Transform the economy for wealth creation
By: Ben Patrick Edema
We have been quiet on the economic situation in the country and concentrated on other issues that are equally important for the citizen.
For almost a decade now, it has been idea after idea and like any other human being you can get fatigued.
It’s time to transform the economy and concentrate on Wealth creation for the citizens because a country whose citizens don’t have capital and land are as good as renting their own country from capitalist landlords.
My only advice to the Central Bank and the Ministry of Finance is that let’s not use old tactics to react to worsening macroeconomic fundamentals like exchange rates or inflation.
Surely how can we increase overnight lending rates as a solution to inflation?
If you want workable solutions that will boost the economy, go to countries that have gone through similar problems but managed to come out.
Africa is going through textbook problems and the solutions are in the same textbook at the back of the book. But you need to read the correct textbook.
I remember at the just ended Russia Africa Summit. The President of DR Congo told Putin that in Congo, mine investors don’t pay tax and that all monies were externalized. Putin immediately answered saying that Russia had the same problems in the 90s and now they are gone after being solved. Infact solving those problems contributed to Russia’s repayment of all IMF, World Bank, Paris Club and other debts years before those debts were due.
After that, Russia created a stabilization fund that could be surpassed by a few in the world. I expected the Congolese President to make a follow up question on how Russia did that? Alas it never came. I expected those that monitor foreign news in Africa for African’s economic development to be interested and follow up but that never happened.
We can’t use the same tactics since independence to deal with the economy. The inflation we have now is exchange rate driven because we don’t have enough forex to meet our forex demands. So the solution is not increasing overnight lending. The solution is getting forex and first of all from the oil.
The IMF is a very good partner but can be very useful without getting their money… (If you know what I mean and please don’t argue with me because we shall enter in Eurobonds deal at the time even the IMF will commend us for issuing them!!)
For example one mine firm invested over $2bn in a mine in Panama. Imagine if that money passed through BOSS. Some of these problems can be sorted out without causing conflicts.
That is the intelligent approach we should take. Let us show relevance by chasing after the big boys and not our small accounts in struggling companies. Your friends are trailing money worldwide but you are busy bringing down your brothers and sisters to receive unexplained $300 yet you are quiet on the big entities not paying tax. Typical African PhD syndrome!!! Arrest a thief who steals a loaf of bread but glorify a person who runs away from $1bn for example!
Economics is not always about econometrics which the BOSS put much emphasis on. Fundamental analysis has weaknesses in an economy where behavior is increasingly influencing economic development. When quantitative economics was a champion, big companies had assets and products that determine their values. It’s all about perceptions. Behavioral finance at its best now, Anyway Behavioral Finance only gained prominence in the early 2000s and it’s yet to be offered by major universities in Africa. Maybe that’s where the problem is.
Sorry colleagues but sometimes we need to shake you up because the only thing for us people from the outside the system can do is to talk. But one day we will reach a point where we shall just be looking and you shall be asking why we are quiet.