Should we Help Niger?

Published on 20th December 2005

The gory details of famine in Niger are making headlines again, with pictures of old and young scavenging for food. This second-poorest country in the world suffers from drought and locusts, but also heavy state intervention. Half its income is from international aid. Instead of finding solutions to the production shortage, many in the aid industry attribute the famine to the government\'s lame market reforms.


Niger is a victim of its own government. Early this year, the government refused to heed warnings that a food crisis was imminent. When the crisis came, it denied there was mass starvation and claimed the harvest had experienced a surplus. The government later proceeded to accuse the World Food Programme of exaggerating fears that Niger could face another famine within months. A few months later, 2.5 million people are short of food.


Niger is still a command economy. It is up to the rulers in Niamey to decide on the prices. But economic sense, let alone common sense, dictates that if producers, particularly farmers, can sell to willing buyers at a mutually agreed price, then it gives them an incentive to produce more. This in turn enables producers to afford basic necessities instead of waiting for the government to provide them.


In a command economy, growth remains elusive. Take for instance the great famines of the 20th century in China (25 to 40 million deaths), Soviet Ukraine (7- to 10-million), North Korea (2- to 3-million) and Ethiopia (nearly a million). It was food requisitioning and economic control by communist governments that destroyed incentives to produce. When countries free their markets, they cut undernourishment down and abolish famine, as in east and south Asia in the past three decades.


But Niger\'s agricultural sector is still government run and mainly subsistent farming. This does not encourage quick responses to changing conditions or bad harvests. The locusts in power are well fed so there is a tendency to pretend that all is well without bothering about the starvation their policies cause.


The crisis is further compounded by regional trade barriers. World Bank figures show that African nations slam tariffs as high as 33,6% on agricultural commodities from their neighbors.


Some groups have blamed Niger\'s famine on its alleged \"free market\" policies. In fact, Niger has one of the least free economies in the world, ranking 107th out of 123 countries in the Fraser Institute\'s report on economic freedom in the world last year. A few government-owned companies have been privatized and some financial services liberalized, but these have had little impact on the majority of Nigeriens. Crucially, farmers lack secure rights to the land they till, which means they have little incentive or ability to improve productivity.


Meanwhile, entrepreneurs face government regulations and restrictions at every turn: for example, the cost of setting up a company is equivalent to about four years\' average income. These problems are compounded by inflexible labor laws, which discourage people taking on employees and so prevent the development of larger-scale businesses. No wonder there is so much poverty.


People are starving in Niger, Zambia, Zimbabwe, Ethiopia and elsewhere in Africa -- but not because of free markets. Rather, they are starving because of the lack of markets and their underlying institutions: property rights, the rule of law and limited government.


More aid won\'t solve these problems -- so far it has perpetuated poverty, corrupt politicians and malign policies. Rich countries should lead by example, committing themselves to liberalizing trade and reducing subsidies -- then maybe political leaders in Africa will follow suit.

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