The curious case of domestic capitalists in Africa: towards a political economy of diversified business groups

ABSTRACT

Existing models of capitalist transformation have nearly always prioritised an analysis of domestic capital in shaping economic trajectories. Yet, even as industrial policy has been re-imagined in Africa, the potential contribution of domestic capital has remained marginal in academic analysis and policy discussions. The prevailing assumptions are that African capital is either non-existent or too weak to influence the policies of African governments. However, there is evidence within nascent literature that large African-owned businesses continue to influence the trajectory of capitalist transformation within their countries. This paper examines why the study of African capitalists – popular in the 1980s and 1990s – has remained dormant. This paper makes the case for analysing the politics driving the activity of large African-owned firms through researching the politics of diversified business groups (DBGs). Arguing that DBGs are the predominant form that large-scale domestic investment takes on the continent, the paper introduces an inductively-informed typology of African DBGs. The framework shows how domestic political economy (and the politics of state-business relations, in particular) shapes the form and trajectories of diversification of domestic business groups.

KEYWORDS:

• State-business relations
• business
• diversified business groups
• capitalists
• Africa

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 This scholarship assumed the most pessimistic arguments of dependency theory. For a more nuanced discussion of dependency theory, see Kvangraven (2020).

2 See Taylor (2016) and Cramer, Sender, and Oqubay (2020) for a critical discussion of Africa Rising narratives.

3 See Ouma (2019) for a critique of ‘Africapitalism’.

4 Fick’s (2002, 2006) books on African entrepreneurialism exemplify this shift where training in American universities is perceived to be of benefit before they return to start businesses in their home countries.

5 See Hallward-Driemeier and Pritchett (2015) for a critique of the World Bank’s Doing Business Index.

6 Interviews, Rwanda Private Sector Federation, May 2013 and January 2015; Annual PSF reports.

7 DBGs are defined as ‘a set of legally distinct firms that operate in three or more unrelated business activities and that are subject to centralised control, usually through significant equity holdings or other financial connections’ (Schneider 2009, 180–181).

8 Van Donge (2002) describes Banda’s Press Corporation as Africa’s chaebol. There are also other examples of DBGs, owned by political families. See Taylor (2012) for former Malawian President Bakili Muluzi’s business interests. The relatives of several serving and former Presidents also own DBGs. For example, Leo Mugabe (son of former Zimbabwean President Robert Mugabe) and Zacky Nujoma (the son of former Namibian President Sam Nujoma).

9 Schneider (2009).

10 See Cramer (2001) on Mozambique.

Additional information

Funding

This work was supported by the University of Manchester's Hallsworth Research Fellowship and the United Kingdom's Department of International Development (through The University of Manchester's Effective States and Inclusive Development Research Centre).

Notes on contributors

Pritish Behuria

Dr. Pritish Behuria is a Lecturer in Politics, Governance and Development at The University of Manchester's Global Development Institute. He has previously worked at The London School of Economics and Political Science and SOAS, University of London. He completed his PhD in Development Studies at SOAS in 2015. His research investigates the political economy of development, with a specific focus on industrial policy, finance, state-business relations and energy transitions.