The Corporate Swamp: a New G20 Strategy for Africa

By Patrick Bond

The World Economic Forum (WEF) – Africa conference in Durban just hosted some of the world’s most controversial politicians: not just Jacob Zuma and his finance minister Malusi Gigaba plus regional dictators Robert Mugabe, Yoweri Museveni, King Mswati and Edgar Lungu, but also the most powerful man in Europe, the notoriously-corrupt neoliberal German finance minister, Wolfgang Schäuble.

At a public lecture on 4 May hosted by the University of KwaZulu-Natal, Schäuble undiplomatically threatened Britain’s Prime Minister Theresa May, in the midst of her election campaign: “The [Brexit] negotiations will become terribly difficult for the UK. They will see it.”

The next day at the WEF-Africa summit, Schäuble sold his plan for reviving multinational corporate investment in Africa. It is a priority, he said, because “In Europe, we have come to understand that Africa represents one of the most important issues for the growth and stability of the global economy.”

Africa as an ‘issue’ for global economic ‘growth’ – managed by imperialist elites – dates to an earlier Berlin project: the infamous “Scramble for Africa” in 1884-85. The continent’s dysfunctional borders were drawn then in order to facilitate property rights for colonial extractive industries, all the better to ensure infrastructure investment. Roads, railways, bridges and ports needed to withdraw resources have been cemented into place ever since, and now require refurbishing and expansion.

In addition to imperialist aspirations, another explanation arises: Germany’s national election is in September. Schäuble’s boss Angela Merkel needs a rhetorical device to explain to voters how the million African refugees who entered Germany over the last dozen years can be kept at bay in future. Hence the ‘Compact’ with African elites.

Schäuble was speaking on behalf of a G20 bloc that will hold its annual meeting in Hamburg in two months’ time. Amongst the world’s largest economies plus multilateral financial institutions, South Africa – with only the 3rd largest African economy and sixth most populous society – represents a continent glaringly absent from view.

The ‘C20’ group of civil society critics  has expressed concern not only about Schäuble’s top-down process, but about “higher costs for the citizens, worse service, secrecy, loss of democratic influence and financial risks for the public… … and the multinational corporations involved demand that their profits be repatriated in hard currency – even though the typical services contract entails local-currency expenditures and revenues – and that often raises African foreign debt levels, which are now at all-time highs again in many countries.”

In contrast to Berlin, Donald Trump’s Washington regime has proposed cutting the USAID budget dramatically and diverting $54 billion in state funding to the military. But while once preaching isolationism, Trump has already expanded ‘low-profile’ “Africa Command” interventions from the Maghreb across the Sahel to the Horn, according to researcher Nick Turse who last week analysed newly-declassified Pentagon data.

On June 12-13, more Compact details will be shared with G20 finance ministers at a Berlin meeting reportedly to be co-chaired by Schäuble and Gigaba. In spite of the latter’s occasional leftist rhetoric and widespread praise for his WEF-Africa diplomacy, Gigaba’s record of white-elephant infrastructure promotion when he was State Enterprises minister suggests how prone Pretoria remains to offering massive public subsidies to construction and mining corporations. That tendency overlaps precisely with Schäuble’s aims.

In addition to South Africa, five countries have initially signed up to the Compact with Africa – Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia – with many more anticipated to join, so as to maintain aid and political favour with the European Union. 

Schäuble’s Compact was released in March in the German resort of Baden-Baden without substantive African input (in contrast to Tony Blair’s 2004-05 Commission for Africa which co-opted a comprador elite including Finance Minister Trevor Manuel). Schäuble  not only side-lined the more generous ‘Marshall Plan’ strategy advanced by Merkel’s development ministry, he also insisted that African governments provide more public subsidies – and take on much more risk – for ‘Public Private Partnership’ infrastructure. This typically amounts to profits, pilfering and – for consumers of commercialised infrastructure – pain.

In his new autobiography and a Guardian article, former Greek finance minister Yanis Varoufakis described Schäuble as a hypocritical financial dictator who privately confessed that his ongoing squeeze of the Syriza government and Greek people – on behalf of the Euro – should really have been rejected by Athens. The very day Schäuble spoke in Durban, he was also busy imposing more austerity on Greece and rejecting a previously promised bail-out.

Varoufakis regrets trusting Europe’s “Deep Establishment” in 2015, and indeed he should have known better. Fifteen years earlier Schäuble had been expelled as leader of the Conservative Party for accepting and then publicly denying a cash bribe – the equivalent of US$56 000 – from arms dealer Karlheinz Schreiber (whose generosity also wrecked the once-invincible Helmut Kohl’s reputation.) A comeback thanks to Angela Merkel’s generosity gave Schäuble first the German Home Affairs and then Finance portfolios.

Likewise, IMF managing director Christine Lagarde is a close Schäuble collaborator and endorser of the Compact with Africa. Less than six months ago, she too was convicted in French courts for a €403 million payout to a major conservative party contributor, Adidas owner Bernard Tapie, when she was finance minister. Her comeback was far faster than Schäuble’s: she continues in her present job, even gaining a re-endorsement on the day of her Paris conviction by IMF directors including those representing the Brazil-Russia-India-China-South Africa bloc.

Meanwhile African infrastructure has failed to attract anywhere near the investment in the manner envisaged in the African Development Bank 2010 Programme for Infrastructure Development in Africa and the wildly overoptimistic 2012 Southern Africa Development Community regional master plan.

But this is not only a function of weak local systems – including widespread corruption in Africa’s construction sector – but another factor for which Schäuble, Lagarde and other elite financial managers are partly responsible: an utterly unreformed, chaotic world economic system.  Africa faced commodity price hikes of 380% from 2002-11 and then crashes by more than 50% in 2014-15, to unprofitable levels. And no Compact with Africa aiming to incentivise multinational corporate investment merely with state supply-side subsidies can reverse those inherent crisis conditions within global capitalism.

Patrick Bond teaches political economy at the University of the Witwatersrand in Johannesburg and directs the University of KwaZulu-Natal Centre for Civil Society in Durban. Bond is on the International Advisory Board of ROAPE. A version of this blog was published in the South African paper Mail and Guardian.

Featured Photograph: Jacob Zuma, President of South Africa, at World Economic Forum on Africa 2009 in Cape Town, South Africa.


  1. I really have become absolutely fed up with the so-called analyses of Africa which incorporate the racist and colonialist concept of the “African dictator”. This is a description that is never used for the real tyrants of the world, namely the governments of the big powers. In reality these governments exercise more dictatorial powers over people in Africa and other oppressed countries and cause more deaths and human suffering than any so-called “African dictator”. To be honest, the counterposing of the “African dictator” against the “western liberal democrat” is just a euphemism for the old dichotomy of the “uncivilised African savage” and the “civilising European christian”. It is time that those who are seriously interested in analysing the challeneges facing Africa give up this racist frame of reference.

  2. One very concerning aspect of some political analysis of contemporary Africa, including by those who consider themselves ‘progressive’, is consistently reserving the use of terms such as ‘dictator’ and ‘regime’ for African governments, while steadfastly refusing to apply such terms to governments in London, Washington, Paris and so on. This analytical approach is both racist and unscientific. It is racist because the very state machinery in Africa which these analysts label as ‘dictatorial’ was in actual fact, implanted in Africa at the point of the colonial gun by the very ‘liberal democracies’ which they refuse to label as dictatorial. Why is it okay to label the Africans who now run these state machines as dictators while those who built and put them in place can’t be described in the same way? It is ironic that some of those African political leaders who are routinely labeled as ‘dictators’ were instrumental in adding such democratic features as universal suffrage to the dictatorial colonial state.

    This approach reinforces the fraudulent distinction between the so-called ‘liberal democracies’and the ‘African/third world dictator’. In reality the ‘liberal democracies’ exercise more dictatorial powers over people in Africa and other oppressed countries and cause more deaths and human suffering than any so-called ‘African dictator’. It is a distinction which, of course, underpins much of the propaganda and justifications for imperialist aggression and war crimes against various countries. The governments of Iraq, Libya, Syria and now Venezuela have all been labeled as ‘dictatorships’ in order to justify the Anglo/American/NATO attacks on them. When confronted with inescapable evidence of their crimes, the imperialists declare there can be no ‘moral equivalence’ between their actions and those of their opponents, because they are ‘democracies’ and their opponents are ‘dictators’. It is evident that the terms’western liberal democracy’ and ‘African dictator’ are simply the 21st century versions of the 19th century ‘civilising European christian’ and ‘uncivilised African savage’ which have their roots in the racist doctrine of the ‘white man’s burden’.

    Apart from its racist character, this distinction is utterly unscientifc. Political science has long established that the very existence of the state is evidence that the society has broken down into contending social classes. Consequently, every state without exception, is at the same time both democratic and dictatorial. Democratic for those whose interests it serves and dictatorial for those whose interests it harms.

    In 2017, we really need to give up racist frameworks when analysing African reality and if we do want to use terms such as ‘dictatorship’, try to do this on some scientifc basis.


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