Wednesday, July 06, 2005

Can Capitalism Save Africa?

I've been listening to all the talk about relieving the debt of African countries. A lot of people with good hearts (such as all the Live 8 concerts) think that if we give more aid and forgive all the debt, then Africa would be a wonderful place.

I have to ask, why is it that Africa is always seen as a charity case? Why is it that there is always talk of more aid as if aid alone is going to solve all the hunger and poverty in Africa? Do people not think that black people can't turn their economies into powerhouses like many Asian countries have done such as South Korea?

At some level, I've always believed their is a sort of benign racism going on in regards to Africa. There seems to be sense that Africa can't help itself, can't solve it's own problems, has to rely on a benevolent West for its survival. It's that whole Rudyard Kipling, "White Man's Burden" updated for the 21st century. Black people can't lead economies is the underlying thought (tell that to South Africa).

The thing is, aid is not going to help if it goes to corrupt governments who go and enrich themselves. It also bypasses civil society, that part of any African nation that isn't government controlled.

I guess my belief is that if China and India can lift hundereds of millions out of poverty, than so can the African continent. It is resource rich, and does have a resourceful people.

By way of Andrew Sullivan, Washington Post writer Anne Applebaum talks about how the simple Live 8 message might resonate with people, it's not what will change Africa. Here is the money quote:

among those who work seriously on Africa, it has long been clear that what Africans need isn't only cash, which can be stolen or wasted, but the opportunity to trade their way out of poverty, just as Asians did over the past several decades. Yet the current regime of agricultural tariffs, quotas and export subsidies, whether for American cotton or European sugar, so reduces the price of African agricultural products that African farmers cannot compete. Each European cow costs taxpayers $2.20 a day, while half the world's population lives on less than $2 a day. Withdraw the subsidies for the cows, and Africans might even be able to make competitive cheese.

In short, what the West needs to do is not give more money to inept African governments, but instead get rid of subsidies that keep Africans from selling on the world market.

New York Times columist, Nick Kristof echoes that trade and not aid given to badly run governments will save Africa:

Liberals may also put too much faith in aid itself. What Africa needs most desperately are things it can itself provide: good governance, a firmer neighborhood response to genocide in Sudan, and a collective nudging of Robert Mugabe into retirement.

Plenty of studies have shown that aid usually doesn't help people in insecure, corrupt or poorly governed nations. Indeed, aid can even do harm, by bidding up local exchange rates and hurting local manufacturers.

All that said, in the right circumstances aid can be tremendously effective, especially in well-governed countries - Mozambique is an excellent example. And Mr. Bush's new push to help Africa is smartly designed, targeting problems like malaria and sex trafficking, where extra attention and resources will make a big difference on the ground.

Finally, there is an great National Public Radio Interview with Geogre Ayittey, an African-born professor of economics at American University. He is basically saying what I've just said, only better. His interview can be summed up in one sentence:

The solutions to Africa's problems lie in Africa, not in Live Aid Concerts.

Are you listening Bob Geldolf?


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