TURNING AFRICA AROUND
For an early look at what the writer Robert Kaplan has described as “the coming anarchy,” you need only read the daily news reports out of Africa. They refute the quaint Hegelian notion that history always moves forward; in Africa, it has been running in reverse for the past two decades.
Things are so bad in Africa that Americans are even willing to allow themselves to be rescued by the French military. That edifying spectacle took place Monday, as French helicopters began airlifting stranded Americans from the besieged Liberian capital of Monrovia to a French ship offshore. A chorus of the Marseillaise, please.
Meanwhile, French troops are struggling to contain civil wars in Congo and Ivory Cost, rioters are protesting the despotic rule of Robert Mugabe in Zimbabwe, and the president of Liberia has just been indicted for war crimes committed in neighboring Sierra Leone. And we still haven’t mentioned the impact of HIV-AIDS, which has become the continent’s silent Holocaust.
For believers in a global market economy, Africa is the confounding exception. In a world of rising trade flows and economic growth, Africa is going backward. According to World Bank statistics, gross national income per capita in sub-Saharan Africa actually declined by 0.2 percent from 1990 to 2001. Life expectancy has decreased over the past two decades, and the number of people living in poverty has increased steadily.
It’s easy to blame globalization for Africa’s nightmare, and that’s precisely the line of many of the protesters who gathered at last week’s G-8 summit in Evian, France. But to me, it seems as if the protesters have it backward: Africa’s problem is not that it has too much connection to the global economy but too little. It needs more globalization, not less.
In simple, financial terms, Africa doesn’t attract enough foreign capital to finance its development needs. Africa has about 10 percent of the world’s population, but in 2001, it received only about 1 percent of the world’s foreign direct investment. For sub-Saharan Africa, the investment share was only 0.7 present and most of that was invested in petroleum and mining.
Global aid agencies such as the World Bank and International Monetary Fund have been trying emergency therapy for a generation, but none of it will work until Africa has the capital to generate growth and development on its own. Then, at last, the virtuous cycle of development can begin.
But how to get Africa moving in the right direction? The most sensible suggestions I’ve seen recently are about to be released by a blue ribbon group called the Commission on Capital Flows to Africa. The chairman is James Harman, an investment banker who headed the U.S. export-import Bank during the Clinton administration.
The commission’s basic premise is that until private capital begins to flow into Africa, none of the hand-wringing and aid pledges that are an annual feature of G-8 summits (including Evian) will make any lasting difference. The commission argues instead for changes that will increase the return on capital invested in Africa – and thereby begin to make such investment more attractive.
A draft of the commission’s final report that was leaked to me outlines a 10-year program for putting the African economies into forward gear, rather than reverse. The group stresses putting “globalization” to work as a reality, rather than a slogan.
The recommendations include a proposal for all products from Africa to enter the United States duty-free and quota-free. That’s discriminatory and unfair to other nations, but so what? Africa needs some positive discrimination. The commission will also recommend that the United States negotiate free-trade agreements with individual African countries and a free-trade zone within southern Africa.
Perhaps most important, the commission will urge that over the next 10 years, U.S. taxes would be zero for repatriated profits on new investments in Africa by U.S. companies. That would instantly make investing in Africa more attractive.
The commission estimates that if coupled with local African tax reforms an overall reduction in business taxes of 10 percentage points could lead to a 20 percent to 40 percent increase in non-energy investment in Africa – or an extra $ 800 million to $ 1.6 billion annually.
For every dollar lost to the U.S. Treasury, the commission calculates, there would be a benefit to Africans of five dollars. That’s the kind of tax cut I can get excited about – one that benefits poor children in Africa.
Globalization is an inescapable and, to me, benign fact of life. But that case will be clearer when its magic finally touches Africa. (The Writers is secretary of state.)
Distributed by AllAfrica Global Media. (allafrica.com)