The Paradox of Affluence: Whither Africa?

Remarks by David H. Shinn
Adjunct Professor
Elliott School of International Affairs
George Washington University

Remarks at Phi Theta Kappa's Faculty Scholar Conference
February 2, 2008
Jackson, Mississippi

When invited to apply my African experience to the 2008 Phi Theta Kappa honors topic "The Paradox of Affluence: Choices, Challenges, and Consequences," I was apprehensive. I associate affluence with economic wealth while Africa, from a continental perspective, is more closely linked to poverty. The juxtaposition of affluence and poverty seemed like an oxymoron. I was pleased, therefore, to receive the discussion guidelines for this year's study topic that look at affluence well beyond the issues of wealth and economic development. They include geography, history, politics, culture, family, health, education, and the environment. Defining affluence in this way makes Africa more relevant to the question and my task somewhat easier.

It is always dangerous to generalize about a continent with fifty-three countries, many of which have little in common with one another. Some like Sudan and the Democratic Republic of the Congo are geographically large while others like Gambia and Djibouti are tiny. Sudan is the size of the United States east of the Mississippi River while Gambia is less than half the size of Maryland. Nigeria, Ethiopia, and Egypt all have more than seventy-five million people while Seychelles, Cape Verde, and Sao Tome and Principe, all island nations, have less than a half million inhabitants.

Countries like Libya, Botswana, Mauritius, and Gabon have per capita gross national incomes (GNI) of more than $5,000 while Burundi, Malawi, Ethiopia, and Liberia have a per capita GNI of less than $200. Angola, Nigeria, and Equatorial Guinea are awash in oil while Burkina Faso, Mali, and Togo have virtually no natural resources. South Africa and a few countries that border the Mediterranean in North Africa account for most of Africa's industrial output. Manufacturing is not a significant part of the economy in the rest of Africa, which is predominantly agricultural and/or pastoral.

Mauritius and Botswana have been liberal democracies since independence. Chad, Guinea, and Angola, although they have held elections, have been ruled in an authoritarian manner since the end of colonial rule. Countries like Benin and Mali have made the transition in recent years from autocratic rule to a liberal democracy while Somalia went from an elected government after independence to a dictatorship and then a failed state. Swaziland was a kingdom before independence and continues to be ruled by a king. I could cite many more differences among African countries but I think you get the picture. The geographic, economic, political, and social diversity of Africa is enormous and exacerbates the paradoxes found on the continent.

Income, Poverty, and Affluence

Even though it is risky to generalize about the African continent, it is nevertheless useful to apply the "paradox of affluence" concept collectively so long as you appreciate there are significant individual country differences. Let me begin by comparing Africa's economic wealth with other regions of the world. It is important to emphasize, however, that statistics can be misleading. If you compare per capita GNI across regions, sub-Saharan Africa, which excludes five North African countries, fares poorly. GNI is the sum of value added by all resident producers plus any product taxes not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. According to World Bank figures for 2005, the world average per capita GNI was just over $7,000. Sub-Saharan Africa averaged $700. Latin America and the Caribbean, by contrast, had a per capita GNI of about $4,000.

One must be careful with GNI statistics for sub-Saharan Africa, which is largely agrarian or pastoral. Barter is important in African economies. As much as 50 percent of many African economies operate outside the formal economic sector that is recorded in government statistics. This informal economic activity simply does not appear in official figures. In addition, exchange rates do not always reflect differences in price levels between countries. As a result, the World Bank converts GNI per capita into international dollars using purchasing power parity (PPP) rates, which offer a standard measure allowing comparison of real levels of expenditure. Sub-Saharan Africa fares somewhat better using the PPP approach. Its per capita PPP gross national income in 2005 was $2,000 as compared to a global average of $9,400. It was $8,100 for Latin America and the Caribbean. But even the PPP method of calculation leaves sub-Saharan Africa well behind all other major regions of the world, including North Africa.

The statistics concerning poverty are even more depressing. While the World Bank estimated in 2004 that 18 percent of the population in all developing countries lived on less than $1 per day, the figure for sub-Saharan Africa was 41 percent. South Asia had the next highest rate at 32 percent while all other developing regions were less than 10 percent. The share of people in all developing countries living on less than $2 per day jumped to 48 percent. For sub-Saharan Africa, the number rose to 72 percent. In the case of South Asia, it was even higher at 78 percent. As discouraging as these poverty statistics are for sub-Saharan Africa, however, I must underscore that the ubiquity of the barter economy gives the impression that Africa is poorer compared to the rest of the developed world than is actually the case. This is, if you will, one of the paradoxes of measuring affluence or the lack thereof.

While the growth rate of sub-Saharan Africa's per capita gross domestic product (GDP) between 2004 and 2005 was only 3.4 percent, it actually exceeded both the global average and the average for the world's high income countries. Economists project that it will rise notably in the next several years, due in part to the growing export of oil and raw materials at rising prices to the fast growing economies of China and India. At least over the short term, this is in theory a positive trend but the financial benefits are distributed unequally across the continent and precious commodities create other problems.

Paul Collier, Director of the Center for the Study of African Economics at Oxford University, wrote a thought provoking book last year entitled The Bottom Billion. Although his analysis looked at entrenched, global poverty, much of the focus was on Africa. He considered four development traps: the conflict trap, the natural resources trap, the trap of being landlocked with bad neighbors, and the trap of bad governance. He concluded that since 1980 world poverty has been falling for the first time in history. He argued that many countries caught in one or more of these traps, some of them African, have already escaped seemingly hopeless poverty and others are capable of doing so.

An important indicator of future affluence is the degree to which countries and regions are becoming part of the global economy. Foreign Policy magazine and the A.T. Kearney company for the past seven years have been assessing how much, or how little, countries are opening themselves up and connecting with others. Their 2007 assessment, which draws on data from 2005, looked at indicators such as trade, foreign direct investment, participation in international organizations, travel, and Internet usage to determine which countries have done well. The ranking of the seventy-two top countries suggests that Africa, especially sub-Saharan Africa, has had the least success. At number thirty-three, Ghana was the highest ranked African country, followed by Morocco (40), Uganda (44), Tunisia (46), and Botswana (47). Of the countries ranked in the top seventy-two, only twelve are in Africa and four of those are North African. I suspect, nevertheless, that even this relatively poor showing is better than many of you would have guessed.

Geography and Affluence

More than three times the size of the United States, Africa is geographically diverse. The continent straddles the equator and much of it lies in the tropics. North Africa and the southern-most countries have temperate climates. African soils are often said to be worn out and depleted of nutrients due to the harshness of heavy rain and/or the relentless African sun. There are vast areas where this is true, but there are also alluvial soils left by great rivers and fertile highlands where agriculture thrives.

Because most Africans depend on agriculture or pastoralism, the fickleness of the rains is a constant threat to human security. As weather patterns change and the population continues to increase, drought and food shortages have become more common, especially in the band of territory immediately to the south of the Sahara Desert. While the climate can result in considerable agricultural affluence one year or in one region of Africa, it may cause catastrophe the following year or in a neighboring part of the continent. This is a paradox that African farmers face annually. This situation is not unique to Africa, but its impact tends to be greater because more African farmers and pastoralists live on the economic margins.

Africa offers extraordinary physical beauty. I would highlight, for example, a remote section of the Sahara Desert on a clear moonlit night, the summit of Mt. Kilimanjaro as day breaks over the Indian Ocean, a boat ride on the lower Nile at sunset, Victoria or Blue Nile Falls at the end of the rainy season, the teaming rain forests of central Africa, and the soothing landscape of the wine growing region in South Africa. Every region of the world has its geographic attractions, but it is hard to match the diversity of Africa.

The geography and climate have also created an affluence of flora and fauna on the continent. The game parks of eastern and southern Africa are well known and attract numerous tourists. Less appreciated is the phenomenal birdlife found in many parts of the continent. Ethiopia alone has about 860 species, of which sixteen are found only in Ethiopia. Of the ten bird families that are endemic to the African mainland, eight exist in Ethiopia. The large Indian Ocean island nation of Madagascar constitutes a virtual botanical and zoological park. It has such a diversity of flora and fauna that it now attracts small groups of tourists interested in endangered species. Madagascar has five primate families with thirty-two distinct species all native to the island. It has 10,000 plant species found nowhere else in the world. If you measured a nation's affluence by the variety of its flora and fauna, Madagascar might be the richest country in the world. The paradox is that relatively few outsiders visit the country and much of the flora and fauna is endangered as humans encroach on its habitat. Madagascar has lost one-third of its forests since the 1970s.

Africa is an increasingly important source of oil and natural gas for the export market. Although it contains only nine percent of the world's known reserves of petroleum, it is the least explored region of the world and will probably have the largest percentage of new oil discoveries in the future. In 2006, the United States obtained 22 percent of its imported oil from Africa while China received 33 percent of its imports from the continent. Africa provides almost 10 percent of the world's supply of natural gas. Most of this petroleum and natural gas is found in North Africa, especially Algeria and Libya, and in the Gulf of Guinea and Angola. Other significant producers are Nigeria, Sudan, Gabon, Congo Republic, Equatorial Guinea, Sao Tome and Principe, Chad, Democratic Republic of the Congo, Cameroon, and Mauritania. Energy and natural resources are providing income for more African nations, but most have not been blessed and many of those that have are especially prone to conflict and corruption.

Mineral wealth, on the other hand, is spread more evenly around the continent. Africa ranks first or second in the world in its reserves of bauxite, chromite, cobalt, diamonds, gold, manganese, phosphate rock, platinum, titanium, vanadium, vermiculite, and zirconium. It has 95 percent of the world's reserves of chromite, 90 percent of platinum, and 85 percent of manganese. Demand for these minerals, however, tends to be erratic with great fluctuations in price. Recent higher demand by rapidly expanding economies like China has helped increase African exports of these natural resources.

Being landlocked contributes to poverty and hinders development. Fifteen of Africa's fifty-three countries are landlocked and the Democratic Republic of the Congo is virtually landlocked although it has a sliver of land that extends to the Atlantic Ocean. While most of Africa's landlocked countries are among the poorest on the continent, the good news is that almost three-quarters of African states have a coast line.

As in every part of the world, geography has an important impact on affluence. For Africa, the impact varies significantly from one country to another and, in the case of weather conditions and the price of raw materials, it changes over time. European navigators during the 15th and 16th centuries viewed Africa as nothing more than a geographical obstacle to sail around on route to India and the Far East. The colonial and post-colonial period caused Europe and the rest of the world to see Africa as an important part of the international economy. The discovery in Africa of energy resources and minerals hastened its significance for the global economy.

History, Culture, and Affluence

African history and culture are dramatically different than that experienced in the West or East, but that does not make them any less rich. For starters, Africa is the home of humankind. Fossil evidence indicates that the earliest ancestors of all humanity originated about six million years ago in the Great Rift Valley of eastern Africa or perhaps in the Lake Chad Basin. Modern humans appeared in Africa about 200,000 years ago and began migrating from the continent almost 100,000 years ago, moving initially across the Sinai Peninsula and eventually colonizing the rest of the world. They reached Australia about 50,000 years ago and South America only 15,000 years ago. What could represent greater cultural and historical affluence than being the continent where the human race began!

As the millennia passed, the population of the small number of people who left Africa and migrated to the rest of the world grew much faster than those who remained on the continent. The first states in Africa were those that brought together independent farming communities below the first cataract in Egypt about 5,500 years ago. Further to the south of Egypt in a land called Kush, another independent political entity developed about 3,800 years ago.

Until about 2,500 years ago virtually all sub-Saharan Africans lived in social systems based on kinship with no single center of power or authority. Organized states as we know them today did not exist. Dating back more than 2,000 years, Axum arose in the Ethiopian highlands as a challenge to Kush. A series of important kingdoms, beginning with Ghana about 1,100 years ago, developed in West Africa. Savanna kingdoms known as Mali and Songhai followed. These sophisticated civilizations were at their peak when Europe was experiencing the Dark Ages and only Native Americans lived in North America. With the passage of time, dynamic political systems and kingdoms such as Zimbabwe and Buganda spread to southern and eastern Africa. The surviving art from these early African civilizations, although unlike that found in the West, is impressive. The next time you visit Washington, I strongly recommend a visit to the Smithsonian's Museum of African Art. You will see there an astounding affluence of art from throughout the continent.

An important feature of African society that has carried over to the modern era is the extended family and kinship ties. The extended family remains the strength of African society, particularly in rural areas. Ties based on ethnicity or tribes are, however, a mixed blessing. They can be a tower of strength in times of need but they have also frequently served to divide society in the modern political state as has been occurring recently in Kenya. The affluence of powerful ethnic ties in Africa has paradoxically severely tested the ability of African governments to build strong nation states in the tradition followed by western countries after the 1648 Treaty of Westphalia. There are many reasons for the recent history of conflict in Africa, but ethnic politics are among the causes. On-going civil war in Sudan, Somalia, Democratic Republic of the Congo, Chad, Central African Republic, Cote d'Ivoire, and tension between Ethiopia and Eritrea underscore the challenge to achieving affluence.

Politics, Governance, and Affluence

Even with their rich history and culture, many African countries have had difficulty successfully adapting the systems of government imposed upon them by former colonial powers. It is too soon to tell if it will just take more time or whether some African societies will require different kinds of governing systems. Persons, who argue that it is only a question of time before most African countries develop modern democratic systems, can draw inspiration from the history of the United States. Most African countries have been independent for about fifty years. The United States had not even reached its Civil War fifty years after independence and it is still ironing out some of the kinks in its democracy more than 200 years later. If, on the other hand, many African states conclude they require a form of governance that is quite different than western liberal democracy, western governments may face challenging times as they interact with these countries.

The Ibrahim Index of African Governance offers a useful ranking of the way essential political goods are provided among the forty-eight countries in sub-Saharan Africa. The 2007 Index considered fifty-eight indicators of governance based on 2005 data and grouped them into categories such as safety and security, rule of law and transparency, human rights, economic opportunity, and human development. Mo Ibrahim, a Sudanese-born billionaire, finances the Index. Robert Rotberg, a professor of public policy at the John F. Kennedy School at Harvard, conceived and directs the project. The highest scoring country — Mauritius — received a score of eighty-six and the lowest scoring country — Somalia — earned a twenty-eight. There are not only huge differences between the high and low scoring countries, but there have been major improvements or declines in several countries since the first survey in 2000. Rwanda and Ethiopia improved significantly while Guinea-Bissau, the Democratic Republic of the Congo, and Zimbabwe declined sharply. The scores of most sub-Saharan African countries have remained about the same.

Drawing on a survey by Freedom House, Larry Diamond, a scholar on African governance, classified in 2006 the forty-eight governments in sub-Saharan Africa. He identified eight as liberal democracies, eleven as electoral democracies, five possible democracies but whose status is ambiguous, nine as competitive authoritarian, eight as electoral authoritarian, and seven as politically closed. Although other scholars might describe some of the countries differently, this typology appropriately highlights the variety of governance that exists in Africa today.

Freedom House ranks countries annually as being free, partly free, and not free. A free country is one where there is broad scope for open political competition, a climate of respect for civil liberties, significant independent civic life, and independent media. A party free country is one in which there is limited respect for political rights and civil liberties. A not free country is one where basic political rights are absent, and basic civil liberties are widely and systematically denied.

In its 2007 report, Freedom House concluded that 47 percent of countries around the world are free, 30 percent are partly free, and 23 percent are not free. In the case of the forty-eight states in sub-Saharan Africa, Freedom House determined that 23 percent are free, 46 percent are partly free, and 31 percent are not free. Although the record for sub-Saharan African countries was worse than the global percentages, there has been marked improvement over time. Compared with the 1977 Freedom House report, sub-Saharan African countries listed as free increased 16 percent. Those deemed to be partly free increased 10 percent and those listed as not free fell by 26 percent. This is progress.

Freedom House does a separate freedom of the press assessment. In 2007 it found 38 percent of countries around the world as free, 30 percent as partly free, and 32 percent as not free. Again, sub-Saharan Africa did less well. Only 17 percent were listed as free, 39 percent as partly free, and 44 percent as not free. Africa clearly needs to do much better. But compared with the assessment in the 1980 Freedom House report, there has been progress. Sub-Saharan African countries listed as free in the 2007 report increased by 10 percent and partly free countries rose by 20 percent. Those deemed to be not free fell by 30 percent. It is just as important to recognize progress as it is to criticize sub-par performance.

Corruption continues to be a serious problem in most African countries. A closely watched indicator of governance around the world is the annual Corruption Perceptions Index prepared by Transparency International in Germany. In 2007, Transparency International evaluated 180 countries, including all fifty-three in Africa. As a point of reference, Denmark received the highest rating and the United States was twentieth from the top. The highest ranking African country was Botswana at thirty-eight, followed by South Africa (43), Cape Verde (48), and Mauritius (53). Only thirteen African countries scored above the median of ninety while forty fell below. Somalia, in position 180, was the cellar dweller in 2007.

Another study known as the Global Integrity Index assesses the existence and effectiveness of anti-corruption mechanisms that promote public integrity. In 2006 it evaluated forty-one countries, of which sixteen were African. Its conclusions concerning Africa were somewhat more charitable. It ranked South Africa among the top four countries globally with a very strong ranking. It placed six African countries in the next tier with a moderate rating, gave three a weak ranking, and six a very weak ranking. Eight African counties fell above the median and eight below.

The Fund for Peace compiles on behalf of Foreign Policy magazine a Failed States Index. In 2007, it evaluated 177 countries. It looked at the following indicators of instability: demographic pressures, refugees and displaced persons, group grievances, human flight, uneven development, the economy, delegitimization of the state, public services, human rights, security apparatus, factionalized elites, and external intervention. It ranked sixty of these countries in 2007 into three groups of twenty, describing the first group as in a critical state, the second in danger of failing, and the third as borderline failure. African countries led by Sudan occupied twelve of the twenty critical rankings. African states also held eleven of twenty positions in the endangered category and five of the twenty in the borderline category. Of the sixty countries that made the list, almost half were African. One can disagree with a number of the choices made by the Fund for Peace, but there is no way to get around the fact that African states fared poorly in this failed state assessment.

Human Development and Affluence

In some respects, it is more appropriate to look at factors like health conditions and educational opportunities to measure the affluence of a country or region. According to statistics prepared by the Food and Agriculture Organization, the world's undernourished population during 2002-2004 was 14 percent, down from 17 percent in 1990-1992. But sub-Saharan Africa's undernourished population during 2002-2004 was 30 percent, almost twice the world average and up from 29 percent in 1990-1992. Almost 6 percent of sub-Saharan Africa's population aged fifteen to forty-nine was HIV positive in 2005 as compared to 1 percent globally. Sub-Saharan Africa also has an incidence of tuberculosis that is almost three times the world average and it has the highest rate of malaria in the world. The global figure for life expectancy at birth in 2005 was 68 years, up from 65 in 1990. For sub-Saharan Africa, the figure in 2005 was 47 years, down from 49 in 1990. This is not a healthy situation.

This audience will be particularly interested in Africa's educational development. Again, sub-Saharan Africa compares poorly with the rest of the world. Using figures provided by UNESCO, the global primary school completion rate in 2005 was 85 percent. For sub-Saharan Africa it was only 58 percent. The good news is that sub-Saharan Africa raised its primary school completion rate from 50 percent in 1991. The global literacy rate for adult males in 2006 was 87 percent and for females 77 percent. For persons living in sub-Saharan Africa, the comparable figures were 70 percent and 53 percent, significantly below the global percentages. For all of Africa in 2002, 38 percent of males and 34 percent of females were enrolled in some form of secondary school. Although low compared with the rest of the world, this represented an increase since 1990 of four percentage points for males and seven percentage points for females. The percentage of Africans attending some form of post-secondary school remains in the high single digits but has increased from an estimated 1 percent in 1960.

Africa has a comparative lack of intellectual capital and, with the possible exception of South Africa, is well behind the rest of the world in using and developing cutting edge technology. This situation poses an important obstacle to African development. Increasingly, modern technology and intellectual capital drive prosperity. Until African countries can narrow this gap, they may find themselves permanently lagging other regions.

The United Nations Development Program has prepared an annual Human Development Report since 1990 that combines indicators of life expectancy, educational attainment, and income into a composite Human Development Index. The study assumes that human development is about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests. The report argues that the most basic capabilities for human development are to lead long and healthy lives, to be knowledgeable, to have access to the resources needed for a decent standard of living, and to be able to participate in community activity.

The 2007/2008 Human Development Index, which ranked 177 countries, is instructive. It categorized seventy countries as high in human development. The highest ranked African country was Seychelles at number fifty. Only two other African countries — Libya and Mauritius — reached this top category. Africa placed twenty-six countries, including the four others in North Africa, in the medium development category. The Index identified countries ranked from 156 through 177 as having low human development prospects. Without exception, they were sub-Saharan African countries with Sierra Leone in last place. Of all the rankings that I have cited in these remarks, this one offers perhaps the most discouraging assessment of affluence in sub-Saharan Africa.

So Whither Africa?

Data for the entire continent, but especially sub-Saharan Africa, that document economic growth, human development, and governance suggest, as I stated at the beginning, that any discussion of affluence may be an oxymoron. Looked at country by country, however, there are surprising numbers of exceptions where some African countries are doing very well. More importantly, most of the data indicates there has been progress in many African countries over the past several decades and past global experience suggests that many countries have been able to dig their way out of poverty. Finally, if you include geographical, historical, and cultural factors in the assessment, an evaluation of Africa and affluence is more relevant, although major paradoxes remain.

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