On Africa's Trade Dilemma 4: Investment

A fourth dilemma involves the real hustle of modern times: the scam of foreign direct investment (FDI). This scam says Africa does not have enough managerial and financial capital to manage its mineral resources and financial assets, so foreigner should be allowed in to provide both. In turn, the investors demand free trade, weak controls and proxy ownership. The hustle is that no meaningful investment actually comes into local economies even as assets are stripped and resources are exported to foreign markets.

Promoting FDI now seems to be the raison d'etre of many, if not all, post-colonial nation-states in Africa. Enabling FDI is the main text of "free trade" as documented in the many multilaral and bilateral trade agreements from NEPAD to AGOA and EU-EPA. Protecting and enforcing FDI is almost definately the principal activity of the "world" bodies (WTO, World Bank, IMF, UN), the national central banks, and the governments of erstwhile sovereign states. There is clearly a need for caution in use of FDI to fuel enterprise in African communities.

So where will the investment come from? Three sources are prepayment based on capitalisation of future cashflows, trade credit, and local value-added. With FDI. the investors put in a small amount of equity as prepayment, add layers of trade credit structured as tied loans, and then send in their own nationals to be the expartriate value added in the recipient country. Countries are made up of communities of people. An intelligent people make effort to define long term interests, country policies, and economic activities that ensure wealth grows and stays within their communities. If foreign markets or agents are sought, the community should look first to the African Diaspora. In turn, the diaspora should maintain its relevance and vigilance.