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Posted on Friday, 18 October 2013 10:37

Reining in Africa's robber barons

Patrick Smith

If Africa is going through its equivalent of America's 'Gilded Age', will this be followed by an equivalent of America's progressive era, curbing excesses and cleaning up politics?

 

After the plane landed at Abuja, we walked gingerly across the rain-sodden tarmac towards the terminal building. The topic du jour was the feuding in Nigeria's long-time ruling party.

"It's got to be a good thing that they're arguing this out [...] the levels of impunity here are getting out of control," volunteered a nattily suited executive.

We need more protests and policies to rein in the robber barons and incentives to inspire development pioneers

"Rubbish! This is all about personal interests, their own and those of their robber baron friends. That's what we've got to watch for," returned another Lagosian with a few more governments under his belt.

Six hours later, we were amongst the business and political glitterati gathering in Abuja's grandest hotel to hear Africa's richest businessman, Aliko Dangote, explain how he seeks to raise more than $9bn to build the country's largest industrial complex, which will include an oil refinery, petrochemicals plant and fertiliser factory.

On such a day of largesse, Dangote staffers handed out $500 Korean-made mobile phones to the attendees. Would that stifle or promote critical thinking?

Waiting for the speeches, we played a business mogul's word association game... Carnegie, Ford, Vanderbilt, Rockefeller, Dangote, Otedola, Sawaris, Ibrahim, Masiyiwa, Motsepe, Ramaphosa and so on.

Doubtless the more self-regarding names, living or dead, would explode with anger at being grouped with some of the others.

Yet Africa's indigenous capitalist class is a work in progress and is now investing in the productive economy.

Equally, it was born out of price fixing and other monopolistic practices, political corruption and exploitation of labour.

Its winners have secured vast tracts of land and mineral resources at preferential rates, lobbying governments for favourable regulations and locking out – sometimes with brute force – competition, whether local or foreign.

No one said capitalism was going to be fair. So the parallels between them and America's robber barons, however unflattering, are not entirely overblown.

Africa's ruling class has presided over dysfunctional and import-dependent economies for decades.

The rise of China and India has concentrated minds: the hunger of their hyper-economies for African commodities propelled the continent's extractive economy but also pointed to a stark comparison between Asia's industrial sophistication and Africa's continuing technological dependence.

Faced with this contrast, policymakers such as Nigeria's central bank governor Lamido Sanusi and Agriculture Minister Akinwumni Adesina together with South Africa's finance minister Pravin Gordhan and industry minister Rob Davies are trying to corral Africa's business elite into productive mode.

For the billionaires and the barons, the big question is that if Africa is going through its equivalent of America's 'Gilded Age', will this be followed by the equivalent of America's progressive era, in which liberal politicians and enlightened regulators curbed the market's excesses and tried to clean up politics?

No, it will be much messier, at least chronologically. The fight against grand corruption led by many brave activists and some politicians is underway, as are efforts to restrict monopolies.

And as our survey at the beginning of this year showed, Africa has already got many of its own philanthropic foundations. And some of Africa's capitalist class – such as Mo Ibrahim and Strive Masiyiwa – are already financing serious attempts to tackle the horrendous exploitation in Africa.

None of this is irreversible. Four years after Nigeria's spectacular banking restructuring, some of the old malpractices are reappearing.

South Africa may have one of the most liberal constitutions in the world but that did not stop MPs from trying to introduce a law criminalising investigative journalism.

That argues for keeping up the pressure. We need more protests and policies to rein in the robber barons and incentives to inspire development pioneers. ●



Patrick Smith

Patrick Smith

Patrick Smith is Editor-in-Chief of The Africa Report. He has edited the political and economic insider newsletter Africa Confidential since 1992 and was associate producer on a documentary about the 2004 coup attempt in Equatorial Guinea commissioned by Britain's Channel 4 television.

 

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