Thursday, May 1, 2008

Bad Governance ... Terrible Impact on Africa

Dear Colleagues

The issue of governance ... the issue of poverty ... and the perception of Africa as an economic success or failure all need to be seen in perspective.

Recently the Carnegie Council newsletter alerted me to an article written by Ian Bremmer that included the following paragraph

Whither Africa's "Frontier Markets"?
By Ian Bremmer
April 14, 2008
There are three main reasons why many sub-Saharan countries are performing well. First, high commodity prices yield windfall profits for the region's leading producers of raw materials. Growing demand for energy, metals, and minerals—particularly in China—has driven unprecedented levels of foreign investment. Even large pension funds are beginning to take notice. Moreover, a large number of Africa's poorest countries have benefited from exponential growth in (primarily United States–based) philanthropy.
Using the Tr-Ac-Net Community Impact Accountancy approach it becomes really clear that what is happening at a macro or country level is not being reflected in the wellbeing of the general populace.

The fact of Africa's dysfunctional governance and economy has been observable for a very long time ... but the macro analysis favored by the World Bank, IMF and most development "experts" completely fails to take note of the systemic mess that has engulfed most of Africa's real economy.

Funds have been flowing for years ... but what has been accomplished with these fund flows? There can be no doubt that Switzerland has been more of a macro-economic beneficiary than all of Africa ... and this might also apply to other banking centers around the world.

While the US is concerned that remittance might be funding terrorism and has the banking system monitor fund flows to identify potential supporters of terrorism ... there is no similar effort to identify fund flows in the banking system that move wealth out of Africa into international banking centers.

Bad governance has had a huge impact on African economies ... and there needs to be change. One component of change can be the development and deployment of Community Impact Accountancy ... a system that helps to identify value destruction and value creation ... and fair value chains from farm gate to consumer or from oil-field to automobile.

There is work to be done ... better start sooner rather than later.

Peter Burgess