Creating Wakanda: youth, technology and entrepreneurship across Africa

Report by J Boima Rogers – June 2018

This report on an event which was co-hosted by the Blavatnik School and the Pathways for Prosperity Commission evoked the recent Black Panther movie which is inspiring a generation of Africans to see themselves as technological leaders in a sci-fi world.  The objective was to discuss real-world technologically driven future vision of Africa, how this future can be created by people from the continent and whether Africa’s young entrepreneurs hold answers for Africa’s development and challenges such as youth unemployment. Presentations were made by Strive Musiyiwa, founder and executive chairman of the Econet Group, Atherton Mutombwera, founder and CEO of Hutano Diagnostics Ltd. and Jessica Price, co-founding partner of the Rhodes Incubator, which empowers scholars from diverse global communities. Professor Ngaire Woods, dean of the Blavatnik School of Government moderated the event.

In his opening statement Strive noted that technology is the path to prosperity and highlighted the exponential pace at which changes are taking place in the technology space making the process very disruptive.  The issue is how to manage the opportunities that arise from such disruptions. Africa needs to dramatically improve its educational systems, particularly in science, technology, engineering and mathematics (STEM), where it is lagging behind.  Entrepreneurship should not be viewed as a mechanical process or merely for profit rather entrepreneurs aim to solve problems.  Universities on the continent are producing graduates who cannot find jobs and the focus is training people to work for other people.  The challenge in developing an entrepreneurial culture is how to recognise, nurture and take it to the next stage.  The continent needs to move away from arrogance of governance, in particular, passing laws without consultation. Africa does not need to be focussed on foreign investment because there is significant capital that can be mobilised domestically.  The emphasis should be on how to harness entrepreneurship.  There must be a move away from reliance on natural resources because the pathway to prosperity is being smart. The private sector has more funds than governments and governments need to develop policies that will assist in the mobilisation of capital and movement of it across the continent.

Strive noted that stock market exchanges across the continent are not up to the challenge and need to up their games.    He cited Israel and Silicon Valley as models to look up to. In Israel the culture is promoted at high school level.  When he visited Silicon Valley he was very impressed on what the government was doing to make the environment conducive to entrepreneurs, something he noted the Chinese had copied.  Policy makers need to visit those countries as well as other African countries to see what have been achieved and how they can improve their own systems. He highlighted the mobile phone revolution in money transfers in Zimbabwe which was even more advanced than Kenya which pioneered the process and is often hailed.  Mauritius has developed a cyber city and is unique in having the facility for business registration where Econet is registered. Key challenges for entrepreneurs in Africa, which are universal, are: getting it right with regards to the product, customer base and monetising the product/concept; organising people (Staff) and; the business process, including the supply chain.

Atherton revealed that his start-up is looking at 7 diseases which are endemic or are severely impacting the continent to try to simplify diagnosis, a crucial development because there are only 14 laboratories for such processes on the continent. His unit is having conversations with stakeholders, developing the business at various levels, namely, the concept, company structure and execution.  His unit is based in Oxford to have access to technology and capital but plans to start a manufacturing and distribution in Africa.

Jessica introduced the Rhodes incubator she has co-founded which targets projects that will make a significant impact.  The challenge for Africa is developing eco-systems that will make it attractive for investment, notably, the legislative framework and funding streams. She noted that the success of technology has a cultural perspective which needs to change, in particular, the expectations of what the government can do.  Governments need to realise that they are not omnipotent and must be willing to give up rights and be ready to partner with other stakeholders.  Access to technology needs to be broadened.

Comments and analysis

Professor Ngaire Woods posed the question of what are the pathways to prosperity and what governments can do to create a more conducive environment.  She noted that crucial factors are the mind-set, minimising risks and developing a supportive infrastructure and highlighted the work of the Gates Foundation. Other participants noted the need for more conversation on opportunities and barriers to investment.  Countries, as South Africa has done, need to develop one-stop-shop facilities to enhance the investment process.  Kenya had recently hosted an event to review the regulatory regime to learn and test how to use the regulatory regime to support innovation, develop peer learn and peer pressure and networking, with the aim of enhancing new product development and minimising risks. A major point learned from that event was that regulators do not have the skills for innovators.

The event was very refreshing and part of a series that Blavatnik have organised in its pathway to prosperity programme. It gave a platform to innovators using new technology in a variety of ways, namely, a very successful African telecommunications, media and technology entrepreneur, an interesting start-up that aims to address pressing health issues facing the continent and an incubator which will broaden the technology landscape and mobilise funds to spur investment and development.  It brought into focus the notion that Africa offers investment opportunities and African entrepreneurs are active in the technology space.   While there has, as should be a lot of attention on the physical infrastructure, the focus at the event was on soft infrastructure, namely, the regulatory framework and training.  African governments, it would appear need to up their game and the continent needs to place more emphasis in developing STEM where it lags behind, to the detriment of a fast moving global technology sector.  It is rather perverse that it is turning out so many high school and university graduates who cannot find jobs while missing out on investment opportunities because of lack of skilled labour.

While it was laudable that Blavatnik hosted the event, such events should also be hosted in Africa, to make sure that this conversation hits home for all stakeholders.  One solution should be for events such as this one to incorporate a webinar capacity, whereby audiences in Africa and elsewhere can participate. Two other processes could further develop this important forum, ensure that it is not just a talking shop and build momentum.  Firstly, it would help if such forums are documented to allow stakeholders who cannot participate to have access to the event.  Blavatnik, the African Union and national governments could develop databases of such forums, initiatives, regulatory regimes, stakeholders and indices that governments and entrepreneurs could tap into to learn from, offer advice and facilitate networking.

One issue that I disagree with Strive about is the fact that he downplayed the role of Africa’s natural resources.  While I do not think these should be the sole focus in the development process, they can and must play a major role.  Developing and processing products from these natural resources still have a crucial role to play.  African countries have for too long exported raw commodities and imported processed products.  Processing such commodities will add value, provide employment, develop other related downstream products and minimise the volatility in prices and revenues that commodities are often subjected to.  Technological breakthroughs could assist in making this transition.

With regard to one of the major challenges facing the continent, youth employment, making use of the continent’s vast resources will be more effective by increasing the production and productivity of minerals and agricultural products and processing them.  This in no way means that technology should be ignored, indeed it will be an ever increasing part of the development process which requires a multi-pronged approach.  Training, particularly focussing on STEM as noted by Strive should be a priority but this should be in tandem with improvements in traditional sectors.  While Africa cannot afford to continue lagging behind new technology, the sector can only absorb a small percentage of its fast growing labour force.  It will generally help improve its overall competitiveness and economic growth, allowing farms, mines, factories, supply chains and services to offer employment opportunities. The crucial factor here though will be improvements in physical and soft infrastructure, reduced corruption, avoiding wars and civil strife, all things that are not specifically geared towards the technology sector or sexy, but just plain simple good governance.

Technology should not be viewed as a stand-alone sector but rather the engine for development.  The challenge is how to leverage new technology to assist in the development process.  Mobile phones have played a part in providing market intelligence for farmers.  Mobile phones played a crucial role in Nigeria’s effective and prompt response to the recent Ebola epidemic. Atherton’s work in the health sector and Jessica’s start-up which aims to diversify access to new technology are part of that process.  In my paper on the recent Ebola epidemic in West Africa I noted that Big Data would be very useful in mapping the spread of the disease and efforts to stem the epidemic.  New technology, in particular, the digital revolution can and should therefore be used for a range of sectors, including agriculture, mining, tourism, health etc.

One interesting point is that all of the presenters are operating out of their home base which itself demonstrate the challenges African countries face and how they lose out on one of their most significant resource base, their entrepreneurs.  Strive’s Econet is based in South Africa and registered in Mauritius, rather than his native Zimbabwe.  This is partly because of the protracted and bitter fight he had with the Zimbabwean authorities who tried to muzzle the operations of their talented son, according to my sources, because he would not give in to corrupt government officials. It is also likely that the depressed market conditions and dilapidated infrastructure of that country, Mugabe’s legacy, was not a conducive environment for his company.  Atherton’s Hutano Diagnostics is based in the UK rather than his native Zimbabwe, as is Jessica’s Rhodes incubator instead of her native South Africa.  African countries must therefore do a lot more to hold on to their crown jewels and attract those who have flown the nest.  This factor is even more so in the globalised digital world.

BIOGRAPHIES

Strive Masiyiwa is the founder and executive chairman of Econet Group, a pan-African telecommunications, media and technology company with operations and investments in over 20 countries. Masiyiwa has been selected twice, in 2014 and 2017, to Fortune Magazine’s list of the “World’s 50 Greatest Leaders”. Over the last few years, Masiyiwa has devoted his time to mentoring the next generation of African entrepreneurs through his Facebook page, which has a growing followership of nearly 3-million young people from across the continent. Facebook has identified his platform as the most engaging of any business leader in the world. Masiyiwa serves on a number of international boards including Unilever Plc, the Rockefeller Foundation, the Council on Foreign Relations’ Global Advisory Board, the Africa Progress Group, and the Hilton Foundation’s Humanitarian Prize Jury. Strive is founder and co-chair of the Pathways for Prosperity Commission on Technology and Inclusive Development.

Atherton Mutombwera is the founder and CEO of Hutano Diagnostics Ltd. Hutano Diagnostics Ltd is a start-up developing a diagnostic and surveillance platform for diseases caused by emerging and dangerous pathogens which cause recurring epidemics in Africa. The company is currently developing an Ebola diagnostic and surveillance platform. Atherton has experience in healthcare provision, Nano biotechnology research and business. He graduated with an undergraduate degree in Pharmacy, then obtained an MSc in Nanoscience as a Mandela Rhodes Scholar. He was awarded the Coursework Masters Award in the Science, Engineering and Technology fields by the Nelson Mandela Metropolitan University in 2016. His research focus during the MSc was the development of a rapid diagnostic device for Ebola. He has most recently completed an MBA at the University of Oxford as a Louis Dreyfus-Weidenfeld and Hoffmann Saïd Scholar.

Jessica Price is a co-founding partner of the Rhodes Incubator, which empowers scholars from diverse global communities to use entrepreneurship to drive impact. Jessica is particularly interested in the intersection of entrepreneurship and complex societal challenges, particularly questions of access to healthcare, and improving health systems. She holds an MBChB (Bachelor of Medicine, Bachelor of Surgery) and MPH from the University of Cape Town, and is currently on a Rhodes scholarship in Oxford studying for a DPhil in Primary Care Health Sciences.

 

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) www.oxfordmemo.co.uk

 

 

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Britain at Sea – Brexit

 

Presentation by Lord Malloch-Brown at Blavatnik, University of Oxford

J Boima Rogers – June 2018

In a presentation by Lord Malloch-Brown last week in which he outlined how the UK can salvage its foreign policy, he expressed anger at Britain’s decision to leave the EU, highlighting two hypotheses which he asserted meant that that the country was facing a storm and had lost anchor.  These were the turbulent environment that Europe and the US currently face and the challenges of the post-war liberal order that is facing a significant unprecedented challenge. British society he noted is rooted in continuity and had fought for centuries for a balance of power.  Brexit supporters were deluded in trying to revive the country’s imperial global status, ignoring the fact that the county no longer has the economies of scale which the European Union (EU) offers. For too long British politicians cast the EU as the bogeyman, with some of the right wing media featuring distorted stories, fuelling anti EU sentiments.  The reality he noted is that EU has been good for both parties, Britain and the EU.  The EU is the UK’s principal trade partner, security arrangements have been enhanced and as well as the country’s global posture by belonging to a larger entity.  Many EU partners appreciate the UK’s input in making its institutions more efficient and effective and less protectionist on trade issues to the benefit of all member states.  EU leaders at the top level have been magnanimous in the negotiations, not to give ammunition to the right wing media although at a lower level, local politicians have been more pugnacious, citing the Mayor of Paris who wants his city to supplant the city of London in finance.

Overseas observers view the British government’s position with bewilderment and comment that the country is not relevant.  While he felt that the country is in no danger of losing its Security Council seat in the UN at the moment, France will position itself as the European representative.  Europe is defecting and the commonwealth is not taking up the space. The UK’s position is however not unique as in other parts of the EU national electorates are turning against the union.

On security, in the face of the Russian strategy of disruption of western democracies, Britain is viewed as the weakest link.  In Europe, Hungary, Greece and Italy cannot be depended on to back the fight against the Russian aggression.  Europe’s dependency on oil imports from Russia makes the continent vulnerable to that country.  The Trump administration’s call for closer ties with Russia is likely to receive some support in Europe because of these conditions, particularly from countries noted above.  Britain, with its mercantilist position, is isolated.  On the global stage, some large countries are moving towards authoritarianism and country first positions and taking a cue from Trump towards bilateral relationships.

The British brand is still strong with regards to soft power.  It is one of the few advanced countries to devote the.7% of its GDP to foreign aid that is recommended by the UN.  The BBC and the country’s championship of human rights and the environment are a big plus which means while still a small country, it punches above its weight and this is magnified as part of the larger EU entity.   In moving away from the EU, the UK will have to depend on institutions like the UN for world solutions where, as a small country it is vulnerable.  He noted that foreign policy is effective when driven by values and Britain needs to join the EU to build global collaboration and conversation to democratise foreign policy, particularly as studies suggest that electorates around the world have lost trusts in governments.  Europe needs to fashion its unique path as one of three blocs, namely the EU, China and the US.  In post Brexit, there would be moves, led by the French to minimise the UK’s leverage within the EU. The UK needs to be part of the EU bloc EU, using its expertise to make the bloc more effective on the global stage.

The fight against Brexit must be multipronged, highlighting the economy security, shared values and bread and butter issues like healthcare.  He noted that uncertainty is dangerous and there must be a clearly specified time limit for negotiations after which Parliament and the electorate should have a vote.

Comments and Analysis

In discussions by the audience it was noted that the former Prime Minister, David Cameron was partly responsible for Brexit by joining the hard right group in the European parliament which reduced his Conservative party’s ability to work with mainstream conservative groups in that body.  The UK had failed to make use of clauses that would have allowed it to limit immigration.  Europe, it was noted, does not have a single focus and would find it difficult to navigate its way on the global stage particularly with American dominance of technology, international banking and military power.  This has been demonstrated in Trump’s withdrawal from the Iran agreement as EU companies have pulled out of that country despite support for the agreement by EU members and other signatories.  Macron and Merkel it was noted were charting further EU integration, notably, among the 16 members sharing the Euro currency.

The most profound comment was made by a member of the audience who noted that there were very few young people in the audience made up primarily of middle aged and elderly academics and professional people.  In the referendum the young voted overwhelmingly – 75% of voters aged 18-24 – to remain in the EU, however as a percentage of all voters in that age group only 36% voted against over 80% of voters aged 55 and over. A majority of the working class also voted to leave. This means that the views of the young, whose future was being decided and who backed staying in the EU were not reflected in this momentous decision.  The working class, who felt more threatened in terms of jobs and housing from increased immigration and voted for  Brexit, do not as a rule participants in formal debates but rather made their decisions informally, in discussions with family and friends.  This indeed is the challenge that Lord Malloch-Brown and other remainers face if they are to press politicians to stay in the EU, negotiate for closer ties after Brexit, call for a new referendum and if that is granted to win that referendum.

The issue which was not discussed in detail was the tools needed to convince supporters of Brexit to change their position.  The right wing media is very vocal in support of Brexit.  However significant changes in the media landscape and people’s formulation of views, notably, the importance of social media, means that the fight for voters is more complex and so far remainers do not seem to have found solutions.  The strongest influence on voters is often the views of friends and family, people they trust, often these days through social media.  Often such views can even be inimical to the interests of such voters as I pointed out in my paper on Trump’s America.  Logic does not often take prominence, a fact that Russia has played on in elections in Europe and America. How to penetrate and sway the tribe is the major challenge.

There was only a brief mention of the post Brexit opportunities and challenges of the US and other non- EU partners and the Trump doctrine and how they could affect the debate.  Malloch-Brown admittedly noted that it was unlikely that the commonwealth would take up the slack that Brexit will unleash.  The UK would need to work hard in strengthening links with other (non-commonwealth) countries.  A key factor is the bilateral US/UK trade negotiations that are already taking place even though this is at an informal level.  Since the UK/EU trade is much larger than UK/America trade, the outcome, if the these negotiations result in the US supplanting the EU as a market and source of goods and services, if indeed that is feasible, would have very significant effect on Britain’s jobs, economy etc., way beyond the “chlorinated chicken” issue that Lord Malloch-Brown noted.  Lord Malloch-Brown’s statement that the EU has been magnanimous in the negotiations is not correct.  As I noted in a previous paper, the EU has to insist on punitive actions to make Britain realise that there is a cost to Brexit, if anything as a deterrent to other states within the Union.  Consequently, the EU has also indicated that Brexit will usher in new EU/UK relationships and collaboration including research, space, security, supply chains and other areas.

The remain camp need to push harder on prominent Brexiteers who are often deluded as regards the huge opportunities they paint, notably, Boris Johnson, the Foreign Secretary, who not only disdains links with the EU, has lauded the relationship with Trump’s America and recently reportedly stated that Trump was a much better  negotiator than the Prime Minister.  As Robert Kagan stated in his article in the Brookings Institute titled, Trump’s America does not care, ”Those that depend on the United States, meanwhile, will be treated with disdain, pushed around and used as pawns.”  This point was echoed by Thomas Wright, Director of the Center of the United States and Europe who noted in his article titled, Trump is choosing Eastern Europe, that the Trump administration in its current bilateral trade negotiations with Britain is insisting that Britain break away from the EU and adopt US regulatory framework thereby making it difficult for the UK to come to an agreement with the EU, is therefore “treating Britain as an easy mark, not as a vital strategic ally”. Rather than ensuring a proud Britain anchored in a strong EU, Mr Johnson it would appear prefers the UK to become Trump’s poodle.  Malloch-Brown and his remain group need to highlight these issues and hopefully engender British pride and the antipathy towards Trump by British voters to further their cause.  This will probably be as effective if not be more than the dry technical arguments about the negative impacts of Brexit. They should highlight the dangers of siding with a mercurial and nationalistic leader against the UK’s natural and major trading partner, the EU.

Furthermore, aligning closely with Trump rather than being closely linked with leading liberal democratic stalwarts within the EU, namely, France and Germany will tarnish the UK brand that Malloch-Brown alluded to, while diminishing the UK’s clout.  Trump has demonstrated an inclination to dictators and “strong leaders”.  Even in Europe, in a speech on the Trump’s Europe strategy by Wess Michell, the US Assistant Secretary of State, he indicated that the US was pivoting away from Western Europe towards central and Eastern Europe which have been trending away from liberal democratic values.  A post Brexit Britain would therefore be aligned to a grouping of undemocratic states, become the poodle of Trump’s America, lose the major role that it shares with Germany and France in the most powerful economic entity in the world, the EU and, be an outlier minor player in world forums, even with its UN Security Council seat.

Britain is at sea, buffeted by strong winds, in the form a hostile Russia, a domineering and nationalistic America and an assertive EU.  On deck, the crew, while not quite in an open state of mutiny are in a rebellious mood, notably, Scottish demands for a more prominent role at the table, the Northern Ireland/Irish border quagmire, the House of Lords push for Parliament to have a strong input in negotiations, Labour and Lib/Dem assertiveness and Conservative party fights between moderates and hard-liners.  Among voters while there is an element of buyer remorse among people who voted to leave the EU, no one knows how deep this is or if voters will be asked again for their verdict.

J Boima Rogers is the Principal Consultant at Media and Event Management Oxford, http://www.oxfordmemo.co.uk.

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Trump’s Perverse America

 

December 2017 – J Boima Rogers

The election of Trump as president demonstrates the perverse attitude of a significant segment of the American electorate and his policies have validated this point.  The definition of perverse is irrational, illogical, contradictory and senseless, and indicates support for actions that are inimical to the interests of the person.  His policies have hurt the country, his base and his party rather than making America great as he frequently quips.  This is the case even with his most recent “success”, the tax cuts.  Why did Americans elect this man? As in any such decisions there are seemingly credible reasons to his supporters although the majority of Americans, in terms of the popular vote, which he lost, did not agree during the election and subsequently given the fact that he is the most unpopular president since polling started.

Trump’s election beggars belief.  He was the least qualified of the candidates within his party and against his Democratic rival.  He had no experience of government; other candidates and previous presidents had worked in government, as civil servants, in elected roles or the military.  He had not distinguished himself in business, having inherited his wealth from his parents and was legally bankrupt four times.  One analysis of his wealth concluded that he would have been better off if he had saved his inheritance.  Candidate Trump asked for and presumably received assistance from America’s major military and strategic rival, Russia.  He advocated spurious and unrealistic policies and encouraged and attracted racist organisations.  He was accused of indecent actions against women and was caught on camera making lewd and sexist statements. Dr Elaine Kamarck, Senior Fellow in Governance and Director of the Center for Effective Public Management at the Brookings Institution said “we have elected the least experience person ever to hold the office of the presidency”.

Since taking office, Trump has implemented policies that are, contrary to his claim, caused America to lose its leadership position in many ways.  He is loathed by the public and leaders around the world, including in states allied to the US.  In a recent poll conducted by Pew Research in 37 countries, 22% had confidence in Trump doing the right thing in marked contrast to the 64 percent who agreed with that statement for President Obama; 74% had little or no confidence in Trump compared to 23% who expressed the same sentiment about Obama; favourable views of the US had dropped from 64% to 49% since Trump took over.  His initial statements and/or lack of affirmation of core principles of NATO, the cornerstone of US/European defence since the end of the Second World War, made his European allies jittery and got them thinking that America under Trump was an unreliable ally.  While, he has subsequently reaffirmed America’s commitment to the alliance, his allies are still wary because they view those initial statements as the true Trump, as confirmed by his desire to be friendly to what NATO allies consider to be the alliance’s biggest threat, Russia.  In a meeting of the G20 last summer, he ignored allies and walked over to have a long chat with Putin at a dinner function.  In a recent speech after the US published its National Security Strategy which labelled Russia and China as the two major threats to the US, Trump pointedly ignored that document and instead focussed on the need for a “great partnership” with Russia.  He took America out of the Climate Change accord.  He abandoned the Trans Pacific Partnership (TPP) agreement that Obama had worked so hard to build, largely to counter China’s relentless rise.  In both the climate accord and TPP decisions he gave China the opportunity to take up the space vacated by the US, thereby ceding America’s role to a key rival.  His position on climate change is likely to see other countries edging the US from its leading role in new technology; other countries involved in TPP have subsequently signed up to an agreement dubbed TPP light.  America, the beacon of democracy has lost that position as Trump has cosied to dictators and attacked the media, judiciary and the democratic process at home.

The American people and in particular, his base are paying a price for Trump dogma and ignorance.  He has dismantled Obama’s environmental protection rules causing increased pollution. He appointed a man who is very hostile to environmental issues to head the Environmental Protection Agency (EPA) who has subsequently allied himself with industry leaders, potential polluters, rather than advocates for environmental concerns.  His attack on his predecessor’s rules protecting consumers from predatory finance companies will hurt the public.  After several unsuccessful attempts to dismantle Obama’s healthcare legislation that provided healthcare to millions of people, his recent tax cuts have finally got rid of the Individual Mandate in Obamacare, a major blow to the programme.  According to the Congressional Budget Office dismantling the scheme will result in thirteen million people losing healthcare as well as increasing premiums for everybody else. His major “success”, the tax cuts will, according to the Tax Policy Centre see 83% of the benefits accruing to the 1% wealthiest Americans while increasing the budget deficit that America’s children and grandchildren will have to pay. Trump and his family will obviously be major beneficiaries of these tax cuts. In addition to this lopsided benefit to the wealthy, The National Low Income Housing coalition have noted that the removal of subsidies in the private activity bond scheme will result in a reduction by 800.000 in rental housing construction for low income people.  As a follow up to the reforms, largely to pay for the give-away to the rich, the administration is reportedly planning significant cuts to social programs like Medicare and Medicaid that benefit the poor and middle class.   The tax cuts will result in what many commentators consider to be one of the major issues, namely, the huge disparities in income and wealth between the rich, like the Trump family and the middle and working classes and poor; this is particularly the case because of the steep reduction in inheritance tax.

Leaving aside the social implications of the tax cuts, the economic benefits touted are a mirage and rather than resolving some of the country’s major challenges, the bill will exersabate them.  Most Economists, including banks have noted that the additional economic growth generated by the tax cuts will be minimal and short-lived. The additional growth rate, according to most Economists will not generate sufficient tax revenue hence US debt will balloon.  The legislation will encourage tax avoidance, using new rules for Pass Through and C-corporations; consequently the 1.5 trillion dollar cost of the bill is likely to be even higher.  These observations are not merely based on theoretical analysis but have played out in a much smaller scale in the state of Kansas where Republicans adopted similar policies; state revenues plummeted and the economic growth rate for that state was only a fraction of other states with much higher tax rates.  In a meeting with business leaders when Gary Cohn, President Trump’s chief economic adviser asked them  whether the tax cuts would result in increased investment only a handful put their hands up.  Analysts have noted that companies are more likely to buy back their shares and pay off debts and shareholders rather than invest or raise the wages of employees.  America’s huge trade deficit could rise because of the shift to a territorial tax system.  The shift in taxes to only income earned in the US will encourage multinational corporations to shift operations abroad.  Trump’s tax cuts which penalize California and New York, with high state taxes which used to have those taxes deducted from federal taxes but can now deduct only a small fraction of those taxes, will damage the US economy.  Both New York and California account for a high proportion of America’s output and exports largely because they have developed good infrastructure.  Trump’s bill therefor risks damaging two of its most productive states, a point made by the Wall Street Journal.  Consequently the tax cuts which will have limited effects on the economic growth rate will only worsen America’s major challenges, output, government debt and trade deficit.

Trump’s tax cuts and approach fails to support areas where the US has comparative advantage, namely, education, science, technology and the creative sectors.  The tax bill will impose new taxes on leading universities and the net neutrality rules change which reverses Obama’s policy will restrict access to internet content and encourage major providers to hike prices.  Trump’s Education Secretary, driven by dogma is introducing changes that most experts believe will be detrimental to the educational sector. Unlike Obama who was lauded by the scientific and creative community, Trump is viewed with suspicion and even antagonism. This is partly because he has taken positions that are clearly at variance with science, notably his position on climate change and the people he has appointed to key position who share his ignorance and scepticism to established scientific findings.  He has railed against leading actors and Hollywood in general which has largely been anti-Trump.  It should also be noted that his treatment of California and New York in the tax cuts which host a large proportion of these sectors will have a detrimental effect on America’s most productive and promising industries.

Trump’s perverse America has exhibited a dysfunctionality that has huge implications for the country which will last a long time.  Republican support for Russia and authoritarian rule is on the rise.  In a YouGov poll in December 2016 37% of Republican voters had a favourable view of Putin, nearly quadrupling the 10% that had a favourable view of him in July 2014.  Putin’s net negative had dropped from 66% to 10% among those voters and was much better than the 66% recorded for Obama during that period. A major reason given for this trend by Republicans is the strong leadership qualities shown by Putin. Trump is appointing a record number of very conservative and often unqualified federal judges, according to the American Bar Association, that will have life time tenures and work their way through the system.  Both houses of congress continue to have historically low approval ratings from the American public and with Trump that applies to the presidency.  Similarly, the public has a high distrust of the media and with the increasing reliance of voters on social and “trusted” partisan traditional media, the public, particularly Republican voters are becoming increasingly polarised and not open to objective analysis.  These trends are very disturbing for America’s democracy.

Trump has not been good for the Republican Party.  The party of Lincoln is now regarded as the nasty party, increasingly controlled by and/or accommodating religious and racist extremists who Trump panders to.  Trump has received prominent support from the Alt-Right and openly racist organisations like the Ku Klux Klan.  While these types of supporters were embedded in the Republican Party, dating back to the 1960s and 1970s due to the party’s southern strategy, explicitly outlined by Lee Atwater in early 1980’s, Trump has encouraged them to come out openly to support him.  A notable case in point is Trump’s support for Roy Moore in the Alabama senate election.  Trump went against his own Congressional caucus and leading Republicans in supporting this candidate who had been removed from office for breaking US federal laws, accused of sex with minors and had made racist statements.  The party that had prided itself on financial prudence and had railed against Obama’s “reckless” spending which saw America recover from the great recession faster and stronger than all other major developed countries – remember the Tea Party – is now adding trillions to the national debt even though the solid economy Trump inherited from Obama makes such a move unnecessary.  The party of defence hawks, fiercely antagonistic to America’s nemesis, Russia, now has a standard bearer who wants to embrace the Russian bear.

Why has America chosen an unqualified president?  Why have working class Whites chosen a man that clearly does not have their interests at heart?  Why has the Republican Party chosen and its congressional leaders cosied up to a man who clearly does not have its traditional interests on trade, global hegemony aspirations and fiscal prudence that it has always prided itself with?  This is largely because he is the antithesis of the suave, intellectual and cautious Obama who was often accused of too much nuances in his policies and pronouncements, leading from behind and not being tough on foreigners.  Here was a tough talking guy who was going to” make America great again” and foreigners were always taking advantage of America.  Race is a major factor as The Atlantic magazine stated when it described Trump as the first White president.  Trump started his bid for the presidency by questioning the legitimacy of the first Black president.  While not explicitly stated, his support base views Obamacare and social programmes as disproportionately benefiting Blacks and other minorities.  And then there is the demographic time bomb which will see Whites lose their majority status in the next 30 to 50 years. Trump is, to give him credit, a superb salesman as we all know how clever sales gimmicks often get us to buy things we do not need.  Much of his appeal is to do with ignorance and prejudice, cleverly exploited by the rich who saw early on that Trump was going to make them richer; Trump confirmed this recently when he told guests in Florida that his tax reform would make them richer.

Trump, particularly to his White working class base, makes them feel good, speaks their language, is kicking asses and to hell with those foreigners and the coastal cosmopolites.  Rationality does not come into play and because even though this guy is clearly part of the 1 percent, he is regarded as their kind of guy, now that is perverse.

America has elected the least qualified president who asked for and received help in his election from the country’s major adversary, Russia; it has abdicated its leadership role in key forums and lost favourable views around the world; implemented policies that adversely affect wide sections of the America environmentally, in consumer finance and health; adopted a tax cut which gives huge benefits to the rich while failing to address America’s key long term challengers and penalizes its most productive states; fails to spur sectors where it has huge comparative advantages and; moved away from the ideals and tradition of his party which is causing the Republicans to lose their appeal to the electorate as confirmed recently when the Democrats won a senate seat in Alabama, a feat they had not achieved in that state for a quarter of a century, a trend that polls suggest will continue and result in huge losses for the Republicans in the congressional elections in 2018.

 

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

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Was Brexit Inevitable?

 

November 2017 – J Boima Rogers

The Brexit vote was a shock but in many ways it was inevitable.  At the end of the Second World War when European leaders decided to form a union to bind the continent together, ironically, the UK, the country that had played the leading role in bringing down the Nazis was not welcomed.   True to form, France reverted to its centuries old rivalry with the UK and did not welcome Britain to the new club.  The UK on its part has always had ambivalence towards the continent, making forays into continental wars and projects but steadfastly guarding its status as an island nation and marine time power with a global focus. In many ways the seeds of the divorce had been planted and germinating for a long time.  Negotiations are proceeding at snail’s pace and the likely outcome is uncertain.

Brexit was a shock that pundits and the political and economic establishments failed to foresee.  All the national parties, with exception of the United Kingdom Independence Party (UKIP) and most business groups opposed and campaigned against Brexit, predicting dire consequences which voters ignored.  It was a bitter fight, with both sides spending significant time and millions of pounds making their case in all forums, but at the end of the day the public decided it had had enough of the European Union (EU) and wanted powers brought back to the UK.  Scotland and Northern Ireland voted to stay but England and Wales voted to get out.  The shock reverberated across the UK, other EU countries and globally.  The British Prime Minister, who was on the Remain side and had initiated the process resigned.  The Scottish National Party (SNP), which had been licking its wounds after a failed independence referendum, tried to reassert its call for an independent Scotland because Scots had narrowly voted to remain.  Mrs Theresa May, the new Conservative Party Prime Minister decided to call an election to secure a strong mandate in the negotiations with the EU.  The British public decided that they could not trust her party to call all the shots and she lost the slim majority her party had and now has to depend on the Unionist Northern Ireland party to form a government.  In Scotland, the public decided to reign in the SNP which lost seats to other parties.

The seeds of the divorce go a long way and are implanted in the British psychic. Britons say they are going to Europe when they decide to cross the channel.  Over the centuries the Island nation has often been embroiled in military campaigns against continental partners, including the Dutch, Germans, Spanish, Portuguese, Austrians and French as well as in pan-European wars and projects, often reluctantly. For centuries, it focussed on its global outreach, acquiring colonies in all continents and was proud of the fact that by the end of Queen Victoria’s reign, its vast empire included over a quarter of the world’s population, excluding its rebellious child, the United States.  The British public, while playing pivotal roles in both world wars was not too enamoured with the European Economic Community (EEC as it was then called) that France and Germany spearheaded after the Second World War. The new club was designed to integrate the economies of Europe, largely to forestall major conflicts like the two world wars that had ravaged the continent in the twentieth century.  The UK held out for many years and eventually joined the club in 1973.

At the birth of the union, the British economy, heavily reliant on trade with its colonies and the world in general, did not fit well with the new club.  The focus of the group was initially steel and coat, but subsequently, agriculture became the dominant focus in terms of budgetary outlays.  The economies of the new club members were much more integrated, reliant on heavy industry and agriculture employed up to a quarter of some of its members, compared to less than three percent in the UK.  When the UK joined, half of the EEC’s budget was spent on agriculture (down to 40% in 2012) and a large proportion of the budget went to poorer south European countries which also had large agricultural economies. Britain, with a very small agricultural sector and a relatively high per capita income was a net payer into the group’s budget.    The UK, which proudly boasts of not having a written constitution, was suddenly inundated with regulations from Brussels on a myriad of areas.  It had joined the organisation on the basis of trade but it found that the union was encroaching on a host of political, economic and social areas. Much effort was made to harmonise standards to facilitate trade among members, with detailed regulations. The group aligned the currencies of its members and subsequently adopted a common currency.  It initiated a growing diplomatic corps and there have been moves towards a military alliance which some of its members would like to supplant NATO.  It increasingly made use of a separate but closely linked European Court of Justice as an arbiter of disputes.  The Schengen agreement allowed citizens to travel throughout the Union without passports.   The straw that broke the camel’s back was the mass migration of three million EU citizens into the UK over the last decade as the EU allowed its citizens to move and work in all states within the union.   Many workers in new, poorer East European countries took advantage of this clause and moved into the UK – other richer EU states had applied a clause that limited this free flow but Britain did not because it had wrongly assumed that a much smaller number of migrants would come to the UK.  Another cause of this migration is because other EU states have taken much longer than the UK to recover from the recent great recession.

These developments were viewed with alarm by Euro sceptics, mostly in the Conservative party but also in the Labour party, notably among working class members who faced increased competition for jobs and depressed wages as a result of the migration.  The pushback however started much earlier.  Margaret Thatcher secured the famous rebate, reducing Britain’s contribution to the EU budget significantly.  Politicians and the tabloids railed against new regulations and detailed product standards, which they argued were costly to businesses and consumers.  The UK withdrew from the arrangement which pegged the pound to other European currencies and refused to join the common currency and the Schengen agreement. Politicians and the tabloids railed against the European Court. Britain has been very opposed to the idea of an EU military unit supplanting NATO.  In the European Commission and the European parliament, the UK has often been in the forefront of what it labels “common sense” approach to new regulations and the enforcement of regulations.

In unravelling the UK’s rift with its EU partners we need to look at the legal and political frameworks which are markedly different.  As a policy adviser for British farmers my colleagues in Brussels were often perplexed about the UK’s concerns with new regulations.  The continental approach was to simply transcribe new regulations into their national statutes.  The British government’s approach was usually to refer new regulations to its lawyers to check on how they fit in with existing statutes but even more important,  to check whether the government would be open to legal challenge in the courts.  In one notable case (paying growers to grub apple trees because of EU-wide overproduction) that I was involved with, but which no doubt applied to other cases, the government used force majeure.   This meant that that regulation was one-off and could not be used as a precedent in the future.  This is partly because the lack of a written constitution means that policies are often based on precedents set in legal outcomes.  On the political front, most EU countries, largely because of the use of proportional representation, cobble together groups of parties to form coalition governments, whereas in Britain, because of the electoral process and tradition, coalition governments are rare.  In industry, notably in Europe’s powerhouse, Germany, there is a tradition of owners, management and workers setting councils to formulate strategy and policy, markedly different from the UK where each of those stakeholders is entirely beholden to its members and very partisan in relationships with other stakeholders. Indeed this adversarial legal, political and economic tradition is viewed by Anglo-Saxon countries as healthy for politics and business but for continentals as unnecessarily confrontational.

The clock is ticking fast but the negotiation between the UK and its EU partners is crawling at snail’s pace.  Britain wants a comprehensive approach while EU partners want to settle key issues first, notably, the divorce settlement (UK payment for what the EU considers as current commitments), the status of EU/British nationals in Britain and other EU states respectively and the Irish/Northern Ireland border, the only land border between the EU and Britain, before the most important issue to the UK, trade arrangements can be discussed.  The UK has suggested Twenty billion pounds divorce settlement, a far cry from the fifty billion pounds that the EU has suggested.  Developments within both camps complicate matters.  In the UK, the two major (UK-wide) parties emboldened by gains in the recent general election and the SNP, which were in the Remain camp, want a soft Brexit and are clamouring for a significant input in the negotiations.  The UK government is weak, partly because it lacks an outright majority but also because the Conservative party is sharply divided between the Leave and Remain camps.  In the EU, Angela Merkel, whose party lost significant ground in the recent German election, is still cobbling together a coalition and until that process is completed, the most powerful country in the EU cannot be fully engaged in the negotiation.

The last two weeks have been tumultuous, with the British government buffeted from all sides.  The weakness of the government was demonstrated when Mrs May refrained from sacking government ministers that have been accused of serious transgressions; two have resigned, not sacked as they would have been in a strong government.  Two other senior Ministers that opposition parties feel should be sacked because of transgressions and allegation of impropriety remain in the cabinet.   The Financial Times reported last week that executives of major American companies have expressed frustration with the lack of progress and clarity in the Brexit negotiation, suggesting that they would be forced to relocate to other EU states from the UK.  Michel Barnier, the EU chief negotiator has given the UK government two weeks to state how much it will pay for the divorce bill before negotiations can move on to trade and other arrangements.  Business Europe, the pan-European grouping met with the Prime Minister seeking clarity and expressing serious concerns about the uncertainty generated by what it sees as lack of clarity on the part of the British government and slow pace of the negotiation process.  A letter spearheaded by Boris Johnson, the Foreign Secretary and Michael Gove, signed by other Conservative Members of Parliament (MP) exhorted the Prime minister to follow the mandate it was given in the referendum, which for the group, suggests a hard stand in the negotiations and hard Brexit.  The UK chief negotiator announced that MPs will have a vote on the deal negotiated, a statement that pacifies MPs but which may be meaningless as Britain would not be able to amend the deal without the agreement of the 27 other EU members states.

The final outcome of Brexit is still uncertain but there are a few broad scenarios.  The EU needs to make Britain pay a price for its decision for two reasons.  As a net contributor to the EU Britain’s departure will leave a big hole in the budget, hence the demands for a hefty divorce settlement and we should expect Britain’s divorce bill to be significantly higher than its initial offer.  The EU has to impose punitive action in trade terms as a warning to other members who might want to follow the UK’s example.   However Britain is a major economic, political and military player and that is something that the EU has to accept and factor in the negotiation.  The UK buys more from other EU member states than it sells to them so EU exporters will be wary of measures that would disrupt this lucrative market.  Businesses are concerned about disruptions to supply chains that have been developed over many years if hefty tariffs and other trade restrictions are imposed. The UK is a major investor in many EU states who would like to maintain such investment flows; other EU countries also have major investments in the UK.   There are far more EU citizens in the UK than there are UK citizens in the EU.  These factors, combined with the size of the UK market, suggest that the UK should be able to negotiate better terms than arrangements with other non-EU countries like Norway and Switzerland.

My predictions are that the UK will increase its divorce settlement significantly higher than its initial offer and negotiations will continue after the formal Brexit deadline of March 2019, into the two year extension that the UK has proposed.  The UK will continue to play a significant economic, political and military role in the continent, albeit at a less engaged capacity.  In the short run, many experts are predicting that the economy will take a hit and indeed many global brands have indicated that they would shift some operations to the continent, no doubt looking at the much bigger EU market and egged on by governments in those countries.  In the long run though one should never underestimate the Brits, who initiated the industrial revolution and were the chief architects of globalisation.  Britain, through conquests, alliances and plain skulduggery established its presence in all continents and moved people, products and services around the globe.  Brexit may be another opportunity to play a more global role and in a way, history tells us that it was inevitable.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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Compact with Africa – a game changer or another white elephant?

 

 

October 2017 – J Boima Rogers

At the G20 meeting in June this initiative was launched.  Is it a game changer or one more grandiose proclamation that will not go anywhere? The initiative, Germany’s support and recent developments suggest otherwise.  It will hopefully improve Africa’s investment climate.  At the summit, the project was spearheaded by Germany’s Angela Merkel, the leader of the largest economy in the most powerful economic group in the world, the European Union (EU).  Recent developments, namely, mass migration from Africa into Europe across the Mediterranean Sea, the Trump factor and new technology, suggests that the compact could be a game changer.

The project report was jointly produced by the African Development Bank, the International Monetary Fund and the World Bank. It would target and try to ameliorate impediments to private investment and ensure closer cooperation and coordination among stakeholders.  The priority is countries that have “sufficient administrative and policy capacity”, to ensure stable and appropriate macroeconomic (soft) infrastructure, namely; effective, efficient and stable business regulatory policies and practices and; efficient financial markets, risk mitigation and availability; peace and security; governance and; the rule of law.  The five countries, probably nudged by the project authors that initially expressed interest in the initiative were Ivory Coast, Morocco, Rwanda, Senegal and Tunisia.  The priority statement appears to work on the centre of excellence concept that is, demonstrating to other African countries that by putting their houses in order they can get support from external stakeholders and investment opportunities.

This initiative is undoubtedly the result of recent developments in the geo-political landscape.  It was announced at the G 20 forum under the German presidency of that body.  The EU, by default, has taken the leadership of the world as the US retreats under Trump’s America First posture. Trump by his statements and actions, is no friend of the non-White world.  His budget reduced the State Department appropriation by a third and his speech in Poland and views of his Alt Right support base have clearly indicated that his priority, other than military adventurism, is people of European decent.  He left the meeting when the initiative was launched. China and the two main former colonial masters, France and the UK, major players on the continent would obviously need to be key stakeholders.

German support of the compact is a good development for a number of reasons.  Firstly, it has huge financial muscle and large foreign exchange reserves from the hefty trade surpluses it has accumulated over the years.  It is the dominant economic force in the EU, the world’s largest trading bloc. This means that it has the financial muscle to bankroll the project and it can press the EU to open its market to Africa.  Germany’s educational system, notably, its superb technical vocational system is what is badly needed in the continent where the educational infrastructure has failed to develop a technical cadre that the continent needs.  Germany is the factory builder of the world and has a solid industrial base, a track record that will be relevant to African countries requiring this expertise.  Finally, it should be noted that the recent election setback for Chancellor Merkel when her party lost out to the far right might ironically strengthen her position in supporting the compact, by arguing that failure to facilitate economic growth in Africa could spur migration from the continent, something the far right is very much opposed to.

It has been noted that there have been a hundred plus development initiatives in Africa and this one may sound like another white elephant but this need not be the case for a number of reasons.  Firstly, countries must have “sufficient administrative and policy capacity” to be eligible; countries that have expressed interest in the scheme appear to possess this requirement. This means they have to have done their homework, rather than as is often the case where donors have had to do all the lifting, projects often collapsed as soon as foreign donors withdraw.   The emphasis would appear be on improving the chosen countries rankings in the “ease of doing business” indices that the IMF, the World Bank and other organisations compile. Countries that are highly ranked in those indices and have the relevant physical infrastructure attract investment.  African countries have to apply to join the scheme and in so doing set, own and manage the agenda rather than having projects thrust upon them that merely salve the conscience of developed countries and ex colonial masters. The centre of excellence concept should make the compact attractive to other African countries, they can see that improvements in the investment climate results in assistance from donor countries, increased private investment and consequently economic development and jobs.

If this initiative is to be really effective it must make use of technology.  Technology in the form of database, Big Data and the internet will be crucial.   The project must build a database of previous initiatives, projects, studies, processes and outcomes.  This will allow all stakeholders, notably, donor countries and organisations, African governments and commercial operators to make use of what has been done, obstacles and successes.  The project can make use of Big Data to build comprehensive and detailed profiles and analysis in real time.  This information should be posted on the internet, emailed to relevant parties and updated on a regular basis. This will allow participants to learn from history, each other and for all stakeholders to develop policies and projects.

Africa’s main ex colonial powers, France and the UK have the largest footprints on the continent in terms of history, trade, investment, aid and connections, a factor that must be recognised and their active participation in this project is required.  They would need to re-orientate their engagement with the continent to increased focus on making Africa attractive for investment.  Their programmes should factor this element and they should use their influence on African governments.  China, the largest trading partner and physical infrastructure investor has so far ignored soft infrastructure.  This is partly because that country’s emphasis is to showcase gleaming structures.  China is also mainly interested in the continent remaining a source of raw materials.  It needs to incorporate soft infrastructure in its engagement with the continent; it should realise that those structures can only be maintained when Africa develops its soft infrastructure and; an acceleration of economic growth would increase the demand for physical infrastructure.  It needs to use its expertise to help Africa develop its industrial base for intra-Africa trading as well as exports to China.

The compact sets new precedents because of a number of factors. By explicitly setting out to make the continent more attractive for investment, it will ensure that corporate brands become more prominent not just aid brands.  While the latter do much needed work, the sustainable path to economic development, as the case everywhere else, is the development of the private sector for investment and job creation.   It brings into prominence a new major player, Germany, which has the resources, track record and educational tradition that will add significant value to economic development.  The use of Big Data and the internet has huge potential in a number of areas. African countries can learn from “centres of excellence” on the continent that have implemented measures that have worked.  African stakeholders can and must take the initiative in doing the relevant homework, setting, owning and managing the development process.  The focus for all stakeholders should be on persuading African countries on the merits of building the capacity to own and manage the process.

Two additional factors that the compact does not address but which are very important in the development process are conflicts and population growth.  The former can be minimised because conflicts are often the result of poverty and unfair income distribution.  Increased economic growth which the compact would generate will reduce this pressure.  The conditions set in the compact, notably, governance and rule of law, should ensure a more level playing field.  A growing private sector and the ensuing relative shift in economic activity away from government control, which often gives undue powers to certain ethnic groups, is another way of levelling the playing field. Finally, as noted above, aid organisations can still assist with some of the most disadvantaged groups. The rapid population growth in Africa must be addressed, something that the compact does not cover.  Africa needs to confront cultural and religious taboos otherwise the fight against poverty can get nowhere.

I would like to highlight some papers in my blog that have addressed many of these issues, notably, “Africa must build and maintain its infrastructure”, May 2013.  That paper takes a unique approach in that it reviews the continent’s physical and soft infrastructure.  It also reviews the continent’s inter-Africa trade infrastructure, which has huge potential for development and moving up the food chain.  Another paper notes that African countries should take an approach akin to a beauty contest, making their countries attractive to foreign investors.  In my paper on the Rwanda experience, I highlighted that country’s impressive development from its nadir in the 1990s mirroring similar elements to the compact.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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Has Trump Lost the Plot?

August 2017 – J Boima Rogers

President Trump appears to have lost the plot after less than a year into the job which Obama and many observers, including members in his own party had predicted.  This was clearly evident on Tuesday, 15th August at a press conference which was supposed to be on infrastructure but quickly descended into a typical brawl with the media on the Charlottesville clash between KKK, neo-Nazis and White supremacists on one side and protesters against that group.  Trump reverted to type, equally blamed both groups to the consternation of politicians from both major parties and even the two former Bush (Republican) presidents.  This event followed a tumultuous month including bellicose rhetoric on North Korea, fights with the Republican Senate majority leader regarding the failure of that body to pass a bill on healthcare, denigration of his Justice Secretary, the dismissal of key aides and the continuing Russian election investigation.  The administration appeared to have taken corrective action with the appointment of the well-respected General Kelly to replace Reinbus as chief of staff and then came Charlottesville.  The Charlottesville crisis is however only one more of the constant barrage of chaotic events never seen before in this office.  Trump who came to fix America appears to bring chaos into the system, damaging his incoherent agenda, his party and America.

The Charlottesville fiasco has shown Trump’s real colours.  The well prepared statement on Monday, which in line with mainstream politicians lambasted the neo-Nazis, was not really Trump.  A combative Trump in the press  conference on Tuesday in which he reiterated a moral equivalence between neo-Nazis and protesters as he did in his first statement was the real Trump, rather than the caged animal on Monday.  It is hard to imagine that the President of the USA, which had fought wars to free enslaved African Americans and Nazi Germany, would refer to neo-Nazis as “good people”.  It is hard to believe that a President of the USA would support a general who had rebelled against the federal government because the rebels wanted to keep a section of the populace in slavery and compared that general to heroes of the American Revolution. Where else in the world would you have a statue of a rebel who tried to break up a country getting the support of the President of that country?  It is hard to believe that the President would support neo-Nazis who are advocating hatred and subjugation of non-Whites.  Trump claimed that his original statement and the delay in issuing the much appreciated denunciation of the neo-Nazis was because he was waiting for facts on what really happened.  This goes against numerous actions he has taken regarding terrorist incidents around the world, when he has frequently tweeted condemnation and inflammatory statements about perpetuators almost in real time. Indeed Trump had time to denounce the African American Chairman of Merck who had resigned from his manufacturing council because of Tump’s action almost immediately after the resignation, even before his denunciation of the neo-Nazis?  And Trump has remained silent on attacks on Muslims, even in his own country, while lambasting attacks by Muslims abroad.  The Charlottesville incident has confirmed that Trump is beholden to neo-Nazis who regard themselves as superior to all other races in this polyglot nation.

Crucially for the self-styled doyenne of the business world, the Charlottesville fiasco has resulted in a barrage of criticism from business leaders. Mass resignations from two councils on manufacturing and general business that he had set up have resulted in him disbanding both groups.  However the rot started even before this incident.   He has yet to get any significant legislative win and is obsessed with Obama’s legacy, no doubt because of his racist tendency.  His attempt to repeal and replace Obamacare has flopped and he faces major hurdles in his other legislative agenda, namely, tax reform and infrastructure.  He has a crowded schedule in the next few months which, together with his lack of a clear and coherent vision and strategy, experience in politics, interest in in the intricacies policy formulation and his laziness will make him one of the most ineffectual leaders the country has had.

Republicans in congress are pushing the president to move on to tax reform even though Trump is still obsessed with health care.  Tax reform is a minefield that Trump is ill prepared to deal with.  It was assumed that savings from health care would have been used to part fund the tax give away that Republicans planned; that is no longer possible.  There are many competing interests and Trump has shown that he is unable to deal with such complexities.  Recent polls have shown that the public is not enamoured with huge tax reduction for corporations that the Republicans have been touting.  The public appears to believe by and large that personal taxes are currently fair. Crucially, observers have noted that the administration’s position in two areas have resulted in missed opportunities to raise revenue and conflict with Trump’s stated objective of making the US more competitive.   The administration, in its push for deregulation is reviewing Obama’s 385 tax rule and has postponed its implementation by a year from 2018.  This rule was intended to combat tax avoidance but also make American companies more competitive.  It eliminates a major tax advantage foreign competitors have over U.S. businesses in the latter’s home market: the ability to avoid U.S. corporate taxes via interest stripping.  The administration has also abandoned the Border Adjustment Tax (BAT) proposal that had been championed by Paul Ryan, the Speaker of the House.  That proposal which would tax imported goods consumed in the US but not exports, much like the value added tax in most industrial countries, would have raised significant income for the Treasury while giving US based producers a competitive advantage, thereby also helping stem the country’s huge trade deficit.  Trump is therefore not adhering to his America first principle but also losing out on significant revenues.  The planned tax cuts will increase the budget deficit without spurring significant economic growth as has been the case in previous initiatives.  Both the Reagan and Bush tax cuts resulted in lacklustre growth, much less than under Clinton and Obama when the opposite happened in taxes, economic growth and employment. The increase in the deficit is likely to be a point of contention with Republican deficit hawks and Democrats are not going to be too keen on tax cuts that disproportionately benefit the rich. Trump’s infrastructure plan is as yet a vague idea as his press conference on Tuesday demonstrated. Suffice to say it will be another opportunity for corporations to have rich pickings, no doubt to the cost of tax payers and users. While Trump and members of his team view this as a bipartisan project, expect opposition from Democrats and Republican deficit hawks in Congress.

All is not gloom for Trump’s agenda because the Environmental Protection Agency (EPA) is currently assaulting America’s environment by dismantling Obama’s rules and Executive orders which have protected country’s land, water and air.  The Justice Secretary, like Trump, an ethno-nationalist, is tightening immigration to effectively stem the diversification of America – the majority of immigrants are non-White and the birth rate or non-Whites are higher than for Whites hence their concern.  There will be tweaks with NAFTA, ironically using the tools that Obama created for TPP that Trump abandoned.

Trump has indeed lost the plot and it is hard to see how he can resuscitate this sick patient.  His chaotic administration is embroiled in one scandal after another. He has antagonised and insulted members of his team, party and the business community.  That and his lack of success and unpopularity are making it hard for him to lead his party even though they control both houses of congress.   In 2018 the House of Representative and some Senators will be facing voters and he is likely to be an albatross on his party, if he has not been impeached by then.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) www.oxfordmemo.co.uk

 

 

 

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Should Rwanda be the template for project Africa?

J Boima Rogers – July 2017

The rise of Rwanda from its nadir in 1994 when 800,000 people were killed in genocide against the minority Tutsi has been phenomenal.  Economic and social indicators have out-performed other countries in Africa and around the world.  How did Rwanda achieve this feat in just over two decades?  Yes there are caveats to the story, notably, issues regarding the democratic process and the sustainability of this model. However, even with this caveat the Africa project can learn a lot from this Rwanda success story.   How can Africa learn from this project and what are the implications for foreign partners?

I have used the project concept because in Africa, Asia, the America and Australasia the nation states were conceived and constructed by European powers and for much of Africa and Asia this nation state concept is very much in transition.  Whereas Europe had negotiated and fought for centuries to develop its nation states, the countries in rest of the world it conquered, created and ruled were based on the interests of European powers, formalised at the Berlin conference in 1884.  Fifty to seventy years ago African and Asian countries were given independence with little preparation for their newly minted status.  Since then they have faced major challenges and used a number of models in development with varying degrees of success.

The Rwanda case is a fascinating one that African countries could learn from. Rising from the ashes of the 1994 genocide, the country has made impressive economic and social gains.  GDP (PPP) doubled from $575 in 1995 to almost $1,170 in 2012. Between 2001 and 2015 it achieved an average of 8% GDP growth rate. The total value of exports increased at a rate of 20% per annum in the decade up to 2014. Nearly 620,000 tourists visited Rwanda in 2010 – just short of a six fold increase on the 105,000 recorded in 2000.

Strong economic growth resulting in substantial improvements in living standards has been accompanied by significant gains in social indicators.  The country spends huge proportions of its national budget on health and education. In 2011, almost 24% of total government expenditure went to health and 17% to education. It has achieved near-universal primary school enrolment. Life expectancy has risen from less than 48 years in 2000 to 65.7 years for women 62.4 years for men in 2011.  Deaths of under-fives have fallen from 230 per 1,000 live births in 1998 to 55 in 2012. Infant mortality has also plummeted – from 120 deaths per 1,000 live births in 1998 to fewer than 40 in 2012.   Rwanda tops the global league tables for the percentage of female parliamentarians. Fewer than 22% of MPs worldwide are women; in Rwanda, almost 64% are.

Rwanda achieved its success because its leaders had the vision, plan and ownership of the process.  The emphasis has been on developing its infrastructure, that is the physical and soft infrastructure as defined in a paper published in this blog in 2013 (Africa must develop its infrastructure).  The leadership has clearly outlined economic and social goals and measures that need to be taken in detailed plans on how to achieve them. The ownership factor has been crucial in the development process, because rather than allowing foreign partners to just jet in and prepare reports, make decisions on strategies,  plans and their implementation, the Rwandan government has emphasised the importance of its citizens setting the development agenda and being involved in all aspects of the development project.  It has clashed with foreign partners when it believes that policies advocated are not in the interest of the country.  A notable current case is the importation of second hand clothes where the government is taking a hard line against such imports because of the damage to its textile sector, to the extent that it is willing to go against the US which is arguing that the Rwandan policy contravenes the Africa Growth and Opportunity Act (AGOA) rules that gives goods from Africa preferential access to the US market.

Key factors in the Rwanda story relate to corruption, efficiency and effectiveness of the government.   The country was ranked as the third least corrupt country (tied with Maur1tius) in Africa by Transparency International in 2017.    The government has made major strides to create an efficient regulatory framework, which makes it much easier for private visitors, investors and aid organisations to operate in the country.  Finally, in a continent noted for failed or abandoned projects it has been effective in its delivery.   There are tangible physical evidence and solid statistics of project outcomes.   Rwanda was the third ranked African country in terms of its competitiveness by the World Economic Forum at number 52, behind Mauritius and South Africa in 2016/17.  In the table below compiled by The World Bank on ease of doing business, the country was ranked overall at 58 globally in 2017, an improvement on the previous year. It was the second highest ranked sub-Saharan African country in the index, after Mauritius.  Amazingly, it was ranked fourth in registering property and second in getting credit in the world as a whole.

Ease of Doing Business – Rwanda’s ranking in the world
2017 rank 2016 rank
Overall 58 59
Starting a business 76 109
Dealing with construction permits 158 110
Getting electricity 117 119
Registering property 4 12
Getting credit 2 2
Protecting minority investors 102 97
Paying Taxes 59 48
Trading across borders 87 131
Enforcing contracts 95 117
Resolving insolvency 73 69
Source: World Bank

 

The International Growth Centre in a review of the cost in terms of number of hours and monetary value of border and documentary compliance of members in the East African Community (EAC) found that Rwanda was the most competitive country in the group.  Worldwide, it was ranked 87th, higher than Kenya, 105th, Uganda, 136th and Tanzania 180th.

The efforts of the Rwandan government have resulted in positive outcomes three areas.  It has attracted foreign investors, tourists and foreign aid.  In 2005, Foreign Direct Investment (FDI) was less than 5% of gross fixed capital formation; in 2015, these inflows amounted to 24%, 8-10 percentage points higher than other countries in the EAC. FDI reached US$320 million in 2015, equivalent to 4% of GDP. This is well above the average for sub-Saharan Africa, comparable to Uganda and Tanzania and well ahead of Kenya.  One crucial aspect of Rwanda’s FDI is that a high proportion (40%) comes from other African countries, an indication that other African countries view the country as a good and safe return on investment.  The strong Rwanda brand has seen a very rapid expansion in tourism as noted above. Finally foreign aid donors have continued to pour aid at US113/head, much higher than the level of other countries in the region, because of the efficiency and effectiveness of projects in the country.

The Rwanda experience is far from perfect and has many issues.  Firstly, it is a small country, in terms of population and area.  There are only two ethnic groups and one indigenous language compared to other African countries with multitudes of ethnic groups and languages.  While the economy has grown significantly, it is still classified as a low income country with foreign aid forming an unusually large proportion of its economy and budget.  The ethnic divide may not be highly visible but it is still a major underlying factor that caused the genocide and could still is a destabilising factor in the future.  The major driving force is President Kagame, who is often viewed as the archetypical strongman. What happens if the Hutu majority is again mobilised against the Tutsi minority and/or when Kagame leaves office, dies or is toppled.   There are allegations of political and press suppression that the government has yet to fully account for.  The country has been accused of interfering in the Democratic Republic of Congo militarily and economically.  However even with these issues, which have yet to be fully validated, the country has achieved a lot since its nadir in 1994 and in many respects therefore the rest of Africa can learn from its experience. It should be noted also that when Kagame and his team ended the genocide they were benign in the treatment of the perpetrators, bringing to justice only the ringleaders even though a much wider group took part in these despicable actions.

The Africa project has a lot to learn from Rwanda as do the other projects around the world.  After the passion of independence, the reality check of the day after the party the Africa project stalled and in some instances went off the rails.  The Rwanda experience with the vision, plan and ownership of the Kagame regime is the antidote that many countries need.  While many other countries have far more natural resources than this small country, they lag behind in so many ways.  Governments are often viewed as the piggy bank that must be raided, jobs offered to friends and relatives without people manning those posts and/or providing any service, just receiving salaries and income from bribery.  Consequently, citizens do not receive the services and investors are deterred from investing in business ventures.

As noted above, there are issues with the Rwanda model, the most critical being democracy.  The ideal scenario of free elections, media and judiciary is theoretically crucial in creating a framework for economic development.  Empirical evidence however suggests that economic and social developments are not an increasing function of this democratic ideal.  The greatest economic and social case in modern times, China has not followed that path.  Other cases include Singapore and Malaysia, both projects created by Europe, which have experienced phenomenal economic and social development without going through this democratic ideal phase fully.  Does it therefore matter to the poor peasant in rural areas and slum dweller in towns and cities? In cases noted above, governments have demonstrated vision, plans, ownership and investment in infrastructure, critical factors that have spurred and nurtured investment by local and foreign investment.

In Africa in the 1960s and 70s Houphouet Boigny of Ivory Coast was the best example of such leadership which led to the transformation of that country in terms of its physical infrastructure although he was not so successful in building the country’s soft infrastructure.  In the last two decades Ethiopia is another example of rapid economic and social transformation but with allegations of political repression.  Other African countries like Cape Verde, Mauritius and Botswana have demonstrated good governance, low level of corruption and high efficiency levels.  Ghana is the gold standard in terms of parliamentary democracy having changed governments several times in the last two decades.  However none of these other African countries have achieved the performance of Rwanda in terms speed and rate of economic and social transformation. In the case of Ghana, ironically, the democratic process, which entails compromises and rewarding loyal voters, may have hampered its efforts to minimise corruption and improve efficiency.  I have therefore highlighted the Rwanda experience as an example for other African countries for a reasons noted above.  African countries can and must learn from each other as this is the best way, because it is not through a text book process or fleeting visits by consultants but the practical approach, a country with similar background which has proven it can be done.  Using Rwanda as a case study is also a significantly cheaper process.  This does not mean that outside assistance is not required.

Major foreign partners need to use Rwanda as a model for other African countries.  The key players are likely to be Europe and China.  Europe, which conceived the Africa project and has the strongest link recently announced at the G20 meeting a “Compact with Africa” initiative which aims to increase investment in Africa with the aim of  reducing corruption, improving the regulatory environment, and enhancing skills.  This German initiative should be welcomed.  China which has increased its commitment to the continent in terms of aid and trade needs to up its game in terms of ownership and corruption issues and go beyond viewing the continent as merely a source of raw materials.  These are dark days for USA/Africa partnership under the Trump administration.  This was evident in the recent G20 meeting in Germany when he left the room during discussions on the German proposal on Africa.  That combined with his American First ideology, sharply reduced state department budget and  other developments suggest a significant retrenchment in American engagement with Africa other from a military perspective – note the recent bombing in Somalia.  The focus of these project partners must be improvement of Africa’s physical and soft infrastructure to ensure that aid is more effective and the continent is more attractive for both domestic and foreign investors.  This focus makes the Rwanda model very relevant.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford http://www.oxfordmemo.co.uk.

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