THE AFRICAN CONUNDRUM

GORDON O.F. JOHNSON

What would God have us do?

Africa puzzles the best of minds. “It is the richest of the seven continents in natural resources and yet her people are the poorest,” observed a leading African churchman.

The continent has extensive land areas with fertile soil, an abundant water supply to support farming and livestock, and 40 percent of the world’s hydroelectric power potential. Africa has some of the world’s largest reserves of gold, diamonds, copper, bauxite, manganese, nickel, platinum, cobalt, radium, and phosphates. Nigeria, Angola, Gabon, and Sudan have large oil reserves.And Africa has ample human resources—about 12 percent of the world’s population lives there.

Yet, Africa has accumulated many of the world’s most serious problems.While world poverty has been decreasing, helped by rising incomes in China and India, poverty has worsened in Africa. Violence, hunger, disease, illiteracy, gender discrimination, religious rivalries, crises in leadership, and endemic corruption all add to the complexity of Africa’s problems.Why is Africa so far behind the rest of the world? What should outsiders do to help them catch up? Good answers are not easy to come by.

There has been much talk of debt relief for heavily indebted countries, an approach favored by church leaders and others. The heavy burden of overwhelming debts can be blamed on the lenders as well as the borrowers. But is debt relief really the key? For the most part, debt service costs did not drain African budgets because multinational lenders simply loaned additional money to cover debt service payments. Debt relief, in itself, does not seem to provide new funds for needed services.

Even if governments do have more money to spend, will they spend it wisely? As noted by a prominent African educator, “Few African presidents would be alive today if they dared to reduce their military budgets.”Does it make sense that, according to a 1999 report from the National Bureau of Economic Research, Africa’s wealth owners have relocated 37 percent of their wealth outside the continent? Note that this compares to 17 percent in Latin America and only 3 percent in East Asia. If Africa reduced its capital flight to that of Asia, its capital stock would increase by half. Does it make sense to send new money into Africa when Africans are sending money out?

While some say developed nations, particularly the United States,must provide increased funding for foreign assistance, it’s fair to say that billions of dollars of well-intentioned aid from Western nations over the past five decades have produced disappointing results. In order to create an environment that will attract investment, encourage new businesses, and create better jobs, Africa’s leaders must address the problems that drive away local and foreign investors. Outsiders cannot do this for them.

Others say that trade, not aid, is what really matters, and that we in the developed world must reduce our subsidies and trade barriers on agricultural and other products from developing nations so these nations can earn their way out of poverty. But is it realistic to expect that revenues from increased trade will do more to help the poor than revenues from increased foreign assistance? Have oil revenues in Nigeria (or Saudi Arabia, for that matter) really helped the poor in those countries?

If we must question the effectiveness of debt relief, increased aid, or increased trade, what then is the answer to the problems Africa faces today? This is the African conundrum. The very complexity of the problem might encourage us to ask ourselves “What would God have us do about it?”

ATTACKING THE POVERTY PROBLEM

The first rule in problem solving is to define the problem—and reach agreement on this definition. We want to do “something” about the many African problems we see on television: heart-rending stories of violence to women and children; hunger and famine; HIV/AIDS and other diseases; primitive schools, and even more primitive sanitary conditions. These stories grab our attention, but they divert our energies and resources away from the root cause of poverty in Africa.

Let’s start by dividing the big problem into smaller parts, in much the same way a physician or surgeon must deal with an accident victim, or a CEO of a failing business must figure out how to fix it.

First, stop the bleeding (i.e., for a business, stop the losses).

Second, nurse the casualty back to health (i.e., make the business profitable).

Third, after the patient is back on his feet again, start training to win the marathon (i.e., develop a business vision and plan for future growth). If we follow this approach in Africa, we must take three steps:

Deal with the violence in order to stop the bloodshed and create a safe environment in which citizens can live and work together safely.

Address starvation through direct temporary humanitarian aid in the form of food and medicine (while trying not to distort local markets and displace local suppliers).

Begin the long-term process of economic development and “nation building.” Success here is critical. Without this step, violence and hunger will keep returning.

Ending the cycles of violence and hunger in Africa will depend on solving the systemic problem that has made economic growth and development difficult for most African nations. I suggest that the systemic flaw at the heart of the African conundrum is concentration of power. Power is money and money is power. Those in power do not want to relinquish their control over natural and human resources. Hernando De Soto, a Peruvian economist, likens the power scenario to a bell jar. The elite who live under the bell jar can live “high on the hog” while the rest of the people can only look in, from outside, with envy and frustration.

The bell jar scenario has three possible outcomes. In one scenario, an outside group seeking power finds the resources to lift the bell jar and kill or push the elite group out. The new group takes its place and the bell jar then closes anew. Liberia, Sierra Leone, the Democratic Republic of Congo (formerly Zaire), Rwanda, and Burundi offer examples, among others, where this scenario prevails.

In the second scenario, the inside elite group uses its resources to strengthen its hold on the bell jar by diverting resources from productive to unproductive uses. To enhance its position and further marginalize those outside the bell jar, the elite group strengthens the military while it manipulates the legal and economic system to enrich itself. In some cases, the elite group may kill off or imprison outsiders who threaten its hold. Robert Mugabe’s policies and actions in Zimbabwe typify this second scenario.

A third scenario, however, suggests it is possible to effect genuine change in a country’s economic, political, and social system. Members of the inside elite group muster the courage to lift the bell jar themselves and discover that they themselves benefit when they allow others equal rights under the law on a fair, equal, and impartial basis. South Africa and Botswana are examples where the processes of power sharing and political compromise are at least partially under way.

THE FOUNDATIONS FOR A JUST SOCIETY

Power sharing and willingness to compromise are the hallmarks of a civil society in which everyone can participate—not just the elite few. George Ayittey, an astute Ghanaian analyst of Africa’s problems, has suggested that three fundamental pillars are needed to support a civil society:

A just rule of law. A just and peaceful society requires fair and understandable laws to protect persons and property. Titled property rights for every citizen, not just the rich, are necessary to assure all citizens, including the poor, that they can enjoy the fruits of their labors and look forward to a better future for their children.

Hernando De Soto calculates that “the total value of real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 trillion.” That is more than 20 times the total direct foreign investment into all Third World and former communist countries between 1989 and 1999, and 46 times as much as all the World Bank loans of the past three decades. “The poor are not the problem, but the solution,” he observes.

The many benefits of capitalism in the developed world have not been repeated in Third World countries because capitalism and the rule of law have only worked for the elites. The capital of the poor has been locked up, kept dormant by an unfair legal system. A just rule of law will protect all citizens from those who would exert power over them, rather than expand the power of a few to exercise their will over the many.

An independent judiciary. The rule of law can be effective only if there is an honest, independent, impartial judiciary to pass judgment and enforce the law equally for all when there are disputes and differences.

An independent press. The best protection to ensure a just rule of law and an independent judiciary is transparency in the process. Transparency requires a free and independent press.

WHAT WOULD GOD HAVE US DO?

History tells us that power sharing and compromise are not innate traits for human beings. History also teaches us that, in the words of the great English historian, Lord Acton, “Power tends to corrupt and absolute power corrupts absolutely.” More recently, in an outstanding history of every major region in the world, University of Colorado professor John P. Powelson showed that countries have prospered where there was genuine diffusion of power, and failed to prosper where power was concentrated in a small elite.

Power sharing and the willingness to compromise involve value judgments by humans. These value judgments come from the community. They come from families where children learn by example how adults resolve their differences. And they come from religious leaders, who have no power to tax or raise armies, but must teach by persuasion and by example.

This is where God comes in. History and tradition have given us many ways to think of God. The Bible presents God as an authority figure—a father, a shepherd, a landowner, or a master of the manor. Systems of government in biblical times were highly authoritarian, and authority figures for God came naturally to biblical writers.When the Pharaoh wanted a pyramid, he called in his vice president in charge of slaves and said,“Build me a pyramid.”And the slave drivers saw to it that a pyramid got built! Today, in contrast, command economies have been discredited and “best management practices” in business call for decentralizing decision-making and empowering workers.

I would like to offer a different image of God as allpowerful, but also all-empowering. I picture God as an entrepreneur, a risk taker. God had to be the biggest risk taker of all time when He created man with free will. Why would the Ultimate Being, the Absolute Power, give up power absolutely?

God may have created us with free will because, in the final analysis, He knew that this was the best way to make this world work. In the long run, organizations work best when people do what they do because they want to do it, not because they are told to do it. God the Entrepreneur/Risk Taker is trying to manage His business here on Earth after empowering His employees— us, you, and me—to exercise our own best judgments to make the business succeed. How frustrated God must be to see what is happening around the planet, particularly in Africa, where elite minorities profit at the expense of the marginalized majorities.

But while creating man with free will, God also created us free to make mistakes. It’s up to us to make the right choices and reach agreement on what is wrong and what is right. We do this through power sharing and compromise.We do it by passing laws.

Over the centuries, we in the West have learned to shift the responsibility for taxes and law-making away from the emperor and elites to a system of laws of the people, by the people, and for the people. God, after all, can work only through us, the people, which says that there is some of God in each of us. That understanding dictates that if we are created in the image of God, we must move away from top-down management. We must be willing to give up power. We must look to empower every individual, and not just the elites. Learning to do this is an ongoing process. African nations need to become part of this learning process.

MAKING CHANGE HAPPEN IN AFRICA

Historical views of God and the rule of law help us to see what now needs to be done to bring about systemic change in Africa, which has a long tradition of top-down management. In pre-colonial times, power lay in the hands of tribal chiefs and the elite tribal elders. Power then shifted to colonial rulers and, later, to post-colonial rulers and their cronies, who captured power in fledgling democracies. If we all are created in God’s image, then the ruling elites in Africa must be willing to compromise and give up power. Other groups must be able to develop and earn their share of power in deciding what is best for all the people.

Political democracy is not enough, by itself.Written constitutions can be counter-productive if they give too much power to the state. The key is economic freedom for every person, based on a just rule of law that protects every individual’s right to live in peace and to earn and dispose of the fruits of his or her own labor as he or she deems best.

Systemic change in Africa cannot be forced from outside, but must come from within. Short-term help from outsiders may be necessary to reverse the cycle of violence and to alleviate hunger and disease. A longterm solution will require improved governance within each African nation to allow economic freedom, and a new willingness to compromise and to share power. This process does not start with building new hospitals, schools, roads, dams, or irrigation systems. These costly projects, because they were government financed and government controlled, served to concentrate even more power in the hands of the elites.

It’s encouraging to see that President George W. Bush has proposed a new approach to foreign aid in his Millennium Challenge Account, which will provide significant new money over and above existing programs to combat violence, hunger, and disease. These funds will be disbursed only to countries that:

Rule justly, by fairly enforcing law and contracts, respecting human rights and property rights, and fighting corruption;

Encourage economic freedom, by removing internal and external barriers to trade, allowing companies to compete without excessive interference, and pursuing sound fiscal and monetary policies, including government divestment of business operations; and

Invest in their people, by providing the best possible systems for education and health care.

These proposed new criteria recognize that, to paraphrase management expert Peter Drucker, it is more important to select the right countries than to select the right projects. For the first time, foreign aid allocations can be decided based on a country’s performance rather than its “assessed needs” or promises. This new approach will begin to reverse the centralization of power in Third World countries.

Past assistance programs measured their overall progress in terms of increases in per capita income and other macroeconomic data. Now we are focusing on poverty.We are measuring numbers of people living on less than $2 per day and less than $1 per day. This new focus forces us to recognize that improving these critical numbers requires systemic change. We can now focus on ways to bring economic freedom and fair and effective governance to countries where these assets have been sorely lacking in the past.

As Lord Kelvin said many years ago, “If you can’t measure it, you can’t improve it.” The Heritage Foundation (with help from the Wall Street Journal) and the Fraser Institute (with help from Milton Friedman) have each developed world indexes of “Economic Freedom.” Transparency International has developed effective tools to compare levels of corruption and bribery, country by country. The World Bank now compiles data on government accountability, political instability and violence, rule of law, and corruption. Freedom House measures democracy by looking at electoral rights and civil liberties. And there are private political risk-rating services used by banks and investors.

Armed with this information, we now have far better tools to measure the impact of our efforts to solve the African conundrum.We know that massive government expenditures have not solved Africa’s problems and that “conditional aid” tends to produce promises rather than results. We know that the poor already possess massive resources, but their resources are locked up by flawed systems of law that take power away from the people. The poor lack economic freedom under systems of governance which allow manipulation of the “rules of the game” to benefit and enrich elite groups.We know what to measure in order to make aid decisions based on a country’s performance, rather than its promises.

We have every reason to hope that US programs to aid developing nations, particularly those in Africa, may now be moving into a new era focused on empowerment of all the people, where God the Entrepreneur would be well pleased with efforts to make the world a better place for all to live in peace together. It will not happen overnight, but we do seem to be moving in the right direction.

Additional Resources:

De Soto, Hernando. The Mystery of Capital. Basic Books, 2000.
Dulles, Avery. “Centesimus Annus and the Renewal of Culture,” Journal of Markets and Morality, Spring 1999. Available online at http://www.acton.org/publicat/m_and_m/1999_spr/dulles.html.
Powelson, John P. Centuries of Economic Endeavor. University of Michigan Press, 1994.
Faith in Development: Partnership between the World Bank and the Churches of Africa. Edited by Christopher Sugden, Deryke Belshaw, and Robert Calderisi. Regnum Press, 2001.

Gordon O.F. Johnson (CC ’83) is an adjunct scholar at the Acton Institute for the Study of Religion and Liberty, and co-founder of LogEtronics Inc. and The Center for Privatization. He helped establish the first overseas US aid missions in Southeast Asia under the Marshall Plan.

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