New Free Trade Area in Africa

There is some potential good news coming out of Africa, although, as usual it isn’t being publicized by the world’s mainstream media. Recently, 3 trading blocs in Africa, namely, the East Africa Community (EAC), The Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA). This passed Wednesday (Oct 22 2008), these 3 trading blocs agreed to form a Free Trade Area (FTA) of 26 countries with a combined estimated Gross Domestic Product (GDP) of $624bn.
I approach this new development with caution and that is why I used the word “potential”. This FTA, which stretches from South Africa to Egypt, is an economic arrangement which Africa needs and, in my view, is a necessary step toward the realization of continental African economic unity. The FTA will allow goods and services to flow between member countries with little or no tariffs, quotas and preferences. However, the potential benefits of the FTA, which is a macro level arrangement, will not be realized if it is based on desultory micro-level economic policies.
By micro level, I am referring to the most basic building block of any economy, namely, the individual and in this particular case, the individual’s ability to set up, operate and expand a business. A complete rehabilitation at the domestic level is needed to create a conducive business environment that will produce jobs and growth simultaneously. The list of things in need of rehabilitation is long but I will focus on 3 items.

First is the issue of Taxation. Many African governments still follow the false notion that raising tax rates translates to increasing tax revenues. This is a wrong policy, especially in Africa. Tax rates in many African countries prevent new companies from emerging and entering the formal sector and cause existing companies to exit the formal sector or to fold up altogether. A study of the Laffer Curve would be advisable. Governments need to understand that businesses in Africa are not only taxed in terms of money but also every time the power goes off, when water doesn’t flow, when it takes days to deal with government agencies over business matters, when phone lines aren’t dependable etc. All these scenarios, which occur frequently, represent a tax on business.

Second is the rule of law. No vibrant economy can exist without a timely, transparent, accountable and effective judicial system. Basic human rights, civil and criminal law must be known by citizens and observed by authorities. Limits to the powers of the police force must be set and violators swiftly punished. Citizens should not have to spend days and bribes to fight a minor traffic violation. The right of the civilian should be paramount and the police and military shouldn’t have the ability to infringe on it with impunity.

Third, get government out of the business of being a business and into infrastructure and institutional development. This would involve many things, including land administration reforms. The process of land acquisition must be streamlined, title and land ownership well documented and accessible to the public, establish regional bodies comprised of traditional rulers, local authorities and general citizens to administer the sale of local lands with generated proceeds allocated based on a predetermined formula.

If these and other micro level improvements were instituted then the FTA would stand on a sound economic foundation and the realization of its potential would be far more certain. Thus, the FTA is a step in the right direction, we, however, have to make sure our shoe laces are well tied.

Is Obama neglecting the Black Community?

There is a long standing view or notion, within a section of the Black community, that an issue is a "Black Issue" only when it is a product of racism and it manifests itself in a relationship that is reminiscient of the master-slave relationship.
This view affects not only what is perceived to be a "Black Issue" but also who is deemed to be advancing the interests of Black people. As a consequence, those who hold this view, only regard individuals who more or less exclusively confine their social commentary and community organization around a short list of issues that are generally perceived and understood to have racist undertones such as Police brutality, racism in education, the criminal justice system etc.
Blacks who do not conform to this notion of what is a "Black issue" then become labelled as 'Uncle Toms' and 'House Negroes'. This is why some Black groups claim that Barack Obama is neglecting the interest of the Black community.
To be sure, these are issues which do affect the Black community and need to be addressed. Grassroot organizations deserve to be praised for their work in this regard.

But a lot of the activists in these grassroot organizations tend to hold this view of what a Black issue is and as a result they are complicit in distorting the reality within the Black community. They have taken 'a reality' and made it 'the reality' for all of us. This is simply a misrepresentation of our daily lives. Jay-Z says in one of his songs " I got 99 problems but a ----- aint one".
So, what about the majority of Blacks in America, who have 99 problems but being shot by the police aint one, being incarcerated aint one, living in the ghetto aint one etc?

As of 2006, about 6 million working age African-American adults had no medical insurance. Is the elimination of this reality not in the interest of the Black community? What about making healthcare more affordable?
Millions of working class Blacks in America pay taxes, is the reduction of these taxes not in the interest of the Black community?
Is improving the quality of public schools not in the interest of the Black community?
Blacks drive vehicles, is finding alternative sources of energy and fuel which would reduce the costs of operating a car and produce a healthier environment, not in the interest of the Black community?

Not only are all of the above in the interest of the Black community but these issues affect relatively far more Blacks in America. So, is Obama speaking like Malcolm X, no he is not. But is not speaking like Malcolm X tantamount to not advancing an agenda that is in the interest of the Black community, the answer is no.

Equatorial Guinea: Typical African Style Economics

When it comes to Africa, prosperity appears to be a guest not wanting to pay a visit.
Africa is probably the only continent to have either reversed or stagnated the living standards of her people in the last 25-30 years.
If you have ever wondered why this is the case, then a country by the name of Equatorial Guinea has an answer.

This tiny country, composed of a mainland portion plus five inhabited islands, is one of the smallest on the African continent, with a population of about 700,000 people. The economy of Equatorial Guinea (EG)is a perfect microcosm of the larger African Economy.

EG is the continent's third largest oil exporter and one of the world's top 30 oil producers. The country earned $4.3B from Oil revenue in 2007, giving the country one of the 60 top per capita incomes in the world of about $20,000. Yet, about 60% of her citizens live on less than $1 a day.
This type of economics, where wealth is created but fails to produce a decent standard of living and to eliminate chronic poverty, has become the defining condition of Africa. The problem is complex but, yet, simple. The economics that Africa practices is unsound.

In Africa, the common feature of her economies, is a government, immersed in corruption and crippled by bureaucracy, pretending to play the role of a business that creates jobs and produces goods and services adequately and efficiently on a sustained basis. Foreign governments and agencies have become accomplices in maintaining this poverty producing economics. Every year, foreign governments and agencies give billions of Dollars, in the form of loans and aid, directly to African governments for the alleged purpose of reducing poverty and spurring economic development. Yet, if we examine the economics practiced by these foreign governments and agencies in their countries, we find that the transfer of resources is from governments to their private sectors and not the other way around.
The economic principle is simple.

Any economy, which is structured in such a way, that the bulk of resources are transfered from a more effective and efficient user to a less effective and efficient user is bound to destroy wealth.
In Africa, governments have been shown to be horrible users of resources. That explains why an Equatorial Guinea exists throughout Africa.

Uhuru News attacks Obama