Beware! Social Virus on the Loose

Published on 24th January 2006

African states should recognize and accept the fact that the current state of affairs has arisen primarily from local causes.  Some of these local causes (well known to participants in the policy discussions in Africa) are of historic and traditional nature but many of them relate to disastrous policy adopted by African governments in the postcolonial period.  Even though the source of the ideas behind these policies were often external -- Marxism and its fellow travelers – they were readily embraced locally and enthusiastically pursued. Owning a problem is an optimistic pathway since problems caused locally can be solved locally.

While some of Africa’s problems have emanated from individuals who have not only abused their power but also used it to aggregate wealth at the expense of their people, there must be a resolution on the part of the people of Africa not to permit this kind of tyranny in the future. If there is no resolve on this issue most of the other discussions that one might have about improving the economic performance of Africa are rendered moot.

It is crucial to recognize the extent to which the bad ideas and rapacious conduct of leaders in the past have poisoned the soil of Africa from the point of view of economic development.  In many African countries, people have been taught by hard experience that entrepreneurship and hard work are rewarded by confiscation and theft of their property by more powerful government related people.  On the other hand the culture induced by decades of aid payments has taught people to be dependent and to rely on others for their livelihoods. The challenge of future development in Africa must cope with and overcome the residue of past bad ideas.

The key to economic development in Africa is to increase the amount of investment per person so that the productivity of effort is enhanced by machinery, equipment, skills and new technology.  The second part of this insight is to recognize that it must be investment by locals in their own economy that will do most of the good that can be accomplished by investment. Unless African governments create a domestic environment in which locals are willing to invest their own savings in the development of their own businesses there will be no economic resurgence in Africa. Quite often, discussions of economic development  focus on foreign investment and the creation of circumstances that will make it safe and attractive for foreigners to invest in the local economy. However, if there is no corresponding change in the conditions felt by ordinary people as they conduct their less momentous affairs, then the goal of broader economic development will not occur.  Investment which is made by foreigners under some special conditions arranged by the government of a country specifically targeted at those foreign investors will not provide sustained development of infrastructure and the economy.

African governments must ask themselves: What should we do to encourage local seed merchants and farmers to make investments in a borehole for the irrigation of crops? What will encourage a local safari company to invest in a new lodge or more buses to transport local and foreign tourists to their destinations?  If they are successful by the changes in policy they undertake in persuading local farmers, merchants and investors to make their investments, foreign investors will be much less reluctant and much more enthusiastic about making investments also.

Africans should look at other countries which have prospered by shaking off the yoke of the bad ideas of the past.  There are now many countries of the Western European variety (Ireland for example), of the historically underdeveloped variety (Chile and Peru for example) and of the Marxist variety (India, China and the former Soviet dominated states), which have transformed themselves into rapidly growing and prosperous jurisdictions.  These countries provide all the evidence that is necessary to show what can be accomplished by changing the policy settings towards the direction  which encourages the emergence of economic freedom.

What these countries which are so diverse in their historical context and modern experience illustrate is that people are naturally prosperous. Prosperity happens when people are left to trade, truck, barter and pursue their own individual ambitions.  The spectacular development which is occurring in places like Slovakia, Shenzen, and Santiago has also been experienced in Botswana and Mauritius and is beginning to emerge in Uganda. All that is necessary for governments to do is not to stifle this natural upwelling of economic activity.

This is not to say that it is enough for government to do nothing.  In countries where governments have been active participants in the economic process pursuing policies which while well-intentioned have been actually destructive, it will be necessary for governments to do many things, or rather, to undo many things. What sorts of things should they do and undo?  Fortunately there is a roadmap that governments can follow in this regard, compiled from the experience of 127 countries.  This roadmap is the Fraser Institute\'s Economic Freedom of the World Index.  This index compiles 38 different policies  which together describe the extent to which the governments of countries permit their citizens to be economically free. Andrei Illarionov, the courageous economic adviser to Russia\'s President Putin who has recently resigned rather than be associated with the illiberal policies of Mr. Putin, says that the Economic Freedom of the World Index is the recipe for economic development.

To be successful in their campaign to encourage economic development in Africa the heads of the African states must begin a movement in Africa --an economic freedom movement which penetrates every aspect of African society.  The question that must dominate every cabinet meeting and every decision made by a government agency, every town council and every tribal gathering is \"what will the proposed measure do to the level of economic freedom?\".  If measures reduce the level of economic freedom, they must be avoided and if they increase the level of economic freedom, they must be pursued.

While to many this will seem a simplistic program for reform, it is undoubtedly the direction in which Africa must move if it is to solve its own economic development problems.  The evidence that economic freedom is like a beneficial social virus is everywhere around us in the world today. The real challenge for African leaders is to accept this evidence and to get on with the creation of a uniquely African economic freedom movement.

 

 


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