EXCERPTS FROM ‘THE WHITE MAN’S BURDEN’: Why the West’s efforts to Aid The Rest have Done So Much Ill And So Little Good
WILLIAM EASTERLY
This book is a must read for development economists or anyone seriously concerned about the plight of the million of people living in absolute poverty. Of course many factors contribute to why poor countries are poor. Easterly focuses on analyzing the effect of aid, which goes by various names “foreign assistance, Overseas Development Assistance, Poverty Reduction Strategies, Donor assistance and the works.
What this book did for me was really drive some point home, the major one being, why markets are the answer. It was also a thought provoking read. Some issues such as why charity fails, why poor people behave recklessly, why preaching institutional reforms is not so easy, and how the colonial history of African countries is partly to blame for present day instability.
Whereas easterly in no way suggests that he has the answer, he does offer some insightful and interesting solutions to the problem of aid ineffectiveness. The one that impressed me the most was that of issuing development vouchers to the poor. The poor could then redeem these at any NGO or aid agency for any good or service they want- food, books, bed nets and so. In this way demand and supply mechanism would come into play and the poor would have a say in what they require most. NGOs too would feel competitive pressure to deliver because the poor would choose where to get the goods from.
Below are just a few excerpts from a 400 page book. My intention is that it will whet your appetite to learn more
Examples of why the price mechanism is the best way of delivering services to the poor
1) Selling treated bed nets to the poor
PSI sells bed nets for 50cents to mothers through antenatal clinics in rural Malawi, which. The nurse who distributes the nets gets nine cents per net to keep for herself, so the nets are always in stock. PSI also sells nets to richer urban Malawians through the private sector channels for $5. The profits from this are used to pay for the subsidized nets sold at the clinics, so the program is self sustaining. PSI’s bed net program increased the nationwide average of children under five sleeping under nets from 8% in 2000 to 55% in 2004, with a similar increase for pregnant women.
By contrast, a study of a program to handout free nets in Zambia to people, whether they wanted them or not, found that 70% of the recipients didn’t use the nets.
2) Gonoshasthaya Kendra (GK)- the ‘Peoples Health center’, in rural Bangladesh.
GK is the brainchild of Dr. Zafrullah Chowdhury, a Bangladeshi doctor who returned from Britain after Bangladesh won independence in 1971. Dr Zaf trained teenage girls to treat common ailments, deliver prenatal and postnatal care to pregnant women and to refer any emergencies to the hospital that he built. Foreign donors and the Bangladeshi government gave Dr. Zaf money but he also charged the poor modest fees to expand services further. He found that even the poor were willing to pay for good service. Charging the poor modest fees for health care -a notion that outrages anti-globalization activists and ‘planners’ is a way to increase accountability for delivering health services. If the villagers don’t get good service after they have sacrificed to pay for it, they loudly complain. “If a woman dies, the worker has to face the whole village. Accountability is here”, says Dr. Zaf. GK has been successful in lowering maternal deaths in childbirth, infant mortality, and also the number of children that women choose to have. Maternal mortality in the area covered by GK is one fourth the national average.
On free market reforms
Free markets work but free market reforms often don’t. Introducing free markets from the top down is not so simple. It overlooks the long sequence of choice, institutions, and innovations that have allowed free markets to develop in the rich Western economies. It also overlooks the bottom-up perspective on how markets often don’t function well in the low-income societies of Africa, Latin America, Asia and the former Communist bloc. Markets everywhere emerge in an unplanned, spontaneous way, adapting to loyal traditions and circumstances, and not through reforms designed by outsiders. The free market depends on the bottom-up emergence of complex institutions and social norms that are difficult for outsiders to understand, much less change.
Paradoxically, the West tried to plan how to achieve a market. Even after evidence accumulated that these outsider-imposed free markets were not working, unfortunately, the interests of the poor did not have enough weight to force a change in Western policy. Planners underestimated how difficult it is to get markets working in a socially beneficial way. People everywhere have to explore with piecemeal, experimental steps how to move towards free markets.
On ethnic networks
Ethic societies or ‘closed’ groups, in many cultures and societies help solve the problem of cheating. Easterly gives examples of Indians in Kenya, the American entrepreneurs in the 19th century all served together in the Civil war and hence trusted one another. However, he goes on to say that such networks are far from a perfect solution in making markets work. The networks exclude as well as include, missing many entrepreneurs and suppliers when they limit trade to a minority. The gains from trade through personalized exchange are much less than through the impersonal exchange made possible by formal institutions.
On colonialism and forced tribal divides
Given administrative limitations, the colonizers in Africa often relied on ‘chiefs’ to rule for them. But many societies in Africa had no chiefs. The British appointed chiefs anyway, sometimes choosing a village head to rule another village. And in this way Europeans increased despotism in Africa. They left behind a legacy of mistrust between the educated class and the traditional rulers. A rare exception was Botswana where the British left largely intact the traditional structures of the Tswana tribes.
Easterly concludes by saying that Western interference during colonization and at present has been unhelpful. The West should learn from its colonial history when it indulges in neo-imperialist fantasies. They didn’t work then and won’t work now.
Aug 31, 2006
MY FAVORITE BOOKS (READ JAN 2005- AUG 2006)
• ‘In defence of global Capitalism’ by Johan Norberg- This book gives an in-depth explanation on how globalisation in the 21st century is promoting freedom and creating opportunities for the poor. The author uses a lot of examples, which makes it a lively read. The use of graphs also makes and easy reference point
• Lords of Poverty’ by Graham Hancock- A touching expose about the lifestyles, power, prestige and corruption of the multibillion dollar poverty ‘industry’.
• The Mystery of Capital: why capitalism triumphs in the West and Fails Everywhere Else- Hernando de Soto. This book has a simple idea to offer- capital is important for prosperity. But most poor people have assets that de Soto calls ‘dead capital’-assets that they cannot use as collateral to start up businesses. The author proposed how to enable the poor to turn this dead capital into useful productive assets that could help create more wealth.
• Behind the scenes at the WTO: the real world of international trade negotiations- Fatoumata Jawara & Aileen Kwa. Exposes the hooligan methods used by the West and powerful lobby groups in employing arm-twisting techniques when it comes to trade negotiations with poor countries. This book paints a very contradicting picture to that of the mission and role of the WTO- a democratic international organization in which all member countries are equal.
• Lords of Poverty’ by Graham Hancock- A touching expose about the lifestyles, power, prestige and corruption of the multibillion dollar poverty ‘industry’.
• The Mystery of Capital: why capitalism triumphs in the West and Fails Everywhere Else- Hernando de Soto. This book has a simple idea to offer- capital is important for prosperity. But most poor people have assets that de Soto calls ‘dead capital’-assets that they cannot use as collateral to start up businesses. The author proposed how to enable the poor to turn this dead capital into useful productive assets that could help create more wealth.
• Behind the scenes at the WTO: the real world of international trade negotiations- Fatoumata Jawara & Aileen Kwa. Exposes the hooligan methods used by the West and powerful lobby groups in employing arm-twisting techniques when it comes to trade negotiations with poor countries. This book paints a very contradicting picture to that of the mission and role of the WTO- a democratic international organization in which all member countries are equal.
Aug 6, 2006
PATRIOTISM DOES NOT COME NATURALLY, BUT WITH PROGRESS OF SOCIETY
PATRIOTISM DOES NOT COME NATURALLY, BUT WITH PROGRESS OF SOCIETY
Dr. Mutua’s commentary on ‘Why we should all be proud to be Kenyans’ (Sunday Nation, 6 august) was indeed a timely and thought provoking piece. In the one year that I have spent living away from home, I have always pondered over the question what makes Kenya special. Surely there must be more to it than the wildlife, the good weather, the lovely chai and friendly people that explains the magic of Kenya. Upon reflection however, many things that came to mind were not ‘truly Kenyan’ things. This is where the problem lies.
Several factors contribute to the level of pride citizens have towards their country. According to the National Opinion Research Center at the University of Chicago, people rate how proud they are of their countries in 10 areas: political influence, social security, the way their democracy works, economic success, science and technology, sports, arts and literature, military, history, and fair treatment of all groups in society. So, patriotism does not come naturally, it comes with progress of society.
Kenya has been known to be more western than her neighbours, mimicking everything from music, fashion to diet. Today, Kenyans are suffering from a disease called ‘demonstration effect’, that is, the phenomenon of local residents adopting the styles and manners they have observed in foreign cultures and lifestyles.
Kenyans need to embrace a patriotism based on the unconditional love of their country. We need a new sense of patriotism, one that expresses our unconditional love for Kenya and lives up to our responsibility to our fellow Kenyans. Efforts and emphasis must focus around rediscovering on what it means to be Kenyan. This type of patriotism brings with it much more; when your country misbehaves, you can't just roll your eyes as if you had nothing to do with it.
Dr. Mutua’s commentary on ‘Why we should all be proud to be Kenyans’ (Sunday Nation, 6 august) was indeed a timely and thought provoking piece. In the one year that I have spent living away from home, I have always pondered over the question what makes Kenya special. Surely there must be more to it than the wildlife, the good weather, the lovely chai and friendly people that explains the magic of Kenya. Upon reflection however, many things that came to mind were not ‘truly Kenyan’ things. This is where the problem lies.
Several factors contribute to the level of pride citizens have towards their country. According to the National Opinion Research Center at the University of Chicago, people rate how proud they are of their countries in 10 areas: political influence, social security, the way their democracy works, economic success, science and technology, sports, arts and literature, military, history, and fair treatment of all groups in society. So, patriotism does not come naturally, it comes with progress of society.
Kenya has been known to be more western than her neighbours, mimicking everything from music, fashion to diet. Today, Kenyans are suffering from a disease called ‘demonstration effect’, that is, the phenomenon of local residents adopting the styles and manners they have observed in foreign cultures and lifestyles.
Kenyans need to embrace a patriotism based on the unconditional love of their country. We need a new sense of patriotism, one that expresses our unconditional love for Kenya and lives up to our responsibility to our fellow Kenyans. Efforts and emphasis must focus around rediscovering on what it means to be Kenyan. This type of patriotism brings with it much more; when your country misbehaves, you can't just roll your eyes as if you had nothing to do with it.
M-BANKING IN AFRICA
Mobile-Phone Banking Showing Signs of Growth!
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The mobile phone is the one pervasive device which has fewer barriers to entry than most technologies, and it has penetrated some of the poorest economies due to the overwhelming demand for any form of telecommunications. Mobile phones have presented a unique opportunity to individuals and even companies, not only in the communications and data transfer environments, but the banking environment as well.
"Africa and other developing nations are in the supposedly unenviable position of having a great number of people outside of the realm of traditional financial services. Although this is viewed by many as a challenge, from an African context this presents an opportunity for exploring new avenues of bringing these people into the financial transactional environment though the world of mobile banking or m-banking. Financial institutions on the African continent have acknowledged that in order to achieve greater penetration and ultimately share of wallet, they need to explore new methods of banking," says Hannes van Rensburg, CEO at Fundamo.
"Africa is a cash-based society, and while the Western world views m-banking as almost exclusively about credit card transactions - African companies are proving that it can better be used as a tool to facilitate virtually any form of payment, directly from a mobile phone. To people unable to always make it to the nearest town or transaction point at the drop of a hat, m-banking offers banking to virtually all," adds van Rensburg.
An example of such a deployment is FNB-owned Celpay, a mobile payment facilitator operating in Zambia and the Democratic Republic of the Congo (DRC). It offers mobile phone-based virtual bank accounts with advanced features which compare to many normal bank accounts. Account transfers, bill payments, cash deposits and withdrawals and prepaid airtime vending are all supported with real-time clearing. Celpay has also developed m-banking business services like cash-on-delivery payment functionality and companies like BP, MultiChoice and various caf閟, supermarkets, pharmacies, hair salons and even an O'Hagan's in Zambia use the system.
Mobile transacting has a number of advantages over more traditional banking methods as it breaks down geographical constraints and offers other advantages such as immediacy, security and efficiency.
The knock-on benefits of this are seen by the users, mobile operators, banks and retailers. Operators see M-banking as increased traffic, customer retention and improved service offerings. Banks see it as allowing for immediate transactions (meaning the unbanked become banking customers), an alternative to carrying cash which in turn means better cash retention, increased security and payment efficiencies, reduced dependency on ATMs and branch infrastructures (meaning lowering of operating expenditure) etc. The greatest benefit is probably for the users who are able to affect a payment from anywhere to anyone creating a macroeconomic benefit that is as yet unmeasurable, but is most certainly significant.
The realityM-banking is gaining momentum throughout the continent and Fundamo has already provided solutions and supporting services to providers in South Africa, Kenya, Botswana, Zimbabwe, Zambia and the DRC.
The reality is that African businesses are willing to try new technologies which are safe, cost effective and allow them to break traditional barriers. There is a growing base of retailers accepting payments already and for consumers, buying airtime, paying bills and other payment types make this a worthwhile and convenient tool.
"The use of the mobile phone is still growing rapidly in Africa. Mobile phones not only break communication barriers but can also be seen as a mini-computer - with a mobile phone people are always on, always reachable and have a secure computing device in the palm of their hands. M-banking certainly offers many application opportunities, especially to developing countries, on the back of a technology culture which is already accepted - meaning half the battle is already won," concludes van Rensburg.
***********************************
The mobile phone is the one pervasive device which has fewer barriers to entry than most technologies, and it has penetrated some of the poorest economies due to the overwhelming demand for any form of telecommunications. Mobile phones have presented a unique opportunity to individuals and even companies, not only in the communications and data transfer environments, but the banking environment as well.
"Africa and other developing nations are in the supposedly unenviable position of having a great number of people outside of the realm of traditional financial services. Although this is viewed by many as a challenge, from an African context this presents an opportunity for exploring new avenues of bringing these people into the financial transactional environment though the world of mobile banking or m-banking. Financial institutions on the African continent have acknowledged that in order to achieve greater penetration and ultimately share of wallet, they need to explore new methods of banking," says Hannes van Rensburg, CEO at Fundamo.
"Africa is a cash-based society, and while the Western world views m-banking as almost exclusively about credit card transactions - African companies are proving that it can better be used as a tool to facilitate virtually any form of payment, directly from a mobile phone. To people unable to always make it to the nearest town or transaction point at the drop of a hat, m-banking offers banking to virtually all," adds van Rensburg.
An example of such a deployment is FNB-owned Celpay, a mobile payment facilitator operating in Zambia and the Democratic Republic of the Congo (DRC). It offers mobile phone-based virtual bank accounts with advanced features which compare to many normal bank accounts. Account transfers, bill payments, cash deposits and withdrawals and prepaid airtime vending are all supported with real-time clearing. Celpay has also developed m-banking business services like cash-on-delivery payment functionality and companies like BP, MultiChoice and various caf閟, supermarkets, pharmacies, hair salons and even an O'Hagan's in Zambia use the system.
Mobile transacting has a number of advantages over more traditional banking methods as it breaks down geographical constraints and offers other advantages such as immediacy, security and efficiency.
The knock-on benefits of this are seen by the users, mobile operators, banks and retailers. Operators see M-banking as increased traffic, customer retention and improved service offerings. Banks see it as allowing for immediate transactions (meaning the unbanked become banking customers), an alternative to carrying cash which in turn means better cash retention, increased security and payment efficiencies, reduced dependency on ATMs and branch infrastructures (meaning lowering of operating expenditure) etc. The greatest benefit is probably for the users who are able to affect a payment from anywhere to anyone creating a macroeconomic benefit that is as yet unmeasurable, but is most certainly significant.
The realityM-banking is gaining momentum throughout the continent and Fundamo has already provided solutions and supporting services to providers in South Africa, Kenya, Botswana, Zimbabwe, Zambia and the DRC.
The reality is that African businesses are willing to try new technologies which are safe, cost effective and allow them to break traditional barriers. There is a growing base of retailers accepting payments already and for consumers, buying airtime, paying bills and other payment types make this a worthwhile and convenient tool.
"The use of the mobile phone is still growing rapidly in Africa. Mobile phones not only break communication barriers but can also be seen as a mini-computer - with a mobile phone people are always on, always reachable and have a secure computing device in the palm of their hands. M-banking certainly offers many application opportunities, especially to developing countries, on the back of a technology culture which is already accepted - meaning half the battle is already won," concludes van Rensburg.
MOBILE PHONES IN DRC
This is an article from The Washington Post, Sunday 9 July. It talks about how mobile phone banking is fast catching up in remote areas of developing countries. It aslo illustrates how mobile phones are fast reducing the inequalities in access to technology. Enjoy!
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In War-Torn Congo, Going Wireless to Reach Home
For Poor, Cellphones Bridge Digital Divide
By Kevin Sullivan
Washington Post Foreign Service
Sunday, July 9, 2006; Page A01
KINSHASA, Congo -- Until not long ago, if Zadhe Iyombe wanted to talk to his mother, he had to make the eight-day boat trip up the Congo River to the jungle town where he was raised. In a country with almost no roads, mail or telephone system and a grisly guerrilla war raging, making that exhausting and dangerous trip was about the only way he could find out if his 59-year-old mother was still alive.
Then he got a cellphone.
Fiston Disundi, an ex-soldier, receives cash in a transaction recorded on the teller's cellphone. The payment aims to get fighters to turn in their guns. (Kevin Sullivan - Twp)
Crisis in Darfur
More than 2 million civilians have fled their homes and hundreds of thousands have died in the Sudan conflict.
Now he talks to his mother every day. And once a week, with a simple new feature in African cellphones, he uses a text message to transfer five minutes of airtime to her phone to make sure she can always call him.
"Now I know immediately how she is doing," said Iyombe, who lives here in the capital, 400 miles southwest of his mother's home. "These phones make everything easier. It has totally changed life in Congo."
As surely as the light bulb and the automobile before them, the cellphone and text messaging are radically changing the way people live in the developing world. In widespread use for about five years in much of Africa, technology long taken for granted by the world's rich has made life easier, safer and more prosperous for the world's poor.
For the first time, millions of Africans are able to communicate easily with people who are beyond shouting distance. Farmers and fishermen, for example, use text messaging to check market prices, eliminating middlemen and increasing profits -- and preventing long trips to the market on days it is canceled.
In cities, cellphones are becoming a basic tool of electronic commerce, allowing consumers to transfer money to merchants with a few presses on the keypad.
Restaurant owners now can advertise by sending bulk texts to their customers, promising something delicious for lunch. People call a doctor, mechanic or police officer instead of walking miles to find one. News of births, deaths and illnesses instantly reaches the farthest corners of the jungle, where mothers like Iyombe's struggle with the concept of their children's voices emerging from a little plastic box with buttons.
"Before, if you had a sick baby in the middle of the night, he could easily die," Iyombe said, holding the Nokia phone that has raised his ambitions and expectations of life. "Now you can call somebody to help."
Worldwide, there are more than 2.4 billion cellphone users, with more than 1,000 new customers added every minute, according to industry analysts. About 59 percent of users are in developing countries, making cellphones the first telecommunications technology in history to have more users there than in the developed world.
Cellphone usage in Africa is growing faster than in any other region and jumped from 63 million users two years ago to about 152 million today, according to David Pringle, a spokesman for the GSM Association, a trade group that represents cellular companies whose customers account for 80 percent of the global total.
Few places are seeing faster growth than Congo, which has 3.2 million cellphone customers and just 20,000 conventional land lines. At least 8,000 new cellphone customers sign up each day here; the number of users has increased more than tenfold in the past five years.
_________________________________________________________________________________
In War-Torn Congo, Going Wireless to Reach Home
For Poor, Cellphones Bridge Digital Divide
By Kevin Sullivan
Washington Post Foreign Service
Sunday, July 9, 2006; Page A01
KINSHASA, Congo -- Until not long ago, if Zadhe Iyombe wanted to talk to his mother, he had to make the eight-day boat trip up the Congo River to the jungle town where he was raised. In a country with almost no roads, mail or telephone system and a grisly guerrilla war raging, making that exhausting and dangerous trip was about the only way he could find out if his 59-year-old mother was still alive.
Then he got a cellphone.
Fiston Disundi, an ex-soldier, receives cash in a transaction recorded on the teller's cellphone. The payment aims to get fighters to turn in their guns. (Kevin Sullivan - Twp)
Crisis in Darfur
More than 2 million civilians have fled their homes and hundreds of thousands have died in the Sudan conflict.
Now he talks to his mother every day. And once a week, with a simple new feature in African cellphones, he uses a text message to transfer five minutes of airtime to her phone to make sure she can always call him.
"Now I know immediately how she is doing," said Iyombe, who lives here in the capital, 400 miles southwest of his mother's home. "These phones make everything easier. It has totally changed life in Congo."
As surely as the light bulb and the automobile before them, the cellphone and text messaging are radically changing the way people live in the developing world. In widespread use for about five years in much of Africa, technology long taken for granted by the world's rich has made life easier, safer and more prosperous for the world's poor.
For the first time, millions of Africans are able to communicate easily with people who are beyond shouting distance. Farmers and fishermen, for example, use text messaging to check market prices, eliminating middlemen and increasing profits -- and preventing long trips to the market on days it is canceled.
In cities, cellphones are becoming a basic tool of electronic commerce, allowing consumers to transfer money to merchants with a few presses on the keypad.
Restaurant owners now can advertise by sending bulk texts to their customers, promising something delicious for lunch. People call a doctor, mechanic or police officer instead of walking miles to find one. News of births, deaths and illnesses instantly reaches the farthest corners of the jungle, where mothers like Iyombe's struggle with the concept of their children's voices emerging from a little plastic box with buttons.
"Before, if you had a sick baby in the middle of the night, he could easily die," Iyombe said, holding the Nokia phone that has raised his ambitions and expectations of life. "Now you can call somebody to help."
Worldwide, there are more than 2.4 billion cellphone users, with more than 1,000 new customers added every minute, according to industry analysts. About 59 percent of users are in developing countries, making cellphones the first telecommunications technology in history to have more users there than in the developed world.
Cellphone usage in Africa is growing faster than in any other region and jumped from 63 million users two years ago to about 152 million today, according to David Pringle, a spokesman for the GSM Association, a trade group that represents cellular companies whose customers account for 80 percent of the global total.
Few places are seeing faster growth than Congo, which has 3.2 million cellphone customers and just 20,000 conventional land lines. At least 8,000 new cellphone customers sign up each day here; the number of users has increased more than tenfold in the past five years.
FOREIGN AID: CHALLENGES AND OPPORTUNITIES
WOLFOWITZ ON FOREIGN AID: CHALLENGES AND OPPORTUNITIES
I recently attended a lecture by Paul Wolfowitz, president of the World Bank, at the Heritage Foundation in Washington DC.
Since he came into office, Mr. Wolfowitz has stressed on Sub-Saharan Africa and fighting corruption.
In his speech, he acknowledged the incredible energy and ambition that can be seen in ordinary Africans. This, he said makes it possible to change the continent. Although the region of Sub-Saharan Africa faces an enormous challenge, it is not a hopeless case. The reason for this is that, today, in Africa, there are two important transformations taking place. First, Africans themselves are taking the lead in overcoming challenges. The progress in countries such as Liberia, Sierra Leone and Mozambique speak is evidence. Secondly, both donors and recipients worldwide are putting an increasing importance on aid effectiveness and that in turn is demanding institutions and policies that work. Corruption is really not separable from any of the other areas of priority.
The world has seen significant progress in the last 15 years and in the last 25 years; half a billion people have escaped extreme poverty- defined as the number of people living below the poverty line. Most of this progress, however, came from south East Asia and China. However, this progress was not inevitable as it may see today. In the 1960s there was a frequently used expression, ‘oriental fatalism’, which described what people in China thought- Life has been miserable for 400 years and its going to be so for another 4000 years- there is no point in making any efforts to change things. In the 1960s South Korea was considered to be a basket case, with no natural resources, griddled with corruption, and burdened with a Confucian ethic that men don’t work. But things did change and they too can change in Africa. The challenges it faces are HIV/AIDS, and education.
Africa’s greatest and most important resource are its people and the challenge is how to the unleash this energy and potential, in a way that can improve their lives.
15 African countries have been able to maintain growth rates of 4% or better over the last 10 years, and the median of that group is better than 5%. The top performers are Rwanda and Mozambique. However, this trend will not automatically translate into less poverty. Investors have increased private debt and equity flows from $10 billion five years ago to $30 billion. The average annual return on investment in Africa is one of the highest in the world, averaging around 30%.
African government are making it easier for investors to do business and for entrepreneurs to set up business. For example, entrepreneurs in Burkina Faso which used to be one of the most overregulated economies can now open a business in fewer days, using fewer forms and following lesser procedures. One entrepreneur launched a cell phone company in the Democratic Republic of Congo, not a place once thought to be promising. The initial forecast was a market for only 10,000 subscribers; his company reached his first 1 million customers in less than five years.
Importantly, Africa is moving toward greater peace and stability. Just four years ago there were 16 active conflicts destroying countries, families and businesses. Today that number is down to six- still six too many. There is hope and opportunity emerging from the ashes of these conflicts. Just 5 years ago, Sierra Leone and Liberia seems truly hopeless. Sirleaf-Johnson, Africa’s first female president (a former World Bank employee), has promised to electrify the entire capital city in 6 months. Rwanda, after a gruesome genocide had no infrastructure, no capital, but today, it is doing well, because the government invested in its people. In fact it ranks as one of the best reformers.
Throughout the continent countries are adhering to their constitutions, the voices of civil society in parliament have become stronger; people are demanding stronger public governance and more accountability.
However, it must be remembered that corruption is not a disease or a plague of developing countries. Every corrupt transaction has 2 parties, very often the bribe being developed countries, multinationals and foreign banks. Stolen assets end up in the banks of developed countries, which have an obligation and responsibility to help African government recover these assets.
Developed countries have promised to double aid to Africa. But as Tony Blair put it it is ‘a deal for a deal’- in exchange for increased assistance, developing countries must strengthen their institutions and ensure resources are spent wisely. Mutual accountability has been top on the agenda in the development community and as a result, governance is also gaining importance. Research suggests that a country that can improve its governance can almost triple its income per capita in the long term, can reduce infant mortality and illiteracy by two-thirds; that’s what some people call the triple dividend of good governance.
In Dec 2005, Gallup International took a poll asking people around the world whether they thought 2006 would be better that 2005. Africans came out as the most optimistic. 57% of them though things would be better. Now more than ever the opportunity exists for Africans to transform Africa and determine their own future.
I recently attended a lecture by Paul Wolfowitz, president of the World Bank, at the Heritage Foundation in Washington DC.
Since he came into office, Mr. Wolfowitz has stressed on Sub-Saharan Africa and fighting corruption.
In his speech, he acknowledged the incredible energy and ambition that can be seen in ordinary Africans. This, he said makes it possible to change the continent. Although the region of Sub-Saharan Africa faces an enormous challenge, it is not a hopeless case. The reason for this is that, today, in Africa, there are two important transformations taking place. First, Africans themselves are taking the lead in overcoming challenges. The progress in countries such as Liberia, Sierra Leone and Mozambique speak is evidence. Secondly, both donors and recipients worldwide are putting an increasing importance on aid effectiveness and that in turn is demanding institutions and policies that work. Corruption is really not separable from any of the other areas of priority.
The world has seen significant progress in the last 15 years and in the last 25 years; half a billion people have escaped extreme poverty- defined as the number of people living below the poverty line. Most of this progress, however, came from south East Asia and China. However, this progress was not inevitable as it may see today. In the 1960s there was a frequently used expression, ‘oriental fatalism’, which described what people in China thought- Life has been miserable for 400 years and its going to be so for another 4000 years- there is no point in making any efforts to change things. In the 1960s South Korea was considered to be a basket case, with no natural resources, griddled with corruption, and burdened with a Confucian ethic that men don’t work. But things did change and they too can change in Africa. The challenges it faces are HIV/AIDS, and education.
Africa’s greatest and most important resource are its people and the challenge is how to the unleash this energy and potential, in a way that can improve their lives.
15 African countries have been able to maintain growth rates of 4% or better over the last 10 years, and the median of that group is better than 5%. The top performers are Rwanda and Mozambique. However, this trend will not automatically translate into less poverty. Investors have increased private debt and equity flows from $10 billion five years ago to $30 billion. The average annual return on investment in Africa is one of the highest in the world, averaging around 30%.
African government are making it easier for investors to do business and for entrepreneurs to set up business. For example, entrepreneurs in Burkina Faso which used to be one of the most overregulated economies can now open a business in fewer days, using fewer forms and following lesser procedures. One entrepreneur launched a cell phone company in the Democratic Republic of Congo, not a place once thought to be promising. The initial forecast was a market for only 10,000 subscribers; his company reached his first 1 million customers in less than five years.
Importantly, Africa is moving toward greater peace and stability. Just four years ago there were 16 active conflicts destroying countries, families and businesses. Today that number is down to six- still six too many. There is hope and opportunity emerging from the ashes of these conflicts. Just 5 years ago, Sierra Leone and Liberia seems truly hopeless. Sirleaf-Johnson, Africa’s first female president (a former World Bank employee), has promised to electrify the entire capital city in 6 months. Rwanda, after a gruesome genocide had no infrastructure, no capital, but today, it is doing well, because the government invested in its people. In fact it ranks as one of the best reformers.
Throughout the continent countries are adhering to their constitutions, the voices of civil society in parliament have become stronger; people are demanding stronger public governance and more accountability.
However, it must be remembered that corruption is not a disease or a plague of developing countries. Every corrupt transaction has 2 parties, very often the bribe being developed countries, multinationals and foreign banks. Stolen assets end up in the banks of developed countries, which have an obligation and responsibility to help African government recover these assets.
Developed countries have promised to double aid to Africa. But as Tony Blair put it it is ‘a deal for a deal’- in exchange for increased assistance, developing countries must strengthen their institutions and ensure resources are spent wisely. Mutual accountability has been top on the agenda in the development community and as a result, governance is also gaining importance. Research suggests that a country that can improve its governance can almost triple its income per capita in the long term, can reduce infant mortality and illiteracy by two-thirds; that’s what some people call the triple dividend of good governance.
In Dec 2005, Gallup International took a poll asking people around the world whether they thought 2006 would be better that 2005. Africans came out as the most optimistic. 57% of them though things would be better. Now more than ever the opportunity exists for Africans to transform Africa and determine their own future.
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