“At present, 47% of African savings are sent out of Africa by Africans themselves. If we don't believe in our own continent, who will?” – Source http://news.bbc.co.uk/2/hi/business/2797405.stm What are the implications of such actions with respect to development? If we as Africans send outside this much of our savings, it is a clear indictment of our leadership that we do not believe in our economies or leadership, or a combination of both. It is also clear that we have a lot, in terms of our ability to capture more potential capital to reinvest in our economies for growth. This 47% taken out of the system is not available for reinvestment at the moment. In sending out this huge amount of our savings into other economies, we have rather enhanced the capital position of those foreign economies where these monies are. These monies could come back to the continent in the form of development funds or private capital at higher interest rates. This particular situation should convince African leaders that the combined efforts and resources needed for economic success, very much includes building confidence within their respective economies. The management of economies without a responsive approach to the needs of the people is an effort that serves no ones interest. Not the government’s and of course not that of the people. I have argued that the effort spent in seeking investors from outside the country in the case of Ghana, should be second to that effort put into making our local environment suitable for both domestic and foreign investment. There are potential local investors who are not being tapped. What sense does it make to have capital leaving your shores while you spend money attempting to attract someone else’s capital, which actually could be yours, which was sent out? Our citizens need to have confidence in our economies.
In order to inspire confidence, the stemming of corruption must be pursued with zeal. However, laws, access to capital, an efficient judiciary system and a true supportive environment for nurturing business must be in place. Attitudes must change, especially that of the public sector. These very much-needed items must be supported by an efficient judiciary system. One that works. One that is swift and not one of promises without substance, as is the case now. In Ghana if the private sector will be the engine of growth, how is it currently being translated by government in terms of the capacity of the ministry of private sector Development? Does it reflect what its aspirations are, and is it indicative of government’s true commitment to make the private enterprise the engine of growth? I beg to differ.
No one suggests it is easy, but the task or challenge must be met. Ghana today is typical of this African situation of capital flight. Even though there are no scientific figures with respect to this claim, specifically for Ghana, the holding of savings in foreign currency is always a sign of a lack of confidence in an economic system. In Ghana this practice still goes on. Even though the political climate has changed, old behaviors are difficult to change and they will need long-term effort to be modified. It does not help to think the problem will fix itself. Not all those engaged in this practice see how it affects them economically but it is the responsibility of government to educate. In Ghana, to instill the right confidence, the government must really find out through polls or focus groups, what issues truly affect the small-scale industries, big business, and even budding entrepreneurs. Supposedly, these are the engines of growth and for that matter, if their experiences are given the outmost considerations, with respect to policy development, it will go a long way to make our local environment more conducive for investment. We can also look at relatively enhanced economies with commonalities to ours, which are not western, such as India, Malaysia, South Africa, Egypt, and many more, for first hand knowledge, with respect to what makes their environments more conducive to business, in comparison to ours. Ideas such as having an “incubator” to facilitate entrepreneurship, especially for young men and women are are long overdue. Government must facilitate a systematic and comprehensive approach to entrepreneurship, and it must be also shared with the public in a more enthusiastic manner. The fact of the matter is, until we recognize that we are not leveraging our own resources for our benefit, and we also do not have the right environment yet for investment (local or foreign), much of our efforts in seeking investment, which is biased in favor of foreign Direct Investment, will not be optimized. The success of Japan and North Korea had to do with government’s support for local business, some of which were created, nurtured and developed to become conglomerates. Of course there was FDI, but that accelerated technology transfer, giving another boost to the local enterprise, in an already enhanced business climate for local industry. If the private sector will be the engine of gr! owth in Ghana, then the policies must be specific and less ambiguous. The support from government should be meaningful and substantial, and quantifiable targets must be put in place as yardsticks to measure our progress in this regard.
The issue of the poor judiciary and archaic laws must be taken care of. Lawmakers, that is MP’s must understand their effort needed in this regard, and without partisanship, utilize their time and resources in shaping the laws of our land to create maximum benefit for its citizens. Something, which I must say, is not happening now.
As we try to create the right environment, with the right legislature and laws, to help facilitate the development of the private sector, let us not discount the fact that we need to arrest this direction of capital flow, being monies of Africans, generated with resources of Africa, leaving our shores to go elsewhere only to be repacked for us to secure for our development at a higher price. Does this make any sense to any Government leader?
Of course this figure of 47%, could be higher or lower for individual countries, but either way, this is an embarrassing situation, which the leadership (where there are leaders) in Africa need to reverse.