23 Things They Don't Tell You About Capitalism

Not just nature but Africa’s history is also supposed to be holding it back. African nations are ethnically too diverse, which causes people to be distrustful of each other and thus makes market transactions costly. It is argued that ethnic diversity may encourage violent conflicts, especially if there are a few equally strong groups (rather than many small groups, which are more difficult to organize). The history of colonialism is thought to have produced low-quality institutions in most African countries, as the colonizers did not want to settle in countries with too many tropical diseases (so there is an interaction between climate and institutions) and thus installed only the minimal institutions needed for resource extraction, rather than for the development of the local economy. Some even venture that African culture is bad for economic development – Africans do not work hard, do not plan for the future and cannot cooperate with each other.[2]

Given all this, Africa’s future prospects seem bleak. For some of these structural handicaps, any solution seems unachievable or unacceptable. If being landlocked, being too close to the equator and sitting in a bad neighbourhood are holding Uganda back, what should it do? Physically moving a country is not an option, so the only feasible answer is colonialism – that is, Uganda should invade, say, Norway, and move all the Norwegians to Uganda. If having too many ethnic groups is bad for development, should Tanzania, which has one of the greatest ethnic diversities in the world, indulge in a spot of ethnic cleansing? If having too many natural resources hampers growth, should the Democratic Republic of Congo try to sell the portions of its land with mineral deposits to, say, Taiwan so that it can pass on the natural resource curse to someone else? What should Mozambique do if its colonial history has left it with bad institutions? Should it invent a time machine and fix that history? If Cameroon has a culture that is bad for economic development, should it start some mass brain-washing programme or put people in some re-education camp, as the Khmer Rouge did in Cambodia?

All of these policy conclusions are either physically impossible (moving a country, inventing a time machine) or politically and morally unacceptable (invasion of another country, ethnic cleansing, re-education camps). Therefore, those who believe in the power of these structural handicaps but find these extreme solutions unacceptable argue that African countries should be put on some kind of permanent ‘disability benefit’ through foreign aid and extra help with international trade (e.g., rich countries lowering their agricultural protection only for African – and other similarly poor and structurally disadvantaged – countries).

But is there any other way for Africa’s future development beyond accepting its fate or relying on outside help? Do African countries have no hope of standing on their own feet?

An African growth tragedy?

One question that we need to ask before we try to explain Africa’s growth tragedy and explore possible ways to overcome it is whether there is indeed such a tragedy. And the answer is ‘no’. The lack of growth in the region has notbeen chronic.

During the 1960s and 70s, per capita income in Sub-Saharan Africa grew at a respectable rate. At around 1.6 per cent, it was nowhere near the ‘miracle’ growth rate of East Asia (5–6 per cent) or even that of Latin America (around 3 per cent) during the period. However, this is not a growth rate to be sniffed at. It compares favourably with the rates of 1–1.5 per cent achieved by today’s rich countries during their Industrial ‘Revolution’ (roughly 1820–1913).

The fact that Africa grew at a respectable rate before the 1980s suggests that the ‘structural’ factors cannot be the main explanation of the region’s (what in fact is recent) growth failure. If they were, African growth should always have been non-existent. It is not as if the African countries suddenly moved to the tropics or some seismic activity suddenly made some of them landlocked. If the structural factors were so crucial, African economic growth should have accelerated over time, as at least some of those factors would have been weakened or eliminated. For example, poor-quality institutions left behind by the colonists could have been abandoned or improved. Even ethnic diversity could have been reduced through compulsory education, military service and mass media, in the same way in which France managed to turn ‘peasants into Frenchmen’, as the title of a classic 1976 book by the American historian Eugen Weber goes.[3] However, this is not what has happened – African growth suddenly collapsed since the 1980s.