The History of Business in Africa by Grietjie Verhoef

Author:Grietjie Verhoef
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

5.6 The State, Power and Business: Central Africa

In the only former Belgian colony after independence, Zaire, the development of indigenous business experienced a similar development path as in the former British or French colonies. Before independence the presence of nonindigenous Zairians, namely, people of Greek and Asian origin, dominated business. After independence the political elite took advantage of the Zairianisation programmes to secure the enterprises of former expatriates, but to disastrous consequences. The state took over the big agro-industries, commercial agricultural enterprises, around 2000 small- and medium-sized wholesale and retail businesses, small factories, plantations and farms belonging to foreigners. These were handed to Zairians, and the ‘consequences for the economy were disastrous: few of the new owners had serious business intentions, aptitude, managerial skills or experience’ (MacGaffey 1987: 46). The beneficiaries of Zairianisation entered retail enterprises, wholesale trading, light manufacturing and plantation agriculture. A frequent combination was trading and transport, but reliance on family labour was not as prevalent as in, for example, Nigeria. The new businessmen encountered similar difficulties as elsewhere in Africa—access to loan capital, skills, insufficient infrastructure and foreign competition—but also massive corruption (‘the second economy’, smuggling) (MacGaffey 1987: 91–142; MacGaffey 1994). The sheer extent of bureaucratic and political corruption (‘parasites’ as MacGaffey termed the phenomenon) undermined business development.

In the case of post-independence Zambia, the United National Independence Part (UNIP) of President Kenneth Kaunda ended the multiparty constitution of the Republic of Zambia in 1973, ending not even a decade of democracy in Zambia. After independence in 1964, UNIP moved systematically to revoke property rights of many of the most successful businessmen in Zambia. State capture led to state monopoly control over the entire mining industry and related limited industrial interests. Disruptive riots in the Copperbelt in 1965/1966 caused by disparity between wages of Zambians and non-Zambians in the mining industry gave UNIP the reason to push hard on Zambianisation policies. A systematic process of dismissing non-Zambians commenced: first senior European civil servants were dismissed and replaced by ‘patriotic political assistants’. UNIP failed to Zambianise, but actually ‘UNIPanised’ by appointing party loyalists to control workers, resulting in sustained workers unrest and an inclination by the state to clamp down on all opposition (Tordoff 1980: 42–45). In the Mulungushi Declaration of April 1968, UNIP announced that the state will acquire majority shareholding in certain industries. The Industrial Development Corporation (INDECO) was established to manage the takeover, and in 1970 the mining interests of Anglo-American Corporation and the Rhodesian Selection Trust were under state control. Despite public assurances, as well as in the Mulungushi Declaration that the state would not nationalise business, the state walked away from the agreements on management and non-nationalisation of the minority shareholding in the mines. The state nationalised all the mines using the Mining Development Corporation (MINDECO), established the Finance Development Corporation (FINDECO) to nationalise building societies and insurance companies and finally in 1971 consolidated all the state-owned enterprises under the management of ZIMCO—the Zambian Industrial and Mining Corporation. Since Mulungushi private business was subjected to nationalisation (Williams 1973).

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