[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap]he word “sustainable” has acquired many meanings in recent years. However, in essence, the word means “able to keep going” and it is with this meaning which it is here applied to organisations and individuals as well as to their physical, social and cultural environments.
The challenges we face in our economies and societies in our divided unsustainable world are perhaps greater than at any other time. These challenges have arisen because of how we have been trained to think, plan and act as individuals and how we have applied this training to the way we organise and govern ourselves. We have thought, planned, organised, governed and acted as though our world is comprised of parts which can be separately exploited by humans and managed by us from one stable state to another. We have forgotten we are just one species in a complex natural world. We have tended to act without a sense of wholeness – without integrity. Meeting these challenges will require new approaches to how we are trained to think, plan and act as individuals and how we are trained to organise and govern. These new approaches will need to be based on our current scientific understanding of our world and the human mind.
How we think is not how we are trained to think!
Broadly, we tend to be trained in critical thinking. In educational institutions, at work and even at home we train what may be called our Critical Mind. We train people to reason in a disembodied way as though our minds were symbol manipulators like computers, unconnected with the remainder of our bodies and our physical, social and cultural environment. We train them to break problems down into parts, to put these parts into rigid categories with shared properties and to manipulate symbols representing these categories. We train them to hypothesise using these rigid categories ( thereby excluding all other possibilities) and look for a grain of the “truth” about these categories which is imagined to be “out there” in the “real” world and to justify that “truth” with propositions expressed in words or mathematical symbols joined together in accordance with the rules of logic. We train them to think in a straight line towards a conclusion. We train them as though the way we justify our thoughts – in logical statements – is the way we think. In short, we train people to think “inside the box”. We dehumanise reasoning.
The effects of this on our lives and work include:-
• People who are predisposed to be less comfortable with manipulating symbols tend to become alienated from the better justifiers.
• As justifications become more specialised the difficulty of communicating increases and trust decreases.
• We tend to become locked into our justifications.
• We make a habit of being critical first and thinking constructively second or not at all.
• We continue doing what has worked in the past even when circumstances change.
• Critical thinking based on different, crude and rigid categorisations often leads to unresolved conflict in groups and organisations. This unresolved conflict can surface later and undermine the group or organisation as may be seen in organisations in which management does not consult meaningfully with staff.
• Similarly, as individuals we can be left with unresolved internal conflict. This can damage the individual and others and lead to poor relationships and unhappiness.
• All this unresolved conflict leads to cruelty, unhappiness and inefficiency and hinders our creativity and performance as individuals, in groups and in organisations.
• Overall, this “parts” thinking is not compatible with the thinking necessary to achieve sustainable development, as explained by Paul Weaver in “The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century” (pp.246-253).
For instance, he states:- “In the process of breaking down real world systems into parts, most of the links and relationships that are the central concerns of sustainable development – the links between the natural and social systems or between levels in hierarchical structures or between time periods – are severed and are not studied by the specialized disciplines. Relatively new academic fields such as resilience and complex systems theory seek to address these issues by integrating the social and natural sciences.” (p.250).
Critical thinking has produced and will continue to produce much knowledge of parts of the world around us but it is inconsistent with the integrative way in which nature, our bodies, brains and minds function. There is mounting evidence in our increasingly interdependent world that in addition we need to be trained specifically in something like NEW Integrative Thinking (NEW IT) which is consistent with the integrative way nature, our bodies, brains and minds function. While continuing to train in and employ critical thinking we need also to train what may be called our Integrative Mind of which our Critical Mind is a part.
NEW Integrative Thinking (NEW IT)
NEW IT is based on extensive research in Mind Science in recent years. Mind Science draws on work from the brain sciences (which include neuroscience, immunology and endocrinology); biology; ethology; computer science; social, evolutionary and cognitive psychology; physics; anthropology; neurophilosophy (a new science established with a view to building a unified science of the mind and brain); linguistics; systems theory; complexity science including self-organisation, chaos, uncertainty, and emergence; the philosophy of mind; the philosophy of science and evolutionary epistemology (a branch of philosophy concerned with the origin, nature, methods and limits of human knowledge). Based on this work the human mind may be defined as the process of the living human brain interacting with the rest of the human body, which is interacting with its physical, social and cultural environment.
Among other things this research has shown:-
• Our mind and reasoning are inherently embodied, that is, shaped by our bodily interaction within itself and with its physical, social and cultural environment.
• Most thought is unconscious and much of our reasoning is done when we are not conscious of its being done.
• Over a lifetime of experiences we develop a number of prototypes in our minds which are reflected in patterns in our brains.
• It is difficult to change these prototypes so solving novel and complex problems in a creative way usually involves redeploying prototypes from another domain to the novel or complex domain.
• The more prototypes we have (the broader and deeper our knowledge) and the greater our ability to trigger those prototypes, the easier it is for us to creatively address novel and complex problems.
• We tend to be simplifiers because we can keep only about four items, plus or minus one, in our short-term memory while we are working on other information.
(For a concise introduction to the Mind Science which underpins my work please see the interview with leading cognitive scientist George Lakoff about his and philosopher Mark Johnson’s book “Philosophy in the Flesh” at http://www.edge.org/discourse/lakoff.html. For an annotated bibliography relating to Applied Mind Science in the field of Integrative Thinking please see NEW IT Module 1 at http:www.integrative-thinking.com.)
While encouraging and applying critical thinking when appropriate, NEW IT is a process of habitually and almost automatically making connections to create a whole new picture rather than habitually and almost automatically breaking down an old picture into its parts. NEW IT may be thought of as a more comprehensive successor to lateral thinking and using multiple intelligences but, not surprisingly, is fully integrated, not an add-on extra. It is a practical application of Mind Science so is a form of technology but it is human-based rather than machine-based technology. It is a NEW way of thinking which helps us think “outside and inside the box” and integrate the two as we plan and act.
The process of NEW IT may be thought of as our wondering (W) about a situation, creating a narrative (N) connecting our wonderings and managing our experiences (E) in acting out our narrative. It is distinctive in that it helps integrate intuition, reason and imagination. It involves understanding and learning what our basic human needs and aspects of our human will are, what guides us in balancing those needs and will, clarifying what we have and what we want to set our goal, exploring possible connections when relaxed, arriving at a strategy to negotiate the change from what we have to what we want, devising tactics to advance the strategy, taking bold, assertive and timely action to achieve our goal, reviewing and evaluating our performance.
Becoming an Effective NEW Integrative Thinker (NEW IT) Is Not Difficult
For example, the SOARA (Satisfying, Optimum, Achievable Results Ahead) Process of Integrative Thinking in NEW IT includes a comprehensive set of aids to memory to help trigger connections in our minds, help us see analogies in unrelated fields and provide a way of self monitoring our thinking and acting. All these aids to memory are joined together in a meaningful sentence so the Process as a whole can be learned in about the time it takes to learn to drive a car (about twelve hours) and is easily remembered. With practice its application can become almost automatic. At all stages of the Process provision is made for learners to record their reflections and possible actions based on those reflections. People can be introduced to the basic concepts of the Process at almost any age. The Process is culturally neutral because it accepts the uniqueness of each human being.
With practice, applying the SOARA Process of Integrative Thinking becomes a habit which empowers people and makes easier our struggle to achieve successful outcomes on a life-long journey among possibilities. It helps us refine our perceptions, expand our horizons, sense and respond successfully to emerging trends and events. By helping us to make analogies from other domains it brings out and enhances our creativity. By helping us to always consider a comprehensive range of variables it ensures we always take others into account including our “customers” and stakeholders. NEW IT helps us and our enterprises thrive.
By helping improve our creativity and performance NEW IT helps us gain a sense of meaning, a sense of belonging and a sense of personal power. This is because NEW IT helps us reconcile our needs and wants and balance and integrate our thoughts, feelings and actions in harmony with our physical, social and cultural environment. In this way NEW IT helps us to a self-reliant state of mind from which we can work towards uplifting sustainable development and the better linking of life and work.
In all contexts NEW IT provides an essential ingredient for sustainable successful connections, relationships and interactions – a common basis for communication between individuals.
Against this background, the Integrative Improvement Institutes Project directly addresses our challenges in a novel way. It is designed to improve the well-being of people and their physical, social and cultural environments through low-cost adaptive diffusion, refinement and implementation of a unique bottom-up Integrative Improvement (II) approach for uplifting sustainable development.
II emphasises dynamic connections, relationships and interactions in line with our current scientific understanding of the world as tending to be self-organising with human beings whose minds are naturally integrative. II improves in a balanced, integrative and sustainable way the lives people already have. II involves training individuals in NEW Integrative Thinking and encouraging and facilitating Integrative Governance enabled by technology in all government, business and civil society organisations. II progress is measured by a Genuine Progress Indicator (GPI).
The project is at the stage of seeking people and institutions which would like to advance Integrative Improvement in the world. In line with the adaptive tendency inherent in the Integrative Improvement approach, the current draft plan is designed to adapt as other catalysts join as one of a maximum of seven founding members of the Federation Integrators Team of the first Integrative Federation (IF) or in other roles as the project evolves. Alternatively, start-up or existing business, government and civil society organisations may like to apply the Integrative Improvement approach in their own organisations now.
The current draft project plan is as follows:-
Aim:- Improve the well-being of people and their environments through low-cost diffusion, refinement and implementation of the Integrative Improvement (II) approach for uplifting sustainable development.
Strategy:- Establish an adaptive networked Integrative Federation (IF) of largely virtual Integrative Improvement Institutes (IIIs)) in a number of countries using the training modules and templates at http://www.integrative-thinking.com and complementary tools for uplifting sustainable development.
Outline plan:- Have one IF website for teaching, research and consulting in Integrative Improvement with a page for each Institute, for each tool and for research related to NEW Integrative Thinking, Integrative Governance, Integrative Improvement, Integrative Capitalism and Integrative Democracy. A catalyst in each of 7 countries would attract and train 7 people to be the IIIs Integrators Team (IIIsIT) in their country. Each Institute would attract, train and license 7 people with experience in 7 industries to provide personal contact in 7 local areas to further diffuse Integrative Improvement and, for a fee, train successive groups of 7 people from government, business and civil society organisations based on material on the IF website. These trained people would implement Integrative Improvement in start-up and existing organisations and help in the further diffusion, refinement and implementation of Integrative Improvement in line with the model outlined here.
Tactics:- Sense and respond adaptively to other catalysts and end-users/citizens as the Integrative Improvement Institutes “virus” spreads.
Other relevant project information is as follows:-
Catalysts:- A provisional list (this and the whole project is designed to adapt as catalysts join) of the sort of catalysts needed is: a) people from a range of countries and practical settings; b) people committed enough to obtain all the modules and learn about the processes; (Money raised goes to advance the Project.) c) people with institutional bases which would lift credibility and lower overheads; d) web builder and webmaster to provide and maintain the virtual presence of the Federation and its Institutes as per the outline plan; e) facilitator for meetings – mostly virtual; f) executive secretary; g) people to seek content for and coordinate the pages on the website under the headings “Institutes”, “Tools” and “Research”. Overall, fields, interests and skills will need to cover Planning; People; Market; Product; Money; Physical, Social and Cultural Environment.
Affordability:- The basic modules offered at www.integrative-thinking.com may be purchased and learned one at a time so they should be affordable by even the smallest and poorest organisation.
However, if even the existing low prices are not affordable one copy of each module and template can be provided at whatever price an organisation certifies it can afford. Special arrangements can be made if multiple copies are required so all involved in the organisation can learn the processes and thereby acquire a common basis for communication – essential for success in any relationship or organisation. Each organisation is invited to suggest the financial arrangement that would suit it best.
Time:- The material is in easily digested small “bites” with a page at the end of each group of “bites” on which the learner records reflections and possible actions. In this way busy people can keep track of their learning. Moreover they can retain what they have learned because there are aids to memory and revision sections built-in.
Practicality:- The material is designed to be learned by each learner applying it to a problem of their own so each needs a copy of all the material to retain and refer to in future. It is designed to be accessible to people whose frontal lobes are more or less developed (mid-teens onwards) but the concepts could be taught to young children too.
Applicability:- To meet the many challenges we all face as individuals and in groups we all need integrative problem solving skills. This is what learning NEW Integrative Thinking teaches quickly, economically and permanently. Moreover, every organisation needs good governance policies. Douglas Integrative Governance 247 templates help organisations produce them quickly, economically and permanently. The potential market for a licensee would be huge as the material is applicable outside formal education channels and to people in the existing economy.
Joint venture basis:- Joint venture agreements are used to record contractual arrangements between all parties.
Uplifting sustainable development
Implementing the Integrative Improvement Institutes Project would be uplifting and sustainable for individuals because it would provide them with integrative problem solving skills to enable them to be self-reliant, innovative and reach with more confidence their full potential in the face the realities of life in general and the labour market in particular. It would be uplifting and sustainable for organisations because it would help them be adaptive in rapidly changing market conditions and assist their employees to contribute most to the organisation. It would be uplifting and sustainable for economies because all people would have an understanding of the need for and means of achieving sustainable development and economic activity would be generated by more people. It would be uplifting and sustainable for the global community as all could have a common basis for communication and problem solving.
Do you want to be involved in this uplifting project? Please contact Graham Douglas at integrative[at]optusnet.com.au
Kleptocracy Under Democracy
Power comes with dire consequences if it is misemployed. Great minds orchestrate a great nation but a corrupt mind razes it as personal gain pollutes honor and pride. Ruler of a country clasps great amount of power. On a stork of a pen destiny of people can be changed. However what if that pen is in hands of an amoral mind.
Across the globe reverberates of democracy can be heard. But the question still remains that is there is an actual democratic world order or are we just modern slaves being exploited by the power, wealth and technology.
A quite basic and easily comprehendible understanding of how democracy works is that it sows the seed where transparency and mutual benefit can grow and people become the one who are torch bearers. Society grows as a collective unit in a democratic order. Emancipation of people is prime concern in the democratic society and they are catered at every level.
Whereas kleptocracy, derived from a Greek word “klept” which means steal or thieve, is a form of government where corrupt rulers exploit the resources and population for personal gains or uses state resources to enrich themselves. In order to increase personal wealth corrupt leaders maneuver any means at their disposal indulging themselves in committing more crimes.
However with the advancement in globalization and spread of dubious democratic norms across the globe have made things worse, not realizing that one size doesn’t fit all. Systems are changing, absolute democracy is a far sighted phenomenon. Now even near to actual democracy rarely exists except Scandinavian states. Democracy index 2018 published by The Economist revealed stats about the democracy across the globe. Even United States of America was numbered at 25th number in top 30 democratic countries. It was also categorized under flawed democracies. Whereas first five were the Scandinavian countries having Norway at the top.
Under the veil of democracy self-interest of an individual or specific flock is being wangled. On plight of humanity individual or groups who holds power imbibe their benefits. Power no longer remains an instrument to direct and regulate society but to tranquilize the populace and suck the benefit out of greater pain.
Corruption perception index of 2018 revealed that more than two-thirds of the countries secured to score below 50 with an average score of 48 out of 100. It also states that countries have failed to curtail corruption and also to take considerable measures to uproot it. One needs to understand that when the leaders become economic poachers it steadily annihilates the society.
What usually happens is such individuals after gaining throne shift tides of economic rivers to their own pots. Instruments like trade policy is often not used to further the national interest but the business interest of a single wealthy individual or a handful. Tenure is considered as a business deal to extract maximum benefit. Often individuals make the deals on the form of government to enrich the few. New denotation of democracy seems to be that when there are many hands to snaffle then it is regarded as “democracy” and when there is one hand or few then it is labeled as monarchy or dictatorship.
Across the globe there is a wave of populism where contestants of throne are getting votes on populist narratives. Sedatives like populism, ethno-nationalism put the contestant into power but put rest asleep. Heaps of national wealth is looted by the ones who are
When the economics are being controlled and manipulated by few hands it often leads to debts and ultimately when there is less circulation of wealth and money the society and economy itself collapses. If the dynamics of world kept going the way they are then after the Great depression of 1929 and the financial crisis of 2007-08 there is next big economic collapse around the corner and world is waiting for it to happen.
Iraq corruption menaces both average citizens and outside investors
While Iraqi forces are still undertaking the slow, grueling effort to defeat the last vestiges of the Islamic State (IS), and 1.8 million people remain displaced, an equally important and perhaps even more complex political and humanitarian challenge is looming over Iraq. That challenge? Iraq’s egregious levels of corruption, which have poisoned the fundamental relationship between the Iraqi state and its citizens.
As protesters in Iraq’s southern port city of Basra made clear last year, corruption in their country does not just mean acts of bribery, but an entire parasitic “looting machine” that extracts resources and deliver nothing in return. Nor are everyday Iraqis the only ones at risk from the country’s endemic culture of graft, with some of the country’s largest investors – such as the French telecommunications giant Orange – seeing their investments expropriated and themselves kicked out of a market that nonetheless badly needs their support.
A parasitic relationship
The fundamental lack of credibility and legitimacy of Iraq’s official government institutions is at the center of the country’s myriad difficulties, from the government’s frighteningly incompetent attempts to fight off IS during the group’s initial onslaught in 2014 to the graft that seems to have permeated every link in the national bureaucracy.
Perhaps the best way to show the extent corruption impacts the governance of Iraq is to take a close look at one of the oft-touted “success stories” of post-war construction: the semi-autonomous Kurdistan Region of Iraq (KRI). Iraq’s largely autonomous Kurdish region, often held up as a model for the rest of the country, is ruled as a fiefdom by powerful Barzani family, who recently gained an almost “monarchic” degree of control after two of its members, Masrour Barzani and Nechirvan Barzani, were recently respectively elected Prime Minister and President of the regional government.
When the Economist Intelligence Unit once claimed that corruption in the Kurdistan region is “not perceived” to be as bad as in the rest of Iraq, it pointed out this is a “small accolade given that Iraq is ranked 171/177 in Transparency International’s Corruption Perception Index.” A closer look reveals the only research suggesting the KRI is less corrupt seems to be a UN report that relies on asking civil servants how many bribes they are offered. If the results this study are to be believed, the percentage of civil servants being offered bribes in one of the most corrupt countries on Earth stands at only 4% in the KRI and 5% in Baghdad, percentages that fly in the fact of reality.
Orange shows no one is safe
One doesn’t need to depend on international statistics to see the depth of corruption in Iraqi Kurdistan. Last month, a deeply reported article in French weekly Le Journal du Dimanche explained how telecoms multinational Orange and its partner firm Agility, two of Iraq’s largest foreign investors, stand to lose more than $810 million and see themselves stripped of their shares in the Iraqi mobile operator Korek by the country’s telecommunications commission (CMC). While the regulators claim that Orange and its partner failed to “honor their commitments,” the companies insist they are being expropriated via a corrupt process.
The key detail in their accusation? The fact that Korek’s managing director is Sirwan Barzani, Nechirvan Barzani’s first cousin and a key figure in the aforementioned Barzani family. Sirwan Barzani, according to court filings from the companies, has misappropriated tens of millions of dollars from the firm through shady loans and self-dealing.
Allegations that Sirwan Barzani and his allies had managed to corrupt Iraq’s CMC were seemingly proven by the Financial Times last year, which discovered the chief executive of the regulatory body living in a London house that belonged to Barzani’s business partners. Over the weekend, the World Bank’s International Center for Settlement of Investment Disputes (ICSID) agreed to take up Agility’s claims against the Iraqi government.
Steep price to pay
Why would one of Iraqi Kurdistan’s most powerful figures manipulate regulatory officials to expropriate major investors? To prevent those investors, it seems, from exercising their options for full control over Korek. With other major companies like Germany’s Siemens and the US-based GE pursuing their own contractors to help Iraq rebuild and expand its highly inadequate infrastructure, the Korek expropriation could have a major chilling effect.
The fiasco surrounding the Barzani family’s willingness to expropriate one of the country’s most prominent investors also speaks to the sheer sense of immunity Iraqi leaders feel when it comes to taking the country’s wealth for their themselves. While the leadership of the KRI presents itself as a reliable partner for the West, the region’s economic statistics remain dismal despite years of outside aid.
Despite its oil wealth, the region faces both a recession and high unemployment – over 20% for those aged 18-34 and 69% among women under 24 – as well as rolling blackouts. Factional control over construction projects and government ministries, meanwhile, has left public education in Iraqi Kurdistan facing dire shortages of both schools and teachers. Of the KRI’s approximately 6,800 schools, it is estimated that 25% need to be demolished and fully half are in need of renovation. Paralyzed by political infighting, the regional government has not seen to any of these pressing needs.
While international companies like Orange enjoy access to outside recourse, ordinary Iraqis find they seemingly have no choice but to live with systematic corruption and unaccountability every day. Faced with such a bleak picture, and unless the governments ruling over Iraq fundamentally rethink their handling of the country’s resources, it is only a matter of time before the next great period of instability begins.
The new African currency
On June 11, 2019, during a meeting held in Abuja, the federal capital of Nigeria, the fifteen members of the Economic Community of West African States (ECOWAS) decided to coin – most likely within 2020 – a new African currency, whose name has already been chosen: “ECO”.
The fifteen States of ECOWAS – the association that deals above all with part of the implementation of the CFA Franc – are the following: Benin, Togo, Burkina Faso, Cap-Vert, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau and Liberia, which founded ECOWAS in 1964. Later, with the further definition of the Lagos Treaty in 1975, also Mali, Niger, Nigeria, Senegal and Sierra Leone joined it.
It should be noted that while Mauritania withdrew from ECOWAS in 2000, since 2017 the Alawite Kingdom of Morocco has officially requested to join.
However the “ECO” project, which has been lasting – at least programmatically -since 2015 and much echoes the “EURO” project, was born within a more restricted association of States than ECOWAS, namely the West African Monetary Zone (WAMZ), which is composed of Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
As can be seen, said States also belong to ECOWAS, but they intend to reach an economic and monetary union very similar to the EU’s, considering that their economies are less different than those of the whole group of countries belonging to ECOWAS.
It should be recalled that the ECO launch has been postponed as early as 1983 and is currently expected to take place in 2020, but again only on paper.
Using an old formula of summer media jargon, France defines it as a “sea snake”, but we must always be very careful about oversimplifications and low esteem for friends and foes.
Hence, certainly eight ECOWAS countries shall abandon the CFA Franc, while the other seven countries their national currency.
As the final communiqué of the last meeting held by the fifteen Member States, a “gradual approach” is required for ECO, starting from those countries that show a more evident “level of convergence”.
As we all know, in the case of the EU and its Euro, the convergence criteria were price stability – which is seen as the only sign of inflation, although we do not know to what extent this idea is correct – and “healthy and sustainable” public finance, which means nothing but, within the EU, means a deficit not exceeding 3% of GDP and public debt not higher than 60% of GDP.
From this viewpoint, things are not going very well in Africa.
Africa’s debt has just slightly exceeded 100 billion euros, after Ghana recently taking out a 2.6 billion Euro-denominated loan, in one fell swoop.
In 2018 alone, African countries reached a total debt of 27.1 billion euros, but in 2017 Egypt, Ghana and Benin had borrowed 7.6 billion euros.
Nigeria will reach 17.6 billion euros of debt at the end of this year.
Ten African countries have already issued Eurobonds and there will soon be 21 of them.
It is equally true, however, that the African countries’ debt-to-GDP ratio is on average 53%, while in the 1990s and in the first decade of 2000 it had reached 90-100%.
The obvious reasons underlying the recent increase in the African countries’ Euro-denominated (and dollar-denominated) debt are the following: the consequences of the global financial crisis and the structural decrease in the price of raw materials.
Moreover, considering the very low interest level in the United States and Europe, many investors have also begun to operate in Africa.
Currently Egypt is the most indebted country, with a total of 25.5 billion euros.
It is followed by South Africa (18.9 billion euros), Nigeria (11.2 billion), Ghana (7.8 billion), Ivory Coast (7.2 billion), Angola (5 billion), Kenya (4.8 billion), Morocco (4.5 billion), Senegal (4 billion) and, finally, Zambia with only 3 billion euros.
The analysts of international banks predict that, in the future, the Euro- and dollar-denominated debt will not be a problem for African countries.
Quite the reverse. According to the World Bank, the debt-to-GDP ratio is expected to fall by up to 43%, on average, in all major African countries.
The worst standard in terms of share of Eurobonds on total debt is Senegal (15.5%), while Tunisia remains the best standard, with 6.3 billion euros of debt issued through Eurobonds.
As can be easily imagined, other variables are the cost of debt service, which has doubled in two years up to reaching 10%, and the uncertainty of the barrel price on oil markets, considering that all these countries, except Nigeria, are net oil importers.
Therefore, it is certainly not possible to talk about “sustainable” finance, even though many ECOWAS countries have a debt-to-GDP ratio that currently make us envious.
As is well-know, also the exchange rate stability – required for entering the Euro area – is one of the primary “convergence” criteria.
A 6.3% average annual GDP growth is expected for the 15-member African association, considering the expansion of oil extraction in Ivory Coast, Sierra Leone, Burkina Faso and Ghana, while fiscal stability -which is, on average, about 1.7% higher in 2019 – is acceptable.
Hence, if we apply the usual Euro criteria, the new ECO currency appears very difficult, but not impossible, to be created – at least in the long run.
ECOWAS has repeatedly advocated its single currency project: it was initially theorized as early as 1983, then again in 2000 and finally in 2003. As already seen, currently there is much talk about 2020 as the possible date for its entry into force.
Certainly there is already an agreement between ECOWAS countries for the abolition of travel permits and many of the fifteen Member States are entertaining the idea of economic and productive integration projects.
Nevertheless, as far as the budget deficit convergence is concerned, only five countries, namely Cap-Vert, Ivory Coast, Guinea, Senegal and Togo can currently comply with the single African currency project, since they record a budget deficit not higher than 4% and an inflation rate not exceeding 5%.
Hence we cannot rule out that there will be convergence in reasonable time, but it is unlikely it will happen by the end of 2020.
Moreover, the levels of development in the fifteen Member States are very different.
It is impossible to even out the differences in the levels of debt, interest rates and public debt in the short term, considering that the share of manufacturing in Africa is decreasing and the economies that operate on raw materials have always been particularly inelastic.
Furthermore, Nigeria alone is worth 67% of the whole ECOWAS GDP – hence the ECO would ultimately be an enlarged Naira.
With the same problems we have in Europe, with a Euro which is actually an enlarged German Mark.
The inflation rates range from 27% in Liberia to 11% in Nigeria, with Senegal and Ivory Coast recording a 1% “European-style” inflation rate.
Certainly the CFA Franc is a “colonial” instrument, but it has anyway ensured a monetary stability and a strength in trade that the various currencies of the former French colonies could not have achieved by themselves.
It should be recalled that the mechanism of the CFA Franc, envisages that the Member States must currently deposit 50% of their external reserves into an account with the French Treasury.
However, the Euro problem must be avoided, i.e. the fact it cannot avoid asymmetric shocks.
The Euro is a currency which is above all based on a fixed exchange rate agreement.
We should also consider the adjustments made by Nigeria in 2016-and, indeed the inflation rates of the various ECOWAS countries are stable, but not homogeneous.
They range from 11% in Nigeria to 1% in Senegal.
Between 2000 and 2016, Ghana had an inflation rate fluctuating around 16.92%.
The fact is that all ECOWAS countries, as well as the other African States, are net importers.
Furthermore the West African countries do not primarily trade among themselves.
While single currencies are designed and made mainly to stimulate trade, this is certainly not the case.
The CFA Franc, however, was a way of making the former French colonies geopolitically and financially homogeneous, with a view to uniting them against Nigeria – the outpost of British (and US) interests in sub-Saharan Africa.
Furthermore, none of the ECOWAS governments wants to transfer financial or political power to Nigeria, nor is the latter interested in transferring decision-making power to allied countries, which are much smaller and less globally important.
The region could be better integrated not with a currency -thus avoiding the dangerous rush that characterized the Euro entry into force – but with a series of common infrastructure projects or with the lifting of tariff and non-tariff barriers.
The largest trading partner of sub-Saharan Africa, namely the EU – with which the ECO would certainly work very well -currently records a level of trade with the ECOWAS region equal to 37.8%.
Nigeria exports only 2.3% to the other African partners and imports less than 0.5%.
However, if ECO is put in place, this will be made possible thanks to a possible anchorage to the Chinese yuan.
This would avoid excessive fluctuations – probable for the new currency – but would create ECOWAS African economies’ greater dependence on the Chinese finance and production systems than already recorded so far.
Certainly it would be a way of definitively anchoring Africa to the Chinese economy.
From 2005 to 2018, Chinese investment increased everywhere, but in Africa it totalled 125 billion US dollars.
Africa is currently the third global target of Chinese investment.
17% of said Chinese investment has been targeted to Nigeria and its ECOWAS “neighbours”, especially to railways and other infrastructure.
Moreover, in 1994, thanks to its liquidity injections China rescued the African wages from the CFA Franc devaluation, which had halved all incomes.
Those who govern Africa will control globalization. India is now the second major investor in Africa, after China. The EU takes upon itself the disasters of African globalization, but not the dividends.
Whoever makes mistakes has to pay. There has not been a EU policy that has “interpreted” Africa intelligently, but only as a point of arrival for ever less significant “aid”.
Therefore China will bend the African economic development to its geostrategic aims and designs.
China offers interest rates on loans that are almost seven times lower than Western markets, which never reason in geopolitical terms, as instead they should do.
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While Iraqi forces are still undertaking the slow, grueling effort to defeat the last vestiges of the Islamic State (IS),...
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To help organizations identify the value of blockchain technology and build a corresponding business case, the World Economic Forum, the...
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IRENA and the RES4Africa Foundation have agreed to cooperate to increase the speed of renewable energy development in Africa in...
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In a debate with MEPs, Ursula von der Leyen outlined her vision as Commission President. MEPs will vote on her...
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The discourse about the international security and defense affairs have always been impregnated with the dynamics of security dilemma. Even...
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