Africa: A Case of Flogging Dead Horses?

On pure economic indicators and all other indicators of development Africa is a dismal picture. Life expectancy has declined; mortality rates increase; heavily indebted, with over half the countries having debt that exceeds their GNP; GDP growth fallen; GDP per capita fallen as population growth gets out of control; health care is collapsing and so and so on. What has gone wrong with what after all is continent rich in mineral and material resources?

Too much medicine

There are several factors. First and probably most simple is that Africa after independence was not allowed to chart its own course. With good or bad intentions too many ” aid ” agencies have prescribed,subscribed and proscribed all sorts of panacea for Africa’s ” that they destroyed any capacity for that continent to solve its own ills. Africa has simply become a vegetable or as some say a huge experimental waste ground. This is really not far from the truth.

Another factor is that African governments after independence failed to formulate clear mission and objectives that could be translated into sound economic policies. Corruption and mismanagement took hold of almost every strata of society. This was further assisted by the aid agencies. Marginal benefits were put as further evidence for aid while government excesses on grand scale were overlooked.

For political reasons, Western governments supported dictatorships and turned a blind eye to corruption and mismanagement. Cold war politics meant that the major powers had to have a balance not only in armaments but also in allies. The drive to prevent communist influence in Africa meant keeping regimes in power that supported Western interests.

All too often these regimes were despots and perpetrators of the most sadist human rights abuses. Moreover aid agencies ignored every basic economic or social criteria for development assistance in favor of this higher political goal. This problem was further complicated by the fact that often the aid agencies will differ with their own governments. Thus vast sums were squandered on irrelevant constructions, large sums made their way into private accounts without so much as a whisper. What I call the “guilt” factor came in handy when others dare to complain of such corruption.

The “guilt” factor argument is” oh well, we are giving and that is the most important thing. Whatever, the President choose to do with it is his business. After all they are an independent and sovereign nation”.

The result is that today despite several billions poured, Africa is still underdeveloped and conditions are even worse than when they were at independence. My argument seems to point to the thesis that aid can work. Yes, I believe aid can work to alleviate poverty or change the society overnight. However, it cannot bring about economic development.

Rather it should be used to ease the pain of the unpleasant side effects of harsh monetary and fiscal policy which is precisely what was needed at this point. For example due to the cyclical nature of the markets that face Africa main exports, there often severe variations in earnings. These can be very damaging especially given the fact that some countries depend on just one commodity. What aid should do is to bridge the gap between these shortfalls in earnings.

Poverty can never be eradicated in a country; the aim should be to distribute wealth in a manner that ensures that the gap between the rich and the poor does not create social tensions.

Counter-productive

What “Aid” did to Africa was to exacerbate and indeed encourage irresponsible fiscal and monetary policy on the part of governments. There was some positive aspects of aid, but these were at the margin and as far as the big picture is concerned, too insignificant to alter the present argument. Look at how much money Norway has pumped into Tanzania and what condition that country is in today!

I seem to have pointed the blame at the aid agencies and the Africa politicians. My belief is that the development agencies had good intentions. The explanation for their failures stems from the fact that the Africans that they encountered were not educated enough to challenge their assumption. Thus very soon these agencies began to get the view that the African does not know what is good for them. In effect their mission was not simply to give aid, but to make decisions for them!

Bad Governments

To say that “people deserve the government they get” is a little too harsh on Africans. In many parts of Africa, after independence there were too few university graduates or technocrats to replace the white administrators. Political rhetoric and nationalism prevented any form of expatriates assistance from former colonial administrators. Those that saw themselves in power had got there on a platform of”we can do it ourselves”. Thus any notion of keeping the very people you have been fighting against was nonsensical. The truth was many nations could not” do it themselves”.

Governments ministers and officials with half-baked educational background suddenly saw themselves in power. They had little in the way of program or policy document. What matters was the trappings that the office brought and the personal gains one could get out of the office. Of course there some educated people. However, these quickly fell out with the government or sacrificed their principles for survival. The result of course was gross mismanagement, incompetence, corruption, graft on a scale that saw millions of Africans reduced to the lowest stage of survival.

Is it any wonder that if things have to change, we have to start with ensuring well educated take the reins of power. There is little doubt that part of the success of the Asian countries lies in pool of well educated politicians and planners in the 1960s. These individuals not only set a strategic orientation for their nations, but they continuously surveyed their environments to see new opportunities.

Education became a central plank of development policy. Not so in Africa- resources geared for such efforts were not used- Bad economic planning could be partly explained by such poorly educated civil servants. Take the case of monetary policy. At independence, most African countries inherit a monetary system based on the English pound, the French Franc or the Portuguese escudo. However in time nationalistic pride got in the way of financial practicalities and one country after another cut itself from the backing European currency and began turning out a spectacular array of non-convertible currencies. As one commentator note ” If nothing else the President got a chance to put their picture on the note”. And in the early and late sixties, since Presidents were short- lived it was inevitable that the currencies were too.

Many of these currencies were worthless and not even accepted in neighboring countries or in the international banking system for that matter. As the currency weakened, the general response was to print more money. In Nigeria, between 1975-1977 the money supply increased by 180%. And this was pretty much the case elsewhere.

As money supplies rose, inflation soared and in time rates of over 100% were not uncommon. In early post independence period as the public discontent grew, the greater the social control that was exerted by leaders. The greater the national debt, the greater the reliance grew of foreign grants to keep regimes in power.

Tribalism

Tribalism has been put forward by many writers as the root of Africa’s problems. Tribalism was made to look exclusively African. Events in the former Yugoslavia have shown that tribalism and ethnicity are not African preserves. Colonialism brought ethnic groups(tribes if you refer to Africa) that had nothing to hold them together except force and a colonial policy of divide and rule.

When people talk about tribal problems in Africa, I put the question on how they would feel, because of some historical error, you had to live with people that you have no desire to. The second World War in Europe created a Europe that fell into the East(Communist Bloc) and West(Capitalist Bloc). The countries of the East under Soviet hegemony manage to hold the different diverse groups found within these countries. As the Empire collapse, so has the desire for self government risen or some form of regional autonomy.

Yugoslavia has even manage to coin a new vocabulary, -“Ethnic cleansing”. What is very African about Tribalism is the way Africans choose to solve the problem. But even these atrocities cannot match the systematic methods of say Hitler or present day”Hitler’s” in Bosnia and Croatia.

More to the point, economically, tribalism in some countries has crippled the economy by diverting resources to unproductive efforts. It has also meant in some places governments did not capitalize on their best talents simply because they belong to the wrong group. Vast numbers of refugees have been created which has meant whole populations have been displaced, their economic productivity unrealized.

The Future

The collapse of the old order has created new economic partnerships, shift resources and emphasis, which has pushed Africa further into economic uncertainty and regression. The fall of Communism has opened up new areas in the world that are far more immediately attractive than Africa for investment purposes.

Eastern Europe provide valuable investment opportunities that are fast attracting capital. One of the legacies of the Communist era are the large numbers of scientist. These are fast becoming partners with establish Western companies for research into new fields.

Western Governments face constituencies that are increasingly frustrated with their governments wasting money on corrupt and hopeless leaders.

This is combined with the fact that domestic social problems are getting acute. Today Europe faces difficult social problems. Unemployment, lack of growth and increasing refugee problems from Eastern Europe. Indeed many experts believe that unemployment will become a more structural problem. What this indicates is that social services budget will become bigger. These factors make it all the more difficult for governments in the West to hand over large sums as they had done in the past. Finally, we see a new economic phenomenon or to be more precise, trade phenomenon-trade blocs.

lready in place is the European Community EC. The North Americans are working out with Mexico -NAFTA North American Free Trade Area. In South East Asia,we see increasing Japans activity in the region. This is made doubly so with the expanding Chinese economy. It is my belief that as Japan makes efforts to address her war past and apologize, this will clear the way for some kind of trade area.

Given this new world order, what does the future hold for Africa. It is my belief that some parts may never move from the traditional society that describe earlier on. War, famine and disease are the main preoccupation that any notion of social investment is ridiculous. The leadership is some cases actually perpetuate the situation thus guaranteeing their hold on power. However, there are a few that have the potential for spectacular development. Most impressive is Botswana. Botswana apart from South Africa is the fastest growing economy in Black Africa. This economy is characterize by a work ethic, skilled and an industrious labor force.

Namibia is also an impressive case. However that country has only been independent since 1990. Nevertheless its institutions and policies are on the right track.

The other group is lead by Kenya, Ghana, Ivory Coast, Nigeria, Gabon and to some extent Senegal and Zaire. There is another group that have all the ingredients but have yet to make any social investments. Some of these are actually at the bottom of UN list of poor quality of life. This group is led by Sierra Leone, followed by Uganda and Angola.

Multinational Corporations

In an increasingly global economic environment the role of the Multinational Enterprise (MNE), more commonly known as Multinational Corporations (MNCs), in fostering economic development is going to become increasingly important. Capital that is needed for domestic investment in the poor countries will come largely from investment by these organisations.

Western governments are going to find it increasingly hard to justify flows to African governments. In another respect there will be increasing demand in African countries that the private sector plays a more central role. These will need the resources and expertise of MNCs. This will be helped by the fact Aid agencies favor joint ventures between foreign firms and local companies as a viable path to development.

MNEs have much to offer the region in terms of capital, technology, innovation, managerial expertise, and access to world markets. It is important that the investment by MNEs is direct and not portfolio, for direct investment brings more than just financial resources. Further, it is important that MNEs source most of the materials locally so as to develop local skills and enterprises.

It has been suggested that the target sectors for encouragement of Foreign Direct Investment (FDI) are the

(a) wood and paper products, (linked to forestry)

(b) textiles and clothing, (linked to textile fibers) and

c) metal products or food processing( linked to the extractive sector).

The objectives for African governments is to both attract the downstream diversification of multinationals already in the relevant extractive sector, and new the investment of multinationals whose operations in the more develop countries are tending to move downstream and may wish to relocate what for them are now upstream activities.

Dead Horses?

Africa is not like flogging dead horses. African countries are on a life support machine or as the world bank puts it, its in a state of transition. It needs it own doctors and experts to bring her back to life. To cure the ills of Africa is to understand its environment and no one can better Africa except Africans. The bottom line is you can take the horse to the stream but it she does not want to drink there is not much you can do. In the meantime you have wasted time. Africa is rich in mineral resources and has the potential for development.

It has the market potential to provide people in the industrialized countries with employment through its demand for unmet needs.

The growth potentials of the developed world are limited but in Africa there is a huge demand for food, clothing, shelter and consumer goods. What is needed as Philip Kotler points out is that the west puts purchasing power in the hands of these consumers. If this is not done the west will be saddled with over capacity and slow growth. On the other hand, there is body of opinion that believes that modernization goes through stages and that Africa is going through the same process. As such trying to speed up the process by interfering with its dynamics, merely causes cross-cultural and domestic conflicts. Evidence from South East Asian countries however indicates that this process does not necessarily have to follow a linear path. With the right set of policies, governments can make rapid development or even a leap.

What is urgently needed are several things. In the first place governments should try to recruit their well educated citizens who arc presently abroad. These individuals could be put in special ministries responsible for charting a future for the country. This stems from the fact that Africans that are capable of generating the kinds of ideas and policies that it would take to turn what Africa is today into a modern society or at least developing nations are all abroad. We must also encourage the African entrepreneur as in many parts of South East Asia.

What is needed in Africa is a system that propels the right people to power. Leaders that could respond to the needs of their peoples. Africa needs leaders that have the foresight for long-term constructive economic and industrial policy. Above all its needs leaders that recognized the need for social economic investments, without them, no sound economic or industrial policy will yield positive results.