Guest: Africa, The Shackled Continent, economic development, governments, culture

Political and economic shackles:

Reasons - real and ideological - for African poverty are examined right at the beginning of "The Shackled Continent: Africa's Past, Present and Future." The book deals with sub-Saharan Africa.

The large-scale slave trade by European slavers during the 18th and 19th century ended over a century and a half ago and provides no excuse for current conditions in Africa.

Prosperity can only come from self help. Outside assistance can at most help at the margins.

Geography and Climate are certainly influential factors - mainly for the prevalence of tropical diseases. However, nations like Zimbabwe and Mozambique have a mild climate and a wealth of resources.
Slavery disrupted many African societies. Arab slavers were the first outsiders to arrive (and the last to leave) but Africans had been enslaving each other for centuries prior to the arrival of the Arabs.

"In fact, slavery was common in most parts of the world before the British started trying to crush it, and Africa was no exception. By one estimate, between 30 and 60 per cent of Africans were slaves before the Europeans arrived. The shipping of slaves to America could be seen as an extension of Africa's internal market: Many African chiefs saw no wrong in selling slaves to European traders, and some even protested when the trade was banned."

The European slave shipments were particularly "cruel and rapacious," Guest concedes. However, slavery continued into the 20th century in East Asia and the Middle East, and still exists today in Sudan and Mauritania. The large-scale slave trade by European slavers during the 18th and 19th century ended over a century and a half ago and provides no excuse for current conditions in Africa.

Colonial rule did not end until less than a half century ago. The colonial powers left social scars, precedents of dictatorial rule, and troublesome artificial national boundaries. However, they also left considerable modern infrastructure - roads, railroads, medical clinics, etc. - and laws. Over 70% of Africans alive today were born after their nations became independent, and there are many examples of newly independent states outside Africa that have not been held back by their colonial legacy. Korea, Taiwan, and Asian tiger states are offered by Guest as prominent examples.
Reliance on outside assistance to solve Africa's problems is an obvious exercise in futility. Such efforts, extending over several decades, have been "spectacularly unsuccessful." Prosperity can only come from self help, Guest emphasizes. Outside assistance can at most help at the margins.

"Countries grow wealthy in much the same way that individuals do: by making things that other people want to buy, or providing services that others will pay for. There are exceptions. Just as some individuals inherit wealth, so some countries are rich simply because they have a lot of oil and not many citizens. But by and large the route to prosperity is through thrift, hard work, and finding out what other people want in order to sell it to them."

Today, Africa produces nothing that the world wants except natural resources and a few agricultural commodities. Africa manufactures almost nothing. (Recent U.S. trade initiatives have brought some textile manufacturing to some African states.)

There have been several "Holocausts" in Africa since WW-II.

The "tribalization of politics" provides fertile soil for demagoguery.

The trade barriers against African agricultural and textile exports cause far more damage to Africa than can possibly be made up by aid.

AIDS is a new plague hobbling Africa. Its victims are typically in their early mature and most productive years.
Tribal loyalties are often stronger than national loyalties and are readily played upon by demagogic leaders - sometimes with horrific results. There have been several "Holocausts" in Africa since WW-II. Rwanda was the worst, with Burundi, Nigeria, Côte d'Ivoire and several other nations also experiencing ethnic slaughter.

The "tribalization of politics" provides fertile soil for demagoguery. Guest asserts that this tribalization of politics, along with economic quotas and other ethnically divisive laws, increases the influence of "tribal hucksters" and inhibits economic growth so that economic policy is transformed into a zero sum game where every gain is someone's loss.

An unconscionable trade war against Africa is being waged by the world's wealthy nations. The trade barriers against African agricultural and textile exports cause far more damage to Africa than can possibly be made up by aid. Far worse are the wealthy nation agricultural subsidies that ruin all the international agricultural markets - and cost the wealthy nations many tens of billions of dollars. (African states impose debilitating trade restraints against each other as well.)

Predatory governments usually make their countries poorer. Worse, when power confers riches, people sometimes fight for it.

Socialist tendencies of African governments still hobble African economies. Administered alternatives to free markets impoverish whole nations.

The lack of property rights, widespread corruption and administrative red tape hobble economic activities.

Guest puts the blame squarely on poor leadership. He quotes African novelist Chinva Achebe speaking of Nigeria.

"The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian character. There is nothing wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership."

The same can be said for all of Africa, Guest emphasizes.

"Since independence, Africa's governments have failed their people. Few allow ordinary citizens the freedom to seek their own fortunes without official harassment. Few uphold the rule of law, enforce contracts or safeguard property rights. Many are blatantly predatory, serving as the means by which a small elite extracts rents from everyone else. Predatory governments usually make their countries poorer, as in Nigeria and the Central African Republic. Worse, when power confers riches, people sometimes fight for it, as in Congo and Liberia."

Zimbabwe's Robert Mugabe is a prime current example of how not to lead a nation. Previous examples extend back over a host of African leaders to Kwame Nkrumah in Ghana. Socialist tendencies of African governments still hobble African economies. Administered alternatives to free markets impoverish whole nations.
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Vast sums of Western aid and loans were wastefully misspent. In nations with substantial mineral wealth, kleptocratic governments absorb all the benefits. These governments are not dependent for their resources on the civilian economy and thus feel no need to facilitate the economic activities of the people. Wars over control of assets impoverish the people and destroy their meager economy. Mineral wealth is transformed from an asset to a curse.
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Even without conflict, the lack of property rights, widespread corruption and administrative red tape hobble economic activities. Guest refers extensively to Hernando de Soto for the impact of all this "dead capital." He goes over much material previously set forth by de Soto. (For more material on these subjects, see de Soto, "The Mystery of Capital.")

Widespread corruption among petty officials, and a lack of infrastructure, hobble business. Starting a business in Africa often means establishing your own electric and water and transportation infrastructure. Because risks are high, only the most profitable businesses can survive. The demonization of international corporations inhibits productive investment from outside.
A lack of modern skills - a lack of engineers and technicians - is the result of the failure of governments to provide education.

Importance of good government:

South Africa remains an exception to much of this. It has sound budgetary and monetary policies and reasonably good infrastructure. However, even South Africa has failed to grow fast enough to employ most of its unemployed blacks.
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Prosperity is actually readily achievable, Guest points out. Technology is always there for the taking. "The political, legal and economic arrangements of rich countries" are not secret. Nor does prosperity mean "Westernization." Japan and several other Asian nations have copied successful western policies without losing their Asian characteristics.
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Better government is always the key. "If Africa were better governed, it would be richer."
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The difference between good government and bad government is starkly revealed in Korea, where the South prospers and the North languishes. Before 1990, West Germany prospered while socialism plagued the East German economy.
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This is true in Africa, too. Guest compares a reasonably well governed Botswana with its northern neighbor Zambia which is socialistic and corrupt - and poorer today than when it gained independence.
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"[Governments impoverish their people] in many ways; through corruption, through bad economic policies, and sometimes, as in Zimbabwe, by creating an atmosphere of terror that scares off all but the most intrepid businessfolk."

Robert Mugabe's rule over Zimbabwe is a prime example of what is wrong with African governance.

"African's are poor largely because they are not yet free. They live under predatory, incompetent governments, which they have great trouble shaking off. Their governments impoverish them in many ways; through corruption, through bad economic policies, and sometimes, as in Zimbabwe, by creating an atmosphere of terror that scares off all but the most intrepid businessfolk."

Kleptocracy - physical intimidation of opponents - inflationary monetary expansion - corruption - burdensome levels of taxation - a bloated and overpaid bureaucracy - an obstructionist licensing and regulatory regime - budget deficits - price controls - confiscation of private property - all result in an economic system ravaged by runaway price inflation and in rapid decline.
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Guest provides extensive details of this deplorable scene and its background in the history of Mugabe's regime. "The country was undergoing an industrial revolution in reverse" as all business - all enterprise - was brutally suppressed, indirectly by wretched economic policies, directly through confiscatory taxation and political policies. Elections are rigged by blatantly thuggish conduct against political opponents and their supporters. The only hope is that Mugabe can't live forever.

"If Mugabe's successor were to turn out not to be a despot, Zimbabweans could soon start farming, manufacturing and entertaining tourists again. It would take years to repair the damage Mugabe has inflicted on his country, but Zimbabweans are up to the task. All they need is a less vampiric government."

With the exception of Botswana, other African states have similar dreary histories and disastrous economic results. Mozambique has also been an exception since the end of its dreadful civil war in 1992, but the war had reduced its economy below subsistence levels and it still has a long way to go. All too often, efforts at government reform are just a sham to attract more foreign aid.
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War:

Wars - usually civil wars - blight the lives of 20% of the African population as of the time when this book was written in 2003-2004. Ninety percent of the casualties are civilian, Guest notes.
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Ethnic antagonisms, the efforts of Machiavellian despots to divert public attention from their misrule, and control of mineral wealth are the primary causes of these conflicts.

There are about 20 million refugees and an estimated similar number of landmines in Africa. The recruitment of armies is easy in Africa.

"For young men with few prospects, a soldier's pay, or the opportunity to loot a neighboring village, can seem appealing."

Ethnic antagonisms, the efforts of Machiavellian despots to divert public attention from their misrule, and control of mineral wealth are the primary causes of these conflicts. In the 1990s, at least eleven African nations suffered from conflicts over control of mineral wealth. Guest provides details of the long, complex civil wars in Congo, Angola and Mozambique.
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The end of the civil war in Angola has left a kleptocratic and inept government in place. It has oil and diamonds, so it does not depend on the rest of the economy for its revenues. Not only does it do nothing to facilitate the people's commerce, it actively represses private economic activity. Nevertheless, peace is better for commerce than war, and some economic revival is visible as people return to their homes and farms.
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Sub-Saharan Africa has no strategic value, and Western nations are loath to expend much effort at peacekeeping there.

There have been some successful interventions from within and from outside Africa since the end of the Cold War. Boycotts of "conflict diamonds" from rebel-held mines was effective in Angola. It only took 800 British soldiers to end a horrid civil war in Sierra Leone. African statesmen Nelson Mandela and Ketumile Masire have worked diplomatically for peace in Congo and Burundi. Western aid has been cut off from warring nations and given instead to peaceful ones, with some impact on conflicts involving Ethiopia and Eritria, and Rwanda and Uganda.
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But sub-Saharan Africa has no strategic value, and Western nations are loath to expend much effort at peacekeeping there. The botched efforts in Somalia deter American intervention - as does a full plate of troubles in more vital areas. It takes 17,500 blue U.N. helmets to keep the peace in Sierra Leone. The 15,000 U.N. troops in Liberia cost $800 million a year. Africa is no longer viewed as worth the life of a single Western soldier. "So Africans will have to solve their own problems" with whatever help they can get from the U.N.

"To stay peaceful in the long term, countries need governments that serve their citizens instead of robbing them, and which can be removed without violence. Not only must these governments be elected; they must be elected under rules that more or less everyone agrees to be fair. Countries need constitutions that provide reasonable protection for all citizens, regardless of whether they support the ruling party. Governments must respect their constitutions under the terms of which they govern, and should stand down when they are voted out."

Farmers without credit can't buy seeds or fertilizer to make the best use of their land. Tradesmen without credit can't expand a successful business. Many can't even start a business. Charity, micro-lending, and government handouts are not enough to fill this void. As population grows, farms are further subdivided, further impoverishing the people. Those who move to the cities to find work risk losing their land. They can't sell the land without approvals from family and the local chief, and someone will grab it if they leave it untended.
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In the cities, there is never enough shanties in the shanty towns to meet demand. Without mortgage lending, houses are not built until the user is actually present. Thus, rents are high relative to the value of the houses. A year's rent is generally greater than the value of the house.
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Guest reviews what it takes to create the legally enforceable property and creditor rights enjoyed in the West, and the huge advantages they bestow. He reviews the long evolution that led to enforceable property rights in the U.S. See, de Soto, "Mystery of Capital," at segment on "Legitimating the gray market."

"For poor countries today, the lesson is not in the details of American history, but in the general principles. For property law to be respected, it has to reflect what is actually happening on the ground, and it has to include as many people as possible.
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"Poor countries' efforts at reforming property law have rarely succeeded. Middle-class reformers have too often assumed that their ideals could be imposed on the poor. In Peru, for example, numerous attempts to give indigenous people title to their land failed because the mechanisms by which they could assert their right were too complex and costly."

See, "The Economist" of 8/26/06 at p. 62 for an article on current studies of the impact of property rights in Argentina and Peru. There have been noticeable improvements in living conditions, but failure to enforce the rights of private creditors still to a large extent leaves this property as "dead capital."

Since credit is based on political influence instead of title to assets, there is less advantage in title.

Imagine having to create or grow everything you sell and take it physically to market on foot to sell it for whatever you can get that day because of the difficulty of carrying it back and storing it. Imagine having to build your own house from only the materials you can create or gather. Without legally enforceable rights in property and the credit it creates, that's how business has to be done.
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Blocking the establishment of enforceable property and creditor rights are all those who benefit from the current system. The vested interests include lawyers, bureaucrats, licensing authorities - most of whom are corrupt. In Africa, there is another obstacle - traditions of tribal communal ownership of land. The lack of a reliable and accessible judicial system is another basic problem.
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In Malawi, formal systems are suspect because the British used them to get Malawians to surrender ancestral lands, and because the despots who have since taken control of the government were able to grab the land they wanted regardless of legal rights. Since credit is based on political influence instead of title to assets, there is less advantage in title.
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However, without property and creditor rights, impoverished peoples must remain impoverished.
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Ethnic strife:

Tribalism is alive and well in Africa. Ethnic and religious differences are causing conflict in many African nations.
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The "nation state" is the problem. That artificial European transplant - with its artificial borders - lacks indigenous legitimacy. Politicization of tribal and religious differences makes politics a life-and-death contest.
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Ultimately, it becomes clientism - governance becomes concerned only with the welfare of political supporters. This is official bigotry. Individuals are treated badly because they are members of particular groups.

"People find all sorts of unjust reasons to hate, and unjust governments exploit them all."

Guest relates experience in Rwanda, Nigeria and South Africa. There are great differences in the three - but there are also vital similarities.

"In all three countries politicians have at times sought to stir up, rather than soothe, ethnic passions. In all three, governments have made laws that explicitly discriminate against their own citizens on tribal or ethnic grounds. And in all three, the results have been either woeful or, in Rwanda's case, catastrophic."

Tribal politics is now unfortunately firmly imbedded in most African states. It can only be mitigated by farsighted leadership.
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Nelson Mandela provided such leadership in South Africa. He prevented the worst of such tribal politics. He also prevented a blood bath, the abandonment of South Africa by whites, and the economic collapse that many expected.
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His successor has applied increasingly rigorous affirmative action laws that have observably hindered the economic growth needed to expand employment of poor blacks. Affirmative action, Guest points out, has been of major benefit to the new black middle and wealthy classes, but has materially reduced economic benefits and prospects for the mass of poor blacks who remain largely unemployed and destitute.
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Julius Nyerere made a socialist mess of Tanzania, but left it essentially free of tribal politics and resentments. It is an island of tolerance and ethnic peace in the seething African sea of tribal and religious hatred.

"While other African leaders stirred tribal rivalries to keep themselves in power, Nyerere sought to soothe them instead. He imposed a single official language, kiSwahili, and urged every Tanzanian to learn it so that they could talk to each other. He banned ethnically divisive talk from politics."

Of course, he who pays the piper calls the tune. Foreign assistance has seldom been unencumbered with requirements based on the self interest of the donors.

During the Cold War, each side had its client states in Africa - and each side supported guerrilla and dissident forces seeking to undermine the other's clients. Little of these support funds found their way into critical infrastructure or economic development. Client state giving still constitutes a large proportion of foreign aid.
Support for economic development was often limited to purchases through donor-nation contractors.
Much public and private assistance was spiritual rather than economic. Saudi Arabia distributed free Korans - Western churches supported missionary activities.
During the 1970s, Western as well as Soviet assistance was wastefully directed toward support of impossible socialist experiments.

A substantial group of third world and Western "intellectuals" somehow lacked the intellectual capacity to understand the inherent ineptness of government management until the socialist experiments collapsed around 1990. See, "Government Futurecast," Part II on "Government Management." Many of these "intellectuals" are still in denial.

Much foreign assistance was directed at "big showy" infrastructure projects like dams.

With appropriate political correctness, Guest grieves over the homes flooded. However, dams such as the controversial Aswan Dam have often been huge economic successes. It is hard to imagine modern Egypt without its Aswan Dam. Other infrastructure projects - like roads and railroads and buildings for schools and clinics - have simply been allowed to deteriorate for lack of maintenance by the Africans. See, Theroux, "Dark Star Safari."

Surplus products distributed by charities are often ludicrously inappropriate - like high heeled shoes or heartburn pills for starving peoples walking on rutted unpaved paths.
Inappropriate projects have been initiated without knowledge of local conditions - such as a fish farm in a stream that is dry half the year.
Aid can come with administrative red tape that burdens the meager administrative resources of recipient nations.
"Less spectacularly but more commonly, corruption, incompetence and bad economic policies can often be relied on to squander any amount of donor cash."

Aid just permitted the government to backtrack on reforms, maintain a bloated civil service, and feed its astounding level of corruption. It is impossible to get corrupt governments to implement reforms that they do not like.

Zambia is a prime example of failure. At independence in 1964, it was the second wealthiest nation in Africa after South Africa. It had a popularly elected government and the world's best copper mines - and "a generous stream of aid." But socialism, Zambia's own protectionist trade restraints, and one party rule ruined all its chances.
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Corruption followed inevitably. Even the copper mines declined precipitously and were ultimately ruined. By 1990, despite massive foreign assistance inflows, inflation was over 100% and the economy was in ruins. Aid just permitted the government to backtrack on reforms, maintain a bloated civil service, and feed its astounding level of corruption. It is impossible to get corrupt governments to implement reforms that they do not like.
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Aid can help, but it is always government economic policies and administration that dictates success or failure.

Botswana provides an opposite story. Aid and money from diamonds was used to finance infrastructure, education and health. The nation was open for business. Eco-tourism flourished. Government was reasonably honest, and GDP per head rose to $3,000. It still had problems - especially with AIDS and an economy insufficiently diversified. However, the contrast with Zambia just across its northern border is stark.
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"Good economic policies, soundly administered," was the difference between Botswana and Zambia, Guest points out. Aid can help, but it is always government economic policies and administration that dictates success or failure. A massive World Bank study confirms this point.

"The adage that foreign aid is a transfer from the poor in rich countries to the rich in poor countries is often true. A typical poor African country receives aid equivalent to about 10 percent of GDP, but the poorest fifth of the population disposes of only 4 percent of GDP. In other words, a lot of aid is paying for conferences in five-star hotels, study trips for MPs to Washington, and Toyota Landcruisers to ferry aid workers around."

However, advice and the education of government officials has had some successes - especially in South Africa where the African National Congress ("ANC") was suddenly transformed from a revolutionary party with strong communist leanings into a ruling party in charge of a modern capitalist economic system. When they took power, the Marxist rebels were given crash courses in the importance of financial stability and other aspects of market economics.
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Money is fungible, Guest emphasizes. Money for specific projects and purposes - like roads or education - may simply free-up general revenues previously required for roads and education to be spent on limousines or a bloated bureaucracy.
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Frequently, it is the technology and know how provided in the construction of a project that is the most valuable aspect of the assistance. Without this, assets like dams, telephone networks and buildings may be ineptly managed and poorly maintained.
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Economic development:

It's not difficult for nations to prosper. All that is needed to get started is to implement some of the basics of good economic policy.

"Needs vary from country to country, but most African countries still need the basics: primary education, primary health care, passable roads, piped water and a functioning legal system. Such bare necessities should be given priority, but often aren't.

A pervasive sense of victimization has been particularly disabling in Africa.

Globalization - as "scandalously unfree though it still is" - is not holding Africa back.

More sophisticated reforms can come afterwards. (As China has amply demonstrated, any substantial effort at market economic reforms quickly provides a cornucopia of economic and social benefits.)
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However, Africa has two fundamental governance problems, Guest points out. There is the tendency to spend aid money on perquisites for the governing class. (General revenues and revenues from natural resource wealth are similarly wasted.) There is also the tendency to believe that Africa's problems are someone else's fault. A pervasive sense of victimization has been particularly disabling in Africa.
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Guest reemphasizes that Africa can only become prosperous by "making things and providing services that other people want to buy." He emphasizes that the era of European colonization is not a primary cause of poverty in modern Africa, and that globalization - as "scandalously unfree though it still is" - is not holding Africa back.
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The responsibility rests with "its own crooked and incompetent leaders." Well governed nations advance, and poorly governed nations don't.
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Economic assistance should be concentrated on well-governed nations with substantial poverty problems, Guest advises. Also, it should be provided as cash for balance of payments support. He asserts that India, Vietnam, Mozambique, Tanzania and Uganda would qualify - although he concedes that all have corruption problems.

(If they are truly well governed, they will not be poor for very long - and will not need aid. Investment inflows and trade will provide all the cash needed.)

Development of treatments for tropical diseases would be even more helpful. Most helpful would be the opening up of wealthy nation markets to poor nation exports.

It is - as FUTURECASTS never tires of repeating - UNCONSCIONABLE for wealthy nations to maintain trade barriers against poor nation exports. However, poor nation trade barriers are far higher than those of the wealthy nations. The fastest growing developing nations are invariably those with the most open markets.

Developing countries with open economies grew by an average 4.5% per year in the 1970s and 1980s, while those with closed economies grew by only 0.7% per year.

Wealthy nation agricultural and textile trade barriers and agricultural subsidies and the damage they cause are examined in some detail by Guest. Trade barriers cause substantial increases in food prices, which particularly hurt the poor in the wealthy nations. Subsidies induce overproduction which is dumped on world markets closing down affected agricultural exports world wide. Family farmers receive very little of these subsidies, the vast majority of which goes to wealthy agribusinesses.
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Guest easily shreds some of the arguments invoked in support of these trade barriers and subsidies. See, Irwin, "Free Trade Under Fire," and Bhagwati, "Free Trade Today." He provides a simple explanation of comparative advantage - the Ricardian explanation for why trade is a win-win-win-win activity. Both parties benefit from both exports and imports. See, Ricardo, "Principles of Political Economy," at "International Trade and Comparative Advantage."
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New Zealand slashed its trade barriers and subsidies and now enjoys food prices that are about 50% less than in Western Europe. The Cato Institute - a Libertarian think tank - rated 91 countries on the basis of their trade policies.

"The twelve most open economies had a GDP per head in 1998 of $23,387 - seven times the figure for the twelve least open. Average incomes in the most open countries grew by 2.5% annually over [the previous] nineteen years, leaving them on average 1.6 times richer in the end. In the twelve least open countries, average incomes grew by a pathetic 0.3% per year over the period, leaving them on average only 6% better off at the end. -- The countries in the middle showed middling income and middling growth. -- The bottom twelve contained 5 African countries; the top twelve none. Half of the countries in Africa were not ranked, mainly for lack of data."

A Harvard study showed similar results. Developing countries with open economies grew by an average 4.5% per year in the 1970s and 1980s, while those with closed economies grew by only 0.7% per year. Guest does note some minor improvement in seven African states in the 1990s.

With the current extensive monetary inflation in the dollar - the world's primary reserve currency - and the resulting multiple double digit commodity price inflation of the last several years - there is currently no excuse for lack of growth in natural resource exporting third world nations.

Poor infrastructure creates many difficulties and costs that hold back development. This is demonstrated by Guest by relating his experience in a big delivery truck bringing beer 500 kilometers into the interior of Cameroon's rainforests.
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The dirt roads are a mess of ruts and potholes, bridges are in bad repair and are frequently washed out, numerous wrecks litter the shoulders of the roads, numerous police roadblocks enforce a vast array of regulations that provide numerous opportunities for demands for bribes.
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The scheduled 18 hour journey took four harrowing days. It takes great ingenuity and considerable courage to do business under such circumstances. However, profits can be made since everybody faces the same obstacles (as long as your competitors do not have more political influence than you do).
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It is the people who pay the costs. Bad roads increase the costs of manufactured items in the interior by 25%. Since bottled beverages like beer and Coca Cola are the only safe liquids to drink in these areas, this is no minor matter. The costs of medicines and vaccines are similarly affected.
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Bad roads also make it impossible for interior farmers to get cash crops to big city markets. Bad roads thus doubly impoverish the peoples of the interiors of poor nations. Incomes immediately rise wherever roads are improved. Environmentalists hate roads that open up rainforests, but the absence of good roads keeps the peoples of these regions hopelessly impoverished. They thus desperately exploit the fragile forest ecosystem for wood fuel and bush meat and other resources.
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Although quite low by Western standards, multinational pay and working conditions are by far the best available in undeveloped nations.

Foreign direct investment is desperately needed in Africa. Although quite low by Western standards, multinational pay and working conditions are by far the best available in undeveloped nations. Multinationals also transfer valuable skills. Africa desperately needs such "exploitation" of its cheap labor and rich resources, Guest emphasizes.
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There are, in fact, good profits to be made in Africa. The reasons have been understood since the days of Adam Smith. There are perceptions - and realities - of extraordinary risks in doing business in Africa. Lack of reliable infrastructure, suppliers, utilities - or even physical safety - are added to lack of rule of law enforcement of contract and property rights - to make doing business in Africa an activity that requires courage and endurance.
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It may take months or years of persistent efforts - and substantial bribes - to get required regulatory approvals even to begin a new business or to expand an existing business. At least the risk of nationalization is mercifully much reduced.
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Unlike India or China, Africa is not one massive national market. Breaking into small national African markets may not be worth the effort.

Africa has other major drawbacks. Unlike India or China, it is not one massive national market. Breaking into small national African markets may not be worth the effort.
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Yet another risk is to reputation. Multinationals that most developing nations ardently seek to attract are pilloried by ideologues for any environmental or human rights infraction - large or small - real or imagined. Many simply decide that they don't need that trouble - and the jobs and resources they would bring are lost to the poor whom the ideologues purport to protect. The "exploited" workers in undeveloped nations ardently seek jobs with multinationals because those are the best they can get.
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There are indigenous entrepreneurs all over Africa. However, they face the same kinds of problems as the multinationals, and then some others.
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The lack of financing makes it impossible for even successful businesses to expand. Inheritance traditions cause businesses to break up on the deaths of the founders. Above all, there is no culture of trustworthiness, so business must rely on a family circle and must conduct transactions with others in cash. Generally, checks and credit cards are not accepted, but cash cards are attracting widespread use.
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Technology offers mixed blessings for Africa. Modern weapons - land mines and automatic guns and helicopter gunships - kill and maim hundreds of thousands and keep despots in power. Genetically modified crops offer vast benefits that must be rejected lest European markets close even more to African agricultural exports. However, modern medicines have increased lifespan 150% in the last century, and a wide variety of creature comforts are becoming increasingly available even in Africa. In some African nations, AIDS is reversing some of the lifespan gains.
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Very little research is done on medicines for tropical diseases, because the market is poor and the risk of theft of intellectual property is high. AIDS drugs delivered at cut rate prices to Africa were sometimes grabbed by corrupt officials and sold in Europe at a great profit. It costs about $500 million to develop a new drug (and each success has to cover the costs of many failures).
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Thus, there is little incentive for pharmaceutical company research into tropical diseases. Of 1223 drugs introduced between 1975 and 1996, only 13 were for tropical diseases. Charities are now trying to step into this breach and finance such research.
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Internet cafes have sprouted even in remote African towns. Internet telephony helps locals bypass the price-gouging state telephone companies. Wind-up radios are another recent communications advance. Accurate, timely information about weather and market prices can be extremely valuable to farmers and herdsmen. Medical information delivered to local clinics saves lives.
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Private mobile telephone firms provide telephone service where no land lines exist. This market is competitive, so the service is efficient and rapidly expanding. Prepaid phone cards overcome the problem of widespread lack of credit.
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A rigid labor market and powerful unions have greatly limited economic growth and has caused increased unemployment among poor blacks.

South Africa still has a huge black underclass with huge economic problems. Nevertheless, the democratically elected government is making real progress in spreading the availability of such infrastructure basics as electricity and piped water, and has provided for the construction of millions of neat little brick homes for its black constituents. Equality before the law and a variety of welfare programs have also been provided - but life for the black underclass and the millions of African immigrants streaming into the country remains grim.
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Budgetary and monetary policy has been consistent and conservative, trade barriers have been lowered somewhat and other matters of economic governance have been improved under the new regime. However, a rigid labor market and powerful unions have greatly limited economic growth and has caused increased unemployment among poor blacks.
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Lack of any real political opposition at present has unsurprisingly resulted in growing levels of corruption.

There is legitimate fear that the ANC will evolve into a socialist monster like the ruling party in Zambia and bring the nation to its knees.

Unfortunately, smothering left wing labor policies inhibit the growth of the smaller businesses that provide so much of the employment growth in the U.S. "The rise in joblessness has largely been a consequence of the government's efforts to protect workers." These policies may help those who have found work, but they are keeping millions of poor blacks hopelessly unemployed.
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Unemployment, crime, vengeful poor whites grieving loss of privileged status, unskilled police forces, extensive use of private security forces, vigilantism - these are all a part of the South African picture. Lack of any real political opposition at present has unsurprisingly resulted in growing levels of corruption - especially in provincial and local governments. Most threatening is the strong socialist and communist factions within the ruling ANC party that might at some future date undo everything that has been slowly accomplished, or impose policies that bring economic growth to a halt.
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There is legitimate fear that the ANC will evolve into a socialist monster like the ruling party in Zambia and bring the nation to its knees. This could happen in some future time when the ANC begins to face real political opposition.
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Meanwhile, extensive and increasing affirmative action requirements of many types cause vast wastage of capital, and a steady exodus of bright young white South Africans continues.