How Africa’s obsession with ‘governance’ issues is too much ado over little or nothing
Let me articulate a heresy: the argument that Africa’s failure to prosper economically is fundamentally due to “governance” i.e. that our leaders are greedy, selfish, corrupt, dictatorial and power hungry is baloney. These ills may be morally repugnant but they do not automatically impede economic development.
Today’s rich countries had leaders with similar characteristics and in spite of them (and sometimes partly because of them), their nations transformed from poor agricultural societies to modern industrial nations.
The United States industrialised alongside genocide of Native Americans and enslavement of black people, which became convict leasing; a system of conscripting labour of prisoners that was actually worse than slavery. During its most intense phase of industrial transformation (1865 to 1900) America did not allow its women and black population to vote. Corruption was rampant, in fact legal. Votes were bought and sold on the open market. The U.S. overtook Great Britain as the world’s largest economy in 1890.
Yet during that period, U.S. politicians were in the pockets of big money cats and political parties auctioned government jobs to their financiers (like they still do today). It had no competitive bidding. During this phase of its history, the U.S. never recruited a single civil servant through an open competitive exam. Indeed, there was no requirement for professional/technical competence or qualifications for a job in the civil service until the early 1900s.
America was not alone. European powers industrialised in the mid to late 19th and early 20th centuries against the backdrop of officially sanctioned corruption called prebendalism, cruel labour practices (read Karl Marx’s critique of early capitalism), and voting restricted to a few adult males with property. Many argue that it was possible to undergo industrial transformation in those days with such ills but today things have changed; that today’s realities demand honest government that is liberal-democratic with checks and balances.
This is sentimental hogwash. The most rapidly industrialising countries of today – China and Vietnam – are saddled with high levels of corruption. Both are ruled by single party dictatorships and no organised forces in civil society hold them to account. China’s human rights record is appalling. These factors may be morally repugnant but they have not stopped China from rapid economic progress.
Just next door to Africa are the gulf states of the Arabian Peninsula. Dubai is the most rapidly transforming mini-state with oil revenues only contributing 4% of its budget. It has no elections, no elected parliament or free press and no political parties or any form of competition for power. Instead it is ruled by a traditional monarchy with absolute authority and no term or age limits.
There is hardly a distinction between the private property of the ruling emir and the public property of the state of Dubai.
The Asian Tigers
Even the Asian tigers are not exemplars of the governance virtues often attributed to prosperity. South Korea, Singapore, Taiwan, Indonesia and Malaysia were very corrupt and undemocratic during their intense period of rapid economic growth.
They were ruled by military or civilian strongmen; the type we are told are responsible for Africa’s poor performance.
Their leaders clung to power for decades and died, retired or were forced out of office (Taiwan after 45 years, South Korea after 18 years, Singapore after 36 years, Malaysia after 24 years and Indonesia after 32 years).
Even when it comes to economic policies, the common gospel of low inflation, wholesale privatisation and liberalisation, openness to Foreign Direct Investment (FDI) etc. does not stand the test of evidence. Japan and South Korea industrialised with low FDI and when banking was 90% in local hands (either by the state or its private sector cronies) – as it is in China today.
From 1930 to 1987, Finland had a law categorising any firm with foreign ownership above 20% as dangerous. It liberalised in 1993 only as a condition for joining the EU. In South Korea, inflation averaged 19% between 1960 and 1990, its most intense period of transformation. In China, 65% of industrial production today is by state owned enterprises.
Nearer home in Africa, the fastest growing economy is Ethiopia. It has not liberalised and inflation has been at 30%. All banks are either owned by the state or by its nationals. It is a virtual one party state that brooks little dissent – it has one television channel, one radio station and one opposition member in parliament.
It is clear that all the ills that secular priests of development claim are holding Africa back were rampant in all of today’s rich nations during their intense period of transformation from poverty to prosperity. If they are holding Africa back, we need to know the special circumstances on our continent that make them bottlenecks to prosperity.
From the perspective of the history of economic development, one thing seems obvious: if what a country sells abroad attracts more value than what it buys, that country will prosper. This is how USA (through industrialisation) and Saudi Arabia (through oil) became prosperous. The other factor is national control over the most valuable parts of the economy.
Africa has been sold a gospel of governance that has taken our eyes off this ball. We are permanently involved in struggles over “governance” issues – term and age limits on presidents, press freedom, multiparty politics, corruption and favoritism etc. As we fight over these peripheral issues, multinational corporations take all our banks, manufacturing firms, telecommunications companies and win all multi-billion dollar public infrastructure projects.
My argument that corruption, longevity of our rulers in power and undemocratic rule are not fundamental constraints to our economic prosperity is not a call for inaction on these fronts. Rather it is to make the point that in the struggle for prosperity, the quarrels over these problems is a sideshow. I am aware this argument gives my critics an opportunity for ad hominem attacks, claiming I am trying to justify those of our rulers who are corrupt, dictatorial and clinging to power – because they have paid me.
As I wait for the cheques to flow in, let me insist that the most important battles we must fight are national control and direction of our economies and the shift from being producers and exporters of raw materials to value added products. Rich countries are not rich because they had democratic governments that were honest and professional. Instead they are less corrupt, more democratic and professionally managed today because they are rich.
“Good governance” is a consequence of development not a cause of it.