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Can Africa stand on its own two feet? Part 1

PICTURED: French president Emmanuel Macron with Ghana's President Nana Akufo-Addo at the Presidential palace in Accra, Ghana (Photo credit: Reuters/Philippe Wojazer)

SINCE INDEPENDENCE, Africa has had the freedom to turn on itself. Genocide, terrorism, civil wars, hundreds of coup attempts, dictatorships, corruption oh and of course, ‘modern day slavery’, has ravaged Africa. Squandered funds from the West and China have also blighted the continent.

Instead of becoming an undisputed global powerhouse, African nations have embodied an Oliver Twist persona, asking foreign donors for more. Indeed, images of little Daniel rummaging through trash in front of Comic Relief camera’s is far from everyday life. Young millionaires and thriving businesses are creating an emerging middle class.

However, the existence of a middle class does not guarantee that those below will not wallow in a cesspool of poverty. But, the blunt reality is that life is still unnecessarily difficult. On the contrary, during a passionate exchange between Ghana’s president Nana Addo and French premiere Macron, Nana ideologically targeted one of Africa’s greatest problems: Dependence.

As Macron stood dumbfounded by a Ghanaian emphatically criticising the “mindset of dependency”, Nana pitched a new direction for Africa. “We can no longer continue to make policy… in our country…in our continent on the basis of whatever support that the western world or France, or the European Union can give us…it will not work.”

However, as recent as September 6 2017, the IMF approved the disbursement of “US$94.2 million” to Ghana. The West African nation and the IMF previously agreed a “three-year arrangement for … US$918 million”, in which a total of “US$565.2 million” has been released so far.

It’s not that I feel Nana’s words are disingenuous. My paradoxical concern is that African economies are being held upright by a considerable amount of loans in which, contractually, the destiny of nations is partly determined by creditors or institutions. For readers it’s imperative to remember that institutions such as the IMF approve loans on a “conditionality” basis. That is, “When a country borrows from the IMF, its government agrees to adjust its economic policies”.

What does this mean? Conditionality may require deregulations or privatisation of say infrastructure and energy sectors or wage cuts to certain sectors of the economy etc. Furthermore, in some sub Saharan economies, servicing debt drastically eats away at the nations revenues.

According to the IMF, in oil producing countries like, Angola, Gabon, and Nigeria, servicing debt absorbs “more than 60 percent of government revenues”. In other words, almost two thirds of the money that these nations make, is used for paying creditors who supply loans.

Although technology transfer and private capital from outside the continent, for some, is essential for African economies, this seems partially incompatible with the idea of African solutions to African problems. What most people probably took from Nana Addo’s speech is that African governments should use their own resources to fund themselves and break free from depending on foreign donors.

For this to occur, the very nations that have insufficient infrastructure, health care and security have to somehow cough up the money. Considering the huge infrastructure investment gap that blights African economies, can the continent afford to shun foreign donors for the sake of Pan-Africanist sentiment of ‘true independence?’

According to McKinsey, since the 2008 financial crisis, global investment rates have plummeted leaving a “shortfall of…$350 billion”. McKinsey offered a stark warning to African nations, stating that, “the size of the gap triples when we compare current investment against what would be required to meet the UN Sustainable Development Goals, which are critical for the future of undersupplied regions such as Africa”. So, it would seem Africa is in a rather compromising position.

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