Are foreign investors problems or solutions in the Ebola crisis?
For months, the news out of West Africa has been unrelentingly grim. As of Jan. 18, the devastating Ebola epidemic had infected a reported 21,724 people and killed 8,641, according to the World Health Organization (WHO); the actual toll, which would also account for unreported cases, is presumed to be even higher. Order has broken down in some towns and villages, and entire families have been wiped out. In Sierra Leone, Guinea, and Liberia, seeds of economic growth that only recently seemed so promising have been threatened, suddenly, by catastrophe. The cost of the epidemic is likely to hit at least $3 billion by the end of 2015, according to recent World Bank estimates.
Yet there have been glimpses of good news amid the tragedy, including some emanating from unlikely sources: multinational companies that play an outsized role in West Africa’s economy. At its vast plantation and company town in Liberia, for example, rubber producer Firestone — which accounts for around 60 percent of the country’s rubber exports — built two isolation clinics after an employee’s wife contracted the disease, converted pickup trucks into ambulances, and enforced a “no visitors” policy, intended to protect its 8,500 workers and their 71,500 dependents from contact with the sick. By October, the company reported that no cases of infection remained on its plantation. Steel giant ArcelorMittal, whose planned $1.7 billion iron-mining project in Liberia — now delayed because of the epidemic — will eventually cost nearly as much as the country’s entire GDP, moved with similar efficacy, educating its workers about the disease, creating buffer zones around its property, and constructing medical facilities staffed with trained personnel. As of November, the firm’s sprawling community of 500 square miles and 25,000 people had seen only one fatality.
Under normal circumstances, neither Firestone nor ArcelorMittal is accustomed to getting much positive press out of Africa. Firestone has been attacked for allegedly channeling funds to Charles Taylor, the murderous dictator who ruled Liberia from 1997 to 2003, and ArcelorMittal has faced accusations of twisting arms and gaining unfair advantage — including a preferential tax regime — with regard to the granting of its 25-year mining concession. Moreover, some critics have blamed all of West Africa’s extractive industries for helping to spark the Ebola epidemic in the first place. The logic here is straightforward: As firms harvested resources or made way for open land, they inevitably cut through forests, reducing their mass and forcing wildlife into areas of human habitation. As a result, animal-borne viruses such as Ebola could jump more easily and ferociously to humans, spreading along the networks of commerce and transportation that the firms also helped create.
As the Ebola epidemic continues to rage, therefore, foreign investors such as Firestone and ArcelorMittal find themselves cast on both sides of a complicated, perennial debate: Are multinational firms part of the problem in epidemics and other crises in Africa, or part of the solution? Do they help poor countries on the path to development, or only hurt them?
As is so often the case with delicate relationships, the answer to these questions is simultaneously yes, maybe, and a little of both. That’s because the underlying reality is murky, shaped not only by foreign firms’ undeniable power, but also by their host countries’ lack of it. Or, put another way, one of the reasons firms appear to have responded so efficiently to Ebola is that the governments of Guinea, Liberia, and Sierra Leone have responded so poorly.
To be sure, Ebola caught everyone by surprise; even the United States and Spain arguably bungled the first cases that reached their borders. But Guinea, Liberia, and Sierra Leone were stunned by the sheer enormity of the crisis and their lack of capacity — financial, technical, medical, and even military — to do anything about it. This relative incapacity stems not from their relationship with multinational firms, but from their recent historical legacy as very young, very weak states. Liberia and Sierra Leone are just over a decade removed from ruinous civil wars, while Guinea has been plagued since independence by civil strife and a string of military coups. None of these countries has managed yet to build independent political parties, strong government institutions, sound infrastructure, or robust civil societies. Based on the most recent data, all rank very low on the World Bank’s scale of government effectiveness, scoring only in the 12th percentile (Liberia), 11th percentile (Sierra Leone), and 9th percentile (Guinea).
In comparison, it is telling to note where Ebola has not spread: Nigeria and Senegal, for instance, where democratically elected governments are slowly starting to acquire legitimacy and administrative competence. As soon as these countries registered cases of Ebola, their governments implemented quarantines and swiftly tracked all possible contacts. In Nigeria, only 20 people contracted the disease before the WHO declared the country Ebola-free; in Senegal, not a single transmission occurred.
This contrast says a lot about the complicated balance of power between firms and states in post-colonial Africa: When states are weak and crises emerge, resident firms inevitably fill power vacuums, for better or for worse. When states are strong, however, the role of foreign investors — for better or for worse, again — inevitably declines. In Botswana, for instance, diamond mining has long accounted for the vast bulk of economic activity. But as the country has become stronger and more stable — today, it ranks in the 67nd percentile of the World Bank’s scale, and the World Justice Project says it has the strongest rule of law in sub-Saharan Africa — the South African firm De Beers has gradually ceded control of the diamond industry to the government and local investors. And thanks to progress since the 1994 genocide, Rwanda — which now sits in the World Bank scale’s 53rd percentile — has managed to woo foreign investors but also keep them from exerting too much control over industry and politics.
In the end, the threat of Ebola is so dire that the world community would be foolish not to deploy whatever lines of resistance are available. That includes the WHO, Doctors Without Borders, armies, volunteers — and, yes, even rapacious extractive industries. Because the problem here is not the power of foreign firms. It is the weakness of local states.
Illustration by MATT CHASE