by Alex Lenferna, South Africa Climate Justice Campaigner
Did colonialism ever really end? To some extent yes, but to a large extent, not really. In many ways it simply morphed into different forms, which continue to haunt countries in the global South, particularly now as they attempt to recover from the impacts of COVID-19.
Following the formal end of colonialism, countries in the global South had to grapple with how to fund their economies. They were often left without much choice but to turn to lenders in the global North. Those lenders enacted a form of what was called neocolonialism by former Ghanain Prime Minister Kwame Nkrumah.
The debt the global South received was no act of charity. Instead, it came with harsh interest rates, typically much higher than their global North counterparts. The result is that global South countries are paying massive amounts to service debt, rather than investing in public well-being.
That debt also typically came with structural adjustment programs which further prevented them from making major public investments in sectors like healthcare and education. Because of that, many global South countries are now less equipped to deal with the coronavirus crisis and less resilient in the face of climate impacts.
One of the central ongoing forms of neocolonialism is through the fossil fuel industry and its extractive and exploitative business model – we could call it coalonialism. It’s a business model that is often built on indebting the global South to fund problematic and harmful fossil fuel projects.
Coalonialism in South Africa
One recent example of coalonialism comes from a World Bank loan given to South Africa, my home country. The loan was to build a massive coal powered station called Medupi – one of the biggest in the world.
The initial proposal to build the Medupi coal plant was met with fierce resistance from civil society in South Africa. They worried about the financial costs and environmental impacts of a mega coal power project. They worried that in a time of climate change and decreasing costs of renewable energy, the power plant would be financially and environmentally nonviable.
Despite the resistance, in 2010 the leadership of the ruling political party, the African National Congress (ANC), were able to secure a World Bank loan to build it. Steeped in corruption, the ANC’s investment arm owned a 25% share in Hitachi Power, one of the companies that would get 60% of the contract. The ANC received improper payments for the project and had a R3 billion stake in it.
In a rare moment of intellectual honesty, the recently appointed head of the World Bank, David Malpass, accused the bank of regular corruption when dealing in developing countries. He explicitly mentioned South Africa and the Medupi project as emblematic of a much deeper problem.
The concerns of South African civil society turned into a reality: Medupi has run into major cost overruns, making it twice as expensive to build as renewable energy would be. While solar and wind now produce the cheapest energy, South Africa is now locked into some of the most expensive coal power in the world from Medupi.
The corruption and mismanagement of the project, has meant that the Medupi project has gone way over cost, and still is not complete. Together with another white elephant new mega-coal power plant called Kusile, those two plants have cost South Africa nearly R500 billion to build – that is more than South Africa’s COVID-19 stimulus package.
As a result of the coal plant project’s massive costs and broader mismanagement, the state-owned national utility Eskom now faces a growing R450 billion in debt which it cannot afford to pay off. As such, the state is having to bailout the utility to the tunes of tens of billions every year, so that they can pay international creditors.
That debt is draining the national budget and leading to increased austerity measures, such as cuts to education, healthcare and other public services. South Africa is impoverishing its public services to fund corrupted coal contracts and the international creditors behind them.
Apart from being a financial disaster for South Africa, Medupi is also a climate disaster for the world. The Medupi power station, if fully completed, will be one of the largest coal-fired power plants on Earth, emitting more carbon dioxide than the 143 least-emitting countries combined.
Ironically the word Medupi means “gentle rain” in Sepedi, a Southern African language. The irony or sheer audacity of that name is that climate change in Southern Africa is leading to much less gentle rain. A reality already felt in South Africa which is facing a national drought emergency as I write.
The economic and ecological disaster of Medupi demonstrates the rapaciousness of coalonialism. Debt is taken on largely to serve certain powerful and rich corporate, political, and financial interests. It has also helped lock in a carbon-intensive infrastructure at the heart of the climate crisis.
Thus, countries like South Africa are not only left deeply indebted to corrupt, expensive and polluting fossil fuel infrastructure. Furthermore, if they are to meet the Paris Climate Agreement’s target of 1.5C, they will need to prematurely strand that infrastructure, thus not even realising the full economic benefits of those investments.
From Coalolonialism to a Global Green New Deal
The South African example is just one of many showing how much of the debt currently weighing on global South countries should be considered illegitimate from a climate justice standpoint. Instead of funding social programs to benefit people, it finances harmful projects, weakens democratic processes and laws, deepens poverty and inequality, and violates human rights.
Beyond just South Africa, the global South has often been locked into indebted coalonialism through the finance arms of the global North. It has come in the form of loans, finance, and guarantees, often arranged without the proper consent or consultation of impacted communities.
As COVID-19 recessions hit across the world, the debt underpinning those projects are preventing countries in the global South from investing in a just recovery. It is preventing them from investing in local visions of a Green New Deal which transform their economies along the lines of social, environmental, and economic justice.
If we are to ensure a truly just global recovery, we must cancel those debts and scrap any new financial support for fossil fuels. Instead we must fund a global Green New Deal founded on the idea that the global South is owed climate debt, rather than owing illegitimate financial debt to coalonialists. If we can do so, we can hopefully help bring an end to a dark fossil fueled chapter of neocolonialism.