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Trading And Investing In & Out Africa

ISSUE 150 - VOL 2
January 15 - April 14, 2018

Dr. Bienvenu-Magloire Quenum
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Welcome to the quarterly issue of Africabiz Online /free access Synopsis & RSS Feed edition. Previous issue available at this link

The introduction to this issue is available at this link

- TO BOOST THE ECONOMIC GROWTH, AFRICA NEEDS TO SETUP STATE OWNED CENTRAL BANKS

By Dr. Bienvenu-Magloire Quenum

The 54th-electoral conference of the South African National Congress - ANC, resolved to nationalize the South African Reserve Bank - SARB.

A courageous decision that could turn around the socio-economic development for the better, not only of South Africa, but also in the whole Black Continent.

Indeed, as explained in several Africabiz Online's deliveries, most central banks of the world do not belong to the country for which they mint money. The shareholders are foreign private entities. They loan the minted currency/money to the country against payment of interests and have a strict control over the supply of money under the false argument of "money-stability".

In addition, existing foreign owned Central Banks operate under the same procedure enacted by the Bank of International Settlement - BIS, which rules for instance that countries should not used national currency/money to financing the implementation of development projects. The reason? Because doing that would create inflation in the country and work against the stability of the currency.

But in fact, what that really means, is that countries are forced to borrow foreign currencies, pay back the principal - sometimes without a grace period, and pay back interests in foreign currencies - without having the control over the disbursement period of the borrowed money.

Gaddafi proved the rule wrong and irrelevant. He financed national projects and particularly the "man-made river" with the national currency, providing loans with zero interest attached to the companies in charge of its implementation...We all know what happened to him for that audacity and some other revolutionary planning to establish a global currency for Africa - backed by gold!

- He Who Controls The Money Controls The Country

The independence granted to African countries in the 1960's was a well crafted Machiavellian strategic trap depriving them from the control of the so-called "national" currency.

Indeed, the independent African countries have no say on the supply of money (to develop vital infrastructure projects) and the interest rate for loans. In some countries, this is even engraved in the Constitution - under the bogus explanation of money stability!

Celebrating the 106-year anniversary of the ANC, Cyril Ramaphosa, during the meeting held at Absa Stadium in East London, declared the following on January 12, 2018 - guided by the National Development Plan drafted by the ANC:

"...they aim to restore focus on building an economy in which all South Africans can flourish, an economy that benefits the people as a whole, rather than a privileged few.

“We seek an open, dynamic economy that embraces technological innovation, pursues higher productivity, creates jobs that pay better and improves the quality of life of our citizens. We recognise the challenges of modernisation and the imperatives of structural change in all sectors, especially in mining, manufacturing, agriculture and finance.”

Above declaration sounds good, very hopeful and the masses will cheer!

But this kind of declaration have been made year after year, over 6 decades, starting from Ghana independence in 1956, during political rallies, around the continent, in the bid to conquer the supreme power of governing African countries.

However, one notices that till today these goods words and promises never materialized, anywhere in Africa, precisely because African countries do not have control over the supply of their so-called "national" currency, and the interest rate charged on projects!

Let us be clear, there is no greater power over a nation than having control of its money supply and interest rates.

Think about it: interest rates influence just about everything in the economy.

Changes in interest rates influence housing prices, company stock prices, retail sales, food prices, oil prices, business purchases, imports and exports, insurance charges. Etc.

Interest rates have a significant impact over employment, business investment, inflation, and the currency’s international exchange rate.

Increases in the interest rate even have the power to bring a government to its knees.

This ultimate power is an extraordinary one, that has been awarded/granted (even engraved in the Constitution) by African countries, to foreign interests located continents away, which decide upon the pace of development of the countries.


- Islamic Banking rules and procedures are the answers to the predatory financial system

Based on above discussion, one sees that the nationalization of the existing South African Reserve Bank would be a step in the good direction, because South Africa would stop paying back huge amount of money to foreign entities for the utilization of its own money - and eventually would control the money supply to speed up the economic development process.

However, to nationalize is not the ultimate panacea to boost the economy. Rules and procedures should change.

Indeed, the outcome of the nationalization of South African Reserve Bank would create a powerful engine to boosting the economic development process (and create jobs by the millions), only if the new state owned South African Central Bank sheds predatory rules enacted by the existing Bank of International Settlement, and adopt rule and regulation pertaining to the Islamic Banking system.

What that means? To provide loans to entrepreneurs and consumers at quasi nil interest rate; and to get the loan paid back only when implemented projects are fully operational. That is the "secret" of the so-called Islamic Banking.

In the Islamic Banking system, the notion of "surface financière" (peculiar to the French banking system) does not exist. That is the "financial capacity" to use the requested loan. In other terms, one has to be already a accomplished and prosperous entrepreneur to obtain the requested loan - even if you have a solid feasibility study to introduce your project.

In the Islamic Banking system, you get interest free loan without procedural uphill battle with the bank - if you have a sound, well documented feasibility report. And consumer-credits are given to citizens, nationals and expatriates alike without the shenanigan of "surface financière".

With such Islamic Banking procedures and rules, no wonder that in the Middle-East states, infrastructure projects, roads, bridges, hotels, recreational parks, airports, hospitals, museums, universities campuses, agricultural concerns, livestock breeding, sea farming of sea-food, buildings/towers, desalinization plants etc., are sprouting out month after month, year in year out like mushrooms!

The middle eastern countries are prosperous not only because they are endowed with huge amount of oil and natural gas, but because they know how to use money as energy to boost the productivity of the population ...exactly as the economic miracle accomplished in Germany by the Third Reich - from 1925 to 1940.


If the new state-owned South African Central Bank operates under rules and procedures (discussed at the beginning of this delivery) established by the existing predatory financial system under the supervision of the Bank of International Settlement, nothing would change as far as the pace of the economic development is concerned.

Indeed, looking at existing African Central banks, you would notice that they abide to the rule to not financing national projects with national currencies, and charge huge interests for the management of loans "imported" from abroad - in addition to interest payments already attached to the loans! If this is not swindle at high places what is it? African countries are literally screwed!

No wonder that the pace of the developing process of African countries had been sluggish as amply demonstrated in Africans, Stop Being Poor!

For 60 years running, starting from Ghana independence in 1956, the global yearly economic growth rate of African countries remained flat around US$ 500; and poverty level is rising in African countries, South Africa included, reaching 80% in some!

- The courageous decision of the ANC to nationalize South African Reserve Bank is the beginning of the true economic development of African countries

In a previous delivery titled, Time is Ripe To Set Up State-owned Banks In African Countries To Accelerating the Development Process, this writer stated that doing so is only a question of political will, and that no sophisticated feasibility study is necessary.

The state-owned banks would be the engines to boosting the economic development process by doing the following stated in below outlined caption:

- To mint money for the state, manage it and pay interests to the country's treasury.
- The state to use the money to setup/establish all kinds of infrastructure, roads, bridges, dams, universities, schools, hospitals, airports. Etc. Providing credit to entrepreneurs at very low/insignificant rate, in the range of 0.5%. The beneficiary enterprises would pay taxes and fees of all sorts to the state's coffer.
- To provide credit to private entrepreneurs/handicraft makers, small businesses and artisans for the purchase of equipment, at 0.5% interest rate; and operational credit facility to the same, at 1% rate. The beneficiary would be paying back taxes and fees to the state.
- To provide credit facility to the agriculturalists/peasants at ZERO percent rate for seeds purchase; and credit facility to purchase machinery at 1% interest rate. No doubt that the agricultural production would be boosted. The beneficiary agricultural enterprises would pay back taxes and fees.
- To provide credit to consumers to build houses, purchase equipment for the house and cars. Etc. No doubt that a consumption boom would result from such a policy - and boost the manufacturing of household equipment. Etc.

Now that the ANC had exercised its political will, the next step would be to speed up amendments to the Constitution to make it a reality. The sooner the better, as the time-bomb of unemployment is ticking - for the whole Black Continent.

South Africa, by establishing a state-owned bank that performs as above discussed under rules and procedure pertaining to the Islamic Banking system, would show the way to other African countries; to accelerating the development process and lift the Black Continent from the "shithole" in which the predatory financial system had put it.

Indeed, projects like the Transaqua mega-project, that is the development of lake Chad basin could be implemented. Click here for more on said fantastic project.

About the management of this Blog: Dr. Bienvenu-Magloire Quenum is the principal/ managing director of Dr. Quenum & Associates, IBC; an experienced Investment & Business Planner with 30 years consulting practice in African countries; author of Africans, Stop Being Poor! and the editor in chief of Africabiz Online

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