Friday, September 13, 2013
As Africans, we have been made to believe that African states are propped up by loans and foreign money from the west. That right from free HIV treatment to World Bank loans,to government budget support, western credit and philanthropy sustains Africa's 'failed' states. A bold recent book however challenges this widely-held perception by providing stunning economic evidence that African countries are actually net creditors to the rich industrialized world. Put in lay man terms, the book's central argument is that more money leaves Africa to the west than comes into Africa from the west. The book (recommended to me by Pelegrine Sebulime) is entitled 'Africa's odious debts: How foreign loans and capital flight bled a continent'' was authored by Ndikumana and Boyce, Economics professors at the University of Massachusetts at Amherst, the former is actually Burundian. The book is no idle polemic but provides hard economic data most of which has already been published in academic journals since 2001. One of the articles written on this precise argument won an Economics award. Leonce Ndikumana should know. He holds a doctorate in Economics from University of Washington at St Louis and was head of research at African Development Bank from 2008 to 2011.He was also Chief of Macroeconomic analysis at the United Nations Economic Commission for Africa from 2006 to 2008. In an article the authors published in the Journal of Development studies in 2001 titled’ Is Africa a net creditor?', the authors write ''We found that capital flight from 25 low-income African countries over the 1970-96 period amounted to $ 193 billion(and to $ 285 million including imputed interest earnings) comparing to this to the $178 billion in external debt to the same set of countries, we concluded that Africa is a net creditor to the rest of the world: the external assets of these countries exceeded their external debts'. Here is how Ngozi Okonjo-Iweala Nigeria's Finance Minister put it 2005 ''We make annual debt repayments of more than$1.7 billion,three times our education budget and nine times our health budget'' Compounding the outrage is the empirical fact that most of loans borrowed by African countries end up in private pockets while the loans of course, remain publically-held by African states-for generations. The book discusses compelling case studies of Mobutu Sseseko's Zaire and Fernando Marcos' Phillipines. In a memorable story from the Philippines, 2 billion US dollars was borrowed from US Export-Import Bank and a Citibank and American Express consortium to build a nuclear energy plant that never produced even an ounce of electricity yet Philippines went on to pay billions of dollars in loan repayments. The trouble, partly, was that the nuclear plant was built on a site prone to earth quakes! The book highlights the complex behind-the-scene dealings at multilateral lenders such as the IMF which was arm-twisted by the US government to lend to Mobutu's Zaire contrary to its' own assessment. Not altogether strange if you have read similar tales in the frame of'Confessions of an economic hit man'. The notion that the west has taken more out of Africa than the other way round is hardly original. It has been previously harped by economic historians and anti-colonialism African intellectuals. This book, however, is hard empirical proof of this contemporary African reality of a hemorrhaging continent. One mortgaged by its elites in lots of needless borrowing with many in the west on the take as well. ''Aid in reverse: how poor countries develop rich countries''is how one observer sums it up.
Tuesday, September 3, 2013
I have been a loyal Obama supporter from the moment he delivered his ground-breaking speech at John Kerry's nomination at the Democrat's convention in 2004. I predicted on these very pages that Obama would win a second term before he was even sworn in for his first term. But over the years I have been underwhelmed. It's not that he has done nothing striking for Africa. I knew that first and foremost he was a President of USA. I hate to think that even George W Bush's PEPFAR program trumps anything Obama has done thus far for Africa. It is clear as well that Syria's conflict is complex drawing in many regional powers with Russia added in for good measure but surely Obama flanked the Syria chemical-use incident. Any mediocre President would still have ordered surgical strikes in retaliation against the Assad regime for gassing its own people. Not every decision has to have approval of congress surely. The element of suprise is lost and Assad has been given all the time in the world to prepare for a potential strike. Even the Bush-era 'Shock and awe' seems preferable in comparison. Clearly, Obama's reluctance is partly because of the Iraq-Afghanistan hangover and an American public wary of another endless and costly foray of foreign interventions and an economy that is slowly recovering from (partly) its effects but still.. As US president, Obama has the privilege of presidential discretion. He could have easily ordered a surgical strike against Assad without requiring approval of the legislature. Obama gets a daily intelligence briefing that requires his swift action at certain times that requires a decisive President. Now he set an unwelcome precedent for the next US presidents. This was, without doubt, one of Obama's lowest moments as US president-for me at least. May be I am not as unqualified for US president as I thought.