1st Prize Winner re 2010 Essay Competition : Is the free market economy alien to Africa’s development?

Tuesday, January 18, 2010

By Alex Ndung’u Njeru, Maseno University; Kenya

The main foundations of a free markets rest on the assumption that exchange is both informed and voluntary, meaning the absence of external force and availability of information that allows individuals to arrive at rational decisions.

The question of the form and nature of African markets over time has persisted in academic circles for a long time now. In order to have useful insights into the matter we must carry out an in-depth chronological analysis into the form and nature of African markets. This can only be possible if we divide Africa history into three distinct time epochs;

(i)                 Pre-colonial Africa
(ii)               Colonial Africa
(iii)             Post-colonial Africa/ Independent Africa

A historical examination of most African markets in pre-colonial times shows the presence of free markets. This heralded from the division of labour by African tribes, some being pastoralists some crop farmers and some middle men. In Kenya a vibrant trade ensued between the kikuyu, who were crop farmers and the Maasai, who were nomadic pastoralists.

There has an ingrained fallacy about African markets mainly propagated by Marxist economic theorists who posited that pre-civilized societies been characterized by primitive communism. They argued that the only antidote to this situation was the promotion of socialist market system that would suit African social and economic traditions.

However such scholars overlooked certain key truths with regard African pre-colonial society. For example although land in most tribal societies was communally owned, families residing on pieces of land had the right to farm and trade the resulting produce, they could even hand over the land to subsequent generations. Even in hunting and gathering communities, though land was communally owned, private property existed in the form of tools and hunting weapons.

In addition domestic free markets and inter-regional free trade were part of the continents economic tradition. Village markets were organized weekly or bi-weekly, they rotated around clusters of villages and were fundamental in the exchange of both goods and ideas among people.

Inter-regional markets existed especially along trading routes. These were in existence long before European annexation of the African continent. Trade routes on the Trans-Saharan trade route were Timbuktu in Mali, Salaga in Ghana. On the trade routes along the Zambezi River and Sabi Valley were Mombasa in Kenya and Ivuna in Tanzania. The Kamba community in Kenya was important in in acting as conveyor belt for goods both from hinterland and from the coast for they were long distance traders.

Initially barter trade was the main form of trade however with time primitive currency involved in cowrie shells, gold and gold dust and others.

In most of these instances centralized market intervention was absent with its introduction having disastrous results.

Colonial period

Colonial governments did the most they could to control economic activities carried out by Africans, often with little success. Though largely colonialism did very little to alter the economic orientation of African markets, colonist tried to reduce indigenous peoples involvement in trade as evidenced by ban’s on cash crop farming on African farmers and travel passes which reduced African merchants mobility in a significant manner.

However the colonists were responsible for introduction of mainstream money economies in Africa and the introduction of taxation mainly of labour as a tactic of procuring cheap labour from Africans. But this in itself did little to dampen the entrepreneurial spirit Africans or shake up pre-colonial market foundations in a significant way. Indeed researchers argue that one of the reasons why colonial rule existed for long in Africa was because of its ‘glove hand’ approach to African markets. Colonialism did little to interfere with African market orientation, thus even after the colonialist had left, the vibrancy of free enterprise still reigned supreme. A visit to Luanda market a township a few kilometers away from my college provides little in the way of a radical re-orientation, with it still bearing the characteristic African warmth.

Post-colonial Africa

After independence, African leaders educated in the West and mostly influenced by Marxist ideology showed utter lack of historical and contextual insight by making a case against free markets, arguing that these were alien institutions in Africa. They thus opted for centrally economies. They created governments where the debilitating hand of the state permeated all aspects of society and on a bigger magnitude the market. This complex situation arose from the fusing together of anti-imperialism and socialism. Most African governments responded to perceived imperialistic threats from the West by creating socialist systems that were supposed to be more efficient in allocating resources to people than ‘raw capitalism’.

Kwame Nkrumah, of Ghana often called the “Father of African Socialism"Capitalism is too complicated for a newly independent state; hence, the need for a socialist” argued that society."  He sought nothing less than ”the complete ownership of the economy by the State."

Julius Nyerere of Tanzania misread the African tradition of helping family and friends as an indigenous socialism. He criticized capitalism or the money economy because it "encourages individual acquisitiveness and economic competition." He saw this money economy as foreign to Africa and "catastrophic with regards to the African family social unit." His “Ujamaa” philosophy mindlessly led Tanzania into the gutters of economic ruin especially because of its lack of cognizance of diverse social cultural lifestyles of the African people.

In most cases State control of the economy usually was accompanied by one-man dictatorship or rule by small elite that soon became corrupt. Often an "ideology" was invented, centered on the country’s leader, to give rhetorical support to his denial of democracy, individual rights, and he rule of law.  Only one black African country adopted a free market system, Botswana, currently has a democratic, multiparty system. This has led to it being an exemplar of good governance and developmental ethic in Africa.


From the foregoing there is little in way of evidence to show that the free market systems are alien to Africa and the African people. The antagonists of the free market systems have used various uncouth methods to misrepresent the true historical nature of African trade and ancient market systems often for personal and egoistical reasons.

This underhand ways justifying state control of the economy have often led to disastrous results. State control of markets has led to self-enclosure, a situation where producers have no incentive to produce for trade but rather produce for self-subsistence. As a result individual enterprise which is inherent in all men is hampered. “Adam Smith argued that if all men act out their rawest self-interest, pursuing whatever enterprises best satisfy their needs and their egotism and their cupidity; if the government keeps its hands off the economy – then the result will be not anarchy or chaos or a jungle of selfish social destructiveness, but an ordered harmony in which the automatic forces of supply and demand, in a responsive and resilient free market, must bring about the most efficient utilization of all resources (labour, land, capital, skills, brains, ingenuity, inventiveness) to secure the largest and most lasting advantages to a nation.” Free, unregulated competition, Smith audaciously argued, converts "the private interests and passions of men" into consequences "most agreeable to the interests of the whole society" – as if by an Invisible Hand, and despite the intentions of rapacious landlords, greedy merchants, mendacious traders, or ruthless profiteers.  John Locke on his part argued a case for private property, he posed that a man’s own body is his first responsibility and therefore private property. Ha argued that a man had the right to appropriate the product of his labour for himself without interference or intrusion.

Sauvit Chakraverti argues that the major difference between man and ape is his ability to trade, he thus poses that man is a “Homo-economicus” being. Chakraverti observes that only ability to trade is evident in children.

African states and statesmen have been shown to engage in systematic mind conditioning that aims to alienate the African people from the truth. They often draw peculiarities of African societies and culture with other people to propagate and brainwash Africans into submission that free market systems have never worked and will never work in Africa. This statement is further away from the truth than its converse.

Thus for Africa to return to the path of rational ideology and sustained development, policies that restore Africa’s ‘free market traditions’ must be put in place.

The focus should be placed on strengthening the institutions that support the functioning of efficient market systems. These institutions include an impartial legal system and well defined property rights among others. Adam Smith argues that the ‘invisible hand’ of the market should function to distribute and re-distribute resources in the economy.

The arguments against free market systems in Africa can thus be said to be built on historical shortsightedness, for free market systems are neither alien nor new in Africa.

Alex Ndung’u Njeru, Maseno University; Kenya