Africa Is Playing Against A Stacked Deck

Dr. Gary K. Busch

There is a lot of discussion in the worlds press about a new, positive, view of African development. African nations recent high growth rates coupled with an increased foreign investment in Africa and the development of national stock exchanges and African international banks have given rise to the popular idea that the continent may well be on track to becoming a global powerhouse. Observers have cited Africa's recent high GDP growth rates, rising per capita incomes, and the almost universal acquisition of mobile phones and mobile phone banking as evidence that Africa is "developing." There have been massive new discoveries of oil and natural gas in Eastern and Western Africa as well as major mineral finds of iron ore, coal and uranium. There is now an expanding African jet set of billionaires spending their wealth around the world. Indeed, there has been growth. The economies of Sub-Saharan Africa have grown about 4.8 per cent overall in 2012, despite the higher initial estimate of the World Bank of 5.2%. According to the World Bans African Pulse report i high commodity prices and mineral discoveries are underpinning African growth. Foreign direct investment into Africa is projected to reach $48.7 billion by 2014 from $31 billion in 2012. The majority of sub-Saharan Africa's 48 countries could possibly achieve middle income status by 2025 though their dependency on natural resources is likely to continue in the medium term. Countries such as Mozambique, home to some of the world's biggest untapped natural gas and coal reserves, and iron-ore exporting Sierra Leone are expected to perform strongly. After ten years of economic advancement, 22 of Africa's 48 countries have already achieved middle-income status, the World Bank said, while another 10 could reach middle-income status by 2025 if current growth trends continue.ii However, this growth masks a decline in the African manufacturing sector. There is a notable and disturbing deficiency in the growth of manufacturing industries in Sub-Saharan Africa (SSA). Free market economic gurus have concentrated on advising poor countries to stick to their current primary agriculture and extractives industries and "integrate" into the global economy as providers of mineral exports. Today, for many champions of free markets, the mere presence

of GDP growth and an increase in trade volumes are euphemisms for successful economic development. But increased growth and trade are not development. For example, even if an African country like Malawi achieves higher GDP growth rates and increased trade volumes, this doesn't mean that manufacturing and services as a per cent of GDP have increased over time. Malawi may have earned higher export earnings for tea, tobacco, and coffee on world markets and increased exports, but it is still largely a primary agricultural economy with little movement towards the increased manufacturing or labour-intensive job creation that are needed for Africa to "rise". iii According to the latest UNCTAD figures Africa remains a continent where most of the people are still occupied in agricultural labour and their countries are principally committed to commodity exports. SSA Country Angola Benin Burkina Faso Burundi Cameroon Central African Republic Chad Congo (B) DRC Equatorial Guinea Eritrea Ethiopia Gabon Gambia Ghana Guinea Guinea-Bissau Ivory Coast Kenya Liberia Malawi Mali Mauritania Mozambique Namibia Niger Nigeria Rwanda Agricultural Labour % Labour Force 69.0% 42.0% 92.0% 89.0% 49.0% 63.0% 66.0% 32.0% 57.0% 64.0% 74.0% 77.0% 26.0% 76.0% 55.0% 80.0% 79.0% 35.0% 71.0% 62.0% 79.0% 75.0% 50.0% 81.0% 34.0% 63.0% 25.0% 89.0% Commodity Exports % Total Exports 100.0% 91.0% 94.0% 91.0% 89.0% 90.0% 96.0% 99.0% 96.0% 98.0% 46.0% 90.0% 96.0% 82.0% 90.0% 85.0% 99.0% 85.0% 65.0% 62.0% 90.0% 88.0% 100.0% 93.0% 73.0% 68.0% 97.0% 88.0%

Senegal Sierra Leone South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe

70.0% 60.0% 6.0% 52.0% 76.0% 53.0% 75.0% 63.0% 56.0%

66.0% 69.0% 60.0% 99.0% 83.0% 61.0% 70.0% 89.0% 75.0%iv

There are, of course, several indicators that offer a more precise picture of how well Africa is developing. One can look at whether manufacturing has been increasing as a percentage of GDP, or whether the manufacturing value added (MVA) of exports has been rising. In these cases a comparison between Africa and East Asia is quite revealing. A recent UN report paints a far less flattering picture of Africa's development prospects. It finds that, despite some improvements in a few countries, the bulk of African countries are either stagnating or moving backwards when it comes to industrialization. The share of MVA in Africa's GDP fell from 12.8 per cent in 2000 to 10.5 per cent in 2008, while in developing Asia it rose from 22 per cent to 35 per cent over the same period. There has also been a decline in the importance of manufacturing in Africa's exports, with the share of manufactures in Africa's total exports having fallen from 43 per cent in 2000 to 39 per cent in 2008. In terms of manufacturing growth, while most have stagnated, 23 African countries had negative MVA per capita growth during the period 1990 - 2010, and only five countries achieved an MVA per capita growth above 4 per cent. The report also finds that Africa remains marginal in global manufacturing trade. Its share of global MVA has actually fallen over recent years. Africa is also losing ground in labour-intensive manufacturing. Its share of low-technology manufacturing activities in MVA fell from 23 per cent in 2000 to 20 per cent in 2008, and the share of low-technology manufacturing exports in Africa's total manufacturing exports dropped from 25 per cent in 2000 to 18 per cent in 2008. Finally, Africa remains heavily dependent on natural resources-based
v

manufacturing, which is an indication of both its low level of economic diversification and low level of technological sophistication in production.

What this means, in short, is that while African economies with extensive mineral wealth benefit from the expansion of extractive investments in their economy and the rents they earn from the exploitation of this wealth through exports, the

value-added of beneficiation of ores or the refining and processing of its petroleum and gas assets devolve to the industries of those to whom these goods are exported. The notion that some form of growing national wealth is reflected in the rising GDP figures or as evidence that development is taking place is a cruel misuse of statistics when this GDP is converted to GDP per capita. In most of these African states the large majority of the capita never get near the wealth these increasing cash flows bring but survive as marginal or subsistence agriculturalists or artisanal miners earning less than $1.50 per day.

Agriculture
One of the most unfortunate areas in African development derives from the import and export of agricultural products. One might have thought that with so much African human capital invested in agriculture that it might be a sector which is thriving. This is far from the case for a variety of fundamental reasons. Africa imports close to USD 50 billion worth of food annually; equivalent to what the continent receives as Official Development Assistance (see ILO statistics January 29, 2013). The continents food imports take place against the backdrop of untapped arable land and growing unemployed populations. In Sub Saharan Africa, an estimated 60 per cent of the continents workforce is involved in agriculture mostly as unpaid family work. Around 30 per cent of Africas 18 29 year olds are out of work and condemned to a bleak future as there is little scope for profitable agricultural employment and manufacturing opportunities are limited as to scope and skill requirements.

Food Trade Impediments:

There are a range of hidden impediments to the ability of Africa to attain food sufficiency and success in exporting, even in countries like Zimbabwe and Kenya which have been traditional food exporters. Some of these impediments highlight Africas weaknesses, even among those products where African exports are valued and sought. One of the problems which have oppressed African producers is the Africans inability to choose the best market for the sale of its goods. Our company used to ship flowers from Zimbabwe to Amsterdam, where they were bought by the Dutch flower mafia and put in their daily auctions for sales to the rest of the world. In those days the African farmers were receiving under $6 a box for roses. The next day those roses would be in Russia (a big buyer of flowers) for more than $25 a box. The Russians asked us to supply directly to

Russia and said they would pay the African grower $20 a box (e.g. more than trebling the price received by the African grower). When we asked the African growers to supply us they said that they couldnt. They were contracted growers to the Dutch flower mafia who provided the seeds and the root stock which carried the obligation that any flowers from these would have to be sold to the Dutch at an agreed pre-established price. They offered to grow some non-Dutch flowers for us but it would take a year or so. In the meantime, the value-added of these flowers went to the Dutch auctioneers. Things were not too different in the fresh vegetable business. We shipped green beans, baby corn, etc. from Southern Africa to Europe for the supermarkets there. About 26% or more of the vegetables designated to be shipped to Europe were rejected as unacceptable. We could not load them on our planes. There was nothing wrong with the green beans; some looked different because they were more curved than the European standard allowed. The buyers rejected them and they were fed to the animals or ploughed back into the ground. We offered to buy these rejected vegetables ourselves at the same price as that being sold to Europe. We wanted to deliver these fresh vegetables to the DRC, Liberia and Sierra Leone where fresh produce was unavailable because of the wars. We were told that we could not buy them because they were unacceptable to the European standards and that the European agribusinesses did not want to have these substandard goods on the market which would threaten their quality guarantees. However, they said they would graciously sell us the acceptable ones at European prices once they had reached Europe. Since these vegetables, too, were often grown on a contracted basis by the Europeans, the Africans had no choice but to feed them to their animals or dump them if they were rejected. There are several tons of perfectly healthy, nutritious and hygienic foods being thrown away every day in Africa because of the artificial cosmetic standards of European agribusiness. The African farmer gets nothing for this discarded food. He cannot even eat them himself. This system functions in a similar manner in the meat and livestock, poultry and fish businesses as well as in the horticultural and agricultural products. This is a burden which every African exporter faces. It is a vicious cycle. African entrepreneurs cannot get the credit lines which would allow them to buy their own root stock, seeds, fertilisers, pesticide, etc. They are already in debt trying to buy energy and water. Therefore, if they are to live they must contract with

Europeans or others to utilise African land, African labour and African water to produce goods for the European market on the terms the Europeans dictate.

Structural Adjustment
It is not only agribusiness which impedes African agricultural growth and selfsufficiency. Many developing nations are in debt and poverty partly due to the policies of international institutions such as the International Monetary Fund (IMF) and the World Bank. In pursuit of an ideology known as neoliberalism, Structural Adjustment Policies (SAPs) have been imposed to ensure debt repayment and economic restructuring. But the way these have happened has required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. In effect, the IMF and World Bank have demanded that poor nations contrive to lower the standard of living of their people. It foreshadowed the austerity program now afflicting Europe. This concentration on debt and debt reduction has severely impeded Africa. Debt is an efficient tool. It ensures access to other peoples raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market saturation ensues, reducing exporters income to a bare minimum while the North enjoys huge savings. vi The important characteristics of these SAPs include cutbacks, liberalization of the economy and resource extraction/export-oriented open markets as part of their structural adjustment plan. Privatization is encouraged as well as reduced protection of domestic industries; there are demands for higher interest rates; flexibility of the labour market, and the elimination of subsidies such as food subsidies.vii While this sounds like a reasoned and thought-out program it was anything but. It caused, and causes, havoc for African agriculture. A good case in point is the cashew industry. Nearly 40 % of the worlds cashew harvest comes from Africa, but African farmers rarely reap the benefits of this valued commodity. Although a substantial portion of the worlds cashews come from Africa most of the cashew processing takes place in South Eastern India. About 30% of the worlds cashews are grown in Mozambique. Mozambique was once the worlds largest producer of

cashew nuts. At its height, Mozambique supplied over 240,000 tonnes a year, with a significant proportion being processed in the country prior to export. The local company, Caju de Mozambique, employed around 6.500 people. It was a major source of export revenue for the country. However, in 1986 Mozambique was forced by its heavy international debt which had resulted from its years of civil war to embark on a series of Bretton Woods imposed SAPs to reduce its debts. One result of these SAPs was that the Mozambican government was obliged to remove all price supports to the cashew growers and processors. The Government was not able to control or protect the internal market price for cashews paid by the local cashew processor. Caju de Mozambique found itself competing with the major Indian processors for the supply of Mozambican cashews. Because of this, by the late 1990s Mozambique was exporting to India 98% of its raw cashews for processing in India. Caju de Mozambique had no domestic raw cashews to process and the factory closed and the workforce became unemployed. Mozambique lost the value-added of its cashew exports as a result of the structural adjustment programs. We were contacted by the Mozambicans to see if we could source raw cashews for them from Sierra Leone which had a surplus of cashews for export. We had an air operators license in Sierra Leone so we could fly the cashews to Mozambique efficiently. We contacted the Sierra Leone Government to see if we could arrange the sale. By the time we had made the arrangements with the Sierra Leone officials we were told we couldnt supply Mozambique because the Indian processors were offering to pay more than the Mozambicans and as the Sierra Leoneans, too, had a SAP in place they were unable to protect the price for export. In recent years there has been a slow return of raw cashews to the Mozambican processors However, the damage to African cashew producers has not ended. It has been the basis for major unrest in Guinea-Bissau. Cashew nut farmers and traders in Guinea Bissau have been left holding tonnes of produce after India slashed imports, and the low prices being offered by Indian processors have dramatically increased hardship in the West African country. India, the top importer of raw cashews has now increased its own domestic production of raw cashews. By July 2012, Guinea=-Bissaus exports reached only 60,000 tonnes of cashew nuts compared to more than 100,000 tonnes by the same period in 2011. The proposed benchmark price of 250 CFA per kilogramme was not respected and prices fell as low as 100 CFA (around 20 US cents) per kilogramme. Some 120,000 tonnes of cashew nuts are still stockpiled in Guinea-Bissau and awaiting

buyers, lying in piles alongside the major roads across the country. The farmers and the authorities have tried to find a solution to this problem but the low prices being offered to the farmers for their stock mean that most cashew farmers will not earn enough money to pay back their bank loans. The yearly April to June cashew harvest accounts for 98% of the country's export revenue and employs, according to the World Bank, nearly nine out of every 10 people, including children. Some of the world's tastiest cashews are rotting in roadside piles on rural byways leading to and from the capital of the Guinea-Bissau, where a recent military uprising has left farmers stranded with no way to ship their nuts to the Indian factories that steam the cashew out of its poisonous shell. Not only are the prices low, the farmers cant even deliver at this low price because transport is too hazardous. On April 13, 2012 soldiers kidnapped Prime Minister Carlos Gomes, Jr. for the second time in two yearsweeks before he was set to be elected president of Africa's fifth-biggest cashew grower. Generals opposed his plans to slash military spending in a country that depends on aid for more than half its budget. Now the country has no effective government and internal transport has come to a halt. Ship owners are afraid to approach the berths as they havent been dredged and there are no trucks to bring produce to and from the harbours. This has meant windfall profits for the Indians as scarcity has increased and impoverishment for the African producers of 98% of the national exports. Between civil unrest and destructive structural adjustment plans the African farmer faces unending and unresolvable problems.

The Common Agricultural Policy

A look at the European Unions Common Agricultural Policy (CAP)
viii

shows that it

has several trade distorting effects which have seriously damaged African agriculture and African economies. In the beginning the CAP was made up of production subsidies, intervention buying, and export subsidies. Through several reforms with the aim of creating a more liberalised market, the production subsidies have been changed to a direct subsidies scheme and intervention prices have been lowered a bit. The production/direct subsidies and the intervention buying both create higher prices in the internal EU market. This means that too much is produced, and most overproduction is sold at world market prices only through the aid of export subsidies. The EU has regularly been accused of dumping its agricultural products into the African markets. In the

opposite direction several agreements have been made to ensure African producers tariff free access to the European market. However, very high food safety and cosmetic standards have been set along with other non-tariff barriers, which prevent many African producers from actually exporting to the EU. The most fundamental change in the CAP since 1992 has been the gradual shift from price support for EU agricultural products to income support for EU farmers. The old system of price support required a highly protective tariff regime, to prevent third-country agricultural products from flooding the high-priced EU market. However, the high prices served to stimulate production in the more efficient agricultural areas of the EU, while at the same time lowering demand for EU-produced feed products for the livestock and industrial sectors. This created large surpluses, which either had to be stored in the EU at considerable cost, or exported as food aid. Under this system EU agricultural products would regularly be exported at highly subsidised prices to African markets, often in ways which disrupted local production or held back the development of local production. While this might benefit traders and processors the production effects in what are largely agrarian economies commonly outweighed these temporary consumer benefits. While under the CAP reform process EU farmers have largely been insulated from the income effects of price reductions, African exporters simply had to carry the income loss. This has served to significantly erode the value of tradi tional African trade preferences.ix So, if one asks where the Grain Mountain and the Milk Lake of the CAP have gone, the answer is to Africa. The milk was dumped as cheap foreign aid in West Africa where it collapsed the production of milk in Mali, Chad and the Central Africa Republic. The grain was delivered elsewhere, in the Horn of Africa and Sudan, which made it cheaper to acquire than locally-produced grains. The farmers lost their domestic market and had no funds to pay back their bank loans; lost their credit and were unable to plant the next seasons crop because they had no cash. The culture of aid dependence was fostered and nurtured by the CAP. According to Oxfam, the 30bn-a-year EU agricultural subsidy regime is one of the biggest iniquities facing farmers in Africa and other developing counties. They cannot export their products because they compete with the lower prices made possible by EU subsidies to European producers. In addition, European

countries dump thousands of tons of subsidised exports in Africa every year so that local producers cannot even compete on a level playing field in their own land. Meanwhile, governments of developing countries come under intense pressure from the World Bank and the International Monetary Fund to scrap their own tariffs and subsidies as part of free trade rules. x World trade talks aimed at reaching agreement on subsidy reform have stalled because of the EU's intransigence over its CAP. The CAP costs British taxpayers 3.9bn a year and also adds 16 a week - 832 a year - to the average family of four's food bill. Recently the 1.34bn-a-year EU sugar regime was ruled illegal by the World Trade Organisation and European countries were found guilty of dumping too much subsidised sugar in developing countries under-cutting local farmers. European farmers are guaranteed a price for their sugar three times higher than the world price and there are restrictions on foreign imports - backed up by import tariffs of 324 per cent. Export subsidies, meanwhile, allow surplus EU sugar to be dumped at bargain prices in African countries. Mozambique loses more than 70m a year - equivalent to its entire national budget for agriculture and rural development - because of the trade distortions and South Africa also loses 31m a year. While chicken producers in Europe do not receive direct payments, the grain that feeds the birds is subsidised, substantially reducing the cost of farming. Kenya, Nigeria and Senegal have been hit by cheap, subsidised imports from Europe while the 30 paid to British farmers for every tonne of wheat they produce inflates the price of breakfast cereals, bread and other goods in Britain to British consumers. European preference for chicken breasts and legs means that thighs and wings are often frozen and exported to Africa where they are sold for rock-bottom prices. Chicken farmers in Senegal and Ghana used to supply most of the country's demand now their market share has shrunk to 11 per cent because subsidised imports are 50 per cent cheaper.xi

The Sale of African Land

One of the growing trends in African agriculture has been the sale of African land to foreigners who invest in large-scale modern farms for export of foodstuffs and biofuel-producing crops to their own countries. This has had a profound effect on African farming and a devastating effect on the availability of scarce water supplies.

Leading the rush into African land are international agribusinesses, investment banks, hedge funds, commodity traders, sovereign wealth funds as well as UK pension funds, foundations and individuals attracted by some of the world's cheapest land. Together they are scouring Sudan, Kenya, Nigeria, Tanzania, Malawi, Ethiopia, Congo, Zambia, Uganda, Madagascar, Zimbabwe, Mali, Sierra Leone, Ghana and elsewhere for land. Ethiopia alone has approved 815 foreign-financed agricultural projects since 2007. Any land there, which investors have not been able to buy, is being leased for approximately $1 per year per hectare. Saudi Arabia, along with other Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the biggest buyer. In 2008 the Saudi government, which was one of the Middle East's largest wheat-growers, announced it was to reduce its domestic cereal production by 12% a year to conserve its water. It earmarked US$ 5bn to provide loans at preferential rates to Saudi companies which wanted to invest in countries with a strong agricultural potential. For example, the Saudi investment company Foras, backed by the Islamic Development Bank and wealthy Saudi investors, plans to spend $1bn buying land and growing 7m tonnes of rice for the Saudi market within seven years. The company says it is investigating buying land in Mali, Senegal, Sudan and Uganda. By turning to Africa to grow its staple crops, Saudi Arabia is not just acquiring Africa's land but is securing itself the equivalent of hundreds of millions of gallons of scarce water a year. Water, says the UN, will be the defining resource of the next 100 years. Since 2008 Saudi investors have bought heavily in Sudan, Egypt, Ethiopia and Kenya. Last year the first sacks of wheat grown in Ethiopia for the Saudi market were presented by Mohammed al-Amoudi to King Abdullah xii from the new Saudi Star plantation in Gambela. Food cannot be grown without water. In Africa, one in three people endure water scarcity and climate change will make things worse. Building on Africas highly sophisticated indigenous water management systems could help resolve this growing crisis, but these very systems are being destroyed by large-scale land grabs amidst claims that Africa's water is abundant, under-utilised and ready to be harnessed for export-oriented agriculture. The current scramble for land in Africa reveals a global struggle for what is increasingly seen as a commodity more precious than gold or oil - water.

The Alwero River in Ethiopias Gambela region provides both sustenance and identity for the indigenous Anuak People who have fished its waters and farmed its banks and surrounding lands for centuries. One new plantation in Gambela, owned by Saudi-based billionaire Mohammed al-Amoudi, is irrigated with water diverted from the Alwero River. Thousands of people depend on Alwero's water for their survival and Al-Moudi's industrial irrigation plans could undermine their access to it. In April 2012, tensions over the project spilled over, when an armed group ambushed al-Amoudi's Saudi Star Development Company operations, leaving five people dead. In recent years, Saudi Arabian companies have been acquiring millions of hectares of land overseas to produce food to ship back home. Saudi Arabia does not lack land for food production. Whats missing in the Kingdom is water, and its companies are seeking it in countries like Ethiopia. Indian companies like Bangalore-based Karuturi Global are doing the same. Aquifers across the Indian sub-continent have been depleted by decades of unsustainable irrigation. The only way to feed India's growing population, the claim is made, is by sourcing food production overseas, where water is more available. All of the land deals in Africa involve large-scale, industrial agriculture operations that will consume massive amounts of water. Nearly all of them are located in major river basins with access to irrigation. They occupy fertile and fragile wetlands, or are located in more arid areas that can draw water from major rivers. In some cases the farms directly access ground water by pumping it up. These water resources are lifelines for local farmers, pastoralists and other rural communities. Many already lack sufficient access to water for their livelihoods. If there is anything to be learnt from the past, it is that such mega-irrigation schemes can not only put the livelihoods of millions of rural communities at risk, they can threaten the freshwater sources of entire regions. The reality is that a third of Africans already live in water-scarce environments and climate change is likely to increase these numbers significantly. Massive land deals could rob millions of people of their access to water and risk the depletion of the continent's most precious fresh water sources It is almost impossible to know just how much of Africa has been sold or leased out in the past two years because the deals are shrouded in secrecy and happening at a great pace.

More than US$100 billion has been mobilised in the past two years for investing in land, the trick being, according to one analyst not to harvest food but to harvest money.

There are estimates that in this period, 30 million hectares (an area the size of Senegal and Benin together) have been grabbed, in at least 28 countries in Africa.

Ethiopia is offering more than a million hectares of what it calls virgin land to foreign investors.

Almost a third of Mozambique is, quite literally, up for grabs.

It was just such a land investment deal between the South Korean company, Daewoo, and the former president of Madagascar, which would have accorded Daewoo about half of the countrys arable land for industrial monoculture production of food and agrofuels for export to Korea that contributed to the political turbulence and the overthrow of President Ravalomanana xiii It isnt only that the most arable land is being sold or that the water resources have been diverted. In Zambia the farmers are being evicted from their lands as well to make room for foreign agribusiness. Increased agricultural development in Zambia is compromising the countrys food security as peasant farmers continue to be driven off their customary land to pave the way for large-scale local and foreign agribusiness; mainly for export. Land grabs increase the incidence and prevalence of poverty in the country by increasing the number of people who cant grow their own food, and who cant send their children to school. Smallholder farmers account for 70 per cent of Zambias farming community, The eviction of farmers from their customary land started 12 years ago but has assumed prominence after 2005 when the government started calling for increased foreign investment. Land grabs by both foreign and local investors are now considered commonplace in Zambia. In the Masaiti district, in the mineralrich Copperbelt Province, over 2,000 farmers were evicted from their land in 2011 following the acquisition of over 200 hectares by a Nigerian cement manufacturer. They were later paid 250 dollars per hectare as compensation. The land-grab in Zambia illustrates a related problem for much of African smallholder farms; the failure of the bureaucracy to account for land title. The Zambia Land Alliance, an advocacy group, blames the eviction of farmers on the

cumbersome procedures involved in obtaining title deeds and the archaic laws which do not recognise customary rights as a form of land ownership. Under Zambian law, title deeds are the only legal proof of ownership of land. To get a title deed, it takes anything between two months and 10 years. The system is very archaic and centralised one can only get the title deeds from the Ministry of Lands in Lusaka. For farmers in rural areas, obtaining a title deed for their land is very costly. They have to pay transport fares to and from Lusaka as well as pay for meals and lodging facilities every time they travel to make a follow-up. It can cost them up to 10 million Kwacha (about 2,000 dollars) just in the process. As a result, many of them just sit back and continue farming. Then, without a title deed they lose their land and often forfeit compensation. xiv There is a political aspect of this widespread lack of title deeds in Africa. Many of the most intense and vicious conflicts on the continent have arisen because the land, held under customary law, was never properly registered. In the Ivory Coast the country has been plagued by migrant labour working on farms for years and never getting title to the lands they farmed. The customary owners demanded that the migrants leave their property after the harvest but the migrants refused to leave claiming that their de facto presence on the land gave them a de jure claim to title. The lack of a clear title to land has deprived millions of Nigerians of a claim for compensation for the rights of way for oil pipelines and pumping stations. Even more, this lack of title has prevented a rational solution to the problem of taxation and electoral registration. The influx of foreign investment in African land has made it even harder for indigenous farmers to claim title to their lands as there is a powerful financial incentive for the investing agribusiness and the politicians who arrange the sale of the land to delay or inhibit the granting of title to indigenous farmers or pastoralists.

Transport Impediments
Africa is a vast continent of immense resources but with very poorly developed transport integration with other centres of commerce. This lack of integration with the rest of the trading world is a heavy burden on African exporters and has led to a situation in which an enormous percentage of the prices realised by African exports in the world marketplace is paid for in transport costs. In the developed world these transport and insurance costs make up about 5.5%-5.8%

of the delivered price. In Africa the cost of transport and insurance can make up to almost 80% of the cost of goods or products delivered to the world markets. Moreover, absent a developed intra-African air or sea service, this 80% of the market price for African products is paid mainly in hard currency to foreign transport companies in the developed world. This burden of external payments has a marked effect on currency price pressures. To illustrate this one can work backwards. If the market price of a good is determined by the price at the export destination then that price is the CIF price (cost, insurance and freight). If the transport and insurance costs account for such a high percentage of this price, it then follows that to be competitive; the African exporter must reduce his FOB price to reflect this differential. For example, if manganese ore sells at $2,400 per ton CIF Western Europe and transport and insurance costs of this manganese amount to $380 per metric ton, then the maximum FOB price of the manganese ore FOB Africa cannot be more than $2,020 per metric ton. Moreover the price of transport and that of insurance as well, is not controlled by the African exporter. He is at the mercy of the shippers for whom transport rates are constantly escalating; especially with the rising price of fuel. Extensive research has shown that the most important consequence of high international transport costs is the detrimental impact on firms' competitiveness in international markets. First, for small countries that exert little impact on world prices, the higher the international transport costs, the more firms in that country will have to pay for imported intermediate goods and the less they will receive for their exports. If a country faces a perfectly elastic supply of imports or a perfectly elastic demand for its exports, changes in international transport costs will be translated one-for-one into changes in domestic prices. In competitive global markets, higher transport costs have to be offset either by lower wages or by reduced costs somewhere else in the production process to allow firms to compete. Countries with higher international transport costs are less likely to attract foreign investment in export activities For exporters of primary products higher international transport costs reduce the rents earned from natural resources thereby lowering

aggregate investment and thus growth. Higher international transport costs increase the price of all imported capital goods, which reduce investment, the rate of technological transfer and thus reduce economic growth. Due to a lack of better data, it has become customary to use the CIF-FOB spread on import costs as a proxy for international transport costs .The FOB (free on board) costs of imports measures the costs of an imported item at the point of shipment by the exporter. The CIF price measures the costs of the exported item at the point of entry into the importing country, inclusive of the costs of transportation. Using the CIF-FOB band as a proxy, studies found that for a For sample of 97 developing countries, the mean CIF-FOB band was 12.9%.

coastal economies this average was 11.8%, while for the 17 fully landlocked economies the average was 17.8% - this implies that the costs of international transport for landlocked developing countries was on average 50% higher than for coastal economies. If one takes into consideration that more African countries tend to be landlocked than elsewhere, then regional integration to promote seamless transportation may be important to improve the attractiveness of investment in export- oriented industries in these countries. Another important aspect of Africas dilemma is that the transport patterns which have emerged as a result of the outsourcing of international transport has been the continuation of links between African countries and their traditional colonial markets; e.g. Anglophone Africa to Great Britain; Francophone Africa to France; Lusophone Africa to Portugal, etc. North-South traffic is the most frequent African transport route; East-West Africa is almost unknown. Western Europe still takes about 50% of Africas exports. With the growth of major petroleum and gas exports from Africa since 1992 this figure of 50% is, in itself, misleading as these high value exports mask a concomitant decline in the value of African nonhydrocarbon exports. These trade patterns have led to ludicrous anomalies. Fresh produce from Southern Africa is shipped to Europe and then trans-shipped again to West Africa. Tobaccos often follow this routing. The hungry displaced civilians in Africas regional wars in Liberia, Sierra Leone, Angola and the D.R. Congo were forced to import expensive food from Europe via the World Food Program while African exporters of food had to send their products to Europe at low prices because of the transport nexus and punitive European taxes and quotas.

A contributory factor in the cycle of transport dependency is the expansion of Western European owned or affiliated freight forwarders in Africa who are tied to European transport companies and who determine the type of carriage, the cost of the carriage and a ready route for tax and currency rules avoidance. The rise of a major trading route between Africa and China has not offered a better solution as most of the transport between Africa and China is on Chinese-owned and operated vessels, aircraft and handled by the forwarding agents of these Chinese carriers.

The Reliance on Containers

A principal factor in the high costs of transport in Africa has been the reliance of shipping cargoes, even some ores, in metal containers on dedicated container vessels. Instead of loading the goods for transport in the holds of a vessel, current practice is to stuff the cargoes into standard metal containers for transport. In the maritime trades there is an international system which allows standard metal containers of either 20 feet (TEU) or 40 (FEU) feet length to be used to transport goods on specialised container vessels. These containers are of a uniform size and dimension. Some may be refrigerated. An increasing amount of world trade is conducted using the containers. The container-carrying ships are growing ever larger; some are now capable of carrying 10,000 to 18,000 units on each carrier vessel. The newest container vessel is the Triple E. It will be the largest vessel ploughing the sea. Each ship contains as much steel as eight Eiffel. Each vessel will carry enough containers than could fill more than 30 trains, each a mile long and stacked two containers high. Inside those containers, you could fit 36,000 cars or 863 million tins of baked beans. These are giant ships.

Theoretically the use of the giant container ships reduces the cost of transport by dint of their sheer size. However, for many nations in Africa they are not efficient at all. These vessels, as can be seen from the illustration above, require a draught in the port of up to 16 metres. That means that there needs to be a berth which has 16 metres of water alongside and 400 metres in length so that the portal cranes can load and discharge the containers; they must be frequently dredged to keep their depth... There are very few ports anywhere in Africa which can accommodate these vessels in a berth accessed by portal cranes. Except for several specialised berths in South Africa and scattered around the coast there are few berths on the continent with more than 12 or 13 metres alongside and 400 metres in length. These vessels cannot reach the berth so, to use these large container ships the cargoes have to be shipped to a port which is equipped to handle them. That involves double or triple handling. The nature of container shipping is, even without the distortion of giant size vessels, very difficult for African importers and exporters. The containers are not

provided for free. They must be rented in advance; taken to a place of stuffing; transported to the port; loaded on the vessel; unloaded and de-stuffed at the receiving end. The rental period covers the entire period and often there is a charge for repositioning the containers after unloading. There are other downsides to containerisation. The first is that it is generally more expensive than conventional shipping; not only because one is paying for the transport of an empty metal box. The stuffed container needs to be shipped on special rail flatcars or on trailer trucks to the port. Another downside is that not every loading or discharging port has a container terminal; replete with the portal cranes and stacking areas which allow a quick handling of containers. That means that specialised container vessels cannot call at ports without the draught or the proper equipment for container handling. Quite often the goods being shipped do not fit exactly into a container. They may be too heavy so the container reaches it maximum weight limit with only a few components or they may be as light and bulky as to require many containers to carry them. There may also be less than a full load for the container. In that case the forwarder may offer groupage' which shares the cargo space in the container with other cargo or a LOL (less than full load) service. Most importantly, container shipping is very expensive. It is expensive because, although the international freight rates may seem reasonable, the internal movement of containers in Africa is very expensive. To ship a standard TEU from Hamburg to Mombasa may cost US $ 1,625 but the costs of moving that container to an inland factory or farmstead may well cost another US $ 1,550. That is because the rail and trucking costs in Africa are prohibitive. A few years ago India was having an onion crisis. There was a shortage of onions which are a staple of the Indian diet. They needed onions. There were a lot of suitable onions in Zimbabwe which we could make available. We contacted the suppliers and got a reasonable price ex-storehouse. We then contacted some freight forwarders to give us a shipping price to Porbandar where the Indians wanted the onions. The price that was given to us was extremely high. They wanted US$500 for the use of the container; US$600 for the rail costs of the container to Maputo; US$1,050 for the container to Mumbai; and a further US $35 per ton (that is $700 for a TEU) for the transfer of the onions by conventional transport to Porbandar because it wasnt a container port and had no facilities to offload containers. So, that would make the freight cost of the onions around US

$ 142.50 per ton using a container. It would take forty-two days because of all the handling and waiting for vessels. That would make the price far too high to satisfy the Indian buyer. We decided to use conventional shipping, e.g. without containers. We put the onions on a freight train to Beira and used a 2,500 deadweight animal carrier (to get the maximum air circulation around the onions) and sailed for Porbandar. Our net costs were US$62 a ton and it took eighteen days. So by using conventional shipping we saved US $80.50 per ton and twenty-four days. The ever-increasing use of and reliance on container shipping is a heavy tax on African exports and a major inhibitor of competitive pricing. For much of Africas trade, containerisation adds little to the efficiency of the transport but rewards the international shipping and forwarding agencies by their use.

Problems of Taxation
One of the most important aspects of the impediments to African growth and development is the simple fact that most Africans do not pay direct income or property taxes to their governments. Revenues for African national budgets derive primarily from customs and excise taxes and on taxes on the licensing, sale and production agreements of raw materials sold for export to major international markets. There are taxes on financial transactions and on businesses in urban centres but these are minimal in comparison to the massive revenue flows from foreign investment, foreign aid and rents on land and resources. For most Africans the tax they know best is school fees for their children, followed by the heavy taxes on domestic energy costs at the petrol pump... Many, if not most, African countries fail to raise the tax revenues needed to provide for their public sectors. Domestic revenue mobilisation is very weak in Sub-Saharan Africa and makes up about the equivalent of 12% of GDP. Governments relay on dealing with importers, exporters and investors for their revenues. This is why there is such a gap between the politicians, civil servants and the wananchi (common people). Politicians and civil servants do not derive their revenues from the common people. This revenue comes from their relations with large national and international businesses; granting concessions and leases of mines, oil wells and land; and customs and excise taxes on goods entering and leaving the country.

The politicians and civil servants know that it is their job to wrest from these corporations as much revenue as possible to carry out their budgetary obligations and, quite simply, to use this power to enrich themselves on a personal basis while they have their chance. Since the common people do not pay tax and only marginally contribute to the costs of electricity, water and communications the general notion within African leadership circles is that the common people do not contribute to the funding of the state and thus should only be rewarded rhetorically for their participation in the nations economy. In return for this rhetorical benefit the population is asked periodically, to put their X next to a name of a candidate or a political party who will continue to operate and perpetuate the system. Roads are not built or repaired, schools are not established, hospitals are without adequate provision and public services decline with age and are not renewed because they are theoretically funded by national revenues. In most cases there is no residue of national revenue available to fund them. The government has other urgent priorities. In many of the cases of petroleum and mineral extraction sectors the government is obliged to pay for its share of its joint-venture partnership insisted upon by the government as its right as a national stakeholder in the project. The revenue streams from the joint projects are earmarked for fulfilling the governments infrastructural contributions to the process (rail links to the mines, roads through rural areas, etc.) and for revenues to fund the budget. As these ventures are profit-making and generate revenues they tend to take priority over non-profit-making capital or service projects which benefit only the common people and for which they do not pay.

African Wars
By far the most direct impediment to African growth and development is the profusion of wars on the African continent. An enormous portion of the national revenue is diverted from civil projects to pay for a large standing army. A substantial part of the national revenue stream is diverted for this purpose. Indeed, many African states have known little else than military rule where the military have seized power for themselves and operated their nations under military rules and using military justice as a guide. There is the prevailing notion that military justice is to justice as military music is to music. They are vaguely similar but recognisably unique.

African wars have displaced millions from their land and killed many others. As long as the wars continue, farming is diminished, transport is diverted, and resources stolen and provide no public revenue Perhaps the best examples are the Eastern Democratic Republic of the Congo (DRC) and the Ivory Coast. Between August 1998 and April 2004 some 3.8 million people died violent deaths in the DRC. Since 2004 this number has almost trebled. Many of these deaths were due to starvation or disease that resulted from the war, as well as from summary executions and capture by one or more of a group of irregular marauding bands. Millions more had become internally displaced or had sought asylum in neighbouring countries. Rape was endemic; insecurity was the rule; and impunity the remedy. This war and the rapes, murders and pillaging associated with them derived from the efforts of Uganda and Rwanda seeking to profit from the valuable mineral resources of the Eastern Congo. Now the M23 band of irregulars carries on the same war but without the open presence of Uganda and Rwanda. Nonetheless farming has come to a halt; mining is done by artisanal miners working as hostages of the M23 and millions of displaced people are hiding in the bush, more interested in survival than contributing to the GDP. In the Ivory Coast, once one of the most prosperous countries in Africa was riven by a rebellion in 2000. The country was divided between North and South and their dividing line was patrolled by the French Army (Force Licorne) and the UN peacekeepers. Above the line, in the Muslim North, the nation was run by warlords and local despots. The civil servants fled and there was no more government or schools or services. The citizens who hadnt fled stopped paying rents or taxes; they paid for no services or utilities; and they paid no excise or customs duties on the products they sent out of the country as exports. These rebels were united under the leadership of Alassane Ouattara, originally a Burkinabe citizen, and now the French-installed President of the Ivory Coast. There was no freedom of movement and investment plans were disrupted and thousands killed. While these two cases are good examples of the disruptions caused by wars they are not unique. The other wars in Sudan, in Darfur, in Somalia, Eritrea, Ethiopia, Liberia, Sierra Leone and now Mali are recent struggles. The disruption to the economies of these countries involved cannot be overestimated. Rapes, murder, starvation, child soldiers, internal displacement and disease are the usual concomitants. Wars have been a major factor in the lack of development and growth in Africa and, while often provoked, incited, armed and funded by

external nations (notably France and Libya) they engaged a substantial participation of African leaders.

The Currency Crisis

One of the most serious impediments to the functioning of the African economies is that, for a large number of African states, the African governments do not have control of their own monetary or fiscal policies. The best example is the operation of the CFA franc (the Financial Community of Africa -Communaut financire d'Afrique CFA franc). There are actually two separate CFA francs in circulation. The first is that of the West African Economic and Monetary Union (WAEMU) which comprises eight West African countries (Benin, Burkina Faso, GuineaBissau, Ivory Coast, Mali, Niger, Senegal and Togo). The second is that of the Central African Economic and Monetary Community (CEMAC) which comprises six Central African countries (Cameroon, Central African Republic, Chad, CongoBrazzaville, Equatorial Guinea and Gabon), This division corresponds to the precolonial AOF (Afrique Occidentale Franaise) and the AEF (Afrique quatoriale Franaise), with the exception that Guinea-Bissau was formerly Portuguese and Equatorial Guinea Spanish). Each of these two groups issues its own CFA franc. The WAEMU CFA franc is issued by the BCEAO (Banque Centrale des Etats de lAfrique de lOuest) and the CEMAC CFA franc is issued by the BEAC (Banque des Etats de lAfrique Centrale). These currencies were originally both pegged at 100 CFA for each French franc but, after France joined the European Communitys Euro zone at a fixed rate of 6.65957 French francs to one Euro, the CFA rate to the Euro was fixed at CFA 665,957 to each Euro, maintaining the 100 to 1 ratio. The monetary policy governing such a diverse aggregation of countries is uncomplicated because it is, in fact, operated by the French Treasury, without reference to the central fiscal authorities of any of the WAEMU or the CEMAC states. Under the terms of the agreement which set up these banks and the CFA the Central Bank of each African country is obliged to keep at least 65% of its foreign exchange reserves in an operations account held at the French Treasury, as well as another 20% to cover financial liabilities. The CFA central banks also impose a cap on credit extended to each member country equivalent to 20% of that countrys public revenue in the preceding year. Even though the BEAC and the BCEAO have an overdraft facility with the French

Treasury, the drawdowns on those overdraft facilities are subject to the consent of the French Treasury. The final say is that of the French Treasury which has invested the foreign reserves of the African countries in its own name on the Paris Bourse. In short, more than 85% of the foreign reserves of these African countries are deposited in the operations accounts controlled by the French Treasury. The two CFA banks are African in name, but have no monetary policies of their own. The countries themselves do not know, nor are they told, how much of the pool of foreign reserves held by the French Treasury belongs to them as a group or individually. The earnings of the investment of these funds in the French Treasury pool are supposed to be added to the pool but no accounting is given to either the banks or the countries of the details of any such changes. The limited group of high officials in the French Treasury who have knowledge of the amounts in the operations accounts, where these funds are invested; whether there is a profit on these investments; are prohibited from disclosing any of this information to the CFA banks or the central banks of the African states. This makes it impossible for African members to regulate their own monetary policies. Convertibility of the CFA franc into French francs through authorised intermediaries is supported by provision for central-bank overdrafts on these accounts. In short, at least 80% of the financial reserves of these African countries are held in the French Treasury under its control. This has been an aggregation of currency reserves since 1961; that is over fifty years of accumulation without recourse by the African states to their capital. There remained only one market for the CFA zone, and that was France their colonial master. This enabled Metropolitan France to appropriate to itself the raw materials needed for its post-War and young industries. The colonies were tied hand and foot to serve Metropolitan France as other markets closed their doors to their expensive products. Thus through the new CFA currency, France was able to economically re-colonise its African colonies that had earlier been cut off from Paris as a result of the War.xv The major current problem with the CFA franc is that because of its pegging to a fixed rate to the Euro its value reflects the successes or failures of European monetary policies, not African realities. Now, in the wake of the global credit crunch there are more worrying changes. The principal worry is the state of the French economy and the pressures on the Euro to cope with the vast monetary

and fiscal divergences among the twenty-seven states and the impact of the sovereign debt crisis. The declining value of the African reserves, bound up in investments in a falling French stock market has diminished the ardour for French subsidies of development projects in such economic basket cases as Niger, Mali, Burkina Faso and others. France has shown itself unwilling to continue to finance the stationing in Africa of so many troops, including those wearing the blue berets of the United Nations. If the Euro fails, breaks apart into two zones, or disappears in a mountain of defaults what happens to the francophone African states? Their money is tied up in the French Bourse, almost completely out of their control. They have no idea of their positions and are not confident that a decaying France will be able to financially maintain a par CFA which will be credible or reflect the value of African exports; the very nature of the original bargain. There are many African economists who are convinced that the French Treasury has been using their reserves as collateral on French long-term debt. If the Euro breaks up or declines dramatically, how will the Africans get their own money back?

Conclusion
All of the factors above have contributed to the inability of Africa to fulfil its potential. Each factor interacts with the other to put hazards and impediments in the way of growth. There is no one solution or magic wand which can resolve these problems; they must all be resolved. The absence of these solutions has had a tragic consequence across Africa. The economic problems which have been delineated in part above have opened the opportunity for an influx of religious terrorism in the shape of the Salafists of Boko Haram, Al Qaida of the Islamic Maghreb, and the Colombian drug cartels. There are now African narco-states and whole areas of the Sahel and the Horn of Africa which have become terrorist states. While these are security and military problems they cannot be solved without the restructuring of the economic miasma from which they emerged. Referring to the success of African stock markets and booming GDP numbers as measures of African growth and expansion misses out a fuller explanation of how these mask the fact that Africa is playing against a stacked deck.

Africa Pulse , vol.6, IBRD 10/12 ibid iii Rick Rowden, The Myth of Africa's Rise, Foreign Policy 4/1/13 iv UNCTAD, The State of Commodity Dependence 2012 v Rowden, op.cit. vi Susan George, A Fate Worse Than Debt, (New York: Grove Weidenfeld, 1990), vii Anup Shah, http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-ofpoverty. viii See Thomas Lassen, What are the economic consequences of the EU's CAP on trading with Africa? University of Aarhus 209 ix Dr. Paul Goodison, Nordic Africa Institute, The Impact of Common Agricultural Policy (CAP) Reformon Africa-EU Trade in Food and Agricultural Products 2009 x Maxine Frith, EU subsidies deny Africa's farmers of their livelihood , Independent 16 May 2006 xi Ibid xii John Vidal, How food and water are driving a 21st-century African land grab, Observer 7/3/10 xiii Joan Baxter, Africa's land and family farms - up for grabs? GRAIN 14/1/10 xiv Nebert Mulenga, Foreign Farmers Undermine Food Security in Zambia, IPS 1/11/12 xv The Euro is bad news for the CFA, Ruth Nabakwe, New African 7/02
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