Africa and Entrepreneurship
Since 1981, the percentage of the world's population living on less than $1.25 a day has dropped from 50 percent to just more than 20 percent. Billions have been raised out of poverty as state control of capital has declined.
Unfortunately, the news isn't all good. Approximately 1.2 billion people continue to live in poverty. The World Bank notes that Sub-Saharan Africa alone is home to one-third of the world's poor.
The question naturally arises: why hasn't sub-Saharan Africa shared fully in the economic growth enjoyed elsewhere?
The do-gooders of the world have certainly tried their best. In his 2006 book, The White Man's Burden, William Easterly estimated that between 1956 and 2006 more than $2.3 trillion in aid flowed to Africa.
I recently spoke with Senegalese-born “serial entrepreneur” Magatte Wade, a leading light in a new effort to raise Africa out of poverty. She said there is only one answer: Africans must lift themselves up by their bootstraps. Indeed, she said, outside help often hurts the cause, not least by reducing the pressure to correct the systemic barricades to economic growth that now exist.
Wade may be the perfect spokesman for the African cause, with her business success providing street cred within the business community. She speaks French, English, and her native language fluently, and is also a compelling writer, with pieces published in Barron's and on Huffington Post.
Taken altogether, she's a formidable figure. In 2011 she was named one of the “20 Youngest Power Women in Africa" by Forbes and a “Young Global Leader” by the World Economic Forum. That has led to more opportunities to speak her mind, including appearances on John Stossel's Fox News show.
These days Wade is becoming a familiar face on college campuses. She particularly relishes the opportunity to meet with college students because she knows who her target audience is. “I always try to speak to the leftists -- the progressive people who don't get it.”
“I know your conservative audience will get what I'm trying to say. But I want to say it in a way the left-wing person can hear.”
What a Web we Weave
Entrepreneurs are the key to a prosperous Africa, Wade said. Unfortunately, she added, Africa is awash in regulations.
She points to the “Doing Business” rankings http://www.doingbusiness.org/rankings prepared by the World Bank, noting that just five of the 48 sub-Saharan nations are friendlier to business than the declared socialist countries, including “Nicaragua, Bolivia and such.”
“Sure, there's a sense of chaos,” she said. “But that's because [the people] are trying to figure out a way to avoid the laws.”
A printed copy of the employment laws in Senegal would fill five trucks, she said. In the end, those laws create a system of employment guarantees that are sure to kill any new business. Wade sums up the issue, saying, “If I can't fire you, I can't hire you.”
In the Congo it takes 18 documents to import goods; another 18 are required for exports. Each of these documents must include a signature, with each signature costing $500. “How do you think any small entrepreneur could do that? Could anyone build a business there?”
Wade is blunt: “Whether it's in Africa or in the U.S., I'm in favor of [the government] putting the property rights structure into place and then getting out of the way.”
Stop Helping Us
Wade said she has “a huge problem” with foreign aid, the long-term assistance that pours into Africa in an attempt to raise the living standards of the people.
She says American taxpayers are rightly fed up with donating their money and seeing no results. She suggests tying funding to regulatory reform, or simply tying it to improvements in the recipient nation's ranking on the Fraser Economic Freedom Index. “We know if they do better on that index, they're going to do better economically,” she said. That would be a great improvement on “the very silly things” the donor agencies now promote.
Wade added that much of the aid is simply stolen by those in charge. “On the Stossel show, I said, 'Look no further than the people who make most of that money -- Chanel, Dior, Mercedes, people selling real estate on the French Riviera.”
“That's where the money ends up -- and in Swiss bank accounts.”
A Word about NGOs
Wade has particularly harsh words for the NGOs -- the non-governmental organizations whose employees are swarming all around sub-Saharan Africa in their expensive Land Rovers. A current estimate puts the number of do-gooders at somewhere around a half million.
“The aid business,” Wade said, “is the only industry in which if it's done right the people fire themselves. Who is going to do that?”
The absurdity is especially grotesque in the “development” end of the aid industry. “They have people who have never been in business, never built a business, never sold a thing in their lives -- these are the people who are now supposed to come and help these poor farmers write a business plan for growing something and selling it.”
She laughed. “You have this Harvard graduate, 21 years old, he's coming to my country all mighty, mighty, to tell me how to live my life. Why? Because he's smarter than me.”
She added that “there's something surreal” about watching American professors, mostly white and male, and most with no business experience, promising to teach Africans to be more entrepreneurial. “The patronizing that goes on. It's unbelievable.”
She described with evident contempt the Global Soap Project, a recent Atlanta-based effort to collect “slightly-used” soap from hotels for shipment to Africa. “So the people paid to ship it to the NGOs, then the NGOs paid to sterilize it, then the NGOs spent money to ship it to Africa so they can give it away free.
“What if instead you took all of that money and invested it into a local entrepreneur who's making soap?
“What they did was not only waste money, but also put out of business a local soap maker. The stupidity is unbelievable. If they were helping a dog, it would be less stupid than what they are doing for us. They would have way more confidence in the dog to learn and accomplish something than they do in us.”
She said decades of this “help” has led to its natural outcome: “A large number [of Africans] are now convinced that they can't do any better. So you see how self-destructive this is.”
Wade said some progress has been made. She pointed to Bono, the rock star who is nearly as famous for his aid efforts as he is for his work with his band, U2. She first ran into him at a TED conference in Africa. “He basically wanted redistribution,” Wade said.
Wade is happy to note that seven years later, Bono has finally begun to change his tune. In 2014 he declared “Aid is just a stopgap. Entrepreneurial capitalism takes more people out of poverty than aid.”
That, Wade said, is exactly the message that Africa, and those who are trying to help, need to hear.
Theodore Dawes was a reporter, editor, and publisher for more than 30 years. These days he's a consultant and speaker on media relations. For more of his columns, see Theodore Dawes. To contact Ted, drop a line to firstname.lastname@example.org.