South African President Nelson Mandela (C) and his counterparts, Zimbabwean President Robert Mugabe (L) and Namibia's Sam Nujoma (...
What Is Economic Freedom?
Economic freedom is the fundamental right of every human being to manage his or her own labour and property. In an economically free society like Scandinavian countries, individuals are free to work, produce, consume, save and invest in any way they please. In economically free societies, governments create jobs, provide initial capital for projects funding, and allow goods to move freely among the citizens while refraining from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
What Are The Benefits Of Economic Freedom?
Economic freedom brings greater prosperity to an individual and accelerates development for the country. The Index of Economic Freedom highlighted the positive relationship between economic freedom and a variety of positive social and economic goals. The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater GDP per capita wealth, human development, democracy, and poverty elimination.
How Do You Measure Economic Freedom?
We measure economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:
- Rule of Law (property rights, government integrity, judicial effectiveness)
- Government Size (government spending, tax burden, fiscal health)
- Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
- Open Markets (trade freedom, investment freedom, financial freedom)
The recent studies in the Economic Index have provide insightful into the dimensions of the world economy and African developing countries that still grappling with historical challenges, and the need to spur on entrepreneurship as well as innovations. Notable improvements for Sub Saharan African in the span of 2018 specifically in the area of democracy and judicial effectiveness is quite recommendable. However, these countries still rapping behind when it comes to socio-economic improvement.
Economic freedom is an idea that has been central to Africa’s political liberation, yet, paradoxically it is imprecise and nebulous. Political freedom without economic freedom is useless! The implications should be clearly understood in the language of political rhetoric employed by our leaders without action to command economic freedom. The state discretion to redistribute land to the masses would enable it to maximise developmental potential and eliminate poverty. There is an irony in this approach. It passionately invokes economic freedom as a condition, but the state is ambivalent about its exercise. Economic freedom is the gift of state.
This is a perspective that economic freedom is impossible to attain in developing nations under a capitalist system. And while economists debate the role of the state in economies, the evidence is clear that the market and independent sector is the bedrock of national prosperity. Prof William Easterly, an eminent economist and commentator on developmental matters, has remarked that ''In Africa, the best hope for progress lies in using markets and the dogged entrepreneurial culture of its people, rather than attempting to direct growth through states that typically lack the means to do so.''
Neocolonialism
The term “neocolonialism” generally represents the actions and effects of certain remnant features and agents of the colonial era in a given society. Post-colonial studies have shown extensively that despite achieving independence, the influences of colonialism and its agents are still very much present in the lives of most former colonies. Practically, every aspect of the ex-colonized society still harbors colonial influences. These influences, their agents and effects constitute the subject matter of neocolonialism. The term has become an essential theme in African Philosophy, most especially in African political philosophy arguing for the immediate disengagement from any form of political or economical grip.
African countries were colonized separately which led to some African states regarded as Francophones, Anglophones and Lusophones more respectively. Ex-colonies called for total emancipation from the continued influence of foreign policies and domination. All African People’s Conferences (AAPC), a movement of political groups that was established by the Africa countries under the colonial rule, which held conferences in the late 1950s in Egypt and early 1960s in Accra, Ghana, where the new term ''Neocolonialism'' was first coined in Africa.
Neocolonialism is being described as the subtle deliberate propagation of socio-economic and political activity by former colonial rulers aimed at reinforcing capitalism, neo-liberal globalization, and cultural subjugation of their former colonies, by turning these states into a political tool, mental slaves and vassal states in order to form a perpetual domination carried out through indirect manipulation that did not include direct violence. In a neocolonial state, the colonial masters ensure that the developing countries should remain dependent on them for economic and political direction.
The dependency and exploitation of the socio-economic and political lives of the now independent nations are carried out for the economic, political, ideological, cultural, and military benefits of the colonial masters’ home states. This is usually carried out through indirect control of the economic and political practices of the dependent states without direct military control. With the publication of Kwame Nkrumah’s Neo-colonialism: The Last Stage of Imperialism in 1965, the term neocolonialism finally came to the fore. Neocolonialism has since become a theme in African philosophy on the continent itself and the diaspora.
Many works of literature have evolved and have been written and studied by scholars in sub-Saharan Africa and beyond. As a theme of African philosophy, reflection on the term neocolonialism requires a critical reflection upon the present socio-economic and political state of Africa after independence from colonial rule and upon the continued existence of the influences of the ex-colonizers’ socio-economic and political ideologies in Africa.
To understand how neocolonialism has impacted the developing countries of Africa, it would be imperative to also understand the present status quo in African societies. With that in mind, it is no news that Africa is a poverty-stricken and misery-ridden society. It is also no secret that Africa is wallowing extremely, well behind other developing nations in Asia and Latin America respectively whom once on the same scale. Look where they are now, Malaysia and Hong Kong for instance?
It is the result that Africa is deeply in debt and engulfed by hunger, diseases, illiteracy and civil strife. Many argue that the condition in Africa is in fact far worse today than it was at the end of colonialism under the European occupiers in the 1960s and 1970s. When the communities have access to free potable water in the villages. Now, where are those free water taps today? Observing the living conditions of the rapidly growing population, it is apparent that this is actually the case.
Tracing the whole root causes of these problems, Mardof (1978), noted that the foundation of today's conditions in Africa was laid long ago by Europeans through violence, slavery, and colonization. These conditions, he explains, are now maintained through institutions, policies that were established during the colonial period. Africans must restructure these situations and overturn even the entire constitution if it is in the conflict with economic freedom in order to serve people's needs. In his book “False Start in Africa” Professor Rene Dumont (1969) asserted that much of Africa's problem can be resolved "in twenty years". This is believable because, with all its resources all that the continent needs in order to accomplish such a task, the continent needs leaders with vision and the courage to reject domination and exploitation.
It is worthy of note to mention that many African nationalists and critics of neocolonialism see the independence gained from the withdrawing colonial powers as only partial liberation. Some call it ‘false independence’. The real freedom will only come with economic independence. The implication is that western powers still control African nations whose rulers are either willing puppets or involuntary subordinate of these powers. The natural resources of the developing nations are exploited for their own benefits. How do you call this? When means of production are owned by foreign corporations who employ various means to transfer profits out of the country rather than invest them directly in the local economy.
The unequal relations between developed and underdeveloped countries make even economic progress impossible, the latter need to break economic links with international capitalism and only by becoming either socialists or something else that could able to develop their own economies. Some theorists went further to postulate that revolution in the developing countries would not be enough because of the same structure of world capitalism that has made any national development impossible. Only the ending of capitalism at once would permit underdeveloped nations to achieve total economic emancipation. Take note that any country or leader attempting to go beyond capitalism settings is already perceived as a serious threat to the global order.
CHINA TAKING OVER
The first two decades of the 21st century have been characterized by the meteoric and unparalleled economic growth of China. Since 2000, China’s annual growth rate has only fallen as low as 7% and peaked at twice that in 2007. However, underlying the façade of the rising power lies the secret ingredient to Beijing’s economic miracle: Neo-colonialism.
What Is Soft Power?
In the 21st Century, the tools of colonialism have changed. The dominant powers no longer employ military force or divide up entire continents, like Europe did with Africa during the Berlin Conference of 1884-5, or Spain and Portugal did with the “New World” in the Treaty of Tordesillas nearly four centuries earlier. Rather, the neo-colonists' toolkit now is to use soft power to attract rather than coercion. Instead of conquering and seizing politically or militarily, state can be conquered through favors and networks of trade as well as personal relationships. This new toolkit of international affairs is called soft power. The term coined by Harvard Political Scientist Joseph Nye Jr. The instruments of soft power carry different names: foreign direct investment (FDI), infrastructure spending, and educational programs. The results and goals, however, stay constant: political influence and control over natural resources.
Soft power is also governed by a different set of rules. A soft power strategy depends on three important tenets:
- (1) Soft power is the result of being esteemed, valued, or respected.
- (2) Soft power is mental, it is based on intangible assets.
- (3) Soft power varies from state to state and situation to situation.
How Chinese Soft Power Manifested Itself In Sub-Saharan Africa?
The journey begins with the founder of the CCP, Chairman Mao Zedong. In 1974, Chairman Mao unveiled his Three Worlds Theory: That there was a “third world” beyond Capitalist and Communist superpowers. Alternatively, Mao’s Three Worlds theory placed China in the “Third World.” This was a strategic manoeuvre. Deng Xiaoping, China’s historic reformer, who publicly unveiled Mao’s theory in his 1974 speech to the United Nations General Assembly, stated: The Third World countries strongly demand that the present extremely unequal international economic relations be changed, and they have made many rational proposals of reform.
As the 20th Century came to a close, China’s claws sunk deeper into sub-Saharan Africa. After renewed interest in Africa and repeated visits of Chinese officials throughout the 1990s, Chinese President Jiang Zemin announced the creation of the Forum on China-Africa Cooperation (FOCAC) in 1996, proudly proclaiming, “the Chinese government encourages mutual cooperation, broadening trade, increasing African imports, and finally promoting the balanced and fast development of China-African trade.” Jiang also proudly laid out the public foundations for Chinese trade in the region. As reported by the Chinese Ministry of Foreign Affairs these are: To foster a sincere friendship between the two sides and become each other’s reliable ‘all-weather friends,’ To treat each other as equals and respect each other’s sovereignty and refrain from interfering in each other’s internal affairs, To seek common development on the basis of mutual benefit, To enhance consultation and cooperation in international affairs, To look into the future and create a more splendid world.
While these precepts and principles appear like mutually beneficial concepts, a closer examination of the bilateral relationship reveals that they are no more than just concepts. They represent the party line on China’s relationship with Africa, that of “all-weather friends” or a “win-win” relationship. FOCAC based on the mutual benefits and intergovernmental organization (IGO) to foster joint and equitable development. FOCAC, according to its members, was founded as a “framework for collective dialogue between China and African countries on the basis of equality and mutual benefit and that to seek peace and development.” However, in reality, it has acted as a tri-annual conduit for Beijing to get access to African natural resources. At the first meeting of FOCAC – notably held in Beijing at the turn of the millennium – the group instituted Chinese educational programs, massive debt forgiveness, and, most importantly, promoting political cooperation to create a favourable environment for China-Africa business affiliation and trade.
In 2012, China has become sub-Saharan Africa’s single largest trading partner (it has spent more money in the region than the World Bank ever does since 2000), maintained a trade surplus for 10 years, and its importation of sub-Saharan African goods accounts for 17% of the continent’s trade. Thus, the reality of China’s relationship with Africa is that of a “favorable” unequal relationship for its own gain, rather than the “win-win” relationship broadcasted by the Politburo.
These horror stories cultivated from a natural distrust of capitalism and western intervention, both financial and political. This, in turn, has created an opening for China. The Middle Kingdom’s hybrid capitalist-socialist economy and a shared history of exploitation during the era of Western colonial expansion, make it a natural partner for Africa, and the soft power toolkit – based on trust, economic success, infrastructure, and development – enormously successful. Africa is also the perfect target for China’s soft power due to Africa’s abundance in natural resources.
China has funded opulent infrastructure projects such as the brand new US$200 million African Union Headquarters in Addis Abba, Ethiopia. In fact, China has funded infrastructure projects in 50 of 54 countries in Africa, including whole cities in Angola, Tanzania’s entire railroad system, the Democratic Republic of the Congo’s (DRC) highways, and Addis Abba’s subway system. These massive infrastructure projects, however, are a prime example of China’s soft power offensive. The monetary benefits attract countries to the CCP, and then it traps them in the neo-colonialist system through massive amounts of debt and economic control under the guise of a “win-win” relationship. Specifically, the primary vehicle for China’s economic attraction is the low-interest resource-for-infrastructure loans (R4I), which allow the CCP and Chinese firms to corner markets and set prices, and by extension, seize control of impoverished nations’ economies.
From a fiscal perspective, an R4I loan is a low-interest loan that exchanges Chinese infrastructure investment for Africa’s natural resources. While this may appear as a win-win for both parties, as it allows for a symbiotic relationship – China needs natural resources to sustain its manufacturing sector and Africa desperately needs infrastructure – there are two factors that make these loans predatory vessels of China’s neo-colonialist gambit: lack of diversification of economic partners on the part of the African nations, and the liquidity and debt crises that R4I loans cause. Once ensnared in debt, China extorts political favors ranging from breaking promises on local African employment and ignorance for local labor laws, to offering exorbitant packages for nations to vote with China in the United Nations or break ties with Taiwan.
The economic profile that China targets for predatory loans allows for them to easily manipulate markets and seize control of the exports and trade of their debtors. Of China’s top eight debtors in Africa, five have signed R4I loans – Angola, Sudan, Nigeria, the Democratic Republic of the Congo and Ghana, and every one of these nations owes China billions of dollars in natural resources. Furthermore, at the time the R4I loans were issued, three of these five nations (Angola, Sudan, and DRC) had recently exited bloody civil wars, all five nations had unranked or junk bond designation by the three major credit rating agencies (S&P’s, Moody’s, and Fitch’s), and all five nations were in the bottom ten or had unranked economic complexity indices (ECI), which declined since the nations began dealing with China.
Thus, these nations were perfect targets for risky, low-interest loans that were backed and paid for by their precious hydrocarbons and minerals, as they have low quantities of hard currency to pay back their Chinese debtors and extremely concentrated and weak economies. The central African nation of Angola is a case in point. Angola signed its first R4I loan with China in 2004 leveraging its massive petroleum reserves in exchange for US$2 billion of infrastructure investment, including the “ghost city” Nova Ciudade de Kilamaba. However, as the price of oil has fallen, Angola’s oil backed debt has snowballed to upwards of US$25 billion and Angola has consistently fallen behind on loan payments. This has forced Angola to sign an extension and a new R4I loans to try to gain new lines of credit in 2007 and 2009 respectively. However, rather than usher in financial resurgence, China has gained control of Angola’s economy and its massive petroleum reserves.
Over the last decade, Chinese imports of Angolan goods has consistently risen and now accounts for over 35% of the African nation’s economy. Furthermore, the portion of Angola’s petroleum reserves that is shipped to China has increased from four or five of Angola’s 50-60 tankers per month, to upwards of 40-50 tankers per month, a whopping 1,000% increase. Thus, Angola is trapped between a rock and a hard place. If they disobey the Chinese, their economy is at risk and but if they listen, they continue down the rabbit hole with no escape in sight. Hence, Angola has become a “neo-colony” of China, with all the “outward trappings” of economic autonomy, but in reality, it is at the beck and call of the Politburo and its pocketbook.
China’s resource gambit is not just confined to petroleum. China’s massive manufacturing sector, which accounts for 30% of the Chinese economy, requires access to the massive mineral reserves found in Africa. Sub-Saharan Africa has over 50% of the world’s cobalt reserves, 77% of the world’s manganese reserves, and 88% of the world’s platinum group metal reserves. It is also home to the “copper-cobalt” belt, a massive swath of resource-rich land with large quantities of copper and cobalt, both of which are necessary for manufacturing. One of the major countries along this belt in the Democratic Republic of the Congo.
In early 2007, through an R4I loan, the DRC agreed to transfer a large portion of the stake in its highly resource rich mines to Chinese companies. However, it appears that the price that Chinese firms paid for the mining rights to this land was drastically undervalued. Much like Chinese petroleum exports, the trade was pushed through and incentivized by the Politburo. The CCP approved a US$6 billion credit line for African infrastructure along with the deal and has since produced hundreds of thousands of tons of copper from the mine, providing China with US$500 million USD in unrefined copper and cobalt resources per year.
Political Consequences
This system of economic entrapment has evolved into political exploitation and has real human consequences and effects on local politics. In 2017 Lusaka, over thirty Chinese nationals were arrested in Zambia for a variety of illegal mining practices, such as but not limited to child labor and unlicensed smelting. China, which has invested over a billion USD in the Central African nation, claimed that the evidence presented by the Zambian government was not substantial and demanded that the Chinese nationals be released. Within 48 hours, all 31 Chinese miners were on a flight home to China. This too is an example of neo-colonialism and, ironically, the very same extraterritoriality which China suffered at the hands of 19th-century Western imperial powers. The Chinese government, using its economic influence, exerted political control over the situation while preserving the “outward trappings” of autonomy. This is not unique.
In 2013, Zambia dropped attempted murder charges against two Chinese nationals who shot 13 Zambian miners after repeated pressure from the Chinese government. It is also not confined to Zambia. Chinese nationals have committed crimes across the continent amounted to wildlife poaching, human trafficking and been only asked to leave African countries rather than stand trial for their actions. In Ghana, 160 Chinese nationals, were asked to leave the country for crimes that range from polluting water supplies with cyanide and pesticides intentionally to cause deaths of so-called illegal miners that frequenting near their gold mines.
China, as previously mentioned, has spent billions of dollars in infrastructure deals and R4I loans in the country and sent diplomats to secure their release. Furthermore, the majority of the massive infrastructure and aid projects that appear represent the African “gain” from the relationship have unfairly benefited China, Chinese construction firms, and Chinese workers. Many of the skilled and unskilled workers who work on these large infrastructure projects are Chinese expatriates sent from China.
Furthermore, this benefits the Chinese, as the lack of skilled laborers allows for Chinese firms to employ Chinese nationals, flout labor laws, and destabilizes economies creating demands for more lines of credit and predatory R4I loans. In addition to local politics and unemployment, China’s political exploitation also has geopolitical ends. One example of the political ends of the Chinese checkbook is the “One China” policy and Taiwan. In recent years, it has become apparent that the CCP and China have been offering large packages to sub-Saharan African nations in exchange for cutting diplomatic ties with Taiwan. Burkina Faso, one of the few remaining sub-Saharan African states with diplomatic ties to the island nation, perennially receives multi-billion-dollar infrastructure packages in exchange for dropping formal diplomatic ties. In January of 2017, Bloomberg reported that Beijing offered Burkina Faso upwards of US$50 billion in infrastructure spending.
Foreign Minister Alpha Barry, however, reaffirmed the West African nation’s commitment to Taiwan saying, “We get outrageous proposals [from China] telling us, ‘if you sign with Beijing we’ll offer you $50 billion or even more,’…Taiwan is our friend and our partner. We’re happy and we see no reason to reconsider the relationship.” While Burkina Faso has maintained diplomatic ties with Taiwan, other nations have succumbed to the Chinese soft power offensive.
In the past year, the African archipelago of São Tomé demanded US$100 million to maintain diplomatic ties with Taiwan. When Taiwan refused, São Tomé cut diplomatic ties, and summarily received millions of dollars in aid and doctors from the Chinese Government. In addition, China also considered building a deep-water port in that country. Pulling on the success and reputation of other African states and the Chinese pocketbook, the CCP attracts nations and partners, with the end goal of achieving its own political means and economic gains. In São Tomé’s case, the goal was to isolate Taiwan diplomatically. As more nations buy into this system, the noose tightens. Countries that do not receive Chinese cash fall behind economically and become politically isolated. China also has used their checkbook and control over the debtors to garner international support and votes at the United Nations.
According to researchers at the College of William & Mary’s AidData project, in exchange for a 10% increase in voting with China at the United Nations, African countries receive, on average, a whopping 86% increase in aid. Furthermore, of China’s top eight debtors, the five who have signed R4I loans have also seen their voting patterns change. Angola, Sudan, Nigeria, DRC, and Ghana vote with China between 83% and 93% of the time, according to The Economist. Thus, China’s neo-colonialist system of systematic economic and political exploitation follows a simple playbook. China produces extravagant infrastructure, loan, and credit packages; corners markets on valuable natural resources; forgives and renegotiates massive amount of debt; and in return receives special treatment, “favorable” trade deals, and political influence and control. This allows China to achieve geopolitical objectives. But to what end? What is the CCP’s endgame?
The Chinese Dream
In 2013, Xi Jinping became President of China, and his ascendance to the upper echelons of the Politburo was aided by his concept of the “Chinese Dream.” Despite channelling the rhetoric of the “American Dream,” the two concepts could not be any more different. The American Dream prioritizes individual success; the Chinese Dream is an ethno-nationalist ideology that prioritizes the country over the individual. It is the final step in the ascendance of China back to its prior greatness before the “Century of Humiliation,” and it is strategically supposed to coincide with the centennial of the People’s Republic of China in 2049. The Politburo and Xi Jinping have been publically broadcasting the “Chinese Dream” as the date that the CCP will finally deliver on its promise to “solve all of China’s problems,” running a public relations tour and publishing a book on how the CCP will deliver on its massive promise.
However, in order to achieve this end, the Chinese Government must become the global economic, political, and military leader, and it has turned its pocketbook on various regions of the world to aid in achieving this massive goal. One such region is sub-Saharan Africa, which has acted as an economic and political tool in achieving President Xi’s “Chinese Dream.” The neo-colonialist exploitation and soft power offensive in the region are all means to this end. The exorbitant infrastructure, aid and FDI spending in the continent has helped grow China’s manufacturing and construction sectors and resulted in the suppression of domestic business and companies. Finally, China’s soft power, namely its reputation and its bottomless pocketbook, has allowed it to wield massive influence on the continent, and attract other nations to its multitude of political and economic goals.
China’s actions in Africa certainly passes Kwame Nkrumah’s litmus test of neo-colonialism. The appearance of national sovereignty is preserved, but vast economic control allows China to wield undue political influence and prolific tax invasion. Sadly, this neo-colonialist system is not limited to sub-Saharan Africa. Much like R4I swaps and loans in Africa, Chinese projects in Southeast Asia have political riders attached to them. However, rather than local favoritism or United Nations votes, China has required ideological purity for its regional ambitions. Whether it is Taiwan and the “One China” policy or Tibet and the Dali Lama, participation in Chinese initiatives such as One Belt, One Road or the Asian Infrastructure Investment Bank, carry political provisions both spoken and unspoken. With China’s neo-colonialist tentacles spanning from Saigon to Johannesburg, Pyongyang to Accra and then now Windhoek, the question remains: who is next?
China is re-colonizing Africa by appealing to the ignorance and selfish interests of our leaders. Today, the Chinese are offering mouthwatering deals to Africa, both in cash transactions, humanitarian aid and defunct barter trade which seem very attractive on the outlook but dangerous in design. Some African governments contracted the Chinese, lazy-thought projects, but the future generations will face the problem when these agreements morphed into real neocolonialism. Chinese have an influence and gradually gaining grounds over major institutions, biggest mining companies and governmental parastatals soon will be “taken” over by Chinese global empire. The 21st-century's slavery will never be in the chain but in debt caused by the ignorance and self-serving African leaders.