Tuesday, November 6, 2007

Will Money Solve Africa’s problems?

Some time ago, the John Templeton Foundation asked development experts and their ilk the following question: Will Money Solve Africa’s problems?

It’s an important question, so I capitalized it, hoping it would be turned into a report of some sort. Anyway, of the eight responses so far, only two positive answers were yielded, a few emphatic negatives (including a “no way”), an “I thought so” and “only if.”

The question reminds me of the chicken-or-the-egg debate. You can endlessly discuss and dispute (and if the funds permit, perhaps hold a roundtable in a fancy Manhattan restaurant where lunch costs you half the GDP of Somalia). Part of me, however, says you’re not going to solve anything into you get yer butts out of the bistro (steal an ashtray, though, will you?) and bring a little concreteness to the proceedings. Instead of “Africa,” why not pose specific questions about “Rwanda” or “Congo Brazzaville” or “Niger.”

Speaking in the abstract sense, you can come up with all sorts of wacky plans and ideas. On the ground, however, we’re limited by reality. So let’s charter a plane to Zinder, Niger and hold a hearing. Now, that would be eye opening.

Another quibble. I understand the respondents know a bit about development, but how about actually asking someone who works in the field. My buddy Steve will talk for hours on the issue. Better yet, ask Africans – not only wildly successful ones, either – someone like Ahmed, this kid I know who sells phone cards at the end of the street. He’ll probably riff on your question forever. And he’s not the kind of guy who’d lift an ashtray.

The one good thing about these experts is that just because they’re not in the field so much, they definitely have their uses. These experts are good at speaking to each other without paying too much attention to the sounds us plebes make. It’s a good thing, really: these cats can really move the debate. We can only watch it moving.

Will Money Solve Africa’s Problems?

I thought so, says Michael Fairbanks, the co-founder of OTF Group, and the SEVEN FUND, which provides grants for enterprise solutions to poverty.

Every nation needs money to upgrade and improve the lives of their citizens; and it is good when a rich nation helps a poor one after a devastating act of God, or to meet a basic human need. But, too often, when one nation aids another it is based on a massive infusion of financial capital in return for changing monetary, trade, investment, fiscal, sectoral, and wage policies. This is often the right advice, but there is a trade-off, too. The nation with all the money often assumes the decision rights; and the responsibility for a nation’s future must always reside with the citizens of that nation, not with foreign advisors, and certainly not with its creditors and donors.

This sort of checkbook development confuses compassion and generosity with over-responsibility for fellow human beings. Explicitly or implicitly, the donor is telling them how to run their country, and in the process, without meaning to, can rob citizens of emerging nations of their most precious assets – dignity and self-reliance.

No, says Dr. Donald Kaberuka, president of the African Development Bank and formerly minister of finance of Rwanda.

Not as long as there are issues such as prolonged violent conflict, bad governance, excessive external interference, and lack of an autonomous policy space. Alone, money cannot solve Africa’s development problems. Proof, if any was needed, is the fact that many of Africa’s natural resource-rich countries score very low on human development indicators.

Africa must be given a chance to meaningfully integrate into the global trading environment in order to sustain growth performance. It will not happen if international commitments such as those made at the Gleneagles G 8 Summit are not met. The Doha Trade Round negotiations need to succeed. These negotiations have been called a Development Round because they frontload the interests of developing countries such as those in Africa. At the end of the day, we are all God’s children and he gave us one world in which we are interdependent.

Yes, says, Ashraf Ghani, chairman of the Institute for State Effectiveness. He was adviser to the UN for the construction of the Bonn Agreement for Afghanistan, and was finance minister of Afghanistan from 2002–2004.

If it is invested in enhancing African capabilities to integrate the continent into global networks of knowledge and creating prosperity and stability. This will mean confronting and overcoming a triple failure: corruption and abuse of power by African governments, predatory practices by extractive industries, and the waste of resources by an uncoordinated and ineffective aid system.

Africa will acquire a strong voice when it is represented by credible leaders and managers. Such people cannot be produced without investment in the appropriate institutions. Currently, about $5 billion per annum is provided in the form of technical assistance to meet donor requirements. Directing a significant portion of this money toward investment in institutions will produce stakeholders focused on creating a positive change.

No Way, says James Shikwati, founder and director of the Inter Region Economic Network and CEO of The African Executive business magazine.

The problem in Africa has never been lack of money, but rather the inability to exploit the African mind. Picture a banana farmer in a rural African village with a leaking roof that would cost $100 to fix. If one purchased $100 worth of his bananas, the farmer would have the power and choice to determine whether the leaking roof is his top spending priority. On the other hand, if he is given $100 as a grant or loan to fix the roof, his choice would be limited to what the owner of the big money views as a priority. Out of 960 million Africans in 53 states, there are innovators and entrepreneurs who, if rewarded by the market, will address the challenges facing the continent.

If money was the key to solving problems, banks would send agents on the streets to supply money to afflicted individuals. But banks only offer money to individuals who successfully translate their problems into opportunities. A $7 million British compensation to 228 Samburu herders in Kenya in 2002 did not stop them from turning into paupers by 2007. Money in itself is neutral. Big money viewed as capital has led strategists (who depict Africa as trapped in a cycle of poverty) to argue for massive inflows of money as the only means of escape from poverty. Viewing money as a receipt for value, a creation, and a resultant effect of exchange between different parties offers a chance to translate African problems into opportunities.

I think you get what I say about the abstract. Any idea will work, especially when you’re only allotted 350 words. The good folks at the John Templeton Foundation society also asked William Easterly his thoughts on the issue, but I already give him enough press – not that I don’t agree with him.

I am all for changing the system of development; in the macro sense, it surely doesn’t appear to be working. But are we pinning too much hope on the business class around these parts? On one level, that’s a good thing – it’s better than waiting for your average functionnaire to get out from behind his desk.

My question is whether the business sector is ready for it. As my wife says, “I don’t mean to be mean” but there’s a lot of hurdles to cross before professionalism sets in. We are living in a time where factories in Asia produce “African” masks because the Asian-produced goods arrive on time, aren’t full of mistakes and are cheaper for stores in Europe to buy. Add on to that heavy transportation costs, and Africa surely feels further apart from the rest of the world than ever.

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