Where It All Began!

 This is a series of why Africa needs to wake up!

First: Some history....

 

 

Beginning around 1650, the British government pursued a policy of mercantilism in international trade. Mercantilism stipulates that in order to build economic strength, a nation must export more than it imports. To achieve this favorable balance of trade, the English passed regulatory laws exclusively benefiting the British economy. These laws created a trade system whereby Americans provided raw goods to Britain, and Britain used the raw goods to produce manufactured goods that were sold in European markets and back to the colonies. As suppliers of raw goods only, the colonies could not compete with Britain in manufacturing. English ships and merchants were always favored, excluding other countries from sharing in the British Empire’s wealth. 

 

Between 1651 and 1673, the English Parliament passed four Navigation Acts meant to ensure the proper mercantilist trade balance. The acts declared the following:

• Only English or English colonial ships could carry cargo between imperial ports.
• Certain goods, including tobacco, rice, and furs, could not be shipped to foreign nations except through England or Scotland.
• The English Parliament would pay “bounties” to Americans who produced certain raw goods, while raising protectionist tariffs on the same goods produced in other nations.
• Americans could not compete with English manufacturers in large-scale manufacturing.

The Navigation Acts severely restricted colonial trade, to the benefit of England.

The colonists initially complained about these strictures on trade. In New England in particular, many colonists evaded the restrictions of the Navigation Acts by smuggling. But although relations between England and the colonies were often full of friction (as in 1684, when Charles II revoked the Massachusetts Bay Colony’s charter as punishement for smuggling), the two sides never came to any real conflict. Instead, England developed a policy of salutary neglect toward the colonies, which meant that the trade laws that most hurt the colonial economy were not enforced. 

 

Threatened by the presence of the French in North America, British officials knew that at some point they would have to clash with the French over the domination of the continent, and they needed the colonists to support them when that time came. The British did not want to alienate their much-needed allies through aggressive trade restrictions.

With the prospect of war against the French looming, the British employed salutary neglect to maintain the colonists’ loyalty.

The Triangular Trade

British mercantilism manifested itself in the form of the triangular trade. Trade routes linked the American Colonies, West Indies, Africa, and England. Each port provided shippers with a payoff and a new cargo. New England rum was shipped to Africa and traded for slaves, which were brought to the West Indies and traded for sugar and molasses, which went back to New England. Other raw goods were shipped from the colonies to England, where they were swapped for a cargo of manufactured goods. 

 

Mercantilism and the triangular trade proved quite profitable for New England tradesmen and ship builders. But in the Southern Colonies, where the Navigation Acts vastly lowered tobacco prices, economies suffered. The triangular trade also spurred a rise in the slave population and increased the merchant population, forming a class of wealthy elites that dominated trade and politics throughout the colonies.

 

 

 

Africa and Economics : My Continent and My Passion II

My mind has been deeply troubled and it still is troubled by the situation in Africa. I don't like the fact that most  Economic theories rarely work for Africa. The theories that seem to work for our lovely continent are the negative ones, like the vicious cycle of poverty. Politics seems to get in the way of Economic theories.

Zimbabwe's economy is projected to grow 8.9 percent next year if the political environment remains stable and the government lives within its expenditure targets.

Uncertainty over the date and conduct of elections due within the next year is casting a shadow over the economy given Zimbabwe's recent history of violent and disputed polls.

This was the same situation in Kenya (2007), the economy was projected to grow by over 7%. This projection became a dream after the elections turned violent.

Why do elections and politics always change our projections, and carefully planned GDP's? What exactly is ailing our continent.

On the positive side, I was impressed by President Goodluck Jonathan's decision to reject the N5,000 note last month. This averted possible inflation in Nigeria. I was also impressed by Nigeria's budget that was read yesterday. I love the fact that security had an allocation of  N921.91 Billion (now that the Boko Haram terrorize the country). Well planned. Congratulations, Mr. President and team.

The Euro Zone crisis has time and again thrown financial markets into turmoil as several countries in the EU and several monetary union blocks continue to face difficulty in servicing their debts. On the other hand, although many emerging and developing countries, like India and China are experiencing relatively robust growth, downside risks remain as well. In fact, global growth projection has continuously been revised downward and is now 4% for 2012-2013.

These developments have implications for our African economy as, aside from the impact on the inflow of Foreign Direct Investments, they could also lead to lower demand for our primary export commodity. We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from US$147/barrel in July 2008 to about  US$38/barrel four months later. Thus, although the oil price is currently over US$100/barrel, there is no guarantee what it would be in the future. There are also uncertainties in the area of international food prices which make it imperative that we take steps to safeguard our position through policies that would promote food security.

Despite the drama in the international arena, local politics also affects our African economy. For instance, Kenyans celebrate the fact that the president did not sign the bill to raise the MP's retirement benefit to Ksh. 2 Billion. Kenyans, this is my advice to you:  "Wake up! Your president has been signing bills that have been raising their salaries for the last 10 years! Meanwhile, your kids stay out of school for months because the same president failed to take control of the teachers' salaries, many people die at national hospitals because the doctors are on a salary-increment-strike". Please don't get me wrong: I know that the Kenyan president is an economist, and that raising all these people's salaries would cause inflation...but for crying-out-loud, why in the world would he allow the MP's to have their salaries raised over the last ten years?

I think that it is up to us, as economists, to come up with an Economics-Politics integration policy that will not distort all the theories we use.

I have this deep passion for development in Africa, for a developed Africa. I still think that Somalia and Zimbabwe would do much better if they had their own measures of value. I believe that Africa is rich, and that we can turn the tables around.

Africa, a time is coming when all will be well.

Africa and Economics, My Continent and My Passion I

I have been away from my motherland for quite some time now. I have been in a country that encourages promiscuity (from my own analysis), a country who's president has many wives and concubines, and even sleeps with HIV+ women, then takes a shower afterwards, believing that he'll not get the deadly virus.

Please don't get me wrong, the country is quite developed; more developed than Kenya... and Kenya has a long way to go before it catches up with it.

Absence from my motherland has opened my eyes wider. I have come to realize that things are not as they seem to be. For instance, this country gained independence almost two decades ago. The country is still controlled by its former colonizers. Their former bosses own the land, the companies, they employ, they feed the nation, the make decisions on behalf of the president, they run the economy.

The lifestyle of the natives is extravagant, they depend on loans to get food,clothes, shelter and even luxuries. They then spend the rest of their lives repaying their debts, and the cycle continues with their offspring.

To the North of this country is another troubled country. It has been on the headlines for quite some time for the wrong economic reasons. First of all, its president chased all foreign farmers from the agriculturally-productive country... then disbursed all the fertile land to the natives. Then natives were not familiar with managing farms. In addition to that, it has not been raining as it used to when the foreigners occupied the land. He then started blaming the foreigners by saying that they were playing tricks with the sky, and God... and that is why it doesn't rain any more :)
Secondly, the country's currency lost its value shortly after doing away with the foreign farmers. It now doesn't have its own currency, it uses the USD as its currency.

In my motherland, there's a silent fear in everyone's heart. The fear of being a victim of a terrorist attack. My country has been threatened, on several occasions, by the Al Shabaab and the Al Qaeda. There's also a fear of an ethnic battle (My country is made up of 42 tribes). The fear is not only on my fellow countrymen, it is also felt by the foreign investors...consequently reducing the level of foreign direct investments.

To the East of my country is a country in which bomb-blasts happen more frequently that it rains, and more frequently than child-birth. The economy in this country is the worst in the world (I stand to be corrected). I hope that it'll be a better place, especially now that it has a new president,  Hon. Xassan Sheikh Mahamoud.

To the North-West of my country, Kenya, is the newest nation in the world as at today. Kenya helped the country in its journey to independence. It is so sad that the residents of the black-diamond-rich are jealous of Kenyans. Xenophobia is rampant in the country. It is a common thing to see corpses of my fellow country-men being returned home for a decent send-off. Kenyans are killed mercilessly in this neighbour. This consequently discourages investors and great minds from going to invest and to develop the Kenyan neighbour.

To the South of my country is a country that disregards capitalism and embraces socialism. Unlike China, this country with extremely slow people has been unsuccessful in practising "all for all". In this day and age, it doesn't have any form of identification for the citizens. Despite the long coastline, numerous islands, many tourist-attraction sites and the wonderful opportunities presented to the natives of this wonderful country, the inhabitants are still too slow to capture, or to even see, the opportunities.

Further to the West, Nigeria has been experiencing its share of problem of this wonderful continent. Corruption has been ailing the country, interfaith war, oil wrangles. Despite the efforts of Hon. Ngozi Okonjo Iweala (my role model) in eliminating corruption, the leaders of this country continually let her down. She's now working hard to formulate irreversible economic policies (She's the finance minister. I long for the day that I'll meet her, and ask her so many questions about economics in Nigeria and the policies made during her tenure as the World Bank deputy president. Oh God, please make my dream come true).

To the North, the people have been under a wave of transformation - which am so proud of. But really, why kill the US ambassador? How would they feel if their ambassador at the US was attacked and killed? Do people always have to turn violent when their religion seems to be attacked? Shouldn't religion guide us on how to live peacefully with each other? Don't Christianity, Islam, Buddhism, Hindu and other religion teach us how to love each other, to do good, and to repay evil with good?

I always look at my continent and wonder whether we should be living the way we do. Poverty has attacked a high percentage of the continent's residents, people are at war killing each other. With all these vices, the world looks at us and just laughs at what they call "African problems". Meanwhile, they develop their countries and shun from Africa. They invest in their own countries, chase poverty and love each other.

Issues that affect the economic progress continent in my continent ignite in me a passion to make a change. Africa would be a better continent if there was a South Africa with hardworking people, a Zimbabwe with its own currency and hardworking farmers, a terrorist and  ethnic-free Kenya, a stable and safe Somalia with its own currency. It would be the envy of other continents if South Sudan didn't fight with Sudan and if its people would welcome foreign business people. Africa would be wonderful if Tanzania realized that this is the 21st century, socialism wouldn't work if it hasn't worked for more than half  a century, and if Tanzanians woke up and learnt from the rest of East Africa. I'd be proud of Africa if Nigeria wasn't as corrupt as it is, and if its citizens weren't be feared by the rest of us. I'd be happy if Christians and Muslims didn't fight.

I always have, and I always will be inspired by my dream of making Africa a better place for our people and children. I will work hard to make sure that I improve the economic situation in my continent. I always pray to God to give me opportunities that will make me productive to my continent...so that I may be active in implementing functional currencies for countries without currencies, in formulating economic policies for countries like Somalia and Southern Sudan. If presented with an opportunity, I would work tirelessly to make sure that the East African Community (EAC) is successful, with common goals (including sociatalism > a term I've come up with that describes a combination of socialism and capitalism. If implemented, I believe EAC would be productive).

God, please hear my prayer for this beautiful continent.