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Abel Nerumedzo In the Money
Africa’s greatest and oldest enemy from time immemorial has been the lack of funding to finance Industrial development and evolution.
Africa is endowed with abundant natural resources that fuelled western industrialisation since the 18th century. Even to this day, the continent remains a source of raw materials for western industrialisation.

For centuries, African countries have struggled to turn their abundant natural resources into sustainable growth and development for their respective economies.

Resultantly, many African countries have sought financial assistance from the developed countries in an effort to grow their economies and transform their resources to national wealth.

The question we attempt to answer in this issue is “will Africa realise notable development from financial aid or is it a western tool for imperialistic interests”.

It is pitiful to learn that over the years many African countries have relied on donor support in key economic and social spheres.
This has resultantly killed industry and key sectors like agriculture and technological innovation in communities and cultivated a deep dependency syndrome and laziness in African societies that inhibit the initiation of sustainable development programmes.
A simple example is the activity of donor groups here in Zimbabwe.

The supply of grain in rural areas is believed to be fuelling the abandonment of participation in the agriculture sector by rural communities.
With reference to the recent suspension of a US$90 million health care loan facility to Uganda citing the recently enacted legislation on homosexuality, it drives argument for the proper assessment of the “strings attached” to foreign support in all forms.

Uganda is ranked among the poorest countries in Africa with GDP per capita of US$506 and has a life expectancy of 54 years, one of the lowest in the world.

Eight-nine percent of the population is rural-based of which 92 percent of that are impoverished and living on less than US$1 per day.
The US$90 million loan suspended over the gay law was aimed at reviving health programmes that were going to benefit women and children.
The United States has issued a statement warning that Uganda risks compromising relations between the two countries if it maintains its law.

This brings to memory another African country which suffered the same fate – Malawi.
In 2011, Britain announced that it would use budget support to make sure receiving countries adhere to its idea of human   rights.
The British Prime Minister was quoted saying, “British aid should have more strings attached”.

The superior powers have a tendency of forcing down laws and standards on the throat of dependent poor African states to influence their thinking, their laws and their freedom according to their idea of freedom and democracy which in itself is a form of modern day slavery.
Poor countries pin their survival on the efforts of another; free will and independence are compromised in the process.

It is a pity that aid can be used as a tool for policy influence.
Russia imposed a law that was deemed harsh against homosexual minorities but apart from media coverage and criticism, there were no penalties imposed on it by other western countries.

Now a poor African country passes a law debated in a legally constituted parliament elected by its people and all of a sudden, the price they pay is hunger and starvation, economic sanctions and retardation because they expressed their will as a people.
This perhaps could be modern day politics.

However, there are economic implications that need to be considered before accepting certain financial hand outs.
The financial support offered by foreign countries allow them leverage to reverse properly and constitutionally enacted legislation and influence culture, economics and even politics.

Whether we see this view as political or subjective, we cannot utterly reject the notion that foreign financial support in any form has a cost attached to it and in some cases the cost plays in to areas beyond business.

Africa risks entering into financial agreements that do not hang well on the mutual benefit scale especially when financial intervention is relied upon to revive economies and initiate stability and growth (in desperate times).

As Zimbabwe extends a begging bowl across the globe and opens its doors for foreign investors into the economy at the height of a chronic liquidity challenges that has brought industry to its knees by fast eroding competitiveness, it is crucial to assess the deal that foreign investors place on the table and if need be, we should have the courage and foresight to walk away from financial aid that cripples our ability to derive trans-generational value from our resources as a nation.

Wherever we shall seek to establish relationships and acquire financial aid, the East, the West, in Africa or in other Emerging Markets, let us read between the lines and approach each deal with objectivity and long-term focus.

Whatever we give in return, whether mineral rights, land or revenue claims, due diligence on the strings attached cannot be over emphasised.
Remember, “It is not out of the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from the regard to their own interest” – Adam Smith.

We owe it to future generations to safeguard our natural resource endowment that is non renewable once utilised. It is only through creating internally generated capacity that Africa can record notable development and growth.

Dependency on foreign handouts as proved by history will not bring industrial revolution but will only fuel continued dependency.
With the current levels of resource endowment, Africa has the potential to become an industrial powerhouse that rivals the largest economies in the world.

It defies logic not to envy the progress of oil producing nations that have transformed their oil into wealth. Notable examples are the United Arab Emirates, its major turning was the discovery of oil in 1966.

It is paramount to assess the strings attached in any relationship, business or otherwise, and as such Africa and Zimbabwe in particular should carefully read the fine print before getting into economic partnerships with investors regardless of where they hail from.

Albert Norumedzo is an equities and alternative investments analyst. He can be contacted at [email protected]