Peace and Good Governance the Key to Reducing African Poverty
A change in policy would improve safety and reduce congestion
The IEA's Shadow Monetary Policy Committee has voted by five votes to four to hold interest rates
Security is essential for investment and economic growth
In just 50 years, GNP per head in Africa has fallen by 85% relative to the level in Asia. A major cause of economic stagnation is civil war. The first part of the study argues that many African countries are too small to provide their own security and that government security forces are themselves a major part of the problem. External military intervention by major powers, such as the UK, USA and France, is an essential component of providing the peaceful conditions conducive to economic growth – and must be pursued, even in the face of accusations of neo-colonialism. The study shows the enormous benefits of British military intervention in Sierra Leone. Collier describes it as “possibly the most cost-effective instance of British assistance to Africa”.
A section of the study, by John Githongo, the renowned Kenyan anti-corruption campaigner, shows the importance of “good governance”. African governments have few external constraints on their actions, unlike those in the developed world. The IMF and the World Bank have tried to impose conditions on loans and aid but African governments have learnt to ride roughshod over their authority: the Kenyan government has sold the same reform programme to the World Bank, in return for aid, five times. In response to the problems highlighted by Githongo, Collier proposes that Africa builds upon the Extractive Industries Transparency Initiative which requires its signatories to exhibit transparency in the way natural resource revenues are used. This could be expanded to govern how contracts are awarded and how government expenditures are accounted for; it should also be expanded to cover other areas of commerce.
Compulsory legal standards should also be negotiated by the OECD. Until recently bribery of an African official by OECD company employees was not only legal but tax deductible in some countries. Corruptly obtained funds should be tracked down and repatriated.
Collier also proposes that, in a reversal of current protectionist policies in the West, African products are specially favoured in trade policy. There should be a wide-spread adoption of the US Africa Growth and Opportunity Act which gives duty-free access to the US for African goods. Collier describes the EU trade scheme, known as “Everything but Arms”, as “useless”: it covers the wrong countries and is too restrictive. Trade restrictions and the problem of corruption are linked. African trade restrictions are described as a “major instrument of corruption”. In Madagascar a job in the customs service was so lucrative that the bribe to obtain a place in training school was 50 times average annual income.
In summary Collier argues that Western governments must promote peace and security in Africa through hard but unglamorous work. Peace and security are a precondition for the government’s much trumpeted aid programmes to work.
*Africa left behind, edited by Paul Collier, Economic Affairs , Vol 26 No 4, The Institute of Economic Affairs, £7.50.
** Paul Collier is Professor of Economics and Director of the Centre for the Study of African Economies, Oxford University.