Why Global Capitalists Remain Disinterested in Africa

The title sounds like a complaint about absence. It is not. Capital has come to Africa for four centuries, through three industrial revolutions and into a fourth, and it is still coming. The complaint is about what it does once it gets there.

Most of the capital Africa attracts is what I call disinterested capital. The word is not a verdict that Africa is not worth the interest, nor a lament that the world does not care. Every capital relationship carries an interest, and someone pays it in some currency. What distinguishes disinterested capital is where the return is collected. It is collected somewhere the receiving economy's productivity cannot reach.

Consider the three largest kinds. A remitter is paid in affection. A friend in East London sends money for his mother's medicine every month, and he will send it whether the clinic has drugs or not, whether the shilling holds or not, whether the government he condemns reforms or not. He put it to me plainly: he cannot discipline the president with his mother's health. The money arrives, saves lives, and asks nothing of the state, because London paid its return before it left.

A donor is paid in legitimacy, and the government behind the donor is paid in influence. A grant that builds a clinic does what it was for when the clinic opens and the ribbon is cut. It renews next year by mandate, not because the economy around the clinic has learned to pay for the next one.

An insulated investor is paid in money, but money that has been walled off from the economy around it. The mine's revenue sits in an escrow account abroad. The power plant is paid in dollars under a contract the state guarantees, whether or not the electricity reaches a factory. If there is a dispute, it goes to arbitration in London or Paris. Each of these arrangements is prudent. Each has run profitable mines and built real power. And none of them needs the economy it entered to become more productive before it is renewed on the same terms.

That is the whole of the argument. Disinterested capital is not bad capital. It is capital whose return does not wait for Africa to develop, and a continent financed mostly by that kind of capital can grow for a very long time without developing. It can add electricity, roads, houses, and consumption, yet still not add the thing that compounds: the capability to build the next enterprise with its own hands and its own money.

The capital that builds nations is the other kind. Its return waits. The factory in Taiwan or Penang could not pay its investor until it learned to make the thing, and then to make it better, and then to make the next thing. The supplier down the road could not be paid until it met the standard. The refinery at Lekki pays its owner nothing until it runs. A builder that does not teach is only a landlord, and the test of any capital relationship is not whether the money is foreign or domestic, public or private, generous or profit-seeking. The test is what its return waits for.

Why, then, does the arrangement remain? Because the state is paid too. Budget support pays the treasury. The signing bonus pays the ministry. The sovereign loan pays the budget before the project pays anyone. The import licence pays the regulator and the marketer, and in Nigeria it paid them for a generation while the country waited for a refinery. When every party at the table collects its return from the arrival of the money rather than from what the money does, nobody at the table needs the conversion to complete. That is not a conspiracy. It is an equilibrium, and equilibria do not move on their own.

This is why I ask nothing of global capitalists out of obligation. They have none, and they have behaved exactly as the terms they were offered allowed. I ask what makes investment in Africa commercially possible and developmentally consequential; why so much of what has come has been the first without the second; and, where African governments wrote the terms, I hold them to account for them.

The ledger records where the return went. These papers will ask what it waited for.

This essay borrows arguments from the forthcoming book Why Global Capitalists Remain Disinterested in Africa by Dennis Matanda.