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Opinions of Wednesday, 14 July 2004

Columnist: Adjei, Nsiah

Poverty, Leadership and Development

The first step in solving any scientific problem is the correct identification and diagnosis of the problem. And economics is a ?science?. So, half a century ago, most sub Sahara African countries were granted independence based on the fundamental reason that good and African leadership would bring economic prosperity and alleviate poverty among its people.

Then African ?leaders? and students studying in the West are of the economic opinion that slavery and colonization is the main cause of Africa?s underdevelopment. And that Africa must be ruled by Africans. That diagnosis may be dignified and true at the time. But correct diagnosis does not necessarily mean one can logically solve the problem(s).Because between diagnosis and solutions lay greed, further knowledge and love.

Most African politicians then and now chose and ended up with greed. But choosing greed and corruption means dishonestly keeping national wealth for oneself. And for leadership, girlfriends and children only. The poor can go to hell.

Hello, African Politicians and pastors then and now are so rich .And operate like drug couriers-you never know the ?assets? they carry (or own) on their arrival (and departure). Very often richer than their western counterparts from whom they always march to beg for money. And their subjects so poor.

But someone must still be blame for Africa?s woes, wars, chaos and poverty. So the causes of African poverty were shifted by its politicians and spin doctors from slavery and colonialism-to imperialism. Next, to World Bank/ IMF conditionality. Then the attitude of the poor. ?Ohia ye ya?.

Take the case of loan conditionality. Every economist knows that all bank loans come with conditionality. You have a reason to (re)negotiate, take or reject it. Period. Next take the case of Structural Adjustment Program (SAP). SAPs generally require countries to devalue their currencies against the dollar; lift import and export restrictions; balance their budgets and not overspend; and remove price controls and state subsidies. But deep down SAP laid economic data collected by the countries themselves to prove or argue their economic performance, or underperformance. And financiers make limited public comments about false data, because of the political implications of these comments. Comments can create economic upheavals, wars and coup d'?tat. For a very long time in the SAP era, African politicians doctored and cook up SAP economic data to prove that these countries are miraculously doing well. And poverty is falling among their people. Because these leaders wanted to score credit in the eyes of the world and opponents. And consolidate political power.

And financiers kept quiet.

Reason: Poverty and corruption is an economic time bomb. And no government can privately go bed with it for a very long time.

Take the case of Ghana?s Poverty Reduction Strategy(GPRS).If an economy grows @+7% for 10yrs-its Per Capita Income doubles. And results in four fold increase in 20 yrs. Now think of Ghana?s growth rate of 4% and per capita income of $365 and juxtapose it to the per capita income of $1000 in 2010, as envisage in the GPRS i.e. 6yrs from now. Under the bar.

Apparently, the noise being made by politicians in these countries that SAP has brought hardship and HIPC to their people-are all political and economic nons-nse. And late, too. If SAP is fundamentally wrong, what justifies the core, economic reason for HIPC which these countries are pursuing?

In fact, what the Structural Adjustment intends and entails is not what was mostly carried out in these African countries. True-the policies pursued were out of sync and principle with the 19 point SAP plan. Because you cannot solve an economic problem with a political solution.

Most state-owned companies intended to be transparently divested to drive private led growth were non-transparently sold to political fronts, Para ?political organizations and girlfriends of African politicians. And who run them down because of inexperience, political interference and high tariffs. Promotion of South-south and intra regional trade was also minimal or non existent. Economic data from ECOWAS alone shows that countries in the sub region can carry out so much business among itself without looking up to the West .Business from the export of salt ,frog legs ,yam, alomo bitters ,clay, leaves, tubers etc.

But judge Nigeria, an ?ECOWAS close? economy that did better under agriculture than after the discovery of oil. And which now blames IMF conditionality and ?begging? to join HIPC. If Nigeria has invested its oil revenue alone @2% interest rate. Its per Capita income would have been US$1000. Now, Nigeria?s per capita income is less than $300.And there are 20 road blocks within a distance of 200 meters in Lagos state, targeted mostly at other West African citizens. And this keeps one wondering if the ECOWAS bloc is not a useless, documentary organization. Nigeria is likely to drag its feet to join the ECO- the 2nd monetary bloc for West African Countries.

Currently, Africa and Africans find itself in HIPC-not by curse, slavery, colonialism, SAP or the attitude of the poor-but by leadership and political design .Because nations the world over have one thing in common. These are Natural resource, Human resource, 24 working Hours and a visionary leader to convert these resources into wealth. African leaders have converted their resources into HIPC.

The HIPC initiative is based on 2 main economic principles:

First, that nations (or individuals) cannot take loans to settle debt. Because the cumulative interest would be unbearable in the future.

The second principle is based on the Modigliani?s theory, which states that wealth is created out of thrift .And that nations must look inward for resource mobilization. All other HIPC ratios are based on these two principles.

HIPC or no HIPC, what African politicians thirst for is dollar, denominated loans. And financiers laugh in the dark about the way African politicians become excited and lick their mouth at the mention of HIPC funds, loans, grants etc.

And so in a bid to dribble donors and get access to dollars, some HIPC nations are approaching human banks like CNTCI and IFC for loans-instead of institutional Banks. These loans (or credit) are less likely to come because multilateral and bilateral donors will definitely block them. Because it is antithetic to the HIPC principles.

In Ghana, people in high places are quoted as saying that these ?monies? are not loans but supplier?s credit. And that money would not be used to settle the loan?s management fees- but ?supplies? .Supplies like nails, snails, gear box, kasoa cassava and beautiful Ghanaian gals. Oh Africa!

Now, what Africa needs to get out of poverty and HIPC is good leadership, peace and Investment. But Africa from the sky, land and economic records look like a high risk investor?s delicacy. In fact, the last straw that has broken the back of African investment (FDI) drive and poverty is the sterling performance of China, India. And the 10 new EU members.

And so half a century later.

The clarion call is that: still, the African problem must be solved by Africans. But this time not a dignified and confidence call-but an insult. Meaning-the world is tired of cleaning the sh-t and invented poverty by African leaders and politicians. And so Africans must clean it themselves.

But the insults and manufactured wars by politicians. The wickedness, disgrace, lies, and counter lies displayed in places like the National Reconciliation Commission (in Ghana)-makes African politics and political appointments look like job for perverts, bad boys and gals-who have nothing serious doing.

And so, the African continent and its poor is fast becoming a derelict. The Leaders and Politicians have failed? The World Bank and IMF have failed? The youth and private sector are running away from the continent? Who would save this continent-Africans!

Nsiah Adjei
Current Solutions
1st Floor, Mobil
Sahara, Dansoman

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