Please Don't Help?

October 2018

More than four trillion euros have been invested in the continent of Africa since the 1960s, but the standard of living situation has not improved. According to economist James Shikwati, for its economies to grow Africa needs capitalism and self-confident branding. However, former Foreign Minister of Ghana, Hanna Tetteh, says the focus should be on promoting infrastructural development and regional integration.

Hanna und James Please dont help

Ms. Tetteh, Mr. Shikwati, what has development cooperation in Africa accomplished thus far?

Tetteh: Actually, it hasn’t achieved as much as expected because the aims of those giving the aid do not always align with the priorities of those receiving aid assistance. That is why I consider policy initiatives like the Marshall Plan with Africa, which the German Ministry for International Development is promoting, and the G20 partnership with Africa to be much more productive. They support opportunities for public and private sector partnerships and promote investment in infrastructure that is critical to economic growth.

Mr. Shikwati, am I right to think that you share this view?

Shikwati: I would even go a step further and say that this help mindset behind development aid is wrong, since it is anything but a help. It cements problematic relationships, it keeps Africa stuck in the status quo, and does not allow for any movement to keep pace with global shifts towards Industrialization 4.0. Traditional development cooperation has not changed the fundamental issues. This help is no help.

Can you give an example of what relationships you believe are being cemented in place?

Shikwati: Let’s take an example. European companies purchase a gram of vanilla in Uganda for one euro. It’s then processed in their country and ultimately sold for 345 dollars. This value creation process, which enables Europeans to make 345 dollars out of one euro, is denied to Africa in this process. This prevents growth. The same is true of the smartphone market. Instead of just purchasing raw materials in Africa, an entire smartphone could be produced there. That would be real transformation. But in maintaining the status quo, Africa's entry into the global market cannot be realized. Those receiving help are in a poor negotiating position.

What should we do to change that?

Tetteh: Something that often gets overlooked in Europe is that Africa is a continent, not a country. There are different challenges across the different regions. In my country, for instance, about half of the population lives in rural areas and is engaged in agriculture, mainly in subsistence farming. The cost to the government of collecting payments for income tax, those not made voluntarily from our rural communities, would likely exceed the revenue to be collected. The tax revenues generated would amount to a fraction of what is required to make the infrastructure investments that will make a significant impact on people’s lives.

This seems like a vicious cycle. The lack of infrastructure prevents people from producing more than they themselves need, and therefore prevents them from paying taxes. And the lack of taxes prevents the state from investing in infrastructure which, in turn, holds people back ...

Shikwati: Yes, but this vicious cycle is man-made, which is why we also have the power to stop it. It is the result of the relationship between Africa and Europe. For example, if a donor contributes to all children under the age of five being immunized against the most harmful diseases in an African country, thereby reducing the child mortality rate, that sounds like a good thing, doesn’t it? But these kinds of activities lead to governments prioritizing requests for aid – instead of finally taking responsibility for such initiatives themselves. The mentality here needs to change as well, and that is no easy task.

Can you be more specific when you say that the mentality needs to change? In what sense? Is it a question of culture?

Shikwati: I believe it’s more about a strategy of cultivating self-confidence and agency to pitch Africa as an true alternate market. For example, Europe and the U.S. engage in economic cooperation and corresponding free trade agreements that spur entrepreneurship among their citizenry. But that is not without its dangers, especially with tariff wars. If the U.S. were, for example, to all of a sudden be of the opinion that we no longer need this or that product from Europe and were to enormously increase the customs duties, that would be a problem for Europe. The backup plan could be: there is a market in Africa that has yet to be fully tapped. That’s why I think that these notions of aid are not only wrong from a philosophical perspective but also for long-term strategic reasons. Europe should have its own interests in a strong African economy as a possible alternate market partner and not just a burden, a place that requires help.

Tetteh: I agree that as important as it is to reduce child mortality, and invest in social initiatives, it is just as important that our governments take responsibility and focus on building partnerships that will help to grow our economies The only thing I hesitate to fully endorse is Jame’s idea of this “brand Africa” that would present us as a continent open for business. It is desirable, but we are not there yet.

Yes, that’s something I would like to talk about in greater depth: turning Africa into a brand. This doesn’t seem such a bad idea on the face of it ...

Tetteh: It sounds a bit like a cliché and requires a lot of cooperation to make it really happen.

Shikwati: Let me explain: many developed countries that are economically successful have branded themselves and investors follow brands and big buzz. Take, for example, the U.S. with its “American dream”. This attracts labor and capital, which is what make phenomenon like Silicon Valley possible. However, if you look at how people in Europe see Africa, they talk about wars, violence, terrible diseases. No one fears to invest in the U.S. where deadly shootings are reported quite often. America has worked on its branding. That’s why nobody shies away from travelling to the U.S. But if there’s a shooting in Nairobi, a travel warning is immediately put out. If we all agree that Africa could provide a robust alternate market, then we now need to work on our branding.

You see this differently, Ms. Tetteh?

Tetteh: Ironically, it was right here in Berlin in 1884 that the conference was held where the European powers agreed on a framework for expanding their influence in Africa, which led to the division of the continent into colonies. The colonial structures largely disregarded the different traditional communities and ethnic groups that were already established and you see the consequences of those arbitrary divisions today. Additionally, different official languages and systems of administration were developed and harmonizing these structures to create “brand Africa” will take time. We should focus on improving integration within the regional economic communities to achieve, ultimately, a more integrated continent.

But to what extent does that work against a common African branding, a positive brand image?

Tetteh: Our first step should be to work on the content. No matter how good a PR campaign is, it won’t amount to anything if the substance isn’t there. But all the issues currently being discussed and negotiated – from a Marshall Plan for Africa, the G20 Compact with Africa to various other policy instruments – we cannot afford that these debates remain discussions among the elite, specifically among government officials. The key stakeholders in the private sector and in civil society need to make their contributions to the discussions. The people have to identify with the issues. We need everyone’s participation.

Shikwati: History shows us that an interested party is always needed to ensure that these plans are implemented and the tools are used. We need a quick transformation. To my eyes, private companies must demand this, and governments will follow. Only when a company from, for instance, Europe is constrained because it is unable to invest in an African country even though it really wants to will anything truly change. It worries me that Hanna relies so heavily on the official conventions and politics. I have little confidence in our political sphere.

Ms. Tetteh, what is wrong with politics in Africa that makes people like Mr. Shikwati say they have lost trust in the state?

Tetteh: Not every African country has the same politics. There is no “one-size-fits-all” here. There are states in Africa that are close to being dictatorships, but we also have some incredibly agile democracies. We have to talk about how to achieve greater participation by the people and civil society since this increases pressure on politicians to do things well. If the politicians are constantly pressured by people demanding action, they realize they will have to make an effort if they want to be re-elected. In my view, competitive democracies are the solution for the problems that have been mentioned.

Shikwati: People have to have something they fear to lose to make a positive impact in politics. Expanding capabilities of indigenous African enterprises will create a constituency of strong and capable stakeholders to ensure that these political structures change for the better and for African interests.

Ms. Tetteh, Mr. Shikwati, thank you very much for speaking with us.

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