lessons ....not lesions

1. Why Africa Fails:
The case for growth before democracy (2012)
Presented to
International students
at Uganda Christian University
Mukono Uganda
By the Author
Elly Twineyo Kamugisha
www.twineyo.com
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2. Why Africa Fails – Elly Twineyo Kamugisha
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Copyright © 2012 Elly Twineyo-Kamugisha
http://www.tafelberg.com
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3. Introduction
• Africa is not suffering poverty of resources
• DRC alone has currently US$ 22 trillion worth of resources (
what is the current GDP of USA ==== US$ 15 trillion and is the
No.1 economy in the world
– Africa requires sustained rapid economic growth: More than growth, it
requires economic transformation to achieve inclusive growth.
– More exports.
– Trade matters for Africa. Trade not merely aid ‘handouts’. Aid has failed
to boost SSA’s growth.
– Colonization no longer a viable excuse for Africa’s poor growth
• In this book, we focus on SSA: For Arab North Africa, we look
at the causes of the Arab spring
• Growth and democracy:
– We discuss the Asian(now referred to as the Chinese) Model: Growth
before Democracy
– Asian countries before China took same route
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4. AFRICA: Key figures
Population 1 Bio (2011 UNECA)
Africa’s total GDP USD 1.150 trillion
Middle class 355 mio (AfDB)  34 percent of Africa’s pop. (2011)
Elected governments More than 20 (incld’g new govts of Egypt, Tunisia & Libya)
Average per capita Central Africa $466; West Africa $441; East Africa $303
Countries that have had
internal strife, conflict or
war in SSA
More 70%
Sudan, Uganda, Rwanda, DRC, Nigeria, Madagascar, Angola,
Mozambique, Burundi, Somalia, Kenya, Ethiopia, Eritrea and
Zimbabwe
Only Tanzania, Botswana, Swaziland and Mauritius have had long
periods of peace.
FDI US$ 35 Bio (2009); $ 41 Bio (2010)
Remittances US$ 40 bio (2010) === 2.6 Africa’s GDP
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Countries that have had
internal strife, conflict or
war in SSA
More 70%
Sudan, Uganda, Rwanda, DRC, Nigeria, Madagascar, Angola,
Mozambique, Burundi, Somalia, Kenya, Ethiopia, Eritrea and
Zimbabwe
Only Tanzania, Botswana, Swaziland and Mauritius have had long
periods of peace
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5. Unjustifiable excuses/ and some blame game
• Colonization is responsible upto now for Africa's poor
economic showing
• We are landlocked. But Switzerland is landlocked too.
• Ending diseases burden
• Lack of technology
• Many ethnic groups
• Land tenure systems
• Leaders staying too long in power
• Lack of ‘western’ style of democracy
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6. Colonization no longer an excuse
• More than 50 years since independence for most
countries
• Even Ethiopia? Liberia, Sierra Leone? Were they
colonized?
• History is not destiny
• Other developing countries eg in Asia were also
colonized. How come they are developed
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7. Why Africa Fails
• Lack of Leadership
• Corrupt; and rent seekers
– Use clan, sub-ethnicity and ethnicity and region for
selfish motives
– Use religion for political advantages
– Not patriotic or nationalistic
– Brutal and Dictators
– A leadership to encourage private sector led growth;
and promote exports
– A leadership to unit ethnicities in diversity
– A leadership to regulate the economy
– A leadership to find good partners for FDIs
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8. Leadership Question
– Leaders not committed to their nations and people
– They fail manage diversity of ethnicity (I hate the
word ‘tribes’) by enhancing Patriotism and
nationalism
– Poverty; diseases; wars – to share the national
cake;
– Disease and the silent leadership on Aids/HIV;
Mbeki – HIV not the cause of Aids; King Mswati
attending reed dance to pick a young wife;
– Regular elections and multiparty democracy has
been a sham in Africa
– Does duration of leader in power matter?
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9. Lack of institutions
• Lack of institutions and policies as a structural
challenge
• Institutions: Political , legal, economic
• Lack of institutions
– To promote and protect private sector
investment
– To promote private property rights
– To promote exports
• Lack of policies for creation of an enabling
environment
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10. Attitude change pro prosperity
• Attitude towards prosperity
– Prosperity is choice
– Attitude is a predisposition; related to perception
(‘the way we see the world around us’)
– Work hard pays
– Free things don’t build nations
– An attitude of ‘we will never make it’ is wrong and
pessimistic
• An attitude of ‘we need help to survive’
• This kind of attitude has been observed in some places
in Africa
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11. Lack of Patriotism/nationalism
• Is patriotism/nationalism relevant to growth?
– I say YES
– Commitment to your country is paramount – for both leaders
& citizens
• Chinua Achebe (Kamugisha, 2012, p.33 ) cited in
tells us in The Trouble with Nigeria:
– “A patriot is a person who loves his country. He is not
a person who says he loves his country. He is not even
a person who shouts and swears or recites and sings
his love of his country. He is the one who cares deeply
about the happiness and well-being of his country and
its people”. (Achebe, 1984: 15–16).
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12. A capital problem
• Capital in Africa not easily available
• Limited access to affordable sources of
capital for private sector (aid is to gov’t; aid is
to the public sector)
• Few sources of loanable finances locally
• It is expensive
• Banks think Africans are risky to lend: they
then charge high interest rates (e.g 18-22
percent in Uganda before the global financial crisis)
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13. Aid not a solution
• Foreign aid: the total sum of both concessional loans and
grants. This definition refers only to official development
assistance.
• Since 1970, Africa has received at least $300 billion
– Has this aid helped get us out poverty. Big NO
• The government could cut the fleet of vehicles given to
ministers and other top civil servants.
• Aid is attractive to leaders and technocrats.
– It is easy to steal and ‘account for’. Public servants can
‘cook the books’ and show that money was spent
according to plans and without waste.
– the budgetary needs to be covered by aid can be
inflated.
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14. Aid is not working
• It is public expenditure yet Africa needs private
capital & technology
• Associated causes:
– Inflation
– Enhances corruption
– Future public debts
– Gov’ts forget to be accountable to the citizens (the
key stakeholder is the donor)
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15. Little Trade – and few export receipts
• Africa accounts for about 2.5 percent global imports; 2.3
percent exports
• Slow or lack of industrialization
• Slow growth and lack of economic transformation
• Infrastructure problems
• Quality problems ; Quantity problems
• Management of the global value ( and supply) chains
• Unfair trade terms
– Developed countries restrict entry into their market
( = protectionism)
– Developing countries restrict entry into their market
( = protectionism)
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16. Continued copying of policies and systems
from developed countries
• Aided by IMF and World Bank
– Washington consensus
– Economic liberalization
– Trade liberalization
– Sell of state owned enterprises (SOE)
( But china has SOE!)
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17. Way forward for Africa ?
1. Capital solution
– Attract more FDI and encourage domestic
investment
– Target and attract remittances from African diaspora
– Ensure and protect property rights ( e.g land titles)
– Encourage stock and capital markets
– Strong campaign to encourage people to keep their
money in banks (people still keep their money in
their homes)
– Create a middle class ( at 355mio Africans (2011))
• Avoid politically created middle class
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18. 3. Institutions matter
• Build institutions to promote private sector
competitiveness;
• for law and order;
• for democratization
– Protection of investors, their property, and earnings
matter
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19. Leadership matters
• Committed and visionary
• Patriotic and nationalistic
• Some benevolence is important ( see what
benevolent leaders achieved for Asian tigers)
• Values the role of the private sector
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20. 2. Reduce the large size of the informal sector
• Aid exit strategy (trade and markets instead of aid).
Produce and exports
• Fight corrupt:
– with political will
– Make laws and enforce them
– Avoid rewarding ‘looters’ with fat positions in
government
– make corruption an expensive venture e.g apply
time value of money charged on those convicted
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21. 4. Population control strategies
How about quality of Population?
• Traditional drives for more children at family level?
– Labour
– Bride wealth
– Insurance: just in case diseases kill some; some may
remain
• Population control strategies
– At family level in SSA a big population enhances
the family’s poverty)
– Need for quality population to provide labour and
be consumers ( a market)
– Health and Education matter
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22. Population & Wealth of nations
• What matters?
• Population numbers?
• A healthy population?
• Employable and employed?
– Quality of population matters
– Quality of education matters
– Dependency ratios are high
– few bread winners but many mouths to feed
– Unemployed youths causing insecurity
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23. 5. Trade and Markets are important
• Markets are important both at domestic and
international levels.
• The markets in West are more lucrative…….BUT
these markets are not OPEN!!
Trade
• Value addition and Exports
• Access to lucrative markets vital (EU,USA, etc)
• Regional integration (EAC, SADC, ECOWAS) 
Africa wide economic community?)
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24. 6. Foreign Aid exit strategy
• Free money is bad for growth of a country
– In accounting it becomes different to explain free
money.
• Hard earned money is valued
• Hard earned money makes the earners proud
• Aid? The need for an aid exit strategy is
urgent.
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25. 7. Role of Gov’t during growth & democratization
• Create an enabling environment for the private
sector to operate ( to do biz)
– Facilitate
– Influence
– Regulate ( very important)
• In the event of market failure:
– Come in but don’t interfere
– Establish expensive venture ( later sale them)
– Public Private Partnership (PPP)
– Letter of support to funders of the key private
players
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26. 8. Economic diplomacy & image building
Economic diplomacy by African gov’ts:
• Relationships to promote trade and markets and
investment;
• A positive image of a country is influenced by key
stakeholders: the media, diplomats, government and the
private sector.
• A fair and balanced reporting is vital for Africa. Don’t say
that Africa has no challenges on the continent. (It is
important to explain the current issues and the steps being
taken to address them).
• Politics will remain important, too.
– Western governments will continue to require African
countries to make strides towards democratization and
more progress in their observance of human rights
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27. Growth and Democracy Model?
• The case for growth before democracy model
• The Asian Model: democracy after growth; e.g Japan,
S. Korea, Taiwan, and Singapore. And now China
• Democracy evolves gradually (same thing happened
in the west?)
– Growth first ( higher levels of per capita); reduction of
absolute poverty
– Build institutions
– Growth makes people demand for democracy
– The middle class requires protection, good laws and
ultimately democracy
– The power of the middle class and the literate will force the
gov’t in power to democratize
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28. Some research the relationship between
growth & democracy
• What nations need are:
– Maintain rule of law
– Free markets and institutions that promote
competitiveness
– Small gov’t consumption
– High human capital
• Analysis: Once the variables and the initial level of
per capita growth are held constant, the effect of
democracy in growth is weakly negative.
• The analysis implies that, once these variables are in
place, growth can occur in different types of regimes.
• It growth happened in Chile under Augusto Pinochet)… the
country achieved high levels of growth without a fully
developed democracy
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29. Growth before democracy model for Africa?
• The case for growth before democracy? Or growth &
democracy? See my position in the book pg.48 para.1
• Democracy and the regular elections in Sub –
Saharan Africa
– Have been a sham; Elections are bought, rigged;
Flawed processes
– Some causes: greed by politicians takes advantage
of the levels of illiteracy and poverty influence the
outcomes of the vote
• Ignorance of what the citizens themselves want:
– Who knows what the candidates manifesto means to the
future of their countries?
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30. Role of other key stakeholders
1. Role of individuals /
private sector
• Work and earn incomes
– Save
– Invest
– Pay taxes
• Have affordable families
(because there is no one willing
to shoulder your family)
– Plan your families
– Educate them
2. The Civil Society
• Undertake policy research
• Organise dialogue
• Disseminate information
to the public
• Expose corruption
• Promote good causes
• Reduce theory – and
recommend working
solutions
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31. Devt partners ( Donors?)Want to engage with Africa?
• Trade
• Tourism
• Invest – FDI
• Trade related infrastructure
• Keep dialoguing on efforts at democratization
• Understand the situation in Africa
– There are lesions to learn from the Arab spring for both the SSA
and the West
– support efforts by the African to choose they gov’ts they want
– Democracy must be related to the conditions mainly that are
endogenous within a country
– China still faces challenges but gives lesions to African
countries
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Role of other key stakeholders

32. I come from Uganda….
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I could be a descendant of people from South Africa..or
Zimbabwe…or Zambia… or Tanzania…..or Rwanda. But
am a Ugandan. Above all I love Africa………and am an
African
THANK YOU FOR LISTENING TO ME
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