African Development and the Marginalisation of Domestic Capitalists

Abstract

The revival of industrial policy discussions has operated in parallel to reports of increasing domestic wealth accumulation across the African continent. Regional and continent-wide industrialisation has begun to be rhetorically linked to discussions of regional common markets and through the African Continental Free Trade Area. Yet, there is barely any mention of integrating African capital into the African industrial policy agenda. Where such discussions have appeared, they have emerged through the 'Africapitalism' narrative, which ignores the role of the state and politics in supporting and sustaining domestic business groups. Instead, the re-imagination of industrial policy on the continent relies on foreign investors, particularly the relocation of Chinese industry to various parts of the continent. This paper has two core objectives. The first is to explain why the study of African capitalists-popular in the 1980s and 1990s-has remained relatively dormant since then. Dominant narratives-through neopatrimonalism and dependency-inspired arguments-have been pessimistic about the potential of African capitalists to deliver structural transformation. Gradually, these narratives, alongside intellectual trends within mainstream social science and African studies, have discouraged the study of politics of state-business relations in Africa. Yet African capitalists have become increasingly prominent in popular culture. Many of the wealthiest and most prominent capitalists have emerged through owning diversified business groups across the continent. This paper argues that more attention should be dedicated to the study of the politics of the emergence and sustenance of African diversified business groups (DBGs). To achieve this goal, a fluid categorisation of DBGs is introduced, building on Ben Ross Schneider's previous work. By examining three country case studies-Rwanda, Kenya and Tanzania-this paper highlights how a range of DBGs are emerging across three very different political contexts.

Analysing corporate governance and accountability practices from an African neo-patrimonialism perspective: Insights from Kenya

“…Consistent with the evidence above, Behuria (2019) observes that the Africanisation policies implemented in post-independence Kenya resulted in the emergence of an indigenous capitalist class dominated by politically connected families. These domestic capitalists are noted in the literature as wielding significant power and influence that helps in protecting their interests, without facing sanctions from the authorities (Gray & Whitfield, 2014), hence undermining the corporate sector enforcement systems.…”

“…For instance, neo-patrimonial systems are noted to suffer from a widespread culture of "corruption, predation and theft" (Cammack & Kelsall, 2011, p.90), while at the same time exhibiting subversion of formal institutions (Woods, 2012;Lassou, 2017), such as existing accounting and auditing standards (Hopper, Lassou, & Soobaroyen, 2017). Moreover, the indigenous capitalist elites found in many African countries such as Kenya (see Behuria, 2019), are also noted to serve as key enablers of clientelism and rent-seeking practices (Mkandawire, 2015).…”

Industrial Policy and Monopoly Capitalism in Nigeria: Lessons from the Dangote Business Conglomerate

“…With a population of just under 200 million, the potential size of the Nigerian market is unique in sub-Saharan Africa (SSA), but historically the growth of domestic markets has been important (Frankema and van Waijenburg, 2018) even in small and export-oriented economies like South Korea (Chenery et al, 1986). African capitalists commanding diversified business groups are an increasingly widespread phenomenon (Behuria, 2019).…”