A far-reaching strategic debate is underway about how to respond to the global financial crisis.
The world financial meltdown has its roots in the neoliberal export-model (dominant in Africa since the 1981 World Bank Berg Report and the subsequent onset of "structural adjustment programs") and in 35 years of world capitalist stagnation/volatility.
Africa has always suffered a disproportionate share of pressure from the world economy, especially in the sphere of debt and financial outflows. But for those African countries that made themselves excessively vulnerable to global financial flows during the neoliberal era, the meltdown has had a severe adverse impact.
In Africa's largest national economy, South African finance minister Trevor Manuel presided over the steady erosion of exchange controls and the emergence of a massive current account deficit: minus 9% in 2008, second-worst in the world.
This was in large part due to a steady outflow of corporations formerly based at the Johannesburg Stock Exchange but which re-listed in Britain, the US or Australia during the 1990s (Anglo American, DeBeers, Old Mutual, Didata, Mondi, Liberty Life, BHP Billiton).
In the first week of October, South Africa's stock market crashed 10% (on the worst day, shares worth US$35 billion went up in smoke) and the currency declined by 9%. The second and third weeks witnessed further 10% crashes.
South Africa's speculative real estate market had already begun a decline that might yet reach those of other hard-hit property sectors like the US, Denmark and Ireland. The early 2000s housing price rise far outstripped even these casino markets (200% from 1997-2004, compared to 60% in the US).
On the other hand, the cost of market failure could somewhat be offset by ideological advance. The main gains so far have been in de-legitimising the economic liberalisation philosophy adopted during the 1994-2008 governments of Nelson Mandela and Thabo Mbeki (presided over by Manuel).
Indeed, Mbeki's dramatic September departure occurred partly because of substantially worsened inequality and unemployment since 1994, in turn was responsible for thousands of social protests each year.
The rest of Africa
As for the rest of Africa, similar opportunities to contest financial system orthodoxy now arise. At this stage, it is practically impossible for staff from the most powerful external force in African economic policy, the International Monetary Fund, to advise the elites with any credibility.
The IMF's October 2006 Global Financial Stability Report, after all, claimed that world finance showed "exceptionally low market volatility".
Moreover, it claimed, global economic growth "continued to become more balanced, providing a broad underpinning for financial markets".
Because financial markets price risk correctly, according to IMF dogma, investors could relax: "[D]efault risk in the financial and insurance sectors remains relatively low, and credit derivatives markets do not indicate any particular financial stability concerns".
According to the IMF two years ago, the derivatives and in particular mortgage-backed securities "have been developed and successfully implemented in US and UK markets. They allow global investors to obtain broader credit exposures, while targeting their desired risk-reward trade-off."
As for the rise of credit default swaps (the $56 trillion house of cards bringing down one bank after the other), the IMF was not worried, because "the widening of the credit default swaps spreads [i.e. the pricing in of higher risk] across mature markets was gradual and mild, and spreads remain near historic lows".
Since then, the IMF has continued proclaiming the merits of liberalisation and rising financial flows to Africa, especially portfolio funding (i.e. short-term hot money in the forms of stocks, shares and securities issued by companies and government in local currencies but readily convertible).
Such "hot money" — speculative positions by private-sector investors — flowed especially into South Africa's stock exchange, and to a lesser extent those of Ghana, Kenya, Gabon, Togo and Seychelles.
However, financial outflows continue apace. An updated report on capital flight by Leonce Ndikumana of the Economic Commission for Africa and James Boyce of the University of Massachusetts shows that thanks to corruption and the demise of most African countries' exchange controls, the estimated capital flight from 40 Sub-Saharan African countries from 1970-2004 was at least $420 billion (in 2004 dollars).
The external debt owed by the same countries in 2004 was $227 billion. Using an imputed interest rate to calculate the real impact of flight capital, the accumulated stock rises to $607 billion.
According to the IMF, the "debt sustainability outlook" of low-income African countries "has improved substantially, with 21 out of 34 countries classified on the basis of the Debt Sustainability Framework at a low or moderate risk of debt distress at end-2007".
Yet the major lesson from the prior quarter-century of debt distress was not the abstract ratios, but instead, the ability to pay the debt in the context of pressing human needs.
It was here, according to London-based Jubilee Research, that the Bretton Woods institutions had not accurately assessed the damage done by debt, or the injustice associated with repaying debt inherited from prior undemocratic governments.
Jubilee Research noted that "47 countries need 100% debt cancellation ... and a further 34 to 58 need partial cancellation, amounting to $334 to $501 billion in net present value terms, if they are to get to a point where debt service does not seriously affect basic human rights".
For some African countries, the solution lies in an alternative source of hard currency finance. China provides condition-free loans to several of Africa's most authoritarian regimes.
More hopefully, Venezuela is considering a proposal to displace the IMF, as happened in Argentina in 2006, in which case repaying the IMF early or even defaulting would be feasible.
In other African countries, progressive social movements have argued for debt repudiation and are concerned about any further financial inflows beyond those required for trade financing of essential inputs.
This would also entail inward-oriented light industrialisation oriented to meet basic needs (and not to luxury goods, a major problem that emerged in Africa's settler colonial economies during the 1960s and '70s).
Pressure from below
The crucial ingredient for establishing an alternative African financing strategy from the left is pressure from below.
This means the strengthening, coordination and increased militancy of two kinds of civil society: those forces devoted to debt relief, which have often come from what might be termed an excessively polite, civilised society based in internationally linked NGOs that rarely if ever used "tree shaking" in order to do "jam making"; and those forces that react via short-term "IMF riots" against the system — best understood as "uncivilised society".
The IMF riots that shook African countries during the '80s and '90s often rose up in fury and even shook loose some governments' hold on power.
When these contributed to the fall of Kenneth Kaunda in Zambia (one of many examples), the man who replaced him as president in 1991, former trade unionist Frederick Chiluba, imposed even more decisive IMF policies.
Most anti-IMF protests simply could not be sustained.
In contrast, the former organisations are increasingly networked, especially in the wake of 2005 activities associated with the Global Call to Action Against Poverty (GCAP), which generated (failed) strategies to support the Millennium Developmental Goals partly through white-headband consciousness raising, appealing to national African elites and joining a naive appeal to the G8 Gleneagles meeting.
Since then, networks have tightened and became more substantive through two Nairobi events: the January 2007 World Social Forum and August 2008 launch of Jubilee South's Africa chapters.
These networks could return to making demands squarely within the logic of the existing neoliberal system and its geopolitical power relations, in a manner that disempowers activists even if they gain slight marginal changes.
Or they could identify sites where the logic of finance can be turned upside down. The most striking case might have been the South African "bond boycott" campaign of the early '90s, wherein activists in dozens of townships offered each other solidarity when collective refusal to repay housing mortgage bonds was the only logical reaction.
This anticipated the 1995-96 strategy by more than a million Mexicans who fell into debt peonage when interest rates soared from 14% to 120% over a few days: they simply said, "can't pay, won't pay".
That slogan was also heard in Argentina in early 2002, following the eviction of four presidents in a single week due to popular protest. The ongoing pressure from below compelled the government to default on $140 billion in foreign debt so as to maintain some of the social wage, the largest such default in history.
Instead, next month in New York and Washington the global elites aim to refashion the world's financial architecture, likely adding to the G8 a few comprador regimes: China, India, Brazil and South Africa for legitimacy (and access to substantial dollar reserves).
Activists should contemplate whether to "Seattle" the event; African social movements and a few patriotic African trade ministers were, after all, not only present but instrumental in preventing the World Trade Organisation's 1999 Seattle summit from proceeding.
Much more forthright national action can be taken against global finance, spurred by far-seeing civil society activists, such as those who demand reparations for apartheid, colonialism, slavery and the "ecological debt" owed by the North to the South.
Africa needs to reimpose national exchange controls and import controls (especially on luxury goods for the elites), as installed successfully by Malaysia, Chile and Venezuela in recent years.
As commodity prices plunge from their 2002-07 speculation-driven bubble prices (such as a 70% drop in mining shares since May), as trade deals with the North are unveiled as clearly disadvantageous, as trade finance becomes difficult as a result of bank mistrust of counterparty debt, and as hot money portfolio flows dry up and new sources open for hard currency, the argument for what Africa's greatest political economist Samir Amin calls "de-linking" becomes all the more compelling.
It is already beginning to happen, in no small part thanks to civil society advocacy.