by Algernon Austin

Recessions hurt. And they hurt the poor and socially marginalized populations the most. As we face the prospect of the second recession of the decade and consider the merits of various stimulus packages, it is useful to examine what a recession would mean for black America.

The late 1990s produced a full employment economy and significant absolute and relative economic gains for blacks. This Issue Brief contrasts the benefits of a national full-employment economy with the harm caused by the 2001 recession and the weak job growth that followed.

Black America’s permanent recession

In the best of times, many African American communities are forced to tolerate levels of unemployment unseen in most white communities. The 2001 recession pushed the white annual unemployment rate up from a low of 3.5% in 2000 to a high of 5.2% in 2003. During the same period, the black unemployment rate shot up from 7.6% to 10.8%. National recessions take African Americans from a bad situation to a worse one.

In 2007, the black unemployment rate was 8.3%. This figure is still above the pre-recession low and more than twice the white unemployment rate. Goldman Sachs estimates that a new recession would increase the national unemployment rate to 6.4% by 2009.¹ For African Americans, the unemployment rate would be expected to rise to 11.0%.²

African Americans lose income relative to whites

The low unemployment rates of the 1990s led to positive gains in the black/white income ratio. In 1995, the median black family earned 60.9% of what the median white family did. By 2000, the ratio had climbed to a record high of 63.5%. The effect of the 2001 recession and the weak economic recovery was to undo all of those gains?and then take away some more. By 2005, the median black household earned only 60.2% of the median white household, 0.7 points lower than it was in 1995. ³

But median family income does not tell the entire story. The 2001 recession and weak recovery hurt the poorest African Americans the most. In 1995, the poorest fifth of black families only earned on average 43.0% of what the poorest fifth of white families earned. Again, the economic growth of the late 1990s was a significant boon. The black/white average income ratio for the poorest fifth increased to 49.9% in 2000. By 2005, it had fallen back to 43.4%. Among blacks, the poorest black families lost the largest share of their income gains from the late 1990s.⁴

Another recession will likely reduce the median family income for all Americans by about 4%. However, for blacks, the decline would be about 6%, leaving the average African American family $2,400 poorer.⁵ Again, this loss of income will hurt the poorest fifth of African Americans the most.

Additional social costs

Associated with the strong economy of the 1990s, there were significant declines in the black violent crime rate and the black teen pregnancy rate. Between 1993 and 2001, the black violent crime rate declined by 60%.⁶ Between 1990 and 2004, the black teen pregnancy rate declined by 46%.⁷ These improving trends have ended, and it is likely that the worsening economic conditions of African Americans since 2001 have played at least a partial role.

At the community level, criminologists find a correlation between violent crime rates and socioeconomic disadvantage.⁸ At the national level, too, the black violent crime rate has recently been strongly correlated with black poverty rates.⁹ Therefore, it is not surprising that the historic crime decline of the 1990s ended with the reversal of economic fortunes that African Americans experienced at the beginning of the 21st century.

Based on a study of five countries including the United States, the Alan Guttmacher Institute reports “across all of the focus countries, young people growing up in disadvantaged economic, familial and social circumstances are more likely than their better-off peers to engage in risky behavior and have a child during adolescence.”¹⁰ Given that socioeconomic disadvantage has increased for African Americans since 2000, it is not entirely surprising that black teen pregnancy rates have started to rise again.

Another recession would likely continue these negative trends. The black violent crime rate and the black teenage pregnancy rate both will likely rise. Once again, the negative effects of these trends will hurt the poorest African Americans most.

What black America needs

Even when the national unemployment picture is good, the black unemployment rate is more than twice that of the white unemployment rate. This means that in what looks like good economic times nationally, most of black America is still experiencing a recession. When white America is in recession, black America is in an economic depression.

Faced with the prospect of another recession, what black America needs is what all of America needs: a stimulus package that will help average Americans and those with the most insecure jobs. The lesson from black America is that the poorest among us are most hurt by recessions. Stimulus proposals based on tax cuts for the wealthy or for business owners are not likely to provide immediate relief to those still hurting from the 2001 recession, much less protect them from the additional damage of a new one.

A better approach would be to boost the economy by 1) providing targeted supports through expanded unemployment insurance and broad-based tax rebates, 2) providing assistance to states to prevent tax increases or spending cuts, and 3) directly stimulating job growth by accelerating funding for infrastructure, particularity for bridge and school repair. (See EPI’s Strategy for An Economic Rebound for more details.)

While the discussion above is based on national data about African Americans, it is important to remember that some black communities are better off than average and some are worse off. Also, although the discussion is about African Americans, the findings likely apply to a degree to other poor minority communities and to the poorest white communities, as well. For example, the violent crime decline for whites has also stalled, and the teen pregnancy rate for whites has also increased in the latest data from the National Center for Health Statistics.¹¹

source: http://www.epi.org/content.cfm/ib241

Link

http://www.youtube.com/watch?v=2sMPADvxfKI

She started her 10 million dollar business in her 1 bedroom apartment in New York! You GO GIRL! Now she has 3 separate store fronts…

http://www.youtube.com/watch?v=cNQ8lh_HQSw

“Africa as a continent has more oil and gas than the middle east” Africa is STILL one of the richest continents is the world….We all need to understand the importance of networking with our own people!

1. Jay Z - $34 Million
2. 50 Cent - $32 Million
3. Diddy - $29 Million
4. Timbaland - $21 Million
5. Dr. Dre - $20 Million
6. Eminem - $18 Million
7. Snoop Dogg - $17 Million
8. Kanye West - $17 Million
9. Pharrell Williams $17  Million
10. Scott Storch - $17 Million
11. Ludacris - $16 Million
12. T.I. - $16 Million
13. Outkast - $14 Million
14. Lil Jon - $14 Million
15. Ice Cube - $13 Million
16. Jermaine Dupri - $12 Million
17. Swizz Beatz - $12 Million
18. Chamillionaire - $11 Million
19. The Game - $11 Million
20. Yung Joc - $10 Million

These figures are estimated from 2006 but gives a general idea of how much the Hip-Hop Industry is commanding in revenue. The current cashflow of these Hip-Hop Kings are probably much more than these numbers! Unfortunately no women in Hip-Hop made this list, although I am sure they are not far behind…

Source: http://africanpress.wordpress.com/2007/04/26/ 

The sudden ostentatious display of wealth by Raila Odinga has left many baffled. Unbeknown to the public, Raila is a fabulously wealthy man with a personal fortune estimated to be in excess of Kshs. 4 billion. Read how the man who wants to be Kenya’s next president acquired his wealth which includes investments in the lucrative petroleum industry and in manufacturing.

How Raila acquired his billions.

Raila Odinga’s big break came in 2001 soon after he led his party, NDP, into a merger with Kanu, the then ruling party. As Energy Minister in Moi’s government he was introduced to the family of Sheikh Abdukeder AlBakari, one of the richest families in Saudi Arabia with interests in petroleum drilling, petroleum exploration and export in the Middle East, Asia, USA and Africa.

Through the Saudi contacts, Raila was initiated into the lucrative world of oil business and soon enough he had joined the league of gig independent oil importers via his firm Pan African Petroleum Limited.

Industry sources say that one of the things that helped Raila make a quick buck in the oil business was a concessionary petroleum deal he struck with the Al Bakri Group where he was not only incorporated as a silent partner in the local arm of Al Bakri International but was also supplied with petroleum products from Saudi Arabia at subsidized prices which his firm would sell in the market at normal prices. That way, Raila was able to deftly beat the competition in oil business by occasional price undercutting.

While still Energy Minister, Raila re-established and nurtured his links with the Libyan government of Colonel Muammar Gadaffi where again he not only did good business in oil importation but also got substantial material support during the 2002 general elections.

Besides supporting Raila’s political causes, the Libyans also played a key role in stabilizing Raila in the oil business in a couple of ways. Industry sources say that between 2001 and 2002 when Raila served as Energy Minister, he received at least three consignments of petroleum products at very low prices which were later sold locally at market prices.

The overall turnover from the three Libyan consignments is reliably said to have been in the region of over half a billion shillings, a tidy sum of money in any language, enough to ensure that one crosses the Rubicon once and for all.

Raila’s enviable international links

Reliable sources say that Libyans bankrolled the Narc campaign with some US$ 3 million (about Kshs 210 million), thanks to Raila’s good contacts in the oil-rich land of Gadaffi. There is no doubt that if Raila becomes the ODM presidential candidate he can count on massive financial support from the Libyans once more.

Besides Libya, Raila enjoys good links with the South African government of Thabo Mbeki while in Nigeria he is known to have strong links with Olosegun Obasanjo, who was a close friend of Raila’s late father Jaramogi.

That Libyans, South Africans and Nigerians had enough confidence in Raila to channel campaign funds through him although he himself was not a presidential in 2002 is an indication of how highly regarded he is in some international circles.

Evidently, he could certainly count on even more enthusiastic support from his international contacts should he become the ODM presidential candidate.

For Raila, the linkage between politics and business went much deeper than petroleum business. It is significant that the Odinga family business, Spectre International Ltd, acquired the then state-owned Kisumu Molasses Plant soon after Raila started politically cooperating with Moi.

Raila has consistently argued that the acquisition of the molasses plant was a pure business deal “which had nothing to do with politics”, but his critics point out at the coincidence between the time his family acquired the parastatal and Raila’s shift of political alliance. It is highly unlikely –indeed one may even say impossible-that the Moi government would have sanctioned the Kisumu Molasses Plant deal at the time if Raila had not become an ally of Moi’s.

Former commissioner of Lands Sammy Mwaita offered to sell the 240 acres on which the Kisumu Molasses Plant is built to Spectre International on January 11, 2001 at a price of Kshs 3.6 million at a time when Odinga started working closely with Moi. By June of the same year, Raila was appointed to the cabinet and made Energy Minister.

Significantly, Spectre International had applied for the same land in a letter of February 18, 1999 but the request had been rejected by the government at the time.

Titles were prepared in favour of Spectre International on February 3, 2002 for a 99-year lease backdated to September 1, 2001 and the Odinga family was ready to laugh all the way to the bank.

When the Odinga family started the process that led to the acquisition of the Kisumu Molasses Plant in 2001, Raila had already established good business contacts in South Africa. Energem Resources Incorporated, an international firm quoted at the Toronto Stock Exchange, had been looking for an investment opportunity in Kenya for a long time and the Kisumu Molasses Plant appeared just right.

Soon after taking over the plant from the government, Raila struck a lucrative deal with Energem whereby the Canadian firm bought 55 per cent of the Kisumu Molasses plant. Sources say that the Odinga family was paid over US$ 5 million (about Kshs 420 million) to relinquish the control of the molasses plant. The Odinga family had paid only Kshs 3.6 million for the property.

The Canadians also ploughed in millions of dollars to rehabilitate the plant and it is today one of the largest manufacturing concerns in the country employing hundreds of people and producing at least 60,000 litres of industrial ethanol for local consumption and export.

Ethanol from the Kisumu Molasses Plant is used as a fuel additive in east and Central Africa. Among other products coming out of the plant include yeast, carbon dioxide alcohol and related industrial products.

A valuation of the plant carried out three three years ago placed the Kisumu Molasses Plant at US$100 million (Kshs 7 billion). With the Odinga family owning 40 percent of the plant, putting the family’s stake in the plant in the region of Kshs 7.8 billion. The remaining five per cent shares in the plant are owned by a development trust on behalf of the local community.

Besides Kenya where Energem is in partnership with Raila in the Kisumu molasses plant business, now renamed Kisumu ethanol Plant, other African countries where Energem’s presence is significant include Sierra Leone, Sao Tome, Congo Brazaville, Angola. Zimbabwe, Democratic Republic of Congo (DRC), Chad and Central Africa republic.

Raila’s wealth at a glance.

Company/Property
Estimated Worth

Spectre International Limited (the holding company for Kisumu Ethanol Plant)
Kshs 7 billion of which Odinga family owns 40 per cent whose value is approximately Kshs 2.8 billion

East African Spectre (the gas cylinder manufacturing plant founded by Raila’s late father)
Kshs 500 million

Raila’s family home in Karen Nairobi
Kshs 50 million

Runda House
Kshs 15 million

Pan African Petroleum Company (the firm through which the Odinga family imports and distributes petroleum products)
Has had a turnover in excess of Kshs 500 million.