Lillian Bogonko

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Will Africa's growth be stunted with China's economic growth slowing down?

A lot has been said about Africa being the next boom market and how many countries and individuals are scrambling for an opportunity to invest in the continent. Their is however a report out by S $ P that this may not necessarily be true.

Please review the attched link and let me know what you think about the article and the arguments articulated.

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    Sep 2 2012: If you mean by Africa those who prosper already, they will profit less as China will concentrate on other parts of the world for instance Europe or manage internal affairs first.

    The majority which is poor can only benefit by this situation.

    For what I've seen, Chinese activity in Africa is rather evasive. They put Africans out of business with competitive strategies, they buy the best pieces for little and keep the know how to themselves. They built infrastructure for their own efficiency.

    Most African leaders rule the same way their colonial predecessors did, only serving their private interests and every foreign nation or company can plunder at their hearts content as long as they keep the leaders happy.
  • Sep 2 2012: I never heard anyone say that Africa is a boom market in the sense of national economy or employment growth. All that i heard about is that Africa is Chinas treasure chest insofar, that Africa handed out the key to it's treasures almost for free. A little money here, some weapon deals there, in exchange for mineral deposits of any kind, thats it.

    A place without existing markets can't become a boom market. Africa, due to great lack of ambition, together with harmfull financial interventions from outside on the almost non existing african political systems, has no national markets. They do have of course national trade, but mostly run by imports from outside, even the basical economy like agriculture are so much down and dependent on imports almost only.

    Africa should know that it will not be able to protect the mineral deposits, so the only way out of the mess is to establish an economy based on the idea none of these deposits exists. Africa is neither united, nor has it the intelligence, nor the military power to become a big number. But they can at least become a number insofar that they concentrate on building a peaceful continent, what is the elementary need to build up a running economy and development of the state.

    None big player became a big player as long as they did not end civil wars and conflicts with close-by neighbor states. This must happen first, it will not work the other way round that you get money and anyone gets peacefull. There have been billions over billions spent on africa and it only went worse, because inside nothing really changed. And you hear Africans only say "if...then...but...", but you do not see anyone do something, just talk and daydreaming, and complaints.

    If the people there don't make a change, only dream about it, they will not get out of this mess. From zero to top is not working and will not happen. That takes decades. I strongly believe Africa can make a change to the better, but only on its own.
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      Sep 2 2012: All the problems you identified have its roots in the west. The civil wars and conflicts are sponsored by foreign government. Just because this doesn't flash in your news channel doesn't make it any less real. I do not however take the entire blame from the locals .- let me tell a story.

      In Mali, more than three million people – a third of the population – depend on cotton to survive, while the United States has 25,000 cotton farmers. World Bank and other funding organisations pressurised the government of Mali to withdraw any kind of technical/material support to farmers, as this distorts the true price of cotton. The U.S. cotton farmers are paid approximately as much from government subsidies as they earn from the total value of their harvest. In the 2001/2002 period, the value of U.S. cotton production amounted to $3 billion at world market prices with subsidies of $3.9b in the same year. The United States exports half of the cotton it produces, so that America’s export prices have a great influence on the world price of cotton.

      Several studies have attempted to describe the effect of US cotton subsidies on African cotton producers. One study by the Fair-trade suggests that cotton subsidies from the U.S. are costing Mali, Benin, Burkina Faso and Chad) £155m a year. Another study by Oxfam estimates the lost income for West Africa cotton producers as $191m (£118m) each year, while sub-Saharan cotton exporters lost $302m as a direct consequence of US cotton subsidies. The Oxfam study further reports that Mali lost 8 per cent of its export earnings yearly, which amounts to an annual $43m loss to local cotton farmers as a result of U.S. cotton subsidies. Similarly, due to US subsidies, Burkina Faso sustains a yearly loss of $28m; Benin $33m; Cameroon $21m; the Central African Republic $2m; Chad $16m; Côte d’Ivoire $32m; and Togo $16m. The list goes on to include all of the 32 cotton-producing countries in Africa, comprising roughly 27 to 30 million cotton producer
      • Sep 2 2012: It is in the news channels, at least if a person does a little research. The conflicts may be sponsored/held alive by foreign governments, but they do not have their source there. That is what i want to point at, there are so many civil conflicts in Africa, foreign governments just need to pick one of these once it is useful for them. They do not create these conflicts, they just use them in their own interest.

        The use of subsidies is legitimate i think, why should a nation put other people over their own? And, Africa uses "subsidies" for inner conflicts, instead of for development. The money Africa spents on wars is comparable to that what other nations put in the development of their states, not in quantity, but in quality, so to say.

        I think that it is still the shooter who is responsible for the gunshot, not the one who might pay him or the one who builds the gun.

        And the civil wars and such, that is just the top of mountain, below there are lots of structure problems that have nothing to deal with foreign interventions. You can't blame the times of colonisation, that happened to many nations during history, but it is interesting that Africa is still without a progress. There is no conspiracy in the world to hold Africa down, Africa does that pretty much alone.

        The problem is history related, but not in the aspect of interventions from outside, but in the culture inside. Africa is still very much attached to his cultural roots, whilest other nations with comparable history did changes in cultural aspects, in self-understanding and such. It is not visible yet that Africas citizens want to give up cultural aspects for the benefit of development.

        Thats why it is strongly needed that Africa unites inside, not to fight the foreigners, but to establish a society that is future orientated. If there is no civil conflict, foreign governments could not sent their hidden soldiers, as western societies would not tolerate it.
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          Sep 3 2012: You completely missed my point on subsidies. I outlined cotton farmers in Mali and the United States - both supported by government (although one is far more supported). The World Bank and IMF came along and stripped one of the minor technical support she receives. Its like a war where country A has machine guns while country B has hand guns . . The the handgun is stripped from country B . .I am getting at WORLD bank and IMF not the United States - sure they have the right to distort trade to the point that it makes the poor poorer. No one is arguing away that.

          To turn to your second point, it is simply not the case that civil war is the problem of development in Africa. That's a myth.Nigeria civil war ended in 1970 - Ghana never tasted a civil war. The conflict thesis is nonsense.

          The problem i see is that Sub-Sahara Africa countries are not allowed to go through the mandatory passage point needed for development. All advanced countries went through a learning period which is technically impossible now due to world bank, IMF and WTO. I promise you that these are not empty words.
        • Sep 5 2012: The problem originates from Africa indeed, but not because of civil wars. It is primarly because the African leaders simply do not care about their nations and have been willing to sell out their people, and/or help take down a leader that dared think of his people first.
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          Sep 7 2012: Maryline, they are not truly African leaders. They have been hand-picked by the west because it fits their interest. America oppose strongly and sometimes assassinate the once that doesn't fit with their programs . . e.g Thomas Sankara and even Patrice Lumumba.

          I can give you a page full of CIA assassination in Africa . . they killed the real leaders and install clowns as "leaders"
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        Sep 2 2012: A similar thing also occurs with ethanol and sugar. I would not doubt the veracity of your story as it is the typical M.O.
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          Sep 3 2012: YES. in almost all crops. No nation or people can get wealthy through agriculture but we are speaking of poverty now.
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      Sep 2 2012: I can provide you sources to check the figures out . . . just ask me for any.
      • Sep 8 2012: Don't get me wrong, i don't disagree with many of your points, for example the pressure done by IMF and WTO is one big aspect of the problem.

        About the civil war thesis, a continent is always influenced by war situations. And inside the continent there are ongoing conflicts, and these do affect also the states which have peace. Look at the situation in europe, there have been smaller and bigger wars, but since they stopped this, changes began. As long as there have been conflicts on the continent, progress was slow.

        Ghana is sourrounded by states with ongoing conflicts. How do you want to establish a working economy under these circumstances? You have to take actions to protect yourself that these conflicts don't swap over to your country, you can not trade like you need to, people will not likely invest in your country because situation is unpredictable and so on.

        These conflicts can not be installed nor solved by foreign governments, they just can use them in their interest.

        Take IMF, WTO, foreign governments hidden actions away-do you really think that this will make a change? Every country has to deal with these problems, not just africa.
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    Sep 2 2012: Barbara Njau works for an FDI publication tied up to FT, so i can understand why she produced such a weak analysis.
    I will turn to a bigger point though. .There has never been any sort of economic growth in most Africa countries since the 1980s. . I don’t know what you mean by growth Lillian but it is often tied to commodity. . My country expanded 6.2 percent in the first quarter of 2012 and it is entirely on revenue from Oil.

    Most Nations in Sub-Saharan Africa countries are still under colonial system - even in a strict traditional sense. Colonial official has been replaced with IMF and World bank . . plus WTO. They have been dictating the policies since the opening of 1980s. If you study the economic calendar of any Africa country that received independence in the 60s, like i have done, you’d realize that there was real growth in the late 60s and 70s but seized in the beginning of 80s. Coincidentally this was the period that Washington institutions took over the affairs of the so-called third world. We have been duped.. . . . IMF and World Bank are the creators of our woes.

    Also, Asia giants did not take advice from the evil IMF and World Bank. .
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      Sep 2 2012: Good point.
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      Sep 3 2012: "We have been duped... IMF and World Bank are the creators of our woes" That is a contradiction in terms... If you get duped, it's your own fault. Just like all the dumb Americans who took out a loan on a house, that they couldn't afford to pay back, and are now complaining about "debt slavery". They're stupid, and it was their own fault. It is up to you, as an individual, not to let other people take advantage of you. You are responsible for your own actions.

      That said however... The important thing is "How were you duped?"... Africa trusted and had faith, in European currency, which is virtually worthless. Africa also trusted and had faith in American currency, which used to be pretty stable, but is now virtually worthless as well. Next China came in and convince Africa that their currency was worth money...

      Why is it that no one is coming to Africa suggesting that African currency is worth money? Why is no one mentioning the fact that in a world of bullshit currency, Africa should have a much higher exchange rate than it curently enjoys? Why aren't any African leaders saying "stop accepting western currency, ours is more valuable, those people are idiots"?
  • Sep 7 2012: What is your definition of growth?
    Everything can only grow so far. Everything has a limit. Africa, Asia, Europe, USA.... not matter where.
    We are reaching critical growth limit at a planetary level.
    Most will realise this only when is too late.
  • Sep 5 2012: No because they invest knowing they will urn the money otherwise they wouldn't invest or harvest.

    I have not read the article, I'lm tired.

    You should sheck CAI:

    They are a study firm what you can subscribe to their newslettre, and they work on personal demands for knowledge and studies also.

    Very intreaging 'humanitarian' engaged they are so it seems from their newslettres I recieve since months now.
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    Sep 5 2012: Most Africans do not have proper conditions to grow. There is no stable political and economical situation. If You live in unstable coutry You just fight for survive.

    Feyisayo, good point. Visionary leaders needed for Africa!

    Where they are now?!
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    Sep 1 2012: During an economic crisis, the nation with the cheapest labor recieves a temporary boost. I believe China's growing pains, should lead to more investment looking to Africa... What it does with that investment, who it lets in, and whether it can take advantage of this situation, is yet to be seen.

    You know me though, I think Africa will do very well by concentrating the sun if they stick to local growth, local infrastructure, and local investment... So, I'm always going to have a slanted perspective on this issue.
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      Sep 2 2012: The country that is the most productive and thus has the cheapest per unit cost, will get the boost, it has nothing to do with wages.

      For example tech companies go to silicon valley to get their tech products going, this despite higher costs in silicon valley, because the talent for this sort of thing is in silicon valley. Southern Calif always has been one of the top producers of aeronautic parts for the same reason despite higher cost here.
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        Sep 2 2012: Manual labor does not operate under these rules, especially during times of great unemployment. Manufacturing, and simple labor moves to the cheapest country that can maintain the rule of law, that's why a Republic is so handy...

        "It has nothing to do with wages"... Really? If I were trying to turn a profit, and there was a place where I could legally pay people less... I'd take advantage of it, as often as possible, until transportation costs ate up the profit.
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          Sep 2 2012: This how our conversations typically go. You are missing the point on unit cost.

          One worker with a backhoe can out produce say 100 workers with shovels at .5 per hour $ .5 x 100 = 50 one back hoe and operator might be $40.00 per hour or a cnc operator that is not available in the other country or people who are very good at writing code where one good code writer might produce what 3 code writers might be able to produce in another country.
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        Sep 3 2012: I take your point, and accept it as valid... What you seem to neglect, is that corporations have more than enough money to provide the equipment, it's literally digitally created for them by the government, what they need for jobs that do not require special expertise, are backs.

        I agree with you on skilled labor. I am talking about entry level, unskilled, also known as "family starting" labor. Both economies exist, one for skilled, one for "unload the machine, and put stickers on the boxes". You seem to ignore the fact that some labor is always unskilled, and some laborers, are barely capable of unskilled labor. Some don't desire more than subsistence.

        Americans with an 80 IQ need jobs, just like Chinese people with an 80 IQ need jobs, in that market, the cheapest place with a rule of law... wins. So you need incentives in both markets... what used to be known as a working or middle class, not constantly spiralling into debt.
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          Sep 3 2012: The most able are always going to do better, the slowest animal in the herd gets eaten. I know that is not warm and fussy but it is what it is.

          But the fact is that anyone in the U.S. that wants to do better can do better.

          The real problem is the nanny state that indoctrinates people into handouts while punishing those who do produce.
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        Sep 3 2012: You look a little old, and overweight, and balding... alright... I'm with ya... Kill the weak, and don't make young people farm and mine for old...
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          Sep 4 2012: I resemble that statement, but if we are getting chased by a predator...

          Oh come to think of it you appear to be getting eaten by the government already and don't even realize it.
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        Sep 4 2012: I should put this on my profile to remind everyone... I'm probably the only human being on this website who refuses to be eaten by the government. I have a little two year tech degree, and a strong back, so I'll never be forced into poverty, but still I choose to surf at the poverty line rather than paying taxes, because I believe the US government has become the most monstrous force of power and corruption on the planet.

        I shouldn't have made a personal comment though... that was childish, and stupid. I was hoping it would bring out the "I've got a gun" defense to which I could respond "guns don't farm, how good a hunter are you?".

        That's the only problem I have with neocons, and pure randian conservatives... You're all going to get old, and weak... Just like I am. Community, is designed to force the young, strong, and often dumb, to provide sustenance for the old and weak, so that we can continue to gain from their knowledge and wisdom. That wisdom is valuable... but, so is the strong back and weak mind. We need them as much as they need us.
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          Sep 4 2012: No country for old men? So they have sequestered you to the "poverty line" but they have not influenced you? get out the binoculars, patrol the perimeter and get back to me on how free you are! (8^(l)
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        Sep 5 2012: They have certainly influenced me... but, as I'm sure you're aware, the poverty line is nowhere near as crippling in America as it is throughout the world. I've been to 15 countries, and seen enough massive and wonderous works of art to fill the lifetimes of a thousand kings.

        I am free to do anything, but engage in a life of luxury. If I wanted to do that I could. All of America's institutions are open wide to people like myself... In fact, I would suggest that I have sequestered my talent and skills outside their reach, while maintaining an enjoyable life. My government and community have suffered for my life of mediocrity, but I have not, I got to enjoy every bit of it, because i've never murdered anyone... I consider that a win. They can't say that.
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        Sep 5 2012: "I swear by my life, and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."

        "I'd rather be a day laborer."

        Those parts she got right... That is why I think your contribution to this collectivist society... is a cop out. My work belongs to no one, but myself. My labor fed me, and paid for interesting travels when saved. I refuse to cross the threshold into which government feels it has a right to steal my labor at the point of a gun, and use it to murder people... I, unlike many so called individualists... am on strike... and it's quite a bit of fun... I get to write nonsense like this all the time.
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        Sep 5 2012: Not selling anything Pat. I don't have taxes to pay.
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    Sep 1 2012: Does Africa run to it's own time? i've never been there but i was just wondering if whether the African peoples see time different than the rest of the world,like that of mine.
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    Sep 1 2012: Only African nations and their leaders will determine (by proper planning or lack of it, and by good leadership or lack of it) if African economy will grow or not.

    African nations remain poor because there is always an expectation that some super-nation will solve their numerous problems.

    No nation can be great without visionary leaders, transparent and efficient systems, and hardworking citizens.