Why is Africa so poor?

Guest points out that Africa is the poorest continent on earth, and the only one that has actually grown poorer over the last 30 years. "Not even Africans want to invest in Africa - about 40% of Africa's privately held wealth is held offshore."

TROPICAL DISEASES

So, how do we explain such a mineral rich continent, with such rich agricultural and tourist potential, literally growing poorer? Guest notes that some blame geography. Most African countries are tropical, and hot countries are home to all manner of diseases. Africa has the worst of them: Malaria, Yellow Fever, rare but deadly viruses such as Ebola, and a host of energysapping parasites', such as guinea worm.

SLAVERY

"Another popular culprit for Africa's ills is history Slavery was not introduced to Africa by Europeans. Arab slavers arrived earlier than the Portuguese, British and French, and Africans were enslaving each other for centuries before even the Arabs arrived. In fact, slavery was common in most parts of the world before the British started trying to crush it, and Africa was no exception. By one estimate, between 30 and 60 percent of Africans were slaves before the Europeans arrived many Africans chiefs saw no wrong in selling slaves to European traders, and some even protested when the trade was banned but the Trans Atlantic slave trade ended in the 19 th Century," so that can hardly explain 21'st Century problems."

COLONIALISM

"The colonists left deep scars. But they also left behind some helpful things such as roads, clinics and laws. If colonialism was what held Africa back, you would expect the continent to have boomed when the settlers left. It didn't - but over 70% of Africans alive today were born after Independence - Africa's colonial legacy, though influential, cannot explain all that is awry today."

COLONIES THAT PROSPERED

Guest notes that although Korea was occupied by Japan in 1910 and endured horrific oppression when the Japanese colonists tried to destroy the local culture, ban the Korean language, bar Koreans from universities, enslaving vast numbers of Korean to work in mines and ammunitions factories, drafting over 100,000 Korean women, some as young as twelve, to serve as sex slaves in military brothels, and despite the invasion of Red China and a vicious 3-year Civil War, which cost over a million lives, splitting the country in two, yet, Korea is one of the most prosperous countries in the world today!

"With such a traumatic history, Korea would have every excuse for failure. But the Southern, capitalist part, which was as poor as Ghana was in 1953, is now twenty times richer. Taiwan, Hong Kong, Malaysia and Singapore -  all ex-Colonies - are all now affluent and peaceful. So are Ireland, Australia and Massachusetts."

Countries that prosper tend to do so by their own efforts. Countries grow wealthy in much the same way that individuals do: by making things that other people want to buy, or providing services that others will pay for.

LACK OF PRODUCTIVITY

The Shackled Continent informs us that despite Africa having 10% of the world's population, Africa only accounts for less than 2% of the world's trade. "To understand why Africa is so poor, we must first ask why Africa is so unproductive."

BAD GOVERNMENTS

Guest observes: "Since independence, Africa's governments have failed their people. Few allow ordinary citizens to seek their own fortunes without official harassment. Few uphold the rule of law, enforce contracts or safeguard property rights. Many are blatantly predatory."

ZIMBABWE'S RUINS

Guest documents how Robert Mugabe's ZANU-PF regime in Zimbabwe has impoverished that once prosperous nation. Mugabe' siezes private property, thus sending a deafening warning to foreign and local investors alike: Do not put your money into Zimbabwe. He also tries to alter the laws of economics by decree. He fixes the price of petrol at below what it costs to import it, so the pumps run dry. He tries to create money by printing it, and so causes hyperinflation. These policies have failed as utterly in Zimbabwe as they have everywhere else they have been tried, and have made Zimbabweans much poorer than they were at Independence - he rigs elections to keep himself in power -he regards his opponents as enemies to be crushed.

POLITICS OF POVERTY

The example of how Kwame Nkrumah impoverished Ghana (what was once known as the Gold Coast) is also considered. Nkrumah imposed a one party state, "nationalised everything from mines and factories to bicycle repair shops, staffed them with ruling party cronies and then ran them into the ground. For a while they were able to disguise the fact that they were not producing much by borrowing huge sums of money from foolish Western banks and governments. This created a temporary illusion of prosperity" the money was wasted on prestige projects: dams, conference halls, steel mills erected far from the nearest port and over budget, and so on African governments eventually found themselves unable to service their loans, let alone repay them.

Guest notes that while Nkrumah is still considered a hero to many Ghanans who remember his generous spending, he points out that it was only by using the accumulated surplus of the colonial period that he managed to finance his social programmes "which collapsed when the money ran out."

DEAD CAPITAL

"Most African peasants do not own the land they cultivate. In some countries, the state owns all the land - the value of dead capital in poor countries - that is, property which cannot be capitalised because of the lack of a Title Deed, is roughly 40 times the foreign aid received throughout the world since 1945. In Africa, the unexploited value of informal urban shacks and informally owned fields is almost a trillion US Dollars, which is about 3 times the annual GDP of all the countries south of the Sahara."

THE AIDS PLAGUE

Africa's Shackled Continent also points out that "life expectancy has fallen in much of Africa in the last two decades - 30 million Africans are infected with HIV. Three quarters of the world's AIDS deaths occur in Africa. Nearly 5 Africans die of the disease every minute - migration and war helped the virus to cross borders - the disease threatens to kill more people than all the continent's wars put together and multiplied by ten."

Guest points out that not only do war and migration help the virus to cross borders, but
polygamy, witchcraft and superstition aggravate the crisis. "AIDS is making employees sicker and therefore more expensive and less productive AIDS is making Africans poorer the South African economy will be 17% smaller in 2010 than it would have been without the virus the Zambian Health Ministry estimates that half of Zambia's population will eventually die of it."

RUSSIAN ROULETTE

"In 2002 there were an estimated 11 million AIDS orphans living in Africa - many Sub Saharan societies are relatively permissive. Polygamy is quite common - many men flaunt mistresses, and unmarried urban women do not seem embarrassed when a boyfriend stays the night, a married man may have sex with prostitutes, but he may also have casual affairs with teenage girls. Girls who contract HIV from a sugar-daddy often survive long enough to get married and pass the virus on to their husbands. Sex between people of different generations helps keep the virus circulating."

Guest quotes a Zimbabwean novelist: "Since our women dress to kill, we are all going to die." He concludes that sex in Africa is like playing "Russian roulette."

THE ABUSE OF AID

"For half a century now, the continent has been deluged with aid, but this aid has failed to make Africans any less poor - bankrolled tyrants - or idealists with hopeless economic policies' both types of aid have been wasted."

Guest notes that "Africa has terrific agricultural potential: fertile land, sun when the Northern hemisphere is frost - a comparative advantage in textiles." So the question needs to be asked: Why have the previous colonies in Asia prospered while previous colonies in Africa have become impoverished?

Guest notes that Africa needs more investment and more successful business ventures, "but doing business in Africa can be tricky. Bad roads, punctuated by roadblocks manned by bribe-hungry policemen, make it slow and costly to move goods even short distances - local firms, meanwhile, have been held back by arbitrary governments, dysfunctional legal systems and the difficulty, for those without political connections, of raising capita - if Africa were better governed, it would be richer."

CONSIDERING THE KOREAS

Guest compares North and South Korea. While Northern Korea lives with electricity power cuts, empty shops, famine, shortages and forced labour camps, South Korea is ten-times richer than its stern neighbour to the North.

SOCIALISM Vs FREEDOM

Similarly, Communist East Germany, with its Socialist economic policies and political oppression had living standards less than a quarter that of their free neighbours to the West.

ZAMBIA AND BOTSWANA

Guest also compares Zambia and Botswana. "At Independence in the 1960's, Zambia was Africa's second richest country, whereas Botswana was what one British colonial official described as a useless piece of territory." Yet after decades of Kenneth Kaunda's Socialist Humanism, nationalising Zambia's mines, telling the peasants what to grow and forcing them to sell their crops to the government at artificially low prices, Zambia was bankrupted.

"Despite huge infusions of foreign aid, Zambians are now poorer than they were at Independence. Contrast this with Botswana, unlike Zambia, Botswana spent its windfall wisely. Dollars were ploughed into infrastructure, education and health. Private business was allowed to grow, foreign investment was welcomed. Government was astoundingly clean. The budget is usually in surplus - for Africa to thrive, it needs more and bigger Botswanas. And for that, the continent needs saner policies."

CORRUPTION AND OPPRESSION

The conclusion of the Shackled Continent is: "Africans are poor largely because they are not yet free. They live under predatory, incompetent governments which impoverish them in many ways; through corruption, through bad economic policies, and sometimes, as in Zimbabwe, by creating an atmosphere of terror that scares off all but the most dapper business folk."

THE DISASTER OF ZIMBABWE

Guest notes that Zimbabwe has so much going for it: beautiful sun-soaked scenery, wildlife and waterfalls, a moderate climate, tremendous agricultural potential and mineral wealth, a good infrastructure, "and yet Zimbabwe is a mess. Two decades after Independence, Zimbabweans are dramatically poorer and can expect to die decades younger."

He quotes a young businessman: "The government are a bunch of thieves." They grab "half their wages in taxes and then eroded the value of what was left by printing too much money and causing inflation." Like Kwame Nkrumah's Ghana, Mugabe "could only maintain his big spending ways as long as Zimbabwe received large amounts of foreign aid. The longer the Mugabe regime was in power, the more corrupt his cronies became, and the more erratic his policies became. Doners grew tired of handing over money only to see it wasted or embezzled, so they became less generous." Mugabe's anti-White racism, state sponsored terrorism and land invasions have resulted in a national suicide.

DICTATORS DEFEAT DEMOCRACY

Mobutu Sese Seko of Zaire bluntly claimed that "Democracy is not for Africa." That certainly seems to be Mugabe's sentiments as he rigs elections, terrorises voters, controls the media, bans foreign journalists, threatens judges, and mercilessly persecutes the White minority in Zimbabwe. "Few African governments have been peacefully voted out of office - but when people can freely ditch their rulers, it gives those rulers an incentive to govern a bit better."

SYMPTOMS OF CORRUPTION

"Poverty seems to breed war, especially civil war - Africa is worse afflicted than any other continent." One out of five Africans live in a country wracked by war. Over 90% of the casualties are civilians. 19 million Africans are refugees and there are an estimated 20 million landmines lurking beneath African soil. "Why is this?? - poverty and low growth are often symptoms of corrupt and incompetent government - not only does poverty breed war, but war exacerbates poverty, too." The Shackled Continent gives numerous examples of dictators such as "Mobutu who looted the state into paralysis."

WHEN FOREIGN AID HELPS

Guest asks: why the West does not do more for Africa? He notes that Western governments have sometimes provided incentives for peace by withholding aid from governments that were fighting and showering aid on those who stopped fighting. These tactics may have helped to persuade Ethiopia and Eritrea to cease-fire in 2000 and why Rwanda and Uganda did not go with war with each other in 2001.

America did send soldiers to protect food aid deliveries to Somalia in 1993, "but when 18 were killed and their naked corpses dragged through the streets of Mogadish" this experience probably was decisive in holding America back from dispatching troops - to stop the genocide in Rwanda the following year. With more political will humanitarian interventions can work. In 2000 a mere 800 British troops turned the tide of Sierra Leone's ghastly Civil War in a matter of days. The Revolutionary United Front, a band of rebels notorious for cutting off hands "had overrun Sierra Leone's capital Freetown. The British intervention brought these atrocities to an end" and passified the country.

PREREQUISITES FOR PEACE

"To stay peaceful in the long term, countries need governments that serve their citizens instead of robbing them, and which can be removed without violence. Countries need constitutions that provide reasonable protection for all citizens, regardless of whether they support the ruling party."

POTENTIAL FOR PROSPERITY

One of many practical positive suggestions offered by Guest is to free up capital by recognizing private ownership of property in Africa. "One of the reasons why Africa is so poor is that most Africans are unable to turn assets into liquid capital. In the West the most common way to do this is to borrow money using a house as security" but most Africans cannot do the same thing because even if they own their homes they usually do not have the Title Deeds to prove it. Africans are thus deprived of capital - the life blood of capitalism. In most African countries, the informal economy is larger than the formal one. Only one African in ten lives in a formal house with Title Deeds and only one African in ten holds a formal job. It is estimated that the value of African's informal dwellings and rural land would be over a trillion US Dollars. "Three times the continent's entire annual Gross Domestic Product." Third world leaders wander rich country capitals begging for aid and investment. All the while, they fail to notice the much larger source of potential wealth at home.

SECURE PROPERTY RIGHTS

"In a country with good property laws, almost anyone could use a house or a piece of land as collateral to raise a loan - formal property law enables people to do business with strangers - millions of third world squatters, by contrast, cannot obtain telephone or electricity lines because no one trusts them to pay their bills." In some parts of Africa, such as Ethiopia and Mozambique, freehold land ownership is simply not allowed. And other beauracracy blocks the way to formal ownership "all rich industrialised countries have secure property rights, accessible to more or less all citizens. No poor country has."

EXPLOITING ETHNICITY

The Shackled Continent also looks at the problems of tribalism. "Ethnic differences have been the pretext of violence in Sudan, Nigeria, South Africa, Zimbabwe, Namibia, Kenya, Liberia, Cote D'ivoire, Uganda, Somalia, Ethiopia, Eritrea, Congo" the list goes on. Africa's ethnic conflicts are often imagined to be the spontaneous expression of ancient hatreds. Tribal animosity certainly exists, but it rarely erupts into large kinds of bloodshed unless deliberately inflamed by unscrupulous leaders - it is not tribal feelings themselves that cause trouble; it is their politicisation. Most of Africa's ethnic strife has its roots in the manipulation of tribal loyalties by "authorities."

THE POLITICS OF HATE

"Tribalism, racism and sectarianism - bigotry: treating individuals badly, not because of something they have done, but because they belong to a particular group. People find all sorts of unjust reasons to hate, and unjust governments exploit them all."

The Hutu government of Rwanda attempted to exterminate the minority Tutsi population in 1994 resulting in over 800,000 people (10% of the population) being killed in six weeks. "The genocide was carefully planned by a small clique of criminals, to maintain their grip on power - France provided Habyarimana with money and weapons because, although odious, he did at least speak French."

NEWSPEAK

"Hacking men to death was referred to as bush clearing; killing women and children was pulling out the roots of the bad weeds. Tutsis were called cockroaches, and those who helped exterminate them were sometimes rewarded with the victim's land or cows." It's worth noting that Rwanda was a gun free zone. Tyrants prefer unarmed victims.

GREED AND QUOTAS

The Shackled Continent also considers Africa's most populous country, Nigeria. The 250 ethnic groups in Nigeria are split between the mainly Muslim North and mainly Christian South. Civil service jobs and university admissions are decided by tribal quotas. The oil riches of Nigeria are constantly bickered over by various ethnic groups over whether they have received their fair
share of the handouts. Yet, through corruption, and mis-management, by 1998 Nigerians were poorer than when the oil boom began in 1974, and the country was saddled with over 30 Billion dollars in debt.

In order to receive a larger share of the oil revenues, "Nigerian censuses are usually marred by fraud and mayhem, as each tribe seek to inflate its numbers. As a result, no one really knows how many Nigerians there are - most tribes claim to be undercounted and underpaid."

The twelve Northern states have adopted Islamic Sharia law with its whipping, amputations and stonings. Thousands have been killed in the vicious street fighting.

THE NEW RACISM

Robert Guest also looks at the new racial discrimination in South Africa. "The ANC passed laws  mandating preferential treatment for members of previously disadvantaged groups, in hiring, promotion, university admissions and the award of government contracts - inspired by America's affirmative action programmes, but there is a difference. Whereas in America, the intended beneficiaries of affirmative action are a minority, in South Africa they are 95% of the population - but the important question of corrective discrimination is not: Is it justified?, but: Does it work?"

Guest notes that nationwide the number of students with grades good enough to qualify for university have actually plummeted since 1994. Concerning affirmative action he notes: "The ANC does not want to strangle business, it just want private firms to do some of its social engineering for it - rational employer hires staff on merit; he employs those who will do the best job for the best price. An employer who discriminates on the basis of an unproductive quality such as skin colour will be at a disadvantage relative to competitors who hire on merit."

A CONVENIENT COVER FOR CORRUPTION

"Affirmative action is portrayed as a means of helping the poor. But the beneficiaries are mainly middle-class, which is to say those who have already largely overcome the legacy of past discrimination he poor lose in two ways. First they receive worse public services than they otherwise would. Second, affirmative action retards economical growth and so makes it harder for the jobless to find work the poor receive fewer houses, water pumps and village roads than they should. In effect affirmative procurements is a transfer of wealth from the poor to the well off. It can also provide a convenient cover for corruption."

THE DISASTER OF DISCRIMINATION

"Tribal politics leads to ethnic tension, inefficient government and slower wealth creation, as in South Africa; or worse, as in Rwanda." Governments should not discriminate on grounds of ethnicity, period. Civil servants should be recruited on merit alone "equality before the law."

FOREIGN AID FAILURE

Guest exposes the abject failure of foreign aid. "Donors have lavished more aid on Zambia, per head, than almost any country in the world. The aid was supposed to make Zambians less poor. It failed. Between Independence in 1964 and 2000, average incomes in Zambia actually fell from $540 to $300 per capita. Over 6 billion dollars of aid, just between 1980 and 1996, produced little discernable improvement."

SIX MARSHALL PLANS

"African leaders sometimes talk of the need for a Marshal Plan for Africa." In fact, Africa has already received aid equivalent to six Marshal Plans. But whereas the original Marshal Plan was a triumph, aid to Africa has failed to alleviate the continent's poverty - corruption, incompetence and bad economic policies can always be relied on to squander any amount of donor cash."

DESTROYING PRODUCTIVITY

"At independence in 1964, Zambia seemed poised for success. The second wealthiest nation in Africa, after South Africa, it had a popularly elected government committed to helping the poor, some of the world's best copper mines and a generous stream of aid."

Yet, Zambia's first president, Kenneth Kaunda set up a one party Socialist state and nationalised everything from copper mines to hair salons and dry-cleaning shops "erected tariff walls and currency control - his officials told farmers what to grow, bought their crops and then sold them at heavily subsidised pricess in state hands, Zambian industry withered." As Kaunda's economic policies grew more foolish, aid climbed steadily "aid kept the treasury full even as Mr. Kaunda destroyed most of the productive businesses in the country - after 27 years in power, he left his country far poorer."

A SUCCESS STORY

By way of contrast, Botswana was at independence in 1966 one of the poorest countries in the world. In 1971 aid was equivalent to 98% of the state revenue. However, in the last 35 years Botswana's economy has grown faster than any other in the world. "Yet cabinet ministers have not awarded themselves mansions and helicopters, and even the president has been seen doing his own shopping. Exchange controls were abolished in 1999, the budget has usually been in surplus and GDP per head tops $3000 its record is impressive."

FUNDING WEALTHY DICTATORS

"Aid is suppose to help the poorest, but often doesn't foreign aid is a transfer of wealth from the poor in rich countries to the rich in poor countries if you give money to a recalcitrant junky, he will waste it."

MORE TRADE - LESS AID

"Rich country tax payers are fed up with bank rolling failure. If aid could be made to work, however, people in rich countries would surely be more generous. Donors should be both more generous and should be more selective. Countries that are generally trying to implement sensible policies should be given more money. Countries that are not should be offered advise, but no money. Most importantly, rich countries should open their markets to goods from poor countries. Trade has far more potential to reduce poverty than aid."

FREEDOM, INTEGRITY AND INGENUITY

Guest offers several inspiring examples of economic success stories in Africa, showing that when Africans enjoy freedom from Socialism and corruption, the ingenuity and potential is tremendous. "The bad news is that Africa still has towering informal trade barriers: muddy roads, bad ports, crooked customs officials and policemen who specialise in highway robbery."

ROADS TO RICHES

"Where roads improve, incomes tend to rise in parallel - no country with good roads has ever suffered famine. There is no substitute for building and maintaining a better infrastructure."

REDUCING RISKS

Foreign firms not only create jobs, but they bring ideas and technology. But "multi-nationals hesitate to do business in Africa because it seems too difficult and risky. In much of Africa reliable services are so hard to come by. Many African countries lack clear laws impartially upheld by an honest and independent judiciary. In such places contracts are hard to enforce."

OPPRESSING THE POOR

He points out the crippling effect of price controls and government interference in Africa. "In a typical case, in 1980, a Ghanan peasant woman was sentenced to five years imprisonment with hard labour for trying to smuggle $4.36 worth of cocoa into neighbouring Togo to buy some soap."

THE BRAIN DRAIN

He notes that famines in Africa are usually caused more by bad government than by bad weather. As a result, "once people have valuable expertise, however, keeping them is a problem. Africa loses 23,000 professionals every year, which helps explain whey Chad has 1 doctor for every 30,000 people. It is the brightest and best educated who leave."

THE BLAME GAME

Guest concludes that Africa has "two big problems. First, the tendency of African elites to spend other people's money on themselves second, their tendency to believe that Africa's problems is someone else's fault."

AFRICA NEEDS FREEDOM

The Shackled Continent has many incisive insights that diagnose the economic problems of Africa, and far more importantly, it offers hope for the future by pinpointing the problems which - if honestly and wholeheartedly tackled - would unleash all the creative energy and free enterprise of our mineral rich continent with its tremendous agricultural and tourist potential. Africa needs freedom.


Reviewed by Dr. Peter Hammond, Frontline Fellowship, P O Box 74, Newlands, 7725, Cape Town, South Africa. The Shackled Continent - Africa's Past, Present and Future, by Robert Guest is published by MacMillan (2004) London.

Source: http://www.frontline.org.za/articles/hopeforafrica.htm