Africa and Europe: Who is Dependent on Who?

Unveiling Economic Intersections and Power Dynamics

In 1976, when I was still playing with toys and ran around with my favorite childhood dog, Dookie, Foreign Affairs magazine published an article examining whether the Decolonization of Africa created a dependency of Africa on Europe. The point was that despite the UN resolution of December 1960 that granted independence to colonial countries and peoples, Europe still had a significant influence on African countries.

Independence never meant they ultimately left and allowed these formerly colonized countries to be autonomous. European power became more subtle through aid, investment, a similar preferential trade regime as during colonialism, and a sizable flow of teachers, businessmen, missionaries, and consultants, like me, at the time, providing technical assistance and capacity building to help them graduate to becoming “developed” countries.

Did Foreign Aid Work in Africa? Presentation by Bill Easterly. See the link for his full presentation.

In good conscience, as consultants, most of us believe we are moving the needle towards more significant “development,” whatever that means. Yet, I always wondered why aid does not seem to work. In a course I did entitled African History Through the Lens of Economics, there was an edition featuring Bill Easterly on Did Foreign Aid Work in Africa? His conclusion was basically that it did not. It had the stark opposite effect. He does not venture into solid causality, but there is something to be said: as aid reached about 7% of GDP in 1976, per capita growth of GDP fell to zero and below zero from 1985 and onwards.

I suspected things were not working, but that graph shocked me. (See Figure 2.) Yet, it was not surprising, especially given that Africa was the cradle of civilization. It was clear that colonialism and even de-colonialism in 1960 led to, and continue to be the demise of many African economies.

The reasons may be apparent to those who like maths. According to a Guardian newspaper article, African countries received $162 billion in 2015, including $32 billion in loans. The $162 billion comprised loans, aid, and remittances. They paid $18 billion in interest on the $32 billion debt. Unfortunately, $203 billion was taken from the continent during that same year through multinationals repatriating profits and illegally moving money into tax havens or by costs imposed by the rest of the world through climate change adaptation and mitigation.

The African continent is not poor. It is persistently being robbed.

In the same article, we see the wealth that Africa exports while many peoples in such countries remain poor. Counterintuitively, more resources attract more poverty. South Africa’s in-the-ground mineral wealth is estimated at around $2.5 trillion. For the Democratic Republic of the Congo (DRC), it’s about $24 trillion. Yet, South Africa’s GDP per capita for 2019 was $6,001, while DRC was $557.

For comparison, as the former colonizer of DRC, Belgium’s per capita GDP was $42,888 in the same year. As Western countries scramble to halt or slow climate change with more use of electric vehicles and more high-tech equipment, we will likely see a renewed scramble for minerals like cobalt from DRC, thus pushing up the value of the very soil of Africa. Between Africa and Europe, who is dependent on who? Logic and the data suggest that the West depends on Africa for its development. It’s always been the case, thus colonialism.

Some African leaders have realized this European dependency on Africa’s resources. They want to control more of their resources, the prices, and the impact of mining on their people and benefit from their wealth rather than keep exporting to and remaining poor. This desire to reap the benefits of their resources is not new. In the 1960s, leaders like Patrice Lumumba of DRC and Kwame Nkrumah of Ghana were just two leaders either assassinated or ousted from power due to outside influence. They tried to control their resources and demand prices for their country’s raw materials to help them develop. They wanted to be genuinely independent. If you are curious, read about President Lumumba’s assassination. Will today’s leaders suffer a similar fate? The world watches.

The presidents of Ghana, Rwanda, and many other countries are trying to take back control of their lands, not by avoiding trade with Western countries but by trading up the value chain more to get at least some of the value added for their products.

Should aid continue to Africa as it always has, or should we have fair trade for Africa’s output?