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- Convenors:
-
Pritish Behuria
(University of Manchester)
Anne Pitcher (University of Michigan)
Send message to Convenors
- Discussants:
-
Anne Pitcher
(University of Michigan)
Lindsay Whitfield (Roskilde University)
- Stream:
- Economy and Development
- Location:
- 50 George Square, G.02
- Sessions:
- Wednesday 12 June, -, -
Time zone: Europe/London
Short Abstract:
This panel welcomes papers on the political economy of diversified business groups (DBGs) or 'conglomerates' in Africa. DBGs include party-affiliated companies, family-owned companies or JVs between domestic and international investors. Cross-country comparisons of DBGs are also welcome.
Long Abstract:
Following independence in Africa, scholars devoted much attention to detailing the emergence of local businesses and capitalist classes. A central debate in the literature concerned whether emerging capitalist classes were 'comprador' or showed signs of leading structural transformation. Answers to this question were, and continue to be, largely negative. Even as industrial policy has become fashionable again, the focus has been on foreign investors rather than existing local businesses. Moreover, much of the literature assumes that African capitalists are unproductive and incapable of leading capitalist transformation in their countries or worse, that local capitalist classes simply don't exist.
Yet, there is substantial evidence that many diversified business groups with extensive local participation have emerged in almost every African country. How did these DBGs arise? What are their characteristics? Are they dependent on the state or wholly separate from it? What is the balance between local and foreign capital? This panel welcomes papers that use mixed methods, case studies, and cross national comparisons to answer these questions. We are particularly interested in exploring those economic sectors where DBGs with substantial local investment are found; the features (if any) of their linkages with politicians, state agencies and foreign investors; and whether DBGs are welfare-enhancing or still conform to the previous "rent seeking" stereotypes. In drawing scholarly attention to these aspects of DBGs, we seek to understand more clearly the origins and the consolidation of businesses with roots or shareholders on the African continent, but who may also be expanding beyond the continent.
Accepted papers:
Session 1 Wednesday 12 June, 2019, -Christina Wolf (University of Hertfordshire) Richard Itaman (King's College London)
Paper short abstract:
This article scrutinises the Dangote Business Conglomerate in Nigeria to understand factors that drive successful industrial policy Nigeria and factors explaining why success for the company is not necessarily success for development/ or industrialisation.
Paper long abstract:
This article asks which insights can be gained from the Dangote conglomerate both in terms of why pockets of efficiency formed in the Nigerian manufacturing sector and why, at the same time, structural transformation remained limited across the economy as a whole. Mapping Dangote's business activities across sectors and levels of production shows evidence of backward linkages including upscaling across domestic and regional value chains. We review various initiatives of the Nigerian state to support economic diversification and especially manufacturing. We argue that the expansion of, in this case, domestic markets can discipline learning. Yet emerging monopoly capitalism carries with it the fruit of fragile accumulation to the extent that price setting power, tax evasion and control over wages undermines the growth of purchasing power.
Antoinette Handley (University Toronto)
Paper short abstract:
When do African business groups respond to a national crisis in ways that are not narrowly directed only to short-term profits, but that assist their society to solve that crisis? The paper introduces the concept of relative business autonomy and explores both how it may emerge and decline.
Paper long abstract:
Forty years ago, Colin Leys asked "how far the class that has the greatest interest in surmounting and resolving the problems confronting capitalist development … [has] identified these problems or shown itself able to tackle them?" An examination of the business response to moments of national crisis in four African cases (Kenya, Uganda, Botswana and South Africa) provides surprising answers: African businesses can be key responders to crisis, on occasion responding well in advance of the state and in welfare-enhancing ways that assist the society more widely to resolve the underlying crisis. Large, home-grown, diversified business groups are prominent in the ranks of the constructive responders to crisis, in surprising and counterintuitive ways.
This paper introduces the idea of relative business autonomy as the capacity, on the part of a key fraction of a business community, to understand and secure the broader system-level needs of capitalism as a whole. The paper makes use of qualitative, country-based fieldwork in East and Southern Africa to explore the conditions under which business autonomy may emerge and develop, as well as when and how it may decline. Relevant explanatory factors include more economistic, firm-level features (including firm size, degree of specialization, ownership model, and the sub-sector of the economy in which the firm operates). Also important however is a second set of more explicitly political factors that may serve to connect the interests of the country's national economic elites to those of the broader society.
Farwa Sial (University of Manchester) Antonio Andreoni (SOAS University of London)
Paper short abstract:
This paper analyses the historical evolution of Tanzanian conglomerates with a specific focus on 'Regimes of Capitalist Accumulation'.
Paper long abstract:
Authors: Antonio Andreoni and Farwa Sial
Conglomerates or diversified business groups are a specialised unit, encompassing inter-linked, market-based economic activities, which are organised to complement the overall operation of the entire business. Complementarity operates in different ways, from leveraging financial resources and reallocating internally generated profits, to developing upstream and downstream activities, 'internal markets' and services along several value chains.
A conglomerate's operation, productive capacity and ability to innovate, in essence, 'as a sum, which is greater than its parts' is contingent on a variety of contextual factors and, even within the same political settlement, different 'conglomerates models' may emerge. While the experience of conglomerates such as keiretsu and chaebols have been widely studied, little is known about conglomerates in Africa, their emergence and different patterns and models of capitalist accumulation.
This article focuses on the emergence and evolution of Tanzania's top five conglomerates within a specific framing called 'Regimes of capitalist accumulation'.
Regimes of capitalist accumulation identify different 'mechanisms of rents allocation'(and the related policies, regulations and processes) which allowed conglomerates to initiate their businesses in early stages of industrialisation and, over time, to consolidate operations and diversify in related and unrelated sectors. Each regime followed a distinct pattern, building on certain existent legacies as well as constructing new mechanisms for capitalist accumulation.These regimes not only enabled conglomerates to have precedence over other businesses as 'market makers' and 'rents extractors', they also continue to define their contemporary characteristics and distinct business models.
Pritish Behuria (University of Manchester)
Paper short abstract:
This paper examines how a range of different forms of diversified business groups have emerged in Kenya since independence. It highlights how politics has nurtured different growth trajectories among businesses.
Paper long abstract:
Since the 'Kenya debate', which generated a range of studies examining the status and hopes for African capitalist classes in the 1970s-1990s, there has been comparatively fewer discussion of the status and politics around the emergence of African businesses. This paper examines how a variety of diversified business groups have emerged in Kenya since independence, higlighting how politics has been central to nurturing and obstructing their growth.
This paper forms part of a broader comparative research agenda, examining the emergence of Africa's diversified business groups and how their position within domestic economies is currently de-linked from the agenda to revive nascent manufacturing sectors across the continent.
In Kenya, in particular, several different forms of business groups have emerged (portfolio, organic and politically-induced). While some have concentrated their growth in manufacturing sectors both within and outside the country, others have focused their activities on finance, real estate and construction. The paper explains what may account for these different trajectories of growth.
Anne Pitcher (University of Michigan)
Paper short abstract:
This paper incorporates information on the business interests of 800 politically powerful individuals in Mozambique to discuss whether business groups containing politicians are economic "paragons" or "parasites".
Paper long abstract:
The growth of market economies in Asia and Africa over the last thirty years has generated a robust literature on the structure of business groups in developing countries and the nature of their linkages with the state. What are the important economic and political variables that contribute to different characteristics of business groups, and ultimately whether they become economic "paragons or parasites" (Khanna and Yafeh, 2007)? How have political connections between the state and business promoted or deterred the growth of domestic capitalists? How have political connections undermined or improved firm profitability?
To answer these questions, this paper relies on information regarding the business interests of around 800 former and current politicians in Mozambique starting from the moment of independence in 1975 until 2016. It not only identifies the sectors in which politicians have invested, but also their effect on the Mozambican economy. Although it provides evidence that crony capitalism is alive and well in Mozambique, it also distinguishes several cases where the education and expertise of particular politicians offer just as convincing an explanation for their presence in a sector as their political connections. Future work needs to consider more carefully the sectoral and cross-national variation in the impact of state - business connections.
Pallavi Roy (SOAS, University of London) Farwa Sial (University of Manchester)
Paper short abstract:
This paper examines the role of conglomerates in engineering Nigeria’s industrial policy beyond the extractives (oil) sector.
Paper long abstract:
The Nigerian economy has been extensively scrutinised to analyse the causes and implications of the oil sector as a ‘resource curse’. A relatively under-researched area is the role of the private sector, specifically Nigerian conglomerates, in adapting their evolution around the oil sector. As a distinct unit, conglomerates have the organisational capacity to operate in diverse sectors, often rooting their competitive prowess in core sectors, whilst simultaneously maintaining an efficient equilibrium in other economic activities and sectors. In this context, the study of Nigerian conglomerates offer an insightful conceptualisation of the trajectory of the Nigerian economy in different eras; the historical institutionalisation of incentives for the private sector by the state allowed some conglomerates to transcend their operations beyond the extractive sector whilst others chose to invest in the oil economy. However, extractive and non-extractive centred growth has not been a binary for the evolution of these conglomerates. Overall, competitiveness in key sectors has been highly contingent on the limitations of the state to offer an investment environment beyond the oil economy.
Using a political settlements framework, this article focuses on the historical evolution of five conglomerates to identify the private sectors’ approach to the opportunities and challenges associated with the uncertain terrain which has marked Nigeria’s oil dependent economic growth. In doing so, we also inquire the possibilities of broadening the private sector space to include small and medium businesses which still remain in stages of infancy in contrast to major conglomerates.
Joyce Omwoha (Technical University of Kenya) Job Mwaura (University of Witwatersrand) Lynete Mukhongo (Saint Joseph's University)
Paper short abstract:
This paper seeks to discuss alternative media ownership and its implications on shifting power dynamics in political economies of the Kenyan media. It will question the term media ownership in an era where media ranges from old media, social media platforms, to podcasts and streaming services.
Paper long abstract:
This paper seeks to discuss alternative media ownership and its implications on shifting power dynamics in political economies of the media in Kenya. It will question the term media ownership in an era where media ranges from old media (TV, radio, and newspapers), social media platforms, bloggers to podcasts and streaming services. A case for the argument of shifting power relations in media ownership is the recognition of the fact that regulations for media ownership were first drafted in many countries around the world when social media and mobile technologies as we know them today had not emerged. Today social media and mobile technologies are a critical alternative source of political news. The questions guiding this paper are: How do we conceptualize media ownership in an increasingly mediated environment in Kenya? How has the ownership of alternative media contributed to shifting power dynamics in Kenya? To what extent does ownership of alternative media contribute to users challenging power and countering state controls? With social media increasingly shifting from "alternative" to "mainstream" source of political news consumption, social media platforms such as Twitter and Facebook have not only become sources of breaking news, but also spaces of contentious political engagement. However, of concern is, the growing state interference and repression of bloggers and other social media users by government forces. The paper will focus on alternative media ownership and shifting power relations within emerging digital media frameworks; one that is highly driven by user generated content and users becoming media owners.
Nadine Wenzel (University of Fribourg) Nobantu Mbeki (University of the Witwatersrand)
Paper short abstract:
This paper considers a relevant and alternative framework to explain the behaviour of large corporations in South Africa today. Domestic competition will be put in the broader context of global cities research.
Paper long abstract:
Two paradigms are dominant in economic explanations of the competitive behaviour of firms in South Africa. One extreme is rooted in the structure-conduct-performance (SCP) framework, emphasising the ability of corporations to persistently charge 'excessive' mark-ups relative to their peers (cf. Aghion, Braun and Fedderke, 2008). Clegg (2006) suggests that the explanatory power of SCP is debatable, and Zalk (2014) describes the specific approach taken in the case of South Africa as logically flawed. The other extreme is in a Structuralist tradition, focusing on the historical and contextual factors explaining the specificity of competition in the broader context of the development of South Africa.
More recent studies in the industrial organisation tradition are more nuanced, but the scope remains narrow. Similarly, the mineral-energy complex approach has evolved to take account of financialisation. This explains historic types of behaviour extensively, but since MEC is empirically based, the explanation is not as comprehensive for more recent types, raising the question of its applicability today.
First, this paper uses the case of Bell Equipment to explore the problems inherent in characterising competition in this polarised way. Second, it tries to understand whether the problem itself is still the same since key empirical features of companies' behaviour lie outside the scope of either framework. Third, the paper asks about the relevant framework to explain the behaviour of corporations in South Africa, considering domestic competition in the broader context of global cities research. Fourth, an alternative is proposed and new insights and limits are discussed.