Without fear or Favour.... The Facts.......

How to fix 'risky Africa'

04-FEB-2013 | MADALA THEPA

Africa came up in the World Economic Forum in Davos, Switzerland - a forum that has been for years a masquerade ball of "global cooperation" and a haven for the so-called "masters of the universe" feeding their annual addiction of spreading globalisation propaganda while purporting to improve the state of the world.

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REALLY? President Jacob Zuma questioned the view of the World Economic Forum's 'masters of the universe . Pictures by Simon Mathebula

SPOT ON: Rwandan president Paul Kagame says we need African solutions to African problems. Picture by Reuters

 But the real problem is perception - we are growing rapidly 

It's like a trendy little boutique showing off countries that have apparently advanced their economies with their nominal GDP or companies that are "driving the world economy forward."

To prove that the forum is not for "global cooperation", in order to gain membership and acceptance the forum requires that you have "a global enterprise with more than US$5bn (R44,22bn) in turnover."

Your enterprise must also appear in the "Global Competitive Index".

The 2013 theme was Resilient Dynamism - a play on words declaring an open season on interpretation.

But what was interesting to note was the topic on Africa - "De-Risking Africa: How are Africa's leaders mitigating investment risk in Africa's economies?" - a time honoured narrative that continues to cast doubt on Africa and its people.

This risk perception is psychological profiling of the continent as hopeless.

But what is meant by De-Risking Africa? Is the topic linked to a study that says "over the last 40 years aid in developing countries has reached $2,6trn (R23trn), 25% of which has gone to sub-Saharan Africa" and that despite this aid injection Africa has failed to eliminate poverty due to many factors, including corrupt leaders and the IMF's and World Bank's lending programmes that are known to devalue currencies and deepen the developing countries' debts through interest rates?

President Jacob Zuma participated as a panellist on the forum of this topic and asked if Africa was riskier than other countries.

"It looks like there's a perception about Africa that needs to be dealt with. There's growing evidence that Africa is growing and that African leaders have collectively come together to do things to move Africa forward," he said.

The president wrote an opinion piece after the conference: "This means Africa is still considered as an investment risk.

"Fortunately fellow panellists and the audience agreed that viewing Africa as a risk was an erroneous exaggeration. Doing business can be a risk in any part of the world, as recent developments in the developed North indicate.

"The reality is that Africa is becoming a remarkable success story. In 2010 six of the world's 10 fastest growing economies were in Africa and seven African countries are expected to be in the top 10 over the next five years.

"Africa's output is expected to expand by 50% by 2015. Africa's GDP per capita stood at US$1,630 in 2010.

"It is expected to increase to US$2,200 by 2015 at a real annual growth rate of 5,7%, resulting in a 30% rise in the continent's spending power," he wrote.

Perhaps it was Rwandan president Paul Kagame who nailed it.

"The problem is that Africa's story is written somewhere else and not by Africans themselves. That is why the rest of the world looks at Africa and wants to define it.

"They want to shape the perception about Africa. The best thing we can do for ourselves is to own our problems, own our solutions and write our stories. That will also give us the right definition about the level of risks, real risks and the perception part of it will also be put in its right place."

But the pertinent question in the 21st century was not discussed. Does Africa need money or foreign aid to solve problems of development and to undo the colonial history in Africa and perception?

Nedbank economist Isaac Matshego says foreign aid can be a boon for an undeveloped country if it is channelled towards expanding the economy's production capacity.

"Historically though, aid funded consumption. Hence many countries still depend on aid to this day," he says.

"I believe in African solutions for African problems but we must remember that we operate in a borderless global economy where your chosen solutions have to take into account global trends and give a competitive advantage in global markets.

"Undeveloped countries have small economies with very low incomes and they often rely heavily on foreign capital."

He says a way of obtaining foreign capital other than foreign aid is by exporting goods.

"Africa is well endowed with mineral resources and this is what we export to the rest of the world, but the disadvantage is that African commodity exporters are price takers and not price makers in global markets.

"Therefore undeveloped economies often have to take the price offered for their goods, particularly minerals."

Asked if there will come a time in Africa when we can say "to hell with the IMF and World Bank's austerity measures", he says: "Austerity measures should not be imposed on a country but each country's circumstances should dictate the policies to be adopted."

"The problem with some undeveloped economies is that they still have to go to the IMF and World Bank for bail outs as they have limited alternative sources of assistance."

Until such time that Africa trades and invests within itself, the likes of the World Economic Forum will continue to trick us with "global cooperation" idioms.

Sunday World

COMMENTS BY SONNY

Mr Zuma, Sir, You cannot "quick fix" the corruption and social problems in South Africa, now you want to fix the problems of AFRICA?

Fix the "Zuma spy tapes & Nkandla affairs" and you may start to regain some creditability!  

....."President Jacob Zuma participated as a panellist on the forum of this topic and asked if Africa was riskier than other countries"......

....." But the pertinent question in the 21st century was not discussed. Does Africa need money or foreign aid to solve problems of development and to undo the colonial history in Africa and perception?".....

"Undeveloped countries have small economies with very low incomes and they often rely heavily on foreign capital." Quote Nedbank economist Isaac Matshego.

At the moment the IMF and World Bank controls Africa.

China has a "Quick Fix" solution for Africa.

They will lend you money at prime rate and when you cannot pay off your debts they will repossess Africa and export the minerals on their own behalf.

There is however the possibility that they may export most Africans as a bye-product of CHINA!

BYE BYE PROBLEMS!!

This will all be accomplished in the 22nd Century.......!