Private Investment the Only Sustainable Answer to African PovertyBy: Richard Lough on October 15, 2008
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There's a popular slogan bandied about the globe by the likes of Bob Geldoff that goes "Trade not Aid" ... the simple rationale behind this mantra is that over the last few decades tens of billions of dollars have been ploughed into Africa and yet all the social indices would suggest that this money has not had much impact.
Infant mortality remains desperately high in Ethiopia, malnourishment remains a major killer of children under the age of five across sub-Saharan Africa, and literacy levels are at best creeping up –- in some cases, Zimbabwe for example, they have plummeted.
The blame for this is widespread and the aid community is certainly not to be held responsible. From the time I spent in northern Uganda, a region wracked by civil war over two decades, it was all too apparent that without the aid agencies many, many more lives would have been lost in the squalid refugee camps. Donor countries, whose aid still comes with strings attached, and African governments who have squandered billions, have much to answer for.
But, back to "Trade not Aid." It depresses me beyond belief to see African economies struggle with their hands tied behind their backs as round after round of world trade negotiations collapse because of the selfish, vested interests of rich nations, while all the while the West pumps billions of dollars into the continent. Why should American cotton farmers be protected yet the Ugandan government be forced to open up its cotton market to the rules of free trade?
One man who has stuck in my mind throughout my travels is Tadesse Meskala. Meskala runs a cooperative in Ethiopia that fights to ensure his country's coffee farmers, who produce some of the most sought-after coffee beans in the world, earn a respectable income and live a dignified life.
At the time I met Meskala in February 2007 he and Oxfam were taking on the might of Starbucks, a multinational company whose annual profit rivals the GDP of some African countries. Meskala and the Ethiopian government rightly felt Starbucks was looking to exploit coffee farmers for the sake of its profit margin. Nevermind the company's social corporate responsibility projects to ease the consumer's confidence, argued Meskala; we want our farmers to trade on an open market and receive a fair price. The Ethiopian government, Meskala and Oxfam eventually won their battle and Starbucks dropped its branding claims.
I would never wish to belittele the role of the aid and development community. But after my time in East Africa I am convinced that private investment is the only sustainable answer to lifting Africa's people out of "poverty."
Mauritius, my next destination, is a case in hand. At independence four decades ago, many wrote of the tiny Indian Ocean island. But Mauritius built up its economy, first on sugar and textiles, then on tourism, and now off-shore banking. The average income is $7,000 per capita -– ten times what Kenyans earn on average.
It is possible!
