Ivey Business Journal interviews Jeffrey Sachs

I can get a little glib and dismissive about Jeffrey Sachs, who I feel is turning into the modern-day Carl Sagan, a guy who felt a Phd in one area of study gave him carte blanche to be a know-it-all in every other field. (A prototypical blogger, if you will.)

However, Sachs a well versed economist and when he’s talking about his field, you can feel his knowledge. Here’s a quick excerpt of an interview with him by the Ivey Business Journal.

Ivey Business Journal: In The End of Poverty, you write that “clinical economics,” as you call it, is one solution to leading people out of the poverty trap. Describe clinical economics?

Jeffrey Sachs: Clinical economics means doing economic development with the same precision and attention to science -- and I'd also add ethical standards -- as does the practice of good clinical medicine. Having been married to a clinical pediatrician now for 27 years, I’ve observed the essence of good clinical medicine, which is of course having a rigorous science base and then being able to provide a good differential diagnosis, as the doctors call it, to any particular patient and the patient's conditions.

So when you see the problem of extreme poverty, just as when you see a fever, one has to understand that there are many possible underlying causes. Treating the symptoms is almost never sufficient. There is almost never a single possible cause for a specific economic syndrome. And just as with clinical medicine, the key is to make a good diagnosis from the various possibilities and then make a good regimen in response. Part of the problem with economics as it's practised now is its very glib attitude, where people often try to peddle their single magic bullets or believe what has worked in one place automatically works the same way in another, rather than understand that since the underlying conditions are different, we need specific approaches that are well-tailored to the specific problems. In the case of Africa, where I have directed a lot of my attention in the past dozen years, I put a lot of stress on Africa's unique geographical burdens of disease, tropical agriculture in a savannah climate, and the problems of isolation, with the lack of basic infrastructure needed for high levels of productivity. This combination of disease, flagging agricultural productivity and chronic food shortages, and the problems of economic isolation need to be addressed specifically in an African context to break the poverty trap and enable Africa to get on a path of development.

IBJ: In The End of Poverty, you say that governments in Africa need to create an environment conducive to business coming in. You also believe that corruption and misrule are not the problem. How do you create an environment that's conducive to business coming in while ignoring the corruption and misrule?

JS: There is certainly corruption in Africa but there's corruption everywhere, including in our own country, of course. The point I'm making is that there is not only corruption in many parts of Africa, but that the situation is no worse and often considerably better than it is in much faster growing parts of the world, particularly in Asia. The point is really a diagnostic point that we absolutely, simplistically I would say, rush to the Big C, corruption, as the explanation for Africa's problems, ignoring the challenges that I mentioned before which I think are the much bigger ones, and therefore we fail to keep problems of corruption in perspective. It has become both an excuse for inaction and a kind of paralyzing factor in discussion, a kind of showstopper. “Well, we can't do anything, there's so much corruption.” The fact of the matter is that it's simply not true and it's not really a sound or full explanation. It's a misunderstanding to think that I somehow condone this or condone corruption or feel that it isn't a problem. I don't mean to say that. I just mean to say that we have exaggerated this one problem to the neglect of many other programs designed to promote economic development. We're not helpless in simply thinking that our option is to hand money over to corrupt officials and that's the end of it. Either we do it or we don't do it. No, the fact is that we can design the delivery mechanisms of assistance programs in ways that keep the corruption in check, that are designed for, according to transparent performance standards with milestones, audits, regular monitoring, the kinds of things that one does to account for what is often a relatively weak management environment. Of course we have to respond to the realities, but we aren't helpless in the face of these problems.

Is corruption gaining of foothold in Benin?

Beninese political parties and the customs services are the country’s most corrupt sectors, according to a survey jointly carried out by the government and the World Bank, the Journal Chretien reported.

“Out of the 971 persons questioned in the households, 80% felt that the political parties are the most corrupt sector, followed by customs services (79%), tax administration (70%), traffic control police officers (62%) », the survey reveals.

According to the survey released on Monday in Cotonou which also targeted 28 state services, 55% of the people questioned felt that « the Beninese customs are corrupt ».

The other corrupt services include the justice system (45%), the highway police, the dues and taxes, the criminal investigation police, the electricity and water services, the public works, and the education and health services.

The survey disclosed that "the corruption is a worrying issue in Benin" because it biases the stability and security of social actions and sullies the democratic values. Such drawbacks are likely to compromise the socio-economic development and law and order.

To fight this plague, the government issued a bill to prevent and crack down on corruption and similar offences, an official source said.

Of course, this survey looked at perceptions of corruption within Benin. When compared to other states, the country has a pretty good track record. According to the Ibrahim Index of African Governance, Benin does favorably well compared to other governments on the continent. Overall, the country ranks 13 of 47, but does score low in “Rule of law, transparency and corruption.”

Transparency International ranks Benin 118 out of 179 countries in its Corruption Perceptions Index, placing it below other West African states like Ghana, on par with states like Mali, and well above states like Gambia, Cote d’Ivoire and Guinea.

West Africa: Home to the world's most expensive and inefficient road system

“It costs more to move goods across West African countries by road than any other region in the world due to the huge unofficial payments business owners have to make at the borders,” says Business Day in Nigeria.

From the Story:

WATH, a regional trade facilitator established by the United States Agency for International Development (USAID), says the elimination of corruption at the borders is critical to the success of the economic integration aspirations of the Economic Community of West African States (ECOWAS).

The unofficial payments, WATH noted, most times cost more than what traders pay to the official sources. West Africa, the agency maintains, has the least efficient trucking in the world due to delays at numerous road check-points and border posts as a result of bribe-taking by uniformed officers such as the police, customs and immigration officials as well as gendarmes.

“West Africa has the most expensive, least efficient road transport in the world. Reasons include the high costs of inputs and taxation, low capacity use, overloaded vehicles running on degraded roads, and a surfeit of old, dilapidated trucks operating when they should be retired from the fleet.

“Another source of high costs is road barriers, set up mostly by law-enforcement agents to exact bribes from truckers. Bribery and delays also occur at border crossings, where officials may exploit the need to redo paperwork for cargo as part of the transition from one country to the next”

Arresting the 'Big Fishes': Fighting corruption in Sierra Leone

When Earnest Bai Koroma was elected to govern Sierra Leone, he claimed he would fight corruption, which is seen by locals and the international community of one of the country’s biggest stumbling blocks to better development.

This is what the Index of Economic Freedom has to say about corruption in the country.

Corruption is perceived as pervasive. Sierra Leone ranks 142nd out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. International companies cite corruption in all branches of government as an obstacle to investment. Official corruption is exacerbated by low civil service salaries and a lack of accountability.

To help fight graft, the president appointed Abdul Tejan-Cole, a lawyer and human rights activist, to lead the country’s Anti-Corruption Commission.

One issue facing the ACC is that in May its leading donor, British Dfid, refused to continue funding after a review found it had achieved little impact fighting corruption. Tejan-Cole claimed ACC’s new administration is speaking with Dfid in hopes to restart funding. “DfID support is absolutely necessary for us -- we require it -- the government of Sierra Leone on its own cannot fund the commission,” he told Inter Press Service.

On other fronts, Tejan-Cole recently admitted to Reuters he has presidential backing to create a separate court to fast-track the prosecution of corruption cases; a constitutional amendment is required to create this new court. He would also like to compel senior politicians and officials to declare their assets, which would be investigated by a 112-person team.

Tejan-Cole recently sat down for a Q & A with Inter Press Service. Here are some highlights.

What specific strategies have your commission put in place to fight corruption?

I think we are taking a three fronts approach. Prevention, Education, and Prosecution. Prevention, by putting in place systems and mechanisms, to be working with Government Ministries, Departments, and Agencies, to ensure that they have proper systems and practices in place. Also prevention includes declaration of assets for key public officials.

Education, I think the emphasis is really on educating the people of Sierra Leone, about the ills and vices of corruption. But also about working with integrity clubs in various schools, to ensure that the next generation of Sierra Leonean leaders live up to the right moral standards expected of them.

Prosecution as a means of setting up a deterrent to committing the act of corruption, and if possible to recover some of the proceeds of corruptions.

The public is often sceptical about the ACC because it always arrests the ordinary man and the big fish gets away?

'Big fishes' have been arrested by the commission, but really I do not think it is for me to look at what happened in the past. I am looking forward and I can assure the public that if any of the so-called 'Big fishes' commit acts of corruption -- and I have the evidence to prove it in the court of law - - action would definitely be taken against them That is why I need the support of the people. We need to get people to report acts of corruption. We need to get people to be engaged with the commission to ensure that we are all in the fight against corruption. If I don't have the necessary evidence and people do not come forward to give the necessary evidence then unfortunately these 'Big Fishes' will have to go scot-free. So the obligation really is also on the people of Sierra Leone, the government and the various key stakeholders to ensure that we have the necessary evidence to prosecute.

…

Low salaries paid to officials in developing nations are said to be one of the main reasons for public sector corruption. Do you think levels of graft among Sierra Leonean civil servants can largely -- even exclusively -- be attributed to low pay?

I do not think it can exclusively be related to low salaries. I think low salaries can be one factor… there are so many causes of corruption that we can look at in Sierra Leone. I think if we just simply concentrate on low salaries we will not solve the problem of corruption. There are instances where salaries have been increased in certain institutions and where the corruption rate has still remained the same. So, in as much we address the issue of low salaries we need to look at other issues. The general attitudes of people need to change. The whole question of the economic decline, lack of governance structure within the system, the collapse of moral value within the country needs to be revised.

Take backs

I’d like to take back (or re-think) my comment yesterday regarding the role Africans must play in democratizing their countries, ushering in a respect for the rule of law, freedom of the press and that other good stuff. To tell you the truth, I was inspired by a comment page on the BBC where readers could write in and respond to this question: Should there be a limit to the amount of terms or years African leaders serve? By looking at the names or the addresses, most of the comments were from Africans themselves. The polling wasn’t scientific by any means, but the responses sent a clear reminder how much the West needs to consider the opinions of regular Africans in this process.

Ok, put that aside for a moment.

My new argument is that the Western/Donor/Former-Colonial nations have a role to play in this, too. It’s their money (or, their taxpayer money) that funds these countries and we should have a say in the matter. That’s not to say regular Africans shouldn’t have a say; they should, perhaps they should possess the greatest say. Also, I don’t mean to say that the West should instruct a foreign government how to run its own country. (That went out in 2003.)

Rather, donors have the right choose whether a country gets funding at all. It’s the right of the West to say no to aid – although few countries have the guts to pull out every stake and walk away from the table.

Perhaps these donor nations can take the lead from Robert Calderisi, a former World Bank guy and author of The Trouble with Africa: Why foreign aid isn’t working. In his primer on ten ways to change Africa, he says the Richie-Rich nations should “focus foreign aid on five countries that are serious about reducing poverty.”

That’s right, have the international aid community give five well-run governments blank checks to help them fight poverty, hire teachers in villages, fight river blindness, whatever they choose. He creates this list from what he sees are the best run governments on the continent: Uganda, Ghana, Mozambique, Tanzania and maybe Mali. (My paperback has a 2006 copyright date, so my guess is that he would now include Mali on the list.)

His argument is simple: these well run governments are transparent enough so corruption isn’t a major worry and inclusive enough so the people have a say on where this development money should go. (Which should be the whole point of development.)

As for those other countries? He’d like to expand the list and give out money to more countries, but not until their governments start playing nice.

“The number could grow,” he writes of the list of five, “as political systems throughout the continent are opened up, corrupt leaders are replaced, and the benefits of self-directed development become clear.”

His arguments remind me of another World Bank turncoat, William Easterly, who wrote a book with a title surprisingly similar to Calderisi’s: The White Man’s Burden: Why the West’s efforts to aid the rest have done so much ill and so little good. (What is it with these former World Bank guys and their long titles?)

Easterly looks at development from a global vantage point and is markedly crankier than Calderisi (he’s an economist), but nobody would confuse either as a stoolie of the development crowd. Calderisi’s prescription for those leaders who don’t meet his demands: “[G]overnments that are indifferent to poverty, cannot guarantee basic education for their citizens, or offer only lip service to fighting HIV/AIDS should not be helped at all.”

If you think that is harsh, his prescription goes on from there:

• Introduce mechanisms for recovering public funds, that is put controls on secret banks and money stashes of African leaders, just like you’d target terrorist organizations;
• Require all heads of state, ministers and senior officials to open their bank accounts for public scrutiny. (My guess is the political big wig building the mansion across the street from my house may not support that one.);
• Require all countries to hold internationally supervised elections;
• Supervise the running of Africa’s schools and HIV/AIDS programs. I never said he was a bleeding heart.

It’s a bitter pill, this stuff. But as a Ghanaian said in the BBC forum:

African democracy is in its early stages and therefore must be given enough chance to grow. The continent is now going though an era of transition from the military days to the rule of law. In order to avoid the mistakes of the past, African leaders should not be given the mandate to rule for more than four years. The longer they stay in power the more complacent and less popular they become. We must give democracy a chance.

Our Nigeria Problem

There’s a voyeuristic side of me that can’t stop reading human rights reports. When I have a little downtime, I’ll scour through old tales of Serbian and Croatian crimes against humanity. Or, I’ll catch up on Charles Taylor’s use of amulets to tell his boy soldiers they’re impervious to bullets. Old narratives from Apartheid-era South Africa, anyone?

The best human rights reporting opens a window to world few people know. That’s a good thing. A talented human rights investigator will give readers plenty of illicit knowledge, dirty little secrets from the underbelly of despotic regime. To me, human rights reporting underscores my twin beliefs that most power is corrupt and there’s some really sick bastards out there.

Yet reading the press reports of Human Rights Watch’s new report on the 2007 elections in Nigeria failed to stir anything but a yawn. Politics in Nigeria are dysfunctional? It’s like someone told me, at 39, that my insurance company isn’t looking out for what is best for me.

Every report has to start somewhere, but “Criminal Politics: Violence, ‘Godfathers’ and Corruption in Nigeria” takes us down the path we’ve all heard before. “Nigeria is mired in a crisis of governance,” the report’s summary begins. “Eight years since the end of military rule, the country’s longest-ever stretch of uninterrupted civilian government, the conduct of many public officials and government institutions is so pervasively marked by violence and corruption as to more resemble criminal activity than democratic governance.”

The authors go on to list Nigeria’s problems. And I quote:

• Systemic violence openly fomented by politicians and other political elites that undermines the rights of Nigerians to freely choose their leaders and enjoy basic security;
• The corruption that both fuels and rewards Nigeria’s violent brand of politics at the expense of the general populace; and
• The impunity enjoyed by those responsible for these abuses that both denies justice to its victims and obstructs reform.

Election violence? Corruption? Impunity? Ordinary Africans will argue those words apply to nearly half the countries on the continent. Maybe more. Would anyone have batted an eye if Human Rights Watch wrote a similar report condemning the faux elections of Zimbabwe or Libya or Egypt? No. That’s the important point. The fact that Nigeria is at least an ornamental democracy is a slap in the face to this West African nation.

Let’s get something straight. In Africa, Nigeria is a codeword for a seriously unwell country. Even the most casual reader of newspapers knows a few head-shaking anecdotes from Africa’s most populous country: the wicked email scams; the violent fight against polio vaccines; the impromptu roadblocks manned by 14-year-olds with Kalashnikovs; the corrupt oil industry that’s bleeding the rest of the country like a back full of leeches.

In Africa a dysfunctional political arena doesn’t necessarily translate into any further suffering for the rank and file. I know this doesn’t jibe with the often frowning analysis from World Bank officials, democracy consultants to USAID and foreign correspondents of major metropolitan dailies. Most Africans have adapted a healthy skepticism regarding the role of politics in their countries. That’s because the state of politics in most countries is not pretty or well organized or even fair. When things seem to hit rock bottom, life often continues apace. Take this from Kwame Anthony Appiah, writing on Ghana’s political crisis of the 1970s in his book In My Father’s House:

“For a Hobbesian, I suppose, the withdrawal of the Ghanaian state, in the face of its incapacity to raise the income to carry out its tasks, should have led to disaster. Yet, despite the extent to which the government was not in control, Ghanaian life was not a brutish war of all against all. Life went on. Not only did people not “get away with murder,” even though the police would usually not have been in a position to do anything about it if they did, but people made deals, bought and sold goods, owned houses, married, raised families.”

I think Human Rights Watch understands this dilemma. (Because they’ve seen so much political dysfunction, they comprehend it very well.) What they may argue is this time, the Nigerian government stepped over the line. The 2007 Nigerian elections did not merely constitute a state retreating from the public sphere. Rather it created an atmosphere where a very sick group of people ran rampant over a nation and killed 300 people in the process. The level of political violence, corruption and impunity reached a never-before seen scale, it went so low that it shocked not only election monitors (who called it the worst they’ve ever seen) but even Nigerians. And there’s something to be said for that.

So, what was the problem? I quote again:

“Many political figures openly recruit and arm criminal gangs to unleash terror upon their opponents and ordinary members of the public.”

• In Gombe State, for example, politicians openly recruited violent cult gangs to intimidate their opponents and rig the voting on Election Day. Encouraged by the prevailing climate of impunity, these gangs unleashed a wave of violence on local communities that included murder, rape, arson and other crimes.
• In Rivers State, criminal gangs hired to rig Nigeria’s 2003 elections have since become a law unto themselves, spreading violence and insecurity throughout the restive Niger Delta. Scores of civilians have either been killed or injured during clashes involving those gangs since the 2007 elections alone.
• No one has been held to account for sponsoring these gangs.

Here’s the part that gained so much press in the U.S. (Quoting again from the report)

• In some states, powerful and violent political “godfathers” have gained control over politicians who are dependent on those sponsors to provide protection and fight their street battles. In return, the godfathers have captured government institutions to serve their own interests.
• In Oyo State, People’s Democratic Party (PDP) godfather Lamidi Adedibu recruited gangs that sowed terror on the streets of Ibadan and other cities while fighting to preserve Adedibu’s power and influence in the state.
• In Anambra State, a godfather whose political power may now be on the wane has nonetheless so far gone unpunished for his role in fomenting violence and corruption.

What may have begun as a ho-hum report finishes as a thoroughly researched, well reasoned and admittedly angry look into the state of Nigerian politics. The report contains enough grisly details for sickos like me who think he’s heard it all before. There’s also enough ammunition for those who know – and love – Africa to find a way out of this mess. But there’s also a chilling reminder: Our government looks to Nigeria for oil because politics appear to be a lot less messy near the Gulf of Guinea than the Persian Gulf. How are we not going to make the same mistake twice?