Demystifying the world of business 1(traduction français)

Titre en Francais sur notre site: 
Le monde des affaires demystifiés pour les peuples d'origine africaine

Demystifying the world of business (session 1)
écrit par Hort 
October 2007

  
Background to business 

This month we start our brand new series which will take more than a cursory look at the business world. The goal is to help remove a lot of the fear and apprehension from our people regarding the economy. We should master this area of activity because it negatively impacts our people all around the world. Economics is quite simple because it is concerned with ‘how people get a living,’ but economists tend to use a lot of jargon to discourage the masses from becoming interested because it is in this area that they are the most exploited. So our goal is to simplify this jargon so that the ordinary black man and woman can have a better understanding of how business works. With this knowledge they will be able to spend their money much more judiciously and will help to change the way business is done in our society. In this session we are going to look at the background to business and then examine how it relates to Africa and her diaspora.

 

What is economics?

Economics is a social science that studies human behaviour. In other words, it looks at how people earn and spend their money and how society allocates scarce resources. In society people want many things however, the problem is we do not have unlimited resources at our disposal. If we had an unlimited supply of resources at our disposal we would be able to meet any want or need. Needs are things humans can’t do without or they will die, for example food and water, while wants are things often artificially created to make people believe they can’t do without. for example, the mobile phone, a car, etc. As a result we have to make choices. For example, you might go into a shop and see two pairs of jeans but you only have enough money (resources) to buy one of them. So you have to make a choice. This is what we do every day in our lives. We must decide whether to buy a new car or save for our child’s college tuition, the government has to decide whether to build more hospitals or more highways, we have to decide if we want more free time or more income from work? Etcetera  This is what economics is all about so it could be described as the science of choice.

 

Types of Economic systems

Since resources are limited and it is not possible to produce everything people want to consume, every society must ask the following questions:

a)      What is to be produced?

b)      How will it be produced?

c)      Who will get what is produced?

To answer these questions, different economic systems have developed. These systems revolve around how people in those societies allocate scarce resources to satisfy competing wants and needs. In other words, an economic system attempts to find ways of solving the basic economic problem. There are three main types of economic systems:

 

a) A command or planned, economy: a planned economy means that economic decisions are taken by the state. The state owns all the means of production and all the workers are employees of the state. All the factories and machines are owned by the state and all goods are distributed through state owned shops. For example, Cuba, the former Soviet Union, China and North Korea are examples of a planned economy.

 

 b) A market or free market economy: in a market economy the state has no or very little role to play in the direction of resources. A market is simply a place where buyers and sellers meet. Consumers (the buyers) must be free to choose between different goods and services offered by the seller (the producer)   This system depends on what is known as supply and demand. Demand in economics is what people are willing and able to buy at various prices .in other words, their ability and desire to purchase goods and services. Generally, people will demand more of a commodity (product) at a lower price. The lower the price, the higher the demand, the higher the price, the lower the demand. Supply measures the quantities of a good which is produced and offered for sale at various prices. The supply of a product increases as the price rises, and decreases as the price falls. When the quantity suplied equals the price demanded it is called an equilibrium price. A market economy is known as a laissez faire system,commonly known today as liberalism.

 

 c) A mixed economy : a mixed economy uses elements of both the planned and market systems to allocate resources and there is a private (profit oriented) and a public sector.(non profit oriented). A mixed economy is common in most of the industrialized world.

 

What are resources?

 

Resources can be natural (land), human (labour,) or man made (capital). In economics, land, labour and capital are usually called the factors of production.

 

Natural resources are things that the earth produces naturally. Land is a natural resource and includes the land itself, the oceans, minerals, fishing, forestry, etc Natural resources are often classified as renewableor non renewable resources.

a) Renewable resources: Resources such as trees, fish, oxygen, and fresh water are generally considered to be renewable resources as they can be continually reproduced. In other words, they are infinite and limitless. However, renewable resources can become non renewable if used at a rate greater than the environment's capacity to replenish them.For example,when land is overgrazed or the nutrients in the soil used up from improper farming practices, the soil cannot renew itself and plants and crops cannot grow. When plant and animal species become extinct, these are examples of renewable resources which have become non renewable..

b) Non renewable resources: are finite, and have a limited existence. Natural resources such as coal, oil, or natural gas, take millions of years to form naturally and cannot be replaced as fast as they are consumed.

2. Human Resources

Human resources are all the human, mental and physical effort that goes into production, called the labour force. The reward for labour is referred to as wages.

 

3. Man made Resources

- This includesall the equipment, machinery and buildings which are used to make other products.  For example, office desks and chairs, computers, etcetera.

 

There are 3 types of human activity which may be classified as economic

1.      Production: this is the process whereby man transforms the resources ( land, labour, capital) available to him into the products which people want, making them available where they are wanted.

2.      Consumption: this is the process of using up the products of man’s labour, the burning of coal, the wearing of clothes, the eating of food, etc

3.      Exchange: this is by far the greater part of the subject of economics. In general, goods and services are exchanged for other goods and services.

Economics then is concerned with the production, consumption and exchange of goods and services.

 

Hort’s analysis

The information above is what every business and economics student learns in their first day of class but how does this information relate to Africa and her people? First of all, let’s examine the concept of scarce resources. The world is not suffering from a scarcity of resources. The West is. There is a difference so let’s discard that idea immediately. The major problem of the arrogant West, (especially Anglo Saxons) is that it tends to consider its problems as world problems. A cold place like Europe with snow on the ground for 6 months of the year will suffer from a lack resources. It’s logical therefore that the West would be concerned about how its resources are used so that their people can survive, however, in a fertile continent like Africa where the sun shines almost every day there is an overabundance of both human and natural resources. Already we can see that the West and Africa should not be using the same yardstick, but unfortunately that is the case.

 In fact, Africa is the richest continent on the planet and that is why every race wants a part of it. With its enormous human and natural resources Africa therefore has all the ingredients for a thriving economy ,so one is forced to ask the following questions. Why are Africans unable to earn a decent standard of living? Why do Africans suffer from poverty? Why are their basic needs such as access to clean water still not satisfied? To understand this anomaly we must go back to the past because that is where the origin lies.

When Europe conquered Africa 500 years ago, they were able to take control of Africa’s human and natural resources and they have controlled them since and have made decisions for Africans since then. For example, Europeans decided that every African would become a servant. So our kings and queens, our architects, our teachers, doctors, our priests, etc, in the stroke of a pen, were reduced to servitude. They also decided that Africa’s human resources (its people) would be shipped out to the new world to produce sugar and cotton and so we were, and its natural resources (gold, diamonds, etc) would be sent to Europe where they would be transformed and sent back to Africa as manufactured goods. Furthermore, they decided what Africans would produce, how much they would produce, what and how much they would eat, and even what Africans would wear. This is what is known as the triangular trade.

 The triangular trade was to take Africa’s human and natural resources, send them to Europe and the new world. In return, Europe would transform the mineral wealth and agricultural resources and send them back to her colonies as manufactured goods and this has continued right up until today. For example, the Ivory Coast produces coffee, yet very few Ivorians drink coffee. They produce coffee because the West drinks a lot of coffee.

The Western capitalist system is built on creating a mountain of unnecessary and extravagant wants therefore the idea of scarce resources was introduced because the West wanted to use Africa’s resources as she pleased without sharing any of the benefits with African people. Today, this abuse by the West poses a serious threat to Africa’s long term survival because if they continue to squander Africa’s resources at the present rate Africans will really not have much left for their own development later on. It is their excessive greed which is making our resources scarce. They have already turned African wildlife into an endangered species. There was an abundance of wildlife all over Africa until the Romans conquered Egypt and exterminated most of the animals in North Africa in the colosseums of Rome. Those that remained found refuge in Subsaharan Africa and subsequently became endangered 50 years after colonization. When slavery was abolished, the triangular trade system was not, yet If Africans are ever to enjoy a decent standard of living they must control and protect their own resources by putting an end to this 500 year unfair trade between the West and Africa.

This leads us to the next question: Why don’t Africans change the system? It’s much easier said than done. For example, in the Caribbean where Europe did the same thing, Caribbean economies still continue to depend on exporting sugar to Europe for their livelihood and those that have abandoned sugar have now become dependent on tourism which is exactly the same thing. Likewise, since independence African leaders have continued down the same road because change must be brutal, not gradual and it’s always difficult to make radical change. When Europe imposed this system it was brutal and sudden and to remove it the solution must be exactly the same.

Africans will eventually have to follow the example of Hugo Chavez and the Bolivian president to change the present system, so they should start weaning themselves off the West by introducing a diversified portfolio so that when they do act, it will not increase the suffering of their people. Africans must do market research to find out exactly what their domestic market needs and to increase production in those products while decreasing those destined for the West, but it is not so easy because African economies have been made totally dependent on exports to the West which bring in much needed revenue to the continent..

The other problem is that one country in Africa cannot do it all alone. It has to be a collective effort. For example, it must be done through structures like the African Union or regional groupings, because the West will not give up Africa’s resources which it has controlled single-handedly for the last 500 years without a fight and it’s going to be a brutal fight. We have seen what happens to individual countries when they try to stand alone against the West. Laurent Gbagbo of the Ivory Coast and Robert Mugabe of Zimbabwe are recent examples of the damage the West can wreak on the economy of countries that dare fight back. That is exactly why Africans must come to realize that it has to be a collective effort.

Unfortunately, the present leaders in Africa are pretty gullible and naïve and will not be able to undertake this struggle. Therefore seasoned Pan Africanists must come to power in Africa to carry out this struggle to retake our resources. Not only must they be Pan Africanist, but they must have a thorough knowledge of business and politics and all the underhand dealings that go along with those professions so that they can make the strategic decisions necessary to weaken the Western system forever. Pan Africanists in Africa must infiltrate governments and other organisations and must become double agents. In fact, every single black person on this planet should be a double agent whatever their profession, until our people are liberated from all of our oppressors. Malcolm X told us to do whatever is necessary to liberate our people. Only informed Pan-Africanists will be able to see behind all of the hype and will not be seduced by Western rhetoric.

When the fight has been won and Africans control their resources once again, they will decide what to produce for their people, how much to produce and unlike the West should not be selective about who gets what is produced. Our ancestors produced for all the members of society and that is what the New World Order in Africa must return to. Europe has set up an unfair hierarchy and therefore the backbone of their system is to deprive the people who produce the wealth, in order to create an excess for an elite but we must not do the same. That is the kind of economy that we must create in Africa and teach the rest of the world. We have more than enough natural and human resources to achieve that goal.

Tune in next month when we will be looking at the different sectors of the economy.  In the meantime here is an article which is related to our topic.

 
°°°°This information can be published web sites and blogs  around the world without the permission of the author.


Farmers Working Hard But Not for Their Benefit

Arusha Times (Arusha
4 August 2007 

One of the major problems of African farmers and industries is that they are simply working to make people in other countries richer. They produce what they do not consume and consume what they do not produce. Tanzania is famous for the production of coffee, sisal, cotton, cashew nuts, among others but most of it is exported raw to developed countries.

Former Nigerian President Olesegun Obasanjo recently challenged African countries to add value to their export products instead of remaining suppliers of raw materials and consumers of finished goods from the west. General Obasanjo made the remarks in a meeting with the Tanzanian business community in Dar es Salaam, in a two-day tour hosted by the National Investment Company Limited (NICO). He said the challenge facing the African continent despite several decades of independence is that most African economies still remain suppliers of raw materials to the industries in the West.

The retired statesman said that the only solution is to begin enhancing the quality of products produced in Africa and trade more among themselves. Most of the finished products being shown in the on-going Nane nane show are in fact imported. "Tanzania produces abundant maize per year. Nigeria or any other country requires maize to supplement its production; why look outside Africa? Do we really need to look for markets outside Africa?" he asked.

General Obasanjo said that in the last fifty years, Africans have acquired experience through which they have managed to seek what they want and discard what they don't and therefore the paternalistic idea that some people can bring investment capital from Europe and North America to develop must be discarded.

Speaking at the dinner organised in his honour by the Confederation of Tanzania Industries (CTI), Obasanjo said Africans can only reach the Promised Land when they walk and swim together, adding that redemption in their economy, social, political arena only depends on them. In his address, the CTI Chairman, Reginald Mengi, said there are serious investors within Africa who can invest directly in the continent and bring development in their respective countries just like foreign investors.

He said Africa is blessed with various natural raw resources which they always export at very low prices to foreign investors from developed countries. At the end of the day the same materials are processed and imported back to be consumed by Africans as manufactured products, he noted. "By exporting natural resources in their raw form, Africa is in effect exporting both jobs and the value of its products to other countries, leaving its own people unemployed and poor," he remarked.