“When men attain power, they go crooked.”
This piece is coming from an author, I, and the introductory quote is quite dubious enough but the truth is perpetually bitter.
To open the curtain on this important discussion, I would like to congratulate several African leaders on the various precautionary measures they have instigated to hamper the raging spread of this plague. They should know that this is the dawn of a new era and certainly not the time to cast aspersions on who bears the onus or play politics on the suffering proletarians. Those residing in the hinterlands have successfully lost their sources of livelihood as almost every country has embarked on complete lockdown. The private sector, considered as elites, are even battling on how to pay their employees who are now on official vacation.
The government as a whole cannot import their needs and have to dig into their reserves to try to keep every Tom, Dick, and Harry in the country reasonably sane and surviving. Consequently, this is having a very devastating sapist effect on countries’ economies. Many of them went into recession even before this virus started walking majestically from person to person. One can only wonder what they would be doing at this very epoch. How would they survive and fearfully, after?
This is what this article will recommend in a bit.
For years, Africa has been termed a developing continent. Honestly, I have no objections to such a form of nomenclature considering the fact that the leaders have weak ideologies and unwilling body languages which has not been proffering progress breathing space. The deep flaws in the healthcare services have been the talk of the world. It is shameful that a very high number of the ruling class fly overseas to obtain top-notch treatment sponsored by tax-payers monies, while they insensitive leave the ones in their homelands to neglect and ruin. Now that Coronavirus has surpassed the world’s initial perception, African healthcare centers are gradually stretching beyond their endurance limit. Uganda is not yet clear on how to tackle the rising index cases in its domain. Consequently, this lockdown has imparted a lesson or two into these classes of people, but whether it would stick is another story.
I shall now go ahead to enumerate some steps that African governments should deviate from in reviving their economies after this pandemic. Adherence to any and we might have issues of neo-colonialism in the 21st Century.
DEVALUATION OF THE DOMESTIC CURRENCY:
This will no doubt be on the minds of most African leaders, but who one considers the historical antecedents of what devaluation has wrought; we might want to permanently delete it off our to-do list.
Devaluation of the local currency gives ample room for foreign capital inflow normally in the form of loans which will appear as huge sums when compared with the just devalued currency. This will proffer the government’s expenditure leverage ratio and a twisted amount of hope that they will be capable of paying back when the time arises. But even the foreign creditors sometimes wonder what their beneficiaries do with these mammoth loans as the countries remain the same even after extensively poring through a well-articulated A4 paper containing dividential investments. But African leaders are quite predictable, less creative, and unimplementative. They would amass debts to the extent of selling the country’s public assets to the foreign creditors. This is not a profitable path. Nigeria had strong-headedly towed this path in the 1980s and guess what? The military government piled over $30 billion external debt which left the citizens crying, due to hunger, unemployment, high cost of goods, just to mention a few progenies of poverty. Twenty-six years after Independence the country almost came apart.
BORROWING FOR REOCCURING EXPENDITURE:
I would never recommend borrowing but seeing as World Bank has just approved a $3.4 billion loan for the Nigerian government, I shall point out what they should not do with the funds. You cannot borrow foreign money to pay salaries of workers neither should a sensible leader borrow to pay for imported products (which will even come from the same foreign creditors). These are reoccurring expenditures. They never improve the GDP. Sadly, a good number of African presidents, governors, have made this act a habit. This must be stopped as it does not create space for palatable investments. Instead, there shall be an increasing backlog of debt rescheduling loans.
How long would a leader have to keep borrowing to pay salaries or imports before it dawns that debt is amassing and the country is becoming a bag of doldrums?
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PRIVATIZATION OF PUBLIC ASSETS:
Privatization refers to the diverting of public funds from business undertakings. Consider a debtor nation, prima facie. An accompaniment, there is a debt-equity-swap strategy that connotes the conversion of nation’s public debt into equity holdings in the country’s business undertakings. This implies that a considerable amount of money will be injected into the economy. Who are the beneficiaries of such an investment – the capitalists? They would benefit since the injected money is to enable them to reschedule their debts through government assistance, but their profit-making tendencies will make them maximize these motives to the detriment of the consumer – the common masses.
Because more loans will be obtained, the debt burden will increase rather than decrease. In this case, the government has surrendered investments to the capitalists or the big private-owned companies to allow them to decide the market value. This will cause inexperienced inflation of prices which the lower class citizens cannot endure. This is akin to selling the country to the whims and caprices of capitalists, who are only (I repeat, only) out to make a profit, amass wealth, and amass more wealth.
REMOVAL OF SUBSIDY:
A large percentage of economists will vehemently argue that subsidy is grandly otiose and must be removed to allow funds to be injected into other critical areas of development. Slightly true, but when one brings Africa under the magnifying lens, this is my opinion. First of all, a subsidy is an investment. It is a situation where products are sold below the cost of producing such products. If the subsidy is removed, the government would withdraw their investments on business and therefore cannot effectively control the prices of commodities produced by the private investor whose aim is to make a profit. The adverse effect of this measure is greater on the part of the proletarians because transport fares and other prices would be hiked. Removal of subsidy must be unequivocally opposed by those who have the unwavering welfare of African citizens at heart.
On the other hand, long term remedies should include: a holistic reshuffling of selected heads of departments in the public and private sectors, adoption of policies that would help to generate huge surpluses in output via a proportionate increase in productivity of investment (self-sustainment), slacking it down on IMF loans (which can wreck faster than recession), purchasing of mechanized implements (from the internal industrial sector) and encouragement should be given to the rural farmers so that rural food production can be increased (hunger is at the corner). That African countries are exporting large volumes of primary foods is meaningless if the corresponding prices of processed foods or other imported items are exorbitantly high.
With these, I hope the economy will be revived without pauperizing the masses after Covid-19.
Some African countries, their COVID-19 cases, discharges, and deaths as at May 18, 2020:
Egypt 12,764 3,440 645
Algeria 7,201 3,625 555
Morocco 6,952 3,758 192
Nigeria 6,175 1,644 191
Ghana 5,735 1,754 29
Cameroon 3,529 1,567 140
Chad 519 117 53
Tanzania 509 183 21
Congo-Brazzaville 412 110 15
Ethiopia 352 116 5
Benin 339 83 2
Mauritius 332 322 10
Togo 330 106 12
Cape Verde 328 85 3