The Global South and The Debt Crisis – A different Approach Required
National Debt is the new weapon of domination of nations by other nations- domination via wealth transfer. It is very attractive – lucrative to the lender nations because it is almost totally risk free to the “lending” countries. It is in reality, the modern evolution of slavery. The people are enslaved within the borders of their own countries. One interesting fact about the foreign loans is that the only thing the citizens in the debtor country see is the debt. It is hardly ever possible to easily see what was purchased with the money or any benefits to any community within the debtor country. The interest rate on the loan is tied to the rates in the lender country. The borrowed money is hardly ever taken out of the lender country. The loan is tailored in every aspect to benefit only the economy of the lender country. There is often no realistic way the debtor could ever pay back the debt. It is really predatory lending and both the lender and the debtor country officials signing for the loan know this.
Big businesses in Africa are very often owned by non-African investors which is not a bad thing and even should be expected and encouraged given the history of the region. A major problem arises with investors who are in Africa to “take out only” – “minimal footprint for maximum returns” investors. These category of people are not investors but day-traders to put it in a stock market parlance. In Africa, critical natural resources are mined through companies controlled mostly by foreign interests who tend to encourage and incentivize African leaders to live and operate like the colonialists. Africa should always encourage investors but do everything to make things difficult for day-traders masquerading as investors.
The officials of the debtor country are happy to take the loan because they often personally are laughing all the way to the bank once the loan is approved or renewed. The Politicians of the lender country are even happier because they get to ship part of their economic problem to another country. The lawyers, bankers and other professionals in the lender country get to make easy money and they would of course, charge premium for any related service. There is always competition by professionals in the lender country to work on third world debts – their incentive is minimum accountability and the possibility of maximized fees. The losers, of course, are the citizens and future generations in the debtor country.
The West Africa region is one of the few parts of the world which is naturally over blessed. Yet poverty now dominates. When I was nine years old, in the 1950s, I was helping my grandmother in the village to clean up after a session of grinding corn to make what was then called pap (OGI in Yoruba language). I lazily swept the waste and some corn across the yard in to the small garden area in front of the house. Three months later at the next school term holidays, I was harvesting corn. It had rained often and the soil was rich enough for the corn I had swept in to the garden to germinate, grow and produce new fruit without any input or effort from any human. When in 2023 I read about food insecurity in West Africa I have a problem believing it. May be the foreign loan salesmen in Africa have been too successful. Poverty in Africa, especially in West Africa, is man-made. The problem is largely, the result of bad leaders creating and fueling perpetual suffering among the populace in the midst of plenty.
It will probably be a good idea to prohibit African politicians and government officials from taking foreign loans without public referendum approving the loan first. It should be clear to most people capable of good reasoning by now that Africa will never develop until foreign loans are totally banned or at least have citizen approval. Pretty well everything is imported in the West Africa region. In Nigeria, the biggest country in the region, manufacturing has practically disappeared. “Planting cash crops is better than planting food crops”, an erroneous idea which we were taught as elementary school pupils in the fifties now rules the country. A trial experiment we can perform is to “Ban African leaders from freely taking foreign loans for just five years”. We would likely see inflation drop drastically and some manufacturing, disciplined work culture and related employment return to the West Africa region. In fact, the GDP in countries such as Nigeria will surely rise and some of the rampant corruption will most certainly disappear.