Continued
The BRICS powers aren’t anti-colonial counterweights. They’re looking for new markets and resources for their corporations, just like Western countries.
by Pádraig Carmody
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Over the last few years, much has been written about the “new scramble for Africa” — the attempt by countries and companies to increase their access to markets and natural resources on the continent.
In one telling, China has been the principal actor donning neocolonial garb to advance its interests. Growing economic and political interest in Africa certainly has been driven by the impact of Chinese demand on natural resource prices and the country’s need for new overseas markets to absorb the products of its expanding economy. China is now the world’s largest consumer of many commodities, such as copper and also, reportedly, illegally harvested timber (although much of this ends up in products destined for Western markets).
Despite popular perceptions that emphasize external neocolonialism, the contemporary jostling has also involved African companies — particularly those from South Africa, which has developed close ties to China — sometimes in joint ventures or implicit partnerships with other BRICS-based companies.
So what do China and South Africa’s behavior in Africa tell us about the latest drive to reap the continent’s riches? And, perhaps even more importantly, what would an enlarged international role for the BRICS mean for global justice?
Cooperation and Competition
While Britain and France nearly came to blows in Fashoda (a town in present-day South Sudan), Africa was for the most part “cooperatively” divided among the European powers in the nineteenth century. So too today. The current iteration of territorial control and influence by external and internal powers is marked by cooperation, in addition to competition.
Companies jockey for control over natural resources and markets, as well as governments, in order to ensure economic access — but not necessarily in a zero-sum way. For example, some British and Chinese oil companies have engaged in joint ventures in Africa.
The BRICS are playing an important role in this new scramble, with their influence continuing to grow despite the uncertain economic prospects of some member countries. This is particularly true for the South Africa–China relationship. The South African and Chinese governments and companies on the continent are increasingly aligned, allowing power to be projected across Africa’s borders in novel ways that may be more durable than their colonial precursors.
Since South Africa joined the BRIC grouping in 2010 at China’s invitation, there’s been considerable discussion about the rationale for its admittance. Jim O’Neill, the Goldman Sachs analyst who coined the term BRIC, has questioned why South Africa was asked over much larger economies. Yet other commentators, including author Kingsley Chiedu Moghalu, have argued that geopolitics trumped global economics: while its economy is dwarfed by others around the world, South Africa is important regionally because its economy is sizable in continental terms. This geopolitical consideration is, of course, important, but it’s the strong economic ties between China and South Africa that are key to understanding how both they and their corporations are tapping Africa’s valuable markets and natural resources.
During the last decade of apartheid, sanctions and domestic capital controls largely prevented big South African conglomerates from investing in the rest of Africa, even as they dominated their home country’s economy. These restrictions were overturned after Nelson Mandela came to power in 1994, and more rapid economic growth in the intervening years has created additional excess investment capital — the market capitalization of the Johannesburg stock exchange is roughly 150 percent of GDP, whereas Brazil’s, for example, is approximately 50. In recent years, the combination of higher surpluses and previously bottled-up capital has allowed South African conglomerates to aggressively expand into Africa and overseas.
The relationship between South Africa and China is central to this expansion. South Africa is now China’s largest trading partner on the continent, and China has become South Africa’s largest trade partner in the world.
This strong economic connection has fostered close relations between the two countries. For example, when the Dalai Lama wanted to visit South Africa for Desmond Tutu’s birthday in 2011 and again for an event to commemorate Nelson Mandela’s legacy in 2014, the South African authorities denied his applications. Likewise, when there was widespread concern about the impact of Chinese clothing and textile imports on South African industries, the Chinese government agreed to limit these commodities’ entrance. Maintaining good relations with South Africa is important because, as an Indian diplomat in the country put it, “South Africa is the country that matters in Africa” — at least from a certain power politics and economic perspective.
Chinese companies are also keen on the relationship, investing heavily in their South African counterparts. In 2007, for instance, the Industrial and Commercial Bank of China (now the world’s largest company) bought a multi-billion-dollar stake in the South African Standard Bank, which has an extensive branch network across the continent. It was the largest foreign investment in South African history.
This intermingling of South African and Chinese originating capital has its analog in political coordination between the respective states — the BRICS cooperation mechanism being a prime example. According to an official at the South African Department of International Relations and Cooperation, all the BRICS have an interest in the African market, but they should be entering it “in a coordinated way” rather than “trampling each other.” Such coordination is achieved through foreign investment and a variety of other modes of geo-governance or economic and political power projection across borders.
The Zambian Example
It is often held in international relations that dominance in economic production is a major source of state power — because the US has the world’s largest economy, it must be the world’s most powerful country. However, power flows not only from production but also from the circulation and exchange of products and services.
In the China–South Africa alliance, the case of the South Africa–based Shoprite, Africa’s largest retailer, is demonstrative. With approximately 1,500 supermarkets across the continent — and a vow to open twice as many stores in 2015 as it did in 2014 — Shoprite has a major effect on the countries in which it operates, while also helping Chinese capital realize value.
We can see this in a place like Livingstone, Zambia, a border town dominated by South African capital. In this city of 150,000, there are two large Shoprites, in addition to South African businesses such as the fast-food outlets Hungry Lion, Steers, and Ocean Basket; the gas station Engen; and the telecommunications company MTN (which sells Chinese products like Huawei phones). The Protea hotel, one of Livingtone’s biggest, was part of a South African corporation until the group was bought out by Marriot in 2014.
A manager at one of the Shoprites in the city told me that, aside from some vegetables and poultry supplies sourced locally, everything else in the store is produced either in China or South Africa. Instead of benefiting local Zambian producers, profits from the sale of Shoprite products largely flow back to South African shareholders, even though Shoprite is listed on the Zambia stock exchange.
Robust local companies in Livingstone are effectively non-existent — partly because, as one manager pointed out, the town is reliant on imports and small-scale tourism from the nearby Victoria Falls. But the strength of South African companies is also driving monopolization — Shoprite’s only nominal competitor is Spar, which is also based in South Africa. Meanwhile, many of the bank loans going to small and medium-sized enterprises are intended for trade — despite an urgent need to, as one small-scale retailer argued, “emphasize local productivity.”
The Zambian case is illustrative of broader trends: South African and Chinese (trans)national capital, among others, are capturing value by selling commodities in the country, by investing in copper mining and processing, and through profit repatriation from direct investments and through money circuits (loans from banks, for example). Flows of tourists and business travellers also generate profits for South African and Chinese-owned hotels in Livingstone. All of this has created a relationship of dependency for countries like Zambia because it no longer produces many of the goods its population needs.
How, then, did this particular configuration of geo-governance come about, and what are its implications for development in African countries like Zambia?
The New Scramble for Africa | Jacobin
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