In addition to China, Africa is meant to be one of the most critical markets for South Africa’s SEZs, and attracting other investment, trade and finance to the continent was one justification for entering the BRICS bloc, according to Jacob Zuma and his colleagues.
In 2013, for example, deputy foreign minister Marius Fransman (2013) argued is that “South Africa presents a gateway for investment on the continent, and over the next 10 years the African continent will need $480 billion for infrastructure development… Our presence in BRICS would necessitate us to push for Africa’s integration into world trade.”
The drive to make Africa more competitive appeared effective during the 2002-11 commodity super-cycle, but since its peak in 2011 and crash in 2014-15, commodity export values ebbed along with aid, foreign investment and remittances. Some of the largest economies in Africa – South Africa, Nigeria, Egypt and Angola – fared very badly in this process, but the fate of Africa’s 32 “Least Developed Countries” (LDCs) is even more revealing, especially in large countries: Angola, DRC, Ethiopia, Senegal, Sudan and Tanzania. At the end of the commodity price rise, African LDCs’ terms of trade plateaued in 2011-14 before suffering a substantial drop. Export revenue from these countries peaked at levels 360 percent higher than in 2000. But imports continued rising to 570 percent of the 2000 level by 2014.
As a result, Sub-Saharan Africa’s current account balance – incorporating both the trade deficit and outflows of interest, profits and dividends – fell to negative $55 billion per annum. Incoming flows of overseas development aid (ODA), remittances from workers and new foreign direct investment (FDI) declined in absolute and relative terms. African LDCs were hardest hit of all poor countries in these categories (Unctad 2018, 2). All LDCs witnessed a decline in export revenues, from $255 billion in 2014 to $190 billion in 2016 due to “weak global demand and low commodity prices.” Moreover there was a 13 percent decline in FDI inflows to LDCs from 2015-16, and total North-South ODA disbursement of just $43 billion in 2016, far below the UN Sustainable Development Goal target range of $75-96 billion.
Adding to Africa’s 31 poorest countries the other 17 in Sub-Saharan Africa reveals even gloomier estimates of looting. The London-based campaigning NGO Global Justice Now and its allies estimate that exploitative economic processes – not including the $100+ billion in resource depletion – were responsible in 2015 for a net outflow of $41.3 billion. According to their report, “African countries received $161.6 billion in 2015 – mainly in loans, personal remittances and aid in the form of grants” (Curtis 2017). Against that, outflows that year amounted to $203 billion, including $68 billion in illicit financial flows (TNCs “deliberately misreporting the value of their imports or exports to reduce tax”), $32 billion in repatriation of profits and dividends (licit financial outflows), and $18 billion in debt servicing. Curtis (2017) also recommends adding other costs imposed on Africa: $37 billion in damages related to climate change; and $29 billion in illegal logging, fishing and trading in wildlife and plants. The net negative $41 billion in 2015 would have been much larger were it not for the dramatic commodity price decline in 2014-15.
