Learning from the Africans: World Bank Commentary: 'How to Empower Africans'

Learning from Africa’s experience

There have been numerous unsolicited advices on how the Philippine Government should be run coming from the extreme left to the far right, from establishing a rule of the proletariat to a military junta led ‘revolutionary government’. So far none of these political solutions seems to address how these forms of governance would uplift the domestic economy.

The article below by Moeletsi Mbeki, brother of South Africa’s president Thabo Mbeki, published in Wall Street Journal Europe and quoted by the World Bank writes of their experience; the structural ailments and proposed cures…something quite relevant to the Philippine experience. I guess we should take a leaf or two from them…

World Bank Commentary: How to Empower Africans

In a commentary published in the Wall Street Journal Europe, Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs and the brother of South Africa's president, Thabo Mbeki, writes that as the G8 summit approaches and the leaders of the developed world contemplate huge increases in aid to Africa, we must ask ourselves what has become of the billions of dollars already poured into the continent. Africa remains wracked by poverty and disease. At the root of Africa's problems are ruling political elites that have squandered the continent's wealth and choked its productivity over the last 40 years.

The list of abuses is long and impressive. African political elites have systematically exploited their positions in order to line their own pockets. They have given favors and won influence through the funding of huge loss-making industrialization projects. They have exploited the natural resources of their countries and then transferred profits, taxes and aid funds into their own foreign bank accounts at the same time that they ran up enormous debts to finance their governments' operations.

What were the results of those predatory policies? According to the World Bank and the International Monetary Fund, Africans are poor and getting poorer. The World Bank noted, "Despite gains in the second half of the 1990s, Sub-Saharan Africa enters the 21st century with many of the world's poorest countries. Average per capita income is lower than at the end of the 1960s. Incomes, assets and access to essential services are unequally distributed. And the region contains a growing share of the world's absolute poor, who have little power to influence the allocation of resources."

Successful development in Africa will not be achieved by throwing more fuel on the flames. Merely handing more aid money to African governments only reinforces the pattern of abuse. The key to development lies in a dynamic private sector. For a country to produce more, private individuals must generate savings and plow those savings back into the production process in the form of new and improved techniques, processes and products. Africa's private sector is predominantly made up of peasants and, to a lesser extent, subsidiaries of foreign-owned multinational corporations. But those groups are exploited by the unproductive political elites who control the state. Africa's private sector is powerless because it is not free to decide what happens to its savings. Were the peasants free to retain that surplus capital, they could invest it in improving their production techniques or diversifying their economic activities.

Future development in Africa requires a new type of democracy -- one that empowers not just the political elite but private-sector producers as well. It is necessary that peasants, who constitute the core of the private sector, become the real owners of their primary asset: land. Private ownership of land would not only generate wealth but help to check rampant deforestation and accelerating desertification. The so-called communal land tenure system, which is really state ownership of land, ought to be abolished. Moreover, peasants need direct access to world markets. The producers must be able to auction their own cash crops rather than be forced to sell them to state-controlled marketing boards.

Africa needs new financial institutions that are independent of the political elite and can address the financial needs not only of peasants, but of other small- to medium-scale producers as well. In addition to providing financial services, those institutions could undertake all the other technical services that are not being provided at present by African governments, such as crop research, extension services, livestock improvement, storage, transportation and distribution to make agriculture more productive. Such changes could for the first time bring into being a genuine market economy that answers to the needs of African producers and consumers.

African governments currently acknowledge the role of good governance in stimulating economic growth. However, they are still doing little to address the fundamental problem of the enormous power imbalance between the political elite and private sector producers. African governments must spend more time addressing that problem rather than impressing foreign governments, including those of the G8, with inflated accounts of democratization on the continent, writes Mbeki.