An Africa that takes care of itself

MICHAEL HOLMAN, former Africa editor of the Financial Times of London, is author of "Last Orders at Harrods."

POOR AFRICA! Seldom has debate about the fate of so many been shaped by so few from so far away -- and with so little effect.

Increase aid, tackle health hazards and build model “development villages,” argues Jeffrey Sachs, director of Columbia University’s Earth Institute, and Africa can be pulled out of the poverty that makes life hell for six of every 10 of its 650 million people.

Not so, retorts William Easterly, economics professor at New York University. We’ve tried that and failed. Instead, aid agencies should focus on specific tasks -- such as getting malaria medicine to the sick, clean water to the poor, textbooks to schoolchildren -- coupled with home-grown political and economic reforms.


Yet 50 years after the first of the colonies won independence, Africa’s capacity to follow any such advice or to manage its affairs is weaker than ever. Its dependence on foreign “experts” is greater than ever, and the influence of proliferating Western aid agencies is more powerful than ever.

And corruption is endemic. Hardly a country on the continent has enough honest officials who can deliver aid, medicines or schoolbooks without paying or receiving bribes or exploiting the aid for political patronage.

So when World Bank President Paul Wolfowitz put a crackdown on graft at the top of his development agenda, he had his priorities right. Wolfowitz’s crusade against corruption is starting to be felt in Asia and South America. In India, the World Bank reportedly held up lending to health clinics because of concerns about possible misuse of funds. In Bangladesh, road contracts have been canceled because of improper bidding. Argentina, under pressure from the bank, has tightened anti-corruption measures. But the crackdown on corruption seems not to have reached Africa, the region that needs it most.

In Kenya, nearly 18 months have passed since John Githongo, the country’s former top anti-corruption official, chose to go into exile and expose the details of top-level graft. Yet the response from the World Bank has been mild.

It is hard to believe that the tough Wolfowitz, the former U.S. deputy Defense secretary and architect of the Iraq war, is shirking a fight. Rather, it suggests that he has learned that what works elsewhere in the world does not necessarily work in Africa. That lesson is a prerequisite to change in Africa, which is undergoing a continental crisis distinct from the rest of the developing world. To grasp the depth of Africa’s problems, consider two debilitating symptoms of its loss of confidence in itself: capital flight and the brain drain.

Every year, about $15 billion pours out of Africa -- a sum that equals international aid. In other words, as fast as aid comes in, capital flows out into Western banks. Roughly 40% of African savings are held outside the continent, compared with 6% in East Asia and 3% in South Asia. Moreover, every year 70,000 of Africa’s brightest and best leave to work abroad, and 100,000 foreign “experts” come to work in Africa.


So how should Wolfowitz proceed?

About 30 years after the World Bank warned of the continent’s deepening crisis, it is surely time for the world’s leading development agency to admit defeat. But the bank should not withdraw; it should reengage.

Admitting defeat means setting a time limit on phasing out development aid -- at least five years but no more than 10 -- to allow an orderly end to an effort that has cost donors more than $550 billion but left more Africans poorer than before it began. Reengaging means ending the unhealthy dependency that aid has helped create. The bank should, for example, make no new loans or grants unless the recipient government provides matching funds, dollar for dollar.

Africa’s own resources must be tapped to replace donor funds. To do this, Africa needs to double its domestic savings, aiming at hitting Asian savings rates. It also needs radical reform of the largely communal land-ownership system. It must introduce a competitive business environment, one that does not, for example, require six weeks to register a new company in Kenya, compared to six days in Hong Kong. It needs a bill of business rights, with provisions to allow arbitration of disputes in a neutral venue abroad, circumventing the corrupt legal systems that have scared off investors. In short, Africa must create the business conditions in which African capital will return.

During a recent visit to Mozambique, British Chancellor of the Exchequer Gordon Brown remarked: “In the 19th century, the issue was what we could do to Africa; in the 20th, what we could do for Africa; and now, in this century, the issue is what Africa, empowered, can do for herself.” One hopes Wolfowitz and the World Bank were listening.