A Gentle Revolution in Africa

In 1985 one of the finalists for the Prometheus Award was Lee Correy’s Manna, in which a nearly anarchist African country fights the world’s governments for the right to trade freely (or to exist at all). It seems appropriate that Africa the “cradle of humanity” might be the birthplace of a new kind of freedom for our troublesome and upstart species.

Since independence was achieved 25 years ago, Sub-Saharan African nations have moved from one economic catastrophe to another. The devastating 1984-85 drought and famine was, according to Richard Richardson and Osmon Ahmed, economists in the Development Department of the international Finance Corporation, “not a mere temporary aberration of nature, but part of a long downhill slide.”

For reasons ranging from keeping power to stimulating economic development, many leaders in the newly independent African nations adopted highly interventionist policies. The nearly endless list of policies included high taxes, often above 50 percent, on agriculture to stimulate industrial development; price controls, especially on farm products, to provide cheap food for city dwellers; agricultural marketing boards and the often ruthless abolition of the private sale of produce; tariffs to encourage uneconomic local industry; state-protected monopolies for politically powerful elites; inefficient state-owned enterprises; widespread nationalization; and overvalued exchange rates that impeded exports.

Ideological support for these policies was provided by the “structuralist” and “dependency” schools of economics, which were popular during the 1950s and ’60s. In contrast to traditional development thought which emphasized market incentives, the structuralist school, led by the late Gunnar Myrdal, argued that people in the Third World did not take things like prices into account and therefore did not respond to market incentives. Economic development, according to the structuralists, required as Robert Heilbronner wrote, a large public sector and a “powerful, even ruthless government.” The view of the dependency school reinforced those of the structuralists by maintaining that the Third World could achieve independence only by terminating economic relations with the West.

The results were tragic. Between 1960 and 1965 per capita income for all developing nations increased 87 percent. It doubled in the low income nations of South Asia. But in Sub-Saharan Africa it either remained stagnant or worsened. And in agriculture, per capita food production fell by 25 percent since 1960. As Tony Jackson and Paula Clark of Oxfam, the famine-relief organization, have noted, Africa was a net food-exporter in the 1930s and self sufficient in the early 1950s. But by the 1980s it was a major food importer.

Africa is the only region where per capita food production has fallen. As tragic as the recent famine was, it underscored how precarious Africa’s economic situation had become. Now, in response to this condition, we are seeing changes that are noteworthy for two reasons: they are widespread and they favor the free market.

Zaire, Zambia, Ghana, Togo, Nigeria, Madagascar, Camaroon, and Guinea have introduced significant agricultural reforms. Marketing boards have been abolished and prices decontrolled in some countries. In Nigeria and Ghana, prices paid to cocoa farmers have tripled. Prices for cassava in Zaire have tripled; prices for maize doubled.

The growth of government, which had been about 50 percent higher than the growth of the private sector, has been greatly reduced and in some countries reversed. Government spending in the region has actually been declining by 1.5 percent annually since the late 1970s. Eleven nations have either sold or reformed their state-owned enterprises. Ghana recently dismissed 19,000 employees of its Cocoa Marketing Board. Government ownership of public enterprises fell five percent during the 1980s.

Several nations, including Ghana, Guinea, Gambia, Zaire, Madagascar, and Mauritania have adopted either flexible or free market exchange rates, which have encouraged exports and eliminated the implicit subsidies to those who consume imports, usually the urban elite.

Although reforms have been in effect briefly, their success is clear. In the decade before its 1983 reforms, Ghana’s per capita GDP (gross domestic product) declined 3.1 percent a year. Its GDP increased 7 and 5 percent in the next two years. Inflation dropped from 123 percent in 1983 to 20 percent in 1985. Agricultural output rose sharply; maize production tripled. Similar, although less dramatic results are found in Zambia, Togo, Nigeria, and other countries that introduced market reforms.

“In Sub-Sahara Africa,” write Richardson and Ahmed, “the countries that have shown the most impressive performance are those in which the private sector dominates. In countries where the public sector dominates, economic activities have shown a negative performance.”

After more than a decade of bad news from After this is good news indeed—compliments of the free market.

David Osterfeld is a fellow of the Institute for Humane Studies at George Mason University.