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To Mr. Blair: Africa Needs Traders Not Aid
By Franklin Cudjoe in Ghana
Tony Blair, Gordon Brown and Bob Geldof will not rest until they turn Africa from being “a scar on the conscience of the world,” as Blair likes to describe the continent, to a star in the sky. The trio is associated with perhaps the most ambitious international project purported to salvage a continent’s race to the bottom. Set up in February 2004, the project, known as Commission for Africa, demands that wealthy nation’s double aid to the continent, adding £30bn ($50bn) a year over 10 years.
Bob Geldof, especially, makes an emotive estimate that putting the Commission’s recent 400-page report into practice would cost the citizen of every rich country half a stick of chewing gum each day. Ethiopian Prime Minister Meles Zenawi, who launched the report in his country, said it represented a "moment of awakening for Africa.”
The editor of The Times in London made similar conclusions when Tony Blair hyped his overly philanthropic agenda in Ethiopia last year. The editor, in the October 8, 2004, edition of The Times said: “The solutions to Africa’s problems have been well rehearsed over the years. Developed nations must grant more aid and write off debt. The US and the EU must cut agricultural subsidies and open their markets. Pharmaceutical companies must make anti-retroviral drugs cheaper and more readily available.”
I wrote the following response. “Your first recommendation, like many in recent times, smacks of a misplaced idea of Western guilt for the poverty of the third world and in particular Africa. Before the Brandt Commission on Africa in the 1970s suggested this lame-duck approach, post independent African leaders such as Kwame Nkrumah of Ghana and Julius Nyerere of Tanzania virtually coerced Western leaders into assuming responsibility for all the ills on the continent. Perhaps for ideological reasons Western leaders went for the bait with billions of dollars ‘invested’. This has since become big business. But it is an unprofitable one with losses in the form of the politicization of life on the continent and many failed states.
“Much of Western aid money went on financing the killing machines of African governments while some was stashed away in Swiss banks. The World Bank itself agrees that over US$200 billion poured into the continent in the last three decades has returned negative results. The Millennium Development Goals set by the UN, a twin of the Commission for Africa, to halve poverty by 2015 will not be achieved, not because I’m a cynic, but because history tells me that no amount of foreign aid has ever solved the bedlam in Africa.”
Ethiopia is in the news today because foreign aid robbed that country of its ability to feed itself and perhaps the rest of Africa. People are so emotive about Ethiopia that they tend to forget that over 60% of that country is fertile yet only 10 per cent has been cultivated. The reason is that when socialism replaced feudalism in 1975, state land redistribution coerced everyone in to subsistence production with marketing boards doing their worst with price controls. Farmers had no incentive to grow food and famine resulted. Tons of food aid never got to the famished people.
Mengistu’s thugs sold the food and purchased arms to kill and maim his own people, yet the aid continued to pour in. Somalia was the largest recipient of foreign aid in sub-Saharan Africa until it imploded in 1990, yet it was also the food basket of the region. Zimbabwe has, since independence in 1980, received billions of dollars to finance its land redistribution program but today more than 60 people die daily in what was once the food basket of Southern Africa.
Kenya’s anti-graft czar John Githongo resigned recently after being overwhelmed by the high level of corruption. Diplomats are reported to have calculated that Kenya had lost some US$1billion in corruption over the past three years, almost the equivalent of what Africa receives annually in aid. Malawi's president Bingu wa Mutharika recently quit his governing party, saying he was tired of criticism about his high-profile anti-corruption campaign. Recently in Ghana, a high-ranking member of Ghana’s ruling party swore to overturn series of what he considers systemic official acquiesce in corrupt practices.
The Commission for Africa needs to explain how prudent it is to forgive debt and increase aid when over 70% of it would be used to finance budget deficits. This approach has left many African countries with debts greater that 100% of their incomes. Who bears the burden of repayment? Not the governing elite, but the poor producers of export crops such as cocoa, coffee, peanuts, palm oil, and, in some cases, local labor employed in oil and other mineral extracting industries.
There are many more trade barriers between African countries than exist with the US or EU. As the World Trade Organization’s 2001 statistics show, Africa’s share of intra-and inter-regional trade flows to Western Europe alone was 51.8% while it is a paltry 7.8% within Africa.
On pharmaceuticals and anti-retroviral drugs, pharmaceutical companies desire them to reach as many poor patients as possible. But there is a need to give incentives to innovators so they are able to maximize output and reduce prices and conduct more research. One effective way is to recognize their intellectual property rights to the drugs.
Interestingly, the inability y of the poor to access some of these drugs has nothing to do with patents, as most are not on the World Health Organization’s patent list. The problem has always been with health bureaucrats who waylay these usually cheap drugs, slap exorbitant rates and deliver them to rural communities when they have almost lost their efficacy. In some cases, and especially with anti-retrovirals, the knowledge and infrastructure that goes with administering these drugs are non-existent.
Africa’s real devils are the continent’s own bureaucratic ‘creatures’ that are busy harvesting the proceeds of the toiling entrepreneurial masses and burdening them with obstacles that defy economic rationality. Most of these obstacles range from complex, obnoxious and unpredictable laws and tax regimes, the absence of secured property rights, the rule of law and free markets. A functionally corrupt leadership and civil service is enough to entrench bureaucracy and fatten government at the expense of the citizens.
Significant institutional reforms are needed. Botswana, since attaining independence in 1966, has been politically stable and has encouraged widespread institutional reforms in managing its most valuable resource – diamonds. As a result, it has been rewarded with four decades of economic growth with the highest per capita income of almost US$7,000 in Africa.
Others can do it too. It is the only way innovation and entrepreneurship can be encouraged since they empower ordinary people economically. As economies grow and develop, people will be able to afford better technologies, clean water, superior energy sources, better healthcare, and insurance. This is what gives a fair chance to everyone to succeed, not aid.
Franklin Cudjoe is the director of Imani: The Centre for Humane Education based in Ghana. He last wrote of the travails of entrepreneurs in the West African country.
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IMANI Center for Policy& Education