Aug 27 2010

Nigeria for sale (finally)

Category: Uncategorized<ADMINNICENAME> @ 8:27 AM

OK, Nigeria isn’t for sale, not all of it at least, only the national electric power company.

In a country most people lack reliable electricity to their homes and workplaces, the government’s declaration of an intention to sell of its pathetic state-owned electricity company is cause for celebration — and also reflection on how what private-ownership will bring, should the government manage to sell even a controlling stake to outsiders.

The government this week said it wants foreign investors to put $10 billion into its ailing electricity company, Power Holding Company of Nigeria. The long list of potential investors includes Canada, Turkey, Saudia Arabia, China and India, but not the U.S.

Surely Nigeria offers profit-opportunities for foreign investors — and the promise of improved living standards for all but the top ten percent of Nigeria’s population who already live in relative opulence. Electricity is the critical technology for African countries to master. The difficulty is more political=economic than technological. State-ownership, while sometimes warranted, has been an utter failure in the electricity sector in Nigeria and in many other African countries.

Privatization isn’t easy, however. Nigerians need look no further than neighboring Cameroon, where ten years ago an American electricity supplier, AES, purchased a controlling stake in Cameroon’s entire electricity system, dominated then as now by hydro-power sources. To date, the purchase by AES is the only case of a single company taking over responsibility to supply electricity to the residents of an entire African country.

While the Americans brought cash and expertise, they were initially stymied by the endemic corruption in the electricity network. Not only were customers routinely looting the company, by stealing electricity or hijacking equipment, employees were conniving with the crooks. When I visited Cameroon in 2005 expressly to study the privitization, AES had installed a new local management that ultimately got its arms around the worst abuses of the old regime. Service vastly improved. Yet at a price: tariffs rose also. AES then faced a new problem: resentment at rising rates, without gratitude for the improvements brought by foreign investment expertise.

Nigeria likely will follow a similar path, if indeed the privitization occurs at all or even if Nigeria sells off different pieces of its electrcity network to different investors. After all, the electricity supplier touches the lives of everyone. Power outages in Nigeria are of course a symbol of the impotence of a government that controls mammoth oil reserves and permits vast gas flaring that might even be used to generate electricity for beleagured locals. Even hardened socialists and their statist cousins must by now despair that the government can ever reform on its own the Nigerian electric power company. But private investment is no panacea. While it ultimately may provide relief for those who live too much of their lives in darkness or by the dim light of a kerosene lamp, privitzation may ignite new types of frustrations that neither the state nor private investors will be prepared to manage.

Hints of the possible mayhem were quick to emerge. Following the privatization announcement, workers at the state-owned electricity went on strike, reinforcing their image as greedy incompetents yet at the same time causing more severe blackouts than what passes for normal.

The turmoil over who supplies electricity and how is worth the struggle. Nigerians can talk about shooting satellites into space, or the massive expansion in mobile phone use or the creative explosion of the footprint of Nigerians on the Internet . These are impressive achievements of course. But until Africa’s most populous country masters the most important technology of the 20th century, neither Nigeria nor Africa can enter the technological world of the 21st century. Electricity is a foundational technology on which so much else depends. No other technocratic project in Nigeria could be more important than renovating, improving and indeed democratizing electricity delivery for all.

Aug 13 2010

Praise girls: Kidjo and the cult of African poverty

Category: Uncategorized<ADMINNICENAME> @ 3:40 PM

The singer Angelique Kidjo presents a rather pedestrian portrait of her life growing up in Benin, and then — as she insists — her life in “exile” as a performer in Europe and the U.S. The whole notion of Kidjo as an exile is worth examining. Her native Benin never posed an explicit political threat to her, but rather economic and artistic limits. The Marxists who took power in Benin thought the extreme Westernization of the countries Paris-centric elite deserved condemnation. Kidjo’s life outside of Benin suggested that the Marxists were not wrong about everything. Her hybridized and highly Americanized form of pop music retains her African roots, but mainly in the manner of her attire, hair-style and stage presence. Musically, she is product as well as a victim of the “world music” market. Drained of her specific West African background, Kidjo’s “sound” is as generic as her political comprehension. Writing as both she and her independent Benin reach 50 years old, Kidjo rather casually sums up the entire sub-Saharan with a sweeping (contestable) generalization: “After 50 years of independence,” she writes in The New York Times, “my country is stuck in what the Nigerian writer Chimamande Adichie calls the “single story” of the continent: poverty.”

The equation of African-ness with impoverishment offends me, morally, empirically and aesthetically. The canard that “all Africans are poor” is designed chiefly to appeal to white Europeans and Americans who are most comfortable comprehending the African experience as a variant of impoverishment. But as I have written often on this site and, most recently, in The Christian Science Monitor and the Milken Review, the real story of Africa today is the coevolution of wealth and poverty. That some Africans are poor is without dispute. That a surprising number of Africans are well-off is often ignored. That wealthy Africans, at home and abroad, have an obligation to assist poor Africans is the one thing that virtually remains unspoken about the African condition, and the attitude of non-Africans to this crucial region. That elites arose in Africa, despite wide gaps between rich and poor, is widely accepted by scholars, and well-known by elite families themselves, of which Kidjo most certainly hails. Her relative enriched and enriching experience as a youth in Benin she proudly displays: “Although I was already making a living as a teenager with my singing career, my parents insisted that I dedicate myself to school because we lived in such a great educational and cultural environment. By the 10th grade, I was already studying philosophy, and debating the merits of Rousseau and Camus with my friends.” And yet her exit from Benin and her current relationship with her nurturing maternal society draws a blank. Writes Kidjo: “As a singer, the only thing I could do was to praise the revolution and sing at political gatherings. I felt I could no longer express myself and one day in 1983, without telling anyone, I escaped the country. I realized on that day that the dream of a proud independent Africa had been broken. Since that day, even though I’ve lived and worked in exile, I’ve drawn almost all of my inspiration from the incredible richness of my culture.” Her gratitude prompts her to ask readers to donate to charities working to assist the worthy cause of girl education in Benin and Africa generally. “Invest in girls education,” Kidjo says, is the most important single step that Africans can take to assist Africa. Investing in girls is terrific, but should not be done without an awareness that there are two classes of girls in Africa: rich ones and poor ones. These two types of girls begin with different advantages — and require different types of assistance. Ignoring wealth in Africa, and making a cult of impoverishment, helps neither of these very important girls.

Aug 05 2010

African needs a history lesson that Naomi Campbell can’t provide

Category: Uncategorized<ADMINNICENAME> @ 8:07 AM

Based on her reticent posture in Holland today, Naomi Campbell may be hoping to receive more unsavory gifts from some present or future African dictator in the years ahead. The super-model, cross-examined as a “hostile” witness in the criminal case against deposed Liberian dictator Charles Tayler, pointedly denied that she knew that the bag of diamonds she received in 1997 while on a visit to South Africa came from Taylor. Disputing testimony from her agent at the time that indeed Taylor tried to ignite an affair with her, Campbell — a legendary beauty afflicted with an infantile mind — seemed intent on signaling to other African dictators that she is not the kind of women who gets an illicit gift and then gabs. She even went so far as to dis the rough diamonds she received, calling them “pebbles.”

The prosecutors with a United Nations war-crimes tribunal want to show that Taylor directly dealt in illicit diamonds, using them to lubricate his dictatorship and float his lifestyle. That the court must rely on such flimsy evidence as the Campbell affair suggests that Taylor’s trial is verging on the trivial. The major questions about his role ought to include an examination of the U.S. government’s role of installing him in power and, perhaps, helping him remain in power long after he vacated the peculiar “reservation” that his C.I.A. liasons envisioned for him. That a UN war-crimes tribunal persists in conceiving of Taylor’s crimes in the most narrowest of fashions — as if he was a shoplifter caught on a clumsy encounter with Harrod’s — highlights the limitations of human-rights law. The big crimes committed by Taylor go well beyond the scope of any war-crimes mandate and hark back to an era when really “big men” in Moscow, Washington and Havana called the shots in many African countries. What’s needed much more than criminal trials of deposed African dictators is a kind of truth-and-reconciliation commission on how the Cold War contest between the U.S. and the Soviet Union distorted African societies from top to bottom and consumed some of the continent’s best and brightest.

Aug 02 2010

Markets, at long last, deliver for West Africa’s cocoa farmers

Category: Uncategorized<ADMINNICENAME> @ 10:49 AM

Cocoa farmers in West Africa – growers of the main portion of world cocoa supply – are distant actors in a weird rumble over prices, which recently hit a 33-year peak, achieving the highest prices on record since 1977. The proximate cause of the record price is speculative activity by commodities traders, especially a particular hedge fund, Armajaro of London, which recently shocked financiers by actually taking deliver of physical cocoa.

The financial drama has masked a fundamental shift in the pricing of one of Africa’s most prized outputs. Cocoa is essential in the manufacturer of chocolate and producers, who are largely clustered in the neighboring countries of Ghana and Ivory Coast, have long failed to form a cartel to drive up prices, much in the same oil producers (OPEC) do. In economic terms, cartels can make sense, rewarding owners of a relatively scarce commodity.

Common and concerted action is often required for a cartel to take hold. When governments try to form cartels – say, to fight back against traders in the world’s big cities – they must hew to the same script. In the case of Ghana and Ivory, such common action has never been possible. Since independence in 1957, Ghana’s government has closely controlled the sale of cocoa, essentially nationalizing the crop through a cocoa board that acts as a single selling agent on the international market and prices on farmers who by law must sell their crop to the government. Ivory Coast, by sharp contrast, has long permitted farmers to sell to anyone, on the open market, at any price they can fetch. The result is that farmers in Ivory Coast gain more money from their cocoa than farmers in Ghana; it also means that official production in Ivory Coast is boosted by smuggled cocoa from Ghana.

The cartel of international cocoa buyers – chiefly America’s ADM and Cargill and Zurich-based Barry Callebaut – all of three of whom exist in close cooperation with a small group of global end users, concentrated in Europe and the U.S. – benefited greatly from the schism between Ghana and Ivory Coast on cocoa policy. Lower prices were the result. For decades even, Western companies, and consumers, benefited from ultra-low prices of raw cocoa, which fueled the expansion of cheap chocolates in groceries and sweet shops.

The days of inexpensive cocoa are unlikely to return. One expert told the Financial Times on July 30 “If you consider the fundamentals, I’d tend to say prices won’t fall. There’s no fundamental reason why cocoa should become cheaper.” And that’s not because of the changing practices of commodity traders. Demand for cocoa is already high, China (largely chocolate-free today) represents a new frontier and cocoa supply is stagnant, so a re-evaluation upward of cocoa has occurred.

The benefits to African farmers should be significant over time. Unlike some other crops, new gardens can require years of planning and labor. Existing trees are subject to blight and aging and must be worked intensively to maintain yields. When I visited Ghana’s cocoa-growing region a year ago, I was struck by the prosperity of farmers I met but also the relative inflexibility of growing cocoa. Expansion of output is hard to achieve. Inputs, such as fertilizers, are expensive and are used less than they should be by non-organic growers. New trees take years to reap fruit. Field labor is surprisingly costly. Producers also fear a glut; they can benefit from stagnant production too.

Ghana’s independence leader, Nkrumah, once dreamed of setting cocoa prices in Accra and Abijan, not in London or Chicago. A producer cartel proved impossible, and cocoa farmers in West Africa suffered. Now a “market cartel” has emerged. West African cocoa farmers, and their families, should be cheering. Capitalism, so often the instrument of their oppression, is now working dramatically in their favor.