Continuing on the crisis of un-captured value. In Africa Unbound:
A $100 bar of raw iron is worth $200 when forged into drinking cups in Africa, $65,000 when forged into needles in Asia, $5 million when forged into watch springs in Europe. How can this be? European intellectual capital – the collective knowledge of its people – allows a $100 raw iron bar to command a 50,000-fold increase! It could be said, therefore, that a lack of intellectual capital is the root cause of poverty.More here
Without African intellectual capital, iron excavated in Africa will continue to be manufactured in Europe and exported back to Africa at enormous cost. To alleviate poverty, Africa needs to cultivate creative and intellectual abilities that will allow it to increase the value of its raw materials and to break the continent’s vicious cycle of poverty. Poverty is not an absence of money. Rather, it results from an absence of knowledge.
In oil-exporting African nations, multinational corporations such as Shell (selling rigs for a 40% royalty on exported oil) are getting rich, while the oil rig workers remain poor. Instead of addressing the underlying causes of poverty – minimal productivity resulting from a lack of intellectual capital – Third World leaders have focused on giving false hope to their people.
We need less talk about poverty and more action to eliminate it. So how do we do this? Education has done more to reduce poverty than all the oil companies in the world. So it is disheartening to realize that few leaders believe that their people’s potential is far more valuable than what lies beneath the soil.
Intellectual capital, not higher wages, will eliminate poverty in Africa. If we all demand higher wages, we will end up paying the higher wages to ourselves. Intellectual capital will result in the creation of new products derived from new technologies. The end result will be not just a redistribution of wealth, but the creation and control of new wealth.