The Plan for Financial Sovereignty
African leaders had come to recognize the various factors that hinder the continent’s development and seriously jeopardize the future of its peoples. The Abuja Treaty was put in place to increase economic self-reliance, promote self-sustained development, and raise the living standard of African peoples. The treaty signifies years of hard work in the socio-economic, political, and diplomatic arenas. Africans are on many levels committed to seeking a solution for the myriad problems that have stifled many African countries since they obtained independence in all its vague forms. In the Abuja Treaty, the establishment of the African Economic Community also serves in the process of economic integration, and according to a report in Africa Today, four stages are involved, and they are the free trade area, a customs union, a common market, and finally an economic union.
Within the African Economic Community, the establishment of the three financial institutions are key aspects of the African Union’s Agenda 2063 program. They are considered the spearheads in the economic integration of Africa, as expressed in the 1991 Abuja Treaty, which was centered on promoting the financial independence of Africa. Prior to the 1991 Abuja Treaty, a major source of pressure for fundamental change was centered on international debt, domestic crisis, and the impact of global change. Donor countries and agencies such as the World Bank and the International Monetary Fund provide ‘solutions’ to which in essence are designed to recover loans given to African countries. Consequently, the measures taken have the effect of exerting terrible economic pressure on the African masses. The measures such as the infamous Structural Adjustment Programs (SAP) usually translate to a political backlash against concerned governments, especially in the short run. Not all analysts agree that economic or any other form of integration is the proper solution to the African economic problem. One can simply observe the operations of international financial institutions, which, as a matter of practice, never encourage any form of integration in Africa; (IMF, Bank of International Settlement, etc.) only promote internal measures like austerity programs and privatization schemes.
The Challenges to Financial Independence
Another stifling factor to the financial independence of Africa is capital flight, which is generally considered unrecorded and rapid outflow of assets and money from a country or economic region because of intended, or unintended economic consequences. The international mainstream media leads many to believe that the African continent depends on foreign ‘aid’ and functional private investment. The general image depicted is that of advanced economies providing money to poor and developing African countries. On the contrary, research and data prove that Africa is a ‘net creditor to the rest of the world. According to a 2018 Political Economy Research Institute (PERI) report, with a sample of 30 African countries over 46 years(1970-2015), the group of countries lost a combined total of $1.8 trillion to capital flight, including interest earnings. Additionally, the report indicates that the stock of debt owed by the countries as of 2015 amounted to $496.9 billion. The evidence proves that countries on the African continent lose more value through capital flight than is received in foreign aid or investment.
The founding president of Global Financial Integrity (GFI), Raymond Baker, is quoted as saying, “The traditional thinking has been that the West is pouring money into Africa through foreign aid and other private-sector flows, without receiving much in return. Actually, that logic is upside down – Africa has been a net creditor to the rest of the world for decades.”
The GFI and the African Development Bank released a report in 2013, estimating that the most common strategy for transferring capital from developing countries to advanced economies was trade mis-invoicing. The GFI further reports that sustained conditions of capital flight undermine revenue sources and stifle affected countries’ ability to build a domestic tax base.
In similar fanfare afforded to the 2016 Panama Papers Leaks, the FinCEN Files, which details over 200,000 suspicious financial transactions, were leaked and globally publicized on the 20th of September 2020. The investigation was carried out by the International Consortium of Investigative Journalists (ICIJ), and the files were leaked from the Financial Crimes Enforcement Network (FinCEN). It is claimed within original reports that global banks are entirely complicit in or willfully ignorant of the outright stripping of economic value from the majority of the world’s population, favoring multinational elite/criminal interests. The FinCEN files show proof that global banks such as JPMorgan Chase, Deutsche Bank, HSBC, Standard Chartered Bank, and Bank of New York Mellon continued moving cash for illicit networks, even after they had been fined by U.S authorities for failing to stem illicit fund transfers, according to key findings by the ICIJ. Furthermore, the ICIJ also reports that in about half of the FinCEN Files, banks did not have information on one or more entities behind transactions, and, after years of concern, banks carried on providing services to criminal interests allegedly leading to cases of actual harm.
As it relates to the geopolitical projections in West Africa, it can be expected that detractors to African economic integration will support an internationally pliable leader for the typical two-year term of a Nigerian administration, and this will run from 2024~2032, which falls squarely within the AU’s timeframe of establishing the African Central Bank. This play means that such a leader will be lean toward economic policies that potentially prop up the rival regional currency – the Eco, and while this will be dressed up as a win for the African Union, it must be noted that the Eco is essentially a rebranded CFA Franc.
In a bid to ground these observations, memory must recall that the downfall of Libya was initiated not long after the Gaddafi administration expressed plans to implement a Pan-African Currency based on gold-backed Libyan Dinars. Through the makings of a color revolution, a country that had free medical care and education for its citizens was eventually reduced to a failed state that has allowed for the criminal sale of African people and the further destabilization of the Sahel region. The status quo makes it unlikely that Libya will be stable enough to host the headquarters of the African Investment Bank by 2025. Additionally, a country like Nigeria with issues of bad governance and weak policies is not impervious to such imperialist designs, and widespread unrest can disrupt development plans indefinitely.
The African Continental Free Trade Area (AfCFTA) agreement also exposes systemic challenges that hinder effective implementation of measures meant to foster economic and extension, financial autonomy on the global stage. Firstly, the World Trade Organization (WTO) is an illustration of misalignment, seeing that it removes policy freedom from states and weakens the capacity to pursue regional and contextual industrial policies. Furthermore, the high export of agricultural products like cocoa from Ghana and Senegal or coffee from Kenya still promoted through pre-existing colonial relationships means such products are susceptible to degrading production factors. In late 2020, the East African Herald reported on the fact that Kenya’s coffee is losing top global appeal due to high chemical contamination, also overall, production had dropped because local farmers couldn’t keep up with the high-interest loans or compete with cartels.
The deeper issues are usually traced to colonial economic interactions and the introduction of capitalism in developing countries. There were concerted efforts to build and maintain economic relations, in which the colonies were made into permanent producers of raw materials to satisfy the requirements of metropolitan countries. The established links between the producers and the colonial metropoles meant that colonies became dependent on other countries to purchase and dictate the prices of products. Colonies, as a result, were left without the infrastructure to process the raw materials and only purchased ready-made goods from the associated colonial power. The result was that colonies produced what they did not consume and consumed what they did not produce.
Furthermore, writers like Pradip Ghosh have argued that the Bretton Woods Agreement, signed after World War II, directly affected African economies less competitive on the so-called international market. Established trace structures allowed developed countries to increase tariffs on processed African products and African exports to the European Economic Community, subject to quotas and stringent price rules. Policies like the 1947 General Agreement on Tariffs and Trade (GATT) served to sustain the domination of developed countries over young economies, particularly in Africa. African economies could not take advantage of tariffs from developed countries because of their small economies, and industrialization was discouraged because African nations could not raise tariffs to protect internal industries, retaliation from larger economies would have devastating effects. The GATT and the International Monetary Fund had the indirect effect of discouraging African economies from diversification, creating a situation where Africa continues exporting primary commodities but keeps borrowing to fund an already sabotaged cycle of development; a lose-lose scenario.
The popular Marxist analyst Samir Amin aptly described outcomes of colonial interaction between Africa and European colonizers that are still apparent. He defined West Africa as the Africa of the colonial trade economy due to the easily accessible coastal regions and the ‘rich’ hinterlands, in terms of resources (labor, palm oil, agro-produce, etc.), the Congo River Basin as the Africa of the concession-owning companies based on the immense mineral resources that have basically powered the development of modern society if one is to go by the work of Walter Rodney; How Europe Underdeveloped Africa. Finally, Samir Amin refers to the southern regions of the continent as Africa of the labor reserves. In the southern regions, he states that the region saw widespread colonial imperialism applied based on ‘enclosure acts’ set towards entire peoples.
It is also important to note in what amounts to intellectual compromise, Samir Amin states that current academic programs in the social sciences for many African universities prescribed by the World Bank and related authorities basically stifle the capacity to develop critical thought. Combined with the inability to comprehend the systems that govern the global economic systems, graduates of these universities end up as ‘executives’ that implement policies decided in other parts of the world. Here, he relates African problems to capitalism and describes it as “a regime in which successive states of disequilibrium are products of social and political confrontations situated beyond the market”, further stating that capitalism is synonymous with permanent instability.
Lessons & Next Steps
As stated above, the causes of Africa’s debt crisis are multifaceted. Austerity measures now have the effect of attempting to squeeze water from stone, the socio-political conditions in African debtor nations are quickly becoming intolerable and the political leadership is not demonstrating any conviction. The foundations for the current state of disarray in Africa were laid primarily during colonialism and the status-quo is sustained through neocolonial operations with corrupt African elite leaders as accomplices. Development aid and other forms of Euro-American ‘support’ has been consistently counterproductive. When combined with cronyism and corrupt pluto-gerontocratic leadership, the efforts from the West causes untold hardship for the people of Africa. Neocolonialism has survived and continues to exist because the west had set up a dependent political and economic structure that was not demolished by many African leaders but was inherited even though leaders like Thomas Sankara, Amilcar Cabral, and Samora Machel, among others, gave their lives in the pursuit of African liberation. Research and material realities have shown that within African countries, many leaders promote foreign interests over domestic ones, while supporters are basically reeducated into upholding systems of neocolonialism, all to the detriment and underdevelopment of Africa and Africans.
Leaders, research organizations, and academia understand that developing countries have sustained the prosperity of developed countries and will always be exploited by imperialist nations. Milquetoast calls for structural changes to predatory economic systems have lost all steam and have no value. The façade of ‘decency’ only serves those that benefit from a status quo that sees Africa perpetually exploited. If interested in any real measures for ‘aid’, the West should seek to dis-link its extractive industries that carry on the rapacious exploitation of African resources to support extremely consumerist societies. African leadership on the other hand must come to reflect on the role of government in any society and move to reeducate themselves away from foreign dependence and towards African sovereignty and socio-cultural confidence. The African struggle toward true autonomy is multi-faceted and concrete steps to collective financial sovereignty is a necessary phase of that journey.
 Alemazung, J.A. Post-Colonial Colonialism: An Analysis of International Factors and Actors Marring African Socio-Economic and Political Development (2010)., The Journal of Pan-African Studies, vol.3, no.10.