Part 3 Kojo Tamakloe
The failure of African entrepreneuralship and “Fambulleh dogs “
Private businesses have the sole aim of providing a product or service at a profit to themselves . At the center are people called entrepreneurs who bring the factors of production together to realize this aim . A lot has been written about private enterprise being the engine of growth . In the USA monthly reports are given out to indicate private sector jobs. Why only private sector jobs beats my imagination. For me a job is a job . Any how whatever you want to produce you need to identify .That important aspect is marketing . Marketing is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer behavior and providing superior customer value. In it is the identification of what the needs of the target market are, and therefore plan how to satisfy them. Any successful marketing strategy to be translated into sales is a result of BRANDING . The process involved in creating a unique name and image for a product in the consumers' mind, mainly through advertising campaigns .It makes the product easily identifiable and helps to promote sales. Ghana was known as Gold Coast and now can be the Center of Pan Africanism. That makes Ghana stand out and if we support Prez Mahama’s crusade against corruption then Ghana becomes easily recognizable. Add the, then “ Akwaaaba “ symbol which Nkrumah used to portray Ghana as a friendly and welcoming country , we should be able to attract the needed investments The recipe for growth and job creation . The question is are all on board? .
It is in this light that one should seriously take a look at the presentation of Dr Amoako at the Economic forum whatever our views on it are . Questions that come into mind should be 1 Why is the cost of finance high in Africa in relation to others 2 why are African countries in Debt 3 Why do African countries have high inflation 4 Why is there a higher unemployment rate 5 Why has Africa been by passed by the West in the age of out sourcing
Why is cost of capital so high ?
What factors affect interest rate:
1. The opportunity cost of lending - this money could have gone into a saving account, or could be used to buy other assets. The borrower has to be charged for this cost.
2.Likelihood of default - the borrower may die the next day and will not be able to pay back the loan.(risky)Misuse of the funds or losses. Why ? As the market size is small and demand for capital is high . Here also we need to factor in the fact borrowers are not educated and the size of operation is small . Then one must ask what the borrowing is for ? We all tend to rush into fields where we see some one is making money . This creates undue competition raising the risk level
3. Inflation - one of the key factors in determining interest rates. High interest rates dampens inflationary pressures.. Inflation is too much money chasing fewer goods. Should this not be a motivating factor for our entrepreneurs to produce more and improve their earnings?
4. Time value of money - . The value today is more than it will be in 5 years time
2 Today nearly all African countries have a trade deficit , Nigeria and South Africa included .Simply put they are buying(consuming) more that they are producing and selling . In their quest to close the deficit they, go cap in hand to donor countries for hand outs and loans at unfavorable terms . As I wrote before most African countries depend on one produce, the selling price of which they have no control over .It is thus difficult to budget as they prices any change at any time. Debt write offs under HIPC may have been like “band aid “as they did not last long .They served if used prudently played catch up to the back log of developmental needs . The only solution is conservative budges or diversification of products
Debt of African Countries Sources “Some of the current levels of debt were amassed following the 1973 oil crisis. Increases in oil prices forced many poorer nations' governments to borrow heavily to purchase politically essential supplies. At the same time, OPEC funds deposited in western banks provided a ready source of funds for loans. While a proportion of borrowed funds went towards infrastructure and economic development financed by central governments, a proportion was lost to corruption and about one-fifth was spent on arms”
Also, many of the debts were signed with unfair terms, several of the loan takers have to pay the debts in foreign currency such as dollars, which make them vulnerable to world market changes. The unfair terms can make a loan extremely expensive, many of the loan takers have already paid the sum they loaned several times, but the debt grows faster than they can repay it. Finally, many of the loans were contracted illegally, not following proper processes..” Let us be careful when we make accusations . I know most of us are gullible . But I hope patriots will stand up and tell the truth .There really is no pot of money which any in coming government ill use for development . Taxation of sorts is the only way left or else we go begging . That is why some parties cannot speak out against GMO, nor EPA , nor Gay rights . They will be shooting themselves in the foot . After all “ he who pays the piper calls the tune” . Should the private sector not have identified other products and services to add to the market , making money while adding to the national tax stream and help close the disparity.
High Inflation Definition of 'Inflation'. The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. This is a supply and demand situation. The SSSS mooted by the NPP was implemented by the NDC . All of a sudden there is a bountiful supply of money . But where were the equivalent supply of goods ? Then coupled with our appetite for foreign goods it never had the effect of boosting local supply . Why do we then complain about the depreciation of the Cedi.? . This is another failure of the local capitalist. Hs inability to foresee that there was an opportunity to make money by producing . Until there is an equilibrium we will blame the government to no avail. The real culprits are our CRONY CAPITALISTS, all hovering around government for contracts , unable to invest and create wealth. All depending on the sweat of the farmers while looking down on them
High Unemployment The unemployment is mainly due to:
1. Faulty Human Resources planning at the Central/State Government.
2. Lack of planning and execution in Education/Technical Education.
3.Lack of Capital and Technical Know how
4. Lack of skill development/Vocational Training programmes..
5.Technological Changes.
6. Lack of natural resources.
7.Migration of people from Villages to Towns and Cities.
8..Lack of motivation/dependency on others.
9.Lack of entrepreneurial capabilities/risk taking capacity.
10.Frequent changes in Political Systems.
11.Increased Life Expectancy. People going for 2/3rd careers.
12. Unplanned population growth/explosion..
We see most of these affect mother Africa with the addition of the “ brain drain” and again the inability of our so called entrepreneurs who shout from the roof tops about free enterprise but wait for government. Is it not time for us to critically focus on technical, vocational and trade skills instead of the “ book long’ that we invest in? .What is the use of a Latin scholar or ancient Greek scholar in Africa’s development? Even our history scholars have failed us and we still believe some people came from caves? Where are the Caves any way? When do we introduce STEMIC type education so we have thinkers instead of “geniuses “ who cannot reason outside the box . We had a Head of government, who the workers used to mock “ on which page is it in the book” ? Engineers who did not know the difference between a spanner and a screw driver. Should we wait for GMOs or we should be using our own locally developed plant and animal hybrids that contain the features we want?
Why has Africa been by passed in the age of out sourcing ? It is said “ God helps those who help themselves” . Business is about profits but most of the time we think we need charity. Our markets are small and fragmented with trade barriers .Poor infra structure leads to expensive distribution system How will these companies make money and how much will the products be sold? . So they put the plants in China and India both with large population and markets and we Africans refuse to merge and beat our chests” I am Ghanaian’. Those who come , come to exploit with little technological transfer . But are we dumb? A Ghanaian recently got admitted to 8 Ivy League Colleges and another into 24 . I attended school with guys who got aggregate 8 in the eight subjects they presented at the then “O” Level, then went on to get 4 As at the then A Level in subjects like Physics, Chemistry , Pure and Applied mathematics . They then got into MIT and have qualified. Where are they and their children? Are they not the type who can make a difference? Why are we not encouraging our local inventors who will create products that can be marketed to create jobs? I bet if Steve Jobs or Bill Gates had been Ghanaian, they would have been destroyed by a society that does not tolerate deviance . Today even as Nkrumah is honored outside Ghana’s shores we still have a sizeable population calling him names. He attracted the best of the best . One has just passed on Maya Angelou . “ Show me your friends and I will show you your character” . We need to have an Nkrumah Institute for Pan Africanism , that will attract such brains and that is the way to attract the venture capital we need . The man is a marketable asset . Let us use his name . It is a BRAND by itself Let us get off this petty jealousy and inferiority complex . To borrow from Mohamed Ali , “ Nkrumah is the greatest African of all times”
The writer Kojo Tamakloe is a Pan Africanist who believes it is African Unity that can solve Africa’s underdevelopment
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