Connect with us

Politics

Railway Rivalry in the East African Community

Published

on

Railway rivalry
Download PDFPrint Article

Politics rather than economics are driving multi-billion dollar investments in new ports and railways.

Commentators agree that Africa needs huge investment to bridge the ‘infrastructural deficit’ after decades of neglect. In recent years, East African Community (EAC) members have launched transport projects worth tens of billions of US dollars. A Chinese contractor is building a standard gauge railway (SGR) from Mombasa to Nairobi and (perhaps) Kampala and Kigali (see map). The Mombasa-Nairobi phase of the project is estimated to cost KES327 billion (US$3.8 billion), 90% financed by China’s Exim Bank. The new line will run parallel to the existing meter (‘narrow’) gauge railway. The proposed Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) project consists of a new port, a 3,250 km standard gauge railway line, and other projects costing an estimated US$23 billion. In Tanzania, large projects underway or planned include upgrading Dar es Salaam port (US$500 million), building a new port at Bagamoyo (US$10 billion), upgrading the current central railway line from Dar to Isaka (US$300 million), and constructing a SG railway linking Dar es Salaam with Rwanda and Burundi (US$7.6 billion).

Cooksey map_Kenya-SGR_14-kenya-rail-COL

This map was produced by Africa Confidential. Permission for re-use should be obtained from Africa Confidential.

COST CONCERNS

Although the EAC desperately needs more and better infrastructure, the economic viability of some of the proposed investments has been questioned, given the enormous costs involved and possible cheaper and less risky alternatives in rehabilitation and upgrading existing facilities. Soft loans from China’s Exim Bank are financing most of the SG railway projects, while both Kenya and Tanzania have introduced a Railway Development Levy on imports to help cover local costs. Apart from finance, other vital issues that have not been addressed are how the railways will claw back freight from the roads, and, crucially, how the new facilities will be managed and regulated.

Tanzania and Kenya compete to serve the transit trade of Uganda, Rwanda, and Burundi, whose landlocked geography gives all three (and other non-EAC neighbours) a keen interest in the cost, safety and convenience of trading through Dar or Mombasa. 80% of Uganda’s imports pass through Mombasa, while Rwanda and Burundi depend on both Dar and Mombasa for imports and exports. Services have improved at Mombasa and Dar es Salaam ports in recent years, but there is still a long way to go to reach international standards. According to the World Bank (WB), inefficiency and corruption in managing Dar port and the Central Railway are estimated to cost EAC countries US$2.6 billion a year.

FLAWED PROCUREMENT

Large investments in railway upgrading designed to complement port improvements are also underway, but they have been marred by lack of transparency and competent economic analysis. In March 2010, Kenyan transport minister Amos Kimunya cancelled the procurement process that Kenya Railways had initiated for feasibility and design of the SGR, and the contract was awarded to China Road and Bridge Corporation (CRBC). Thereafter, there was no competitive tendering or public oversight of the procurement process. CRBC was involved in ‘all aspects of the project’, including the feasibility study, project design, cost, and finance, ‘and was then handed the contract to build.’

Critical voices included Transparency International Kenya, who ran a campaign to stop the SG project on the grounds that it would ‘cripple the country financially’; ignored procurement rules; and was unnecessary given the upgrade option. In January 2014, John Githongo wrote an open letter to President Kenyatta questioning the credentials of the SGR contractor CRBC and the inflated cost of the project. Economist and commentator David Ndii flagged the likely negative effects of railway duplication on the budget and the national debt. In response to these and other critics, Vice President William Ruto retorted: “No one and nothing will stop us from building the railway…”

In June, the tender to manage the new line when completed was awarded to China Communications Construction Company (CCCC), parent company of CRBC. On completion of Phase 1 of the SGR, Kenya will have competing railway lines from Mombasa to Nairobi. Rift Valley Railways (RWR), the concessionaire for the existing railway, plans to claim compensation from the Kenyan government for loss of custom to the SG line. RVR effectively helps finance SG through the 1.5% Railway Development Levy paid on all imports. RVR’s performance has improved in recent years, but the SGR has put into question the future of the concession, and further investments are on hold.

PARALLEL LINES

The economic viability of the SGR option was challenged in a 2009 study by Canadian Pacific Consulting Services (CPSC), which concluded that the benefit of replacing narrow gauge by SG would be marginal. The conversion of the entire EAC rail backbone to SG was considered ‘cost prohibitive’ using ‘even the most optimistic’ traffic and income projections. On the basis of this report, the EAC Secretariat produced a regional Railways Master Plan that foresaw the growth of rail traffic in the region from 3.7 million tonnes in 2007 to 21 million tonnes by 2030, using the existing track. This Master Plan was superseded by a pro-SGR version that made no mention of the CPSC findings.

Pro-SG lobbies dominate public discourse. Justifications for the SG option include: increased freight carrying capacity, reduced wear and tear on the roads, and greater speed. According to President Kenyatta, the inefficiency of the rail system ‘has placed a disproportionate burden on the slow, cumbersome and more costly road network.’ Thus, ‘the cost of goods and services is unduly high and … uncompetitive.’

The Tanzanian government also turned to the SG option after first opting to rehabilitate the existing Central Line. In 2003, the African Development Fund financed a feasibility study for a SG line from Isaka to Kigali and Bujumbura (1,435 km) which declared the project feasible and attractive to private investors. This and subsequent detailed engineering proposals were based on the assumption that a new SGR would be built from Dar to Isaka. When in March 2014 the Tanzanian government agreed a US$300 million project to upgrade the existing track to Isaka, there was still no public discussion of SGR. In April, the SGR option was proposed publicly for the first time, and finally in March 2015, Minister of Transport Samuel Sitta announced that Tanzania was embarking on a 2,500 km SG railway costing an estimated US$7.6 billion. In collaboration with the World Economic Forum, the government appointed American financial advisory group Rothschild as a transaction adviser. If both projects go ahead, Dar to Isaka will also have competing parallel railway lines.

NEW RAIL VIABILITY

Apart from the CPCS, the main critical voice in the SG debate has been the World Bank, who insisted that rehabilitation was the better policy option. A WB transport specialist argued that the “Business case for railway depends on the improvement of train availability, reliability, punctuality, and financial sustainability, not the size of track gauge.”

Since politics is driving the SG projects in both Kenya and Tanzania, it is possible that certain categories of goods will be obliged by law to use the railway. There are no studies that would allow an assessment of the economics of transporting goods by rail or road. It is assumed that passenger services will also be provided, irrespective of their economic justification. In 2011, the EAC Secretariat made the following comment on transport policy:

…there is no indication that partner states intend relinquishing their ownership role to the EAC. They will therefore remain responsible for the planning of, investment in and operation of their transport assets…. The role of the Community will be to guide partner states on the components of the transport system that are of regional importance…

Still, the Secretariat’s advice to rehabilitate the existing track was overruled in favour of the SG option. Issues of governance, management and profitability in a context where past PPPs have largely failed are ignored. The enormous costs involved stretch national budgets and add to the national debt. How rail transport will claw back enough freight from the politically well-connected trucking industry to make rail financially viable is not explained.

POLITICAL DOMINATION

For better or worse, political relations between EAC elites strongly influence which infrastructure projects will be implemented. Since President Magufuli came to power in late 2015, warm relations have been established between Tanzanian and Rwandan heads of state. In April 2016, Uganda decided that a US$4 billion oil pipeline would go through Tanzania, scrapping a previous agreement with Kenya. In May, Rwanda announced that it planned to build its SG railway through Tanzania instead of Kenya. In turn, Kenya announced that the planned SG project might have to end at the Ugandan border, since Uganda appeared to be no longer committed to its part of the project.

The above discussion suggests that there is little or no effective coordination of transport policy in the EAC. Dar es Salaam and Mombasa ports are being upgraded at considerable cost while new ports are planned with huge additional handling capacities. The decision to invest in SG railways was made in the absence of any plans on how to phase the transition from narrow to standard gauge. The Tanzanian government negotiated with the World Bank to upgrade the Dar-Isaka line while at the same time negotiating with Chinese companies over the SG plan.

There is no public discussion on how policy will encourage (or force) a massive transfer of freight from road to railway. While ruling elites are the ultimate drivers of major rail investments, they are also influential in road transport policy. EAC governments are committed to private investment and management of the new railways, but it is difficult to imagine robust private participation without state protection, meaning further tinkering with the market mechanisms that should be driving the transport sector. For the moment, politics dominates transport coordination in the EAC, with the Arusha secretariat playing little or no significant role.

The author has also written a discussion paper for ECDPM on Tanzania and the East African Community: A comparative political economy and contributed to ECDPM’s Political Economy of Regional Integration in Africa – East African Community Report with Chapter 3 on Transport Infrastructure.

By Brian Cooksey
Brian Cooksey is an independent researcher.

This article was published in GREAT Insights Volume 5, Issue 4  (July/August 2016).

Support The Elephant.

The Elephant is helping to build a truly public platform, while producing consistent, quality investigations, opinions and analysis. The Elephant cannot survive and grow without your participation. Now, more than ever, it is vital for The Elephant to reach as many people as possible.

Your support helps protect The Elephant's independence and it means we can continue keeping the democratic space free, open and robust. Every contribution, however big or small, is so valuable for our collective future.

By

Brian Cooksey is an independent researcher.

Continue Reading

Politics

The Axis-of-Evil Coalition in the Horn of Africa

The “Tripartite Agreement” signed between Ahmed Abiy of Ethiopia, Mohammed Abdullahi Farmajo of Somalia, and Isaias Afwerki of Eritrea is a “Trojan Horse” deal that could eventually destabilise the entire Horn of Africa region.

Published

on

The Axis-of-Evil Coalition in the Horn of Africa
Download PDFPrint Article

The political dynamics in the Horn of Africa have always been tense and volatile. Being a geographically strategic region, it has historically attracted competition among the big powers, with the region’s diversity in terms of population, norms, politics, and history rendering it susceptible to proxy politics emanating mainly from Western countries.

The countries of the Horn of Africa are Ethiopia, Somalia, Eritrea, Djibouti, Sudan, South Sudan, and by extension, Kenya, and Uganda. In this article, we focus on Ethiopia, Somalia, and Eritrea. More specifically, we shall examine how the incumbent leaders in Ethiopia, Somalia, and Eritrea have created a coalition to extend their terms of office under the pretence of “Horn of Africa Integration”.

The Horn of Africa region has been vulnerable to multipolar politics ever since, at the Berlin Conference of 1884-5, 13 European countries laid claim to Africa’s territories: Britain signed the Rodd Treaty with Menelik II of Ethiopia in 1897 that dominated the country’s administration, Djibouti came under French control while Italy took Somalia, Italian Somaliland, and Eritrea. By 1914, with the exception of Ethiopia and Liberia, all other African countries were under colonial rule.

Russia joined the race during the Cold War and supported the regimes in Somalia and Ethiopia, with President Siad Barre of Somalia and Prime Minister Mengistu Haile Mariam of Ethiopia becoming close allies of Russia. But despite their allegiance to the former Soviet Union, the two countries fought a vicious war from 1977 to 1978.

Somalia

From 1960 to 1969, Somalia was a fledgling democracy led by civilian governments established through peaceful transfer power. The military seized power in 1969, led by Siad Barre who ruled with an iron fist until he was ousted in 1991, leaving in his wake a civil war that killed thousands of Somalis, and pushed thousands more into exile. In 2000, Djibouti called a reconciliation conference that brought together civil society groups and culminated in the formation of the first government since the beginning of the civilian war. The new government was short-lived, however, as the warlords who controlled most of the south-central regions resisted and revolted. In 2004, the second government was formed under the Transitional Federal Government of Somalia under the leadership of the late President Abdullahi Yusuf.

However, this government made the same mistakes as its predecessor, calling on the African Union to send troops to support President Yusuf’s government and escort him to the capital, Mogadishu. The new government and the Islamic Courts Union (ICU)—which controlled most of the south-central region—held several meetings in Sudan to try to reach an agreement, but the talks failed. A military confrontation between troops of the Islamic Courts Union the Transitional Federal Government backed by Ethiopian forces ensued and, after a bitter fight and great loss of life, the TFG entered Mogadishu. Following a political fallout between the president and his prime minister, President Abdullahi Yusuf resigned, and the leader of the ICU, Sheekh Sharif, succeed Yusuf after negotiations between the leader of the ICU and the international community.

The first elections since the outbreak of the civil war were held under President Sheekh Sharif and Hassan Sheikh Mohamud, a civilian and veteran academic, was elected. Somalia became a federal state with five federal member states under President Hassan who oversaw the implementation of the provisional constitution which had been adopted in August 2012.

Although there were allegations of corruption, President Hassan’s government was relatively stable. One person one vote elections were scheduled to take place in 2016, but they were postponed for various reasons, including the insecurity caused by the Al-Shabaab and disagreement between the federal government and the leaders of the federal member states and others. Despite the challenges, however, President Hassan Sheikh’s administration pioneered indirect parliamentary elections where 51 delegates from each clan would each elect the members of parliament. Although the process was not considered a fair fight, the transition was smooth. In February 2017, Hassan Sheikh lost his re-election bid, and President Mohamed Abdullahi Farmajo became his successor. President Farmajo received a warm welcome from the public and many accolades from the international community and the neighbouring countries. Indeed, many Somalis believed that he would be better than his predecessors and would deliver the one person, one vote in 2021.

The situation turned when the government extradited Ogaden National Liberation Front (ONLF) commander Abdikarim Qalbi Dhagah to Ethiopia, leading to a public backlash, protests, and fierce criticism of the government. It was the first time that a Somali person had been extradited to Ethiopia, a country that many Somalis consider the archenemy. Since then, public support for the government has plummeted. Intimidation, attacks, smear campaigns, extrajudicial actions, and incarceration have become the modus operandi of the current government and the Somali people’s hope in Farmajo’s government has declined dramatically. Meanwhile, Farmajo’s government declared the UN Ambassador to Somalia persona non grata and expelled him, leading to international condemnation of his government. The government of Somalia also cut ties with Kenya, a country which has hosted the largest number of Somali refugees since 1991.

It was the first time that a Somali person had been extradited to Ethiopia, a country that many Somalis consider the archenemy.

The mandate of the sitting president ended on 8 February 2021 without elections being held for a successor government. In March 2021, the Somali parliament unilaterally extended the term of the president for another two years, which resulted in a confrontation and a split within the National army. After two weeks of chaos, the parliament reversed its decision.

The long-awaited one person one vote elections became a pipedream and indirect parliamentary elections were maintained albeit with an increase in the number of the delegates from 51 to 101. The May 2022 parliamentary elections were been mired in fraud, favouritism, rigging, and massive irregularities and the country has been plunged into uncertainty.

Ethiopia 

Historically, Ethiopia has never held free and fair elections. On the contrary, the country has lived under a political dynasty and patrimonial leadership interspersed with coups. There has always been a power struggle between Ethiopia’s diverse communities. The Amhara, who collaborated with the colonial powers, enjoyed the support of the British Administration under the Rodd Treaty of 1897 agreement, and dominated the country’s politics. Both Menelik II and Haile Selassie marginalized other communities, especially the Oromo, the Somali, and Tigrayans. In 1974, Mengistu Haile Mariam overthrew Haile Selassie in a coup d’état and moved the country’s allegiance away from the West to the Soviet Union, leading to a proxy war in Ethiopia between the US and Russia. Mengistu was ruthless to his critics, especially the Oromo, Tigray, and Somali; he was known as the “Butcher of Addis Ababa” and the “Red Terror.”

Led by Meles Zenawi, the Tigray People’s Liberation Front (TPLF) ousted Mengistu’s regime in 1991 and Ethiopia adopted federalism under the Ethiopian People’s Revolutionary Democratic Front (EPRDF) coalition party made up of the TPLF, Amhara, Oromo, and the Southern Nations and Nationalities. The first mistake committed by the Zenawi regime was to disregard other communities, particularly the Somalis, who are the third largest community in terms of population. The second mistake was to nullify the results of the elections in the Somali region where the Ogaden National Liberation Front (ONLF) had won by a landslide, resulting in a confrontation between the Zenawi regime and the ONLF. After three years of demonstrations emanating from the Oromo region and spreading to the Amhara region, Prime Minister Haile Mariam Desalegn resigned in 2018. It was the first time in Ethiopia that a public office holder had resigned due to pressure from the citizens. Abiy Ahmed took over as prime minister in April 2018.

Eritrea 

Eritrea was an Italian colony before World War II, but after Italy was defeated in the war in 1952, the United Nations tried to federate Eritrea to Ethiopia to as a compromise for Ethiopia’s claim of sovereignty and Eritrea’s desire for independence. Unfortunately, after nine years, Haile Selassie dissolved the federation annexed and annexed Eritrea.

As a result, the Eritrean Liberation Front (ELF), which was created in 1961, revolted against Haile Selassie. When Haile Selassie was dethroned by the Derg regime, former Prime Minister Mengistu Haile Mariam, who had led the revolution, tried to reach a settlement with the Eritrean Liberation Front (ELF) and the Eritrean People’s Liberation Front (EPLF) without success and insurgencies against his rule increased. In 1991, when Mengistu was ousted by the rebel movements led by Tigray People’s Liberation Front (TPLF), Prime Minister Meles Zenawi tried to keep Eritrea as part of Ethiopia, leading to renewed conflict with the rebel groups. After two years of fierce fighting Eritrea gained its independence in 1993 but the country has never held an election since; Isaias Afwerki, the first president, is still at the helm. After five years of a territorial dispute between Ethiopia and Eritrea, the Badme War erupted in 1998, lasting until 2000 and claiming more than 100,000 lives.

Mengistu was ruthless to his critics, especially the Oromo, Tigray, and Somali; he was known as the “Butcher of Addis Ababa” and the “Red Terror.”

Several peace agreements were brokered, including by the United Nations Mission in Ethiopia and Eritrea (UNMEE), the Algiers Comprehensive Peace Accord (ACPA), the Eritrea-Ethiopia Boundary Commission (EEBC), all culminating in deadlock, and Addis Ababa and Asmara remaining at loggerheads.

Horn of Africa Integration Project

With the exception of April 2018, when the former Prime Minister Haile Mariam Desalegn resigned following three years of demonstrations against EPRDF rule, Ethiopia had never experienced a peaceful transition of power. Abiy Ahmed, who was part of the EPRDF rule, succeeded Desalegn.

In the beginning, under Prime Minister Abiy, Ethiopia enjoyed relative press freedom, there was greater inclusion of women in politics, and the 20 years of animosity between Ethiopia and Eritrea came to an end, paving the way for Abiy to receive the Nobel Peace Prize in 2019. Abiy Ahmed visited Mogadishu in June 2018, where he met his counterpart President Farmajo. In a joint statement, the two leaders talked about strengthening diplomatic and trade relations between their two countries, with Ethiopia pledging to invest in Somalia’s port facilities. But apart from that brief statement, nobody knows precisely what the agenda of Abiy’s meeting with Farmajo was. President Farmajo has also visited Addis Ababa several times, but has not informed Somalia’s parliament what has been agreed between the two leaders. In December 2018, Eritrean president Afwerki visited Mogadishu and had talks with president Farmajo; the agenda of the meeting between the two leaders remains unknown. Somalia’s president also paid a visit to Asmara in July 2018.

Eritrea used to supply weapons and ammunition to the ICU during its conflict with the Somali government of the late President Abdullahi Yusuf, leading the Somali government to accuse Eritrea of supporting the extremist Al-Shabaab rebel group and as a result, the United Nations imposed an embargo on Eritrea in 2009. The UN lifted sanctions on Eritrea in November 2018 after the country reconciled with Ethiopia and Somalia. The leaders of the three countries, Abiy, Farmajo, and Afwerki, signed a little-known “Tripartite Agreement”. In hindsight, Abiy’s reconciliation with Afwerki was to enable Ethiopia to ostracize Ethiopia’s Tigrayan community and launch an attack on the Tigray region. Abiy’s secret agenda came out into the open on 4 November 2020 when he attacked the Tigray region backed by Eritrean troops. The coalition forces have committed gross human rights violations in the Tigray region, which has led to international condemnation against the brutality of the coalition troops and calls for Eritrean forces to withdraw from the Tigray region.

In hindsight, Abiy’s reconciliation with Afwerki was to enable Ethiopia to ostracize Ethiopia’s Tigrayan community and launch an attack on the Tigray region.

Meanwhile, although there is no smoking gun, there is a strong possibility that the Somali troops being trained in Eritrea are involved in the Tigray war. The Somali government had denied that Somali soldiers were sent to Eritrea for training but later confirmed this.

Despite the ongoing civil war and the political discontent in Ethiopia resulting from the delayed polls that were supposed to take place in September 2020, Abiy has decided to remain at the helm by hook or by crook.

The regimes in Addis Ababa, Mogadishu, and Asmara that I have called the axis-of-evil coalition have led the region astray through lack of an adequate response to the protracted drought, the unbridled corruption, the instability, and the internecine conflicts. The reasons behind the “Tripartite Agreement” between the three leaders were not and never have been to serve their respective people, enhance the trade relations, or improve security, but to keep a hold on power through their “Trojan horse” deal. This may lead to a revolt by the oppositions in the three countries that could finally destabilize the entire Horn of Africa region.

Continue Reading

Politics

Moving or Changing? Reframing the Migration Debate

The purpose of the mass and civilizational migrations of Western Europe was the same as now: not simply to move from one point to another, but also from one type of social status to another, to change one’s social standing in relation to the country of origin.

Published

on

Moving, or Changing?
Download PDFPrint Article

Do we move to change, or do we move to stay the same?

That seems to depend on who we were, to begin with. In most cases, it seems we move in an attempt to become even more of whatever we think we are.

A good Kenyan friend of mine once (deliberately) caused great offense in a Nairobi nightspot encounter with a group of Ugandans he came across seated at a table. There were six or seven of them, all clearly not just from the same country, but from the same part of the country.

“It always amazes me,” he said looking over their Western Uganda features, “how people will travel separately for thousands of miles only to meet up so as to recreate their villages.

He moved along quickly.

“Most African Migration Remains Intraregional” is a headline on the Africa Centre for Strategic Studies website:

Most African migration remains on the continent, continuing a long-established pattern. Around 21 million documented Africans live in another African country, a figure that is likely an undercount given that many African countries do not track migration. Urban areas in Nigeria, South Africa, and Egypt are the main destinations for this inter-African migration, reflecting the relative economic dynamism of these locales.

Among African migrants who have moved off the continent, some 11 million live in Europe, almost 5 million in the Middle East, and more than 3 million in America.

More Africans may be on the move now than at any time since the end of enslavement, or perhaps the two large European wars. Even within the African continent itself. They navigate hostilities in the cause of movement—war, poverty and environmental collapse.

The last 500 years have seen the greatest expression of the idea of migration for the purpose of staying the same (or shall we say, becoming even more of what one is). The world has been transformed by the movement of European peoples, who have left a very visible cultural-linguistic stamp on virtually all corners of the earth. It is rarely properly understood as a form of migration.

It took place in three forms. The first was a search for riches by late feudal Western European states, in a bid to solve their huge public debts, and also enrich the nobility. This was the era of state-sponsored piracy and wars of aggression for plunder against indigenous peoples. The second form was the migration of indentured Europeans to newly conquered colonial spaces. The third was the arrival of refugees fleeing persecution borne of feudal and industrial poverty, which often took religious overtones.

Certainly, new spaces often create new opportunities, but only if the migrants concerned are allowed to explore the fullness of their humanity and creativity. The historical record shows that some humans have done this at the expense of other humans.

A key story of the world today seems to be the story of how those that gained from the mass and civilizational migrations of Western Europe outwards remain determined to keep the world organised in a way that enables them to hold on to those gains at the expense of the places to which they have migrated.

We can understand the invention and development of the modern passport—or at least its modern application—as an earlier expression of that. Originally, passports were akin to visas, issued by authorities at a traveler’s intended destination as permission to move through the territory. However, as described by Giulia Pines in National Geographic, established in 1920 by the League of Nations, “a Western-centric organization trying to get a handle on a post-war world”, the current passport regime “was almost destined to be an object of freedom for the advantaged, and a burden for others”. Today the dominant immigration models (certainly from Europe) seem based around the idea of a fortress designed to keep people out, while allowing those keeping the people out to go into other places at will, and with privilege, to take out what they want.

Certainly, new spaces often create new opportunities, but only if the migrants concerned are allowed to explore the fullness of their humanity and creativity.

For me, the greatest contemporary expression of “migration as continuity” has to be the Five Eyes partnership. This was an information-sharing project based on a series of satellites owned by the United States, the United Kingdom, Australia, New Zealand and Canada. Its original name was “Echelon”, and it has grown to function as a space-based listening system, spying on telecommunications on a global scale – basically, space-based phone tapping.

All the countries concerned are the direct products of the global migration and settlement of specifically ethnic English Europeans throughout the so-called New World, plus their country of origin. The method of their settlement are now well known: genocide and all that this implies. The Five Eyes project represents their banding together to protect the gains of their global ethnic settlement project.

In the United States, many families that have become prominent in public life have a history rooted, at least in part, in the stories of immigrants. The Kennedys, who produced first an Ambassador to the United Kingdom, and then through his sons and grandsons, a president, an attorney general, and a few senators, made their fortune as part of a gang of Irish immigrants to America involved in the smuggling of illicit alcohol in the period when the alcohol trade was illegal in the United States.

Recent United States president Donald Trump is descended from a German grandfather who, having arrived in 1880s America as a teenage barber, went on to make money as a land forger, casino operator and brothel keeper. Franklin Delano Roosevelt, the 32nd president of the United States was the paternal grandson of a trader named Warren, a descendant of Dutch settlers who made his fortune smuggling opium into China in the 1890s.

While it is true that the entire story of how Europeans came to be settled in all the Americas is technically a story of criminality, whether referred to as such or not, the essential point here is that many of the ancestors of these now prominent Americans would not have passed the very same visa application requirements that they impose on present-day applicants.

The purpose of migrations then was the same as it is now: not simply to move from one point to another, but also from one type of social status to another. It was about finding wealth, and through that, buying a respectability that had not been accessible in the country of origin. So, the point of migration was in a sense, not to migrate, but to change one’s social standing.

And once that new situation has been established, then all that is left is to build a defensive ring around that new status. So, previously criminal American families use the proceeds of their crime to build large mansions, and fill the rooms with antiques and heirlooms, and seek the respectability (not to mention business opportunities) of public office.

Many of the ancestors of these now prominent Americans would not have passed the very same visa application requirements that they put to present-day applicants.

European countries that became rich through the plunder of what they now call the “developing world”, build immigration measures designed to keep brown people out while allowing the money keep coming in. They build large cities, monuments and museums, and also rewrote their histories just as the formerly criminal families have done.

Thus the powers that created a world built on migration cannot be taken seriously when they complain about present-day migration.

Migration is as much about the “here” you started from, as it about the “there” you are headed to. It is not about assimilating difference; it is about trying to keep the “here” unchanged, and then to re-allocate ourselves a new place in that old sameness. This is why we go “there”.

This may explain the “old-new” names so common to the mass European migration experience. They carry the names of their origins, and impose them on the new places. Sometimes, they add the word “New” before the old name, and use migrant-settler phrases like “the old country”, “back east”. They then seek to choose a new place to occupy in the old world they seek to recreate, that they could not occupy in the old world itself. But as long as the native still exists, then the settler remains a migrant. And the settler state remains a migrant project.

To recreate the old world, while creating a new place for themselves in it, , such migrants also strive to make the spaces adapt to this new understanding of their presence that they now seek to make real.

I once witness a most ridiculous fight between three Ugandan immigrants in the UK. It took place on the landing of the social housing apartment of two of them, man and wife, against the third, until that moment, their intended house guest. As his contribution to their household, the guest had offered to bring a small refrigerator he owned. However, when the two men went to collect the fridge in a small hired van, the driver explained that traffic laws did not permit both to ride up front with him – one would have to ride in the back with the fridge. The fridge owner, knowing the route better, was nominated to sit up front, to which his friend took great and immediate exception; he certainly had not migrated to London to be consigned to the back of a van like a piece of cargo. After making his way home via public means, and discussing his humiliation with his good wife, the arrangement was called off – occasioning a bitter confrontation with the bewildered would-be guest.

There must have been so many understandings of the meaning of their migration to Britain, but like the Europeans of the New World, the Ugandans had settled on replicating the worst of what they were running from in an attempt to become what they were never going to be allowed to be back home.

A good case in point is the ethnic Irish communities in Boston and New York, whose new-found whiteness—having escaped desperate poverty, oppression and famine under British colonial rule on what were often referred to as “coffin ships” —saw them create some of the most racist and brutal police forces on the East Coast. They did not just migrate physically; they did so socially and economically as well.

It starts even with naming.

The word “migrant” seems to belong more to certain races than to others, although that also changes. When non-white, normally poor people are on the move, they can get labeled all sorts of things: refugees, economic migrants, immigrants, illegals, encroachments, wetbacks and the like.

With white-skinned people, the language was often different. Top of the linguistic league is the word “expatriate”, to refer to any number of European-origin people moving to, or through, or settling in, especially Africa.

According to news reports, some seven million Ukrainians fleeing the Russian invasion were absorbed by their neighboring European countries, most of which are members of the European Union. Another 8 million remain displaced within the war-torn country.

This is an outcome of which the Europeans are proud. They have even emphasized how the racial and cultural similarities between themselves and the Ukrainian refugees have made the process easier, if not a little obligatory.

This sparked off a storm of commentary in which comparisons were made with the troubles earlier sets of refugees (especially from the Middle East and Afghanistan) faced as the fled their own wars and tried to enter Western Europe.

And the greatest irony is that the worst treatment they received en-route was often in the countries of Eastern Europe.

Many European media houses were most explicit in expressing their shock that a war was taking place in Europe (they thought they were now beyond such things), and in supporting the position that the “white Christian” refugees from Ukraine should be welcomed with open arms, unlike the Afghans, Iraqis and Syrians before them.

Human migration was not always like this.

Pythagoras (570-495 BC), the scholar from Ancient Greece, is far less well remembered as a migrant and yet his development as a thinker is attributable to the 22 or so years he spent as a student and researcher in Ancient Egypt. The same applies to Plato, who spent13 years in Egypt.

There is not that much evidence to suggest that Pythagoras failed to explain where he got all his learning from. If anything, he seems to have been quite open in his own writing about his experiences, first as an apprentice and later a fellow scholar in the Egyptian knowledge systems. The racial make-up of Ancient Egypt, and its implications, was far from becoming the political battleground it is today.

Top of the linguistic league is the word “expatriate” to refer to any number of European-origin people moving to, or through, or settling in, especially Africa.

Classic migration was about fitting in. Colonial migration demands that the new space adapt to accommodate the migrant. The idea of migrants and modern migration needs to be looked at again from its proper wider 500-year perspective. People of European descent, with their record of having scattered and forcibly imposed themselves all over the world, should be the last people to express anxieties about immigrants and migration.

With climate change, pandemic cycles, and the economic collapse of the west in full swing, we should also focus on the future of migration. As was with the case for Europeans some two to three hundred years ago, life in Europe is becoming rapidly unlivable for the ordinary European. The combination of the health crisis, the energy crisis, the overall financial crisis and now a stubborn war, suggests that we may be on the threshold of a new wave of migration of poor Europeans, as they seek cheaper places to live.

The advantages to them are many. Large areas of the south of the planet are dominated physically, financially and culturally, by some level of Western values, certainly at a structural level. Just think how many countries in the world use the Greco-Latin origin word “police” to describe law enforcement. These southern spaces have already been sufficiently Westernized to enable a Westerner to live in them without too much of a cultural adjustment on their part. The Westerners are coming back.

This article is part of a series on migration and displacement in and from Africa, co-produced by the Elephant and the Heinrich Boll Foundation’s African Migration Hub, which is housed at its new Horn of Africa Office in Nairobi.

Continue Reading

Politics

The Iron Grip of the International Monetary System: CFA Franc, Hyper-Imperial Economies and the Democratization of Money

Cameroonian economist Joseph Tchundjang Pouemi died in 1984, either poisoned or by suicide. His ideas about the international monetary system and the CFA franc are worth revisiting.

Published

on

The Iron Grip of the International Monetary System: CFA Franc, Hyper-Imperial Economies and the Democratization of Money
Download PDFPrint Article

Despite being one of Africa’s greatest economists, Joseph Tchundjang Pouemi is little known outside Francophone intellectual circles. Writing in the 1970s, he offered a stinging rebuke of orthodox monetary theory and policy from an African perspective that remains relevant decades later. Especially powerful are his criticisms of the international monetary system and the CFA franc, the regional currency in West and Central Africa that has historically been pegged to the French currency—at first the franc, and now the euro.

Pouemi was born on November 13th, 1937, to a Bamiléké family in Bangoua, a village in western Cameroon. After obtaining his baccalaureate and working as a primary school teacher, Pouemi moved to France in 1960, where he studied law, mathematics, and economics at the University of Clermont-Ferrand. Pouemi then worked as a university professor and policy adviser in Cameroon and Cote d’Ivoire. In 1977, he joined the IMF but quit soon after, vehemently disagreeing with its policies. He returned to Cameroon and published his magnum opus, Money, Servitude, and Freedom, in 1980. The recently elected president of Cameroon, Paul Biya, appointed Pouemi head of the University of Douala in August 1983—then fired him a year later. On December 27th, 1984, Pouemi was found dead of an apparent suicide in a hotel room. Some of his friends and students argue he was poisoned by the Biya regime (which still governs Cameroon), while others believe that harassment by Biya’s cronies drove Pouemi to suicide.

International Monetary System

Writing in the turbulent 1970s after the breakdown of the Bretton Woods regime of fixed exchange rates, Pouemi anticipated the three “fundamental flaws” with the international monetary “non-system”: one, using a national currency, the US dollar, as global currency; two, placing the burden of adjustment exclusively on deficit nations; and, three, the “inequity bias” of the foreign reserve system, which makes it a form of “reverse aid.” All three issues have been highlighted by the economic impact of the COVID-19 pandemic.

Long recognized as a problem, the challenges with using the US dollar as the world’s currency have once again become apparent. Low- and middle-income countries (which include essentially all African countries) have to deal with the vicissitudes of the global financial cycles emanating from the center of the global capitalist system. As the Federal Reserve raises interest rates to combat inflation by engineering a recession—because if borrowing costs rise, people have less money to spend and prices will decrease—they are increasing the debt burden of African governments that have variable-rate loans in US dollars. Already, the World Bank has warned of a looming debt crisis and the potential for another “lost decade” like the 1980s. Moreover, higher interest rates in the US lead to the depreciation of African currencies, making imports more expensive and leading to even higher food and oil prices across the continent.

Pouemi viewed the IMF’s attempt to create a global currency through the 1969 establishment of the special drawing rights (SDR) system as an inadequate response to the problems created by using the US dollar. The issuance of SDRs essentially drops money from the sky into the savings accounts of governments around the world. The IMF has only issued SDRs four times in its history, most recently in August 2021 in response to the COVID-19 pandemic. With African governments dealing with falling export earnings and the need to import greater amounts of personal protective equipment—and, eventually, vaccines—there was a clear need to bolster their savings, i.e., foreign reserves. The problem is that the current formula for allocating SDRs provides 60% of them to the richest countries—countries that do not need them, since they can and have borrowed in their own currencies. Of the new 456 billion SDR (approximately US$650 billion), the entire African continent received only 5% (about US$33 billion).

Decades ago, Pouemi had slammed SDRs as “arbitrary in three respects: the determination of their volume, their allocation and the calculation of their value.” Instead, Pouemi advocated for a truly global currency, one that could be issued by a global central bank in response to global recessions and that prioritized financing for the poorest countries. Such a reorientation of SDRs could provide a way of repaying African nations for colonialism and climate change.

Secondly, unable to get the financing they need, African governments with balance-of-payments deficits (when more money leaves a country than enters in a given year) have no choice but to shrink their economies. Pouemi strongly criticized the IMF, which he dubbed the “Instant Misery Fund” for applying the same “stereotypical, invariable remedies: reduce public expenditures, limit credit, do not subsidize nationalized enterprises” regardless of the source of a country’s deficits. Devaluing the currency is unlikely to work for small countries that are price takers in world markets and instead improves the trade balance by lowering domestic spending. The IMF has become “a veritable policeman to repress governments that attempt to offer their countries a minimum of welfare.” The current international monetary non-system then creates a global “deflationary bias,” since those countries with balance-of-payments deficits must reduce their spending, while those with large surpluses—like Germany, China, Japan, and the Netherlands—face little pressure to decrease their surpluses by spending more.

The third major issue with the current international monetary non-system is that developing countries have to accumulate foreign exchange reserves denominated in “hard” currencies like US dollars and euros, which means they are forced to transfer real resources to richer countries in return for financial assets—mere IOUs. Pouemi claimed that “if the international monetary system was not ‘rigged,’ reserves would be held as other goods like coffee or cocoa, gold for example. But the system is ‘rigged’; coffee reserves are quantified as dollars, pound sterling or non-convertible francs.” Instead, in the late 1970s, governments like that of Rwanda effectively lent coffee to the United States by using export earnings to purchase US treasury bills, whose real value was being quickly eroded by high inflation in the US. Hence, we live in a world where developing countries like China and Brazil lend money to rich governments like that of the US. As Pouemi explains: “The logic of the international monetary system wants the poor to lend to—what am I saying—give to the rich.”

CFA franc

Pouemi was also a harsh critic of the CFA franc, since maintaining the fixed exchange rate to the euro implies abandoning an autonomous monetary policy and the need to restrict commercial bank credit. Pouemi also argued that the potential benefits and costs of currency unions are different for rich and poor countries, and that therefore it is inappropriate to analyze African monetary unions through a European lens. His thoughts are especially relevant at a moment when the future of the CFA franc and West African monetary integration are up for debate.

In theory, by fixing the exchange rate to the euro, the two regional central banks that issue the CFA franc—the Banque centrale des états de l’Afrique de l’ouest (Central Bank of West African States) and the Banque centrale des états de l’Afrique centrale (Central Bank of Central African States)—have relinquished monetary policy autonomy. They have to mimic the European Central Bank’s policy rates instead of setting interest rates that reflect economic conditions in the CFA zone. The amount of CFA francs in circulation is also limited by the amount of foreign reserves each regional central bank holds in euros. Therefore, “the solidity of the CFA franc is based on restricting M [the money supply], a restriction not desired by the states, but one proceeding from the very architecture of the zone.” As a result, the economies of the CFA franc zone are starved of credit, especially farmers and small businesses, hindering growth and development. In Pouemi’s words, “There is no doubt, the CFA remains fundamentally a currency of the colonial type.”

When discussing the possibilities for a single currency for the Economic Community of West African States (ECOWAS), Pouemi stressed that the potential benefits and costs of currency union are different for rich and poor countries. “There is not only a difference of perception of the mechanisms of cooperation” between Europe and Africa, “there’s a difference of the conception of common life. Economic cooperation as it is conceived in the industrialized West is the Kennedy Round, North-South dialogue, the EEC, etc.—in other words, essentially ‘customs disarmament’ or common defense; armament is the rule, disarmament the exception.” In Africa, however, economic cooperation is a positive-sum game. Conventional economic theory argues against monetary integration among African countries, since they trade little with each other. But to Pouemi, the goal of monetary integration is precisely to get these countries to trade more with one another. He also questions the view that monetary integration should come last, following the same sequence as the European Union from free trade zone to customs union to common market and, finally, to currency union. “This view is not only imaginary, it is practically non-verified; we have seen examples. Theoretically, it is indefensible: a 10% decrease in tariffs could be … offset by a devaluation of 10%.”

Pouemi also dismissed arguments that Nigeria would dominate the proposed ECOWAS single currency as another example of the classic colonialist tactic of “divide and conquer.” While he acknowledged that “monetary union between unequal partners poses problems,” these are “only problems, open to solutions.” They do not make monetary integration unviable. Such integration need not limit sovereignty. In a regional or continental African monetary union, no “currency would be the reserve of others. Each country would have its own central bank, free to conduct the policy that best suits the directives judged necessary by the government. The only loss of sovereignty following such a union would be the respect of the collective balance. It would not be appropriated by anyone; it would be at the service of all. It would be, for that matter, less a loss of sovereignty than the collective discipline necessary to all communal life.”

Pouemi advocated for an African monetary union with fixed exchange rates between members, the pooling of foreign reserves, and a common unit of account—like the European Currency Unit that preceded the euro. He thought that the debate over whether the CFA franc is overvalued is misguided, since there is no a priori reason for its members to have the same exchange rate. Fixed but adjustable exchange rates—as in the Bretton Woods system or European Monetary System—would allow each nation greater monetary and exchange rate policy autonomy. Settling payments using a common unit of account instead of foreign exchange reserves would help economize on the latter. Moving toward the free movement of capital, goods and labor—as envisioned by the African Continental Free Trade Area—would help diffuse shocks through the monetary union. Finally, such a union would need to have a common policy on capital controls or at least collective supervision of international capital flows.

As Pouemi so eloquently lamented: “History will hold on to the fact that all of [Africa’s] children that have tried to make her respected have perished, one after the other, by African hands, without having the time to serve her.” We do not know what Pouemi could have accomplished had he had the time to serve Africa for longer. All we can do is heed his call that “in Africa, money needs to stop being the domain of a small number of ‘specialists’ pretending to be magicians.”

This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

Continue Reading

Trending