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Reviewing the world economic model, By Lekan Sote

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The newly elected President of Argentina, Javier Milei, promises to smash orthodox economic models in Argentina. He vowed to cancel a slew of government ministries, departments and agencies, including the Central Bank of Argentina.

Kenyan President William Ruto, who wonders why Africans must use the dollar for intra-African trade, says, “From Djibouti, selling to Kenya, or traders from Kenya selling to Djibouti, we have to look for US dollars. How is US dollars part of the trade between Djibouti and Kenya?”

He adds, “That is why Kenya champions the Pan African Payment and Settlement System that is done by our own institution — the Afreximbank… Why is it necessary for us to buy things from Djibouti and pay in dollars?”

Proof that the world is taking note and acting on this argument is in the fact that China, the world’s second-biggest economy, initiated a Yuan-Naira payment arrangement for trade with Nigeria.

This international payment option will bypass the Belgium-based Society for Worldwide Interbank Financial Telecommunications system, operated by G-10 Nations to power global money and security transfers.

Russia, warring with Ukraine, its former client state, now insists on receiving its currency, the ruble, for the gas it sells to (especially) the Western European members of the North Atlantic Treaty Organisation military alliance.

The blurb of Thomas Pakenham’s “The Scramble for Africa,” a historical account of how the West took over the fortunes of Africa, observes that, “Europe was experiencing a period of economic stagnation (in the closing years of the 19th Century) and (thought that) Black Africa might be… an El Dorado, a new market and tropical treasure.”

Pakenham stated that the missionary, explorer and medical doctor, David Livingstone, had suggested ‘the 3 Cs,’ of commerce, Christianity and civilisation, which he cynically interpreted as “a triple alliance of Mammon, God and social progress,” as a remedy for the blight of slavery and slave trade in Africa.

Livingstone’s conclusion that “trade, not the gun, would liberate Africa,” is just a pacifist route for Western nations to rule the economy of Africa.

GlaxoSmithKline Beecham is vacating Nigeria which no longer serves its commercial purpose.

Dr Patrick Lumumba, lawyer, social activist and former Director of Kenya School of Law and the Kenya Anti-Corruption Commission, probably a motivational speaker to African politicians, has urged Africans to define their terms of economic and political engagement with the world.

Maybe Milei, who vows to dollarise Argentina’s economy, is cynically pointing out that the metropolitan economies have become so dominant that peripheral economies may have no need for their own currencies. By the way, the Argentine peso bears the American dollar sign.

Dollarisation will mean either the substitution or simultaneous use of the dollar with the currency of Argentina, the largest debtor of the International Monetary Fund, with a killing 143 per cent inflation rate.

It looks like the people of Argentina, their Western economic policy advisers and the rest of the world will see even more iconoclastic policies from the oxymoron in the radical, yet far-right, Milei.

Anyone who knows the workings of capitalist economics and can read economic trends knows that beyond becoming “flat,” the world and its increasingly interdependent economy will sooner or later be ruled by a single leviathan that operates from wherever the international monopoly capital chooses between New York, Beijing, London, Berlin or Tokyo, or even Pretoria.

Japanese business consultant, Kenichi Ohmae, has shown how cross-border businesses almost no longer have national addresses but take up an amorphous identity as it becomes more difficult to classify the legal residency of their ubiquitous international monopoly capital owners.

Ohmae says: “National borders are now irrelevant to most companies and consumers, regardless of whether they are in Japan, North America, or Europe. Current frictions and clashes at the national level may seem serious, but they are insignificant at the microeconomic level where customers buy and companies sell.”

The first place to look into for the tendency that the world’s economies may eventually merge into one is the consumerist outlook of the “glocal” citizens, the ultimate cosmopolitans, who dress, look, speak and exhibit the Western materialistic attitude wherever they are resident in the world.

Ohmae adds: “Americans are eager to buy (Japanese) Sony Walkmans and wear (Italian) Benetton sweaters. Like other cosmopolitan consumers in advanced industrial countries, they acknowledge the value of good products and buy them, regardless of their country of origin.”

If you took this “one-world” idea to the ridiculous, even bizarre, extent, you would have observed that striptease dancing, cross-dressing, even the LGBTQ syndrome and the biologically ridiculous idea of a transgender are trending throughout the metropolitan and peripheral nations!

Another evidence of the “one-world” trend is the global brands and the multinational corporations that manufacture, market, distribute and advertise them. Nearly everyone in the world today knows and craves one global brand or the other.

Again Ohmae points to an irony that hits the West: “The (now materialistic) Japanese (consumers) are not aware of contributing to imports when they drink the products made by Coca-Cola, nor do they feel any duty to drink a Japanese brand instead….

“They pay no attention to the fact… that Coca-Cola is an American company, or that Kleenex tissues are made in Japan by a joint venture that is 50 per cent American-owned. Schick has the largest share of the Japanese market for razor blades, but Japanese men don’t feel they have jilted the leading domestic (razor blade) brand!”

These global brands include European football teams and fast-moving consumer goods, like dresses, accessories, shoes, personal hygiene products, wines, beers, and quick-service restaurants, like Kentucky Fried Chicken, Domino’s Pizza and Nando’s.

But how all these work, almost like one big orchestra, to impose one culture and one economic model on the whole world, is the more intriguing part: Finance, technology and marketing communications are the nodal nexus in this intricate loop.

Yet the workings of the mechanism of Western capitalism have an inherent problem. By continuously adding layers of costs on a product, as it travels throughout the labyrinth of the market, a product acquires added costs that are almost irreversible.

It may be difficult to replace this cost-loading template that has permeated even into the communist systems (run by Communist China under Chairman Mao), and the Union of Soviet Socialist Republics (spearheaded by Lenin)!

Today, China and Russia are leading capitalist economies, even if communism and socialism are tucked in somewhere in the formal posturing of their Marxist political literature and economic theories.

The hypocritical USSR, under Stalin, appointed Dr Amanda Hammer, whose father emigrated from Russia to America, to establish Occidental Oil company, to handle Soviet Union trade in petroleum, gold and mink, with capitalist economies of the West.

The Minister of Finance, Wale Edun, who is also the Coordinating Minister of the Economy, needs to assemble economic theorists, corporate players, and entrepreneurs to review Nigeria’s current economic template and design a new one.

Just as Western democracy is not quite working out for Africa, as former President Olusegun Obasanjo and former Ekiti State Governor, Kayode Fayemi, have observed, the spiralling cost-loading template of the West is also not working for Africa.

Nigeria must evolve an economic template that works for it, and halt the hand-me-down template that holds its economy down for the West to exploit.

X (formerly Twitter):@lekansote1

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How South Africa, US elections could shape Tshisekedi’s bread in Kinshasa, By Charles Onyango-Obbo

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The conflict in the eastern Democratic Republic of Congo, the future of the giant country, and that of President Felix Tshisekedi in Kinshasa could be dramatically altered by two distant elections. The first is South Africa’s May election, and the second is the US presidential vote in November.

A region already in turmoil was plunged into a new crisis when the M23 rebels returned to war after a nine-year hiatus, blaming Kinshasa for reneging on the terms of the political settlement that ended the fighting over a decade ago and for the persecution of the Kinyarwanda-speaking people of the country. That persecution has, in recent months, become a full-on ethnic cleansing campaign.

The M23 has since had its tail high, with a string of military victories that have seen it capture swathes of territory. The long-running, largely ineffective UN peacekeeping force, Monusco, which failed to pacify the region, has begun a phased withdrawal, in the face of popular Congolese anger against it.

The East African Community Regional Force (EACRF) was bedevilled by the murkiness of Congolese politics and retreated at the end of 2023 after barely a year.

In Kinshasa, the war rhetoric and accusations and attacks against Rwanda for backing M23 — a charge Kigali denies — has reached fever-high, with President Tshisekedi threatening to march into Rwanda.

That has further inflamed sentiments against Congolese Tutsi, with daily reports and social media videos of lynchings. It also seems to have driven the Kinshasa government into a deeper alliance with FDLR, the largest of the 120 rebel groups in eastern DRC, which comprises elements blamed for the genocide against the Tutsi in Rwanda in 1994, and who fled and set up shop in eastern DRC after their defeat by the ruling Rwanda Patriotic Front (RPF).

 

In recent weeks, a force from the Southern African Development Community (SADC) has stepped in to help the Kinshasa government. Anchored by South Africa, which plans to have nearly 3,000 troops, it is looking to defy an inescapable trend of the past 60 years: Every foreign force has, in the end, lost its shirt in Congo.

Two South African troops have already been lost in shelling of their camp by the M23, and the rebels are alleged to have shot at one of its helicopters.

The two main opposition parties in South Africa, the Democratic Alliance (DA), seen as a largely white party, and radical Economic Freedom Fighters (EFF) led by Julius Malema, have both been very critical of South Africa’s return to the Congo war theatre. They argue that the South African Defence Forces is a shambles, and the money spent on the DRC intervention would be better invested back home in an economy with the highest unemployment in Africa.

Three months before the election, most polls and analyses project that the ruling African National Congress (ANC) could have its worst performance at the ballot since 1994, when it won power following the end of apartheid.

While it could still win the most votes, it will be less than 50 percent, which will force it to govern as a coalition with parties that oppose its DRC project. A South African withdrawal, or significant cutback, would all but collapse the mission unless Tanzania steps up to the plate.
That is unlikely — at least not until after the October 2025 election. Tanzania, after all, did not join the ill-fated EACRF mission.

A lot would then rest on the US position. The US has flip-flopped on the eastern DRC conflict, bouncing between criticising Rwanda for alleged support of the M23, scolding Kinshasa for aggravation, and playing mediator.

In recent weeks, though, it has cosied up to Tshisekedi, and even briefly whitewashed the FDLR, calling it simply a “negative force,” a move from its previous categorization of it as a terrorist organisation, which seemed to sweep its genocide credentials under the carpet.

Scrambling to stem the shock, the US representative at the United Nations in New York, quickly put the FDLR back into the “terrorist organisation” box.

Regional analysts in East Africa, and many people in Rwanda, think Washington’s posture in DRC is driven by the need to get a slice of its vast precious mineral resources.

They specifically point to the heavily US-backed Lobito Corridor, a 1,344-kilometre railway project linking the Angolan port of Lobito to DRC through Zambia, through several large mineral deposits.

It is also a foil to China’s Road and Belt and would checkmate rival Russia’s further advance towards Southern Africa through a Central African corridor.

Many opinion polls, most of them admittedly shabby, have former US President Donald Trump, who will be the Republican candidate, leading incumbent Democratic President Joe Biden. Trump is an admirer of Russian President Vladimir Putin and will dismantle many of Biden’s sanctions against Russia, imposed after it invaded Ukraine two years ago. He is unlikely to put a premium on the Lobito Corridor, as Biden has.

But, most of all, Trump, wearing his racist cap, didn’t—and won’t—give a hoot about Africa, and will not lose sleep over the DRC.

With the ANC humiliated at the polls and Biden defeated, the geopolitical dynamics that Tshisekedi has exploited against both M23 and Rwanda could disappear. He could be on the run. M23 would get a leg up and, if took most of eastern DRC, it could well finally seek autonomy.

Or Biden could win, as the more thoughtful American pollsters and commentators predict. And the ANC could lose.

Charles Onyango-Obbo is a journalist, writer, and curator of the “Wall of Great Africans”. Twitter@cobbo3

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Strengthening the state in Somalia, By Chris Oberlack

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In Somalia, the decade-long partnership between the government, the World Bank, and the UN demonstrates how collaboration between humanitarian and development actors is critical to state-building and delivering tangible support to citizens.

Since the collapse of the state three decades ago, Somalia continues to face significant challenges, including high levels of conflict and violence, an unfinished political settlement, weak government institutions, recurrent crises, and significant levels of socioeconomic exclusion.

Today, over 70 percent of the population lives in extreme poverty, and approximately a third require humanitarian assistance. In this context, an important factor in the success of this partnership has been the ability to maintain a shared strategic objective to build a more stable and visible state that delivers for Somalis, while strengthening resilience to overcome crises and helping the country address the drivers of fragility that undermine peace and development.

The partnership between the government, UN and World Bank provides support to those in need of urgent humanitarian assistance, while building the capacity of the state to administer and deliver predictable support across the country.

Joint priorities focus on strengthening human capital and enhancing resilience. The key challenge is how to strike the right balance between addressing the vast immediate needs today, and building sustainable country systems and institutions that can last for the long term.

Over the past decade, this partnership has evolved significantly. While many actors channelled short-term assistance outside of state institutions, since the adoption of a provisional constitution in 2012 this partnership deliberately focused on long-term support to Somali government institutions.

This helped pave the way for the debt relief process through the Heavily Indebted Poor Countries (HIPC) Initiative, which led to increased development assistance in 2020 through financing from the International Development Association (IDA).

However, the debt relief process coincided with a confluence of shocks – Covid-19, a desert locust outbreak, and heavy floods – that deepened socioeconomic challenges. IDA re-engagement therefore brought crucial development financing to Somalia to complement humanitarian assistance.

In addition, IDA grants enabled the Government to scale-up ‘people-centred’ support and strengthen the capacity, visibility, and presence of the state. Given that the majority of Somalia’s population has grown up without functioning state institutions, this approach has been important to help mend a fractured social contract.

In practice, this means that for several projects, IDA resources have been channelled through the Government to UN agencies and NGOs to deliver World Bank-financed operations. Through this unique approach, the Bank provides predictable development financing and strengthens the Government’s ability to manage a growing development portfolio and respond to shocks.

It leverages the operational presence and capacity of UN agencies to deliver assistance to communities on the ground. This partnership model, representing approximately a quarter of the World Bank’s $2.3 billion portfolio in Somalia, extends across six operations.

For example, the $418 million World Bank-funded “Baxnaano” Project has provided predictable cash transfers to 200,000 families in Somalia with the support of UN agencies. Through the project, WFP delivers emergency cash transfers in response to shocks and Unicef helps build social protection systems that are essential for direct government management of safety net programs in the future.

The Somalia Urban Resilience Project, in collaboration with United Nations Office for Project Services (Unops) and Internal Organisation for Migration (IOM), strengthens local government systems to support service delivery and resilient infrastructure in urban areas, including those hosting internally displaced people. Several other projects, ranging from crisis recovery to health and social protection, also use this operational partnership.

Though there have been challenges in operationalising this approach, collaboration across these sectors is critical to enhance the Government’s capacity to administer services for its citizens moving forward.

Through a joint liaison function, supported by the UN Partnership Facility under the Secretary-General’s Peacebuilding Fund and the World Bank’s Somalia Multi-Partner Fund, this partnership has also helped advance the strategic dialogue on shared priorities and ensure close coordination on security and political developments.

The experience in Somalia underscores how operational partnerships can advance the strategic vision to build a more capable state that delivers services for its citizens in a complex FCV context. While there is still a long way to go, the last decade and recent achievements, including the completion of the debt relief process, have shown that significant progress can be made if the Government and international partners align strategic priorities and financing.

Looking ahead, an approach anchored in government leadership and impact-driven partnerships must continue to support Somalia’s state-building journey.

Building on the lessons learned from this partnership – including as part of the World Bank’s new country strategy for Somalia – will be crucial to continue building government institutions, strengthening intergovernmental relations, enhancing resilience to crises, and providing access to basic services to millions of Somalis.

Importantly, this can also provide a roadmap for how governments, the World Bank, and the UN can come together to deliver in other fragile and conflict-affected settings.

Chris Oberlack is UN-World Bank Liaison Officer and Miguel de Corral is Senior Operations Officer, FCV Group, World Bank

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