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Shhh, the grown ups are talking

Nicholas Norbrook
By Nicholas Norbrook
Managing Editor of The Africa Report

Posted on Friday, 7 November 2014 14:25

A West African president, who shall remain nameless, grumbled ahead of August’s United States-Africa summit: “Who does Obama think he is, summoning us to Washington like schoolchildren?”

IMF has praised Ethiopia despite Ethiopia championing ideas counter to the Bretton Woods orthodoxy, such as industrial policy

Everyone resents being lectured. There are numerous tales of experienced finance ministers grinding their teeth while young men from the World Bank explain how they should do their jobs.

However, the global elite is no longer shushing new voices like wayward children. This is partly due to a reassessment of the past.

In our finance edition last year, World Bank president Jim yong Kim admitted the bank had been too ideological.

But it is mostly because the rest of the world, including much of Africa, has seized the day.

This is not just about the new BRICS bank pooling resources from China, India, Brazil, Russia and South Africa or the African Monetary Fund being set up in Yaoundé, Cameroon.

It is predominantly Africans investing in Africa that is making the difference.

For example, African Development Bank president Donald Kaberuka has long called for African investors to take capital kept in US treasury bills and invest the money in infrastructure projects at home.

That advice is being followed in three of Africa’s largest economies.

Nigerian and Kenyan pension monies are being put into vehicles that invest in local road and power projects, while South Africa’s pension funds are putting money into private equity funds focused on Africa.

In July, Nigerian oil company Oando bought ConocoPhillips’s local assets, raising half the capital for the $1.5bn dollar deal from Nigerian banks.

This is the fruition of both corporate ambition and policies that promote indigenous players.

You can talk of backing African firms now without being painted an eye-bulging, Hugo Chavez-sympathising resource nationalist.

On a wider canvas, the International Monetary Fund (IMF) has praised the Ethiopian government for its work to improve the livelihoods of poor people, despite Ethiopia championing ideas counter to the Bretton Woods orthodoxy, such as industrial policy.

The IMF even surprised itself with a report on inequality that finds that progressive taxation has little effect on growth and that greater equality can spur growth, something that Brazil’s former president Luiz Inácio Lula da Silva has long insisted.

Thomas Piketty, a French economist who has recently caught the attention of the White House, has resurrected inequality as a serious topic of debate, while top US conservatives like Marco Rubio and Eric Cantor are making speeches about it.

Piketty is no radical. He tells The Africa Report that property rights are the bedrock of a successful economy.

He says he relishes today’s climate, where these issues can be debated without accusations of being a closet communist.

Even if they disregard his policy advice, his critics often admit that the data gathered on inequality matters.

Conversations are now broadening; and Africa has a seat at the table. ●

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