C. The centrality of FDIs in NEPAD's development strategy

In order for Africa to "slice up the value chain" in the process of globalisation, NEPAD says, Africa must be prepared to undertake massive investments. Without these, NEPAD's vision will remain merely rhetorical. But where are these investments going to come from? In the entire NEPAD document, this is the most critical question: Where is the money going to come from to get Africa out its present state of underdevelopment and marginalisation? No amount of dreaming about new visions, or about new kind of leadership in Africa, will amount to much unless ways are found to finance the new vision.

NEPAD hopes that the capital will come from its "partners." There is a "resource gap" in Africa, says NEPAD (para 153). Africa must therefore depend on foreign capital to fill the gap. And this, for all intents and purposes, means, capital from the highly industrialised countries. "The locomotive for these major advances is the highly industrialised nations. Outside this domain, only a few countries in the developing world play a substantial role in the global economy." (para 31)

NEPAD is not optimistic about aid or credit as sources of finance from the West. In fact, it looks at these rather unfavourably.

Historically . the credit and aid binomial has underlined the logic of African development. Credit has led to the debt deadlock, which, from instalments to rescheduling, still exists and hinders the growth of African countries. The limits of this option have been reached. Concerning the other element of the binomial - aid - we can also note the reduction of private aid and the upper limit of public aid, which is below the target set in the 1970s. (para 3)

Under NEPAD, African leaders will seek to "mobilise domestic resources" (para 148); they will seek "the extension of debt relief beyond its current levels (based on debt "sustainability")", and link debt relief with "costed poverty reduction outcomes"; (para 148-49); they will seek "increased ODA flows in the medium term, as well as reform of the ODA delivery system, to ensure that flows are more effectively utilised by recipient African countries" (para 151-152). They will do all this, but, in the final analysis, it is the flow of FDIs that will decide whether Africa can meet its growth targets. NEPAD considers debt reduction and ODA "as complementary external resources required in the short to medium term", and "addresses private capital flows as a longer-term concern." (para 147) NEPAD sets its target at an estimated 7 per cent annual growth rate needed to meet the millennium goals - particularly, the goal of reducing by half the proportion of Africans living in poverty by the year 2015. "To achieve this Africa needs to fill an annual resource gap of 12 per cent of its GDP, or US $64 billion. . the bulk of the needed resources will have to be obtained from outside the continent." (para 147, emphasis added). This is only a reiteration of what NEPAD had already indicated earlier in para 66 :

The new long-term vision will require massive and heavy investment to bridge existing gaps. The challenge ahead for Africa is to be able to raise the required funding under the best conditions possible. We therefore call on our development partners to assist in this endeavour.
D. But why should the West help Africa?

The West should help Africa for two main reasons. One is that, under the new partnership concept, the West must recognise that Africa is an "indispensable resource base that has served all humanity for so many centuries." (para 9) To be specific, these are: Africa's "rich complex of mineral, oil and gas deposits, its flora and fauna", etc.; the "ecological lung provided by the continent's rain forests"; "the paleontological and archaeological sites containing evidence of the evolution of the earth, life and the human specie"; and Africa's cultural contribution. (paras 10-16) "In this new millennium," says NEPAD, "when humanity is searching for a new way to build a better world", the West must recognise that Africa's past and present contributions place Africa "on a pedestal of equal partnership in advancing human civilisation." (para 17) The West must help to "build a universal understanding of the historic need to end the underdevelopment and marginalisation of the continent." (para 14)

The second reason the West must help Africa is because it is in its own interest to do so. "Improvements in the living standards of the marginalised offer massive potential for growth in the entire international economy, through the creation of new markets." (para 38) Furthermore, it will bring with it "greater stability on a global scale, accompanied by a sense of economic and social well-being." (para 38) "The imperative of development," says NEPAD, "therefore, not only poses a challenge to moral conscience; it is in fact fundamental to the sustainability of the globalisation process." (para 39)

But NEPAD does not leave matters to work out on their own. The West will not help Africa if Africa does not help itself first. What Must Africa do to help the West to help Africa?


E. What must Africa do the help the West to help Africa?

First of all Africa must put its house in order. This is where the new leadership that is in power now will make all the difference.

"Across the continent," says NEPAD, "democracy is spreading, backed by the African Union (AU), which has shown a new resolve to deal with conflicts and censure deviation from the norm." (para 45, emphasis added). NEPAD puts in place a system of "peer review" by which African leaders will monitor each other's behaviour and domestic practices. If these deviate from "the norm" then the deviants will be brought to book.

What does "the norm" comprise? What are its principles? Who is to judge the "deviations" from the norm? NEPAD spells these out in detail (see below), but there is one thing that stands out paramount. Since foreign capital is the most critical factor in meeting Africa's future goals (paras 31, 66, 147, 153-155) nothing must be allowed to happen in the continent that prejudices the flow of foreign capital. And here comes arguably the most powerful, and probably the most controversial, message of NEPAD:

A basic principle of the Capital Flows Initiative is that improved governance is a necessary requirement for increased capital flows, so that participation in the Economic and Political Governance Initiatives is a prerequisite for participation in the Capital Flows Initiative." (para 147, emphasis added)

This, by the way, is the basis of the sanctions imposed on Zimbabwe (including, on the recommendation of the Heads of states of Australia, Nigeria and South Africa, its suspension form the Commonwealth). NEPAD goes into considerable detail (paras 71 to 92) to spell out the principles of "Economic and Political Governance" and the mechanism to put these in place.

For example:

Long-term peace is one of the primary conditions to attract FDIs. It also includes addressing "political and social vulnerabilities" (para 73);
Africans must make all efforts to find a lasting solution to existing conflicts (para 77);
Africa undertakes to respect the global standards of democracy, whose core components include political pluralism (para 79);Principles of democracy, transparency, accountability, integrity, respect for human rights and promotion of the rule of law and Economic Governance Initiatives (para 80);
Commitments by participating countries to create or consolidate basic governance processes and practices (para 81); and appropriate diagnostic and assessment tools, in support of compliance with the shared goals of good governance (para 82);
Strengthening of national, sub-regional and continental structures that support good governance (para 84);
The "Leadership of the NEPAD" will periodically monitor and assess the progress made (para 85)
"State capacity-building" as a critical aspect of creating conditions for development (para 86);
Promoting a set of concrete and time-bound programmes (para 88); ? A "Task Force from Ministries of Finance and Central Banks" to review "economic and corporate governance practices" (para 89);
There are many things here that may be put to question. For example, who elected the "Leadership of the NEPAD"? Where did they get the mandate to monitor the rest of the leaders from Africa? On the other hand, the NEPAD says many things, in the earlier parts of the document, that most people on the left would agree with, such as the need for "self-reliance", the need for Africa's renaissance to be based on Africa's "ownership" of its development agenda, the need for civil society organisations to be mobilised in support of Africa's millennium vision, and so on. But when NEPAD hitches Africa's star to the wagon of FDIs, and puts in place a sanctions-imposing machinery to ensure that nothing is done to prejudice the flow of FDIs to Africa, then it is necessary to seriously examine the assumptions under which it does so, as well as to assess its future implications for Africa.


III. Some Conceptual and Political Anomalies of NEPAD
A. Resource and Resource Gap

Starting with the simplest concept first, what does NEPAD mean by "resource" and "resource gap"?

It is clear that there is double confusion about this term in NEPAD. It uses the term "resource" in at least two senses: resource as physical, natural, human or knowledge assets; and resource as simply money or capital. The following elucidates this anomaly in NEPAD.

Resource as physical, natural, human or knowledge assets: Africa, NEPAD says, has been an "indispensable resource base" that has served all humanity for so many centuries." (para NEPAD, as mentioned earlier, goes on to enumerate four kinds of "resources" of Africa.

"For centuries, Africa has been integrated into the world economy mainly as a supplier of cheap labour and raw materials. Of necessity, this has meant the draining of Africa's resources rather than their use for the continent's development." (para 19)

"It is time that African resources are harnessed to create wealth for the well-being of her peoples." (para 20)

Africa has suffered lack of growth on account of "structural impediments" and "resource outflows" as well as "unfavourable terms of trade". (para 34) If Africa's "enormous natural and human resources" are properly harnessed, NEPAD says, then it could lead to "equitable and sustainable growth" of the continent (para 52)

Need to reverse the loss of "environmental resources" by 2015. (para 68) NEPAD talks about culture as part of Africa's resource and adds: "The term also includes genetic resources and associated knowledge." (para 143) And so on.

Resource as money or capital

Nepad quotes the United Nations Millennium Declaration emphasising the need to enhance "resource flows to Africa", in the form of aid, trade and debt relief (para 46) The whole section on "Mobilising Resources" treats the word purely in terms of money and capital. For example:

To achieve 12% annual growth, NEPAD says, Africa needs "to fill an annual resource gap of 12 per cent of its GDP, or US $64 billion". (para 147)

By the phrase "increasing domestic resource mobilisation", NEPAD means simply money. "Domestic resources include," NEPAD say, "national savings by firms and households". (para 148)

"HIPC," says NEPAD, will "release resources for poverty reduction." (para 155)

NEPAD's entire discussion of FDI is couched in terms of "resource gap", meaning Africa lacks adequate capital for its development. It is from this perspective that NEPAD bases its theory of "The Capital Flows Initiative". What anomalies result from this double use of the terms?

There are several anomalies resulting from this dual meaning, but we mention two of these, for they lead to quite absurd strategic and political choices that NEPAD advances.

Nigeria, for example, is one of the sponsors of NEPAD. Everybody knows that Nigeria is "resource rich" (in oil for example). However, somehow its approximately US$ 20 billion a year in oil revenue alone somehow gets "spirited away". So, then, it has a "resource gap" in the second meaning of the term which, NEPAD advises, needs to be "filled" by attracting FDIs as "resource" from outside. If Nigeria is both "resource rich" (oil, etc) and at the same time "resource poor" (in the sense that it has no money), then this should open the strategic discussion in several possible directions, and not simply the single-minded, tunnel-visioned, monistic advice from NEPAD that the way out for Nigeria is to create conditions for FDIs to fill the "resource gap."

What will foreign capital do that it has not been doing for all these decades? Para 34, quoted above, for example, says that Africa has suffered lack of growth on account of "structural impediments" and "resource outflows" as well as "unfavourable terms of trade". How will the flow of more foreign capital help tackle these "structural impediments", or reverse the "resource outflows" and "unfavourable terms of trade"? Indeed, is not one kind of "resource inflow" (i.e. capital from outside) the very reason why there has been "resource outflow" of another kind (i.e. the mineral and other resources of Africa) under terms of trade that are not only not changing but getting worse over the last forty years and more?