, 314, 319 economic diplomacy, 23, 227, 229–30, 238 economic growth, 9, 124, 126, 129, 143, 145–46, 148–51, 156, 169–70, 197, 200, 213, 268, 272, 287, 295, 300, 309, 319 economic history, 28 economic inequality, 30 economic integration, 31–32, 68, 150, 182–84, 190, 204, 206 economic liberalism, 28 economic nationalism, 62–64 economic partnership agreement, 189 economic prosperity, 37, 39 economic protectionism, 26 economic recession, 23, 206 economic reform, 192 economic regionalism, 57, 67 economic relations, 24 economic system, 192 economic transformation, 55 economic union, 57 economy, 10, 19, 22, 25–26, 28, 31, 39, 44, 56–57, 63, 65, 75, 96, 107–8, 117, 184, 203–4, 288 empiricism, 27 environment, 91–92, 95, 100–101, 154, 169, 335 environmental, 91–92, 94, 96, 244, 296 EU-Africa Partnership, 7 Europe, 11, 73, 128, 204, 222, 229, 285, 309, 329, 345 European integration, 58, 61 European powers, 5, 123 European Union, 32, 59, 79, 130, 167– 68, 190–91, 205, 224, 249 export, 43, 50, 55, 79–80, 145, 165, 168, 173–74, 176–77, 181, 187, 190, 200, 206, 220–21, 223–34, 250, 252 extra-regional, 7, 65

360

Index

Final Act of Lagos, 6 finance, 3, 23, 28, 50, 61, 66–68, 76, 110, 119, 222–23 financial, 55, 115, 123, 150, 176, 275– 76, 280, 327, 341, 352 financial crisis, 176 financial inflow, 3 financial system, 29 food aid, 249, 278 Food and Agriculture Organisation, 243 food crisis, 251 food security, 11, 177, 243–44, 247–49, 253 forces, 13, 28, 33, 63, 221, 264, 279, 333, 341 foreign, 3–5, 8, 12, 23, 28, 63, 78, 118, 205, 260, 263, 277, 301, 304, 314 foreign aid, 4, 23, 134, 263, 309–10, 312–14 foreign debt, 304 foreign direct investment, 3, 11, 63, 134, 276–77, 293, 296 foreign exchange, 28, 316 foreign loan, 8 foreign policy, 5, 231, 260 France, 293, 298 Frank, Andre Gunder, 77, 128, 203, 264 free market, 217, 327 free movement, 176, 223 free trade, 29, 31, 57, 63, 67, 78, 163, 199, 205, 207, 219, 222, 328 free trade area, 6, 57, 67, 144, 163, 199

global economic, 8, 93, 192 global economic order, 93 global economic system, 192 global economy, 4, 10, 39, 44, 288 global financial institution, 123 global forces, 13 global inequality, 73 globalisation, 11, 21, 23, 27–28, 31, 219, 225, 232–33, 263, 297, 329 global market, 177, 208, 220, 249 Global North, 82, 95, 100, 260, 264–70, 272–73, 331, 341, 354 global political economy, 1, 8, 13, 108, 130 global trade, 37, 60, 204, 229, 232 Global South, 74, 76–78, 82–83, 94, 101, 259, 266, 268, 331, 352–55 global system, 8, 12, 19 global warming, 100 government, 28, 39, 49, 66, 117, 154, 186, 207, 227, 260, 271, 283, 310– 11, 317, 348, 350 grants, 310–11, 329–30 Greater Arab Free Trade Area, 144, 155 greenhouse gas, 263 gross domestic product, 1, 80, 146, 166, 201, 228, 285, 313 Group of Seven, 9, 123, 130 growth, 9, 33, 124, 126, 129, 143, 145– 46, 148–51, 154, 156–58, 169–70, 197, 200, 213, 233, 260, 275, 287, 309, 312, 351

Galtung, Johan, 260, 264 gas, 100–101 General Agreement on Tariffs and Trade, 197, 213, 221, 231 Germany, 63, 123, 315 Ghana, 101, 265, 283, 294, 347 global, 1, 4, 8, 10, 12–13, 24, 37, 39, 44, 46, 48, 50, 62, 73, 76, 84, 92–93, 100–101, 108, 123, 128, 186, 192, 206, 215, 220, 229, 238, 249, 251, 259, 264, 276, 304, 314 global capitalism, 123, 127–28

Heckscher-Ohlin theory, 43–44, 51 hegemon, 93 hegemony, 265, 272, 324, 333–34 historical, 13, 38, 74, 269, 309 history, 27–28, 63, 73, 185, 214, 223, 265–66 horizontal integration, 60 Horn of Africa, 172 human development, 150, 262, 316–17 human development index, 313 human rights, 97, 266 Hume, David, 38

Index

ideology, 7, 270 imperialism, 260, 264–66 import, 46–47, 80, 83, 168, 177, 191, 246, 250–51 India, 79, 293, 300 Indian Ocean Commission, 144 inequality, 11, 30, 73, 207, 250, 260, 262, 281, 295–96, 341 inflation, 81, 169–70, 202 inflow, 3, 11 infrastructure, 48, 50, 112, 145, 186–87, 190, 301, 304, 317 institution, 28, 55, 61, 69, 80, 83, 102, 109–10, 119, 123, 134, 150, 158, 173, 177, 204, 223, 228, 284–85, 304, 314, 317, 328, 334, 343 institutionalism, 56, 59, 68 institutive integration, 58 integration, 2, 5–6, 10, 31–32, 55–66, 68–69, 143, 145, 148, 150–51, 153– 55, 157, 161, 165–66, 169, 172–73, 176–77, 181–83, 190, 192, 197, 204, 206, 222, 246 interdependence, 60 Intergovernmental Authority on Development, 6, 143, 162, 286 international, 1, 8–10, 12, 19–30, 33, 37, 45, 55, 57, 64, 74, 76, 79, 91, 108, 110, 134, 197, 215, 231, 238, 276, 323, 353 international actors, 11 international aid, 261 International Bank for Reconstruction and Development, 29, 59, 93 international capital, 91 International Centre for the Settlement of Investment Disputes, 94 international development, 28, 30 International Development Agency, 93 international diplomacy, 12, 231 international economic relations, 28 international economics, 27 international finance, 23, 28, 76 International Finance Corporation, 93

361

international financial institution, 28, 204 international financial system, 29 international institution, 134, 261 internationalisation, 21, 33 international market, 206–7, 251–52, 333 International Monetary Fund, 29, 82, 123, 231, 246, 259, 267, 297, 311 international organisation, 57, 134, 329 International Organisation for Migration, 172 international philanthropy, 323 international political economy, 1, 8, 19, 21, 25–26, 74, 76, 108, 110 international politics, 29 international relations, 19–24, 28, 33 international system, 9, 12, 28, 33, 76 international trade, 10, 28–29, 37, 45, 51, 79, 197–98, 207, 213–15, 220, 222, 224–25, 227, 243, 246–47, 251, 253–54 international trade war, 227 inter-regional, 168–69, 206, 253 inter-regional trade, 168–69 intra-African, 190, 206, 229, 285, 293 intra-African market, 79, 229 intra-African trade, 43, 48–50, 55, 60, 69, 182, 190, 206 intra-regional, 65, 149–50, 168, 177, 187, 272–73 intra-regional trade, 60–61, 150, 168, 177, 187, 207, 272–73 intra-trade, 190, 192 investment, 23, 63, 67, 111, 145, 151, 158, 186, 227, 268, 271, 277, 279, 288, 293, 298–99, 304, 312, 314 Kagame, Paul, 188 Kagame Report, 4 Kauda, Kenneth, 133, 162 Kenya, 12, 99, 161, 170–72, 174–75, 190, 252, 299–300, 303, 341– 43, 346, 349 Keohane, Robert, 21

362

Index

Keynes, John Maynard, 93 labour, 37, 43–44, 64, 66–68, 76, 202, 222, 227 Lagos, 6, 199 Lagos Plan of Action, 6, 199 Latin America, 259, 315 less developed countries, 199, 318 liberal, 5, 173, 218, 270 liberal intergovernmentalism, 147 liberalism, 24, 26, 28, 39, 213–14, 216, 218–20, 222–25 liberalisation, 10, 32, 51, 182, 188, 201– 2, 204, 207, 223–24, 237, 245–46, 248–49, 251, 253, 271, 353 liberal theory, 218 liberal world order, 5 loan, 8, 100, 260, 263, 270, 273, 310– 11, 346, 348–50, 352 Locke, John, 38–39 logic, 28

Mill, John Stuart, 37 Millennium Development Goals, 30, 131, 261 monetary, 6, 23, 28, 32, 57–58, 67, 176 monetary regionalism, 57, 67 monetary relations, 28 monetary union, 6, 32, 57–58, 67 money, 39, 281, 329, 348 Monrovia, 6 Monrovia Strategy, 6 Moravcsik, Andrew, 147 multilateral, 5, 6–8, 13, 109, 119, 133, 144, 223–24, 228 multilateral agreement, 144 multilateral diplomacy, 5 Multilateral Investment Guarantee Agency, 94 multilateralism, 1, 5, 228, 233, 238 multilateral trade, 7 multinational corporations, 7, 23, 28, 32, 46, 60, 215, 218, 301

Mano River Union, 143–44 market, 6–8, 19–20, 24, 32–33, 46–47, 50, 57, 60, 67, 73, 76–77, 94, 118, 126, 165, 176–77, 204, 208, 217, 220, 222, 229, 250, 253, 269, 285, 288, 310 market capitalism, 76–77, 126 market economy, 204, 222 market forces, 8, 221 market integration, 7, 60 Marshall, Alfred, 312 Marshall Plan, 309 Marx, Karl, 203 Marxian, 21 Marxism, 24, 26, 61 mercantilism, 24, 26, 61, 216–17, 221 mercantilist, 38–39, 63 mercantilist theory, 38 meta-theory, 27 Middle East, 147–48, 152, 311 migration, 97 military, 93, 280 military hegemon, 93

national, 31, 55, 260 national borders, 31, 223 nationalism, 59, 61–64 neo-colonial, 6, 55 neo-colonialism, 203, 264, 266, 269 neo-functionalism, 55, 59–61, 67–69 neo-liberal, 7–8, 56, 68, 124, 127, 147, 268, 297 neo-liberal ideology, 7 neo-liberal institutionalism, 56, 59, 68 neo-liberalism, 24, 26, 56, 59, 124– 25, 293, 297 neo-liberal theory, 147 neo-Marxism, 61, 264 Nigeria, 39–40, 42, 98, 115, 117, 130, 191–92, 201, 261, 263, 270, 281, 293–96, 300–303, 314 Nkrumah, Kwame, 5, 55 Non-Aligned Movement, 205 non-governmental organisations, 92, 311 non-state actors, 5, 66 non-tariff barriers, 37, 66, 191, 220, 229, 246

Index

North Africa, 10, 143–57, 261, 294 North American Free Trade Agreement, 41, 233 North–South relations, 259, 270 Nye, Joseph, 21 Nyerere, Julius, 5, 55 official development assistance, 8, 11, 278, 309–11 oil, 100–101 order, 5, 93, 266, 334 organisation, 57, 96, 134, 144, 205, 224, 311, 329 Organisation for Economic Co-operation and Development, 1, 248, 293 Organisation of African Unity, 5, 108, 143, 183, 199 Organisation of Petroleum Exporting Countries, 130 Pan-African, 58 Pan-African integration, 58 Pan-Africanism, 183 Pan-Africanist, 55, 334 pandemic, 23, 80, 108, 177, 189, 193, 234, 238 paradigm, 37, 56, 61, 272, 326 paradigm shift, 37 partnership, 4, 11, 206, 271 peace, 9, 283, 325 philanthropy, 12, 323, 327, 329, 332, 334–36 policy, 5, 7, 11, 13, 58, 63, 91, 93, 98, 100, 132, 167, 176, 186, 193, 227, 243, 245, 247, 251, 253–54, 259–60, 268, 271, 297, 304, 314, 336, 347, 353, 355 policy reform, 193, 332 political, 1–2, 4, 6, 22, 26, 28, 33, 55, 57–59, 61–62, 64–65, 67–68, 74, 91, 96, 107–8, 110, 115, 119, 154, 177, 229, 270, 289, 342 political economy, 1–2, 8, 13, 19, 21–23, 25–26, 74, 76, 96,

363

107–8, 110, 115, 119, 130, 293, 296, 309, 324 political instability, 177 political integration, 61, 64–65, 68 political regionalism, 57, 67 political science, 19 political union, 6, 57 politics, 19–21, 24, 27–29, 31–33, 57, 63, 243, 249, 260, 272, 354 post-neo-functionalism, 9, 61–62, 64–66, 68 poverty, 2, 7, 11, 30, 61, 108, 131, 134, 165, 192, 201–2, 207, 213, 250, 283, 295–96, 304, 309, 325, 327, 331, 341, 346, 351, 354 power, 21, 27, 110, 123, 266, 284, 324, 333, 345 primary goods, 10 private sector, 112, 149, 279, 336 privatisation, 124, 126, 268, 271, 297, 300, 328 process, 8, 61, 155, 221 production, 40, 43, 46, 48, 50, 175, 217, 230, 232, 243, 248–50, 253, 328–29 product life cycle theory, 45, 51 prosperity, 37, 39 protectionism, 10, 29, 61–63, 213–14, 220, 224–25 public-private partnership, 11, 101, 126, 271 public sector, 126, 304, 327, 336 qualitative, 13 quantitative, 344 reform, 5, 186, 192–93, 267– 68, 270, 332 regime, 7, 10, 198, 318 region, 149, 151–52, 156, 163, 176, 183, 186, 247, 287 regional, 2, 7, 10, 13, 55–57, 59, 61, 63, 65, 68–69, 120, 143–44, 148–49, 153, 155, 157, 161, 163, 173, 175, 177, 181 regional bloc, 6, 55–56, 176–77

364

Index

regional cooperation, 56–57 regional economic community, 6, 58, 152, 162, 185, 199, 286 regional economic hegemons, 7, 56 regional economic integration, 68 regional institution, 173 regional integration, 2, 10, 55–56, 59, 61, 63, 68–69, 143, 145, 148–49, 151, 153, 155, 157, 161, 163, 165, 172–73, 181, 190, 192, 289 regional international organisation, 57 regionalism, 9, 55–58, 60, 64, 67–68, 148, 151, 161–62, 173, 176 regional organisation, 144 regional trade, 173 remittance, 3, 278 remittance inflow, 3 rentierism, 63 research, 13, 19, 56, 334, 343 resources, 73, 75, 115, 150, 166, 267, 279, 328 revenue, 316, 341 Ricardo, David, 29, 37, 216–17, 223, 231, 312 Rodney, Walter, 128, 203 security, 9, 11, 55, 57–58, 177, 230, 243, 247–49, 263 security regionalism, 57 semi-periphery, 109 single currency, 67, 169 single market, 6, 57, 67 Smith, Adam, 29, 37–40, 50, 197, 223, 312 social sciences, 146 South Africa, 39, 81, 96, 237, 261, 281, 293–94, 296–97, 299–301, 303 Southern Africa, 294 Southern African Customs Union, 144, 161 Southern African Development Community, 6, 59, 143, 162, 184, 286 South–South cooperation, 10, 13, 197–98

sovereignty, 162, 173, 177 specialisation, 43, 217 stability, 39, 276, 353 state, 8, 11, 19, 20, 33, 58, 65, 289 state-owned enterprises, 303 strategy, 7, 47, 55, 58, 98–99, 206, 260, 341 Structural Adjustment Programme, 200, 206, 246, 260, 267, 271, 297 structural dependence, 60, 69 structural imperialism, 260, 264 sub-Saharan Africa, 2, 12, 79, 108, 133, 182, 187, 234–35, 237, 250, 260, 281, 295–97, 309, 311, 316 supranational, 57, 68, 173, 177 supranationalism, 59, 67 sustainable, 148, 263 sustainable development, 108, 119, 162, 263, 266–67, 279, 281, 294, 325 Sustainable Development Goals, 30, 131, 275, 281, 296 sustainable economic development, 149 sustainable economic growth, 145–46, 149–50 symmetrical integration, 60 system, 19, 21, 24, 27–29, 33, 76, 94, 132, 192, 217, 222, 265, 317, 325, 335 tariff, 6, 37, 39, 61, 66, 177, 188, 205, 234 tariff barriers, 66, 245 technology, 31, 43–44, 50, 56, 112, 150, 215, 230, 301, 304, 329, 342, 354 theory, 9, 19, 37–38, 42–47, 51, 55, 59, 74–75, 109, 124–25, 147, 215–16, 218–19, 231, 260, 311 third world, 259 trade, 2, 5–10, 23, 28–29, 31–32, 37–38, 40, 42–43, 45, 48–50, 55, 57, 60–61, 63–64, 67, 69, 78, 150, 152, 158, 168, 172, 177, 182, 188, 204, 216, 221, 224, 231, 249, 265, 293, 328 trade agreements, 7, 150, 152, 168 trade barriers, 31

Index

trade diplomacy, 23 trade integration, 172, 176 trade liberalisation, 10, 32, 182, 188, 201–2, 204, 207, 224, 245–46, 248–49, 271 trade regime, 10 trade regionalism, 57, 64, 67 trade restriction, 191 trade tariff, 176 trade war, 8, 10, 227, 229–30, 233–35 transnational corporations, 9, 32, 60, 66, 91 treaty, 6, 151, 155 Ubuntu, 325 underdevelopment, 32, 76–77, 82, 345, 351 unemployment, 7, 145–46, 201, 284, 353 unilateralism, 5 union, 6, 32, 57–58, 67 United Kingdom, 93, 123, 130, 219, 282, 297, 315 United Nations, 107, 134, 176, 228, 262, 296 United Nations Conference on Trade and Development, 2, 294 United Nations Development Programme, 262 United Nations Economic Commission for Africa, 6 United Nations Economic Commission for Latin America, 75 United States Agency for International Development, 325 United States of America, 8, 10–11, 44, 49, 73, 123, 130, 168, 214, 219, 221,

365

224, 228, 230, 232–34, 249, 293, 298, 300, 309, 315, 331 unity, 28, 108 Uruguay Round, 197, 221 vertical integration, 60, 69 Wallerstein, Immanuel, 109 war, 23, 127–28, 172, 229–30 Washington Consensus, 11, 259–60, 265, 267–73 wealth, 39, 295 West, 55, 69, 223 West Africa, 294 West African Economic and Monetary Union, 315 Western, 13, 51, 56, 59–60, 124, 127, 222, 265–66, 309, 311, 332–33, 355 White, D. Harry, 93 world, 2, 5, 12, 31, 40, 44, 50, 63, 75, 79, 203–4, 222, 250, 288, 319, 332, 348 World Bank, 9, 29, 92, 94–97, 99–102, 123, 125–27, 130, 133, 183, 231, 246, 248, 259, 261, 267, 271, 297, 311 world economy, 75, 203 world order, 5, 334 world politics, 63 world system, 21, 27, 264, 341 world-system theory, 109 world trade, 2, 79 World Trade Organisation, 11, 93, 152, 197, 213–14, 221, 227, 243, 261 World War II, 5, 93, 199, 259, 309

About the Editors and Contributors

Ernest T. Aniche (PhD) is currently a Senior Lecturer and the Acting Head of the Department of Political Science at Federal University Otuoke in Bayelsa State, Nigeria. He earned the BSc, MSc and PhD degrees of the Department of Political Science at the University of Nigeria with bias in international relations. His fields of research interest include African regionalism, comparative regionalism, migration and border studies, conflict and peace studies, security studies, international political economy, international environmental politics and oil and energy politics. Dr Aniche is a prolific scholar with more than eighty publications. He is on the editorial board of journals and publishers, particularly Springer Nature (SN) Social Sciences and Cambridge Scholars Publishing. He is a postgraduate external examiner at the University of Pretoria and the University of Zululand—both in South Africa. Dr Aniche is a recipient of several travel grants from UNESCO-EU and Jean Monnet-ERASMUS. He was formerly Acting Head, Department of Political Science, Hezekiah University, Umudi, Imo State, Nigeria, 2017–2019. Stephen N. Azom (PhD) is a Senior Lecturer in the Political Science Department at Federal University Lafia in Nasarawa State, where he doubles as the Coordinator of Postgraduate Studies. He holds a PhD in political science with specialisation in international relations. He has published in both local and international journals, authored a number of invited book chapters and participated in many national academic conferences. His research interests include, but are not limited to: international economic relations, development studies, peace and conflict studies, oil politics and international institutions and organisations. Emeka C. Iloh (PhD) holds a PhD in international political economy from the University of Nigeria in Nsukka. He is currently Senior Lecturer in the Department of International Relations and Diplomacy at Afe Babalola University in Ado-Ekiti, Nigeria. He has previously lectured at Madonna 367

368

About the Editors and Contributors

University Nigeria, Okija Campus. Prior to that, he worked as Senior Researcher at the African Heritage Institution, a research institute based in Enugu, Nigeria. He has published widely in many peer-reviewed international and national journals. He has also contributed chapters to edited books in the areas of African political economy, food security, international trade and regionalism, security and peace and conflict studies, and migration studies. Some of his book chapters have appeared in volumes published by Palgrave Macmillan, Routledge, Rowman & Littlefield and Lexington Books. He coauthored Separatist Agitation and Peacebuilding: The Challenge of National Integration in Nigeria (2019) and Political Economy of Migration in Africa (2021). He has participated in several donor-funded research projects in Nigeria. He was part of the research team that conducted the World Bank’s 2018 edition of the Ease of Doing Business in Nigeria survey. He was co-consultant for the Christian Aid’s ‘Evidence and Collaboration for Inclusive Development (ECID)’ baseline study in Nigeria, funded by UKaid. He has also led research teams that conducted studies for Nodac Consulting, Nextier SPD Ltd and other consulting firms. His research interests are in the areas of international trade and regional integration, African political economy, migration, politics of food security, gender politics and peace and conflict studies. *** Toyin Cotties Adetiba is Associate Professor and the HOD of the Department of Political and International Studies at the University of Zululand. He holds a PhD in social sciences (development studies) with a specialisation in ‘ethnic politics’ from the University of Fort Hare in South Africa. His research interests include, among others, the broad field of political science: international relations, conflict resolution, military in politics and diplomacy. Adetiba has published extensively in accredited peer-reviewed journals and book chapters and has coauthored a book. He is a member of the South African Association of Political Studies (SAAPS), the International Society for Development and Sustainability (ISDS) and the Society for the Study of International Relations and Strategic Studies (SSIRSS). Olabode Agunbiade (PhD) holds a PhD in infrastructural and development economics from the University of Abuja. His doctoral thesis was on the impact of road transportation on rural poverty reduction in the federal capital territory in Nigeria. Dr Agunbiade holds a BSc (honours) degree in economics, with a Second-Class Upper Division from the then–University of Ife (now Obafemi Awolowo University) where he was a University Scholar for three years (1982–1985). He thereafter attended the University of Ibadan, from where he obtained an MSc degree in monetary economics in 1987. Currently, he is the Director responsible for research and human capital development at

About the Editors and Contributors

369

ATACOFF Services LLP, a medium-sized professional consulting firm based in Abuja, Nigeria. He is widely travelled and has contributed extensively to top local and international refereed journals in the areas of infrastructure and transportation economics, development economics, poverty reduction, foreign aid and foreign direct investment. Andre Ben Moses Akuche is Lecturer in the Department of International Relation at Madonna University in Nigeria. He graduated with a BSc in international studies from the Ahmadu Bello University in Zaria. He obtained his MSc in political science with a bias in international relations and diplomacy from the University of Nigeria in Nsukka. His research interests are international relations and diplomacy, human rights, migration studies, youth empowerment, leadership and good governance, human security, tourism and cultural diplomacy. Nnabuike Christopher Anikwudike is presently Lecturer with the Department of Social Science of the Federal Polytechnic in Bida of Niger State. He obtained his BSc and MSc from the University of Nigeria in Nsukka, and the University of Abuja in Nigeria, respectively. His specialisation is on political economy and development studies. Areas of interest include, but are not limited to, peace and conflict management and resolution, ethnic politics and third world economies, and electoral violence and emerging democracies. He has authored and equally coauthored many articles in both national and international journals. Dominic Degraft Arthur (PhD) is Lecturer in the Department of Social, Political and Historical Studies at the University for Development Studies at the Wa Campus in Ghana. He holds a PhD from Aalborg University in Denmark. Dr Arthur is a Double Fellow of CODESRIA. Gafar Idowu Ayodeji (PhD) is Professor of governance, contemporary politics and administration in the Department of Political Science at the Tai Solarin University of Education (TASUED) in Ijagun of Ogun State, Nigeria. He also possesses an LLB and PGDE (postgraduate eiploma in education). He has published widely in the area of political science, covering anti-corruption issues, democracy, development and local government studies. His research interest extends to contemporary Africa. He was, in the immediate past, Head of the department and is currently the Dean of the College of Social and Management Sciences (COSMAS) in the same institution. Ademola Azeez (PhD) is Professor and the fifth Provost of the College of Social and Management Sciences at Afe Babalola University in Ado-Ekiti

370

About the Editors and Contributors

(ABUAD), Nigeria. He holds his BSc, MSc and PhD degrees from the Department of Political Science at the University of Ibadan, in Ibadan, Nigeria. He has taught political science, also, at the University of Ilorin, in Ilorin of Kwara State and at Achievers University in Owo of Ondo State. Azeez has published widely in both national and international journals of repute and has attended conferences in Nigeria, Ghana, South Africa and the United States. His research areas include: governance, democracy and development, while his teaching areas are: comparative politics, political economy, research methodology and social statistics. He is a member of various professional organisations including the Africa Association of Political Science (AAPS), the Nigeria Political Science Association (NPSA), the Social Science Academy (SSA) and the American Studies Association of Nigeria (ASAN). He is an Associate Member of the National Institute of Marketing of Nigeria, a Member of the Institute of Strategic Management of Nigeria and a Fellow of the Nigerian Society for Financial Research. He was also an International Visitor to the United States of America on Global Economic Recovery (IVLP 2011). His values and strengths include dynamism, coordination, team work, leadership and zeal for excellence. Nzube Aguchukwu Chukwuma obtained his First Degree in Political Science at Nnamdi Azikiwe University, Awka, and his master’s degree in conflict, peace and strategic studies at the University of Nigeria, Nsukka, both in South Eastern Nigeria. He is currently pursuing a PhD in international politics at Central China Normal University in Wuhan, China, and serving as Editorial Assistant (Africa) for Politikon: Journal of the International Association for Political Science Students (IAPSS). Formerly, he was a Research Assistant at the Department of Political Science at Nnamdi Azikiwe University in Awka. His research interests include African and Asian politics, peace and conflicts, democracy, terrorism and counterterrorism, election studies and human rights. Olawari D. J. Egbe (PhD) is a scholar in international relations with bias in environment and Aboriginal Peoples, military and strategic studies, international organisations, international political economy (IPE) and transnational organisations. He is a member of several academic associations in Nigeria and beyond. He has participated in numerous conferences, including the controversial conference on ‘Witchcraft: Meanings, Factors and Practices’ at the University of Nigeria, in Nsukka (2019). His most recent publications include, ‘National Policies as Impediment to the Paris Climate Change Agreement: The United States of America in Focus’ and ‘Contestations Over Natural Resources in Africa and Beyond: Channels of Causation,’ among others that have recorded enormous mentions in www​.researchgate​.net, www​

About the Editors and Contributors

371

.academia​.edu and www​.googlescholar​.com. He teaches political science at the Niger Delta University at Wilberforce Island in Bayelsa State, Nigeria. Queeneth Odichi Ekeocha is PhD Candidate at the Institute for Development Studies of the University of Nigeria, Enugu Campus, with research interest in intra-regional trade and economic development in sub-Saharan Africa. She holds a master’s degree in development studies from the above-mentioned university, holds a postgraduate diploma in international trade facilitation and development from Trade Policy Training Centre in Africa (TRAPCA), Arusha Tanzania, in affiliation with Lund University in Sweden. She worked for more than a decade in a research institution as a researcher and is skilled in research and technical knowledge. She has attended many international and local conferences on international trade, research training and development policy analysis. Her publications include journal articles, book chapters and policy briefs, among others, in the areas of international trade, gender, SDG and so on. Felix Aja Elechi (PhD) is a lecturer with the Department of Political Science at Ebonyi State University. He holds a BSc in political science, an MSc in international relations and a PhD in international relations with bias in energy security, all from the University of Nigeria in Nsukka. His research areas of interest include but are not limited to strategic and security studies, and energy security and development studies. He is widely published. Ifeanyi P. Maduechesi is currently a PhD candidate in the Economics Department of the University of Abuja, with his thesis focusing on maritime transportation efficiencies. He has earned his MSc and BSc degrees in economics from the University of Birmingham in Edgbaston England and the University of Nigeria in Nsukka, respectively. His field of research and professional interest revolves around economics of transportation and infrastructure development, international trade, democracy, good governance and political economy. He has actively participated as Transaction Adviser in the Concession and Privatization of some infrastructure projects in Transportation, Power and Water Resources Sectors of the economy. He is currently the Managing Director of Resident Capital Finance Limited, a Fund and Portfolio Management Company licensed by the Securities and Exchange Commission (SEC), having previously worked as Assistant Vice President of Public Sector Advisory at BGL PLC and Senior Banking Officer at Citibank Nigeria, among other roles. He has coauthored several papers in national and international journals.

372

About the Editors and Contributors

Jerry Mathekga is Senior Researcher at the Centre for Science, Technology and Innovation Indicators (CeSTII) within the Human Sciences Research Council (HSRC) at Cape Town, South Africa. He is a PhD candidate (industrial sociology) at Rhodes University in Grahamstown, South Africa. Victor H. Mlambo (PhD) earned a PhD from the Department of Political Science and Public Administration. He is currently Lecturer at the School of Public Management, Governance and Public Policy at the University of Johannesburg in South Africa. Dr Mlambo’s research interests include conflict and migration studies, border studies, political geography, regionalism and security studies. Chukwuemeka Vincent Muoneke earned his MSc from the University of Nigeria in Nsukka (UNN) and BSc degrees from the Department of Political Science at Imo State University in Nigeria (IMSU). His field of research interests include international institutions and organisations, international political economy, regionalism, peace and conflict studies, developmental studies, government and politics, Middle East geopolitics and international law and human rights. He is currently studying for his PhD. He is currently a lecturer in the Department of Political Science at Nnamdi Azikiwe University in Awka. He has several published articles in reputable national and international journals. Stephen Mutie (PhD) is Lecturer and Researcher based at Kenyatta University in Kenya. His area(s) of specialisation are: life writings (political auto/biography), African literature(s), literary theory and gender studies. His numerous publications stand at the intersection of intersectionality studies, social media communication and African Studies. He is Chief Editor of the Editon Consortium Journal of Literature and Linguistic Studies, peer reviewer for Postcolonial Text, Imbizo and Kabarak Journal of Research & Innovation, and a published author. He is outgoing Research Fellow at African Multiple Cluster of Excellence at the Bayreuth Academy of Advanced African Studies and Double Fellow of CODESRIA. He is currently working on a project titled ‘Epistemologies of the South.’ Chigozie Joseph Nebeife is Lecturer in the Department of Political Science at Federal University of Wukari in Taraba State, Nigeria. He holds a master’s degree in political science from the Federal University of Lafia. His research area includes comparative politics, governance, elections, integration and conflict studies, as well as development. He has published locally and internationally. He is happily married with children.

About the Editors and Contributors

373

Jude Odigbo (PhD) is Lecturer in the Department of Political Science at Madonna University Nigeria, Okija Campus Anambra State. He holds a BSc, MSc and PhD in political science from Anambra State University, Uli (presently Chukwuemeka Odumegwu Ojukwu University), the University of Ibadan and the University of Nigeria Nsukka, respectively. Dr Odigbo is the current Head of the Department of Political Science at Madonna University Nigeria, Okija Campus. He has several articles and book chapters in reputable journals and conference proceedings. Kennedy Chibuike Ohazuruike is Lecturer at the Nile University of Nigeria in Abuja. He holds: a PhD in political science from the Nile University of Nigeria, with bias in comparative politics; an MSc in international relation and diplomacy from Veritas University Abuja; an MEd UNICAF—Zambia, from PGDE University of Maiduguri; a BA in philosophy and a BA in theology. His research area of interest includes, but is not limited to, federalism, separation of powers and comparative governmental institutions, as well as blended learning. He is widely published. Okechukwu Richard Oji (PhD) is Professor of political science at the Enugu State University of Science and Technology in Enugu. He was formerly Director of Research and Policy Analysis for the National Boundary Commission in Abuja, Nigeria. He was also formerly, Head of Department and Political Science/Director at the Social Science Research Institute, ESUT, before he was called to national service to serve as a Special Assistant to the Honorable Minister of State for Foreign Affairs of the Federal Republic of Nigeria, from 2000 to 2003. He holds a PhD in political science with specialisation in government, and was called to the Nigerian Bar in 2012. Professor Oji has consulted for various international agencies including CEDPA/USAID, CRESNET/UNDP/UNEAD and UNDP. He has more than fifty publications to his credit, including books and articles in local and international journals. He has also mentored a lot of professionals and leaders in the public and private sector both in Nigeria and other countries of the world. Emmanuel Chukwunonye Ojukwu (PhD) is Senior Lecturer in the Department of Political Science at Nnamdi Azikwe University Awka in Nigeria. He was formerly Director of Information and Protocol for the University for twelve years before his redeployment to teach politics. He has authored many scholarly articles on political economy, African politics, governance studies and international politics. Remi Chukwudi Okeke (PhD) holds the degrees of BSc/Ed, MSc (public administration) and PhD (public administration) from the University of

374

About the Editors and Contributors

Nigeria in Nsukka. He has several multidisciplinary academic contributions to his credit and currently teaches undergraduate and graduate courses in the Department of Public Administration at Madonna University, Okija Campus, in Nigeria. Dr Remi Okeke is presently Lecturer I. With further pedigrees in the domestic financial sector of Nigeria, his research focus and scholarship cover financial administration, development administration, public policy analysis and international administration. Al Chukwuma Okoli (BSc, MSc, political science), holds a PhD in defence and strategic studies from the Nigerian Defence Academy (NDA). He is a Reader (Associate Professor) in political science at the Federal University of Lafia in Nigeria. Dr Okoli’s research interest revolves mainly around security studies in which field he has researched and published widely. He has consulted for the African Union (AU), UN-Women, the Centre for Democracy and Development (CDD), the Armed Forces Command and Staff College (AFCSC) in Nigeria and the National Open University of Nigeria (NOUN). Dr Okoli successfully examined a doctoral thesis for the Graduate School of Queensland University, Australia, in 2020. He is a triple laureate of the Council for the Development of Social Science Research in Africa (CODESRIA), having attended the council’s three institutes (Gender 2018, Higher Education 2019, Democratic Governance 2021). Dr Okoli is a member of Amnesty International (AI), a Research Fellow of IFRA-Nigeria and a member of CORN-West Africa. He believes in a world governed by liberal knowledge and free thought. Clement Okonkwo is Lecturer of the Political Science Department for Madonna University, Nigeria Okija Campus. He earned his first degree from the then–Anambra State University, now, Chukwuemeka Odumegwu Ojukwu University (COOU) Igbariam campus with Second-Class Upper Division in 2008. After the one-year compulsory youth service in 2009, he proceeded to the University of Nigeria Nsukka (UNN) where he bagged his MSc in political science with bias in political economy in 2012. Presently, he is a PhD student at the UNN. His research interests include political economy, development and underdevelopment, peace and conflict studies. He has published in different reputable journals at both national and international levels. Iseoluwa Raphael Olayinka holds a National Diploma in public administration and a BSc (Ed) in political science (first-class honours) from the Polytechnic Ibadan in Ibadan of Oyo State and the Tai Solarin University of Education of Ogun State, respectively. Currently, he is on an MSc Programme at the Department of Political Science in the Tai Solarin University of Education where he also works as a Graduate Teaching Assistant.

About the Editors and Contributors

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Sunday Orinya (PhD) is Lecturer in the Department of Political Science at Federal University in Lafia. He holds a BSc degree in political science from the University of Nigeria Nsukka and an MSc degree in international relations and strategic studies from the Benue State University in Makurdi. He is awaiting final defense of his doctoral thesis. His areas of research interest include peace and conflict resolution, security, international relations and development studies. He has published scholarly articles in reputed local and internal journals and contributed chapters in scholarly books. He is the coordinator of Peace and Conflict Studies of Federal University Lafia. Orinya is a member of the Nigeria Political Science Association (NPSA). Segun Oshewolo (PhD) holds a PhD in political science and has published widely in his areas of research interest which include foreign policy and diplomacy, democratisation, environmental politics, global health governance and African affairs. His scholarly works have appeared in leading academic journals such as Commonwealth and Comparative Politics, World Affairs, Energy Policy, African Security, African Identities, Strategic Analysis and Geo Journal, among many others. He is currently Senior Lecturer at Afe Babalola University in Ado-Ekiti, Nigeria. Goddy U. Osimen (PhD) is Senior Lecturer in the Department of International Relations and Diplomacy at Afe Babalola University of Ado Ekiti. He is a consultant in peace and security matters and Director of third-party initiative resolution. He is a member of Society for Peace Studies and Practice (SPSP) and Amnesty International. He holds a PhD degree in strategic studies from Ambrose Alli University, Ekpoma, where he obtained his first degree in political science and a master’s degree in international relations, respectively. He has a diploma certificate in international studies and diplomacy and holds a second master’s degree in peace and conflict studies from the University of Ibadan in Nigeria. He has earlier taught at the Wesley University, Ondo, Saint Monica’s University, Cameroon (Abuja Campus), and Achievers University, Owo, where he served as the Head of general studies, and as the Acting Head of Department of Political Science and International Relations. He has authored many scholarly books, including Early Warning Sign to Early Action in Conflict Management; Managing Security in an Unsecured Environment; and Principles of Conflict Management, among others. He has also published several articles in conflict and security related issues in reputable journals both at national and international levels. He is the Chief-Editor of the Journal of International Peace and Security, which is a quarterly security and peace awareness multimedia publication by Intermediates Shield publishers.

376

About the Editors and Contributors

Moses Etila Shaibu (PhD) holds BSc political science, MSc international relations and strategic studies and PhD political science (political economy) from the University of Jos and University of Nigeria Nsukka, respectively. He started his working career as Lecturer 111 in Kogi State Polytechnic in 1993 and rose to the position of Chief Lecturer in 2007. Within this period, he was Head of Department, Dean of School, Director, Kogi Poly Consults and Director Academic Planning Unit. He transferred his services to National Open University of Nigeria Abuja (NOUN) in 2017 as Senior Lecturer in the Department of Political Science. He became a Deputy Director with Regional Training and Research Institute in Open and Distance Learning (RETRIDOL). He has more than thirty publications in international and national journals, book chapters, technical reports and text books to his credit. He has attended many international and national conferences. His research interests are political economy, poverty alleviation, gender issues, rural development and election issues. He is currently Dean of the Faculty of Social Sciences at the National Open University of Nigeria in Abuja. Patrick Nwabueze Ubru is a PhD candidate at the Department of Economics in Enugu State University of Science and Technology, Enugu, Nigeria. He holds a bachelor of science and master’s degree, respectively, in economics from the same university. He is a career banker with more than a decade experience. He manages the public-sector desk in First Bank of Nigeria, Enugu. He is an active member (Assistant Governor) of the Rotary Club Enugu State and also Paul Harris Fellow. Kenechukwu Udoka Udibe (PhD) is Facilitator at the Department of Political Science at the National Open University of Nigeria, Enugu Study Centre. He is Fellow of the Institute of Corporate and Public Administrators of Nigeria (ICPAN). He is also a member of the National Political Science Association (NPSA). His primary research interests are in international relations, election and democracy, public policy and peace and conflict studies (etc.). He has published in reputable national and international journals. Denis Nfor Yuni has a PhD, MSc and BSc in economics from Nnamdi Azikiwe University, the University of Nigeria, Nsukka, and the University of Yaounde 2, Cameroon. He has more than eight years research experience and more than twenty-five peer-reviewed journal article publications, some of which are indexed in the Economics Bulletin, the Journal of Studies in Economics and Econometrics, International Economics, International Migration, the Journal of Economic Asymmetries, and the International Journal of Sustainable Economy and Environmental Hazards. He has equally consulted for the United Nations University Institute for Natural

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Resources, Climate Analytics GMBH Berlin, the African Economic Research Consortium, the Nigerian Communication Commission, the Civil Resource Development and Documentation Centre and the African Heritage Institution, among others. He equally has more than six years teaching experience in the Department of Economics and Development Studies at the Alex Ekwueme Federal University Ndufu-Alike. He is the former Deputy Director of the Centre for Internationalisation and Advancement of the university. He is currently Senior Lecturer in the Department of Economics at the National University of Lesotho.