Cry the Beloved Continent

Africans are poor because they're poorly governed.

Melinda Ammann from the July 2005 issue

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Securing property rights is just the beginning. For Africans to join the mainstream of global markets, they also need roads, airports, and seaports that work, as well as schools and hospitals. Investment in infrastructure and human capital is sorely lacking in African nations, excepting Botswana and South Africa.

Guest takes his readers on a four-day slog through thick Cameroonian jungle and 47 roadblocks that illustrates the importance of infrastructure. "Peasant farmers are doubly squeezed by bad roads," he writes. "They pay more for what they buy, and receive less for what they sell." Between delays for washed-out roads, Guest's journey with a Guinness beer delivery truck is regularly interrupted by corrupt policemen dreaming up violations and demanding bribes. Given the costs of corruption and poor infrastructure, many foreign firms that otherwise would tap African markets refuse to invest.

As Guest puts it, "If there's one thing worse than being exploited, it's not being exploited." The delivery truck driver's assistant works long hours away from his family with a low-grade malarial fever; but he has enough to eat, money for medicine, and an aspiration to drive his own truck some day.

In addition to jobs and products, foreign investment brings ideas and technology. Guest argues that technology should be exploited rather than treated as the bogeyman of globalization. Genetically modified foods, for instance, should not be turned away by countries where people are dying from starvation. Food aid dumped in Africa often hurts the very people it's meant to help by distorting market prices and undercutting native producers, but in an emergency it can mean the difference between life and death for thousands. Medical technology is also needed. Media attention to the AIDS crisis and the resulting pressure on drug makers have prompted companies to collaborate with governments and nonprofits to deliver treatments for a fraction of their normal price.

A process Guest calls "leapfrogging" will also help Africans get ahead. "As I write," he says, "most Africans have never made a telephone call. By the time you read this book, that may no longer be true. Landlines are still expensive and unreliable, but mobile telephones are spreading throughout the continent."

Along with letting the outside world in, Africans must be invited to compete in global markets on an even playing field. Subsidies to rich farmers and tariffs on food imports to rich countries are an unbearable burden for Africa. According to Guest, "farm subsidies in rich countries are running at a billion dollars a day. This is roughly the equivalent of the entire GDP of sub-Saharan Africa." Farmers in rich countries "sometimes are paid to grow stuff. Other times they are paid to stop growing stuff that they've grown too much of because they were paid to grow it." Surplus food is dumped on African markets, lowering the prices that African farmers can get at home. Opening agricultural markets to exports from Africa by eliminating tariffs and subsidies that shelter rich farmers overseas could make more difference for Africa than any aid program.

Guest's prescriptions boil down to common sense and Econ 101. The only way Africa can prosper is by offering products and services that people want to pay for.

As a self-described outsider writing for other outsiders, Guest offers an education in messy realities and a call for reasonable responses, rather than bleeding-heart aid or tongue-clicking despair. Despite all the ways that aid can go awry, he argues, there are places where charity can be useful; vaccines, for instance, help millions of people even when they're living under corrupt regimes. Elimination of barriers to free trade would do more, however.

What the continent really needs to thrive, writes Guest, are "more and bigger Botswanas." By investing diamond riches in infrastructure, education, and health, Botswana has set itself apart in the region, progressing from subsistence to a per capita GDP of $4,000 since it became independent in 1966. As Guest notes, "private business was allowed to grow; foreign investment was welcomed; government was astoundingly clean."

Botswana's small population (about 1.6 million) has advantages, including the highest credit rating in Africa and a pristine natural environment, but it's hard to attract foreign investment to a tiny domestic market with a shortage of skilled workers and middle managers. Vast disparities in wealth persist, with about 40 percent of the populace in poverty and at least a quarter unemployed. Botswana also has the highest HIV infection rate in the world, estimated at 40 percent.

Unlike Botswana, South Africa is not a model of good governance, but it has the region's most industrialized and diversified economy. This is largely due to well-established business-support services, roads, and airlines, as well as a large educated work force and, at the highest level, relatively clean government. Guest therefore thinks South Africa has the best shot at catching up with the developed world.

Racial preferences modeled on American affirmative action, he argues, are what hold South Africa back. These, combined with the African National Congress' continuing appeals to black solidarity, have repolarized South Africa along racial lines. The tension between blacks and whites is palpable in downtown Johannesburg. Whites are angry because they continue to pay taxes to a government that mandates hiring preferences for blacks and fails to provide domestic security. Blacks are angry because they're not yet prosperous.

"If South Africa prospers, it could pull the rest of the continent in its wake, as Japan did in Asia," Guest writes. But a black business class cannot be created by fiat. "What's missing," he concludes, "is a wider understanding that wealth is something you have to create."�