First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

New paradigm needed to inspire private corporation type...

Defend Truth

Opinionista

New paradigm needed to inspire private corporations Africa needs

mm

Professor Brian Ganson heads the Centre on Conflict & Collaboration at the Stellenbosch University Business School.

Africa is littered with fragility entrepreneurs whose very business model is premised on corrupt access to resources, weak enforcement of environmental regulations, and denial of labour, community and indigenous rights.

Africa Day (25 May) has its roots in African Freedom Day, declared by the First Congress of Independent African States in 1958 “to symbolise the determination of the people of Africa to free themselves from foreign domination and exploitation”.

Our history of corporatised slavery through the Dutch East India Company, corporatised imperialism through the British South Africa Company, the symbiotic relationship of businesses with the apartheid state, and the entanglement of foreign companies in State Capture make us acutely aware that the face of this exploitation has far too often been a private corporation.

The African challenge with respect to foreign investment and corporate operations in Africa is still systemic. Patterns of trade and investment remain largely extractive, with the continent’s largest investments premised on the expatriation of corporate profits as well as of African mineral or agricultural resources to be turned into valuable products elsewhere.

Furthermore, the continent is littered with fragility entrepreneurs whose very business model is premised on corrupt access to resources, weak enforcement of environmental regulations, and denial of labour, community and indigenous rights. Any developmental impact from the presence of these corporate activities is incidental; and far too often, there is a net negative impact on human security.

For example, the mines in Bojanala in the heart of South Africa’s platinum belt extract 50% of the platinum produced in the world. Yet, the unemployment rate for Bojanala is 48.7% and the Gini oefficient 0.62; fewer than 20% of homes are connected to running water, and fewer than a third of adults have finished high school. Bojanala’s crime rate is the highest of the sub-regions within the North West province. For the local municipality of Rustenburg, the murder rate in 2016 was roughly 36 per 100,000 population — comparable to South Sudan, and higher than Colombia, Central African Republic and Yemen, all countries experiencing armed conflict.  

Furthermore, foreign companies — arrogantly or ignorantly — ignore social conflict and even armed violence related to their operations. Rio Tinto ceased operations last year in response to violence in Richards Bay, but it notably did not highlight that the company contributed to community strife by building few meaningful linkages between major industry and the development of local businesses, and having limited, if any, community consultation and participation in the planning of its initiatives.

When Total suspended its natural gas project in Mozambique, it did not speak to how its own actions — including marginalising community voices, militarising responses to social risk, and exacerbating regional and political fault lines — directly contributed to the escalation of conflict resulting in thousands dead and some one million people displaced.

Historically, the response of African liberation movements to the corporate dynamics they saw repeated endlessly across the continent was a call for socialism. Contemporary voices also call for nationalisation of key industries to both curtail corporate wrongdoing and to increase African development from African resources.

One needn’t wade into the debate of socialism versus capitalism to recognise the truth of their fundamental premise: that the structures of our economy — notably including large corporations that are largely answerable only to foreign interests — are badly broken and in need of fundamental reform.

If we take as our starting point that the private corporation that Africa needs has not yet been invented, we can perhaps make meaningful progress. We can work to ensure that the ones that thrive in Africa are also for Africa — and thus will look meaningfully different from the landscape we see today.

First, corporations for Africa will eschew the easy profits of extraction; they will rather create opportunities in the real economy that directly address the needs of poor, vulnerable and marginalised groups at scale. Given that some 80% of Africans find their livelihoods in the informal economy, in particular as smallholder or subsistence farmers, this will require a shift in focus from the “mega-projects” beloved by banks to inclusive value chains.

Concurrently, corporations for Africa will take pride in bringing valuable products to the world. We will see fewer primary products and raw materials exported. We will see a West African chocolate champion to rival Nestlé; a southern African automotive parts champion to rival the German companies now turning African platinum into catalytic converters; and many more.

Corporations for Africa will also be forces for, and examples of, sound governance. They will refrain from lobbying or dealmaking with public entities apart from transparent and inclusive processes; they will make stakeholders decision-makers in company processes of public importance such as ESG assessments, risk mitigation planning, and impact monitoring; and they will subject themselves to accessible, binding dispute resolution processes and redress mechanisms managed by independent third parties.

Finally, the corporation in Africa, for Africa will be equally accountable for all of its responsibilities. Today, a CEO cannot brush off repayments to its project finance lender by claiming that the company is somehow “making progress” in that direction. In the African future, failure to deliver on human security and human development will have the same consequences as failures to deliver on financial goals.

We should not naïvely assume that the corporations that are currently dominant on the African continent will be on board with this agenda. After all, they have over decades or even centuries adapted themselves to be optimally profitable under the status quo.

However, we should remember that corporations are not a force of nature, but rather, creatures of law and policy. A combination of smart regulation, nurturing of the emergence of new private sector actors, alliances with forward-thinking development banks and international partners, and community and civil society engagement can bring about change.

It can make corporations in Africa, for Africa, “a concrete manifestation of the pan-African drive for unity, self-determination, freedom, progress and collective prosperity” as aspired to in the African Union’s Agenda 2063. DM

 

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted