Pete’s blog

This week is about capital, money, investment, alcoholism and Africa

The Organisation for Economic Co-operation and Development (OECD) recently released a report on Foreign Direct Investment (FDI) – that money flow that every developing nation covets. China beat America in 2003 as the world’s largest recipient of FDI – an extremely interesting fact. Many authors and large International Finance Institutions (most notably the World Bank and IMF) have been telling poor developing nations that if they have a democratic government, respect human rights and privatise all business they will get more FDI. In fact most free market advocates will tell you that this is why the free market is so wonderful, because it will reward good countries that have free market policies with more investment, making them richer. Interesting indeed that the world’s largest remaining communist country, with an appalling human rights record, should get the most FDI… I think that most of the problem stems from the fact that we tend to humanise money – money and capital flows become this ethereal entity that flows from country to country. Money becomes a goal, a healer, an inspirer and a liberator. How often have you thought to yourself, “If only I had more money! Everything would be alright, I will be free to do what I want with my life.” If only more people would invest their money in Africa, if only the poor had more money, if only the West would give more aid – the world’s problems would be solved, we would no longer have any poverty, disease or famine. This is the biggest lie of capitalism and the free market – the lie that says, if you are rich you are happy, and anyone can be rich if they work hard. The truth that we forget is that money has no soul, it has no conscience, it has no morality or humanity. Money is a piece of paper, or some numbers in a computer. Money is not real. So why does China get the most investment? Because people always want more money, and so they will invest it where it will give them the most growth. Who cares about human rights, corruption or the type of government? People want more money, and they need it now – not in 50 years.

South Africa is the star of Africa in terms of government and free market economics, yet we get a worrying low amount of FDI. And so Africa wallows in poverty and debt, because no-one believes that they can make money there, and they can’t be sure that they might not lose their investment in the next coup attempt or civil war. Am I condemning Africa to perpetual poverty? No, I am saying stop worrying about money, money is not the issue – it will come later. If you give a poor man a million dollars, will he know what to do with it? An uneducated man might lose it on bad investments, a compulsive gambler will spend it on gambling, an irresponsible person will blow it all on flashy stuff and be left with nothing after a few years, and an alcoholic will drink it away. Money does not solve problems, people solve problems. I read an article about a street children refuge that was complaining about people giving money or food to the children on the street. How ironic, people thinking that they are doing good by attempting to help someone with money, food and blankets, yet doing more damage. The refuge provides all their kids with schooling, a roof over their heads, food and a better environment to grow up in, but because the kids know that they can get enough food and money to survive on the streets, they would rather not go to the shelter.

So what am I suggesting that Africa needs? Patience, love and attention. Africa needs to find its own feet, find its own way out of poverty. You can tell an alcoholic a thousand times that they should stop drinking, that alcohol is poisoning and slowly killing them, but they will not change. They might even listen and understand exactly what the dangers are, but they still will not change. You might check them into a rehab centre and have them sober for a year, but as soon as they get out, they will return to drinking. To cure someone, they have to accept the problem as their own and have to want to find a way out. How do alcoholics get sober? They go to meetings with fellow alcoholics.

But how does this analogy relate to Africa? The West trying to tell Africa what to do is a bit like a well meaning friend telling an alcoholic that all he needs to do is stop drinking and he will no longer have a problem. “Drink orange juice instead of beer and you will be fine…” Africa also needs a support group. The AU, NEPAD… sound familiar? South-South cooperation, talks with India and Brazil? The support groups are forming. Africa is accepting its own problems now and are creating forums to discuss the problems… the African Parliament. Did you know that they had their first session this year and that South Africa will be the seat of this parliament? It is happening and I think that they are finally doing it the right way. Let’s hope it continues.

Quite a long ramble this week. Going to leave you with one last thought, South Africa may not be the biggest recipient of FDI, but we are the biggest provider of FDI in Africa. Which do you think will make us richer in the long run? Nervous and flighty American capital coming to our country, or us taking a chance and investing our own money in our own continent?