Democracy, Growth and African Development

Two changes left their mark on Africa in the last few years. First, democracy is now the accepted form of government in most African states. Second, the, Washington consensus‘, an agenda for economy and governance reform, has become the ruling political orthodoxy without, however, producing political elites or generating enthusiasm among the public. Both these shifts merit a closer look. Ways and means of accelerating growth in Africa have been considered for a long time. In that context, the endeavours undertaken in other continents were consulted as well. In the period from 1960 to 2000, the gap between the richest and the poorest fifth of the global population widened from 30:1 to 74:1, with the sub-Saharan states hardest hit by the process. However, much more meaningful information comes from the endemic poverty that is evident in the shantytowns of Luanda or the slums of Nairobi – and it is always the women and children who suffer most. Even so – there is no universal answer to the question of why Africa should be so poor. Mauritius provides a good example of a country that has successfully mastered the transition from a purely agricultural economy to an economy that is underpinned by a manufacturing and a service sector. Botswana, on the other hand, demonstrates how natural resources can be used to advantage. At the same time, it is a fact that the record of most other commodity producers in Africa has been poor so far. In Nigeria, for instance, the number of people living below the poverty line (1 US $ per day) grew from 19 million in 1970 to 90 million in 2000. To find a short and telling answer to the question about the reason for Africa’s poverty, we would have to focus on politics or, in more concrete terms, on the weakness of public institutions that is death for the development of any national economy. In Europe, the path towards industrialization lay through the agricultural revolution of the 17th century. Moreover, those countries that developed quickly were receptive towards pluralism, the freedom of information, and the willingness to take personal risks. The celebrated economic miracle that happened in Asia late in the 20th century was the fruit not only of hard labour and high productivity but also of sound policies that aimed to promote public welfare. In Africa, on the other hand, undemocratic governments are responsible for misguided development policies and infringements of human rights. In point of fact, the history of development assistance in Africa and India proves that money alone is not enough to make a country flourish. The success of any ,growth solution‘ rests on a combination of diverse factors, including appropriate political, economic, and social structures, skills, and leadership qualities. The states of Africa are not poor because other states are rich. Geographically speaking, they are situated on the periphery, cut off from the world’s markets. What is more, they are poor because they are unable to profit from globalization. It is crucial for the development of a country that its leadership should be prepared to grant certain freedoms to the individual, as in Europe, and to intervene strategically in emergencies, as in Asia. Africa must confront the inevitable process of change. What is needed is a fresh political mindset, qualified labour, and a legal and technical infrastructure that is able to absorb new technologies and serve international markets – next to a meritocracy, new ideas, and new information. Ghana may serve as an example. 25 years ago, it was a failed state, although it was free from endemic violence. Today, it may look back on three successful multiparty elections and a peaceful change of government, while in terms of macroeconomic reforms it is now a model country. Located at the ‘geographical centre of the world’, as its president, Mr Kufuor, put it a short while ago, Ghana is the best gateway to the populous market of west Africa. Its rate of inflation hovers around 15 percent at the moment, its currency is stable, and many things have changed on the surface. But will Ghana be able to increase its rate of growth to the east Asian level of eight percent? According to experts, this would require a fundamental break with the country’s present strategy of economic management. During the period in which Ghana rebuilt itself, it was found that a year of recovery is needed to make up for a year of decline. Today, after 22 years, the endeavours of the country’s leadership are paying a dividend. The Blair Commission similarly asked itself how Africa’s growth could be enhanced. Tanzania, currently the recipient of development aid in the amount of one billion US $, demonstrates how difficult it is to break through the six-percent ceiling. Since the old socialist collectivization theory was abandoned, liberal reforms have presented the country with fiscal and monetary stability. What it needs today, however, is reforms that aim at structures rather than macro-economic stability, reforms that might serve to increase productivity, employment, and capital stocks. The most important target for such reforms would be Tanzania’s agriculture, which accounts for half of the country’s gross domestic product, 85 percent of its exports, and two thirds of the jobs on the market. Further causes of concern include the overvaluation of the national currency, the state of the rural infrastructure, and the country’s legislation on land tenure. Until land is seen in Africa as a commodity which can be owned, sold, and efficiently utilized by anyone, the series of food crises will go on without interruption, exacerbated by erratic rainfall patterns to which agricultural technology does not really have an answer. Further problem areas that urgently need resolving include the slow progress of privatization in the utility and infrastructural sectors, administrative and judicial corruption, and the defective range of services provided by the government. It is entirely justifiable to ask questions about the role played by governments, for that role is being challenged by globalization and market deregulation. However, the World Bank found that first, an effective state is vital for economic performance; that second, the role of the state needs to be modified with regard to its fundamental duties; and third, that the capability of the state is not a matter of destiny, and that countries can indeed build up their capacities. At this point, Morocco provides a suitable example. In implementing its policy of reform, Rabat must walk a narrow path between liberalization – to promote a society that is driven by ideas – and the need to contain Islamist forces. The cases of Dubai and Singapore, to name but two examples, show that it is indeed possible to find the right blend of innovation, capital, culture, behaviour, and location. To be sure, the cultural inertia that prevails in Morocco is an obstacle that does hamper attempts to motivate people to think and act independently. Is Morocco, and are other African countries really in a position to say about themselves what Jeffrey Sampler and Saeb Eigner wrote about Dubai, that growth there is not simply a matter of economic indicators, it is part of the culture? Months after the efforts of Tony Blair as well as numerous celebrities and artists, Africa is not receiving any more help, only promises. Yet these efforts perpetuated the impression that Africa might be helped by a ,big push‘. This prescription, however, is anything but promising because it ignores four factors. First, the 54 states on the continent differ widely, and their problems cannot be solved by the same approach. Second, it is unrealistic to assume that the states of Africa will begin to recover as soon as democracy is strengthened. Third, it is wrong to believe that money can solve all problems, or the sums that have already been expended would have transformed Africa into a flourishing continent long ago. And fourth, it is indispensable for the African elites to confront globalization if they want their countries to advance. No paradigm change is necessary for Africa to develop. What is needed is a fresh quality of governance and leadership. As the World Bank put it, the biggest African challenge is the total responsibility of some of its leaders. Many know how to talk-the-talk to foreigners but do things differently at home‘. Allowing the economy free play is another important element. Africa’s future depends less on help than on self-help, less on external than on internal factors. Instead of bewailing their woes, the leaders of the continent should devote their energy to promoting the economy and building the requisite democratic institutions. To be sure, it would be unrealistic to expect immediate success even then, but then again, nobody ever predicted such a thing.