The Shackled Continent
FUTURECASTS online magazine
Vol. 8, No. 11, 11/1/06
Political and economic shackles:
|Reasons - real and ideological - for African poverty are examined right at the beginning of "The Shackled Continent: Africa's Past, Present and Future." The book deals with sub-Saharan Africa.
The large-scale slave trade by European slavers during the 18th and 19th century ended over a century and a half ago and provides no excuse for current conditions in Africa.
Prosperity can only come from self help. Outside assistance can at most help at the margins.
The European slave shipments were particularly "cruel and rapacious," Guest concedes. However, slavery continued into the 20th century in East Asia and the Middle East, and still exists today in Sudan and Mauritania. The large-scale slave trade by European slavers during the 18th and 19th century ended over a century and a half ago and provides no excuse for current conditions in Africa.
Today, Africa produces nothing that the world wants except natural resources and a few agricultural commodities. Africa manufactures almost nothing. (Recent U.S. trade initiatives have brought some textile manufacturing to some African states.)
There have been several "Holocausts" in Africa since WW-II.
The "tribalization of politics" provides fertile soil for demagoguery.
The trade barriers against African agricultural and textile exports cause far more damage to Africa than can possibly be made up by aid.
The "tribalization of politics" provides fertile soil for demagoguery. Guest asserts that this tribalization of politics, along with economic quotas and other ethnically divisive laws, increases the influence of "tribal hucksters" and inhibits economic growth so that economic policy is transformed into a zero sum game where every gain is someone's loss.
Predatory governments usually make their countries poorer. Worse, when power confers riches, people sometimes fight for it.
Socialist tendencies of African governments still hobble African economies. Administered alternatives to free markets impoverish whole nations.
The lack of property rights, widespread corruption and administrative red tape hobble economic activities.
The same can be said for all of Africa, Guest emphasizes.
Zimbabwe's Robert Mugabe is a prime current example of
how not to lead a nation. Previous examples extend back over a host of African
leaders to Kwame Nkrumah in Ghana. Socialist tendencies of African governments still hobble African
economies. Administered alternatives to free markets impoverish whole nations.
Importance of good government:
| South Africa remains an
exception to much of this. It has sound budgetary and monetary policies and
reasonably good infrastructure. However, even South Africa has failed to grow
fast enough to employ most of its unemployed blacks.
Prosperity is actually readily achievable, Guest
points out. Technology is always there for the taking. "The political,
legal and economic arrangements of rich countries" are not secret. Nor does
prosperity mean "Westernization." Japan and several other Asian
nations have copied successful western policies without losing their Asian
"[Governments impoverish their people] 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 intrepid businessfolk."
Robert Mugabe's rule over Zimbabwe is a prime example of what is wrong with African governance.
Kleptocracy - physical intimidation of opponents - inflationary monetary
expansion - corruption - burdensome levels of taxation - a
bloated and overpaid bureaucracy - an obstructionist licensing and regulatory
regime - budget deficits - price controls - confiscation of private property - all
result in an economic system ravaged by runaway price inflation and in rapid
With the exception of Botswana, other African states have
similar dreary histories and disastrous economic results. Mozambique has also
been an exception since the end of its dreadful civil war in 1992, but the war
had reduced its economy below subsistence levels and it still has a long way to
go. All too often, efforts at government reform are just a sham to attract more
| Wars - usually civil wars - blight the lives
of 20% of the African population as of the time when this book was written in 2003-2004. Ninety
percent of the casualties are civilian, Guest notes.
Ethnic antagonisms, the efforts of Machiavellian despots to divert public attention from their misrule, and control of mineral wealth are the primary causes of these conflicts.
There are about 20 million refugees and an estimated similar number of landmines in Africa. The recruitment of armies is easy in Africa.
Ethnic antagonisms, the efforts of Machiavellian despots
to divert public attention from their misrule, and control of mineral wealth are
the primary causes of these conflicts. In the 1990s, at least eleven African
nations suffered from conflicts over control of mineral wealth. Guest provides
details of the long, complex civil wars in Congo, Angola and
Sub-Saharan Africa has no strategic value, and Western nations are loath to expend much effort at peacekeeping there.
There have been some successful interventions from
within and from outside Africa since the end of the Cold War. Boycotts of
"conflict diamonds" from rebel-held mines was effective in Angola. It
only took 800 British soldiers to end a horrid civil war in Sierra Leone.
African statesmen Nelson Mandela and Ketumile Masire have worked diplomatically
for peace in Congo and Burundi. Western aid has been cut off from warring
nations and given instead to peaceful ones, with some impact on conflicts
involving Ethiopia and Eritria, and Rwanda and Uganda.
Property and creditor rights:
| The lack of property rights hinders
economic growth in Africa. Guest echoes and supplements Hernando de Soto.
It is not enough to have a title. There must also be a reliable rule of law legal system that will enforce the rights of property owners and their creditors.
Ninety percent of Africans are without enforceable
legal title to their homes. They work without formal contracts or written
records of their efforts or in the gray market "informal" economy
without any legal status at all. Africa is not alone in this plight - it is one
problem that afflicts all poor countries. Without property rights, there can be
no credit to finance enterprise.
Farmers without credit can't buy seeds or fertilizer to
make the best use of their land. Tradesmen without credit can't expand a
successful business. Many can't even start a business. Charity, micro-lending,
and government handouts are not enough to fill this void. As population grows,
farms are further subdivided, further impoverishing the people. Those who move
to the cities to find work risk losing their land. They can't sell the land
without approvals from family and the local chief, and someone will grab it if
they leave it untended.
Since credit is based on political influence instead of title to assets, there is less advantage in title.
Imagine having to create or grow everything you sell and
take it physically to market on foot to sell it for whatever you can get that
day because of the difficulty of carrying it back and storing it. Imagine having
to build your own house from only the materials you can create or gather.
Without legally enforceable rights in property and the credit it creates, that's
how business has to be done.
| Tribalism is alive and well in Africa.
Ethnic and religious differences are causing conflict in many African nations.
The "nation state" is the problem. That
artificial European transplant - with its artificial borders - lacks indigenous
legitimacy. Politicization of tribal and religious differences makes politics a
Guest relates experience in Rwanda, Nigeria and South Africa. There are great differences in the three - but there are also vital similarities.
Tribal politics is now unfortunately firmly imbedded
in most African states. It can only be mitigated by farsighted leadership.
| The ravages of AIDS are covered by Guest in
considerable detail. The epidemic is a personal, social and economic disaster on
a massive scale, and is added on top of malaria and other tropical diseases.
Yet, Africa's population is growing rapidly.
| Life is cheap - even to those at risk -
because of widespread and
increasing poverty. People live only for
today, and sex is their only accessible pleasure.
There have been some successes in fighting AIDS in Africa, but there is still a long way to go.
| Polio vaccination campaigns - often
carried out heroically amid local anarchy - are a prime example of successful
Studies have discovered no robust link between the amount of foreign aid received and success at economic development.
Foreign assistance grants, on the other hand,
provide numerous examples of failure.
Of course, he who pays the piper calls the tune. Foreign assistance has seldom been unencumbered with requirements based on the self interest of the donors.
Aid just permitted the government to backtrack on reforms, maintain a bloated civil service, and feed its astounding level of corruption. It is impossible to get corrupt governments to implement reforms that they do not like.
Zambia is a prime example of failure. At independence in 1964,
it was the second wealthiest nation in Africa after South Africa. It had a
popularly elected government and the world's best copper mines - and "a
generous stream of aid." But socialism, Zambia's own protectionist trade restraints,
and one party rule ruined all its chances.
Aid can help, but it is always government economic policies and administration that dictates success or failure.
Botswana provides an opposite story. Aid and money from diamonds was
used to finance infrastructure, education and health. The nation was open for
business. Eco-tourism flourished. Government was reasonably honest, and GDP per
head rose to $3,000. It still had problems - especially with AIDS and an economy
insufficiently diversified. However, the contrast with Zambia just across its
northern border is stark.
However, advice and the education of government officials has had
some successes - especially in South Africa where the African National Congress
("ANC") was suddenly transformed from a revolutionary party with strong communist
leanings into a ruling party in charge of a modern capitalist economic system.
When they took power, the Marxist rebels were given crash courses in the
importance of financial stability and other aspects of market economics.
It's not difficult for nations to prosper. All that is needed to get started is to implement some of the basics of good economic policy.
A pervasive sense of victimization has been particularly disabling in Africa.
Globalization - as "scandalously unfree though it still is" - is not holding Africa back.
More sophisticated reforms can come afterwards. (As China has
amply demonstrated, any substantial effort at market economic reforms quickly
provides a cornucopia of economic and social benefits.)
The responsibility rests with "its own crooked and incompetent
leaders." Well governed nations advance, and poorly governed nations
Development of treatments for tropical diseases would be even more helpful. Most helpful would be the opening up of wealthy nation markets to poor nation exports.
Developing countries with open economies grew by an average 4.5% per year in the 1970s and 1980s, while those with closed economies grew by only 0.7% per year.
Wealthy nation agricultural and textile trade barriers and
agricultural subsidies and the damage they cause are examined in some detail by
Guest. Trade barriers cause substantial
increases in food prices, which particularly hurt the poor in the wealthy
nations. Subsidies induce overproduction which is dumped on world markets closing
down affected agricultural exports world wide. Family farmers receive very little of these subsidies, the vast
majority of which goes to wealthy agribusinesses.
A Harvard study showed similar results. Developing countries with open economies grew by an average 4.5% per year in the 1970s and 1980s, while those with closed economies grew by only 0.7% per year. Guest does note some minor improvement in seven African states in the 1990s.
Poor infrastructure creates many difficulties and costs that
hold back development. This is demonstrated by Guest by relating his experience
in a big delivery truck bringing beer 500 kilometers into the interior of
Although quite low by Western standards, multinational pay and working conditions are by far the best available in undeveloped nations.
Foreign direct investment is desperately needed in Africa.
Although quite low by Western standards, multinational pay and working
conditions are by far the best available in undeveloped nations. Multinationals
also transfer valuable skills. Africa desperately needs such
"exploitation" of its cheap labor and rich resources, Guest
Unlike India or China, Africa is not one massive national market. Breaking into small national African markets may not be worth the effort.
Africa has other major drawbacks. Unlike India or China, it is not one
massive national market. Breaking into small national African markets may not be
worth the effort.
There are indigenous entrepreneurs all over Africa. However,
they face the same kinds of problems as the multinationals, and then some
Technology offers mixed blessings for Africa. Modern weapons -
land mines and automatic guns and helicopter gunships - kill and maim hundreds
of thousands and keep despots in power. Genetically modified crops offer vast
benefits that must be rejected lest European markets close even more to African
agricultural exports. However, modern medicines have increased lifespan 150% in
the last century, and a wide variety of creature comforts are becoming
increasingly available even in Africa. In some African nations, AIDS is
reversing some of the lifespan gains.
Most of all, people need freedom - in all its many forms.
| Some of the other economic policies needed for development in
Africa are reviewed by Guest.
Intellectual property protection - patents and copyrights - are needed to
encourage technical and artistic innovation. Most of all, people need freedom -
in all its many forms.
There are some hopeful signs. Today, there are several African
nations that have had peaceful transfers of power due to reasonably fair
democratic elections. One of these is Nigeria - Africa's most populous state.
The result has been some notable - but fragile - improvements in governance.
| Africa's only modern economy is that of South
Africa. If it prospers, it provides markets and income for other African
nations. If it fails, it would be a catastrophe for all Africa.
| The history and current conditions of South Africa are familiar
stories. Its liberal constitution and the policy of national reconciliation of
the current black-dominated government are magnificent bequests of the founder
of modern South Africa, Nelson Mandela. He stands on a very high and exclusive
historic pedestal - probably the only revolutionary leader other than the
original who really qualifies as the "George Washington" of his nation.
A rigid labor market and powerful unions have greatly limited economic growth and has caused increased unemployment among poor blacks.
South Africa still has a huge black underclass with huge
economic problems. Nevertheless, the democratically elected government is making
real progress in spreading the availability of such infrastructure basics as
electricity and piped water, and has provided for the construction of millions
of neat little brick homes for its black constituents. Equality before the law
and a variety of welfare programs have also been provided - but life for the
black underclass and the millions of African immigrants streaming into the
country remains grim.
Lack of any real political opposition at present has unsurprisingly resulted in growing levels of corruption.
There is legitimate fear that the ANC will evolve into a socialist monster like the ruling party in Zambia and bring the nation to its knees.
Unfortunately, smothering left wing labor policies inhibit the growth of the smaller businesses
that provide so much of the employment growth in the U.S. "The rise in
joblessness has largely been a consequence of the government's efforts to
protect workers." These policies may help those who have found work, but
they are keeping millions of poor blacks hopelessly unemployed.
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Copyright © 2006 Dan Blatt