The Prometheus Institute Factbook | Africa 

- In a recent publication entitled Can Africa Claim the 21st Century? the World Bank noted that many observers, the 1974 winner of the Nobel prize for economics Gunnar Myrdal among them, expected Asia to remain mired in poverty while Africa steamed ahead. A comparison between Ghana and South Korea, two countries that were at a similar level of development in the 1960s, shows that the opposite happened. The World Bank found that "In 1965 . . . incomes and exports per capita were higher in Ghana than in Korea . . . Korea's exports per capita overtook Ghana's in 1972, and its income level surpassed Ghana's four years later. Between 1965 and 1995 Korea's exports increased by 400 times in current dollars. Meanwhile, Ghana's increased only four times, and real earnings per capita fell to a fraction of their earlier value." (1. World Bank, Can Africa Claim the 21st Century? (Washington: World Bank, 2000), p. 19)

- According to the National Bureau of Economic Research, Thirty-six percent of the region's population lives in economies that in 1995 had not regained the per capita income levels first achieved before 1960. Another six percent are below levels first achieved by 1970, 41 percent below 1980 levels and 11 percent below 1990 levels. Only 35 million people reside in nations that had higher incomes in 1995 than they had ever reached before. (Richard B. Freeman and David L. Lindauer, "Why Not Africa?" National Bureau of Economic Research Working Paper no. 6942 (1999). In 2003, sub-Saharan Africa had 688 million inhabitants. )

- The political elites that took over African countries in the 1960s saw government as a source of personal enrichment. One of the great pioneers of this scramble for power on the eve of Africa's independence, Ghana's Kwame Nkrumah, urged the emerging political elites: "Seek ye first the political kingdom and all else shall be given." (4. Daniel Yergin and Joseph Stanislaw, Commanding Heights(New York: Simon and Schuster, 1998), p. 84)

- During the past 50 years there have been only two interstate wars among African countries--the war between Tanzania and Uganda in the 1970s and the war between Ethiopia and Eritrea in the 1990s

- % of population working in industry:
Agriculture (1970, 1980, 1990) | Industry (1970, 1980, 1990) | Services (1970, 1980, 1990)

Agricultural countries
Ethiopia (91, 89, 86) | (2, 2, 2) | (7, 9, 12)
Kenya (84, 82, 80) | (5, 6, 7) | (9, 11, 13)

Oil producing countries
Nigeria (71, 54, 43) | (11, 8, 7) | (19, 38, 50)
Gabon (79, 65, 52) | (9, 12, 16) | (12, 22, 33)

Newly industrializing countries
Mauritius (34, 27, 17) | (25, 28, 43) | (41, 45, 40)
South Africa (31, 17, 14) | (30, 35, 32) | (39, 48, 54)

Source: World Bank, African Development Indicators 2002(Washington: World Bank, 2002).

- More recently, Milton Friedman observed that the reduction of the size of the agricultural sector relative to the rest of the economy tends to be accompanied by increased political clout of agricultural producers. When farmers form a majority of the population, they tend to subsidize the urban minority. When farmers form a minority, the urban majority subsidizes them. The reason, Friedman wrote, rests in higher transaction costs that large groups have to face in comparison to smaller groups. A group that seeks benefits through political pressure is handicapped by being too numerous and, at least up to a point, benefited by being few. Government can spend a dollar per member of a majority only by collecting more than a dollar from each member of the minority, each of whom will therefore squeal louder than each of the majority will applaud. On the other hand, government can spend a dollar per member of a small minority by collecting only a few cents from each member of a large majority--the applause is then far louder than the squeal. (Milton Friedman, "The Advantage of Being Few: How Farmers and Other Vocal Minorities Get Their Way," Washington Post, January 22, 1987)

- The Economist recently made the following observation about Ethiopia's dependence on foreign food donations: "By law, all Ethiopian land is owned by the state. Farmers are loath to invest in improving productivity when they have no title to the land they till. Nor can they use land as collateral to raise credit. And they are taxed so heavily that they rarely have any surplus cash to invest." ( The Economist, "People Aren't Cattle," July 17, 2004.)

- (GDP) in 1996 dollars adjusted for purchasing power parity fell from US $1,215 to US $706. The authors pointed out that the 40 percent drop in income understated the size of Nigeria's problem. "First the fall in real per capita consumption was very much greater [than the fall in per capita income] while the available evidence suggests that inequality rose. This combination of a very large fall in per capita consumption combined with increasing inequality implies a large rise in poverty." (8. Centre for the Study of African Economies, "Sources of Growth in Nigeria: An Initial Analysis," unpublished.) According to another source, the number of Nigerians living below the poverty line increased from 19 million in 1970 to 90 million in 2000. That was accompanied by a massive rise in inequality. In 1970 the top 2 percent of the population earned the same income as the bottom 17 percent. By 2000, the income of the top 2 percent was equal to that of the bottom 55 percent. ( Nancy Birdsall and Arvind Subramanian, "Saving Iraq from Its Oil," Foreign Affairs, July- August 2004, pp. 77-89.)

- To understand the potential of what could be achieved in Africa with correct policies, let us compare what is happening in Nigeria to what is happening in China. While per capita GDP nearly halved in Nigeria and the number of people living below the poverty line skyrocketed between 1970 and 2000, per capita income in China increased sevenfold during the same period, lifting more than 400 million people out of poverty. (10. The Economist, "Where Are the Patients?" August 21, 2004)

- If one takes a growth rate of 6 percent over more than a decade as a measure of successful development performance, in the 1967-1980 period, ten countries enjoying such growth were African. These not only included mineral-rich countries such as Gabon, Botswana, Congo and Nigeria but also such countries as Kenya and Côte d'Ivoire, who slightly outperformed both Indonesia and Malaysia during the period. One interesting feature is that much of this growth was sustained largely by domestic savings, which increased significantly after independence, reaching, on the average, 21.5 percent by 1980. (Thandika Mkandawire, "Thinking about Developmental States in Africa," Cambridge Journal of Economics25, no. 3 (May 2001): 289-313. )

- During the 1980s, the first decade of Zimbabwe's independence, the ZANU government made strenuous efforts to uplift those agricultural constituencies. In the meantime, however, ZANU set out to crush ZAPU--its former ally. ZANU succeeded only after a great deal of bloodletting. What remained of ZAPU was absorbed into ZANU-PF (ZANU's new name) in 1988. Once it consolidated its hold on power, the ZANU-PF political elite quickly forgot about its wartime constituency and proceeded to enrich itself to the great detriment of the national economy and the population at large. The University of Zimbabwe's Tony Hawkins notes that Zimbabwe's per capita GDP in 1990 Zimbabwean dollars fell from Z$2185 in 1999 to Z$1355 in 2003. Zimbabwean per capita GDP was lower in 2003 than at the time of Zimbabwe's independence from British rule in 1980. ( Tony Hawkins, "The Zimbabwean Economy in 2003," Moneyweb South Africa, February 11, 2003. Also see m1.mny.co.za--0 C2256B190030A01742256CCA00450883?Open Document. )

- Many corporations survived as best they could. They bribed the new elite or found ways of ingratiating themselves with their new masters. Even the mighty Western oil companies have not escaped the destructive power of Africa's political elites. They are periodically compelled to make huge payments to foreign private bank accounts of the local heads of state and their friends and families. For example, the U.S. Senate has uncovered vast sums paid by oil companies to the private American bank accounts of Equatorial Guinea's head of state, Obiang Nguema. (UN Office for the Coordination of Humanitarian Affairs, "Equatorial Guinea: US Senate Probe Reveals Massive Theft of Oil Revenue," July 16, 2004, www.irinnews.org--report.asp ID=42237&SelectRegion=West_Africa&SelectCou ntry=EQUATORIAL_GUINEA. )

- A recent study by the World Bank showed that the most productive companies in, for example, Nigeria, are those owned by multinational corporations or by non-African industrialists, including Indians, Chinese, and Lebanese. (World Bank, An Assessment of the Private Sector in Nigeria(Washington: The World Bank, September 2002))

- Between 1970 and 1980 [Ghana's] per capita GDP declined by a total of 19.7 percent; from 1980 to 1983 it dropped by a further 21.3 percent. There was sharp decline in both domestic and export production. The manufacturing index plunged from 100 in 1977 to 69 in 1980 and 63.3 in 1981, with average capacity utilization in that year estimated at only 24 percent." Even after 1983, when the World Bank and other donors tried to breathe life into Ghana's industry, "Overall capacity utilization improved from 30 percent in 1983 to 40 percent in 1989 and appears to have stagnated at around this level for much of industry in the 1990s. (Eboe Hutchful, Ghana's Adjustment Experience: The Paradox of Reform(Oxford, UK: Oxford University Press, 2002), pp. 6, 81-82. ) *

south africa - south africa - Though part of sub-Saharan Africa geographically, South Africa has two features that distinguish it from the rest of the region. First, South Africa does not have a large peasantry. Second, its private sector is owned mainly by South African citizens, one of the unintended consequences of sanctions and disinvestment in the 1970s and 1980s.

- Although South Africa is ruled by a political elite that has much the same roots and characteristics as most of the political elites in the rest of sub-Saharan Africa, the South African elite is enormously constrained by the fact that it does not have a passive peasantry to exploit. Instead it is surrounded by a dynamic private sector that is owned by South African citizens whose rights are constitutionally guaranteed and are enforced through the electoral process, the judiciary, and an independent mass media that sees itself as the watchdog over citizens' rights.

- In addition, during the struggle against apartheid, the current South African political elite was compelled to enter into an alliance with the black urban workers. South Africa's urban workers are well organized into independent labor movements, especially trade unions, which articulate and represent their interests. Central to the interests of the black workers and private-sector owners is job creation for the former and profit maximization for the latter. Those two forces, therefore, have a common interest in promoting economic growth and minimizing the private enrichment of the political elite.

- That argument does not, however, mean that the political elite in South Africa will not try to enrich itself at the expense of private-sector producers. Black Economic Empowerment, a government policy that aims to increase black participation in the South African economy through a system of racial quotas, is in reality an attempt to siphon savings from private-sector operators. operators. h African political elite was compelled to enter into an alliance with the black urban workers. South Africa's urban workers are well organized into independent labor movements, especially trade unions, which articulate and represent their interests. Central to the interests of the black workers and private-sector owners is job creation for the former and profit maximization for the latter. Those two forces, therefore, have a common interest in promoting economic growth and minimizing the private enrichment of the political elite.

- Courtesy of the Cato Institute

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