Combating The Spread Of Extremism In The Third World (Part II)

Links A. Impact of The Repudiation Of Third World Debt
          B. Council On Foreign Relations Comments Regarding Terrorism And Debt



(Part II)

I'm not an economist, though I have followed up on the arguments for and against the dissolution of all foreign debt in Africa.  From my simple perspective, I imagine that the elimination of all debt will loosen up capital for job creation, education reform, infrastructure development, hydro-electric projects, and much more.  Some individuals more cynical than myself, have argued for conditions on any debt relaxation agreement.  The concern is that once the constraints are removed, the inmates will be uncontrollable.  And why would that development automatically be considered a negative?  We want uncontrolled growth.  Granted, certain European and North American commodities might face some unexpected competition in the international marketplace.  Another concern is that providing African nations with control of so much of their own revenue (without that revenue automatically disappearing in loan payments) will encourage a return to the days of political despots.  The concern being, that if you remind the Africans of just how much wealth they have, that inevitably tribal conflict will return, along with the Idi Amins, Mobutu Sese Sekos, Jean-Bedel Bokassas, and the Robert Mugabes (wait a second....that crazy old rooster is still around, isn't he?).  I say, "Racist much?"  This type of thinking proceeds on the assumption that congenitally, the blacks of Africa (regardless of tribe, heritage or language), are unable to learn enough from the errors of the recent pass to avoid repeating those mistakes.  Having spent a decent amount of time in Africa (by the way, six months living in the leafy Pretoria suburbs of Waterkloof or Brooklyn, shopping at the conveniently located Checkers and Menlyn Park Mall, and dining at Priva Gastrolounge, does not constitute "Africa" in my book), I think the people of this continent are ready for a change.  And I don't think they will hesitate to remove anyone who tries to turn back the clock to the days of  endemic corruption.  The world is much smaller, and our leaders are much more accessible.  Africans (especially the younger generation) are ACHING for the opportunity to start with a "Coup de Torchon", a clean slate.  Most the these young people don't remember Daniel arap Moi, Kenneth Kaunda, or PW Botha.  The amazing advances in communication technology has revolutionized education on our planet.  Young people receive lessons in Cultural Geography and Social Studies every time they access the internet on their phone.  In the past, the list of options regarding future employment was limited by many factors.  Today, young people are beginning to accept the idea that they can achieve anything that they're willing to sacrifice and work for.

One particular argument against eliminating the debt of African nations is that it will discourage lenders from getting involved in Africa.  Who wants to make a loan that can be erased twenty years down the road?  No doubt Africa needs continued access to loans from wealthy countries, and its easy to understand how this decision could impact African nation's access to international currency.  But lets approach this dilemma seriously.  If the decision were made to dissolve all debt currently owed by African countries (including to each other), it would be a decision that could only be repeated again by the same group of people/organizations.  If there was a legitimate concern that this one isolated decision would create some contagion effect, removing debt from Latin America  (I already have a solution for Latin America...just dump everyone's debt into Christina Fernandez Kirchner's bank account) being next on the list, I would oppose this initiative.  But as long as rational thought properly influences the decision making process of everyone involved, I believe that a one-time elimination of all African debt, would not create expectations of the same decision being made in other places.  No one can convince me that Africa would become "persona non grata" with the international banking community.  Companies exist for the sole purpose of negotiating international loan agreements.  Personally, I would consider Africa to be one of the safest places to make a loan, if the international community had just agreed to a one-time elimination of all African debt.  Certainly that event won't be repeated in our lifetimes, so any new investment would be safe.  The idea that African countries would no longer have access to the IMF and the international banking community is bogus.  Africa will continue to provide endless opportunities for making money, and plenty companies and organizations looking to make a profit, will line-up to loan money to African nations.

My opinion on this subject has evolved.  When I was younger, I had a strong conviction regarding agreements between people.  Someone's word, and someone's signature, had to be worth something.  I believed that since countries had borrowed (and spent) the money, that they should pay it back.  A bit of research later, and I had discovered that many African countries were using new loans to pay the interest on previous loans.  Reminds me of me in my younger days.  Its all become a bit of a mess.  But technology has given Africans new hope for the future.  Nigeria, Equatorial Guinea, Sao Tome and Principe, Mali, and an encouraging number of other African nations are discovering oil reserves (mostly off the coast).  The process of fracking has also started to have an impact on a continent that has always been dependent on energy imports.  Once again, thanks to technology, we have confirmed that West Africa is home to more deposits of Gold and Diamonds than previously thought.  And I haven't even mentioned all the sensitive metals and minerals that sit under the African soil.  If African nations are relieved of the repressive debt obligation, then they would be better-positioned to create their own exploratory companies to access all of this hidden wealth. But some players in the game don't want self-sufficiency in certain market places.  They want to locate, dig, retrieve, and sell whatever particular resource of the moment, and pass back to the host nation a modest one-time payment.  That is the way it has always been done.  An elimination of African debt might just provide the impetus that encourages Mali to explore the north of the nation for oil on its own, not under the foot of a French company.  Wouldn't it be something if Guinea and Botswana cleaned and processed diamonds themselves, instead of relying on Dutch and Israeli companies?  In truth, I'm getting ahead of myself here.  I'm grasping, folks.  I'm looking for an opportunity to be excited for the future.  With Islamic Extremism expanding so rapidly, I welcome any change of circumstances.  Relieving Kenya of its international debt, will allow Nairobi to institute immediate job creation programs in the slums of Kibera.  The government of Kenya can win the battle against Al-Shabaab/Al-Qaeda for the hearts and minds of its young people.  The same argument can be made in Uganda and Nigeria.  Young people will gravitate to a legitimate opportunity to create a successful career, before they will agree to picking up an AK-47 and randomly killing people.  Call me foolishly optimistic, but this is what I believe.

The international banking community, including the IMF, should immediately institute a blanket forgiveness of all African debt, to include Mauritania, Ethiopia, Eritrea, Djibouti, and South Sudan.

Sub-Saharan Africa 2015: What To Expect

Link: Brookings Evaluates Sub-Saharan Africa 2015

When I consider the prospects for Sub-Saharan Africa in 2015, by habit, I always start with

political considerations.  But Africa has changed, evolving and adjusting to international economic trends much more quickly than I expected.  I don't think we can under-estimate the impact that communication has had on Sub-Saharan Africa.  The relative simplicity and low cost involved with cell phone networks has brought every dark corner of Africa into the light.  I remember the cell phone revolution as it arrived in South Africa.  It seemed as if overnight, everybody had one.  The real-time contact engendered by the presence of cell phone networks as instrumental in getting the continent reasonably wired on the net.  I remember being in Bangui, Central African Republic, sometime in 2001, and suffering from water shortages and no taxis or public transportation.  But the internet café was up and running, thanks to the world's first home-made satellite dish and a motley combination of modern and World War II-era French Army generators.  From my perspective, the arrival of the cell phone ushered in a techno-economic revolution in Africa.  We had BACP (Before the Arrival of the Cell Phone) and AACP (After the Arrival of The Cell Phone).  I think this date-differentiation can be accurately used when examining economic trends in the Middle East and the Indian Sub-Continent.  The cell phone has made that much of a difference, folks.

Africa in 2015 is connected.  Abidjan is connected to Maputo, and Yaoundé is chatting with Tokyo.  Sadly, the last bit of "African mystery" is gone.  An archaeologist can be digging in Mali and be interrupted by a phone call from Dublin.  But in this instance, there can be no doubt that the benefits of technology outweigh the negatives.  African banks and stock markets have real-time communication with the big guys in Europe, Tokyo and New York.  The western investments in oil and mining no longer have to wait for value-impacting information from on-site.  That information is available as it occurs.  Wow.  More so than in many years, I am optimistic for the future of Sub-Saharan Africa.  The days of military coups and brutal dictators seems to be ending.  Africa still suffers from the ass-boil that is Robert Mugabe, but everyone dies eventually, right?  Some folks see Museveni in Uganda as a dictator, and also young Kabila in Kinshasa.  But these guys seem to be out of touch and behind the times.  The world has become so much smaller, and the money to be made in Africa isn't limited to African money.  There is Euro to be made, and Dollars.  The Chinese seem to be all over Africa, but I think we will see a bit less of them in 2015.  I think the trend away from despots and one-party rule will continue, because there is more money to be made in a competitive system, and even the nasty guys will end up chasing the bigger $.

Let's start with China in 2015.  The Chinese started 2014 on a rampage, flying from capital

Dakar Railway Station;  Source: J.W.H. van der WAAL

to capital, promising all sorts of funding for development projects.  In the past, the Chinese have been good on their word.  They have built roads, dams, and blocks of flats.  Everyone, I mean EVERYONE, took notice when the Chinese offered to finance the rebuilding of the Dakar-Niger Railway.  This ambitious and absolutely overdue plan included building an additional rail line, linking Bamako, Mali and Freetown, Sierra Leone.  As things stand at present, the Dakar-Niger Railway is a mess.  It rarely is able to keep to a schedule and its ability to transport is limited.  Any rain or weather-related incident is likely to shut the rail system down for weeks.  The real problem is the lack of repair of the track system.  Why does this issue attract the attention of EVERYONE (as I stated earlier)?  Because this rail system transports the gas that keeps the various mines in Mali and Guinea in operation, not to mention the other materials it transports that are essential to those particular mining operations that basically belong to western investors.  Ideally, Mali should be able to rely on transport of goods in three directions: Dakar, Freetown, and Abidjan.  I have no doubt that in my lifetime I will see this develop.  But the anticipated rebuilding of the Dakar-Niger railway hit a huge snag.  The Chinese went back to Beijing, took out their calculators, met with banking and economic officials, and announced that "they had never actually agreed to finance the project....that it was all just conversation".  In the end, I think the Chinese will realize that the benefits outweigh the cost, and will provide a definite amount of invaluable goodwill. 

Now for some serious conversation.  African countries need to continue the move away from one-commodity economies.  Nigeria, that doesn't mean you continue moving towards being totally dependent on oil, it means to diversify your economy, so that when the price of oil tanks, your economy doesn't crash as well.  Cote d'Ivoire and Ghana have been successful moving away from a reliance on cocoa, as has Mali with cotton and Botswana with Diamonds.  I am concerned about the falling price of oil and its impact on juvenile economies such as Cabo Verde and Equatorial Guinea. I don't really have much sympathy for Nigeria.  They are sitting on a gold mine of resources, and all they can do in Lagos is fight their own cousins for every Dollar, while the nastiest of insurgencies terrorizes and brutalizes children all over the north of the country.  How does a nation with the resources and international connections of Nigeria, not have an army worth a damn?  All this may

Goodluck Jonathan
Source: World Economic Forum

change if Goodluck Jonathan losses the election in February (it ain't gonna happen, folks).  I would be willing to take a chance on the other guy just for the sake of change.  Ebola in 2015: I believe this outbreak of Ebola is winding down, and Africa learned some invaluable lessons on how to respond.  This particular outbreak could have been monstrous.  For Liberia, Guinea and Sierra Leone, it was.  But the protocols that were put in place and followed worked exactly as expected.  This bodes well for the future.  Unfortunately, West Africa will take some time to climb out of the economic and social disaster that Ebola wrought.  The rest of Africa needs to step up, especially South Africa, who pretends to be a leader, but always seems to be missing at the table during a crisis.  I think China will revisit its commitments, and return with a smile.  The Dakar-Niger project will begin, and positive economic fallout will help with the Ebola recovery.

I think this subject was a bit heavy to tackle in one post, but wither way, as a lover of Africa, I'm looking forward to 2015.  I purposely left South Africa out of the conversation.  They seem to be chugging along just fine down south, on their own schedule and in their own little world.  Zuma had a tough year in 2014, and I anticipate that his enemies are smelling blood, so to speak.  South Africa has always been a bit obsessed with its own identity and importance in the world.  It's sad, because I believe that Nelson Mandela truly wanted South Africa to be the leader of the continent.  Heck, even Nigeria seems to draw more attention from other African states.  South Africa does remain popular for illegal immigration though, as people from all over go searching for jobs and opportunities.  I believe that the fall in the price of oil will be a boost to South Africa, which has always been so sensitive to that commodity.  South Africans have a tendency to worry when the Rand hits a free-fall against the Euro and the Dollar.  They shouldn't.  It directly impacts the all-important tourist industry, not to mention the increasing number of investors from the United States, looking for a good value for their Dollars.