The Hegemony, Imperialism and Chicanery of Western States

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The post-World War 2 period, the era of the dawn of independence in Africa and certainly the post-Cold War period have all been critical junctures that have largely determined the foreign relations of the different states of the world with respect to the superpower status and operations of the multi-lateral institutions.

The end of the WW2 led to the establishment of the United Nations Organization and its related entities thereafter, the dawn of the independence era in Africa was undoubtedly a milestone that assured Africans of a greater role in the global geopolitics and the end of the Cold War was earmarked with the disintegration of the Union of Soviet Socialist Republics (Soviet Union).

All the three phases, as far as the inter-relations between the states of the world are concerned, have cemented the position of some of the leading Western nations as the world’s political “prefects.”

The Proxy Wars

With the formation of the United Nations Organization, it was highly expected that incidences of wars and atrocities would no longer take place. But this might just be an assumption because a closer look at the main objective that informed its establishment, the UN categorically was to prevent the occurrence of another World War. However, for over a number of years, several alterations have been made to the charter in view of the aggressive actions of different states and non-state actors.

The failure of the UN and its entities to put to an end the proxy wars should be the greatest 21^st century concern for Africa, the Middle East, Asia, South America and Eastern Europe. The UN has never been fair and it will never be as long as its operations are controlled by an elitist group of states. The United States of America, the United Kingdom and France in particular have been notorious in orchestrating the covert operations and clandestine activities that have often interfered with the sovereignty of the states which have fallen victim to their machinations.

It is a pity that over sixty wars have occurred since the inception of the UN, most of which have been instigated by the “owners” of this institution that is supposed to ensure peace and stability in the world. The greed for wealth especially oil and the need to control the flow of trade/commercial activities have justified the imperialistic tendencies of the USA and her allies.

In the disguise of stopping Iraq from stockpiling Weapons of Mass Destruction, the USA, the UK and their allies led to the fall of Baghdad. The avarice for oil and currency was the underlying issue that motivated the attack on Iraq and the subsequent murder of Saddam Hussein who initially was an ally of the USA. The decision by Saddam Hussein to begin trading the Iraqi oil in Euros and no longer in US$ was instrumental in the destruction of Iraq. In any case, if Iraq had the nuclear weapons as claimed, would the USA and her allies have dared to invade her? This was a well fabricated lie and propaganda to portray Iraq as a danger to global security and peace.

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The events leading to the fall of Libya, the capture, torture and murder of Libya’s Brother Leader Colonel Muammar al-Qaddafi, the invasion of Syria, the covert operations in Yemen among many others justify that indeed the United Nations Organization is a powerless, puppet institution mainly seeking to advance the interests of the elitist states that supposedly control it.

Colonel Qaddafi was on course championing for the economic independence of the African states. In particular, he was fronting for the establishment of the Africa Development Bank, the Africa Monetary Fund and the Africa Investment Bank. In addition, the Brother Leader of Libya was pushing for the adoption of a common currency by the African states known as the African Dinar. This currency was to be in form of gold and not the notes and coins that are currently used to trade in the world. An important point to note is that Libya had gold reserves amounting to US$ 150 billion which were apparently stolen by the invaders the likes of USA, UK and other imperialistic states, including France which hardly have any gold reserves. Again, Libya has very large oil deposits which some of the Western states had always salivated for. The Chilcot Report and the UK-Libya Report by the British Parliament have documented that the invasions of UK into Iraq and Libya were unnecessary.

The plot to oust and perhaps kill Bashar al-Assad and consequently control the commercial oil activities in the Middle East occasioned the invasion of Syria. The situation is the same in Yemen with Saudi Arabia, a USA ally, being funded to cause chaos and wreck havoc in the Yemeni state. These invasions have been anchored on pure propaganda and malice with no justification that the now categorized “fallen states” jeopardized in one way or the other the sovereignty of other states.

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The successive French governments have been fantastically ignoble in Western Africa. Having been the dominant colonial master in this region, the successive French governments have largely funded and supported dictators in West Africa in exchange for economic resources. I guess that some of these Western states governments are the most corrupt and evil of all. The French government is responsible for the murder of Thomas Isidore Sankara and its support for Blaise Compaore among other notable political and economic evils.

Corrupted Justice & Governance System

Senior government officials, including the presidents of past and present regimes of these imperialistic states are supposed to face trial at the International Criminal Court for the atrocities that they have committed. Innocent citizens have lost their lives with massive destruction of property taking place. If at all Muammar al-Qaddafi was a tyrant as portrayed, why was he tortured and killed without being subjected to a fair trial? Saddam Hussein was prosecuted haphazardly by a “Kangaroo Court.”

Such is the unfairness that characterizes the UN and the International Court of Justice. The UN is a government of few governments and it embodies the features of the Animal Farm where some animals are more equal than others. In this case, some states are more equal than other states and they determine the operations of these multi-lateral and supra-national institutions.

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Existence of the tax havens is a pointer of an inherent break-down in the governance system. From the outset, this fundamental issue of the tax havens and the illicit financial flows affects all the regions and continents of the world. But the Western states have been at the forefront of abetting these activities because they largely benefit from them. A number of banking institutions in Western Europe have been known to act as safe houses for the ill-gotten wealth. The establishment of the shell companies is in fact a mechanism used by some of the wealthy individuals to run their business activities most of which involve fleecing and tax evasion.

The UN and its concerned bodies ought to have put efficient and effective mechanisms that would have dealt with such cases. But because the elite states that control this organization benefit from these covetous activities, hence the reluctance and complacency.

Global Terrorism

No state in the world would like to see its citizenry subjected to the acts of terrorism. Efforts by the leading Western nations as well as the UN and other states in combating terrorism are fully appreciated. However, the evolution of the post-Cold War strain of terrorism is highly linked to the operations of the USA and her allies especially in the advancement of the proxy wars.

Before the end of the Cold War, the Soviet Union invaded Afghanistan and USA, then under the administration of Ronald Reagan, had to counter this move by the Soviets. To avoid direct military combat, the USA funded the infamous Al-Qaeda under the leadership of Osama Bin Laden to fight against the incursion made by the Soviets. After the end of the mission, Al-Qaeda embarked on another undertaking; spreading the ideology of Salafism and the creation of caliphates.

Of course the USA (CIA) and her allies had to destroy Al-Qaeda after the end of the initial mission of countering the Soviets. This perhaps led to the animosity between the USA as well as her allies and Al-Qaeda plus other related terrorist groups who began perceiving the former as the enemy. This led to one of the worst terrorist attacks, the 9/11 attack on the World Trade Centre, a juncture which shaped the fight against terrorism.

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The failure by the governments of the USA and her allies to learn from history is appalling. The invasion of Iraq, Syria, Libya and Yemen justify this; USA and her allies still fund the terrorist groups/militias in the name of fighting “illegitimate” regimes. The uncalled for invasion of Iraq led to the creation of ISIS/ISIL and the situation worsened with the invasion of Libya, Syria and Yemen. These invasions have given room to the rise of many other terrorist activities as well as militias and may be this is a divide and rule tactic used by the governments of USA and her allies to rule the world.

The Present & the Future

At the moment, African states are contemplating pulling out of the ICC en masse following similar actions by Burundi and South Africa. Furthermore, the activities of Russia in Syria and the intensified operations of China and Russia against the USA in the South China Sea are pointers that the imperialism of the Western states must be destroyed. I do not support the withdrawal of African states from the ICC because of a lack of a better alternative but this is a demonstration that atrocities occasioned by the proxy wars must be dealt with fully by the ICC. The events in Syria and the South China Sea also call for the institutionalization of a New World Order that is characterized with relative fairness and utmost respect to a state’s sovereignty.

The USA and her notable allies which have been causing the wars have to shoulder the burden of immigration. After all, only 9% of the world’s refugees are hosted by the sixth largest global economies.

USA’s foreign policy remains the major hindrance towards the realization of peace and stability especially in the Middle East. The emergence of a bi-polar world, China + Russia would help to neutralize the dangers posed by the USA foreign policy. Irrespective of whoever wins the forthcoming USA presidential elections, the covert operations will continue because the presidency of the USA is quite ineffective compared to the Pentagon and CIA when it comes to commissioning of the proxy wars.

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African states and other developing nations calling for fairness during the World Trade Organization conference in Nairobi in December 2015 and UNCTAD conference also held in Nairobi in July 2016 should prompt the hegemonic West to re-visit its actions and relations with the rest of the world. The WTO has been used as a platform for advancing the interests of the Western states. Nevertheless, Africa has no permanent representative at the UN Security Council and this is a weighty matter of geopolitical importance. In a nutshell, all nations of the world deserve fair and nearly equal representation as far as membership of these multi-lateral institutions is concerned.

In conclusion, the Western axis has been very unfair to the other states of the world. The various multi-lateral institutions established to look into such issues have proven to be largely ineffective as they hardly confront the elite states when they commit serious crimes and economic sabotage. Such is the unfairness occasioned by the hegemony, imperialism and chicanery of the Western states.

This article was first published on savicltd.wordpress.com

The “Oromia Question” A Reflection of Ethiopia’s Misgovernance

A photo showing members of the Oromo ethnic community protesting
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In recent months, one of the world’s fastest growing economies, Ethiopia, has witnessed an intensified series of protests mainly planned and staged by the members of the Oromo community. The Oromo ethnic group is the largest in Ethiopia with its population making up 34.4% of the country’s 100 million plus people. Other ethnic communities as a percentage of Ethiopia’s total population include: the Amhara at 27%, Somali 6.2%, the Tigray 6.1% and the others making up 26.3%.

The Oromo are found in the Oromia State which covers 284,538 square kilometers. The state of Oromia is rich in natural resources and fertile agricultural land and it contributes about 60% of Ethiopia’s economic resources. The country’s capital city, Addis Ababa, is located in the Oromia State.

Causes of Anti-Government Protests

There are two main factors that have led to the wave of the anti-government protests in Ethiopia. The explicit factor was the formulation and attempted implementation of the Addis Ababa Master Plan. The implicit factor is the continued marginalization and mistreatment of the community by the elitist club that runs the government.

The Addis Ababa Integrated Master Plan is a development blueprint whose main objective was to expand the city of Addis Ababa. The intended expansion of the city would have consequently led to the displacement of the members of the Oromo ethnic community from the land that they possess. With majority of the Oromo people being farmers, this would have eventually cut off the main source of livelihood for the community.

Though the implementation of the plan was later on halted, the initial attempt by the government to forcefully implement it is a pointer of the lack of consultation by the government and subsequently public participation by the affected community.

For the last 25 years since the fall of the Derg, the country has been under the rule of the Ethiopian People’s Revolutionary Democratic Front (EPRDF) which is a coalition of four parties namely: the Oromo People’s Democratic Organization (OPDO), the Amhara National Democratic Movement (ANDM), the Southern Ethiopian People’s Democratic Movement (SEPDM) and the Tigrayan People’s Liberation Front (TPLF).

The TPLF has been politically dominant among the four and as a matter of fact, the Tigrayan ethnic community that is 6.1% of the total population controls the country’s economy. This has subjected the Oromo and partly the Amhara, to seclusion by the successive governments in the state.

This disenfranchisement has been simmering for over twenty years but has occasionally flared up. However, as from November 2015, the frustrations have eventually turned out into consistent protests against the government of the day.

Historical Nexus of the Misgovernance

For centuries, Ethiopia has never had democratic institutions of governance. Before the inception of the Mengistu-led government in 1974, Ethiopia was under the monarchical rule of Haile Selassie and his dynasty. The Derg government under the leadership of Mengistu Haile Mariam was in power from 1974 up to 1991 when the EPRDF took over the reins by ousting the military regime.

Right from Haile Selassie’s era, through Mengistu’s junta system of government to the current regime led by EPRDF, only few segments of Ethiopia’s populace have significantly benefited from the state. In short, the country has not experienced inclusive growth even at the moment when it continues to register one of the highest GDP rates in the world.

A key concern to this has been the deliberate efforts by the successive governments and regimes not to embrace the principle of political/institutional inclusivity. It has been common for many years in Ethiopia to witness the disregard for the rule of law which forms the basis of the fundamental human rights. The governments that have been in existence in Ethiopia have been known to be non-tolerant to dissent.

Students from the Oromo community leading one of the anti-government protests.
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A notable feature is that the honchos are still nursing communist hangovers and collectivist hallucinations. This implies that the state is the main actor economically, socially and politically hence limiting the economic and political freedom of the citizens.

Historically, it is well documented that EPRDF’s foundation is anchored on Marxism and communism whose prevalent characteristic has always been the establishment of an authoritarian government. The post-Derg era has resorted to revisionism of this system and structure of governance.

Mechanisms of Marginalization & Oppression

In discussing this part of the text, I’ll make reference to specific excerpts of the ‘Road to Serfdom’, a book written by Friedrich A. Hayek (1899-1992), one of the world’s remarkable economists.

• ·    Advancement within a totalitarian group or party depends largely on a willingness to do immoral things. The principle that the end justifies the means, which in individualist ethics is regarded as the denial of all morals, in collectivist ethics becomes necessarily the supreme rule.
• ·         …From the collectivist standpoint intolerance and brutal oppression of dissent, deception and spying, the complete disregard of the life and happiness of the individual are essential and unavoidable.
• ·         ‘Collective freedom’ is not the freedom of the members of the society, but the unlimited freedom of the planner to do with society that which he pleases. This is the confusion of freedom with power carried to the extreme.

The leaders of the Ethiopian regime being revisionists of the communist system have not distanced themselves from adhering to the principles of this form of governance. Since the state is the main economic actor in the country, its actions remain unquestionable hence the limited political freedom.

Any form of opposition towards the government’s allocation and distribution of resources has been utterly suppressed through brutal means. And on this, the attempts by the Oromo to question the regime’s methodology in resource allocation have resulted in their imprisonment, death, injuries and loss of property.

The EPRDF government has engaged in deception and spying against the opposing voices. The governments have over the years spread propaganda with the main goal of portraying the Oromo and the Amhara as enemies. This is a divide and rule mechanism through which the Oromo have been consistently branded as narrow-minded and secessionists while the Amhara have been tagged as chauvinists with intentions of restoring the old feudal order.

An image showing a bus that was burnt during one of the protests.
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It is apparently clear that the EPRDF regime under the late Meles Zenawi and the current Prime Minister, Hailemariam Desalegn, has perfected the principle of the end justifying the means. The authoritarian EPRDF regime has pursued economic development at all costs without regarding the concerns of the Ethiopian citizens especially the Oromo. The exploitation of resources and land grabbing in the Oromia State by the EPRDF-led government and a small club of elites, notably the Tigrayan elites justifies the operationalization of this principle.

This is the problem of the state advancing the art and act of ‘collective freedom.’

The Road Ahead: Safeguarding & Sustaining the Economy’s Momentum

Ethiopia is expected to be Eastern Africa’s largest economy by GDP estimates by the end of this year. Forecasts by the International Monetary Fund (IMF) show that Ethiopia is expected to record a GDP of $69.21 billion compared to Kenya’s expected $69.17 billion. However, Kenya’s living standards and overall GDP per capita still remain twice as high that of Ethiopia.

To ensure that the strides the state has made on the economic front are safeguarded, the respect for human rights ought to be prioritized. Currently, Parliament is made up of 100% of the members of the EPRDF hence no effective system of checks and balances. The media which is supposed to be instrumental in revealing the government’s wrong-doing, has always been subjected to strict government control with well known cases of incarceration of journalists.

If at all the government is carrying out genuine development projects, then it must allow for scrutiny. But historically, an economy that is largely driven by the state hardly gives room for criticism and this has often led to the disregard of human rights. This is the growth and development model that China has a penchant for.

Going forward, the Ethiopian government seeks to have a vibrant private sector in the economy but to actualize this, the rule of law must be adhered to. From economics, it is a well-known fact that an economy largely controlled by the government may lead to government failure thus the importance of the private sector. The Ethiopian state should thus be committed to observing the rule of law and fundamental human rights.

The Prime Minister has acknowledged that indeed the country has to make improvements to the governance institutions and instruments of government to allow democracy to flourish. This is a positive sign which if embraced will steer Ethiopia into one of the largest economies in Africa. But at the moment, commitment to the implementation of this promise is unknown bearing in mind the recent declaration of the state of emergency in Oromia State for six months.

Several foreign states like Germany and USA have expressed their concern in relation to the anti-government protests but I don’t expect USA to be really tough on Ethiopia as they are strong allies in the anti-terrorism ‘war.’ China, the largest investor in Ethiopia cannot criticize and condemn the government’s action against the protestors because of her history in relation to violation of human rights and the rule of law.

Ethiopia’s growth and development trajectory can be termed as not inclusive due to the plight of the Oromo, the Amhara and other ethnic groups which have been excluded/marginalized by the successive governments. Perhaps, only a few individuals and groups have benefited from the growth which casts doubts on the country’s economic future. The anti-government protests offer a critical juncture that the state can use to change its system of governance.

This article was first published on savicltd.wordpress.com

Of Cartelism, Mandevilleanism and the Era of Robber Barons

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It is turning out that the vice of corruption and its associated elements are being perceived as normal within the Kenyan state. The concerned authorities and even a large pool of the Kenyan citizens are no longer taken aback by the incidences and instances of social, political as well as economic venality witnessed and experienced on a daily basis.

Kenya’s system of societal and state organization that is capitalism has morphed into a system of cartelism, after undergoing a systemic and synthesized evolution since the attainment of our independence up to the current period of time. But are we really reaping the fruits of our independence? Not at all because true independence lies in all the three planes of the state board. This implies that independence is a three-dimensional aspect, that is, it bears social independence, political independence and most importantly economic independence. Majority of Kenyans are not economically, socially and politically independent due to the fact that corruption is thriving in the country.

Just to be clear enough, corruption has in fact turned out to be a vibrant independent and inter-dependent sector of the economy just like any other sector such as agriculture, manufacturing and others. Its peppiness within the Kenyan economy continues to intensify through its own creation of the forward and backward linkages with the other sectors and sub-sectors of the economy; it is deeply entrenched in the country’s economic, social and political systems.

With the country ranking among the bottom thirty on the corruption perception index, according to Transparency International, it implies to a greater extent that our moral standards are highly questionable, largely depraved and unequivocally putrescent. But of course not all Kenyans have stinking morals.

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Corruption is a case of morality versus immorality and in Kenya’s case, the reigning of cartels and its system of cartelism has deprived majority of the Kenyans the right and privilege of accessing and utilizing the basic facilities and resources. The initiators of the cartels and subsequently the propagators of cartelism are the robber barons and so mind you, we are in the era/age of barony and happily or sadly living during the time of the robber barons.

In his book, The Robber Barons published in 1934, Matthew Josephson endeavored to document at length on how some of the American capitalists were “milking dry” the citizenry and in due course enriching themselves. Certainly, the situation is not in any way different from the “state of corruption” in Kenya at the moment.

Perhaps, the culture of cartelism and barony in the country can be related to Bernard Mandeville’s (1670-1733) intellectual and philosophical heresy of virtue being vice and vice being virtue. The satirical political economist documented in his book, ‘The Fable of the Bees: Or, Private Vices, Public Benefits’ that, ”the profligate expenditure of the sinful rich gave work to the poor, while the stingy rectitude of the virtuous penny pincher did not, hence, private immorality may redound to the public welfare, whereas private uprightness may be a social burden.”

The Mandevilleanism doctrine has been fully embraced in the Republic of Kenya. Being corrupt or extensively mentioned in cases of corruption creates a figure and perception of heroism. By not engaging in corruption, one is branded as being naïve and even classified as a villain! Reflecting on this statement by Mandeville, does the public benefit? Not holistically but the cronies and those closer to the “backbone” are the beneficiaries. So, the immorality occasioned by some Kenyan somewhere to loot improves the welfare of the beneficiaries.

Cartelism, Mandevilleanism and barony have taken root in various spheres of the Kenyan state. The situation is catastrophic especially to the majority of the public coffers whose coins are plundered by an uncaring lot, a minority whose voracious appetite for public resources is well known.

In the corporate sector, we have seen and continue to witness the collapse of several entities because of the acts of avarice. Revisit the situation at Kenya Airways which is now the biggest ‘Shame of Africa’ and no longer the ‘Pride of Africa’. How can a firm make losses of Kshs.25 billion then Kshs.26 billion? In the finance industry we have the super-normal/abnormal profits but in KQ’s case, these can be termed as abnormal losses. The situation at Uchumi Supermarket was not different before the management was changed. The events at Mumias Sugar Company were not in any way different. Refer to the collapse of some of the banks in the country. Dubai Bank and the Imperial Bank collapsed because of the insatiable appetite of some corrupt individuals.

The housing sector has also been taken over by the cartels especially in Kenya’s capital, Nairobi. How many cases relating to collapsed buildings have we seen? Criminals, white collar criminals, have staged a coup in the sector by masquerading as real estate investors. These criminals of course engage in connivance with the responsible authorities to risk the lives of Kenyans who contribute dutifully to the economic growth and development of Kenya’s economy.

The health sector hasn’t been left behind. The invisible hands of the cartels that execute visible criminal acts have penetrated into this sector that plays a fundamental role in treating the populace and in due course maintaining a healthy labour force for the economy. Have we not heard of some of the medical doctors referring patients to India and some of their privately-owned medical clinics out of collusion? Have we not heard of the ‘shortages’ in medical supplies artificially created by these individuals who only think about making an extra immoral shilling from the public resources?

Our education system has been taken hostage by these cartels, invisible as they seem to be. Over the years the national examinations for the primary, secondary and tertiary institutions have been leaked because of these criminals. In fact, the acts by Dr. Fred Matiang’i the Cabinet Secretary for Education to sanitize the system especially the administration of the national exams have been subjected to resistance by these disciples of Mandeville.

Let’s not forget that our political system is largely dominated by these barons. Who owns political parties and systems in Kenya? A secluded class of elitist capitalists who of course use political power to cement their “investment” deals. Political parties are neither agenda-driven nor are they people-centred in the Kenyan state. They are tools used to orchestrate the economic manipulation of the whole and because the economy forms the basis for socio-political organization, then the thoughts of economic, social and political independence are consequently and consistently watered down.

The preying culture is also ingrained in the petroleum industry. At a time when oil prices are at their lowest globally, locally we have not fully benefited from the slump in the prices because some fellows somewhere are controlling the gears. I’m meant to believe that the current prices of petroleum products are supposed to be relatively cheaper by Kshs.20 or thereabout. What if we start drilling the recently discovered oil in some parts of Kenya? I have a feeling that we might not be significantly better off with the discoveries and the subsequent drilling of the “Texas Tea.” Right now the barons are conspiring to grab the land on which the Kenya Petroleum Refinery Limited is situated.

I still don’t have a clear comprehension of why some bottled “mineral water” is more expensive than petroleum in this country. Most of these water bottling firms have in fact admitted to filling the so called “mineral water” with ordinary tap water. Water is supposed to be a basic right and basic commodity freely provided by the state and its agencies. In my opinion, all towns, centres and market centres are supposed to have a constant flow of cool and clean water freely available to all people. But because we allowed water, one of the basic rights to humankind, to be corruptly commercialized then such an act only remains a reverie. Cartels have taken over the water industry that we end up experiencing artificial shortages for them to reap big. Recall the closure of several water bottling plants in Kenya sometime back by the Kenya Bureau of Standards (KEBS).

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Cartels have even gone to an extent of stealing and looting relief food and items. What a shame! What an embarrassment! These are the effects of cartelism, a mutated form of capitalism. Is it that capitalism has failed to generate social, economic and political independence? Maybe…Joseph Alois Schumpeter (1883-1950), one of the greatest and brilliant economists and political scientists in the world, attested to the fact that economically capitalism had succeeded but sociologically capitalism had failed.

The political leadership, at the national and county levels MUST be committed in the fight against corruption. What happened to the Economic Crimes Act of 2003? Parliamentarians should make amendments to this legislation and make corruption very expensive. But I doubt most of these “honorable” members of the august House because they have never been concerned about scrutinizing the national budgets that we have had for the last three years or so. Theirs is to keep strategizing on how they will be re-elected and globe-trotting by making silly benchmarking tours on policy-making when similar policies are gathering dust on shelves of various ministries. What is the role of the Executive in this republic? Resign to cartels and corruption?

Sadly enough, the justice system hasn’t been spared by the cartels and the robber barons. The institutions mandated to fight corruption are indeed waging their own unending battles against corruption itself. The Ethics & Anti-Corruption Commission (EACC), the Attorney General’s office, the Judiciary, the office of the Director of Public Prosecutions and the various police units are all faced with corruption.

The national teams have mercilessly fallen in the fishing nets of the cartels. Teams which have fallen victim to these economic robbers include the athletics team, Harambee Stars, the men’s rugby team (Shujaa), Malkia Strikers (Women’s volleyball team) among others. Where did our African values disappear to? Is cartelism African?

Well, let’s change our conduct or forget altogether about the bright unforeseen future of Vision 2030 and beyond if we are not going to be ANGRY ENOUGH about corruption.

This post was first published on savicltd.wordpress.com

The Divergence & Sustainability Doubts of Africa’s Economic Growth

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The October issue of the Africa Pulse report, a publication of the World Bank that highlights the state of economic growth in Sub-Saharan Africa (SSA), reveals that the region’s rate of economic growth for 2016 will be 1.6%. This is the lowest rate of economic growth that SSA would have registered for the last two decades and it is in fact lower than the previously forecasted 3% expansion of the real Gross Domestic Product (GDP) for 2016.

In addition, the 1.6% rate of economic growth is lower than that of the Emerging Markets & Developing Economies (EMDEs) which is projected to be 3.5% and the global growth rate of 2.3%. It marginally surpasses that of the advanced economies by a mere +0.1. However, it is expected that SSA’s economic growth rate will pick up in 2017 heading into the medium term. The World Bank analysts forecast that SSA will register an economic growth rate of 2.9% in 2017 and 3.6% in 2018.

Several factors have been identified as the causes of the slump in the economic growth for SSA in 2016. They include the incidence of low commodity prices in the global market, tight financial conditions in USA and the Euro Area that have occasioned a reduction of capital flows into the region, policy uncertainty in the domestic economies, droughts, political and security threats and the slowing down of the growth of China’s economy.

One startling fact documented in the report is the nature of economic growth exhibited by the respective economies of the states that make up SSA; some of the economies are registering relatively high rates of economic growth, a few are growing a bit slowly and others are experiencing a continuous contraction of their GDP.

The economies of Ethiopia, Rwanda, Tanzania, Cote d’Ivoire and Senegal are projected to register economic growth rates of above 6%. The performance of these economies has been attributed to several factors key among them; good monetary and fiscal policies, better business regulating environments, the diverse structure of the commodities exported and more effective public institutions.

On a general scale, this has an implication that the other countries’ economies that are playing catch-up with the aforementioned ones, and those whose economic performance is dwindling are operating in the middle or at the extreme end of the continuum that is an aggregation of the stated metrics. This is in fact where the divergence stems from and paints a picture of a continent fantasizing with the aspect of Africa Rising.

Primary Causes of the Economic Slump

Considering the general economic performance of SSA, there are more doubts than hopes in light of the envisaged economic resurgence of the region in the second decade of the 21^st century. Externally, the continued internationalization of capital and the global integration of different regional economies cannot be disregarded or disputed for that matter. The global financial crisis of 2008 and the Eurozone Crisis thereafter are deeply interlinked to the decline in the economic growth rate of SSA. As a direct result of this, the financial resources funneled to the SSA region have significantly decreased and this is especially with regards to the flow of capital to the region. The aftermath of the crises has resulted in the crafting and drafting of stricter monetary and fiscal policies in the USA and in Europe. The USA and the Euro Area are still gravitating towards the equilibrium hence the effects of the adjustments.

One of the primary causes of this decline in the economic growth of SSA has been the decreasing commodity prices in the global market. This has greatly affected the commodities from SSA that are exported to Europe, the Americas and Asia.  The commodities that have largely been affected are oil and the minerals. The increase in the supply of oil has resulted in low prices of the product and this has seriously dented the African economies that are dependent on it. The economies dependent on the minerals have also experienced the economic misfortunes in the world market.

To a larger extent, Nigeria and South Africa which make up 50% of the GDP of SSA, experienced near-recession situations in their respective second quarters. Nigeria chiefly depends on oil while South Africa’s economy is largely fueled by the revenues realized from the minerals. Other countries such as Botswana, Angola, Chad, and the Democratic Republic of Congo among others have suffered from this.

Sustainability of the Growth Momentum

Before the economic slump that began in 2015, SSA had registered an average economic growth rate of approximately 5% per year for over ten years. The paradox from the sustained economic growth rate was the failure to cut on the levels of poverty and unemployment in the region. This is perhaps a pointer that the growth was not anchored on feasible policy frameworks.

The sustainability of the economic growth of SSA is a mirage basing on the prevailing form and nature of the economic model of the region. An interesting fact is the growth and expansion of the service sector compared to the manufacturing sector whose growth is relatively slower. The other regions of the world, in the course of their economic growth and subsequent structural transformation, the manufacturing sectors were developed into the largest contributors of their GDPs. This should trigger economic curiosity in light of the different nature of SSA’s growth trajectory.

Logically, a thriving manufacturing sector creates the economic momentum through the backward and forward linkages with the other sectors within the economy. The failure to heavily invest in the manufacturing sector has led to the failure to diversify the exported commodities.

The doubts in the sustainability of the growth momentum of SSA can be traced to the peripheral role played by the agricultural sector. The sector contributes 30% of the region’s GDP and 2/3 (67%) of the region’s labour force but its total factor productivity is very low compared to the other regions of the world. To effectively reduce the poverty and unemployment levels in SSA, special attention must be paid to the agricultural sector. Its development through the establishment of agro-based industries will further create other external industrial linkages which will set up a stronger foundation for the manufacturing sector and a vibrant service sector.

Back On Track: Fundamental Policy Prescriptions

The future of SSA is bright but the formulated policies need to reflect the current situation and address the reality on the ground. The economies of SSA have to diversify the commodities that they export. This entails value addition of the products and even diversification of the markets in which the commodities are exported to. This will reduce the uncertainties associated with the fluctuations of the commodity prices.

The development of the agricultural sector should be prioritized given its contribution to the region’s GDP and the labour force in the sector. The policies formulated ought to focus on the sector’s commercialization, leveraging on technology and special programmes tailor-made to harness the productivity of the smallholder farmers.

More investments should be made in the manufacturing sector. The investments in this sector should mirror the on-going investments in infrastructure.

Above all, the SSA countries must create friendly business environments that encourage, promote and attract investors both domestically and externally. Intertwined to this is the need to ensure that there is a lot of efficiency in the public sector such as a reduction in the red tapes and the levels of corruption.

Addressing uniformly the challenge of economic growth divergence is a challenge in itself as different SSA states have a lot of dynamism as far as economic management is concerned. But the divergence is a cause to worry about as it may lead to cases of immigration which often precipitate the xenophobic effects. This is why the growth trajectory of SSA ought to be consistent and in due course sustainable.