Voter apathy in Nigeria's 2019 presidential election is very likely but certainly bad
Editorial commentary.
WHEN MUHAMMADU BUHARI won Nigeria’s presidential election in 2015, his victory was greeted with euphoria. He unseated the People’s Democratic Party (PDP), which had ruled uninterrupted since the restoration of democracy in 1999. Many hoped Mr Buhari and his All Progressives Congress (APC), a coalition of regional bigwigs whose party symbol is a broom, would sweep away the corruption and dysfunction that flourished under the PDP. But when Africa’s most populous country returns to the polls in February, Mr Buhari faces a fight for his political survival.
The excitement of 2015 has long since dissipated. A collapse in the price of oil, Nigeria’s main export, dragged the country into a recession in 2016 from which it is gradually emerging. The 75-year-old Mr Buhari spent much of 2017 in London being treated for an undisclosed illness. (Some felt the economy was better-run in his absence.) Corruption is less flagrant than it was under his predecessor, Goodluck Jonathan, who fired the central bank’s governor in 2014 for pointing out that $20bn of oil revenue had gone missing. But Nigerians still see too much of it in their daily lives to believe that things have changed.
Mr Buhari’s approval ratings have languished below 50% for most of 2018. Ominously, he has been hit by a wave of defections to the PDP. Desertions to the APC four years ago, by many of the same people, felled Mr Jonathan. Mr Buhari’s electoral opponent in 2019, Atiku Abubakar, is one such double-turncoat. He is also a septuagenarian, billionaire businessman, former vice-president, and three-time presidential aspirant. With Mr Abubakar distrusted for his wealth and opportunism, the election will be close. Its outcome will hinge on who arouses less apathy.
So who will win? Many Nigerians do not care. The back-and-forth floor-crossing has convinced them that the same people will be in charge either way. The PDP holds a slight edge, if only because expectations for Mr Buhari were higher and his failure to meet them was more recent. But with successive governments having failed to make Nigeria less oil-reliant, says Ayo Teriba, an economist, the country’s economic health in 2019 will depend not on who rules it, but on the price of crude.
Relative calm and democracy at the federal level will obscure the small fires burning in some of Nigeria’s 36 states. The war against Boko Haram in the north-east is stalling; the jihadists roam the countryside unimpeded. Bandits prowl the oil-rich Niger Delta. Fighting is escalating between farmers and herders across the country’s middle belt. Things will not fall apart in the year ahead, but Nigerian voters have little reason to believe they will improve.
*First published in the The Economist.
China's One Belt One Road Globalization Agenda
Zheping Huang.
World leaders gathered in Beijing in May to hear China’s plan for global trade: the One Belt One Road initiative. Nearly 70 countries and international organizations have signed up for the mega infrastructure project, said president Xi Jinping at the close of the summit, but others still have no idea what it is. The next gathering in Beijing is slated for 2019. During his speech at the opening of the “Belt and Road” forum, Xi pledged at least $113 billion in extra funding for the initiative, and urged countries across the globe to join hands with him in pursuit of globalization.
“We have no intention to form a small group detrimental to stability,” Xi said. “What we hope to create is a big family of harmonious co-existence. “
Essence of the Project
It’s all about building massive stuff, mostly around transport and energy: roads, bridges, gas pipelines, ports, railways, and power plants. Proposed by Xi in 2013, the program is an estimated $5 trillion (pdf) infrastructure spending spree that spans 60-plus countries across Asia, the Middle East, Europe, and Africa.
Hailed by Xi as a ”project of the century,” the plan fits into his bigger narrative that China is setting an example of globalization, filling the void left by the US under Donald Trump’s “America First” policy.
What the Name Stands For
It’s a mouthful. The “One Belt” part of it refers to the Silk Road Economic Belt while the “One Road” refers to the 21st-century Maritime Silk Road. Jointly, they’re meant to be a revival of the ancient Silk Road trading routes. Don’t get too tied to OBOR: China might be toying with a different acronym. Meanwhile, one writer noted it’s an even more unfortunate acronym when you have a Belt and Road Forum, or BARF. A few people are mixing and matching for OBOR/BRI.
Who’s in and who’s out?
China says the project is open to everyone, but it has also identified 65 countries along the Belt and Road that, since the early stages of the proposal, it has insisted will participate in the initiative—whether they’ve confirmed it themselves or not.
Together, the 64 nations plus China account for 62% of the world’s population and 30% of its economic output. Nevertheless, only 20 of those nations sent their heads of state to the OBOR summit over this past weekend, and most of them are smaller Asian countries that are economically dependent on Beijing. A total of 52 nations are confirmed to have had some level of participation in the forum.
Those included the United States and North Korea. Matthew Pottinger, senior director for Asia at the National Security Council was the US representative at the forum, despite a previous plan to send a low-level Commerce Department official. Pottinger showed up in Beijing soon after the Trump administration announced a major agreement with China on trade, which entails an endorsement of the Belt and Road Initiative.
The North Korean delegation at the forum, led by minister of external economic relations Kim Yong Jae, was overshadowed by his nation lobbing yet another ballistic missile May 14, in reaction to calls to rein in its weapons program.
Chinese planners had reportedly hoped for at least some top Western leaders to attend the OBOR forum, including British prime minister Theresa May, in order to burnish the plan’s credentials. Instead, the UK, Germany and France sent their lower-ranking officials to Beijing. India was absent. The country has boycotted the Belt and Road Intiative, mainly due to concerns over the China-Pakistan Economic Corridor, a key part of the initiative that runs through disputed Kashmir.
How’s it going so far?
China has never published any comprehensive list of all OBOR-related projects or deals. The initiative is vaguely conceived and described at the first place, perhaps to make it easier to bundle anything it wants into it. As leading players in the initiative, about 50 Chinese state-owned companies have invested in nearly 1,700 OBOR projects since 2013, said the Chinese government days ahead of the Beijing forum.
The flagship projects include the $46 billion China-Pakistan corridor, a 3,000km high-speed railway connecting China and Singapore, and gas pipelines across central Asia. The Belt and Road initiative has also entered regions as far as New Zealand, Britain and even the Arctic. Nearly $500 billion worth of projects and M&A deals were announced in 2016 across seven infrastructure sectors including utilities and telecoms in OBOR countries, a decline from 2015, according to a report from audit firm PricewaterhouseCoopers (pdf) in February. A third of the projects and deals were in China, PwC said, and the rest spread across other OBOR nations.
Breaking them down, PwC found that the value of newly announced projects has been flattening, going up just 2.1% in 2016 from the earlier year to about $400 billion. And M&A deals in 2016 fell 49% in dollar value from the previous year, PwC noted, citing stricter capital controls amid a weakening yuan.
By another gauge, foreign direct investment from China to other OBOR nations went down 2% in 2016 year-over-year and has dropped an additional 18% (paywall) so far this year, according to the Financial Times, citing commerce ministry data.
Where does the money come from?
The $113 billion in extra funding Xi promised will be disbursed through three different sources. These include the state-owned Silk Road Fund, which was officially launched in 2015 with $40 billion of initial capital, and two Chinese policy banks, the China Development Bank and the Export and Import Bank of China. Some analysts have warned (paywall) that some OBOR projects financed by these banks may lose money–maybe a lot of it.
Two multilateral institutions led by China, the Beijing-based Asian Infrastructure Investment Bank (AIIB)—with its registered capital of $100 billion—and the Shanghai-based New Development Bank—with $50 billion starting capital—are also major financiers of the initiative. In 2016, for example, the AIIB approved $1.7 billion in loans to nine development projects along the Belt and Road.
Chinese lenders are also powering the new Silk Road plan. Louis Kuijs, head of Asia research at Oxford Economics, estimates that the annual Chinese lending to other OBOR countries stands at around $130 billion (paywall) in recent years—and the bulk of that is from commercial banks.
Speaking at the Beijing forum, Zhou Xiaochuan, governor of the Chinese central bank, has pledged (link in Chinese) to help domestic banks fund more OBOR projects in the years to come. He added that China is also seeking financial cooperation with other OBOR nations, as its own resources are limited. China is also hoping that other countries and funds will pitch in.
The Debate on China's Role in Africa; One Point of View
China’s “Marshall Plan” for Africa – Debt or New Deal?
Peter Kagwanja.
The recently concluded China-Africa Summit offers a new deal for Africa’s recovery. The Forum for China-Africa Cooperation (FOCAC) has the making of a 21st century equivalent of the Marshall Plan, America's massive economic rescue programme that President Harry Truman unveiled for Europe on April 3, 1948.
In the largest financial bailout in human history — officially the European Recovery Programme (ERP) — named after United States Secretary of State George Marshall, Washington offered $17 billion (equivalent to $193.53 billion in 2018) in economic assistance to help rebuild Western European economies after World War II. It is doubtful that Europe would have emerged from poverty without the American bailout.
Sadly, Africa was left out of the Marshall Plan, and post-colonial U.S. aid to Africa ideologically bolstered dictatorial regimes as bulwarks against communism.
INCREASE IN LOANS
In the 21st century, Beijing is offering to Africa a South-to-South economic rescue deal. From 2000 to 2017, the Chinese government, banks and contractors extended US $136 billion (Sh13tn) in loans to Africa. Chinese foreign aid expenditure in Africa has increased steadily in the past decade, growing by an annual average rate of 14 percent, from US$631 million in 2003 to close to US$3 billion by 2015.
In September 2018, Beijing offered $60 billion in form of official development assistance, capacity building, export credits, suppliers' credits and commercial loans to cover the 2018-2021 period. There are striking similarities between America’s aid to the kith-and-kin in Europe and China’s South-to-South aid to Africa.
The Marshall Plan sought to remove trade barriers, modernize industry and improve European prosperity.
SHARING MONEY
American aid to Europe had an overt ideological agenda: to promote liberalism (elected government, free market and consumerist culture — and prevent the spread of Communism. Chinese aid to Africa seeks to create prosperity and incorporate Africa into “a community of shared destiny for humanity”.
After the 2018 Beijing Summit, the big question is how the $60 billion will be shared out among the 54 participating African nations. The Marshall Plan aid was divided among some 18 European states roughly on a per capita basis.
The large industrial powers received the lion's share of the bailout and with less going to the Axis powers or those that remained neutral during the war. In this configuration, the United Kingdom received about 26 percent of the total followed by France (18pc) and West Germany (11pc).
AFRICA'S INDUSTRIALISATION
On its part, China is taking a Pan-African approach targeting projects with regional impact such as Kenya’s standard gauge railway. Like the Marshall Plan that prioritized the reindustrialization of Europe after the war, China is laudably giving a pride of place to Africa’s industrialization.
Industrialization was top on the list of President Xi Jinping's eight-point plan to guide Chinese aid to Africa in the next three years. Recipients of Marshall Plan had to invest 60 percent of these funds in industry. The funds also involved Technical Assistance Programmes to create a skilled labour force to drive industrialization.
The 1940s and 1950s witnessed large-scale tours of American factories, farms, stores, and offices by European recipients of Marshall Plan, enabling them to return to their home countries and implement the technologies used in the United States.
PRUDENCE
An enduring lesson from America’s aid to Europe is that it takes more than aid to develop. The jury is still out there as to whether the Marshall Plan was singularly responsible for Europe's rapid recovery. Naysayers of the Marshall Plan rejected the idea that the rescue project alone miraculously revived Europe.
But Africa must use Chinese aid prudently. It has to avoid the pitfall of the Marshall Plan where aid was mostly used for the purchase of goods from the United States.
Ahead of the 2015 FOCAC Summit, China’s African strategists toyed with the idea of implementing Mr Jinping’s $1.2 trillion Belt and Road Initiative (BRI) in four ‘pilot countries’: Kenya, Tanzania, Ethiopia and Egypt. This raised resistance from the rest of Africa. The Marshall Plan offers invaluable lessons to Africa on how to manage the repayment of Chinese loans.
Aware that the Marshall Plan aid was to be repaid, Germany spent its funds very carefully, explaining why it became more industrialised than the rest of Europe.
MOLOTOV PLAN
As in Europe, the speed of recovery and degree of success of China's aid will vary across Africa's 54 nations participating in FOCAC. In Europe, both France and the United Kingdom received more aid, but West Germany recovered significantly faster.
Finally, as in Europe, Africa has to deal with a raft of propaganda against China's aid. America’s Marshall Plan was lampooned as economic imperialism. Indeed, the Soviet Union refused the Plan benefits, and blocked it to Eastern European countries to check American imperialism. Instead, it developed its own recovery plan known as the Molotov Plan.
European critics saw the America’s deal as an attempt to gain control over Western Europe. Today, critics of Chinese aid to Africa are fretting China’s “debt-heavy projects abroad”.
However, President Xi Jinping has reiterated that China's investments on the continent have "no political strings attached". Africa should use China’s Marshall Plan wisely to industrialize.
*Prof Peter Kagwanja is former government adviser and currently Chief Executive of Africa Policy Institute.
**First published in the Daily Nation.
Peace and Security Summit
The summit on Peace and Security in Africa held on September 17, 2018 at the African Union Mission in Washington, DC brought together security experts, diplomats, NGOs, and development professionals to address the nexus of insecurity in the continent and economic underdevelopment. The summit was timely, for it addressed the root causes of insurgencies in the continent and how they have retarded development efforts in recent years.
In the background of the discussions and debates on insecurity in the Sahel, West and East Africa are the relentless attacks on civilians and regional infrastructures by groups such as Boko Haram, al-Quaeda in the Islamic Maghreb (AQIM), the Jihadist group of Abu Mus’ab al-Barnawi, commonly known as the Islamic State in West Africa (ISWA), and Al-Shaabab at the horn of Africa. The instability and destruction caused by these jihadists and their splinter groups have repelled investment capital from African economies at a rate that has made sustainable growth almost impossible for affected countries such as Mali, Libya, Nigeria, Somalia, and Mauritania. In spite of concerted effort by internal and external forces to suppress and contain these groups, the damage they inflict on the continent’s ability to restore peace and stability remains remarkable and abetting.
The panelists and participants in the summit grappled with these issues and what avenues should be explored to restore peace and stability in the continent. On the panel were Ambassador H.E Nimaga of Mali, Professor John O. Ifediora, Director of the Council on African Security and Development, Professor Raymond Gilpin, Dean of Academic Affairs at the African Centre for Strategic Studies, and General William Ward, former commander of US Africa Command.
Melvin Foote, President of Constituency For Africa (CFA) was the principal organizer of the summit; Ambassador Bonnie Jenkins played a crucial role in formulating the summit’s agenda.
US Aid to Fragile States: Where Does the Money Go?
Drew D'Alelio.*
By 2030, 60 percent of the world’s poor will be concentrated in fragile states, a shift that has prompted the United States (and other donors) to rethink how to confront the particular challenges of these environments and support a path to greater country resilience. To contribute to that conversation, CGD recently launched a working group that will look at the future of US development assistance to fragile states, with a report forthcoming later this year. This blog post takes stock of the current landscape of US foreign aid to fragile states and gives an overview of where the money is going, what agencies are involved, and for what purpose(s) the money is given.
The United States and other donors are ramping up efforts to tackle fragility
Even as US government engagement with fragile states has grown in prominence over the last decade, development success has been mixed at best. Several new initiatives and proposed reforms seek to take stock of the lessons of the past to address shortcomings in how the US government delivers aid to address fragility.
For example, USAID, the Department of State, and the Department of Defense just completed the first-ever Stabilization Assistance Review in order to streamline interagency coordination efforts in conflict-affected areas, with a focus on learning lessons from Iraq and Syria. Meanwhile, a bipartisan coalition in the House introduced the Global Fragility and Violence Reduction Act, which tasks the three agencies above with developing country-specific strategies in 10 pilot countries and implementing “10-year plans” to combat fragility in those countries. In addition, as part of its proposed ”transformation,” USAID plans to create a Bureau for Conflict Prevention and Stabilization to harmonize the agency’s prevention, stabilization, and crisis response efforts with a heightened focus on fragility, conflict analysis, and preventing violent extremism. The new bureau would also assume the lead on stabilization programming implementation, as outlined in the Stabilization Assistance Review.
Other donor institutions and countries have also recommitted to combatting fragility. The World Bank agreed to double its funding for fragile, conflict, and violence-affected countries in the last International Development Association (IDA) replenishment. The IMF recently published a comprehensive review of its technical assistance programming in fragile environments with a set of recommendations for improving fiscal capacity. A coalition including France, Germany, the EU, World Bank, African Development Bank, UNDP, Spain, Italy, and the United Kingdom recently launched the Sahel Alliance and announced 500 regional projects with €6 billion in investment. And the United Kingdom committed to allocating 50 percent of its aid to fragile states, resulting in a substantial scale up in many of these countries since 2015.
What is “fragility”?
There are some generally accepted commonalities among fragile states. Their governments often lack the authority to implement basic policy, struggle to control territory, and fail to provide basic public services to their citizenry. Transnational threats such as terrorism, mass migration, extreme poverty, food insecurity, and climate shock are also often rooted in and exacerbated by conditions of fragility. Yet fragility looks different in different places: some countries, like Somalia, struggle in most or all the areas mentioned above, whereas other countries grapple with just a few of these challenges. Pakistan, for example, has an economy that continues to grow with comparatively little income inequality, but has fared poorly in managing political and communal divides.
Just as fragile states are a diverse lot, so too are the definitions that attempt to describe them. The World Bank, Fund for Peace, and OECD all employ different metrics to measure various aspects of fragility. Even so, there’s considerable overlap in what each seeks to measure—and the list of fragile countries each produces. This piece uses the Fragile States Index because of its consistent methodology over a dozen years, and its use of a comprehensive and measurable set of indicators.
The US is the top donor to fragile states
In total, the United States was the largest donor to fragile states in 2016, as the table below shows. The US is the top or second largest donor to most of the selected countries outside of West Africa and the Sahel, where the European Union and World Bank provide more funding. China does not provide its ODA data to the OECD, but it has emerged as a dominant player, especially in sub-Saharan Africa. AidData estimates that in the past 15 years of available data (2000-2014), Chinese ODA exceeded $3 billion in Nigeria, Zimbabwe, and Ethiopia. And ODA represents only a small slice of China’s global aid footprint—most is classified as other official flows (OOF), which consists of non-concessional lending for commercial purposes. These flows reached $16.3 billion in Pakistan and $6.29 billion in Sudan over the same 15-year period.
US Development Assistance to Fragile States
Afghanistan is by far the largest recipient of US official development assistance (ODA); in the last three years, the United States has spent in Afghanistan nearly double the amount of aid allocated to the next largest fragile state recipient (Kenya). More than half of US assistance to these states goes to only seven countries—Afghanistan, Iraq, Nigeria, Kenya, South Sudan, Pakistan, and Ethiopia. While US official development assistance spans all regions, 25 out of 35 of these states are in Africa (including Libya).
The US provides more development assistance than military assistance to fragile states
The remaining analysis looks at 13 fragile states selected because they consistently rank in the top 20 in the FSI or are strategically relevant to the United States.
In examining the types of foreign aid the US government gives to this set of fragile states, the clear majority (78 percent) is economic or development assistance (programs with a development or humanitarian objective), with military assistance making up the other 22 percent (programs for armed forces or to enhance partner military capability). US military assistance is concentrated in four countries where the US has either a troop presence (Afghanistan, Iraq), a large peacekeeping force (Somalia), or historic partner military ties (Pakistan).
Most of the money directed to these countries (32 percent) comes from the Economic Support Fund (ESF). ESF funds support US strategic interests in countries of “special importance,” and do not need to be primarily for development purposes. The State Department oversees the allocation of ESF in coordination with USAID.
Fragile states also receive a significant amount of global health program funding (about 24 percent of total aid to fragile states, two thirds from the USAID account, one third from the State Department). The Food for Peace/PL 480 account, which supports food assistance in emergency and nonemergency situations, also makes up a substantial amount (18 percent).
By agency, DOD spends the most—until you factor out Iraq and Afghanistan
DOD spent more in fragile states than USAID, the Department of State, and the Department of Health and Human Services combined in the 2016 fiscal year. But 99 percent of that was security assistance, and almost all of that (97 percent) went to Iraq and Afghanistan. DOD’s tiny sliver of nonmilitary assistance (less than $20 million) is related to its involvement in the President’s Emergency Plan for AIDS Relief (PEPFAR). USAID is the top provider of development assistance by a substantial margin.
Most US development assistance goes to conflict, emergency response, health, and governance
Most US development assistance to high-priority fragile states is directed to a few specific sectors. In Afghanistan, Iraq, and Pakistan, the largest sector is conflict, peace, and security, which encapsulates security sector reform, conflict resolution programs, peacekeeping operations, land mine removal, child soldier demobilization, and more. That sector represents nearly 60 percent of US development assistance to these 13 countries in FY 2016, given the large amounts of aid going to Iraq and Afghanistan. Emergency response represents nearly 20 percent of US assistance to these states, and is, unsurprisingly, the top sector in countries where there is active conflict, such as Yemen, Syria, and South Sudan. While health, government and civil society, and “other” sectors don’t receive as much overall funding, in certain countries without active conflict—such as Pakistan, Nigeria, and Haiti—the United States invests more in long-term development challenges such as governance, health, education, and agriculture.
US Aid to Fragile States by Sector
Three questions for US development policy in fragile states
As the US government and its partners elevate fragility as a top development priority, three critical questions should factor in to US strategic considerations:
What does good international cooperation look like in fragile states? The US government is among the top donors in many fragile states, but other donors also have significant presence and are increasing their fragile states focus. The US will have a major role in international efforts to strategically align priorities with other major donors, define comparative advantages, and harmonize procedures to promote more efficient aid delivery.
How can efforts across agencies be best coordinated? With foreign assistance to fragile states spread across multiple agencies, each with a distinct remit, there is a risk that their individual efforts will not only fail to work toward a broadly shared objective, but may be at odds with one another. For some time, this has prompted calls for better interagency coordination, but getting it right in practice has proven challenging.
How should the United States think about prioritization in its engagement in fragile states as part of any strategic reorientation? The United States has a larger presence and historically provides more funding to certain countries. With a development aid budget under pressure, the US government will need to prioritize its engagement in fragile states based on how it defines its interests and objectives. In addition, as the donor ecosystem broadens, especially with the rise of China, it could be beneficial for the US to rethink where it adds the most relative value.
*Fellow at Center for Global Development.
**Courtesy of Center for Global Development.
Canadian Foreign Policy in Africa
Edward Ansah Akuffo.
After over fifty-years of Canadian engagement with Africa, no comprehensive literature exists on Canada's security policy in Africa and relations towards Africa's regional organizations. The literature on Canada's foreign policy in Africa to date has largely focused on development assistance. For the first time, Edward Akuffo combines historical and contemporary material on Canada's development and security policy while analyzing the linkage between these sets of foreign policy practices on the African continent. The book makes an important contribution to the debate on Canada's foreign policy generally, and on Africa's approach to peace, security and development, while shedding light on a new theoretical lens - non-imperial internationalism - to understand Canada's foreign policy. The author captures an emerging trend of cooperation on peace, security, and development between the Canadian government and African regional organizations in the twenty-first century. The resulting book is a valuable addition to the literature on African politics, new regionalisms, foreign policy, global governance, and international development studies.
The Debate on China's Role in Africa; A Different Point of View
A Brief Response: Marshall Plan for Africa or “Debt Trap?”
Lawrence Freeman.
The world is witnessing an increase in attacks on Africa’s relationships with China in various articles, as well as low-level, unthoughtful, messages on Twitter, Facebook, and YouTube. Not only does that content intend to demonize China as the new colonial empire of Africa, but it also includes vulgar demeaning caricatures of African Heads of State.
Could the reason for the uptick of these kinds of diatribes be related to the successful September 3-4, Forum on China Africa Cooperation (FOCAC) summit in Beijing, attended by leaders from almost every African nation? China has reached out to Arica and formed a special relationship which is being embraced by African Heads of State. It should be clear to any intelligent historian, that China is not acting as an Imperialist manner towards Africa.
However, what has been conspicuously, egregiously omitted from this unsubstantiated vilification of China, is the history of Western nations and institutions, which have acted as an Imperialist power towards Africa. The latest accusation is that China is deliberately entrapping African nations into unpayable debt. However, this is precisely what the IMF, World Bank, Paris Club, along with their allies in the City of London and Wall Street did to Africa immediately following the “Winds of Change.”
The motivation for this propaganda barrage is that China via FOCAC and the Belt & Road Initiative is offering African nations a pathway toward growth uncontrolled by the financial predators in the City of London and Wall Street. Contrary to the myth that China is stealing African resources; which the Western powers did first under slavery, then under colonialism, and have continued under neo-colonialism, China is actually providing credit for physical infrastructure; the sin qua non to spur economic growth.
Debt and Credit for What?
A pervasive and quite serious problem affecting well-intentioned individuals from all corners of the globe is the lack of understanding of what actually creates economic growth. Neither money, nor financial transactions, nor derivatives, nor speculation, nor rising stock markets, nor the market place are the cause of growth or synonymous with real economic growth.
Credits issued for infrastructure; water, energy, rail, roads, healthcare, and education, identifying the most vital categories, if properly organized, leads to an increase in the productivity i.e. the economic power of the society. This is measured by the ability of society to increase its physical output from one production cycle to the next. By utilizing advanced technologies embedded in new capital equipment, including infrastructure, farmers and workers can produce more efficiently. Simply providing abundant energy, high-speed railroads, and water inputs to an African nation would lead to a jump in economic output. Shortly after the death of President Kennedy, the US ceased its commitment to assist Africa nations in expanding their infrastructure.
China is committed to lending, issuing credit-yes creating a debt to fund long-term investment in infrastructure. Credit directed in this way is good debt. With non-usurious interest rates over 15-20 years, the loan can be retired from the profit it generates to society. This form of debt is not equivalent to the hundreds of billions of dollars African nations were forced to pay to the financial capitals of the world for loans to cover rigged terms of trade, and currency devaluations.
If you study the American System of Political Economy with its cornerstone; Alexander Hamilton’s national credit policy, you will realize that China is emulating the best of America’s past. For example, President Franklin Roosevelt, who successfully applied Hamilton’s principle to rebuild the Depression riddled US with state issued credits, would have little trouble understanding the principles of President Xi Jinping’s Belt & Road.
Economics and the Common Good
There is a deeper level to comprehending economic growth. Every human being is united by a universal principle often expressed as the “common good of mankind.” Yes, all human beings regardless of religion, color, ethnicity, or place of birth, share a “common interest.” We are all created with the power of creativity. Not logic, not deduction, not induction, but the power to hypothesis new ideas. The power of discovery, to discern new principles of the universe that we previously did not know but were there waiting to be revealed to the human mind. These scientific discoveries spawn new technologies which are the primary source of economic growth. Thus, it is the responsibility, nay the obligation of every society to nurture and develop that creative potential innate in all its citizens from birth to death.
For all citizens to realize their potential, live productive lives, and raise their families without fear of hunger and security, a nation must have the economic means to expand the total physical wealth of society over succeeding generations. An advanced industrialized nation requires a healthy manufacturing sector, which is also an essential component of a productive agriculture sector. The absence of robust agro-manufacturing economies in Africa is crime along with its huge deficit in infrastructure.
Sadly, the West does not have the vision to assist African nations in overcoming these deficiencies. China in all, but name has launched the equivalent of a Marshall Plan for Africa.
Among the eight major initiatives that President Xi laid out at the Africa-China Summit, China will:
1.Promote industrialization; 2. Support agricultural assistance programs; 3. Work with the African Union (Agenda 2063) to formulate a China-Africa infrastructure cooperation program; 4. Increase its imports from Africa, in particular non-resources products; 5. Train 1,000 high-caliber Africans for training in innovation sectors; provide Africa with 50,000 government scholarships; and sponsor seminar and workshop opportunities for 50,000 Africans and invite 2,000 African students to visit China for exchanges.
China has come to understand that it is the common interest of its own country, and in the fact all nations, is to help Africa develop productive industrialized societies not dependent on revenue from one resource or one crop. Under these improved conditions, hunger and poverty, the underlying causes for conflict, can be eliminated. Great progress can be accomplished in Africa and the world, if the US and Europe acquire the wisdom to join China’s Spirit of the Belt & Road.
US new $60 billion Agency would benefit Africa
Jonathan Berman.
Business between the US and Africa just took a step forward.Easy to miss amidst the partisan din of the approaching election, the US Senate passed the Better Utilization of Investments Leading to Development (BUILD) Act, and it was signed into law Oct. 5. Despite the strong bipartisan support (93 of 99 senators voted for it) the act has its critics, in particular among libertarian conservatives.
In my view, the BUILD act brings the US-Africa business relationship from underground to above ground and may yet bring it to the cloud.
For at least thirty years, the US’s commercial relationship with Africa has been dominated by resources underground. Oil, gas and minerals account for about half of all US direct investment in Africa. There has been growth in almost every sector of Africa’s economy, but commercial relations with the US have been dominated by US engagement in natural resources.
I’m a fan of effective mineral resource development. But it is a narrow and unstable base on which to build a healthy commercial or strategic relationship between the US and Africa.
Enter the BUILD Act. It establishes a new entity, new financing and new authorities designed to support Africa and other emerging markets as they build critical infrastructure. To date, Africa’s primary partner in building road, rail and social infrastructure has been China. Since 2009, China has committed over $75 billion to African infrastructure, and developed an effective complex of infrastructure builders and state-supported concessionary finance. At its triennial meeting with African heads of state, Chinese leader Xi Jiping recently committed to $50 billion more in financing, warmly embracing Africa in the One Belt One Road infrastructure initiative. Meanwhile, the United States, which so effectively built its own infrastructure and rebuilt Europe’s in the 20th century, has been slow to participate in Africa’s in the 21st century.
The BUILD Act brings American competitiveness above ground. It authorizes the US government to activate up to $60 billion in US financing for emerging market infrastructure projects. It allows that funding to be invested in equity, not just debt instruments and in local currency, not just dollars. And it creates the US International Development Finance Corporation (IDFC) to do it, consolidating the previously diffuse development finance activities of the US government into one better-resourced organization.
The BUILD Act has 44 co-sponsors in the House and 16 in the Senate. One of its principal architects is Sen. Chris Coons of Delaware. We recently had a chance to talk as it became clear the BUILD Act could pass after seven years of effort. “When I was in the private sector,” Coons said, reflecting on his eight years with W.L. Gore (the makers of Goretex) before entering public service, “we always asked ‘what’s the next China after China?’ Well, appropriately, China figured it out. It’s Africa. And in the last twenty years, US commercial engagement with Africa has remained flat or dropped, while that of our peers and near peers has risen. If the US wants to compete in the 21st century, we have to be in Africa.” Senator Coons sponsored and shepherded the BUILD Act in part for that purpose.
The effect {of the BUILD Act] on US business could be significant. “If you want to be competitive in Africa, you have to be involved as a partner of government from the beginning of planning, and then you have to be able to bring a complete package solution for delivery—technical and financial—to delivery,” said Andrew Patterson. He has been the Africa president for US-based infrastructure builder Bechtel since 2015.
“The BUILD Act will help do that, by supporting funding feasibility and pre-feasibility and feasibility studies including master plans, then creating equity and non-equity financing opportunities. Bechtel has partnered with global development finance agencies worldwide and the BUILD Act will let us do more. It will provide opportunities to do more with the US government and increase US content on the projects.”
There is some risk the IDFC will favor large companies disproportionately, a criticism levelled against US development finance organizations before. The BUILD Act enjoys broad support in Washington in part because it is perceived as a counter to China’s spending on emerging market infrastructure and other capital-intensive, state-led projects. If the USIDC limits its activities to those sectors, the large companies that dominate them will be the primary beneficiaries.
Broadening the reach of the BUILD Act to additional sectors will require active management from the new IDFC. In Africa, the digital sector holds particular potential for sustained returns, impact and US interests. While growth rates on the continent fluctuate steeply with political and economic cycles, connectivity in Africa – the number of people connected to the internet – has grown by 29%, annually since 2000, 2.5X the rate of the rest of the world. Two potential African digital unicorns—Interswitch and Jumia—are reported to plan listings next year on international exchanges. There is a gap between those two and most other digital ventures emerging on the continent, in part due to a lack of capital. It is IDFC’s explicit mandate to fill such gaps.
The IDFC is also mandated to deliver development impact and the human and economic impact of digital innovation is hard to overstate. The majority of the world’s unbanked are in Africa, where the mobile banking adoption rate is already over 12%, six times the world average. The future of access to finance is on the phone. Much of the future of access to power is there as well. About 360 million people have acquired mobile-enabled off grid power to date. Another 380 million (about a third of all those without power today) are expected to get it via mobile-enabled solar units in the next four years. It’s simply non-controversial that the social impact of investing in digital technology rivals the social impact of infrastructure.
The Act has several vehicles that could deepen US engagement in the African digital economy. First, it authorizes the creation of investment funds. One or more funds designed to foster financial inclusion or digital innovation in a high-impact sector like health, power or education would be well within the mandate. There are risks associated with impact funds of this kind, and the US government has a mixed record managing them in the past. But much has been learned about emerging market investing and impact investing since then and it is possible for the IDFC to do it well, as the World Bank’s IFC Unit does currently.
Second, the IDFC will be absorbing and adapting the program previously run as USAID’s Development Credit Authority, a credit guarantee window intended to expand access to finance. The new agency should take the opportunity to redesign the DCA for a mobile-first future. A strong step would be for the first CEO of the IDFC to invite some of the entrepreneurs and investors leading Africa’s digital revolution over for a chat.
At a time when US engagement abroad and bipartisanship at home are in short supply, the BUILD Act is an example of both. It’s likely to help propel the US commercial engagement in Africa above ground. With creativity, it can also expand the US’s role as African producers and consumers connect to the cloud.
Education and Development
*Erna Solberg and Børge Brende.
Education is a human right. And, like other human rights, it cannot be taken for granted. Across the world, 59 million children and 65 million adolescents are out of school. More than 120 million children do not complete primary education.
Behind these figures there are children and youth being denied not only a right, but opportunities: a fair chance to get a decent job, to escape poverty, to support their families, and to develop their communities. This year, decision-makers will set the priorities for global development for the next 15 years. They should make sure to place education high on the list.
The deadline for the Millennium Development Goals is fast approaching. We have a responsibility to make sure we fulfill the promise we made at the beginning of the millennium: to ensure that boys and girls everywhere complete a full course of primary schooling.
The challenge is daunting. Many of those who remain out of school are the hardest to reach, as they live in countries that are held back by conflict, disaster, and epidemics. And the last push is unlikely to be accompanied by the double-digit economic growth in some developing economies that makes it easier to expand opportunities.
Nevertheless, we can succeed. Over the last 15 years, governments and their partners have shown that political will and concerted efforts can deliver tremendous results – including halving the number of children and adolescents who are out of school. Moreover, most countries are closing in on gender parity at the primary level. Now is the time to redouble our efforts to finish what we started.
But we must not stop with primary education. In today’s knowledge-driven economies, access to quality education and the chances for development are two sides of the same coin. That is why we must also set targets for secondary education, while improving quality and learning outcomes at all levels. That is what the Sustainable Development Goal on education, which world leaders will adopt this year, aims to do.
Addressing the fact that an estimated 250 million children worldwide are not learning the basic skills they need to enter the labor market is more than a moral obligation. It amounts to an investment in sustainable growth and prosperity. For both countries and individuals, there is a direct and indisputable link between access to quality education and economic and social development.
Likewise, ensuring that girls are not kept at home when they reach puberty, but are allowed to complete education on the same footing as their male counterparts, is not just altruism; it is sound economics. Communities and countries that succeed in achieving gender parity in education will reap substantial benefits relating to health, equality, and job creation.
All countries, regardless of their national wealth, stand to gain from more and better education. According to a recent OECD report, providing every child with access to education and the skills needed to participate fully in society would boost GDP by an average 28% per year in lower-income countries and 16% per year in high-income countries for the next 80 years.
Today’s students need “twenty-first-century skills,” like critical thinking, problem solving, creativity, and digital literacy. Learners of all ages need to become familiar with new technologies and cope with rapidly changing workplaces.
According to the International Labour Organization, an additional 280 million jobs will be needed by 2019. It is vital for policymakers to ensure that the right frameworks and incentives are established so that those jobs can be created and filled. Robust education systems – underpinned by qualified, professionally trained, motivated, and well-supported teachers – will be the cornerstone of this effort.
Governments should work with parent and teacher associations, as well as the private sector and civil-society organizations, to find the best and most constructive ways to improve the quality of education. Innovation has to be harnessed, and new partnerships must be forged.
Of course, this will cost money. According to UNESCO, in order to meet our basic education targets by 2030, we must close an external annual financing gap of about $22 billion. But we have the resources necessary to deliver. What is lacking is the political will to make the needed investments.
This is the challenge that inspired Norway to invite world leaders to Oslo for a Summit on Education for Development, where we can develop strategies for mobilizing political support for increasing financing for education. For the first time in history, we are in the unique position to provide education opportunities for all, if only we pull together. We cannot miss this critical opportunity.
To be sure, the responsibility for providing citizens with a quality education rests, first and foremost, with national governments. Aid cannot replace domestic-resource mobilization. But donor countries also have an important role to play, especially in supporting least-developed countries. We must reverse the recent downward trend in development assistance for education, and leverage our assistance to attract investments from various other sources. For our part, we are in the process of doubling Norway’s financial contribution to education for development in the period 2013-2017.
Together, we need to intensify efforts to bring the poorest and hardest to reach children into the education system. Education is a right for everyone. It is a right for girls, just as it is for boys. It is a right for disabled children, just as it is for everyone else. It is a right for the 37 million out-of-school children and youth in countries affected by crises and conflicts. Education is a right regardless of where you are born and where you grow up. It is time to ensure that the right is upheld.
*Author: Erna Solberg is Prime Minister of Norway. Børge Brende is Norway’s Minister of Foreign Affairs.
**Courtesy of World Economic Forum
Fighting corruption in Nigeria: Going to a gunfight with knives
John Ifediora.
Time and again Nigerians are placed on notice that those who engage in corrupt practices, especially public officials found wanting in upholding the public trust that define their official capacity, would properly acquaint themselves with the services of a prison warden. Time served would be severe; the forfeiture of looted funds would be just as exacting. While progress has been made in this misnomer of the “fight against corruption,” looting by public officials in Nigeria remains unabated, and debilitating to the effort to place the nation’s economy on a positive growth trajectory. The problem so far is not the act of corruption per say but how the effort to curb it is framed and executed. The effort by the government in this front is akin to bringing knives to a gunfight; the ones with knives deserve to lose. Nigeria and other African countries that continue to declare war against corruption would continue to lose so long as they retain the current model of engagement.
The problem is not bureaucratic corruption, but rather the absence or inadequacies of social institutions necessary to curb it. By adequate social institutions I here make reference to the state of the country’s economic system, the presence of a mature and independent judiciary, the functionality of its educational system, the degree to which its laws are observed and enforced, and the national will to guard and implement democratic principles in its electoral process and governance. A country can only subdue bureaucratic corruption by strengthening these social institutions. Creating laws to fight corruption without these institutions firmly in place is as vacuous and ineffectual as going to a gunfight with knives. It is also foolish.
Ambassador John Campbell, now at the Council on Foreign Relations, gives an account of recent effort by President Buhari, in collaboration with the United States Department of Justice, and European governments to regain looted funds by Nigerian officials in an article entitled “Loot from the time of Sani Abacha repatriated to Nigeria,” John Campell:
Nigeria’s Minister of Justice and Attorney General Abubakar Malami said that Abuja has reached an agreement with a number of countries, including the United States, France, and the United Kingdom, for the repatriation of $500 million in looted public funds. This follows an earlier agreement with Switzerland for the return of $321 million allegedly stolen by the former military head of state, Sani Abachi. Though the attorney general provided no details, he said that “specific projects” have been identified to which the returned funds will be committed. After the Paris Club write-off in 2005 of an estimated $18 billion in debt, the Nigerian government identified projects to fund with the money freed up by the reduction in debt service, including the expansion of female education in the north. However, it is unclear how long the funding continued.
During his April 30 visit to Washington, DC, President Muhammadu Buhari publicly thanked President Donald Trump at their joint press conference for the administration’s assistance in the recovery of looted assets. He referred to the “machinery” the respective attorney generals had put in place for the return of some $500 million of looted assets “siphoned away in banks around the world.” Buhari also praised the U.S. Kleptocracy Asset Recovery Initiative at the U.S. Department of Justice (DOJ). Established in 2010, this initiative uses civil forfeiture proceedings to recover looted assets parked in, or laundered through, the United States. Notably, in 2017, the U.S. DOJ filed a civil complaint seeking the recovery of approximately $144 million allegedly laundered in the United States by two Nigerians associated with the former Minister of Petroleum Resources Diezani Alison-Madueke. President Buhari’s electoral victory owed much to his promises to fight against corruption. The next election in February 2019 and he is running for reelection. However, corruption in Nigeria is structural and addressing it will require decades, if not generations. In the run-up to the elections, Buhari will look to highlight examples where his policy has been successful in his first term.