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The Therapy Sessions
Thursday, July 07, 2005

African corruption explained

I witnessed so much waste and corruption when I was in Sierra Leone that interviews like this come as no surprise:

The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good...

SPIEGEL: Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa...

Shikwati: ... for God's sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

Corruption is almost always endemic in tribal societies (which is why the corruption in Iraq does not surprise me in the slightest).

There are really basic reasons for this. In Sierra Leone, it was the idea of the Sababu.

A Sababu is an older person who helps you along the way. He might be an uncle who pays for your schooling or gives a place to live. You expect others to help you when you need help, and when you are prospering, you are expected to act as a Sababu for them in return.

It is a very nice idea, but it is at the heart of African corruption.

For example, if you achieve some level of sucess in Africa, you are expected to give your wealth back to everyone who has helped you along the way.

And to their friends and relatives.

This can get very expensive, but it is viewed as unthinkable to turn these people away. In Sierra Leone, these would be called "krabitz," one of the worst insults in their culture.

This puts real pressure on people.

A clerk earning $10/day can quickly find himself supporting several people, paying their school fees and giving them food.

He is under tremendous pressure to steal.

As a result, the mail in West Africa cannot be trusted. The governments bleed money and get nothing in return. In the Peace Corps, drivers often steal gasoline out of their own cars.

It a tremendous disincentive to economic growth. What incentive is there to to spend months of hard labor digging a fish farm if, in the end, the culture forces you to give away all of your fish to your relatives?

If West Africa is ever to grow, Sababu culture has to go.

But how?

I think that in most Sub-Saharan African countries, most aid given to the governments should be ended. Fifty years of it has accomplished nothing; its absence can hardly do worse.

We should marshal our resources for the few countries that are willing to take the painful steps needed to solve their problems.

Fortunately, American policy may now be moving in this direction. This will concentrate our aid in countries that might just use it wisely.

The painful steps are the very "structural adjustment programs" that liberals consider harsh.

They are harsh, but they are necessary.

What are the painful steps? They are basic steps that any are the foundation of any working economy.

African nations must reduce budget deficits (which are the highest in the world). They desperately need to end price controls, particularly on food and energy. Price controls favor the rich in the cities while they impoverish farmers, encourage scarcity, and create black markets. Countries must stop recklessly printing worthless currency (which causes inflation), develop fair systems of taxation (so that citizens will develop a proprietary understanding of their governments), and clamp down on corruption (which is difficult if people do not have a proprietary understanding of their government).

It is vital for countries to open their borders to trade with (at least) other African countries. Right now, working for the customs department is the road to wealth for mid-level African bureaucrats: the bribes and tariffs are wealth creation, African style. Freeing trade will improve access to needed goods (especially food), stimulate competition and improve efficiency. Standards of living and diets will not be far behind.

State-owned enterprises, which fill the pockets of corrupt leaders, should be sold. Most of them divert government money and attention, and the collusion of business and government interests inevitably leads to corruption. Imagine if the owner of your company could have you arrested and tortured for not working hard enough. This is the case in the Congo. Cotonniere, the state-owned cotton monopoly, makes government officials rich and the police beat farmers when they fail to grow enough cotton. Business and government interests are best kept separate.

African property ownership thoroughly needs to be reformed and legitimized. Currently, Africans are allowed to work lands that have been in their families for centuries, but they do not own them and they can lose them at any time. Formal ownership of land would make households wealthier, give homeowners collateral so that they can formally borrow money, and reduce tribalism. It would also strengthen African legal systems, which in most cases are in their infancy.

What countries would practice such “radical” economic policies?

These are the very same policies practiced by the rich nations of the world, and they are the primary reason that these countries maintain their wealth. Africa has suffered for thirty years with nationalized industries, Marxist leaders preaching economic self-sufficiency and independence from the outside world. Bad economic policy is at the heart of African poverty.

What can the U.S. do? We could certainly stop dumping our cheap subsidized food on them, for one. But the most important thing is simple: give African countries freedom to sell their products on the American market. West Africa would love to sell its fine cotton and cloth to Americans, not to mention its fruit, and Haiti would love to sell us sugar. If it weren’t for US law, the flood of hard currency would certainly transform these economies much more than any aid package would. The opening of the US market could be used as a reward for any country that is willing to undergo such painful structural reforms.

And it would make the US richer too...

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