February 19, 2013
Direct investment in African nations by the previous colonial rulers
This is a very large graphic by Richard Johnson from Canada’s National Post. Click it a couple of times to enlarge enough to read. The reasons for the investment are along the bottom. The west depends on the wealth of Africa.
November 30, 2011
The petition below has my heartfelt support. EPAs have nearly destroyed Ghana’s poultry industry (and a great many more economic sectors) and severely damaged our family farming efforts. The EU dumps frozen chicken parts on Ghana and West Africa that are subsidized to sell below what it costs to produce them. Frozen chicken parts are not as tasty or as healthy as locally grown chicken, but they are cheaper, and the Ghana poultry farmers can’t compete. Only a few times a year, generally on holidays when people want something really good, will they splurge and buy chickens grown locally.
As it says in the petition below:
The EU’s current economic crisis is partly due to the same unbridled liberalisation policies it is trying to impose on us through the EPAs.
… we locked ourselves into agreements that predictably provided all the guarantees and benefits for our ‘partners’. We are left with dwindling shares, missed opportunities, the destruction of livelihoods and of the very environment we live in! Our national and regional development plans and their integration must come first and determine the scope and content of any EPAs. The world is very different at the end of 2011 than it was at the beginning of 2002 when EPA negotiations began. The speed of change, including negative change is the key feature of economic fortunes. The entire ECOWAS leadership and the Government of Ghana must begin to lay down concrete alternatives to the EPA as they meet in Accra this week.
…
Thirty or so years of trade liberalisation … has brought collapse of industries, paralysis of agriculture and unprecedented mass unemployment and youth discontent in our societies.
As another press release from Third World Network Africa points out:
The other change [since 2002] is in the shifting centre of gravity of the global economy from regions like Europe to East Asia. Our contention is that the IEPA must be abandoned. It is a threat to the re-positioning of the national economy and to regional integration in ECOWAS.
The full text of the petition is below the graphic. The distinguished groups who sponsor and sign it are listed at the end, all members of the EJN, Economic Justice Network of Ghana.
Handshake wrapped in money, who gets the money?
PETITION TO THE MINISTER OF TRADE AND INDUSTRY ON THE ECONOMIC PARTNERSHIP AGREEMENT
Written by members of the ECONOMIC JUSTICE NETWORK OF GHANA (EJN)
Monday, 28 November 2011 14:29
GHANA CANNOT RIDE TWO HORSES – PETITION TO THE MINISTER OF TRADE AND INDUSTRY ON THE ECONOMIC PARTNERSHIP AGREEMENT (EU) WITH THE EUROPEAN COMMISSION ON 28TH NOVEMBER 2011
1.0 Preamble
As Ghana hosts the ECOWAS Ministerial Monitoring Committee Meeting (MMC) from the 28 -30th November 2011, the preservation of the coherence of our Economic Community and the future of West Africa’s Regional Integration hangs in the balance. The so-called Economic Partnership Agreement (EPA) West Africa is currently negotiating with the European Union (EU) has already caused costly divisions in ECOWAS.
The EPA has created at least 3 contradictory trade regimes in a region that is supposed to have a single unified trade regime. LDCs in West Africa currently trade with the EU under the non-reciprocal Everything But Arms regime; as a non-LDC, Nigeria trades under what is known under the EU GSP; and Cote d’Ivoire has a bilateral EPA with the EU under which it is exempt on a small range of taxes imposed on Nigerian exports to the EU, BUT in exchange for exempting 81% of all imports from EU into Cote d’Ivoire from any tariff whatsoever.
The EU is our biggest trading partner and impacts our economies for better or for worse. Goods coming into West Africa from the EU will come in at 3 different tariff regimes and costs. What then will happen to the flow of these goods from each of these three sets of countries into each other as well as all other goods trade that exists between them? It is not difficult to imagine the trade bans, blockades and wars that will escalate within the region. This is the state of affairs that exists in West Africa as the MMC convenes in Accra today. The implications for ECOWAS are simply staggering.
But in can get much worse. In addition to these three trade regimes Ghana is on the brink of finalising and making PERMANENT its own INTERIM EPA which it undertook as a temporary measure three years ago. The Ghana IEPA has only slightly better terms in the scope of free entry it allows imports from Europe. Thus, Ghana will join Cote d’Ivoire in offering EU imports the most liberal, widest and therefore potentially most damaging market access. Meanwhile Ghana’s terms are not identical to that offered by Cote d’Ivoire. In effect, the Government of Ghana would have created a FOURTH trade regime in West Africa. How can anyone seriously claim that this is and will remain in the national interest of Ghana? If taken any further, Ghana’s unilateral stance will be a disaster for herself and for the region she is permanently tied to!
However this need not happen if Ghana and sister West African governments show vision and leadership and put the defence of ECOWAS’ integrity today and its progressive development tomorrow as the central common priority and shared destiny.
The current MMC which gets underway in Accra this morning and the outcomes it produces will accelerate ECOWAS fracture or consolidate and enhance its future.
2.0 Issues in the EPA and Our Position:
1. The threats by Ghana Government to sign and ratify the interim EPA initialed in 2007 will destroy efforts over the years to integrate as one region. Ghana’s Interim EPAs eliminates tariffs on above 80% of EU trade goods but the collective ECOWAS EPA is currently offering much less than that. ECOWAS is now considering 70% offer, we think this is already too high and too dangerous for our economies! But the EU still rejects the (excessive) 70% offer. The EU is intransigent to the ECOWAS position because once it has the 80%-plus benchmark from Ghana (and Cote d’Ivoire) it knows West Africa’s common stance has been greatly weakened. The EU’s ruthlessness, divisive and bullying stance in the EPAs has been officially acknowledged and condemned by African governments, including Ghana. But the example and fact of Ghana’s IEPA gives the EU clear evidence and encourages its confidence that if it remains just as ruthless for long enough other West African governments will crack. Today, it is Ghana’s position that is in the balance. The Ghana IEPA is a Trojan horse. We demand the Ghana IEPA be suspended immediately and Government commits fully and unconditionally to the collective ECOWAS EPA process, including the immediate issue of the collective position on the scope of Market Access.
2. ECOWAS must take a collective stance which, among others, compensates non-LDC members like Ghana for the costs in extra tariffs that their exports to the EU market will attract if they abandon the IEPA. Credible estimates indicate that the three non-LDCs in West Africa will incur additional tariffs on their exports into EU of about €132million if they trade without an EPA. Ghana’s direct share of these losses will be about €37 million euro. The economy, total global trade and the livelihoods of the overwhelming majority of 25 million Ghanaians cannot be sacrificed for a paltry tax bill of 37 million euro. West Africa’s development and its future cannot be sold for 132 million euro. ECOWAS must immediately create a REGIONAL SOLIDARITY FUND to absorb these losses. Ghana must signal her complete commitment to promoting this Regional Solidarity Fund rather than its ‘national interest’ in the IEPA. It must also reject the attacks the EU is making on the ECOWAS levy in the EPA negotiations, as this is the kind of mechanism needed to create the solidarity fund.
3. Beyond the immediate threat of extra tariffs on exports to Europe from Cote d’Ivoire, Ghana and Nigeria (the non-LDC countries in ECOWAS), it must be made clear that ALL West African countries will incur massive fiscal losses from the EPAs. It is worth reminder that the 13 West African LDCs currently export everything but arms duty-free, quota-free to the EU market. But they are currently entitled to impose tariffs on all EU imports. Revenue from trade tariffs are the lifeblood for these and other least developed as well as vulnerable lower income developing countries. Ghana alone stands to lose $194 million (UNECA, 2005). Under the EPA even the LDCs have to grant EU imports free entry and lose the associated revenues from tariffs. This will be ‘in exchange’ for something they ALREADY HAVE (and have for free), i.e. duty-free quota-free access to EU markets for all exports apart from arms.
Further, the EU’s position on various aspects of the EPAs, e.g. standstill on introduction of new tariffs and taxes or increase in existing ones; restrictions on the use of export taxes and quantitative restrictions; the MFN, non-execution clause and others, collectively termed ‘contentious issues’ in the negotiations, will divert trade within West Africa as well as West African trade with other, non-EU countries and regions to their gain but to our loss. They will also undermine the Region’s efforts to industrialize and its ability to move up the industrial value chain. As a result, the region will remain a perpetual supplier of raw materials, with all the adverse implications that this entails. Any regional EPA must remove these EU impositions and narrow the scope of threat or damage to ECOWAS. Suspending Ghana’s IEPA and the provisions it contains on these issues will enhance ECOWAS ability to review and strengthen its collective positions.
1[4]. The EU’s demands and pressure in areas that go beyond tariffs and World Trade Organization (WTO) commitments – such as Financial Services, Public Procurement, Investment, Health, Raw Materials, Natural Resources and Intellectual Property – pose even greater threats and are of more strategic importance to Ghana’s (as well as West Africa’s) economic transformation, industrialization and overall development. In the case of Services, internal trade within West Africa is even bigger and more dynamic than trade in goods within the region. But West Africa is hardly in a position to export services to the EU. Officials claim that negotiating and including services (as well as the other WTO-plus, Trade-Related Issues like Procurement. Investment and Intellectual Property) will create a predictable environment for EU trade and investment in West Africa. We have already had increasingly free trade in goods with the EU and others for more than 30 years. There is one predictable outcome we already know – EU companies will dominate in these areas, our already low existing capacity will be weakened even further, including our foothold in the growth areas of trade in services and in manufactures within West Africa. Any EPA must be a goods-only agreement and must exclude Services and the so-called Trade related Issues.
5. While ECOWAS has bent over backwards to accommodate EU demands, her ‘partner’ remains inflexible, unyielding or worse. In fact the EU has consistently flouted and retracted on commitments it has previously made. A most telling example is in the area of EU responsibility to finance fiscal losses West African countries will incur as a result of entering into EPAs. Another is the subterfuge the EU has shown in respect of providing ADDITIONAL funding for the EPA Development Programme (or ‘PAPED’). The EU has watered down and reversed commitments and has engaged in patent falsehoods, recycling existing European Development Fund commitments as ‘new and additional funding’. By foul and other means the EU continues to show beyond all reasonable doubt that its interests in the EPAs have little or nothing to do with ECOWAS development or regional integration aspirations, but everything to do with securing preferential advantages in West African economies and markets against all comers – including our own domestic and regional producers and our development needs. ECOWAS must insist and secure binding and unequivocal EU compensation, adjustment and development commitments as a pre-condition for any EPA.
6. But Ghana and West Africa must also prioritize the diversification of their trade away from the EU, as well as our own developmental regionally integrated production capacities, investments and markets. The EU’s current economic crisis is partly due to the same unbridled liberalisation policies it is trying to impose on us through the EPAs. In Europe today, the corporate monopolies in the financial services sector in particular are holding all working people in Europe and whole economies to ransom. Meanwhile as current trends show, many more prospects exits for production partnerships, trade, investment and economic development with emerging regions in the global South. Locking in our entire trade, investment and development finance policies by giving EU privileges no one else has, not even our own companies and citizens, is not a forward looking policy. Today we are unable to share in windfall profits of mining companies because we locked ourselves into agreements that predictably provided all the guarantees and benefits for our ‘partners’. We are left with dwindling shares, missed opportunities, the destruction of livelihoods and of the very environment we live in! Our national and regional development plans and their integration must come first and determine the scope and content of any EPAs. The world is very different at the end of 2011 than it was at the beginning of 2002 when EPA negotiations began. The speed of change, including negative change is the key feature of economic fortunes. The entire ECOWAS leadership and the Government of Ghana must begin to lay down concrete alternatives to the EPA as they meet in Accra this week.
3.0 Conclusion
As Ghanaian organisations and citizens we call on the Government of Ghana to live up to the nation’s role and responsibility to ECOWAS and Africa’s unity and to our self-determination in charting and realising our developmental transformation. Thirty or so years of trade liberalisation has not brought us any closer to this. Rather it has brought collapse of industries, paralysis of agriculture and unprecedented mass unemployment and youth discontent in our societies.
Ghana must pull back from the brink of a unilateralism that will put another nail in the coffin of development in our country and in our region. It must suspend its bilateral EPA and fully and unconditionally return to the fold of the collective regional EPA process. Ghana cannot ride two horses at once. Two horses going in different and opposite direction will tear the rider apart and trample her underfoot.
Sister ECOWAS Trade Ministers and Governments must also play their part that we ride together towards the same destination and destiny for our collective mutual protection and benefit. The ECOWAS MMC must define a collective solution that addresses any losses that Ghana, Cote d’Ivoire and other countries will face in the absence of their interim EPAs. This is the most immediate means to consolidate ECOWAS in the EPA process and in our deep common interests that go way beyond extra taxes that we will have to pay on a very small proportion of our exports to Europe.
Accra, 28th November 2011. Signed by the ff Organizations:
GHANA TRADE UNION CONGRESS,
GHANA TRADE AND LIVELIHOODS COALITION,
ISODEC,
THIRD WORLD NETWORK-AFRICA,
ABIBIMAN FOUNDATION,
ACTION AID GHANA,
GAWU,
SEND FOUNDATION,
FOODSPAN
– all members of the ECONOMIC JUSTICE NETWORK OF GHANA (EJN)
h/t to E.K Bensah for bringing this to my attention:
Emmanuel.K.Bensah Jr.
Communications Officer (Web Journalist)
COMMUNICATIONS UNIT
Third World Network– Africa
9, Ollenu Street East Legon
P.O.Box AN 19452
Accra-Ghana
March 14, 2011
“The human toll here looks to be much worse than the economic toll, and we can be grateful for that.” Larry Kudlow on the earthquake and tsunami in Japan.
Milton Friedman and Arnold Harberger, chief theologians, welcome the boys to class at The Chicago School of Economics, the source of the religion we call Free Market Economics. from DonkeyHotey on flickr
Larry Kudlow … On CNBC this week, the “renowned free market, supply-side economist” and host of “The Kudlow Report” noted, regarding the robustness of the markets in the wake of the devastating Japanese earthquake and tsunami, that “The human toll here looks to be much worse than the economic toll, and we can be grateful for that.”
That is the essence of Chicago School free market supply side economics that have blighted US economic development and foreign policy for several decades. The core belief of these economic gangsters is: markets matter, people don’t. Kudlow was only expressing a sentiment that our governing and media elites share, though he will be trashed for saying it out loud. The Chicago School ethic is shared throughout the US Congress, the Defense and State Departments, much of the Judiciary, and even by the President himself.
Mat 7:16 Ye shall know them by their fruits.
And here are those fruits as they have been harvested:
Net worth and financial wealth distribution in the U.S. in 2007. sociology.ucsc.edu/whorulesamerica/power/wealth.html
And to throw in another metaphor, the following chart records the rising tide that is sinking 90% of our boats, income gains and losses 1979-2005. That tide is still surging.
December 17, 2010
Almost half of the top 12 fastest growing economies in the world come from Africa. Ghana has swept from a 4.5% growth rate last year, to an astonishing 20.146% growth rate for 2011, making Ghana the fastest growing economy in the world.
See more information and detail at The True Size of Africa
Ghana is expected to be the fastest growing economy in the world in 2011!
12 Fastest Growing Economies of 2011
For 2010, we noted that none of the top growth countries were advanced economies; only one was G20.
Many people assume that China is the fastest growing country in the world, but that is not the case – it is the fastest growing large economy, and as we will see that is a different thing.
We also took a look at the key trends that are driving the growth figures.
Let’s take a look at the stats for 2011:
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Growth rates are much higher this year. The chart tops out at over 20%.
…
Once again, developed countries do not feature in the Top 12. Almost half of the top 12 come from Africa. Ghana has swept from 4.5% last year, to an astonishing 20.146% for 2011.One third of the Top 12 are from the Far East; two from the Middle East and one from Central Asia.
…
The African decade continues to hold sway. 2010 to 2020 is bringing massive development to the continent. As China continues to boom we will see the Chinese offer more large-scale infrastructure development to African governments in return for natural resources and farmland to support it’s vast population. In turn African countries are continuing to challenge old perceptions of corruption and violence through practicing better governance. Chart leader Ghana is one of Africa’s strongest democracies. African countries will continue to veer in favor of increased prosperity. The picture continues to be replacement of Western aid for Africa by Eastern trade with Africa.
…
The peace and democracy bonanza.
Rounding of our counter-intuitive list is another perfectly intuitive point. Countries like Ghana who are experiencing a new era of good governance will enjoy massive growth increases. Where there is peace and good governance, prosperity will follow as we see these countries making use of their resources more actively and using them to build, rather than wage war.
Check the Ghana Economic Statistics and Indicators.
Ghana is not the only country in Africa that is doing well. From Roubini Global Economics:
African Poverty Is Falling…Much Faster Than You Think.
Many believe:
Sub-Saharan Africa has made little progress in reducing extreme poverty, according to the latest Millennium Development Report. This column presents evidence from 1970 to 2006 to the contrary.
…
The sustained African growth of the last 15 years has engendered a steady decline in poverty that puts Africa on track to meet the Goals by 2017. If peace is established in the Democratic Republic of Congo, and it returns to the African trend (which is what happened to other African nations that were formerly at war), Africa will halve its $1/day income poverty rate by 2013, two years ahead of the 2015 target.Moreover, African poverty reduction has been extremely general. Poverty fell for both landlocked and coastal countries, for mineral-rich and mineral-poor countries, for countries with favourable and unfavourable agriculture, for countries with different colonisers, and for countries with varying degrees of exposure to the African slave trade. The benefits of growth were so widely distributed that African inequality actually fell substantially.
Africa: graph of poverty and GDP, 1970-2006
Using the $1/day definition of poverty adopted by the Millennium Development Goals, African poverty declined strikingly, from 41.6% in 1990 to 31.8% in 20061.
Poverty seems to co-move with GDP almost perfectly.
African inequality has also fallen over this period, almost entirely reversing its rise since 1970, but still remaining at a high absolute level
…
Our main conclusion is that Africa is reducing poverty, and doing it much faster than many thought.
- The growth from the period 1995-2006, far from benefiting only the elites, has been sufficiently widely spread that both total African inequality and African within-country inequality actually declined over this period.
- The speed at which Africa has reduced poverty since 1995 puts it on track to achieve the Millennium Development Goal of halving poverty relative to 1990 by 2015 on time or, at worst, a couple of years late.
- If the Democratic Republic of Congo converges to the African trend once it is stabilised, the MDG will be achieved by 2012, three years before the target date.
We also find that the African poverty reduction is remarkably general.
- African poverty reduction cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic.
- All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty.
This observation is particularly important because it shows that poor geography and history have not posed insurmountable obstacles to poverty reduction.
The authors, Maxim Pinkovskiy and Xavier Sala-i-Martin, explain their methodology and provide many more graphs that demonstrate their research and conclusions. View the graphs and read more at: African Poverty Is Falling…Much Faster Than You Think
In a previous post I wrote about The African Growth Miracle PDF study by Alwyn Young at the London School of Economics, published in September 2009. His study showed:
… real household consumption in sub-Saharan Africa is growing around 3.3 percent per annum, i.e. more than three times the 0.9 to 1.0 percent reported in international data sources and on par with the growth experienced in other developing countries.
…
Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.
The thing that delayed this growth and created setbacks is war. It is unfortunate that current US attention to Africa is almost entirely military, preparing for more war. US foreign policy in Africa is military policy. The US is missing the African success boat. It may be trying to sink it with its efforts at seabasing, its emphasis on military training to facilitate proxy war, and where there is war, partnering with the perpetrators. I would like to see positive development in US relations with African countries. For that to happen we need US leadership that can learn, that knows a bit of history, or we need new leadership.
Nevertheless, this news on economic growth and the reduction of poverty and inequality is wonderful news, something we can celebrate as we prepare for lots of hard work ahead.
July 8, 2010
The world’s wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won.
Johann Hari writes: How Goldman gambled on starvation. As he describes:
It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn’t afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it “a silent mass murder”, entirely due to “man-made actions.”
…
Most of the explanations we were given at the time have turned out to be false. It didn’t happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn’t because demand grew either: as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand actually fell by 3 per cent. Other factors – like the rise of biofuels, and the spike in the oil price – made a contribution, but they aren’t enough on their own to explain such a violent shift.
…
… through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into “derivatives” that could be bought and sold among traders who had nothing to do with agriculture. A market in “food speculation” was born.…
Here’s how it happened. In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world’s frightened investors stampeded on to this ground.
So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose – which meant the all-rolled-into-one price shot up, and the starvation began. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.
…
As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was “the main cause” of the rise.
So it has come to this. The world’s wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. … What does it say about our political and economic system that we can so casually inflict so much pain?
As Hari begins his story:
By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You’re wrong. There’s more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here’s the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.
Read the entire article, which explains what happened more clearly and in greater detail: How Goldman gambled on starvation.
________
To my regular readers, apologies for being absent lately. We are having a major reorganization at my work, and at the same time, major activity with the farms in Ghana. This may keep me fairly busy for another week or two, but for now the major portion of my work on these projects is done.
April 23, 2010
These first two graphics come courtesy of The Strategist. I don’t know if this first one is intended for civilians or for military training. Let us hope it is not part of ACOTA or IMET ;)
US Air Force Aircraft Identification Chart
These first two are not new, but I got a chuckle out of them. Right now I’m working hard on some farming projects, with not much time to write. The need for this next one is obvious. Click on any of the graphics in this post to see the larger version.
Journalist's Guide To Firearms Identification
The following are not intentionally humorous. They come via The Strategist and Information is Beautiful, and come originally from The Guardian DataBlog. The following graphics are by David McCandless. If you go to the originals at The Guardian DataBlog there is some commentary, but I prefer to present them without commentary. As someone once said to me when I was trying to get a specific political opinion from them: patriots may draw their own conclusions.
Which country has the biggest military budget per year?
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The US military budget in context
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GDPs of major nations as combined earnings of US states
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Big spenders, yearly military budget as % of GDP
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Active forces - who has the most soldiers?
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Active forces - the number of soldiers per 100,000 people
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Total armed forces - the number of soldiers, reservists, and paramilitary per 100,000 people
March 16, 2010
… real household consumption in sub-Saharan Africa is growing around 3.3 percent per annum, i.e. more than three times the 0.9 to 1.0 percent reported in international data sources and on par with the growth experienced in other developing countries.
School children in Bunkpurugu in Northern Ghana 2005, a very cheerful picture, not directly related to the story, but cheerfully upbeat.
Alwyn Young of the Department of Economics of the London School of Economics published the study The African Growth Miracle PDF in September 2009. As the abstract says:
Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.
Mr. Young has made this survey based on the Demographic and Health Survey (DHS).
The DHS data on consumption of consumer durables and housing, children’s health and mortality, the schooling of youth and the allocation of women’s time between marriage & childbirth and market activity, indicate that since 1990 real material consumption in sub-Saharan Africa has been rising at a rate more than three times that recorded by international data sources such as the PWT, and on par with the growth taking place in other regions of the world. This is a miraculous achievement, given that the very real ravages of the AIDS epidemic have deprived families of prime working age adults, burdened them with medical and funeral expenses, orphaned their school age children and directly and adversely affected the health of their infants. And yet, the overall health and mortality of children is improving, their school attendance is rising, and family consumption of a variety of material goods is growing at a rapid rate. (p.58)
As he points out:
The paucity and poor quality of living standard data for less developed countries is well known and is motivating expanding efforts to improve the quality of information, as represented by the World Bank’s International Comparison Programme and Living Standards Measurement studies. However, there already exists, at the present time, a large body of unexamined current and historical data on living standards in developing countries, collected as part of the Demographic and Health Survey (DHS). For more than two decades this survey has collected information on the ownership of durables, the quality of housing, the health and mortality of children, the education of the youth and the allocation of women’s time in the home and the market in the poorest regions of the world.
…
In this paper I use the DHS data to construct estimates of the level, growth rate and inequality of real consumption in 29 sub-Saharan and 27 other developing countries. These estimates have the virtue of being based upon a methodologically consistent source of information for a large sample of poor economies. Rather than attempting to measure total nominal consumption and marry it to independently collected price indices, they employ direct physical measures of real consumption that, by their simplicity and patent obviousness (the ownership of a car or bicycle, the material of a floor, the birth, death or illness of a child), minimize the technical demands of the survey. While the items they cover provide little information on comparative living standards in developed countries, in the poorest regions of the world they are clear indicators of material well being, varying dramatically by socioeconomic status and covering, through durables, health & nutrition and family time, the majority of household expenditure.
He provides tables, and far more detail as to his methodology and his findings. You can read the entire economic report here, The African Growth Miracle PDF.
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photocredit here
January 2, 2010
Africa’s economic growth is steady despite the global financial crisis. The World Bank confirmed that growth in gross domestic product has been higher than the world average for five years and is predicted to grow in 2009 and beyond.
The size of Africa (click to enlarge)
An article by Frank Aneke from October 2009 provides some positive perspective for the new year:
One-third of Africa’s total trade is now with markets in emerging economies, namely China, India, Brazil and Malaysia among others. Africa is marking a shift away from previous reliance on traditional trading partners in Europe and North America.
…
While many of Africa’s traditional trading partners are in a recession, many of its new markets, particularly China and India, show relatively healthy growth prospects.…
The image of Africa as a continent bedevilled with sufferings and wars still exists in minds of millions through television images and news reports. Most media outfits in developed nations continuously mirror the worst pictures out of Africa to maintain the stereotype. There may be drought, disease and corruption. Still, there are new generations of young, educated, savvy entrepreneurs running businesses in Africa. A great number of professionals and business managers in Africa are educated in the world’s best universities, and have worked in high profile organisations in developed economies across the globe before returning home.
As more emerging economies defy the media blitz on Africa and invest in key sectors that are generating jobs and return on investment, Africa is slowly but surely heading towards economic transformation
The map above comes from Strange Maps, where you may find quite a few interesting maps. As the map above shows, Africa is far to big to think of it as one place or one group of people.
November 16, 2009
Locally made guns
A photo of a real Makarov gun next to a fake one made by a Ghana blacksmith. (Anna Boiko-Weyrauch)
Suame Magazine, picture from johnnypayphone.net/labels/ghana.php
The gun business is creating harm in Ghana and among the neighbors: Locally made guns business flourish in Ghana.
Blacksmith Sarpong, 35, operates a small shop in Ghana’s second largest city, Kumasi. He is trained to produce cooking utensils, but prefers to make guns as he can earn more money that way.
When sales are good his shop brings in US$1,000 a week, he said. Foreigners paying better than Ghanaians. “Most of my buyers are from Nigeria or Sierra Leone.”
…
Sarpong sells to clients using a gun-runner – most of them are ex-peacekeepers or mercenaries according to the UN Office on Drugs and Crime – in a growing clandestine small arms industry, according Ghana’s Deputy Interior Minister, Kwasi Apea-Kubi and confirmed by police officials.Small arms proliferation destabilizes West African countries and has increased the intensity and human impact of conflicts in the region, according to regional arms experts.
Apea-Kubi recently toured the country to ascertain the state of Ghana’s small arms industry and along the way met with hundreds of gunsmiths who “openly admitted to producing guns”, despite that local small arms manufacturing is illegal.
“We know now that many of the armed robbery cases we are witnessing are being fueled by these small arms,” Apea-Kubi told IRIN.
Eighty percent of firearms Ghanaian police confiscate are homemade, according to Accra-based NGO Africa Security Dialogue and Research.
…
Gun production estimates vary. The National Commission on Small Arms, set up in 2007 to check the manufacture and cross-border movement of small arms, estimates 40,000 Ghana-made guns are in circulation; UNODC estimates 75,000, while Kwesi Aning, head of the conflict resolution department of the Kofi Annan International Peacekeeping Training Centre in the capital Accra, puts the figure at 200,000.“Local production has recently gone through the roof,” Aning told IRIN.
Blacksmiths have the knowledge and skills to manufacture single-shot pistols, multi-shot revolvers and shotguns, according to UNODC. When IRIN investigated a locally-made pistol sale in Tudu neighbourhood – Accra’s small arms hub – a dealer known only as Musah would not go lower than $130 for a single-barrel shot gun.
…
UNODC’s July 2009 West Africa threat assessments report establishes a direct link between trafficked arms and instability in the region, with the chief clients of clandestine arms groups seeking to overthrow or challenge state authority.“Instability in Togo, Nigeria, and Côte d’Ivoire has resulted in higher prices of Ghanaian manufactured arms,” Aning said.
Ghanaian gunsmiths have been invited to teach their gun-manufacturing skills to local blacksmiths in the Niger delta, Aning said.
However buyers of Ghanaian guns tend to be individuals while established insurgent groups purchase heavier weapons from outside the region, according to UNODC.
…
AlternativesThe government is seeking creative solutions to the problem, the Interior Ministry’s Apea-Kubi told IRIN, as past arrests and detention of guilty blacksmiths have only pushed the trade further underground.
“We know we have to do something but we don’t want to use force,” he said.
Interior Ministry officials are consulting gunsmiths across the country to explore how to attract them to alternative – legal – ways of making a living, as well as to examine how to prevent cross-border trafficking.
Apea-Kubi also hopes gunsmiths will allow their names and locations to be logged on a national database so their activities can be monitored. At least that way the industry will be less secretive, he said.
But Sarpong is not convinced. “No alternative can give me enough money like what I get selling the guns. They should not waste their time.”
Armed robbery is a dreadful scourge in Ghana. Recently we lost a young employee, shot to death by armed robbers. He left a wife and two young children. We can make sure the children go to school, but we can’t replace their father. And it has been an ongoing source of sorrow, as he was a good friend and someone who had always been there to help us. There are a number of precautions we take at the house, it is deeply painful to feel that any of them are necessary. This is the main “terrorism” we fear in Ghana, and it is only fueled by the arms trade and increasing militarization in the region. (For some perspective, I have lost more Ghanaian friends to gun violence here in the US over the years, than in Ghana, from a much smaller population of Ghanaians.)
At the same time I have much sympathy with the blacksmith Sarpong in the article. US$1,000 a week is a fabulous income in Ghana. It would be very difficult to voluntarily give that up. I would certainly find it difficult if I had the skills and was making that money in Ghana.
From Marketplace:
Drug dealers and thieves like handmade guns because they can get them under the table and don’t have to register them with the government. But, handcrafted guns didn’t used to be such a problem. Blacksmiths in Ghana have been making them for centuries, mostly for hunting and protecting farmland. When the British came in, they outlawed gun-making — but the demand continued.
…
Blacksmith Philip Nsiah lives five hours north of the capital.… Nsiah says local guns are cheaper than imported ones, so they’re popular with farmers. He used to sell each shotgun for about $100. Those cheap pistols I saw earlier can go for as little as $4.
Nsiah trained for years to learn his craft. But then he found out how much harm these guns cause. Nowadays, he helps lead the local blacksmiths’ association, encouraging others to stop making illegal guns.
Nsiah: I can do any type of gun. If they allow me, I can do it. But since, I know the dangers involved that is why I don’t go in.
When the crime rate got bad, the police started rounding up blacksmiths. Many stopped making guns, because they didn’t want to be arrested and lose their legitimate business. The crackdown helped. But it pushed the industry underground.
Now, Police Superintendent Aboagye Nyarko says they’re encouraging blacksmiths to produce something else, like tools to prune cocoa trees and handcuffs for the police.
Blacksmith Philip Nsiah shows me some handcuffs he made seven years ago.
Nsiah: But you see, it’s still there rusting. Nobody is buying it.
But he’s been able to make a living without making illegal guns. He repairs authorized weapons, used by security personnel, he works on cars. And he’s made a tool-shed full of other products — garden shears, hunting traps and gong-gongs, or cowbells for making music and calling community meetings.
Nsiah says the government hasn’t been effective at promoting these types of alternative products. And without that backing, illegal handmade guns will continue to be the product of choice for many blacksmiths.
Ghana has enormously talented craftsmen. In general people are inspired by the hope of creating and accumulating for themselves and their loved ones. People in business understand business, understand its potential and its motivations. So businessmen and women should be far better suited to being partners in development than eleemosynary organizations, provided their motives are not entirely exploitive.
I may sometimes write as if I am anti capitalist, but that is not the case. Capitalism needs the regulation of democratic controls, otherwise it is the same as organized crime, but the hope of accumulation drives all of us. That is why I particularly liked this quote from the following article: what poor people need most is a way to make more money.
Slumdog engineers of Suame magazine
As he pours dangerous molten metal from a home-made furnace at a ferocious 600 degrees, a worker flings a skimpy T-shirt around his head for protection. Another worker grabs a chunk of mud and shoves it into the makeshift foundry to plug the flaming lava flow of molten metal.
None have safety helmets or other equipment. Their neighbours at nearby industrial workshops are wearing plastic flip-flops and shorts. Their welding cables are ripped and exposed, risking a high-voltage shock, and few of the welders wear safety glasses.
Safety is an afterthought for the 200,000 people in horrific conditions in one of Africa’s biggest industrial slums. Survival comes first, and they need to eat.
The slum, known as Suame Magazine because of its origins among the artillery-makers at a local armoury, is a 180-hectare cluster of 12,000 repair shops and small-scale metal works on the outskirts of Ghana’s second-biggest city, Kumasi.
At first glance, it seems like a vast wasteland of tin shacks and wrecked cars and impoverished mechanics, where the dust-choked air is filled with hammering, banging, pounding and shouting.
But some look at this post-apocalyptic junkyard and see hope for the future. If the small-scale artisans and repairmen can be linked into the supply chain of multinational corporations, could they escape poverty and work in safer conditions?
That’s the experiment a Canadian group has launched. With a new aid philosophy that aims at business-oriented solutions, the Canadians are marketing the skills and ingenuity of the slum-dwellers, connecting them to foreign investors and helping them bid on valuable contracts that could transform their lives.
“My heart beats faster just thinking about this,” says Florin Gheorghe, a 21-year-old engineering student at the University of British Columbia who has been immersed in this giant scrapyard for the past seven months.
“I’ve come to believe that what poor people need most is a way to make more money,” he says. “Many development projects treat the poor as if they were incapable of fending for themselves, just sitting around waiting for whites to give them free food and clothes. It creates dependency and crushes local capacity …. The difference in our business-like approach is the dignity that comes in choosing to live a life that you value.”
Though the mechanics and metalworkers of Suame Magazine are poorly educated and 98 per cent lack any Internet access to help them seek customers, many are astonishingly skilled.
Some build entire buses or fuel tankers from scratch, or design drilling rigs or foundries. All they need, the Canadians believe, is a helping hand to market themselves.
Mr. Gheorghe, supported by a Canadian non-profit group called Engineers Without Borders, arrived at the slum in January to work for its industrial development organization. He put on a suit and tie and began knocking on the doors of multinational companies around the city, giving out his business card and sending a deluge of e-mails to companies around Ghana.
After weeks of going door-to-door, he and his colleagues began to persuade some companies to award business to slum-dwellers. They won contracts at several major U.S. companies, including Newmont Mining Corp., Coca-Cola, and the cocoa division of Archer Daniels Midland Co.
Under the first Newmont contract, valued at $30,000, the Suame Magazine artisans and repairmen were hired to build stairways, railways and platforms for massive Caterpillar trucks at the mining company.
It was followed by agreements on further contracts from Newmont, providing the much-needed prospect of steady revenue for the workers.
…
… amusement and disdain soon gave way to respect as the mining company saw what the artisans could produce.One group of 10 workers earning less than $4 a day were able to double their income when they landed the Newmont deal, with the prospect of further revenue from profit-sharing at the end of the contract.
The contract helped them learn new skills, including the ability to read computer-aided engineering drawings. And it encouraged them to invest some of their profit in safety equipment. For the first time, they have switched to steel-toed boots and safety glasses, instead of flip-flops and bare eyes.
“When we went to Newmont, our guys came back flabbergasted at the safety equipment there,” Mr. Gheorghe said. “Now they are always reminding me to put on my equipment.”
The workers say they’ve benefited from the marketing efforts and the multinational contracts. “We’re getting more experience and more jobs,” one worker said. “Since we started wearing the safety equipment, we don’t get injured any more.”
George Roter, the Toronto-based co-founder of Engineers Without Borders, says the project in Suame Magazine is an innovative approach that could produce broader lessons for the foreign aid sector.
“The concept of stimulating business development using demand from international resource-extraction operations could be powerful in many countries in sub-Saharan Africa,” he said.
“It’s certainly a contrast to traditional aid-based approaches, and fits well with EWB’s philosophy of development that sees successful African businesses and entrepreneurs as the engine of development.”
As for Mr. Gheorghe, he is returning to the University of British Columbia this fall to finish his engineering degree after seven months of toil in the slum. But he’s already planning a life of activism. He is convinced that he can find more capitalist innovations to help the developing world.
“My ambition,” he says, “is to become incredibly rich, and to lift a million people out of poverty. I don’t think you have to be poor to help people.”
I like Mr. Gheorghe’s ambition.
There is another story I read recently that may relate to the guns:
Niger Delta militants training Ghanaians
…
A respected legal practitioner and lecturer at the University of Ghana, Law Faculty, Dr. Raymond Atuguba has chillingly revealed that militants in the Niger Delta region, notorious for blowing up oil pipes, kidnapping and demanding huge ransoms and causing unrest in the oil rich Nigerian region have started tripping to Ghana in droves.…
He said, when he visited the Western region a few weeks ago, he discovered that “groups there were already creating linkages with groups in the Niger Delta”. According to him, the people were “preparing to create the same amount of chaos we have in the Niger Delta if we neglect their concerns.”Dr. Atuguba stopped short of stating the exact ‘lessons’ the Ghanaians could be taking from the ‘visiting’ militants, but said people were preparing to protect their interest. He remarked that if the security agencies were on their toes, they would have noticed the movement of arms.
Dr. Atuguba is of the view that the culture and livelihood of the people located at the coast of the region will be greatly affected due to the infiltration of various forms of social vices the region will have to embrace.
As if making a case for the them, Dr. Atuguba said as a result of the governmental decision to drill oil in their area, “prostitution is going to increase in their community, stealing and contract killings are going to increase in their community, land grabbing has started in their communities such that they can’t even buy a piece of land in their communities to build a house.”
“You have dislocated the man in his own society and you expect him to sit there and watch you do it …and the politicians will take the money and stuff it in their foreign accounts somewhere…”
Dr. Raymond Atuguba who is also the director of the Law and Development Associates warned that it will be ghastly to ignore the concerns of those communities. “We should not underestimate it…”he advised.
I wonder about this. The oil in the west will be offshore, so, other than potential oil spills, the environmental degradation should not be similar to the Niger Delta. There are certainly some in the Western Region who feel agrieved. And there is much potential for them to feel more agrieved. I also get the impression that there are those who want to stir up more trouble over oil in the west. When I asked friends about this they said it was someone trying to make trouble, but I think this was more opinion than information. I wondered when I first read this story whether it might be part of a US Africa Command “information operation”. I don’t have enough information myself to make an intelligent guess. Dr. Atuguba may be trying to do his best for the people of the Western Region.
Land ownership issues are huge throughout Ghana, and are particularly bad around cities and towns, but hardly limited to the urban areas.
There are Delta militants across West Africa, and there are certainly some in Ghana, and likely in the Western Region. If they are there in organized groups, they are probably not buying the locally made guns, as the …
… buyers of Ghanaian guns tend to be individuals while established insurgent groups purchase heavier weapons from outside the region …
If the militants are visiting the Western Region, it is unlikely they are there to learn gunsmithing, because the skilled practitioners are likely to be in the larger urban areas where there are more customers. The proximity of Ivory Coast, and its recent civil conflicts might be a factor if there are organized militants in the area. I am doubtful about how much organization there is at this point. People from the Niger Delta are moving away in many directions, to avoid the problems there, and to try and make a living. Unfortunately some bring criminal training and skills with them.
The government needs to listen to the people in the Western Region and throughout Ghana. The business model in Suame Magazine working with the Canadians, described above, is something that the government and other organizations interested in development should look at long and seriously. And suggesting people go into another form of business, as with the gunsmiths like Mr. Nsiah or Mr. Sarpong, without assisting them to reach current markets or create new markets, is a waste of time and effort.
September 24, 2009
Ruaraka Export Processing Zone, EPZ, near Nairobi. This is the fifth or sixth hour of production. The 900 indicates the total number of jeans produced at that time. But the daily target is indicated on the green papers, which is between 1200 and 1500. If the EPZ workers do not meet this target by 5pm, they will have to stay until they finish. They will not be paid overtime because they were supposed to reach the target in 8 hours. (picture from Pamoja Tunaweza slideshow, link below)
In Jendayi E. Frazer’s 4-Point Plan to Plunder and Pillage Africa Sophia Tesfamariam writes a devasting indictment of the AGOA program, the African Growth and Opportunity Act. Tesfamariam has also collected and included some of the most searing criticisms made by a variety of people familiar with the program. She shreds all of Frazer’s points, but AGOA gets the most extensive treatment.
Almost 10 years since the introduction of AGOA by the Clinton Administration, oil imports to the US from Nigeria, Angola and Gabon still make up over 94% of Africa´s export to the US under AGOA. So who benefited? As we shall see later, the much touted “success” in the textile sectors were a gross exaggeration and in some cases actually reversed development of these sectors and destroyed nascent industries. Many African economists and analysts had reservations about AGOA and I, as a longtime Africa observer, had strong reservations about it and said so. I was actually happy when Eritrea was unceremoniously removed from the list…it turned out to be a blessing in disguise.
I was not alone in my suspicions of AGOA; here are some of the voices that were just as skeptical and critical of AGOA from the very beginning, voices that were ignored and gagged by the likes of Frazer:
“…African countries are pressured to adopt WTO-like, and even WTO-plus, provisions relating to intellectual property rights protection, investment and financial liberalisation, and labour – all in exchange for some illusory benefits. The AGOA is a US law enacted by the US for the purpose of securing opportunities for US businesses, to the detriment of African economies. It offers no benefits for African economies. The AGOA is a Trojan horse used to trap African governments into giving up their legitimate rights under the WTO…”-(Dakar Manifesto 2001)
“… we reject on principle the “conditionality” approach, which tramples on the sovereignty of African nations and the democratic rights of its people to shape national policy…”-(Letter signed by 35 Africa based NGOs)
“…This is a matter over which we have serious reservations… To us this is not acceptable…”- (Former South African President Nelson Mandela )
AGOA is the “Africa Recolonization Act”-(Congressman Jesse L. Jackson, Jr.)
“…the only groups targeted for assistance are the multinationals who largely control Africa’s trade and access to rich markets…”-(The Association of Concerned African Scholars)
“…To argue that AGOA will be the means by which we can penetrate the US market is a delusion. The main effect of AGOA is to link aid to economic reform, [such as] the dismantling of a states regulatory environment. There are no benefits, and the costs include clear manifestations of deepening structural adjustment and deregulation. AGOA is simply another way of undermining Africa´s ability to mobilize domestic resources for development…”-(Charles Abugre, director of the Integrated Social Development Center in Ghana)
There are several conditions that have to be met to become eligible for AGOA, including one that says that the country has to have a “market-based economy” and has to “eliminate all barriers to US trade and investment”. There is also a provision of AGOA that is not listed amongst the formal conditions for eligibility and is not often mentioned by Frazer and her cohorts. It is the one that says that unlimited duty-free exports of textiles and apparels are allowed only if they are produced with American raw materials. In addition, the President has the authority to suspend duty free apparel if they “cause serious damage, or threat thereof” to the domestic US industry. So Africa, with its unlimited raw materials had to sell in the world market at lower than cost to others who then turn around and sell finished products to Africans who then make the apparel to send to the US. It is actually mind boggling that African leaders actually agreed to do it, essentially destroying their own farmers.
Since Frazer mentioned Lesotho´s textile sector, let us take a look at Lesotho and three other countries, Madagascar, Namibia, and Uganda to appreciate the effects of AGOA on nascent African textile industries.
Imagine my shock when I found out that there were over 50 Taiwanese-owned clothing factories in Lesotho, a very small country (the size of Maryland) that is completely surrounded by South Africa. The way Frazer talks about Lesotho, you are led to believe that the people of Lesotho owned the factories that were producing these AGOA eligible products. The Taiwanese sought to take advantage of AGOA and Lesotho´s proximity to South Africa´s good roads, highways and ports to ship million of jeans, T-shirts and other apparel to American stores such as the GAP, K-Mart, J.C Penney at low cost. As for the thousands of new jobs for women, Frazer forgets to tell her readers that the job migration to the capital was a result of the collapse in rural farming which used to be entirely run by women. The men in Lesotho used to earn a good living by going to mine in South Africa, but they have lost their mining jobs because South Africa stopped importing foreign workers, and decided to use mechanized mining, leaving the men in Lesotho without any livelihood. That is how the women of Lesotho became the breadwinners.
So there was no real increase in overall employment and because only women were being hired at these plants to sew and thread etc. the men were left unemployed and desperate. The situation did not create wealth for the people of Lesotho. Corporate America benefited from cheap labor and transportation costs. As a matter of fact, despite what Frazer wants us to believe about Lesotho, the textile industry in Lesotho was well underway before AGOA ever came into the picture and AGOA may have actually irreversibly stunted its growth and development. The real and serious challenge to Lesotho is what happens to it in 2015 when the initiative ends and Lesotho made products no longer have privilege to enter the United States market.
AGOA was a nightmare for the people of Namibia, they became victims of the predatory transnational corporations like Ramatex Textile & Garment Factory, a Malaysian company moved to Namibia in 2001 to take advantage of AGOA. The plant turned cotton (imported duty free from West Africa) into textiles for the US market. Herbert Jauch, head of research and education for the Labour Resource and Research Institute (LaRRI) in a 26 March 2008 Report stated that:
“…A study carried out by LaRRI in 2003 found widespread abuses of workers rights, including included forced pregnancy tests for women who applied for jobs; non-payment for workers on sick leave; very low wages and no benefits; insufficient health and safety measures; no compensation in case of accidents; abuse by supervisors; and open hostility towards trade unions etc…Ramatex used a significant number of Asian migrant workers, mostly from China, the Philippines and Bangladesh. Although the company claimed that they were brought in as trainers, most of them were employed as mere production workers with basic salaries of around U$ 300 – 400 per month which were higher than their Namibian counterparts…”
In the end, Ramatex, the only beneficiary under AGOA in Namibia, closed its factory leaving hundreds and thousands of Namibians unemployed. Rauch writes:
“…Ramatex represents a typical example of a transnational corporation playing the globalisation game. Its operations in Namibia have been characterised by controversies, unresolved conflicts and tensions…Worst affected were the thousands of young, mostly female workers who had to endure highly exploitative working conditions for years and in the end were literally dumped in the streets without any significant compensation…Ramatex had shown the same disregard for workers when it closed its subsidiary Rhino Garments in Namibia in 2005…”
On 19 November 2007 the Namibian paper quoted President Pohamba as saying:
“…AGOA has not yielded the desired results as far as American investment is concerned despite the incentives provided by African governments to potential investments…”
The story of Tri-Star in Uganda is basically the same story of exploitation and destruction of nascent indigenous industries, plunder of abundant human and material resources and another example of how African governments have squandered the peoples´ resources in order to curry favor with Washington. Lowery Museveni´s Ugandan government promoted Tri-Star in order to cash in on AGOA. During its operation, Tri Star imported fabric from Asia and then made finished clothing products for US markets, even though there is ample cotton in Uganda. Instead of investing Uganda´s resources on establishing milling factories, the Government of Uganda chose instead to do what was the quickest and best option for US importers. The expectations were high. According to a report published by the BBC in 2004:
“…The Tri-Star apparel factory in the Kampala suburb of Bugolobi is bright and clean. Large motivational signs urge staff to build the nation. Banners on the wall read “Made in Uganda, sold in USA”…Tri-Star supplies clothes to a range of US companies…There are more than 2,000 workers at the site, stitching clothes to sell to American companies such as Wal-Mart, JC Penney and Target…”
Judy Auma, a Uganda based Staff Writer for African Executive wrote the following about Tri Star, in a January 2007 article:
“…The factory, which was launched 5 years ago, received high government support and was viewed as an opportunity for Uganda to exploit USA´s tariff and quota free market. Ugandans were made to believe the establishment would not only nurture a rich and stable market for Uganda´s struggling cotton farmers, but also become a reliable source of employment…Since its inception, the factory has neither bought a single bail of Uganda´s local cotton nor exported a stitch from locally produced fabric. Worse still, it has promoted nearly zero growth in terms of employment and the development of the cotton sector…”
The company left the country without repaying any of its debts, leaving behind a destitute workforce and an industry struggling to remain afloat.
What about Madagascar, the other nation that Frazer and company tell us benefited from AGOA? It too has not fared well. A segment of the population, again, only women, may have benefited from its textile sector, but all that is at risk today, not because of anything of their doing but because of political problems in that country that may disqualify Madagascar from the AGOA list. As for AGOA benefiting the Malagasy people, let us take a look at the statistics. A 29 March 2009 Africa Rising report says:
“…the promised AGOA benefits have not translated to a better life for Madagascar´s people. Madagascar ranks at 143 out of 179 countries measured by the United Nations´ Human Development Index Despite its economic progress on paper, the country ranks 164th in terms of gross domestic product per capital…”
Reports surfaced in June 2009 about Washington threatening to pull the plug on Madagascar´s AGOA certification. These reports said:
“…Madagascar could be removed from eligibility for trade preferences under the African Growth and Opportunity Act due to a recent change in government that the U.S. has determined was “undemocratic and contrary to the rule of law… the State Department has classified the change in government as a coup d´etat and is therefore moving to suspend assistance to the government of Madagascar…”
Madagascar is a good example of the US State Departments hypocrisy and duplicity. Everyone knows that Ethiopia is by no means a democratic country and that the minority regime has:
Violated international law and the Eritrea Ethiopia Boundary Commissions´ final and binding delimitation decisions and numerous Security Council resolutions on Eritrea and Ethiopia, it has also violated both the African Union and the United Nations Charters by invading and occupying sovereign Eritrean and Somali territories
Committed international crimes in Somalia including rape, murder and wanton destruction.
Violated and continues to violate the human rights of the Ethiopian people by detaining thousands across the country for voting against the regime in the 2005 elections. Thousands more are being held on trumped up charges, including Birtukan Medeksa, a prominent Ethiopian opposition leader and a judge. It should be noted here that Ethiopia is one of the countries used by the Bush Administration in its extraordinary rendition program where prisoners are taken to places like Ethiopia where in secret CIA run prisons they are interrogated and tortured.
Committed genocides in the Gambela, Ogaden and Oromia regions of Ethiopia. Genocide Watch and other rights groups are seeking a ICC indictment against the regime.
Yet, the US State Department that is threatening to remove Madagascar from the list for violating one of the AGOA conditions today, has refused to take any punitive actions against Meles Zenawi´s regime that has committed even graver crimes.
I am in no way suggesting that Ethiopian textile workers pay for the crimes committed by Meles Zenawi and his regime by having their AGOA status revoked, I am however suggesting that the US State Department, if it wants to salvage its fledgling credibility, can “look the other way” and don´t punish the Malagasy textile sector workers for the “coup” in Madagascar, for which they had no part. By the way, Madagascar may turn out to be the only “success” story on AGOA.
Today, the US State Department´s own Inspector General in his August 2009 agrees with this author and others who were skeptical of AGOA from the get-go. Here is what he said in his scathing Report about Frazer´s Bureau of African Affairs and AGOA:
“…the economic impact of AGOA has been limited even though most of sub-Saharan Africa is now in AGOA… Many African countries have yet to benefit substantially from AGOA preferences. Poorly developed infrastructure, a lack of affordable credit, weak merchandising, and an inability to meet U.S. phytosanitary regulations are among the many factors that thus far have limited the intended trade promotion and diversification effects of AGOA… The bulk of AGOA exports result from petroleum and other extractive industries. When U.S. imports of African petroleum products are excluded, the sum of trade for which AGOA can make some boast for promoting is relatively small…”
Johnnie Carson, the new US Secretary of State for African Affairs ought to take a closer look at AGOA and make realistic and non-parasitic recommendations to the Obama Administration.
________
Picture above from the Ruaraka slideshow by Pamoja Tunaweza, scroll down to the bottom of this page to view the pictures, and read what people say about being in or near the EPZ.
September 1, 2009
Large sums were misappropriated, and just plain stolen by the people managing the celebrations and observances for Ghana@50 in 2007, Ghana’s golden jubilee celebration. On June 17 2009 President Mills established a 90 day Commission to look into what happened, and deliver a report.
Ghana@50 scandal over over stolen property and vanished funds
Quite a few, though not all, of the relevant articles can be found in this list: Ghana@50 Dossier
[Nov. 18, 2009: That list appears to have been removed. But you can get a good selection of relevant articles by going to the GhanaWeb Search the News Archive page, select the year 2009, and search for Ghana@50. It is not comprehensive, but you’ll get a good overview.]
From Commission of inquiry into Ghana@50 inaugurated the Commission is to provide:
… an objective, fair and just enquiry that establishes the cold hard facts of all transactions and activities related to the 50th anniversary celebration.
Reports and stories of malfeasance have been trickling out for some time. They really gathered steam after the election, though it was obvious well before then that something was seriously wrong. I gather from people watching the hearings of the Commission on tv, that it is breathtaking how much money just disappeared, and how those responsible appear to be totally unprepared for any reckoning. Those being questioned are twisting and squirming, and many of the major players are yet to be interviewed. I understand a few have fled the country to avoid being held accountable.
From Ghana@50 Cost US$60m:
… another irony of the situation was that while GH¢12 million was raised and used for the procurement of Jubilee Souvenirs, only GH¢318,417 was realized as proceeds from the sale of those items.
Ghana@50 in arrears; already spent $60 million:
Accra, Jan. 26, GNA – The Ghana@50 Secretariat charged to organize Ghana’s Golden Jubilee celebrations two years ago is in arrears of more than GH¢18 million to contractors.The Secretariat has reportedly already spent US$60 million and with the arrears, the expenditure so far incurred stands at US$78 million against the US$20 million which Parliament approved for the celebration in 2007.
Government auditing officials on Monday told the sub-Transition Team on Executive Assets sitting in Accra that only one out of 25 toilets for which an amount of GH¢19 million was allocated had so far been provided.
…
Auditor General, Mr Edward Dua Agyemang … said neither staff nor records to assist in the auditing were available, and the Auditor General’s Department had to put receipts and payments together to determine whether there was value for money.“We just had to put things together to be able to form our opinion. There wasn’t any account over the $60 million account,”
27 January 2009 The interim report of the Auditor General on the Ghana@50 celebrations reveals dinner wear for 48 houses at the AU Village in Accra was procured in excess of GH¢108,000 ($100,000) and were not used.
A company was overpaid in excess of GH¢43,000 for the supply of 288 decanters or flasks and sample count of items costing over GH¢1million revealed that items valued at over GH¢467 were missing.
A loan of approximately GH¢1.3 million granted by the Secretariat to the Ghana Trade Fair Company has not been refunded.
The Secretariat is said to have overdrawn its bank account with Prudential Bank in the sum of GH¢1.2 million.
The report noted that management of the Secretariat could not provide invoices and receipts covering procured receipt books and so the omission prevented the audit team from determining missing receipt books
Ghana@50: No trace of 139 vehicles – CEPS
Jan. 27 One hundred and thirty nine vehicles imported for the office of the President by five motor firms in the country cannot be located by the Customs, Excise and Preventive Service (CEPS).
CEPS has also described the mode of disposal of the vehicles as questionable, as no records on them can be traced.
…
The 139 saloon and 4×4 vehicles were imported on behalf of the Office of the President …
…
Giving a breakdown of its finding in the letter dated January 19, 2009, the CEPS commissioner noted that 968 vehicles were imported by the Office of the President between 2003 and 2008 with the value of tax forgone on the said vehicles amounting to GH¢7,892,935.67.It explained that imports made on behalf of and for the Office of the President were tax exempt.
On PHC Motors Ltd, CEPS indicated that its current records and enquiries did not disclose the current location or mode of disposal of the 35 Chrysler vehicles imported for the Office of the President. It said Fairllop International Ltd imported 40 Jaguar X-Type, 40 Rover 75, two Rover 75V6 and one Rover 45 for the Office of the President.
Out of the number, Fairllop bought back 35 Jaguar X-Type, while CEPS’ enquiries did not disclose the location and mode of disposal of the remaining five Jaguar X-Type and 43 Rovers.
With regard to Mechanical Lloyd, CEPS said the company imported 50 BMW 730 LI, two Land Rover Discovery, two BMW 745 Li high security, 13 Ford Ranger pick-ups and one Ford Explorer.
…
CEPS’ “current records and enquiries did not disclose the location or mode of disposal of two Land Rovers, 10 BMW 730 Li; two BMW Li 745, 13 Ford Ranger pick-ups and one Ford Ranger”.The letter noted that Universal Motors imported 36 VW Passat (Comfort Line) for the Office of the President and subsequently released 35 of the vehicles to the custody of the Ghana@50 Secretariat.
…
… under the CEPS Law, although items bought for the Office of the President and the Diplomatic Corps were tax exempt, anytime they were to change hands into private hands the new owner was made to pay the appropriate taxes.
Some of the cars were allegedly sold, although CEPS law also requires any sales of vehicles acquired by the government in this way to be open for public bid, and there is no record of any public bid for the vehicles that were “sold” or disappeared.
Spending by Ghana@50 Secretariat questioned
[From] a statement, issued and signed by the Executive Director of NGYL (Next Generation Youth League, an NGO) Benjamin Akyena Brantuo, a former Junior Common Room (JCR) President of the Commonwealth Hall of the University of Ghana, Legon …
“Whilst we are equally alarmed, and concerned about the horrifying revelations coming from the report – the total cost of the celebrations (¢60,172,251.8400), fraud in the form of over-invoicing (¢432,000,000), purchases in excess of budget (¢1,080,000,000), failure to account for VAT deductions (¢3,796,575,000), failure to pay withheld taxes to the Internal Revenue Service (¢1,396,400,000), etc, financial recklessness, lack of proper cash books, no stock register of value books, no contract register, technically incompetent financial officer, etc, the total debt owed to contractors and suppliers ¢184,439,340,000 and the lack of priorities in spending, we are far more disturbed about the limited scope of the public debate, which has confined itself to the ability or otherwise of the Golden Jubilee Celebrations Secretariat to provide adequate documentations to support expenditures they have engaged in.”
…
… accountability should not be limited to the ability of public servants, to legally support their whimsical and impulse actions with documentations, but the extent to which such actions have satisfied ethical requirements, which includes adding value and bringing improvement into the living conditions of the people they work in trust for.… anything short of this, is a proper case of causing financial loss to the state …
…
“For the sake of argument, let us concede that indeed, the findings in the report amount to witch-hunting, and is a ploy by the NDC-led regime and the Auditor-General to persecute their political rivals. Does that assumption change the fact that the whole concept of Ghana@50 was a fraud by a few political elites to enrich themselves?
Ghana@50 report -Mpiani Milked Ghana
The main concern raised in the report is the total expenditure incurred GH¢71.70, which is almost twice the original allocated amount of GH¢31 million. Also, out of the 25 much-talked-about jubilee toilets only one has been completed.
For a sample of the proceedings: Prudential Bank boss grilled:
In what could be described as teacher-pupil session, the Managing Director of Prudential Bank, Mr Stephen Sekyere Abankwa, was on Thursday quizzed when he took his turn at the Presidential Commission mandated to investigate the activities of the Ghana @50 secretariat. …
Mr Abankwa had to constantly consult his counsel before giving any answer, attracting the attention of media cameras.
The first hefty punch which was thrown to Mr Sekyere Abankwa by Mrs Marietta Brew Appiah- Oppong- a member of the Commission was that : Did he (Mr Abankwa) sought to enquire whether the Ghana @50 secretariat was a corporate entity when it approached his outfit for loan?
In a shivering mood, the veteran economist (Mr Abankwa) directed the question to his counsel, Akoto Ampah who was sitting beside him to handle the question after sipping some water.
Interestingly, Mr Akoto Ampah’s response to the question was that, “Mr Chairman, my client is not a lawyer so therefore; he can not answer legal questions.”
The answer which obviously made the Commission members to wonder why then did Mr Sekyere Abankwa responded to their invitation since he was aware that the Commission had the powers of a High Court.
And more revelations continue as the Commission of inquiry continues. There has been much discussion of vast amounts of souvenir cloth that was given away rather than sold, with no accounts kept. And there are other items missing, houses built, home furnishings that disappeared, and more.
It is obvious that no one ever expected any accounting to be required for any of this. I hope these proceedings serve as a warning to anyone who joins Ghana’s government who might be planning to chop and go.
On the plus side, because democracy worked in Ghana, these crooks may be held accountable. In many countries the government would be able to get away with this, no questions asked. It is obvious the previous government was expecting to continue in this fashion, with no accountability.
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You can find a more comprehensive list of related stories by searching GhanaWeb here. Enter the search Ghana@50, and specify the year. I check the following areas to be searched:
General News
Business News
Politics
Crime & Punishment
Diasporian News
Regional News
You can also choose Feature Article, for opinion pieces.
August 2, 2009
These charts tell us all we need to know about the militarization of the US economy, which has marched hand in glove with the militarization of US foreign policy.
US durable goods shipments from 2000-2009 (shown full size)
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US shipments and orders of durable goods 2008-2009 (shown full size)
This trend is a particularly ominous sign for American democracy. Back in 2006 Harpers published a conversation about American democracy and the military over the question of whether a military coup is possible in the United States, American coup d’etat: Military thinkers discuss the unthinkable. Participating in the conversation were Andrew Bacevich, Brig. Gen. Charles J. Dunlap Jr., Richard Kohn, Edward Luttwak, and Bill Wasik. A number of interesting points were discussed.
BACEVICH: … another crucial reason there could never be a military coup in the United States: the military has learned to play politics. It doesn’t need to have a coup in order to get what it wants most of the time. Especially since World War II, the services have become very skillful at exploiting the media and at manipulating the Congress—particularly on the defense budget, which is estimated now to be equal to that of the entire rest of the world combined.
…
WASIK: If we are talking about a “creeping coup” that is already under way, in what direction is it creeping?
BACEVICH: The creeping coup deflects attention away from domestic priorities and toward national-security matters, so that is where all our resources get deployed. “Leadership” today is what is demonstrated in the national-security realm. The current [Bush] presidency is interesting in that regard. What has Bush accomplished apart from posturing in the role of commander in chief? He declares wars, he prosecutes wars, he insists we must continue to prosecute wars.
KOHN: By framing the terrorist threat itself as a war, we tend to look upon our national security from a much more military perspective.
BACEVICH: We don’t get Social Security reform, we don’t get immigration reform. The role of the president increasingly comes to be defined by his military function.
KOHN: And so our foreign policy becomes militarized. We neglect our diplomacy, de-emphasize allies.
…
BACEVICH: … Meanwhile, we’ve underfunded the State Department for twenty-five years.
…
DUNLAP: Well, I don’t think it’s anything new that the State Department is underfunded. The State Department has no bases in any state, so it does not have a constituency.…
KOHN: One of the great pillars in our history that has prevented military intervention in politics has been the military’s nonpartisan attitude. That’s why General George Marshall’s generation of officers essentially declined to vote at all, as did generations before them. In fact, for the first time in over a century we now have an officer corps that does identify overwhelmingly with one political party. And that is corrosive.
…
WASIK: So it seems clear that whether we like it or not, the military has learned how to use the political system to protect its interests and also to uphold what it sees as its values. Thinking over the long term, are there any dangers inherent in this?
KOHN: Well, at this point the military has a long tradition of getting what it wants. If we ever attempted to truly demobilize—i.e., if the military were suddenly, radically cut back—it could lead if not to a coup then to very severe civil-military tension.
BACEVICH: Because the political game would no longer be prejudiced in the military’s favor.
KOHN: That’s right.
BACEVICH: But there is a more subtle danger too. The civilian leadership knows that in dealing with the military, they are dealing with an institution whose behavior is not purely defined by adherence to the military professional ethic, disinterested service, civilian subordination. Instead, the politicians know that they’re dealing with an institution that to some degree has its own agenda. And if you’re dealing with somebody who has his own agenda, well, you can bargain, you can trade. That creates a small opening—again, not to a coup but to the military making deals with politicians whose purposes may not be consistent with the Constitution.
Looking at the charts above, it looks like there has already been a coup of sorts on the economy. If spending on the military were reported the way spending on health care is reported, people would be asking some serious questions about this. One can certainly argue that public health and health in general is an equally important part of the defense of a country and its citizens, though I have not ever seen the argument framed in those terms. Of course the money issues are not going to be reported the same way. We have just seen what happens with our corporate dominated news business. Even when news reporting results in actual news getting reported, and is good for ratings, if the major corporations who own the news companies see it as harmful, it will be censored and shut down, witness the Olbermann O’Reilly feud.
China is the paymaster for current US military spending. And China is also a target of US military attention. China is perceived as a great rival for the natural resources of Africa, especially oil, which is one major reason for the creation of the US Africa Command, AFRICOM. We can infer a number of things from the charts above, especially if the trend they map continues. Among those is that the Africa Command will grow, and increase its interference with people, countries, and governments in Africa. The other is that China will have increased ability and power to control what the US says and does, much in the way that the corporate paymasters shut down the Olbermann O’Reilly feud. After all, when your finger is between someone’s teeth, you don’t hit him on the head.
July 20, 2009
World Bank/IMF policies have consistently increased the number of unemployed, expanded poverty, and decreased productivity and self sufficiency in Ghana as in most countries. Once again Ghana is caught in that vicious cycle.
Anti WTO poster from the Thai Labour Campaign 2005, TNC = transnational corporations, the results listed across the bottom read in English: Privatisation, No job security, Suppression of union rights, Environmental destruction, State Violence against citizens, Displaced and landless population, De-democratization, Destruction of local culture, Increasing poverty (click image to enlarge)
An article on Ghana web gives a clue as to what Ghana is up against with loans from the World Bank and IMF, and shows it got into these problems by following the prescriptions of the World Bank and IMF. As an earlier article pointed out. Ghana has been an economic and political success story, but:
… last year world food and oil prices soared. China’s slashed demand for raw materials is harming much of Africa. Global warming caused a drought that drained the dam powering Ghana’s electricity, requiring crippling oil imports. The last government borrowed to cover these unexpected costs, the currency dropped in value, inflation rose to 20% and credit has dried up.
Economists at the NGO Oxfam point out that this was not caused by profligacy, but by external events last year. A further source of bitterness: if rich countries had kept their 2005 Gleneagles promises, as Britain did, Ghana would have received $1bn, with no need to borrow at all.
…
Every government knows what it has to do to get credit, so Ghana has already said it will lower its deficit from 15% to 9.5% of GDP in one year, steeply cutting public sector costs … an IMF thumbs-down means money from everywhere is cut off.
And so Ghana needed a loan, and is trapped in the vicious cycle:
…Public sector labour freeze costs Gov’t 1billion dollars
Ghana’s, dependence on donor-fundings, and their attendant conditionalities, for the implementation of her fiscal policy year in and out, is beginning to take a heavy toll on the country.News about the recent International Monetary Fund (IMF)’s $1billion total financial facility to Ghana for her budgetary support, as approved by its board on July 15, 2009 came just a day after the Attorney General, Hon. Betty Mould Iddrissu had disclosed that Government of Ghana (GOG) owes as much as over $1 billion dollars in judgment debts which have accumulated over the past 10 years.
She explained that the problem boils down to the fact that, the attorney general’s department lacks the human resource capacity to function adequately as government’s legal advisor in all transactions government enters into.
According to her, “Ghana lacks the capacity to retain attorneys for all Ministries, Departments and Agencies (MDAs), so out of frustration, the MDAs hire private legal practitioners to guide them in some of their transactions, some of which bring about legal problems.
“The department also lacks the requisite manpower to send attorneys to court to defend the state whenever those litigations come up”, she disclosed, adding, “it is a systemic and an endemic problem with the department which has been there over the years”
For this reason, government is now saddled with such a huge debt including those to CP Construction, Attachment Awards against the government in France, Britain Belgium, USA and Holland.
It has been suggested that the genesis of the problem of the lack of human resources in the public sector dates back to the late 1980s and 1990s when government was instructed to freeze public sector recruitments in return for World Bank/IMF supported Economic Recovery Programmes.
This same condition, of freezing public sector employments, is said to have been reaffirmed by the Breton Woods institutions in the current loan agreements, but Finance Minister explains it is government’s own decision to manage public funds prudently.
However another contradictory condition is also the call on government to establish a Public Sector Reform Ministry as a requirement for further assistance from the World Bank. Opinions are divided as to where manpower would be secured to run such a new ministry if recruitments into the public sector is to remain frozen.
Although Finance Minister, Dr. Dufuor has told this reporter that the AG’s department has been given the clearance to recruit 20 new attorneys, Financial Intelligence (FI) investigations have revealed that the problem of inadequate manpower is not peculiar to the Attorney General’s Department, but a general problem that has bedeviled the whole of the Civil Service in Ghana.
Departments such as the Veterinary Department, Extension Services of the Ministry of Agriculture and other government departments have been crying over the years for more personnel to be recruited to beef-up their activities.
For the Crop Extension Services and Veterinery Services, although their training schools in Kwadaso, Nyankpala, Ohawu, and Pong-Tamale have been churning out well-trained personnel over the years, due to World Bank conditions that were introduced as a result of the Economic Recovery Programme and The Structural Adjustment Programmes, employments of these personnel have remained frozen till date, leaving the departments with the only other option of replacing retiring and diseased staffs.
The Cocoa Services Division is on record to have attracted a large number of extension officers from the Agric Ministry, while engaging many others who had either completed the Agric Training Institutions as well as some Sixth Form leavers from the early 1990s, and current gains being made in that sector is believed to be as a result of those investments earlier made in human resources.
Questions are being raised as to whether it is prudent to continue freezing recruitments into the public sector, when evidence has started emerging that it can be costly in the long run as evidenced by happenings at the AGs department.
If the MDAs can find money to hire the services of private legal practitioners whose legal advice in transactions have proven to be costly to the nation, it would have been better if the state spent money employing full time attorneys for the AG’s department, for onward attachment to the MDAs.
…A senior Lecturer at the University of Ghana Business School, Kwame Gyasi … “it is the public sector which moves the private sector and not the vice-versa, then; there is a problem if you freeze employment in the public sector down here”.
“Now that the private sector is collapsing, freezing employments in the public sector would not only end up in some costly financial consequences for the state as has happened in the judgment debts, but will also create upheavals”
Neoliberal free market practices have brought disaster on the western governments of the northern hemisphere. But the World Bank and the IMF continue to impose those policies on the developing countries when they issue loans.
As one impassioned comment on the article said (all caps are frequently used in the comments):
IMF AND WORLD BANK SUCCESS STORIES SOON TURN INTO MIRAGES EVERYWHERE. I CHALLENGE ANY IMF, WORLD BANK OR GHANAIAN OFFICIAL TO CITE ONE SIMPLE EXAMPLE OF REAL SUCCESS.
THE IMF IS THE ACRONYM FOR “I MOSTLY FAIL”, “INTERNATIONAL MONSTER WITHOUT FEELINGS”, “INTERNATIONAL MISMANAGER OF FINANCES”
THE WORLD BANK (WD) STANDS FOR “WORST BANDIT”, “WORLD DESTROYER”, “WORST DEATH”.
…
THEY REJOICE WHEN THEY SEE AFRICANS MARGINALIZED AND IMPOVERISHED. THAT IS WHY THEY PRESCRIBE STRUCTURAL ADJUSTMENT FOR AFRICANS WHILE THEY EMBRACE RESCUE PACKAGES.
Ghana does not have the personnel to oversee and regulate contracts because those staff were laid off and reduced, due to previous World Bank/IMF requirements to lay off and reduce staff. Without those public sector legal advisors providing advice and oversight, Ghana incurred expensive judgements.
At a time when the economy is contracting and losing private sector jobs, it is a huge mistake to also reduce public sector jobs. In fact, public sector jobs help create private sector jobs, particularly in health and education, which often suffer the most under World Bank/IMF requirements and structural adjustments. A healthy workforce is productive, the more healthy, the more productive. And an educated workforce brings business and employers looking for a large available pool of smart, healthy, and well educated people to work for them. A strong public education system, including universities, attracts and creates strong private sector growth.
But as the earlier article: What Wall Street did to Ghana said:
Oxfam’s senior policy adviser and economist, Max Lawson, doubts such cuts are needed, just a loan to tide Ghana over. “The IMF is too brutal … demanding balanced books within one or two years. The only way to make such a deep cut is in social spending: teachers’ salaries are the main item.”
In the West governments are undertaking huge fiscal stimulus programs to repair their economies. But in the developing world those same governments and institutions continue to advocate reductions, restructuring and belt tightening. It looks like the plan is not to help but to prevent developing nations from developing.
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Note: graphic above from here
May 5, 2009
Barclays offshore banking will bring more slums like this to Ghana
In a move guaranteed to increase poverty and crime throughout Ghana and West Africa, Barclays Bank, at the 2005 invitation of former President Kufuor, is setting up off shore banking in Ghana. Other big banks are waiting to join in the tax haven business in Ghana following Barclays lead.
Barclays bank is playing a lead role in the establishment of a tax haven in Ghana, in a move that could see huge mineral wealth in west Africa vanish into it from poverty-stricken countries’ coffers, the Observer can reveal.
The controversial British lender has for the last four years worked closely with the Ghanian government to start an International Financial Services Centre offering low taxes and minimal financial disclosure.
Development charities fear that the establishment of a fully operating tax haven so close to oil- and mineral-rich countries such as Nigeria, Sierra Leone and Equatorial Guinea will encourage a rapid increase in tax and capital flight.
There is also concern that cocaine barons, increasingly using west Africa as a trafficking route into Europe, could launder drug money through Ghana.
…
“Oil-producing nations are plagued by corruption and drug trafficking and the creation of this international financial services centre will make this worse – not better.”
This move was initiated in 2005 by former President Kufuor. In light of what we now know about the theiving and raids on the treasury by himself and his cronies, it looks like they were planning ahead to hide stolen assets from the people of Ghana. We know Kufuor initiated this move from an article on GhanaWeb in 2005, when the offshore banking plans got underway:
Barclays Bank to assist Ghana establish off-shore banking
2005 Accra, March 30, GNA
Barclays Bank Plc is to assist the Government to establish off-shore banking in Ghana, Mr David Roberts, Executive Director of the Board of Directors of Barclays Plc and Barclays Bank Plc, said on Wednesday.“We have to make the necessary arrangements to make off-shore banking operational in Ghana,” he said in reaction to an appeal by President John Agyekum Kufuor that the Bank cooperated with the Government to establish offshore banking.
President Kufuor made the appeal when a delegation of the Bank’s Directors attending the first International Executive Committee Meeting outside Europe in Accra, paid a courtesy call on him at the Castle, Osu.
The discovery of oil in Ghana was not announced until June 2007. But by 2005 they knew it was in the works. The Cape Three Points Deep Petroleum Agreement was signed in 2002, and potential oil fields mapped, also in 2002. So it seems likely Kufuor and his NPP cronies were planning for the influx of oil cash, and a place to stash and hide the money conveniently close to home. Even without oil, their misappropriation of government assets is impressive. There are many examples documented on GhanaWeb, such as Massive looting at Ministries, especially since the change in government has brought a bit more transparency. Financial transparency is what every watchdog group says is needed in the African oil and resource business. Financial transparency is what off shore banking is designed to eliminate.
Barclays Bank has been repeatedly implicated in illegal and unethical banking operations. In March the Guardian published a number of internal memos from Barclays, from WikiLeaks:
The documents are copies of alleged internal memos from within Barclays Bank. They were sent by an anonymous whistleblower to Vince Cable, Liberal-Democrat shadow chancellor. The documents reveal a number of elaborate international tax avoidance schemes by the SCM (Structured Capital Markets) division of Barclays.
According to these documents, Barclays has been systematically assisting clients to avoid huge amounts of tax they should be liable for across multiple jurisdictions.
A commentator to the Financial Times stated:
I was lucky enough to read through the first of the Barclays documents…
I will say it was absolutely breathtaking, extraordinary. The depth of deceit, connivance and deliberate, artificial avoidance stunned me. The intricacy and artificiality of the scheme deeply was absolutely evident, as was the fact that the knew exactly what they were doing and why: to get money from one point in London to another without paying tax, via about 10 offshore companies. Simple, deliberate outcome, clearly stated, with the exact names of who was doing this, and no other purpose.
Until now I have been a supporter of the finance industry – I work with people there regularly and respect many of them, and greatly enjoy the Financial Times and other financial papers. However this has shone a light on something for me, and made me certain that these people belong in jail, and companies like Barclays deserve to be bankrupt. They have robbed everyone of us, every single person who pays tax or who will ever pay tax in this country (and other countries!)
If Barclays can get away with this in the UK, with UK laws and enforcement, how much more can they get away with in Ghana, where the current legal and enforcement communities have a much shorter history, and are grossly underpaid.
Barclays have also been implicated in corrupt associations and illegal dealings with Equatorial Guinea, and along with other banks in Angola. From the BBC:
The same lax regulation that created the credit crunch has let some of the world’s biggest banks facilitate the looting of natural resource wealth from poor countries.
I have quoted Nicholas Shaxson in previous posts, but what he says regarding the movement of money is right on the mark:
There are basically three forms of dirty money. One is criminal money: from drug dealing, say, or slave trading or terrorism. The next is corrupt money, like the fromer Nigerian dictator Sani Abacha’s looted oil billions. The third form, commercial money – what our finest companies and richest individuals hide from our tax collectors – is bigger. The point – and this is crucial – is that these three forms of dirty money use exactly the same mechanisms and subterfuges: tax havens, shell banks, shielded trusts, anonymous foundations, dummy corporations, mispricing schemes, and the like, all administered by a “pinstripe infrastructure” of mainstream banks, lawyers, and accountants.
. . .
In this parallel secret universe the world’s biggest and richest individuals and firms, News Corporation, Citigroup, and, yes, ExxonMobil – can quite legally cut themselves loose from pesky full taxation and grow explosively, leaving smaller competitors, who pay their full dues along with the rest of us, choking in their dust. This undermines the very notion of capitalism: the big companies’ advantage has nothing to do with the quality or price of what they produce. If you are worried about the power of big global corporations, don’t always attack them directly, but attack bank secrecy instead. This is the clever way to take on the big fish, using a net that would also snag the Sani Abachas, the Mobutus, the North Koreas, the terrorists, and the drug lords.
(Poisoned Wells: The Dirty Politics of African Oil, by Nicholas Shaxson, p.225&227, ISBN 978-1403971944)
In 2007 Kufuor and Barclays raved on about what a wonderful opportunity offshore banking would be for Ghana:
President Kufuor said … the Government was fully aware of the numerous challenges and difficulties inherent in the operation of the facility and gave the assurance that the necessary safeguards had been put in place to stave off abuses.
Legal and administrative measures, he said, had been enacted to provide the needed checks and balances within the economy in particular and society in general.
“These measures should promote best practices in service delivery. More importantly, they should affirm the good faith and determination of the entire society to make Ghana a safe, secure and peaceful environment for investment.”
President Kufuor, through whose initiative the offshore banking had become a reality, said It must help to transform the financial system for accelerated socio-economic development.
…
He said last year, 658 billion dollars was transferred from developing countries to the developed countries, noting that if about half of this had been lodged in such a facility in Africa, the pace of development of the Continent would have been tremendously enhanced.
If that money had gone into offshore facilities in or near the developing countries, it would have made no difference. The reason for offshore banking is to evade the checks, balances, and safety measures. In fact, offshore banking will allow and promote the legal and illegal theft of money from Ghana, and is designed to do just that. Corporate money, drug money, stolen money, money from arms deals, money from illegal bunkering and corrupt politicians, all disappear offshore. Barclays and other big banks take money out of the reach of the countries those assets came from, and out of the reach of the governments and the citizens they are supposed to serve. I doubt Kufuor’s lavish praise for offshore banking was due to naivité. He was planning to be one of those advantaged by the bank at the expense of his own country. It is not for nothing he is known as Thiefuor to many of his countrymen.
Aside from those few who become very rich indeed, oil, and other extractive resources can make a country much poorer. The phenomenon is described in this article in Foreign Policy:
Collier’s model shows that producers of oil, timber, and minerals would on average see their gross domestic products rise by 10 percent in the first seven years, only to have them crash two decades later to only 75 percent of where they started. Sudden cash flows in unprepared countries, he says, lead to unsustainable public consumption, rising inflation, soaring inequality, trade protectionism, and a real danger of civil war.
As Shaxson points out:
People often put the problem like this: oil money would be a blessing but politicians steal it, so people don’t see the benefits. But it’s much worse: the oil wealth not only doesn’t reach ordinary people, but it actively makes them poorer.
Barclays and other big banks help make and keep the majority of people poorer. They insure there is no level playing field. Offshore banking is the tool that possessors of criminal money, corrupt money, and commercial money use to hide that money from its source, and to prevent reinvestment in the people and the places the money came from. That is why it is so shameful for Ghana to be setting up offshore banking. It is shameful that a former president initiated and promoted this tool to steal from the Ghanaian people, and it is shameful for the current government if they allow this to proceed as planned. If offshore banking goes forward, slums such as in the picture above will expand exponentially, people will suffer and die because their assets are being stolen from them, and they have nothing to fall back on.
April 26, 2009
EU dumping chicken parts on Ghana, cartoon by Khalil Bendib for corpwatch.org
Once again it looks like Africa will get to to subsidize the disasters of western capitalism.
In past global downturns, the severity of the impact on Africa varied considerably from state to state. This downturn is washing up on all of the continent’s shores, cramping both the formal and informal sectors as currencies lose value, the cost of imports rise, and living standards fall. As the big engines of regional growth have slowed – South Africa in the south, Nigeria in the west, and Kenya in the east – the contagion has spread to poorer countries in the landlocked interior.
Economists, investment analysts and policymakers were all slow to see this coming. Until late last year, many believed that the poorest continent would escape relatively unscathed from the gathering storms. This was partly because African banks were not exposed to the toxic assets eating away at Wall Street and the City of London.
It also resulted from the belief that the continent’s strengthening economic performance has been the result of interwoven trends, not just the commodity boom. …
… it now seems painfully obvious just how vulnerable this emerging recovery was likely to be, given its roots in world trade and a relatively narrow base of exports.
Ghana has already suffered at the hands of the free marketeers, the banksters who are eliminating the middle class, and crushing the poor everywhere. Ghana has been the victim of agricultural dumping, chicken and tomatoes from the EU, plus rice from the US. From CorpWatch in 2005:
In 1992 domestic poultry farmers supplied 95 percent of the Ghanaian market, but by 2001 their market share had shrunk to just 11 percent. The imported chicken is available (wholesale) at a price that is only slightly more than half of the wholesale price of local chicken.
The accompanying loss of jobs has also been remarkable. The industry has lost 150 jobs in the past few months alone, say the Farmers Associations. Commercial poultry farms — which do not include small rural producers — employ up to 5,000 people. Any job loss has far reaching implications for Ghana’s 20 million people because each worker often provides support for numerous others in their household.
Foreign producers currently pay a 20 percent tariff or tax on the poultry they send to Ghana. Two years ago, the Ghanaian Parliament passed a law allowing an additional 20 percent tariff to be imposed on imported chicken, bringing the overall tariffs to 40 per cent.
In a dramatic move, just two months after the law was passed, the Customs and Excise Preventive Services (CEPS), the body responsible for implementing the tariffs, issued an order reversing the decision. The new tariffs were said to be in conflict with regional tariffs. In other words, the proposal have been blocked by the International Monetary Fund (IMF), an institution in which the Ghanaian government has less than 0.5 per cent of the vote.
Adding insult to injury:
The IMF made it clear that it was opposed to the higher tariffs on the grounds that it will hurt Ghana’s poverty reduction program.
Wheareas IMF policies consistently increased the number of unemployed, expanded poverty, and decreased productivity and self sufficiency in Ghana as in most countries.
There is some question as to whether a 40 percent tariff on the chicken would actually solve the problem. According “For Richer or Poorer” an April 2004 report released by Christian AID, it was estimated that “tariffs would need to be 80 percent, four times their current level” to allow local producers and processors to compete fairly with EU imports,” because “European producers gave enjoyed decades of subsidies, support and protection from their government.”
In fact IMF policies expand and increase the reach of poverty:
“It is through no fault of ours that our production costs are high,” he adds. “Just look at electricity and water tariffs, as well as the price of petrol and diesel. So, in plain terms, our government is telling us to fold up.”
As pointed out farther along, those electricity and water tariffs are the direct result of IMF actions.
In fact, most members of the once thriving 400,000 member National Association of Poultry Farmers have folded up. And Ghana’s rice and tomato industries are equally threatened.
… Ghana was on the way to becoming self-sufficient in rice production in the 1970s and 1980s. But the IMF structural adjustment program halted farm subsidies to rice farmers. Ghana now produces a mere 150,000 tonnes of rice, or 35 percent of its domestic need.
No longer able to farm because of the high prices of agriculture inputs, many young people are flocking to the urban centers searching for non-existent jobs. More displaced people from the rice and poultry sectors are bound to increase the numbers drifting to the urban centers, causing social problems.
The greed and theft of Wall Street are hitting Ghana through no fault of Ghanaians:
This is a good place to survey what Wall Street and the City of London did to the world. Ghana, which has met its millennium goals on children in primary education and cutting poverty, has been an economic and political success story, with high growth. A centre-left government has just taken over after hard-fought but peaceful elections. It is better protected than some, the prices of its gold and cocoa holding up in the recession. Offshore oil will flow in a few years.
But last year world food and oil prices soared. China’s slashed demand for raw materials is harming much of Africa. Global warming caused a drought that drained the dam powering Ghana’s electricity, requiring crippling oil imports. The last government borrowed to cover these unexpected costs, the currency dropped in value, inflation rose to 20% and credit has dried up.
Economists at the NGO Oxfam point out that this was not caused by profligacy, but by external events last year. A further source of bitterness: if rich countries had kept their 2005 Gleneagles promises, as Britain did, Ghana would have received $1bn, with no need to borrow at all.
Where should Ghana turn? To the IMF, of course, now the G20 has swelled its treasury. But there is deep political and public resistance after previous bad experience. Remember how humiliated Britain felt going cap in hand to the fund in 1976. Ghanaians know how World Bank and IMF largesse came with neoliberal quack remedies.
Cutting public services, making the poor poorer, putting cash crops and trade before welfare was the old IMF way. It was the IMF that insisted on meters for Ghana’s water supply, demanding full cash recovery for the service, steeply raising costs for the poorest. The World Bank insisted on a private insurance model for Ghana’s health service that has been administratively expensive and wasteful. The new government rejects it, promising free healthcare for children. The IMF wants subsidies for electricity removed, again hitting the poorest hardest. A market policy of making individuals pay full cost for vital services instead of general taxation has made the IMF hated; Ghana has now voted for more social democratic solutions. Freedom from the IMF feels like a second freedom from colonialism to many countries.
No wonder the new government hesitates to apply for a loan…
…
The IMF protests that it has changed: it no longer prescribes or monitors so oppressively, and countries seeking loans can set their own goals. A British cabinet minister was quoted on G20 day as saying that it should be no more stigmatising than “going to a spa to recuperate”. Arnold Mcintyre, the IMF’s representative in Ghana, insists that it would be entirely up to the government to propose its own measures. This is, to put it politely, disingenuous.Every government knows what it has to do to get credit, so Ghana has already said it will lower its deficit from 15% to 9.5% of GDP in one year, steeply cutting public sector costs. “They can do it through efficiency savings, with no damage to services,” says Mcintyre breezily. The government grits its teeth and says it can, and will: IMF economic thought often enters the soul of finance ministers. IMF power makes it the sole credit-rating agency for all other donors and lenders – an IMF thumbs-down means money from everywhere is cut off.
Oxfam’s senior policy adviser and economist, Max Lawson, doubts such cuts are needed, just a loan to tide Ghana over. “The IMF is too brutal … demanding balanced books within one or two years. The only way to make such a deep cut is in social spending: teachers’ salaries are the main item.”
It’s a strange irony that Barack Obama and Gordon Brown embrace a Keynesian fiscal stimulus and in its name pour out global largesse to the IMF to distribute. But loan recipients risk a Friedmanite tourniquet, cutting off their economic lifeblood. Will Obama and Brown see how their policy is translated on the ground?
Free market is a religion, a belief. It is not science or economics. We have brutal global evidence that it does not produce the advertised results, or live up to its promises. As long as the true believers are in charge, there will be no substantive change. The article quoted above points out that microcredit, and local credit unions are the way to raise productivity, relieve poverty, and increase the numbers of children in school and spending on education. The tiny local credit unions in Ghana discussed in the article have a 0% default rate on their microloans. But none of that is big and glamorous, and it does nothing to add to bankster CEO salaries and bonuses. So I doubt we will see much change in the behavior and policies of the IMF.
Note (4/28/09):
Khalil Bendib very graciously extended permisssion to use the cartoon above. His cartoons combine elegant drawing with witty and incisive commentary. You can see more at his website: The Pen is Funnier Than the Sword.
You can buy his book here.
Crossed Crocodiles 