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FRONTPAGE VIEWPOINT MAGAZINE BY SECTION Special Report Business Nigeria COVER POLITICS BUSINESS & ECONOMICS BACK OF THE BOOK REGULARS NEIL FORD LETTERS PUBLISHERS NOTE AROUND AFRICA POLITALK WILMOT ADVERTISING Email us for advertising information COMPANY PROFILE MISSION TEAM EDITORIAL BOARD DIRECTORS |
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Click here for the NewsAfrica Special Focus Article The myth of globalisation At the end of 2008, total foreign exchange reserves of Africa stood at $460bn. A country like Nigeria presently has sufficient foreign reserves to cover its imports for the next 24 months, writes CHIKA EZEANYA. One requires more than a lay understanding of macro-economics, to decipher what Africa stands to gain in her continuous pile-up of savings in a currency that is loosing its value by the day, while the continent’s hundreds of million of inhabitants suffer extreme deprivation. As is well understood, Africa was drafted into the global economic system through the process of colonialism. During colonial times, the foreign exchange earned from the sale of exports was held by the colonial power. By 1955, Africa’s sterling reserves in Britain alone were £446m. The case of francophone Africa was no different – only more pathetic. Fifty years at the end of formal colonial rule, the CFA is still directly linked to the euro. The international monetary regime dictates that the foreign reserve of a country be used as the yardstick to determine its ability to repay its foreign debt or to make payments for its imports. Theoretically, it is expected that the foreign reserves of a developing country should be enough to meet its import requirement for at least six months. Global monitoring institutions serve as watchdogs to sanction any country that defaults in this requirement, usually by downgrading the country’s credit rating. Simply put, Africa cannot assess its foreign reserves to solve her problems for fear of being ostracised from the global trading arrangement. The colonial legacy of economic lethargy has left Africa in a situation where no action is being taken regarding the utilisation of her huge foreign reserves to benefit the continent. African leadership displays an astonishing apathy to the issue of the continent’s foreign reserves, and is more interested in clamoring for increased aid. As during the colonial era, Europe and now the US continue to manage and benefit from Africa’s external reserves. African intellectuals, rather than research for appropriate mechanisms to ensure that Africa’s foreign reserves cease to prop the faltering Western economies, are more inclined to follow the lead of their Western counterparts. However, some conscious Africans have spoken out on the issue. In its October 2009 issue, NewsAfrica interviewed Jean-Louis Ekra,president of the African Export Import Bank, who suggested Africa’s foreign reserves be channelled to institutions such as the African Development Bank (AFDB). This would ensure that the Western rating institutions would not downgrade the continent, as the AFDB, an internationally accredited body, would guarantee the disbursement of the loan. A brilliant suggestion, no doubt, from a patriot concerned about Africa’s continued cash drain. The reservation about the AFDB and its like is that it is a stooge of the World Bank and other similar international agencies. Should Africa’s foreign reserve be spent on running the AFDB? Should paying international consultants huge sums of money take precedence over verifiable infrastructural and human development projects? Should the continent’s foreign reserves be expended in the sponsorship of irrelevant workshops and conferences on subjects far removed from Africa’s immediate need, but of more importance to the West? The institution’s track record would provide the answers. The AFDB has not in its 45-year history of existence shown itself to be radically different from other institutions whose development efforts in Africa has yielded scant benefits. There are few strategic development achievements that can be attributed to the efforts of the AFDB. In this regard, it is expedient that the investment of Africa’s foreign reserve within the continent does not assume a business-as-usual approach if any verifiable success is to be recorded. The colonially entrenched cycle of enriching the West to the detriment of Africa must be reversed. Africa cannot keep begging and borrowing to fund development efforts, while it has money invested in another nation at little or no profit, and at the risk of being further devalued. There is need for serious research and thought to be invested in this matter to reach a solution that would benefit the hundreds of millions of poverty stricken people on the continent. Ways of reducing imports and improving intra-continental trade for the one billion inhabitants of the continent should be seriously explored. Fifty years after independence, Africa is only a victim of her own ignorance and inability to rise up to the challenge to change the existing colonially imposed structure. chi_eze@yahoo.co.uk |
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