Why African
countries should follow the example of Rwanda, Ghana and Zambia by moving from
foreign aid to bond markets
Last week,
the government of Rwanda issued an international 10-year bond to raise $400
million for infrastructure development. Within two days, the bond had been
oversubscribed as investors placed orders worth $ 3 billion for a piece of this
pie. Given that Rwanda’s GDP is just $6.4 billion, this is a great show of
confidence by self interested investors. It was also a slap in the face of the
self-righteous merchants of charity who have recently shown low confidence in
the country.
Never mind
that soldiers from the DRC’s army have on their own freewill been giving
interviews to BBC saying they were actually the perpetrators of these crimes.
However, the report provided considerable grist for the anti Rwanda mill whose
leading advocate is Human Rights Watch. The head of HRW, Kenneth Roth, like his
ilk in our colonial past, has appointed himself the voice of the people of
Rwanda.
Thus as
Rwanda sought to raise money from international markets in circumstances where
aid was being cut, the ghost of Congo hung over the bond like a sword of
Damocles. The international press, save for Time magazine and CNN, has
been relentless in its attacks on Kigali buying the UN report hook, line, and
sinker.
This is one
major reason Rwandan officials issued a $400 million bond fearing international
financial markets may be reluctant to buy $3 billion. Investors thought
otherwise.
Something
else had happened just before the bond was issued. S&P had given Rwanda a
`B’ credit rating. No serious investor listens to HRW before making a decision.
Few follow The New York Times or The Guardian, the leading anti Rwanda
newspapers on the globe, above the opinion of S&P.
It was very
likely that most, if not all potential buyers of the Rwanda bond, would be
swayed by S&P’s assessment rather than the rants of a self appointed human
rights’ advocacy group and their cheer leaders in the international mass media.
International
investors have not merely purchased the Rwanda bond. They have given a vote of
confidence to the government and leadership of the country. That is the
ultimate objective measure of the quality of governance especially for an
African country, one that has been a victim of jihad by a fundamentalist human
rights cult whose story is bought by a complacent international press without
question or reflection.
The regime in
Kigali has one million and one weaknesses. However, even the most biased
observer would admit that it places the interests of its citizens above
everything else. The regime’s singular source of legitimacy is performance in
service to the citizen.
Where public
officials in other countries work in a relaxed environment and often can get
away with incompetence, indifference, foot dragging and corruption; public
officials in Rwanda are under constant pressure to perform, to deliver to the
citizen. That is why that country punches far above its skills-weight in
national development endeavors.
For far too
long, African countries have avoided going to the international bond market to
raise money for their development needs. They prefer to go to international
donors for subsidised loans. I have always had a problem with this form of
financing. Because it is given out of kindness, it tends to carry with it a
self-righteous hubris. Those who administer it are not businesspersons seeking
a return on their hard earned money. Instead, they are civil servants misusing
taxpayers’ money.
These civil
servants possess a self-righteous streak as bearers of economic salvation. Like
our colonial masters of old, they carry an arrogance that makes them believe
that they care about the welfare of the citizens of the recipient country more
than local leaders – even elected ones. They ignore the fact that politics,
even when corrupt, reflects a specific social compromise based on the values,
norms and idiosyncrasies of a given country.
So the
merchants of charity come with lectures and summons, demands and threats. The
poor country must behave, regardless of local circumstances, as they dictate.
By ignoring the role of nuance and complexity these international civil
servants promote development strategies that if implemented as they wish would
destroy the very essence of human existence and make a mockery of desired
development objectives.
International
investors tend to be democratic. Because they are risking their money, they are
careful to accommodate local context and nuance. If they produce and sell a
product in the local market, they know that disregard of local idiosyncrasies
can cause them to suffer productivity losses (with their employees) or lose
market share (with their consumers).
So every day
they have to tweak their organisational and management strategies to generate
the best out of their employees. Everyday they have to respond to the norms,
habits and idiosyncrasies of their consumers – if only to remain effective in
the market.
International
aid workers are not restrained by any of this. If a project they manage fails,
they suffer little or no consequences. They are rated on how easily they
disburse money rather than on what results that money generates on the ground.
They do not lose anything – whether their jobs or funding – if the aid project
fails because they depend on taxpayers’ money from their home government.
And these
taxpayers are far removed from the situation to hold them accountable. Equally
important, there is little or no effective feedback mechanism because the
beneficiaries of aid programs cannot vote out of office aid givers and aid
managers. Therefore the very architecture of aid shows that there is little
incentive for innovation. Theirs is power without responsibility.
Therefore the
ultimate test of good governance is not altruistic self righteous aid donors
but self interested investors. Every dollar they invest, especially of a long
term nature, is a genuine vote of confidence in the management of the country –
its policies, institutions, practices and leadership. Africa needs to
move from aid dependency to trading on the international bond market. It is
there, and only there, that it will realise its true worth.
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