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South Africa is qualify to be in BRIC

Summary: Jim O’Neill, Chairman Goldman Sachs Asset Management, misread the tea leaf that South Africa will not be accepted into BRIC because of her relatively small population of 50 million and $287.2 billion GDP. But population is not everything as it has been proven with the entrance of South Africa into BRIC. South Africa a gateway to Africa is the largest and most developed economy in Africa. With relatively less corruption and with strong democratic standing coupled with durable civil and social infrastructures makes SA attractive to BRIC.

Jim O’Neill of Goldman Sachs, who coined the term BRIC, was not reacting favorably on the formal invitation of South Africa to join BRIC.  The invitation was extended to South Africa by China a member of the BRIC. These nations named BRIC comprises of Brazil, Russia, India and China. The BRIC are the largest and most powerful emerging economies.

Even before South Africa was invited to join BRIC, Jim O’Neill read the tea leaf incorrectly and made the prediction that South Africa was not the right candidate for BRIC membership. He further predicted that Nigeria will make it to BRIC before South Africa. Both of his predictions never materialized and the grip he thought he has on BRIC was waning.  Now he is sounding like he knows what is more important to the BRIC than the member nations.

Jim O’Neill did not wait for the ink of the invitation card for South Africa to dry before he commenced to give every reason why South Africa is not the justifiable candidate to make it to BRIC.  He made the claimed that South Africa was invited for political reason and not economics.  His words: "When I created the acronym, I had not expected that a political club of the leaders of the Bric countries would be formed as a result. In that regard, the purposes of the two might be regarded differently."  This statement makes him to sound like a mercantile economist of 18th century.  Jim O’Neill needs to take a class in political economy and to review Adam Smith’s Wealth of a Nation.  He should come into 21st century and understand the prevailing and the emerging state capitalism. Politics has never been divorced from economics in 21st century capitalism.

For his final analyst note of 2010, Jim O'Neill has placed his not inconsiderable stash of intellectual chips on the USA.

Jim O’Neill, Chairman Goldman Sachs Asset Management Photo:Telegraphy

Jim O’Neill commented on the GDP of South Africa which is about $287 billion and said, that South African economy is “quite small by not only BRIC standards, but compared to some others. For example, Russia is around $1,600 billion, nearly 5 times larger than South Africa. And, India is currently similar in size to Russia. Brazil is currently closer to $2,000 billion in size, while China is considerably larger at around $5,500 billion.”  His omission is that South Africa has a great potential and it is a gate way to Africa.  Looking at the GDP of South Africa will not tell you the whole story about the country.  The country is natural resources-rich and Africa has a vast arable soil for cultivation and agriculture. Moreover, South Africa’s debt-to-GDP ratio 29.50 % is among the lowest in the country’s category compared to Greece with debt-to-GDP ratio of 125 %.

All those raising voices on South Africa invitation into BRIC do not know more about South Africa than China that made the invitation. The China knows about her interest and where it lies and she is willing to protect her interest. Before China sends out invitation card to South Africa she has done her home work and has contacted rest of the BRIC members. What Jim O’Neill and his opposition camp should have done is to ask the BRIC members why they think that South Africa is the most suitable for membership.

On the population size of South Africa that prompted an initial reason for Jim O’Neill for not rooting for the relatively smaller South African population of 50 million. South Africa can easily increase her population by opening door to willing African neighboring countries to migrate into her country.

Mr. Emeka Chiakwelu is the Principal Policy Strategist at Afripol. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

 

Published in Archive

South Africa becomes BRIC member

The South African Foreign Minister, Maite Nkoana-Mashabane said that her country has received a formal invitation to join BRIC,  reported by the news agency AFP. The  BRIC -  Brazil, Russia, India and China are group of emerging nations with large and dominating economies in their own corners of the world. The BRIC nations have influencing economic power in each of their economic blocks.  For a while the economic experts have been speculating and forecasting that Nigeria will be the first country in Africa to make it to BRIC because of her size and future economic growth.

While Nigeria was sitting down occupied with lethargy and internal politics, South Africa as usual was busy lobbying for a membership into the league of the largest emerging economies BRIC.  Now South Africa has made it and has become the first and only African country that has made into the advantageous and prestigious economic group.  Nigeria’s finance minister, Olusegun Aganga has just dropped the ball this time and has shown lack of leadership in this issue. Aganga is a respected voice in the financial world, and should have used his influence and prestige to lobby for his country.  Africa should be proud of South Africa for trying to better her country but Nigeria must also catalyze her economic progress by getting involved and not waiting for things to be handed to her. Nigeria must be proactive and must make the intrinsic initiative to lead and to get involved.

Leaders of the BRIC countries--Brazil, Russia, India and China

South Africa is also a member of G20, the only Africa nation in the group. Nigeria is not admitted to G20 and cannot make it to BRIC nation membership. Being a participating member of this important groups can be good thing because it shows that the country is matured and respected to make it to those bodies. Moreover, significant strategic, economic and financial decisions are made in those meetings. A nation absent cannot be fully represent her interest and aspirations in the globalized economy. The participation can become a confidence booster that enable other countries to accept each other, therefore making more trading and investments possible.

"Chinese President Hu Jintao also issued a letter of invitation to (South African) President Jacob Zuma to attend the third BRICS leaders' summit, to be held in China in the first quarter of 2011. China in its capacity as rotating chairperson of the BRIC formation, based on agreement reached by the BRIC member states, invites South Africa as a full member into what will in future be called BRICS”  according to SA Foreign Minister  Nkoana-Mashabane .

“The BRIC countries are not formally linked but have held summits and taken steps to boost financial cooperation and investment opportunities among them. The group held its first formal summit in Russia last year. She said she received a phone call on Thursday from Chinese Foreign Minister Yang Jiechi informing her of the invitation to join the group, whose current members will account for 61 percent of global growth in 2014, according to the International Monetary Fund.”

Jim O’Neill, Chairman Goldman Sachs Asset Management, misread the tea leaf that South Africa will not be accepted into BRIC because of her relatively small population of 50 million comparing to Nigeria’s 150 million. But population is not everything as it has been proven with the entrance of South Africa into BRIC. South Africa is the largest and most developed economy in Africa. With relatively less corruption and with strong democratic standing coupled with durable civil and social infrastructures makes her attractive to BRIC. Nigeria will not only rely on her population as the only factor to be recognized as an emerging power, she must work aggressively to develop a disciplined and diversified economy.

Prior to this development, Kingsley Ighomwenghian of Agency Report, commenting on South Africa and Nigeria membership quest in BRIC, wrote: “The BRICs are some of the world’s fastest growing economies, to which according to Reuters, quoting Russia’s President Dmitry Medvedev, South Africa had “applied” to join in. Others eager to join the club include Turkey, Mexico and Indonesia, which investors typically eye as possible additions to the BRICs, having grabbed a chunk of emerging market investment in recent years due to their scale, growth and impact on the global economy. “

Nigeria has been favored over South Africa because of her large population and her bulging GDP. Nigerian economy has been growing at about annual rate of 7.8 percent and even expected to grow up to 10 percent with the future upgrade and improvement of electricity. Razia Khan, an African research expert at Standard Chartered joined the debate by predicting that Nigeria’s economy may overtake and supersede South Africa’s by 2023 and “in the next five years, Nigeria will add another 23 million people and South Africa will add another 2.8 million.” Even with all the Nigeria’s advantage, the well organized South Africa made it to BRIC before her.

 

 

 

 

 

Published in Archive
Wednesday, 08 December 2010 03:21

South Africa cancels Cuban debt and grants credit

Cancels $137M and  Offers $30M credit

President Zuma and wife arrive in Cuba for three-day official visit Pics credit: SA presidency

South Africa, a member of G20 and the largest economy in Africa cancelled approximately $137 million in debt owed by Cuba and granted $30 million in new credits to Cuba. This development took place in Caribbean Island communist controlled nation as South African president Jacob Zuma was on his official 3-day visit.

Cuba a trading partner to South Africa was being slowed down by command economy, recession and lack of trade, therefore the revival of trade becomes imperative to the visiting African president. President Zuma came to Cuba with some 50 representatives from different businesses of South Africa with interest to do business with Cuba.

“Trade between the two countries has been practically nonexistent for years because of the debt issue, while South Africa does pay an unknown amount for Cuban doctors working in the country and has a joint project to produce vaccines. Cuba last reported its foreign debt as $17.8 billion in 2007 and is currently going through a financial crisis that has left it hard pressed to obtain credits and meet obligations. “

South African trade ministry official Pumla Ncapayi said that his country hoped to export agricultural machinery to Cuba inorder  to help President Raul Castro’s program of improving agriculture and reduction of  food importation to Cuba.

“South African mining companies have expressed interest in Cuban nickel and other minerals in the past, but no major investments have materialized. More recently, a South African group of investors has financed hotel construction in Cuba. Meanwhile, Cuba has provided health services, as well as personnel and logistics for workforce housing construction and construction of facilities in the run-up of the 2010 soccer World Cup. Also, South Africa is funding some of the healthcare programs Cuba is providing to third nations in Africa. Cuba and South Africa maintain cooperation agreements in health, labor relations, social security and information and communications technology.”

South Africa's President Jacob Zuma, left, talks to Cuba's Vice Foreign Minister Marcos Rodriguez upon his arrival at the Jose Marti international   airport in Havana, Cuba, Sunday, Dec. 5, 2010. (L) President Zuma interacts with  Cuban  diplomat and Cuban people (Right)

South African Black liberation struggle was supported by Fidel Castro’s Cuba. And South Africa at the end of Apartheid has blossom into a full capitalistic economy and has become an emerging industrial giant.  While the Island nation of Cuba has refused to embrace free enterprise and democracy which can revive its fragile economy.

 

 

Published in Archive

Image of a nation might as well be the destiny of a nation. Nigeria's disfigured image in the global village has become an insignia of dishonest, dishonor and disrespect; this is outright humiliation of a nation of almost 150 million people. Majority of Nigerians are industrious, God-fearing and law abiding people. But a tiny minority is destroying the image of the country and the governance ineptitude is adding salt to the injury.

Consequentially, Nigeria is in self-doubt, bedeviled with nihilism, lethargy and encompassing corruption. Now comes the climax, a Nigerian was associated with terrorism and finally the image of the country is demolished. What Nigeria needs is genuine re-branding and re-alignment that is not cosmetics but rooted in truth, pragmatism and an affirmative change.

"There's no arguing that the image we have of another country says a lot about how we view it as a tourist destination, a place to invest or a source of consumer goods." And the rest of world's perception about Nigeria will affect her pocket and economy because less people will be incline to invest and travel to the country. A nation re-branding is not peculiar to Nigeria; many countries including Germany and Japan were re-branded at the end of Second War World: Now Germany and Japan are known as liberal democracies with peaceful and progressive policies. South Africa was re-branded with an image of gentle and cheerful multicultural country at the end of Apartheid.

The litany of Nigerian sins and misbehaviors are no longer a news to the entire world, as the world have come to see the intractable problems of Nigeria as threat to global financial and economic stability. Nigeria is known for e-mail fraud, manipulation of established standard operations and now for terrorism. The peril of this dented image is taking its toil on the average citizen of Nigeria who cannot freely travel nor conduct international business. Nigeria with all the wealth she generated from oil and local revenues cannot provide the basic necessities of life to her populace.

Many Nigerians are quick to point accusing fingers to the country's leadership but fail to see themselves as part and parcel of the unworkable Nigeria. By no means, nobody is excluding the elite and ruling class from the generated mess but the masses cannot fold their hands and anticipate a change to initiate itself. The average Nigerians must also shoulder some responsibilities by shunning corruption including coming to work on time and rejecting short /dubious path to wealth accumulation.

There are enduring and lingering ramifications that are associated with poor and disastrous image of a nation. The financial and economic impact is overwhelming especially on the wealth of nation, wealth creation and GDP. The wealth of nation and its creation must involve the attraction of foreign capitals and manpower. No serious capitalist desire to invest his wealth in a nation of untrustworthy people. Subsequently, economic downturn does give rise to mammoth unemployment; that can trigger instability and inability for government to protect lives and properties.

In 21st century of inter connecting world, an image can help to lift up a nation and this is exactly why many nations are very protective of their images. Once an image of a nation is tarnished it becomes an arduous if not an impossible task to reverse the trend. The only hope for Nigeria is that an image of a nation is neither indelible nor etched in stone. For Nigeria it is never too late to commence to make the affirmative moves in the comprehensive transformation of the country's image.

The total transformation of Nigeria's image must be deliberate, coherent and self-evident. This is not going to be superficial, a tinkering at the peripheral with piecemeal characteristics similar to toddler step taken by respectful Dora Akunyili, Nigerian Minister of Information, as she tries to re-brand her country. With all due respect, her tactics of blaming game is self-defeating, incoherent and contradicts her objective. Re-branding and image making of a nation is not a singular act but a collective effort of patriots including men and women of goodwill.

In paper presentation on Vision 2020 Nigerian project, I reiterated the importance of Nigeria's Image Management: "Nigerian policy and decision makers have not certainly explored the power of image making. The image of a nation both abstract and aesthetic speaks a volume of the nation. Nigeria must be able to tell the world that she is ripe for investment and tourism without obstruction. No foreign institutions or countries can tell the world about Nigeria more than Nigerians could do. Nigeria cannot afford to be NAIVE and NONCHALANT."Nigeria must undergo fundamental paradigm change and must be focused on a path of transformation and progress. It is not going to be a picnic nor an ego trip but a deliberate act with superior intellectual power to give birth to a new Nigeria. This is not about hiring international image consultants that will cost millions of dollars.

It is about Nigeria and Nigerians undergoing a candid self examination and making decision to do the right thing for the interest of her citizens, our children and posterity. When the fundamental changes are made, then Nigeria may hire media specialist and spokesperson to tell the story of the new Nigeria to the world. Many well known people of Nigerian heritage including musical superstars Sade, Seal, Slash of Guns and Roses; media star Adaora Udoji and sport stars Christian Okoye, Nnamdi Asomugha, and many others can be employed to be the spokespersons for the country.

Nigeria at this point in time is left with one alternative which is to rebuild her image if she desires to be relevant in geo-political and economic affairs of our shrinking global village. If Nigeria fails to travel the pathway of revival, reawakening and rebirth she will end up becoming a sinking ship and diminishing giant of Africa. Nigeria to be respectful and relevant in 21st century she must rise to the challenge of self transformation and revitalization.

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

Published in Archive

The disaster that beset Haiti is colossal and the human suffering with destruction brought by earthquake is up to biblical proportion. The whole world is coming together to help Haiti, the poorest country in Northern Hemisphere, to safe lives and ameliorate human sufferings. Africa is not missing in the picture; many African countries including Nigeria, South Africa, Rwanda and others are offering assistance to Haiti but they should synchronize their effort.

Nigerians are already part of the UN police mission in Haiti that are assiduously working to rescue people who are missing and trapped in the fallen building structures. The Nigerian Vice President Jonathan Ebele Goodluck has promised to follow up with more assistance. Rwanda and Liberia governments have contributed US $100, 000 and $50,000 respectively. Senegalese government has promised to offer land to Haitians, those that are willing to come to Senegal. And "South Africa - The government has announced a three-phase assistance package: deployment of doctors to a search and rescue team led by Rescue South Africa, a non-profit company; deployment of forensic pathologists to help identify bodies; provision of unspecified humanitarian aid in partnership with South African NGOs".

All these contributions by African countries are the right steps in affirmative direction but the planning lacks vitality and coherence. In this case Africa needs coordination that will enable her to make a reasonable impact; this is not to negate the singular effort made by each country. But when they come together under the auspices of African Union the impact will be greatly felt and they will speak with one voice. The whole world will understand that Africa can work together for the rescue and revitalization that citizens of the world are doing in Haiti. African governments must not make this solely a government intervention operation but must devise a method to include their citizens especially the wealthy people in the country to contribute to a Haiti fund and NGOs that are dedicated to charity works.

Afripol Organization has applauded Liberia and Rwanda for the cash donations they made to Haiti. For inspite of the economic downturn and problems these countries were experiencing still they made these donations. Rwanda with her past history of genocide and destruction understood quite well the suffering and Liberia with her legacy of civil war knew what it means to lose life and property on a staggering scale.

Obama's American has taken the lead and has done a good job and the American people have followed with donations. Africans can learn from this; not by giving large resources which they do not have but having a concerted planning and coordination. Nigeria and South Africa the two largest economies in Africa must shoulder bigger responsibilities, simultaneously showing sense of leadership by working together to streamline African response.

Mr. Emeka Chiakwelu is the Principal policy strategist at Afripol Organization. Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

Published in Emeka Chiakwelu

Economic perspective and analysis by Afripol Organization www.afripol.org

The West African energy giant, Oando Plc of Nigeria is set to raise the sum of 21 billion naira ($140 million) by selling shares in the capital market. The capital raised will be used to finance ventures in energy sector and

"refinancing the acquisition of upstream assets, providing operational capital to fund the operation of the upstream business, and short and medium term investment in its gas and power business segment."

Oando Plc headquartered in Lagos, Nigeria is the biggest indigenous energy firm in Nigeria that market oil products and involve in oil exploration at its acquired upstream assets, the segment that will receive the largest chunk of the proposed capital infusion.

Oando Plc will raise the capital "through a Right Issue of 301,694,878 ordinary shares of 50 kobo each at N70.00 per share on the basis of one 1 new ordinary share for every 3 ordinary shares of 50 kobo each held as at the close of business on Friday, 18 December 2009." Two powerful and resourceful companies in the capital market: Vetiva Capital Management Ltd. and Stanbic IBTC Bank Plc will participate in the selling of the shares to raise the proposed capital.

The capital market venture was announced by the CEO and Group Managing Director, Mr. Wale Tinubu at the end of the meeting of the executive board of directors. According to Mr. Wale the company planned to raise the capital for the refinance its acquisition of upstream assets.

The achievements of Wale Tinubu, the erudite and efficient chief executive officer must be acknowledged as a driving force at Oando Plc for his vision and leadership. Under his strategic leadership Oando‘s growth has been tremendous thus appreciating the shareholders’ dividends.

During the press conference Wale reaffirmed, "the size of the business we run at Oando Plc would require a substantial amount of capital. We are doing things in several stages. The one we are doing now is Right Issue which is a small amount of N20 billion for the recapitalisation process. Then we will be proceeding to do a much larger international equity Issue which would occur at the beginning of the second quarter. Then there is going to be two debt issues. One is a local five year debt issue which we are working on right now and the mandate has been signed, it’s in the final stages."

Wale further emphasized: "the final thing would be the bond issue. We are in the process of fund raising the debt restructuring 5 year term for N60 billion. Then we would do an international equity and debt raising of N75 billion which would come in the 1st week of April (second quarter). The bulk of the money is going into our gas and upstream division for the upstream, we have our crude oil. You are aware; we have diversified heavily towards increasing our production in the crude oil sector."

The bold move made by Oando Plc buttressed the company’s growth and strong confidence even in the turbulent oil industry especially in Nigeria with her unending problems in Niger Delta. The issue of Niger Delta has a global effect on the oil price and energy sector but with relatively less impact on the oil-marketer Oanda.Oando Plc is listed on both Nigerian and Johannesburg Stock Exchanges, and has been concluding the arrangement to be listed in London Stock Exchange.

Recently it was reported by Reuters that "Dow Jones Capital Markets Report reported that Oando Plc had signed Memorandum of Understanding with Gazprom OAO. The two companies have agreed to collaborate on the development of oil and gas assets and infrastructure in the West African sub-region and the Gulf of Guinea." 

Oando Plc is growing rapidly by increasing the number of oil rigs and "All Africa reported that Oando Plc has increased its fleet of oil drilling rigs to three with the acquisition of a USD 53.5 million rig, named the Constitution. Constitution, a swamp barge rig, has capacity for approximately 15,000 psi pressure output, about 3,000 horse power as well as the ability to undertake drilling operations, work over and high pressure/high temperature (HPHT) wells of over 30,000 ft drilling depths. The facility was purchased in July 2008, and was recently delivered to the Company. "

Emeka Chiakwelu, Principal Policy Strategist at Afripol, recently speaking at Energy Workshop noted that "Energy industry is capital intensive and continuously needs injection of large resources. The growing energy companies in Nigeria and Africa must be willing to look beyond the continent to raise capital that Africa cannot provide." Therefore Oando Plc is moving in the right direction.

Oando Plc is gradually but steadily making impact in the energy industry, therefore the infusion of the 21 billion naira will strengthen and energized its business prospect.

Oando’s stocks are doing well in the stock market in spite of the global economic downturn. Oando Plc must widen its scope beyond Africa and venture into new territory particularly in East Asia and Latin America. And the company must spend more resources in public relation to become an international household name, thus deemphasizing its Nigerian localized image.

Oando Plc has the potential and the credibility to become a major player in the global energy industry in 21 century. With this enormous injection of proposed capital Oando Plc is geared up for growth and expansion.        

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

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Nigeria the economic power house of West Africa sub-region was invited to the G-8 and G-20 combined summit that took place in the Western hemisphere nation of Canada. Nigeria is not an official member of either G8 or G20 but an invitation to the summit was given to her along with other important emerging markets of Southern hemisphere. South Africa was also at the meeting as an official member of G20. Nigeria and South Africa are largest economies in Africa. While South Africa is a member of G-20, Nigeria is not. Nigeria‘s GDP is bulging and her economy is growing at the rate of 7.23 percent in the first quarter of 2010 compares to the expected global rate of about 3.9 percent.

This is not the first time Nigeria has been invited to G-8 meeting. She has been coming to these meetings for a while including those held during the era of the former British Prime Minister Tony Blair and former US President George Bush. As a guest and as an observer to the summit, Nigeria cannot not fully and thorough participate in depth or take the advantage of a membership holder. The exclusive privileges given to the members of the group eluded of the country, particularly on the fiscal matters.

Why is Nigeria invited to these summits? Well, one can give an intelligent and reasonable answer without much guessing. Yes! Nigeria is the most populous country in Africa and the natural leader of the continent. Nigeria is a sleeping giant of Africa that has been in dormancy for a long time. Nigeria is rich in both human and natural resources but paucity of strategic managers to manage her efficiently has delayed her rise as a developed economic power in the continent. She has been invited to the summits because she has something to offer to the global village. For Nigeria as an economic unit can contribute to stabilization of the world economy by her active and comprehensive participation in the world economic system.

Nigeria could not make it as an official member of G-20 nations because during the formation of the group the country was both political and economic unstable. For a long time Nigeria was under ruler ship of a dictatorial authority and her economy were in miserable hands without adequate productivity and planning. The country‘s economy was fundamentally and structurally imbalanced. The economy operated in the cloak of opaqueness without transparency and probity. But the story is changing and Nigeria is singing a new tune. Democratic capitalism is gradually but steadily taking root in the country.

Now with emergence of democracy and steadily economic progress, Nigeria is ready to become a fully and active member of G-20. The fledging democratic dispensation needs to be nurtured and supported; therefore the best way of encouraging Nigeria is to be accepted into this August body. Nigeria is changing and changing for the best with enduring political sensibility. The change was buttressed during the recent transfer of power which was smooth without hiccups. When the late President Umaru Yar’dua passed away, the vice-President Goodluck Jonathan was swiftly sworn-in without much ado.

His Excellency President Goodluck Jonathan represented Nigeria at the summit in Canada. Since he took the helms of power he has demonstrated his capacity to lead his fellow country men and women in accordance to democratic principle. President Jonathan has been working speedily to resolve the issue of Niger Delta and has been making the requisite arrangements and plans to solve the problem of electric power shortage. Nigerians on the street are beginning to say good things about the new leader. The world leaders are receiving the Nigerian leader with open hands and respect as he moved forward in restoring the dignity of our country. All these developments can help to make Nigeria become an official member of G-20.

Nigeria has continued to be a stabilizing force in Africa and beyond. Nigeria with its strategic role in African Union is moving Africa forward with its leadership. When Liberia and Sierra Leone were raging with civil wars and uprising, Nigerian military contingency was a peace keeping force that restored stability in the troubled land. All over the world, Nigerian peace keepers can be found in troubled places of the world, propelling and protecting peace. Nigeria needs to be part of the G-20 in order to fully represent African financial and economic interest. Resources-rich Africa with a population of almost one billion has not been fully represented in the G-8 or G-20 of the world. Nigeria together with South Africa can best represent the interest of Africa. Therefore let‘s make it official and admit Nigeria to G-20.

Emeka Chiakwelu is the Principal Policy Strategist at Afripol Organization. Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

The Governor of Central bank of South Africa, Gill Marcus has proven herself a pragmatic free market banker rather than ideological by the way she goes about with her responsibilities as the apex banker of the land. She has wisely asserted her independence by refusing to yield to pressure from politicians and labor union to further cut down the benchmark interest rate.

"On March 25, the central bank cut its benchmark interest rate to the lowest in at least 12 years, reducing it by half a percentage point to 6.5 percent, to shore up a recovery from the first recession in 17 years. Labor unions have been pushing for further rate cuts to create jobs." Governor Gill Marcus understood quite well that credit crunch must be ameliorated in order to stimulate the economy for wealth and job creations. For her gallant action she deserves every kudos.

Gill Marcus, Governor of South African Reserve Bank

Gill Marcus was the deputy governor of South African Reserve Bank before she was appointed the new governor of South African apex bank to replace the retired Tito Mboweni. Marcus appointment assured the global financial market that President Jacob Zuma who made the appointment was still committed to free market and financial discipline of his predecessor Thabo Mbeki.


The retired former governor of South African Reserve Bank, Tito Mboweni have the reputation of being fiscal conservative with a prudence in the application of well thought monetary policy to control inflation and maintaining the value of rand. Under the watchful eye of Mboweni the South African currency rand have continue to maintain its strong value but not too strong to dwindle export of home made goods.

South African economy is quite ebullient with its relentless dominance of the entire African economic and financial landscape - the largest economy in Africa and the only African country that made it to G20. A good thing coming from South Africa is the continued investments in the continent. South African investors are investing heavily in West Africa particularly in Nigeria and neighboring countries where they are dominating telecommunication industry. Many of construction contracts in buildings and road constructions in many African countries are dominated by South African firms.

Afripol praised the appointment of Gill Marcus by President Jacob Zuma and maintained that "the keeping of high interest rates do not augur well for growth of small and viable businesses in South Africa. High interests make it difficult for a flourishing economic growth in the country and for upcoming new capitalist it can be detrimental in obtaining and paying back loans from financial institutions." Therefore lower interest rate can be necessary for economic growth and job creation.

The further cutting of interest rate can stimulate economic activities and can help to regenerate economic growth in South Africa in era of global recession, ultimately setting the climate for job creation that is badly needed in the country. When business community and marketers have access to credit, it will surely bring about the needed liquidity that the market is craving for. But cutting the interest rate to appease political constituents will not be good for a coordinated and well thought monetary policy.

A way lower interest rate may certainly encourage more borrowing but more spending and easy money have its downside too. Excessive liquidity may trigger inflationary trends and higher inflation that may retard economic growth that comes with higher unemployment and even weaker rand. The rand is not doing badly even with local demand of dollar; it stood its ground and always rebounded. It was reported that "the rand has surged almost 27 percent since the start of last year, helping to ease price growth by reducing the cost of imports such as oil." An appreciating and strong rand is an indicator of prosperous economy but overtly stronger rand may discourage and dampen export.

The inflation rate since February in South Africa has been 5.7% and that is three-year low. And Reserve Bank Governor Gill Marcus deserves the credit on the handling of the apex bank and its monetary policy. Keeping the inflation lower may be the most important job she has been doing. Higher inflation will complicate her duties by slowing growth and that will not help to alleviate poverty among the youths and unemployed of South Africa. And the increasing stronger and appreciating rand will lose its luster and potency with rising inflation.

Governor Gill Marcus has done well by resisting the mounting pressure to further lower the benchmark interest rate. Yielding to such pressure without the consideration of the market forces will not be prudent. And with that comes the losing of independence and a weaken reserve bank.

 

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

 

 

 

 

 

 

 

 

 

 

 

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Strategic Research and Analysis

  •  Ex-President Jonathan Meets with the Nigerian-American Leadership Council (NAL) Ex-President Jonathan Meets with the Nigerian-American Leadership Council (NAL)
    February 10, 2017       Washington, DC Ex-President Dr. Goodluck Jonathan Meets with the “Nigerian-American Leadership Council (NAL Council)”, in Washington, DC

    On Thursday February 2, 2017, Nigeria’s former President, Dr. Goodluck Jonathan, met with executives of the Washington-based NAL Council at the US Congress, Washington, DC.
    Dr. Jonathan was in Washington to address members of the US Congress’s Africa...
  • Martin Ifedi:  Nigerian American playing  in the NFL Super Bowl 2017 Martin Ifedi: Nigerian American playing in the NFL Super Bowl 2017
    Nigerian immigrants in America have its largest population in Houston, Texas and that is where the super bowl 2017 is taking place.  And the son of Nigerian immigrant, Martin Ndubuisi Ifedi will be playing in the super bowl representing Houston, his city of birth, Nigeria and Africa.



    One can say without equivocation that the most important date in the National football league (NFL) calendar is the boisterous super bowl. “The...
  • NIGERIA VENTURING INTO NUCLEAR AGE: PRECAUTIONARY MEASURES ARE NECESSARY NIGERIA VENTURING INTO NUCLEAR AGE: PRECAUTIONARY MEASURES ARE NECESSARY

    Nuclear energy and nuclear technology can be of great aid to Nigeria in her endeavor to supply steady, reliable and clean energy for her domestic electric consumption. Without doubt Nigeria at this stage of her industrial stage must do something about the paucity of electricity to power her industries and residential homes. Nuclear technology with its entire prospect has its challenges that must be appreciated and be given the requisite attention...
  • Goodluck Ebele Jonathan writes to President Trump Goodluck Ebele Jonathan writes to President Trump
    Dear Donald J. Trump,

    By the grace of God, President of the United States of America.



    As the United States of America opens a new chapter today, many around the world, myself inclusive, are optimistic that the success you have achieved in your career as one of the world's foremost entrepreneurs will be translated to your life as a public servant and custodian of the trust of the American people.

  • Naira is falling to nearly N500 to $1 Naira is falling to nearly N500 to $1
    Macroeconomic dislocation and the distressed pressure brought to bear on naira is triggering the precipitously freefall of the value of the Nigeria’s currency.  This is now beyond the pale, a disastrous saturation point and if it continues unchecked the naira as we know it will become a worthless currency just like the Zimbabwe currency.

    Since the official devaluation of naira coupled with negative growth of the economy, things are...
  • Britain’s Theresa May on Israel: When a leader speaks from both sides of her mouth Britain’s Theresa May on Israel: When a leader speaks from both sides of her mouth

    The British Prime Minister, Therese May is trying too hard to become the next Iron lady of conservative party in the reminiscent and mode of the late Margaret Thatcher.  But is she the real deal?  Is she willing to do what it takes to deserve the title of the iron lady? When Thatcher took over the helms of affairs, she instituted numerous reforms that brought Britain towards the path to true capitalistic society. She was also loyal to her...
  • RePrint Of Hitler’s ‘Mein Kampf’  Selling like a Hot cake in Germany RePrint Of Hitler’s ‘Mein Kampf’ Selling like a Hot cake in Germany

    Sales of Adolf Hitler’s “Mein Kampf” have soared since a special edition of the Nazi leader’s political treatise went on sale in Germany a year ago, the German publisher has said.



    The book outlines Hitler’s ideology that formed the basis for Nazism and sets out his hatred of Jews, which led to the Holocaust.



    The new edition is the first reprint since World War Two, released last January...
  • Biafra: Can One Kill an Idea Through Coercion? Biafra: Can One Kill an Idea Through Coercion?

    “Injustice anywhere is injustice everywhere”, and “he who holds a man down stays down” (Martin Luther King).  Slowly but steadily, Nnamdi Kanu’s detention in Nigeria, and the IPOB (Indigenous People of Biafra) cause, are beginning to resonate around the world, propelled by the phenomenal presence of the Nigerian and Igbo Diaspora around the world, especially in the US.


    It took a while for Igbo elites in the US...
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