That the West is losing the sub-Sahara does not come as news in Africa itself. One leader after another has been explicit on this point, from Senegal's president ("Today, it is very clear that Europe is close to losing the battle of competition in Africa") to Botswana's president ("I find that the Chinese treat us as equals; the West treats us as former subjects") to Nigeria's president at a banquet for China's President Hu ("This is the century for China to lead the world. And when you are leading the world, we want to be very close behind you").
If the West is losing hold, it's doing so at least partly for the right reasons. In recent years, Western companies have come under increasing pressure from shareholders and regulators to improve their ethical and environmental performance. The caseload at the Justice Department under the Foreign Corrupt Practices Act doubled between 2006 and 2007, and the FBI has a brand-new team dedicated to catching violators. Worldwide, the Paris-based Organization for Economic Cooperation and Development (OECD) estimates, there are now more than 150 ongoing foreign bribery investigations in 30 industrialized countries, and cooperation between countries is more common than ever. That shift, along with the enactment of the Sarbanes-Oxley law tightening financial oversight of corporations, has started to change how Western firms operate in undeveloped countries. Indeed, the world's largest mining firms (representing more than $700 billion in assets -- including DeBeers, Rio Tinto, Newmont, and Anglo-American) have approached the UN for help in selling an idea to the developing world: a "badge of excellence" that would require all mining firms to meet high environmental and safety standards. The Congo's Kasongo calls it a "gimmick," and although it's hard not to laugh, one can hardly blame the firms for trying.
But all of this comes very late in the game, after much of America's capacity to lead has been lost or squandered. The charge of American hypocrisy is everywhere in the air. And still the United States and Western institutions manage to talk out of both sides of their mouths when it comes to transparent governance, human-rights protection, and fair trade in developing countries.
Leaders in Africa and China are well aware of this hypocrisy, of course, and use it as leverage against us. A year ago, China threatened to stop borrowing funds from the World Bank if the agency didn't heavily water down its anticorruption demands. The gambit worked flawlessly: A week later, the bank succumbed, and then tried to keep China's threat a secret. Last summer, the World Bank was preparing to publish a report that included the startling fact that 750,000 Chinese die prematurely each year from air pollution; China's government stepped in and insisted that the bank delete the figure, arguing that it could provoke social unrest. Again, the bank complied -- and again tried to keep China's demand from the public.
Capital flight out of Africa shows Western hypocrisy from a different angle. For every dollar the West lent Africa between 1970 and 1996, studies show that 80 cents flowed back out in the same year, often into foreign bank accounts in New York, London, and Zurich. A 2005 report by the (Tony) Blair Commission for Africa estimates that "stolen African assets equivalent to more than half of the continent's external debt are held in foreign bank accounts."
It's believed that at least $500 billion is now stashed away, but Western banks and governments have done almost nothing to repatriate it -- or to help African governments crack down on the thievery. "Most investigations by African countries of money laundering and tracking the funds of corruption are stifled by the developed world -- by banks and governments," maintains a top Western money-laundering official with extensive knowledge of Africa. "The U.S. is the No. 1 uncooperative country, followed by the U.K."
There are two reasons for this, says the source, who would be fired if his name were revealed here. First, Western governments say they are too busy and simply ignore Africa's requests for assistance, especially if a transaction is not in the multi-millions. Second, Western banks don't want to part with the funds. "It would show they never did due diligence in the first place," says the source. "And if we pulled this money back, we'd damage the U.S. and European banking systems. Africans know this. And it puts a cynical tone to all this do-good stuff. We're part of the money-corruption problem, just like the timber problem. Globalization connects us all."
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Recent Comments | 8 Total
May 17, 2008 at 2:42pm by arnie lerma
Dear Mr BEhar, You have out done yourself. This is an amazingly informative article, thank you. I learned from your words. Regards Arnie Lerma
May 21, 2008 at 3:37pm by Shelley Mosley
Mr. Behar:
An incredibly informative article highlighting that while we focus on how the price of gas impacts Americans' ability to take summer vacations, others are taking the longer view and are out-strategizing us in acquiring the resources we will all require in the next 50 years. We are asleep at the switch.
June 3, 2008 at 4:53pm by James Belle
China is a much bigger player on the world stage than many think, the west better have contingency plans, otherwise competing with them will be much harder in the next 50 years.
June 6, 2008 at 12:38am by CHET WHITESIDE
THANK YOU, AFTER 27 YEARS TRAVELING THROUGHOUT AFRICA YOU HAVE PUT INTO WORDS TO WHAT I HAVE SEEN AND EXPERIENCE AND HAD NOT THE POWER TO DO ANYTHING ABOUT IT. TODAY WHAT IS THE VALUE OF LIFE?
June 6, 2008 at 5:51pm by GEOVANI LUNA
Dear: Mr. Behar
astonishing article.
What can I say. keep up the good work.
Regards. Geovani Luna.
June 6, 2008 at 8:13pm by Afam Edozie
It is the nature of man to exploit his fellow man, whether man on man, village on village, clan on clan or nation on nation. To deny this is a triple failure, failing to understand our history, failing to understand the purpose of law, and failing to understand what goes on in every school yard in the world.
Europeans, Americans, Chinese and Indians all come to Africa with a view to what they can take out, not what they can put in. They have always done so and I don’t see a world in my lifetime where I will expect anything different.
That China is now emerging as did the US, Germany and Japan at the beginning of the last century. And Germany and Japan did again after the war, is obvious. But the fact that China has the scarcity mentality (as did Germany, Britain and Japan at the beginning of the last century – which led them to fight for resources) (and for sure in the short term all things are scarce,) does not mean that energy and food will always be too scarce to support the needs of +10 billion people.
Time and time again, man’s creativity and ingenuity has been up to the task of finding alternatives, that support the continued accession (in some fronts) of our species. And there are alternatives, it is just that they take some years to develop and bring on stream. Natural resource cycles typically last between 15 and 20 years, so six years really is just the beginning – if you stay focused on demand and supply you will be one of the few that will see the market turn, at exactly the same time that everyone else is saying that prices will continue to rise for ever and indeed even the people who are today skeptical about more gains will be in the process of getting into the market just as it truly peaks and goes after another 20 year trough (the greater fools.)
The United States and the West are no more special to Africa than any other country or group of countries that can provide markets for their goods, capital for their industry and expertise for their development. During the cold war the US understood this and took over leadership for Africa from Britain and France, after the cold war they abandoned their puppets in Somalia and elsewhere leaving behind a vacuum resulting in an explosion in conflict across much of the continent, which is only just subsiding as new power equilibriums have been reached.
Before the emergence of Asia, the United States and the West were the only game in town. But the US did not use this power in any positive way. As a result few Africans will cry at the emergence of a new exploiter.
The great mistakes of US foreign policy (if I can call them mistakes) are that the US does not to have a strategy nor to have any 'real' values that they adhere to.
So Africans neither look up to them as a moral beacon (despite the fancy talk,) nor have they built in strategic advantages that will give them an edge in the future.
As a result the US lost the Shah's Iran (where it backed autocracy over democracy; whilst extolling the virtues of democracy), is loosing a host of other countries. And will likely loose much of Africa to China.
The Chinese also have no values worthy of emulation (Ok, they are disciplined and work hard etc. but you know what I mean,) but they do have an effective strategy.
Their strategy is to
i) use loss leaders (and leverage their low cost base) to get a foot hold into a country - offering to support good projects for cheap (foreigners bearing gifts policy),
ii) Ignore national politics, you do just what you want we’re only here for business (which may seem shocking, except when you compare it to the US rhetoric (from the perspective of us natives) which is ‘be just like me’ (I see no evil policy),
iii) corrupt the locals (despite Nigeria's reputation as a den of corruption I know many people who don't take bribes, regardless the Chinese still try to bribe them and when they don't accept they try even harder, like they were programmed to do this in head office, and
iv) invade the country
I live in Nigeria and the Chinese are moving in here at an alarming rate, there are more Chinese living here than any other minority group and they are coming in at every level. Large, Medium and Small sized Chinese companies. As well as sole Chinese traders. They have factories in almost every corner of the country.
They go to the middle of no where, ask the locals for land to build a $10 million processing plant (or something) (why should anyone say no, no one else - not even our own govn - has come to do anything to provide us with jobs) and in any locality outside of the major cities even $1 million investment is a big deal. They then import hundreds of Chinese workers for every job except the most menial and go ahead to treat all their workers (Chinese and Nigerians) like slaves.
They do not transfer skills, they do not train, they do no even die (I kid you not, Chinese do not die in Nigeria), when one dies his death is kept secret, his body is shipped back to China in bulk using refrigerated containers and another Chinese comes to take his job.
The only part of their colonialisation strategy that is failing is that they are not allowed to marry local girls. But I think they have a shortage of girls of their own, so we see an increase in the number of 'secret' wives. How this one will pan out is anyone's guess. But I guess they will get shipped home and we will be left with lots of half Chinese babies.
Few policy makers in Africa understand the Chinese strategy and even fewer of them have the capability of doing anything about it. In 20 years, the Chinese will be a big minority in Africa, with significant participation in industry and economic life. I think it is in the Prince by Machiavelli that it is explained that one of the best ways to bind a country to you is to relocate a sizeable number of your loyal subjects there (as the English did in Northern Ireland.) Tensions and civil turbulence come with the territory, but exploiter seldom care.
The west has not had a coherent strategy since neo-colonialism failed in the 70s (another exploitative system that replaced colonialism which was also exploitative, which replaced slavery.) The US attempt to establish an African command is laughable and is seen in Africa as a desperate attempt to introduce a military strategy.
No doubt a charm offensive with promises of dollops of aid will eventually get them the base, and no doubt they will be able to establish a naval presence through their planned deep water port in Sao Tome. But as you can see it does not stand up to the Chinese strategy which involves feet on the ground and involvement in the community.
On Richard’s last point, the ‘development’ boat has not left, there are always opportunities for people who have land, can acquire skills and live in a stable environment, to begin the process of creating capital and becoming more productive.
Unfortunately, mainly due to geography, all the races did not develop productivity at the same speed (Negro Africans were still taking the continent from Khoi Africans in the mid fifteenth century,) and our nature is to exploit rather than help those that are weaker than us. Within nations this predatory behavior is controlled by law, but between nations, peoples and races it remains the order of the day. So any African expecting that the Chinese (Americans or any one else from the outside) are here to help would better spend their time making their own chains.
Richard and other observers may be surprised to see Africa tackle many of its political problems over the next 30 years (just as China was able to tackle its ideological problems between the 1940s and 1970s, which has led to their emergence now,) After which it is a short trip to get on the boat or if the boat has truly sailed then to make our own.
I apologize if I have rambled on too long for a comment on an article, but the Richard’s brilliantly researched article brought out many issues that I could not help but comment on. And if you really want to help Africa keep your aid dollars in your pocket and instead invest them in African business, not only will you be increasing productivity of Africans (leveraging their labour with capital) you will make a better return than you would from the S&P500. You can read about African companies that are building boats at www.smartinvestorafrica.com.
June 9, 2008 at 2:52pm by david wayne osedach
This is an eye opening article.
Does it leave any doubt that there will be devastating global wars in the near future over commodities such as oil, water, or copper, and iron?
Can or, will the US instigate them?
June 16, 2008 at 9:52am by Sowande Tichawonna
I applaud Richard Behar and Fast Company for shedding light on this global issue. If there was ever a justification to boycott the upcoming Olympics this qualifies in spades.