The Development of African Dependency
Drunk with the potency of their own rhetoric leaders of newly independent African countries adopted populist positions on many political issues. In the times of colonial rule the Europeans had taken all the best land, they owned and ran all the largest businesses, held all the top posts in the government and pretty much made up whatever semblance of a middle class existed. Now that they were independent, with their leaders promising that they would now take control of their own destinies, most Africans developed hopes and dreams of bright futures. Futures in which with their brothers now in power they would have access to those jobs, would have the opportunity to own those large businesses, would be able to own land, would live in a country where they could afford to educate their children and set them up to succeed to a higher level than their parents. Populist dreams that took root.
These are great aspirations and it is not only the right of Africans to aspire to them, it is also the responsibility of those in power to manage the affairs of their countries such that those aspirations are, by and large, realistically achievable.
Hindsight is twenty/twenty but arithmetic is also pretty simple. Looking back to the decisions that were made at the time and how the ball, once set in motion, was never stopped it is easy to sit in the comfort of an armchair and criticize things we have the opportunity to objectively study. However, the people being groomed for post independence leadership all had the capacity to add a few numbers together. They had the ability to add up the tax receipts of their governments and realize that beyond meeting the basics the current economic structures did not allow for the provision of services beyond sustaining a system that was designed to reap the raw materials and natural resources for export.
In order to be able to afford the things they wanted to promise their fellow citizens they would have to make drastic changes to the fundamentals of their economies. They would have to change the tax structures so that they received additional revenue but also fostered the diversification of the economies beyond dependence on agricultural products which were essentially commodities and over which they had no price control. That is not to say that the politicians should have been planning schemes that would put the government in charge of setting prices; a system like that is doomed to fail.
Africa primarily exports commodities. The word commodities as used in this context means goods that are basically indistinguishable from those produced elsewhere. For instance, if a country is a large producer of sugar, they must sell that sugar at the market price because their sugar does not make coffee any sweeter than sugar produced on another continent. Sugar is sugar and where it comes from makes no difference. It is the same with tea, coffee, oil, iron, coal, wheat, copper, aluminum and all of the other raw materials produced on the African continent. There is another source for them and if you raise your price above what others charge you simply lose customers and go home hungry.
So, what to do? Get out of the commodity business. Rather than exporting crude oil, refine it and sell petroleum products. Rather than selling raw copper, use the copper to manufacture electrical wire, generators, light switches and other products that use copper. Rather than selling raw aluminum, develop parts for cars, windows, bats, boats, engines and anything else in which aluminum is used. These products can be differentiated, and you can charge more for better engine parts, for higher grade airplane body panels or wire with higher conductivity.
If the little money they had on hand had been invested in these industries, even one at a time, they would have been able to grow the tax base and thus increase the revenues to the treasury and increase their budgets to levels where they could actually deliver on promises. They should have them made promises based on what the national wallet could deliver. Taking issues on one at a time and spending only that which they had would have meant slower growth in the beginning but it would have been a growth that would have laid the foundation of wealth creation among the citizenry, wealth that would have been invested in the countries and contributed to increased levels of growth in the future.
Had the politicians come clean with the population and set their expectations to realistic levels they would not have been saddled with the problem of having to deliver on promises they did not have the financial resources to deliver. As long as there is a realistic hope that dreams can be realized, people are generally pretty patient. But, no, they had to go out and promise the world when they could not even deliver the next meal.
In order to deliver they had to borrow money and that money did not come free. The industrialized world naturally charged interest on this money. As the debt grew so did the interest payments and soon the interest payments began to bite into the budgets and have grown to the extent that Africans spend the majority of their discretionary budget on interest payments and have very little discretionary allocation left for the delivery of development activities. The foreign aid that once paid for hospitals and schools now goes to the payment of interest on accumulated debts. So, with this structure it is evidently not the lenders that suffer, it is those who are denied the services that should be delivered by developed economies.
There are many regrettable things the Europeans did to Africa but this situation was home grown. Africa is essentially responsible for the cycle of poverty in which it exist and it is Africa that must find a way to get out of it by pulling herself up by the strength of her arms and the power of her brains.
Our earlier leaders should have been able to count and realize that the numbers did not add up. Rather than be impatient they should have made the tough decisions and waited until they really did have the resources to deliver on promises made. Unfortunately, everyone has a price and a look across the continent will reveal that the political leaders of Africa are all extremely wealthy and that wealth was accumulated during their time in office. They are feeding off the system at the expense of the general population. They are eating more than the land can produce and the only thing that develops is a dependency on the hand that feeds them, the hand of the industrialized countries shoveling “aid” money down their greedy throats.
These are great aspirations and it is not only the right of Africans to aspire to them, it is also the responsibility of those in power to manage the affairs of their countries such that those aspirations are, by and large, realistically achievable.
Hindsight is twenty/twenty but arithmetic is also pretty simple. Looking back to the decisions that were made at the time and how the ball, once set in motion, was never stopped it is easy to sit in the comfort of an armchair and criticize things we have the opportunity to objectively study. However, the people being groomed for post independence leadership all had the capacity to add a few numbers together. They had the ability to add up the tax receipts of their governments and realize that beyond meeting the basics the current economic structures did not allow for the provision of services beyond sustaining a system that was designed to reap the raw materials and natural resources for export.
In order to be able to afford the things they wanted to promise their fellow citizens they would have to make drastic changes to the fundamentals of their economies. They would have to change the tax structures so that they received additional revenue but also fostered the diversification of the economies beyond dependence on agricultural products which were essentially commodities and over which they had no price control. That is not to say that the politicians should have been planning schemes that would put the government in charge of setting prices; a system like that is doomed to fail.
Africa primarily exports commodities. The word commodities as used in this context means goods that are basically indistinguishable from those produced elsewhere. For instance, if a country is a large producer of sugar, they must sell that sugar at the market price because their sugar does not make coffee any sweeter than sugar produced on another continent. Sugar is sugar and where it comes from makes no difference. It is the same with tea, coffee, oil, iron, coal, wheat, copper, aluminum and all of the other raw materials produced on the African continent. There is another source for them and if you raise your price above what others charge you simply lose customers and go home hungry.
So, what to do? Get out of the commodity business. Rather than exporting crude oil, refine it and sell petroleum products. Rather than selling raw copper, use the copper to manufacture electrical wire, generators, light switches and other products that use copper. Rather than selling raw aluminum, develop parts for cars, windows, bats, boats, engines and anything else in which aluminum is used. These products can be differentiated, and you can charge more for better engine parts, for higher grade airplane body panels or wire with higher conductivity.
If the little money they had on hand had been invested in these industries, even one at a time, they would have been able to grow the tax base and thus increase the revenues to the treasury and increase their budgets to levels where they could actually deliver on promises. They should have them made promises based on what the national wallet could deliver. Taking issues on one at a time and spending only that which they had would have meant slower growth in the beginning but it would have been a growth that would have laid the foundation of wealth creation among the citizenry, wealth that would have been invested in the countries and contributed to increased levels of growth in the future.
Had the politicians come clean with the population and set their expectations to realistic levels they would not have been saddled with the problem of having to deliver on promises they did not have the financial resources to deliver. As long as there is a realistic hope that dreams can be realized, people are generally pretty patient. But, no, they had to go out and promise the world when they could not even deliver the next meal.
In order to deliver they had to borrow money and that money did not come free. The industrialized world naturally charged interest on this money. As the debt grew so did the interest payments and soon the interest payments began to bite into the budgets and have grown to the extent that Africans spend the majority of their discretionary budget on interest payments and have very little discretionary allocation left for the delivery of development activities. The foreign aid that once paid for hospitals and schools now goes to the payment of interest on accumulated debts. So, with this structure it is evidently not the lenders that suffer, it is those who are denied the services that should be delivered by developed economies.
There are many regrettable things the Europeans did to Africa but this situation was home grown. Africa is essentially responsible for the cycle of poverty in which it exist and it is Africa that must find a way to get out of it by pulling herself up by the strength of her arms and the power of her brains.
Our earlier leaders should have been able to count and realize that the numbers did not add up. Rather than be impatient they should have made the tough decisions and waited until they really did have the resources to deliver on promises made. Unfortunately, everyone has a price and a look across the continent will reveal that the political leaders of Africa are all extremely wealthy and that wealth was accumulated during their time in office. They are feeding off the system at the expense of the general population. They are eating more than the land can produce and the only thing that develops is a dependency on the hand that feeds them, the hand of the industrialized countries shoveling “aid” money down their greedy throats.
posted by Bongo at 2:27 AM
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