One hears quite a bit about events in central Europe pertaining to the transformation of
those states out of socialist control. Often it is of a doubting nature. It is suggested that
some of what has occurred there is demonstrative of the limitations of capitalist transition.
That they have tried it and it hasn't worked is the basic form such arguments may pose.
The problem with such analysis is that it simply is not true. In fact, they have tried too
little to move to free markets, and therein lies the dilemna of their shortfalls. It is even far
from certain that they have tried political democracy to an adequate degree. But that may
be less of a problem, for without free economies, the freest of political regimes will not
stand, at least not on solid foundation. Indeed, there may be a good case that the
economic reforms must proceed prior to the political, and that the latter must rest on the
former.
There have been exceptions to this, and some prime examples of phenomenal
accomplishment in the area. Foremost among these is probably that set by Vaclev Klaus in
the Czech Republic. The lack of success elsewhere from Warsaw to Moscow is due simply
to the fact that they have not yet really tried capitalism.
But one need not limit one's scope to Europe to find the bountiful result of markets.
Similarly, the economic 'miracles' in Asia are largely attributable to flirtations with market
economics, and the failings due to lapses in the pursuit of those ends. Hong Kong is
perhaps the prime example (at least prior to the takeover by the PRC, although in other
areas Hong Kong has left much to be desired, as in for instance the right to bear arms --
with the communist takeover, one of the first demonstrations of folly we have seen is the
over-reaction of the new rulers in slaughtering millions of chicken in late 1997 and early
1998 because some 15 people came down with chicken flu), but there have also been
tremendous advances in South Korea, Singapore, Taiwan, and elsewhere. The Japanese
example may well have been one of the factors contributing to the demise in the
attractiveness of socialist schemes in many sections of the world. One of the incantations
that persevered for a long time was that surely if the Soviet Union had not reached the
level of the west, it had come so far since the total destruction of World War II, and that
was attributable to the system there. But, even before that system began to implode, it had
become obvious that the economic development in Japan had far outpaced that of the
Soviets, and the reason was the freer economy of Japan. Against that backdrop, the claims
of socialism fail miserably.
Now, of more recent vintage, we have seen some travails sending shock waves through
many of these economies. However, in every instance, these are in great part the result of
the countries involved not having gone far enough along in the pursuit of free markets.
Japan has begun to recognize this, and has during the last year, begun to weed out some
of the collectivist baggage which has interfered with and interrupted their progress.
Korea's need for a massive bail-out can be traced to the level of non-free financial sectors
and other less than market approaches utilized there, although reports directly to the
contrary abound. There is also the case of mainland China. It is often touted as an
advancing exemplar of a third way, with a dual system of markets and planning, albeit in a
less than free political setting. But even where China has pursued 'capitalist' solutions, they
generally come down to too great a degree of 'state capitalism.' (See The PLA and
Capitalism in The Slow Boat to China in an earlier issue of eJPS). On the other hand,
probably Brazil offers a tremendous instance of movement toward freer markets sparking
real economic promise (Even here, however, the non-market aspects of policy, often
foisted upon it contrary to its national self interest from without by such as the IMF, have
caused the problems which evolved).
African Spring
But the one area which has gotten little attention, and in which great strides have been
made, is Africa. There are a limited but important number of settings across Africa where
market approaches have begun to show the power of such economic forms in advancing
societies. China, of course, took the road of suppression with the Beijing Spring debacle,
and there was the hope of the Velvet Revolution in the former Soviet satellites. That
presents a spotty record, but it does pose a possibility that what has been taking place in
Africa may represent a real 'African Spring' that should not be overlooked.
There was some legitimate concern that South Africans might be setting themselves up to
exchange white slavery for red slavery with the rise of Nelson Mandela, given his apparent
ideological background. What has happened there, of course, has not quite been of that
character. Given the massive changes the society there has been undergoing, the
maintenance of a level of economic growth and development that has been possible is
testament to the powers of free market economics, although some of the shortcomings in
the republic are unquestionably due to too collectivist a mentality.
But South Africa, somewhat under the guiding hand of Mandela, has launched a joint
development project built upon free markets 'promoted' by state power which has shown
tremendous signs of promise. The Maputo Corridor is an African version of the Kwa
Canal project largely promoted by the Japanese across the Malay peninsula.
The Maputo Corridor
The project is intended to help South Africa by opening its northeastern area to an easier
access to the sea through the deep water port at the southeast tip of Mozambique. In the
process, however, it will also provide tremendous catalyst to the entire area's
development, including that of Mozambique:
"Example: South Africa and Mozambique. Sworn enemies just a few years
ago, they are now cooperating on the Maputo Corridor, a system of roads,
railroads and port facilities that will get goods made in Johannesburg into the
world market through Mozambique's deepwater port city of Maputo cheaper
than if they were shipped to Durban." (Forbes, 11/17/97, p 94)
This is also indicative of a spirit of reform, deregulation, privatization, and promotion of
markets that has come to mark some aspects of the Mandela administration in South
Africa. It has worked out a wide regional development plan which include Maputo and
Walvis Bay, but also a Beira Corridor comprising Mozambique, Zimbabwe, Malawi,
Zambia, and Botswana, although it is one which may find itself handicapped by the
incorporation of IMF and World Bank grounded SDI's in the financing of the plan.
Go Here
The Namibian project is centered around a highway being built from Gautang Province to
Walvis Bay, and it is expected to stimulate agriculture, manufacturing, manufacturing,
mining, tourism, and new growth around urban centers.
Go Here
Namibia Economist Online for mid September 1997 posted a detailed report on the
Namibian Port Development project at:
Go Here
Co-operation in the funding of these projects has been far-ranging. Investments in them by
a large group of funding sources can be examined in a report at:
Go Here
and Norway's contribution in cooperative efforts for Maputo are examined at:
Go Here
As a "cash tide hits Maputo," this site also details some of the corollary resource
development involved in these projects:
Go Here
An African Eye News Service posting at:
Go Here
documents the wide investment in Maputo and related sites.
A bit of a critical commentary and warning of the red tape and corruption discussing
problems with the Maputo Project and its promise of resolving the now twelve hour drive
from Johannesburg to Maputo can be found at:
Go Here
The Freedom Front's Constitutional Package involved in these four projects may be seen
at:
Go Here
But the economic impact of these projects is discussed at length in a number of places.
For consideration of Mbendi oil resource development, see:
Go Here
the reduction of Mozambique's balance of trade deficit through increased exports and less
dependence on imports is considered at:
Go Here
and the increase in export crops out of the commercial farming ventures in Mozambique is
analyzed at:
Go Here
For a review of the wide ranging plans, including the role of South African trading
companies in Maputo and the SADC and other projects in Kenya (with Singapore's aid to
make Mombasa a free trade port), and much more, see:
Go Here
Uganda's economic growth has been aided by the institution of export processing zones,
taking the lead from Kenya's fourteen such zones. This is assessed at:
Go Here
The Uganda Ministry of Foreign Affairs presents a broader picture of the country's
undertakings:
Go Here
with a broader discussion of the rapid growth of sub-Saharan Africa on these activities
found at:
Go Here
Item: These links are being posted 1/5/98, and there is no way to ascertain the longevity
of their accessibility.
Yoweri Museveni
It isn't exactly democracy as we are used to the term, but Uganda is making advancing
under the leadership of Yoweri Museveni that are setting his efforts apart in the world.
end of Mobutu's reign of terror
peace efforts with Rwanda and Burundi
Danish development initiative
economic reforms
efforts to support end of civil war in Sudan
connections to Tanzania
Senegal mission
Iran mission for development aid
European Development Bank efforts
effort to quell guerrillas in Uganda
came to power in 1986
non party government
investment in pursuit of cheap labor in Africa
Museveni has not been free of criticism for his efforts, as suggested above, but the impact
of his efforts, hamstrung as they have been by domestic and area interference, have been
inspiring. Furthermore, he has emerged as a dogged pursuer of the economic
development of Africa.
This does not mean that Uganda has advanced wholly to the level that might be hoped for.
There are tremendous backward aspects of the Uganda situation. Forbes magazine has run
two articles in recent weeks portraying both the advances and the problems of Uganda. In
late November, their article documented some of the more positive advances, but in their
last issue of the year, December 29, 1997, they picked up the theme of the work yet to be
done in an article by Richard Marois (p 110). One of the more critical elements of the
article by Marois is his reaction to the horrific conditions at the 'world's first department
store,' the open air market places he encountered with great chagrin.
Obviously, the conditions he describes leave much to be desired, but they are not all that
uncommon throughout the Third World. Nor are they so far removed from much that is
found in more 'genteel' areas of the world, such as Europe. And his reaction to the
deplorable stench from the slaughtering of cattle clearly is indicative of his unfamiliarity
with slaughter house districts even in the US. He should frequent the areas around the
facilities in Chicago, for example. Having taught high school just northeast of the
slaughter house district in Detroit, I can attest to the unpleasant aroma they emit especially
during the hot summer months. But his criticism is a little troubling, since such matters, or
those arising from the Coffin Alley areas he found where AIDS victims create a macabre
atmosphere, are only going to be resolved, if at all, through the sort of economic
development which Museveni is fostering.
In November, Marois described Museveni as a harbinger of "good news" from Africa
(Forbes, Nov 17, 1997, p 85). He has set upon a course of privatization such as the
elimination of the state Coffee Marketing Board, which he described as having "served as
a collection agency for dictators and their entourages." He identified an exemplar of the
impact of the deregulation in Gerald Jjakira who rose as a local entrepreneur with a 30
acre coffee farm to buy a threshing machine which brought him business from his
neighbors. His work brought him trade financing and other help from the US agribusiness
conglomerate Cargill which has further advanced him position:
"With the recent reforms, 58 exporters compete for Jjakira's beans,
and he pockets 80 % to 85 % of the export price, the highest
percentage in the world, says Andrew Potter" [or Cargill Uganda].
The result of such incentives has been a tremendous growth in Ugandan coffee output,
"from 2 million 132-pound bags in 1991 to 4.4 million bags last year" (1996). Uganda has
become Africa's largest exporter of java. It has also improved living conditions in his neck
of the woods, with mud and thatch huts being replaced with "modest huts of brick and
corrugated iron roots."
The country still has a per capita income of only $ 300 per year, but economic growth has
been averaging 7.5 % over the last five years, while inflation has been held to single digit
levels. Marois also depicts efforts by Finance Minister Mathew Rakikaire to root out
corruption, the nation's currency is now convertible, Kampala's streets are safer, and the
effort to privatize 85 % of state-owned businesses by the end of this year had led to
noncoffee exports rising 40 % each year. Rakikaire has argued that the direction Uganda
is being taken under Museveni will give rise to a middle class on economic growth which
"will transcend religious and ethnic divisions."
The program has been given impetus by the reforms which have brought back into Uganda
some of the middle class that fled from Amin a quarter of a century ago. The
accompanying 'business interruption' has been rejoined. Forbes interviewed members of
the Asian Indian Madhvani family, former moguls who left and have now come home.
They have helped reinvigorate Kikira sugar production, are launching a
telecommunications enterprise, and have bought and raised production levels at a brewery
in Zambia and a sugar refinery in Rwanda. And then there are the Huddas. They have also
been lured back from Canada by Museveni and have resurrected the newly privatized
Uganda Meat. Their industries account for more than $ 4 million in revenues annually.
The political situation which Museveni has inherited from the dictators before Obote and
Amin who proceeded his rise to power left the country with severe difficulties far beyond
this. There is still outlying armed resistance from Obote supporters and forces. Like many
new African countries, "virtual gangsters" grabbed power with independence, Marois
reminds us, many of whom "found the concept of Marxism appealing" because "[I]t
provided teleological cover under which they could skim the cream of the economy for
their foreign bank accounts." The Coffee Board in Uganda was a case in point, paying
farmers 20 % of the export price, and pocketing the rest.
Museveni has been criticized for continuing the absence of democratic forms in Uganda,
but given the situation of resistance and too pervasive poverty, that may be expecting too
much. In any event, Museveni has constructed a "no party democracy" in which anyone
may run for office, but as individuals, without party. Uganda had a modicum of free
speech in parliament, in public, and in the press, as well.
Even though free market successes don't play well in competition with more disturbing
and emotion-invoking sound bites we see from Africa, there are enough examples to offer
some hope. Morais actually sees many 'points of light' across the continent, all connected
with market forces. Much of the reform is coming at the behest of leaders who, like
Museveni, might be called 'reformed Marxists.'
Botswana, for example, has seen its GDP increase then fold since 1981, with annual
growth averaging over 7 %. Among Africa's countries struggling toward free markets are
Cameroon, Gabon, Ivory Coast, Malawi, Mozambique, Tanzania, and Zambia. The list
also includes Ghana, where even J.J. Rawlings has seen "the capitalist light" and "has
committed himself to a 'market driven economy,'" and Zimbabwe where the formerly hard
boiled socialist Robert Mugabe has begun to the error of his ways and the wisdom of free
enterprise. It was a hard choice for him and others, because collectivism meant more
money and power for the state regime. Jaideep Khannan, who runs the $327 million
African Investment Fund for Morgan Stanley, told Marois:
" Africa has not seem this sort of peace in 30 years. These new leaders are
momentarily fiscally conservative. Although [many] come out of fighting in
the bush and 1960's African socialism, they are capitalists."
Marois does enter one comment in the article in Forbes which raises some serious
questions about where he is coming from, however. He seems to think that both prior to
the present and now, Africa has been "struggling with . . . too-fast population growth . . ."
With 600 million people in its 48 nations, Africa is hardly overpopulated. It is
underdeveloped. It need not remain so.
An Agenda of Progress for Africa
Even with the efforts thus far undertaken under such endeavors, the continent has so far to
go in development. It is relatively easy to identify a whole range of areas in which
development projects are feasible which would boot Africa into the modern world in a
real way. For purposes of illustration, we might look briefly at ten such prospect:
Qatar Depression
Maputo Corridor
Lake Chad/Ubangi/Congo River irrigation system
Nuplexes for Sahel
Reclaiming the Sahara
Libyan 'river'
transcontinental railroads and highways
Dead Sea canal
Lake Victoria/Indian Ocean Canal
Expansion of Nile Irrigation Systems and Suez
The Qatar region of western Egypt is a geographic depression in an area which is desert.
But its typography below sea level and its proximity to the Mediterranean Sea, present the
prospect that the area is ripe for development. The construction of a canal running from
the Mediterranean to the depression would allow the flow of water into the depression,
thus creating a large salt-water sea or lake. The flow of the water could also be harnessed
for hydro-electric power the region is so much in need of. It would also be possible to
build canals for shipping in and out of the lake thus created, opening the potential
settlement of the area around the lake for trade.
With the creation of the lake, there would also proceed a revitalization of the area through
irrigation as well as naturally as evaporation and condensation would allow the region to
become an area of cultivation. Agriculture there could permit Egypt to return to its former
status as a grain exporting nation. But that is but the tip of the iceberg of the development
which could follow, as the area was settled and developed. Egypt also has similar potential
which could come from expansion of the Suez Canal and from expansion of the Nile River
irrigation systems.
A project not unlike this picture was once advanced for central Africa, as well. But the
prospect of building a dam on the Ubangi River to divert through canals a flow of water
into Lake Chad would alter the biosphere around the lake, permitting its increased size to
'fertilize' the area around it, on the natural processes of evaporation and condensation, as
well as through irrigation. The lake which would form behind the dam could also be used
to produce hydro-electric power, and for general development of the region. Navigable
canals are also possible into the enlarged Lake Chad, but efforts to open the
Ubangi/Congo River system to navigation are also necessary and possible.
Such an undertaking could be part of a larger effort to reclaim large areas of the Sahara
for agriculture, and for more developed production on it. Even beyond the Sahel, the area
has vast regions of very culivatable soil. They require irrigation -- something even the
Romans and Africans of ages ago were involved in providing. But in recent times, the area
has been becoming, or being made or allowed to become, more arid. And this in an area
quite literally on the threshold of subsistence. Designs of this sort were being considered
by the Roosevelt Administration as it prepared for the transition to the post-war economy,
but they apparently vanished with the demise of FDR. With more modern technologies,
the prospect of the endeavor has even greater potential. Given the harnessing of the atom,
there is great capability to construct what have been called nuplexes throughout west
Africa. They would provide needed electricity (for consumption and industry), as well as a
source of fresh water for irrigation systems, but on a scale which is not even envisioned in
the IMF appropriate technology agenda for such areas.
And the ability to build such systems clearly exists. It would produce a boon to the US, as
well as other industrialized nations, because the construction projects would draw heavily
on their expertise and production. It would create untold jobs in the US. On it, we would
also have a market for tractors for the cultivation of the new agriculture. Other such
undertakings could involve the building of a canal from the Mediterranean to the Dead
Sea. This would provide a source of power, but would also, merely through the water
cycle, make the area around the Dead Sea alive for agriculture. It would also be possible
to engineer a similar canal between the Indian Ocean and Lake Victoria, for power,
development, shipping, and more.
Whatever one thinks of Libyan strongman Qadaffi, and there is plenty to fault him on, the
government of that country has been engaged in a project to create a 'river' which projects
water from the Mediterranean across the Libyan desert to make it fertile agricultural land.
Beyond all of this, Africa can take a valuable lesson from the development of the US
which proceeded on the building of the transcontinental railroad and the interstate
highway system. The continent is in dire need of such infrastructure, even at levels far
below what they suggest. It should not be forgotten that the area that is now the Bread
Basket of the world, the Great Plains, was considered the Great American Desert before
Lincoln's policy initiatives. A system of rail and highways across the African continent
would do the same thing for it that ours has achieved here. Local infrastructure is ripe for
expansion, and the linking of it to a pan-African system of highways and rail would
prompt tremendous economic development. It would help engender an economy of scale
which would advance the entire continent economically, but also promote trade and peace.
It is a travesty that this has not occurred in Africa, but it is one that is largely attributable
to the colonial regimes, both European and post-colonial Africa, which have actively
blocked such development if only through their lack of vision or collectivist agenda (see
also the article, The Third World War, elsewhere in this issue of ejps).
Financing Development
Efforts such as these, and many others -- much of the impetus for development must come
from the expertise of the peoples involved themselves, who know their resources and
potentials -- even in their relative level of underdevelopment -- better than any else (it is a
form of comparative advantage) -- will have to be financed, but that is not the problem it
might be imagined to be. It is a problem, of course, but the problem is not where the
capital will come from, but rather the political will to pursue them (See Ayittley's Africa
Betrayed for a good account of a large part of this problem). Money is already invested in
huge quantities into Africa from outside, but it is generally invested with ulterior motives,
as when it comes from the IMF or World Bank -- and that ulterior motive is not greed for
profit (see The Third World War elsewhere in this issue for a discussion of this). Even
indebtedness need not absolutely strictly stand in the way of development. We have the
example of the policies of Alexander Hamilton (and Lincoln among others) as clear
evidence of this.
Redirection of such credit to really productive, wealth-generating enterprises would
provide much of the necessary capital. Much more will become available as the prospect
of profit from such enterprise becomes evident. Regimes in Africa must also be dedicated
to economically wise utilization of the investments. The problem in this area has been
foreign influence and ideological (again, see Ayittley's Africa Betrayed for a good account
of this). This is why such efforts as those of Museveni and the Maputo Corridor are so
encouraging. Over the recent period, there has already begun to show up a phenomenon
of outside investment in Africa.
Marois, in the November Forbes, writes:
"It's still just a trickle -- but watch. The World Bank estimates that
sub-Saharan growth rates will double, to an average 4.1 %, between
1997 and 2006. That will put the area in the same growth class as
Latin America. Capital follows opportunity."
And then more clearly specifies the sources of some of the investment:
"South African conglomerates -- such as brewers, miners and
supermarket chains -- are quietly pushing north. Prince Alwaleed,
Saudi Arabia's billionaire investor . . . is now investing in luxury
hotels and agribusiness across Africa."
The advanced industrial nations of the earth might even pursue coordination of investment
for infrastructure and technology transfer. By regime initiative, a tremendous amount of
money could be funneled into such efforts. This does not violate market principles. The
promotion of market forces hardly undermines them. It is wise to be vigilant in such
matters, however, for a number of false banners have been raised in the past. This appears
in a maize of disguises. For instance, it is hardly going to foster development to force or
even encourage countries to limit population growth. It is absolutely counter-productive.
Government policy of such promotionalist form should be principally structured around
proactive coordination of financing of such projects, which does not mean that they
themselves should not 'invest' even great amounts of money in the endeavors. But such
must be done from the standpoint of the expectation of return on the investment. By
pursuit of self interest by all parties, the self interest of all parties will be furthered to the
greatest extent.
Nations such as the United States would stand to profit tremendously from such enterprise
-- by way of the demand for goods that will arise, from engineering and infrastructure to
tractors and rising demand for consumption goods which will result; but also from sheer
profit on investment. We all benefit, as well, by the contribution such development makes
to a greater level of interdependency and peace in the world.
Continue
