Oromian Economist

Exploitative Investment Opportunities In Naked Africa November 19, 2013

“Free market works only if there is no asymmetry. For there to be a free market and pure capitalist growth, there must be a powerful judicial system, corruption must be minimal, competition must be protected and preserved and oligopolies, banned. With these pre-conditions being scarcely present, will it be reasonable to promote capitalism in flagrantly corrupt, oppressive and deprivation riddled Africa?” –Dr. Peregrino Brimah

“Typically, narratives about Africa have been shaped by non-Africans and not been particularly complimentary. Whether through images of emaciated children fending off flies from their faces or stories of wild-eyed assault-rifle toting warlords, Africa for many has become synonymous with poverty, helplessness, and hopelessness.But in recent years, these stereotypes have been increasingly challenged by proponents of new narratives, ones that seek to reclaim Africans’ agency and emphasise the continent’s positive trends. Evangelists of these new discourses are often Africans themselves and aim to articulate the visions, histories, philosophies and aspirations of Africans, that have for so long been suppressed and misrepresented on the global stage. …One feature of many African economies which continues to define Africa’s relationship with the global economy is its continuing dependence on foreign aid. While Ethiopia is heralded as one the continent’s rising stars, for example, some estimate that 90% of its annual budget is derived from donor funding. Meanwhile Malawi, another aid darling, gets40% of its national budget from foreign benefactors.” Think Africa Press

The following is  interesting and timely debate on issues of Africpitalism and whether free market system is working in African environment of flagrant corruption, absence of rule  of law, minimal competition and oppressive politics.

‘Africapitalism sounds exciting, but before capitalism can be approached, there are prerequisites. The United States sells bonds and these are purchased based on “trust”. Trust is key in a successful capitalist society. Can we say that Africa has gotten to a stage where trust exists? Many will disagree. Can there be a free market where there is no middle class? This is the reason why the United States gives monthly employment records. There are two factors that predict the success and viability of capital societies—the employment report, which indicates purchase power; and the tax system.Nigeria was recently reported as the only country in the world where illicit cash flows were more than taxes paid. The rest of Africa shares these parameters. What is the suitability of capitalism in such societies? How does it benefit society and government? With unemployment levels in high double digits in sub-Saharan Africa, is capitalism the next best venture for such economies? Who will buy non essentials? This is where the bordering-on-insensitive reality of today’s Africapitalists features. As, in reality there are no jobs and no middle class, capitalists in Africa focus on investment and maximizing profits in essential utilities and not unessential/luxury items as obtains in Europe and America.“Utilities” like power, water, construction materials-cement, communication and even roads are the sole ventures the Africapitalists have invested in, knowing well that only in these areas can they secure sure sales and tasty returns on investment. It takes a certain amount of innovativeness and skill to develop a “luxury” non-utility product, market it, compete in a free economy, sell it, and to provide customer service and support for it. Africapitalists do not venture there. They simply work with their friends in the government to handle essentials of existence: Transportation, communication, power and construction. They have no marketing skills or plans. They lack innovative skill and intent. Thanks to government enforced monopolies; they have a simple secret of success and market schema—construct or die. Drive or die. Communicate or die. Eat and drink or die. Power your property or die. Their success is enforced by the government in top-down policies, banning all small business and middle men competition. In the Africapitalist expert, Elemelu, CON’s report, he mentions that he believes government should enable private sector growth with equity and transparency, without top-down management. The question to the Guru’s theory is—will he and other Africapitalists venture into any of their recent investments, like cement, mobile communication and power if they were not assured by the government of a dissolute top-down, authority enforced oligopoly to disable competition and enforce purchase at their rather, ridiculously inflated prices? Here we detect possible untruth and hypocrisy. The recent (November 13th, 2013) Afrobarometer report, surveying 51,000 Africans found that over half felt their governments did a shoddy job of controlling corruption. Currently at 54%, this was an increase from 46% 10 years ago. In contrast to the wealthy, poorer status was not surprisingly linked with greater reports of corruption and distrust. Apparently, Africa’s rich are invested, beneficial and insulated partners in the corruption. What will a campaign of ravenous capitalism predict for the future of the people with the present corruption parameters? Is there a safety-net for the poor of the continent?Publishing on a so-called Africapitalism is the bold promotion of a personal interest and brand. This is expected in the interest of self-preservation, but is clearly not honest and reflective of reality and not in the best interest of the continent, at this point in time. What is beautifully branded and offered is get-rich-quick, risky but equally rewarding, exploitative investment opportunities in naked Africa. The growing gap between the rich and poor in Africa only promises to be expanded as capitalist development is culturing underdevelopment in the continent by reinforcing exploitative dependence. The greed and selfishness of capital accumulation and market profit-seeking have been at the root of divisionism, ethnic chauvinism, tribalism and dissension in Africa. With this new Africapitalist push to divert Aid funding and foreign investment, the money that is touted as supporting the continent’s poor, is now being incriminated in financing bloody political divisionist and ethno-fractioning campaigns that the private big business sector is historically credited with in Africa’s struggling and prone democracies. An important question to ask when considering Africapitalism is; where does the Africapitalist want to take Africa to? It is important to define what the expected outcome of Afrocapitalism is, as with any other mantra, venture or policy. This end direction is hard to deduce reading through all the current material on Africapitalism. Is it all about ensuring profit for business? Is the goal the provision of jobs to Africans? Is the goal, the development of Africa?Most perturbedly: Is there a single Africapitalist product, solid and competitive enough that it has/is/can be marketed outside Africa? Is the goal of the Africapitalist, global export or rather a closed exploitative marketing to Africa, like the historic “Robber Barons” of 19th century USA?The Afrocapitalism agenda appears to be marketed toward foreigners, in soliciting foreign investment in Africa, or actually, the diversion of Aid money into African big corp. One must agree it is a great pitch for diverting the foreign Aid money through the cabal. A really super pitch! We must thank Dambisa Moyo’s “Dead Aid” –for rightly criticizing Aid—and the Nigerian “sharper” mind for this latest cabal “hustle.” That Aid money must not be lost, right?Why is democratic Africa suddenly appealingly marketed to foreign investors by its Africapitalists —with evidence— as promising quadruple the return on capital investment and bonds? The answer is simple. It is the result of the “trust,” not of African governments or clime, but of the mutually beneficial, co-dependent relationship between the political leadership and their private sector sponsors. Government radical support for oligopolies and total lack of regulation of private-sector provided utilities creates an atmosphere for frank exploitation of the masses. End utility-essential products are sold at terribly inflated, quadruple global prices to the poor who have no protection and are allowed no alternative.Talking about protection and dependency: If/when we open our doors to foreign Africapitalists, the so-called “philathrocapitalists,” are we going to encourage our farmers to sign-up for the “Golden rice,” and “WEMA,” genetically modified, patented seeds from Monsanto and the Bill Gates foundation, which will make them loan dependent in order to purchase new modified, dangerous seeds every year, eventually further crippling and destroying the farming sector? Haitians burning donated Monsanto seeds despite their post-quake hunger, comes to mind. Will the cabal protect us from hurt and extortion? This has not really been the strong point of Africa’s rich men, has it?We ask earnestly; what system exists for the protection of the masses? Even the United States, the capitalism capital of the world is being shut-down due to capitalisms shortfalls. The Occupy Wall street protests which were brutally quieted, which exhibited 99% protesting against 1% who virtually control 99% of US income, is a pure demonstration of the result of capitalism; and this in a society that has some regulations.In the US, corporate bodies, aka, Wall Street virtually controls the government. The least Africa can do is learn from the tribulations of others, which have led to a global recession that continues to cause massive unemployment, austerity and suffering in European nations , than utilize and advertise Africa as the next and last frontier of capitalist invasion.There is no food on the continent. There is stark corruption. There is poor governance. There is marked inequality. Purely capitalist ventures have been proven to never alleviate these issues, but to only foster greater deprivation, corruption and poverty while in the job-creation regard, they only provide transient slavery-like employment status for a few, while for the majority, they cripple small businesses and lead to greater job insecurity and financial dependence. Are we thinking about environmental economics? Economics of the poor? What is the sense in manufacturing cars, while we import rice? (Both ending up at more expensive prices than if we did it the other way around.)There are different types of economies. There is the China model, which is a manufacturing economy. In China, the government has supported millions of cottage industries which compete freely and are protected by the government and assisted in exportation of their products around the world. China today is one of the strongest economies in the world.A focused Dubai has a thriving trade and tourism economy. The state runs a “centrally-planned free-market capitalism” system, and this government controlled system has fostered growth with only 3% revenue from oil. A responsible government which monitors and ensures a favorable and stable society for foreigners, has sustained Dubai among the UAE states. Dubai did these things in less than 5 years. Can we not likewise develop systems tailored around our competitive and progressive advantages, without selling the people?What is in the best interest of African nations? There is great land, there is great resource, and most of all, there is the invaluable human capital. Is it to maximally exploit the continent in capitalistic ventures? Or to develop the human potential, to exploit the land and resource while ensuring the proper appraisal of Agricultural and mineral produce to promote individual and communal wealth that can now, while protected by the government, foster small-business growth and national growth? Or is it to empower a handful of super-rich Africans and their foreign invited investors to operate “toxic” industrial monopolies which will employ a percent of the population in perpetual bondage, and then maximize profits by government enforced oligopolies—marketing essential utility goods to the large catchment African population? Evidently, Africapitalism should be seriously reconsidered and debated. Before we fight to put Africa’s Aid into the hands of the Cabal and put “capital” and “profiteering” first, how about we put, “eradicating corruption,” “people,” “land,” “small business” and “Innovation” first? Trade was not invented yesterday. Common, we are all businessmen. Yes, the government must support industrialism, but not in discriminatory fashion, with advantage given to the Oilgarchs. My challenge to the Africaptalists: Let us see you produce and successfully market a single non-essential product or service within the environment of a free market to Africa and abroad. Generate power and sell it competitively, without first buying the nations grids and inhibiting state and populace power generation and sale. Manufacture cars and compete in their sale, without first banning the importation of “tokunbo” vehicles. Then we will agree that you are truly and honesty engaged in “powering Africa.” And to us commoners, we can’t sit and keep blaming the Cabal for coming up with these master schemes, each and every time. The Cabal can only think the way they know how. We the people need to rise up fight and challenge and chart our own course. Africa does need its founding fathers to develop its “strategic vision,” but not of these crop. For now, when it comes to a choice between being a slave for a white master—through Aid— or slave for an African Cabal, I think we humbly choose neither. If you want, you can keep the Aid, but please, never use it to empower those that got us and keep us “here,” any further.’

Read  the full article from:

http://saharareporters.com/article/africapitalism-good-or-bad-africa-dr-peregrino-brimah

http://en.wordpress.com/read/post/id/56832612/24/

‘According to Dambisa Moyo, Zambian economist and author of Dead Aid: Why aid is not working and how there is a better way for Africa, Africa has received at least $1 trillion of development-related aid from developed countries over the past 60 years, and this has not only flattered prognoses of African development, but fostered dependency and perpetuated poor governance. Although aid may be beneficial in the short-term, so long as African nations are dependent on overseas aid for public services and development, buoyant Africa rising narratives seem premature. Economic growth so heavily bolstered by overseas aid cannot be organic, stable growth. Furthermore, this ongoing dependency perpetuates a global power imbalance between North and South. Too often, African leaders attend international conferences not in the hope of contributing to discussions, but to ask for aid. And as long as external donors have such sway over national budgets, Africa will not be able to stand on an equal footing with the rich world….But Africa’s finances are not only undermined by where they come from, but where they go. With regards to both development aid and finances generated from Africa’s vast minerals resources, money is often illicitly siphoned off to lubricate patronage networks rather than going to the most needy. A study released this May by the African Development Bank and Global Financial Integrity revealed that from 1980-2009, Africa lost up to $1.4 trillion in illicit financial outflows – whether through corruption, tax evasion, bribes or other criminal activities. This figure, as Obadia Ndabapoints out, is more than three times the total amount of foreign aid received over the same period. Nigeria is reported to have lost over $400 billion to oil corruption alone since independence in 1960. These figures are particularly staggering when one considers the majority of sub-Saharan Africa’s population live on around $2/day.’ http://thinkafricapress.com/development/lessons-africa-rising?utm_content=bufferae09b&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer

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