Africa needs good governance, not aid

Morally speaking, it is hardly possible for the Group of Eight (G8) rich nations to not cancel Africa’s debt. But politics, as we know, is not morality. Africa owes over $300 billion, which is twice the total export income of the entire continent. The poor countries — and Africa has 22 of the 25 poorest nations in the world — simply cannot service their debt. Yet it would be an error to think that cancellation of this debt is going to solve Africa’s problems, or even go a long way to doing so. And, although activists at the G8 summit in Scotland have been calling for the rich countries to increase aid to Africa, this too is no panacea. A British Commission for Africa report has called for debt relief, fair trade, and an extra euro20.7 billion a year in international aid for the continent by 2010, with a further euro20.7 billion annually up to 2015. But it is highly optimistic to assume that this package can make a significant dent in Africa’s problems within the next decade.

Africa is the only region in the world which has experienced negative economic growth in the past 20 years. And this is in a context where since 1996 the United Nations, the World Bank and the International Monetary Fund has raised $25 billion, over and above normal funding, to invest in African improvement. But, historically, aid has not helped Africa. This is largely because the aid dollars never reached ordinary Africans. Indeed, in 1991 the UN estimated that over $200 billion in aid funding was in foreign bank accounts, put there by corrupt rulers. That figure was a full 90 percent of the GDP of sub-Saharan Africa.

Apart from basic challenges of geography and climate, the real cause of the African crisis is bad government. The richest people in Africa are almost invariably heads of state and their ministers. African economies are distorted by these persons setting up schemes to pay relatives and henchmen and ethnic supporters. And ideology also plays its part, with many African leaders typically shifting the blame for their own incompetence and corruption onto colonialism and white people. It is, of course, true that the colonial past bears some blame for Africa’s present woes. But it is also true that, during the colonial years, the per capita gap between Britain and its African colonies was several times less what it is today. Indeed, in 1960, most African countries had higher incomes and better public services than most Asian countries.

But the ex-colonies inherited revenue systems based on agricultural products and raw materials, whose prices were determined by a fluctuating international market. This was an advantage in the 1950s and 1960s, but by the 1970s falling commodity prices, the revolution in oil prices, plus drought and a series of famines all combined to knock Africa out of the global economy. Now, less than one percent of direct foreign investment in developing countries goes to Africa. And, contrary to what the anti-globalisation crowd argues, the most prosperous developing nations are those which are most open to globalisation. So the G8 may forgive debt and give aid, and still Africa will be in dire straits. What the rich world has to do is drop the tariff barriers on agricultural and textile products that stymie free trade for developing nations. And what African countries have to do is get good governments. Only then will there be a turnaround on what was once called the Dark Continent.