Endless Poverty in Africa

There are regions of intense poverty all over the world, but Africa remains the poorest continent anywhere. Three quarters of its people are at the bottom of the bottom.

What causes that? Here are just a few of the more obvious causes. In a future podcast we will talk about some of the new solutions being discussed.

One is the extreme debt trap that so many of Africa’s countries have fallen into. For example, the US gives $3.6 billion to Sub-Saharan Africa per year, but the region pays that much back to US banks and international lending institutions (such as the World Bank) about every ten days. There’s no way that a government, good or bad, that could ever develop its economy and lift its people under that much ancient debt.

Second are a combination of weak governments and strong elites. I don’t mean that some do not have strong dictators. But the government structures are weak and often controlled by economic elites. Their governments are structured to help a small circle of elites and are a bureaucratic nightmare for foreign investments and trade.

Most countries have abundant natural resources, and under some forms of governance, that would be a boon, but under weak governments, it has allowed their strong elites to be non-responsive to their people. They can just suck up all of the oil, gold and agriculture wealth for themselves and are not at all responsive to the people.

For decades foreign, wealthy nations like ours have actually promoted weak governments and strong business interests (you might recognize the same doctrine being promoted in our country). And as a result they have created a system with an elite group at the top unresponsive and uncaring of vast poverty at the bottom.

Third, there are many poor countries that are land locked next to other countries that are equally poor, and they drag each other down. In other regions that’s not a problem. Switzerland is landlocked, but it has Germany next to it that can build roads to ports but Uganda has to depend on Kenya.

Fourth has been their seemingly endless wars, something that again is exacerbated by weak governments and which benefits strong elites (both within and surrounding the warring nations). When your family or clan is benefiting financially from war it becomes very difficult to see a way to negotiate its end. But the results are devastating. Economist Paul Collier estimates that a war typically costs a country and its neighbors $64 billion. And once a state fails, it takes 59 years, on average, to return to functionality, at a cost of $100 billion. And the tab for foreign military interventions to attempt to pick up the pieces (though usually too little and too late to do much good) is born by foreign tax payers like you and me.

Fifth is globalization. The Washington Consensus on rules for free trade has been a disaster for Africans. For one thing, the unwritten rule underlying free trade is cheap labor, which Africa has in abundance, but it can’t compete with the even cheaper wages being paid to poor people in Indonesia, Mali, Thailand, etc., where the infrastructure is better and the financial institutions more advanced. The “one size fits all” rules of economic globalization have not only failed Africa, they have actually made its situation worse.

These are just a few of the irascible problems. We will offer a few suggestions on what to do about it in a future post.