“The essence of neo-colonialism is that the State which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty. In reality its economic system and thus its political policy is directed from outside…. The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases, rather than decreases, the gap between the rich and the poor countries of the world.” Kwame Nkrumah
Neocolonialism was coined in the 1960s by the first president of independent Ghana, Kwame Nkrumah, who argued that its practices reveal how newly independent countries are still primarily controlled by international financial capital. While this theory was formed over 60 years ago, these neocolonial mechanisms persist and have adapted to keep pace with powerful capital forces driving the global economic system.
While it may be generally accepted in development circles that these neocolonial relations have created negative manifestations in various areas of public life, no significant shift in former colonial power relations has occurred. Lives in the global South continue to be valued ‘less than’ those in the Global North. Africa, in particular, holds key minerals the global markets need – yet the ways in which excess profit continues to be extracted along with those minerals, keep the continent poor in relation to the countries who ‘buy’ those minerals.
In stark terms, the Covid-19 pandemic response to vaccine access highlighted how colonial legacies continue to play out, affecting millions of lives. While initially, newly independent Zambia remained reliant on capital from their former colonisers, the rise of corporate globalisation in the 1970s saw a new form of power, called neocolonialism. This allowed for a free flow of capital around the world and incorporation into the global value chain by transnational corporations (TNCs). In the absence of post-colonial reparations, newly independent states had to access capital investments and loans to improve the lives of their citizens. In a balanced power dynamic this is all to the good, but colonial mind-sets persisted. Nkrumah’s observation is more pertinent than ever.
Unfair advantages built into the TNC system meant access to raw materials in Southern Africa were obtained on much the same terms as under colonial rule. TNCs have championed and vastly benefitted from the development of globalisation, as have banks and other lenders. Because TNCs had the money to influence or directly control the production process in various countries through vertical integration, or through imposing pressure on local suppliers to make sure they reach production targets set by manipulating market demand in the value chain (Selwyn and Leyden, 2021). This had both economic and environmental implications.
The impact of this can be seen first in the capture of economic policymaking from the global South by TNCs and international financial institutions. Neoliberal policies were pushed and tied to loan agreements from institutions such as the World Bank and the IMF. So-called ‘structural adjustments’ were enforced, as powerful as invading armies once were, which cut the power of state apparatus and the use of state-owned enterprises (SOEs) (Bayliss and Cramer, 2001), often in the name of ‘efficiencies’. Linked to this are the obstacles placed on developing national industrial strategies, instead insisting that these countries play a particular role within the global supply chain based on the concept of comparative advantage.
The free movement of capital has limited the ability of the state to benefit from the full value of the extraction of their minerals, and state capacity in general. If the state wants to address these weaknesses in their economy, TNCs can threaten capital flight and disinvestment or even take these countries to court by utilising the investor-state dispute settlement (ISDS) and sue countries for affecting their foreign direct investment (FDI) (Wade, 2020). The pressure squeeze on nations’ ability to change policies or re-negotiate terms limits their abilities to respond to the needs and rights of their citizens. This pressure results in low taxes, repressed labour rights, and little to no environmental regulations. This exploitation by TNCs is further compounded by a ‘financialisation’ of a national sovereignty.
Countries that are on the bottom of the hierarchy of the financial and currency system are forced to adopt policies that are inflation-targeting and aim to attract capital flows. These inflation-targeting policies result in the maintenance of high-interest rates creating an upward bias for the domestic currency. Additionally, the capital flows are mostly short-term and volatile with abrupt interruptions, leading to increased external vulnerability, often independent from domestic economic conditions (Kaltenbrunner and Painceira, 2015; Isaacs and Kaltenbrunner, 2018). This phenomenon shows how global finance and countries in the global North with powerful currencies, can greatly influence monetary policies for countries in the global South, often leading to detrimental effects and negative developmental outcomes.
One example of this is offshoring production by TNCs to pursue a cheap supply of labour and low regulations. It has led to the development of ‘sacrifice zones’ where highly polluted zones cause vast damage to the population in the name of development and industrialisation, whose benefits flow back to governments and corporations based in the global North. These areas are often times racialised and based on colonial and imperial foundations. Stepping back to when ‘independent’ Africa was emerging from colonialism, we can consider the case of the Kabwe community in northern Zambia. In colonial times it was known as Broken Hill (by the British). How has this community fared under post-colonial, neo-colonial and globalised economies?
Kabwe was home to a lead mining and smelting operation for almost 90 years, starting in 1906 while the country was under colonial British rule. Between 1925 and 1974 the mine was controlled by Anglo-American South Africa, a subsidiary of Anglo-American plc (Amnesty International, 2023). For most of this time, Zambia was a victim of exploitation by the British and its settler-colonial collaborators, whose absolute power allowed for unlimited lead mining and general extraction without any environmental standards. Even with its independence in 1964, Britain’s power within the international economic apparatus ensured that mining companies were able to operate and exploit Zambia’s natural endowment with no responsibility. During which time, they allegedly failed to safely manage the mine, which resulted in Kabwe becoming a sacrifice zone, with massive lead pollution of the local area, poisoning local residents over the subsequent decades (Davies, 2022). This, in turn, has led to serious and permanent physical damage to bodily organs, the neurological system and fertility. Even at low levels lead can affect children’s brain development resulting in reduced IQ, behavioural changes such as reduced attention span and increased antisocial behaviour and reduced educational attainment (Amnesty International, 2023).
Neocolonialism and its excessive extractivist nature destroyed the lives of hundreds of thousands of inhabitants in the city of Kabwe over decades. The law has only recently changed to provide an opportunity for the Kabwe community to seek compensation. A class action suit being brought by the community in South Africa, against the TNC Anglo-American, is a critical step. It offers the chance of setting a precedent in addressing the harm caused around the world by a neocolonial economic system.
Those supporting global South civil society to remedy these harms, whether on unfair debt, anti-corruption (one thinks of the attack on South African Revenue Service SARS, by Bain & Co), or the cost of extractive production on local people, need to pressure investors and our own governments to set and regulate standards of behaviour of TNCs. There is an increasing focus on three pillars of better corporate behaviour known as ESG – Environmental, Social, Governance. While this presents some opportunities to mitigate against corporate power, the reality in the end is in our hands, because we buy or use the products TNCs sell.
We are all implicated in the extractive and exploitative features of neocolonialism and the economic system that embeds it, because in the global North we all benefit from it. The benefits are in our pensions, our phones, our cars. Can we work together as civil society and mass organisations, as was done to bring down apartheid, to demand push back against excessive, inhumane corporate behaviour? The people of Kabwe are trying to show the world what happens if we don’t.
Bibliography:
Bayliss, Kate, and Christopher Cramer. “Privatisation and the Post-Washington Consensus Between the Lab and the Real World?” In Development Policy in the 21st Century: Beyond the Post-Washington Consensus, 224. Routledge Studies in Development Economics. London ; New York: Routledge, 2001.
Davies, L. (2022) UN experts apply for court role in Anglo american’s kabwe lead poisoning case, The Guardian. Guardian News and Media. Available at: https://www.theguardian.com/global-development/2022/nov/10/un-experts-apply-for-court-role-in-anglo-americans-kabwe-lead-poisoning-case (Accessed: March 20, 2023).
Isaacs, Gilad, and Annina Kaltenbrunner. “Financialization and Liberalization: South Africa’s New Forms of External Vulnerability.” Competition & Change 22, no. 4 (August 2018): 437–63.https://doi.org/10.1177/1024529418788375.
Kaltenbrunner, Annina, and Juan Pablo Painceira. “Developing Countries’ Changing Nature of Financial Integration and New Forms of External Vulnerability: The Brazilian Experience.” Cambridge Journal of Economics 39, no. 5 (September 2015): 1281–1306. https://doi.org/10.1093/cje/beu038.
Nkrumah, Kwame. Neo-Colonialism: The Last Stage of Imperialism. 6. print. New World Paperbacks 140. New York: International Publishers, 1966.
Selwyn, Benjamin, and Dara Leyden. “Oligopoly-Driven Development: The World Bank’s Trading for Development in the Age of Global Value Chains in Perspective.” Competition & Change 26, no. 2 (April 2022): 174–96.https://doi.org/10.1177/1024529421995351.
South Africa hears historic class action for lead poisoning launched by Zambian children and women (2023) Amnesty International. Available at: https://www.amnesty.org/en/latest/news/2023/01/south-africa-hears-historic-class-action-for-lead-poisoning/ (Accessed: March 20, 2023).
Wade, Robert H. (2020) “Rethinking the world economy as a two bloc hierarchy”. real-world economics review, issue no. 92, 29 June, pp. 4-21, http://www.paecon.net/PAEReview/issue92/Wade2.pdf