About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, December 24, 2018

Museveni’s anti-graft crusade

Why the president’s efforts against corruption may be politically appealing but are strategically of little value

THE LAST WORD | ANDREW M. MWENDA | Last week, President Yoweri Museveni launched an “anti-corruption unit” in his office. This is one in many efforts the president has tried and failed in the last 32 years. The NRM’s Ten Point Program had “fighting corruption” as its number two priority. Yet Museveni has presided over the worst levels of corruption in our post-independence history. For our “analysts” this is because Museveni is a dishonest man. Nonsense!

Corruption is not a problem of Uganda alone. Every leader in post-independence Africa has come to power promising to fight it. Nearly all of them have ruled and left power being accused by their opponents of perpetuating it. Corruption is structurally obdurate in post-independence Africa because it is the currency of managing power relations in poor agrarian societies. It acts as glue to hold together the often flabby and heterogeneous coalitions of our multi ethnic societies. Corruption also acts as a weapon for opponents to fight incumbents because it has been constructed as morally revolting and is always given as an explanation for (rather than a characteristic of) our poverty.

Thus leaders across Africa have been placed in the difficult position of having to rule by relying on corruption and then pretend to be fighting it. I do not know of any government in Africa today, with the sole exception of post genocide Rwanda, where corruption is not the main engine of governance. This is not a moral judgement on those governments and leaders that preside over high levels of it. Rather it underlines the fact that corruption and patronage are not just cost-efficient and cost-effective ways of building electoral and governing coalitions in poor agrarian societies, they are also the only affordable options.

Corruption as a moral problem would not have been as toxic as it is today if it was not given as the explanation for Africa’s poverty. Yet there is no evidence that the existence of corruption in a country automatically stifles development. Some of the most successful nations like the United States (19th century) South Korea (20th century) and China (21st century) have had extremely high levels of corruption during their intense period of transformation from backward, poor agrarian societies to modern affluent industrial nations. The lesson: corruption is a characteristic feature of poverty, not a cause of it.

I am not suggesting that high levels of corruption were responsible for America’s or South Korea’s or China’s high rates of growth, even though I cannot rule that one out. This historic evidence demonstrates that the existence of corruption even at the highest levels of state does not automatically stop a country from rapidly transforming from poverty to riches. This is because the effects of corruption on growth depend on the context.

For example, if someone stole money meant for a hospital in Kumi and bought a luxury house in Kololo from an industrialist; and the industrialist used that money to build a firm that grows into a Samsung or Apple, such corruption would have been more productive than the hospital. We need only one in every ten thefts (the success rate of venture capital) for such money to get into the right hands and transformation will follow. Successful firms like Google, Apple, Facebook and Microsoft relied on venture capital to start. Their founders did not investigate the original source of the funds because it was irrelevant. It is the innovation, not the source of money that was fundamental to their success.

Many public investments have symbolic humanitarian value but are economically inefficient and less productive compared to private investments. Therefore, the diversion of resources from the benefit of many to use by a few may, in certain circumstances, be economically productive. If public investments created more value than private investments, communism would have created more prosperity than capitalism. Capitalism is based on the ethic of private greed, not common welfare.

There is another example of context: if a country has an excessively regulated business environment but its bureaucracy is dishonest in enforcing rules, then a bribe to speed up business registration, issuing of an investment license etc. will act as the grease that turns the wheels of investment and growth. So having an honest government is not a magic bullet to economic success, however politically appealing that may be. Equally, having a corrupt government is not a sentence to economic stagnation, however morally repugnant such corruption may be.

The African elite are locked up in false assumptions about the factors perpetuating our poverty. They think it is due to absence of democracy and respect for human rights and prevalence of corruption. This is fashionable nonsense. There is one factor that underlies every country that has grown rich – it is its terms of trade (the relationship between the prices at which it sells her exports and the prices paid for its imports).

It does not matter whether the country in question is a democracy or a dictatorship, a monarchy or a republic, corrupt or honest, etc. as long it has favourable terms of trade over generations, its prosperity follows as night follows day.

Authoritarian Saudi Arabia which keeps its women in subjugation is many times richer than Africa’s leading democracies. Apartheid South Africa grew to become the most industrialised country in Africa while excluding 70% of its black population from all political and economic rights. Equatorial Guinea is the richest country in Africa in per capita income but has equally the most reprehensible government on our continent.

So if Africa devoted only 10% of the time, energy and money expended in pretentious fights against corruption to building national firms/brands that can export high value manufactured goods and increase national control over the commanding heights of her economies, our transformation would be possible. We are blind to our strategic needs (manufacturing and national ownership) and focused all our energies on inconsequential ones (democracy, corruption and human rights). These latter issues make good emotional appeal but contribute very little, if at all, to development.

Where should Africa look? America industrialised with Ford, General Electric and General Motors; German with Mercedes Benz, Audi and BMW; France with Citroen and Peugeot; Sweden with Volvo; Japan with Toyota, Honda and Nissan; South Korea with Samsung, Kia and Hyundai etc. China is building her own brands. Equally Africa’s prosperity will depend almost entirely on us putting the most efforts on building local firms/brands especially in manufacturing high value exports and constructing our infrastructure. The rest are diversionary quarrels and recriminations over irrelevant issues. Happy New Year.



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