African Capitalisms, Infrastructure and Urban Real Estate

By Tom Goodfellow

The series on capitalism in Africa on roape.net has so far provided some excellent reflections focused primarily in two areas: first, the utility of the concept of capitalism (seen as being both historically contingent and culturally loaded) for understanding African economic development processes; and second, the variable ways in which Africa is integrated – usually to its detriment – into the global capitalist system. My contribution takes a different angle by focusing on the inward rather than outward dimension of African capitalisms, and specifically the relationship between capitalism and urbanisation – or, more accurately, the development of urban areas, acknowledging that the ‘urban’ is now another increasingly contested concept both in global debates and in our understanding of changing African societies. Indeed, we are at a crossroads in terms of how urbanisation and urban development are understood both in their own right and in terms of their relationship to capitalism. I believe that understanding how these phenomena relate to each other in African contexts, where urbanisation and capitalism are co-evolving in distinctive and historically unprecedented ways, is particularly instructive for pushing forward this global debate.

In several earlier contributions to this series, a theme that recurs either implicitly or explicitly is the difference between analysing capitalism and analysing capital and its ‘operations’. Efforts over successive decades to analyse ‘African capitalism’ have focused, as one would expect, on the emergence and nature of capitalist systems as a whole, exploring relations of production and whether these resemble capitalism elsewhere. Yet, as Seth Schindler has recently argued, in much of Africa as in other developing regions there has been a ‘persistent disconnect’ between capital and labour. This echoes Chitonge’s observation in this series that ‘restricting the existence of capitalism to the dominance of wage labour relations has offered little insight into capitalist dynamics in Africa.’ In a sense, if we try too hard to look for industrial capitalism and associated wage relations, we miss much of what capital is actually doing and this is crucial because what capital is actually doing partly accounts for the very weaknesses of capitalist industrial development.

To push this further, one can observe that in analyses of African capitalism there has been a relative neglect of what Henri Lefebvre termed in 1970 the ‘secondary circuit’ of capital – in other words, land and real estate – when actually it is central to patterns of investment and growth. In fact, this ‘circuit’ is especially significant in much of Africa today due to low productivity, the limited scope for industrial profits and consequent pull of urban land rents.

This requires further unpacking. In her contribution to this series, Kate Meagher’s reference to the ‘welcome return to investment in industry and infrastructure’ rightly lauds the resurgence of approaches to investment resembling those from the mid-twentieth century, when industry and infrastructure were invested in simultaneously but also were understood as being intrinsically linked in the capitalist development process. However, this emphasis on the ‘return’ of such approaches obscures the extent to which today infrastructure is being massively prioritised over industry (in practice if not in policy) and is being conceived in ways that are often entirely de-linked from industry and industrial strategy.

Uganda’s current ‘infrastructure scramble’, to use a term coined by J Miguel Kanai and Seth Schindler, is a case in point. The emphasis currently being placed by both donors and the Ugandan government on transport infrastructure, funded by foreign loans and constructed by a range of mostly foreign contractors, is framed primarily in terms of decongestion and logistics, and their potential to contribute to economic growth – not in terms of industrial linkages or enhancing industrial production. As Sandro Mezzadra and Brett Neilson highlighted, it is the nexus between extraction and logistics that often defines the operations of capital in the contemporary world. This sense that in many African countries infrastructure development is capitalist development also speaks to the concerns that others in this series have raised about the extraversion of African economies and the ongoing relevance of dependency theory.

However, a further and less-explored point is that the elevation of infrastructure as a development goal has a massive significance for real estate, in both intended and unintended ways, exponentially increasing its importance as a source of wealth and power, and a force that promotes the draining of capital away from industry and production itself, as I have argued elsewhere.  This latter concern is especially pertinent in Africa’s many landlocked countries where the production of both infrastructure and real estate requires ‘heavy’ construction materials they are not well-equipped to produce domestically. Here there is an obvious tension when efforts to promote light manufacturing fixated on export markets are often starved of investment, while domestic capital is diverted to haul in expensive materials from outside in pursuit of infrastructure and real estate-led growth that does little for domestic production.

Indeed, the importation of construction materials often takes place on a scale that far exceeds value of leading exports from African countries lacking major natural resources. In Rwanda for example – a country associated with coffee that has worked hard to move up the coffee processing value chain and access high-end international coffee markets – the combined value of imported cement and large construction vehicles was more than a third higher that the total value of coffee exported in 2016. In Ethiopia, imports of various forms of iron alone – before you even consider other metals – were of around the same value of its entire agricultural and agri-processed exports, including its main sources of export revenue such as coffee, oily seeds, dried legumes and cut flowers.

This great dependence on imports does speak to the integration of Africa into global capitalist system that others in the series have highlighted but we also need consider what those imported materials do internally for African capitalisms. The flipside to Meagher’s analysis of the ongoing extraversion of African economies and its effects of labour precarity is the concentration of capital in construction, much of which is being ploughed into real estate – which, contrary to extraversion, is often a function of the parking of capital by domestic elites. To return to the case of Ethiopia, between 1994 and 2014, Ethiopian investors at home and abroad invested more in ‘real estate and related services’ than in any other sector. The Ethiopian diaspora was particularly active, channelling four times as much into real estate as manufacturing.  Moreover, even the ‘extraverted’ infrastructure that has international connectivity as its primary aim can have the crucially important ‘introverted’ side effect of raising land values along its path and stimulating massive land speculation and investment in real estate, overwhelmingly by domestic elites. More often than not this occurs without robust mechanisms of tax and land value capture, which lessens the capacity of the state to invest in producing more redistributive forms of capitalist development.

All of this can be seen as further evidence of what Gavin Shatkin  – writing about Asia in 2016 – has called ‘the real estate turn’, through which governments ‘seek to exploit urbanization processes in the interest of extending state power’.  Indeed, ‘buying off’ important constituencies or potentially threatening opposition groups by enabling them to join the festival of increased land values is an important strategy in the contemporary governance of urban areas in Africa – a theme I return to below.

Before I do, however, we need to consider what it means to speak of the ‘urban’ in Africa today, since both the concept of the urban and the question of how we measure it are once again being vociferously contested. On the one hand, the ‘planetary urbanization’ discourse (see Brenner and Schmid, 2015) posits that societies across the world are increasingly characterised by modes of production and consumption inextricably linked to urban processes, thus making ‘the urban’ difficult to delimit spatially. On the other, research based on more conventional approaches which define urban areas primarily in relation to density claim that far from being around 40% urban (which is the conventional wisdom), Africa is actually 80% urban. Others argue that Africa’s urbanisation is overstated and even that parts of Africa are actually de-urbanising.

The fact that our definitions of the urban are so unsettled, and that there is no consensus on what constitutes urban socio-economic and demographic patterns, is not unrelated to how capitalism is changing. This dispute over the urban is linked to the fact that urban economies and land use don’t look like they used to, and that in most of the world they don’t look like they did in the places where both capitalist and urban theory was conceived. Under contemporary forms of capitalism, does it make more sense to define the urban in terms of the number of people in non-agricultural jobs, the density of human settlement, or the ways in which urban land is developed and infrastructurally-connected? In the past and in the experience of the global North, these things often overlapped quite closely. In much of Africa today, they do not. This is why Africa is a flashpoint for disputed definitions of the urban and an interesting place in which to pursue a better understanding of the role of cities in contemporary capitalism.

What seems clear is that in much of Africa, as elsewhere, the role played by urban land in relation to capital investment is increasingly characterised by property-led development, mega-projects and infrastructure. The growing literature on urban dispossession in African contexts (see for examples Gillespie 2016; Mbiba 2017) reflects the extent to which urban enclosures, ‘land grabs’, public-private conversions and informal sector crackdowns are pervasive occurrences, invariably in support of real estate or infrastructure developments. There are reasons to believe, however, that these are distinct from both Marxian ‘primitive accumulation’ – in which workers are forcibly separated from their means of production in order to create a reserve of cheap wage labour – and from Harvey’s concept of ‘accumulation by dispossession’, which fixates on over-accumulated capital in search of a ‘spatial fix’. In fact, it is often not corporate capital seeking new returns that results in expulsions from urban space in Africa, but the capital of individuals seeking to park resources and stake their claim to the city in an age where cities are increasingly seen as Africa’s future.

These real estate investments are a form of accumulation, certainly but whether they are truly capitalist accumulation is more of a moot point. Importantly, sometimes these investments yield little or no return, and it isn’t always clear that the property in question is fully commodified. Drawing on Daniel Bin’s conceptualisation earlier in this series, we can suggest that whether urban real estate development in Africa amounts to ‘capitalist accumulation’ is an empirical question, as is the relationship between any given property’s use value and exchange value. Much urban property in any African city I am familiar with sits idle, much is not even completed. The ostensible conversion of money capital into real estate does not necessarily result in either proletarianization or commodification, the two processes through which Bin argues that capital expands.

Moreover, partly because of the uncertainty around African real estate markets, these markets are often not (yet) of much interest to major global corporate investors. Few African countries yet host Real Estate Investment Trusts – those increasingly notorious agents of financialization of the built environment – and most completely drop off corporate calculative tools such as Jones Lang LaSalle’s Global Real Estate Transparency Index. For this reason, I argue that aspects of urban real estate development in African contexts may be partly obscured by the current focus on financialization. It may be true, as Manuel Aalbers has recently argued, that the world is converging towards the ever-greater financialization of housing – but some places are still very much on the periphery of this process. Thus, while we may debate the old dependencia ideas of core/periphery and their link to colonial geographies, we can speak of a ‘finance periphery’ that has no obvious global North/South geography, because the South has places in which real estate is now highly penetrated by global financial institutions but also places (including much of Africa) in which it is not.

But – and this is a big but – the fact that global corporate finance is not much interested in investing in African property markets does not mean that nobody is. In fact, the steering of finance capital away from these places by global calculative regimes that make Africa look far too risky creates opportunities for domestic and diaspora capital. Consequently, we need to seek answers to the ‘real estatization’ of African economies not so much in international political economy as domestic political settlements.

This brings us back to the questions of power and politics.  We cannot understand forms of capitalist development in Africa without understanding which groups of people exercise power over the economy, and – crucially – that these forms and sources of power are often not those conventionally associated with capitalist economic relations. This is not to say that African societies are somehow ‘pre-capitalist’, but rather to highlight that the productive interests classically associated with capitalism, and corporate shareholder interests associated with contemporary capitalism in the North, are not necessarily the most important interests in Africa. Indeed, conceptions of capitalism in which corporate power and shareholding are central must be of limited relevance on a continent where many countries – including the continent’s second and third most populous countries, Ethiopia and DR Congo, do not even have a stock exchange.

This is why, in his influential work on political settlements, Mushtaq Khan argued that political settlements in most developing countries are ‘clientelist’ rather than ‘capitalist’: power is often structured in accordance to patron-client ties and non-capitalist forms of authority rather than capitalist class relations. Strategically important groups, whether these are elites with capacity to destabilise the regime or organised social groups with substantial voting power and/or potential to mobilise major violence, need to be accommodated by governing regimes in ways that cannot be realised through capitalist institutions alone. This is why African governance is replete with informal institutions that enable key groups to garner predictable benefits, in order that a political settlement can be maintained.

One of the ways in which benefits can be distributed in any society is through access to land and opportunities to reap the increasing value of land (often linked to infrastructure), and this becomes particularly important in African cities where land values and real estate assume disproportionate importance due to the relative weakness of the productive economy. But the ways in which land, property and infrastructure are used to allocate benefits will happen differently depending on who the powerful groups in society are, and whether the formal institutions in place can be effectively used to allocate the benefits in question. If they can’t, then those benefits must be distributed informally.

I therefore argue in my own 2018 article on cities and political settlements that urban land and property, being of particular significance for domestic elites and other constituents, is a crucial tool for building and maintaining a political settlement – but also that the way in which this is done has important ‘side effects’ on the cities where it plays out. Thus in Kigali, where the appearance of law-like, ‘uncorrupt’ behaviour by governing elites is considered crucial for regime survival, you are more likely to see formal rules constantly changing to accommodate the necessary interests (which impacts investor confidence and creates substantial delays in realising investments), unlike in Kampala where the politics makes parcelling out land informally more expedient (hastening environmental degradation in the meantime). These cities reflect different varieties of clientelism and different modalities of distributing land rents to maintain a stable order.

The fact that most countries in Africa might be characterised as having clientelist rather than capitalist political settlements does not mean there is no capitalism. But it helps to join the dots between the weak foundations of industrial capitalism, the key role of land, infrastructure and real estate in the ‘operations’ of capital, the limits of commodification and the political relations that lie behind all this. Throughout this blogpost I have referred to African ‘capitalisms’ in plural, cognisant of Stefan Ouma’s exhortation to take a less holistic, universalizing frame to the topic. In cities across the continent, we see different and localized manifestations of capitalist penetration, as M. Anne Pitcher has likewise noted in her work on ‘varieties of residential capitalism’ in Africa. Continued exploration of how capital intersects with contemporary urban forms can help to bring Africa to its rightful position at the forefront of global debates on capitalist transformation.

Tom Goodfellow is a Senior Lecturer in the department of Urban Studies and Planning at the University of Sheffield. He is also a Research Associate of the Sheffield Institute for International Development and Sheffield Political Economy Research Institute.

Featured Photograph: Walking the tracks at Jinja, Uganda, 14 September, 2010