This is the biggest cope I have read in my entire life. You claim that the international institutions don't let you do developmentalist policy making, but in East Asia most of the public and private investment sector came from domestic savings.
Also the international bond holders wait until WB and IMF's sign off because no one in their right mind will ever trust an African government to not cook the books. The reason the credit rating agencies rate Africa so poorly because your governments are irresponsible. Private international bondholders shouldn't be investing in Africa and I would, personally, advice against doing that.
You can't have this feeling of entitlement for foreign investment. The world doesn't owe you anything. If you want to try some unconventional "developmentalist" idea finance it through domestic investment. If you can't get your own citizens to bet on a project, you can't ask some foreigners to do it for you. If you want a sign off for the IMF and WB you have to do what they say. Again you're not entitled to their money.
Has there ever been any history of PFI type arrangements when it comes to infrastructure projects in Africa? While they have a bad reputation here in the UK, reading through this makes me wonder if they could be a better way of using debt to finance projects. The key reason why they are criticised in the UK is that they are essentially government borrowing in a less efficient way - the UK is well trusted and has little corruption, so functionally there’s no difference between the UK government borrowing money through bonds and using it to pay for infrastructure etc, and the UK getting the private sector to build it and paying them back over time. At that point, given government borrowing costs are typically lower than the rates demanded for PFI, there’s little reason for the UK to use it, save for keeping borrowing off of balance sheets (which didn’t work).
However, given African borrowing costs are much higher and corruption is much more of a problem, there could be an argument for an arrangement in which private sector enterprises build the infrastructure first, avoiding having the money siphoned off by corrupt officials, and then the government pays them back over the long term. This would hopefully deal with some of the elements of risk associated with trusting the government to spend the money effectively, and would enable government repayment to benefit from the economic boon of whatever was constructed. Throw in a way for the relevant private sector enterprise to make a small amount of money from running it (eg including small tolls on motorways), and it seems like this would be a far easier sell as a form of borrowing than bond financed debt. Intrigued to hear people’s thoughts?
This is the biggest cope I have read in my entire life. You claim that the international institutions don't let you do developmentalist policy making, but in East Asia most of the public and private investment sector came from domestic savings.
Also the international bond holders wait until WB and IMF's sign off because no one in their right mind will ever trust an African government to not cook the books. The reason the credit rating agencies rate Africa so poorly because your governments are irresponsible. Private international bondholders shouldn't be investing in Africa and I would, personally, advice against doing that.
You can't have this feeling of entitlement for foreign investment. The world doesn't owe you anything. If you want to try some unconventional "developmentalist" idea finance it through domestic investment. If you can't get your own citizens to bet on a project, you can't ask some foreigners to do it for you. If you want a sign off for the IMF and WB you have to do what they say. Again you're not entitled to their money.
Has there ever been any history of PFI type arrangements when it comes to infrastructure projects in Africa? While they have a bad reputation here in the UK, reading through this makes me wonder if they could be a better way of using debt to finance projects. The key reason why they are criticised in the UK is that they are essentially government borrowing in a less efficient way - the UK is well trusted and has little corruption, so functionally there’s no difference between the UK government borrowing money through bonds and using it to pay for infrastructure etc, and the UK getting the private sector to build it and paying them back over time. At that point, given government borrowing costs are typically lower than the rates demanded for PFI, there’s little reason for the UK to use it, save for keeping borrowing off of balance sheets (which didn’t work).
However, given African borrowing costs are much higher and corruption is much more of a problem, there could be an argument for an arrangement in which private sector enterprises build the infrastructure first, avoiding having the money siphoned off by corrupt officials, and then the government pays them back over the long term. This would hopefully deal with some of the elements of risk associated with trusting the government to spend the money effectively, and would enable government repayment to benefit from the economic boon of whatever was constructed. Throw in a way for the relevant private sector enterprise to make a small amount of money from running it (eg including small tolls on motorways), and it seems like this would be a far easier sell as a form of borrowing than bond financed debt. Intrigued to hear people’s thoughts?
Great read. Timely as well, with my home country Kenya opening a new bond buyback offer today.
Thanks again!