Category Archives: Africa

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Why Africa Should Worry Less About Income Inequality

Early this week, the South Africa Daily Maverick published an op-ed titled, “It’s not Zuma that we need protection from, it’s the market.” While the author rightly calls out the role of cronyism in destroying ordinary South Africans’ economic mobility, she doesn’t seem to make a distinction between economic freedom and crony capitalism.

This spotlights a crucial misunderstanding in the ongoing battle against capitalism in South Africa, and across Africa.The values of freedom will continue to take a back seat as anti-market forces demand more state control of the economy against “corporate” interests.

The Benefits Seem Unattainable

How is it that perceptions of the market are so negative on a continent with such a rich tradition of economic freedom?

It can be alleged that the arguments for capitalism have become too utilitarian to appeal to a continent that has been ravaged by the effects of slavery, colonialism, kleptocracy, ethnic genocide, crony capitalism, and extreme poverty. Indeed, in his 1999 book “Development as Freedom,” Harvard Professor Amartya Sen argued,

The discipline of economics has tended to move away from focusing on the value of freedoms to that of utilities, incomes, and wealth. This narrowing of focus leads to an under appreciation of the full role of the market mechanism, even though economics as a profession can hardly be accused of not praising markets enough.”

Read more at FEE Online 

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Before Risking Another War, Trump Needs To Give Diplomacy A Chance

In the aftermath of Trump’s missile strike, congressional Democrats urged precaution while Republican leaders promptly urged President Trump to push for Assad’s ousting. The Democrats have apparently been proved correct in emphasizing precaution; President Bashar al-Assad’s allies have since threatened reprisals against any further assaults on the regime. This development doesn’t bode well for future success in handling the Syrian crisis. A miscalculated American intervention in Syria might worsen the country’s humanitarian crisis, drag America into another war in the Middle East, and leave a leadership void for myriad extremist groups.

The humanitarian situation in Syria is already appalling, with over 400,000 people killed since 2011. The Assad regime has showed little concern for innocent civilians when securing power. If the US toughens their assaults on the regime, a Russia-led retaliation could be imminent, leading to a possible confrontation between the US and Russia. Indeed, Russia and Iran have already committed to “respond with force to any aggressor or any breach of red lines from whoever it is and America knows our ability to respond well.” In this scenario, civilian casualties and internal displacement would certainly deteriorate further.

Read more at the Daily Caller

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The Dangerous Effects of Far-Right Populism on Global Peace and Economics

Last week, a New York court charged white supremacist and army veteran, James Jackson, with second-degree murder for fatally stabbing a black man, Timothy Caughman, to death. Jackson later revealed that his frequent usage of neo-Nazi website, The Daily Stormer, informed his hate views confirming the violent rise in far-right activities.

Like other hate-fueled crimes committed in the last few months across Europe and the U.S., an unrestrained progression in far-right attitudes, especially those ignorantly propagated by political leaders, might trigger more racial intolerance, negatively affect economies and serve a victory for religious extremism and communist states.

Most of these violent opinions have reversed racial and religious tolerance, triggering attacks on minority groups, and, if unchecked, might brook more violence with threat on social diversity. It could also re-institutionalize racism, leaving a negative backdrop on the prolific tourist industry in Europe and the U.S. since one in ten enterprises in the non-financial business economy of European states are linked to tourism.

These over 2.2 million enterprises employ 12 million persons. In fact, Germany and France are top beneficiaries, with an average of over €38 billion in revenue between them. Likewise in the U.S., tourism supports over 7 million jobs and produces an economic output of over $1.6 million.

Continue reading at Outset Magazine

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Nigeria’s Experiment With Welfarism Threatens Its Economic Future

The Nigerian government recently launched the Social Investment Programme (SIP), a welfare scheme aimed at alleviating poverty. Through SIP, the government plans to feed 3.5 million schoolchildren, create jobs and offer loans to 1.6 million Nigerians. The program’s framework might seem noble and appealing, but its dependence on borrowing makes poverty eradication doubtful while increasing the country’s debt profile and general interest rate.

First, current levels of poverty in Nigeria are linked to debt incurred in the 1980s and 1990s. This debt has hindered each successive administration’s ability to spend on development projects to reduce poverty.  Thus, borrowing to fund SIP will inflate the country’s already high debt profile, and negatively influence individual financial security as average income decreases while tax increases. These changes in financial strength will consequently affect savings and investment, which are prerequisites for poverty reduction.

While the government hopes the scheme will help drive entrepreneurship, SIP will do the opposite. If Nigeria’s creditors doubt the government’s inability to repay borrowed funds (likely considering the dwindling oil revenue), there will be higher demands on interest rates to counteract the risk, thereby upsetting general interest rates. This means potential entrepreneurs might get discouraged and existing businesses might not risk high interest loans to expand. This decrease in business growth and economic strength can possibly lead to more poverty.

Continue reading at AfricanLiberty.

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Ban on ‘mitumba’ will deal death blow to survival of poor women

In March this year, the East African Community (EAC) proposed a ban on all imported used clothing by 2019 in an attempt to revitalize local apparel industry and bolster local economies. The argument that protectionism will lead to East African industrialization has been used since at least 2004, conveniently ignoring the fact that textile factories are in trouble in the region because of corruption, insecure property rights and overall bad governance.

The anti-second hand clothing (SHC) protectionist argument has also been bolstered by the loaded language used to describe the SHC industry in Africa. Anti-trade activists speak of the “sale of Western cast-offs” and claim that all used clothing that gets to Africa is “low-grade stuff no one else wants.” This language associates the industry with shame, arguing that it perpetuates the legacy of colonialism. Yet, this language fails to acknowledge how the industry bolsters entrepreneurship. Georgetown University Professor Pietra Rivoli describes how the mitumba (used clothing) foster entrepreneurship in Tanzania:

“A drive through the large mitumba markets in Dar Es Salaam shows a level of economic activity unmatched anywhere else in the city and hundreds, perhaps thousands, of people who are very clearly working. The traders, importers, sorters, and launderers who people the mitumba trade show an astonishing variety of skills, and the tailors, in particular, are a marvel of the employment created by mitumba. Not only do the tailors adapt Americans’ clothing to African figures, they create blouses and shirts to match “new” suits, and they turn curtains into dresses, socks into bathmats, and skirts into tablecloths and tablecloths into skirts.”

Continue reading at Daily Nation.