Killing Africa softly with lethal kindness

By Tunde Obadina

Africa's plight, especially its failure to curb endemic poverty and disease inflicting its long-suffering peoples, is widely seen as one of the global challenges of the 21st century. In an age when all other regions of the world are making progress in building their capacity to meet the basic material needs of their people, Africa stands out as the exception where stagnation or even regression is the order of the day.

The continent's poverty has become an international cause celebre, the major focus of attention of good-hearted men and women who want heal to Africa's problems and make the suffering go away. Africa has a special place in the agenda of anti-poverty non-governmental organisations (NGOs) and even some western governments have dedicated special taskforce to tackle the Africa problem. "The state of Africa is a scar on the conscience of the world," said Britain's Prime-minister Tony Blair in October 2001.

Should Africa's poor inhabitants be thankful for the global concern? Will their poverty be eradicated by making their plight a special problem for the international community to solve - alongside terrorism and environmental degradation?

It would be an easy solution if the outpouring of sympathy and granting of more aid and debt forgiveness could save Africa from a bleak future of worsening poverty and political disorder. Unfortunately, it is not be that easy. Demonstrations of kindness and increases of foreign financial aid will not in and of themselves create the domestic conditions that will give Africans the capacity to build and reproduce the material environment of modern existence.

Many of Africa's friends, inside and outside the continent, are not really helping its people and leaders become aware of what it takes for underdeveloped nations to become prosperous in this modern age. In treating African nations as hapless victims in an unfair world economic system, some of the continent's liberal champions shift the responsibility for its development to external forces. Few advocates seem prepared to say the obvious truth - that is, whilst poverty in Africa, as elsewhere in the world, is an historical condition, the lack of progress in reducing poverty since independence is largely due to internal factors, especially the inability of corruption ruling elites to foster an environment conducive to wealth creation.

Misgovernment, civil strife, debt, corruption, etc are not things that others have done to Africa but things that Africans have done to themselves. This is not to deny that the world economic system favours rich nations and development is a mountain climb - it clearly is, but humans make history in circumstances that is not of their choosing. Whilst trying to change the rules of the game, disadvantaged nations must strive to do their its best under existing difficult circumstances.

Those who out of guilt or anger automatically blame Africa's problems on external factors too often paper over the internal weaknesses in African societies - conditions that explain their current failings which need to be acknowledged in order to be changed. Africa's debt crisis is a case in point. In a recent article the chairperson of Jubilee South Africa, Mpumelele Giyose, contrasted the generous manner the West dealt with the post-war debt of defeated Germany in 1953 with the stingy treatment received by contemporary Third World debtors, and concluded that had today's indebted countries been given better treated "we could have avoided the deaths, sufferings and humiliations of hundreds of millions of people." The sentiment of this moral condemnation sounds radical but is it based on truth and is it helpful? Mr Giyose went on to say that "The origin of much of the Third World debt lies in the recklessness of Western bankers who, in the early 1970s, deliberately unloaded surplus capital on the Third World in the form of loans." He concluded by noting that the doctrine of odious debt removes any obligation to repay the loans contracted by corrupt dictators. The argument is that the population of a country is not responsible for loans taken out by an illegitimate government that did not have the right to borrow 'in its name.'

Mr Giyose's reasoning, common among well-meaning anti-poverty groups, is seriously flawed and does poor indebted nations little good. Firstly, the deaths and misery suffered by millions of Africans has not been caused by unmanageable national debts but by bad governance and the struggles between rival factions of parasite elites for ownership of limited national resources. Secondly, it is ridiculous to blame Africa's debt crisis on western banks on the basis that the bankers should have known better than lend to irresponsible or unelected African governments. It's like a person who accepts a credit card promotion to borrow money which he squanders and then denies liability for the outstanding debt on the grounds that the creditor should have known better than to lend to him. If western banks and government had turned down the request of African governments for loans on the grounds that they could not be trusted, surely we would then have accused them of racism.

African nations, like all other nations, should assume responsibility for their actions. We should not expect to be exempted from the basic rules governing economic transactions. The terms of lending to individuals, businesses or governments, are justifiably tough to protect funds lent. If borrowers were not penalized for default they would not repay their debts and the whole banking system would collapse.

Poor African nations certainly need and should be granted debt forgiveness but not on the basis of dubious arguments that undermines their ability to secure future credit. Debts should be forgiven on the basis that defaulting creditors recognise the reasons for their indebtedness and implement reforms to ensure they are not repeated. It would be tragic for African nations if their debts were forgiven as a precursor to writing them off as countries that should not again be trusted to take out loans.

Credit is a crucial source of acquiring capital for any economy. For cash-strapped developing countries credit is a more important source of development funding than aid. So, anti-debt sentiments that encourage African countries to disassociate themselves from the international money markets do not help the poor.

The  tendency to blame Africa's predicament on the inequities of the international economic system can lead people to supporting global adjustment agendas that are not actually in the interest of Africa's poor. For instance, many anti-poverty groups are demanding the elimination of agricultural subsidies in developed countries on the grounds that they undermine the livelihood of poor country farmers by suppressing world commodity prices and resulting in unfair competition in local markets. Agricultural subsidies in rich nations amount to more than US$300 billion annually, or roughly six times the total amount of aid to developing countries. The World Bank says the average cow in Europe cow receives $2.5 a day in state subsidies and $7.5 in Japan, compared with the fact that 75% of Africans live on less than $2 a day.

All this sound terribly immoral and unjust, but in reality, it is just a play with statistics which has little meaning in reality. It is an illusion to think that the elimination of agricultural subsidies in the West would result in $300 billion being redirected into developing countries.

The claim that subsidy elimination would benefit the poor needs to be carefully examined. Undoubtedly farmers in some developing countries would benefit from the scrapping of farm subsidies in the West - these are farmers able to produce the at prices that would make them competitive if the prices of Western imported commodities reflected their actual production costs - Mozambican sugar producers would, for instance, be able to compete against Europe's high-cost sugar producers in the home and foreign markets.

However, it is doubtful whether farmers in developing countries that do not produce the mainly temperate-zone commodities subsidised by western government will benefit from the elimination of these supports. A recent World Bank study found that complete trade liberalisation would boost global incomes by $165 billion a year, but three-quarters of this would go to developed nations.

Most developing countries have little to gain from agricultural liberalisation because many of them are net importers of agricultural products, and modest increases in world prices are unlikely to turn them into net exporters. In many, and perhaps most African countries, consumers will lose more from increases in the price of imported food than domestic producers are likely to gain. The balance of payments of such countries will likely deteriorate as their import bill rise without a compensating rise in export earnings. This would almost certainly be the case in a country like Nigeria where imported food, especially grains, sugar and dairy products, are part of daily food consumption of people from all social classes. Increases in the domestic prices of these commodities would certainly hurt the poor the most.

Whilst agricultural output in some African countries is hampered by the availability of cheap substitute imports in the domestic market, in most African nations the main constraints are local factors, such as low production technology, infertile land and political unrest. As long as these domestic inhibitors remain, local farmers will find it difficult to respond to the elimination of western farm subsidies and the rise in international prices. The real challenge facing African countries is increasing their productive capacity, which requires mobilising resources to improve agricultural productivity. Measures needed to achieve this include credit for rural areas and more investment in all aspects of agricultural production and processing, including rural infrastructure, research, education and training.

It may sound radical blaming Africa's poverty on the international economic system, but we should be careful not to follow policies that amount to shooting ourselves in the foot - or more appropriating, shooting poor Africans whose poverty outrages us. We should not support the demand for the blanket removal of rich country government farm subsidies.

Rather we should campaign for developed countries to allow poor nations to maintain import tariffs to protect key economic sectors and at the same time grant them duty-free access to their market for both primary and labour-intensive manufactured goods. It is not a matter of getting a level international playing field but of positive discrimination in favour of poor countries while they tackle the internal weakness that rendered them uncompetitive.

Date Uploaded 1/23/2008
Copyright Africa Economic Analysis 2005