Corruption

Cry the Beloved Continent

Africans are poor because they're poorly governed.

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The Shackled Continent: Power, Corruption, and African Lives, by Robert Guest, Washington, D.C.: Smithsonian Books, 288 pages, $27.50

At independence in 1964, Zambia's people earned an average annual income, in 2001 dollars, of just $540. By 2000, according to the World Bank, they made only $300. This was despite foreign aid the bank estimates at nearly $6 billion from 1980 to 1996 alone.

Life expectancy in Angola, which UNICEF rated the world's worst place to live in 1999, is a mere 45 years, about the same as the developed world a century ago. In AIDS-wracked Botswana, average life expectancy has diminished since independence to under 35 years.

In most of sub-Saharan Africa, self-government remains a foreign notion and prosperity an unattainable dream. With rare exceptions such as Botswana, which held peaceful and fair regularly scheduled elections late last year, democracy has proven more a ruse than a reality. Africa's people remain among the world's poorest and sickest, in some cases having become poorer and sicker since their colonial masters departed in the 1960s and '70s.

Has the legacy of colonialism kept Africa down? If the Congo's current leaders treat citizens as prey and Sudan subjugates its people by exploiting tribal divisions, these may well be lessons learned from colonial masters. On the other hand, colonialism also left behind roads, clinics, and laws that have helped countries elsewhere in the world flourish. Some suggest that a "colonization of the mind," a sense of inferiority, is stifling Africa. Yet more than 70 percent of Africans alive today were born after their nations achieved independence. Moreover, the fates of many former colonies in Asia argue against such an excuse. South Korea, Taiwan, Hong Kong, Malaysia, and Singapore all once had foreign masters and are now prosperous.

Robert Guest, Africa editor for The Economist, begins The Shackled Continent by asking why "Africa is the only continent to have grown poorer over the last three decades." After six years of covering the continent's civil wars, genocide, famine, and disastrous monetary policies, his answer boils down to this: Africans are poor because they are poorly governed.

If African governments did a better job of upholding the rule of law, enforcing contracts, and safeguarding property rights, Guest argues–if, that is, they put more stock in freedom than in force–then the people of Africa would be richer. His 258-page tour of the continent, from Zimbabwe to Tanzania to Nigeria, brings the point home with forceful anecdotes that illustrate the hellishness of war, the blessings of specialization, and the impotence of living in countries ruled by the likes of Zimbabwe's Robert Mugabe.

"In 1980, the average annual income in Zimbabwe was $950, and a Zimbabwean dollar was worth more than an American one," Guest reports. "By 2003, the average income was less than $400, a Zim dollar barely bought a fiftieth of an American cent, and the Zimbabwean economy was in free-fall." An ominous reminder of who's to blame hangs on the wall of every government office, in every hotel lobby, and above the cash register of every shop: Mugabe.

Zimbabwe is the epitome of what Guest calls the Vampire State. Mugabe, who has held power since black rule began in 1980, was officially re-elected in 2002 by a wide margin despite polls suggesting that his opponent was supported by 70 percent of the people. To give readers a sense of Zimbabwe's political climate, Guest tells the story of the 2000 parliamentary elections, when liberation war veterans were sent to harass farmers "with sticks, pangas [machetes] and a few guns." The farmers who were willing to speak about their treatment at the hands of these gangs reported forced re-education lectures, beatings, and rapes. The same thugs who carried out these attacks handed out ballots at the polls.

Mugabe bought the loyalty of the vets with cash handouts and promises of land reform. Land would be taken without compensation from white commercial farmers, he promised, and given to the landless poor. Instead, the seized farms typically went to Mugabe's friends. The Zimbabwean dollar plunged at the news. Successful farmers left the country or became consultants to new owners who had no idea how to farm.

Such policies have had a predictably deleterious impact on foreign investment in Zimbabwe: No one wants to invest in a country where the few who have managed to hang on to their assets are frantically looking for an exit. Zimbabwe is now an economic basket case, its borders bleeding economic refugees.

Drawing on the work of the Peruvian economist Hernando de Soto, Guest shows that Mugabe's land grabbing is just one manifestation of a widespread African problem: insecure property rights. "One of the reasons that Africa is so poor," Guest explains, "is that most Africans are unable to turn their assets into liquid capital. In the West, the most common way to do this is to borrow money using a house as security. This is how most American entrepreneurs get started."

Guest estimates that 90 percent of housing in most African countries is owned informally. In Malawi, a country that is "peaceful, stable, off the beaten track and fearfully poor," houses are built on "customary" land, which means that "the plot's previous owners had no formal title to it. The land was simply part of a field their family had cultivated for generations. About two-thirds of the land in Malawi is owned this way….If there is a dispute about boundaries, the village chief adjudicates."

The problem with land ownership at the pleasure of the chief (or king or president) is that it cannot provide the title security that supports impersonal markets. As Guest puts it, "no bank will accept [a contract signed by a local chief] as collateral because it is not enforceable in a court of law. Rather, it is an expression of traditional law, which is usually unwritten, unpredictable and dependent on the chief's whim." Although "the chief may be a wise, just and consistent fellow," Guest writes, "the bank does not know this."

In Malawi, the late dictator Hastings Banda tried to encourage formal ownership but also grabbed large tracts for cronies, undermining the rule of law and forcing banks to lend for political rather than commercial reasons. Formalization of customary law, as De Soto prescribes, cannot secure property rights in Africa, where a chief's whim is the customary law. Tribal chiefs resist changes in the law that diminish their power; and many African dictators are tribal chiefs whose power has reached national proportions.

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."?