Exploring Exploitation

The Role of Multinationals in Neo-colonialism1

Dan-Azumi Jacob, S.J. October 29, 2002

I. Introduction

It has been more than four decades since Kwame Nkrumah in one of his most celebrated works, Neo-

Colonialism: The Last Stage of Imperialism, predicted Africa’s woes to come. He had the

premonition that post-colonial African would suffer an incessant meddling into her affairs by

foreign governments and corporations. Although he might not have understood the details or even

the magnitude of how this interference would be, he knew that Africa in independence would face

an evil more cancerous than that of colonialism. In prophetic words, he told of an Africa where

life would become increasingly unbearable and where the new hope of independent states would

be forlornly dashed only to be replaced by despondency and the crippling fear of inadequacy, over

dependence worsened by the ineptitude of leaders. Nkrumah rightly saw this evil as the worst

form of imperialism and capitalist exploitation, the sheer hypocrisy and detrimental consequences

of which are sickening and appalling. He foresaw a scenario where African states would be

independent with all the pomp sovereignty yet enslaved as their economic systems and political

policies would be directed or influenced from outside.

Many years after he uttered these words, Africa today finds itself in a worst situation than

Nkrumah could ever fathom. Not only is there no remarkable progress in many African countries since

independence, there is, in most cases, retardation and often, relapse into anarchy and lawlessness.

Fuelling and profiting from the ugly state of affairs are foreign nations and multinationals. In an
1
Neo-colonialism is not a phenomenon peculiar to Africa. In the context of this paper, however, when used, it shall refer to
what the All-African People’s Conference (Cairo, 1961) defined as “the survival of the colonial system in spite of the
formal recognition of political independence in emerging countries which become the victims of an indirect and subtle
form of domination by political, economic, social, military or technical means” (Emphasis mine). Neo-colonialism is thus
used in this paper chiefly to explain how the economic and political systems of Africa are being controlled by more
powerful states. The distinguishing marks of this type of control are: export of capital, adverse terms of trade and
westernisation. Since the means of control are overwhelmingly economic, the manipulative elements utilised by the
powerful include trade agreements, investments and above all the operations of transnational corporations. The view taken
by this paper is, however, not fatalistic as it does not seek to attribute all of Africa’s quagmire to neo-colonialism. On the
contrary, I realise that “virtually every nation in the world, whether colonised or not, has had to deal with western
hegemony… The dominant ideology permeates every facet of human existence… The West has not [always] imposed its
will on the world by force but [many times] by the sheer attractiveness of its civilisation and the belief in the desirability of
material progress and prosperity” (Tunde Obadina in “The Myth of Neo-colonialism”).
1
ingenious and subtle way, these nations and corporations not only determine policies of African

nations but also see to it through compelling, coercing and imposing that these policies are strictly

adhered to. Thus, over Africa today hangs a malign, ominous, and subtle evil that threatens to

perpetually perpetuate poverty and slavery of Africans. This evil is so subtle that it is not easily

noticed and when noticed, it is easily dismissed with a laissez-faire wave of the hands. The amoebic,

or rather the amorphous form that this evil assumes makes it more difficult to fight. Neo-colonialism is

a real problem whose manifestation is seen in globalisation and the increasing and unchecked power

of multinationals. This essay seeks to give a visceral breakdown of the role played by multinationals in

this vague and sinister war against Africa and most all third world countries. In attempt to do that, I

shall examine globalisation with the aim of identifying the winners and losers of the phenomenon and

then I shall attempt to show how globalisation has seen to empowering of multinationals placing them

at par or worse even, above nation states. The consequences of these two are overwhelming especially

on Africa and its people. I shall also examine the debt question and see how it gave rise to IMF’s

same-for-all recipe, the Structural Adjustment Programme. Not only did SAP sap out whatever hope

there was for Africa, it also made sure that Africa remained subjugated. Finally, I will offer suggestion

on how to get Africa out of her present pathetic state.

II. The Winner and losers of globalisation

No matter how one chooses to approach this question, one thing remains indubitably true, “the driving

forces behind globalisation: technological change, lower communication and transport costs, increased

trade and financial integration among countries, are powerful.”1 In a paper entitled “The Challenge of

Globalisation in Africa,” Stanley Fischer, a First Deputy Managing Director in the IMF rightly

observed that the implications of globalisation are wide and varied ranging from “the trade and

investment flows that interests economists, to changes that we see in our every day lives: the ease with

which we can talk to people all over the world; the ease and speed with which data can be transmitted

around the world; the ease of travel; the ease with which we can see and hear news and cultural events

around the world; and most extraordinarily, the Internet, which gives us the ability to access the stores

of knowledge in virtually all the world’s computers.”2 True as these observations might be, they are

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acutely brief and to give the whole picture of globalisation. Behind the glamour of these benefits lie

the truth that most people would rather not talk about.

It is true that there has been an increased connectedness of production, communication and

technologies around the world as well as an interlacing of economic and cultural activity. However,

“with increased interconnection has come deep-seated political changes – poorer, ‘peripheral’

countries have become even more dependent on activities in ‘central’ economies such as the USA

where capital and technical expertise tend to be located. There has also been a shift in power away

from the nation state and toward…multinational corporations.” 3 Not only do we see this but also what

has been commonly referred to as the globalisation of the ‘brand’ making it possible for multinationals

to be ubiquitous with an unrestrained power to market their products across borders. Hence “brands

like Coca Cola, Nike, and a host of others have become part of the fabric of vast numbers of peoples’

lives.”4 The problem of the universalisation of “brand” leads to what Oswaldo De Rivero. refers to as

‘the globalisation of rubbish..’5

Contrary to what Fischer would like to see us believe: that economic globalisation is an old

historical process, that it has brought about increased growth, and that we all can live in a global

village “where flows of trade, capital and knowledge across national borders are not only large, but

also increasing every year”6, the truth remains that the “present fruits of economic globalisation are an

ever-increasing gap around the world between the rich and the poor, and the destruction of the middle

class and small businesses in the poorer countries.”7 Consequently, there has been a silent but

inescapable transition from one form of imperialism – colonialism, to another – neo-colonialism.

Globalisation is seen capitalism at its best thriving on the exploitation of the weak by the powerful

through the monopolisation of capital and the empowering of a few. What is happening is what Lenin

calls the change of method of rule by imperialism. This shift from direct military conquest and

subjugation to the present case where “the imperialist powers dominate the world through their

economic might and through terms of trade is what makes neo-colonialism more all-pervading and

elusive ”8 This new brand of capitalism as argued by Manuel Castells has these fundamental features:

“productivity and competitiveness are, by and large, a function of knowledge generation and

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information processing firms and territories are organised in networks of production, management and

distribution; the core economic activities are global – that is, they have the capacity to work as a unit

in real time, or chosen time, on a planetary scale.”9 As expected, the outcome is the networking of

economic factors around a globalised system of inputs and outputs. As Giddens puts it, globalisation is

the “intensification of world-wide social relations which link distant localities in such a way that local

happenings are shaped by events occurring many miles away and vice versa.”10

The effects of globalisation is the emergence of a system which carries the stamp of

utilitarianism which threatens cultural African values and which has little regards for the human

person – a form of neo-liberalism. The ambivalent nature of globalisation is even more threatening as

“it is half way between a potential good for mankind and social damage with serious consequences.” 11

So far, it is tending more towards the latter. The internationalisation of financial markets, of

technology and of some manufacturing and services bring with them a new set of limitations upon the

freedom of action of nation states. This has led a decline in the power of many African states

especially with regards to their economies and macroeconomic management. “The nation state

continues to be central to [the] ‘New World Order.’ Multinationals may trade everywhere but their

headquarters, administrative and research facilities are concentrated in the imperialist nations.”12

III. The Rise of Multinationals and their Role in Neo-colonialism

The fact of political independence has not ended the exploitation of Africa by outsiders. Globalisation

has only made Africa more dependent and continually exploited under the guise of neo-colonialism

and neo-liberalism. This is brought about not necessarily by the direct presence of the imperialists but

through multinationals whose activities make life intolerable for millions of Africans creating

economic hardships and in some cases encouraging and fuelling political repression.

The role of these multinationals can neither be dismissed nor easily ignored. Such companies

account for over 33 per cent of world output, and 66 per cent of world trade. 13 So serious is it that

about a quarter of world trade is done within multinational corporations. The impacts of the

multinationals on local communities are as diverse as they are appalling and exploitative. Through

their manipulative strategies, these big and monopolistic corporations establish in Africa, and indeed

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many poor countries around the world, contracts where they can exploit cheap labour and resources.

Under the guise of improving the lives of the local people, these bodies only help to raise the level

inequality, an element inherent in the very process of globalisation. There is no doubt that their

operations brings some capital into these communities, that notwithstanding, the truth is that large

scale unemployment results in the other communities that these corporations had hitherto operated and

the wage paid in the new settings are normally minimal with workers toiling under poor and

horrendous living conditions. Thus, we are victims of an old age imperialism, but which has been

replaced with a more abstract and invisible but equally powerful rule by capital which is not tied to the

state.14 This is the New World Order often characterised by the movement of money through

multinationals.

Another major strategy of multinationals is the seeking of new and under-exploited markets.

“They look to increase sales – often by trying to create new needs among different target groups.” 15

This has been true especially with the youth. This is not only true for America but also for Africa

where “the child and youth market has grown into one of the most profitable and influential sectors.

The young are not only prized for the influence they have over adult spending, but also for their own

burgeoning spending power.”16 In Africa, this is seen in the growing craze among youths to imbibe

foreign culture and mannerisms. The result is all kinds of rubbish in the form of fashion,

entertainment, and foods are daily dumped in Africa. The consumer media syndrome has mortally hit

Africa resulting in a mental disposition that is today prevalent among many African youths that

identity and relationships are created by possessing what is in vogue.

Neo-colonialism has made Africa simply a producer of primary commodities. This is largely

because of the capitalist system and the so-called International Division of Labour but also because of

the absence in Africa of viable integrated local industries capable of expanding their economies and

supply the rest of the world with finished products.17 An example is given of the mining production

going on in some parts of Africa where what remains in Africa is only the meagre wages paid the

workers. The biggest portion of the money is spent paying Western directors and their buddies. “Two

examples are the deBeers and diamond trade in Angola, Sierra Leone and the Congo that has

5
encouraged the wars in these countries and impoverished them. A recent UN report implicated

Western firms and countries including Belgium in the illegal diamond trade. The second example is

Shell in Nigeria and the Ogoni crisis which led to the state execution of the environmental right

activist Ken Saro Wiwa.”18

Tragically, Africa is always at the receiving end when doing business with the West through

the multinational corporations. Africa is always the victim of unfair and extortive prices. This is

largely because Africa has little control over the international money market. Hence, outsiders

determine the prices of commodities like cocoa, timber, rubber and even oil, to suit their own interests.

Another crucial influence of globalisation has been the steady influence that multinationals are

exerting on many national governments with regards to policy formation. This is also true for

transnational bodies like the European Union and the World Bank. “They have also profited from

privatisation and the opening of up of services.”19 The current situation is worsened by trade

regulations being put forward by the World Trade Organisation (WTO) which increases inequality in

the global economic system.

Another nightmare that Africa faces is the increasing pressure from the International Monetary

Fund, IMF, that public assets be privatised. As a result, many state owned industries in several key

sectors of the economy get sold to the highest bidders normally the capitalist and powerful

multinationals. “These measures result in mass layoffs, higher prices for services, and a general

lowering of living standards.”20Multinationals have thus expanded and with this expansion has come

the concomitant outstripping of many of their old businesses.

The United Nations was once and perhaps is still the hope of many to fight the rich and

monopolistic countries. Regrettably, powerful countries like the US have so infiltrated this body

determining its basic functions. Thus, “The UN may claim to be a global body representing all

countries, but in reality – for effective intervention – it may only act with the say so of a tiny number

of powerful military powers. These are the five members of the Security Council…each with the

ability to veto any intervention that goes against their interests.” 21 A good example is the pretension

and hiding behind the UN engaged in by these nations when they are seeking to protect their interests

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in countries like Iraq. The control exercise by the powerful over this body reveals the stark reality of a

design by the Western world to bring about an imperial domination but in a more subtle, ‘legal’ and

mischievous manner. At first this may sound rather an unbelievable theory but when one realises that

in the case of the IMF the US holds 17% of the vote while only 15% is required for a veto, then the

palpable reality of this form of neo-colonialism hits us with the force of a jackhammer. “Through the

IMF/World Bank and the World Trade Organisation (WTO), [the US] can set rules of global trade

with its junior partners of the G7 nations (the seven most powerful economies).” 22 The sufferers of this

imperial system are the African workers and peasants. In most African countries, real wages have

fallen by 50-60% since the early 1980s and this is also true for other third world countries. The lives

of millions of people all over the world are being controlled the two strongest financial institutions

ever created – the IMF and the World Bank. These institutions have led many African countries to

embracing policies that have led to their ruin and their present state of being heavily indebted and

poor. Let is be said in passing, however, that multinationals cannot always be systematically and

summarily equated with the powerful nations as the pervasive character of these multinationals is seen

as a threat by many of these nations. This however does not undermine the fact that these corporations

are often owned or influenced by these powerful nations.

‘Free trade’ and ‘open market’ is the disguise used to hide the vaulting ambition of the

powerful to dominate the world. These rich and powerful nations “call for competitiveness, but what

they want is monopoly. It is blackmail. They are seeking to do through economic rules what formerly

the powerful did through armies of invasion and occupation.”23 Africa and other third world countries

have thus been used as a field of experimentation and for dumping rubbish. Items like cigarettes and

drugs are being imposed on Africa and Africans are slowly being led along the way of destruction by

the greed of these powerful nations. “The ‘free market colonialism’ strikes Africa with a force and

cruelty never seen in history. Even vast countries as Congo and Angola haven’t the slightest weight

facing multinationals and their chargés d’affairs which are the IMF, the World Bank and the World

Trade Organisation. These institutions dominated by ‘democratic’ imperialist countries, face the

African countries with the alternative: or you let [us] destroy your national industry by liberalisation

7
and privatisation, or we are going to ravage your country by a civil war (UNITA in Angola) or by an

aggression war (Rwandan and Ugandan armies in Congo).”24 There is a rife competition between

American, German, and Japanese firms for the resources in Africa. Hence, these multinationals can go

any length, especially through the use of bribes to secure a place for themselves. Hence, competition is

through bribes. This form of corruption leads to slower economic growth through reduced savings,

investments and wasted resources.

Another subject of relevance to our discussion of the role played by multinationals in neo-

colonialism is that in the area of war. It is not a question of debate that Africa is blessed with abundant

natural and human resources. This has remained largely untapped. The vast multinationals see these

resources and will anything to get their hands on them. Hence, since after the cold war and with the

resultant idleness of western intelligence bodies in Africa, the multinationals have employed their

services to help get the resources out for the benefit not of Africa, but of the industrial nations that

host these corporations. “it is remarkable to watch how every coup that now takes place in Africa

comes to the benefit of some multinational doing business or wanting to do business in that country.

Form the Congo to the Sudan, the fingers of international corporations can be seen trying to make the

best of a bad situation. Profiteering from war is scandalous in the face of humanitarian disasters. Yet,

this is exactly the scenario in the Congo where vested interests of nations has seen to one of Africa’s

worst crisis. A UN panel of experts found a “direct link between conflict, the resulting humanitarian

disaster and foreign interests involved with the exploitation of natural resources.”25

Multinationals often operate with total disregard for the good of the common people. This is

especially true in their constant and flagrant undermining of environmental agreements. They continue

to lead the nations they operate in towards the path of ecological destruction. A good example is the

operation is Shell in Nigeria, which has not only destroyed small communities but also their means of

livelihood. What is worse as observed by Joshua Karliner in his new book, The Corporate Planet,” is

that corporations like Chevron do not present any information about air emissions, harzadous waste or

oil spills in their environmental reports.26 This criticism notwithstanding, there are some benefits that

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accrue to host nations from the operations of multinationals. When weighed on a scale however, these

benefits are only a shadow of the exploitative activities of multinationals.

IV. The Burden of Debt and the Curse of Structural Adjustment Programmes

Another means of economic control of the poor by the weak through multinationals is that of debt.

The debt crisis of the 70s and 80s gave the Western powers the opportunity to force ‘free trade’ on the

‘third world.’ “What the imperialist powers wanted, and what they essentially have won, was a

system where the third world provided cheap raw material and labour and acted as a market to

consume the products of companies with their bases in the imperialist countries.” 27 World Bank

statistics show that between 1972 and 1992, ‘Third World’ countries collectively borrowed $1.935

trillion and repaid $2.237 trillion. Despite all that payment, they still owe $1.7 trillion to Northern

governments (US, UK, Germany, Japan, etc), commercial banks (such as Citibank and Barclays

Bank), and multilateral institutions (WB, regional development banks, and the IMF).28 The problem of

African debt is not simply that of failure to import substitution and/or gross mismanagement of funds

by government officials but one rooted “in the larger and inherently unequal international economic

system.”29

It is against this backdrop that the IMF came in to ‘salvage’ the situation. The IMF promised to

provide loans to debtor countries to service their debts, “provided that they ‘adjust’ their economies

according to specific policy requirements…Thus, in negotiating SAPs, the IMF/or the WB typically

dictated (and continue to dictate) a number of supply-side and trade liberalisation measures, such as

privatisation, currency devaluation, price decontrol, export incentives, decreased government

spending, and exchange rate flexibility.”30 The result was (is) more poverty not relief! SAPs failures

have led Africa to its worst debt crisis and not growth.

V. The Way Forward

This essay has attempted, within limited space to chronicle and x-ray the role of multinational in neo-

colonialism. By so doing, it has exposed the new, powerful and malign force that today threatens to

tear Africa apart by subjecting it to perpetual slavery. This essay is not an attempt to discredit all

multinationals (because there exist a few well-intentioned ones) but it is aimed at unearthing Africa’s

9
quagmire with a view to proffering working solutions. This paper says that Africans have to fight their

own war; that Africans have to be the artisans of their own destiny.

In this age of globalisation, African countries must make their own markets appealing.

Multinationals should only play a supportive role. This is first a call for the much-needed political will

on the part of governments but also for a radical rejection of capitalism in its current exploitative and

profit centred concern. The imposed Globalisation of the Multinational Corporations is undemocratic

and exploitative, in search of higher profits and should be rejected in its entirety. On the part of

African states, a package should be designed that takes seriously issues like “macroeconomic stability

[aimed at creating] the right conditions for investment and saving; outward oriented policies to

promote efficiency through increased trade investment, structural reform to encourage domestic

participation and competition; [the formation of] strong institutions and an effective government to

foster good governance; education, training, and research and development to promote productivity.”31

Africa must industrialise and can do that by promoting small-scale industries and by giving them

incentives. There can be no development however without peace. African countries must rise above

their pettiness, sectarian and often selfish interests to create a society where all can be given equal

opportunity for development. Senseless wars only lead to senseless deaths at the end of which we all

are causalities.

On their part, foreign countries should guarantee African exporters unfettered and tariff-free

access their markets; should support African countries in their attempt to rid poverty; help bring peace

rather than more violence to war-torn African countries, and engage in legitimate and fair trade.

Additionally, Africa should be allowed to govern herself. Laws against bribery by multinationals

seeking contracts in Africa must be carefully enforced and multinationals should make available to the

public reports of their proceedings especially on environmental effects. There is need for the

cancellation of debts than resulted in the first place out of a grand scheme to exploit Africa and

Africans helped by their corrupt political leaders. Additionally, the scenario whereby the African

bourgeoisie is sanctioned by the former colonial masters must be brought to an end. As Claude Ake

observed in his work, “Revolutionary Pressures in Africa,” in the post colonial era one must first of all

10
deal with their mentality in order to eventually have a governmental structure that benefits the masses.

As it stands now, the African bourgeoisie has been Africa’s Achilles heels: they are the receivers of

the bribes and also the worst critic of multinationals. Tunde Obadina was right when he noted that “at

every Organisation of African Unity summit African leaders and ministers who have looted their

nations’ coffers are applauded for speeches that mix cries against regional marginalisation and
32
criticism of the IMF with insincere pleas for African unity and calls for debt forgiveness.” Such

hypocrisy by Africans in the midst of complicity in crimes against their own people is appalling and

an obstacle to our progress as a people. Time has come for us to collectively take our own destinies in

our hands and create a future for our posterity and ourselves.

End Notes

11
1
Ahmed, Masood. “Making Globalisation Work for the Poor” The Independent, London, December 12, 2000.
2
Fischer, Stanley. “The Challenge of Globalisation in Africa.” France-Africa Summit Yaounde, Cameroon. January 19,
2000.
http://wwwimf.org/external/np/speeches/2001/011901.thm
3
The Theory and Experience of Experience of Globalisation
4
Ibid
5
Rivero, Oswaldo De. The Myth of Development: The Non-Viable Economies of the 21st Century. New York: Zed Books,
6
Fischer, Stanley. “The Challenge of Globalisation in Africa.”
7
John Paul II: Globalisation Must Not Be a New Form of Colonialism. http://www.cjd.org/paper/capital.html
8
Sewell, Rob, “Imperialism, Globalisation and the Way forward.”
http://www.marxist.com/Globalisation/imperialism_globalisation.html
9
Castells, Manuel. “Information technology and global capitalism’ in W. Huttonand A. Giddens. (eds.) On The Edge.
Living with Global capitalism, London: Vintage, 2001.
10
Giddens, Anthony. Quoted in “The Theory and Experience of Experience of Globalisation”
11
John Paul II: Globalisation Must Not Be a New Form of Colonialism
12
Globalisation: The End of the Age of Imperialism? http://flag.blackend.net/revolt/ws99/imperialism58.htm
13
Gray, quoted in The Theory and Experience of Experience of Globalisation
14
Globalisation: The End of the Age of Imperialism?
15
The Theory and Experience of Experience of Globalisation
16
Kenway and Bullen. Quoted in “The Theory and Experience of Experience of Globalisation.”
17
The Implications of Neo Colonialism and Neo Liberalism in Africa one the Refugee Question. Webjounal zum
Fiuchtlingskongress vom 21. April bis 1. Mai in Jena. http://www.humanrights.de/congress/2000/04/25/27.html
18
Ibid.
19
The Theory and Experience of Experience of Globalisation
20
Arenburg, Ben. “Poverty and Neo-Colonialism in Nigeria: Three Years into Civilian Rule, Crisis Deepens.
21
Globalisation: The End of the Age of Imperialism? http://www.socialistalternative.org/justice31/17.html
22
Ibid.
23
Sewell, Rob. “Imperialism, Globalisation and the Way Forward”
24
Conclusion http://www.tuc.org.uk/international/tuc-5044-f29.cfm
25
Wouddenberg, Anneke Van. The Business of War http://www.worldlink.co.uk/discuss/msgReader$1096?mode=topic
26
Knight, Daniel. “Environment-Finance: Multinationals Undermine Environment.
27
Globalisation: The End of the Age of Imperialism?
28
Coburn, Christina. “Third World Debt – The Silent Killer.” http://www.cjd.org/papper/third1.html
29
Ferstenfeld, Megan. “Structural Adjustment: Time for Reform/Third World Countries Strangled by Debt.
http://www.cjd.org/paper/struc.html
30
Ibid.
31
International Monetary Fund. Globalisation: Threat or Opportunity?
http://www.imf.org/external/np/exr/ib/2000/041200.htm#II, 2000, modified in January, 2002.
32
Obadina, Tunde. “The Myth of Neo-colonialism.” African Economic Analysis.
www.afbis.com/analysis/neo-colonialism.html