Unless we Africans bury our perennial naiveté once and for all, we are going to perish, literally! First and foremost, we should fully recognize that the reigning global order is not set by us, nor is it primarily intended to benefit our sheeple (human mass). It is time Africans understand the intricate workings of the world system that continues to polarize human existence, both at the level of the individual as well as countries.
Unequal exchange is a permanent pillar of the modern world system. The North extracts resources, financial or otherwise, by employing skewed systems of exchanges! The value of currencies in the global South rarely appreciate vis-à-vis the currencies of northern countries. The economic model that we blindly follow cannot and will not allow our currencies to hold their values against the currencies of the north through time. One can visualize ‘unequal exchange’ by just looking at economies using PPP (purchasing power parity). When goods are priced using PPP, the effect of unequal exchange becomes very clear. Same kinds of goods/services have different prices, depending on location. In the north, prices tend to be dear compared to southern countries. This difference is essentially what is extracted from southern countries on a continuous basis. Going through the analytics of this thesis is certainly beyond the scope of this column. Suffice is to say, this massive loss is 3 to 5% of OECD’s GDP, on annual basis! This is where the actual structural inequality/polarization of the global system resides!
Debt is another scheme of the world order that systemically disfranchises the gullible. In the current monetary regime of the world system, money is created out of thin air and is disbursed as interest bearing financial product in the real economy, mostly to those connected to dominant interests. This systemic extraction of the sweat and blood of labor (including that of entrepreneurs) is another pillar that upholds continuous polarization. Individuals, corporations and states are all affected by this fraudulent scheme of the global banking cabals. Even ‘developed’ economies like Greece, Ireland, Portugal, Italy, Spain, etc., have fallen through the trap and are made to suffer the consequences of phony money creation and its rampant avarice! We admit; our continent has a dearth of competence to interrogate such subtle and brutal economic arrangements of the reigning world system. Obviously, our pompous elites are not up to it. As a result, our sheeple always find itself at the short end of the stick, so to speak. See Michael Hudson’s article on page 41.
To understand and elaborate the prevailing polarizing globalization, Africa’s organic intellectuals must play the critical roles. By organic intellectuals we mean enlightened individuals with commitment, confidence, competence, courage and caliber to create social consciousness, with a view to transform collective existence from the reigning life-destroying trajectory (of the world order), to a more democratic, sustainable, equitable and resilient system! This also implies that we should be left alone (or force ourselves to go it alone) to do what must be done, whatever the sacrifice. This is what the East Asian countries did, to some extent, before achieving some semblance of economic independence. The case of China is probably the best example. Countries in Africa must encourage thoroughgoing independent analyses at all levels. It is instructive to look at the case of South Korea during its transformative years. General Park set up an ‘Economic Development Board’, to lead the whole new initiative. Members of the board were mathematicians, physicists, statisticians, engineers, etc. and it was chaired by the president himself. There were no economists, accountants, managers, lawyers or the likes, in the board. The reason: the task at hand required original thinking, thinking that start from first principles, which naturally reject phony assumptions leading to blind mimicking! See Hopkins’ and Andreotti’s article next column.
We believe Africa has no choice but to fully engage in more creative ideas. It needs innovative approaches to solve its seemingly intractable problems. It is inevitable that mistakes will be made, but these mistakes will enrich the discourse and add to the whole cumulative experience. As the saying goes, ‘what doesn’t kill you will make you strong’. The western model of accumulation at all cost, is a sick philosophy we should intentionally and forcefully abandon. In its place, life centered ideologies need to be propounded. Exposing the whole truth about the system that is destroying both life and life supports systems of our precarious planet must be agenda number one! In Africa and so far, it is our learned zombies, what we call the Ivy Idiots (‘Intellectuals but Idiots’, in the recently coined phrasing of Nassim Taleb) who have been given ample space to pontificate about the various ‘make believe’ scenarios (present & future) that have no rational basis for their realization. Our lives, increasingly based on material consumption will not bring health, wealth or wisdom. Copy catting unworkable and unsustainable nonsenses, is not only very pathetic, it is also dangerous. Our indoctrinated youth expect a future livelihood that closely mimics what is piped through the stupid box, without realizing that it is all a pipedream! As we never tire of repeating; we need to have another six earths before the rest of the South can have a livelihood similar to that of the North. This is not a matter of opinion; it is a scientific fact!
Even those who have been benefiting from the lopsided arrangement of things are no more secured in their old ways, hence are trying to change or at the very least, rearrange the world system. On the other hand, the multipolar world that is trying to emerge is considered a threat and every aspect of its manifestation is being fought tooth and nail by entrenched dominant interests. The wars in MENA, pending wars in Eastern Europe, South China Sea, South America, are all reminders of where the core values of the status quo lie.
“Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.” Samuel Beckett. Good Day!
UNEQUAL EXCHANGE & DEBT
Multinational pharmaceutical companies closing their office as forex crunch continues
Big pharmaceutical representation offices are closing their offices after the country is hit with severe shortage of foreign currency. These offices are said to be hit hard by the lack of foreign currency they are forced to downsize their employment forces in the last two years.
Sources told Capital that GlaxoSmithKline Plc, (GSK) which is one of the companies involved in the pharmaceuticals sector is going to close its office by the end of this month. Moreover Bayer AG, a German multinational pharmaceutical company and Sandoz a subsidiary of Novatris a global healthcare company based in Switzerland, are also having difficulty due to the shortage of forex.
Christian Hartel, Head of Corporate Media Relations at Bayer declined to comment to Capital about their current status in Ethiopia. “We ask for your understanding that we cannot comment on your questions” Hartel replied to an emailed questions. GSK also declined to comment until we went to the printing press.
Another company Sanofi S.A. a French multinational pharmaceutical company is also in the brink of closing if the situation continues to persist.
Kassahun Tesfaye Country Manager of Sanofi said that his office is in grave danger of survival because of the shortage of the foreign currency.
“It has been over a year since we requested for a foreign currency and nothing has come up until now. We import some basic medicines for diabetics and epileptic patients. However due to the shortage it is become very difficult to continue our operation” Kassahun told Capital.
He further said that if it continues like this for the next two or three months our fate is to close down our office. “We cannot continue like this. Operational cost of the office is now higher that that we trade. So how can we go on like this? Our only choice is to close down our office” he added.
“Last year in February we applied for USD 800,000 worth of LC but we only get USD 70,000, which is a mere 10 percent of the total money we want, I have to distribute lifesaving children epileptics medicine with a ration to pharmacies” kassahun said.
“I receive calls daily from desperate parents of patients about the children epileptics’ medicine, which we solely supply, it is personally very hard for me to answer these calls” he said.
The local pharmaceuticals industry is also facing a serious shortage of raw materials, as well as serious financial difficulties, as a result of the ongoing foreign currency crisis.
The prevailing foreign currency shortage was impacting negatively on the importation of critical medicines and ingredients used for manufacturing various drugs as well as packaging material. These factories are also producing way below capacity.
Some of these multinational were also planning to open up pharmaceutical plants in the country.
Dr Allan Pamba, GSK’s Vice-President, Pharmaceuticals, East Africa and Government Affairs, back 2015 said that GSK had completed its investment plans to set up a pharmaceuticals factory in Ethiopia and partner with Addis Ababa University in the areas of pharmaceuticals, manufacturing and healthcare delivery.
Total demand for the pharmaceuticals industry is estimated to stand between 400 million dollars and 500 million dollars a year.
In its report published in January 2018, the IMF signaled that the forex problem is far from being resolved, indicating that the international currency reserve has dwindled to the level of only being able to cover 1.8 months of the import bill of the nation.
The shortage of the foreign currency started to be seen starting in early 2017, the situation seriously deteriorated after mid – 2017. Measures such as the devaluation of the birr by 15 percent against major foreign currencies were also introduced to curb the shortage but to no avail.
The devaluation was followed by a couple of directives issued by the National Bank of Ethiopia (NBE), including ordering private banks to transfer 30 percent of their forex earnings to the accounts of NBE and allowing exporters to retain 30 percent of the forex they generate, up from 10 percent.
The NBE also increased the list of items which are prioritized for foreign currency allocation. Petroleum, agricultural machines, fertilizer, medicines and supplement food were the items which received priority.
The government has also collaborated with the World Health Organization (WHO) and launched the National Strategy and Plan of Action for Pharmaceutical Manufacturing Development in Ethiopia. This plan was expected to increase pharmaceutical production in the country, improve medicine quality, and strengthen the national medicine regulatory system.
There is a plethora of Ethiopian and non-Ethiopian pharmaceutical companies offering generic and branded medication.
Sharp rise in school fees anger parents
Many private schools in Addis Ababa are expected to raise school fees between 5,000 to 12,000 birr per year, according to a Capital survey. The schools blame the devaluation of the birr and increasing costs of school materials and teacher salaries for the increase.
Parents Capital talked to said Flipper school will increase their fees, moreover Gibson by 5,500 and School of Tomorrow by 5,000 birr per year.
Mesret Ayalew has enrolled her two children at School of Tomorrow, she says the school fee increase is unnecessary.
“School fees went up 2,000 birr this year and for the next year it is 5,000 birr for how long will school fees continue to increase, when will there be a consistent price for several years? I have to come up with 60,000 birr for my two kids for the next year and that is not really realistic given what most people make in this country,” she said.
Another man who has a sister trying to put her kids through private school said that the owner of private school cares more about making money for themselves than fairly serving parents.
“When one someone wants to rich it is not right to charge more money for the service they provide simply for that reason. School fees in the city are sharply increasing because the owners don’t consider the country’s economic situation and are eager to amass big profits at the end of the year and parents will not have the courage to condemn them.’’
Currently medium private schools charge from 10,000 birr up to 120,000 birr per year in addition to the cost of books. Meanwhile salaries for teachers are between 3,000 birr to 10,000 birr per month.
Teka W/Micheal, board member of School of Tomorrow told Capital that the increasing fees are directly linked to the rising price of teaching materials.
“We have to motivate our teachers by increasing salaries because they are doing a great job of producing the next generation so increasing fees is the only way to benefit teachers. On the other hand if you look at the cost of school house rent, laboratory materials, they are increasing and inflation is around is 20 percent so how can we survive if we work on the past fees,” he said.
Addis Ababa Education Relevance and Quality Bureau has received complaints from parents and said it is investigating the case and it will take action on schools who raise fees without consulting parents.
Currently 1,000 KG, 589 primary and 149 private high schools operate in the capital city.
Sheger Royal Hotel opens
The new 36 room Sheger Royal Hotel which is located around Bole Medhanyalem, opens its doors after a four year construction. The G+8 building lies on 500sqm of land. The hotel is expected to employ 80 people.
Sheger Royal Hotel is owned by Tadele Kassa, who has worked in the construction and retail business. He spent over 200 million birr to build the hotel. His construction company built the hotel.
It has one restaurant, two bar and a parking lot for 20 cars. It also has a spa with a steam bath, a gym and presidential room. It was officially inaugurated on Saturday May 12.
