Property Rights: Key to Africa’s Prosperity

Published on 5th June 2007

Part 3

The Enemies of Private Property

If secure property rights and their free use bring  evident benefits to ordinary people, why are they not universally adhered to? Three categories of enemies prevent this.

Tradition and taboos often militate against individuals and small groups who own assets and wish to use them as they see fit. In many parts of the third world and throughout much of human history, assets such as land were owned by clans, tribes or large villages and came under the control of elders or traditional rulers. Often, these property arrangements worked reasonably well in fostering traditional asset uses, but had shortcomings in coming to grips with innovation and modernisation. After independence, new political elites, often beholden to African socialism and the socialist credo that 'property is theft', suppressed workable traditional ownership structures and introduced imported institutional models, which did not work at all –– except in enriching small priviligentsias.

Despite the limitations of traditional ownership arrangements, much would be gained by reviving them and then liberalising and modernising what has grown organically and still lives in the hearts of the people. Evolution, not revolution, promises best results.

Crime – theft, robbery, thuggery, guile and corruption – hampers individuals' enjoyment of their property and reduces the willingness of enterprising people to risk their assets in new productive ventures. The sanctity of property (and life), which Westerners or East Asians take for granted, seems elusive for the inhabitants of the bidonvilles of Kinshasa or the shantytowns of Nairobi, Lagos and Soweto. African governments therefore need to concentrate on the essential, classical protective function of government, or else all freedom and development will continue to elude most Africans.

A third enemy of secure property rights is government in collusion with influential groups who have an interest in diminishing other peoples' property rights. The free exercise of individual property rights leads to competition. As we said, established property owners are thereby challenged to risk innovations, time and again, lest the value of their property declines. This is risky and uncomfortable. They therefore lobby for political protection and political operators see gain from offering such protection –– granting export and import monopolies, industrial licenses and the like. In return, they reap kickbacks and other support. It is called 'rent seeking'.

Nowadays, political operators all too readily regulate property uses and thereby expropriate the people. I have called the piecemeal taking of property rights 'neo-socialism'. Legislators all too readily reverse the burden of proof; owners have to prove that they cause no-one harm, rather than harmed parties proving such an impact. For example, in many countries, you are no longer free to harvest the rain that falls on your land and the trees that grow on it, but you have to prove your case (or pay bribes) first to obtain a permit to do so. The neo-socialist threat to economic freedom is nowadays much greater in most countries than the paleo-socialist threat of holus-bolus expropriation.

African freedom fighters should confront the spreading regulatory habit – which is often propagated through UN bodies and NGOs – by pointing out that poor nations have neither the financial nor the moral and administrative resources to properly implement such expropriatory regulations. Nor do African governments have the funds to justly compensate owners from whom they take some of their property rights.

Tackling tradition, crime and rent-seeking is the central, classical task of government, the protective function. It must be made the priority task, if necessary even the only task of government –– no less! A first step will be to compare the track records of individualist-capitalist regimes with the actual achievements of collectivist-socialist ones, and to note that socialism has only been strong on promises, whereas capitalism delivered prosperity and freedom. Of course, the socialist promise appeals to all our deep-seated tribalist-collectivist instincts, which we have inherited from our distant forebears. It is up to the young elites of Africa to embrace rational institutions and to stand up for secure property rights and economic freedom, if the next generation is not to suffer more poverty and civil strife.  

Options for Africans

A recent CNN series was entitled Africa's Misery – the West's Shame! Those who have followed my argument so far will, however, feel inclined to conclude that penury and misery are largely home-made and that betterment will occur only when Africans rework their own institutions.

As elsewhere, the first, critical battle line in reform is the national border. Opening the economy to free international trade and investment flows is critical, because this opens less developed economies to new knowledge, communications and ideas, also ideas about how to shape effective rule systems. Internationally, mobile capital and enterprises undermine tradition and entrenched powers that deprive ordinary people of their property and other human rights. By contrast, preaching and political agitation alone brings little real reward. Nonetheless, it is necessary that many have a good understanding of the spontaneous order of markets and the internal institutions of a trading society.

It will also be necessary that African elites jettison the statist-collectivist baggage, which they picked up so readily from the 1950s onwards and which is still being propagated by international organizations, many foreign governments and NGOs. Quasi-paleolithic collectivist sentiments and notions of some ideal, static end-state may appeal to the subconscious and the instincts we have inherited from many thousands of generations of ancestors. But they do not fit in with dynamic evolution and success in the modern global economy. Understanding the importance of secure property rights and realising economic freedom therefore seems to me the major challenge for the next generation of Africans.

Where the West can make a difference in Africa is with regard to foreign aid. Stop financing corrupt political elites! I agree wholeheartedly with African observers, such as Andrew Mwenda from Uganda or Kenyan James Shikwati, who said: "If the industrial countries really want to help Africans, they should finally terminate this awful aid. The countries that have collected the most aid are also the ones that are in worst shape". After all, we have learnt that domestic redistribution in welfare states is often counter-productive. Why then should international redistribution be any more effective? The current political response to the abuses of official aid is conditionality. However, great reservations seem in order: Aid officials may know of gross abuses, but lack the political will to terminate aid when previously agreed conditions are violated. Moreover, conditionality, if enforced, only leads to international recrimination and accusations of neo-colonialism. The only real option now therefore is to gradually cease all official aid, except for relief after natural disasters.

As long as the West finances half or more of the budgets of poor African countries, African leaders will not feel obliged to raise taxes and implement effective spending programmes for the people nor will they run small governments. Indeed, why should they heed the voice of the electorate and work to facilitate broad-based prosperity, when most of their funding comes from Washington, London or Berlin? That aid often harms the people is of course not new. The doyen of development economics and fellow MPS member Lord Peter Bauer wrote about this tirelessly for nearly fifty years.

In this post-colonial age, outsiders can do little more than proffer information, advice and encouragement. Freedom begins at home and has to be claimed by the young and educated. Other parts of the world, such as East Asia over the past 50 years, demonstrate that this is possible. Never forget that China and most other successful 'pyramid climbers' owe little or nothing to foreign aid. 

The realisation is now spreading that outside intervention – whether in Somalia, Darfur or Iraq – cannot parachute tolerance, respect for others, freedom and security into other cultures. Aid and intervention fatigue has therefore been gripping Western countries. After half a century of being our African brothers' keepers, African affairs will more and more be left to Africans –– pious G8 declarations and new 'Africa initiatives' like Tony Blair's notwithstanding. Africans should realise that the leaders of rich countries typically use noble initiatives in distant lands to divert public opinion from intractable problems at home, or to assuage domestic fears of mass immigration from destitute lands.

Africans have to evaluate critically for themselves what foreign 'helpers' advocate or propose to bring to Africa. Soviet aid has been of little value to Africans, as the Egyptians and Ethiopians found out, for example. Swedish socialist preaching and official aid has not helped Tanzania to become a freer country. UNCTAD and UNIDO long promoted import substitution and harmed genuine development in many countries which followed the advice. East Asians, by contrast, rejected the UN's prescription and were successful. Many NGOs and UN agencies are still preaching collectivism, although it has failed spectacularly, from Moscow to Havana. Many now preach 'fair trade' and propose to inflict costly Kyoto controls over the use of energy on poor countries, although all nations, poor and rich, of course need energy to power their economic development. Beware of the collectivist prophets! After half a century of development experience, Africans should now be capable of judging the ideological trees by their fruit. Observe, and imitate only what works elsewhere!

Above all: never forget that, without secure private property and economic freedom, there is no hope for freedom overall. And remember: freedom is special, because it brings out the best in us.


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