My Beauty Best Teacher

Sanou Mbaye writing in Project Syndicate:

He speaks on the need to liberalize the remittance channels:

The effects of banks’ hijacking of national payment systems to service only the modern economy are compounded by the exclusive agreements that banks and money-transfer companies such as Western Union have signed with most African countries. These agreements lock out non-banking entities from the highly lucrative market for migrant remittances from the African diaspora, which remain a key engine of growth

Furthermore on how key it is to nourish the informal economies:

African states must now recognize that modernizing their informal sectors by integrating them into the modern economy can be a major development tool. Yet only a few countries have started moving in that direction. Nigeria has refrained from signing any exclusive agreements with Western Union and others, and its newly consolidated banking industry is making significant inroads across the region...

Arguing for the broader inclusion of more financial actors in national payment systems

Giving micro-finance institutions access to national and regional payments systems and electronic retail facilities will go a long way toward meeting the requirements of the retail and business sector in terms of banking facilities. It will also help facilitate access by the poorest to financial services, thus helping to reduce the high proportion of the un-banked population.

All of this will invariably spur development and integration of national financial systems and intra-regional trade. This will be a welcome development, because a large proportion of intra-regional trade is carried out by informal operators and small and medium enterprises that do not have access to the banking system. Moreover, economic integration and increased intra-regional trade are the best entry point into global markets for all countries.

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Sanou Mbaye on reasons for renewed growth in the continent:

Many factors have contributed to this upturn. Emerging-market demand has pushed up commodity prices. Urbanisation has given rise to a dynamic informal sector. Improved governance, higher food production, increased inter-regional trade, debt cancellation, better use of official development assistance (ODA), and thriving telecommunications and housing markets have helped as well.
But transfers from the African diaspora stand out as the most significant contributing factor. A study commissioned by the Rome-based International Fund for Agricultural Development indicates that more than 30 million individuals living outside their countries of origin contribute more than $40bn annually in remittances to their families and communities back home. For sub-Saharan African countries, remittances increased from $3.1bn in 1995 to $18.5bn in 2007, according to the World Bank, representing between 9% and 24% of GDP and 80-750% of ODA...[continue reading]

And Francophone Africa thinks its independent? Sanou Mbaye writes about the yoke of the CFA franc:

More appalling is the fact that France guarantees the CFA franc’s free convertibility into hard currency, originally on the condition that all 15 Franc Zone countries surrender 100% of their foreign reserves to the French Treasury. The amount was reduced to 65%, and then 50%, in 2005, but France still deducts its share directly from these countries’ export earnings.
Moreover, the mandatory 20% foreign exchange cover stipulated in the convention signed with France in 1962 now stands at 110%. And a foreign-exchange control enacted in 1993 ensures that only France benefits from this capital drain by limiting the free flow of capital to France alone. The ensuing massive capital flight has bled the region’s economies and eroded their competitiveness.

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via Loomnie