In a previous article, we advocated for the adoption of protectionism to grow our infant industries. In light of several news stories from nations whose economies were set up to service a foreign market, we feel an even greater need to review Africa’s international trading pacts. We are of the opinion that Africa’s solution to its myriad of problems, both economic and social, will be solved by the formulation and implementation of home grown solutions. Solutions free from the imposed insidious international agreements that are perpetuated as ‘restructuring programs’ and ‘austerity measures’. In this vein, we will highlight the egregious machinations of multinational corporations and their western government sponsors that have kept Africa and other developing nations in economic servitude.
Kenya: Political independence swathed in economic peonage
The struggle for the adoption of the multi-party system of government during the Moi regime reached a crescendo in late 1991. A November meeting of the Paris Club Consultative Group for Kenya, which included the IMF, the World Bank, the U.S., the U.K. and France, suspended $350 in quick-disbursing loans and applied additional pressure for economic and political reform.
On Feb. 12, 1993 the government agreed as a precondition to the resumption of foreign financial aid, to implement a number of drastic austerity measures that included the devaluation of the currency by 25%. However donors were not satisfied with the implementation of the dictated measures. In November 1993, the Consultative Group reconvened and offered the Moi regime $170 million on condition that human rights and governance improve and that the KANU provoked ethnic clashes end. The government started to meet some of those conditions but after a year Moi scrapped the austerity measures citing they had caused further economic hardship.
Vital sectors such as tourism took a serious beating due to government mismanagement. Others, such as textiles and manufacturing, collapsed completely, unsupported by inefficient government policies and bogged down by widespread corruption, tribalism, and nepotism. The Kenyan story of these two decades quickly became one of unemployment and underemployment.
Qualified graduates of the universities and secondary schools became idle and frustrated, or took up menial jobs in small-scale trading and other informal sector activities. High taxes to maintain the overblown public sector suffocated the already feeble private sector. A majority of Kenyans saw their standard of living deteriorate steadily beginning in the mid-1980s through the 1990s.
Today we are still mired in corruption with scandal after scandal being the order of the day. Ministry officials in the Education department have stolen donor funds meant for free primary education, Other Ministry officials in the agriculture department sold imported maize to a neighboring country when Kenyans were starving. We have even sold the National railway line to a foreigner with dubious financial standing! Where is the indignation?
Greece: The European Union disciplines a truant lackey
The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state. The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty. While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty.
Austerity measures include freezes on public sector wages and an overhaul of the tax system. Greece must also reduce its deficit from 12.7pc of GDP to 3pc in three years.
How it started
Years of unrestrained spending, cheap lending and failure to implement financial reforms left Greece badly exposed when the global economic downturn struck. This whisked away a curtain of partly fiddled statistics to reveal debt levels and deficits that exceeded limits set by the eurozone.
So what happens now?
Greece's credit rating -- the assessment of its ability to repay its debts -- has been downgraded to the lowest in the eurozone, meaning it will likely be viewed as a financial black hole by foreign investors. This leaves the country struggling to pay its bills as interest rates on existing debts rise.
Will this hurt the rest of Europe?
Greece is already in major breach of eurozone rules on deficit management and with the financial markets betting the country will default on its debts, this reflects badly on the credibility of the euro. If Europe needs to resort to rescue packages involving bodies such as the International Monetary Fund, this would further damage the euro's reputation and could lead to a substantial fall against other key currencies.
So what is Greece doing?
The government has hiked taxes on fuel, tobacco and alcohol, raised the retirement age by two years, imposed public sector pay cuts and applied tough new tax evasion regulations.
Are people happy with this?
Predictably, quite the opposite and there have been warnings of resistance from various sectors of society. Farmers have begun blockading roads to demand greater government subsidies, while on February 10th; workers nationwide staged a one-day strike closing airports, government offices, courts and schools. More strikes are expected to follow. Greek customs officials expressed their anger by kicking off a three-day strike, the first of many stoppages set to culminate in a general strike. Greek workers fear there will be a rise in unemployment if these austerity measures are implemented.
Lessons from Greece.
An export economy built on servicing the needs of neighbors, to the detriment of its citizens, will eventually fail because prices and terms are susceptible to outside forces. An economy structured to feed its citizens before exports can adjust to fluctuations quicker because the decision makers and the consumers are within close proximity and are both vested in the success of this local economy.
Conclusion
Although the Greeks governments need to belong and appease the European Union fueled the crisis, an enlightened citizenry did not passively accept the austerity measures. They expressed their opinions through civil disobedience and demonstrations.
In Kenya, the greedy political elite kow-tow to western imperialism to their benefit but to the detriment of their own people. They visit upon us villainous after villainous scandal yet there is not a sliver of rage from the docile electorate. Where is the furor? It is imperative that we hold to account and banish to political oblivion these pernicious agents of regression. We will no longer bandy around recycled agents of former oppressive regimes. It is time for new untainted leadership from patriotic men and women prepared, with comprehensive plans, to propel our nation forward.
In the final part of this article, we will study the Niger delta as an example of the ill effects of imperialism. We will also study the economic state of South Africa, 20 years after the end of apartheid rule.
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