Title: Emerging Africa: How 17 Countries Are Leading the Way
Author: Steven Radelet
Scope: 3 stars
Readability: 4 stars
My personal rating: 5 stars
See more on my book rating system.

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Topic of Book

Radelet describes how 17 African countries have escaped the poverty trap and showed robust economic growth over the last 25 years.

My Comments

Most Westerners believe that Sub-Saharan Africa is trapped in a state of desperate poverty, wars and famine. In 1990, this was a fairly accurate belief, but this book shows that this belief is no longer true.

Key Take-aways

• About half of all Sub-Saharan nations have seen dramatic changes over the past 25 years. This follows thousands of years of stagnation.
• The changes include strong economic growth, democratic governance, falling poverty, lower levels of debt, greater economic and political freedom, better health, better education and slowing population growth rates.
• Foreign aid may play some role, but it is mainly due to internal changes.

Important Quotes from Book

There’s good news out of Africa. Not all of Africa. But from a large part of Africa that quietly, with little fanfare, is on the move. Seventeen emerging African countries are putting behind them the conflict, stagnation, and dictatorships of the past. Since the mid-1990s—for fifteen years—they have achieved steady economic growth, deepening democracy, stronger leadership, and falling poverty. Six additional African countries are showing signs of following their lead. The old negative stereotype of sub-Saharan Africa don’t apply to these countries. Not anymore.

For too long, politicians, the media, academic researchers, and casual commentators have blended together all the countries of sub-Saharan Africa (SSA), treating the countries of the region as a single entity, and sometimes even as a single country. But this aggregate continent-wide approach is overdone.

While the countries across the region share some common characteristics, one of the clearest patterns since the mid-1990s has been significant divergence in economic performance and political change.

This book…is about a group of 17 emerging African countries comprising more than 300 million people that since the mid- 1990s have begun to undergo dramatic changes in economic growth, poverty reduction, and political accountability. Another six countries have seen promising but less dramatic or less sustained change, a group I refer to as the threshold countries. Together these 23 countries account for nearly half of SSA’s 48 countries.

I purposely exclude oil exporters from the group even though several have grown rapidly in recent years because the underlying dynamics in oil-exporting countries are very different and the foundations for sustained progress are far more open to question. The emerging countries are not defined by commodity booms.

Emerging Countries:

• Botswana
• Burkina Faso
• Cape Verde
• Ethiopia
• Ghana
• Lesotho
• Mali
• Mauritius
• Mozambique
• Namibia
• Rwanda
• São Tomé and Príncipe
• Seychelles
• South Africa
• Tanzania
• Uganda
• Zambia

Threshold Countries:

• Benin
• Liberia
• Kenya
• Malawi
• Senegal
• Sierra Leone

Consider some of the key changes in these countries:

Economic growth rates in each country have been at least 2 percent per capita since 1996, and have averaged 3.2 percent per capita, equivalent to overall GDP growth of more than 5 percent per year.

The share of people living below the poverty line (income of US$1.25/ day) dropped from 59 percent in 1993 to 48 percent by 2005—a huge drop for a 12-year period.

Trade and investment have more than doubled, and financial returns on investment are much higher.

School enrollment, school completion, and literacy rates are all increasing. Education levels for girls, in particular, are rising from their once abysmally low levels.

Health indicators are generally improving, with the exceptions of countries badly affected by the HIV/AIDS pandemic. For example, child mortality (deaths under five years old) averaged 134 per 1,000 in 1985 in these 17 countries; today it averages less than 102, meaning that 32 more children out of every 1,000 are living to see their fifth birthday.

Both population growth and fertility rates have begun to decline.

Consider the economic turnaround in the emerging countries: for two decades between 1975 and 1995, they recorded economic growth per capita of essentially zero. But between 1996 and 2008, they achieved growth per capita averaging 3.2 percent per year, powering a full 50 percent increase in average incomes in just 13 years. Think of that change for a moment: from 20 years of no growth in income to 13 years during which average incomes increased by half. This is a huge turnaround. Something has changed.

Critically, there are equally significant changes in political systems and governance. Across Africa, democracies are replacing dictatorships. The era of the prototypical African “big man” is not quite over, but it is drawing to a close.

At least five fundamental changes are at work. The first two—the rise of more democratic and accountable governments and the introduction of more sensible economic policies—together ignited the turnaround in the 1990s and have helped sustain it over time. The next three—the end of the debt crisis and changing relationships with the international community, the spread of new technologies, and the emergence of a new generation of public and private leaders—began to kick in after the recovery had begun, but they have been critical to continuing it over time.

The rise of more democratic and accountable governments. Africa’s growth and development tragedy has been, in large part, a failure of leadership. Too many African leaders have ruled by intimidation, violence, and brute force. But in the 1980s, as the economic crisis deepened, many authoritarian governments lost both the last shards of their legitimacy and the economic and financial resources they needed to maintain control. Protestors began to call for economic and political change, and governments lost the backing of key supporters. With the end of the Cold War and apartheid in the early 1990s, authoritarian leaders increasingly were forced to give way to democratically elected governments.

The implementation of more sensible economic policies. Twenty years ago, nearly all African economies were effectively bankrupt, with large budget deficits, double-digit inflation, growing debt burdens, thriving black markets, shortages of basic commodities, and rising poverty. Economic mismanagement and the heavy hand of the state scared off investors, generated capital flight, and led to stagnation and rising poverty.

But in the late 1980s, economic policies began to change in the emerging countries, and they have continued to gradually change over time. Today they bear little resemblance to the past. Black markets are but a distant memory. Budget and trade deficits are more sustainable. The business environment is friendlier, and trade and investment barriers have been reduced. Marketing boards have largely disappeared, and there is a better balance between the state and the private sector. As with governance, the changes in economic policy are far from perfect, but they are vastly improved from 20 years ago and are central to sustaining growth and development in the future.

It was the interplay between economic reform and political change that ignited the turnaround.

The winds of global change gave the final push: as the Cold War and apartheid ended, strong forms of socialism and authoritarian control fell into disrepute. People across Africa were fed up with the old systems. Forced to hold elections, most governments were replaced by more pluralistic and democratic regimes.

The research team identified four syndromes that were at the core of Africa’s poor economic performance (described in more detail in chapter 4). Three were directly related to economic policy: heavy-handed control regimes, redistribution systems that rewarded political allies and ethnic groups at the expense of economic growth, and heavy borrowing and asset stripping that sacrificed future income for present gain. (The fourth syndrome was state breakdown and political instability.) Notice the sharp reduction in syndromes in the emerging countries beginning in the mid-1980s.

As the antigrowth syndromes were removed and the political changes stabilized in the mid-1990s, economic growth began to accelerate, and corresponding improvements in a wide variety of other economic, social, and poverty indicators came in to play. By 2008, incomes per capita had increased by an average of 50 percent.

The spread of new technologies that are creating new opportunities for business and political accountability. Cell phones are becoming ubiquitous across Africa, and internet access is growing quickly. It seems as though there is a cell phone in every hand and an internet cafe on every street corner, and they have an enormously wide range of applications.

The emergence of a new generation of policymakers, activists, and business leaders. A new generation of political, social, and economic leaders is emerging across Africa. They are Africans to the core, but with a globalized outlook that comes through the age of the internet and easy air travel that has allowed many to live and attend school abroad and exposed them to international ideas. They are savvy, sharp, and entrepreneurial, capable of combining the best of both worlds.

In the 15-year period from 1980 to 1995, for example, only four non-oil-exporting countries exceeded 2 percent growth: Botswana, Cape Verde, Mauritius, and Swaziland. Even between 1960 and 1977, fewer than 10 countries achieved this mark. With 17 countries now exceeding 2 percent growth, something has clearly changed in a major way since the mid-1990s.

One way to look at the turnaround in the newer emerging countries is to recognize that they began to follow the examples from Botswana and Mauritius of good governance and more sensible economic policies and are now reaping the benefits.

A key reason that the benefits of recent growth have been distributed relatively equitably in many of the emerging countries is that agriculture has been a big part of the turnaround. Agricultural production has been growing at an annual average rate of more than 3.5 percent for 20 years across the emerging countries, meaning that total agricultural production has nearly doubled since 1988 (Figure 2.4). Food production, which for many years grew below population growth rates, is now growing faster than the population, leading to an important increase in food production per capita.

Strong political and economic controls enabled many governments to maintain power for years, and in some cases decades, but these systems contained the seeds of their own ultimate destruction. The economic dynamics proved unsustainable, especially following the global oil shocks of the mid-1970s. As the world economy stalled, budget and trade deficits ballooned across SSA, investment declined, and capital fled. To finance the deficits, governments borrowed from abroad and printed money at home, generating both large debts and rising inflation. But once Mexico defaulted on its debts in August 1982, bank credit for African countries almost completely disappeared.

By the mid-1980s, many governments were running out of room to maneuver. Without financing, there was little choice: deficits had to be closed. And this meant painful choices to cut spending, reduce subsidies on food and fuel, cut health and education services, raise taxes, and devalue currencies. Governments were forced to turn to the International Monetary Fund to obtain emergency funding and debt rescheduling in return for adopting stringent reform programs.

But the austerity measures immediately and directly threatened the economic interests of the key beneficiaries of authoritarian rule. Civil servants and union workers saw their pay cut or their jobs disappear. Urban consumers, including the military, watched electricity, food, and fuel prices rise and had to pay steep black-market premiums for scarce foreign currency. Protected businesses lost their subsidies and tariff protection.

As Bates put it, “Authoritarian governments appear to have fallen not because they faced more unrest but because they were unable to respond to it.”7 Many of the very groups that had supported authoritarian governments now turned on them. By the late 1980s, political protests were on the rise.

The discontent was rooted in more than just lost economic benefits for the favored few—it was much more widespread. Basic beliefs, ideas, and opinions were changing as well.9 Increasingly, civic leaders, bankers, economists, religious clergy, business leaders, and others in the intellectual elite began to recognize the failures of the past and to call for political and economic change.

This change is remarkable: in just 20 years, Africa has gone from almost no democracies to nearly half the continent under democratic rule. It is all the more extraordinary because so many of the countries are among the poorest in the world, and it was long thought that democracy wasn’t really feasible for low-income countries… Never before in history have so many low-income countries become democracies in so short a time. Broadly speaking, the shift in economic policies has been a move away from heavy state intervention and toward fairly orthodox economic policies. While the move toward more market-oriented policies was often criticized at the time (and still is), in retrospect it is clear that this shift paid off with much better economic performance.

If you would like to learn more about how nations create economic growth, read my book From Poverty to Progress.