Andrew Mwenda and the need to focus on African entrepreneurs
Andrew Mwenda, a previous editor of Uganda’s Monitor newspaper and the Chief editor of the Independent magazine, has come to symbolize a new generation of African thinkers. He asks, ‘What man or nation has ever become rich by holding out a begging bowl?’
He argues that more aid to Africa, whether it comes from the West or China, will not solve the continent’s problems. He says, ‘It should not give us too much hope because, at root, foreign aid is an ineffective instrument that distorts recipients’ incentives for the worse.’ He goes on to explain that aid is given with the assumption that its recipients lack the necessary resource base needed to generate tax revenue. This lack in revenue is in effect what limits African governments ability to meet public expenditure needs. Mwenda argues that insufficient tax revenue is caused by poor tax administration, bad policies and institutions that otherwise work to undermine the country’s economic growth. The revenue that is collected is then poorly spent on the wrong priorities.
He goes on to explain that, ‘the failure of Western aid in Africa has little to do with the conditions attached to it, but a lot to do with poor governance on the continent. Look at China giving Sudan money to build a multi-million dollar presidential palace. That surely does not promote economic growth and development in that poor and conflict-ridden republic. You might criticize China, but over the years, Western aid to Africa has done more or less the same thing i.e. helping corrupt African rulers build palaces, fly executive jets, and acquire prime real estate in New York while the citizens of their country go hungry and die of disease.’ The result is that African governments answer only to their ‘financiers.’ It is this final point that is really starting to gain ground in the development debate. The link between governments and citizens needs to be rebuilt if there is to be any kind of real accountability, the kind of democratic dependency that binds a country’s ruling party to its citizen base.
Mwenda goes on to argue that the real potential for development is in fostering trade and business. And that local government is to blame for the continent’s inability to join the global system on a wide scale. It is also misleading to think that China’s loans are particularly generous. He says, ‘Africa’s inability to trade itself out of poverty is not due to bad trading practices by the Western world. That is only an excuse that is theoretically convincing but analytically and empirically false. The real cause of Africa’s trade predicament is mismanagement of policies and institutions that form the relationship between government and exporters.’ He goes on to explain, ‘For example, Africa’s major exports are agricultural. Governments in Africa have for many years pursued policies that reduced farmers’ incentives to produce both food crops and export crops. Bad government is to blame for the continent increasingly becoming a food importer.’ He argues that even when western countries have given Africa preferential trade arrangements the continent has been unable to take advantage of them. He references the Cotounou Agreement and the fact that not a single country in Africa, including Botswana, has met their quota.
In the case of his home Uganda, the country has been given a free trade quota to export 50,000 metric tons of sugar. Unfortunately, the country has failed to export a single kilo. He explains that, ‘Under the Africa Growth and Opportunities Act (AGOA), African countries have 6,000 products they can export duty free to the U.S. market. Most African countries have failed to take advantage of this opportunity and their benefits have been limited. This is because external trade – whether with China or the West – only offers an opportunity. Which country will take advantage of the opportunity depends on its internal institutional capacity. Unfortunately for Africa, this internal capacity is lacking all around. We need to stop looking outside of the continent for solutions. Africa needs internal reform before it can benefit from the rest of the world.’ More specifically, the need to identify local solutions stems from a growing need to identify local talent that can lead the way.
It is on this foundation that Andrew Mwenda puts forward his theory that we need to replace ‘Poverty Reduction’ with ‘Wealth Creation.’ The focus needs to be taken off of symptoms (food, medicine and peace keepers) and in the effort to start addressing the real underlining problems i.e. the ability to generate an income, a trading opportunity and the ability to find a well paying job. His argument is clear; wealth is a function of income. The focus should be placed instead on entrepreneurs as agents of wealth creation. Entrepreneurs make up about 4% of the population and 16% of the population then follows as ‘entrepreneurial imitators.’ Any development efforts should thus be focused on these individuals and the areas of the economy where there are opportunities to productively grow. An emphasis should be placed on private investment and on the institutions and tools that can empower these individuals to do business.
Like Paul Collier and William Easterly, Andrew Mwenda argues that the emphasis should be shifted from ‘top down’ to a ‘bottom up’ approach. Less focus should be made on relations with a country’s president and more emphasis should be placed on Mwenda’s ‘wealth creators’ and Easterly’s ‘searchers.’ These individuals on the ground have the power to seek out local solutions. They are in a unique position to take advantage of local opportunities and tackle local needs and challenges. This new line of thinking is relevant to development efforts generally and the ICT4D debate in particular.