"The African Century", by BY JAMES TRAUB
MARCH 29, 2013
We keep hearing that "six of the world's ten fastest growing economies" over the last decade are in sub-Saharan Africa, but rarely that three of those six -- Angola, Chad, and Nigeria -- depend on oil, and thus could fall to earth as prices decline. But the Economist has convinced me that growth is broader and deeper than I thought. Its recent special report, "A Hopeful Continent," notes that across Africa income per capita has grown 30 percent over the last decade, after having shrunk 10 percent over the previous 20 years. Projected growth over the next decade is 6 percent annually.
That leaves me with a few questions: What does that tell us about development policy? Is this a story about aid? Democracy? Economic policy? The commodities markets?
First of all, is the boom even real? Is Africa itself hopeful, or just little bits of it? Todd Moss, head of the Emerging Africa Project at the Center for Global Development, says that he views the changes in Africa as "big and important and historically different from the past," but he adds that "the dominant trend is divergence among countries." For every Ghana or Ethiopia that is making durable progress, there is a Chad that is "stuck in the past and free-riding on the commodities boom." Nigeria, the most populous country in Africa, is somewhere in the middle, its banking sector set to dominate the continent while the mighty torrent of oil money corrupts politics and barely reaches the poor.
But there's no question about what distinguishes the success stories from the failures -- governance. Moss points out that about half of African contrives have improved on indicators of good governance, and half haven't. Oliver August, author of the Economist report (yes, the famously anonymous "newspaper" now seems to award bylines for its most ambitious efforts), noted that he traveled 15,800 miles over Africa's roads without once being asked for a bribe.
I was astonished at the description of West Africa, a region I've visited three times over the last decade and viewed as a sinkhole of ethnic violence, big-man government, and drug money corruption. In Senegal, August notes, the apparently ageless President Abdoulaye Wade was ridiculed when he tried to stand for a third term despite a constitutional prohibition; in Guinea, a virtual narco-state five years ago, a civilian leader has put the generals in their place; Sierra Leone is at peace; and Ivory Coast is coming back to life after a civil war. On the other hand, Mali, which in 2007 hosted the biennial meeting of the Community of Democracies, is now a barely governed mess.
So good governance is the key. Is that news? To some people, yes. In The End of Poverty, Jeffrey Sachs argued that "Africa's governance is poor because Africa is poor" -- not the other way around. The real reason Africa was poor was the unlucky accident of geography -- bad soil, disease, lack of access to ports and navigable rivers -- and the self-perpetuating nature of poverty. The only solution was thus to kick-start development with foreign aid. Sachs described poor countries as desperately sick patients who needed the care of Western donors, and lamented that the practice of "clinical economics" had not reached the subtlety of clinical medicine. Once it did, governance would take care of itself.
Foreign aid has clearly played an important role in reducing infant and maternal mortality in Africa, decreasing the incidence of malaria and AIDS, and raising the fraction of children who attend school -- all immensely important advances. But it is almost certainly not responsible for economic growth, as the economist William Easterly showed in his polemic, White Man's Burden. And it is economic growth, far more than aid, that has provided the resources which have made social advances possible. Over the last decade, as Jamie Drummond, executive director of DATA, the organization co-founded by Bono in 2002, points out, foreign assistance to African has tripled to $50 billion, but domestic resources have risen almost six-fold to $400 billion.
Sachs's argument was appealing to African political and intellectual elites because he blamed persistent poverty on geography and a callous West. But his metaphor of a "poverty trap" also denied the agency of Africans themselves, since there was no escape absent Western intervention. If the real issue is governance, however, the opposite narrative applies: Both the problem and the solution are essentially African. Good governance requires political leaders who are prepared to threaten the interests of their own class. In fact, for that very reason, scholars who ascribe persistent poverty to bad political institutions rather than geography or history, like Daron Acemoglu and James Robinson, the authors ofWhy Nations Fail, assume that weak states will stay weak, since elites benefit from those bad institutions. The achievement of sustained growth in countries like Ghana or Mozambique, despite decades of past mismanagement -- and civil war, in the latter case -- is thus all the more admirable.
But what, exactly, does "good governance" mean? Is it democracy? The Economist points out that the number of more or less democratic countries in Africa has gone from 3 to 53 over the last two decades. And both Easterly and Acemoglu/Robinson argue that democratic accountability is the only sure means of preventing elites from arranging things to their own benefit. And yet Ethiopia and Rwanda, which made it into the list of fastest-growing economies despite having no real natural resources to speak of, offer very little political freedom. Ethiopia has a Chinese-style command economy, while Rwanda is the closest thing in Africa to an East Asian-style liberal autocracy, with a free market and a very un-free polity. The non-African countries on the list of fastest-growing economies, by the way, were China, Myanmar, Kazakhstan, and Cambodia. This implies either that the list doesn't mean very much, or that the democratic effect on growth is overrated.
Most African autocrats are not, of course, liberal -- they are monsters like Zimbabwe's Robert Mugabe or thugs like Sudan's Omar al-Bashir. It is no coincidence that both those states are rich in natural resources. Countries with oil, gold, or diamonds offer an overwhelming temptation to capture the state and turn it into a private piggy bank. This is the underlying reason for the "resource curse." The development economist Paul Collier argues in The Plundered Planet that the single most important question for impoverished nations is whether their resources will turn out to be a curse or a boon. The answer is almost always the former -- which means, Collier says, that over time nations like Chad and Angola will actually experience a net economic loss from their windfall wealth.
It need not be so. Botswana has used its diamond wealth to create broad prosperity. The Economistreports that administrators in Ghana, which has recently made big oil finds, are being trained in transparent and accountable practices. Drummond directed me to a recent TED talk by Bono, who, after the usual appeal for increased aid, said that Africa's greatest disease was corruption, for which the only cure was transparency. This may prove to be the signal struggle of the next generation. (Of the 20most corrupt countries, according to Transparency International, nine are in Africa.) Collier points out while in many states, elections "discipline governments into good economic performance," in resource-rich countries the incentive to capture the state turns elections into a free-for-all "unless offset by strong checks and balances." That is, Nigeria and Angola need better governance to succeed than do Rwanda and Ethiopia. That's got to be a discouraging thought, even for Bono.
The moral of the story is not, "There's nothing the West can do," but rather, "It's not what we thought." Virtually all African countries still need aid for both targeted social investments and infrastructure, where in general it lags far behind Asia. But more than aid, they need trade and investment. Bob Geldof, Bono's mentor in the aid-for-Africa line, is now a partner in 8 Miles, a private equity firm which invests in Africa. But states will attract foreign investors only if they improve the investment climate, strengthen the rule of law and reduce corruption -- where the West can help with policy advice, training, and technology. It's not very heroic. "We" -- the West -- cannot make poverty history; only "they" can do that. The good news is that they're doing it.
