Guest blog by Gavin Yamey, lead, Evidence to Policy Initiative, Global Health Group, University of California San Francisco
Here’s a quick thought experiment. What’s the first thing that comes to mind when you think of Africa?
That was the question posed to the audience by Steve Radelet, senior development adviser to US Secretary of State Hillary Clinton, at the start of his fascinating and challenging lecture at the University of California Berkeley last week.
Members of the audience, mostly undergraduates studying development economics, shouted out: “poverty,” “disparity between the wealthy and poor,” “AIDS,” “corruption,” “poverty trap,” “oil,” and “agriculture.” All in all, not exactly a glowing depiction of a continent.
By the end of Radelet’s lecture, a rather different picture had emerged.
For a start, Radelet challenged the notion of a homogeneous Africa. “We think of sub-Saharan Africa as a single place,” he said, “yet we don’t do that for Asia.” He argued that we all seem able to distinguish different economic and political realities for the diverse countries of Asia, yet we stubbornly refuse to do the same for Africa.
And this is a mistake, suggested Radelet. While it is true that some African countries are doing appallingly (think Zimbabwe or Somalia, blighted by war and corruption), others are now showing tremendous growth (Radelet calls these the “emerging countries”).
According to his analysis, published as a new book called “Emerging Africa,” 17 countries began to show a dramatic turnaround from the mid-1990s and are now growing economically at a faster rate than the global average.
The average per capita growth rate of these countries is 3.2%, compared with a world average of 2% (the rate in the US is 2.1%, and the rate in the UK, Germany, and France is about 2%). And one of these countries, Botswana, has the distinction of being the world’s fastest growing economy from 1970 to the mid-1990s (a news feature submitted for The Guardian newspaper’s international development journalism competition called the country “Africa’s diamond.”)
In addition, six other countries, which Radelet calls “threshold countries,” are on the cusp of becoming emerging nations.
What’s striking, then, is that “Africa” is a continent of quite dramatic divergence, rather than convergence. The emerging countries are doing much better than the other countries on a whole host of measures. They are showing a much greater decline in infant mortality rate, population growth, fertility rate, and the proportion of the population living below the poverty line (i.e. on less than $1.25/day). They are also showing a much greater rise in investment, trade, agricultural production, and school enrolment.
So what happened in the mid-1990s that allowed these 17 countries to emerge?
Radelet’s work suggests five main reasons, of which the first two are likely to be dominant (and are inter-connected):
1. Democracy and governance. In 1989 there were only 3 democracies in Africa. Now there are 22. Out of the 17 emerging countries, 14 are democracies. “Something changed in the 1990s,” said Radelet. “It had never happened before—ever—in the history of the world, that so many poor countries became democracies.” In every single one of the emerging countries, the rate of domestic conflict declined and governance improved (as measured by the six different Worldwide Governance Indicators from the World Bank Institute: rule of law, regulatory quality, government effectiveness, political stability and absence of violence, control of corruption, and voice and accountability).
2. Change in economic policy. By the end of the 1980s, explained Radelet, state control was hindering economic growth—farmers (mostly women) had to sell to state-owned buyers at deflated prices, the state would control the currency exchange rate, there were state-run banks and stores, and black markets were plentiful. Countries were running massive budget deficits, there was massive borrowing, and there was huge inflation. The combination of dictators plus economic crisis was toxic. “Nobody would lend [to these countries],” said Radelet. “They were bankrupt. There were negative growth rates. Dictators lost their ability to finance patronage.” Countries were forced to turn to the IMF, the so-called lender of last resort. The IMF, said Radelet, “only deals with countries that are in a mess,” and it forced these countries to cut their deficits, sell off their state enterprises, and change their economic policies.
3. The end of the debt crisis and improved donor relations. “Now, with debt relief,” said Radelet, “countries don’t have to go to the IMF,” so they can retain their economic sovereignty and can have ownership of their own national strategies for poverty reduction.
4. New technologies. Mobile phones, for example, have ushered in a new era of phone banking (allowing money transfers between towns and remote rural villages), phone-based literacy programs, and phone-based health innovations.
5. The emergence of a new generation. “The dictators are mostly gone,” said Radelet. “The new generation is sick and tired of seeing Africa viewed as a backwater.”
When Radelet opened the floor to questions, I wasn’t surprised that he was challenged to explain his suggestion that the IMF had played a positive role (the lecture was, after all, in Berkeley, a bastion of progressive politics!). Radelet gave a detailed and nuanced response. While he has sometimes been a critic of the IMF, he said, such as when the IMF has given countries leeway in cutting public health and education services, when it comes to the history of the emerging countries of Africa, he believes that the macroeconomic policies that countries were forced to adopt was a factor in their growth.
The other question that I found intriguing was why his analysis made no mention of international aid. The answer, said Radelet, is that his focus was on the countries themselves. “What matters more is the actions and decisions of people in the countries themselves,” he said. And “trade policy matters more than aid policy.” Nevertheless, he believes that aid has a “moderately positive impact” (though the evidence of benefit isn’t definitive), and that the impact depends deeply on the conditions of the country and how aid is given.
Aid is more effective, he said, when given to democracies with “sensible economic policies,” and when and when the views of affected people are taken into account.