Patrick Bond, University of KwaZulu-Natal Centre for Civil Society and School of Built Environment and Development Studies, Durban Presentation given at the 'Beyond-GDP in Africa: Innovative Ideas for a Regional Dashboard' workshop, Centre for the study of Governance Innovation, University of Pretoria. www.governanceinnovation.org

1. why reversing Africa’s Resource Curse requires calculating
natural capital accounts and ecological debt
Patrick Bond, University of KwaZulu-Natal Centre for Civil Society
and School of Built Environment and Development Studies, Durban
perspectives from civil society
presented to the
University of Pretoria
Centre for the Study of
Governance and Innovation
‘Beyond-GDP in Africa’
workshop
27 October 2014
Centre for Civil Society

2. to be a very good jam-maker,
you need a strong tree-shaker

4. new measurements: against GDP
MISSING FROM GDP:
resource depletion (crucial to ‘extractivism’)
air, water, and noise pollution
loss of farmland and wetlands
unpaid women’s/community work
family breakdown
other social values
crime
Genuine
Progress
Indicator

5. SA corporate profits: world’s 3rd highest
Source: IMF Article IV on SA, July 2013

6. artificially high?

7. Moeletsi Mbeki:
“Big companies taking their
capital out of South Africa are a
bigger threat to economic
freedom than… Julius Malema.”

8. Thabo Mbeki runs AU’s
‘High level Panel on Illicit
Financial Flows from Africa’

9. crime includes vast African capital flight

10. Composition of world’s
illicit financial flows
5%
Source: Kar and Cartwright-Smith (2010)
35%
60%
Corruption(bribery and
embezzlement of national wealth)
Criminal activities(trade in
drugs, weapons and people)
Commercial transactions through
MNCs
• the sin at the origin: capital outflows are illicit if they involve funds
that were acquired illegally (through corruption, drug and human
trafficking, trade mispricing, …)
• the sin at transfer: capital outflows are illicit if they are not properly
recorded with national authorities
• the sin at hidden foreign holdings: capital held abroad is illicit if it is
not reported to the authorities (most likely due to sins #1 and #2)
» Source: Leonce Ndikumana

11. Illicit Financial Flows from Africa 1970-2008
# Country Cumulative IFFs US$ bn Share in Africa’s total
1 Nigeria 217.7 30.5%
2 Egypt 105.2 14.7%
3 South Africa 81.8 11.4%
4 Morocco 33.9 4.7%
5 Angola 29.5 4.1%
6 Algeria 26.1 3.7%
7 Côte d’ivoire 21.6 3.0%
8 Sudan 16.6 2.3%
9 Ethiopia 16.6 2.3%
10 Congo,
Republic
16.2 2.3%

12. Illicit Financial Flows due to trade, 2001-10
Source: Simon Mevel, Siope Ofa & Stephen Karingi / RITD / UN-ECA

13. Illicit Financial Flows due to trade, by sector
Top 10: Cumulative IFF from Africa by GTAP Sector, 2001-2010.
GTAP Sector USD Billion
Metals nec (Copper & Gold and other non-ferrous metals) 84.00
Oil 69.59
Natural gas 33.99
Minerals nec (non metalic minerals eg. Cement, gravel, plaster etc) 33.08
Petroleum, coal products 19.98
Crops 17.06
Food products 16.86
Machinery and equipment nec 16.82
Wearing apparel 14.00
Ferrous metals (Iron & steel) 13.15
Source: Simon Mevel, Siope Ofa & Stephen Karingi / RITD / UN-ECA Total 318.54

14. Illicit Financial Flows due to trade, 2001-10
Source: Simon Mevel, Siope Ofa & Stephen Karingi / RITD / UN-ECA
Cumulative IFF by destination

15. during current platinum
strike, disputes over
corporate profitability have
major implications for
potential wage settlement

16. De Beers
hurts the
SA Treasury

17. trade mispricing by just one firm, 2004-12
US$2.83 billion
http://thestudyofvalue.org/2014/05/15/new-lcsv-
working-paper-explores/

20. 70
60
50
40
30
20
10
0
-10
capital flight outstrips all other flows
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Net transfer on debt
ODA
FDI
Capital flight
Remittances
Source:
Leonce Ndikumana

21. ‘Useful Africa’
Source: Le Monde
Diplomatique, Feb 2011
known minerals
in Africa, 2008

22. 1. South Africa 599
2. Botswana 92
3. Zambia 75
4. Ghana 43
5. Namibia 32
6. Angola 32
7. Mali 29
8. Guinea 21
9. Mauritania 20
Tanzania 20
Zimbabwe 20
Africa’s mining
production by
country, 2008

23. “Africa Rising” (# of citations)

24. “Africa Rising” GDP percentage increases, 1981-2012

27. WAVES ‘50/50’ Campaign for Natural Capital Accounting
Glenn-Marie Lange, Program Manager for WAVES Global Partnership, Environment Department, The World Bank
Building on the Gaborone Communique on NCA
from the African Sustainability Summit, hosted by
Botswana May 24-25, signed by 10 African countries
62 (32 developing) countries signed the NCA
Communique, endorsing
• Implement natural capital accounting where there are
internationally agreed statistical standards –the SEEA
• Develop methodology for the more difficult to measure natural
capital – ecosystem services
• Demonstrate how NCA can support decision-making for
sustainable development

28. World Bank
(minimalist)
adjustments
to ‘genuine
savings’
fixed capital (-),
education (+), natural
resource depletion (-),
and pollution (-)

29. World Bank
(minimalist)
adjustments
to ‘genuine
savings’
fixed capital (-),
education (+), natural
resource depletion (-),
and pollution (-)

30. World Bank
adjustments to
‘genuine savings’

31. South Africa’s natural capital accounts
a first cut in the World Bank’s Changing Wealth of Nations (2011)
substantial ‘subsoil assets’ within ‘natural capital’($/capita)
depletion of subsoil (mineral) assets = 9% of income
net decline in SA’s per person wealth: $245

33. “Africa Rising”
(really?)

34. “Africa Middle Class Rising”
(hmmm, a $2/day ‘middle class’?)

35. multinational corporate profits
as a percentage of firm equity
extractive industries
Source: UN Conference on Trade and Development (2007), World Investment Report 2007, Geneva.

36. African protests rising

37. Africa protests (and food prices) rising

39. ‘ecological
debt’ now
recognised
as one
implication
of natural
capital

40. GHG/capita by country, 2000
Australia
USA
Saudi Arabia
Canada
Kazakhstan
Russia

41. who are climate ‘creditors’? (who’s owed?)
a ‘Climate Demography Vulnerability Index’
main losers:
• Central America
and Caribbean
• Andes and Amazon
• Central/South Asia
and Middle East
• SubSaharan Africa
• Southeast Asia and
small islands

42. Africa burning

43. who’s owed? climate change ‘creditors’
main losers:
Central America,
central South America,
Central and Southeast Asia
and much of Africa
Ecuador
(Yasuni Park)

44. can we leave the oil under the soil?
Yasuni ITT in Ecuador’s Amazon rainforest

45. Ecuador

46. Accion Ecologica, Quito
eco-feminist-indigenous defence of Yasuni
http://www.accionecologica.org/
http://www.amazoniaporlavida.org/es/El-Juego-del-Yasuni/age-of-yasuni-un-esfuerzo-para-hacer-visibles-las-luchas-de-los-pueblos-originarios.html

53. financial sanctions to halt port-petrochem:

55. The results after one year of implementation have
been remarkable.
• Before the pilot program, 42% of children in
the village were malnourished. Now the
proportion of malnourished children has
dropped significantly, to 10%.
• The village school reported higher attendance
rates … children were better fed and more
attentive.
• Police statistics showed a 36.5% drop in crime
since the introduction of the grants.
• Poverty rates declined from 86% to 68% (97%
to 43% when controlled for migration).
• Unemployment dropped as well, from 60% to
45%, and there was a 29% increase in average
earned income, excluding the BIG.
Carnegie Council:
http://www.policyinnovations.org/ideas/briefings/data/000163
Basic Income
Grant (BIG) pilot in
Otjivero, Namibia
(funded by German-
Namibian Evangelical
Lutheran church)
Council of Churches of Namibia (CCN), the
National Union of Namibian Workers (NUNW),
the umbrella body of the NGOs (NANGOF), the
umbrella body of the AIDS organisations
(NANASO), the National Youth Service (NYC), the
Church Alliance for Orphans (CAFO), the Legal
Assistance Centre (LAC) and the Labour Resource
and Research Institute (LaRRI)