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- We released our latest press release, "NGOs Undermining African Countries," that highlights the many reasons NGOs are a detriment to the development of African nations. Contact Eron Henry at ehenry@unleashafricantrade.com for more information.
- This month we launched our Unleashed Online Book Tour and John I. Akhile Sr. wrote a guest post, which Naija Economics featured on their blog. Follow our tour on Facebook and Twitter and participate using #UnleashedBookTour.
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WATCH: This video aligns with Unleash Africa's continuing focus on the governance issue at the center of Africa's poverty. Corruption manifests itself in a myriad of ways in Nigeria, which is arguably one of the most corrupt countries on earth. The short documentary looks at various mechanisms that corrupt officials, businesses, and government officials employ to siphon the people's resources.
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Statement on the Panama Papers
by John I. Akhile, Sr.
President, African Trade Group, LLC and Author of Unleashed: A New Paradigm of African Trade
Economic Terrorism of Corrupt Leaders is Evident in the Panama Papers
African countries are disproportionately represented in the roll-call of corrupt leaders around the world. It is not the same situation as that posed by wealthy Westerners seeking a haven to avoid taxes on income they have earned by legitimate means. Africans in the Panama Papers are leaders who have appropriated income from their people’s treasury. Unfortunately, the people from whom they take the money do not earn an average of $25,000 per year. Average per capita income for most of Africa is between $1,500 and $3,000 per year. A vast majority of Africans are very poor people, subsisting on a meagre 60 cents per day. Therefore, the impact of corruption, such as revealed by the Panama Papers, on their welfare and well-being, by diversion of resources needed to redress their condition, is gravely injurious. People die, when public officials cart away their resources instead of building pipe-borne water systems, healthcare facilities, schools, etc., plain and simple. Corruption, in poor countries kills and Africa has the highest percentage of any region of the poor nations of the world. African leaders who are part of the sordid affair of the Panama Papers are murderers, no less than violent criminals and terrorists.
The solution is not too complicated in a world ruled by post 9-11 strictures on capital migration and financial support for international terrorism. Perpetrators of corruption are also terroristic but of a different ilk. They are orchestrators of economic terrorism on their people. The funds that African leaders implicated in the Panama Papers deny their people exacerbate already gruesome conditions for the lowest rung of the economic spectrum. It is the root-cause of the symptoms of society’s poverty such as high infant mortality rates, childbirth deaths, malnourishment and attendant cerebral defects, and violent strife, etc. The silent price of the Panama Papers can be found in Nigeria, where Boko Haram has killed almost 20,000 and displaced hundreds of thousands from their homes and communities. Multilateral financial institutions like the IMF and the World Bank should be given all the tools to monitor and expose illicit flows of capital from African countries to financial institutions around the world. Safe haven for illicit capital flows encourages perpetrators.
An outlying lesson from the Panama Papers is that corruption is not unique to poor countries. In fact the vast number of westerners exposed in the documents poses a challenge to advanced countries to do more to restrain financial institutions and businesses in the nations and compel them to reject illicit fund flows from African countries. It is also important that the perpetrators are prosecuted, as a deterrent to others, in order to ensure that the price of being caught magnifies the risk to the perpetrators and also that the poor in African countries can experience an environment where people who should be working to improve their lot are actually doing so instead of creating news like the world has been subjected to by revelations in the Panama Papers.
John I. Akhile, Sr. CEO/President of African Trade Group, author of Unleashed: A New Paradigm of African Trade with the World. www.unleashafricantrade.com; www.africantradegroup.net
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Overcoming Historical Divisions
by Eron Henry
A three-month long conference took place in Berlin, Germany, which had a significant effect on the future of Africa. It started on November 15, 1884, and ended on February 26, 1885. Fourteen powers were represented: Portugal, Germany, Great Britain, France, Spain, Netherlands, Italy, Austria-Hungary, Belgium, Denmark, Russia, Sweden-Norway, Turkey, and the USA. The conference provided a forum for the discussion of how to regulate the colonization of Africa, establishing boundaries for spheres of interest of the participating countries.
Two years before the Berlin meetings, 80 percent of Africa was under the control of local traditional rulers. The remainder, consisting mostly of the coastal areas, was under the control of Britain, France, Portugal, Spain, and the Ottoman Turks.
Europe sought new commerce to facilitate its development in the post-slave trade era and Africa had an abundance of material resources to supply the vast potential market for Europeans. The scramble for Africa was well under way.
Existing boundaries in Africa were largely ignored; established kingdoms were divided; ethnic arrangements were overlooked and cultural diversity ignored. The so-called “Principle of Effective Occupation” was agreed whereby, by the mere act of occupying the land, foreign powers were accorded the “right” to control and govern the people who resided in areas of the continent not yet claimed by a European power.
The conference handed a new map to Africa and opened the way for the external appropriation of the African continent’s great wealth. The trophies that came under new ownership included gold, diamond, platinum, copper, iron ore, tin, lead, manganese, zinc, uranium, rubber, timber, palm oil, sugarcane, cotton, tea, and coffee. The capture of elephants for the trade in ivory began in earnest. After the conference ended, negotiations continued and, by 1914, the fragmentation of the African continent was complete.
The foundation was laid for the undermining of social harmony. Cultural stratification was strengthened by aligning the local elite with metropolitan interests in Europe. Many in African communities realized they were in danger of losing material security and social power. Thus, revolutions and wars for independence eventually ensued.
The foundation was laid for the strengthening of unjust rule on the continent. To maintain dominance, foreign powers helped to install undemocratic leaders and established repressive regimes that served the interests of these foreign powers. Millions of local people who were not compliant were eliminated. Often, these foreign powers played one group off against the other, such as Hutu against Tutsi in Rwanda and Burundi, and the largely Muslim north against the largely Christian south in Nigeria.
This legacy continues to undermine many African countries. Since their countries’ political independence, African leaders have yet to transcend the history of divisions and conflicts bequeathed by Europe, with the possible exception of Botswana and Rwanda over the past decade and a half or so.
It is true that what occurs in Africa is not unique. Europe, itself, suffered for centuries under similar conditions of bitter rivalry turning into wars, with boundaries and alliances changing constantly. The most recent example was the barbarism that followed the breakup of Yugoslavia in the 1990s with bloodthirsty conflicts between Serbs, Croats and Kosovars. But Europe has more or less settled down from its barbaric past and has largely recovered from its heinous wars that continued into the 20th century.
The inability to unite for nation building continues to be the bane of nations in Africa. Tribal and religious rivalries turn into outright bloodshed and war. It is virtually impossible for a nation to build a strong economy and social sector under such conditions.
It is time for African countries to shake off the European legacy of war and corruption that they inherited and move forward. Europe moved on, so should they.
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Contrary to Popular Belief, Population Explosion in Africa Can Work to Our Advantage
by Omono Juliana Eremionkhale
During the 2014 World Economic Forum (WEF) in Davos, Switzerland, Nigerian businessman, Aliko Dangote said; “Africa’s risks are mainly perceived and not real. Unfortunately for us in Africa we are not really very good at telling our own story. But things are changing and people are beginning to understand that things are going very, very well.” Although he was referencing economic growth, same ideology can be applied to other aspects of life on the continent, more specifically, population growth.
There are no ways to even begin to quantify the great potentials the continent of Africa has – despite being labelled a third world continent by many outsiders. While we may not even see the special quality about our numbers, it is high time we started recognizing it within ourselves, as it is our duty to identify and exploit this gift.
In August 2014, the United Nations said that due to a seismic change in demographic trends, the future of humanity is mostly African. According to the UN, it is projected that 1.8 billion babies will be born in Africa over the next 35 years and the total African population will nearly quadruple to about 4.2 billion by the end of the century. The report from the UN even specifies Nigeria as being a major contributor to this growth. By 2050, Nigeria will account for one-tenth of all births in the world and its total population will reach nearly a billion by the end of the century.
However, the UN goes further to state that with this expected population growth comes the dearth of all attempts by countries on the continent to ensure economic growth for their people. Is it possible that the United Nation’s fears of the negative effects of population growth in Africa is only perceived and not real? It is often easier to be distracted by the diseases and poverty that currently confronts and ravages our poor in many of the continent’s countries. At the same time, what if we decide to make use of our numbers as a way of tackling our prevailing problems?
Population explosion as it were, has been referred to as having catastrophic ramifications for people all over the world. Some experts have even recommended reduction in world population – whether or not these experts have a way of achieving this, is a subject for debate. However, it is clear that majority of the world’s population only see the spread of diseases and climate change effects when confronted with population growth. But is this the only acceptable narrative on Africa’s ever growing population?
Definitely not, history tells us that population growth in countries like the United Kingdom in the 19th century, made the industrial revolution possible. Why can’t the same rule apply to Africa even now? Is it because the times are different now? Well, that school of thought seems not to matter anyway, due to the fact that Africa is in dire need of an industrial revolution. Like many economic experts have said, operating the way we currently do economically, is a sure way to stunt our productivity.
In fact, it seems some countries within the continent are already taking matters into their hands, bringing about possibilities when there seems to be a daunting challenge of unemployment and unutilized capabilities. If you have ever heard of the Jua Kali (informal workers) in Kenya, you would know that these men and women contribute a lot to boosting the country’s economy. As Open Eco Source refers to those in East Africa’s Jua Kali sector, these "engineers without borders" are skilled in all things mechanical. These workers work tirelessly to repair and transform weather beaten motorcycles, cars, carts, utensils, and all manner of metal objects into things of worth – something that has greatly contributed to East Africa’s economic growth. The Jua Kali sector is poised to become a major source of foreign exchange for East Africa.
If we do decide to fully industrialize our continent to ensure our economic prosperity, our numbers will definitely come in handy, as we have many people strong enough and willing to engage in various tasks to build, sustain and control our own resources and products when we trade with other continents. If this is not a sign of progress, I do not know what is. As British economic expert, Robert Whelan once wrote in the New York Times, economic prosperity and population growth often go hand in hand. If there is indeed a reduction in Africa’s population, the continent will not be able to maintain an autonomous economic society, capable of solving its economic challenges.
Population explosion is in no way a disadvantage to us Africans, the only question is when do we realize that and start making use of this gift we have? Whether we like it or not, our strength lies not only in natural resources but also in numbers. It is possible that we start drawing up strategies to follow the examples of other countries like China who have taken advantage of their population growth to institute a production and trade mechanism that works for them.
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Omono Juliana Eremionkhale is a Nigerian avid reader and writer. She has written for several platforms including Ventures Africa and Edufrica. She currently writes for Premium Times. Her interests are Business, Innovation, and Policy on the continent. You can follow her on Twitter @omonowrites.
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No Pain, No Gain
Reforming Nigeria's Economy
by John I. Akhile Sr.
Nigeria is a country of immense potential and possibilities. With a population of 170+ million, it is the largest conglomeration of black people on the planet. Nigeria has ample human and material resources, emphasis on human, to become one of the top 15 economies in the world in the next twenty years. To achieve it, Nigeria’s economic output (GDP) will need to exceed 1.5 trillion dollars. The fifteenth economy is Spain, at $1.2 trillion. Can it happen? The answer is an unequivocal yes! But will it happen? That is the billion dollar poser, the great unknown. The people who have suffered for more than fifty years under the strain of an unfair, corrupt, visionless, and clueless political and military cabal deserve it. The continent of Africa deserves it, and the world needs it. When Nigeria rises, the entire West coast of the continent will rise. The economic reverberations will spread a rising tide phenomenon far and wide to other regions of the continent.
The history of Nigeria’s financial and political management is interesting in many respects. The most intriguing aspect is the degree of underachievement. Put another way, the degree to which Nigeria, as a country, under the ignominious “shepherdship” of many successive leaders and governments, has done very little with very much is the most interesting conundrum. Between what Nigeria should be, can be, and the reality of her existence as a political arrangement lies a Pacific Ocean-like yawning gulf. The majority of Nigerians believe their country is one of the more successful and prosperous in the world. There are extreme delusional persons who go to the extent of comparing Nigeria to first world nations, like the United States, Britain, and others. It has no basis in reality other than ignorance cloaked in misguided patriotism. The best way to make these comparisons is by using tangible, measurable data. A tale of the tape if you will, that compares political arrangements by what they have done with seed, soil, and sunshine, the basic building blocks of every nation and people.
Comparing Apples to Apples: Nigeria and the Asian Tigers
In 1960, South Korea’s per capita GDP was less than that of Nigeria. Singapore’s was a few hundred dollars more. In 2015, South Korea’s GDP is $1.3 trillion dollars; three times the size of Nigeria’s and per-capita GDP is $30,000.00, which is about ten times the size of Nigeria’s $3,000.00. Singapore’s GDP, a city-state of fewer than six million people, is $300 billion dollars, more than half the size of Nigeria’s and her per-capita income is $55,000.00 or about 19 times the size of Nigeria’s. The Taiwanese, South Koreans, and Singaporeans who engineered the economic miracle of their nations, were not rubbed with a special anointing or magic potion that turned them into super humans. They were flesh and blood like their Nigerian counterparts. However, what the countries’ leaders of the 1960s created, was an economic success story of historic proportions. Their success has been a rising tide. It inspired China and Vietnam, and now Bangladesh and India are following in their footsteps. Their people are better for it because hundreds of millions were elevated from poverty and want. The world is better for it because global GDP, the total goods, and services produced in the world has increased and more people have been able to enjoy a better lifestyle because of the products of Asian nations.
The challenges facing Nigeria today represents a vast field of course correction opportunities. Now is the time for Nigeria to rise up and work her way out of the abyss of poor management, bad cultural habits, and boneheaded decisions. It is high time to get about doing the work. It is a mockery of due process that the President of the country is bogged down in the minutia of chasing crooks who have stolen the people’s resources. While he is ratcheted down in the pig-pen of apprehending corrupt former officials, who is developing the strategy to feed, clothe, house, and give hope to 170+ millions of Nigerians? More than sixty percent of whom survive on a few naira per day. That is the real job at hand. The greatest challenge facing Nigeria is not exacting revenge on people who broke the law. That responsibility should be left to law enforcement and the judiciary system. The task at hand is fashioning an economic engine that will churn out more than enough income, as a nation, to care for the people of Nigeria.
Fig 2 - The chaotic fruits of corruption and poverty.
The Challenges
Caring for Nigerians is a responsibility that has largely been set aside since independence, while generations of irresponsible principals focused all of their attention on creating a “demi-god” illusion in the minds of voters, in order to garner support and adulation. Unbeknownst to the “adorers” the resources that created the “demi-god complex” was theirs. To care for the welfare of the people of Nigeria, the leaders need to alter her course on numerous fronts. Some of it is cultural but the most critical change is a new economic strategy based on Export-Oriented Industrialization (EOI). It is the only mechanism for unleashing the potential of her people. In full bloom, it will create tens of millions of jobs and diversify the economy from primary goods to finished goods export, creating multiple streams of hard currency income. Fortunately, the cupboard is hardly bare because there is much to work with in Nigeria.
Leaders of successful nations concentrate on the task of solving the problems of their constituents. We see the examples of Lee Kuan Yew of Singapore and Park Chung Hee of South Korea. Contemporaneously, we are witnesses to the transformation of Rwanda under Paul Kagame. Nigeria, likewise, has to adopt a governance structure that does not allow abuse of public resources without immediate and exhaustive application of relevant laws to redress the breach of ethics. In order for Nigerian leaders to focus on the task for which they were elected and appointed, they have to demonstrate overt deference to the laws of the country they are sworn to serve.
The challenges on the economic front are many but there is one tap root. It is found in Import-Substitution Industrialization (ISI), which is the economic system that Nigeria has executed since independence. In conjunction with dependence on commodity exports, ISI is a death knell for the economic prospects of a nation. Nigeria is one of a long list of countries where ISI policy has failed. The list includes India (see Fig. 3), virtually every South American country, and most African countries. That is why Japan and subsequent Asian Tiger copycats chose the opposite route of Export Oriented Industrialization. In modern human history, beginning with European nations, only export-oriented development has led to successful economies. It is a fact that the original Asian-Tiger economies have proven conclusively. It is incumbent on Nigeria and African countries to learn from the lesson of history.
Fig 3 - Example of the Failure of Import-Substitution Industrialization (ISI) Strategy
Colonial Rule established two historical precedents. It was the first Public-Private Partnership and the first export-oriented development initiative on a grand scale. Colonial rule evolved as a direct consequence of export-oriented development. European entrepreneurs, who were in search of markets, created the dual institutions of slavery and colonialism which provided labor, raw materials, and a market for their services and manufactures. European privateers with the support of states, using chartered companies, coupled with Dutch invention of the limited liability company, were able to (group) fund ventures that brought great economic benefits to their nations. They not only discovered markets for European goods, they also found sources of products—some of which were unique—that became the basis of the wealth of Western civilization including; sugarcane, tea, opium (imported from India and sold to Chinese), cotton, gold, rubber, cocoa beans, etc. The lucrative two-way trade between European Empires and their colonies on one hand, and the triangular trade on the other, are the foundation of the business activities that led to the economic hegemony and supremacy of Western nations. It had gone unchallenged until Japan and the Asian Tigers unleashed their version of the chartered companies, the Sogo Shoshas of Japan, and Chaebols of South Korea, on Western markets and consumers.
Headquarters of major sōgō shōsha: Mitsubishi (Marunouchi, Tokyo), Mitsui (Otemachi, Tokyo), Itochu (Aoyama, Tokyo), and Sumitomo (Harumi, Tokyo).
Governance is a crucial element in the challenges facing Nigeria. Corruption is a large part of the governance challenges. However, the biggest governance challenge is competence. Nigerians, as a people, are very bright and can learn. However, they are operating a dysfunctional paradigm that has been constructed on a morally bankrupt foundation. It is an edifice that is economically cannibalistic and socially irresponsible. It is highlighted by illegal rent-seeking toll gates at every crucial point of service dispersal; civil service, police checkpoints, ports of entry, schools, hospitals, etc., and everywhere citizens must visit to gain access to services. It falls on leaders to set a proper standard for the functioning of the civil service and other apparatus of society and government. Corruption can be destroyed within three years and other inefficiencies in the infrastructure of government can be eradicated in two years, using a system of checks, balances and stifling human and electronic oversight. If Nigerians are educated about the code of conduct in any arena, they will adapt and excel.
The Opportunities
170+ million Nigerians is a large workforce opportunity for policy makers. In order to overcome the economic challenges facing the country, Nigeria needs to unleash its vast natural resource—it’s people. Above all else, human capital is Nigeria’s most readily available, abundant resource. It is the primary comparative/competitive advantage of Nigeria. It is Nigerians; by starting businesses, creating job opportunities, working in factories that produce/process goods, discovering new ways to meet the needs of their fellow citizens; who will pull their country up by its bootstraps. The government's role is to create an enabling environment for it to happen. Export-Oriented Industrialization is exactly suitable for transforming Nigeria’s economy, society, and future.
Transforming Nigeria’s economy requires a multipronged, multifaceted approach. The first step is to stabilize and reform Import-Substitution Industrialization (ISI) Strategy that she has implemented since independence. Due to flaws of the strategy, business concerns in manufacturing and processing have an insatiable appetite for hard currency to import semi-assembled/processed products as raw materials. It is caused by absence of intermediate industries to produce products (raw materials) ISI industries need in their production. It is not the fault of businesses because they were set up under auspices of government policy of the day.
The rational choice is to reform their (ISI industries) existence without throwing away the baby with the dirty water. The reform should start by categorizing existing companies into sections. The first tier is companies that are vital to the economy. They make things that are important to the supply chain of consumer products and have a large employment base. Tier one companies should be given access to hard currency and given a timeline for sourcing intermediate products from within the country. For instance, the timeline should be ten years for firms that have been operating for less than five years and five years for firms that have been operating for more than five years. The second tier is companies that produce/process non-essentials to the economy but have a large employment base. Luxury goods manufacturers and beverage companies are prime examples in this category. They should be allowed five years to source their raw materials from local sources if they have been in operation for less than five years and two and a half years (2.5 years) if they have been operating for longer than five years. The third tier is companies that produce goods that are not critical to the economy and do not have a large employment base. The companies in this group should be given 2 years to seek a source of hard currency that is independent of official sources.
Nigeria’s government has a duty to the people to approach the current challenges rationally. While the foreign income generating capacity of Nigeria is lower than it has been in recent history, Nigeria maintains enormous potential which global markets recognize and will honor. Provided the government adopts a rational and coherent strategy. It should and cannot be an adversarial relationship but one based on mutual understanding. By categorizing companies and stipulating timelines for weaning companies off “mama’s (the Nigerian government) breast-feeding milk," the government will allow the business sector to own its own future by the decisions they make today. Some companies may choose to exit the stage rather than make downstream investments, which is fine because others will step into their shoes. One man’s meat is always another man’s poison. Others will see the rationale for starting new ventures to produce their primary raw materials in the local market. They are the true partners in the country’s future. Other true-partner companies may invest in export industries that will enable them to import the products they need without resorting to official sources of hard currency. That is also a satisfactory outcome. The goal should be to eliminate dependency, on the part of manufacturers and processors, on the government to provide hard currency for their raw material imports. A business that willingly relegates its survival to the business decision of a third party (government policy) is one that will not long endure.
Expanding the Accordion of Hard Currency Income for Nigeria
There are several avenues available to Nigeria for expanding as well as diversifying hard currency earnings. The South Korean model used Korean people to create businesses that made and exported goods for sale in rich countries. It is the foundation of Samsung and other South Korean Chaebols, which were the vanguard of South Korea’s export prowess. The South Korean export oriented Industrialization model is based on South Korean “quasi-chartered” companies. The model replicated and reversed the exploits of Western chartered companies in Asia in the 16th to the 20th centuries by conquering Western markets. It is one of the reasons why South Korean nationals own most of South Korea’s economy. The great, albeit controversial, visionary spearhead of the transformation of South Korea, is the late, former General and President Park Chung Hee. President Park was a leader who envisioned a country able to feed, clothe, and defend herself when he took power by a military putsch in 1961, when his country was on the brink of devolving into chaos under Snygman Rhee’s, political and economic mismanagement. The transition to Export-Oriented Industrialization (EOI), transformation of rural South Korea through Saemaul Undong (new village) movement and development of Pohang Iron and Steel Works, now POSCO, took place in his watch. It is incontestable that the South Korea that the world knows today, has come about as a result of the seeds that were planted during his tenure. Nigeria has the human and material resources to implement the South Korean model of Export-Oriented Industrialization Strategy.
Singapore used a different paradigm of Export-Oriented Industrialization strategy. Unlike South Korea’s 20+ million, the population of Singapore was about 3.2 million. The entrepreneurial sector was weak and had no champion companies. In South Korea, the culture of Chaebols was already a part of South Korean commerce. Singapore also had one other challenge it faced that other Asian Tiger economies of the era did not face. It was surrounded by powerful political enemies in Indonesia and Malaysia, both of which had the motive and capacity to overrun Singapore. Neither country wanted any commercial relationship with the upstart country. Singapore was compelled to pattern its strategy like that of Israel, another country surrounded by sworn enemies. Like Israel, she decided to develop trade relationships with non-neighboring countries; Japan and Western countries. It adopted a style of EOI that emphasized Singapore’s labor resources. Under the wise counsel of Dutch economist Albert Winsemius, Singapore chose to entice companies to Singapore with a matrix of benefits including pacified labor, ready to occupy industrial shells, affordable mass transit, housing and investment in the companies, etc. The net result of the success of the strategy is that Singapore's economy grew exponentially and the companies absorbed excess Singaporean labor, eliminating high unemployment. In time, Singapore has grown to become one of the most prolific exporting nations in the world.
Venerable nation-builder, the late Maestro of Singapore, Lee Kuan Yew, was the main pitchman. Their major pitch was to US high-tech companies such as Hewlett-Packard, GE, and Texas Instruments, to mention a few. After dogged effort on their part, it started to work. After Texas Instruments and HP took the plunge, the bluest of blue-chip companies, General Electric (GE), decided to locate a plant in Singapore. GE is now one of the largest employers in Singapore. Winsemius also advised Singapore to attract Oil companies to refine crude for distribution in Asia in Singapore. As a result, Singapore has become a major exporter of derivative petrochemical products, although Singapore is not a significant producer of crude oil. Singapore’s investments in multinational companies and in local and international entrepreneurs that were enticed to invest in export ventures has created one of the largest sovereign wealth funds in the world. Not everyone was a success but an overwhelming number of them were successful and have made the investment strategy a huge win for Singapore. The industrial estate created to house the companies has metamorphosed into one of the world’s largest and most successful real estate development ventures. Originally named Jurong Industrial Estate, it is now Jurong, a mix-use, live work and play environment housing 21st-century technological marvels in building architecture, Biotechnology, and many other cutting-edge fields. Singapore has also added financial services and tourism to the sweet sauce of its economic strategy. The economy is diversified, resilient and showing no signs of slowing down. Nigeria can also adopt this paradigm and has more resources to execute it than Singapore when it started.
One of the features of an export strategy that was not available to Asian Tigers is conversion industries. Asian Tiger economies had no significant raw materials that they were exporting to the world market at the time of their economic metamorphosis. That is, fortunately, not the case for Nigeria and most African countries. Every raw material produced in Nigeria is a candidate for conversion industries. For instance, Nigeria can implement a concerted plan to convert a significant portion of its crude oil into finished goods and export gasoline and derivative petrochemical products. The road will be difficult but the skeletal structure of possibilities is a reality. It may include expanding both exploration opportunities and refining capacity. There are markets for crude oil derivatives in African countries and in the West. One model for entering Western markets is CITGO. Venezuela acquired Citgo during the tenure of the late Hugo Chavez. See profile. Using the Venezuelan model, Nigeria, solely or in partnership with other crude exporting African countries should endeavor to enter the processing and of crude petroleum derivative products in Western markets.
Citgo Petroleum Corporation (or Citgo) is an American refiner, transporter, and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. The company is owned by PDV America, Inc., an indirect wholly owned subsidiary of Petróleos de Venezuela, S.A., the national oil company of Venezuela. 2013 revenue for the company is 32 billion dollars. Citgo owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas, and Illinois. It also operates the sixth-largest U.S. retail gasoline chain through about 5,900 branded stations, according to the Arlington, Virginia-based National Association of Convenience Stores. The company has its headquarters in the Energy Corridor of Houston, Texas.
In conversion industries, the objective is to convert raw materials that are exported in raw material form into finished goods and exporting the finished product.
The final piece of an EOI for Nigeria is the export of services and tourism. Together the two areas are prime opportunities for the country. Services include call centers, data processing, billing services, accounting, etc., for companies in rich countries who are keen to reduce their costs. The range of potential export services is vast. Tourism is an area of low-hanging fruit for Nigeria. It requires a purposeful approach and plan that will involve the business community and society at large. Tourism opportunities include sporting and other special events, conventions, and creating world-class attractions for tourist visitors.
In conclusion, Nigeria can transform her economy by the following steps. 1. Create a transition timeline for ISI industries to be weaned from dependence to independence. The timeline would give the companies a set time and date when they have to source major raw materials locally and in local currency or source their own hard currency to procure foreign raw materials. The goal of a transition is to ensure, without equivocation, that companies that are operating the ISI paradigm invest in either export industries so they can earn their own hard currency or in downstream industries that produce the raw materials they require for production. (2) Create a five-step Export-Oriented Industrialization Strategy that will put Made-in-Nigeria on the world map. It will involve: (a) attracting companies to locate industries in the country that will produce goods for export to their international markets and customers; (b) embracing an aggressive export oriented strategy involving businesses and entrepreneurs manufacturing/processing goods for export to international markets for payment in convertible currency; (c) creating conversion industries that will convert any and every significant raw material available in Nigeria into finished goods for export to international markets; (d) unleashing Nigeria’s entrepreneurial capacity to create call-center and data services for companies in rich countries; and (e) creating a tourism product that will compel millions of visitors to visit Nigeria every year within ten years.
Implementing this strategy will diversify the economy and expand hard currency income for the country and begin to elevate Nigeria into a status, which, upon full bloom, will find the country in the position of one of the top 15 economies in the world. In the immortal words of General, later, Field Marshal Bernard Law “Monty” Montgomery, 1st Viscount of Alamein, before the battle of El Alamein against the then-undefeated "Dessert Fox", Field Marshal Erwin Rommel and his Africa Corps in WWII; “It can be done. It must be done.”
1 http://www.referenceforbusiness.com/encyclopedia/Sel-Str/Sogo-Shosha.html
2 http://www.sjsu.edu/faculty/watkins/chaebol.htm
3 http://eresources.nlb.gov.sg/history/events/7f1bd547-bb9a-477e-9d14-b733f428a480
4 https://www.afpm.org/uploadedFiles/Content/Our_Members/What_We_Make/Petrochemicals/petrochemical-infographic.pdf
5 http://www.bloomberg.com/news/articles/2014-08-06/venezuela-says-it-wants-10-billion-for-citgo-oil-assets
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John I. Akhile Sr. is the author of two books: Compensatory Trade Strategy: How to Fund Import-Export Trade and Industrial Projects When Hard Currency is in Short Supply and now Unleashed: A New Paradigm of African Trade with the World. He is also the President of African Trade Group LLC., a U.S. based trading company.
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Corruption: Not Just Africa's Problem
by Gayle Cottrill
Arguably the biggest detriment and the most important thing that is holding back the success of every African nation is the presence of corruption. Being involved with the promotion of Unleashed: A New Paradigm of African Trade with the World has made me more and more aware with every story I read and video I watch regarding it. We often complain about corruption in our government here in the United States, and with the release of the Panama Papers, corruption is a very real problem worldwide. However, if we, here in the U.S., protested a law change or a bill in Congress, we would not feel threatened by a military presence, ready to open fire, like what happens and has happened in many African uprisings when the people are emboldened enough to rise up and say enough is enough.
 I used to think that it was the responsibility of the West to fix Africa’s problems. After all, aren’t the Western nations to blame for divvying up the continent and creating cultural divides? Having learned much these past couple years, I do agree with Unleashed in that the way to success for each African nation requires the nations themselves to initiate the changes needed to become prosperous nations of the world. But I still feel those of us removed from Africa can still help.
I’ve wondered many times over how government officials can get away with such blatant corrupt acts that reduce the standard of living of their citizens. How can they even live with themselves? I’ve wondered why, when we know it’s happening, it still continues. Why, when there are journalists reporting on it that the pressure is not raised to the highest level on those named for their atrocious governance, or lack thereof. And the sad truth of it, is that it is often a death wish to speak out against such entrenched corruption.
Unleashed spends an entire chapter on corruption alone, amidst its detailed outline of the route to prosperity every African nation can and should take. And while I agree with the book’s message that the nations themselves are responsible for making the changes necessary to boost their economies, the corruption needs to be stopped, and that may require help from the outside. The research of the Panama Papers took the cooperation of over 400 journalists and the news of the leak was initially broadcast in over 100 media outlets. The pressure has now been put on those in the wrong, and they must react. Couldn’t the same thing happen in Africa?
African nations need to fix their economies and infrastructure, but when their watchdogs are threatened and silenced, in our hyper-connected world, maybe it requires the help of watchdogs elsewhere to push those in power and prospering at their citizens’ expense to put an end to their corrupt habits. A healthy and prosperous Africa means a healthier and more prosperous world for us all.
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Gayle Cottrill graduated from the University of Wisconsin-Madison with a degree in Journalism and Strategic Communication. She is the Editor of the Unleash Africa newsletter and is also the Marketing Coordinator for the promotion of Unleashed: A New Paradigm of African Trade with the World.
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Competitiveness in African Countries
Becoming a competitive society is not an immediate development. Rather, it is cultivated through a “process” of acquiring the traits, by commitment to the ideal of becoming a better, more competitive society. When all of Society is set on a course to become competitive then the momentum of the “process” kicks-in to supply “kinetic” subconscious energy that propels everything and everyone in society towards the indefinable but tangible destination. The “kinetic” energy is borne of the activities in the “process.” It includes aggressive, saturating, dissemination of information to the public. The fulcrum of the process is a total review of all the functions of the public sector in order to learn the critical control points of service delivery and to create timelines for processing duties in every department. Public lectures and seminars for all levels of society. Retraining of public sector employees and designing an exhaustive oversight process. One of the most important factors in the “process” is to install a network of undetectable electronic monitors at critical points of public service dispersal in order to monitor the work environment and to catch perpetrators in the act of violating public policy. The “process” will expose unproductive staff members, people who work diligently at doing nothing to earn their wages, in the public sector and give them an opportunity to improve or to lose their place. The “process” will also engage all of society in the journey of reengineering society and culture.
Fig. 1 - Corruption hinders society's competitiveness.
One of the more common themes about African development challenges is inherent lack of competitiveness. Whether it is in dealings with the public sector including the court and justice system, housing for workers, importing goods into the countries, moving goods from point to point within the countries; everything takes longer and cost more than in other comparable environments. For example, cost of housing in Kinshasa, D.R Congo is comparable to some European markets. The problem is that D.R Congo is one of the poorest countries in the world. It is the sort of anomaly that emanates from a dysfunctional clueless policy regime.
There are four crucial ingredients to attracting companies to a country or environment. Coincidentally, they form the basis of creating a competitive environment for countries as well. The first and perhaps most important is affordable housing for workers. The second is mass transit network that is affordable and encompasses the entire sphere of work and living environment in the area. In order words, a mass transit system that effortlessly brings workers to work and returns them home at a price they can readily afford without stressing their ability to cater for the basic necessities of life, such as food, clothing and housing. The third is a functioning professional public sector that processes its tasks expeditiously. Two important elements of public sector apparatus are semper fidelis law enforcement and judiciary that upholds and oversees the sanctity of society’s rule of law with fidelity; Public servants that are inspired by the awesome responsibility of managing the affairs of millions of people and who are committed to doing so in a manner that is positive, liberating and empowering rather than negative, confining and enslaving. The fourth element is tranquility and social harmony. A country that has these four elements will be a magnet for businesses. It will be a haven for local entrepreneurs and for companies in international sources desirous of operating the environment.
Fig. 2 - Blending societies resources for optimal competitiveness.
Any African country that wants to transform their economy must of necessity evaluate exchange rate policy as a critical component of creating a competitive society. It should be instructive that prosperous Asian Tiger economies have used low exchange rates to jump-start Export-Oriented Industrialization. There is a very important reason Asian countries devalued their currencies in the building stage of export industrialization and continue to use weak currencies to capture market share in global markets. It works! A weak currency discriminates against import dependence and in favor of export orientation. It makes goods and services of the devaluing country cheaper in the global market and thus accessible to more consumers. Price competitiveness is the cost of admission to the global market. Strong currencies “kill” export competitiveness for poor countries and favors elites who have built their “economic gravy train” on the backs of government promoting their ability to import all they want, anytime they want. To the detriment of the rest of society, who are paying for their own exploitation through inflationary prices for everything they, as living, breathing humans, are mandated to consume; food, clothing, fuel, transportation, housing, schooling, medical care.
In conclusion, creating a competitive society means building a society that can sell goods and services in the global market in competition with other nations. It also means having an environment that businesses can compare favorably with other environments when searching for a place to do business. The first one relates to all the factors that play a role in providing services to foreign client-companies. Or to manufacturing or processing goods-for-export to foreign wholesale and retail customers such as labor, transportation, government policy, ease of international shipping, to mention a few critical points. The other has to do with how much a government is engaged and facilitative of the growth of manufacturing-for-export companies. It is an element of how much effort and resources the government is willing to devote to nurturing the sector.
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Our Mandate
To deliver Africa to the world and the world to Africa.
Our main focus is on African trade. We specialize in helping clients in African countries to develop industrial projects. We will broker commodities and manufactured goods to and from the global market to African countries. In the area of industrial exports, we will help our clients to develop export oriented industries and market the goods produced in hard currency markets.
Our Vision
Our goal is to be a key component of the transition of African countries from raw materials exports to industrial goods export. In addition to contributing to the rise of export industries in every African country, AFRICAN TRADE GROUP aspires to become the premier company in the trading of commodities and manufactured goods of African origin.
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