What frustrates Africa’s attempts to industrialize

18Nov 2018
Guardian On Sunday
What frustrates Africa’s attempts to industrialize

THERE is a saying that if your eyes pop out on seeing the wonders Moses is doing, wait until you hear of Pharaoh’s, then you will simply go numb.

That is what happened in the past month or so with recent news that the Bank of Tanzania had blocked cash amounting to Sh150bn from entering the banking system, as it came from questionable sources.

Across the border a more tantalizing development hit the headlines, with a revelation mid last month that Kenyan tycoons had defied an amnesty to hide Kshs15 trillion abroad, which translates to ten times the Tanzanian annual budget at current exchange rates, an astronomical amount of money by any standards, from a ‘poor’ country!

The news about blocking Tsh150bn/- from entering the banking system is likely to have been received with the same sense of alacrity as in the 1980s when second phase Kenyan president Daniel arap Moi burned a huge pile of elephant trophies instead of selling in the Chinese or other Far East markets and use the cash to spur conservation, etc.

While banks at the local level reel backwards for lack of cash to lend to the private sector and a downturn in business is rampantly visible everywhere, qualms about money being invested in the country, not drugs to destroy a portion of the youth, won’t enthuse all and sundry. It is a sense of probity close to founder president Julius Nyerere.

What these two incidents of different magnitudes and policy implications show is that as has been stated repeatedly, the world’s leading financial houses are stacked with large amounts of hard currency of African provenance, and if that cash was available in the continent, industrialization would be achieved in less than a decade. 

The Kenyan hidden loot amount was suggested by a US think tank, not guesswork by leading Kenyan newspapers, in which case it has grounding in reality.

One can see how a single Nigerian citizen is changing the cement industry in Africa, and here, formerly penniless artistes change the fortunes of football clubs at premier league level, like real businessmen.

The point here is that capitalism grows both by legitimate and illegitimate means, and at a certain point as the second phase did in1992, allowing people to start banks or open bank branches at the local level with no questions asked, that is a preliminary condition to get industrialization off the ground.

The second premise is an overarching protective structure where the legal framework is multilateral, as local investors do not trust their governments, whether it is in Kenya, Tanzania or anywhere. They keep stashing cash abroad because of the fear of tomorrow.

 As the late Kenyan don Ali Mazrui kept repeating in his final years, the proper environment that will enable Africa to progress is when they are contiguous with Europe, something like reverse migration to what is now taking place.

If legal or investment conditions allow Europeans, Americans and Asians to buy businesses here, the cash that came out of Africa will come back by a back door, being part of a wider enterprise, protected by a bilateral treaty or strong multilateral accords.

So long as we try to remain inward looking and harsh towards ill-gotten cash, we succeed only in scaring more capital to get out of Africa as investors fear inspectors, investigators and auditors of all hues. It’s reality.

Top Stories