Another reason why Africans should own their own resources

man-40134_640Last week a well written article appeared on Al Jazeera arguing against the false and somewhat misleading picture of Corruption that is often put out by the western media. In it, it was suggested that over $900 billion a year is lost from developing to developed nations through tax evasion and illicit financial outflows. While this is a major problem for Africa, as was pointed out several years ago by Kofi Annan here, another reason which results in these outflows is that very few major industry (million dollar revenue generating) in Africa is in fact owned by Africans.

The combination of imperialist colonial legacies, poverty, a lack of capital, insufficient education, corruption, plain hypocrisy and other factors has resulted in a state of affairs whereby even capable Africans find it hard to buy into and run their continent’s biggest industries. While there are many Africans doing well in business throughout Africa, they are by far in the minority, and comparatively too few of them on the ground, than say the number of Canadians who own and control multi-million pound ventures within Canada, or say the number of Portuguese who own and control multi-million dollar companies in Portugal.

Thus, this picture inevitably creates an opportunity or gap for foreign corporations and investors to come in, and sweep away ownership of the whole lot – armed with huge amounts of capital. No surprise the profits end up everywhere else but in Africa…

In my view, far from the land grabs of Robert Mugabe (which others have tried to justify – see here and here), another reason in support of more Africans owning their continent’s industry is that doing so could mean that large amounts of money remain on the continent, to be used for education, health  -building hospitals and providing good wages for doctors, eliminating poverty, fighting corruption, policing and security, building infrustracture, improving the plight of women, investment in the youth, creating jobs, etc. It means essential capital is not being wired out to already rich countries. This in my view is a better strategy against poverty, than aid and handouts, whose monies are comparatively miniscule to the monies being siphoned from Africa.

According to the website of Britannia Mining Inc (a US company with operations in Canada and Malawi) here, the Nthale Iron Ore surface deposits which they found before 2009 are estimated from their geological survey to be at least 4.6 million tonnes in quantity. As often happens with these things, especially if we focus on the word ‘Surface’,in practice the deposits can be far larger than the estimate.

Last Friday, on the 7th of February 2014, before close of trading the price of Iron Ore on the international market was hovering around $125 per ton (see latest figures here). Whichever way this price goes (whether up or down) the next few years, 4.6 million tonnes at $125 per ton is still worth at least $575 million, a hefty sum by any measure. Even if we go with the 68% iron ore component indicated on their website, that’s still worth $391 million

Suppose Britannia Mining invested $100 million into Malawi, to cover processing the Ore, overheads including construction, logistics, wages, corporate governance activities, etc, (and it was proved that they had indeed invested such sums because sometimes businessmen overestimate the level of investment when the truth is much lower) I’d think the benefit to the Britannia would be significantly higher and disproportionately in their favour than in the favour of Malawians. Looking at previous examples of resource conflicts involving corporations in Africa, I seriously doubt that first they would invest such sums. Further, I doubt that Malawians or the Malawian government would benefit equally or at least proportionally from the resource. Which begs the question, who actually owns the resource?

As many others have opined elsewhere (see this for example), the unrestrained greed and unguarded capitalism of western businesses in Africa is causing a lot of damage and harm to Africa, and Africans. And that’s even before we get to what China is doing…

Even if the market price of Iron Ore dropped to say below $100, (say it dropped to $65, which is highly unlikely – the last time it hit $100/ ton was back in Aug 2012, and that was only for a very brief period of time), there would still be at least $300 million worth of deposits to be mined.

Don’t you think if the company that was exploiting the deposit was owned or part-owned (say 50%) by the Malawian government, or a group of Malawians, that the majority of the benefit of the resource would remain in the country, as opposed to being wired out of Malawi?

Post Paladin, and the tax outrage they caused when it was revealed that the Malawian tax authorities were missing out on tax revenues worth $200 million, how much tax have Britannia paid to the Malawian government so far, and how much have they made out of Nthale? The reason that question is crucial is because no level-headed Malawian is keen to see Malawi descend into a chaotic easy target where rich corporations (which are already wealthy and well resourced) come into the country and make billions, while the local population remains poor.

And if governments across the world do not speak against unrestrained greed, who will, seeing most governments in Africa are headed by people who have neither the will nor inclination to do so…?

Kenyatta + Branson
image from https://www.facebook.com/myuhurukenyatta

In my view, Africa needs trade partners who will help rebuild the continent, and not those looking for a quick buck, irrespective of the ethics of the means of acquiring that buck.

If you are looking to make money quick, stay away from Malawi. We don’t want get rich quick capitalists or investors. What Malawi needs are Responsible Capitalists, as opposed to a Liberal and unguarded Capitalists – a badge which brings to mind Halliburton’s Iraq heist (or even ILLOVO’s tax avoidance fiasco –  ILLOVO [which is British owned via Associated Foods Limited] is  company that last year posted a 43% rise in profits per share), an incident which it is fair to say has probably been responsible for not only much suffering, but also global unrest.

Depending on who you ask, its undeniable that corporate wrongdoing is currently happening, and the continent of Africa is being systematically ripped off. Yet there has to come a time when the tide turns, and the wrongdoing is forced to stop (sadly it’s not going to stop voluntarily). In the words of the African Development Bank president Donald Kaberuka here:

“The reality is, Africa is being ripped off big time …Africa wants to grow itself out of poverty through trade and investment – part of doing so is to ensure there is transparency and sound governance in the natural resources sector”

In my view this means rectification, and possibly includes learning lessons from those whose policies do not exacerbate the already bad situation; lessons from the likes of Brazil instead of blindly accepting unfair and discriminatory terms from organisations such as the IMF – whose policies towards the poor countries couldn’t be said to be favourable for local ownership of industry.

Maybe Malawi’s mining sector has more to learn from the likes of Vale and Debswana. Debswana is 50% owned by the Botswana government and 50% owned by De Beers. Vale is the world’s biggest producer of Iron Ore, and their profits recently doubled (Interestingly, in the same article Vale says the price of Iron Ore would hit $130 per ton, which it did, confirming the plausibility of my above little theory). They’ve seen an increase in production, which last year hit 73.4 million tonnes of Iron Ore. They are also a major tax contributor to the Brazilian government, with recent tax payments of $9.6 billion, far greater than anything any corporation have had to pay to an African government.

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Same **** different players

So the cowboys have finally taken to the dock. After that fateful night in April plotting to effectively hijack the presidency, an unconstitutional coup that was only prevented by the combination of the fury of discerning Malawians, and the true patriotic knight that is General Odillo – a man every Malawian should be thankful to – the midnight six are now facing charges of treason.

But putting aside the case itself, what I’ve never been able to comprehend is this: While this case is ongoing, why are DPP supporters still betting on Peter Mutharika for leadership? Is DPP’s part of Malawi really that short of people, and leadership, such that they continue to fawn at a man who flew the dead and rotting body of his brother to South Africa, and count on him as a presidential candidate?

NewsTo be frank, as a Malawian, I really wouldn’t want to be associated with a country whose president has such a dodgy and inhumane history. Not in a 21st century post dictatorship democracy.

When Bingu was a president, I supported him. I’ve never believed in the backward, cheap and regionalistic politics of only supporting people from your village or region because such is what causes underdevelopment in Malawi, since people vote for incapable candidates because they are ‘Mwana wakwithu’. Mwana wa Mayi…its absurd, and Malawians must move away from this type of thinking to a logical position where they vote for competency, not along tribal or regional lines.

Anyway, despite being a northerner, I supported Bingu, after he began DPP, because he represented a fundamental shift from the cheap, corrupt and brutish voter-rigging, empty rampaging charade of acheya’s UDF. Having said that , my family didn’t like Bingu  because they didn’t know him and thought he would turn out to be just like the others before him, making promises he wouldn’t be able to fulfill. They had their reasons.

But Bingu did well in his first term of office. He began to actively target corruption (see this brilliant tribute by Yves Kalala), and indicated an interest to spark economic development and improve education and research. Despite the high expense, the FISP programme proved a success, and from around 2006 created a huge surplus (1.3 million Metric tonnes) for Malawi, increasing food availability and transforming Malawi into a grain exporter. Malawian harvests became a global model. Bingu began promoting gender equality and had several female politicians hold high political office – including Joyce Banda. Bingu made a stand against some western policies, which at times have been selfish and not exactly in the best interest of poor Malawians.

But when his second term came, after a 66% majority, and the whole Mulhako Wa ALhomwe thing (which to me is a divisive initiative a sitting president shouldnt involve himself too much in); add  Mulli and Mota Engil to that and I found myself doubting where the man was going.  I couldn’t support a figure who was increasingly becoming divisive.

There were some things I still believe Bingu was right about, even towards the very end. The issue about currency devaluation was a hotly debated topic, and even experts disagreed on whether devaluation was the best course for Malawi to take, considering its circumstances. Then there was the story about energy generation – to buy from Mozambique (and be  a recipient of electricity which you didn’t control, while the Mozambicans made money off your head – kutidyela masuku pamutu) or for Malawi to generate its own energy(he chose the latter – and he was absolutely right)

What he was wrong about was becoming a divisive figure, the attacks on civil liberties and CSO’s, including the question marks over the death of Robert Chasowa. The intolerance  and heavy-handedness that led on July 20, 2011, to the death of 19 demonstrators. The blind eye paid to corruption that saw millions of dollars looted. The close links with Mota-Engil and Mulli – companies which under Mutharika’s leadership won many substantial contracts. All this isolated many well-meaning Malawians who had initially supported Mutharika, when he fell out with UDF. Bingu’s own indiscretion blurred his reputation even more.

Today, we have a different problem in Malawi that is somewhat linked to the problems of those days. When Bingu ignored the advice he received regarding the IFMIS, he either did so knowingly, or he did so because he was trying to appease some people within his circles. Whatever his intention, he was wrong not to address the issue, which today we are told is in fact responsible for the looting of millions of dollars, this time under Joyce Banda’s government.

The plot is intoxicating and the revelations keep pouring in. Yesterday another version or appendage to the story sprang up. Here, I would call upon the auditors looking into the cashgate scandal to take note of what Mphwiyo’s wife is alleged to have said. After all, wives generally do get to know a lot of their husbands’ dealings:

What Ralph Kasambara knows and the reason he wants JB [Joyce Banda]. Mpinganjira,Cecilia Kumpukwe to be his witnesses [ in his court case] is that Lutepo withdrew K4 billion with the help of Chuka and together with Cecilia deposited the money into the Joyce Banda foundation accounts.

Ralph’s role was to explain to Chuka the legal implications of disobeying the president if he was going to say no and consult regulatory bodies. Zonsezi zimachitika [All this was happening] the same week Mphwiyo was shot.

Nde Now aMphwiyo asked Ralph for his cut since he had to be made aware of the transaction and Ralph refused to comment citing presidential confidentiality agreement.

Mukumva? [Are you listening]

thats when they labeled him a liability and had to be eliminated.This is according to Mphwiyos wife… Who also mentioned Manganaue Mphande to be one of many people who visited him in an SA hospital…nkhaniyi ndiyayitali [this story is long]….

a few days ago, someone else said:

Mr. Lutepo had a joint contract with Roy Kachale, to supply transformers to ESCOM. They were supposed to be paid K1,356,000,000.00 (K1.3Billion). Transformers were delivered on 13th September, 2013. Allegedly, award of this contract flouted some procedures and ACB was supposed to interrogate officers at ESCOM headquarters on Monday, 21st October, 2013 after a tip-off from ESCOM employees. Those doubting this information can cross check with MRA, where Mr. Lutepo cleared four 40 feet containers of ESCOM Transformers. AMALAWI TSEGULANI MASO! (Malawians open your eyes!)

And it gets worse, with another group here speculating that they may have been responsible for burning down Escom house???

Who do you believe in a country where some opposition journalists live in fear, or are under intimidation, so cannot do their job properly!

Hopefully, time will tell what is true or what of everything I’ve written regarding this scandal is infact mere speculation. At that point count me in as one deceived by liars!

Time will tell where Malawian politics goes from here, however, knowing how  things have worked in the past, we may never know the full story…we may never know the whole truth. Especially with shady PR organisations being hired (see here) at a cost of millions of tax payers kwachas (at a time when there are no medicines in hospitals, and thousands of teachers have not been paid) to paint false reputations, how should anyone be able to distinguish fact from fiction, or indeed put their leaders to task?

teachers

My message to anyone outside Malawi who truly wants to  know what is going on in Malawi is this: –

IF YOU CAN AFFORD IT, PLEASE GO THERE, AND SEE FOR YOURSELF!

DON’T TRUST ANYONE, CERTAINLY NOT THE MEDIA AGENCIES ACROSS THE WORLD OR IN MALAWI – there are strong indications of a conspiracy going on. Mercenaries with devious intentions are about, pulling strings.

DON’T TRUST ANY NEWS AGENCY-SOME OF THE VOCAL ONES (INCLUDING ONLINE PORTALS) HAVE ‘SOLD OUT’ AND ARE ON THE PAYROLL OF POLITICIANS, OR HAVE AGENDAS.

DON’T EVEN TRUST THIS BLOG! PLEASE DON’T.

GO INTO THE HOSPITALS, THE VILLAGES AND THE SCHOOLS, GO AND SEE FOR YOURSELF WHAT IS HAPPENING IN MALAWI TO KNOW THE TRUTH

HEAR IT FROM THE PEOPLE, AWAY FROM PR GURUS ON POLITICIANS’ / GOVERNMENT PAYROLL, AWAY FROM COMMENTATORS,  PARTY SUPPORTERS OR SPIN DOCTORS WITH QUESTIONABLE AGENDAS