“Colonization is why Africa is so poor” is something I hear all the time. But it was not until recently that I realized: This impulsive defense of Africa is far from the full truth.
Singapore, for example, was a British colony for about 144 years, but now has an even higher GDP per capita than its colonizer. Is there any reason to think Africa can’t replicate Singapore’s success? I see no reason it can’t.
But Africa’s prosperity — or lack thereof — comes down to economic freedom.
With economic freedom comes a better quality of life. People in the freest countries tend to live 15 years longer than those in countries where government plays a significant role in the economy.
As people live longer in freer economies, it’s not surprising that those states also have infant mortality rates almost ten times lower compared to nations in the lowest quartile of economic freedom. The data also reveal that school enrollment, especially at the secondary school level, is much higher in the most economically free countries of the world.
But the African nations are toward the bottom of the Doing Business Index, an indicator that tells how easy it is to start a business in a country.
The disappointing case of Nigeria
With a population of 220 million, Nigeria is Africa’s largest democracy, and the biggest oil producer on the continent. Therefore, whatever occurs in Nigeria demands international attention. For Africa as a whole to be freer, Nigeria needs to be.
But in Nigeria, to start a business, one must get regulatory permits, register new property, protect investors, and pay incredibly high tariffs, the average being fifteen percent. In the United States, it is a mere two percent.
Corruption, therefore, reigns supreme; with so many regulatory hurdles, one needs to pay a bribe to start a business. That becomes a problem quickly, as it skews entrepreneurial opportunities toward the wealthy and reduces the number of businesses overall.
So, as of last year, about 90 million Nigerians lived in extreme poverty — almost half of the nation. What’s even more heartbreaking is that Nigeria is filled with “poverty eradication” programs. These include but are not limited to: Operation Feed the Nation, Green Revolution, Better Life for Rural Women, and the Family Economic Advancement Programme.
Those programs accomplish little, either in Nigeria specifically or Africa in general. Programs that provide food and clean water help communities in the short term, but when those aids run out, crises remain.
Repeating the cycle of handing out money to provide those kinds of resources does little to address the main concern — economic freedom — and so does little to build tangible wealth and prosperity. It is a fallacy that economist Frederic Bastiat describes as concentrating on the “seen” while neglecting the “unseen.”
A far better solution than “poverty eradication” programs is simple: economic freedom. But the application? That’s a much different story.
The promising case of Botswana
Botswana, however, serves as a good example.
First removing itself from British rule in the 1960s, the country went from third-poorest in the world in 1965 to the middle class.
How? While many African nations chose anti-capitalist routes after colonialism, Botswana clung to capitalism and generally free markets. The country has progressed since the ‘60s, as it has fought to secure the right to property and limit local and foreign governments’ roles in the economy.
With economic liberation comes other freedoms as well.
Botswana is much more tolerant of civil liberties than other African nations. The country also has little corruption compared to its neighbors, and is the longest-running democratic nation on the continent. While there is always room for improvement, Botswana continues to be one of the few African nations building long-term prosperity.
The time has come to eradicate poverty throughout Africa — not with the typical “poverty eradication” programs, as we’ve seen in Nigeria, but by following Botswana’s lead in reducing government intervention.
We can start by removing all the red tape between the people who want to start businesses and the fulfillment of their dreams. Doing so will improve incentives for initiative, effort, risk-taking, saving, and investment, and increase employment, productivity, and standard of living.
Africa is much more than its post-colonial past. It’s time we let it show.
Further reading
Why some countries succeed and others don’t
Botswana: a triumph of capitalism in Africa
5 ways market competition can reduce global poverty
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