Carrying on the theme of Africa, I was fortunate a few years ago to spend some time in Cape Town at a conference in a especially pleasant hotel over-looking the famous Table Mountain. Pre-dinner one evening, as the sun was setting in a way you only seem to get in that continent, I got talking to a Gentleman who introduced himself to me in English as Edward. He did also give his African name, which was far more resonant and musical, but it has slipped from my memory with time.
He discovered I was in investments and began to tell me about his home, Botswana. I was, in the space of an hour, educated considerably!
African’s challenges are manifold. Many countries are land-locked, isolating them from world trade and the road and rail systems are often neglected and deteriorating. They have an exploding birth rate and a high death rate from Aids, Malaria and other less known diseases such as sleeping sickness and guinea worm. Their culture is still scarred by disruptions caused by the slave trade and imperialism, where many countries were effectively governed by minorities who did little to encourage an entrepreneurial class.
The combination of imperialism, Marxism and aid dependence has seen the erosion of many social traditions and, crucially, institutions. Even their best economic chance, agriculture, suffers from price controls and stifling bureaucracy. Many countries also have one-off windfalls from the discovery of resources, leading to reckless spending and borrowing, corruption and the entrenchment of dictatorships.
Botswana, Edward taught me, had all these problems. When it escaped colonial rule in 1966 it had just 8 miles of road (its roughly the size of Texas)! It was drought-prone, had high population growth and its people belonged to 8 different tribes. Yet since 1966 Botswana’s growth has been greater than almost any other country. Its average citizens now enjoy a lifestyle comparable to Bulgarians, Peruvians and Thais. It has seen no hyper-inflation like Zimbabwe, nor debt default. Even its elephants are thriving!
How did Botswana succeed so spectacularly in a continent famed for the opposite outcome? Through good public institutions. Botswana was fortunate in that the British colonialists largely left it alone. Britain only colonised the country to avoid Germany or The Boers beating them to it. The ruling Tswana people had a strong democratic tradition within their tribe and were inclusive, welcoming other tribes in. This aided their collective defence efforts and led to common law and justice. Three chiefs even met Queen Victoria to keep Botswana out of the hands of Cecil Rhodes! They succeeded.
Finally, Edward told me, they have through this system of trust entrenched strong property rights and evolved an entrepreneurial and democratic society that has fuelled growth in GDP to rival many Asian countries. The key word is “evolved”. He told me much of Africa is like the Nineteenth century American West with no cohesive law to protect property ownership - so individuals do not find it easy to own property and then borrow against it to build businesses. Botswana has solved this.
I believe that Africa, with its demographic and resource advantages over the next twenty years, can become a great world power – I hope it does. It will not do this by receiving top down aid through global intervention; in fact for many countries these things will stifle growth. Africa must be trusted to evolve and helped to do so through trade, markets, investment, the law and property rights. We in the West do have much to offer, but it should be in ideas and support and not rather patronising aid programmes.
As I read round this subject I was surprised to see who Africa's best friend has been recently. Bob Geldof? Bono? No...it was George W. Bush! Shock!
Anyway, I hope to help by supporting funds actively investing in African infrastructure and banking, business and resources which should give a morally rewarding and satisfying return for all involved.
Don’t give them a sack of grain – give them Tescos!
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