Is Capitalism Un-African?

Capitalism is not “unAfrican”. Pre-colonial Africa had markets, trade, private property, profit-sharing, and credit. The myth that enterprise is foreign to Africa has held back prosperity for too long

Photo by James Wiseman on Unsplash

Is capitalism an expression of a Western value system whose cold, rugged individualism is fundamentally incompatible with the warm collectivism of African communalism?

These are some questions that come to mind when one considers a common question about why free market-oriented policies do not resonate with many black South Africans.

There are, of course, several other reasons for the continued appeal of socialism, or more broadly left-leaning policies, but one such reason is the persistent myth that capitalism is an alien and oppressive system.

The origins of the ‘capitalism is unAfrican’ narrative

This myth dates back to the scholarship of post-colonial African leaders such as the late Julius Nyerere, who in his formulation of Ujamaa (African socialism), concluded that post-colonial African states needed to revert to forms of pre-colonial African communalism that resembled elements of socialism and reject the hyper-individualistic and exploitative capitalism of Western modernity.

The narrative is that the institution of private property was basically non-existent and that pre-colonial African societies were not organised around markets that facilitated trade.

What it conveniently omits is that historically, communalism was not a uniquely African phenomenon and that other parts of the world, including Europe during the Mediaeval period, also had strong communal systems. What it further omits is that the institution of private property did exist in pre-colonial Africa, and that the socialism being ‘Africanised’ was, in fact, a product of Western modernity.

Private property, trade, and pre-colonial Africa

It is true that what can be referred to as modern capitalism developed both in theory and practice in the Western world. But it is false to argue that private property and trade, which are foundational pillars of capitalism, did not exist in indigenous forms in pre-colonial African societies.

The late Ghanaian political economist and ardent advocate of free markets, George Ayittey dedicated his life to challenging this simplified and homogenised image of pre-colonial Africa as lacking private property and trade, and presented a more nuanced view of pre-colonial African societies that did have forms of private ownership and thriving markets.

George Ayittey and “peasant capitalism”

In an article he wrote for African Liberty in June 2019 titled Indigenous African Free-Market Liberalism, he made the following comments on trade:

“Markets were ubiquitous in precolonial Africa. Two types were distinguishable: the periodic (weekly) rural markets and the large regional markets. Some of these regional markets grew into large towns such as Timbuktu, Kano, Salaga, Sofala, and Mombasa. They served as exchange points for long-distance trade. Timbuktu and Kano, for example, served the long-distance caravan trade over the Sahara and the long-distance trade from the coastal areas. Free trade routes crisscrossed the continent. Goods and people moved freely along them. Men dominated the long-distance trade while women held sway over the rural markets, which largely involved trade in agricultural produce.

Prices in African markets were not controlled or fixed by chiefs or tribal governments. They were determined by bargaining in accordance with the laws of demand and supply. For example, when maize is scarce, its price rises, and the price of fish generally tends to be higher in the morning than in the evening, when fishmongers are anxious to return home.”

On private property, he made the following remarks:

“To secure initial startup capital for commercial operations, African natives turned to two traditional sources of finance. One was the ‘family pot.’ Each extended family had a fund into which members contributed according to their means. Among the Ewe seine fishermen of Ghana, the family pot was called agbadoho. Members borrowed from this pot to purchase fishing nets and repaid the loans.

The second source of finance was a revolving credit scheme that was widespread across Africa. It was called susu in Ghana, esusu in Yoruba, tontines in Cameroon, and stokvel in South Africa. Typically, a group of, say, ten people would contribute perhaps $100 each to a fund. When the fund reached a certain amount – say, $1,000 – it was distributed to members in turn, who invested the cash in an enterprise. The Grameen Bank in Bangladesh was built on this concept of a revolving rural credit scheme.

Profit made from these economic activities was private property; it belonged to the traders, not to chiefs or rulers. The traditional practice was to share profit. Under the abusa scheme devised by cocoa farmers in Ghana at the beginning of the twentieth century, net proceeds were divided into three parts: a third went to the owner of the farm, another third went to hired labourers, and the remaining third was set aside for maintenance and expansion. Under the less common abunu system, profits were shared equally between owner and workers. Variants of this profit-sharing system were extended beyond agriculture to commerce and fishing.”

Both trade and private property in this context converged to form what Ayittey calls “peasant capitalism,” a distinct form of capitalism that was structured around clans and based on profit-sharing. It operated within an environment where clans had the economic freedom to engage in a wide range of economic activity without seeking permission from traditional authorities.

One must add that this form of capitalism differed from modern capitalism in that it was not primarily characterised by wage labour systems that drove large-scale individual accumulation, particularly in the context of the Industrial Revolution in the Western world.

Ayittey further notes that, with the exception of parts of Central and Southern Africa where colonial regimes did not confine themselves to urban enclaves and instead attempted to control indigenous economic activity, peasant capitalism largely thrived in West Africa where local populations were able to continue their economic activities and generate prosperity.

The post-colonial rejection of markets

The situation would change significantly in the post-colonial era when leaders such as Julius Nyerere assumed power in newly independent states and rejected capitalism in favour of various socialist projects such as Ujamaa that destroyed indigenous forms of capitalism and contributed to economic decline and poverty.

Over time, a culture of hostility towards Africa’s heritage of markets, trade, and private property was cultivated by a generation of leaders who expanded state ownership, control, and intervention in the economic life of Africans.

So, is capitalism unAfrican?

Today it is not far-fetched to argue that markets, trade, private property, and even the very idea of profit-making are still viewed with suspicion in many circles. They are often treated as inorganic Western concepts that are somehow incompatible with traditional African value systems. Wealthy individuals, even those who have generated their wealth through enterprise and by creating value for society, are also viewed with suspicion.

And so, one returns to the question that was posed at the beginning: is capitalism unAfrican?

The easy and simplified answer may be yes. But the more complex answer is that capitalism arguably did exist in indigenous forms in pre-colonial Africa. This was, of course, not modern capitalism as it is conventionally understood, but it was nevertheless a form of capitalism that was built around private property, trade, and markets.

What this means is that the discourse surrounding capitalism as some inherently foreign Western ideology is historically inaccurate, overly simplified, and ultimately counterproductive. It has contributed to the reluctance of many black South Africans to embrace free market policies because such policies are viewed as being alien to their value systems.

Markets remain the most consistently proven mechanism for generating wealth and reducing poverty across the world. If South Africa, and Africa more broadly, is to achieve meaningful economic progress, there must be a recognition that there is nothing inherently unAfrican about capitalism. Far from being alien to the continent, elements of it have long formed part of Africa’s own economic heritage, and they may ultimately prove essential to its future prosperity and liberation.

Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is a Policy Officer at the Free Market Foundation.