Africa and the Chinese Question [1]

A single superpower emerged at the end of the cold war and continued to dominate international politics and global events until that revered position was challenged at the dawn of the 21^st century. 

The American way of life permeated every nook and cranny in the world as the 'American Dream' translated to a 'Global Dream'. The United States of America was founded upon three main tenets; the right to life, liberty and the pursuit of happiness. The multi-faceted expressions of this ideology have continued to improve the living standard of the average American over the 230+ years of the existence of the United States. The limits of the creativity of the human mind have been stretched continually on no other better test-bed than America. A typical American sees himself and is seen as a first-class global citizen, one before whom all doors are open and no request is denied. In many ways than few, this ideology is the fulcrum upon which all American endeavours have been established and sustained and has served (and continues to serve) its purpose to a degree never before envisaged by mortals. In retrospect and comparison, no other system has worked as optimally as possible to tap into the hidden potentials of mankind and utilize the discoveries for the common benefit of the human race as the American system has. 

The historic commitment to the American way of life also empowered the esoteric aspirations of more than a billion 'unique' individuals. In the years that followed the abandonment of the gold-standard and the assertion of the US Dollar as the world's reserve currency, the economics of the world became more determined by the fine desires of the average US consumer, and the American government, in a bid to keep the capitalist engine running and uphold her commitment to the pursuit of happiness, started running fiscal deficits - and the deficits continued to increase. A fiscal deficit describes a condition in which a government's total (budget) expenditure exceeds her total revenue generated. (Of course the high level of economic activity has been upheld as a good predicate for a deficit-running economy by the distinguished economist, John Maynard Keynes. That makes sense, but my submission is that perception can be different from reality). When governments run deficits, they must borrow money to run and maintain the economy. They do so by issuing government debt, known as bonds. These bonds are issued with a promise to pay back with interest to the lender. The maturity period for a bond can vary from 1 year (short-term) through 5 years (short-term) to 30 years (long-term). A shorter-term government debt - treasury bills (T-bills) - is also issued, bearing a maturity period of less than 1 year. 

On the other side of the globe, however, something important was happening. The more than 1 billion unique individuals - the Chinese - were racking up massive current account surpluses as the export component of her account continued to increase. With more than one-sixth of the world's population and relative low wages (cheap labour), she started out manufacturing very cheap, sub-standard goods and kept it up until standards improved and China became the largest exporter of goods in the world*. According to China's Bureau of National Statistics, China's population hit 1.339 billion by November 2010 and her total exports value was at $1,581 billion** by the end of the same year (just to be sure, that is about $1.6trillion). This leads me to compute each Chinese resident's contribution to the nation's export value as $1,180.73. (I understand that the demographics of the Chinese population would place it at a much higher value). These figures give an indication of the size and potential of China. 

In addition to the surplus balance of trade (higher export value than imports), a savings culture was also developed in China which surged monetary reserves to more than $1trillion. As her reserves kept increasing, she decided to put some dollars to interest-yielding ventures and the best investment destination was the United States of America. In high school biology, I remember studying a special relationship known as symbiosis, which defines a mutually beneficial association between two organisms. A similar relationship developed between the United States and China; the US was running deficits year in, year out, while China was piling up greenbacks. Consequently, to borrow David Smick's phrase, an 'ocean of capital' started flowing between the US and China. 

To be continued...

* CIA World Factbook

** if the EU is factored in as a single entity, China becomes the second largest

Africa's Critical Moment

I believe strongly that the margin that existed, if it ever did, between the unfortunate plane of ignorance and economic struggle in Africa and the glorified heights of enlightenment and prosperity in the West, has diminished substantially. Today we are exposed to tools and resources that if employed in the most optimal, value-oriented manner can spur a sustained wave of economic growth and development in Africa. As much as I appreciate the political and cultural challenges facing Africa, let's look at the following cases:

Aliko Dangote of Dangote Group founded his business in 1981. He is involved in the  production and distribution of various consumables from spaghetti to cement. He is widely regarded as one of the greatest businessmen from Africa whose net worth of $13.8billion is definitely a head-turner*

Mark Zuckerberg, the twenty-something year old co-founder of Facebook Inc., on the other hand, started off in 2004. The social network has swelled exponentially to a 750-million user base and is currently valued at $82 billion**. Mark's net worth is standing tall at $17.5billion.***

That information is just enough to allow us compare. Yes, they operate in very different sectors and under very different circumstances, but a 23-year difference in the establishment of both corporations is a thing to ponder about. What becomes immediately apparent is the organic proliferation of tools and resources over the years that can cause a giant leap in the economic well being of any global citizen.

However, excluding a few Africans like Dangote, a vast majority, whose frequent exposure to these resources stuns the average westerner, have chosen (unconsciously or not) to merely increase their purchasing power. Such a venture is definitely not malign, but it is only when economic strength is exercised in the right direction that it becomes the extraordinary experiences we forever marvel at in the northern hemisphere.

The current global challenges-the US and Eurozone Sovereign Debt Crisis, the (almost) balancing effect of emerging markets (such as the BRICS), the Arab Spring and others-provide a unique opportunity for the explosive growth and development of the African mind. Every time a revolution occurred in history, that moment became, for those who understood the times, a point of inflexion in their mental orientation and they seized the opportunity to make great strides; the French Revolution of 1789, the Russian Revolution of 1917, the end of WWII and the events that followed all yield credence to my argument. A new world order will emerge from the current state of things. Lots will be divided - again. We must take the necessary aggressive steps to ensure that in the next decade of prosperity that follows the current global issues, Africa is not again treated as one with a begging bowl.

Let's drop the begging bowl and get to work.

Good evening.

*Forbes, March 2011.

**Bloomberg, September 2011.

***Forbes, September 2011.

Dexter's Desk Live!

Hello everyone,

Welcome to Dexter's Desk! Like every venture that has a beginning, this represents one of the first steps in participating and contributing to Africa's economic expansion and igniting and sustaining the fire of innovation in Africa.

INNOVATE OR PERISH!

The global engine of capitalism is today challenged by problems whose solutions seem to have eluded the human race. But like we've learnt from the premature clamouring for the closure of the US Patent Office at the dawn of the 20th century (as many believed that everything that could ever be invented had already been invented), there's always more work to do, more rivers to cross, more mountains to level and more valleys to raise. We, as Africans, must now begin to contribute in innovative ways to finding solutions to, not just our problems, but to global problems. The global financial crisis is not hurting Africa as much as it is ruining the fortunes of the world's most advanced economies. Unfortunately, for a majority that is something to be merry about. Africa's historical complacency operates under the false pretext that there is (almost) little to lose - since 'he that is down fears no fall'. On maps and charts describing the global financial crisis, there is frequently no allusion to the fate of Africa (except South Africa, of course). But we must be illuminated to know and understand that we've got a lot to lose. We cannot keep reclining in the back-seat every decade as contributory solutions to every economic crisis are proffered by every other continent except Africa (even if those solutions stand upon faulty fundamentals). What is Africa's stake in the global scheme of things? 

We must become INNOVATIVE OR PERISH!

Good evening.