Andrew Mwenda and the need to focus on African entrepreneurs
Andrew Mwenda, a previous editor of Uganda’s Monitor newspaper and the Chief editor of the Independent magazine, has come to symbolize a new generation of African thinkers. He asks, ‘What man or nation has ever become rich by holding out a begging bowl?’
He argues that more aid to Africa, whether it comes from the West or China, will not solve the continent’s problems. He says, ‘It should not give us too much hope because, at root, foreign aid is an ineffective instrument that distorts recipients’ incentives for the worse.’ He goes on to explain that aid is given with the assumption that its recipients lack the necessary resource base needed to generate tax revenue. This lack in revenue is in effect what limits African governments ability to meet public expenditure needs. Mwenda argues that insufficient tax revenue is caused by poor tax administration, bad policies and institutions that otherwise work to undermine the country’s economic growth. The revenue that is collected is then poorly spent on the wrong priorities.
He goes on to explain that, ‘the failure of Western aid in Africa has little to do with the conditions attached to it, but a lot to do with poor governance on the continent. Look at China giving Sudan money to build a multi-million dollar presidential palace. That surely does not promote economic growth and development in that poor and conflict-ridden republic. You might criticize China, but over the years, Western aid to Africa has done more or less the same thing i.e. helping corrupt African rulers build palaces, fly executive jets, and acquire prime real estate in New York while the citizens of their country go hungry and die of disease.’ The result is that African governments answer only to their ‘financiers.’ It is this final point that is really starting to gain ground in the development debate. The link between governments and citizens needs to be rebuilt if there is to be any kind of real accountability, the kind of democratic dependency that binds a country’s ruling party to its citizen base.
Mwenda goes on to argue that the real potential for development is in fostering trade and business. And that local government is to blame for the continent’s inability to join the global system on a wide scale. It is also misleading to think that China’s loans are particularly generous. He says, ‘Africa’s inability to trade itself out of poverty is not due to bad trading practices by the Western world. That is only an excuse that is theoretically convincing but analytically and empirically false. The real cause of Africa’s trade predicament is mismanagement of policies and institutions that form the relationship between government and exporters.’ He goes on to explain, ‘For example, Africa’s major exports are agricultural. Governments in Africa have for many years pursued policies that reduced farmers’ incentives to produce both food crops and export crops. Bad government is to blame for the continent increasingly becoming a food importer.’ He argues that even when western countries have given Africa preferential trade arrangements the continent has been unable to take advantage of them. He references the Cotounou Agreement and the fact that not a single country in Africa, including Botswana, has met their quota.
In the case of his home Uganda, the country has been given a free trade quota to export 50,000 metric tons of sugar. Unfortunately, the country has failed to export a single kilo. He explains that, ‘Under the Africa Growth and Opportunities Act (AGOA), African countries have 6,000 products they can export duty free to the U.S. market. Most African countries have failed to take advantage of this opportunity and their benefits have been limited. This is because external trade – whether with China or the West – only offers an opportunity. Which country will take advantage of the opportunity depends on its internal institutional capacity. Unfortunately for Africa, this internal capacity is lacking all around. We need to stop looking outside of the continent for solutions. Africa needs internal reform before it can benefit from the rest of the world.’ More specifically, the need to identify local solutions stems from a growing need to identify local talent that can lead the way.
It is on this foundation that Andrew Mwenda puts forward his theory that we need to replace ‘Poverty Reduction’ with ‘Wealth Creation.’ The focus needs to be taken off of symptoms (food, medicine and peace keepers) and in the effort to start addressing the real underlining problems i.e. the ability to generate an income, a trading opportunity and the ability to find a well paying job. His argument is clear; wealth is a function of income. The focus should be placed instead on entrepreneurs as agents of wealth creation. Entrepreneurs make up about 4% of the population and 16% of the population then follows as ‘entrepreneurial imitators.’ Any development efforts should thus be focused on these individuals and the areas of the economy where there are opportunities to productively grow. An emphasis should be placed on private investment and on the institutions and tools that can empower these individuals to do business.
Like Paul Collier and William Easterly, Andrew Mwenda argues that the emphasis should be shifted from ‘top down’ to a ‘bottom up’ approach. Less focus should be made on relations with a country’s president and more emphasis should be placed on Mwenda’s ‘wealth creators’ and Easterly’s ‘searchers.’ These individuals on the ground have the power to seek out local solutions. They are in a unique position to take advantage of local opportunities and tackle local needs and challenges. This new line of thinking is relevant to development efforts generally and the ICT4D debate in particular.
Andrew Mwenda is the publisher of the Independent, a critical voice in Ugandan media
Time to Rethink Development, let entrepreneurs move past ICT4D 2.0
A growing body of work suggests the traditional development approach fails to address the problems of poor countries. The current debate on development cooperation brings into question the very fundamentals on which the sector is grounded. This background is critical to understanding the rise of ICT4D and the role of ICTs in development. In many ways, this new development field stems from the same traditional framework meaning its own purpose, design and practice needs to be reviewed.
In the 1960s economists such as Peter Bauer and Milton Friedman first questioned the effectiveness of development aid. Recent econometric studies now support their view and make the argument that traditional development aid does not impact the speed at which a country develops. On the contrary, development aid can actually be detrimental to its progress (including an unbalanced appreciation of the recipient’s currency known as Dutch Disease). This in turn increases corruption and actually works to stall political, economic and social reform. Authors that contribute recent thinking to this important conversation include the works of Easterly, Sachs and Collier. Each author aims to address a quickly changing environment that most notably includes the rise of new super powers. Specifically, countries like China, India and Brazil that have shown specific interest and influence (political and economic) on Africa. Their interest in the continent works to upset traditional relations (N. America and Europe) and has sparked a new era of competition. This has spurred a new grab for power, influence and resources not seen since the days of European colonialism.
In addition to a fast changing political landscape, increasingly influenced by south-south relations, the continent continues to grapple with ongoing conflict, civil unrest, fundamentalism, gap between rich and poor, food shortages, lack of clean drinking water, the ongoing HIV/Aids epidemic, increasing violence, an energy crisis, ecological crisis, climate change and other economic, social and political challenges. These issues are underlined and exacerbated by the world’s simple inability to eradicate poverty on a large scale.
UN advisor Jeffrey Sachs argues in his book The End of Poverty that there is a need for an even bigger push in investment in local infrastructure. This approach can be described as ‘utopian engineering’ and calls for grand schemes needed to fill ‘large gaps.’ He believes that these challenges need to be tackled head on if they are to be resolved in a short period of time. That infrastructure is the key to getting people involved in a global economy. He argues that the poor need to be helped into the global marketplace at which point their productivity will rise and they can take care of themselves. In a later book Commonwealth: Economics for a Crowded Planet, Sachs takes a broader approach, lessening his emphasis on investment in infrastructure, and dedicating more analysis to climate change, population growth and environmental degradation.
William Easterly takes an opposing view and averts the large-scale ‘top down’ approach of his colleague. He warns against too much planning and believes the deterministic line of attack too often ignores the local context. Instead, he argues for a process of trial and error, an effort to find and search out solutions that can then be replicated and copied. He argues for a ‘bottom up’ approach that responds to demand on a local level. To this extent, planning is only a means to an end. Real development comes from the ‘searchers’ on the ground seeking out local solutions for local problems.
Paul Collier, in his book The Bottom Billion offers a third perspective. He identifies four traps of poverty that includes civil war, abundance of natural resources, landlocked location of countries and poor governance. Collier underpins his book with statistical analysis and offers new and broader thinking about development. He looks wider than conventional aid and makes an appealing argument for more engagement with the private sector. He argues that the bottom billion needs private capital and says, ‘clearly there are brave people within these societies who are struggling to achieve change. It is important to us that these people win their struggle, but the odds are currently stacked against them.’ He goes on to explain the numerous challenges ahead, but introduces a valuable line of thinking that build the case for supporting local entrepreneurs seeking to implement solutions designed for a local context.
Specifically, he recognizes the idea that the pyramid structures and top down approaches used in traditional development are quickly becoming models of the past. Increasingly, people possess the ability to take development into their own hands. It is through economic activity that Paul Collier argues the most progress can be made. He explains, ‘International trade has taken place for several thousand years. However, the most dramatic transformation of the size and composition of trade has been during the past twenty-five years.’ He goes on to say, ‘For the first time in history, developing countries have broken into global markets for goods and services other than just primary commodities.’ It is this most recent development that gives the world’s impoverished an opportunity to make real economic progress.
Collier makes clear that until 1980 the role of developing countries was to export raw materials. He explains that in contrast to popular belief 80 percent of developing countries exports now consist of manufactured goods. At the same time developing countries are increasingly able to export services. He explains, ‘so trade based on primary commodity exporting is likely to generate quite a lot of income inequality. And its scope is inherently limited by the size of the market: as exports grow, prices turn against exporters. By contrast, manufacturers and services offer much better prospects of equitable and rapid development. They use labor rather than land.’ A successful transition into secondary and tertiary sectors remains the key challenge for the continent moving forward.
After several decades of development efforts it is clear that these problems can never be solved by official development assistance. On the contrary, there are an increasing number of reasons to believe that official development aid is one of the key hurdles that inhibits real development on the continent. Specifically, the argument that African governments only answer to foreign aid donors as opposed to their own electorate. The priorities and responsibilities of African governments are warped and influenced by outside actors effectively breaking the relationship between government and citizen in the process.
It is also important to recognize that the problems previously associated with poor countries (rightly or wrongly) are the same problems now faced by countries in the North. Thomas Friedman, in his book ‘Hot, Flat and Crowded’ makes clear that poverty is a global issue and that all countries face growing concerns of population, food security, the energy crisis and global insecurity. This changing landscape questions all assumptions and requires a complete ‘rethinking’ of traditional development at best. This shift is accurately described by the slogan used for the 40th anniversary of the IDS (Institute of Development Studies, Sussex, UK) that reads, ‘Problems are not a monopoly of the South and solutions are not a monopoly of the North.’
These different authors work to effectively question the approach of traditional development aid and illustrate new areas now open to debate. These authors make clear that we need to reach outside of traditional development thinking and look beyond the traditional sector and actors. New language, new theories and new players are required to redefine development for the 21st century. It is important to recognize that now global issues are also at play. In an effort to tackle these challenges a new focus is placed on local entrepreneurs and wealth creation. And as opposed to the top down approach that has failed in the past, a new focus should build from the bottom up. These texts are instrumental in introducing a needed shift in thinking. It is unfortunate its taken nearly 50 years to realize that changes need to be made. Let us hope it wont take another 50 years to reflect on the actions we take today.
Let’s connect
Photos
|
