Here's why the 'BRICS Bank' could change the world order.

Yesterday, after the conference of the BRICS nations (Brazil, Russia, India, China and South Africa) in the Brazilian city of Fortaleza, we got exciting news that had been long overdue. The BrRICS nations are going to set up a developement bank. The BRICS nations, who account for a fifth of the global economy and some 40% of global population have been negotiating this project for some time now, but the final agreement seems to have been reached.

The Indian Prime minister whose country is to head the bank proposed the name by which the bank is to be referred to: New Developement Bank.

With an intitial capitalization of $100 billion, and a subscribed capital of $50 billion, the bank is expected to aid in infrastructural projects and shave off future economic crises. The bank was set up to counter Western monopoly on financial markets and capital.

The Washington-based World Bank is increasingly seen as an arm of the West, and the IMF doesn't seem to represent the inrterests of emerging markets.
In a press confrence, the presdident of Brazil, Dilma Roussef said, "These initiatives show that, despite our diversity, our countries are committed to a solid and productive association,". Russian president Vladimir Putin certainly agreed with the Brazilian president when he said when he said the agreement was "a very powerful way to prevent new economic difficulties."

The so-called BRICS bank came as a necessity to manage the outflow of capital from emerging markets that camme as a result of the stimulus measures proposed by former U.S. Federal Reserve chairman Ben Bernanke. This led to falling currencies in BRICS countries.

The bank is set to start lending in 2016 with an initial total of $10 billion in cash put in over seven years and $40 billion and open it's doors to other countries, but the share of the BRICS countries can't drop below 55%. The contingency currency pool will be held in the reserve of each BRICS nation. China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion.

Having won the bid to host the bank, China will be the last to hold the revolving office of head of the New Development Bank. 

Here's why I think the success of this bank has the potential to change the World Order.
First of all, Russia just signed a $400 billion gas deal with China which aimed at countering the effects of western sanctions over it's annexation of Crimea. In addition to that, India and China did not support sanctions on Russia at the UN Security Council. These two also vetoed war crimes resolutions on Syria, still at the UN Security Council.

That's just the tip of the iceberg. Take a look at the list of countries that have issues with the West besides the BRICS nations: Argentina, Iran, Syria...These are all countries that would line up to offer their allegiance to the BRICS exchange for their support; not to mention the resource rich but financially poor African countries that are weary of extremely high interest rates offered by western banks on bank loans.

This for them is a 'The Messiah' come to take their financial misery away, and they would lmine up at the doors of the bank to create ties in order to seek financing on 'fairer terms'.

Consider this too. The IMF recently imposed cut in oil subsidies on a number of countries, which they had little or no say in, and this has been the practice for decades; imposed reforms on countries even when they are not ready for them. The 1997 Indonesian riots were blamed on the IMF.

The western monopolisation of global financual markets and financial power also means that the West can easily impose sanctions on Countries that do not 'toe the line', like Russia and Iran. If this power moves West, it becomes easier for such countries to dodge these sanctions by simply looking West. Do I need to remind you that Iran has been labelled The Next China?

In case you haven't noticed, I have above given four reasons why the institution of the New Development Bank should raise western eye brows. But the one most important reason I haven't mentioned, The Rise of China.

China, the second largest economy in the world, and poised to overtake the U.S., has finally found a way to gain more control over the 'rest'. Let's be reminded that China is the largest contributor to this bank. Of course the West fears the Rise of Putin's Russia too, but that in no way compares to a China that could grow beyond the West's ability to control it.

Tke a look at China's territorial disputes in Asia, and you get a sense of where China is headed. If this China should gain more influence over rising countries like Iran, Nigeria, Indonesia and even some of the European countries hit with recession, it's certainly bad news for the West.

HOW CAN YOUNG ADULTS PLAN TO BE MILLIONAIRES?...ADVICE FROM AN EXPERT.

We all dream of becoming succesful some day, at least 98.5% 
of us do, and being able to buy all those things we've always dreamt of, but could only see on TV (be they Rolls Royce cars, Gucci shoes, private jets, exotic hotels and resorts)...or may be so just want to stay above the poverty line ($1.5/day).

 The truth is, you'll find several people on the internet who would give you general advice like work hard, be puctual..., rarely do you get advice which is as specialised as the one given below. And meanwhile it would mostly be applicable to those in the Western world at this point in time, it is good to remember that the world has now become a small box due to the internet and due to the interconnectivity of financial markets. In that light, those in non-western nations should also take this advice seriously. You can do most of the things below if you have a credit card.

Over at Quora, one of our members posed a question: How can young adults plan to be a millionaore? The responses he got were all fascinating; but one particular response caught my eye and the eyes of many others. It was the response given by Eric Scott, another one of our members. Here's Eric's answer.

Four Steps:

1. Live below your means
2. Build a cash buffer for the unexpected
3. Pay off debt
4. Invest

The above shows one possible path to $1M in just under 26 years assuming a $50k base salary, annual cost of living raises, investing 20% of your gross salary, and 7% investment returns.  You can also download the Lifetime Investment Returns Google sheet and play with all the assumptions yourself.

Live Below Your Means
First you’ve got to start generating as much free cash flow as possible.  Free cash flow = monthly money you earn and don’t spend .  A solid goal for everyone is saving 10% of their gross salary, monthly.  I know a few college grads that focus on it and free up 20% to 30% of their gross or more.  20% isn’t bad if you haven’t grown accustomed to spending your after college income yet.  30% requires a bit more dedication and sacrifice.

Average US college grads earn $45k. Assuming 15% for taxes, you’ll need to live off of roughly $2800/month at 10% saved, $2500 at 20%, and $2000/month at 30% saved.  Example:  You earn $45k.  You pay 15% in taxes.  You have $38,250 left.  You invest 20% of your gross = $9k.  You’re left with $29,250 which works out to $2438/month to spend on everything from rent and food, to laundry, vacations, and beers with your friends.

Build a Cash Buffer
Once you’ve freed up a chunk of money you’re not spending, you’ll want to save up until you have 3 - 6 months of cash on hand.  Bad things happen.  You’ll break your car, break your leg, or find out what “right sizing” means first hand.  You need cash laying around so you can handle those bad things without panicking and liquidating investments.

Pay Off Debt
Mostly this refers to high interest rate debt.  What qualifies for “high interest rate” can be a matter of discussion.  With interest rates where they are today, anything over 7% like credit cards, and some car and school loans should be paid off before investing.  Those loans are equivalent to high yield, no risk investment, which are tough animals to find in the wild.  Catch them when you can.  The middle ground loans in the 3% - 7% range I’d probably advocate putting a little extra towards to pay them off early.  Anything under 3% is probably best paid using whatever minimum you can that still pays them off in 10 - 30 years.

Invest
Once you’ve created free cash flow, used it to save 3-6 months for a rainy day, and paid off your high interest rate debt with it, all of a sudden you’ll have a stream of money you need to do something with.  Now it’s finally time to invest.

Take free money first.  Many companies have some sort of 401k or retirement package where they match some portion of your contribution.  Matching funds are FREE MONEY.  Take that money by maxing out whatever your employer will match on.

It’s highly likely that after you’ve collected all your free money, you’ll still have a stream of free cash every month to invest on your own.  There are three keys to wealth creation:

1. other people’s companies (stocks and other equity deals)
2. real estate
3. your own company

Stocks are the easiest to get started with using small, monthly amounts. 

• open a low cost brokerage account like Scottrade or Fidelity
• invest in a broadly diversified, low fee fund like SPY or VTI
• invest regularly and don’t touch it - try to keep your trading fees around 1% which means with Scottrade’s $7 trade, you’ll invest every time you accumulate at least $700 - usually monthly or every other month

The main key here is to stick with it, through the stock market ups and downs, and don’t touch the money.  Understand that earning a strong return often requires that money to be left alone for 20 or 30 years. 

While you’re getting all this rolling, I’d also recommend reading a few books on investing.  Start easy with The Millionaire Next Door, The Wealthy Barber, and Rich Dad Poor Dad and if anything strikes your fancy, dig into those topics deeper.  Rental properties, commercial buildings, individual stocks, and starting your own business can all be strong wealth builders and fun too.  Once you’ve got a solid base using the above 4 steps, you should have a reasonable amount of investing knowledge, and a growing pool of capital to start branching out with.

As a final note, the above assumes a fairly average, college grad in the US.  The averages certainly favor getting a college degree, and there’s a lot to be said about not getting into too much debt without a good reason while in school.  Both seem like solid prerequisites to the above 4 step plan.

View Answer on Quora
Sounds very much like easy advice to follow, eventhough vit may get a bit tough during the process. 
My final jusdgement is that all in all, it's great advice that all of us young people should follow. 

DISCLAIMER: THE PICTURE ABOVE IS THE PROPERTY OF BITOINIST

IT TURNS OUT OTHER COUNTRIES ARE FOLLOWING IN CAMEROON'S PATH

Yesterday, we reported that the Cameroonnian government had announced bold new cuts on oil subsidies which had pushed up the price of fuel by 14% and 15% for diesel and petrol respectively. And we also reported that there was a planned strike action by the Cameroon Taxi Drivers Union. We can now confirm that the strike is scheduled for Monday (assuming the whether would permit it).
 It turns out Cameroon is not the only country struggling with the oil subsidies dilemma.

Egypt, under the guidance of the newly elected president Sissi has just cut oil subsidies, a move that sees the price of oil go up by up to 78%. The cuts take effect from midnight.
The price of 92-octane petrol would be 2.60 Egyptian pounds (21p) a litre, up 40% from its current price of 1.85 pounds, while 80-octane petrol would rise to 1.60 pounds a litre, up 78%.
Diesel will rise to 1.80 pounds a litre, an increase of 63%, while the less commonly used natural gas for vehicles will rise by 175% to 1.10 pounds a cubic metre.


It turns out Camerron is not the only country struggling with the 'oil subsidy dilemma'. It has recently been reported that the new Indian Government led by the newly elcted Narendra Modi is expected to cut gradually cut oil subsidies over the next few years. Moody's Investor Service reports that these measures are necessary to improve the credit worthiness of India's oil marketing companies.

Currently, there is an intense debate in the Indian Parliament with regards to the new proposal to cut fuel subsidies. On one hand, the newly elected government fears it could infuriate the general public that just put it into power, and on the other hand, it seeks to better India's budget, improve it's credit rating and better it's Balance of Payment situation.

 In case you still have not noticed what these two countries have in common, let's inform you - they both have very new governments, in the case of Egypt, less than a month old, while Indi's government has been in power barely a month.

So why would a very young government adopt such a controversial and potentially dangerous move? Well for the case of Egypt, food and oil subsidies traditionally consume a quarter of the state budget, but the government is now taking steps to significantly reduce that inorder to revive the country's crippling and budhet deficit budget deficit which has come as a result of 3 years of civil unrest.
However, the mere fact that such a serious law is being passed is a clear sign that there's now a serious person in control.

As for India, it still remains to be seen if this law will be passed. But if it is indeed passed, it will be as a result of the sluggish growth of recent years that has led to a huge Balance of Payments deficit. 

DISCLAIMER: THE PICTURE IS THE PROPERTY OF KNOW INDIA

THE RISE OF AFRICA'S SUPER RICH

       Disclaimer: This image is the property of BLOGS.FT.COM
As far back as we can remember, there have always been those who were extremely rich and those who were extremely poor. The only difference is that at some point back in time, there was no middle class, but now, the middle class seems to be at the centre of every sound economic policy.

Think of Victorian times and the aristocratic nature of the English Society back then, the rich were very rich and the poor very poor. Think of the ancient Roman Empire: Marcus Crassus, whose wealth was calculated as being roughly equal to the empire's total government treasury, had an annual return on his wealth equal to the annual income of 32000 Roman citizens combined. In more recent times (right now), think of Carlos Slim who is responsible for the sustainability of more than 400,000 Mexicans.

The truth is that the number of Super rich has grown exponentially during the last century, both in the West, but particularly in the East. The growth of the super rich in the East, particularly Russia, India and China has been exponential. Take for example a country like Russia; it's most popular city Moscow holds the record for the city with the most number of billionaires (79) and their wealth keeps growing.

 That is simply to show a specific case in point. That doesn't imply that there are no other cities with billionaires. Many other cities in the world are home to several billionaires, like New York City, Hong Kong, Shangai...and even Johannesburg and Lagos.

Ever tasted a £32 hamburger, or slept in a £7500 a month flat? If not, then you probably haven't visited Luanda, Angola; the most expensive city in the world and also home to Isabel Dos Santos. With a net worth of oner $1 billion, she is the richest woman in Africa and daughter of the president of one of Africa's largest oil exporters...yes you guessed right Angola. I don't kno about you, but I'm not surprised. Luanda hosts some of the world's most influential people, especially those in the oil and tech sectors, as the come to take advantage of Angola's massive oil resources.

Victora Island, Lagos Nigeria...if you were blindfolded and dropped there, you'ld think you were in the South of France. Well planned streets, luxury apartment buildings, expensive sports cars...no absence of Rolls Royce's and at the watershores, luxury yachts; all belonging to Nigeria's elite. Just a few kilometers inland, Ermenelgildo Zegna, one of the world's most prominent luxury designer goods brand just came in and set up shop. Their suits retail from $2000 - $2800 at least. And why are they here? Because they know that the Niherian elite has the money, loves to spend, and loves to be seen spending.

VICTORIA ISLAND LAGOS. IMAGE COURTESY OF OYUNGAPALA.COM
Just down the road, there's a Porsche dealership, and Rolls Royce is coming soon. Go to any major airport around the world, especiall in London, which has beome the 'playground for Nigeria's rich', and you'll notice that the best-dressed men are Nigerians, in their expensive designer clothes and shoes.  On one side of the Lagos waters you find the luxury boats of the rich and affluent...

Luxury boats at Victoria Island: Disclaimer- Image is property of NAIRALAND

Federal Hotel in Lagos. Image cortesy of hotels.com


And on the other side of the Lagos waters...

These poor fishermen make mostly less than $1.29 a day

Another country that has also seen a rapid surge in the number of ultra rich people is South Africa. 
Sandton, Johannesburg; one of Africa's most prestigious shopping centers, and home to some of the richest people in South Africa (mostly white), and with some of the highest property values in the country. Paid domestic staff, designer clothes and sports cars are the order of the day. Women with designer shades, covering the faces heavy laden with Botox, carrying bags of designer clothes they just bought from one of the lusury shpos down the road. Their next stop, coffee at one of the exclusive cafés on Nelson Mandela Square. That's the life of SA's rich

NELSON MANDELA SQUARE, Sandton City. Image courtesy of sandtoncity.com

Of the 50 Richest People in Africa, 14 individulas hail from South Africa and 10 from Nigeria, as of 2013. There were 55 world class billionaires in Africa as of January 2014, a 2250% increase from 2003 when Forbes counted only 2 billionaires. The growth has not only been at the level of billionaires. The number of mutli-millionaires, or ultra-rich (defined by Wealth-X as individuals with a networth of $30 mn and above after accounting for shares in public and private companies, residential and investment property, art collections, aeroplanes, cash and other assets) increased 5.1% in 2012 to 2535 individuals with a combined wealth of $539 bn.

A 2012 Wealth-X report claimed that the rise in the number of Africa's ultra-wealthy was mainly driven by South Africa's growing rich population, which is in turn deiven by the growth in the trade in resources such as mining activities and gold. Here's a list of the countries with the highest number of ultra-rich people in Africa. 

Nigeria also has seen a surge in the number of ultra-rich mainly due to it's oil sector, but also because of the astoniushing in sectors such as banking, telecommunications, real estate and manufacturing. Northern African countries too, despite the push-back of the Arab Spring have for the most part experienced a rise in domestic consuption due to increases in oil prices and more inclusive and distributive policies.

The entire African continent has seen a rapid increase in the living standards of individuals, which is reflected (slightly) in an increase in per captia GDP, and hence a greater purchasing power. This means that the demand for many goods and services has increased, thereby enriching the people who provide these services.

Also, the increase in trade with China, which is largely seen as being on more favourable terms has lifted so many people up. China is now the single largest trading partner of Africa. Let's not also forget that the increase in transparency, which is relected in increased democracy in Africa has given opportunities to many more people.
Here's the number of ultra-rich people in the top 5 countries in Africa by number of ultra-rich.
                                                  
1. South Africa    -   785       Combined wealth   $100bn
2. Egypt               -   490       Combined wealth   $65bn
3. Nigeria             -   450       Combined wealth   $60bn
4. Kenya              -   130       Combined wealth    $16bn
5. Tanzania          -    105       Combined wealth   $14bn

FIGURES FROM A 2012 SURVEY.

At the same time, the number of millionaires in Africa has greatly increased.
Here's a list of the African countries with the most number of millionaires (defined as individuals with a networth of at least $1 million excluding the value of primary residence).

1.  South Africa     -  48,800
2.  Egypt                -  23,000
3.  Nigeria              -  15,900
4.  Kenya               -    8,400
5.  Angola              -    6,400
6.  Tunisia              -    6,500
7.  Lybia                -    6,400
8.  Tanzania           -    5,700
9.  Morocco           -    4,900
10. Algeria             -    4,100

All this growing wealth despite the fact that 48% of Africans still live below the poverty line (less than $1.25 a day).



 

WHAT AFRICA NEEDS MORE THAN FOREIGN AID

NOTE: All the WORDS in BLUE are links to sources and references.
DISCLAIMER: THE IMAGE DIRECTLY BELOW IS THE PROPERTY OF BUSINESS SPECTATOR

In the article on The Case Against Foreign Aid for Africa, we presented the various arguments both for and against foreign aid for Africa. We looked mostly at the arguments usually presented in criticism of foreign direct aid for Africa.

It is easy to be blindfolded by the huge amounts of money being thrown into Africa, and not realise the fact that little has changed in Africa since the introduction of foreign aid some six decades ago. But also, the 'bits' of positive change that have come as a result of foreign aid should not also be forgotten, like the thousands of children who now have access to education in poor communities, and the communities that now have access to clean drinking water as a result of World Bank sponsored programs. In my own country Cameroon, the Kumba-Mamfe road is an example of a World Bank sponsored program that has the potential of benefitting hundreds of thousands of people. The thing is, it also has the potential of enriching a select few, and not even being completed like many other internationally sponsored projects.

Now here's my take: We have given the various arguments presented by some of the loudest voices agains foreign aid for Africa, and if you are not conviced yet by these voices, you really should let us know what you think about foreign aid to Africa. In my opinion, the very fact that certain countries depend to such a large extent on foreign aid for their budgets and to finance government spending is an indication of a wider problem within receiving countries, and this is their inability to cash in on their own endowed potential. Why do I say this? Because many of the countries receiving huge amounts of aid are resource rich countries.

We also pointed out in our last article that aid is sometimes given to countries that are highly corrupt, and could do without it. Take Nigeria for example, a country that accounts for 21% of the total GDP of the African continent ($510 billion), and has a mature space program with four satellites launched into space in recent years; and also sitting on one of the world's largest oil reserves...70% of the population of Nigeria live under the poverty line and many more lacking access to the basic neccessities of life. Now $510 GDP would normally assume that a per capita GDP of $3000 for every Nigerian, but that would be a lie. The elite of Nigeria, mostly government officials, their relatives and affiliates luxury and affluence while struggle just to get by. 

Since Nigeria's independence in 1960, it has received $400 billion in aids, that's six time the amount spent by the US in post World War II reconstruction of Europe. The sad truth is that most of this money has been stolen. It is estimated that between 2009 and 2011, 136 million barrels of oil (worth $11 billion) were stolen. 
As far back as the nineties, when military dictator Sani Abacha led Nigeria, the government was receiving huge amounts in foreign aid, probably part of the massive $4 billion dollar fortune he made for gimself at the expense of the Nigerian people. Most recently, the the governor of the Central Bank of Nigeria alleged that $20 billion of oil revenue had gone missing, and for that, he was suspended. This just goes to show how foreign aid money is given to inefficient and corrupt governments, that do not have the interest of the people at heart.
In 2012, the UK government gave £86.8 million to 'help' the people of Somalia, which at the time was the most corrupt nation in the world. You'll be forgiven for assuming that money never went to the hard hit people of Somalia, and the UK government knew it wouldn't.

SEE ALSO: A COUNTRY SO CORRUPT IT WOULD BE BETTER TO BURN OUR AID MONEY

Foreign aid also makes countries reluctant to carry out structural changes and reforms to make their economies better. Take Cameroon in the late 1970's for example, when the first signs of the global economic crisis had started showing face. Instead of the then president, Ahmadou Ahidjo implementing such reforms as forcing state run companies to make changes that made them more efficient, he began to carry out a massive subvention scheme that made inefficient firms more inefficient and shut the inflation rate through the roof. So in essence, he was using foreign aid money, along with money from the sale of natural resources to finance consumption. The eventual result was a devaluation of the currency.

Going back to the point of dictators, foreign aid has only empowered dictators in certain places, like it did empower Sani Abacha more. It also breeds more corruption, as power becomes more appealing due to the control of funds that come with aid; and when people get into power, what happens, they don't want to leave...they become dictators, and that could easily lead to civil war, like in the Central African Republc, Mali and Chad. The World Bank reports that in 2009 and 2010, $130mn in foreign aid money given to the Somali transitional government went missing. This explains the frequent power struggles in that area.

SEE ALSO: BRITAIN 'SPENDS £500MN ON FOREIGN AID FOR MOST CORRUPT COUNTRIES

With all this, what is a better option for Africa?
- A fair price for the sale of it's resources.
- Foreign aid packages should be tied to a set of structural,
  econmic and social reforms. For example, governments could be 
  asked to reduce the level of poverty or child deaths in exchange 
  help any sort.
- Aid should be reduced significantly, and where deemed necessary,
  suspended for governments seen as corrupt or dictatorial.
- Foreign governments should stop taking sides in conflicts in 
   African nations that are driven merely by greed.
- International sanctions and asset freezes for African leaders or 
   government officials who misuse or misappropriate aid money.

With these and more, Africa may not even need foreign aid in the future, and where it is imperative that it be given, it would be properly used.

AFRICA'S ECONOMIC UPRISING

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Africa is largely seen today as the next big thing. It is the fastest growing continent; and has a largely youthful population, about 75% of which is under the age of 35. Four of the ten fastest growing economies in the world are found in Africa, and an African Development Bank report forecasts the average growth rate of African countries for 2014 to stand at 4.8%, a 0.9% increase from 2013. That's actually not a bad improvement when you consider the scale of economic activity it represents. And if you belong to the 'School of Thought' that this has all come due to trade in natural resources, you are wrong, at least not entirely right. Sure exports of natural resources have helped enhance this growth, but the most part of this growth has been as a result of a boom in less traditional business such as retail, transportation, insurance, telecommunications and manufacturing. All this is very good news in the ears of investors who desperately look for havens to throw their money. And one more thing, the average African economy is expected to grow at the rate of 5.7% in 2015.

This shows how far Africa has come in such short time. There was a time when Africa was only known for civil wars, corruption, embezzlement, extreme poverty and ruthless dictators like Sani Abacha of Nigeria, Mobutu Sese Seku of the DRC and Idi Amin of Uganda. These people put Africa in the spotlight for the wrong reasons, and brought untold suffering to their people. It would be unrealist at best, but stupid at worst to assume that Africa has resolved all these issues, at least not with Boko Haram's abduction of hundreds on Nigerian teenage girls, the severe brutality of Al-Shabaab in Somalia and Kenya, or the sectarian violence in Lybia and the Central African Republic. However, it does give africans a glimmer of hope that these horrible incidents do not dominate African headlines as much as before.

But individually too, African countries have been improving on many indices of development like the Corruption Perception Index, Gender Equality, Infant Mortality Index, Human Development Index and many others. To add to this, Africa has a young and increasingly educated workforce that promises to be a big asset as Africa continues on it's path of development. However, some have raised questions about whether this youthful population (Africa has more people under the age of 20 than anywhere else in the world) is an asset or a risk.

In recent years, investors and businesses in general have had good cause to invest, or even move to Africa. This was evident with the visit of US president Barack Obama to Africa. The visit was largely seen as the US trying to catch up with China on the issue of trade with Africa, which has come to be known as the most untapped market. China's trade with Africa currently stands at more than $200 bn annually, double that of the US which stands at just above $109 bn. This highlights how strategic this continent has become. China recently launched a $2 Billion African Development Fund through the African Development Bank at a conference in Kigali to further strengthen it's ties with Africa, and to ensure transparency and ethics. 

Trade with Africa has not only been with China and the US. Brazil, India and the EU have also been making serious advances in trade with Africa in recent years. India for example, expects it's trade with Africa to reach $100 billion by 2015, and Vrazil recorded a serious jump in trade with Africa in 2012. In that year, trade between Brazil and Africa reached $26.5 billion and is expected to have grown further. The EU has ben trying in recent years to negotiate with Africa, in order to re-ignite trade ties. It definitely shows that Africa is on its way to a brighter future.

Here's my perspective. In the past, we were always told of the huge amounts of foreign aid that African governments receive from Western governments and International Organizations, the figure stands at about $60 billion a year. Zambian economist Dambisa Moyo in her 2009 op-ed for the Wall Street Journal argued that foreign aid is actually hurting Africa, and she makes a very strong case; for example pointing out that the the number of Africans living on less than $1 a day has doubled in the last 20 years. But her opinion could be contradicted by looking at a country like Rwanda that has come to be known as a 'foreign aid success story'. The thing is, it's not that straight forward - Rwanda relies on foreign aid for about half of it's budget, so in the end, Moyo has apoint.
The point here is not to argue for or against foreign aid (we'll leave that for a later article), but to highlight the fact that Africa in the past took the wrong 'path to development', reliance on foreign aid. That didn't work.
With the failure of the 'foreign aided economy', African countries took used another model, the 'export of raw material reliant economy'. This was also a tragedy, and the IMF raised a red flag on African countries. It was this model that created the disparity in income that exists in many countries today, like South Africa, Angola and Nigeria; and with the recent discovey of one of the world's largest natural gaz reserves in Mozambique, the same fate may befall it. In the back of all this, western companies and economies were the big winners.
African countries seem to have learned a lesson, and are now advocating for 'win win' trade terms, and rightfully so. Finally, a growth model that seems to let the benefits reach the common people in the form of higher disposable income. Unless African governments continue to pursue benevolent economic models, Africa would contine being just the 'black continent'.

THE PURPOSE OF LIFE

As human beings, we are born, we grow and we die. That's basically all about human life. Everything between these three stages is just an addition. No matter what happens between these stages, we must have been born, we must grow, and we must die. That's for sure, we must all grow, and we must all die. Between these three basic stages, we make chices and decisions that define our lives and legacies, and account for what we will be remembered for. It is for this reason that we see people 'work hard', and others just 'live the moment'. Some people choose to pile up wealth and material things, while others choose to pile up friends and personal relationships. Those who choose to pile up wealth are usually those who are 'ambitious'. Let me just make a disclaimer here: there is absolutely nothing wrong with being ambitious or having 'dreams' or 'goals'.

  We often hear people, both young and old, talk about their dreams, and what they want to become in life.
I want to become a doctor.
I want to become an engineer.
I want to become a businessman.
I want to get married at 30.
I want to have four children.
I want to own a large company.
It goes on and on and on. And you know, no one can be blamed for having dreams, besides, we grew up around people who had dreams, so why shouldn't we do the same? Our parents have invested heavily in our education, so isn't it only right and fair that repay them by becoming succesful? Or, every other parent's child is setting goals and pursuing them, so isn't it only fair that our own parents' child (us) pursue our own dreams? The questions are numerous and varied.

There's only one question: 'Is there more to life than just becoming rich or succesful ?'. And another question that also comes to mind is 'What does it actually mean to be succesful?'. Our society has come to value people more on the basis of what they have and less on what they are. So nowadays, being good actually accounts for very little. It is like I always say, and some people always dispute, that 'Nowadays, being good has become old-fashioned and accunts for nothing. The good girls always end up with the bad bad guys, the jerks, and the good guys...well...the girls think they are boring ,and so they always end up heart-broken, and always settle for less.' This is a rather pessimistic view of life and boy-girl relationships, but at least it does indicate to a certain degree how irronic this life could be. And it thus highlight the realities of life.

So what is it that is actually important in life? Is it the money, or what is it actually? And why are we put into this world by the creator? The answer will be different depending on whom you ask.
We (in Cameroon) spend an average of 16 years in school before we finally get a university degree, and the expectation is that thereafter, we are to get a comfortable and well-paying job. But it doesn't always work out that way. Myself for example, I have s degree in accounting with honours, but no job...yet. So when things don't work out the way we desire, does it mean we have failed. When we do not get a 'white collar' job after decades of education, and in some cases, hundreds of thousands of dollars in tuition fees and allowances, does it mean we have failed? 

For starters, not everybody is interested in the regular 8-to-5 job. And not everybody is interested in the suit-and-tie office job. Not everyone is at ease, answering 'Sir' to a big bellied grey haired man in an ugly suit. Not everyone is interested in going home so tired at night that they can't even sit up and watch a football (soccer) game.
In short, not everyone is interested in a conventional life. This is the life of a hypothetical 'regular guy' with a regular office job. He has just had his GCE Advanced Level Certificate, and gets into university. During his first and second years, he has may be two relationships that don't go anywhere. During his third year, he wants a 'serous relationship' because he thinks he is now mature, and needs a mature relationship because one never knows where it could lead to. He luckily lands a job in a company, and after three  years or so, he decides it's time for him to start preparing to settle down. If he's still with his girlfriend of his university days, he decides it's time to see her parents officially. Two years after that, they are husband and wife and start having children. As he advances into his thirties, he builds a house and they move in. He starts gaining weight and starts growing old. In some decades, he's ripe for retirement and that...is it. Now, don't get me wrong, there's nothing wrong with the conventional life. There could only be something wrong if you settle for this kind of life when you could have more, when you could get more out of life.

Some people are totally comfortable with this kind of life, but others like me are not. This is a comfortable life, with potentially very few hurdles and a peaceful one too, some would way; but others like me would say it is a boring life, it is a life void of stimulation, it is an unchallenging life, it is a life with little motivation to become a better individual or to be different from the usual stereotype. Some people would look at such a description and scream: What happened to travelling?
             What happened to adventure?
             What happened to skydiving?
             What happened to kayaking?
             What happened to mountain climbing?
These are just the questions those who want a little bit of stimulation in  life. Others would ask tougher questions
             How did he know that girl was the right girl for him?
             Does he even love this girl?
             Did he just marry her because she was the most safe and 
              most available option?
             Is he happy with that job?
             Does he love what he does?
             Has he tried to get knowledge in other fields?
The questions could go further and longer. It's not only with the guys, but also with the girls.
            Did she just marry him because he was the most secure
             option?
            Does she really love him?
            Is she afraid to attempt some career advancement?
The questions could be so many, but the answers, few and tough. Why do people setlle for less, why are people satisfied with the conventional life? Why do people refuse to get more and better out of life? Why do people adhere to the norms and cultures put in place by society? The answer may still be different depending on whom you ask.

Speaking for myself, I think the answers are simple. We as human beings are generally made to always try to fit into a particular group or society. And when that group or society sets standards, we are expected to adhere to them because if we don't we are either branded as 'rebels' or 'failures'. So the guy with a university degree who didn't get a job at a prestigious company is a failure because...he went to school so he could eventually get a job. The guy who refuses to be soaked up by a regular 8-to-5 job is a rebel because...there are people who would kill for that job, so why should he be different? We are afraid of 'social shaming', and that's why an older woman can't publicly date a younger gy in many societies. I do not mean that we should sacrifice our core values, morals or religious beliefs. I for one, I'm a christian, and I try my best to follow the laws of my religion, but I also try not to judge those who don't. And why does 'society' try to impose such laws on us? First of all, society is made up of a group of people, who individually have interests, whether financial or moral. So their son has a regular job somewhere, why should I want somethiung different or better, never...so they'll 'advice' my parents not to let me make such a 'big mistake'. That is how the society we live in is structured.

I guess the take home of this piece is intended to be the fact that we should all strive for the best and not let society decide for us. We shouldn't strive to be good, we should strive to be the best we can, even when it annoys some of the people who mean the most to us. Sometimes, they are just ignorant and need some enlightening. If you could be good, then you could get better. Good is never good enough, so why should you settle for it? I challenge us all to go out and become what we always wanted to become, even if it is an astronaut.

 
 
         
 

HOW FREE IS THE FREE MARKET?

HOW FREE IS THE FREE MARKET? DISCLAIMER: THIS PICTURE IS THE PROPERTY OF ACATHEUNDERGROUND.WORDPRESS.COM

 

Right from the time I began studying economics for the first time, I was told the different forms of economic systems being practiced by governments around the world: the Capitalist, the Communist and the Mixed Eco,omic systems. I was told these were the three main economic models, and that of the three, the Capitalist system, also known as the Free Economy, was the most growth accomodating and most succesful system. Even more important, was the fact that there was little or no government intervention in the free functioning of the market. This in effect meant that the government played onlly a limited role in the market, that of making sure no one an unfair advantage over the others, and that no one was bending the rules to their own advantage. It was assumed that the model being thought in the classroom was merely a model and the model could only be practiced to a certain extent. However, it was also agreed upon that countries like the United States and many other develooped countries had developed so fast because of the high degree of freedom in their markets, not to say that these countries did not pass regulations to regulate the business environment. Infact for decades, western countries edged out the East simply because they had a free market that encouraged entrepreneurship and the free movement of capital and resources.

The situation seems to be changing, and changing really fast. Nowadays, governments are seriously engaged in the running of the free market and wider economy, and sometimes understandably so. But sometimes, this sort of intervention is deemed unnecessary and politically motivated, and when it thus happens, it goes against the core values of the free market system. A good example was the US government's bailing out of the large banks that caused the financial crisis in the aftermath of the crisis. This was a necessary move to prevent the total collapse of the financial system, many analysts would argue, but considering the size of the bailout packages, considering the fact that almost none of the executives of the banks that were responsible for the banks that caused the crash faced any jail time. In his interview on CNN's Fareed Zakaria GPS the then US Treasury Secretay Timothy Geithner, who has been highly criticized for being the guy that convinced President Obama to approve a multi-billion dollar bailout package for the big banks. He has tried to explain his decision several times, but the american people seem to have made up their minds. The bailout package eneded up getting so big that the authorities themselves seemed overwhelmed by the size. It's no doubt, many Obama critics said he was a communist, because the very act of protecting these guilty banks from a failing, sounded like something out of a Communist Russia manifesto. The thing is, they almost always never seem to appreciate just how big a fall those banks would have taken, and the national and global ramifications. 
Most recently, we have heard that the US government pressured american CEOs to boycott the St Petersburg forum hosted by russian president Vladimir Putin, due to the political crisis arising as a result of Russia's 'actions' in the Crimea and Ukraine in general. Most economists would condemn this move as unnecessary, as it goes against the basic principles of free, global interconnected markets which the US governement itself has been preaching for decades. Also, some political analysts would argue that it shows a 'double standards approach' on the part of the US government, as they have not boycotted Saudi or Bahraini oil, even though both countries have some of the most brutal internal policies and some of the worst human rights records.

It is not only on the American side of the Atlantic, but also in Europe. We have woken up several mornings to new updates the american drugs maker Pfizer's proposed takeover of the British drug giant Astrazeneca. In a perfect free economy, that deal would have been signed, sealed and delivered, but that's not the case here. It has faced stiff opposition in the UK parliament.
It has become almost a 'new normal' for governments to stand in the way of takeovers nowadays.

The story is not very different for the French governments opposition to American giant General Electric's proposed takeover of French company Alstom SA's energy business. The french also oppose the takeover of the same company by German company Siemens, in both cases by fortifying French anti-takeover laws. This is just part of the story. Trade protectionism has been on the rise in recent years.  

All these bring two questions to mind, "Is there really such a thing as a free market or a free economy?". It would depend on what degree of freedom you expect in a market, or how capitalist you expect the economy to be. I was also thought in my introductory economics lessons that the perfect capitalist system had lots of flaws and only worsened the gap between the rich and the poor. It also led to crimes, and so much bending of the laws for personal gains, all classic prototypes of what happens on Wall Street.
The other question that comes to mind, "Should we really be seeking a perfectly free market or economy?". If you ask me, based on the disadvantages of a free market we just saw above, the answer is "Probably not". The rise of countries with 4alternative systems' like China casts serious doubts on just how necessary it is to have such a system.

Whatever it is you think after reading this piece, just keep in mind that in as much as a free economy sometimes requires governments to back off and let the price system act, governments can't stand by and watch the rich and powerful reep off the benefits of the masses and keep for themselves. It is on these bases that the actions of interfering governments should be judged.  


EGEOGHO CARLSON KIMBI

 

THE ISSUE OF INEQUALITY

THE ISSUE OF INEQUALITYDisclaimer:This map is the property of Penn Political Review 
                                                                                                                                               Economists have long been baffled by the issue of Income inequality for as long as economics itself has existed. The issue has been the source of serious discontent for centuries. If you have any knowledge of French history, you would probably recall the infamous Marie Antoinette, wife of King Louis XVI of France, who was so ostentatious that she almost brought the french economy to its knees. History has it, that this lady would not wear an outfit or evn jewelry twice.
And of course, we all know what happened.... She and her husband were not spared during the French Revolution. The story of Tsar Nikolas and Tsarina Alexandra who were also deposed due to their conspicuos consumption, while the masses were left in poverty.

Barack Obama has said that income inequality is the defining problem of the twenty first century. The rich are getting richer, the poor getting poorer, and the middle class is in serious stagnation. If you want to appreciate just how serious this issue is, consider this: in 2012, the 500 largest companies in the world have a collective net worth of $12 trillion and they account for 14% of global Global GDP which stood at $85 trillion. That's not all, CNN Money reported that if these 500 corporations were single country, they would be the second largest economy in the world, of course after the United States.

Inequality manifests in several ways, take a look at some of these facts about inequality:
 -The United States economy is several times that of all African countries combined

 -The combined networth of the 400 richest Americans is more than the GDP of Russia

 -The 85 richest people in the world have as much wealth as the 3.5 billion poorest people in 
   the world. That is to say, the 85 richest in Oxfam International's ground breaking report 
   Working for the Few during the World Economic Forum.

 -In the US, the wealthiest 1% of the population captured 95% of post-financial crisis growth
  since 2009, while the bottom 90% became poorer.

 -The Ivory Coast, which is one of the world's largest cocoa producing nations (producing
  1.22 million tonnes annually), the cocoa farmers are so poor, that if their income were to be 
  increased 10 fold, they would still be in the definition of 'absolute poverty'.

 -The 6 owners of Walmart (the Waltons), are richer tyhan the bottom 30% of Americans. They 
   have a combined net worth of $93 billion. You can read more on that story here.

 -Nigeria has a revised up GDP of about $510 billion, making it the largest economy in Africa,
  and accounting for about 21% of the African economy, and with one of the fastest growth rates
  in the world, yet the number of Nigerians living in poverty stands at an astounding 61% as
  reported by BBC Africa, and the CIA reports that 65% of the population of Northern Nigeria 
  lives in 'extreme poverty'.

 -Moscow holds the record fopr the city with the highest number of world-class billionaires, 
  standing at 79, as reported by Forbes.

We could go on and on about how unequal the world is, but it would only make you angrier. The issue of inequality is not only among groups of society, but also among continents, and between
genders. Currently, women on average, make just about 77 cents for every $1 made by men.


Looking at the various cases of economic/social inequality above, what could be the causes? It's neither as easy nor as complicated as you may think. For centuries, there have been the rich and the poor. In ancient times, like the Elizabethan Times, if you were born into one of the aristocratic and priviledged families, chances were, you would be rich for life. They controlled the economy, and left almost all the burden of the state tax incoome on the poor. This led to the absence of upward social or economic mobility. Those who were rich got richer, and those who were poor got poorer.

As the industrial Revolution came into play, there was the indiscriminate exploitation of national resources, often by the rich who controlled the factors of production, in order to feed the growing demand for goods and services that came as a result of an emerging middle class. As a result of this, farmlands which were being cultivated mostly by poor subsistence farmers using rudimentary means were destroyed by toxic waste, rivers which were a source of living for poor fishermen were severely polluted by poisonous gases. Taking into consideration that these were the main sources of income for a majority of the poor population, they had few other alternatives, but to look for work in the facories of the rich aristocrats. This led to some form of a poverty cycle, as these rich aristocrats would exploit them by overworking them and underpaying them. A poor factory worker could not educate his children which meant they had very little chance of becming better than their parents.

That was over a century ago. The situation nowadays is a lot more silent, but equally as deadly as back then. Nowadays, access to capital is mostly a priviledge of those who already have it. Most poor countries can't pursue their development goals because they do not have access to the required amount of capital. At the local level, many small business people in the developing world, and even in the developed world can't get access to the required capital  either for expansion, or even survival of their businesses. What this means is that these businesses either stay small, or are forced to close down, hence, the poverty cycle continues.

The decline of social structures in many countries, such as democracy, educational systems, social security structures, housing systems and wage bargaining structures, has led to the decline of upward social mobility. The educational systems of many countries are so untrustworthy nowadays, that it accounts for nothing to have a university degree. It could also manifest itself in the form of skyrocketing tuition fees at universities, even when employment is not guaranteed after graduation. In the US for example, university tuition fees have been soaring rapidly and student debt has been increasing even faster. This places a serious drag on the economy, and punishes the poor who can't afford the high cost of tuition. It comes as no surprise, that some college grads have to repay these loans for decades after graduation.

The Occupy Wall Street Movement that started in 2011 certaily focused more attention on the issue of inequality in the world. It began as a small protest in New York, but soon degenerated to dozens of other countries. The protests weere met by serious police brutality in many cities. They were seen by many as anti-capitalist, as they protested against the practices on Wall Street. They were anti-establishment, and wanted more pay for workers of big corpoarations. RThe thing is, their message really wasn't clear or organized in a way that it could have an effect, at least to some. But to others, their message was as clear as it could be, but was distorted by mainstream media, which are mostly owned by the big corporations they were protesting against.

In Africa and Asia, the main cause of the inequality is corruption.  African and Asian government officials embezzle billions of dollars each year and hide away in foreign banks. It is not only African leaders as was previously thought, but also western politicians too. The US government along with other western governments are now putting intense pressure on swiss and carribean banks to release data about rich citizens hiding money away in off-shore accounts to avoid paying their fair share of taxes. In Africa, many big business owners who contribute heavily to political campaigns can easily excempt themselves from taxes. This puts a break on development, because it deprives the economy of much needed revenue,considering the fact that these people are usually so rich that they practically control the economy. In China for example the members of the ruling Communist Party are mostly influential businessmen looking for favours and usually guilty of serious abuses of power, bribery and corruption, all for their own material benefits.

The same situation exists in some form in the developed world. It was once thought that western countries were champions of transparent politics, but recent happenings and information have led us to think differently. In the US for example, funding for political campaigns have taken an ugly turn. Even the then very young and elegant first-timer, Barack Obama, who spoke out seriously against 'super PACs' for campaigns during his 2008 campaign had a change of mind and during his 2012 re-election campaign, he raised $1.072 billion dollars acording to the New York Times.
This was even more than his republican rival. These sums of money usually come from lobbies, and individuals who have various business interests that need to be protected. So in effect, this is an investment that has to yield a return. This only fuels inequality, because the rich influence policies that favour them, and increase their wealth, usually at the detriment of the common good. it is reported that the Return On Investment of Corporate Lobbying is so high, that if the same amount were invested in a company at the going interest and inflation rate, it would not yield as much. All this because politicians pass laws in direct relation to the interest of their campaign donors.

It doesn't all have to be bad news, because there is a lot that can be done about the situation. It doesn't take a rocket scientist to know what can be done to stem the present state of income inequality. They are very simple and practical:
 -Urbanization, creates a demand for many goods and services, hence creating the demand for workers in diverse sectors.

-Open and well regulated financial markets, where there is equal investment information and opportunities for every willing investor. Studies show that the more open, transparent and regulated the financial system, the greater the potential for growth and development. A good example is Uganda.

- There should be an open and free internet for all to share information that help others make sense of events; along with a system that guarantees equality of basic opportunities for all.

-Governments should invest more in quality education and research. 

-Fair and regulated electoral systems that stem off clandestine campaign funding and guarantee that elections are free and fair.

-Better international relations, as well as trade relations among nations.

-Fair and transparent tax systems that guarantee evry citizen pay their fair shair of taxes.

-The model of the Scandinavian countries should be adopted.




EGEOGHO CARLSON KIMBI