The New Path for Africa: Establishing Free-Market Societies
April 28, 1999
George B. N. Ayittey
Introductory Remarks by David Theroux
Welcome to our Independent Policy Forum this evening. As many of you know, we hold Independent Policy Forums on a regular basis here in our conference center in Oakland. The programs consist of lectures, debates and seminars featuring outstanding scholars and other experts often authors of important new books. In the packet that you have received, there is background information about our program, including membership information and information about our journal, The Independent Review, and our books as well as some information about tonights program. It also features a couple of upcoming events. For those of you who have not given us your email and other addresses, I would urge you to do so, because sometimes we have to make changes in the schedules, and the best way to inform you is usually that way.
The Institute is a non-profit, public policy research organization. We produce about four to six books per year. Our journal is a quarterly journal. We publish many other kinds of studies, and we have about 130 research fellows in the United States and around the world. The idea of the Institute is not to get involved in politics. It is not to preach to the choir. It is not to do anything other than to try and get to the truth as best as we can, from an academic basis, of major social and economic issues and to publish the results and make them as accessible as possible.
The book tonight that we are featuring is the second best-selling book by our speaker, entitled Africa in Chaos. His previous book, Africa Betrayed, was a huge success. It also won the Mencken Award. Africa has been described as the cradle of mankind. For those of you who have been there and for those of you who have not, its clearly one of the most beautiful, resource-rich and fascinating regions of the world. Anthropologists and other scientists are unanimous in agreeing that the human race originated in central Africa, essentially the Serengeti plain where it is now Kenya and Tanzania. And although human beings have since, obviously, spread around the world, in a profound sense we are all Africans.
So the issue of Africa is not just something of a region but its a fundamental issue not just to the people of Africa but I think to the history of the human race. I think the lessons of Africa are applicable everywhere, even in Oakland. However, Africa has been a continent of enormous upheaval; wars, disease, poverty, genocide, on a horrific scale have been commonplace in many parts of the country. Former U.N. Secretary General Boutros Boutros-Ghali once said that Africa was In danger of becoming a lost continent. From the colonial period on, despots of all sorts have carved up the continent and exploited the people through a recurring series of experiments in collectivism and statism. Africa has literally been a cruel cosmos for every form of socialist, fascist, and other central government planned experiment imaginable. Each of these experiments has been a disaster. Sadly enough, such ideas did not originate in Africa, but were imported from the major universities of the West, whose departments of development economics were all consumed with the idea of central planning. For decades many of the best and brightest young people from Africa were sent to such schools in the West only to come back enamored with the latest Marxist or other collectivists notion. For decades, virtually all of these disastrous programs have been in the darling views of administrators of western foreign aid programs and the major international relief and other agencies. What is instructive, though, is to contrast the indigenous social, and very often market-based, economic systems that existed in Africa both before colonial and post colonial systems. To contrast those areas in Africa in which economic liberalization and individual liberty and the rule of law have been able to occur without state-ism to essentially smash it.
Our speaker this evening has been a true pioneer in critically analyzing the African nightmare and what should be done to overcome it. His approach is to ask the hard questions as both a scholar and someone truly devoted to ending this tragedy. Why has Africa, despite its rich history, cultures and abundant resources, largely remained in this precarious situation? How can this tragic legacy, as I mentioned earlier, of colonialism and socialism, be replaced with the welfare of economic liberalization and the rule of law?
George Ayittey is Professor of Economics at American University in Washington, D.C. He is a native of Ghana. He is president of the Free Africa Foundation. Professor Ayittey received his Ph.D. in Economics from the University of Manitoba in Canada. In addition to his newest book, Africa in Chaos, his previous book is called Africa Betrayed. His other books include The Blueprint for Ghanas Economic Recovery, Developing South Africa After Apartheid, and Indigenous African Institutions. Professor Ayittey is also a contributor to a number of other distinguished volumes and his articles appear in the Wall Street Journal and many other publications. I am very pleased to introduce George, and I hope you will all enjoy his presentation.
George B. N. Ayittey
Professor of Economics, American University
First of all let me say how pleased I am to be here, and I thank David and also Carl Close for inviting me and for making this forum possible. I also have to thank you for finding some time to come and listen to me.
The topic under discussion is Africa. Its a continent that a lot of us care very deeply about. Many of you have visited Africa before, and I am sure you have interacted with the people. A lot of you will vouch that African people are very hospitable people. They are very nice people. The continent is breathtaking.
As an African, I am also very angry, because we fought for our freedom from white colonial rule. Back in the 1960s when we fought for our freedom in development, we expected to have more freedom in development. But true freedom in development never came to much of Africa. Our cause of freedom was previously betrayed, which is why I wrote my first book, Africa Betrayed. I need not remind you that since 1985 country after country, Somalia, Ethiopia, Rwanda, Conga, Liberia, were blown up.
We are talking about a continent that is tremendously rich. Name the mineral and you will find it in Africa: gold, diamond, titanium, cobalt, uranium. We are talking about a continent that is not resource poor and yet it has not been able to utilize its mineral wealth to lift its people out of poverty. Thats why a lot of Africans, thats why a lot of us, are angry. The failure of Africa to develop has nothing to do with colonialism. It has very little to do with colonial bodies or artificial bodies. It has little to do with American imperialism. The basic cause of Africas economic atrophy has more to do with bad leadership and defective institutions established by African leaders after independence.
Africa is the only region in the third world which has fallen back, regressed economically. All other regions in the third world have made some difficult progress, except Africa. In this explanation, we always have to make two distinctions. It is important that we keep this distinctions in mind. First, we must always make a distinction between leaders and people. I say this because Americans quite often confuse the two. That is, I might not like President Clinton but that does not mean I hate American people. It is an important distinction. Now white Americans often do not want to make that distinction because of political correctness. They do not want to criticize black African leaders for fear they may be labeled racist.
The problem that we have in Africa is with the leaders not with the people. Now as I stand here, I am not ashamed to say that many of our leaders have failed us. It doesnt mean that it is the peoples fault or the people who have failed Africa. It is the leaders. We must always make that distinction between leaders and the people. We must also make a distinction between the existence of an institution and different forms of the same institution. I say this because an enduring myth of Africa perpetuated by the colonialists was that Africa had no viable institutions, and therefore colonialism was good for Africa. If you go into Africa, into its native traditional system, you find that there were institutions in Africa. There were institutions of free markets in Africa. There was free trade in Africa. There was free enterprise in Africa before the colonial institutions on the continent.
It is important to make these distinctions. Take marriage, for example. Americans marry by taking their brides and bride grooms to church and have a church wedding. In Africa if you want to marry a woman, you go and see her parents and so forth. Obviously, these are different forms of the same institution of marriage.
In the same way, consider the institution of money. You have different forms of money. Before the colonialists came, Africans were using gold-dust salt as money. The Europeans introduced paper currencya different form of money. It does not mean the Europeans invented money.
This is exactly the same thing you can say about the market. A market, as an economist would define it, is any setup which brings buyers and sellers into close contact. In Africa, the buyers and sellers met under a tree and conducted their transactions. So we had village markets in Africa. Of course, here a mall is a market where Americans go to shop. If you go to an African village and are looking for a mall, youre not going to find a mall there. That doesnt mean that a market doesnt exist in Africa. So a mall and a village market are simply different forms of the same institution.
It is exactly the same thing with the institution of democracy. In our traditional system, the chief and his people gather under a village tree and have a village meeting and they debate issues until they reach a consensus. Once a consensus is reached, everybody in the village is required to abide by it. There you have participatory democracy based upon consensus. The Europeans came and introduced representative democracy where people vote. Different forms of the same institution. Obviously if you go to an African village and are looking for a box with ballot written on it, youre not going to find it. Just because there is no box with ballot written on it, doesnt mean that Africans have no idea of what democracy is.
This is important. The reason why I am emphasizing this isif you want to understand why things went so bad and array in Africa, you focus on the institutions. After independence, our leaders never went back to their old traditional institutions. They never went back to their roots to build upon their own indigenous institutions. Instead they transplanted alien institutions into Africa. This is important. In doing so, they betrayed their own cultural heritage. Two of the most defective institutions they introduced into Africa were the economic institution systems and political systems.
First, the economic institutions. They argued that colonialism was evil and exploitative and because the colonialist said they were capitalists, it meant that capitalism too was evil and exploitative. So they rejected capitalism and borrowed socialismthe antithesis of capitalism. This is how they argued that only socialism will save Africa. This was back in the 1960s. Guess what type of socialism they implemented in Africa? They implemented a peculiar form of Swiss bank socialism, which allowed the head of state and his cohort to rip and plunder African treasures for deposit in Switzerland. One of the covenant ministers in Zimbabwe was once asked to define socialism and he said here in Zimbabwe socialism means what is mine is mine, but what is yours we share. And with socialism, Africas economy was controlled. The state demanded for itself ownership of the economy and participation in the economy. It lead to the institution and imposition of the flurry of state controls and regulations on the economy, the operation of a whole lot of state- owned enterprises.
Back then they drift toward statismstate control of the economy was driven by ideology. There were pragmatic reasons. There were some countries like Nigeria, Ivory Coast, Kenya, for example, which did not adopt socialist ideology, but they had extensive government intervention in the economy for good and pragmatic reasons. They argued that if, say, Ivory Coast or Nigeria needed a dam and a dam would cost them $50 million, since nobody in Nigeria had $50 million, it was the state who had to build the dam. This justified state intervention in the economy. Very soon many of those who were operating the state controls discovered that the state controls created shortages. When you create shortages you create black markets. When you create black markets, you always create an opportunity for somebody operating the controls to illicitly enrich himself. In Ghana, Nigeria for example, those who wanted import commodities had to get an import license. Because the licenses were hard to get because of import controls, they were willing to pay something under the table that went into the pocket of the ministers. The first mistake that was made was to set up this defective and alien economic system which allowed the state to control almost every conceivable aspect of Africas economy.
Now Im coming down hard on this because this type of economic system can nowhere be justified by Africas own indigenous economic system. If you go to any African village market today, chiefs do not fix prices. Prices are arrived at by bargaining. You will also notice that women play a very important rolethey dominate market activity in Africa. Now contrast this with modern Africa, where price controls were imposed on many commodities in Africa, something that did not exist in traditional Africa.
That was the economic system. In the political system, the political systems established in post-colonial Africa were not democratic. Once again, the nationalist leaders argued that democracy was a Western invention or institution. Because they had rejected colonialism, they also rejected democracy. Therefore, many of them who had gone to the East and copied the systems in the East imposed upon their respective countries one-party state systems, where no opposition parties were allowed where the leaders became presidents for life. Opposition parties were banished. Political dissent was also banished. So you had a political system which concentrated a great deal of power in the hands of one individual. As you know already from a quote from Lord Acton, power tends to corrupt, absolute power tends to corrupt absolutely.
So, you have a political system in which power was concentrated in the hands of one individual and in the state. You also had the defective economic system where power was concentrated in the hands of the state and ultimately in the hands of one individual. The combination of these defective economic and political systems led to the evolution of what I have written in this book as the pirate state or the Mafia state. This did not evolve all of a sudden but gradually over the post-colonial period with the concentration of political and economic power in the hands of the state. The state ceased to be a government as you and I understand it. Government as you and I understand it is by the people for the people, etc., etc. Such a government doesnt exist in many African countries. What exists is the Mafia state. That is, the government that has been hijacked by thugs and crooks who use the instrument of said power to advance their own economic interests. To enrich themselves, their cronies, their kinsmen and exclude everybody else. In other words, they have established in many African countries what you might call an economic apartheid system. It is important to understand this because this politics of exclusion is what lies at the root of the implosion of many African countries. Let me give you an example.
If you want to understand this, take the United States and then take Africa. Why is the U.S. rich? Why is Africa poor? To understand this, ask yourself how do the rich in the U.S. and Africa get rich? The richest person here in the U.S. is Bill Gates. He is a person of a fortune of $60 billion and counting. How did he make his money? In the private sectorin the computer industry by producing software. In other words, there is something to show for his wealth. Now lets go to Africa. Who are the richest in Africa? The richest in Africa are heads of state to ministers. How did they make their money? By raking it off the backs of their suffering people. That doesnt generate any net wealth. In Africa, wealth is just redistributed from one section of the population to another section of the population to the vampire elites. They dont generate any net wealth. They use the instruments of the state to enrich themselves, their cronies, their kinsmen and exclude everybody else.
Mobutu of Zairethe late Mobutu was one of the richest Africans. He had a personal fortune of $10 billion. When his countrys foreign debt was $7 billion, this meant that this one individual could write a check and pay off his countrys entire foreign debt. Then there is Ibrahim Babangida of Nigeria with a personal fortune of about $11 billion. Nigeria is the worst case in Africa. Nigeria with its oil wealth. Since 1970 more than $100 billion in oil revenue has flowed into Nigeria, and all that has been squandered. You cant blame the colonialists for this. You must blame the corrupt leaders that we have had in Nigeria. Here was a guy who was in power for just four years and yet he managed to accumulate a personal fortune of $5 billion. This is serious, and this is one of the reasons why Africans are angry.
Americans may say, Well we also had this particular type of problem within our own history. We had robber barons, the Rockefellers and so forth. So, you are going to have some corrupt leaders in Africa. Well, that may be true, but there is a differencea very fundamental difference. The robber barons in America invested in America. They built railroads, banks, steel mills, Standard Oil, for example. In Africa, the African kleptocrat doesnt invest the loot in Africahe takes it outside. He puts it in Switzerland. So there is a tremendous amount of capital leaving Africa. Let me give you one example.
In 1991, more than $200 billion was siphoned out of Africa. That amount$200 billionwas more than Africa gets in aid and investment. So, capital flight is a very serious problem. It is occurring because we have had the need to monopolize the state and use the state to rob and plunder the people and benefit only a small minority. The problem is, as I indicated, the politics of exclusion lies at the bottom of the heart of all this. Ask yourself what would you do if you were a member of the excluded class and you see the ruling elites writing about them. They have the fabulous mansions, etc. Now to answer that question lets go to South Africa where in South Africa the whites monopolize political power and refuse to share that power with the blacks and excluded the blacks under a system of apartheid. We all know that. We all condemned it.
But the irony is that in Rwanda a black government was practicing exactly the same type of apartheid system. The government was monopolized by the Hutus who refused to share political power with the Tutsis. Now in South Africa, the whites and the blacks were able to sit down and negotiate a political settlement to save their country and establish democracy and power sharing, etc., etc. What did the Hutus in Rwanda do? Instead of sitting down with the Tutsis, they came up with one macabre solution and that was to slaughter the Tutsis. That was the 1994 genocide where 800,000 Tutsis were massacred in a three-month period. If there were no Tutsis of course there would be no Tutsis to share political power with.
This is Africas dirty little secret, which people here in the West do not want to talk about because of political correctness. If you were a member of the Tutsis in 1994, what would you do? Those who were excluded had two options. The first option is to rise up and remove the ruling elites and replace them with themselves. This is what happened in Ethiopia. This is what happened in Somalia. This is what happened in Rwanda. And you have rebel insurgencies. It is painful for me to admit that we are going to have more African countries blow up in the near future. Kenya is one of them. Zimbabwe is another one of them. Togo is another one of them. Possibly, Ghana may also be on the list. Why? Because of the politics of exclusion.
The other option for those who have been excluded is to break away, to secede. This is what the Africans tried to do in Nigeria in 1967. And this is currently what the enclave in Angola wants to do. In other words, the reason why I wrote this book is to try to come to grips on why all these countries are imploding in Africa. It all boils down to one word: power! It has little to do with tribalism. Somalia blew up. Somalia is a country that is ethnically homogenous. There is only one tribe in Somalia, the Somalia people, but they blew up. It has nothing to do with resources. You take Zaire for example. Zaire is tremendously rich. Even the Congo basin alone can produce enough food to feed the entire continent of Africa. It blew up.
The basic cause of the implosion that we have in many African countries is what I call the power equation. The struggle for political power. Why the struggle for political power? The struggle for political power has become very ferocious because power is concentrated and centered at the center. Obviously there is a solution, and that solution is to take that power out of the center and disburse it. Give it back to the people. This is the way it was in traditional Africa, and this is why some of us say the solutions to Africas problems lie in Africa itself. It involves Africa going back to its roots and building upon its own indigenous institutions. Indigenous institutions of freedom, free markets in Africa, free enterprise and free trade. Some of us may not know these indigenous institutions, and this is why people like us have to talk about it in this book. I have a brief summary of Africas indigenous economic and political institutions in chapter three.
So once again, the solutions to Africas problems are in Africa, and that is why I believe in African solutions for African problems there. The solutions dont lie in the corridors of the World Bank or the IMF. They lie in Africa itself. That is why a lot of us will have to start looking at Africa critically. We have had bad leaders in Africa, and we have had bad governments in Africa. I am not ashamed to say so at all because there are some white leaders who have also failed their people. Just as black African leaders have failed their people. All of us must condemn oppression wherever we see it. Oppression is oppression regardless of the skin color of the oppressor. When you see oppression in Africa condemn it and that does not necessarily make you a racist.
I am sure George would be delighted to answer your questions. One thing I am going to say is that years ago, there was an economist that George may know, who was a young economist of the London School of Economics by the name of Peter Bauer. Actually, he wasnt quite there yet, but he eventually got located there and he did a book which caused a real stink. The book was called West African Trade. It was one of his very first books. In that book he showed that the indigenous economy in Western Africa was more advanced than many European societies. It really created quite an uproar.
George, would you like to answer any questions?
Audience Member #1
George, I would like you to comment a little bit if you would on what seem to be some fairly scary status trends in South Africa lately. The attempt to control the press and that sort of thing.
George B. N. Ayittey
Once again, it is. I should point out that in 1994 when Mandela was running for President I was one of those discouraging him from running. I indicated that he shouldnt run because I wanted blacks in South Africa to learn from my experience in post-colonial Africa. We made a lot of mistakes. One of the mistakes that we made was many of the national leaders who brought independence to their respective countries later on became the heads of states of these countries. In country after country, they ran their economy down the economic slump. Why? Because they did not have the skills to run an economy efficiently. We must always make the distinction that there are political skills that you need to wage a successful liberation struggle and those skills are not necessarily compatible with the skills that you need to run an economy efficiently.
The post-colonial leaders have the former skills but they lack the later skills, and this is why I indicated that Mandela should not be running for President. They brought freedom to their respective countries, South Africa, and it was time for them to step aside. But the ANC went on to become the government, and you notice that in South Africa just as we did, they went after the state institutions like the banking system, the judiciary system to place their people there. The lieutenants of the struggle who may not necessarily be the most qualified within post-colonial Africa. So, gradually what youre having in South Africa is the erosion of the rule of law. Crime is just out of control. Corruption is becoming a problem. Since 1994, the U.S. has invested more than $90 billion in South Africa. It hasnt made a difference. Unemployment rates among the blacks are about 40%. The ANC government has been a very big disappointment.
Then again, political correctness. People do not want to talk about it. This is one of those things, until we lift this veil of political correctness, it is going to hamper our efforts to search for solutions in South Africa and the rest of Africa. South Africa has been a disappointment and people are not willing to speak the truth about South Africa. For example, because of the murder rate, Johannesburg is a no go area. It is worse than even Washington DC. The statistics are just terrible. Last January, the managing director of Diwumutus was brutally killed. Even the UNDP representative who was in South Africa was gang-raped. In 1991 the director of Daimler-Benz was also shot and killed. South Africa is degenerating into lawlessness. I think the time has come for us to put our prejudices behind and speak out against this, otherwise South Africa might turn into another Zimbabwe or another Congo.
Audience Member #2
I have a problem understanding, maybe because my experience is a little different, and I would like to tell you what that is first and then see where the difference is. My difficulty is separating leaders from the people because from what I understand, we had leaders that were also corrupt. The people finally in Europe decided they didnt want to live that way and that it was worth their lives to do something different about it. It is only when the people allow the leaders to get away with despotism and behaviors that we dont want to live with that the leaders can again overtake the people and gain this control. Thats where I have a problem separating the leaders from the people. I was just wondering if it is that much different in any other situation.
George B. N. Ayittey
In a democracy you can argue that the people deserve who they have as leaders. In a democracy you have a choice. People vote for the leadership. We dont have that choice in many African countries. They impose themselves on their people, and quite often you have some nut wielding a bazooka who gets in and declares himself President. Africans just dont have any choice at all. Africans also dont have the choice of removing the leader, because they dont have the guns. Those who attempt to organize against such leadership are sent down. You take a dictator like [the late General Sani] Abacha [of Nigeria]the guy simply dismantled any institutions of democracy and locked up his opponents. You may remember [Chief Moshood] Abiola, for example, who won the elections in Nigeria. He was thrown in jail. One of his wives was brutally murdered.
This is what Africans have to contend with. That is, there arent any legitimate avenues or channels by which one can express dissatisfaction or protest and so forth. There arent many African countries where I can stand and speak like this. There is brutal oppression of intellectual freedom and freedom of expression. Newspapers are controlled and owned by African governments. Not all of Africa is like this. There are exceptions, but the exceptions are very few. In 1990, for example, only four African countries were democratic, only four out of 54 were democratic. And here we were marching down to South Africa to demand one-on-one vote for the blacks, which they should have. Then in our own black African countries, we didnt have this type of political freedom. After the collapse of Communism, the winds of change blew across Africa, so that the number of democracies increased from four to 15 in 1995. Since then we have had erosion. The number of democracies has now dropped from 15 to now 14out of 54 African countries. So, for the majority of the black African people, they live in tyranny. If you are talking about freedom of expression in a free press, that exists in only eight African countries. So, the African people do not have the means and the opportunities to voice the dissent and protest to change the system. This is why they bottle everything up until eventually it blows up in a rebel insurgency. By then, it is too late to save the state and everything collapses. So, it is not that the people have a say in choosing their leaders. The leaders just impose themselves on the people. Thats why we want democracy.