Xenophobia, Neo-liberalism, and NEPAD: The End of African Unity?


In August and September of 1974, people across the length and breadth of South Africa celebrated the coming independence of Angola, Guinea-Bissau, and Mozambique.  People like Mamphela Rampele led massive rallies honoring the success of the liberation movements in these countries.  There was even spontaneous dancing in the streets, and the air was filled with a sense that South Africa would soon be joining these countries in ending racist and capitalist oppression through revolution.  This was due to the fact that the defeat of the Portuguese Empire in Africa gave South Africans a renewed sense of hope, which was one of the catalysts that ignited the 1976 uprisings against apartheid.  In those heady days African Unity was not an empty phrase; it was rather the ideological backbone of the fight against capitalism, imperialism, and apartheid.  By the end of the decade South Africans were fighting and dying side by side with Angolans and Zimbabweans in the struggle against the racist forces of Rhodesia and apartheid South Africa.  People from all over Africa were making massive sacrifices to help free their bothers and sisters in South Africa by providing refuge and moral and material support on a massive scale.  Hope sprung eternal for a united Africa: an Africa that could collectively defeat imperialism and gain its freedom.

Fast forward to May 2008. Small groups of South Africans were once again in the streets, but there was no dancing and celebration.  This time, they were not fighting side by side with Angolans and Zimbabweans; they were hunting them down!  Over the last few weeks xenophobic attacks have erupted in some areas in South Africa.  The political leaders across the country have assured all and sundry that it has only been a small section of the population, driven mostly by criminality, who perpetrated these attacks.  This, however, does not give the full picture.  Xenophobia has been rearing its ugly head in this country since at least the 1990s.  Within the last few years, various arms of the state, such as the police force, have been directly involved in routinely harassing people from other parts of the continent.1 The leader of the official opposition in the country, Helen Zille, has on occasion accused foreigners of being the source of South Africa’s drug problem.2  Even Jacob Zuma, the darling of sections of the South African Communist Party and COSATU, recently told an audience at a COSATU May Day rally in the North West that the ANC would take strong measures to restrict the “scores of illegal immigrants” in South Africa.3  Of course, since the xenophobic attacks began, the likes of Zuma and Mbeki have belatedly rallied to condemn them.  Nonetheless, they have been largely unwilling to move beyond their simplistic criminality thesis to identify the underlying causes that have led to such violence.  In reality it is the dire political and economic situation that exists across Africa and within South Africa that has created the breeding ground for such attacks.  People from all parts of Africa have come to South Africa to escape the abject poverty and misery that they have been forced to live under in their home countries.  Frustrated with broken promises, poverty, and unemployment, some South Africans have turned their anger towards these people, blaming them for taking their houses and jobs.  Yet, the reality is that it is not other Africans that are taking jobs and houses away; it is rather neo-liberal capitalism and the legacy of apartheid that has done this.  In fact, neo-liberal economic policies have caused increasing inequality and increasing competition amongst the poor to survive.  The sad irony is that some of the victims of neo-liberalism in South Africa have chosen to attack fellow victims who have come to this country from other parts of Africa.  This all happens while the real perpetrators, who have forced neo-liberalism onto the people of South Africa and the rest of Africa, sit smugly in their plush downtown Sandton, Pretoria, Sydney, New York and London offices looking for new ways to exploit the people and resources of this country and the rest of the continent.  In reality, the global elite have waged a virtual economic war from their offices and boardrooms against the people of Africa and South Africa in order to enrich themselves.  This has given rise to the conditions in which xenophobia and other forms of ethnic violence can thrive.

The First Shots of the Economic war

The first shots of this virtual economic war were fired in the 1980s when the US, the EU, the IMF, and the World Bank used the debt stranglehold that they had over African countries, excluding South Africa, as a weapon to force them to adopt neo-liberal economic policies through Structural Adjustment Programs (SAPs).  Under SAPs, the IMF and the World Bank forced most African countries to make their debt repayments the most important part of their national budgets.  This meant that most African countries had to cut their healthcare, education, and housing budgets so that they could pay their debts.  The outcome of this was that many African states began spending more on repaying debt than on healthcare or education.  Moreover, governments across Africa were also told to end food subsidies that they were providing to the poor, sell off their public assets to foreign companies, drop their import tariffs, relax labor laws, and provide tax holidays to foreign companies.  The end result was that much of Africa was turned into a profit making haven for multinational companies.  They can swoop into any country, buy up any asset that they want, and extract whatever they desire from the land.  For example, much of Africa’s oil concessions are owned by companies like Shell; the rights to Africa’s minerals are owned by companies such as Rio Tinto; and even its water has started falling into the hands of private companies like Suez.  In certain countries the situation has become so dire that governments are mere puppets for the giant corporations that dominate their economies.

While multinational companies, like Shell, have made massive profits due to neo-liberalism in Africa, it has been the people of Africa who have suffered the dire consequences of this.  With privatization, and its accompanying downsizing, hundreds of millions of people have lost their jobs.  In most parts of Africa, people who can’t afford healthcare and education no longer receive these services as they are now considered commodities.  Corporations have also used the liberal trade and investment environment that exists to shift the money that they make in the continent back to their home countries or into tax havens.  In fact, it has been estimated that between 1970 and 1996 sub-Saharan Africa was looted of $285 billion due to capital flight.4  The result of neo-liberalism, and its attack on the poor, is that Africa is now poorer in real terms than at any other time in its history.  For instance, in 1994 200 million people in Africa lived on less than $1 a day; by 2003 this had increased to over 350 million people — more than half of the continent’s population.  Indeed, in the first 10 years of SAPs, sub-Saharan Africa’s per capita income declined by 25%.5  Along with this growing poverty, life expectancy has plummeted.  In Zambia life expectancy declined from 54 years in 1980 to 32.7 years in 20046; in Swaziland it plummeted from 52 years in 1980 to 33 years today7; while in Mozambique it dropped from 45 years in 1980 to 34 years today.8

Due to the looting of Africa by multinational companies, backed by the EU and the US, vast parts of Africa have been totally destabilized.  Neo-liberal policies, which favor the interests of giant corporations, have wreaked havoc because of the inequality and poverty they have exacerbated.  One only needs to look at places such as the Democratic Republic of the Congo, Somalia, Rwanda, Burundi, Zimbabwe, and the Niger Delta to see this.  In fact, a number of corporations have even been directly involved in fermenting the destabilization of these countries through supporting factions that look after their interests.  For instance Shell — with the backing of the Nigerian state — has expropriated vast tracks of land from indigenous people in the Niger Delta, with little or no compensation.  Beginning in 1993 the people of the Niger Delta attempted to fight back.  They began peacefully occupying oil installations in a desperate bid to stop the environmental destruction that had been perpetrated by Shell.  The response from Shell, along with its stooges in the Nigerian state, was swift and ruthless.  Since 1993, over 2,000 people in the Niger Delta have been murdered by Nigerian state forces at the bidding of Shell.  On various occasions, Shell even directly bankrolled the military operations of the state against the people of the Niger Delta.9  Similarly, corporations operating in the Congo, such as Barrick Gold, paid off various factions involved in the two recent wars to access and secure mining concessions.10  In the process, the various factions stoked up ethnic tensions and hundreds of thousands of people were killed or displaced.

The poverty, inequality, war, conflict and ethnic tensions that neo-liberalism and its accompanying forms of extreme exploitation have created have forced millions of people in different parts of Africa to leave their places of birth.  Some have chosen to move to Europe and North America where they face further exploitation, often as low-paid and very insecure workers.  Others, however, have elected to seek refuge in South Africa.

South Africa’s Own Economic War

South Africa, however, has its own neo-liberal economic policy in the form of the Growth, Employment and Redistribution (GEAR) strategy.  Unlike other parts of Africa, GEAR was not imposed on South Africa by the IMF and the World Bank; it was rather largely a homegrown strategy of the South African elite.  There are a number of reasons why this elite wanted GEAR.

From the early 1970s, the South African economy began to experience a crisis that revolved around the over-accumulation of capital and over-production of consumer goods.11  The result of this was a dramatic decline in profit rates in the manufacturing sector.  This led to sections of the South African corporate elite to begin calling for neo-liberal economic policies as early as the late 1970s.  They wanted to use the space that neo-liberalism would create to expand internationally and to shift their capital from manufacturing to speculation.  This, they hoped, would restore their declining profit rates.12  The apartheid state was open to assisting this corporate elite in its endeavor and by the 1980s it began adopting various aspects of neo-liberalism.  However, with the imposition of financial sanctions on South Africa in the 1980s, it became difficult and politically sensitive for South African-registered companies to openly operate in many countries.  South African corporations wanted to be able to move capital freely anywhere in the world and operate in any country where profit rates or business opportunities were most favorable.  Apartheid South Africa could not offer this.

This situation led to sections of South African elite to favor a political settlement.  To this end, some of the largest corporations began to make contact with the ANC in exile to discuss the future of a post-apartheid South Africa.  As 1994 approached, many of the larger corporations presented scenario-planning seminars to leading ANC figures in a bid to convince them to adopt neo-liberal economic policies, which would favor their interests.13  In order to cement their relations with the future government, many of the largest South African companies also provided funds for the ANC’s 1994 election campaign.  For example, Anglo-American reportedly gave R150 million to the ANC just prior to the 1994 elections.14  It appears that these tactics had some impact: by the time of the 1994 elections, the ANC had agreed to an independent Reserve Bank, it had guaranteed the IMF it would follow neo-liberal economic policies, and it steered clear of any more talk of nationalization.  Indeed, the major winners of the political settlement and transition to democracy in 1994 were the largest corporations in South Africa as the post-apartheid government has served their interests well.

On the domestic front, the post-apartheid state furthered the interests of the South African corporate elite by adopting GEAR in 1996.  This was undertaken with the explicit aim of returning profitability to the South African economy.  Through GEAR, the South African state has privatized or commercialized various public entities, it has implemented trade liberalization, and it has allowed for some labor market flexibility.15  Over and above this, the post-apartheid government has slashed the corporate tax rate from a high of 48% in 1994 to 29% in 2006, in effect embarking on a policy of corporate welfare that has benefited companies.  It has also allowed many South African companies to move their money almost freely in and out of the borders.  Some corporations, such as Anglo-American, South African Breweries, and Old Mutual, were even allowed to move their headquarters and primary listings to London.16  With this, these companies were able to accelerate their already rapid internationalization and become truly gigantic global corporations — rather than South African ones.

It has been the poor in South Africa who have been forced to bear the brunt of these policies.  For example, although trade liberalization has benefited retail giants such as Edcon, it has led to the closure of numerous local clothing and footwear factories and has forced thousands of people out of jobs in the manufacturing sector.  This has all contributed towards South Africa’s unemployment rate soaring past 40%.  The commercialization of public entities under GEAR has also had dire consequences for the majority of South Africans.  Although Eskom has made record profits due to its commercialization, millions of impoverished township residents have had their basic services cut due to unaffordable rates.17  Under GEAR, the South African state has also redirected billions of rands, which had initially been set aside under the Reconstruction and Development Programme to meet people’s basic needs such as housing, towards projects that are aimed at benefiting large corporations.  Some of the projects that this money has been redirected towards include the Maputo Corridor and Coega.18  These projects directly benefit giant companies such as BHP Billiton, and Murray & Roberts.  As a result of GEAR, and its promotion of the interests of corporations over those of the poor, inequality within South Africa has grown.19  It has been in this dehumanizing environment that some South Africans turned their anger towards easy targets, in the form of impoverished people who have fled to South Africa in order to try and escape the effects of neo-liberalism in other parts of Africa.

While the poor have suffered, members of the emerging post-apartheid black elite have been rewarded by both the white South African corporate elite and their international allies for their co-operation in imposing neo-liberalism on the people.  For instance, an elite group with links to the ANC, which includes Cyril Ramaphosa, have become board members of corporations such MTN and SABMiller.  Other individuals, like Mzi Khumalo, were assisted in launching their own companies by the existing white corporate elite; while Bridgette Radebe became the major black economic empowerment partner of Impala Platinum.20  This new elite has also been welcomed into the folds of the World Economic Forum, thereby joining the ranks of the transnational capitalist class.  Some South Africans, such as Mamphela Rampele, have also come to play major roles in institutions, such as the World Bank.  Similarly, South African state officials, notably Alec Erwin, have been drawn into the inner folds of the World Trade Organization (WTO) and have become key participants in the Green Room sessions.  Alec Erwin even played a key role in deliberately undermining other African countries’ resistance to the demands of the EU and the US at the Doha meeting of the WTO.  Indeed, the new political elite in South Africa have become partners of the EU and the US in their endeavor to impose neo-liberalism on the world.  As such, the South African state is far more closely aligned to the EU and the US than it is to the rest of Africa.  Nothing highlights this point better than the advent of the New Partnership for Africa’s Development (NEPAD).

NEPAD and South Africa’s Exploitation of the Rest of Africa   

NEPAD’s origins can be traced back to the late 1990s.  It was during this period that the South African state, along with representatives of the IMF and the World Bank, began jointly working on a policy that would further entrench neo-liberalism throughout Africa.  Corporations from South Africa, the EU and the US were rapidly expanding into Africa using the conditions that had been created under the SAPs, so the corporate elite wanted to perpetuate them.  By early 2001 a draft neo-liberal strategy to do just this had been formulated and was unveiled by Thabo Mbeki at the World Economic Forum in Davos as well as at a G8 meeting.  Later in the year, a number of junior partners — President Obasnajo of Nigeria and President Bouteflika of Algeria — were brought on board and NEPAD was finally unveiled at an African Union meeting.  This allowed South Africa, and its partners in the EU, the US, the IMF, and the World Bank, to essentially claim that their own initiative was in fact an African initiative.

NEPAD itself is based on the classic pillars of neo-liberal economic fundamentalism.  It contains the central belief that the private sector is — and forever should be — the main driving force of the African economy. In order to promote the private sector, NEPAD states that all “barriers” to companies making profits in African countries should be completely abolished.  As such, it explicitly promotes privatization, free trade, financial liberalization, labor flexibility, and foreign direct investment in Africa.21  The reality is that NEPAD, through these policies, aims to further entrench the neo-liberal economic model that the IMF and the World Bank imposed on Africa, only this time the South African government hopes it will also be to the advantage of South African-registered multinationals.22

The South African corporate elite are certainly benefiting from NEPAD.   South African-registered companies are now the largest source of foreign direct investment in other African countries.  They have become major players in almost every economic sector in Africa.  The people of Africa, however, have not benefited from this.  This is because South African corporations and government-owned parastatals have become directly involved in exploiting Africa’s people and resources and in some cases even destabilizing parts of Africa.  This is due to the fact that South African corporations crowd out local capital in other African countries; South African corporations are mainly involved in predatory mergers and acquisitions in Africa; many South African corporations have been involved in the destruction of the environment in Africa; and many South African companies have been involved in undermining human rights in the countries in which they operate.  Indeed, 13 South African-registered companies were operating in the Congo during the war,23 and AngoGold Ashanti was directly involved in financially assisting one of the warlords involved in the conflict.24  In Zimbabwe, a South African-based company Barloworld provided the bulldozers that were used by the ZANU-PF to destroy thousands of homes and informal traders’ stores during Operation Murambatsvina.  Providing these bulldozers proved very lucrative for Barloworld as they sold them to the Zimbabwe government for approximately US $123 000 each.25  Many South African linked companies undermine workers’ rights in other African countries.  For example, Shoprite in Zambia pays its workers as little as $48 a month.26  In Zimbabwe in 2001, the South African-based AngloGold Ashanti also used Mugabe’s riot police to brutally break up a strike at its Freda Rebecca mine.27  The workers had gone on strike because of the appalling working conditions.  Between 1996 and 2003 there were 120 accidents reported at the mine.28

In many African countries, South African corporations and parastatals receive massive tax breaks and in many cases are able to repatriate all of their profits back to South Africa or send them to the tax haven of their choice.  For example, corporations involved in Zambia, such as Game, Woolworths, Shoprite, Supreme Furnishers, Smart Centre, Quick Save and Spar all received tax holidays of 5 to 15 years when they invested in the country.29  This means that the Zambian government and people do not benefit from the profits that are made by these companies in the country.  Furthermore, South African retailers operating in African countries, such as Shoprite, mainly import their goods from or via South Africa.  In fact, the South African Reserve Bank requires South African investors operating in other African countries to import most of the goods that they are using or selling from South Africa (thereby reducing the amount of goods that South African corporations purchase in the other African countries in which they operate).30  This has directly contributed towards deindustrialization in a number of African countries such as Zimbabwe.31  All of this also increases inequality, poverty, and instability within countries where South African corporations are present.  Indeed, South African-based companies, and their partners in the South African state, are directly contributing to the appalling conditions that drive people to leave their countries, and in some cases, paradoxically move to South Africa.  In the light of this exploitation, it is also exceptionally ironic that the South African corporate elite have claimed the moral high ground of African unity during the recent xenophobic attacks.


Through NEPAD and GEAR, the South African political and economic elite have become involved in not only exploiting South Africans but exploiting the entire African continent.  As such, they are far more closely aligned to the elite in the US and the EU (in the form of a transnational capitalist class) than they are to the people of Africa.  In fact, the neo-liberal policies that are pushed by the South African state and corporate elite have turned the notion of ‘African Unity’ into a completely hollow phrase.  It has been this elite’s treasured neo-liberal policies that have created an impoverished and dehumanizing environment in which xenophobia could erupt.  Added this, the fact that the legacy of apartheid was never addressed, partially due to neo-liberal policies, means that an explosion of violence against some perceived “Other” was almost inevitable. Indeed, the ethnic jingoism that apartheid promoted was clear to see in the xenophobic attacks that have wracked this country.

Neo-liberalism and capitalism in general have caused poverty, inequality, and competition amongst the poor merely to survive.  The sad reality is that if we do not end neo-liberal capitalism, such attacks of poor on poor will occur again and again, while the rich are protected in their fortified enclaves by barricades and armed guards.  These attacks are a glimpse into our future if our world continues on the same path that it has embarked upon.  If we are to create a better world, where all forms of oppression including capitalism are eradicated, then we need to begin individually and collectively creating and struggling for that world now.  We cannot wait for false messiahs to save us, in the form of leaders such as Zuma — they never will.  We need to save ourselves through our own actions.  We need to join hands with all of the oppressed peoples of Africa and the world to collectively build equality and unity from below and free ourselves from all forms of oppression and oppressors, including the system of capitalism that has been imposed on us.  Only when everyone is truly equal and free, will the type of violence that we have seen in South Africa over the last few weeks come to an end.


1  Themba Masuku, “Targeting Foreigners: Xenophobia among Johannesburg’s Police,” Crime Quarterly 15, 2006.

2  Michael Hamlyn, “Manuel Accuses Zille of Fanning Flames of Xenophobia,” Mail & Guardian, 22 May 2008.

3  Xolani Mbanjwa, “Zuma Attacks ‘Old ANC Ally’,” Independent, May 02 2008 

4  Léonce Ndikumana and James Boyce, “Is Africa a Net Creditor? New Estimates of Capital Flight From Severely Indebted Sub-Saharan African Countries, 1970-1996, Occasional Paper, University of Massachusetts: United States, 2000.

5  Asad Ismi, “Impoverishing a Continent: The World Bank and IMF in Africa,” The Halifax Initiative Coalition, July 2004.

6  “Life Expectancy Slashed to 33,” News24, 14 July 2004.

7  “Swaziland: Life Expectancy, Male,” Globalis.

8  “Mozambique,” International Women’s Health Coalition.

9  Ike Okonta and Oronto Douglas, Where Vultures Feast: Shell, Human Rights and Oil in the Niger Delta, Verso, 2003.

10  David Borouski, “Mining in the Ituri Province of the Congo,” 14 May 2007.

11  John Pape, “The Myth of ‘Sound Fundamentals’: South Africa in the Global Economic Crisis,” Neil Newman, et al. eds., Is There an Alternative: South African Workers Confronting Globalisation. ILRIG, 2001.

12  Martin Legassick, “South African Political Economy,” Society and Nature, 2006: 1-54

13  Patrick Bond, Elite Transition: From Apartheid to Neoliberalism in South Africa, University of KwaZulu-Natal Press, 2005.

14  “South Africa: Heading North,” Africa Confidential 41.2, 2000.

15  Stephen Greenberg, The State, Privatisation, and the Public Sector in South Africa, AIDC and SAPSN, 2006.

16  Padraig Carmondy, “Between Globalisation and (Post) Apartheid: the Political Economy of Restructuring in South Africa,” Journal of Southern African Studies 28.2, 2002: 255-269.

17  David A. McDonald and John Pape, eds., Cost Recovery and the Crisis of Service Delivery in South Africa, HSRC Publishers, 2002.

18  Bond, op. cit.

19  ILRIG, An Alternative View of Globalisation, ILRIG, 1998.

20  Brendan Ryan, “Not Yet a Usual Suspect,” 7 July 2006.

21  Ishmael Lesufi, NEPAD and South African Imperialism, Jubilee South Africa, 2006.

22  Abe Ezeoha and Chibuike Uche, “South Africa, NEPAD and the African Renaissance,” Unpublished Paper, University of Nigeria, 2005.

23  Patrick Bond and Tapera Kapuya, “On SA Capital in the Region,” OpenSpaces, Open Society Initiative of Southern Africa, 2006.

24  Human Rights Watch, “The Curse of Gold,” June 2005.

25  Mandisi Majavu and Anna Weekes, “South African Business in Zimbabwe,” ZNet. 21 August 2005.

26  Austin C. Muneku, “Zambia: Shoprite,” Africa Labour Research Network, 2003.

27  Anglogold-Ashanti has subsequently sold the mine to Mwana Africa Holdings.

28  African Labour Research Network, Gold Mining Companies in Africa: Workers’ Experiences, 2007.

29  Zarina Geloo, “SA Companies Pull out of Zambia,” Mail & Guardian 16 October 2003.

30  Gottfried Wellmer, “SADC: Between Regional Integration and Reciprocal Free Trade with the European Union,” 2000.

31  Bond and Kapuya, op. cit.

Shawn Hattingh is a research and education officer at the International Labour Research and Information Group (ILRIG) in Cape Town.

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