Cover Story

Minding Africa's business

"Minding Africa's business" Continued...

Issue: "Africa, Inc.," Oct. 10, 2009

As Arunga tells it: "This is a very well-educated person, a public figure, and I was shocked. She was liberal, and I expected her to have an international sensibility, but I had to explain by asking, 'Who do you call?'. . . and then I explained, 'That's who they call too.'" As Arunga explained to an audience at New York University earlier this year, "The branding problem is a big one. The only pictures she'd seen are pictures of Africans begging and dying."

That brand of Africa is where at least one in two people lives on less than a dollar a day; one-third of the population suffers from malnutrition, and one in six children dies before age 5.

Average annual GDP per capita in Sub-Saharan Africa is less than $2,000-the lowest of any of region in the world-and more than half the continent's GDP comes from two countries, Nigeria and South Africa.

The brand of Africa that Arunga, Moyo, and others want more prominently displayed is where human and natural resources ignite to produce a legitimate trading partner and exporter of raw and finished goods for the future. Over 40 percent of Africa's population is under age 15, meaning its share of the world's labor force (given a leveling of HIV/AIDS and other diseases) is set to rise dramatically over the next decade.

Africa is a leading depository of in-demand minerals and metals like platinum, nickel, and cobalt (hosting 60 percent of the world's cobalt reserves and 90 percent of its platinum)-raw materials vital to the production of automotives, computers, and satellite technology. In addition, it is a major producer of gold, diamonds, and uranium.

Africa's proven oil reserves are nearly 10 percent of the world total (making up 12.5 percent of current supply). And it is the only continent to stretch from the northern temperate to southern temperate zones. As President Barack Obama noted at a G8 summit in July, "There is no reason why Africa cannot be self-sufficient when it comes to food. It has sufficient arable land."

Yet for all that, most African governments remain 70 percent to 80 percent dependent on foreign aid (that is, government-to-government transfers of aid, not including most humanitarian aid and emergency relief). The United States sends approximately $40 billion in direct foreign aid to Africa each year, while the continent attracts less than 1 percent of the world's foreign direct investment-about $17 billion.

This aid regime started about 60 years ago as African countries began to move out from colonial rule, creating self-perpetuating bureaucracies and disincentives for development. The results are hard to argue: Sixty years ago roughly 10 percent of the continent's population lived on a dollar a day, and today over 70 percent live on a dollar a day. As Moyo writes in the introduction to her book, "Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world."

Ironically, that alarm bell began to sound just as celebrity advocates like Bono, Madonna, Bob Geldof, and others began a global aid crusade. The U2 frontman and singer-songwriter Geldof launched a campaign that culminated with the Live 8 benefit concerts in 2005-a campaign that notably failed to bring in the desired G8 donations but gave popular credence to the belief that what Africa needed was more charity.

"By the late 1990s, most of us in the aid world knew traditional aid wasn't working," said William Duggan, senior lecturer at Columbia Business School and author of the just-released book, The Aid Trap: Hard Truths About Ending Poverty. "After 30 years and trillions of dollars, most countries receiving aid were just as poor as when the aid started." Meanwhile, China, he noted, took off without aid: "But instead of an aid re-think, Jeffrey Sachs and Bono, Bill Gates and Angelina Jolie whipped up popular support for 'more aid.' This knocked the wind out of any true reform."

Lost in a media frenzy, the anti-aid camp took to giving lectures and writing books: American University's George Ayittey wrote Africa Unchained in 2004, followed by former World Bank economist William Easterly's best-selling The White Man's Burden in 2006. By 2009, with a global recession forcing Western governments to reconsider aid expenditures, a convergence among those in the anti-aid camp took place, with Moyo's Dead Aid and numerous other books (see sidebar, left) along with Duggan's Aid Trap, which he co-authored with Glenn Hubbard, and a burst of new watchdog websites and blogs.

Suddenly Africans like Moyo and Arunga found themselves with publicists and worldwide lecture tours and an appearance on Oprah!-achieving along with a growing group of prominent entrepreneurs (see sidebar, next page) their own kind of celebrity status.


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