Africa is not Poor: Inverted Economics are to Blame

Africa is not poor, it is rich and well resourced. It is considered poor because of the inverted economics by the powers of the world that have made the countries depend on fluctuating fiat money and not on their high value products, that have high potential to store or even increase value over a long period of time and which, command strong weight as a medium of exchange.

To demonstrate that Africa’s plight is due to inverted economics, let us consider the net worth  of the following companies and interrogate their value chain relationship.

Company	Products	One Key Raw Material	Supplier	Net Worth (USD $)
Intel	Semiconductor chips/microprocessors.	Copper, aluminum, nickel, and silver		69.54 billion
HP	Computers, imaging equipment, and Printers	Semiconductor chips/microprocessors.	Intel	62.98 billion
Del	Computers, smart televisions, and smartphones	Semiconductor chips/microprocessors.	Intel	105.25 billion
Lenovo	Computers, smart televisions, and smartphones	Semiconductor chips/microprocessors.	Intel	70.87 billion

Source: 10 Biggest Tech Hardware Companies (investopedia.com), 2023 report

The above shows that Intel’s net worth compares favorably with its clients HP and Leno which it supplies microprocessors as a key input to their products. In contrast, one of the major sources of key raw material, the Minerals that Intel uses, is the Democratic Republic of Congo (DRC) whose GDP was valued at USD 56.516 billion in 2021[i]. By implication, Intel is richer than DRC, the home of most precious minerals such as Tin, tantalum, tungsten and gold, copper and cobalt that are used in the production of computers and other electronics.

So, the question then arises, why is it that HP’s net worth is comparable to its supplier Intel but then each of the two companies is richer than the country supplying their essential inputs? Reason! Inverted economics which resulted in the creation of Fiat Money or paper currencies to replace Commodity money.  Let us take DRC again as an example, the country’s mineral deposits are valued at $24 trillion but its GDP is $56 billion[ii].  How and Why?  Some of its mineral deposits like gold and Siler were once used to store of value and a medium of exchange. But no, even if today DRC mined all its Gold and stored it in its reserve bank, it would remain poorer than HP and Intel. It would remain poorer than the US which depends on the Fiat Money, the dollar that currently serves as a Reserve Currency of the World. Never mind that the Reserve Currency should be stable and safe, a store of value and a medium of exchange, and widely accepted and trusted by countries and people. 

So, is the USD dollar stable and a better store of value than Gold and Silver?  If not, why can’t the world revert to the use of Gold and Siler as reserve currencies? Would this be acceptable to the US, the European Union and the other so-called economic powers? No, they would lose their leverage, influence, and superiority. It could potentially make DRC and other African countries richer than US or the Europe Union. Their economies would depend on the value and power of the commodities from Africa and Africa would call the show.  

The alternative is to keep Fiat Money whose value fluctuates and is subject to economic conditions while ensuring that the otherwise high value commodities from Africa are exported cheaply to their economies for them to harvest the most economic benefit at the expense of the exporter.  

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[i] IMF, World Economic Outlook database: April 2023

[ii] GSP Hub, DRC Country Profile 

Africans are not poor

 In my previous post i indicated that an average African is not poor. He or she may be richer than an average European or American. I based my argument on the fact that an average household in Africa will own either a few cows, goats, chicken or sheep or a combination of some of these. The African household owns land and a house for accommodation, never mind the type, size and durability of the house. They till the land and feed on their own food and when one of them is seek, they pick a herb and treat the ailment. Once a month they go to the market to buy salt, clothing, soap, firm implements and stationary for school going children. These are the major cost centers for a typical African household. 

Using this information we can compare and contrast with a European  or Asian counter part to establish who among them is richer. Let take an example of the daily basic needs and compare an average African with a Briton.        

Basic needs	Daily Amount need (USD)	Monthly Amount needed (USD)	Total Monthly Expenditure by an Average African (USD)	Total Monthly Expenditure by an Average Briton (USD)
Food	45	1,350	0	1,350
Clothing	100	100	100	100
Accommodation	10	10	10	10
Water	0.03	1	0	1
Salt	0.01	0.3	0.3	0.3
Soap	0.3	8	8	8
Total		1469.3	118.3	1469.3

Based on the above its can be seen that an average African needs only USD 118 a month compared to A Briton who requires USD 1469.3 to survive in the same period 1469.3. Again the figures above have been conservatively used to try and get close to the reality in Africa but in real terms USD 1469.3 may not be enough for a Briton for a month. 

Now let look at what an average African owns versus the Briton.

Assets/income generating activities	Total Assets/income generating activities of an Average African (USD)	Total Assets/income generating activities by an Average Briton (USD)
Land at least 1 Acre	500	0
House	1,000	0
Livestock at least two goats	100	0
Job (An African it would be self-employment)	1000	5,000
Firm final income including subsistence food and surplus sales	1,500	0
Total	4,000	5,000

Again the figures are so conservative. For example, land would cost more than USD 500 and some households have livestock in 1000s of dollars. So is an average African poor compared to the European? My answer is no, considering the expenditure needs of two, the African is much richer.

The Guardian in its article released in 2019, indicates that half of England is owned by less than 1% of its population. The England and Wales Housing Census by Office for National Statistics in 2021 shows that 37.3%  9.3 million do not have own houses, they are renting. These are the ones that this article considers as the average Briton.  Are they any better in terms of incomes than an average African? I say no.