Friday, June 17, 2005

A Concert(ed) Effort for Africa ?

We will likely enjoy the concerts Sir Bob Geldof and others are organizing around the world, including the one in Toronto. There will be some good music, a sense of people doing the right thing and some interesting antics on stage. Live8 will be a success, at least in terms of entertainment.

But what of its core purpose? According to Sir Bob, the aim is to put pressure on the G8 leaders to improve aid, cancel debts and ease trade restrictions that have an impact on Africa. He has called for a long march from the concert venue to Edinburgh where the G8 leaders will be meeting to draw attention to these issues and has encouraged young people to leave school for the week following the concert to join this march.

The London concert is problematic. Originally there were to be no African bands. N'Dour is the only major African artist due to perform at any of the five concerts announced earlier this month. Some other black artists have now been added to the roster to ensure that there are some non white people on stage. As one African musician put it "If African artists aren't given a chance, how are they going to sell records and take the message back to Africa?". It looks very much like a showcase for ageing musicians who miss the big crowds who used to pack in to their concerts.

But there are more fundamental concerns. The campaign, of which these concerts are a part, seeks to end poverty in Africa. It is concerned that global trade, debt and insufficient and ineffective aid all cause poverty which is then exacerbated by "inappropriate" economic policies. Here they are dead wrong.

Substantial sums of aid has been supplied to African countries since the post war period. As one leading African specialist has said “if aid was the solution to Africa’s problems, it would be a rich continent by now”. The problem with aid is corrupt governments. Millions of dollars have been siphoned by corrupt officials into their own bank accounts and squandered on military adventures and lost causes – Mugabe, Mobutu and Abacha come to mind as the more recent recalcitrants here, but they are not the only ones. In some countries, corruption is not unusual, it is the norm. The G8 finance ministers have just agreed to “double aid for Africa”. Yet this aid is not likely to make any more difference than the aid previously provided. The US has this right – proper governance before aid is a better strategy.

Canceling debt is a second plank of Geldof’s platform. 23 African countries are getting debt relief through the Highly Indebted Poor Countries (HIPC) program. So far, this means they have an extra billion dollars a year to spend on health care and education. Others are in line to receive this. In this sense this campaign has worked. But the reality is that few countries granted debt relief were paying their debt bills and not all of the countries affected by debt use relief wisely – once again, the issue is governance.

It also needs to be remembered that Africa is the home of five of the worlds fastest growing economies. In 2004, economic output in sub-Saharan Africa grew by 5.1 percent, the highest in almost a decade. In the countries where oil production increased in 2004—Equatorial Guinea, Chad, and Angola—economic growth was particularly strong. Output in Ethiopia grew by 11.6 percent as a result of agricultural recovery after the country received relief from a prolonged drought. African countries are rich in natural resources, now in high demand due to the expansion of the global economy and the growth in trade. Free trade and focused efforts to secure sound economic strategies for African countries are needed.

This leads directly to the issue of trade. It is a scandal that agriculture in the developed world (most especially the US and EU) is so heavily subsidized. Currently, economic studies place the average subsidy at US$17,000/year for European farmers, and US$16,000/year for U.S. farmers. The subsidies are mainly in the form of tax reductions and very low prices for water. Between 1995 and 2002, the U.S. government awarded US$114 billion in agricultural subsidies. France alone has received EU subsidies of US$126billion over the last decade, even though French farmers account for less than 4% of the workforce. What this leads to is over production, dumping of surplus products at less than cost and protectionism. This is why the World Trade Organization continues to declare specific farm subsidies illegal – for example, WTO ruled in 2004 that $3 Billion in US cotton subsidies violate trade agreements and almost 50% of EU sugar exports are illegal. Removing farm subsidies, a key message from Geldof, is the right thing to do and which is already under discussions in WTO talks, where some progress was made readying the WTO for settlement in 2006. Freer markets, more real competition and global trade would be a significant help to African countries.

But globalization and trade are seen by Geldof and others as a part of the problem for Africa rather than part of the solution. Here too, Geldof has it wrong. It is the very fact of trade and the increasing ability of people and organizations to trade globally that holds out the promise for Africa. If we remove trade barriers and artificial constraints on trade, such as fare trade and clean trade, then we can provide opportunities for African companies to get their goods to market. India used to be seen as a poor country, but will soon emerge as one of the leading economies of the world with a per capital income equal to or greater than that of the UK by 2025. How has it done this? Good government, a systematic approach to economic development and trade and embracing global markets. If there are trade barriers, they need to be reduced or removed. What Geldof’s lobby is proposing is special treatment for African goods and priority access to markets (also known as protectionism), thereby distorting trade.

Then we have AIDS, Malaria and other infectious diseases – a most serious long term problem for Africa. Britain, as part of its package of Africa measures, has proposed new funds for African countries to buy new medicines to fight these diseases. This is a most sensible proposal, and will make a significant difference, most especially since the money would not go to Governments.

Long term, water and energy issues are major factors for the future of Africa. The key strategy for water should be to privatize it – when this occurred in Chile, the proportion of households with clean piped water rose from 63% to 99% in towns and from 27% to 94% in rural areas. In Africa, the private sector would likely be more accountable, less corrupt and required to deliver to survive. Not what Geldof has in mind.

In terms of energy, Africa burns “dirty” fuels such as wood and dung, since other forms of energy have been priced out of the reach of ordinary people. Again, government corruption and inefficiency are at the heart of this problem. Nuclear power, hydro power and other forms of energy are needed in Africa.

In the end, people who engage in the Live8 concerts and their related “side shows” will have more awareness of issues, but their “solutions” will miss the point. The focus should be on eradicating communicable diseases, clean water, effective energy and the expansion of free trade. This focus, together with the requirement for competent government, would be a stronger one than a focus on aid and debt. This is not, however, the Geldof agenda.

Meanwhile, the butcher-King of Zimbabwe, Robert Mugabe, has bulldozed 200,000 people out of their illegal dwellings and forced them to live in the bush or on land seized from white farmers. Mugabe calls this "Operation Murambatsvina [Drive out rubbish]". It is a further example of him trampling human rights and causing economic chaos. If anyone wants to see what is really wrong with Africa, look to Zimbabwe. I doubt that Mugabe will tune in to Live8.

1 comment:

Steve Austin said...

Nice blog. Please check out my debt solution blog. It is all about debt solution.