International aid
Professor Paul Collier argues that the prospects for growth and stability in Africa would be enhance if the concern about policy reversals were diminished, thus maximising inward investment flows. He advocates the EU taking a wider role and exerting more pressure on recalcitrant regimes.

Executive Summary

Western business regards Africa as the world’ riskiest region in which to invest. The continent is thus largely excluded from the present rapid process of economic integration. Moreover, during the 1980s much of Africa excluded itself from the global market place through protectionism and statist economic policies. Economic growth has therefore been slow, or negative; this has served to aggravate the risk of civil war which, in turn, has provided a further disincentive to Western Investment.

Relations between Western governments and those of sub-Saharan Africa are now set in a pattern which reinforces the negative attitudes of Western companies towards the continent. The West offer aid in return for economic reform, but even when the proposed measures are introduced, they are often abandoned once the aid has been received.

For reasons of history and self-interest the European Union is best placed to act as an ‘agency of restraint’: the problems of illegal immigration and drug trafficking which would arise from an explosion of conflict anarchy across sub-Saharan Africa are too serious to ignore, while the continent provides a huge potential market.

The most effective means of assisting those states seriously bent on reform would be a revision to the Lome agreement enabling economic relations between Europe and Africa to be shifted from unilateral concessions to reciprocity. As a consequence, African states would have a series of options – ranging from Lome in its present form to full reciprocal free trade with EU members. States which chose the more ambitious option could expect to become the African pace-setters.

As Botswana – one of the world’s fastest growing economies – has demonstrated, economic freedom and market reforms work in Africa, as elsewhere. Over recent decades Africa’s record has not been significantly worse than that of Eastern and Central Europe. What has been lacking has been a way of signalling a decisive break with the past. Europe has a role in enabling Africa to signal the break.

1998, Studies in Trade and Development No. 3, ISBN 978 0 255 36466 9, 39pp, PB