I laud the goals, aspirations and achievements of African Development Bank - ADB, and as a native African familiar with its challenges and mission, the Bank does not live up to most of charges and accolades.
Let's forget appearances at Wall Street, NYSE with attendant non-collateral value of gaveling the closing bell, attendance at Clinton Global Initiative; a bait for unsuspecting hungry fishes, and all the other fanfare that most African leaders seem to and want to adopt as the mantra and manifestation of their leadership and window to the world. The bottom line is that majority of African banks and finance institutions, are mere shadow of western and shady investors whose ultimate goal is to keep Africa the way it's and make sure that leadership of these institutions deliver nothing to the supposed immediate beneficiaries but ensure hefty returns on their marginal investments that often turn huge for them.
I am one that loathe calling institution such as the World Bank and its allied affiliates, a 'bank' when in the normal and typical sense they are not. The better name for them should be development agencies and or commissions. If it is a 'world bank', when was the last time anyone made a deposit there and what is the share price of holding a stock of the Bank? The World Bank is an institution created by western world to keep an eye on the economic behavior and conduct of developing nations. And in the world, the Bank still exists because of Africa. It is not the interest of those that want to checkmate development in Africa that the bank cease to exist. Visiting and using the Bank is like seeing a psychologist: They pray and want one well but really, they do not want one well. Most Asian and Latin American nations no longer use the bank for anything and shun its advances.
On ADB - African Development Bank. When dealing with money and financing, two most important questions are: What is the source of the money and what interest rates are charged likely borrowers. The 24 ADB non-regional members, have more say in what happens at the Bank than the regional 53 members. The partnerships and cooperation unit of the Bank mobilizes untied grant resources from the 24 non-regional member countries with which the institution also has bilateral partnership agreements to fund technical assistance, capacity building and feasibility studies based on grant in Africa. Note the key phrase: 'untied grant resources'. That is, money they do not need, so Africa becomes a welcoming receipent: More like 'dumping' with a view to making heavy gains.
The cost of money is a determinant in borrowing, as it's a factor that affects the level of economic development for a given people. The majority shareholders of ADB are western donors and rich institutions, while very few Africans institutions have exposure at the bank. When one sees the leadership of these institutions frequent London, New York and Tokyo, it's not such much to display their glaring accomplishments but to show up in praise of the donors and stretch arms for alms. The saying that 'he who pays the pier dictates the tones' is very evident in lending and borrowing.
With Africa having minimal financial exposure in such institution that is charged to champion its development, it is no wonder very little is seen and done to elevate the condition of a continent that gives the world a third of the raw materials needed to run industries. Whether one agrees or not, black/Africans are still the ones that borrow at the highest imaginable rate. Here is a glaring illustration. Throughout Africa, lending rate is the highest. Most African businesses borrow at a rate up to 40% and none of the borrowed funds are on an amortizing schedule. Instead, they are revolving credit on short term - less than 2 years. All banks in Africa are knee-jerk lenders because they do not control their destiny. And since African national governments are basically off-springs of their former colonial masters, it is not surprising that as independent nations they are mostly dependent nations.
For instance in Nigeria, interest rate is at 35%+. For a business needing $1m; interest only, it means such business must turn over 3x of the interest payment as revenue in order to sustain the ability to borrow. Meaning such business must produce gross receipts/revenue of $1,050,000. Because banks in Africa are mainly/primarily correspondent institutions that service loans for western donors, they are not part of the development effort. In US, one can borrow $1m at 6%-7%, for an annual interest payment of about $70,000. On the other hand, Africa pays back at 5x on the same loan amount. It does mean it's better for a western institution to loan money to Africa through 'shylock institutions' knowing that pay back is assured and guaranteed by the foreign reserve of the country. If members of G20 really want to assist Africa, they must deliberate on interest rate charged by banks in Africa and cap such at no more than 10%, or a multiplier of 1.25x of the annual percentage rate of a base/benchmark country, which in this case is US. And when an African country has shown remarkable growth rate over a 5-year period, its maximum borrowing rate should be indexed to LIBOR; London Inter Bank Offered Rate, with a multiplier not to exceed 1.5x. Until such happens, no amount of money doled out to Africa without effective reduction in the interest rate will change anything except of course, making and getting rich off the back of Africans. And as long as African-American neighborhoods are laboratories to test how to deal with Africans, Africans must never achieve because whatever they get is first tested on her cousins. Lending to African-American businesses and neighborhoods are high, and most African-Americans are not able to borrow because the credit rating is shot. However, if they have CD - Certificate of Deposit, just like when African nations have hefty foreign reserve, then they can borrow.
Investment returns in Africa is the highest in the world because lending rate is at cut throat. When a nation's borrowing is hinged to the amount of her foreign reserve, unwittingly such nation strives to please the credit rating agencies to remain able to borrow. Is it not the same Standard and Poors, Moody, and all the others, whose ratings gave us the current economic condition/crisis, that also rate Africa institutions? If we believe one is bad on one side but good on the other, then the notion of what is good for the goose and gander, is defeated. Rating is a not pure science and will never be when most of what happens in the world is seen along the line of race and geography.
Money and its attendant resource finance, is the preserve and exclusive right of any nation. As a legal tender, whose ultimate value is for the exchange of goods and services, and inducement for production, no nation must play second fiddle another. But when nations agree to undue devaluation of their currencies and unwittingly agree to sign on to some foreign institution dictating its ability to borrow and grow, then the old adage of 'he who keeps your money enjoys dictating how well the/your money serve you', becomes the order of the day. China is a good example of a country that achieved without succumbing to caprices and machinations of western institutions. African nations can do same but if they remain a pleasing bunch seeking favors and glory at the expense of their people, they will never achieve nor arrive.
Today's world respects defiance especially if one is matching in lock steps to deliver to her people. Democracy is not a panacea for economic development because if that is the case, India would have emerged before China. And isn't an irony that a communist country holds the highest amount of US treasury notes and presses on without pegging its currency to that of anyone and shuns the World Bank? There is a lesson for all in what China has done. But the value of such lesson can only manifest when a nation takes the attitude of 'we/me first' and remain unapologetic as its seeks ways and means to serve and deliver her people.
No one should celebrate the appearance of African leaders in the presence of western donors and institutions because they appear unable to make effective case to effect positive change in the lives of the continent. As long as African leaders keep looking outward for solutions, they will remain the doormat and stepping stone for all that want to take advantage of her. Since nations must never engage in activities that undermine her economic growth, how come African nations are so bent on pleasing and appeasing outsiders at the expense of her people?
No one accords a beggar due respect and Africa must quit appearing as 'beggar' and step up to the challenges by defying mostly conventional wisdoms taught her by her colonial masters. It all possible that an old can learn new lessons even at old age. As the oldest continent, why must Africans act like babies with running nose? Now you go figure.
Ejike Okpa II
Next Generation Fellow
Re: [Article Comment]Banking On Africa
Patcho posted on 10-05-2009, 04:10:07 AM
Excellent piece .... but Ejike you follow look those great nude babes .....
As an entrepreneur with a focus on Africa .... and a special bias for Nigeria, I see
and feel the real consequences of what you are talking about.
Ironically the solution lies with us too. Very true ..... Bad leadership brought us here.
And we have been too afraid to spill our blood to change things for the better. But if we don't
do just that we will keep moving in our current trajectory(and actually spill a lot more blood). Lousy spiral !!!
Look near home .... Ghana on balance is doing a lot better than us .... never mind that Nigerians
claim to drive their economy .... they spilled quite a bit of their own blood
Let's keep up this dialougue
O/C Group Operations
Re: [Article Comment]Banking On Africa
Patcho posted on 10-05-2009, 04:11:33 AM
You see what diversion can do: We both looked at some ladies and now we are cyber connected. 'Me I no say I no look but from looking, wetin go happen'? If you like to look, you need to get a book 'Black Ladies' by Uwe Ommer, and that will get your head spinning. That said.
I agree with you about Nigeria. Nigeria ought to and should do better. But we shy from the responsibility of doing so only to point who else is doing better.
I applaud what Ghana is doing but I will never take Ghana over Nigeria. The Nigeria that I knew back then until 1985 when I left, can pull itself from any condition. We just need a leader speak to the heart of the people. The leaders Nigeria has had speak at the people and sometimes to the people. But when we have a leader that will speak with the people, Nigerians will rise like no nation have ever risen. Nigeria is the highest collection of 'black' people in the world, and that ought to have some collateral value. That Nigeria is picked on is because some do not want her to realize her content knowing that it can do better. Nigerians must never dispair but must begin to hold themselves accountable without being prompted to do so by any outsider, PERIOD!
I believe that when Nigerians strap and brace their challenges relying and calling on a few good men and women, the latent heat would be unleashed to a level no one could have seen it coming. 'I love my country I no go lie', but for that love to have collateral value, we must look each other in the eye and be honest about our shortcomings and sincere about steps we want to take to arrive/achieve.
Nations go through periods of self doubt but once a few decide that enough is enough, the rest will fall in line. I am ready to join forces with good men and women ready to serve. All that is happening in Ghana can be surmised with less than 50% of what is happening in just Lagos. We let them enjoy because the big one is on its way, and Nigeria is that big one. We must not just wish it but go and make it happen.
I plan to visit Nigeria soon and will definitely look you up so that we continue this dialogue. 'Talk is cheap' they say, but if that is the case, Oprah Winfrey should not have so much money. So talk is not cheap if directed to awaken, instill and imbue a sense of direction and purpose, needed by any horse that has ever won a Derby: They ran on strength, sense of purpose, and never apologized for winning. Nigeria is that horse in a Derby, and she is about to run a race of her life, and will WIN.
ejike e okpa ii
Re: [Article Comment]Banking On Africa
Patcho posted on 10-05-2009, 04:13:27 AM
Well spoken !!!
Summary of Nigeria's problem is lack/failure of leadership. PERIOD !!!
I have lived and worked in all continents on this planet. And I know that the
average Nigerian is in the top global 5% wrt smarts and ingenuity.
And Nigerians are darn good followers too. See what happened when Buhari/Idiagbon
showed up ..... our people quickly alligned themselves and became fairly disciplined.
With all the imperfections of that Junta .... they showed us in very clear terms where most of our
real problems lie ..... WITHIN US.
Not many people realize this ..... but the good guys in naija are actually more in number ... they
just don't speak up or act up. They are afraid to speak up, lead, fight, die ...... As you can also figure
out .... it is more of the good guys that end up dead, maimed, impoverished. But all hope is not lost.
I do sense that people are getting sick of it all and are just waiting for a flashpoint. Even the bad guys
also sense that the game will be up shortly.
Personally I have invested too much time, effort, blood, sweat, and tears in this country to give up on it.
So I "WILL" myself up every day and I fight like crazy with my wits and available brawn. I could use some
"divine helpers" too.
I do encourage our peole ... like you .. in diaspora, to come take a peek every now and then. I am certain
that you guys are a major piece of the puzzle. But prepare yourself .... it won't be a picnic. But therein
lies the opportunity too.
In this unannounced war, ... sitting on the fence is really not an option. The tragedy of sitting on the fence is
that you won't even know whose bullet took you out. And the enemy is largely within us.
relying and calling on a few good men and women
Yes ... a few good men & women must lead the charge in there own personal and professional spheres
for us to contemplate a better tomorrow for our dear Nigeria.
Right now I describe us as Forty Nine & still quite foolish. Mercifully it is not too late to salvage us if we
all act now
The dialogue continues ....
Yr Bros Always
O/C Group Operations
Re: [Article Comment]Banking On Africa
Patcho posted on 10-05-2009, 10:18:23 AM
You make the most sense I have read in cyber from someone who got hooked because of some ladies. Maybe we need to do that often.
Jokes aside, we need to salvage our nation and beloved country. We shall keep the flag up and fly it as there is no where else but home.
Throughout the world, leadership keep reshaping and surprising themselves but Nigeria remain passive and aloof. It is time something in the direction of positive difference happened. The folks that run and lead the countries Nigerians like to troop to, are no better in their brain content and intellectual prowess. We have become a people that when we go to someone's house and we like what they have done and or doing, instead of going home to try some of that, we seek and ask to be in the 'boy's quarters', and remain there.
Nigerians have attended all schools in the world, worked in all major corporations in the world, traveled more than most Africans, and yet when we act, we appear as if we just showed up. How can the world's largest concentration of 'black' folks be so malfeasant and dysfunctional to the extent we are ridiculed and laughed at? It is an indirect insult to 'blacks' all over the world: That you all cannot get it together.
Whether true or not, Nigeria needs to champion the revival of the black race because it has the numbers and content to make it happen. Ghana and or South Africa will never be like Nigeria; the attention these countries get is just to make Nigeria look less than. That said, we must never relent and must vow to fish out our dear sons and daughters where ever they are to be ready for the new Nigeria. And that new Nigeria must manifest in our life time.
I was 25 when I left and had the golden opportunity to attend university in Nigeria. And that education I must confess provided the solid foundation that keep propelling me. All other schools I attended since coming to US, I must say was in addition and never the 'eureka' moment. Like my late dad thought me, 'one-plus-one is two; any where in the world. The different in the knowledge and outcome is the attitude attached to the knowledge and the pride hoisting and using it to solve problems. We Nigerians know that, so what is holding the god from biting?
You have renewed my confidence in the home based Nigerian, and I hope we continue to challenge, provoke and stimulate our minds for the task ahead. East or West Home is the best has it benefits. Nigeria is the head of the black race and must honor and up hold that position without fear or favor. We just join in for the horse/human race, and must run on strength, style and unconditional and unapologetic sense of purpose to WIN.
If you are looking for a foot soldier, your home boy is in.
ejike e okpa ii