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How Green Energy and New Technologies Will Impact Kenya’s Power Sector

12 min read.

The biggest question facing the power sector is this: How will it lower costs, compete and improve overall performance for a population promised 100 per cent electricity access in a global business environment where customers can increasingly generate their own power more efficiently than the power company.

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How Green Energy and New Technologies Will Impact Kenya’s Power Sector
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“The waste of scarce resources in Africa’s energy systems remains stark and disturbing. Current highly centralized energy systems often benefit the rich and bypass the poor and are underpowered, inefficient and unequal. Energy-sector bottlenecks and power shortages cost the region 2-4 per cent of GDP annually, undermining sustainable economic growth, jobs and investment. They also reinforce poverty, especially for women and people in rural areas. It is indefensible that Africa’s poorest people are paying among the world’s highest prices for energy.” ~ Excerpt from the Foreword by Kofi Annan in the AFRICA PROGRESS REPORT 2015

“… and all consumers know, when the producers name the tune, the consumer has to dance.” ~ Gil Scot Heron, B-Movie

 

The Kenya power sector is many things to many people. For some, it is a shining African example of a successful power sector while for others, it is a scandal-ridden den of thieves. For some, it is one of the world’s leaders in green energy and for others it is an unapologetic advocate of coal power. As with many countries, amidst the conflicting politically-driven narratives, it is often hard to separate truth from opinion. Tabled plans serve complicated and disguised agendas of both local and international interests.

Currently, Kenya has an installed capacity of about 2600 MW. This is about one-twentieth the size of South Africa’s grid and more than twice that of Uganda’s.

Despite the bad press, there is much in Kenya’s power sector to be upbeat about. Compared to others in the region, the sector has performed well. Kenya Power has a reputation as a credit-worthy off-taker. The sector is, to a large degree, privately owned, funded and operated. It is “open for business” and, eventually, it gets projects done. Much of the time (but not all) companies in Kenya’s power sector are profitable. By fortuitous accident of location and resource availability (geothermal, wind and hydro), the sector is mostly green. The sector has been able to innovate, complete projects and grow power generation with steady increases in supply and demand over 20 years. With donor support for the Last Mile Programme, it has managed a massive expansion, doubling its customer base in 10 years. Kenya Power, KenGen, the Energy Regulatory Commission (ERC), parastatal agencies and independent power producers (IPPs) have talented staff who enjoy competitive salaries and benefits.

Currently, Kenya has an installed capacity of about 2600 MW. (Ministry of Energy online statistics do not include recent solar, wind and geothermal projects.) This is about one twentieth the size of South Africa’s grid and more than twice that of Uganda’s. Recent additions of wind (300 MW from Turkana) and solar (50 MW from Garissa) have ratcheted down fossil fuel-fired thermal generation and greatly increased capacity to meet peak demand, as shown in Table 1.

Table 1: Kenyan Electricity Global legal insights: Kenya Energy Situation

Table 1: Kenyan Electricity Global legal insights: Kenya Energy Situation

Whether the reputation is deserved or not, Kenya’s electricity sector is much-liked by African energy investors. With over 1100MW of power-producing wells, Kenya is in the global top ten of geothermal electricity producers. Turkana Wind is the single largest sub-Saharan wind power project on the continent. At 50MW, Garissa solar is the largest solar project in the East Africa region. Today, tabled investments in geothermal, wind and solar are under way that will double Kenya’s power output in 10 years and most of these are environmentally-friendly (the proposed Lamu coal plant notwithstanding). With 60 per cent of the population connected to the grid, Kenya has the highest electricity access in the region and a higher per capita electricity consumption than Nigeria.

Exceptionally expensive electricity

So, from the above, everything would seem to be satisfactory with the Kenya power sector. But not all is well. In a 2015 assessment, Power Africa lists major “bottlenecks”: inadequate early stage capital for project financing, land/right-of-way risks (i.e. for transmission projects) and IPP “procedural” and process issues. In addition, it points out that the inadequate transmission and distribution infrastructure prevents optimal deployment of the available power resource.

Kenyan industrialists put it more bluntly. For them, exceptionally expensive electricity is among the main causes of manufacturer and investor migration to neighbouring countries. Given the comparatively low-cost hydro and geothermal power in the system, they have long expected reduced power costs. And this is a something the government has long promised but been unable to deliver.

Although murky deals have much to do with the problem, two factors drive continued high consumer power prices. First, we can thank the unbundled power sector. In 1996, at the behest of the international community, Kenya unbundled its power sector. According to a logic pushed by the World Bank, separate companies would independently manage costs, raise finance and increase competition. They would build management efficiency and help to overcome corruption and debt accumulation. Separated entities would enable Kenya Power to place the burden of electricity costs firmly on the shoulders of consumers as there is no subsidy in the payment formulas used to calculate consumer bills.

The unbundling of the power sector and the incorporation of IPPs had a number of positive outcomes. But they did not put to rest the central problems facing the Kenya power sector, nor did they reduce energy costs.

Second, for high power prices, we can thank diesel-fueled thermal power generators. These generators, which are necessary to meet peak loads and supply power when drought reduces hydropower output, add disproportionate long-term costs to power supply. Though they usually supply less than 15 per cent of the overall supply capacity, their costs to consumers (via fuel cost charges) make up an outsized part of the monthly consumer bill.

Kenya Power: An ignoble history 

The unbundling of the power sector and the incorporation of IPPs had a number of positive outcomes. But they did not put to rest the central problems facing the Kenya power sector, nor did they reduce energy costs. To understand the situation today, it helps to review the sector’s past and how the donor-sanctioned unbundling of power altered its course.

At independence, East Africa Power Company Limited (EAPCL), a Nairobi Securities Exchange-listed company, included generation systems in Nairobi, Mombasa and the Tanganyika Electricity Supply Company (that became Tanesco). In 1954, the Kenya Power Company had built transmission lines to connect Kenya to Uganda’s Owen Falls Dam. In 1964, EAPCL sold its stake in Tanesco and it was much later renamed Kenya Power and Lighting Company (KPLC). Initially, most of its power generation was from the Tana River Development Company and hydropower accounted for 72 per cent of the country’s electricity.

The development of Kenya’s vast geothermal potential began in 1981 when the European Investment Bank kick-started the drilling of the Olkaria wells. After the first successful geothermal projects, many other financiers followed.

During the Daniel arap Moi era, high-level cartels used the energy sector investments to build political power and business empires and to fund political campaigns. Between 1983 and 1992, the power sector was plagued by scandals that had repercussions on the rest of the economy and which affected relationships with donor partners and investors. Multiple shady deals from the period, such as the Turkwell Gorge and the Ewaso Ngiro dam feasibility (it was never built), are still debated. Whatever the reality of these still-disputed deals, an outcome of the mismanagement was the withdrawal of donor support for the power sector. Following the Turkwell Gorge saga, a consultative donors’ group meeting (which included the World Bank and the International Monetary Fund) imposed an embargo on Kenya’s energy sector, which stalled international power project investments for almost a decade.

The World Bank and the donor community re-engaged with Kenya in 1996 with a plan to restructure the energy sector. The programme, which was part of global World Bank liberalisation initiatives, would pressure state-owned electricity companies to “unbundle” production, distribution, transmission and regulation. This resulted in the privatisation of power production to KenGen and independent power producers. KPLC was responsible for distribution and transmission and for creating an Energy Regulatory Commission to oversee the sector. The international community anticipated that unbundling would improve the overall management of the sector, increase transparency, expand opportunities for international investment in power projects, and lower prices.

Unlike other regional power sectors (e.g. South Africa, Tanzania, and Ethiopia), Kenya eagerly went along with unbundling, perhaps because it saw business prospects in this restructuring. However, under the new rules, the same cartels responsible for tarnished projects in the previous decade contrived new opportunities for themselves. Focusing on thermal power, insiders profited hugely from the entrance of new IPPs into the unbundled sector.

Contracts for thermal generation companies are attractive; it is almost impossible for IPP players to lose money. First, simply for being there, IPPs receive a “capacity charge”, paid according to the size of the generator. Whether or not they are deployed, contracts stipulate that the IPP is paid for being on standby and ready to supply power. Secondly, all thermal IPPs are paid per kilowatt-hours supplied at a fixed rate that is well above that paid for hydro or geothermal power providers. Thirdly, IPPs receive a “fuel pass-through payment” to cover the costs of fuel purchased. (Unsurprisingly, most thermal IPP companies come from the same business ecosystems as petroleum companies.)

From the very start, the processes of awarding thermal IPP contracts were contentious. There were conflicts of interest in ownership, unusual tendering procedures and allegations of insider trading. During poor rainfall periods in 1999 and 2000, diesel plants made money and consumers suffered. In 2000, while KPLC and KenGen flirted with insolvency, the government had to take an emergency $72 million loan to pay for fuel for generator IPPs. A 2003 parliamentary investigation committee blamed KPLC for mismanaging water from dams and creating artificial power shortages to boost thermal power generator sales.

Starting in 2008, and with the support of donor partners, the government introduced standard feed-in tariffs for wind, solar, geothermal, biomass and biogas, which would attract renewable IPPs. However, the feed-in tariffs did not fast track wind or solar. Instead, between 2008 and 2016, petroleum-fueled IPP and KenGen generation rose from 22 per cent to 35 per cent of the overall generation capacity, while by 2016 wind (from Ngong) amounted to less than 1 per cent of the installed capacity.

If the objectives of unbundling of the sector was to open up opportunities, in the 15 years that followed, it was mainly IPP thermal generation players that benefited from these opportunities. As noted earlier, geothermal power sources also increased significantly during this period, but consumers mostly were impacted by the costs of the long-term agreements signed with thermal IPPs that continue to haunt the sector until today.

Under pressure from the private sector to reduce prices and improve sector performance, the Jubilee administration has made some progress. Several new geothermal plants have been added, Turkana wind and Garissa solar are in place, and there is a considerable pipeline of projects on the way. But the litany of power sector maladministration continues. Sector agencies have been accused of procurement abuses on goods that range from poles to transformers, prepaid meters and drilling rigs. Employees set up “tenderpreneur” companies to do inside deals. On what seems like a daily basis, journalists report on the corruption and leakages in the sector.

From the very start, the processes of awarding thermal IPP contracts were contentious. There were conflicts of interest in ownership, unusual tendering procedures and allegations of insider trading.

So, even though power purchase agreements are being signed, capacity is being added and poles are being strung, the sector’s leaders have not brought down prices. Kenya’s power is still three times as expensive as power in Ethiopia and sector governance remains opaque and inefficient. Consumers are being warned by the regulator that prices are likely to rise.

Centralised or decentralised power: That is the question

The Kenyan government’s plan to address expensive power is to increase supply and to renegotiate unwieldy Power purchase agreements (PPA). However, in response to high prices and continued supply problems, and, in a trend that may foreshadow the future, local industry is exploring alternatives that allow them to control their own power supplies.

If the grid doubles in size in five years, Kenya Power will have to buy this power and sell it to consumers. With recent solar, wind and geothermal additions, and with another 400 MW from Ethiopia, the Kenya grid will have a growing oversupply of power.

Jubilee’s Big 4 industrial agenda requires low-cost electricity for urbanisation, population growth and economic development. Its political platform promised major power supply additions from the start, and its Least Cost Power Development Plan calls for 3000 MW additions that will double the current grid size by 2024. This includes scores of planned KenGen and IPP projects in wind (Kipeto, Ngong Phase III, Chania, Prunus, Meru), solar (Kopere, Alten Malindi, Quaint, Gitaru and others), geothermal (over 1000MW) and coal (Lamu). But even if all of the above power projects can be completed more cost-effectively and with less political influence than in the past, it is not clear that increased supply will reduce power costs. In 2019, current peak demand is just above 1800MW, compared to a healthy production capacity of about 2500MW.

If the grid doubles in size in five years, Kenya Power will have to buy this power and sell it to consumers. With recent solar, wind and geothermal additions, and with another 400 MW from Ethiopia, the Kenya grid will have a growing oversupply of power. Globally, few economies anywhere have expanded fast enough to double power demand in less than a decade and Kenya’s economy today is not poised for double-digit growth. An oversupply of power will create more, not less, problems for Kenya Power and its consumers. This comes at a time when Uganda and Ethiopia also have oversupplies and are looking to sell their surplus power. Common sense says that if the economy took 60 years to grow demand for a 2600MW grid, it will not be able to absorb an additional 3000MW in less than a decade.

Meanwhile, unhappy with expensive and often unreliable power, big customers have begun to produce power on site for their own needs at financed prices that are more attractive than Kenya Power rates. On the order of 25MW of embedded power has been installed in Kenya in the past five years, mostly in the form or solar PV but also from biogas and geothermal sources. In 2019, an additional 20 MW is likely be added. Malls, flower farms, factories, tea estates and universities are taking up embedded solar systems because they are reliable, they help control costs, they meet growing consumer demand for green power and they increase productivity. As shown in Table 2, companies are finding that they can manage their energy costs in ways that support their bottom line – at prices that are lower than Kenya Power rates.

Table 2: Selected Embedded Solar PV Projects in Kenya

Table 2: Selected Embedded Solar PV Projects in Kenya

Although thus far the tally of embedded solar power projects is relatively small, the trend should be of concern to power sector leaders. This is because the top 6,000 power consumers (i.e. those consuming 15,000 kWh/mo) account for about 60 per cent of Kenya Power revenues. These players are watching the early adopters and meeting with the financiers and installers of embedded power systems. Trends for self-production of power will not go away.

With the rapidly decreasing costs of solar, wind, biogas and energy storage technologies, producing one’s own power is increasingly viable. Globally, scores of companies are developing technologies and raising finance that can make consumers energy independent and enable them to sell excess power to the grid. Indeed, embedded solar and biogas and, increasingly, battery storage, are being actively promoted for industries, commercial establishments and households in developed countries. National power production profile curves in California, Germany and Australia now show impressive inputs from wind and solar power. A large portion of these are from household and commercial systems. As batteries get cheaper, more customers will opt to manage their own energy supply. As technology improves and costs go down, decisions will increasingly be driven by company (and household) bottom lines.

A Green New Deal for Kenya?

Although Kenya’s new Energy Act allows for net metering and distributed generation (i.e. self- production of power and sales of excess to the grid), the government and Kenya Power have been less enthusiastic about promoting embedded power. As elaborated above, the government’s focus is on centralised generation projects. This is unfortunate because it is clear that, globally, a tipping point is near. Lower-cost renewables and storage are changing things quickly, enabling large companies and developments to fully manage their own power production and, moreover, to remove part of the financing burden from the state and IPPs.

The biggest question facing the power sector is this: How will it lower costs, compete and improve overall performance for a population promised 100 per cent electricity access in a global business environment where customers can increasingly generate their own power more efficiently than the power company? To survive, the power sector must anticipate changing technologies and business models or it is likely to suffer some of the same consequences that land line telephones did when they were overwhelmed by cellular technology.

Globally, whether East Africa likes it or not, the world is entering the sunset stages of the fossil fuel age and power sector business environments are unfolding very differently than they were just a few years ago. They are moving toward distributed power technologies that can improve grid stability, create jobs and add economic value. In order to fight climate change and clean up the environment, international leaders are looking to green technologies, electric cars and renewably-powered smart and decentralised grids. The good news is that this is no longer science fiction – it is reality.

Rather than fight the inevitable, Kenya – which already has a reputation for having a “green power sector” – should become a regional leader for decentralised clean energy and plan for it. Just as was done with cellular phone networks, power sector planners should rethink their strategies so as to embrace the new realities.

First, power sector planners should move away from IPP-driven exclusively large-scale project approaches that are top-down, opaque and, increasingly outdated. Though economies of scale and stable power requirements demand that there will always be large-scale power suppliers, there is also a need to recognise the developing niches for smaller decentralised power providers and the ways in which they can help improve the overall grid.

Second, planners should give consumers a larger stake in the sector and encourage them to finance and produce their own energy. Large consumers using decentralised solar, geothermal and storage should be incentivised to supply their own power and to sell their excess power to the grid. Since such large consumers make up the bulk of Kenya Power’s demand, their decisions will increasingly affect the prices and power generation choices of millions of smaller commercial and household consumers.

Thirdly, by opening up the sector, and setting targets for smaller-scale decentralised and embedded solar, wind, biogas, geothermal and storage, planners will create jobs for the financiers, developers, manufacturers and installers of these technologies. In developed economies, decentralised solar players create far more jobs than large-scale power projects, jobs that are high quality and available for local small and medium enterprise players. Given the right policy environment, the Kenyan private sector is well-equipped to move into this space and to develop new efficient business models.

Fourth, the power sector should focus on its core business: efficiently distributing and transmitting power. Many recognise that unless considerable improvements are made in the country’s distribution and transmission infrastructure, generation capacity will be added in vain. Kenya Power – and the central investments in its infrastructure – need to be targeted at poorly performing parts of the distribution and transmission system. By allowing decentralised producers to add needed capacity, the power sector can simultaneously refocus its investments on Transmission and distribution improvements and reduce the need for expensive upgrades to sites where energy is self-produced.

Finally, Kenya should seek to be the hub for international electrification connections between Ethiopia, Uganda, Tanzania and SADC markets. By building up the transmission connections between these countries, it will increase local electricity supplies, lower prices and increase income opportunities from the wheeling of electricity between countries. Lower priced electricity, especially from Ethiopia, will force down prices and enable local industry, and eventually stimulate the inevitable transition to electric transport.

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Mark Hankins is a writer, consultant and green energy engineer based in Nairobi Kenya.

Ideas

The Roaming of Colonial Phantoms and a History of Resource Plunder

Since colonization, Africa has provided its best raw materials for the global North. Can countries finally break this pattern?

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The Roaming of Colonial Phantoms and a History of Resource Plunder
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The struggle for control over Africa’s natural resources has raged since the colonization of the continent. It continues today as the forces that undermine Africa shift from the former colonizers to transnational corporations, and the ideology that underpins the global economic order morphs from blunt “flag” colonialism to the hegemony of neoliberalism. The effect is still the same: the underdevelopment of African economies and undermining of state capacity to meet peoples’ needs. The following unpacks the roots of this persisting problem and offers some lessons from the early post-independence era, when governments across Africa recognized these issues clearly and enacted revolutionary policies to confront them.

Prior to colonialism, the countries of Africa were economically, politically, and sociologically structured organically around their internal needs and demands, meeting internal material and social challenges. This is not to say these societies were devoid of internal contradictions, conflicts between them, or engagement with the wider world––indeed, trade routes certainly extended beyond the continent. But on the whole, the economic structures and relationships that developed were shaped by dynamics and demands within African societies.

This was forcefully upended with the onset of colonialism, as African economies were extroverted, destroyed, and fragmented. A new structure was put in place in which African economies were inserted in the global economic order as providers of raw materials for the development of other countries––basically for imperial Europe. This has relegated the vast majority of the continent to a political economy structure of primary commodity export dependence.

Within this structure, African countries became dependent on the export of a small basket of barely processed minerals, timber, and agricultural products (cocoa, coffee, bananas, etc.) as raw materials to feed the industries of the global North. In return, Africa became dependent for their consumption needs on the import of the goods manufactured in the North, most often made using African raw materials.

This enforced “unequal exchange” of unprocessed so-called “low-value” raw materials for “high-value” processed goods has become the basic mechanism of unequal economic relationships between Africa and the advanced industrial capitalist North, and the means of continued appropriation of the wealth created in Africa by the North. This undermines the accumulation of wealth in Africa and its reinvestment for renewing, upgrading, and expanding productive capabilities of the societies on the continent, and therefore of their ability to meet the changing needs of the people. On the contrary, African countries and opportunities for their people have become trapped in the vicissitudes of the global market for their commodities over which they have little control.

The colonial restructuring of Africa’s economies and their orientation to the external needs of European industrialization have devastating consequences for the internal dynamics of the economies and the societies, marked by two key features:

First, as products which were before used and processed for an internal economy came to serve merely as unprocessed raw materials for Europe, the internal usage of these products was subverted. Iron, which was processed into agricultural tools and other mechanical tools, was now mined only to be carted out in raw form. Agricultural products which before were processed in wide-ranging forms for food, clothes, shoes, were now only exported in their raw forms. As a result, the chain of processes, skills, and knowledge of these products and their uses through the domestic economy was broken. Instead of being maintained and upgraded over time, the capabilities and capacity have become degraded.

Second, the relationships that existed between different types of economic activity and “sectors” of the economy were fragmented. The chain of mining, smelting, and crafting iron to supply the technological need of agriculture, such as tools for farmers, was fragmented during the colonial economy. Agricultural supplies to iron crafters were also equally disrupted. This shifted the overall nature of African economies so that these sectors no longer met the needs of and reinforced one another, helped each other grow, or evolved according to African needs.

As different sectors of the economy were no longer “speaking to each other,” the range of internal exchanges became limited and the overall economy became more shallow and weaker. For instance, farmers who now only sold their products to an external (North) market didn’t necessarily have an internal market for their products so that they could also expand their production and opportunities for livelihood. This led to a common belief that African countries have small markets, erroneously attributed to small national populations, and that there is simply nothing that can be done about it. But contrast this with global North countries such as the Netherlands or Denmark: their populations are smaller than many African countries, but because of the coherence in their economies they are able to have a deeper domestic market which allows for expanded production. Their economies were not fragmented and reoriented in the same way.

Such internal fragmentation and consequent shallowness of the African economy is aggravated by the artificial borders inherited from colonialism. Before colonialism, what now constitutes the national border between Ghana and Togo was a common space of economic interaction among societies. By being forced to operate behind new artificial borders also limits the range of exchange and economic depth.

Historically, the mining sector has been the focal as well as entry point for the construction of the primary commodity export dependent political economy. From South Africa to Zimbabwe to Ghana, colonization was consolidated as a process of European companies, supported by their governments, exercising possession and ownership of Africa’s minerals and expropriating the locals. This was replicated as more minerals were discovered in addition to gold, diamond, coal, and oil, and every time a new mineral is demanded by the global North, this dynamic is asserted anew.

However, primary commodity export dependence is not simply a reduction to the specific mineral or agricultural or other natural resources involved. Rather, it is the totality of relationships and dynamics of the appropriation of wealth, the extroversion of the economic dynamics, and fragmentation of African economies. This allows us to see how these dynamics extend beyond natural resources to other economic sectors, such as tourism, telecommunications, and finance. In tourism, for example, it is widely known that the higher end of the value-chain is dominated by a handful of transnational operators, who then appropriate the overwhelming bulk of the wealth generated, leaving Africans little out of it.

In this neoliberal era, the problem of primary commodity export dependence has been ignored at best and celebrated at worst. Promoted first by neoliberal economists and North policy institutions, an insidious narrative has proliferated that African countries should rely on their “comparative advantage,” recommending that they make better and more efficient use of their export of primary commodities. The power of this narrative has ensured that the transformation of primary commodity export dependence and its attendant problems as outlined above has ceased to be a central aspect of African policy making in the neoliberal period.

Echoing the neoliberal suppression of policies aimed at dismantling primary commodity export dependence, at the onset of neoliberalism the World Bank told African governments to abandon any notion to use mineral resources to serve social priorities or developmental priorities, and give up their running and management of minerals and mineral wealth to transnational companies. As the Bank stated:

The recovery of the mining sector in Africa will require a shift in government objectives towards a primary objective of maximizing tax revenues from mining over the long term, rather than pursuing other economic or political objectives such as control of resources or enhancement of employment. This objective will be best achieved by a new policy emphasis whereby governments focus on industry regulation and promotion and private companies take the lead in operating, managing and owning mineral enterprises.

Paradoxically, even the revenue from the export of primary commodities has been undercut through World Bank-promoted programs of lowering corporate taxes and royalties, and giving many concessions and incentives to transnational mining companies in the name of attracting foreign investment.

Many of the best tools to fight against dependency, such as development planning and import-substitution-industrialization, have either been actively repressed by programs like structural adjustment, or pushed into the margins by the dominance of neoliberal thought and “free market” policymaking practices. These tools were widely deployed by early post-independence governments to assert sovereignty over natural resources, before they were truncated by neoliberalism, which has reasserted extractive colonial dynamics.

In the early post-independence period, after formal decolonization, there was wide recognition from governments, across Africa and across ideologies, that the key task for development was to confront primary commodity dependence and its binding economic constraints. Kwame Nkrumah recognized the problem clearly in stating: “Africa is a paradox which illustrates and highlights neo-colonialism. Her earth is rich, yet the products that come from above and below the soil continue to enrich, not Africans predominantly, but groups and individuals who operate to Africa’s impoverishment.”

This recognition across the continent and the global South reverberated into mainstream policy institutions established in this era, such as the UN Conference on Trade and Development Planning or the African Institute for Development Planning. A key lesson from this era is the critical importance of restoring this recognition of the structure of African economies as a starting point for policy and activism.

Early post-independence governments worked to ensure that their economies accumulated for themselves by taking over the commanding heights of the economy strategically. This required asserting sovereignty, and therefore control, over their natural resources. The key mechanism for this was vesting the mineral wealth of their economies in the state. In Ghana, for instance, laws were implemented to declare that the mineral wealth or the wealth under the soil is vested in the Republic of Ghana and, it is the president who has custodianship.

Crucially, this nationalization extended beyond minerals to the mines themselves, even those already constructed. Taxation and royalties were also implemented to fund development and social programs, and the transfer of skills and technology was carefully facilitated.

Early post-independence leaders also saw beyond the hard economics of natural resource sovereignty to recognize its social dimensions. For instance, Kwame Nkrumah bought British mineral mines, which the UK had wanted to close as they did not make any profit. It came as a surprise to many that Nkrumah would purchase unprofitable mines, but his goal was not simple profit, but to create jobs as a social act to expand employment opportunities for the people.

This understanding of the social dimensions of dependency is key for the Post-Colonialisms Today project, as feminist politics is a central pillar. The basic recognition of dependency and its social dimensions, and the need to assert African agency over resources, provides a stronger basis to ensure power and agency for African women. At the same time, post-independence leaders must be critiqued for their patriarchal policies and tendency to sideline African women after independence despite their prominent role in anti-colonial struggles.

The early post-independence era also offers lessons on confronting the fragmentation of African economies. Their approach centered on industrialization: building African capacity to meet Africa’s needs rather than rely on the North to import high-value products.The key challenge many governments faced was generating the resources to support industrialization. Profits from exports from producing primary commodities were leveraged to support building factories, establishing institutional mechanisms, and funding social policies. The widespread use of tools such as the taxation of transnational corporations, protective tariffs, and royalties also generated resources.

However, a deeper problem often remained even as important efforts towards transformation were funded and planned: restoring internal linkages to African economies and making different sectors “speak” to each other once again. This challenge is particularly difficult and one many post-independence governments did not tackle sufficiently. As Post-Colonialisms Today researcher Akua Britum details, post-independence governments had to explore methods for funding development beyond taxation, such as reinforcing social programs to meet workers’ needs without reliance on large cash incomes.

Some countries paid particular attention to restoring these linkages. Post-independence Botswana, for instance, enacted policies to ensure the processing of minerals mined in the country must take place, at least in part, domestically. They also insisted that the procurement of inputs for mining must be sourced in Botswana. This meant that while the economy was temporarily reliant on producing minerals, they could still build up their industrial capacity and promote structural transformation.

There are limitations and layers of complexity to approaches in the post-independence era though: as Post-Colonialisms Today researchers Kareem Megahed and Omar Ghannam point out, post-independence land distribution in Egypt from landowning elite to the peasant class was reversed as peasants only received flimsy usufruct ownership. Under Kenneth Kaunda, Zambia nationalized their mines but still remained deeply controlled by international mineral value chains, meaning that even though they owned the copper mines outright, transnational copper companies managed to undermine their capacity.

Both the strengths and limitations of early post-independence policies offer a wealth of lessons for today’s struggles for control over Africa’s resources. Critically, the clarity in that period around the importance of African state control over natural resources offers a path forward for contemporary efforts––it must be wrestled away from transnational corporations today just as it was wrestled from colonial forces. With basic policies such as nationalization being halted outright, as seen recently in Zambia, this task remains as urgent as ever.

This article is part of the “Reclaiming Africa’s Early Post-Independence History” series from Post-Colonialisms Today (PCT), a research and advocacy project of activist-intellectuals on the continent, working to recapture progressive thought and policies from early post-independence Africa to address contemporary development challenges. It is adapted from a recent webinar on natural resource sovereignty which you can listen to here. Sign up for updates on the project here.

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The Imperialist Soul of Social Democrats

Alfie Hancox writes how the apparently progressive post-war government in the UK which delivered unprecedented social security simultaneously undermined progressive political futures in the Global South – national liberation movements for land and resource sovereignty were thwarted. Hancox reveals Labour’s Aneurin Bevan’s role in deepening British imperialism.

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The working-class vision of socialism during this period may be blurred by the corruption of the ‘welfare state’—Kwame Nkrumah

As the popular national story goes, after the Second World War the British working class, seeking a just reward for their sacrifices, came together to win a fairer society by voting in the Labour government which built the welfare state. At the heart of this reputed ‘Spirit of ‘45’ was the architect of the National Health Service (NHS), Aneurin ‘Nye’ Bevan (1897–1960). Bevan has pride of place in the romanticised pantheon of the Labour left, and he is widely held to epitomise the party’s ‘socialist soul’. While often memorialised as a class warrior who once called for ‘the complete political extinction of the Tory Party’, behind ‘the myth of the miner prophet’ there lies a much more complex and contradictory picture of Bevan the statesman.

Britain’s post-war welfare settlement emerged against the backdrop of negotiated decolonisation – which was by no means a peaceful or straightforward process – and class compromise within the bounds of the capitalist nation-state was mediated by an enduring relationship with Empire. For Bevan, socialism was above all a ‘language of priorities’, and a critical overview of his parliamentary career reveals that colonised peoples in Africa, Asia and the Caribbean were often a subordinate element in his considerations, despite his long-standing friendship with Indian independence leader Jawaharlal Nehru.

It is also often forgotten that the welfare state was serviced by a migrant workforce extracted from Britain’s colonial ‘dependencies’, who were greeted upon arrival with racial-exclusionary impulses which were at times reinforced by Bevan himself. Similar ‘nativist’ tendencies remained present in the recent social democratic revival, demonstrating the need for an interrogation of the traditional Labour movement’s entanglement with imperialism.

The welfare state as neocolonial compact

Social welfare reforms delivered by the state have a contradictory class character. On the one hand, they constitute immediate gains for workers, but at the same time they assist in the reproduction of a value-creating labour force and represent concessions which may boost the legitimacy of capitalism. Welfare measures thus play a mediatory function in the push and pull of class struggle, the surge forward and the reactive containment. Interwar Britain was not wholly immunised from the social convulsions that shook continental Europe, and one wartime Conservative Member of Parliament warned in a famous speech: ‘If you do not give the people social reform, they are going to give you social revolution.’

The reforming Labour government of 1945–51 adopted a carrot and stick approach to class compromise, as the expansion of social housing and public education, and advent of free healthcare, was accompanied with a consolidation of workplace discipline. Bevan claimed to have received his political training in Marxism, but his true faith was in parliamentary democracy, and he believed that national industrial management laid the foundations for the construction of socialism ‘from above’. As a member of Clement Attlee’s Ministerial Emergencies Committee, the erstwhile trade union militant helped defeat a strike wave in the newly nationalised industries (a response to efficiency drives), using the Supply and Transport Organisation which two decades earlier helped beat back the General Strike of 1926.

Britain’s post-war welfare settlement emerged against the backdrop of negotiated decolonisation – which was by no means a peaceful or straightforward process – and class compromise within the bounds of the capitalist nation-state was mediated by an enduring relationship with Empire

While welfare concessions reflect the domestic class balance of forces, this is only one part of the story. As the British New Left historian John Saville identified in 1957, ‘the flexibility and manoeuvrability of the ruling class’ in charting a new social consensus had ‘been derived from the possession of the world’s largest Empire.’ It was this situation which enabled the Labour government to square the circle of maintaining (relative) class peace at home, without eliminating capitalist exploitation. The Pan-Africanist Kwame Nkrumah, in his seminal 1965 study Neo-Colonialism, explained how the governing elite in Europe and North America found a means to deal with social demands at home after the war:

A deliberate attempt was made to divert colonial earnings from the wealthy class and use them instead generally to finance the ‘Welfare State’ … this was the method consciously adopted even by those working-class leaders who had before the war regarded the colonial peoples as their natural allies against their capitalist enemies at home.

Immediately following the war, Britain was facing a currency balances crisis that called Labour’s social plans into question. Bevan was not explicit about where the money for Attlee’s ‘New Jerusalem’ would come from, but his colleague Evelyn John Strachey, a former Marxist and Labour’s Minister of Food, was more forthright. During a parliamentary debate on a Colonial Development bill in 1948, the year of the NHS’s founding, Strachey concluded that ‘by hook or by crook, the development of primary production of all sorts, in the Colonial areas, Colonial territories and dependent areas in the Commonwealth … is, it is hardly too much to say, a life and death matter for the economy of this country.’

A deliberate attempt was made to divert colonial earnings from the wealthy class and use them instead generally to finance the ‘Welfare State’ … this was the method consciously adopted even by those working-class leaders who had before the war regarded the colonial peoples as their natural allies against their capitalist enemies at home.

The Attlee government essentially pursued a policy of issuing ‘IOUs’ to the colonies in return for the dollars earned from key exports such as rubber and tin from Malaya and cocoa from Ghana. Britain’s post-war reconstruction employed ‘a more systematic exploitation of colonies than at any previous time in imperial history’ – with the active support of the labour bureaucracy. The trade union leader, Ernest Bevin, declared: ‘I am not prepared to sacrifice the British empire [because] it would mean that the standard of life of our constituents would fall considerably.’ As the Trinidadian Marxist George Padmore put it, these labour lieutenants of imperialism wanted to turn the British working class into collective ‘shareholders of the Empire.’

British socialism’s civilising mission

Writing in the socialist newspaper Morning Starthe trade unionist and historian Graham Stevenson has attempted to defend the legacy of the welfare state, and detach it from Attlee’s imperialist adventures in Korea, Malaya and Iran, by arguing that ‘foreign policy was not in Nye Bevan’s remit’. It is well known, however, that Bevan had wanted the Colonial Office, and he was an influential voice in international affairs as the charismatic leader of the ‘soft left’ Tribune faction.

Though Bevan’s rejection of the pre-war colonial status quo did put him at variance with the Labour right, he nevertheless stressed he was ‘against any proposal for complete self-government’ until the colonised countries had endured sufficient tutelage under British parliamentary democracy. He believed in the civilising mission of the ‘Socialist Commonwealth’, and in 1948 declared that with the advent of the National Health Service Britain had achieved ‘the moral leadership of the world’. This paternalistic mindset, which smacked of the ‘white man’s burden’, was typical of the ethical socialist tradition in Labour, and distanced Bevan from the approach of the Comintern-affiliated League Against Imperialism and the Manchester Pan-African Congress, which both rejected the ‘Enlightened’ colonial doctrine of trusteeship.

Bevan never challenged the unequal economic relationship with the ‘dependencies’ which characterised Britain’s free trade imperialism, or what he preferred to call ‘the legitimate claims of world commerce’. The superior British capacity for ethicizing self-interest was shared by Bevan’s wife and fellow MP Jennie Lee, who said at Labour’s annual conference in 1956, without a hint of irony: ‘We have to work for the day when there will be a higher standard of living here, a higher standard of living in the colonies, and when as free and friendly nations they will want us to be their bankers.’

It was in his attitudes to the Middle East that Bevan’s more overtly imperialist leanings came to the fore. While opposing the Anglo-French invasion of Egypt, Bevan nonetheless expressed his outrage when President Gamel Abdel Nasser, who he racistly dubbed ‘Ali Baba’, nationalised the Suez Canal used to transport ‘our oil’. In justifying the Zionist colonial project that violently displaced 700,000 Palestinians, Bevan also argued in the Cabinet that ‘it was not necessarily true that we must avoid estranging Arab states. A friendly Jewish state would be a safer military base than any we should find in any Arab state’. He thought that Europeanised Jewish settlers could shake up the ‘semi-medieval institutions’ of the Arab world and prepare the grounds for socialist democracy, betraying a racialised view of civilisational development.

Bevan’s wavering stance on colonial liberation didn’t make him an outlier on the Labour left. For example, it was the former treasurer of the Movement for Colonial Freedom, Anthony Greenwood, who as Labour’s Colonial Secretary oversaw the ousting of British Guinea (Guyana)’s socialist Premier Cheddi Jagan. The Communist Party theoretician Rajani Palme Dutt identified this tried and test pattern of western social democracy, whereby ostensibly left-wing spokespersons are ‘given positions in the imperialist machine such as would not only gag them from expressing anti-imperialist sentiments but compel them to undertake the official duty of defending imperialist policies’.

As the British New Left historian John Saville identified in 1957, ‘the flexibility and manoeuvrability of the ruling class’ in charting a new social consensus had ‘been derived from the possession of the world’s largest Empire

Ultimately, the government that delivered unprecedented social security at home simultaneously thwarted progressive political futures in the Global South – national liberation movements for land and resource sovereignty, and regionalist aspirations like those fleetingly concretised in Nkrumah’s Union of African States. Labour’s inglorious colonial record came up one time when Bevan was lecturing the Conservatives on their imperial policy. When he mentioned the imprisonment of Nkrumah, Tory members opposite reminded him that the Attlee government he served in as Health Minister was responsible! Bevan brushed this off, replying: ‘Well, we shoved him in gaol. If honourable members will restrain their hilarity for a moment, I said that this is part of the classic story of these struggles.’ This glib response omitted the killing of unarmed protestors in Ghana, which took place months before the arrest of Nkrumah. The West African Students’ Union, of which Dr. Nkrumah was a former member, noted that US imperialism often appeared a lesser threat to colonial independence than ‘British Socialism’.

An additional pillar of Attlee’s foreign policy was the backing of Western Europe’s remilitarisation under the US Marshall Plan, enabling the British Communist Party to declare that Labour’s welfare state was really a ‘warfare state’. Before WWII, Bevan had alienated the Labour leadership by calling for a United Front with communists against the fascist threat in Europe. However, his sympathies had changed with the onset of the Cold War, as anti-colonial movements supported by the Soviet Union destabilised the hegemony of the western imperial powers; and the Bevanites became enmeshed in an ideological struggle pitting Occidental social democracy against Marxism-Leninism. Bevan’s 1951 ‘rebellion’ against Labour’s militarism was not a protest against the genocidal proportions of the Korean War – he had in fact fully supported the Anglo-American invasion of the Peninsula – but because bloated defence spending was now cutting into his health service.

Empire and the National Health

The welfare state also carried the imprint of Empire domestically. While healthcare is a basic social necessity, historically the state provisioning of medical services has been framed in terms of labour productivity and, from the late-nineteenth century, imperialist ideologies of racial hygiene. The Liberal economist William Beveridge’s 1942 blueprint for the welfare settlement recommended that ‘good stock should be allowed to breed while bad stock would be ameliorated through state intervention’, and similar eugenics-influenced sentiments permeated the Labour movement through the Fabian Society.

The nationalisation policies in 1945–51 were not in any meaningful sense socialist, being administered from above by the capitalist state. While Bevan described the National Health Service as ‘pure socialism’, it was compromised from the start by the continued existence of independent contractors and retention of private practice. Nevertheless, the post-war reforms were a step forward in terms of collective social security, and they boosted loyalty to the nation-state that administered them: welfare came ‘wrapped in the Union Jack’. The language of socialism was co-opted and degraded by what Tom Nairn termed Labour’s ‘nationalization of class’, and lost in the process of the patriotic social compact were the Marxist values of working class self-empowerment.

Notions of national belonging and entitlement in Britain became increasingly racialised after the war, and as Satnam Virdee reminds us, the apogee of British social democracy ‘was also the golden age of white supremacy [and] legal racist discrimination’. When migrant workers from the non-white ‘New Commonwealth’ were induced to bolster Britain’s public services and stagnating industries, they were met with a racist ‘colour bar’ in employment and housing, often reinforced by the white-dominated trade unions. In 1948, a year that saw violent attacks on Black residents in Liverpool, Bevan wrote that if ‘colonial subjects come here on their own responsibility’ they ‘cannot complain if it is not all plain sailing’.

An informal caste system was built into the NHS itself, with workers of colour restricted to the lowest-paid employment grades, regardless of their level of training. A Brixton-based Black feminist group described how the health service was like a colony in the way it was run: ‘in the head of the black nurse from the Caribbean is the echo of slavery; in the head of the Asian nurse is the servitude to Sahib and Memsahib.’ Britain was simultaneously draining skilled medical labour from developing countries, the effects of which were described in Walter Rodney’s How Europe Underdeveloped Africa. The hyper-exploited labour of Black and Brown women was unacknowledged by Bevan, who ascribed the NHS’s success to ‘the vitality and genius of the British people’.

Healthcare was quickly propelled to the centre of popular anti-immigrant discourses, and only a year after the NHS’s inception Bevan succumbed to nativist pressures by assuring voters that he’d ‘arranged for immigration officers to turn back aliens who were coming to this country to secure benefits off the Health Service’. The image of non-British ‘foreigners’ exploiting the NHS was a trope later deployed to great effect by Conservative MP Enoch Powell in his infamous ‘Rivers of Blood’ speech.

The welfare state also carried the imprint of Empire domestically. While healthcare is a basic social necessity, historically the state provisioning of medical services has been framed in terms of labour productivity and, from the late-nineteenth century, imperialist ideologies of racial hygiene.

Bevan’s capitulation reflected a failure to offer a principled counter to anti-immigration rhetoric. His celebrated essay ‘In Place of Fear: A Free Health Service’ was riven by a tension between the defence of ‘the collective principle’ in terms of socialist universalism, and a cost-benefit approach that stressed immigrants’ contributions to ‘national revenues’, and the expenses that would be incurred by passport checks at hospitals. When Bevan rebuked the Trades Union Congress’s call for immigration restrictions after the 1958 racist riot in Notting Hill, this was not on grounds of proletarian internationalism, but the potential damage it would do to the image of the Commonwealth as ‘the greatest constitutional experiment in the history of nations’.

The legacy of Empire persists in the health service today, as demonstrated by the revival of medical racism in the Coronavirus context. The NHS is also still dependent on the labour of precarious migrant workers, now extracted from developing countries such as the Philippines and Nigeria. The present struggle to defend healthcare services in Britain thus needs to be coupled with a historical awareness of the inherent dangers of seeking social reform within the confines of the imperialist nation-state. We should look beyond the elitist parliamentary socialism of Bevan, to the alternative politics of metropolitan anti-colonialists like Dutt and Padmore who sought not a class settlement within the parameters of capitalist competition, but the levelling of wages and conditions across national and racial boundaries. The experiences of the 1970s–1980s further demonstrated that rank-and-file struggles in the health sector, often instigated by low-paid Black ancillary workers, can galvanise the labour movement in a profoundly progressive manner. We can draw on these lessons, and reconnect with more radical, worker and patient-driven visions of socialist healthcare which target the social roots of ill-health intrinsic to capitalist exploitation.

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

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Neocolonial Components of Algorithmic Capitalism in Africa Today

More than half a century after Kwame Nkrumah first articulated his magisterial critique of neocolonialism, Scott Timcke argues his critique remains just as relevant in the analysis of present-day developments of capitalism in Africa.

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Neocolonial Components of Algorithmic Capitalism in Africa Today
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The present convergence of finance and wireless technology has generated considerable enthusiasm in development circles about the promise of connectivity and FinTech to improve quality of life and create wealth on the African continent. The prototypical example that proponents point to is M-Pesa, a service run in Kenya by Safaricom. Launched in 2007, M-Pesa is a form of mobile banking which uses cellphone accounts as a financial service, permitting transfers and credit extension facilities. Initially funded by the United Kingdom’s Department for International Development (DFID), the service was commercialized through a joint venture by Vodafone and Safaricom.

By 2018 there were 30 million customers and 6 billion yearly transactions. By most assessments, the service is a success. This blogpost revisits that conclusion by asking how these kinds of FinTech technologies, in their current configuration, perpetuate neocolonial relations. Replacing direct military rule, neocolonial relations can be understood as the coordinated exploitation of developing countries by advanced capitalist ones through their clout in international political economy. If such a claim at first appears like a stretch because it appears conspiratorial, it is worth recalling how European imperial and colonial practices were naturalized and normalized for most of modernity.

While ‘the methods of neo-colonialists are subtle and varied’ let us begin with the obvious. Desires to ‘bring Africa online’ in the 2000s had to confront stark realities born from both (i) the legacies of colonial infrastructure planned primarily to support resource extraction or settler communities, and (ii) the IMF imposed structural adjustment policies that slashed state maintenance budgets and social, economic, and political infrastructure. So, when digital neo-modernization advocates maintained that without access to the internet people in the Global South would face a digital divide which would exacerbate poverty that stemmed from the already asymmetrical relations in the global system, they overlooked the very history that gave rise to those inequalities and deficiencies in the first place. But this rhetoric of digital inclusion tended to overlook the historical materialist method at the heart of discussions about digital inequalities. Indeed the ‘connectivity paradigm’ currently promoted by the World Economic Forum and Facebook focuses on building infrastructure to create markets and customers, which will bridge the digital divide. However, this conceptualization ignores the insights of the scholarship around uneven and combined development or the research on the spatial fix required by capitalism to stall social problems in metropoles. In other words, for all the discussion about connectivity when digital neo-modernizers deny the connections of history; they deny how some polities are rich because others are poor.

Take the case of rising household over-indebtedness mediated by micro-lending platforms like M-Pesa. Sociological studies of the working-class in Kenya, like that by Kevin Donovan and Emma Park, demonstrate how these digitally mediated financial markets create debt traps for this class. In effect their earnings are used to pay off debts and more loans are taken against future earnings to service existing debts. This digitally mediated indebtedness of the working class is facilitated by the combination of the increase in the volume of rents extracted in the modern financial economy as well as, crucially, analysis of user generated data to assess their creditworthiness. In short, social reproduction is articulated through the logic of this financial system in turn causing severe maldistribution. Through this employment of FinTech ‘poverty is understood as a new frontier for profit-making and accumulation.’ These are the kinds of processes that Dan Kotliar and Abeba Birhane have in mind when they write about data orientalism and the algorithmic colonization of Africa respectively.

While the excellent critical literature on FinTech in Africa is growing, too often this work is lost in the analytical (and political) noise of neo-modernization. As the connectivity paradigm illustrates, this ideology has a naïve comprehension of technology as a social form. By contrast, when approached from a critical perspective, FinTech is not confined to reconfiguring or extending new services. Rather it involves creating new markets, introducing new machinery to reduce labor costs and more generally aiding inter-sector competition. But most importantly, FinTech is concerned with enclosing and capturing the value in existing informal lending practices the African working class has already built themselves. For example, South African informal saving networks are estimated to hold US$3 billion. To put it another way, the purpose of FinTech is to readjust the balance of power between capital and labor. This means that the central issue is not about the outcomes this technology produces, nor is it even a matter of access. The fundamental question is about how control rights of this technology reside with a minority of shareholders and how their interests are adjacent to the interests of their firms’ customers. And through indebtedness, FinTech is effectively creating a ‘digital-creditor-debtor-divide’ in Africa.

There is considerable value in revisiting Kwame Nkrumah’s Neo-Colonialism, the Last Stage of Imperialism to understand the neocolonial components of algorithmic capitalism (informational or cybernetic capitalism). Published in 1965 and written in the wake of British Prime Minister Harold Macmillan’s 1960s Wind of Change speech in the Parliament of South Africa in which the Conservative British government signaled that is would no longer actively oppose independence movements, neocolonialism as Nkrumah described it, was a technique of indirect rule kept in place through a combination of economic arrangements and treaties, innovations in communication technology, and with the assistance of local sympathetic agents. In short, Nkrumah argued that European politicians like Macmillan and Charles de Gaulle offered disingenuous statements about the formal end of colonial rule, in part because newer mechanisms of colonial exploitation were possible to implement.

As a quick illustration of the durability of neocolonialism as a form of imperial rule, consider how, sixty years after formal political independence, the CFA franc has kept former French colonies under the influence of France monetary policy and structuring the economic relationship between France and these former colonies. Fanny Pigeaud and Ndongo Samba Sylla’s recently published Africa’s Last Colonial Currency concretely shows how 162 million people in 15 states have France mediate their monetary policy. When paired with the frequent military interventions that still take place, as Nkrumah accounted for, African populations continue to be subjects of scientific and financial experimentation by global powers.

Even reviewing Nkrumah’s sequence of chapters gives an early indication of the larger argumentation and stakes of his thesis. “Exercised through economic or monetary means” and “by a consortium of financial interests” imperialist finance and its currencies enable capitalists to establish corporations dedicated to extracting raw materials from concessions. By pressing labor—whose wages are artificially depressed through monopoly in economic sectors and the monopsony of labor (a market situation in which there is only one buyer) like in many African extractive economies—the profits of which are repatriated to metropoles through monetary zones and foreign banks. Indeed, at the time the book even caught the eye of the CIA in November of 1965. Nkrumah’s government would not last even four more months. It was deposed in February 1966 by a military coup. While it is difficult to adequately discuss Ghanaian politics in the 1960s in this venue (and more generally we must resist mono-causal explanations) it is nevertheless telling that Nkrumah’s removal set in motion a ‘diplomatic realignment’ that benefited the West.

Indeed, it is this kind of protracted material struggle between oppressor and oppressed that gave rise to the neocolonial critique. In the 1989 edition of The Black Jacobins, CLR James included an appendix ‘From Toussaint L’Ouverture to Fidel Castro’ in which he writes that about the intellectual encounter between the West Indians like Marcus Garvey and George Padmore and Africans like Jomo Kenyatta and Kwame Nkrumah. Calling this “one of the strangest stories in any period of history”, James described how encounters between sets of migrants in European cities led to the formation of groups like the International African Service Bureau, as Theo Williams has previously discussed on roape.net. Being in metropoles these Pan-Africanists had front row seats to witness the transition from ‘the old colonial system’  that had stood since the 1884-1885 Berlin Conference to ‘neocolonialism’ that emerged after World War Two. Through their ‘criticism of the weapon’—to employ a line from Marx’s Critique of Hegel’s Philosophy of Right—the Pan-Africans made their theory ‘a material force.’

While there are several tendencies in African studies, neocolonialism and neo-modernization represent two divergent conceptualizations of actions occurring on the continent. Despite protestations otherwise, neo-modernization is institutionally, philanthropically, and academically entrenched. It provides the initial frame of reference for design of empirical studies. And it is precisely “because they have already established a near monopoly of what is written on the subject” to enroll some of Walter Rodney’s remarks, that space is made for the neocolonial critique. This critique can, for example, show how local intermediaries facilitate neocolonial rule. Walter Rodney called these local agents’ allegiance to, or cynical cooperation with neocolonial powers, part of the ‘elementary conditions’ of neocolonial rule. For example, as it applies to algorithmic capitalism, the Kenyan government owns 35% of Safaricom. This means that the state gains revenues from the indebtedness of its citizens and the commodification of their data that Donovan and Park describe. But here arises a contradiction, because these revenues may be offset by costs spent to address the social consequences of indebtedness like homeless and mental illness. Indeed, depending upon their mandate, parts of the Kenyan bureaucracy are likely working at cross purposes from one another. This adds conflicting interests to any intra-governmental discussions on how (or if) to regulate lending apps like M-Pesa.

To recap, aside from the skews and parameters that arise from internal properties, it is true that there is nothing intrinsically exploitative about digital technology. That said, due to the global supremacy of the private property regime, the meaning and operation of these digital infrastructures is overdetermined by capitalist values. Accordingly, using neocolonialism in studies of digital sociology can help us focus less on the mechanisms of this or that platform, and more on how platforms are part of the basic forms of a society that shape social relations. In this vein, neocolonialism provides a different methodology—a counter-narrative that foregrounds the experience of the oppressed—that comes to vastly different conclusions to the neo-modernization perpetuated in the elite ‘fintech-philanthropy-development complex’.

This complex promotes platforms to advance economic liberalization and skirting existing regulations believing that such policy courses can nominally improve material conditions for Africans. However, in practice due to platform mediated financialization setting up conditions of perpetual insolvency, the lived-experience of the African working class is delimited by the interests of metropolitan capital, an arrangement that is reminiscent of the same kinds of subordination that Nkrumah described in the latter half of the 20th century. Much like in the 20th century this most recent iteration of neocolonialism will have long reverberations.

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

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