How state capitalism helps the super rich

By Patrick Smith

Posted on February 20, 2012 08:21

Spot the connection. Presidential candidates in Africa are richer than ever and governments proclaim that state capitalism is the favoured…

Spot the connection. Presidential candidates in Africa are richer than ever and governments proclaim that state capitalism is the favoured economic strategy.

A local version of state capitalism has fostered an illusion that the government is in control of the economy – despite youth unemployment levels nudging 40 per cent – and enriched a new class of political entrepreneurs through state contracts.Take South Africa, where the leadership of the once socialist African National Congress has kept its radicals in line with a vision of the developmental state.

When assessing Jacob Zuma’s chances of winning a second term as president of the ANC in December, it is sobering to look at his likely opponents or successors. Almost to a man – and sadly they are all men – they are plutocrats.

The only candidate who is not knowingly a multi-millionaire is Kgalema Motlanthe, who is everyone’s favourite as a caretaker president.

Two substantive runners – Tokyo Sexwale and Cyril Ramaphosa – are acknowledged billionaires, thanks mainly to state-backed deals with South Africa’s giant mining houses.

Other serious candidates – KwaZulu-Natal premier Zweli Mkhize and justice minister Jeff Radebe – preside over multi-million-dollar family fortunes.

And the candidate for the day after tomorrow, Nelson Mandela’s grandson Mandla, will inherit a substantial family fortune before he gets the chance to run.

Rhetorically, President Zuma’s government finds it helps to dress up the policy in Chinese clothes, which these days combine an aura of comradeship and of awesome economic success.

Zuma is not alone in Southern Africa. In Angola, indisputably plutocratic President José Eduardo dos Santos is casting around for a successor this year. Step forward Manuel Vicente, managing director of one of Africa’s biggest state companies, Sonangol.

Having long ago junked its Marxian socialism, the MPLA regime in Luanda can pick and choose its partnerships with the world’s leading proponents of state capitalism, Brazil, China and Russia.

Mozambican president and business broker par excellence Armando Guebuza is often nostalgic for single-party politics but has been a rapid convert to the virtues of state capitalism.

As energy and mining investors descend on Maputo, they seem happy to buy into Guebuza’s doctrine.

Further north, the pattern is more varied. President Joseph Kabila and his political fixer Katumba Mwanke in the Democratic Republic of Congo have stretched state capitalism to the limit by parcelling out state mining company Gécamines to their business cronies.

Assessing Jacob Zuma’s chances of winning a second term as ANC president it is sobering to look at his opponents – plutocrats, almost to a man

Kenya’s famously conservative ruling class abjured all notions of socialism but was happy to build a direct pipeline between state assets and the business elite.

So the state’s mega plans for projects such as Lamu Port will enrich the current generation of political contestants, themselves no slouches in the plutocratic stakes.

In Ethiopia, where Prime Minister Meles Zenawi follows the China party model more closely, there is more emphasis on the state picking winning businesses.

With Ethiopia as one of Africa’s fastest-growing economies, Meles now bluntly dismisses the west’s “failed market fundamentalism”.

There is more raucous debate about the trend in West Africa, where energetically capitalistic Nigeria is arguing over a scheme to break up and semi-privatise the state oil company.

In Ghana, the question of state capitalism is centre stage in this year’s election campaign.

President Atta Mills and the ruling NDC want the government to run the oil and gas development strategy while free marketeer Nana Akufo-Addo argues for the state to regulate and let multinational companies get on with the business.

If Akufo-Addo can maintain his lead in the polls, it may be a significant indicator of the public view.

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