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ebou4th
USA
106 Posts |
 Posted - 20 May 2009 : 15:47:07
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The Silent Revolution: Remittances to Sub-Saharan;
A Power Weapon with which to Reduce Poverty.
According to the World Bank, poverty rates in Sub-Saharan Africa are steadily declining. The bank set a new poverty line of $1.25 a day to reflect improvements. The poverty rate in Sub Sahara Africa fell from 58% in 1996 to 50% in 2005, although there have been signs of recent progress it is unequivocal that the current global financial crisis will offset the recent gains in Sub Saharan Africa. What these impoverished nations cannot avoid is a reduction in foreign aid as donor nations scale back donations due to the current financial crisis. Another indirect effect of the global recession is the increase in prices of imported goods; in the recent past prices of basic commodities have risen and this has directly affected all consumers.
The most immediate direct negative effect of the global financial crisis in Sub Saharan Africa will be a reduction of aggregate remittances to sub Saharan countries. Sub Saharan countries like other third world countries rely heavily on remittances from the developed countries. These remittances help families cater for their daily bread. If Migrants reduce remittances, families back home will be unable to afford basic necessities.
While the effect of remittances on poverty is evident, there is no agreement on the effect on the broader concept of development and wealth creation. There is no doubt that remittances reduce poverty, but the effect on wealth creation depends on how they are used by the receiver. For example, if the remittances are kept untouched under the mattress, then they produce no effect whatsoever. If they are used for expenses in relation to health, education or are invested, or refurbish a home, then they will produce a positive effect.
Since Sub-Sharan Africa consumes and produces very little; most if not all the remittances is spent on imported items such as staple foods like rice which is imported from Asia. Also a major portion of the remittance is spent to imported construction items such cement, construction materials, and luxury items like televisions, automobiles. As a result of not producing goods the remittances sent by Migrants to sub Saharan African does not stay in the economy, these remittances actually benefit the producing nations.
Based on the analysis above, the effect of remittances on development in sub-
Saharan Africa is very limited. The simplest way to reap profits, crate wealth and reduce poverty is for the Diaspora to start taking stock in Africa’s development by depositing their savings in local banks. If the senders are unable to invest their savings, then
financial institutions can find a productive destinations such as loans to entrepreneurs.
One of the many problems in third world countries especially sub Sahara Africa is dependence on direct foreign aid, it is self evident from the result of over half a century of sending direct monetary aid to sub Sahara Africa that cannot alleviate poverty.
Dependence on foreign aid and remittances cannot pull sub Sahara Africa from poverty. A radical new wave of thinking is required today more than ever. What sub-Saharan Africa needs during this global financial crisis is credit based system to create wealth; developed countries with mature economies depend on credit to create wealth. If credit is available, wealth can be easily generated through entrepreneurial ventures, these ventures will eventually lead to job creation and better living for everyone.
Credit is a Wealth Multiplier:
In Adam Smith’s book An Inquiry into the nature and Causes of the Wealth of Nations, he imagined a system for creating wealth and a better livelihood for everyone. Poor nations especially sub Sahara Africa should take this ideas further by encouraging the Diaspora to begin saving some portion of the remittances they send in local banks. If the Sub Saharan Diaspora saves in local banks, those savings have the potential to create more wealth, create more jobs and hence a better living for all.
Entrepreneurs in developed nations with mature economies use credit to expand business, poor nations should to do the same?
As long as market women, farmers, laborers, and businesspeople see an economic reward for their efforts the whole economy will prosper. According to Adam Smith as people try to improve their own situation in life their efforts serve as an invisible hand that helps the economy grow and prosper through production of needed good, services, and ideas.
If given loans and empowered; farmers, market women, builders, laborers and business people working in their own self-interest will produce goods, services, and wealth. To become wealthier, these entrepreneurs would have to expand their businesses to produce more goods. As businesses expand, more people will be employed.
As a consequence of saving in local banks, entrepreneurs will have access to capital crate more wealth and grow the economy. The premise of my theory is, if managed effectively the impact of remittances from Sub Saharan Migrants have a greater dimension and can be used as a powerful force to reduce poverty because the invisible hand will turn self directed gain into social and economic benefit for all.
References:
Shivani Puri and Tineke Ritzeme, Migrant Worker Remittances, Micro-finance and the Informal Economy: Prospects and Issues, Working Paper nr 21, Social Finance Unit, International Labour Organisation, Geneva, 1999.
Richmond Tiemoko, Migration, Return and Socio-Economic Change in West Africa: The Role of Family, Working Paper nr 15, Sussex Centre for Migration Research, University of Sussex, 2003.
Sulemana Braimah. Reducing Poverty and Diseases in the World No Improvements in Sub-Saharan Africa, (22, March., 2009)
http://povertyworlddevelopment.suite101.com/article.cfm/poverty_in_subsaharan_africa#ixzz0FsfwYOvM (visited18, May 2009)
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“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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turk
USA
3356 Posts |
Posted - 21 May 2009 : 07:03:09
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Anyone is going to blame Jammeh for this?
It is a good analysis for short term economic situation in a country like Gambia. I predict, particularly for west african nations like Gambia, Sierra Leone, Liberia, Senegal things will get even worse. The reason is economic activity is shifting from atlantic to pacific. In Canada all the maritime countries became ghost cities as APAC rises. It is inevitable for countries like Gambia will be even more isolated from world economic activities.
Another import development is Globalization. Most corporation are merging, even EU are merging as a country. Stronger, bigger, larger scale would have more impact on Global Economy. Gambia is small peanut that has no impact on globalization.
The answer is: Federal Saharan Republic that includes all the Islamic Countries with similar cultures, demographic, socio-economic realities from Senegal to Sierra Leone to Mali, Burkina Faso, from Mauritania, Niger, Chat to Sudan, Eritre and Somali where atlantic trade meets indian ocean (APAC). |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
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toubab1020
12314 Posts |
Posted - 21 May 2009 : 10:55:40
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Turk, come on can you really see a Federal Saharan Republic working ? there will be so much power struggle amongst all the countries involved that the whole lot will just grind to a halt and nothing will be achieved.
As you say in your signature "Too many Chiefs and Very Few Indians" this sums up your idea completely.
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"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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turk
USA
3356 Posts |
Posted - 22 May 2009 : 03:25:50
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There are already power struggle. At least now there is only one position to fight for. The presidency of Sahara. I am not saying it is a magic solution, it ain't easy. But seems like that is the only solution.
Well. That is the only way out of decline of Africa. With the highest population growth rate, highest HIV/Disease, lowest literacy, poverty, the future is not bright for the ones being ruled. Smaller fishes are ruled, if fish gets bigger that ones start ruling. Those who rule gets the gold, those who got the gold rules. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
Edited by - turk on 22 May 2009 03:27:12 |
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tamsier
United Kingdom
557 Posts |
Posted - 22 May 2009 : 15:06:22
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| For once I have to agree with Turk. But I would go even further by having a United States of Africa - regardless of religion. Many poor countries especially in Africa are not poor in natural resources. They have the natural resources to succeed they only lack the technological know how, and this is where the western world or richer countries under cuts them. With a coalition they can set the terms instead of being dictated to by the west. To strenghten their international trade, they should also think about having strong economic relations with other parts of the world - e.g southern America etc, who also suffer the same plight in terms of being dictated to by the west - about their pricing strategy. For this coalition to work, they need strong internal governance and a change in political leadership behaviour. Leaders who fall outside the guidelines must be severly dealt with. A big leap, I agree, but as Turk said: - 'There are already power struggle. At least now there is only one position to fight for. The presidency of Sahara'. |
Tamsier
Serere heritage. Serere religion. Serere to the end.
Roog a fa ha. |
Edited by - tamsier on 22 May 2009 15:11:23 |
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turk
USA
3356 Posts |
Posted - 22 May 2009 : 15:38:50
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Saharan Federation is more realistic and practical. Same geography, same culture, related languages, same religion. It is easier to unite on more common things. The whole africa is not realistic as the languages, geography and religious differences would make the unification task much difficult. In the mid term Saharan Federation than that will trigger US of Africa in the long run.
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diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
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ebou4th
USA
106 Posts |
Posted - 22 May 2009 : 16:43:23
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Progress in Africa has to start first and foremost with good leaders. Progress in Africa will be difficult to achieve because of we are blessed with horrible leadership; we have leaders who do not see past amassing personal wealth while the populace suffers.
I have always advocated for a rise of regional powers, if Ghana, Nigeria, South Africa to name a few get there acts right, they can influence smaller countries to start with good governance.
African politics and style of governance have a major influence on development and growth. Therefore, to develop and grow, African leaders must adhere to the rule of law and allow basic freedoms.
A major part of America’s business success is due to its political, economic and social climate that allows people and businesses to operate freely.
Most communist countries today are now suffering severe economic depression, for example, in North Koreans are starving while Soule is booming at an unimaginable rate. Half a century ago Korea was in this predicament as Africa. Today South Korea is giving aid to Africa.
Something is wrong with this picture
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“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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Edited by - ebou4th on 22 May 2009 16:44:39 |
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tamsier
United Kingdom
557 Posts |
Posted - 22 May 2009 : 16:53:10
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Turk,
I see the argument for a mid-term Saharan Federation then ultimately a United States of America. However, there is somewhat a version of this in Africa e.g - the ECOWAS. I also aknowledge the fact that, African are perhaps the richest in terms of language - with their diverse languages. This shouldn't be viewed as a disadvantage but an advantage. After-all, several countries with different languages and culture sit on the UN. |
Tamsier
Serere heritage. Serere religion. Serere to the end.
Roog a fa ha. |
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tamsier
United Kingdom
557 Posts |
Posted - 22 May 2009 : 17:04:58
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Ebou4th,
'Progress in Africa has to start first and foremost with good leaders'.
I couldn't agree with you more.
Regional power participation would be grate but I wouldn't include Nigeria until as you said, it gets its act right. Which is a shame, because Nigeria could have been a grate example and force in Western Africa. It has all the essentials, it only lack political integrity. |
Tamsier
Serere heritage. Serere religion. Serere to the end.
Roog a fa ha. |
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ebou4th
USA
106 Posts |
Posted - 22 May 2009 : 18:46:39
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Tamsier,
I thought twice before including Nigeria on the list. But with all the problems, Nigeria has the potential to be a regional power.
When it comes to African affairs it is hard to come with good examples; that being said politically Ghanaians and the South Africans are heading in the right direction. I guess changes will come with time.
It is very disheartening to see the others progress.
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“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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Sister Omega
United Kingdom
2085 Posts |
Posted - 22 May 2009 : 19:18:17
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Ebou4th progress in Africa starts with each individual taking responsibility in becoming the change they want to be. It starts in our heads and hearts. With an "I can do" attitude.
'Progress in Africa has to start first and foremost with good leaders'. This is nothing less than an excuse to be lazy! The only way Africa will improve if ordinary people make an effort through hard work, tenacity, perseverance and focus. To surround themselves with like-minded people who are interested in walking the walk instead of just talking the talk producing nothing.
Peace
Sister Omega
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Peace
Sister Omega |
Edited by - Sister Omega on 22 May 2009 19:21:10 |
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tamsier
United Kingdom
557 Posts |
Posted - 22 May 2009 : 19:18:28
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ebou4th
oh! of course Ghana is doing great. I think it is one of few countries in our region which is leading the field.
'It is very disheartening to see the others progress'.
I understand exactly what you mean. Sometimes I even think that Africa is cursed. In the dark ages Africa was not that far off from the Europe, within few centuries it looks as if it has stayed static. It's time will come, it will take a long time but it will come. If history teaches us anything, not everything goes on forever. Look at Russia, who would have tought. Even America has its time.
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Tamsier
Serere heritage. Serere religion. Serere to the end.
Roog a fa ha. |
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ebou4th
USA
106 Posts |
Posted - 22 May 2009 : 19:41:39
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Sister
If leaders see the countries they rule as their fiefdom and seek to amass wealth and invest that wealth in the West, how do you think progress will come?
Take Nigeria as an example, with all its resources the people are still living in poverty. If the people managing the resources are out for their own interests and that of their immediate families there will be little or no progress.
Why is that the people we see as failures in African become successful in the west?
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“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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ebou4th
USA
106 Posts |
Posted - 22 May 2009 : 21:02:50
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My professional training has taught me to consider the greatest attribute of a leader to be an unselfish attitude. Unless African leaders place the care, protection and wellbeing of their citizens first and share their hardships; progress will be hard to come by. As long as we have leaders who are out to enrich them selves progress will be hard to come by because the cycle will always continue
Can you explain how African leaders come to power and get rich over night?
I will be looking forward to you answer.
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“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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turk
USA
3356 Posts |
Posted - 22 May 2009 : 23:36:36
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Omega
quote:
Ebou4th progress in Africa starts with each individual taking responsibility in becoming the change they want to be. It starts in our heads and hearts. With an "I can do" attitude.
Yes sista. It is bottom-up approach that would work. Leaders come from people. Nations deserves the leaders they got because, leaders do not come from Mars. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
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ebou4th
USA
106 Posts |
Posted - 23 May 2009 : 03:40:04
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Turk,
If you agree with Omega then answer the question. One liners do not work with me. It is amazing how you people became Africa experts by virtue of marriage. |
“Revolutions are brought about by men, by men who think as men of action and act as men of thought.”
Kwame Nkrumah
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