Enough handouts for Africa

Nicky Oppenheimer
International Herald Tribune
July 12, 2005

This year has been anointed by many in the West as the Year of Africa, a status most recently sealed by the continent’s prominence at last week’s G-8 summit meeting and at the much publicized Live 8 benefit concert series.

At first glance, this position appears to occupy the moral high ground, and I applaud the newfound focus of the West to draw attention to challenges Africa faces. Nevertheless, as an African and someone who cares deeply about the continent, I depart from those groups that use a broad brush to characterize Africa as a virtual basket case of crime, disease, corruption and ineptitude. This is compounded by the apparent conviction that an endless stream of aid is the key to lifting Africa out of poverty.

Over the last 50 years, sub-Saharan Africa has received more than $1 trillion in aid, or more than $5,000 dollars in today’s terms for every man, woman and child on the continent. And yet today many African countries are poorer than they were 50 years ago.

At the time of independence, many African states had a higher per capita income than much of Southeast Asia. Today, however, more than 300 million Africans are living on less than a dollar a day, while South Korea, to take one example, which was much poorer than many African countries around the time of their independence, is now 37 times richer.

Yet the seemingly endless flow of aid continues while we hear tales of donor fatigue. But it is Africans who are actually suffering from donation fatigue.

Experience has shown that aid on its own does not achieve the intended good and can cause harm. In many cases it has simply fed the greed of corrupt leaders. The proposed wholesale cancellation of debt could result in sweeping away good practices in countries struggling to achieve independence and rewarding leaders of failed or failing states who have never aspired to it.

The West would provide a greater service to Africa by working with leaders from African governments, civil society and the business community to put forth a set of solutions that will generate lasting benefits. A real and lasting solution demands long-term commitment and a nuanced approach with a number of guiding principles.

  • Abolish domestic subsidies. The playing field of the global marketplace is tilted toward the West. Until Europe and the United States eradicate domestic subsidies and eliminate unfair tariff barriers, Africa’s producers will remain impoverished.
  • Build human-resource capacity. Apartheid in South Africa, colonialism elsewhere and the destruction of intellectual elites left much of Africa desperately short of educated and skilled Africans. Today wealthy countries continue to drain Africa of its medical personnel, who are recruited away to the West. Help with education, as well as skill training, is essential. Multinational companies and other investors have an obligation to play a key role.
  • Invigorate the public health sector. The ravages of AIDS and other diseases like malaria and tuberculosis need to be addressed by donor agencies, governments and the private sector. De Beers, both in South Africa and with its partner Debswana in Botswana, was the first mining company to make antiretroviral drugs available to all employees and their spouses or partners. De Beers will also fully fund two graduate students from Africa to study public health at Johns Hopkins University in the United States. These students will return to Africa to help build the public health infrastructure it so desperately needs.
  • Establish a property rights system. In his book “The Mystery of Capital,” Hernando De Soto notes that the poverty in the developing world is due to a lack of access to usable capital. And the best way to secure access is to reform local systems and grant property rights and legal title to land that can then be used, traded or leveraged to secure collateral.Direct investment is a key indicator of a nation’s economic health, but good investors, those who are committed for the long term and who will make a real contribution to the host community, require clarity, certainty and transparency from governments before they are willing to invest. Good governance and the rule of law are the keys to reducing investment risk and attracting capital flow. Partnerships between governments and responsible long term investors will lift Africa out of poverty.

    These recommendations are not simple. Nor can they be implemented in the course of a few years. They require dedication and commitment by all parties in the public and private sector. We have seen them work in places like Botswana, South Africa, Mauritius and Ghana, which have established themselves as countries increasingly, or completely, independent of aid.

    Africa deserves more than the West’s charity. Africa needs a hand up, not a never-ending series of handouts that do little more than play to Africa’s weaknesses and provide the donors with a false sense of gratification.

    (Nicky Oppenheimer is chairman of De Beers Group.)


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