A NIGERIAN REVIEWS CNBC'S "DOLLARS AND DANGER" PT 2

Wednesday, June 17, 2009

As discussed in Part 1, Erin Burnett's program "Dollars and Danger: Africa, the Final Investment Frontier"managed to present a balanced portrayal of the business challenges and opportunities in Nigeria and indeed the entire continent. While my last post focused on the program's discussion of Nigeria, this post will concentrate on other larger issues related to investment in Africa.


Upon watching the program, I was happy that the African continent was not portrayed as merely a poor, dirty continent waiting with an outstretched hand for assistance and salvation. In fact I was satisfied with the range of discussion the show packed into a 1 hour program. For instance, the revelation that during the current economic downturn, foreign direct investment in African economies surged by 16% in 2008, while dropping by 23% worldwide, was eye opening. Africa is indeed the last remaining frontier for potential high return investment. Many are clamoring to the continent because clearly, the profits outweigh the risks.

http://www.grain.org/seedling_files/africa-dollar.jpg
FOREIGN INVESTMENT & THE LACK OF ACCOUNTABILITY
However, reinforced for me was an issue that continues to puzzle me. Why has the investment in Africa not been maximized to benefit the continent's people? I am not talking about the benefits, or lack thereof, of foreign aid, an issue which has been adequately addressed by writer Dambisa Moyo and many others, who argue that current attitudes toward foreign aid must be reconsidered because foreign aid has failed to truly help the African continent. What I am talking about is foreign money invested not loaned or granted as charity to African countries. Far too often, the investment monies that enter a country fail to make its way down to the majority. This, unfortunately, leaves many Africans poor and without adequate health care, infrastructure and affordable education.

Personally, I believe that the lack of political accountability in many African countries is to blame for the disparity between the possible benefits Africans could have enjoyed from foreign investment and the current reality. The fact that far too many African leaders have historically treated central banks as their personal slush funds, coupled with corruption and the inability to get worthy candidates in leadership positions has prevented the progress that could have been possible. To take full advantage of the many large foreign businesses which come to the African continent for profit, a system that allows the people to genuinely hold their leaders responsible for failures and also rewards them for accomplishments is necessary in most parts of the continent. The will only happen when we Africans realize that we deserve to not be cheated by our leaders and should not be relegated to the scraps from the table.


SELLING YOUR 'SOUL' TO THE HIGHEST BIDDER
Learning that South Korean company Daewoo Logistics somehow 'leased' half of Madagascar's arable farm land shocked me. While I understand that Korea made a business decision to ensure food security for its citizens, I wonder how such "neo-colonialism" (so deemed by the U.N's Food and Agricultural Organization) benefits the people of Madagascar? Keep in mind that the deal is apparently for 99 years and that the only benefits for the Malagasy people will be "employment opportunities" because Daewoo Logistics will not pay fees for the lease, but will only provide "the means to allow exploitation and development of the land."Africa's land is the source of its food and the resources the continent's nations rely upon to finance its economies. That certain governments would therefore relinquish ownership/control of farm land is akin to selling the people's soul to the highest bidder. It is unconscionable. And one cannot help but ask where the money from this deal has gone, particularly as over 60% of Malagasy people live below the poverty level.

But, Madagascar is not the only African country witnessing this new capitalistic approach to food/agricultural security. Saudi Arabia is also seeking to buy land in Africa so as to find locations for agricultural and livestock industries to support its citizens. Saudi Arabia hopes to buy land in Ethiopia and Sudan. It would be redundant to point out that Ethiopia has faced severe famine in the past, is currently is in a shaky peace deal with its neighbor Eritrea and is also neighbored by Somalia. As for Sudan, the continuing Darfur crisis and the many internally displaced men, women and children did not stop its president (for whom the ICC has issued a warrant for arrest) from entering into agreement with China to get funding for a new palace in exchange for oil to fuel China's flourishing economy and growing middle class.

These examples illustrate the dilemma of foreign investment in certain parts of Africa - it props up illegitimate and unworthy governments by putting large amounts of money within their control, to the detriment of the people. That being said, foreign direct investment (FDI) is a necessary element in the modern economy regardless of whether that economy is in the United States, Europe, Asia or Africa. Every nation, regardless of its wealth, clamors for such investment as it benefits their economies and ultimately their citizens. It is just that in too many African countries, not enough citizens benefit from FDI as much as they should. And, this is a problem that Africans themselves must strive to solve or else, the continent will allow certain interests to sign away the continent's future and in the decades to come we Africans will be no better off than we are now.

Ultimately, CNBC's program, "Dollars and Danger: Africa, the Final Investment Frontier", managed to take a frank look at Africa and the incredible financial possibilities it holds for those that , as fellow blogger N.I.M.M.O. commented "dare to come". These same investors that dare to come to the African continent, the money and expertise they bring can be a necessary component for African development. But for African countries to truly become competitive in the global economy they must use the profits from that investment to provide the basics for their citizens. Once that happens, Africa's approximately 900 million citizens will do the rest.



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- Re-Branding Nigeria: Success Is The Key
- Rebranding Nigeria: With Britain's Help?



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Beauty said...

Why has the investment in African not been maximized to benefit the continent's people? The costs of doing business in a challenging environment. ROI soon became nil since the costs of living in a fortress and paying for protection and bribes does not allow life as we know it. But the little that remains is change compared to what might have been. That change is fought over by 140M people hence 60% poverty rate.

Those who can continue to enjoy the benefits of the oil racket. Oando for example, spans the entire energy value chain. Why else would Chevron press ahead with the implementation of key oil and gas projects in Nigeria valued at $6.8 billion notwithstanding the recent wave of attacks on its facilities in the Niger Delta region? We might as well give it free while those mavericks continue to whao the poor.

The leadership challenge is why those multinationals that dared will always win. As rift between the Minister for Information and Communication, Dora Akunyili, and the Executive Vice-Chairman of the National Communications Commission, Ernest Ndukwe shows the consistency of ruin. But until those that do not measure up "just go" the beginning of a continent ready for life might still be far off.

SOLOMONSYDELLE said...

@ Beauty: "
The leadership challenge is why those multinationals that dared will always win. "


Therein lies one of the main problems. A lack of appropriate leadership and the willingness/ability to present and carry through a verifiable political vision that can be beneficial over the long term.

Imnakoya wrote a nice write up last week, I believe, about how to get Nigeria past the 'leadership challenge'. You should check it out. Matter of fact, here is the link to his thoughts.

Thanks for sharing your thoughts on this issue. Hope all is well with you and yours.

Anonymous said...

I think you nailed it.. The lack of political accountability will always mean that being able to cut corners is a necessary condition for doing business in Africa...

The Halliburton case is a good example, as is the manner in which the country's deep water PSCs were negotiated in the 90's

Bottom line is that any investment want significant ROI - and will gravitate to regions where its highest - as long as the ethics of doing business can be rationalized...

Anonymous said...

why has the investment not been maximized to benefit africa?....
which employer has ever got rich while working for an employer? you make your employer rich and thats what africa is doing.
Dont let the investment get to you....some top shot wouldnt really want poverty to be completely eradicated in africa. Africa the way it is benefits them and dishing out peanuts to africa is a benefit to them, as opposed to completely healing Africa.

You are right that the money does not circulate round. Poor leadership in addition to many other things contribute to this. Nigeria for instance is a country where money is hoarded and circulated only in certain environment. The rich keep getting richer and the poor keep getting poorer.Even foreign investors are privy to this trick 'cos they have learned to grease the palm of certain people to get by.

Naija is a rich country but where in the world is the money?....swiss bank and foreign bank accounts

Cee said...

***Warning, long rant.***

SSD, do you know, I have been pondering about this 'leadership' issue which is where everyone agrees the buck stops. From nigerian bulletin boards, to blogs to new generation's pressure and political groups, it is noted that we are all pointing at the government as the cog in the wheel of Nigeria's progress. My question is what next? It'll would be a crying shame if in ten years time we are still writing and talking about the same issues.

As an side, I was watching BEN TV yesterday and on a political discussion programme (focus NGR, I think), they featured two young men - Dapo Israel and Dayo Lam Adesina who happen to be in their (early?) twenties. Dapo Israel heads the future movement and Dayo (former gov. of oyo state's son)is running for 'House of Reps' 2011. They talked about the younger generation becoming more active in the political sphere and bringing about an intellectual revolution - without bloodshed. I applauded these two young men greatly and immediately the programme was done went fishing for them on the www. What I found is worth a blog of it's own but...

My point is, we need to stop talking and start acting. I know that many are contributing in their on little way(s) BUT it is clear that we have spoken ourselves hoarse and our rulers are not listening - take for instance Sen. Ekaette who dropped the indecent dressing bill till our voices had died down. She has now picked it up again. Thus the attitude is very much ' Sc*** yous! I am not listening'. So since we know talking is not working we have to devise another approach and start working in concert. My husby says life gives you what you ask of it. We have to be smart and coerce power from these lot and we cannot underestimate them because they are corruption smart, if not anything else and they will resist.

I, like many others, have a few ideas floating around. It'll be good if you could do a blog on practical things and ideas we could do to start forcing change because one thing's sure; the current cabal are not going to give up power readily. They are benefitting far too greatly from it.

@ Beauty: Thought provoking post as usual.

Sorry for the long post.

SOLOMONSYDELLE said...

@ Danny: "The lack of political accountability will always mean that being able to cut corners is a necessary condition for doing business in Africa... "

Isn't that the truth? Luckily, one can sue some of these int'l orgs in their home countries (if you can figure out which one) but to find the necessary evidence to carry the burden of proof is/will be difficult. More Siemens and Halliburtons getting sued might encourage those with access to information to share that info when lawsuits come around, but the greed incentive might outweigh progress.

Anyway, thanks for sharing your thoughts.

@ Naijagirl: "you make your employer rich and thats what africa is doing."

How sad but true. Africans keep getting pimped from within and without. We need to wake up!

@ Cee: Please never apologize for sharing your thoughts over here, abeg. It is that very discourse that helps me get out of bed and deal with naija madness, I swear.

Now to your points. I did a series of posts on the need for 'revolution' (that post will hopefully lead you to others in the series. I also spent time writing about the need for the psychology/psyche (that post will also lead you to the rest in that series) of the average Nigerian to begin changing in order for the nation to collectively begin to demand the representation it deserves.

I have also taken the time to begin guiding readers in my attitudes towards how to change the status quo. because at this site, I believe in bringing the readers along with me and engaging them when it comes to my political theories, I have to slowly/diligently unveil the issues.

Anyway, I have many ideas and have been working on a book that contains those issues. But, that being said, I will take up your challenge and reveal a few of my thoughts in my post for Monday. Let me just say, entrepreneurship is definitely the key to creating a sense of not just ownership but also political responsibility amongst the Nigerians who will have to 'take back Naija'. It unfortunately will not be you and I. I believe it has to be the average Nigerians - the poor who can't read, those who see their kids die because corrupt politicians and cronies have chopped money meant for their care. Until these people figure out that their very numbers make them powerful enough, we will like you say, keep talking for years to come. The key is how to get to those people. I have some ideas. I have come to learn that despite their non-violence, my ideas are dangerous. But, in time, I will unroll the, I hope I will be able to rely on your insight to engage you on these issues and learn from you and others on how those of us who are like minded and simply want the best for Nigeria, and Africa in general, can make it happen sooner than others think.

Thanks for the challenge, and on the real, send me a message. I honestly like engaging with readers off the site as well, so think about it.

Mayor of Bracketville said...

In case you missed it...


Dollars & Danger on Hulu

http://www.hulu.com/watch/78364/cnbc-originals-dollars-and-danger-africa-the-final-investing-frontier



Dollars & Danger Website (filled with web extras)

http://www.cnbc.com/id/30959351

Also feel free to post your comments in the comment page - the producers of the special do a great job in getting back to you

SOLOMONSYDELLE said...

@ mayor: Thank you so much for sharing this info with us. We truly appreciate it.

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