Remittance is not Key to Africa Economic Development

nairaCritical look at Diaspora Africans remittance to Africa. According to figures from World Bank, annual remittance flows to Africa are in excess of $40billion and are growing at more than 10% year on year. Additionally, there is an estimated $35 billion of annual savings held by the African diaspora.

Assuming the amounts are correct, it equates to about $4 per African living on the continent considering its population of almost one billion. By the potential savings of Africans abroad, that is about $11,670 each. Why should anyone get excited about such numbers?

The country of Israel that came into existence in 1948, today has 70 companies listed on NASDAQ, with venture capital and investment flows more than all national annual budgets of African nations. And Israel’s population is less than all persons that live in Lagos. No African based company is listed on NASDAQ. Prove me wrong.

Remittance is usually money immigrants send to their family members and typically for personal consumption. While such has impact, it does not help cure the deficiency in weak and porous national economic development agenda of most African nations. When there is FDI – foreign direct investment, specific to sectors done on return on and return of capital, assisted by national interest rate on borrowing that is in single digit, Africa may begin to see real and effective growth.

When interest rate on borrowed capital is in high double digits and hardly any amortizing loan on a long term, personal and corporate financing are seen as not supporting economic development. African nations have been confused and often misled by World Bank and IMF prescribed solutions. Considering that Kenya in 1975, was first African nation to benefit from IMF program, how come 37 years hence, Kenya annual budget is less than $20b and Nigeria the most populous African nation with 160m, only has mere $32b federal budget, for its 2012 spending?

The currency wars visited on Africa that devalued its currencies to the extent that no African nation has a single digit exchange rate to either the dollar or pound/euro, an indication Africa is screwed.

While the West insisted on Africa democratizing as a means to economic development: Good intention. However, it did not make such insistence on China and all nations in the Middle East. Here are some examples, China refused its currency to be devalued or peaked to either the dollar or pound/euro, making China strong. And China is a communist nation developin

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