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Another False Messiah: Why Fin-Tech Isn’t the Panacea for Africa’s Development

9 min read.

After the manifest failure of microcredit to address poverty in Africa and everywhere else, the international development community has hit upon a new microcredit-related idea that, it claims, will do the job this time around: ‘fin-tech’, i.e. financial technology. As Milford Bateman argues in this article that fin-tech has the potential to gravely undermine the position of the poor and to increase inequality while, not coincidentally, vastly enriching a narrow elite.

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Another False Messiah: Why Fin-Tech Isn’t the Panacea for Africa’s Development
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Financial technology, or ‘fin-tech’, has been defined as, ‘Computer programs and other technology used to support or enable banking and financial services.’ The pioneering fin-tech that so many development experts love is M-Pesa, Kenya’s agent-assisted, mobile phone-based, person-to-person payment and money transfer system. M-Pesa’s origins lie in a project funded by the UK’s Department for International Development (DFID) in 2000 to encourage the private sector to improve access to financial services. M-Pesa was launched in March 2007 and expected to specialise in providing microcredit, but it was found that clients were more interested in the transfer of money, and so this became the focus of its activity. M-Pesa operates through a network of agents that allow clients to put cash into their account and take it out. By changing cash into ‘e-balances’, it is possible to send cash to another account via an SMS message. M-Pesa is owned by Kenya’s largest and most profitable company Safaricom, which in turn is majority owned (including through its South African subsidiary) by the UK telecoms multinational Vodafone plc.

Kenya stands at the front of the fin-tech movement thanks to M-Pesa and M-Shwari – a lending application also within the Safaricom group. But, thanks to the support of the international development community, the fin-tech revolution is spreading right across Africa. Digital payments are being introduced in many African countries, while fin-tech savings and loan platforms are expanding very rapidly indeed. One of the leading examples is MyBucks, the South African-owned (but registered on the Frankfurt Stock exchange) financial institution. MyBucks has been purchasing non-profit microcredit institutions and other ‘bricks and mortar’ lending operations all across Africa in order to turn them into hugely profitable fin-tech platforms, not least expecting to benefit by significantly upping the amount of expensive microcredit it can make available through a mobile phone.

However, it is largely thanks to M-Pesa in Kenya that the international development community now argues that a new digital utopia has arrived in Africa, i.e. that the further introduction and growth of fin-tech applications will play a major role in addressing the pressing need for meaningful poverty reduction, job creation and sustainable local economic development.

Unfortunately, the debate over the real value of fin-tech, including M-Pesa, is hopelessly one-sided since the fin-tech lobby itself is leading it. By this I mean the World Bank and its International Finance Corporation arm, USAID and DFID. These international development agencies also work in conjunction with a range of other private institutions with a keen self-interest in seeing the fin-tech model spread across the Global South, centrally including many of the major financial institutions (CitiGroup especially), leading Silicon Valley tech investors and investment funds, the two major digital payments companies (Visa and Mastercard) and a handful of high-profile Silicon Valley philanthro-capitalists (especially Bill Gates through his Gates Foundation). This effort is then further backed up by a plethora of fake ‘astro-turf’ NGOs, such as the Better than Cash Alliance (BTCA), that were set up by the private institutions noted above and which quietly do their bidding while presenting themselves to the world as if they are really all about ‘helping the global poor’.

The interests of all of the above parties are patently clear. For the international development agencies, it is about promoting an ideologically preferable ‘pure’ market-driven form of financial intermediation, while also benefitting American and British multinationals. For the multinationals and investors involved, the prospect of fantastic profits in a growing under-regulated market is more than enough to wet their appetites.

Unfortunately, the debate over the real value of fin-tech, including M-Pesa, is hopelessly one-sided since the fin-tech lobby itself is leading it.

The power of the US-based philanthro-capitalists here should also be considered. Some analysts see them as neutral bodies when it comes to promoting interventions designed to assist the global poor, always being careful to choose ‘what works best’. However, this is simply not so. Look carefully and one can find that they are actually primarily engaged in validating and extending the system that conferred upon them their great wealth and power at the expense of many around the world, especially the poor; they have no interest in trying to change this system at all. Philanthro-capitalists support the fin-tech model to preclude any fundamental challenge to African capitalism. The neoliberal model of capitalism supremely validates and celebrates their achievements, and they have no wish whatsoever to change this. Fin-tech is a useful innovation to support because it provides the appearance of great things for the poor, but no substance.

As Anand Giridharadas points out, ‘American elites generally seek to maintain the system that causes many of the problems they try to fix — and their helpfulness is part of how they pull it off. Thus their do-gooding is an accomplice to greater, if more invisible, harm … What their “change” leaves undisturbed is our winners-take-all economy, which siphons the gains from progress upward.’ Like microcredit the US government-led fin-tech movement involves significant downsides for the poor, and keeps off the table alternative pro-poor development models and institutions, while it provides a whole array of ideological and financial gains for global elites.

What is the real development impact of fin-tech on the ground?

Alarmingly, the driving force behind the fin-tech revolution in Africa – market fundamentalist ideology and the aggressive drive for profit – are the very same two noxious components in the US financial sector that gave rise to the multiple frauds that created the global financial crisis in 2008. This fact alone is more than enough to suggest extreme caution. But emerging facts on the ground confirm that extreme caution is very much warranted.

Consider first that in the last decade or so conventional microcredit institutions had already begun to create a worrying level of indebtedness in Kenya. Reckless lending became a pervasive feature of virtually all maturing microcredit sectors across Africa. The arrival of fin-tech has clearly begun to exacerbate this over-indebtedness problem. This was almost inevitable when, for instance, many fin-tech lenders advertise their services with the claim that it is now possible to obtain a new microloan ‘at the touch of a few buttons on your mobile phone’.

Even one-time microcredit advocates are now sounding the alarm bells. Perhaps the most notable of these voices is that of Graham Wright, the founder and Group Managing Director of Microsave, one of Africa’s most successful financial inclusion consultancy companies. Microsave has succeeded down the years by advising governments and the international development community on the need to embrace the commercialised microcredit model and then, when it began to become clear that the microcredit model had failed, how to promote the new financial inclusion agenda. Launched by the World Bank, the financial inclusion movement is an effort to protect and hide the failed microcredit model by incorporating it into a new and wider agenda that argues the poor now need a whole range of market-driven financial instruments in order to better cope with their poverty.

Perhaps one of the worst aspects of the current over-indebtedness problems, however, is the impetus fin-tech has provided for the serious gambling problem currently afflicting Kenya and neighboring countries such as Rwanda, Uganda and Tanzania. Microcredit becomes the chance to be ‘in it to win it’ for so many of East Africa’s poor, offering them the hope of instantly escaping their poverty predicament, or at least a little excitement in an otherwise desperate daily struggle to survive. Young people are particularly susceptible to the allure of gambling, with all too many able to instantly access cash via M-Pesa and then sending it on to one of the many gambling sites. Entry inevitably starts with small sums, but regular gambling can result in major losses for those unable to quit.

Consider also those who choose to use their digitally-acquired microcredit for what it was originally intended – to create new microenterprises. This can only be good, right? Sadly, no. Rather than strengthening the local economy, such a trajectory often undermines it. For one thing, the sheer paucity of local demand means very many new enterprises simply cannot survive for very long; as many as 46 per cent of MSMEs in Kenya fail within a year after their establishment.

However, it is largely thanks to M-Pesa in Kenya that the international development community now argues that a new digital utopia has arrived in Africa, i.e. that the further introduction and growth of fin-tech applications will play a major role in addressing the pressing need for meaningful poverty reduction, job creation and sustainable local economic development.

Worse still, even if enough new entrants are successful, their success will inevitably eat into the local demand that existing microenterprises were counting on to survive. This forces very many of these already struggling incumbents to contract or fail. Economists call this ‘job churn’, a highly unproductive entry and exit phenomenon that creates very few net sustainable jobs and generally makes the local economy structurally weaker. Further compounding the problem created, the ultra-competitive local market structure created by fin-tech lending helps to force average incomes down to the subsistence level. More of the poor might therefore be more active in their own new microenterprise, but all microenterprises in the community will tend to earn less on average, meaning that they are in work but poorer than ever. This was a huge problem in South Africa, when over 1997-2003 microcredit helped create many new informal microenterprises and some jobs, but this additional competition helped depress average incomes by a crushingly large 8 per cent per year. With the current high growth rate of fin-tech lending in Kenya and new fin-tech lenders emerging just about every day, it seems unlikely that such a negative scenario can be avoided there.

Academic Economists and Fin-Tech

But some academic economists say great things about fin-tech. By far the most talked-about contribution to date has been that by US-based economists Tavneet Suri and William Jack. Almost every article on the issue of fin-tech now quotes their astonishing headline claim that up to 194,00 households in Kenya (2 per cent of the total) were able to escape poverty between 2008 and 2014 thanks to their use of M-Pesa.

Unfortunately, this headline-grabbing claim by Suri and Jack is largely unfounded There are a surprisingly large number of defects in the work by Suri and Jack, which is somewhat surprising given that the two economists hold high academic positions in reputable US institutions. So where have they gone wrong?

First, Suri and Jack completely ignore the ‘job churn’ and lower average income effects just noted above. In spite of the clear evidence that failure rates of microenterprises are extremely high in Kenya, as everywhere in the Global South, they chose to assume that every women in Kenya who starts a tiny microenterprise with the help of M-Pesa must have succeeded. There is thus no need to explore in their analysis any of the familiar downside problems associated with the failure of a microenterprise. Of course, that is not to say that there are no positive impacts of new microenterprise entry in Kenya, but without looking at the impact of exit as well as entry we simply cannot tell. Inevitably, Suri and Jack also chose to ignore the displacement impacts affecting incumbent microenterprises. They conjured up instead a Disneyland-style world of perfect competition in which the local economy is sufficiently elastic to absorb any number of new microenterprises supplying lots more simple goods and services without creating any problems for anyone. It is not just sociologists and anthropologists, like Mike Davis, who well understand that such a rose-tinted model is fundamentally wrong, many development economists do too (notably the late great Alice Amsden).

Suri and Jack then compound their problematic analysis by also choosing to ignore the issue of the destructively high rates of individual over-indebtedness that now exist in Kenya. When it is evident to many economists (including surely their local researchers?) that M-Pesa has significantly extended this very serious problem, this is another major omission. And when leading financial analysts such as Graham Wright are vociferously arguing that the over-indebtedness situation is creating a huge problem, it is difficult to see why and how such a serious downside can be missed in any analysis of the development and poverty impact of M-Pesa.

Finally, as economists working in the neoclassical tradition, Suri and Jack dutifully refuse to consider issues related to the operations of power and imperialism in the sector and how they might shape markets in order to benefit above all one – the most powerful – side of any market transaction.

Accordingly, they have nothing to say about the fact that the majority owner of M-Pesa – the UK multinational telecoms giant Vodafone – is generating massive profits from its stake in M-Pesa, value that is ultimately harvested from the tiny and often desperate financial transactions and tiny business operations of Kenya’s poor. This profit stream is being repatriating back to already wealthy shareholders in the UK and in other global financial centres, just as in previous centuries, in fact, when mining and other activities allowed the UK’s colonial elites to extract significant wealth value from the country’s many colonial possessions.

As Anand Giridharadas points out, ‘American elites generally seek to maintain the system that causes many of the problems they try to fix — and their helpfulness is part of how they pull it off. Thus their do-gooding is an accomplice to greater, if more invisible, harm … What their “change” leaves undisturbed is our winners-take-all economy, which siphons the gains from progress upward

All told, one really has to wonder if Suri and Jack’s work was ever meant to be a genuine effort to assess the value of fin-tech and M-Pesa. Or was it perhaps simply an output that was designed to provide a headline-grabbing claim that could then be used by the US-led international development community – notably the World Bank – to convince African governments into embracing fin-tech regardless of the hugely problematic impact it will have on their poor? We should remember that there is a track record of just this underhand tactic being used by certain sections of the international development community with regard to microcredit. In giving an unfeasibly positive view of the impact of microcredit in Bangladesh, two World Bank economists, Mark Pitt and Shahidur Khandker, nevertheless achieved the World Bank’s strategic goal of instantly validating microcredit in the eyes of the world, thus opening the way for its rapid expansion. When Pitt and Khandker’s analysis was later on largely debunked, this did not matter: its expansion around the Global South had been secured in the meantime and many financial corporations and investors in the leading financial centres in the rich countries were soon doing very well indeed from their profit flows originating in the Global South. So, are Suri and Jack the new Pitt and Khandker perhaps?

There is no doubt that fin-tech has the potential to liberate enormous value that could make the lives of the global poor immeasurably better; for example, allowing member-owned financial cooperatives and credit unions to provide better and cheaper services for their members while redistributing any profits from the operation right back to them. But the problem as it stands in Kenya – and wider still in Africa and the world – is that the bulk of the value being released by fin-tech is not designed to go to the poor, who will most likely be worse off: it is very clearly designed to go up into the hands of a narrow global financial-digital elite that are the main forces behind the fin-tech ‘revolution’.

The 2008 global financial crisis showed the world that an exciting new innovation said to be of huge benefit to America’s poor minority communities – sub-prime mortgages – was actually expressly designed to enrich a narrow Wall Street financial elite. If a similar deception is not to be perpetrated in Kenya and across Africa, then those genuinely committed to poverty reduction and social justice, must urgently take concrete action.

This article was first published in the Review of African Political Economy Journal.

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Milford Bateman is a Visiting Professor of Economics, Juraj Dobrila University of Pula, Croatia and Adjunct Professor of Development Studies, St Marys University, Halifax, Canada.

Politics

Who Won Kenya’s “Nominations”?

Being nominated rather than selected by party members may undermine grass-roots legitimacy but it is hard not to suspect that some of the losers in the nominations process might feel a little bit relieved at this out-turn.

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Who Won Kenya’s “Nominations”?
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Who won Kenya’s “nominations”, the tense and often unpredictable political process through which parties select which candidates they want to represent them in the general election scheduled for 9 August? That may sound like a silly question. Social media is full of photographs of smiling candidate clutching their certificates of nomination—surely we need to look no further for the winners?

But maybe we do. Beyond the individual candidates in the contests for nominations, there are other winners. One may be obvious: it seems the general feeling is that Deputy President William Ruto came out better from the nominations than did his principal rival in the presidential race, former opposition leader Raila Odinga—about which more below. However, for some, coming out on top in the nominations may prove a poisoned chalice. Where nominations are seen to have been illegitimate, candidates are likely to find that losing rivals who stand as independents may be locally popular and may gain sympathy votes, making it harder for party candidates to win the general election. This means that there are often some less obvious winners and losers.

One reason for this is that nominations shape how voters think about the parties and who they want to give their vote to, come the general election. Research that we conducted in 2017, including a nationally representative survey of public opinion on these issues, found that citizens who felt that their party’s nomination process had not been legitimate were less likely to say that they would vote in the general election. In other words, disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out. In 2017, this appeared to disadvantage Odinga and his Orange Democratic Movement (ODM), whose nomination process was generally seen to have been more problematic—although whether this is because they were, or rather because this is how they were depicted by the media, is hard to say.

In the context of a tight election in 2022, popular perceptions of how the nominations were managed may therefore be as significant for who “wins” and “loses” as the question of which individuals secured the party ticket.

Why do parties dread nominations?

The major parties dreaded the nominations process—dreaded it so much, in fact, that despite all their bold words early on about democracy and the popular choice (and despite investments in digital technology and polling staff), most of the parties tried pretty hard to avoid primary elections as a way of deciding on their candidates. In some cases that avoidance was complete: the Jubilee party gave direct nominations to all those who will stand in its name. Other parties held some primaries—Ruto’s United Democratic Alliance (UDA) seems to have managed most—but in many cases they turned to other methods.

That is because of a complicated thing about parties and elections in Kenya. It is widely assumed—and a recent opinion poll commissioned by South Consulting confirms this—that when it comes to 9 August most voters will decide how to cast their ballot on the basis of individual candidates and not which party they are standing for. Political parties in Kenya are often ephemeral, and people readily move from one to another. But that does not mean that political parties are irrelevant. They are symbolic markers with emotive associations – sometimes to particular ideas, sometimes to a particular regional base. ODM, for example, has been linked both with a commitment to constitutional reform and with the Luo community, most notably in Nyanza. So the local politician who wants to be a member of a county assembly will be relying mostly on their personal influence and popularity—but they know that if they get a nomination for a party which has that kind of emotive association, it will smoothen their path.

Disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out.

This means that multiple candidates vie for each possible nomination slot. In the past, that competition has always been expensive, as rival aspirants wooed voters with gifts. It occasionally turned violent, and often involved cheating. Primary elections in 2013 and 2017 were messy and chaotic, and were not certain to result in the selection of the candidate most likely to win the general election. From the point of view of the presidential candidates, there are real risks to the primary elections their parties or coalitions oversee: the reputational damage due to chaos and the awareness that local support might be lost if a disgruntled aspirant turns against the party.

This helps to explain why in 2022 many parties made use of direct nominations—variously dressed up as the operation of consensus or the result of mysterious “opinion polls” to identify the strongest candidate. What that really meant was an intensive process of promise-making and/or pressure to persuade some candidates to stand down. Where that did not work, and primaries still took place, the promise-making and bullying came afterwards—to stop disappointed aspirants from turning against the party and standing as independents. The consequence of all that top-down management was that the nominations saw much less open violence than in previous years.

So who won, and who lost, at the national level?

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates. That brings us to the big national winners and losers of the process. Odinga—and his ODM party—have come out rather bruised. They have been accused of nepotism, bribery and of ignoring local wishes. This is a particularly dangerous accusation for Odinga, as it plays into popular concerns that, following his “handshake” with President Kenyatta and his adoption as the candidate of the “establishment”, he is a “project” of wealthy and powerful individuals who wish to retain power through the backdoor after Kenyatta stands down having served two-terms in office. In the face of well-publicised claims that Odinga would be a “remote controlled president” doing the bidding of the Kenyatta family and their allies, the impression that the nominations were stage-managed from on high in an undemocratic process was the last thing Azimio needed.

Moreover, perhaps because Odinga seems to have been less active than his rival in personally intervening to mollify aggrieved local politicians, the ODM nominations process seems to have left more of a mess. That was compounded by complications in the Azimio la Umoja/One Kenya Alliance Coalition Party (we’ll call it Azimio from now on, for convenience). Where Azimio “zoned”—that is, agreed on a single candidate from all its constituent parties—disappointed aspirants complained. Where it did not zone, and agreed to let each party nominate its own candidate for governor, MP and so on, then smaller parties in the coalition complained that they would face unfair competition come the general election. That is why the leaders of some of these smaller groups such as Machakos Governor Alfred Mutua made dramatic (or theatrical, depending on your view) announcements of their decision to leave Azimio and support Ruto.

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates.

So Ruto looks like a nomination winner. But his success comes with a big price tag. His interventions to placate disgruntled aspirants involved more than soothing words. A new government will have lots of goodies to distribute to supporters—positions in the civil service and parastatals, diplomatic roles, not to mention business opportunities of many kinds. But the bag of goodies is not bottomless, and it seems likely that a lot of promises have been made. Ruto’s undoubted talents as an organizer and deal-maker have been useful to him through the nominations—but those deals may prove expensive for him, and for Kenya, if he wins the presidential poll.

Money, politics, and the cost of campaigns

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword. In the short term, many of them will have saved considerable money: depending on exactly when the deal was done, they will have been spared some days of campaign expenses—no need to fuel cars, buy airtime for bloggers, pay for t-shirts and posters, and hand out cash. But that will be a brief respite. The disappointed rivals who have gone independent will make the campaigns harder for them—and likely more expensive. The belief that they were favoured by the party machinery may mean that voter expectations are higher when it comes to handouts and donations on the campaign trail. And the fact they were nominated rather than selected by party members may undermine their grass-roots legitimacy.

Others may experience a similar delayed effect. Among the short-term losers of the nominations will have been some of the “goons” who have played a prominent physical role in previous nominations: their muscular services were largely not required (although there were exceptions). The printers of posters and t-shirts will similarly have seen a disappointing nominations period (although surely they will have received enough early orders to keep them happy, especially where uncertainty over the nomination was very prolonged). The providers of billboard advertising may have seen a little less demand than they had hoped for, although they too seem to have done quite well from selling space to aspirants who—willingly or not—did not make it to the primaries. But where the general election will be fiercely contested, entrepreneurs will likely make up any lost ground as the campaigns get going. In these cases, competition has been postponed, not avoided.

Those in less competitive wards, constituencies or counties—the kind in which one party tends to dominate in the general election—are unlikely to be able to make up for lost time. These “one-party” areas may be in shorter supply in 2022 than in the past, due to the way that the control of specific leaders and alliances over the country’s former provinces has fragmented, but there will still be some races in which it is obvious who will win, and so the campaigns will be less heated.

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword.

More definite losers are the parties themselves. In some ways, we could say they did well as institutions, because they were spared the embarrassment of violent primaries. But the settling of many nominations without primaries meant not collecting nomination fees from aspirants in some cases, and refunding them in others. That will have cost parties a chunk of money, which they won’t get back. That may not affect the campaigns much—the money for campaigns flows in opaque and complex ways that may not touch the parties themselves. But it will affect the finances of the parties as organizations, which are often more than a little fragile.

Are the losers actually the biggest winners?

Some losers, however, are really big winners. Think about those candidates who would not have won competitive primaries but were strong enough to be able to credibly complain that they had been hard done by due to the decision to select a rival in a direct process. In many cases, these individuals were able to extract considerable concessions in return for the promise not to contest as independents, and so disrupt their coalition’s best laid plans. This means that many of the losers—who may well have been defeated anyway—walked away with the promise of a post-election reward without the expense and bother of having to campaign up until the polls.

It is hard not to suspect that some of them might feel a little bit relieved at this out-turn. In fact, some of them may have been aiming at this all along. For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome. Instead of spending the next three months in an exhausting round of funerals, fund-raisers and rallies, constantly worrying about whether they have enough fifty (or larger) shilling notes to hand out and avoiding answering their phones, they can sit back and wait for their parastatal appointment, ambassadorship, or business opportunity.

For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome.

For these individuals, the biggest worry now is not their popularity or campaign, but simply the risk that their coalition might not win the presidential election, rendering the promises they have received worthless. Those whose wishes come true will be considerably more fortunate—and financially better off—than their colleagues who made it through the nominations but fall at the final hurdle of the general election.

Separating the winners of the nominations process from the losers may therefore be harder than it seems.

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Politics

Asylum Pact: Rwanda Must Do Some Political Housecleaning

Rwandans are welcoming, but the government’s priority must be to solve the internal political problems which produce refugees.

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The governments of the United Kingdom and Rwanda have signed an agreement to move asylum seekers from the UK to Rwanda for processing. This partnership has been heavily criticized and has been referred to as unethical and inhumane. It has also been opposed by the United Nations Refugee Agency on the grounds that it is contrary to the spirit of the Refugee Convention.

Here in Rwanda, we heard the news of the partnership on the day it was signed. The subject has never been debated in the Rwandan parliament and neither had it been canvassed in the local media prior to the announcement.

According to the government’s official press release, the partnership reflects Rwanda’s commitment to protect vulnerable people around the world. It is argued that by relocating migrants to Rwanda, their dignity and rights will be respected and they will be provided with a range of opportunities, including for personal development and employment, in a country that has consistently been ranked among the safest in the world.

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives. Therefore, most Rwandans are sensitive to the plight of those forced to leave their home countries and would be more than willing to make them feel welcome. However, the decision to relocate the migrants to Rwanda raises a number of questions.

The government argues that relocating migrants to Rwanda will address the inequalities in opportunity that push economic migrants to leave their homes. It is not clear how this will work considering that Rwanda is already the most unequal country in the East African region. And while it is indeed seen as among the safest countries in the world, it was however ranked among the bottom five globally in the recently released 2022 World Happiness Index. How would migrants, who may have suffered psychological trauma fare in such an environment, and in a country that is still rebuilding itself?

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives.

What opportunities can Rwanda provide to the migrants? Between 2018—the year the index was first published—and 2020, Rwanda’s ranking on the Human Capital Index (HCI) has been consistently low. Published by the World Bank, HCI measures which countries are best at mobilising the economic and professional potential of their citizens. Rwanda’s score is lower than the average for sub-Saharan Africa and it is partly due to this that the government had found it difficult to attract private investment that would create significant levels of employment prior to the COVID-19 pandemic. Unemployment, particularly among the youth, has since worsened.

Despite the accolades Rwanda has received internationally for its development record, Rwanda’s economy has never been driven by a dynamic private or trade sector; it has been driven by aid. The country’s debt reached 73 per cent of GDP in 2021 while its economy has not developed the key areas needed to achieve and secure genuine social and economic transformation for its entire population. In addition to human capital development, these include social capital development, especially mutual trust among citizens considering the country’s unfortunate historical past, establishing good relations with neighbouring states, respect for human rights, and guaranteeing the accountability of public officials.

Rwanda aspires to become an upper middle-income country by 2035 and a high-income country by 2050. In 2000, the country launched a development plan that aimed to transform it into a middle-income country by 2020 on the back on a knowledge economy. That development plan, which has received financial support from various development partners including the UK which contributed over £1 billion, did not deliver the anticipated outcomes. Today the country remains stuck in the category of low-income states. Its structural constraints as a small land-locked country with few natural resources are often cited as an obstacle to development. However, this is exacerbated by current governance in Rwanda, which limits the political space, lacks separation of powers, impedes freedom of expression and represses government critics, making it even harder for Rwanda to reach the desired developmental goals.

Rwanda’s structural constraints as a small land-locked country with no natural resources are often viewed as an obstacle to achieving the anticipated development.

As a result of the foregoing, Rwanda has been producing its own share of refugees, who have sought political and economic asylum in other countries. The UK alone took in 250 Rwandese last year. There are others around the world, the majority of whom have found refuge in different countries in Africa, including countries neighbouring Rwanda. The presence of these refugees has been a source of tension in the region with Kigali accusing neighbouring states of supporting those who want to overthrow the government by force. Some Rwandans have indeed taken up armed struggle, a situation that, if not resolved, threatens long-term security in Rwanda and the Great Lakes region. In fact, the UK government’s advice on travel to Rwanda has consistently warned of the unstable security situation near the border with the Democratic Republic of Congo (DRC) and Burundi.

While Rwanda’s intention to help address the global imbalance of opportunity that fuels illegal immigration is laudable, I would recommend that charity start at home. As host of the 26th Commonwealth Heads of Government Meeting scheduled for June 2022, and Commonwealth Chair-in-Office for the next two years, the government should seize the opportunity to implement the core values and principles of the Commonwealth, particularly the promotion of democracy, the rule of law, freedom of expression, political and civil rights, and a vibrant civil society. This would enable Rwanda to address its internal social, economic and political challenges, creating a conducive environment for long-term economic development, and durable peace that will not only stop Rwanda from producing refugees but will also render the country ready and capable of economically and socially integrating refugees from less fortunate countries in the future.

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Politics

Beyond Borders: Why We Need a Truly Internationalist Climate Justice Movement

The elite’s ‘solution’ to the climate crisis is to turn the displaced into exploitable migrant labour. We need a truly internationalist alternative.

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Beyond Borders: Why We Need a Truly Internationalist Climate Justice Movement
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“We are not drowning, we are fighting” has become the rallying call for the Pacific Climate Warriors. From UN climate meetings to blockades of Australian coal ports, these young Indigenous defenders from twenty Pacific Island states are raising the alarm of global warming for low-lying atoll nations. Rejecting the narrative of victimisation – “you don’t need my pain or tears to know that we’re in a crisis,” as Samoan Brianna Fruean puts it – they are challenging the fossil fuel industry and colonial giants such as Australia, responsible for the world’s highest per-capita carbon emissions.

Around the world, climate disasters displace around 25.3 million people annually – one person every one to two seconds. In 2016, new displacements caused by climate disasters outnumbered new displacements as a result of persecution by a ratio of three to one. By 2050, an estimated 143 million people will be displaced in just three regions: Africa, South Asia, and Latin America. Some projections for global climate displacement are as high as one billion people.

Mapping who is most vulnerable to displacement reveals the fault lines between rich and poor, between the global North and South, and between whiteness and its Black, Indigenous and racialised others.

Globalised asymmetries of power create migration but constrict mobility. Displaced people – the least responsible for global warming – face militarised borders. While climate change is itself ignored by the political elite, climate migration is presented as a border security issue and the latest excuse for wealthy states to fortify their borders. In 2019, the Australian Defence Forces announced military patrols around Australia’s waters to intercept climate refugees.

The burgeoning terrain of “climate security” prioritises militarised borders, dovetailing perfectly into eco-apartheid. “Borders are the environment’s greatest ally; it is through them that we will save the planet,” declares the party of French far-Right politician Marine Le Pen. A US Pentagon-commissioned report on the security implications of climate change encapsulates the hostility to climate refugees: “Borders will be strengthened around the country to hold back unwanted starving immigrants from the Caribbean islands (an especially severe problem), Mexico, and South America.” The US has now launched Operation Vigilant Sentry off the Florida coast and created Homeland Security Task Force Southeast to enforce marine interdiction and deportation in the aftermath of disasters in the Caribbean.

Labour migration as climate mitigation

you broke the ocean in
half to be here.
only to meet nothing that wants you
– Nayyirah Waheed

Parallel to increasing border controls, temporary labour migration is increasingly touted as a climate adaptation strategy. As part of the ‘Nansen Initiative’, a multilateral, state-led project to address climate-induced displacement, the Australian government has put forward its temporary seasonal worker program as a key solution to building climate resilience in the Pacific region. The Australian statement to the Nansen Initiative Intergovernmental Global Consultation was, in fact, delivered not by the environment minister but by the Department of Immigration and Border Protection.

Beginning in April 2022, the new Pacific Australia Labour Mobility scheme will make it easier for Australian businesses to temporarily insource low-wage workers (what the scheme calls “low-skilled” and “unskilled” workers) from small Pacific island countries including Nauru, Papua New Guinea, Kiribati, Samoa, Tonga, and Tuvalu. Not coincidentally, many of these countries’ ecologies and economies have already been ravaged by Australian colonialism for over one hundred years.

It is not an anomaly that Australia is turning displaced climate refugees into a funnel of temporary labour migration. With growing ungovernable and irregular migration, including climate migration, temporary labour migration programs have become the worldwide template for “well-managed migration.” Elites present labour migration as a double win because high-income countries fill their labour shortage needs without providing job security or citizenship, while low-income countries alleviate structural impoverishment through migrants’ remittances.

Dangerous, low-wage jobs like farm, domestic, and service work that cannot be outsourced are now almost entirely insourced in this way. Insourcing and outsourcing represent two sides of the same neoliberal coin: deliberately deflated labour and political power. Not to be confused with free mobility, temporary labour migration represents an extreme neoliberal approach to the quartet of foreign, climate, immigration, and labour policy, all structured to expand networks of capital accumulation through the creation and disciplining of surplus populations.

The International Labour Organization recognises that temporary migrant workers face forced labour, low wages, poor working conditions, virtual absence of social protection, denial of freedom association and union rights, discrimination and xenophobia, as well as social exclusion. Under these state-sanctioned programs of indentureship, workers are legally tied to an employer and deportable. Temporary migrant workers are kept compliant through the threats of both termination and deportation, revealing the crucial connection between immigration status and precarious labour.

Through temporary labour migration programs, workers’ labour power is first captured by the border and this pliable labour is then exploited by the employer. Denying migrant workers permanent immigration status ensures a steady supply of cheapened labour. Borders are not intended to exclude all people, but to create conditions of ‘deportability’, which increases social and labour precarity. These workers are labelled as ‘foreign’ workers, furthering racist xenophobia against them, including by other workers. While migrant workers are temporary, temporary migration is becoming the permanent neoliberal, state-led model of migration.

Reparations include No Borders

“It’s immoral for the rich to talk about their future children and grandchildren when the children of the Global South are dying now.” – Asad Rehman

Discussions about building fairer and more sustainable political-economic systems have coalesced around a Green New Deal. Most public policy proposals for a Green New Deal in the US, Canada, UK and the EU articulate the need to simultaneously tackle economic inequality, social injustice, and the climate crisis by transforming our extractive and exploitative system towards a low-carbon, feminist, worker and community-controlled care-based society. While a Green New Deal necessarily understands the climate crisis and the crisis of capitalism as interconnected — and not a dichotomy of ‘the environment versus the economy’ — one of its main shortcomings is its bordered scope. As Harpreet Kaur Paul and Dalia Gebrial write: “the Green New Deal has largely been trapped in national imaginations.”

Any Green New Deal that is not internationalist runs the risk of perpetuating climate apartheid and imperialist domination in our warming world. Rich countries must redress the global and asymmetrical dimensions of climate debtunfair trade and financial agreements, military subjugation, vaccine apartheidlabour exploitation, and border securitisation.

It is impossible to think about borders outside the modern nation-state and its entanglements with empire, capitalism, race, caste, gender, sexuality, and ability. Borders are not even fixed lines demarcating territory. Bordering regimes are increasingly layered with drone surveillance, interception of migrant boats, and security controls far beyond states’ territorial limits. From Australia offshoring migrant detention around Oceania to Fortress Europe outsourcing surveillance and interdiction to the Sahel and Middle East, shifting cartographies demarcate our colonial present.

Perhaps most offensively, when colonial countries panic about ‘border crises’ they position themselves as victims. But the genocide, displacement, and movement of millions of people were unequally structured by colonialism for three centuries, with European settlers in the Americas and Oceania, the transatlantic slave trade from Africa, and imported indentured labourers from Asia. Empire, enslavement, and indentureship are the bedrock of global apartheid today, determining who can live where and under what conditions. Borders are structured to uphold this apartheid.

The freedom to stay and the freedom to move, which is to say no borders, is decolonial reparations and redistribution long due.

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