Africa is stuck in Poverty Trap

Currently, Africa is home to between 40 and 70 percent of the world’s poorest, depending on which modeling platform you are looking at. What does this mean? It means that everyone else is eliminating extreme poverty except Africa.

In other words, the continent will not meet the UN Sustainable Development Goal-1 (Ending Poverty Everywhere). And, with less than nine years to 2030, a year in which all leaders from all over the world agreed to fulfill all SDGs. One question we must ask ourselves is: Why is it that Africa cannot figure out what we must do to reduce poverty like other nations?

Adam Smith, centuries ago, provided us with the knowledge on how to create wealth. But little of it is ever practiced. African academics too point out why we still remain backward despite the depth of natural benefaction of God but the leadership rarely pays attention to these answers of redemption from the jaws of poverty.

Smith argued that “by giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening the markets up to domestic and foreign competition, people’s natural self-interest would promote greater prosperity than with stringent government regulations.” Instead, we see leaders meddling with the people’s freedom. They also lie to citizens that they can create employment and wealth. Yet, we know that there is no government anywhere in the world that has created wealth for people.

[perfectpullquote align=”left” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Throughout history, public education was seen as key to economic growth and an equalizer between the poor and the rich. However, bureaucrats and the rich in society take their children to privately run schools.[/perfectpullquote]

In truth, where poverty is minimal, it is people’s natural interest that has created wealth and employment. For example, more than 95 percent of employment in Africa is by the micro, small and medium Enterprises (MSMEs).

These enterprises are not created by governments nor do they receive any direct assistance from the governments. They are creations of individual interests. The decisions by governments, however, often limit how much wealth or employment these MSMEs can create.

Therefore, for us to create wealth, the role of governments needs to be limited to creating an enabling environment for citizens to produce and exchange goods as they please.

There are some disagreements on what it entails to have an enabling environment. But according to Smith, having an enabling environment involves maintaining law and order in a country, making national defense stronger, and regulating money supply as the key role of government in the economy.

Other economist thinkers opine that building infrastructure for common use and collection of taxes should add to Smith’s suggestions. Beyond this, the government will be meddling in people’s interests.

From a look at public education, which is a critical component of wealth creation, we see politicians meddling. For example, some of them have used teachers as their agents in rural villages and have bribed union leaders with lucrative appointments to ensure that the teachers are solidly behind them. As a result, public education is as good as dead in Africa.

Throughout history, public education was seen as key to economic growth and an equalizer between the poor and the rich. However, bureaucrats and the rich in society take their children to privately run schools. And with the substandard education, which is being provided in Africa, the continent is making it harder to reduce poverty.

In Kenya, for example, the emerging political narrative of dynasty versus hustler is not any different from Marx and Engels’ philosophy of bourgeois versus proletariat that led to immense violence across the world. Without broad readership of such theories, the danger with such a narrative is that even the propagators will have no control of its interpretation. The country could easily move from poverty to instability.

The great concern, however, is that academia has now been roped into the culture of victimhood to explain the continent’s poverty situation from the point of knowledge. Highly trained economists have become social activists advancing concepts like social justice, which gives the poor false hope.

Bitange Ndemo is an associate professor at the University of Nairobi’s School of Business.

First appeared in Business Day.

Photo Credit: Aleksei Quintero on Unsplash.