Multinational Corporations in the African Economies: Bane or Blessing?
August 23, 2014
By TANGWE Abraham
Multinational corporations (MNCs) are companies with plants or direct investments in one or more foreign Countries. There are also known as Transnational corporations. They have their home or headquarters in one Country and owns and run subsidiaries in other Countries. It is therefore a corporation that operates in a multiplicity of environments. Africa after independence was inundated by a plethora of such companies which have hard a stranglehold on the African economies. They have had some positive fallout but with the limitations of such companies the main reason why African development is still farfetched.
Their origins and evolution in the African economies was well crafted and executed. After the Second World War, their presence was effectively felt and this was explained by the fact that instead of trying to break through tariff and other barriers to be able to export goods to other Countries, many of these companies found it easier to gain access inside such Countries in order to save transportation and other costs so as to make their goods more competitive. Also, many of these Countries offered cheap labour, special tax treatment or exoneration, the new technological innovations and the spread of communication and travels, the containerization of cargo and the emergence of computers capable of storing large amount data all made it possible for MNCs to expand their operations.
Postcolonial Africa faced a mountain of socio-political and economic problems which brought untold misery to the African people and thereby forced them to look for means and ways of tackling the problem and this made the MNCs to appear useful in salvaging them from such precarious settings.
MNCs provided the much needed capital?, technological and marketing skills in exchange for a very profitable market. This has been compounded with their use of sophisticated marketing methods and organization with maximized linkages with their metropolitan base. The talk of transferring technology is a farce because you cannot transfer technology and expect it to stick. Technology has to be invented taking cognizance of the inherent societal peculiarities for it to thrive.
However, their activities have helped in job creation, nay, employment improving in the process the national income through their payment of taxes which the Economic Partnership Agreement with the European Union is sure to put into jeopardy. Such employment and improved income for governments led to improve development, standards of living and the undertaking of reforms.
At first glance, MNCs appear to be real developmental partners but a careful examination of their intrinsic undertones would disclose their devilish savvy in exploitation as they retard African economies, sap resources living the hitherto buoyant natural resource base barren thereby leading to an anomalous situation that injects underdevelopment than development. MNCs are neo-colonialist creation or agents bent on advancing the capitalist ethos.
The dependent theory of Wallerstein is a good base for this argument. This theory argues that the African economies are peripheral or based on primary products to be exploited by the industrialized nations or their agents who are the MNCs. Other theorists like Frank simply posit that the world economies were divided into the developed economies or metropoles and the peripheries or underdeveloped economies with the peripheries dominated by the metropoles. These ideals at face values refer to an era akin to the colonial period but a critical look reveals a different scenario.
As such, we realize that independence to African states was a smokescreen with diminished control over the elites and a “behind the scene” stranglehold of the African economies by the MNCs and their agents otherwise referred to as neo-colonialism. The metropole has therefore ceded that exploitative role to the MNCs who are more ruthless in their drive for profit which has left the African economies under permanent anesthetics or the economic surgeons “thieving” knife.
Unlike the colonial enterprise that was contingent on purity and as far as procedure and end results were concerned, the MNCs opted for a mélange of both; they used all the local mechanisms to extract profit even at the expense of looking for indigenes to control capital. MNCs are in quest of amassing wealth at the detriment of other variables like the welfare and developmental needs of the given societies.
Underneath the MNCs is found a vicious lethal drive for an outright extinction of the African economies. They were seen as offering the so –called modern industries to Africa but their interests in doing so conflict in part with African developmental goals and given the marginality of Africa to global goals or operation, they are in a position to drive very hard bargains.
Perhaps, referring to them as “devils incarnate” may be hard but their destructive base far exceeds their productive base. This could be discern via the Oguni crisis where the late environmentalist Ken Saro Wiwa vigorously challenged the American oil consortium Shell for environmental pollution without a corresponding fallout to the affected masses. This led to a kangaroo court trial session for him on trump up charges for allegedly masterminding the murder of some Oguni chiefs who were against his campaign and was later executed. The late dictator, Gen. Sani Abacha therefore cooked this alibi with Shell to silence him.
In 1997, ELF, the French oil company sponsored and masterminded the overthrow from power of Prof. Pascal Lissouba because it was alleged that he was about to grant the exploration of new oil wells to American companies on a better deal. ELF decided to sponsor a stooge in the person of Denise Sassou Nguessou to reverse this trend and allow them a permanent monopoly. In fact, this is what has forced President Yahyah Jammeh of the Gambia to remark that is better to allow the resources to remain in the ground than exploiting them with nothing to show for it by the people.
We can go on and on. What happen to the contract of construction of a bridge linking the economic capital of Cote D’Ivoire, the French, Laurent Gbagbo and the Chinese? Of course, the Chinese who had a better deal were sidelined with the French and their Shylock terms holding sway and with Gbagbo standing trial for war crimes! Take a walk down memory lane with Charles Taylor and the Americans. Is Charles Taylor really guilty of fanning and abating war in Sierra Leone and for war crimes?
What is glaring is that MNCs wield impressive political, economic and social power. It does not matter whether that power is sought or unsought. It exists! More so, if the political survival of the host government is therefore at stake due to the economic operation of an MNC, that host government is pressured unless it can provide expertise through alternative sources to grant favourable concessions to guest MNCs. You can check the former Zaire under Mobutu where extremely favourable concessions were granted to a number of MNCs for exactly the same reasons and suffice to state here that Zaire is just a storm in the tea cup.
MNCs decisions can either reduce or increase employment levels within a Country, compromise or enhance the security of a Country (Nigeria and Congo Brazzaville) and lead to greater or lesser dependent on it by one country or another. One scholar has rightly remarked that the relationship between MNCs and the nation-states can be termed as “sovereignty-at-bay” meaning that the power and authority of national governments is being at least challenged if not completely overtaken by MNCs.
MNCs are therefore a bane or trauma to African governments and to solve the problem, nationalization or getting a majority of shares in these corporations is a condition sine-qua-non. Nationals should be allowed to group themselves and allowed to put resources together, safeguarded by national governments for their development. Zimbabwe is trying in this direction but this must be accompany by the requisite through quality education.
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