Much Ado About The Billion Dollar Euro Bond-Age

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Much Ado About The Billion Dollar Euro Bond-Age

For the lovers of comedy, when you see the title of this exciting article, the first thing that naturally comes to mind is the love story of Benedick and Beatrice on one hand and Claudio and Hero on the other hand in William Shakespeare’s Much Ado About Nothing.

Much Ado About Nothing chronicles two pairs of lovers: Claudio and Hero (the main couple), and Benedick and Beatrice (the secondary couple). Benedick and Beatrice are engaged in a very “merry war”; they are both very witty and proclaim their disdain of love. In contrast, Claudio and Hero are sweet young people who are rendered practically speechless by their love for one another. Although the young lovers Hero and Claudio provide the main impetus for the plot, the courtship between the wittier, wiser lovers Benedick and Beatrice is what makes Much Ado About Nothing so memorable. Benedick and Beatrice argue with delightful wit, and Shakespeare develops their journey from antagonism to sincere love and affection with a rich sense of humour and compassion.

If we try to relate this exhilarating comedic play to the Euro bond transaction (relationship) between us that is our Government on one hand and the wiser ‘Euro’ Lenders (Fund Managers/ Institutional Investors) on the other hand. Therefore, one may want to ask, what kind of comparison is this for God’s sake? You are absolutely right to say that because a billion dollar transaction cannot be a comedic play. Unquestionably, it is a very serious matter for us to discuss and get the right perspective to the entire transaction or relationship without leaving any aspect of the issues out. What makes it exceptionally important is the fact that the sovereignty of the borrower is always at stake whenever this type of jumbo loan is contracted. That is why it is called Sovereign Euro Bond.

What is Sovereign debt?

Investopedia defined sovereign debt as ‘Bonds issued by a national government in a foreign currency, in order to finance the issuing country’s growth. Sovereign debt is generally a riskier investment when it comes from a developing country and a safer investment when it comes from a developed country. The stability of the issuing government is an important factor to consider, when assessing the risk of investing in sovereign debt, and sovereign credit ratings help investors weigh this risk.

Financing Option

Borrowing in itself is not bad, for students of Financial Management or Corporate Finance, they will tell you it is far cheaper or wiser to borrow to finance your operations than relying on you own equity because of inherent advantages of such decision. It provides a tax shield, and is thus “cheaper” up until a certain risk level. In our situation, why it is worrisome is the reasons for the borrowing and the volume of amount borrowed. The word of God says ‘Just as the rich rule the poor, so the borrower is servant to the lender’. That is the reason why we are disturbed. We don’t want to remember the ugly years of enslavement again not for one day after watching the sugar cane experiences of our forefathers. We read that more than 10 million African slaves were transported over nearly three centuries to work in New World plantation agriculture, most in sugar production; it remains the largest forced migration in the history of the world. Never again should that happen to our race.

The positive Lesson from the Brazil

We have some positive lessons from countries like Brazil and the rest who at one time or the other accessed the funding windows like Euro Bond to grow their economy and now they are rubbing shoulders with great economies of the world. Remember BRIC (Brazil, Russia, Indian and China) that is what Brazil, the country most people were scared about when you look at their foreign debts profile in those days. Interestingly, the whole world attention would be shifting to Brazil in the next few months to see what they have used the multiple borrowings to do as they invite the world to come to their country during the next football fiesta, Brazil 2014 FIFA World Cup.

Why Euro Bond?

In years past, it used to be lMF and its conditionalities but now our lenders, the institutional investors have gained some smartness than us. They are aware of the hush and cry of our people whenever the issue of IMF loan is raised, they know it’s always met with unprecedented public outcry because of its evil pills we are always forced to swallow. Now, they have changed the style by sowing a mini skirt for a sixty year old woman and parade her in the market place by calling her sweet sixteen for the unsuspecting suitors to marry as a young beautiful lady. It is a common saying in my place that he who marries the old woman last must be the one to buy her coffin.

This Euro bond deal looks like the usual drinking water in a bowl, which the seller has decided to add some colouring to look different, rebranded and name it ‘Euro’ juice.

The Hungry Hunter

Borrowing some piece from the highly respected man of God, Pastor Mensa Otabil in his book, Buy the Future. A book I will highly recommend to all our Government functionaries and our institutions of higher learning to read and be examined on clearly captures the event of our continent succinctly.  Jacob is cooking a stew, Esau is hungry. And Esau said to Jacob ‘Please feed me with that same red stew, for I am weary’.

Government of Ghana saw at a glance the red stew they were feeding the Nigerians and Zambians from the Euro bond pot. They also are weary and the only immediate solution “ready-made food” or call it “Instant Euro bond’’ is the most appealing option to Ghanaians to eat.

Other countries like Gabon, the Democratic Republic of the Congo, Côte d’Ivoire, Senegal, Angola, Namibia and Tanzania – followed suit. By February 2013, these ten African economies had collectively raised $8.1 billion from their maiden sovereign-bond issues, with an average maturity of 11.2 years and an average coupon rate of 6.2%. These countries’ existing foreign debt, by contrast, carried an average interest rate of 1.6% with an average maturity of 28.7 years.

Why the rush?

The problem is that of mental laziness of the black man and I think it is only God that can help us out of it. We are physically hard working people but mentally lazy. Our physical prowess can be easily attested to in the field of sports, be it in boxing, athletics or football.  Remember Iron Mike Tyson or the great Edson Arantes do Nascimento better known as Pelé or most recently Usain Bolt of Jamaica. They all distinguished themselves in the field of sports. Why can’t we then excel in other mental tasking areas of life?

The issue is, if you fail to use your brain to work today, you will beg tomorrow.  No wonder that Africa has actually become a beggar continent, since we have refused to put our brain to work.  I don’t know if our people are aware that if you make the brain to sweat it will deliver unimaginable results for you within a second. The great Henry Ford said, ‘’Thinking is hard work, which is why so few people do it.”

That is what the man of God, Mensa Otabil called mental laziness. He described who a lazy man is from the word of God. Proverbs 12:27.”The lazy man does not roast what he took in hunting…’ Mental laziness is when an individual or people find it too mentally tasking to contemplate and explore the possibilities available to him or them that are beyond his or their regular routine.

Solutions to our Overdependence on foreign Help and Debt

Pastor Mensa Otabil said “You can’t be mentally lazy and still find your way out of the maze of life”. He went father to say that the paradigm you operate from will make all the difference between starvation and satisfaction in the midst of plenty. My bible adds that “A wise servant will rule over a son who causes shame and will share an inheritance among brothers.’’ For that not to be our portion like they say in the Christian faith whenever evil word is prophesied we must sit down to think of what to do to come out of this bondage of euro bond.

For our rich not to sit in a lowly place while folly is set in great dignity, there is need for urgent action to bring our economy into part of lenders considering the quantum of human and natural resources  nature has bequeaths on us in Africa.

There is need for our leaders to increase their mental capacity. They need to sit down quietly to think out home-made solutions in order to bring an end to the unending borrowing palaver of the continent. I think that is the major challenge confronting our race particularly our Government officials. We mostly feel comfortable with the ‘business as usual’ kind of governance. That certainly cannot take us anywhere.

We have huge endowments that require sophisticated thinking to turn it into finished goods. That should be a major concern for our leaders. There is need for excellent spirit, the mind of God to be able to do this and you don’t get to that level without being deep in the word of God for him to open you up to His deep things that could take us out of the quagmire. We read in the bible that such revelations were made available to Joseph and Daniel in a night dream.

The idea of sitting in the offices to issue leasing rights or granting concessions to mining companies to extract oil, gold and other mineral deposits and be comfortable with royalties payments should stop. We should take our destiny in our own hands.

As I was writing this article, I read in the papers today that Ghana has lost over $4.9billion in extractive industry between 1970 and 2008. Even if the figure is bloated or over exaggerated for any reason, the truth is that half of this lost money could have turned the state of our economy around. That is the crux of the matter and that is where the solution lies. This is the bane of the lazy man mentality I am talking about.

  1. 1.       We can do this mining and exploration activities ourselves.

What we should do is to send our people to wherever in the world where this knowledge can be acquired at any cost. No matter how long it takes to acquire it, both the technical and managerial know-how.  Learn it and let them bring it back here so that we can own our resources ourselves.

Next question is, what about the capital outlay to execute the project.  The question to ask is, the money we have borrowed either from the IMF, World Bank or Euro bond all these years what have we done with it? What can we point to as legacy from the borrowed money? If that is the money we channelled into these areas we must be enjoying economic independence by now just as we freed ourselves politically. The issue is that we are impatient investors. We don’t have the tenacity to nurture any investment to fruition because we are always wanted to see or show immediate gains at the expense of long term results.

We can pick some useful lessons from our Energy sector. We can say that we owned the power generation sector now. This is not under concessionary arrangement. There are private participations in the sector but that has not taken anything away from the success VRA has recorded over the years.  If we can own the power industry, nothing stops us from controlling our extractive industries as well. We need to develop capacity through education and skill acquisition.

2.  Change our Educational System

By now we should be sick and tired of all those theories and history of how things were invented being thought in our schools.  We should be more practical and innovative in our curriculum design.  It is the nature of your problem that determines the kind of medicine your doctor would prescribe for you. Same approach should be adopted in our school systems curriculum design.

If we want to grow, there is a cost to everything.  We can`t be paying a lecturer for teaching the same old subject using the same old lecture notes for 15 to 20 years in the university or polytechnic and say he has 20 years teaching experience.

If we see technology as our priority for the next 15 to 20 years we must be ready to hire any good lecturer from any part of the world to come and teach our people and impact this knowledge either from Korea, Japan or China at any cost that he can transfer that technical know- how. That is strategic planning and result oriented approach to problem solving which is bound to produce amazing result in the next few years.

If it is engineering- we go for the best in the world of engineering either from Germany or Soviet Union or United States or Israel. Bring them here, pay them what they deserved and let them train us on a long term basis. The bible say buy the truth and sell it not. That is the truth we need to purchase to move forward.

As we are sending our people in large numbers to learn from the experts in overseas countries and at the same time we are bringing the best brains to teach and train the people locally in the space of 15-20years we should be talking about different economic position for the continent.

All those irrelevant courses that we saddled ourselves with in our institutions of higher learning that are not helping our industrial growth agenda we should throw them away.

If one looks at Architectural Engineering, there has been a huge transfer of knowledge to our people in Sub-Sahara Africa.  Same thing we should do for other important engineering and technological based courses. It is a matter of time for the result to start showing. See what Japanese and Koreans have used imported technology to do in their own situation. That is what is required.

Conclusion

We should set an agenda that, by year 2030, seventeen years from now,  Africa in general and Ghana in particular should be free for ever from every form of economic enslavement which Euro bond is trying to capture us into without knowing by surrendering our hard fought political independence through another hand called sovereign Euro bond. Remember it is this same Europeans that put us through the dark ages of slavery. We must wake up and shine our eyes to know what to do.

The writer:
Mike Osikoya