Skulls over economy – Zimbabwe’s case of misplaced priority

Skulls over economy – Zimbabwe’s case of misplaced priority

Recently street vendors in Harare were given an ultimatum by the government to leave the streets. But where to? Most of the vendors are graduates who have resolved to petty trading due to unemployment. President Mugabe has not only failed in achieving his campaign promise of creating two million jobs, his administration has done the complete opposite – force people out of jobs. An estimated three million Zimbabweans are currently living in South Africa as economic refugees after fleeing the country in recent years. Yet the government places priority on the return of age-long remains. Like Rugare Mudavanhu asked, will the millions of starving Zimbabweans survive on skulls?

Why Greece should build strategic alliances with African countries

After the deadlock in Europe over Greece’s debt repayments, should they now look south?

After all the flak Greece has received in recent weeks, you would be forgiven for thinking that it’s only a matter of time before the country’s PM Alexis Tsipras and his finance minister Yanis Varoufakis  throw in the towel. Since Syriza took half of the seats in the Hellenic Parliament, there’s already been a backlash against the deal which the radical left-wing party negotiated with the EU partners on 20th February. A backlash complete with anti-government marches, smashed shop windows, Molotov cocktails and torched cars.

That began in February. On Thursday April 16th, another group of protesters in the form of 4000 miners and their families, descended onto Athens’ main central square over a plan to possibly revoke the licence of a gold mine in Skouries, in the northern Greek peninsula of Halkidiki. The mine is operated by Eldorado Gold Corp, who say the revocation would halt their $US 1 billion investment project which could have created 5000 jobs.

Trouble on Friday April 17th came in the form of police breaking up a 19 day sit-in at Athens University by anti-establishment protesters.  The protesters were occupying buildings at the site for more than two weeks, demanding the closure of maximum security prisons and the release of some suspects.

Conservative and right-wing media groups also have been hostile to Syriza. Peter Martino writing for the Gatestone Institute (a New York city based think tank that specializes in strategy and defense issues, and describes itself as ‘non-partisan’) in an article mockingly titled Hugo Chavez Coming to Europe says:

The new Greek cabinet is not a friend of Israel nor of Jews. Syriza is known for its anti-Israeli and pro-Palestinian positions. Syriza politicians have frequently participated in protests against the Jewish state. Clause 38 of the Syriza party program advocates the “abolition of military cooperation with Israel” and “support for the creation of a Palestinian state within the 1967 borders.” Two other members of the new Greek cabinet, although not members of Syriza but of its coalition partner, the ultra-nationalist Independent Greeks [ANEL], are also known for their anti-Semitism. The new Greek Minister of Defense, ANEL leader Panos Kammenos, recently accused Jews of “not paying their taxes.”

He concludes with:

…The Marxist economic remedies that these parties stand for will not lead to more prosperity for their countries, nor will the transatlantic relations between Europe and the United States much improve with governments whose leaders draw their inspiration from Hugo Chavez.

Greece has been told by its EU partners that if they are to continue assisting it, it must maintain austerity measures which they prescribed – an unpopular move which effectively means Syriza trashing pre-election anti-austerity promises made to the Greek electorate.

[su_box title=”Some of Syriza’s pre-election Promises”]

  • a minimum wage restored to 751 euros ($853) per month
  • negotiated debt relief of at least 50 percent from the country’s lenders
  • an end to austerity policies that have affected healthcare spending and choked the welfare system.  [/su_box]

The IMF chief recently declined to extend an instalment repayment due date of a loan the IMF has extended to Greece, saying the country needed to work on pushing through sensible and workable reforms that will put the economy on the straight and narrow.

GreeceDebt
Source: Economist
GreeceLoanRepayments
Note: The blue line represents the repayment schedule which former prime minister Georgios Andreas Papandreou tried to negotiate

And this bad news didn’t start yesterday. Back in January, Tim Jones writing for Jubilee Debt Campaign, in an article titled Six key points about Greece’s debt lamented how the austerity pills which the IMF were prescribing for Greece have worsened the economic situation of the country:

“When the ‘Troika’ programme began in 2010 Jubilee Debt Campaign warned that this was repeating mistakes made in developing countries in the 1980s and 1990s. Bailing out European banks rather than making them cancel debts would ensure the private speculators would get repaid, whilst the public would pay the costs of having to cancel debts in the future. Austerity would crash the economy, increase poverty and unemployment, and increase the relative size of the debt. This is exactly what has happened”

He goes on to say that:

… The growth projections were extremely optimistic; Greece’s economy is now 19% smaller than the IMF said it would be, having shrunk by more than 20% since the start of 2010.

India warned that the scale of cuts would start a spiral of falling unemployment which would reduce government revenue, causing the debt to increase, and making a future debt restructuring inevitable. They did; unemployment in Greece is over 25%, with almost two-in-three young people out of work.

The combination of the crashing of the economy and the Troika debts means Greek government debt has grown from 133% of GDP in 2010 to 174% today.

The bailout and austerity programme did not take place because it was thought it would help the Greek people or reduce the size of the debt. It was done to save European and Greek banks and protect the profit of speculators.

Many others were eyeing Athens nervously even before Syriza came to power. The Germany finance minister Wolfgang Schäuble in an attempt to send a tough message that there will be no room for renegotiating Greece’s rescue package, warned that by electing Syriza, Greece was risking its membership in the eurozone.

Greek finance minister Varoufakis in Germany
Schäuble and Varoufakis – not seeing eye to eye

Since then, there have been many attempts at striking a deal that would ease the pain of austerity, but none have so far succeeded. On the 24th April, Greece’s creditors will decide whether to accept the country’s new debt proposal to the Troika.

Yet nearly 2 years ago, in June 2013, the IMF admitted that they had failed to realise the damage which austerity would do to Greece. At that time, they said:

The Fund approved an exceptionally large loan to Greece under an stand-by agreement in May 2010 despite having considerable misgivings about Greece’s debt sustainability. The decision required the Fund to depart from its established rules on exceptional access. However, Greece came late to the Fund and the time available to negotiate the programme was short.

The mistake of prescribing austerity to a weak economy has been repeated too many times over the decades for us to recount here.

By most sensible financial analyses, it is clear that Greece has been pushed into a corner by the perfect storm of a huge debt burden, a relatively small and largely undiversified economy (that has been stagnant in recent years partly due to austerity economics), corruption, nepotism and tax evasion.

Greece’s position within the Euro is even more precarious. Paul Mason, writing on 4 News puts it thus: So Syriza’s leadership is wedded to the eurozone but the eurozone is currently configured to smash Syriza

[su_pullquote] So Syriza’s leadership is wedded to the eurozone but the eurozone is currently configured to smash Syriza.[/su_pullquote]

By the terms of the previously agreed deal Greece is owed €7.2 billion, which it desperately needs to pay back loans, to pay wages and service the welfare bill. But European leaders have been reluctant to hand over the money until it is clear that Greece intends to follow through on promised structural reforms.

No wonder Varoufakis thinks that EU ministers are trying to push Greece into Default, an allegation which could be theatrical political manoeuvering more than anything else. Similarly, Alexis Tsipras’ trip to Russia was viewed by some as being no more than a bargaining manoeuvre.

Yanis-Varoufakis-om-eu

It is Syriza’s way of saying Don’t push it, we’ve got other options. It also sends a message that there’s been a clear shift in the geopolitical landscape across Europe — seen for example in Spain by the rise of Podemo; that should the EU try imposing more sanctions on Russia over the Ukraine crisis, Greece as a member of the EU could veto such sanctions.

However, one sentiments common to even Greece’s sympathisers is a realisation that if the Troika do not act to avert what is an almost certain crisis, and in the absence of an alternative cash injection from somewhere, much trouble lies ahead.

According to Ben Wright, writing on the Telegraph:

If more bailout cash isn’t released soon, the Greek government will have to start issuing IOUs promising to pay the holder in euros at a future date. It wouldn’t take long for these notes to start trading at a discount to their face value on the secondary markets. Greece would then be forced to impose capital controls preventing people from shipping real euros out of the country. It would effectively have reintroduced the drachma in all but name.

Paul Mason:

If Greece is forced into an accidental default, damage to the euro project and to the EU’s image would be massive. A central bank seen to be colluding in the bankruptcy of banks it is supposed to supervise, and willing the breakup of a currency union it is supposed to be

Amidst all these signs of impending doom, it must be emphasized that the Greek economy has for decades suffered from speculators, tax evasion, an underground economy, corruption, nepotism, and bad governance compounded by unhelpful economic policies. Syriza is in fact part of the solution that could move the country away from these ills. They are not the problem (as many on the right seem to think).

Thus, what of Greece developing ever closer trade links not only with Russia and China, but also with African countries? Perhaps as a way of reducing Greece’s expenditure and finding new markets for Greece’s exports. Imagine if Greece increased its trade substantially with resource rich countries such as the Democratic Republic of Congo, Nigeria and Tanzania.

Current problems facing Greece’s economy may present it with an opportunity to develop economic partnerships with African countries. Relationships that could solidify into greater economic partnerships down the line. There are at least five reasons why such relationships could be mutually beneficial.

1. Greece could benefit from relatively cheaper raw materials from Africa

When the IMF are demanding huge sums in debt repayment, as Greece had to fork out, the last thing the country needs is to be spending money it does not have on things that are cheaper elsewhere.

Greece could begin sourcing its fuels from West and North Africa. This year alone, the fuel import bill in Greece is expected to reach $19.5 billion. With Nigeria recently awarding most of its long-term oil contracts (worth an estimated $40 billion a year) to local companies, Greece would be best advised to partner with some of these companies in trying to lower its fuels import bill. Greece could do more by talking to countries such as Morocco and Egypt over the prospect of developing solar farms located in their deserts, although this may be a long-term consideration.

2. African countries could benefit from Greek expertise

African countries need equipment, ships for transportation of goods and people, manufacturing equipment for goods ranging from paints and cement, to chemicals and  medical equipment to name a few. Greece could also begin training doctors, nurses, teachers and other professions which are in short supply across Sub-Saharan Africa (many African countries have a critical shortage of trained medical personnel. In Zimbabwe for example, there is one doctor for every 6250 people (**2004 data) and in Uganda, the figures are one doctor to 24, 745 people). It will create jobs for Greek citizens, and will enable technology and knowledge transfer to countries in the most disadvantaged parts of the world.

For example, the UK gains £8.5 billion annually from overseas students .

[su_pullquote]More than 25 per cent of immigrants to Britain are students, compared with 20 per cent five years ago. The influx follows concerted efforts by many higher education institutions to market their wares abroad and boost their income.[/su_pullquote]

Yet with the current divisive and xenophobic rhetoric in British politics, many people who would otherwise have sent their children to the UK to study, will be looking at alternatives elsewhere; to countries where they will not be the object of racist rhetoric for every single problem that the country faces. Greece could take advantage of such a shift and position its higher education sector to attract international students from far and wide in fields such as Medicine & Health sciences, Law, Engineering, Mathematics, Physics, Pharmacy and Dentistry. And here Greece is already at an advantage. It has skilled professionals – for example, UK hosts many Greek lecturers and dentists. So it is probably fair to conclude that Greece has a sizeable pool of nationals who are not only educated, but can also speak English – meaning prospective students applying to Greek Universities will not have to learn Greek as a prerequisite to study in Greek Universities.

3. Greece should increase its exports to African countries by offering quality products at more competitive prices than those offered elsewhere in Europe.

After the fall of the Soviet Union, and the liberalisation of Eastern European markets, Greek exports to Central and Eastern Europe (CEE) increased from  14.5% in 1995 to about 25% in 2001. With a good strategy, similar trade volumes could be achieved in trade links with African economies?

Greece-Exports

Right now Greece finds itself in a place many African countries have been in for decades. Most African countries became independent after long periods of oppression in which a considerable and inestimable amount of their wealth was plundered by colonial institutions (the likes of the East India company) for the benefit of their colonial masters. After becoming independent, with no industry (so no tax base), yet huge private enterprise interests belonging to foreign nationals, they struggled to raise enough funds to finance government functions, failing to create independent institutions. The lack of money fuelled corruption and nepotism, and meant that they needed to borrow funds from somewhere (organisations like the IMF – which emphasized austerity and cuts over growth of the economy). So these countries borrowed, and borrowed, only for their debts to increase exponentially, to a point they could not be repaid, let alone serviced. Many were then asked to liberalise their economies, selling critical assets to foreign corporations, weakening yet again their already precarious positions. Debts were cancelled and replaced with more loans, but because the states owned very little means of generating an income, they still had to borrow money. Further, the corporations which bought state assets used international law and other schemes to shift profits out of the African countries, depriving these countries of critical foreign exchange and also avoiding paying tax. This vicious cycle continues until today in most parts of Africa, with austerity policies only serving to harm the poorest in society.

What was needed for those African countries soon after independence (as is what is now needed for Greece) was growth of industry and diversification of their economies (to grow the tax base). Further, they needed value addition (enabling raw materials to be processed before export – thereby attracting more competitive prices), an end to illicit financial outflows, investment in infrastructure, and the creation of entrepreneur friendly environments where innovators could thrive. Greece could play an instrumental role in helping African countries meet such aims, and in the process further diversify its own economy.

4. The countries which suffered atrocities as a result of war, colonialism and other exploitative practices need to form a strong block to demand redress to their grievances.

5,200 Kenyans have recently been awarded £21.5 million from the British government over its role in the quashing of the Mau Mau uprising, in which many of the Kenyans were tortured or abused.

Yet there remains other African countries which have for many years requested reparations for age-old atrocities, to no avail.

Greece’s claim for $ 300 billion from Germany could add more weight and legitimacy to such a movement. Greece could form a multilateral block to which other countries can join, and together they would request (perhaps via the UN) that the economic imbalances created by war, colonialism and other exploitative practices, which saw some countries gain a huge unfair economic advantage over other countries, to be squarely addressed by reparations and other measures.

5. Syriza’s socialist policies can provide a template for African countries to take charge of their economies

The compromise which Varoufakis is seeking is justified primarily because there has been a long overdue need not only in Europe but across the world to balance up the economic situation of countries, whose economies were disadvantaged by circumstances beyond their control.

For example, many developing countries have for long suffered the effects of illicit financial outflows (according to some estimates up to US$1 trillion annually) but have been unable to raise the funding, drum-up the support, or have the partnerships that would enable them to break free from the malaise created by such chains. The effect is that they fail to raise sufficient funds from tax collection to be able to invest in their economies. So there’s under-investment in almost every important sector of public spending from infrastructure maintenance and development, to education, healthcare and national security. The consequences are that crime is usually on the increase, lack of infrastructure deters foreign investment (which affects the number of jobs), and lack of resources in healthcare means most hospitals have no medicines or sufficient staff and therefore fail to function.

Today Greece finds itself in a position where a multibillion dollar bailout has gone to private and European banks (exactly the same people who created / exacerbated the 2008 -2009 financial mess Europe finds itself in). Those banks and other corporations are often the prime candidates who make illicit financial outflows happen, and who on top of the tax evasion they are already notorious of facilitating, charge high interest which impacts much smaller businesses. And yet innocent people are being forced to pay for the mess others created??

If Greece can partner with Russia and China (whose new Development Bank could be useful), and various institutions in emerging economies, they could create a strong enough lobby which will have the authority to demand a change of the financial rules that benefit corporations over developing countries.

One would hope that Greece reaches a new deal with its creditors on April 24, when the Eurogroup decides whether to accept the country’s new debt proposal. But irrespective of whether such a deal is concluded or not, maybe it’s time to look south.

/This article was first published on African Patriot Website/

Growing African economies that will work for African people

African market
Women at an African market

Tanzania just announced that it will dump English as its official language in schools, opting for Kiswahili instead. This morning, I read this article that somehow appears to suggest that this is a bad idea.

I must say I disagree, and below I’ll try to explain why.

When the colonial powers came to Africa, one of the first things they did was to impose their own languages as the language of learning in their territories. France imposed French in the various west African territories it colonised, Portugal imposed Portuguese, Holland imposed Dutch and Britain imposed English and so on. This had the effect of dividing communities which were otherwise related. The overall effect was to stop any hope of large countries the size of the Democratic Republic of Congo from ever emerging out of Africa. It was divide and rule of the purest form. Fragmentation – a cruel tactic designed to tie the future of those then colonies forever to the colonial powers.

So the english taught was not necessarily to be a conduit of knowledge transfer that would empower the colonies as some people would have you believe. Instead, it was a move to make sure that schools produced compliant subjects which could easily be manipulated, and do the bidding of the colonial masters in Europe.

And that is reason enough in my view for Tanzania to change the official language to Kiswahili, because the motive of colonised Tanzania having to communicate in foreign languages was entirely driven by foreign interests.

Secondly, groups of people often associate and define themselves as an ethnicity on various terms, but one of the most common denominators, other than ancestry is language. You identify as Chewa because your parents are Chewa and they spoke Chichewa, they lived in the land of the Chewa, their village was in the Chewa belt. Therefore you are Chewa.

This is the norm, not the exception.

So as Tanzanians, the question which the above article answers is that Kiswahili is a unifying force in Tanzania. It holds together the people, even though they are made up of 130 different ethnicities.

So why then should they conduct their lives based on an imported language when they have a language of their own?

Who’s interests does having English as an official language of education ultimately serve?

Why teach in English when students could learn in their own African language? Are people not proud of being African?

If the US, Britain or Spain is unlikely to begin teaching their students in Nyanja or Kiswahili which are African languages, why is it somewhat acceptable or expected for Africans to teach their students in foreign languages?!?

In any case, shouldn’t Tanzania develop an economy that first and foremost works for Tanzanians (if you can allow me to temporarily step out of my usual Pan-African shoes), people who are citizens of a sovereign country?

In the above article, the author quotes Ahmed Salim, a senior Associate at Teneo Intelligence, a political risk consultancy that works with U.S investors, who makes what I consider to be a hopelessly narrow-minded point:

However, in terms of overall impact, the main challenge will be felt long-term when companies set up shop in Tanzania and are left with hiring staff that are either bilingual Tanzanians or from neighboring Kenya or Uganda. This will somewhat hinder Tanzania’s competitive advantage in the future.”

Now, I’m not saying they should stop teaching English altogether, or that English isn’t an important international language. That’s not what I’m saying. Instead the argument for English is tied to this over-emphasis on foreign investment (money coming from the outside of Africa) to help and rescue Africans, to give them jobs and create an economy – as if Africans themselves couldn’t use their own resources to create economies that work for the benefit of African countries.

Tanzania has many natural resources including natural gas (See the following links Tanzania’s Natural Gas Reserves Almost Triple on New Finds ; Statoil makes another natural gas find offshore Tanzania ;  BG Group touts Pweza as its largest Tanzania gas find ). The country’s economy is growing at a rate of 7% which is quite high and above the international average. If those resources are utilised properly by the government of Tanzania for the benefit of the country’s citizens (as opposed to liberally auctioned-off to the highest corporate bidder) they could be a source of some serious economic development that would create jobs for young Tanzanians, investment into security, and used for infrastructure development, investment in Education, Healthcare and women’s issues.

That investment, derived from wholly Tanzanian owned resources, could be a serious game changer if utilised wisely.

But if some corporation is allowed to own a majority stake, or lions share of Tanzania’s Natural Gas resources, I can tell you now what difference it will make to the Tanzanian economy in the long run:

NONE.

The profits that corporation makes will be wired out of Tanzania to already developed and rich countries. Countries that needs the benefit of the resource much less, and that have billions in cash reserves to fall back on. And those profits will find their way into the fat pockets of already rich shareholders in those rich countries. Ultimately such funds will trickle down to contribute to the tax system of those already rich countries, benefitting their economies.

Meanwhile, poor Tanzanians already struggling with poverty, low incomes, unemployment, high cost of living, government corruption, who do not own property, poor healthcare in hospitals and the lack of medicines, no electricity in most areas, deforestation, poaching and lack of clean water in the villages will not have benefitted proportionately from such natural gas deals. Instead they will have to continue receiving handouts, breadcrumbs from aid organisations – when their country possesses the natural resources that could be used to create wealth for them…all just because of greed of some corporations

How absurd and stupid is that?

So the scare mongering self-serving attitude against Tanzania choosing to teach their students in Kiswahili is wrong, It’s anti-African and I vehemently disagree with such dishonest views.

Africans and other developing countries have been stamped on for too long. We must end this corporate driven theft and madness and begin to create economies which are designed to serve and benefit us as Africans, just as others have been building economies to benefit their own economies, and their own people.

Wall Street isn’t happy with us

This article, a blog post by Senator Elizabeth Warren titled Wall Street isn’t happy with us is interesting and reveals the kind of greedy system the free world is up against. These people care only for profit…and sadly they have too much influence and control over the financial markets and capital that their decisions can affect things.

I’m very much inclined to replicate Senator Warren’s words on this blog:-

In 2008, the financial sector collapsed and nearly brought down our whole economy. What were the ingredients behind that crash? Recklessness on Wall Street and a willingness in Washington to play along with whatever the big banks wanted.  

Years have passed since the crisis and the bailout, but the big banks still swagger around town. And when Citigroup and the others don’t quite get their way or Washington doesn’t feel quite cozy enough, they quickly move to loud, public threats. Their latest move is a stunner. According to Reuters:

Big Wall Street banks are so upset with U.S. Democratic Senator Elizabeth Warren’s call for them to be broken up that some have discussed withholding campaign donations to Senate Democrats in symbolic protest, sources familiar with the discussions said.

Citigroup has decided to withhold donations for now to the Democratic Senatorial Campaign Committee over concerns that Senate Democrats could give Warren and lawmakers who share her views more power, sources inside the bank told Reuters.

JPMorgan representatives have met Democratic Party officials to emphasize the connection between its annual contribution and the need for a friendlier attitude toward the banks, a source familiar with JPMorgan’s donations said.

That’s right, the biggest banks on Wall Street have made it clear that they expect a return on their investment in Washington. Forget making the markets safer (where they can still make plenty of money) and forget the $700 billion taxpayer bailout that saved them and forget the need to build a strong economy for all Americans. Forget it all. The big banks want a Washington that works only for them and that puts their interests first – and they would like to get a little public fanny-kissing for their money too.

Well forget it. They can threaten or bully or say whatever they want, but we aren’t going to change our game plan. We do, however, need to respond.

According to this breaking news, our 2016 Democratic Senate candidates could lose at least $30,000 because of this decision. Can you help us raise $30,000 to match Wall Street’s money right now – and keep fighting for a Democratic Senate that will work for people instead of big banks?

Now let’s be clear: $30,000 is a drop in the bucket to JPMorgan and Citigroup. Heck, JPMorgan CEO Jamie Dimon makes more than $30,000 in just a few hours.

The big banks have thrown around money for years, spending more than a $1 million a day to hold off Dodd-Frank and the consumer agency. But they are moving out of the shadows. They have reached a new level of brazenness, demanding that Senate Democrats grovel before them.  

That kind of swagger is a warning shot. They want a showy way to tell Democrats across the country to be scared of speaking out, to be timid about standing up, and to stay away from fighting for what’s right.

Ok, they have taken their shot, but it will not work.

I’m not going to stop talking about the unprecedented grasp that Citigroup has on our government’s economic policymaking apparatus. I’m not going to stop talking about the settlement agreements that JPMorgan makes with our Justice Department that are so weak, the bank celebrates by giving their executives a raise. And I’m not going to pretend the work of financial reform is done, when the so-called “too big to fail” banks are even bigger now than they were in 2008.

The big banks have issued a threat, and it’s up to us to fight back. It’s up to us to fight back against a financial system that allows those who broke our economy to emerge from a crisis in record-setting shape while ordinary Americans continue to struggle. It’s up to us to fight back against a regulatory system that is so besieged by lobbyists – and their friends in Congress – that our regulators forget who they’re working for.

Let’s send the biggest banks on Wall Street our own message: We’re going to keep fighting, and your swagger and your threats won’t stop us. Help us match their $30,000 right now.

They represent everything that is wrong with capitalism, their behaviour is contemptible…and the words of Senator Warren proves it.

Frankly, after the 2008 credit crisis which has affected economies across the world, and hurt those at the bottom of the economic pyramid – almost everywhere, the world doesn’t need charlatans like these banks. If you can, please support Elizabeth Warren’s campaign because she is one of only a few legislators who are genuinely working for the people.

Finally, if they have the brazeness to treat the American people with so much contempt, after receiving a $700 billion bailout package from them, how do you think they (and their institutions) will treat Africans, and African governments?

Brazil’s Development

In Brazil, in just 10 years, around 40 million people have been lifted out of poverty.
Recently, the University of Manchester embarked on a three-year research programme (http://www.manchester.ac.uk/discover/news/article/?id=10607) that will chart Brazil’s development experience with a view to identifying which elements might work for particular African countries. Even though the research just began in 2013, it’s clear there are a few vital building blocks that have underpinned Brazil’s progress:

(1) Direct support to reduce poverty

Government investment in health, education and direct poverty reduction has played a major role – with the much-feted Bolsa Familia social assistance programme grabbing many of the headlines.

The scheme has proved to be hugely effective, providing financial support to over 50 million Brazilians. It has been responsible for 28% of the poverty reduction from 2002 to 2012. Bolsa Familia is also remarkably cost effective, amounting to just 0.5% of GDP.

But it’s not the only social assistance programme in Brazil. The government’s non-contributory pension schemes receive much less attention, even though they have twice the budget of Bolsa Familia and help to lift millions more out of poverty.

(2) Investment in agriculture

While the global rise in commodity prices has helped, the long-term growth in agricultural productivity has been catalysed by government policy. In particular, an investment in research through the activities of the Embrapa institute has had positive results. Both large agribusinesses and smaller family farms have benefited significantly. In Brazil, family enterprises account for 84% of Brazilian farms and 24% of farm land. But unlike the subsistence agriculture practised by the majority of African smallholders, family farms in Brazil are well integrated into lucrative export markets. Further, government-sponsored research and adoption of technology such as irrigation has been crucial to this success.

(3) Political consensus

Since the transition to democracy in the late 1980s, there has been a broad consensus across the political spectrum emphasising incremental and inclusive reform. This has led to relatively stable macroeconomic and fiscal policies. The recognition of the country’s “social debt” towards the poorest has also ensured an ongoing political commitment to tackle poverty and inequality.

In other words, each new government improves and continues the policies of the previous government, and there is a concerted effort to tackle poverty.
Source: http://www.theguardian.com/global-development-professionals-network/2014/apr/17/brazil-role-model-development-africa

Similar reading: http://www.the-report.net/brazil/riodejaneiro-nov2012/216-sustainability-sustainable-development

http://in.reuters.com/article/2014/07/15/brics-summit-bank-idINKBN0FK08620140715

Leadership for the Africa we Want – Kigali, May 2014

Sponsored by the African Development Bank.

Shorter version focussing on points made by Thabo Mbeki and Benjamin Mkapa:-

My Comments

  • Education has not been a priority for most countries across Africa. As a consequence, Africa doesn’t have enough high quality and decisive leaders and effectors capable of transforming not only their own countries, but the continent. Thus, Africa needs to develop and entrust young people with the knowledge that will empower them to be agents of change. Agents of change capable of prioritising what the continent needs.
  • Further, African people are disunited. Most African people have been divided on political lines such that they often fail to distinguish when our economies are failing because of external influences (or external cause) – which calls for supporting the leadership – and when a national leader’s policies are failing – which calls for criticism.
  • The Neo-liberal Institutions such as the IMF have fed African governments a crippling poison of conditionalities that work for them and their backers but that has made it extremely difficult for sustainable progress to be made across Africa. Before countries like Great Britain, the US, Canada and New Zealand had market based economies operating under market forces, there were long periods of a planned economy in these countries. In fact in Britain, it was only beginning the 70’s and 80’s that state-owned companies were privatised. Before that most infrastructure (not only in Britain) from Railways, Hospitals, Factories, Utilities (Energy companies, Water companies and Gas companies), Mining, Telecommunication companies belonged to the state (or the state was a large and active player in such industries). And that ownership provided employment, tax revenues and dividends to the State. Yet when the likes of the IMF and World Bank came to Africa, they told African leaders that the state must not own anything. The reasons they gave was that it was inefficient for the state to be in business. They were right to an extent but only because the inefficiencies came as a result of the inherent limitations which those state companies possessed. Specifically, these parastatals were not run efficiently as profit-making businesses in a business sense:- you had the wrong kind of leadership calling the shots (not innovators of the calibre and ingenuity of say Lord Alan Sugar, Sir Richard Branson or Sir Philip Green). So how do you expect an organisation to be profitable and innovate if it’s run by the wrong people? Secondly, there was little investment in employee training – so lifelong and transferable skills in tune with technology were not being passed down. To see understand this anomaly consider this: What percentage of over 60’s who were civil servants in the 70’s and 80’s or who were working in government institutions at the time of the privatisations of major UK industry were comfortable with using computers and other technology at the time or even today? Most were not, and even now only a small percentage is conversant with technology. The reason :- Because when they were working for  these government-owned businesses, there was little or no investment into their skills development. In other words when technology was changing, they didn’t have the skills to keep up. Further, there was little competition between these companies and other independent companies so not enough incentive for innovation. No surprises then that parastatals were inefficient and didn’t perform particularly well. But since we now know all these things, as I clearly articulated here, I don’t believe that its impossible to run a government-owned company profitably in this day and age.
  • Ageism is a real problem in Africa. So is Regionalism and Tribalism. Until we begin to entrust people with responsibility on a merit-based criteria (and not by how old they are or from which region they come from, or what religion they are) we’ll struggle to find an edge.
  • Advanced Business Training If Steve Jobs had a business school which he run, what kind of graduates would the school produce? Correct me if I’m wrong, but I think formidable ones. Africa needs to train its young people to be formidable in business…
  • Capital Without money Africa can’t advance, because where will the tools of development come from? Financial Investment in young people (and I’m not talking minute $1000 – $2000 type business loans) is a necessary tool to development.

 

Foundations of Economic Growth – lessons from pre-industrial Britain – part 1

Among the several books I’m reading is one titled “The Social and Economic History of Britain (1760 – 1965)” by Pauline Gregg, which I picked up at the local bookstore over a year ago. It seems it was initially published as “Modern Britain: A social and economic history since 1760” [amazon copy here ]

As pleasure in reading goes, the beginning is not that interesting. But as the story progresses, it get’s rather animated. And revealing. Having been published in 1965,it also doesn’t look that appealing in terms of aesthetics, unless a hardback is something that tickles your fancy. But as they say, do not judge a book by its cover.

Yet this book is more informative than first appears, and references to a critical period of the Industrial revolution, when Britain was rising to cement its place as a great world power, its empire as the largest in the history of mankind, its economy as one of the biggest and most resilient.
Thus like many others who have an appetite to properly understand how economies develop (or more accurately in my case – how it was triggered in Britain),I’m inclined to share some of its contents.

Firstly the book acknowledges that every nation develops differently. In some its slow – occurring over centuries, in others, its revolutionary, noticeable over a lifetime.

But before I dig into it further, there’s a summary that encapsulates the content which I’d like to begin with:

Eighteenth-century Britain was still far from being a country of capitalist enterprise. In only one of the three parts of the country in which the woollen industry was located had the capitalist form developed on a large scale. Cotton was in an intermediate stage. The iron and coal industries employed comparatively few people, and other capitalist enterprises were not typical. The agricultural interest was still dominant, and the handicraftsman was more important than the industrial or commercial capitalist.
It was not until the second half of the eighteenth century that the change towards large-scale industry quickened, becoming so rapid as to appear revolutionary. A number of interconnected causes produced this acceleration. There was a growth of population, creating an increased demand for goods. There was improved transport, making possible the carrying of finished commodities to markets and raw materials to centres of production. There were the great mechanical inventions, new materials, and improved chemical processes, which quickened and cheapened production. It is useless to try to assign priority to any of these factors; together they comprised the Industrial Revolution

They are building an airport city in Manchester

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Someone please remind me again why I live in this city

Most readers will probably not know that Manchester is quite an experimental city. The first free electric intercity metroshuttle buses in the UK began operating in Manchester. Manchester is set to have a 100MBps fibre optic network corridor interconnecting homes, businesses and universities along the famous Oxford Road. Manchester is home to one of a handful of Fablabs [small-scale workshop offering (personal) digital fabrication] across the world, complete with 3-D printers and such kit, an outfit that helps innovators seamlessly bring their ideas to life. Manchester is now home to Media City, the home of the BBC, a futuristic Media installation that is undeniably as state of the art as it gets. It was in Manchester that Graphene was first successfully isolated in 2004, at the University of Manchester, (and the scientists who discovered it won the Nobel Prize in Physics), and the invention (touted a ‘miracle material‘ and the next big thing) is set to transform technology in ways never imagined before. Beetham Tower, which is home to the Hilton hotel, restaurants and apartments was the tallest building in the UK outside London when it was completed in 2006, and is currently the tallest residential building in the UK. Manchester was the first city in the UK to get a modern light rail tram system when the Manchester Metrolink opened in 1992. Manchester will introduce a water taxi service between Manchester city centre and MediaCityUK at Salford Quays, the only one of its type in the UK. And now, they are building an Airport city, right next to the airport:

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If you want to do something new and fresh to your town and city, or if you want to push the boundaries, you should look to Manchester, because the chances are, if it’s not been done around here before, it’s either not worth doing, or is about to be done.

At this point I must state the obvious. Yes, you saw it coming, here it goes: Manchester is also home to two of football’s greatest clubs (and recently a National Football Museum), although we can probably argue about the ‘greatest’ bit forever, since curiously enough, despite my unashamed infatuation with this city, I happen to be an Arsenal fan :-).

Oh, and Manchester is the third-most visited city in the UK by foreign visitors, after London and Edinburgh.

But that’s not even half of what makes this city great…

As with most things, it didn’t just start yesterday. Anthony Burgess, Manchester born writer and composer (best known for  A Clockwork Orange), recalled in his autobiography published in 1986 how London “was an exercise in condescension. London was a day behind Manchester in the arts, in commercial cunning, in economic philosophy” For Burgess, Manchester was the real deal. And I think he had a point. This city, in the somewhat narrow frame of liberty in which its officials have been allowed to operate has been a pioneer for many years. During the industrial revolution, German writers and scientists came to Manchester, to observe first hand what these things called ‘factories’ were. With cotton mills springing up everywhere across Manchester, the city’s economy boomed, and created wealth for the industrialists. Manchester became the world first industrialised city, not least because of the textile factories and the Port of Manchester. During this time, it was dubbed ‘Cottonpolis’. Despite the city’s reliance on cotton, and the ‘pro-slavery spirit of America‘ which Sarah Redmond, a free African American Activist and Abolishionist talked about in 1859 when she visited to raise awareness about slavery, the pioneering spirit of Manchester soon had a welcome outcome: In 1862, Lancashire mill workers, at great personal sacrifice,took a principled stand by refusing to touch raw cotton picked by US slaves.

With the cotton industry on its knees, [President] Lincoln acknowledged the self-sacrifice of the ‘working men of Manchester’ in a letter he sent them in 1863. Lincoln’s words – later inscribed on the pedestal of his statue that can still be found in Lincoln Square, Manchester – praised the workers for their selfless act of “sublime Christian heroism, which has not been surpassed in any age or in any country.

P1050639The dynamism didn’t stop there, in 1821 the Manchester Guardian was founded.

It will zealously enforce the principles of civil and religious Liberty, it will warmly advocate the cause of Reform; it will endeavour to assist in the diffusion of just principles of Political Economy. – Prospectus outlining  the aims of the Guardian [Spartacus]

In 1878 the GPO (which became British Telecom, the telecommunications giant BT) provided its first telephones to a firm in Manchester. The world’s first stored program-computer was built in Manchester, at the Victoria University of Manchester by Frederic C. Williams, Tom Kilburn and Geoff Tootill, and ran its first program on 21 June 1948.

And it’s not just inventions and infrastructure that defined the city’s dynamism. Manchester has also been home to some great minds including the Chemist and Physicist John Dalton, Physicist J. J. Thompson, Engineer and Philanthropist Joseph Whitworth, and the Textile Merchant and philanthropist John Rylands.

Karl Marx and Friedrich Engels began to write the Communist Manifesto at Chetham Library (the oldest public library in the English-speaking world) in Manchester. As Luke Bainbridge of the Guardian puts it:

This is the home of the industrial revolution and the city that split the atom, the birthplace of the computer and the Guardian, the suffragette movement, the free trade movement, the co-operative movement, the anti-corn law league, vegetarianism, the nation’s first free library, the world’s first intercity railway and the engine room of rock’n’roll that has produced the country’s best bands of the past 30 years, from Joy Division to Take That. 

Basically, without Manchester, and a lot of its creativity, innovation and history, it’s quite likely that much of the world as we know it wouldn’t be where it is today. Certainly not in the shape that we know. We’d probably still be in the dark ages. Or worse. 😉

And that thought alone, whether you agree with it or think it is far-fetched, is enough reason to learn from what this city has achieved, and continues to achieve.

Links

Is the African economy being colonised – again?

Is the African economy being colonised – again?  via Mail and Guardian

A few excerpts are most useful:

I recently read an article in Fortune magazine that described how American businesspeople whose fortunes are falling in the United States are moving in on Africa and taking advantage. They are buying land and building malls on the continent, and are now seeing their fortunes rise again. This made me question who is actually benefiting from the rise of Africa. Is it Africans or is it those who are taking advantage of us?

What do we need to do as a continent to own our destiny instead of answering to others once again? The world’s economy works to the advantage of those who have the financial resources to make things happen. Since those in the West have the financial means, they come in and take advantage of the fortunes that are to be made here.