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Tag: economies

  • Mobile will boost Nigeria’s, others’ economies by $51b

    OVER the next five years, the mobile industry will boost the economies of Nigeria and  other West African  countries with $51 billion, the Global System for Mobile Communication Association (GSMA) has said.

    The group said the sub-region’s mobile ecosystem contributed $37 billion last year, equivalent to 6.5 per cent of Gross Domestic Product (GDP), and will grow to $51 billion (7.7 per cent of GDP) within five years.

    According to a report titled: Mobile West Africa 2018 released by GSMA at the Mobile 360 – West Africa forum in Abidjan, Cote d’Ivoire at the weekend, the economic contribution over this period will be spurred by strong subscriber growth and the move to mobile broadband networks and services, the company says in a statement.

    GSMA Chief Regulatory Officer, John Giusti, said the report shows how important the mobile ecosystem is to the economy of the sub-region.

    He said: “Today’s report demonstrates the vital role West Africa’s mobile ecosystem is playing in driving economic growth and empowering citizens across the region, as well as in delivering against many of the targets of the UN’s Sustainable Development Goals. However, further work is required as more than half of West Africa’s citizens are not yet connected to a mobile service, excluding them from the socio-economic benefits that mobile delivers.”

    According to the report, written by GSMA Intelligence, at the end of last year, there were 176 million unique mobile subscribers across the West African sub-region, which comprises the 15 members of the Economic Community of West African States (ECOWAS). This is equivalent to a penetration rate of 47 per cent of the region’s population, up from just 28 per cent at the start of the decade.

    The ECOWAS region comprises Nigeria, Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Senegal, Sierra Leone and Togo. Strong subscriber growth is forecast to continue over the coming years; 72 million additional mobile subscribers are expected to be added in West Africa by 2025, lifting subscriber penetration to 54 per cent.

    Much of this growth is attributable to the demographic situation across the region, as large youth populations are expected to take out mobile subscriptions as they reach adulthood.

    According to the report, more than 40 per cent of the population in many countries across sub-Saharan Africa is below 16.

    Meanwhile, the transition to mobile broadband in the sub-region is being driven by the expansion of 3G and 4G networks, lower data tariffs and the increasing affordability of smartphones. 3G networks cover two-thirds of the regional population and 4G adoption is also rising rapidly.

    The GSMA said as of last month, there were 29 live 4G long-term evolution (LTE) networks in nine countries across West Africa, six of which have launched in the last year, adding that 3G and 4G together accounted for 36 per cent of West African mobile connections in 2017 and are forecast to rise to 94 per cent of the total by 2025.

    Local operators are expected to spend $8 billion (capex) over the next two years building out and upgrading their networks.

  • Why economists can’t manage economies well

    Economists claim to be concerned with promoting rapid growth, full employment and stable prices. Have they been successful in their attempts to achieve their claimed objectives? No! Economists and economics-based institutions cannot manage our economies well because of the inherent debilities of the discipline of economics. And what are the inherent debilities of economics?

    The first inherent debility of economics as an area of knowledge is its methodology. Economics like other social sciences adopted the scientific method developed for the physical and biological sciences, believing that the application of the scientific method to social science would transform economics into social physics that would provide for students of society, the excitement which natural sciences were providing for the students of the physical sciences (DeFleur, et al., 1977). By conceiving social sciences as social physics instead of social biology, social scientists, especially economists, made a fundamental error from the onset. The consequences of the methodological error are many and fundamental too. They should therefore be considered as the fundamental debilities of economists.

    The second defect of economics is that it is ahistorical and mechanistic. That is, economists’ understanding of the economy lacks a sense of history and appropriate logic. The equations (laws) of physics and mechanics adopted by economists are about time-independent responses of solids like metallic rods, springs, wires, etc. By adopting such laws, economists claim that economies behave like iron wires, spring and rods subjected to small strains and that development does not take time to achieve; development is achieved instantaneously. Economists’ theories are always timeless functions. Economists find it hard incorporating historical evidence into their analyses. Economists do not understand that nations grow and become transformed. They think that the development process is like a once-for-all game such as a football match. They pretend not to be aware that European and American cultures were not counted as the Great Medieval Civilizations (GMCs). The Chinese, Indian and Islamic cultures were the GMCs. Economists do not understand the industrialization process.

    The third debility of economics is that it is unable to distinguish between trivial growth and Competence-Building Growth (CBG). Economists measure growth as change in the Gross Domestic Product (GDP) of a nation; that is, the change in the goods and services produced in a nation in a year. Mere computation of GDP and the change in it does not describe the true economic situation in a nation. Nigeria now has   OPEC-quota of about 2.5 million barrels per day of crude petroleum. The exploration and production are done by multi-national companies. Increase in the number of barrels produced and increase in the international price of crude petroleum swell the earnings from sales of crude petroleum and the Nigerian GDP. The increase in GDP this way cannot be a true reflection of the state of Nigeria, because it has nothing to do with Nigerians. This explains why economists measure growth which has no impact on the people – growth without development. Nigerians lack the competence to explore and produce oil and gas. It is through learning that man acquires all competences. So, it is CBG that Nigeria and other African nations should promote and measure, not GDP growth.

    The fourth defect in economics is that it does not know the primary source of CBG and industrialization. Economists who advocate that African nations should provide favourable environment for inflow of foreign investment into their nations to promote growth do not understand what national economic growth entails. Hence they believe that nations get transformed through mere capital investment. However, Douglas (1948), Abramovitz (1956), Solow (1957), Gerschenkron (1966) and Ogbimi (2003), all demonstrated that capital investment is not the primary source of Competence-Building Growth (CBG) and industrialization. Economists who claim that capital investment is the most important factor of production do not know that in the Middle Ages (450-1450), land was the most important resource in England. The lord of the manor owned the land and all those who did not own land were slaves (serfs) who worked for the lord. The claim about the special role of capital in promoting economic growth came during the industrial age, following the claim by Karl Marx (1867) that the capitalist does not begin to produce till he has accumulated enough capital.

    The fifth debility of economics is that it is based on equilibrium or static analysis. This defect is a very serious one. Real growth is a transformation.  Our research activities in Obafemi Awolowo University, Ile-Ife, showed clearly that learning is the primary source of CBG. One who has learnt something new is transformed from an undesirable status into a desirable status. One who cannot read and write may learn to read and write and be transformed. So, true growth is a transformational process, not an equilibrium one as economists assume. It was through learning that agricultural/artisan European, American and Asian nations increased their knowledge, skills and competences over 2000-3000 years, achieved industrialization and became transformed.

    The sixth weakness of economics is that it does not understand the relationships among the fundamental variables of an economy, so economists’ reports on growth and inflation rates are always incorrect.  The fundamental variables in an economy are employment, productivity and inflation. The values of the three variables must be reported together to understand the true state of an economy. The results of our research show that the employment level (in quantity and quality), is the independent variable which determines the levels of productivity and inflation (the dependent variables) in an economy. The consequence of this defect in economics is that rather than increase employment so as to increase productivity and reduce inflation, economists pump money into economy and claim they are reflating an economy. Then they borrow unnecessary money (mop up excess liquidity) at high cost to society to reduce inflation.

    The seventh weakness of economics and economists is that they do not understand the production or supply side. So, they are unable to promote production. The eighth debility of economists is that they see employment only as a cost-item. They never consider the benefits those employed bring to the organization or nation. Our research results show that employment is the” blood” of an economy. Unemployment is a national loss. Economists’ lack of understanding of the relationships among employment level and levels of productivity and inflation has been the biggest obstacle to promoting economic growth in Africa during the past five decades. Economists promote retrenchment – rightsizing and downsizing, rather than promote training and employment to link the educational sector and the rest of the economy to channel the knowledge developed in educational institutions into production activities. It is impossible to use the knowledge, skills and competences possessed by an individual or group of people without employing them.

    It is clear that economics cannot serve as the intellectual basis for proper management of any economy. Sadly, economists are never prepared to learn and acquire new knowledge. African nations must adopt more robust planning teams composed of technology management experts, scientists, engineers, psychologists and others who are ready to learn.

     

    • Professor Ogbimi writes from Obafemi Awolowo University, Ile-Ife.

  • ‘Hotel investment forum contributed $16.8m to African economies’

    •Created 5,462 jobs

    The total contribution of the Africa Hotel Investment Forum (AHIF) to economies on the continent, since inception, has hit $16.8 million. It is estimated that AHIF has been responsible for deals worth over $4 billion cumulatively.

    An international audit, tax and advisory experts, Grant Thornton, which made the independent assessment, said the headline figures included direct, indirect and induced financial benefits – accepted economic multipliers – and run from the first AHIF in Morocco in 2011 to Rwanda last year.

    AHIF is Africa’s premier hotel investment conference, which attracts many prominent international hotel owners, investors, financiers, management companies and their advisers.

    AHIF is organised by Bench Events, which has a track record of delivering multiple premium hotel investment conferences and forums across Europe, the Middle East, Africa, Asia and Latin America.

    Key findings of the Grant Thornton report, which spanned over six year, listed AHIF’s economic benefits to include $6.9 million direct contribution of AHIF to local economies, additional $9.9 million generated through indirect and induced impact, ie boosting local suppliers, increasing local spending power.

    The report obtained by The Nation, also said a total of $1.1 million were paid in taxes in various host countries, while a total of 5,462 jobs – temporary or permanent – were created or sustained.

    Delegate survey, according to the report, indicated a total deal value of $124 million, an average of $4.6 million per deal – translated for all AHIF events between 2011 and 2016, deals total an estimated $4.4 billion.

    Report author, Martin Jansen van Vuuren, said, “On average, hosting an AHIF event brings a million dollars in direct benefit to the local economy, an additional $1.4 million in indirect benefit and a substantial six-figure sum in tax to the host government.”

    He noted that one key gauge of AHIF’s success was the high-level of the delegates it attracts. “The attending CEO’s and MD’s do not only spend more than average by staying in the best hotels, but much more importantly, they are people with the ability to make decisions, including whether or not to invest in a destination – and that’s reflected in the value of deals done,” he said.

    Vuuren added that the report also highlighted the fact that host economies benefit from wide media coverage and from the credential of hosting a top-level conference like AHIF. He said doing so helps to attract further events, which boost local companies and provide job opportunities as well as the chance to develop skills.

    Commenting on Africa’s broader economic prospects, Martin said: “Economic growth of African countries may have slowed at present because of commodity prices, but commodity prices will rise again.

    “And given hotel development lead-in times, which are three years on average, and taking in to account the life of the asset, which is decades after the hotel is built, this is a good moment for investment, in my view.”

    The Chairman of Bench Events, Mr. Jonathan Worsley, said: “We are gratified that this report bears out what we’ve always believed: that hosting AHIF adds value to the places we visit and the conference is a great place to discuss deals which benefit tourism in Africa.

    “This year’s event will be our most comprehensive and exciting with an outstanding line-up of speakers, first-hand advice from experts and unique networking opportunities.”

    The seventh edition of the AHIF is billed for Kigali, Rwanda, between October 10 -12, 2017. According to Worsley, “Rwanda is a prime example of what can be achieved in our sector by a country that is determined to use tourism to propel itself forward and we’re pleased to be back again in October.”

  • ‘Nigeria, China world’s fastest economies’

    ‘Nigeria, China world’s fastest economies’

    China and Nigeria are strategic partners, and the biggest developing countries in the world and Africa respectively, with highly complementary economies and huge potential of pragmatic cooperation, Charge d’Affaires, Embassy of the People’s Republic of China to Nigeria, Mr. Qin Jian, has said.

    Speaking during the celebration of the 45th anniversary of the establishment of diplomatic relations between both countries, he said China-Africa relations have kept good momentum of overall development in the past decades, with growing political mutual trust and frequent high level exchanges, yielding fruitful economic cooperation and deepening mutual understanding between Chinese and African peoples.

    He said in the past, through the joint efforts between our two sides, the political mutual trust between the two countries has enhanced, economic ties forged closer and mutual understanding between our two peoples deepened further.

    He said last year, President Xi Jin ping met with President Muhammadu Buhari in New York and Johannesburg respectively where they exchanged views on bilateral cooperation and issues of common concern, reached wide-ranging consensus, and charted the direction of future development of China-Nigeria strategic partnership. “Now Nigeria has become the largest engineering contracting market, the second largest export market, the third largest trading partner and major investment destination of China in Africa for years,” he said.

    He recalled that in last November, the country smoothly and successfully got a new cabinet, which is working hard to implement President Buhari’s Agenda of Change. “We congratulate the people of Nigeria on this new development, and wish to embrace the opportunities in its nation building and future advancement. As China and Africa jointly implement the results of Forum on China-Africa Cooperation (FOCAC) Johannesburg Summit, new opportunities of development and prosperity have arisen for both China and Nigeria.”

    He also hinted that China has pledged $60 billion in development funding to Africa. The three priorty areas, he stressed, includes improvement of African people’s livelihood and prioritising enhancement of Africa’s capacity for independent development.

  • Euro zone’s inflation, U.S. jobs to determine health of major economies

    Euro zone inflation and United States (U.S.) jobs data will offer clues to the health of major developed economies in the coming weeks while the malaise gripping emerging markets is expected to prompt India to cut interest rates.

    China may release monthly foreign exchange reserve data indicating how much more the central bank has spent on steadying the yuan following August 11’s surprise devaluation.

    Catalans vote on Sunday in a regional election which separatist parties are framing as a proxy referendum on independence from Spain while polls point to no clear winner in Portugal’s October 4 election.

    Wednesday’s flash reading of September’s yearly euro zone inflation is expected at zero, although core inflation, which excludes volatile energy prices, is seen at 0.9 percent for a third consecutive month.

    A negative headline inflation reading, which would be the first since March, would fuel speculation about further European Central Bank stimulus, six months after the euro zone’s central bank launched a 1 trillion-euro-plus asset-purchase programme.

    However, a surprisingly hawkish-sounding Mario Draghi said the ECB needed more time to assess whether China’s slowdown, particularly its impact on commodity prices, cheap oil and a rising euro, would slow inflation further.

    Even if inflation turns negative again, deflation risks remain low, Unicredit analysts said in a note, with a fading of the base effect from 2014’s plunge in energy prices likely to push the headline rate higher by year-end.

    Friday’s non-farm payrolls data is expected to show the U.S. economy added 203,000 jobs in September with the unemployment rate holding steady after falling in August to 5.1 percent, its lowest since April 2008. Wage growth, a focus for Federal Reserve policymakers, also accelerated last month.

    Buoyant labour market data would revive expectations of a first U.S. interest rate rise in nearly a decade, after a sharp selloff in global financial markets sparked by worries about China’s economy prompted the Fed to hold fire this month.

    Fed Chair Janet Yellen said on Thursday she expects the U.S. central bank to begin raising rates this year as long as inflation remains stable and the U.S. economy is strong enough to boost employment. Her comments lifted the dollar on Friday.

    The Fed has two more chances to hike this year, at meetings in October and December. A Reuters poll this week found 72 of 93 economists expected a rise in December. Only nine foresaw a move next month and eight predicted the decision would be deferred to the first quarter of 2016.

    “We continue to favor a December rate hike,” wrote Commonwealth Bank of Australia economists in a note. “But on the back of Yellen’s comments today the risk is that the Fed pulls the trigger in October.”

    A number of Fed policymakers are due to speak next week, which could help hone views on the likely timing of a hike.

    The Reserve Bank of India is seen cutting interest rates for the fourth time this year when it meets on Tuesday, as falling energy prices have cooled inflation and the economy has slowed.

    A Reuters poll forecast a 25 basis point reduction to seven percent, a four-year low.

    Purchasing Managers’ surveys on Thursday will give further clues to the strength of China’s economy, after a similar release this week showed factory activity at a 6-1/2 year low, while the central bank may also release FX reserves data.

    The $93.9 billion decline in China’s reserves in August, reflecting central bank intervention around the yuan’s devaluation, was the biggest monthly fall on record and marked an 11 percent drop from a June 2014 peak.

    Capital outflows have escalated as fears grow that the world’s second-largest economy is slowing as U.S. interest rates look set to rise, although at $3.557 trillion in August, China’s FX reserves remain the world’s biggest.

     

  • Nigeria’s, others’ economies gloomy, says World Bank

    Nigeria’s, others’ economies gloomy, says World Bank

    Falling global oil prices and other commodities’ rates’ decline will leave Nigeria and other sub-Sahara African’s economies worse-off this year than last year, the World Bank has said.

    It stated in its projections for the year just released at its headquarters in Washington DC ahead of its Spring meetings, that sub-Saharan Africa’s growth will slow in this year to 4.0 per cent from the 4.5 per cent recordrd last year. This year’s forecast is below the 4.4 per cent average annual growth rate of the past two decades, and well short of Africa’s peak growth rates of 6.4 per cent in 2002-08.

    However, it said the harsh economic climate will start to rebound from next year, especially for countries such as Nigeria with a diversified economy and strong services orientation.

    “ In Nigeria, for example, although the economy will suffer this year, growth is expected to rebound in 2016 and beyond, driven by a relatively diversified economy, and a buoyant services sector,” it said.

    The forecast, put together by Africa’s Pulse – a Think Tank Group of the apex bank, said low oil prices will continue to weigh down on prospects of less diversified oil exporters such as Angola and Equatorial Guinea. It added that in several oil-importing countries, such as Cote d’Ivoire, Kenya and Senegal, growth is expected to remain strong. It said in Ghana, high inflation and fiscal consolidation will weigh on growth, the same way that problems in the electricity sector will curtail growth in South Africa.

    The body said Foreign Direct Investment (FDI) inflows were subdued last year, reflecting slower growth in emerging markets and declining commodity prices, pointing out that a good number of African countries are turning to the international bond markets to finance infrastructure projects.

    It however called for fiscal discipline and efficient deployment of government resource. Its Lead Economist for Africa and co-author of Africa’s Pulse, Punam Chuhan-Pole said: “Large fiscal deficits and inefficient government spending remain sources of vulnerability for many countries of the region. It is urgent that these countries strengthen their fiscal positions and fortify their resilience against external shocks.”

    The World Bank Group’s 2015 Spring Meetings will draw the world’s finance and development ministers to Washington, DC,  U.S for talks on the state of the global economy and international development.

     

  • Advanced economies’ outlook improving, says IMF chief

    Advanced economies’ outlook improving, says IMF chief

    International Monetary Fund (IMF) Managing Director Christine Lagarde said the economic outlook for advanced economies has improved marginally, while emerging-market economies face more modest, if not slower, growth.

    “For once, in a long time, there are clearly some relatively better news on the horizon of the advanced economies. This has not happened in a while,” said Ms. Lagarde at a joint news conference with German Chancellor Angela Merkel and other heads of the world’s leading economic organisations.

    The U.S. economy is rebounding and there is good growth showing in the U.K., she said.

    “The euro area is also now turning the corner,” she said. “The European growth is probably going to turn better than expected.”

    But, China is growing slower and Russia’s economy will shrink by at least three per cent this year, Ms. Lagarde said.

    She also warned that there are risks stemming from geopolitical situations as well as monetary policies, given the accommodative central bank policies in the eurozone and Japan, while the Federal Reserve is set to lift U.S. interest rates to return to a more traditional monetary policy.

    “This will clearly involve more volatility and it will also have currency impact,” Ms. Lagarde said.

    In a joint declaration issued Wednesday, the leaders of Germany, the IMF, the Organisation for Economic Cooperation and Development, World Bank, World Trade Organisation and the International Labour Organisation called on governments to undertake efforts to boost their economies and strengthen employment.

    “Geopolitical risks have increased in various regions of the world; they constitute a significant burden for global economic development,” the declaration said. “At a time of moderate and uncertain growth prospects, governments have to strengthen reforms and pro-active measures in order to support recovery and ensure growth. Ambitious reforms can help to create more productive, more dynamic and more inclusive economies and societies.”

    The declaration said strengthening growth prospects remains as a key priority. “It is important to boost investment and revert the recent trend especially of decreasing foreign direct investment flows,” it said.

  • Why India trails China: Lessons for emerging economies

    MODERN India is, in many ways, a success. Its claim to be the world’s largest democracy is not hollow. Its media is vibrant and free; Indians buy more newspapers every day than any other nation. Since independence in 1947, life expectancy at birth has more than doubled, to 66 years from 32, and per-capita income (adjusted for inflation) has grown fivefold

    In recent decades, reforms pushed up the country’s once sluggish growth rate to around eight percent per year, before it fell back a couple of percentage points over the last two years. For years, India’s economic growth rate ranked second among the world’s large economies, after China, which it has consistently trailed by at least one percentage point.

    The hope that India might overtake China one day in economic growth now seems a distant one. But that comparison is not what should worry Indians most. The far greater gap between India and China is in the provision of essential public services — a failing that depresses living standards and is a persistent drag on growth.

    Inequality is high in both countries, but China has done far more than India to raise life expectancy, expand general education and secure health care for its people. India has elite schools of varying degrees of excellence for the privileged, but among all Indians seven or older, nearly one in every five males and one in every three females are illiterate. And most schools are of low quality; less than half the children can divide 20 by 5, even after four years of schooling.

    India may be the world’s largest producer of generic medicine, but its health care system is an unregulated mess. The poor have to rely on low-quality — and sometimes exploitative — private medical care, because there isn’t enough decent public care. While China devotes 2.7 percent of its gross domestic product to government spending on health care, India allots 1.2 percent.

    India’s underperformance can be traced to a failure to learn from the examples of so-called Asian economic development, in which rapid expansion of human capability is both a goal in itself and an integral element in achieving rapid growth. Japan pioneered that approach, starting after the Meiji Restoration in 1868, when it resolved to achieve a fully literate society within a few decades. As Kido Takayoshi, a leader of that reform, explained: “Our people are no different from the Americans or Europeans of today; it is all a matter of education or lack of education.” Through investments in education and health care, Japan simultaneously enhanced living standards and labor productivity — the government collaborating with the market.

    Despite the catastrophe of Japan’s war years, the lessons of its development experience remained and were followed, in the postwar period, by South Korea, Taiwan, Singapore and other economies in East Asia. China, which during the Mao era made advances in land reform and basic education and health care, embarked on market reforms in the early 1980s; its huge success changed the shape of the world economy. India has paid inadequate attention to these lessons. -2-

    Is there a conundrum here that democratic India has done worse than China in educating its citizens and improving their health? Perhaps, but the puzzle need not be a brainteaser. Democratic participation, free expression and rule of law are largely realities in India, and still largely aspirations in China. India has not had a famine since independence, while China had the largest famine in recorded history, from 1958 to 1961, when Mao’s disastrous Great Leap Forward killed some 30 million people. Nevertheless, using democratic means to remedy endemic problems — chronic undernourishment, a disorganized medical system or dysfunctional school systems — demands sustained deliberation, political engagement, media coverage, popular pressure. In short, more democratic process, not less.

    In China, decision making takes place at the top. The country’s leaders are skeptical, if not hostile, with regard to the value of multiparty democracy, but they have been strongly committed to eliminating hunger, illiteracy and medical neglect, and that is enormously to their credit.

    There are inevitable fragilities in a nondemocratic system because mistakes are hard to correct. Dissent is dangerous. There is little recourse for victims of injustice. Edicts like the one-child policy can be very harsh. Still, China’s present leaders have used the basic approach of accelerating development by expanding human capability with great decisiveness and skill.

    The case for combating debilitating inequality in India is not only a matter of social justice. Unlike India, China did not miss the huge lesson of Asian economic development, about the economic returns that come from bettering human lives, especially at the bottom of the socioeconomic pyramid. India’s growth and its earnings from exports have tended to depend narrowly on a few sectors, like information technology, pharmaceuticals and specialized auto parts, many of which rely on the role of highly trained personnel from the well-educated classes. For India to match China in its range of manufacturing capacity — its ability to produce gadgets of almost every kind, with increasing use of technology and better quality control — it needs a better-educated and healthier labor force at all levels of society. What it needs most is more knowledge and public discussion about the nature and the huge extent of inequality and its damaging consequences, including for economic growth.

    •Culled from The New York Times. July 19, 2013.

    Amartya Sen, a Nobel laureate, is a professor of economics and philosophy at Harvard. He is the author, with Jean Drèze, of “An Uncertain Glory: India and its Contradictions.”