June 2, 2021
BY IBRAHIM JABATI.
“Colonies have always been barred from manufacturing in order to concentrate on supplying raw materials, but why the term itself may have become politically incorrect, the practice definitely continue. Industrialisation is at the core of capitalism itself, so barring colonies from industrialisation is tantamount to condemning them to poverty.” Erik S. Reinert Norwegian economic historian.
Well, well, well! Industrialisation is a fit that we must achieve in conjunction with Human Capital Development as a country and as a people if we are serious about lifting our people out of poverty and creating jobs for them. We must stop depending on handouts or aids. For a start yes but in the long term, hell no! For sixty years (60) now since independence, we have been busy exporting raw materials from our mines and collecting aids for over 50 years but nothing to show for it in the lives of our people. In other words, we are still poor! Forget about talk of corruption, it’s just a decoy from the reality as to why we are really poor with mass unemployment. Lack of industrialisation and the continued exportation of raw materials is the cause of our woes. Fancy the fact that since the 1930s when diamonds were discovered here, we don’t even have a diamond cutting or polishing industry in Sierra Leone! That is a mis normal in its entirety.
Vicariously through Osei Boateng reporting for New Africa, I got a thorough insight into two books that opens my eyes that as a country, we have been in the wrong business! The first one written by Erik Reinert, a Norwegian economic historian, How Rich Countries Got Rich … and Why Poor Countries Stay Poor, first published in Norwegian in 2004 and translated into English in 2007 and the second, Bad Samaritans – The Guilty Secrets of Rich Nations & the Threat to Global Prosperity by Ha- Joon Chang, South Korean economist who teaches at Cambridge University in the UK, published in 2007. Both books made startling revelations about rich or developed nations who are now champions of free trade and what they did to become rich and it should be a lesson for Sierra Leone.
History is very important and it was the Roman politician and philosopher Cicero who said: “Not to know what has been transacted in former times, is to always be a child. If no use is made of the past labours ages, the world must remain always in the infancy of knowledge.” This is truth telling enough to wake us up from our slumber and shake off our stultifying mental state regarding creating wealth for our population and nation.
Before coming to the two authors mentioned earlier, let me be honest here that for years, as an African and a Sierra Leonean first in particular, I have been pondering why are we not developing like the developed countries in spite of the rich raw materials we are endowed with? Why are we always begging for loans or grants? What is it that is really the matter with us? It would appear I have not been alone in this wilderness thinking like that! Dr. Dambisa Moyo an international economist who writes on macroeconomy and global affairs, author of Dead Aid; Why Aid Is Not Working and How There Is Better Way for Africa, published in 2011, has been pondering too when she asked: “Why is it that Africa, alone among the continents of the world, seems to be locked into a cycle of dysfunction? Why is it that out of all the continents in the world Africa seems unable to convincingly get its foot on the economic ladder? Why in a recent survey did seven out of the top ten ‘failed states’ hail from that continent? Are Africa’s people universally incapable? Are its leaders genetically more venal, more ruthless, more corrupt? Its policy makers more innately feckless? What is it about Africa that holds it back, that seems to render it incapable of joining the rest of the globe in twenty- first century? The answer has its roots in aids.” Making her point she pressed on; “In more recent times, the Irish musician Bono has made his case directly to the US President, George Bush, in a white house visit in October 2005, and Bob Geldof was a guest at 2005 G8 meeting in Gleneagles, Scotland, and advised the UK’s Commission to Africa. It would appear, despondent with their records of failure, that Western donors are increasingly looking to anyone for guidance on how best to tackle Africa’s predicament.
“Scarcely does one see Africa’s (elected) officials or those African policymakers charged with portfolio offer an opinion on what should be done, or what might actually work to save the continent from its repression. This very important responsibility has, for all intent and purposes, and to the bewilderment and chagrin of many an African, been left to musicians who reside outside of Africa. One disastrous consequence of this has been that honest, critical and serious dialogue and debates on the merits and demerits of aids have atrophied. …… The broadest consequences of the aid model have been ruinous.”
For her, Rwanda’s President Paul Kagame sums it up when he said; “The primary reason [ that there is little to show for the more than US$300billion of aids that was gone to Africa since 1970] is that in the context of post-second world war geopolitical and strategic rivalries and economic interests, much of this aid was spent on creating and sustaining client regimes of one type or another, with minimal regards to development agencies on our continent.”
True as these pointers may sound, there is however a conundrum here, which begs the question, how did Asian countries such as Japan, South Korea, Singapore, Taiwan, China (with dictators as leaders in some cases), and Western Europe devastated by Second World war developed so rapidly? Was it only through aids? The answer obviously is no! If that is the case, why should we, Sierra Leone or Africa continue with the same old pattern, year in, year out, that would take us nowhere. This is where I absolutely agreed with Reinert and Chang for being forthright in their books! They spoke truth to power regardless.
However, what has come out clearly is that as a country, we have not been paying attention to history to emulate what Britain deed to emerged from a status of poor supplier of raw material to become a wealthy nation. Reinert, Boateng said provides incontestable evidence showing that after England, the rest of Europe and the overseas territories with large populations of European emigrants – the USA, Canada, Australia, New Zealand, South Africa – followed the same policy England itself had followed since the end of the 15th century: a relatively high tariff protection to encourage industrialisation.
Reinert and Chang in their separate books, tell how it all began in 1485 when Britain under King Henry VII decided to emulate the economic successes of the City – States of Florence in Italy and the Dutch Republic in today’s Netherlands. The Milanese Enlightenment reformer wrote in 1764 that; “ Around the 13th century, Florentines, Pisans, Amalfitans, Venetians and Genoese began adopting different policy for enhancing their wealth and power because they noticed that the sciences, the cultivation of land , the application of the arts and of industry, and the introduction of extensive trade, could produce a large population, provide for their countless needs, sustain great luxury and gain immense riches without having to add more territories.”
Around this period, it is reported that; “the City- States of Florence and the Dutch Republic were far and away the best economic success stories in then poverty-stricken Europe because they both had flourishing industrial sectors, manufactured woolen cloth, and had attained the elixir of triple rents – a triple market power of manufacturing, a virtual monopoly in an important raw material, and profitable oversea trade. Strangely, the source of their most important raw material – wool – was England.
“The English were content with exporting raw wool that went to make Florence and the Dutch Republic rich while the English themselves wallowed in poverty. …… As Reinert points out; “Between raw materials, and the finished product lies the multiplier: an industrial process demanding and creating knowledge, mechanization, technology, division of labour, increase returns and – above all – employment for the masses of underemployed that always characterizes poor countries…” This is where I strongly believe the Human Capital Development jells with industrialisation and why they should go together. The human resource would supply the need of such industries. Reinert went on; “In the 1700s, it was the rule of thumb developed for economic policy in bilateral trade, a rule that spread rapidly throughout Europe. When a country export row material and imported industrial goods, this was considered bad trade. When the same country imports raw materials and export industrial goods, this was considered good trade.” Ha-Joon Chang says that was the basic insight found in all the countries that industrialised after England. the same principles he maintained, were applied in Japan, Tiwan and South Korea.
England continue to export raw materials and remaining poor until King Henry VII ascended the throne in 1485. Reinert tells the story very well here; “King Henry has spent his childhood and youth with an aunt in Burgundy. There he observed great affluence in an area with woolen textile production. Both the wool and material used to clean it (Fullers Earth on aluminum Silicate) were imported from England.
“When Henry took over his destitute realm with several years ‘wool production mortgaged to Italian bankers, he remembered his adolescence on the continent. In Burgundy not only the textile producers but also the bankers and other craftsmen were well off. England was in the wrong business the King recognized and decided on a policy to make England into a textile – producing nation, not an exporter of raw materials.
“So, Henry VII created quite an extensive economy policy toolbox. His and most important tool was export duties, which ensured that foreign textile producers, (who import raw wool from England) had to process more expensive raw materials than their English counterparts. Newly established wool manufactures (in England) were also guarantee tax exemption for a period and were given monopolies in certain geographical areas for certain period.
“It was also a policy to attract craftsmen and entrepreneurs from abroad, especially from Holland and Italy. As English wool manufacturing capacity grew, so did the export duties, until England had sufficient production capacity to process all the wool the produced.
“Then about 100 years later, Queen Elizabeth I could place an embargo on all.” Having got to the top they kick the ladder which they used to clime and are now asking developing countries to do the opposite through free trade with the rest of the world. And Reinert hit hard; “We live in an age of great ignorance today when established qualitative arguments exploring the process of economic development have been abandoned. … The banality of todays explanations about poverty being as a result of climate and corruption amply testified to this ignorance, fortified by the absence of historical knowledge and interest in proven principles that has brought nation after nation from poverty to wealth over five (5) centuries.”
For the way out of poverty, Reinert and Chang warned: “Don’t do as the British and Americans tell you to do, do as the Americans and the British did.” And for Dr Moyo, the answer lies in Foreign Direct Investment (FDI) because: “… is an engine for economic growth. Besides the welcome cash raised to support development initiatives, … it will create more jobs, assist in the transfer of new technology, help the formation of, Dongo land capital market, improve management expertise, and indigenous firms to open up to industrial market.” She said the following hurdles must be addressed for FDI to occur since: “For the most part infrastructure (roads, telecommunications, power supply etc.) is scant, and of poor quality, making the cost of overall production of goods and services (when transport cost is figured in) steep – which explains why it is cheaper to make almost anything in Asia and ship it to Europe, than produce it in Africa, although the continent is much closer.”