Why is Africa Still So Poor? - #7

May 28, 2021

So what were the 3 major issues Africa faced in the 1980s? The first was that the infrastructure in Africa started to break down and raw materials became far more difficult to export. The second was that Africans who did receive a proper education decided to move to other countries where they would receive a better salary, meaning that Africa was losing its smartest and best educated people. And the third was the fall of the Soviet Union. By the 1980s, the Soviet Union decided to stop participating in the cold war and focus on its own economy. As a result, it was no longer sending as much money to African allies. In turn, Western countries decided that they were also going to send less money to Africa. So all of a sudden African leaders no longer had enough money to keep themselves in power with the system of bribes.

So they decided to ask Western nations for financial aid, but this time those Western nations were no longer interested in giving money directly. Instead, African nations would have to sign loans with rich countries and in exchange African countries would have to reform their economies in such a way that it would become easier for companies to do business in those countries. And while various industries were privatised and free markets emerged, most African countries underwent few reforms. The reason they underwent so few reforms is that African dictators had an idea; they could pretend to privatise their economy by selling the privatisation to the highest bidder. Basically doing what they had been doing for the past couple of decades; bribes in exchange for access to African markets.

So in effect, nothing changed except that this time Western institutions supported this process by rewarding those dictators through foreign aid packages. In Nigeria for example, the government privatised various state-owned businesses of which 80% of the shares were owned by the leaders of the country. In effect, not changing anything. In Kenya, Uganda, Zaire, Guinea and Senegal they sold government businesses to friends and family of government leaders. The only industries which actually saw significant investments were oil and mineral extraction which, just like in the 60s and 70s, had been sold off to the highest bidder by bribing government officials. As a result, the 1980s is often dubbed “Africa’s Lost Decade” and why Africa remained poor throughout the 80s. Until 1989, when protests were erupting all across the world: The Soviet Union, Eastern Europe, Taiwan, South Korea, China, and Africa. Africans were once again protesting their oppression.

Rich countries decided to switch tactics; instead of giving money to dictators for fake privatisation, they instead gave money to countries who reformed their government to be more democratic. And so dictatorships faced two issues at once; on the one hand, their own people were getting restless, while on the other hand their income was decreasing. And so the elites allowed for a small amount of reform, enough to appease the people and the rich countries but not enough that they would be removed from power. Democratisation spread across Africa to Zaire, Ghana, Nigeria, Togo, Gabon, Cameroon, Kenya, Uganda, Malawi, South Africa until it spread across the continent. While some governments resisted, such as for example the Central African Republic, most did democratise at least slightly. Each country had their own unique struggles but in general the continent made slow but steady progress towards democracy. Even today we still see this process in action in Africa as elections are often contested and unfair, yet it is more democratic than dictatorships. This process made Africa more stable and more open for doing business in the early 90s and new leaders were in charge of Africa. These leaders had to fight corruption in order to fight poverty. And by fighting poverty, they could stay in power as this would earn them votes in future elections.

They reduced the government’s role in the economy, encouraged growth in the private sector, allowed Africans who were much better educated than in the 1960s to use their skills to develop their country and attracted investors from abroad. These policies primarily focussed on using the strengths of Africans themselves rather than by having policies enforced upon them by the outside world.

“The African Renaissance, in all its parts, can only succeed if its aims and objectives are defined by Africans themselves, if it’s programmes are designed by Africans ourselves, and if we take responsibility for the success or failure of our policies” - Thabo Mbeki, Former South African Deputy President.

African countries started to work more together through institutions such as the African Union by reducing trade barriers to make trade between African countries easier, investing in stable African governments to make sure countries didn’t have to worry about a civil war right across their borders, and by creating various agencies to cultivate African talents. These trends have had effect in the last 3 decades, with some African countries now being the fastest growing economies in the world. So what does the Africa of the 21st century look like? Read on by clicking here.

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