“Babylon is falling, it was foolish to build it on the sand.” Steel Pulse – Handsworth Revolution.
It was over 30 years ago that UK reggae band Steel Pulse made this observation of what Rastafarians refer to as ‘Babylon system’. True, it was informed more by their Garveyite beliefs than by observation of the world economy, but it is truer today than it ever was. For those of you who didn’t have the benefit of growing up in the church, let me recount to you the biblical verse that Steel Pulse were referring to in full.
And every one that heareth these sayings of mine, and doeth them not, shall be likened unto a foolish man, which built his house upon the sand: And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it. Matthew, chapter 7, verses 26, 27 .
In economic terms the rain is falling and the winds are blowing like billy O. The formally great economic powers of the West, like the foolish man of the Bible, have built their houses on the shifting sands of easy credit, toxic debt and sub-prime mortgages, and as any builder knows, a house built on weak foundations, no matter pretty it looks from the outside, will eventually fall.
The struggling economies of the world are now known by the acronym the P.I.I.G.S. standing for Portugal, Ireland, Italy, Greece and Spain. The few thriving economies of the world are known by the acronym B.R.I.C.S standing for Brazil, Russia, India China and South Africa.
Are you noticing a pattern? Europe is in trouble. In May 2012 more than one in ten people in the Eurozone were out of work – the highest since the Euro was launched in 1999. Some 17.4 million people are looking for work across the 17 country bloc, with 3 million of those aged under 25. Greece and Spain are struggling the most with joblessness among the under 25s standing at 51.1 per cent according to Eurostat figures. Nearly half the Eurozone is officially in recession.
Should Greece crash out of the euro then the International Monetary Fund (IMF) will have to step in to support Athens on its return to the Drachma and Eurozone leaders would then have to try and save the banking systems of Italy, Portugal and Spain. Countries who receive a European bailout then have to deal with the Troika who then dictate that country’s domestic economic policy. They have already forced out the democratically elected leaders of Italy and Greece.
But all of the western economies are struggling, not just the PIIGS
U.S. President Obama has fought valiantly over the last four years to pull the US economy out of decline, but in June the unemployment rate reached 8.2%. California’s economy is the biggest in the United States and the ninth-largest in the world. It was also one of states hardest hit by the 2007-2009 recession with the unemployment rate averaging 11.1 %. Southern California was particularly hard hit by the collapse in the housing market with an epidemic of foreclosures. Today, 44 % of homeowners in the region owe more on their mortgages than their homes are worth. In June the city of Stockton in California declared itself bankrupt, the largest US city so far.
U.K It was announced in May that the U.K. had fallen back into recession. UK manufacturing is at its lowest for three years and the U.K. economy is predicted to grow by just 0.1% in 2012. Unemployment is a massive problem for the young, and as always for young Black men it is even more dire. Research by the Office of National Statistics published in 2012 found that unemployment rates for 16-24 year olds from and African and African-Caribbean background are double that of white job seekers, with 56% of Black men and 39% of Black women being out of work.
Whilst the economies of the West, (formally known as The First World) are failing. The rest of the world, (formally known as the Third World, and now referred to as the Developing World), are racing ahead.
It is estimated that BRIC economies will overtake G7 economies by 2027. The economies of the West now rely on India and China, not just to manufacture their products, but to consume them as well. The British luxury car manufacturer Jaguar Land Rover announced record profits this year, thanks mainly to a growth in demand from China. But this is not really a British success story as the company is now owned by Indian firm Tata. This trend is evident even in football as African born former Chelsea striker Didier Drogba has signed for Chinese club Shanghai Shenhua on a two-and-a-half-year deal.
The U.S. dollar has for long been the world’s reserve currency and part of the source of the US’s global power. With the decline in US dominance the euro was on its way to becoming an alternative reserve currency until the recent crisis in the Euro-zone. With an eye on the approaching dollar crisis the leaders of China, Russia, Brazil, South Africa and India met this year to discuss forming a new bank that would shield their economies. At the fourth annual BRICS summit held in New Delhi in March 2012 the country’s leaders declared their intention to set up a development bank to mobilise “resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.
The five countries intend to settle their trade with one another in their own currencies and cease relying on the dollar. Since Western powers maintain their grip on the world’s major financial institutions like the World Bank and the IMF, these rising powers have simply side-stepped them, setting up new institutions and using old minor ones in new ways.
Seven of the world’s ten fastest growing economies are in Africa. A recent report from the African Progress Panel found that African countries were growing consistently faster than almost any other region, with booming exports and more foreign investment. Ghana was the fastest growing economy in the world in 2011.
Ethiopia The country that in our minds is synonymous with famine is also getting busy. Its economy expanded more quickly than China in the five years to 2009. The drinks giant Diageo has recently bought one of the country’s previously state owned breweries.
Zambia – one of the world’s top copper exporters has seen increased investment by Chinese firms in various sectors from copper mining to massive infrastructure projects like hospitals, a power station, roads and two stadia.
Trade Not Aid in Africa
More enlightened countries, not hampered by ideological shackles, have been trading with Africa for some years now. Some 5,500 Cubans are working in 35 of Africa’s 54 countries. While Cuba sends physicians to Africa’s poorest countries and grants scholarships for their students to study medicine on the island, it does brisk business with more prosperous countries on the continent – especially those that are rich with oil and poor in health professionals. Ghana recently announced that they had reached a deal with the Castro government to train 250 doctors over a 6 year period.
China’s involvement in Africa is well documented. At present Ethiopia, Kenya, Ghana, and Sierra Leone are all beneficiaries of major road projects supported by China. During the last three years China has given more loans to developing countries, mainly in Africa, than The World Bank. Trade between China and the continent has increased in the last decade more than six-fold to $120 bn in 2011, making China Africa’s largest trade partner.
Of Western donors, only Germany spent more than 15% of its aid on infrastructure in 2009-2010, while South Korea and Japan spent over 40%, and China 60%.
According to Ethiopia’s Prime Minister Meles Zenawi “China’s re-emergence and its commitment for a win-win partnership with Africa, is one of the reasons for the beginning of the African renaissance.”
I am not so naive to believe that China is so involved in the continent because they like Black people and want to help. They are obviously there because they feel there is something in it for them. As Zambia’s deputy finance Minister Miles Sampa said “The Chinese are not our relatives or friends, they are here for business and they are our partners.”
Brazil’s trade with Africa grew fivefold between 2002 and 2009. In the last year, the GDP (gross domestic product) Brazil overtook both France and the UK, making it the world’s 6th largest economy. In June it was announced that Brazil and China have jointly reinforced their financial reserves with a $30bn swap arrangement that aims to offset further instability in Europe and the US. China has overtaken the US as Brazil’s major trading partner and the two countries will also set up culture centres and language networks in each other’s countries.
Yet in the Western media all we seem to see are Brazil’s notorious favelas. Perhaps the distorted portrayal will be redressed by African American filmmaker Spike Lee’s. He is currently working on a documentary titled Go Brazil GO! which will focus on the rise of that country on the international scene.
Despite the fact that these trends are reported on the news, the rest of the Western media doesn’t seem to have caught on, and are still pandering to old stereotypes. I can’t turn on Sky news without every ad break being assailed by images of starving African children. In 2011 British television aired two documentary series focusing on the developing nations, one about Nigeria and the other about India. But the new millionaires and budding entrepreneurs of those countries were strangely absent. Instead Welcome to Lagos focused on people eking out a living on a massive rubbish tip, and the Grand Designs special focused on people living in the Slums of Mumbai. Once again perpetuating images of poverty in the Third World.
One TV documentary that I’m still waiting to see is one on Mo Ibrahim. Haven’t heard of him? Let me fill you in.
He holds three degrees – from Egypt’s Alexandria University and Britain’s Bradford and Birmingham Universities. When he finished his PhD, he got a job with BT, working on its early mobile phone projects. Instead of staying with BT and banging his head against the glass ceiling, he took his telecommunications knowledge to Africa. With industry experience under his belt, he started Celtel in 1998 and capitalised on Africa’s mobile phone explosion. By 2004, the company had over 24 million mobile phone subscribers in 14 African countries and he sold it to a Kuwaiti firm for $3.4 billion. With the proceeds of the sale, he set up the Mo Ibrahim Foundation. and came up with the idea of a prize for good governance. The Foundation also compiles the Ibrahim Index, Africa’s leading assessment of governance which compiles rankings of countries according to four categories: Safety and Rule of Law, Participation and Human Rights, Sustainable Economic Opportunity, and Human Development. In 2008, Dr Ibrahim was listed by Time Magazine as one of the 100 most influential people in the world. While Channel 4 shows us documentaries of poor Nigerians eking out a living from Lagos rubbish dumps, I’m still waiting to see a documentary on him.CONCLUSIONS
As the western media like to remind us on a daily basis there is still much poverty in Africa. According to Duncan Clarke of the management advisory group Global Pacific, 70% of Africans live on or below the $2 a day range, and in some countries the figure is higher. But the other reality that we don’t see is that of the emerging middle class. Although only 5% of the continent, that still represents about 50 million people, spread in different countries, concentrated largely in high income countries such as South Africa and Nigeria.
The Chinese are open and unapologetic about their strategic objectives in Africa. It is hungry for Africa’s natural resources and has secured deals for oil, minerals and trade. But at least they are dealing with Africa as partners, rather than taking the patronising paternalistic attitude that has hamstrung the West for so long.
”These three countries (China, India and Brazil) along with South Africa are steeped in anti-imperialist tradition and ideology that promotes self-reliance and partnership over the faux charity of colonial powers which give with one hand and crush with the other,” says journalist Jonathon Glennie . Their growing prominence is a welcome balance to the deeply ingrained arrogance of western donors.”
In previous centuries, the West grew rich by exploiting both the natural and human resources of the African continent. After the end of slavery, and the demise of the Empire and colonialism, the West has salved its guilt by giving aid and charity, viewing the helping of the poor helpless Africans as ‘the white man’s burden’, and thus continuing to perpetuate Africa’s dependency. China on the other hand, unburdened by centuries of racist preconceptions is now in Africa doing business. Maybe, as opportunities in the West dry up, it’s time that we of African descent in the diaspora, went and joined them.
Just to show that I walk how I talk, I will be taking a trip to Ghana in September. Stay tuned for reports of my discoveries in future posts.