Month: August 2012
My last two blogs were fairly bleak with regard to Africa’s state of preparedness for the investment avalanche headed our way. However, optimism lives and the points below illustrate why:
1. Most educated population (in modern terms) ever
Simple point really. As far literacy goes, we are the most literate modern African population since independence. In Kenya it’s 87.01% and Sub-Saharan Africa stands at 62.6%., Though with clear room for improvement, we are doing relatively well…and these figures will likely only improve. Though less impressive, the latest statistics put Kenya’s University enrollment at 177,735 while Africa produces, ‘500,000-750,000 graduates per year, depending on dropout rate and timing’. , So we are the most educated and literate population ever. Whether this fact is used optimally is another issue altogether. However, an emerging foundation exists.
2. Looks like we’re finally recovering from the pressure of the 1980s and 90s
Woe to those who think African governments are dumbasses and will get into the quandaries they did during the 1980s and 90s. We.have.learnt. The biggest mistake we have learnt from are the Structural Adjustment Programs that were imposed on Africa in the 80s and 90s. SAPs are essentially economic policies that were edicts from the World Bank and IMF in that their loan provision was based on the adoption of SAPs.
SAPs policies include currency devaluation, managed balance of payments, reduction of government services through public spending cuts/budget deficit cuts, reducing tax on high earners, reducing inflation, wage suppression, privatization, lower tariffs on imports and tighter monetary policy, increased free trade, cuts in social spending, and business deregulation.
In the opinion of many Africans:
These programmes (SAPs) have been linked to the high rate of income inequality, inflation, unemployment, retrenchment, and so on, which have lowered living standards, especially, those relating to the material resources in the family. Furthermore, the SAPs in Kenya have been linked to the increasing deviant and crime rates, ethnic hatred and discrimination and welfare problems, especially in the areas of education and health.
Linked to the devastation of the SAPs, African government got themselves in heinous levels of debt. There was, ‘excessive African indebtedness in the 1970s and early 1980s, and which…ballooned from $140 billion in 1982 to over $270 billion in 1990’. In Kenya’s case, ‘from 1998 until 2010, Kenya Government Debt to GDP averaged 52.2 Percent reaching an all time high of 60.6 Percent in December of 2003’. For Africa,’ in 1980, 56 per cent of Africa’s total public and publicly guaranteed debt was official, and by 1995 the figure had increased to about 77 per cent…Between 2000 and 2002, more than 80 per cent of Africa’s public and publicly guaranteed debt was official’. In recent years however, African governments have turned things around and as we speak the 10 countries in deepest debt are all EuroAmerican with the exception of Japan which is number 1. This is not to say that all is rosy on the economic front. We still have trade challenges and of course local issues such as poor governance and corruption, however the positive momentum seems to be in our favour.
3. Engaged citizenry
Having endured decades under dictatorships often interspersed with coups and ‘liberation movements’ led by rebel factions, Africa is now at peace generally speaking. This is not to say that there aren’t tensions or brief flares of violence such as those in Kenya in 2007-8, but on the whole there exists a relative state of calm in Africa. This is crucial for it is only when peace exists that citizens can engage their government and each other especially in matters concerning the nation’s progress and development of the nation. It is during times of peace that ONE government can become a target at which citizens direct their critiques, criticisms and thoughts. With an engaged citizenry African governments realise they have to deliver something be it new/ repaired infrastructure, free primary education, better health facilities, new schools, SOMETHING. This is not to say corruption doesn’t bedevil the government, but there is pressure on them and elected political representatives to leave office with a nation a bit better than they found it. Should Africa continue on this path, it will become increasingly difficult for governments to live in a void bereft of comments on their performance. Peace also means citizens can better track what their government is up to and what deals they’re agreeing to. This again means Africans are better placed to trail the economic agreements their governments sign…and the governments know they are being watched. The confluence of these factors put pressure on governments to ensure that key investment agreements made are in the interests of the nation as a whole. One cannot naively assume that an engaged citizenry or even a smart investment deal negotiated by African governments will automatically reap dividends for the citizenry. However, an engaged citizenry will make it much harder for governments to agree to dubious deals or trifle away the investments away without having to answer some hard questions.
4. More freedom of expression, comparatively speaking
Linked to the point above not only are the citizens more engaged, but having fought for freedom of expression from tyrannical leaders, Africans are now enjoying that freedom. Although black-holes of repressed freedom exist in countries such as Zimbabwe, Ethiopia and even (arguably) Rwanda, numerous African countries can gab away over just about everything they deem appropriate and interesting, particularly their governments and politicians. Kenyan’s notorious obsession with politics is rather extreme but that spotlight, alongside freedom of expression means that politicians and government will hear what their citizenry think of them, especially the negative comments. Freedom of expression has shed light on immense government corruption in Kenya leading to high profile government suspensions from office. With a free press, investigative journalism can thrive and allow the sector to play its watchdog role for the nation, and shed light on obscure government dealings. Although credibility of information may be an issue when there is so much freedom of expression, it does increase the likelihood that important information will surface. This is crucial for Africa, especially when it comes to money. Not only can we better see what the government is up to, we can put pressure on them to behave as well. Though the checks and balances are still young and volatile, as we mature so will this architecture and its rigour. This is a reason for optimism…
So yes the investment may be coming in a rate we can’t quite keep up with, but we do have basics in place that make us more capable than ever before to handle it…part 2 coming soon.
 United Nations Educational, Scientific, and Cultural Organization (UNESCO) Institute for Statistics.(2009), ‘Literacy rate, adult total (% of people ages 15 and above)’, http://www.indexmundi.com/facts/indicators/SE.ADT.LITR.ZS
 Higher Education in Sub-Saharan Africa, ‘Economics of Higher Education: Loans, Budgets, and Emigration’, http://ent.arp.harvard.edu/AfricaHigherEducation/Economics2.html
 WHO (2012), ‘Structural Adjustment Programmes (SAPs), http://www.who.int/trade/glossary/story084/en/index.html
 Rono, Joseph (2002), ‘The impact of the structural adjustment programmes on Kenyan society Journal Of Social Development In Africa’, http://archive.lib.msu.edu/DMC/African%20Journals/pdfs/social%20development/vol17no1/jsda017001007.pdf
 Background to the African Debt Crisis (1992), From: African Debt Revisited: Procrastination or Progress? FONDAD, The Hague, http://www.fondad.org/uploaded/African%20Debt%20Revisited/African%20Debt%20Revisited-Chapter%20I.pdf
 Trading Economics (2012), ‘Kenya Government Debt To GDP’, http://www.tradingeconomics.com/kenya/government-debt-to-gdp
 This measure gives an idea of the ability of a country to make future payments on its debt. If a country were unable to pay its debt, it would default, which could cause a panic in the domestic and international markets. The higher the debt-to-GDP ratio, the less likely the country will pay its debt back, and the higher its risk of default. Read more: http://www.investopedia.com/terms/d/debtgdpratio.asp#ixzz23WPwj8IK
 Michael Sauter, Charles Stockdale, Ashley Allen (2012), ‘The 10 Countries Deepest in Debt’
 The fracas in Mali and Sudan notwithstanding…and of course Somalia is NOT being referred to here either.
 Of course the tracking isn’t comprehensive however it is a start.