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Uneven Urban Development, Water and Finance during Africas Global Economic Integration

By Patrick Bond

Patrick Bond

School of Development Studies and Centre for Civil Society

University of KwaZulu-Natal, Durban, South Africa (http://www.ukzn.ac.za/ccs)

 

Encompassing:

Paper 11

The polarizing effect of globalization between capital cities and secondary towns

Session III: Globalization and the Institutional (and Legitimacy) Gap

and

Paper 12

The conundrum of finance and time in the production of local infrastructure

Session IV: Globalization and the Financing Gap (Comparative)

 

For the conference

Global Cities: Water, Infrastructure and the Environment

UCLA Globalization Research Center-Africa and

The Globalization Research Network

University of California/Santa Barbara, 18 May 2005

1. Introduction

 

We begin, as guided in the call for conference inputs, by considering the particular position of city-regions in the new global hierarchy, and specifically, the position occupied by Africa in a global division of labor which is being continually restructured, in no small part due to periodic bouts of economic turbulence. Large metropolitan areas are the crucial platforms through which countries are inserted into the world economy, whether on the basis of productive, financial, commercial or extractive circuits of capital. Their vulnerability is often the basis for local economic crisis, especially when a city’s comparative advantage hinges on factors such as currency valuation, interest rates and trade policies which are a function of national policy and international investment dynamics. What, then, is the fate of the thousands of urban centres in Africa, whether the capitals, larger port cities or smaller towns? And moving to the specific problem of water access for the poor in these larger and smaller urban areas, what dynamics can be traced to global economic pressures? Can factors influencing the pricing of water to poor people, for example, be traced to multilateral financial agencies and multinational corporate partners in urban water systems, or to the perceived need of municipalities to lower operating costs so as to attract new foreign direct investment?

                  In asking these questions, we must consider the public-private interface, the institutional and legitimacy gap, the financing gap and the mobilization gap. All are integral parts of the story, but the author’s mandate from conference organizers is to integrate especially the problems of uneven development and water infrastructure financing. The author’s particular experience in South and Southern Africa may mean that the highly political environment associated with urban social struggles, especially over water, do not reflect the rest of the African condition. But whether ‘deglobalization’ or ‘decommodification’, there are sufficient instances of continental resistance covered in the concluding section to retain an optimism of the will, namely that the ‘legitimacy gap’ associated with globalization and worsening urban inequality can be turned upside down.

 

2. Uneven development, stagnation, turbulence and interurban polarization

 

The uneven development of Africa with respect to both the world economy, and to its own internal urban structure, can perhaps be best understood as following a ‘see-saw’ movement of capital (Smith 1990), which alternately pushes and pulls national, sub-national, and local economies into either downward slopes or virtuous spirals of capital accumulation (Bond, 1999). At the scale of the African continent, it has long been recognized that, as Giovanni Arrighi and John Saul (1973:145) explained, nation-states have suffered from the

 

                  uneven development thrown up by capitalist penetration in Africa. For the underdevelopment of Africa as a whole relative to the industrial centers of the West has been accompanied and mediated by uneven development as between regions, states, tribes, and races within Africa itself, and this fact adds important dimensions to the class struggle in Africa and to the character of the resistance of progressive African forces to contemporary imperialism.

 

Since the early 1970s, neoliberalism as the most recent stage of global capitalism has not offered any scope for Africa to ‘develop’ evenly. Consider the main trends in these primary economic categories: financial accounts (including debt, portfolio finance, aid and capital flight), trade and investment:

 

·              Africa’s debt crisis worsened during the era of globalization. From 1980-2000, SubSaharan Africa’s total foreign debt rose from $60 billion to $206 billion, and the ratio of debt to GDP rose from 23% to 66%. Hence, Africa now repays more than it receives. In 1980, loan inflows of $9.6 billion were comfortably higher than the debt repayment outflow of $3.2 billion. But by 2000, only $3.2 billion flowed in while $9.8 billion was repaid, leaving a net financial flows deficit of $6.2 billion.

·              African access to portfolio capital flows has mainly taken the form of ‘hot money’ (speculative positions by private-sector investors) in and out of the Johannesburg Stock Exchange (as well as Harare, Nairobi, Gabarone and a few others on occasion). In 1995, for example, foreign purchases and sales were responsible for half the share trading in Johannesburg. But these flows have had devastating effects upon South Africa’s currency, with 30%+ crashes over a period of weeks during runs in early 1996, mid-1998 and late 2001. In Zimbabwe, the November 1997 outflow of hot money crashed the currency by 74% in just four hours of trading.

·              Meanwhile, donor aid to Africa dropped 40% in real terms during the 1990s, in the wake of the West’s Cold War victory. Most such aid is siphoned off beforehand by bureaucracies and home-country corporations, or is used for ideological purposes instead of meeting genuine popular needs. The then director of the Harare-based African Network on Debt and Development, Opa Kapijimpanga (2002), remarked, ‘The donor creditor countries must keep all their aid and against it write off all the debt owed by poor African countries... The bottom line would be elimination of both aid and debt because they reinforce the power relations that are contributing to the imbalances in the world.’

·              An important source of financial account outflows from Africa that must be reversed is capital flight. James Boyce and Léonce Ndikumana (2002) argue that a core group of SubSaharan African countries whose foreign debt was $178 billion had suffered a quarter century of capital flight by elites that totaled more than $285 billion (including imputed interest earnings): ‘Taking capital flight as a measure of private external assets, and calculating net external assets as private external assets minus public external debts, subSaharan Africa thus appears to be a net creditor vis-à-vis the rest of the world.’

·              Africa’s underdevelopment through unbalanced trade is also a major problem. The continent’s share of world trade declined over the past quarter century, but the volume of exports increased. ‘Marginalization’ of Africa occurred, hence, not because of insufficient integration (Africa is probably the integrated region based upon trade/GDP as a measure of globalization), but because other areas of the world - especially East Asia - moved to the export of manufactured goods, while Africa rapidly deindustrialised thanks to excessive deregulation associated with structural adjustment. In the process, rapid trade-related integration caused social inequality, as World Bank economist Branco Milanovic (2003) concedes. The ‘terms of trade’ between Africa and the rest of the world deteriorated steadily, thanks in part to the artificially low prices of crops subsidised by G8 countries. The UN Conference on Trade and Development argues that if the terms of trade had instead been constant since 1980, Africa would have twice the share of global trade than it actually did in the year 2000; per capita GDP would have been 50% higher; and annual GDP increases would have been 1.4% higher.

·              Foreign direct investment in Sub Saharan Africa fell from 25% of the world’s total at peak during the 1970s to less than 5% by the late 1990s, and those small amounts were devoted mainly to extracting minerals and oil, mainly from extremely corrupt regimes in Nigeria and Angola in which transnational corporate bribery played a major role. The only other substantive foreign investment flows were to South Africa for the partial privatization of telecommunications and for the expansion of automotive-sector branch plant activity within global assembly lines. This was by far offset by South Africa’s own outflows of foreign direct investment, in the forms of delisting and relocation of the largest corporations’ financial headquarters to London, not to mention the repatriation of profits and payments of patent and royalty fees to transnational corporations. Moreover, official statistics ignore the long-standing problem of transfer pricing, whereby foreign investors underpay taxes in Africa by misinvoicing inputs drawn from abroad.

·              Globalization has also entailed the implementation of public policies known as neoliberalism, initially codified in Africa in the World Bank’s 1981 Berg Report (written by consultant Elliot Berg). Very few countries resisted, and the effects were quite consistent. Budget cuts depressed economies’ effective demand, leading to declining growth. Often, the alleged ‘crowding out’ of productive investment by government spending was not actually the reason for lack of investment, so the budget cuts were not compensated for by private sector growth. Privatization often did not distinguish which state enterprises may have been strategic in nature, was too often accompanied by corruption, and often suffered from foreign takeover of domestic industry with scant regard for maintaining local employment or production levels (the incentive was sometimes simply gaining access to markets).

 

There is convincing documentation that women and vulnerable children, the elderly and disabled people are the primary victims, as they are expected to survive with less social subsidy, with more pressure on the fabric of the family during economic crisis, and with damage done by HIV/AIDS closely correlated to the tearing of safety nets by structural adjustment policies (Tskikata and Kerr, 2002). Moreover, there were no attempts by World Bank and IMF economists to determine how state agencies could supply services that enhanced ‘public goods’ (and merit goods).

         It is crucial to point out, however, that all of this has transpired not because the durability and prosperity of the world economy ‘marginalises’ Africa (as conventional wisdom has it), but instead because of global capitalism’s combination of economic stagnation and financial turbulence since the late 1960s (Brenner 2003, Foster 2002, Harvey 2003, Pollin 2003, Wood 2003). The world’s per capita annual GDP increase fell from 3.6% during the 1960s, to 2.1% during the 1970s, to 1.3% during the 1980s to 1.1% during the 1990s and 1% during the 2000s. (Moreover, GDP measures are notorious overestimates, especially since environmental degradation became more extreme from the 1970s.) This occurred in a very uneven manner, with some sites suffering sharply declining per capita GDP. Just as severe unevenness can be found doing sectoral analysis. Manufacturing revenues were responsible for roughly half of total (before-tax) US corporate profits during the quarter-century post-war ‘Golden Age’, but fell to below 20% by the early 2000s (Dumenil and Levy 2003). In contrast, profits were soon much stronger in the financial sector (rising from the 10-20% range during the 1950s-60s, to above 30% by 2000) and in corporations’ global operations (rising from 4-8% to above 20% by 2000). There have been far more revenues accruing to capital based in finance than in the non-financial sector, to the extent that financiers doubled their asset base in relation to non-financial peers during the 1980s-90s.

        The primary problem for those wanting to measure and document the dynamics of capitalist accumulation, has been the mix of extreme asset-price volatility and ‘crisis displacement’ that together make the tracking of valorization and devalorization terribly difficult. David Harvey’s (1999, 2003) analyses of spatio-temporal ‘fixes’ (not resolutions), and of systems of ‘accumulation by dispossession’, are also appealing as theoretical tools. They help explain why ‘capitalist crisis’ doesn’t automatically generate the sorts of payments-system breakdowns and mass core-capitalist unemployment problems witnessed on the main previous conjuncture of overaccumulation, the Great Depression. That these systems of dispossession today more explicitly integrate the sphere of reproduction – where much primitive accumulation occurs through unequal gender power relations – reflects a ‘reprivatization’ of life, as Isabella Bakker and Stephen Gill (2003) put it. And these are notoriously difficult areas of political economy to measure and to correlate with accumulation.

         Still, while the manifestations of rising financial profitability simultaneous with relative US manufacturing decline are varied, they are unmistakeable. The past few years of massive deficit spending by the US state indicate the importance of military Keynesianism. But so too is consumer-Keynesianism via credit increasingly crucial, with household debt as a percentage of disposable income rising steadily from below 70% prior to 1985, to above 100% fifteen years later. On the one hand, there be no doubt that financial product innovations and especially new debt instruments associated with new information, communications and technology simply permit a greater debt load without necessarily endangering consumer finances. On the other hand, however, during the same period, household savings rates fell from the 7-12% band to below 3%. Moreover, consumers and other investors are also more vulnerable to larger financial shocks and asset price swings than at any time since 1929. Although there were indications from around 1974 that major financial institutions would be affected by the onset of structural economic problems, few predicted the dramatic series of upheavals across major credit and investment markets over the subsequent quarter century: the Third World debt crisis (early 1980s for commercial lenders, but lasting through the present for countries and societies); energy finance shocks (mid 1980s); crashes of international stock (1987) and property (1991-93) markets; crises in nearly all the large emerging market countries (1995-2002); and even huge individual bankruptcies which had powerful international ripples. Late-1990s examples of financial-speculative gambles gone very sour in derivatives, exotic stock market positions, currency trading, and bad bets on commodity futures and interest rate futures include Long-Term Capital Management ($3.5 billion)(1998), Sumitomo/London Metal Exchange (L1.6 billion)(1996), I.G.Metallgessellschaft ($2.2 billion)(1994), Kashima Oil ($1.57 billion)(1994), Orange County, California ($1.5 billion)(1994), Barings Bank (L900 million)(1995), the Belgian government ($1 billion)(1997), and Union Bank of Switzerland ($690 million)(1998). Subsequent firm bankruptcies on an even larger scales - e.g., Enron, Anderson Accounting, World Com, Tyco - had more to do with corruption, but were also symptoms of gambling in immature markets. The US stock market was the site of an enormous bubble until 2000, perhaps culminating in the Dot Com bubble crash which wiped $8.5 trillion of paper wealth off the books from peak to trough - but on the other hand, seemingly reinflating in 2003-04 thanks to the return of household investors and mutual fund flows, and possibly rising further in future years if Bush begins social security privatization. The market’s bubble can be witnessed through the five-fold increase in 10-year price/earnings averages (using Shiller’s methodology) from 1984-2000, and through the price/resources measure which also shows extreme overvaluation, worse even than prior episodes such as the run-up to 1929. Of course, the lost paper wealth from 2000-02 brought these ratios down, but with the subsequent rise, the markets are by no means yet down to levels that are in keeping with historical averages. The implications of the 2000-02 crash are still important, however. Combined with the demographic trend towards baby-boomer retirement, it appears there are some substantial pension shortfalls in the US. Moreover, household assets also crashed because of the share bubble burst, although fast-rising housing prices kept overall asset levels at a respectable level, at least for the top 60% of US households who own their homes. This particular bubble was enhanced by the 1998 drop in interest rates – the Fed’s response to the Asian and LTCM crises – which spurred a dramatic increase in mortgage refinancings. As a result of the huge rise in property prices that followed, the difference between the real cost of owning and of renting soared to unprecedented levels. The fact that the housing sector has contributed to roughly a third of US GDP growth since the late 1990s makes this bubble particularly worrisome.

              Where might the US’s own vulnerabilities become overwhelming? Given US dependence on imported oil, which has increased in price from $12/barrel to more than $50/barrel the last five years, the implications of this scale of speculation-driven price swing are devastating to the US trade deficit, already vast at 5% of GDP. As for investment accounts, the US held 5% worth of its GDP in net foreign holdings as recently as the early 1980s, but this figure plummeted to negative 30% within two decades. Ironically, the power of the US to manipulate the economies of other countries, and lower the value of their exports, has not changed these ratios for the better. The US was the main beneficiary of East Asian countries’ 50% currency crash in 1997-98, as massive capital flows entered the US banking system, and as imports from East Asia were acquired at much lower prices, keeping in check what might otherwise have been credit-fuelled inflation. To be sure, this is a long-standing problem of ‘unequal exchange,’ but it appears to be a much more severe drain on countries reliant upon commodity exports during epochs of ‘globalization’ such as the 1910s-20s and 1980s-90s. The US current account also suffers from trade/investment disequilibrea, and once the Dot Com boom was finished in 2000, the US share of global Foreign Direct Investment fell substantially, even further than declining US-sourced FDI elsewhere. Where, then, would the US get its needed capital fixes, especially financial inflows to permit the payment of more than $2 billion each work day required for imports and debt repayments? The foreign inflows were quite volatile in 2002-04, but of greatest importance, perhaps, was the rapid rise in foreign – especially East Asian inflows – ownership of aggregate US Treasury bills, from 20% to 40% over the course of the past decade. This is important not because the supply side of capital market funding is in any way constrained, what with $124 trillion to (theoretically) draw upon within global capital markets, and an additional $36 trillion in GDP each year contributing ongoing surpluses to the markets. The distribution of these funds is notable, reflected by four major blocs of funds: the EU ($43 trillion), US ($41 trillion), Japan ($19 trillion) and Asian emerging markets ($9 trillion). The stock of capital is invested in stock markets ($31 trillion), public bonds ($20 trillion), corporate securities ($31 trillion), and banks ($41 trillion), as well as foreign exchange reserves ($3 trillion). There is no shortage of liquid capital in the global markets, only a question of what rate of return will be required to maintain foreign interest in the US position. In conclusion, we shall pose the option that with US economic decline imminent, perhaps in a dramatic fashion, the argument for delinking from many US-controlled circuits of capital is all the more compelling and realistic.

                  What general points are worth drawing from this situation? For our purposes, it is crucial that uneven hierarchies of scale are exacerbated during times of relative economic stagnation (capitalist crisis) and financial ascendance, such as the past quarter century, at the same time unevenness in sectoral and spatial patterns of development is being generated. While the national scale of economic development usually occupies financial economists to the neglect of the sub-national, it is the international scale of financial power which turns the heads and quickens the pulse of analysts and practitioners alike. The power of international money over development strategies at the national scale is today reflected across Africa, as well as in many advanced capitalist countries. Sub-nationally, the ramifications of international financial power are increasingly evident. For smaller, home-bound manufacturing industries not well-located near air or shipping lanes to serve global markets, the fluctuating interest rates and national currency values dictated from Washington, New York, London, Tokyo, Frankfurt, and other sites of international financial control can be debilitating. The size of the national market - which was typically the key consideration in the expansion and contraction of production - now appears nearly irrelevant in the context of trade liberalization enforced by the major financial institutions. Not just nation-states, but cities and regions are also increasingly caught up in the vortex of the international law of value, as more direct - often municipal-level - strategies of restructuring production and reproduction are brought into play, often at the behest of global financiers and aid agencies. In effect, the nation-state gives way to the city as a new unit of analysis, implementation, and control and as a means of enhancing the international competitiveness of production, via structural adjustment policies.

                  The financial aspects are particularly worthy of exploration. According to Harvey, writing of this phenomenon already two decades ago (1985a:73), ‘Urbanism has been transformed from an expression of the production needs of the industrialist to an expression of the controlled power of finance capital, backed by the power of the state, over the totality of the production process.’ Harvey’s words are increasingly true - in Africa as well as in the advanced industrialized countries - as the financial explosion that began a decade or more ago runs its course. Cities are more affected by the broad macroeconomic shift from production towards financial speculation than are any other spaces. The result is a diverse set of symptoms of a rather depraved urbanization process during a ‘financial explosion’, which include:

 

                  •    the general flow of funds into ever more expensive real estate, because of its role as a hedge against inflation or, if the location is optimal, as a speculative investment vehicle;

                  •    the consequent deterioration of the urban small and medium-sized business sector as rent costs become prohibitive;

                  •    the general rise in housing prices, and the simultaneous intensification of processes of uneven urban development - gentrification of close-in slums on the one hand, and the ghettoization of working-class neighborhoods,is a counterbalance - as the use values of residential real estate are increasingly transformed by financial capital into exchange values;

                  •    the increased concentration of corporate and financial command and control functions in city centers, and the restructuring of regions around financial sector growth poles, concomitant with the broader process of the centralization of capital;

                  •    the transformation of urban space and infrastructure away from industrial forms, and towards meeting the transport, communication, and recreational requirements of financial-administrative capital; and

                  •    postmodern urban cultural attributes ‘irreducibly specific to the reckless overbuilding of commercial space’ which arises from the ‘hypertrophic expansion of the financial service sector’ (Davis 1985a:103).

 

All of these are notable tendencies, and they appear to be the logical outcomes of the rise of finance in most urban centers across the globe. Traditionally, before the advent of the financial explosion, finance played an accommodating role in development, lubricating the payments system and providing funds for productive investment. Yet housing finance in particular has always contributed substantially to unevenness in urban development, and still does so in remarkably variegated ways: housing finance can often enhance the stability of the entire financial system, since housing is among its best sources of collateral; it allows the housing market to be used as a site of commodity production and disinvestment, which are both crucial to the profitability of neighborhood change (Smith 1979); it contributes to class and community formation by imposing residential differentiation through different qualities of credit (Harvey and Chatterjee 1974); and it spreads the time horizon of investment significantly by allowing consumers of housing to service their housing bonds over the long term (usually 20 to 30 years). Such factors allow finance to act as a nerve center for urban capital flows, and this is not necessarily conducive to a rational allocation of housing resources.

                  What are the implications of these processes for interurban relations and especially entrepreneurial competition between cities? For roughly two decades, since the 1986 launch of the World Bank’s New Urban Management Program, a neoliberal consensus solidified with respect to interurban processes under the pressures of globalization. Senior advisor to the United Nations Conference on Human Settlements, Shlomo Angel (1995:4), insisted that the 1996 Habitat conference in Istanbul should be about ‘creating a level playing field for competition among cities, particularly across national borders; on understanding how cities get ahead in this competition; on global capital transfers, the new economic order and the weakening of the nation-state....’ This is only one of the more vulgar articulations of an increasingly familiar theme (as expressed again by Angel): ‘The city is not a community, but a conglomerate of firms, institutions, organizations and individuals with contractual agreements among them.’ The World Bank’s 1991 policy paper on urban management (for a critique see Jones and Ward 1994), the UN’s Development Program and Habitat housing division adopted similar strategies, alongside the US Agency for International Development, British Department for International Development, Canadian CIDA, the Japanese and other official donor agencies. The overall orientation is nearly identical to the austerity policies at the macro-economic scale, with US AID consultants from the Urban Institute spelling out the ‘....important change in policy thinking in the developing world closely linked to the acceptance of market-oriented economies: the growing acceptance of rapid urbanization.... An emphasis on national economic growth and export-led development will usually mean that new investment resources must be directed to already successful regions and cities.... Governments have considerable control over the entire cost structure of urban areas. Public policy should be directed to lowering these costs’ (Urban Institute 1990).

                  ‘Lowering these costs’ - especially by lowering the social wage (including subsidies for water) – is crucial for the more direct insertion of ‘competitive’ cities into the world economy. The focus here is not merely on limiting public financing of social services to those deemed to add value (though this is one of the more obvious effects of structural adjustment, and the catalyst for many an IMF Riot). Just as importantly, the New Urban Management Program also highlights the productivity of urban capital as it flows through urban land markets (now enhanced by titles and registration), through housing finance systems (featuring solely private sector delivery and an end to state subsidies), through the much-celebrated (but extremely exploitative) informal economy, through (often newly-privatized) urban services such as transport, sewage, water and even primary health care services (via intensified cost-recovery), and the like.

                  South Africa is illustrative. The African National Congress government of Nelson Mandela (1994-99) cemented this sensibility in the Urban Development Strategy (UDS): ‘Seen through the prism of the global economy, our urban areas are single economic units that either rise, or stagnate and fall together.... South Africa’s cities are more than ever strategic sites in a transnationalized production system’ (Ministry of Reconstruction and Development 1995:17,41). As intrametropolitan and interurban struggles over resources intensified, the competition in laxity that South Africa began experiencing at the regional level via 1970s and 1980s apartheid-era decentralization initiatives jumped scale to the international level. As apartheid was running out of steam and Mandela was released, the main corporate advocates for urban neoliberalism, the Urban Foundation (1990a:59), called for a ‘”bottom-up” regional development policy, in which functionally-defined regions compete with one another for development funds on the basis of their local and regional comparative advantages.’ The ‘winner region’ would be Johannesburg, while the demise of decentralization incentives also meant the demise of household living standards in peripheral areas. Based upon Mike Morris and Dave Kaplan’s (1987) analysis of post-fordism in South Africa, the UF (1990a:12) celebrated this on grounds that ‘just-in-time production technology requires spatial compactness and spatial integration of metropolitan areas in order to ensure rapid interactions between complementary firms.’ As Morris and Kaplan (1987:8,10) warned, however, ‘At the very least the wholesale adoption of such technology within the South African economy would have a problematic if not a negative effect on total labor employment.... This is likely to have serious and deleterious differentiating effects on the social productivity of far-flung regions.... The social effects of this are likely to be extremely serious for space is pre-eminently a political question.’

                  Yet the policy debate over the uneven development of primary and secondary cities was unsatisfactory during South Africa’s transition from apartheid to neoliberal democracy. According to the UDS, no major state intervention was required in South Africa’s urbanization process: ‘The country’s largest cities are not excessively large by international standards, and the rates of growth of the various tiers also appear to be normal. Hence there appears to be little reason to favor policies which may artificially induce or restrain growth in a particular center, region or tier’ (p.9). Moreover, ‘the growth rate is sufficiently normal to suggest that effective urban management is possible and there is, therefore, no justification for interventionist policies which attempt to prevent urbanization’ (p.9). An alternative view is never mentioned, much less seriously considered: the megacities of the Third World and the large metropoles of South Africa (specifically, the five largest conurbations) are terribly overcrowded, dangerous, environmentally-unsustainable, unpleasant places that - even if growing at a ‘normal’ rate - should undergo a fundamental transformation rather than be considered acceptable by international standards. In short, by downplaying problems associated with excessive concentration of population, and by focusing only on relative growth/size as the indicator for state intervention, the UDS ignored the numerous other reasons for the state to help shape urbanization patterns. The contrast between the UDS and the 1994 Reconstruction and Development Programme (RDP) – Mandela’s campaign promises - could not be more explicit: ‘Macro-economic policies must take into consideration their effect upon the geographic distribution of economic activity. Additional strategies must address the excessive growth of the largest urban centers, the skewed distribution of population within rural areas, the role of small and medium-sized towns, and the future of declining towns and regions, and the apartheid dumping grounds.’ (4.3.4) Ultimately, however, neoliberal macro-economic policies (such as very high interest rates, or reduced tariff protection for agriculture) intensified the rural crisis and sped the urbanization of laid-off farmworkers and evicted labor-tenants. Instead of the laisser-faire UDS (which promoted drift to the major cities), government support for village or small town economies would have been closer to the spirit of the RDP. But such opportunities perhaps reminded the drafters of apartheid-era deconcentration policies. The UDS correctly notes that ‘the legacy of decentralization and deconcentration policies has left these cities and towns with industrial zones and townships far away from town centers’ (p.13). As a result, ‘Costly and uneconomic subsidies will be phased out.... Public investment at all levels will be expected to relate to the economic or functional base and potential of an area’ (p.22). The RDP’s perspective was not only more nuanced, it explicitly recognized that tens of thousands of jobs and enormous amounts of fixed capital are still located in the deconcentration areas: ‘The incentives for decentralization introduced under apartheid frequently proved excessively discretionary and open to misuse. Still, in many areas simply eliminating them would cause severe job losses. For this reason, the democratic government must establish clear-cut guidelines and procedures for reviewing decentralization incentives. Where communities and workers can certify that the subsidies are being utilized in a sustainable, non-exploitative manner, the democratic government must maintain the incentives. Otherwise, it must redirect subsidies to ventures that promote linkages within the local economy.’ (4.3.6) The UDS not only ignored the progressive principles in the RDP’s discussion of the three dozen deconcentration points, it contained no explicit discussion of what will happen to the concentration of labor and capital that now exist there.

                  In sum, South Africa demonstrates the influence of neoliberal ideas and export-led growth strategies upon intensified uneven development in the country’s system of cities of towns. Consistent with such economic centralization was the drive towards political decentralization of a rather circumscribed sort. This led to a problem termed ‘unfunded mandates’ in which the decline in central-local operating subsidies (by 85% in real terms during the 1990s) left municipalities incapable of drawing upon external resources for infrastructural investments (either capital or operating/maintenance), while at the same time their capacity to generate cross-subsidies from differential prices to high-income residents and corporations was also declining due to interurban competition. There is no better case to witness the problems associated with these trends towards uneven development than the urban water sector, where access by poor people across Africa has been threatened by intensified commodification and diminished state subsidies.

 

3. Financing water infrastructure

 

How should water systems be financed, not only in terms of capital investment but especially with respect to the operating and maintenance costs which bedevil so many retail systems? No one would doubt ‘the principle that water is a scarce good with dimensions of economic efficiency, social equity, and environmental sustainability’. Yet as articulated in the World Bank’s (1996:ix) African Water Resources document, the principle disguises two polar-opposite positions about how to price water. On the one hand, The Economist magazine’s (2003:1-5) survey on water declared the central dilemma: ‘Throughout history, and especially over the past century, it has been ill-governed and, above all, collossally underpriced.’ Identifying this problem, naturally begets this solution: ‘The best way to deal with water is to price it more sensibly,’ for ‘although water is special, both its provision and its use will respond to market signals.’ In rural areas where there is competition among farmers for irrigation water, ‘The best solution is water trading.’ As for the problem of allocating and delivering water to the poor, ‘The best way of solving it is to treat water pretty much as a business like any other.’ We can term this the neoliberal position. Six months later, on the other hand, a international movement with ‘progressive’ politics, the People’s World Water Forum (PWWF), emerged in Delhi, India to promote the ‘decommodification’ of water, based upon feeder social movements from around the world, in both cities and rural sites of struggle over water access. The PWWF (2004:1) founding statement declared that ‘Water is a human right; that corporations have no business profiting from peoples’ need for water; and that governments are failing in their responsibilities to their citizens and nature.’ To be found in the PWWF and likeminded networks are social movements in Africa ranging from anti-privatization campaigns in Accra, Lagos and several South African cities, to African trade unions, to anti-dam movements across the continent.

                  Because there are many different ways that the pricing of water can be considered in bulk and retail settings, it makes sense to first outline the philosophical positions using a simple graph that distinguishes between neoliberal and progressive values. At the extreme where maximizing the production of economic goods is the prime objective, a leaked World Bank memo by then chief economist Lawrence Summers (1991) proposed an environmentally- and socially-insensitive allocation of resources: ‘I think the economic logic behind dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that’, in part because Africa is ‘vastly underpolluted’. Rather than ‘internalize the externalities’ associated with social impact or ecological damage, Summers’ solution was simply to displace these to somewhere political power was negligible and the immediate environmental implications were less visible, in the name of overall economic growth. And yet there are well-established critiques of GDP, the most common measure of the aggregation of economic goods. Contrary to a more nuanced ‘economic logic,’ GDP treats the depletion of natural capital (including water resources) as income instead of depreciation of an asset; ignores the non-market economy of household and community, in turn devaluing childcare, elder care, other home-based tasks and volunteer work (all of which rely upon access to clean water); considers natural disasters and pollution as economic gain because of associated service sector employment and repair/clean-up/replacement opportunities, not as a debit from social welfare or, with respect to drought and flooding, from ecosystem integrity.

            Even as a caricature of neoclassical economics in the memo cited above, the promotion of commodifed nature and society struck a chord during the neoliberal epoch of the late 20th century. Throughout, those lobbying to treat water ‘much as any other business’ grew in strength, and privatization and commercialization of water supplies expanded in many parts of the world. The intense conflict over the economics of water resources allocation was prefigured by the 1992 International Conference on Water and the Environment in Dublin, where water was formally declared an ‘economic good.’ Four years later, the formation of the Global Water Partnership and World Water Council advanced the position that commodification of water would lead to both private sector investments and more efficient utilization. In the same spirit, 1997 witnessed the first World Water Forum in Marrakesh, the founding of the World Commission for Water in the 21st Century, and an emblematic statement by the Swedish International Development Agency (1997:11-13): ‘As the realization increases that fresh water of satisfactory quality is a scarce and limited resource, matters related to management of the water resources have become more into focus ... At least four conditions need to be fulfilled to carry through efficient water allocation: (1) well defined user rights, (2) pricing at its marginal cost, (3) information related to availability, value, quality, delivery times, and (4) flexibility in allocation responding to technologic, economic and institutional changes.’ The United Nations Panel on Water declared in 1998 that ‘water should be paid for as a commodity rather than be treated as an essential staple to be provided free of cost’ (New York Times, 22 March 1998). At the same time, the International Monetary Fund (IMF) and World Bank became much more explicit in promoting water commodification through what were once mainly macro-oriented structural adjustment programs, whether the Enhanced Structural Adjustment Facility, Poverty Reduction and Growth Facility, or Poverty Reduction Strategy Programme (Hennig, 2001). According to one NGO critique by the Globalization Challenge Initiative (http://www.challengeglobalization.org), ‘A review of IMF loan policies in 40 random countries reveals that, during 2000, IMF loan agreements in 12 countries included conditions imposing water privatization or full cost recovery. In general, it is African countries, and the smallest, poorest and most debt‑ridden countries that are being subjected to IMF conditions on water privatization and full cost recovery’.

                  In large African cities, the commercialization of water is typically introduced so as to address classic problems associated with state control: inefficiencies, excessive administrative centralization, lack of competition, unaccounted-for-consumption, weak billing and political interference. The desired forms will vary, but the options include private outsourcing, management or partial/full ownership of the service. In the field of water, there are at least seven institutional steps that can be taken towards privatization: short-term service contracts, short/medium-term management contracts, medium/long-term leases (affermages), long-term concessions, long-term Build (Own) Operate Transfer contracts, full permanent divestiture, and an additional category of community provision which also exists in some settings (Bond, McDonald and Ruiters, 2001). Aside from French and British water corporations, the most aggressive promoters of these strategies are a few giant aid agencies (especially US AID and British DFID) and the World Bank. For example, ‘The World Bank has worked with the City [of Johannesburg (CoJ)] in recent years to support its efforts in local economic development and improving service delivery,’ according to Bank (2002) staff and consultants. Early interventions included a 1993 study of services backlogs and the new government’s 1994 Municipal Infrastructure Investment Framework. More recently, according to the Bank (2002), Johannesburg’s vision strategy document for 2030 ‘draws largely on the empirical findings of a series of World Bank reports on local economic development produced in partnership with the CoJ during 1999–2002, and places greater emphasis on economic development. It calls for Johannesburg to become a world-class business location.’ In turn, the Bank insists, businesses (not low-income consumers) should be allowed benefits that will trickle down: ‘The ability of the city to provide for services is related to its tax revenue base or growth. The CoJ does not consider service delivery to be its greatest challenge to becoming a better city... The city finds further support for its Vision in a survey that suggests that the citizens are more concerned about joblessness than socio-economic backlogs.’ Bank staff continue by citing ‘the World Bank’s local economic development methodology developed for the CoJ in 1999,’ which ‘sought to conceptualize an optimal role for a fiscally decentralized CoJ in the form of a regulator that would seek to alleviate poverty... through job creation by creating an enabling business environment for private sector investment and economic growth in Johannesburg.’ (emphasis added)

                  This short-termist commitment to urban entrepreneurialism negates the needs of poor people for higher levels of municipal services paid for through cross-subsidies from business, for Johannesburg would become less competitive as a base within global capitalism if higher levels of tariffs were imposed. Internationally, such contestation of urban services prices has became central to the broader struggles over whether development strategies genuinely meet basic needs or instead take on a neoliberal character, and whether international agencies and corporations should be at the helm of urban planning and management. If the rise of urban social movements and urban ‘IMF Riots’ have shown anything since the 1980s, it is that the neoliberal approach to both national policies and municipal services calls forth opposition (Schuurman and van Naerssen 1989, Walton and Seddon 1994). For in many cases, the orientation that resulted in municipal services neoliberalism was nearly identical to the austerity policies at the macroeconomic scale: namely, splitting the urban working-class into a small fraction of ‘insiders’ served by the market, and masses of peri-urban, slum-dwelling ‘outsiders.’

                  Throughout the 1990s, pressure intensified on South African cities, especially Johannesburg, to outsource a variety of functions. Amongst key pilot projects were late-apartheid water supply projects established by the Suez-controlled company Water and Sanitation South Africa in three Eastern Cape towns: Queenstown (1992), Stutterheim (1994) and Fort Beaufort (later named Nkonkobe) (1995). Similar supply deals with foreign firms in Nelspruit and the Dolphin Coast were temporarily stalled in 1998 by trade union-led resistance, but were resuscitated in 1999. Johannesburg followed in 2001. The primary advocates of privatization were the World Bank and its private sector investment arm, the International Finance Corporation, as well as local and international firms. For example, Banque Paribas, Rand Merchant Bank, Colechurch International, the Development Bank of Southern Africa, Generale des Eaux, Metsi a Sechaba Holdings, Sauer International and Suez had all met with officials of South Africa’s fifth largest municipality by 1997, in the wake of a week-long 1996 World Bank study of the council’s waterworks which suggested just one policy option: full privatization (Port Elizabeth Municipality 1997). Many municipalities had closed down their public housing and in some cases civil engineering departments during the 1980s as part of the first wave of municipal state shrinkage. The adoption of municipal neoliberalism intensified thanks to dramatic shortfalls in central-local operating subsidies (down 85% in real terms during the 1990s), late 1990s legislation favouring PPPs, and a large US Aid grant for the development of PPP business plans in various towns.

                  South Africa and Ghana may have been the cutting edge of water privatization, but the Kampala Statement and Africa Utilities Partnership indicated more of the same to come across Africa. The mandate for full cost-recovery and an end to cross-subsidies - with meagre subsidies allegedly to be available for poor people at some future date - follow logically. As a result, one of the most important issues associated with water resource management, abuse of water by large-scale agro-corporate irrigation and wealthy consumers, was barely remarked upon in the Kampala Statement, and the word ‘conservation’ was only used once, in passing. With this kind of support in African cities (including Johannesburg), the World Bank felt able to continue promoting privatization, including in its 2004 World Development Report. In addition to its ideological commitment to the market, the Bank also would have considered self-interest in safeguarding its vast sunk investments in water systems. The International Consortium of Investigative Journalists found that during the 1990s, the Bank lent $20 billion to water-supply projects and imposed privatization as a loan condition in one third of the transactions (Logan, 2003).

                  To protect these loans and investments, the Bank and other financiers participated in the 2002-03 World Panel on Financing Infrastructure that reported to the World Water Forum in Kyoto. Chaired by former IMF managing director Michel Camdessus, it brought together the Global Water Partnership, presidents of major multilateral development banks (IADB, ADB, EBRD, WB), representatives of the International Finance Corporation, Citibank, Lazard Freres, the US Ex-Im Bank, private water companies (Suez, Thames Water), state elites (from Egypt, France, Ivory Coast, Mexico, and Pakistan) and two NGOs (Transparency International and WaterAid). Among Camdessus’ recommendations were that international financial institutions should increase guarantees and other public subsidies for private water investors. Camdessus called for $180 billion in capital expenditure, even though just one sixth of that would be earmarked for investments aimed at meeting drinking water, sanitation and other hygiene needs. A primary reason for the Commission’s existence was that after the East Asian, Russian, Brazilian and South African crises of 1998, the dramatic increase in private water investments in the Third World suddenly reversed. With Suez in trouble in Argentina and many other settings, Camdessus was required as a means of generating greater risk and currency insurance for the large French and British water firms. Assisted even by an NGO (Water Aid), Camdessus designed a ‘Devaluation Liquidity Backstopping Facility’ to those ends, as well as a ‘Revolving Fund’ to cover the ‘large fixed cost of preparing Private Sector Participation contracts and tenders.’ Public Services International (2003), whose union affiliates boast 20 million members, declared, ‘The bankers’ panel pursues the goal of having private corporations manage and profit from delivering the world’s water. They want these companies to serve the world’s cities, and to build more dams and reservoirs. They present a plan to grab much of the increase in foreign aid promised since the 9‑11 disaster, when the link was made between terror and poverty... (yet) there is no attempt to address the issue of how the international community can effectively cross‑subsidise the provision of clean water for the poor.’

                  As both Public Services International and The Economist agree, hence, the crucial controversy is the way water is priced under conditions of commercialization. In the course of outsourcing to private (or even NGO) suppliers, the benefits of water as a public good (or ‘merit good’) - namely, environmental, public health, gender equity and economic multiplier features (Bond 2000:Chapter 4) - are generally lost. The lack of ‘effective demand’ by poor consumers, and the difficulty in identifying accurate ‘shadow prices’ for subsidies, together make it very difficult to internalise these externalities via the market. Regulation is normally insufficient in even middle-income countries like South Africa. Indeed, the aspect of water commodification that is both most dangerous from the standpoint of low-income people, and most tempting from the side of management, is to reduce cross-subsidization within the pricing system, sometimes termed ‘cherry-picking’ so as to signify that within a local retail market, the premier customers are served and the masses are left behind. When the World Bank (2000, Annex 2) instructed its field staff on how to handle water pricing in both urban and even impoverished rural Africa, the mandate was explicit: ‘Work is still needed with political leaders in some national governments to move away from the concept of free water for all… Promote increased capital cost recovery from users. An upfront cash contribution based on their willingness-to-pay is required from users to demonstrate demand and develop community capacity to administer funds and tariffs. Ensure 100% recovery of operation and maintenance costs.’ It was not long before a bureaucratic class emerged within Africa to work on cost recovery, for according to the 2001 Kampala Statement coauthored by the World Bank and the African Utility Partnership (2001:4), ‘The poor performance of a number of public utilities is rooted in a policy of repressed tariffs.’

                  But a debate quickly followed over the merits of full cost recovery of operating and maintenance costs. In most urban systems, the cost of supplying an additional drop of water – the ‘short-run marginal cost curve’ (Line A in Figure 1) - tends to fall as users increase their consumption, because it is cheaper to provide the next unit to a large consumer than a small consumer. Reasons for this include the large-volume consumers’ economies of scale (i.e., bulk sales), their smaller per unit costs of maintenance, the lower administrative costs of billing one large-volume consumer instead of many small ones, and the ability of the larger consumers to buy water at a time when it is not in demand - e.g, during the middle of the night - and store it for use during peak demand periods. The premise here is that the pricing of water should correspond directly to the cost of the service all the way along the supply curve. Such a system might then include a profit mark-up across the board (Line B), which assures the proper functioning of the market and an incentive for contracting-out or even full privatization by private suppliers.

          The progressive principle of cross subsidization, in contrast, violates the logic of the market. By imposing a block tariff that rises for larger consumers (Line C), the state would consciously distort the relationship of cost to price and hence send economically ‘inefficient’ pricing signals to consumers. In turn, argue neoliberal critics of progressive block tariffs, such distortions of the market logic introduce a disincentive to supply low-volume users. For example, in advocating against South Africa’s subsequent move towards a free lifeline and rising block tariff, the World Bank advised that water privatization contracts ‘would be much harder to establish’ if poor consumers had the expectation of getting something for nothing. If consumers didn’t pay, the Bank suggested, South African authorities required a ‘credible threat of cutting service’ (Roome, 1995:49-53).

 

Figure 1: Pricing water - marginal cost (A), for-profit (B), and cross-subsidized lifeline plus block tariff (C)

 

File written by Adobe Photoshop® 5.0

 

                  The progressive rebuttal is that the difference between Lines A and C allows not only for free universal lifeline services and a cross-subsidy from hedonistic users to low-volume users. There are also two additional benefits of providing free water services to some and extremely expensive services to those with hedonistic consumption habits: higher prices for high-volume consumption should encourage conservation which would keep the longer-run costs of supply down (i.e., by delaying the construction of new dams or supply-side enhancements); and benefits accrue to society from the ‘merit goods’ and ‘public goods’ associated with free provision of services, such as improved public health, gender equity, environmental protection, economic spin-offs and the possibility of desegregating residential areas by class.

By way of definition, public goods can be observed and measured, for underlying their existence are two characteristics: ‘nonrival consumption’ and ‘nonexclusion’ from consumption. Nonrival consumption means that the consumption of a public good/service by one person need not diminish the quantity consumed by anyone else. A classical example is a national defence system, which is ‘consumed’ by all citizens in a quantity which is not affected by the consumption of defence benefits by fellow citizens. Likewise, the benefits of a clean environment and hygienic public water system - reflecting a strong municipal water system and lifeline access to all - are enjoyed by all municipal consumers, regardless of how much water is consumed by a particular individual, although a minimum consumption level is required for all citizens so as to prevent the spread of infectious diseases. The principle of nonexclusion simply means that it is impossible to prevent other citizens from enjoying the benefits of public goods, regardless of whether they are paid for. This is important, as a state determines the detailed character of water pricing policy, and distinguishes between necessities guaranteed by the state, versus luxuries that people must pay for. A simpler way of putting it is that where the net benefits to society outweigh the costs associated with consumption of a good/service, the result is a ‘merit good’. When the merit good benefits apply universally, so that no one can be excluded from their positive effects, the result is a ‘public good’. Markets usually underprovide for public goods, so the ‘Post-Washington Consensus’ style of economics attempts to correct this market imperfection, even if it might mean introducing other market distortions, such as a free lifeline supply of water.

                  Another progressive critique of private suppliers who require tariffs reflective of marginal cost plus profit, is that water infrastructure is a classical natural monopoly. The large investments in pipes, treatment centers and sewage plants are ‘lumpy’ insofar as they often require extensive financing and a long-term commitment, for which the state is more capable. To the argument that a progressive tariff could still coincide with a private sector supplier through a strong state regulator, progressives mistrust ‘captive regulatory’ relations given the long history of corruption in the water sector. Rebutting those who argue that African states are intrinsically incapable of providing water services, progressives cite more proximate reasons for the recent degeneration of state water sectors: 1980s-90s structural adjustment programs which decapacitated most states; corrupt state bureaucrats; weak trade unions; and disempowered consumers/communities.

                  Finally, the progressive argument for making a water subsidy universal - not means-tested for only ‘indigent’ people - is both practical and deeply political. If the service is means-tested, it invariably leads to state coercion and stigmatization of low-income people by bureaucrats. Further, it is an administrative nightmare to sort out who qualifies since so many people depend upon informal and erratic sources of income. More philosophically though, it is a premise of most human rights discourse that socio-economic rights such as water access are universally granted, not judged on the basis of a subjective income cutoff line, especially given the differences in household size for which different low-income people are responsible. This is partly because international experience shows that defense of a social welfare policy requires universality, so that the alliance of poor, working-class and middle-class people that usually win such concessions from the state can be kept intact (Esping-Andersen, 1990).

 

 

Figure 2: Divergent water pricing strategies  -

Johannesburg (2001) v. ideal tariff for large household

shtuff  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Johannesburg Water (thin) and own projection (thick)

 

                  As The Economist observed in mid-2003, one of the most important sites to consider the economics of water resources allocation is South Africa. One reason is that because of the international drive to commercialize water, even post-apartheid South African citizens were subject to neoliberal cost recovery and disconnection regimes. This affected many who simply could not pay their bills. From the late 1990s through 2002, as a result, approximately 10 million people suffered water disconnections. Africa’s worst-ever recorded cholera outbreak—affecting more than 150,000 people - can be traced to an August 2000 decision to cut water to people who were not paying a South African regional water board. After the ruling African National Congress promised free basic water supplies in December 2000 during a municipal election campaign, the same bureaucrats responsible for water disconnections began redesigning the water tariffs. In July 2001, revised price schedules provided a very small free lifeline: 6,000 liters per household per month, followed by a very steep, convex curve (see Figure 2). But the next consumption block was unaffordable, leading to even higher rates of water disconnections in poor areas. The 6,000 liters represent just two toilet flushes a day per person for a household of eight, for those lucky enough to have flush toilets. It left no additional water to drink, wash with, clean clothes or for any other household purposes. In contrast, from the progressive point of view, an optimal strategy would provide a larger free lifeline tariff, ideally on a per-person, not per-household basis, and then rise in a concave manner to penalize luxury consumption. Johannesburg’s tariff was set by the council with help from Suez Lyonnaise des Eaux, a Paris-based conglomerate, and began in July 2001 with a high price increase for the second block of consumption. Two years later, the price of that second block was raised 32%, with a 10% overall increase, putting an enormous burden on poor households which used more than 6,000 liters each month. The rich got off with relatively small increases and a flat tariff after 40 kiloliters/household/month, which did nothing to encourage water conservation and hence did not mitigate the need for further construction of large dams, which in turn would drive up the long-run marginal cost curve and further penalize low-income Johannesburg townships residents.

What this discussion of the economics of water resources allocation goes to show, simply, is that pricing is political, and indeed the pursuit of ‘impeccable economic logic’ in the water sector has generated some of the most intense struggles in the world today, calling into question the very tenets of the neoliberalism. The economics of privatized or commercialized urban water services have been challenged in cities ranging from Cochabamba, Bolivia – where the US firm Bechtel tried to take ownership of rainwater collected by poor residents in the context of huge price increases – to Accra, Ghana, to most Argentine cities (where in May 2005 Suez withdrew under intense popular pressure), to Manila and Jakarta, to Atlanta and Johannesburg, and to many other sites in between. Needless to say, outside South Africa (where redistributive water pricing is feasible for more than half the population in major urban centres), a prerequisite for improving state supply of water is dramatically intensified advocacy for debt repudiation and the implementation of exchange controls, so as to halt the outflow of finances that would make expanded systems financiall feasible. Working out the contrasting discourses in political-economic analysis, as above, is crucial to any resolution of the problem in public policy via social struggle. Fortunately, given the depth of the legitimacy crisis associated with globalization and commodification, new social forces have emerged to contest these processes.

 

4. Conclusions: Deglobalization and decommodification

 

Across Africa, we can identify a diverse set of ecological, community, feminist and labor struggles which in different ways are offering alternatives along the same lines advocated above. In recent years, Egypt, Ghana, Kenya, Mauritius, Nigeria, Senegal, South Africa, Zambia and Zimbabwe have been among the most intense sites of conflicts between social activists and ruling parties. Across the continent, however the contradictions are endemic, and the continuation of ‘IMF Riots’ confirms that the global justice movement’s critique of neoliberalism remains valid and relevant. However, that critique is not limited to Washington Consensus macroeconomic policies, debt peonage and unfair terms of trade. The Africa Trade Network, the Gender and Trade Network and Jubilee Africa’s affiliates are regular critics – and active protesters - at the sites of global-scale negotiations and African elite summits. In addition, the micro-developmental and ecological damage done through neoliberal policies is also widely recognized.

              Some of the most impressive recent upsurges of protest have been in areas of environmental justice. Following the militant example of 2004 Nobel Peace Prize winner Wangari Maathai two decades ago in building Kenya’s Greenbelt Movement, for example, women in the oil rich Nigerian Delta regularly conduct sit-ins at the local offices of multinationals. Oil workers have vigorously protested at several Delta platforms over not only wages but also broader community demands, even taking multinational corporate managers hostage for a time. In Botswana, indigenous-rights campaigners fight the DeBeers diamond corporation, the World Bank and the Botswana government because of the displacement of Basarwa/San Bushmen from the central Kalahari. According to the Guardian, the San targeted for relocation away from diamond exploration areas ‘had their water supplies cut off before being dumped in bleak settlements with derisory compensation.’ The impact was so great that by August 2002, the Botswana Gazette described the government as a ‘disease-ridden international polecat.’ In the same spirit, activists resist large dams that threaten mass displacement in Namibia (Epupa), Lesotho (Highlands Water Project), Uganda (Bujagali) and Mozambique (Mphanda Nkuwa), as well as the Chad-Cameroon oil pipeline. Solidarity from northern environmentalists has been crucial.

              In South Africa, where capital is strongest and most sophisticated, the Environmental Justice Networking Forum and far-sighted NGOs like groundWork work closely with counterparts elsewhere against environmental racism, toxic dumping, asbestos damage, incinerators, biopiracy, genetically modified food, carbon trading and air pollution. Movements against privatization of Africa’s basic services - mainly water and electricity, but also municipal waste, health and education - began in Accra and Johannesburg in 2000 and quickly attracted global solidarity. To illustrate, the Soweto Electricity Crisis Committee’s Operation Khanyisa (‘Switch On’) illegally reconnects people whose electricity and water supplies were cut because of poverty and rising prices associated with Johannesburg’s drive to commercialize services. Similar community-based protests in Durban and Cape Town against disconnections, evictions and landlessness have won recognition from across the world.

              Can these sorts of protests and campaigns graduate into a more generalized program and even a mature ideology? If so, it is possible that the African Social Forum (ASF) will be the site, especially in the wake of the gathering just completed in Lusaka. From December 10-14, 2004, several hundred African grassroots, labor, women’s and student leaders gathered. The ASF’s emergence has not been easy, because of regional differences, languages, cultural styles and different political priorities. In January 2002, dozens of African social movements met in Bamako, Mali, in preparation for the Porto Alegre World Social Forum. Bamako was one of the first-ever substantial conferences to combine progressive NGOs, labor, activist churches and social movements from all parts of the continent. It was followed by ASF sessions in Johannesburg (August 2002), Addis Ababa (January 2003), Maputo (December 2003), Mumbai (January 2004) and now Lusaka.  The original Bamako Declaration insisted that ‘the values, practices, structures and institutions of the currently dominant neoliberal order are inimical to and incompatible with the realization of Africa’s dignity, values and aspirations.’ Of particular concern was the New Partnership for Africa’s Development (NEPAD), promoted mainly by Mbeki. According to the Declaration, ‘The Forum rejected neo‑liberal globalization and further integration of Africa into an unjust system as a basis for its growth and development. In this context, there was a strong consensus that initiatives such as NEPAD that are inspired by the IMF‑WB strategies of Structural Adjustment Programs, trade liberalization that continues to subject Africa to an unequal exchange, and strictures on governance borrowed from the practices of Western countries, are not rooted in the culture and history of the peoples of Africa.’

              But a critique of the ASF emerged in Lusaka from South Africa’s Social Movements Indaba movement, one which parallels concerns about the World Social Forum: ‘The underrepresentation of social movements in relation to NGOs is reflected in the political content of the forum. It manifests in the persistence of the notion that the Africa Social Forum is nothing other than a space, in contrast to the perspective that it should have a program to advance our struggle against neoliberalism.’ Hence, as Durban activists Amanda Alexander and Mandisa Mbali wrote about the ASF, ‘Capturing Social Forums and blunting their impact is a tantalizing outcome for the World Bank and “third-way” politicians’. Yet they also point out that because of extremely strong advocacy by social movements, that danger was averted in Lusaka. Indeed, as Console Tleane of the Johannesburg-based Freedom of Expression Institute wrote in the ASF’s daily African Flame newspaper, ‘The message was clear: there [was] no way that the ASF would entertain any dealings with the Bank. Activists in the NEPAD session came to the same conclusions on the potential of neo-liberal institutions and policies.’ To be sure, the difficulty of pulling together a continental initiative is profound, especially when ‘suit-and-tie-NGOs’ – sometimes set up by former politicians and bureaucrats anxious to maintain petit-bourgeois lifestyles - predominate in some countries. And just as great a challenge remains to weed out neoliberal philosophy amongst African intellectuals.

              Consider the once great tradition of leftist thinkers and activists (and occasionally national leaders) exemplified by Ake, Biko, Cabral, Fanon, First, Lumumba, Machel, Mafeje, Magubane, Nkrumah, Nyerere, Odinga, Onimode, Rodney, Sankara and others who were mainly in their prime during the 1960s-70s. Their legacy has been kept alive and well today in the writings of radical (and independent-minded) nationalists, feminists, critical political economists and anti-imperialists, including Jimi Adesina, Neville Alexander, Samir Amin, Dennis Brutus, Carlos Castel-Branco, Fantu Cheru, Demba Dembele, Ashwin Desai, Yasmine Fall, Dot Keet, Sara Longwe, Amina Mama, Mahmood Mamdani, Guy Mhone, Thandeka Mkandawire, Dani Nabudere, Trevor Ngwane, Njoki Njehu, Adebayo Olukoshi, Vishnu Padayachee, Mohau Pheko, Brian Raftopoulos, Issa Shivji, Yash Tandon and many others who have helped to shape ASF constituents’ strategies. Conditions are not easy in most sites of African intellectual work, with many academics surviving on less than US$100 a month pay. Even in once proud universities like Dar es Salaam and Makerere, former leftists are prone to taking jobs or consultancies with multilateral agencies, donors, corporations and wealthy Northern NGOs. Nevertheless, the April 2002 Accra meeting of the Council for Development and Social Research in Africa and Third World Network-Africa called upon ‘scholars and activist intellectuals within Africa and in the Diaspora, to join forces with social groups whose interests and needs are central to the development of Africa.’

              To that end, Dakar-based political economist Samir Amin argues for a ‘delinking’ strategy that ‘is not synonymous with autarky, but rather with the subordination of external relations to the logic of internal development... permeated with the multiplicity of divergent interests.’ In 2002, a restatement of Amin’s delinking theme came from Bangkok-based Focus on the Global South, director Walden Bello, in his book Deglobalization: ‘I am not talking about withdrawing from the international economy. I am speaking about reorienting our economies from production for export to production for the local market.’ The hope of attracting potential allies among a (mainly mythical) ‘national patriotic bourgeoisie’ still exists in some formulations of delinking, which coincides with reformist tendencies amongst a state-aligned intelligentsia and trade unions. The challenge in any such conversation is to establish the difference between ‘reformist reforms’ and change that advances a ‘non-reformist’ agenda. The latter would include generous social policies stressing more generous, universal state services; controls on capital flows and imports/exports; and inward-oriented industrialization strategies allowing democratic control of finance and production, in order to meet social needs. These reforms would ideally strengthen democratic movements, empower producers (especially rural women), and open the door to contesting other oppressions.

              The strategic formula which the South African independent left has broadly adopted - internationalism combined with rigorous demands upon the national state - places a high priority on removing from Third World necks the boot of the multilateral capitalist agencies: the IMF, World Bank and World Trade Organization, as well as neoliberal donors (usually ‘coordinated’ by the Bank in most African capitals and at the Paris Club). For example, South Africa’s Jubilee movement has focused on defunding the Bank through the World Bank Bonds Boycott (http://www.worldbankboycott.org). Of course, even if sensible deglobalization policies were adopted to ‘lock capital down,’ a national capitalist strategy in a society like South Africa would still be insufficient to halt or reverse uneven global development. South Africa’s independent left fully understands the need to transcend national-scale capitalism. One step along the way is the strategy of ‘decommodification.’

              The South African decommodification agenda is based on interlocking, overlapping campaigns to turn basic needs into genuine human rights including: free anti-retroviral medicines to fight AIDS; at least 50 liters of free water and 1 kilowatt hour of free electricity for each individual every day; extensive land reform; prohibitions on service disconnections and evictions; free education; and a monthly ‘Basic Income Grant’. Social movements, women’s groups, churches, NGOs and trade unions are all basically committed to this agenda, even if there are temporary divisions over alignments with Mbeki’s ruling African National Congress. To make any progress on decommodification, it is evident that deglobalization and delinking from the most destructive circuits of global capital will be necessary. Those circuits rely upon the three main multilateral agencies which apply the most direct pressure on African state elites to oppress their citizenries. Hence a unified international strategy is urgently required against the IMF, Bank and WTO, as well as against the U.S. state agencies – the Treasury, U.S. Trade Representative and Fed – and corporations which pull the multilaterals’ strings. Amplified assistance is obviously required from the Northern progressive movements, which are already so pressed to step up pressure against Bush’s militarism and begin offering concrete solidarity to Iraqis. 

              Ultimately, even if the imperial project is rolled back, it is not clear whether the forces discussed above will be strong enough to fill the vacuum in any of Africa’s national settings, the way Venezuela now suggests is feasible in Latin America. But this, still, is what must come onto the agenda: state power, through elections in which a democratic political party builds up mass community/worker/peasant support by generalizing the sorts of struggles discussed above, thus finally contending with those elites who remain locked into neocolonial power relationships. The objective conditions for change across Africa remain ripe. However, it was more than forty years ago, in The Wretched of the Earth, that Frantz Fanon made a prediction that, no matter the passage of time, remains frustratingly valid today: ‘The former colonial power increases its demands, accumulates concessions and guarantees and takes fewer and fewer pains to mask the hold it has over the national government. The people stagnate deplorably in unbearable poverty; slowly they awaken to the unutterable treason of their leaders. This awakening is all the more acute because the leaders are incapable of learning its lesson. The distribution of wealth that it effects is not spread out between a great many sectors; it is not ranged among different levels nor does it set up a hierarchy of half-tones. The new caste is an affront all the more disgusting in that the immense majority, nine-tenths of the population, continue to die of starvation. The scandalous enrichment, speedy and pitiless of this caste is accompanied by a decisive awakening on the part of the people, and a growing awareness that promises stormy days to come.’

 

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