How Will The Financial Crisis Affect Africa?

Two months ago, when concerns about the global financial crisis were peaking, I eagerly watched what the African leadership would have to say about the crisis and its possible effects on the continent. They rushed to announce that African banks wouldn't be affected. "It's not like we have stocks in London, New York or Tokyo, you know," chuckled one of the finance ministers who had been interviewed. It would seem that, for the first time, 'underdevelopment' was a saving grace. African banking systems probably won't experience the turbulences seen in U.S banking systems. The chief economist of the Africa region at the World Bank, Shanta Devarajan, explains:

"African banks retain loans they originate on their balance sheets, the interbank market is small, and the market for securitized or derivative instruments is either small or nonexistent. Even though some African countries’ banking systems have significant foreign ownership, the parent banks are typically not in the U.S. Furthermore, the foreign ownership share in the largest economies, Nigeria and South Africa, is less than five percent (compared with a developing-country average of 40 percent)."

While the banking systems may not feel the impact as much, consequences engendered by the crisis will manifest themselves in other sectors; particularly those sectors dependent on foreign capital inflows- foreign direct investment, portfolio investment and loans. The African Development Bank's chief economist, Louis Kasekende, says that stock markets in Uganda, Tanzania, Kenya, Egypt, and South Africa are already feeling the impact of the financial crisis, due to international investors withdrawing in fear of future impacts.

Most countries were using foreign capital inflows to finance infrastructure investment. For anyone who has ever traveled to an African country, lack of infrastructure is a daily obstacle to economic and human development, especially in the rural areas. A halt or delay in such projects would also mean the loss of livelihood for so many whose employment was tied to infrastructure and construction projects. In addition, if the cutbacks spread to official development assistance, public health efforts, particularly HIV/AIDS prevention and treatment, and education monies could be greatly affected. Foreign N.G.Os will also probably see their funds dry up as their benefactors re-adjust their financial priorities. Whether the latter is a bad thing, I don't know...

The bigger challenge, though, is how African countries, especially those already battling high inflation, will be affected on a macroeconomic level. Ethiopia’s inflation rate is 61 percent, Kenya’s 28 percent, Ghana’s 18 percent and South Africa’s 13.6 percent. Ethiopia’s trade deficit is 30 percent of GDP, Ghana’s current account deficit is 13 percent of GDP, and South Africa’s 8.2 percent of GDP. In addition, a number of African currencies, namely, the Ugandan and Kenyan shillings, have been depreciating since October. Devarajan says that, "although unrelated to the financial market crisis in the U.S. (but closely related to the food and fuel price increases of earlier this year), these developments will require early and decisive actions to avoid the situation getting worse."

What are the 'early and decisive actions' these countries should take? The two main economic policy approaches advanced by economists when trying to reach macroeconomic stability are monetary policy and fiscal policy. Check out my next post as I go deeper into the differences of these two approaches, and the implications following either could have on the future of African economic development.

Victory

"When you get inside the N-Zone...""...act like you've been there before."

May I rant?

When Obeezy clinched his historic victory and the roars and cheers deafened the masses, I was waking up from a 2 hour nap.

My cynical mind had already decided he was going to win, that history had already been made, and that it was now merely just a matter of setting up a photo op that didn't expose all that bullet-proofing on stage.

I strolled out of my sanctum into the my living room to find a bunch of visitors intruders people sitting around clenching their brews, and chanting that one's name. I took a quick gander at the screen to see a genuinely surprised President Elect holding back tears of joy and maintaining composure like he always had, and hopefully, always will.

Then I panned back to the drunk cheering squad bouncing off the walls, ceilings, furniture and floors.

I took of my glasses, massaged my tear ducts in shame before I snapped my headphones on and walked over, around, and out the door onto the front porch to actually listen to the speech.

I have to admit that halfway through the speech, I had gotten distracted by the deluge of phone calls, voicemails, emails and texts. My phone had also grown weary and it's vibration was less than enthusiastic by the time I decided to call Soukeyna.

I needed to hear a sensible voice that would restore the glee the people keep stealing from me. (Sidebar: Thank you Soukie)

Let me tell you about this theft.
There is a deeply ingrained culture of defeatism and underdog worship in these States, United as they may or may not be. Unfortunately, like most other negative facets of day to day life that would stunt social development, this affliction is rampant amongst those with more melanin.

When you infuse those points of perception into a people pursuing freedom and emancipation in a capitalist playground...well, you just gave the emo kid a razor and some depressing death metal and left him/her to her own devises.

It's really cultural suicide.

My main concern with Obama, that I have tried to hide in my back pocket, remains that people were and are not ready for this man, and for the change he can bring, and that their unreadinesses will foil his otherwise flawless bringings.

Those same drunks that had populated my foyer the night that Kenyan won, had been in my house the day prior as I walked in from work. They were doing the same thing, except this time, they were discussing polls and Senator McCain...and whatshername. As a joke, I decided to ask: "If Obama wasn't black, why would you vote for him?"

Nervous laughs and cricket chirps reigned until finally one of the 12 college educated, dark skinned, "microwave pundits" spoke. He made valid points and went so far as to draw shortcomings of the man. Then, after a gloriously laudable answer, he said "But regardless, I'm only voting for dude coz he black."

My heart sunk to the tune of Deja Vu. There would be celebration. Loads of it. There would be unnecessary shows of pride. Gratuitous amounts of them. Then there would be silence after people realized that they cheered before the movie was over. Then there would be more celebration after the inauguration. Then all cameras would slowly zoom into the White House and we would all watch and wait for the first presidential f*ckup. Sensationalist peons and pawns that we are.

There would be a boost in spending, but a decrease in productivity, an inflated interest in politics, but an even more staggering increase in political subjectivity...There would be more of what we want, and less of what we need.

Obama's victory was a cause for celebration, but it was more than anything a call for action. This is the iron when it's hot, and this is when we strike; these are the chickens hatching, and this is when we count. For anyone who's ever asked "What's next?" Well, you're next.

Obama leads, we follow. We don't just sit back and watch him run the distance. He is not a sled dog. He's a leader. Love him or hate him on your own free time, but for now, we all have work to do.

The thing about doors being kicked open, is that they very quickly bounce back unless it's held open. The President has shown that he will his do his job. The people need to show that they can do theirs. The President has proven that he will do his part to break down social, political, international and intra-national divides, we need to prove we can do the rest.

There was a group email proclaming "We won!" in my Inbox that day at about 11:10pm. 20 minutes later, there were about 20 replies reciprocating the emotion in increasingly outlandish manners. I stared at my phone's screen as number 21 came in, then stretched away the nap I had just taken, and prepared to confront the people in my living room who were babbling the same victorious chants.

Phone in hand, I stood in front of the screen on an imaginary soapbox and read to them the reply I sent out to the Victory email:

"We've scored the winning touchdown, but the game is not yet over."

Then I proceeded back into my office, and got straight back to work.

African Governments Need to Mobilize the Diaspora

The mobilization of diasporic communities has been one aspect of development generally unexplored in the context of Africa. As is the case with other diasporas, the African diaspora has the potential to serve a niche in the development of the continent. Case studies from other countries and regions have demonstrated how diasporic communities can be utilized to promote development.

In the case of China, the Chinese government was able to increase foreign direct investments by sponsoring conferences, delegation visits, and providing preferential treatment to overseas Chinese investors. The Indian government has also implemented similar programs making it easier for diasporic communities in the United States to invest in the country. Within the Indian government’s Ministry of External Affairs a Special High Level Committee on the Indian Diaspora was established to encourage Indians in America to invest in Indian companies through the creation of an “India Fund”, deposit savings accounts in Indian banks, and ease the process of attaining dual citizenship. In the case of South Korea, the Korean Export Bank saw an opportunity in the wig industry and orchestrated a strategic plan to provide South Korean wig manufacturers and immigrant wholesales and retailers, with subsidized loans. The implementation of this plan led to a take over of the industry, increasing South Korea’s share of the US wig market from 5 percent in 1965 to 89 percent in 1972.

Using similar models, African countries could experiment with various kinds of development programs. Incentives are some of the best means of promoting repatriation although they can be costly. Temporary tax exemptions for diaspora start up businesses could promote more direct investment. Additionally, African governments could provide higher salaries or honorary posts for exceptional members of the diaspora contributing to development. However, lack of opportunity, corruption and weak institutions are some of the biggest deterrents to repatriation worldwide (not just in Africa), therefore governments have to strive to promote transparency and intellectual freedom.

The establishment of a Department or Office of Diaspora Affairs could also facilitate a prolific dialogue between the diaspora and homeland. This department could help:

1. Link diaspora and homeland entrepreneurs
2. Negotiate business and legal transactions between diasporic entrepreneurs and government officials
3. Solicit the diaspora for special aid projects (disaster relief)
4. Provide supportive services for citizens intending to live overseas (free language classes, assistance in locating housing, and/or assistance with basic business acumen such as writing grants or business proposals)

The African diaspora is a largely untapped resource in terms of continental development and, properly mobilized, has the ability to provide much needed support toward reaching development goals.

What Is Better Than Voting?

Greetings,
My name is Josh Myers, a student at Howard University, and I share with Masake the spirit of ubuntu!! Here's an article that I wrote in light of the Obama presidency



The otherwise unruly and disruptive expressions of Africana culture on the streets of Washington, DC, and other urban areas Tuesday were largely ignored and sometimes appreciated by law enforcement. This Africana response came in the midst of this country electing its first president of African descent. It was a celebration that had nothing to do with the politics of Barack Obama. It had everything to do with the idea that for centuries, black people in this country have been oppressed, victimized, and marginalized. The celebrations were linked to its symbolic end in the minds of some of those who crowded the streets. In the President-Elect’s father’s native of Kenya, African people rejoiced to see what they hoped to be a cultural coup d’etat in America. The (real) scholar community as well as what Michael Gomez and others term, “the least of these”, have no reservations about the potential of a Barack Obama presidency. Beyond the symbolic imagery (whether or not that is plausible will not be discussed here), these two groups have acknowledged that the propensity for a Barack Obama presidency in and of itself to change the structural inequality of the United States of America is very low. It is the black bourgeoisie in this country who have in their view, seen their prospects at inclusion rise in direct proportion to Barack Obama’s ascendancy. They were the ones who aggressively campaigned door-to-door, “got on the bus”, and organized many of the Obama ’08 functions. It is because they like the abolitionists, the Civil Rights movement workers, and other similar movements America had a direct stake in an Obama presidency. It was a reinstitution of a class-based, meritocractic-myth driven political posture, whereby they would be entitled to internships, jobs, and high government positions. However, there is a way that they can be included and not at the expense of the aforementioned “least of these”, who in fact were the soldiers that lined up at the polls at 5:30 in the morning. These were the people that were actually prepared to advocate for us all, had this election been stolen!
The way we go about change is through our collective power. African-Americans in this country have never utilized their collective power to effect meaningful change within this racial capitalist system. The aforementioned class fragmentation, coupled with what Joy Leary has termed post traumatic slave disorder, are two of many reasons we can attribute this to. However, there is not a better time for Africans in this country to create a lobby that speak specifically to the multitude of agenda items facing Africans, and only Africans. Yes, there is such a thing as “black issues”. For us to harness this power, it would take the same enthusiasm that we saw Tuesday night, when Africana was immersed throughout America’s streets. The next Africana response must be one grounded it our communal aspiration towards first reclaiming our humanity, then our lives, livelihood, and future. We have to be able to generate a forum and political foundation from which leaders like Barack Obama and the government at large must be responsible to us. The creation of this type of forum is the only way in which we will implement the change we need. As most people have been saying, and Obama himself would agree, the change we can believe in starts with us. We cannot rest now, Obama won, but African people in this country must make history again. Our duty as laid out by the ancestors was not to vote and quit, but to vote, learn, fight, and build our community ourselves. The Howard University student body has heard the voice of the ancestors. Maa Kherw. Today marks the beginning of the work of creating this forum for President-Elect Barack Obama, to pressure his administration to speak to our issues as African people.

Ubuntu Praxis

Over the summer, I realized that I knew many amazing people with great ideas. If only I had a way to bring them together, I was convinced sparks would fly and powerful results could emerge from their exchanges and networking. This drove me to start a group blog in order to connect all these people and their ideas, interests, current and future projects in hopes that it would help create major changes in their respective communities and globally. The result is Ubuntu Praxis: an online space for communities, groups, thinkers and activists to exchange ideas about the future of African peoples, humanity and the world, and to network. The blog mainly targets contributors and readership with two things in common:

I. A shared belief that the Liberation of oppressed people must be achieved through collective struggle, and

II. A solution-driven attitude and commitment to action.

In order to understand Ubuntu Praxis and the need for it, not so much as a blog but as a way of life, it is important to know what Ubuntu and praxis mean, respectively.

What is Ubuntu?

Ubuntu is a concept that says a person is a person through other persons. It is an affirmation of our humanity as we acknowledge the humanity of others. While the word has Bantu origins, this deeply communal philosophy is one that can be found in cultures all over Africa and the world. There is an Ashanti Proverb which gives deeper insight into the humanist concept : "I am because we are; without we I am not and since we are, therefore, I am".

Archbishop Desmond Tutu describes a person living this philosophy:

"A person with Ubuntu is open and available to others, affirming of others, does not feel threatened that others are able and good, for he or she has a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished, when others are tortured or oppressed."

Why Praxis?

Praxis is the process of putting theoretical knowledge into practice. We frequently discuss change, but easily get caught up participating in an 'armchair revolution' : brooding over the same old problems but just waiting- waiting for the fateful moment when things will go in uproar. However, I believe that the things we DO to make a difference on a day to day basis are what will culminate into powerful movements. It is crucial we start finding and applying possible solutions to our problems, instead of only seeing the problems we are confronted with. Thought and consensus-building must be an integral part of our struggle, but visions only become realities in the 'doing', through our actions.

The path of relentless struggle isn't an easy one- having a support community to encourage us, to remind us, to help us and to share mistakes and successes with is essential. Many of you have been a part of my community, and as of today, I want to bring all of us together - because together, the possibilities are endless.

Sincerely,

Masake Kane

Facilitator

Ubuntu Praxis