The Economic Community of West African States and the African Union should be commended on putting pressure on Togo’s coup-installed Faure Gnassingbe to resign. A spokesman for Olusegun Obasanjo, chairman of the Africa Union and Nigeria’s president, said:
What happened in Togo was a coup d’etat dressed in the borrowed robes of democracy and we are glad that Faure Gnassingbe has finally realised the folly of what happened.
The success of pressure on Togo might suggest a useful course of action for dealing with Zimbabwe. That country rigged parliamentary elections in 2000 and the presidential election in 2002. Yet, as the Economist points out in this week’s issue, Zimbabwe’s neighbouring states seem to see little evil:
South Africa’s Mr Mbeki… admitted that some of Mr Mugabe’s policies were “incorrect”. But he repeated the ludicrous canard that Zimbabwe’s present conflict is between blacks and whites. In fact, it is between a large black majority who want a fair election, and a small, predatory minority who wish to deny them one.
Togo has shown that the Africa can put its own house in order. Now it needs to do it more consistently.
President Hosni Mubarak of Egypt, who has ruled the country since 1981, has announced that Egypt will have open presidential elections in future. He announced on television today:
The president will be elected through direct, secret balloting, opening the opportunity for political parties to run in the presidential elections and providing guarantees that allow more than one candidate for the people to chose from with their own will.
However, The New York Times reports that some are skeptical:
Egypt’s Parliament has a long history of diluting reforms, critics noted, and may yet announce rules on candidacy that would create the aura of democracy while preventing any real change. Also the president only mentioned amending the constitutional article on how the president is chosen, No. 76, not No. 77, which provides for unlimited terms.
Nevertheless, this does look like a positive move forward and should be welcomed.
The front page of today’s London Metro features a new Oxfam and ActionAid report. The headline is: “Why 80% of global aid goes missing”. Donor bureaucracy and linking aid to the donor country’s industries are particularly criticised. The report, Millstone or Milestone?, makes a number of interesting points.
Oxfam and ActionAid say that 80 official agencies and 35,000 aid transactions a year impose a huge administrative burden on poor countries.
The report attacks the practice of “round-tripping” aid. This is where countries link aid to the purchase of products from companies at home. This wastes aid money and constitutes corporate welfare.
But then the report says that procurement should be biased towards local producers in the recipient countries. These local producers should be decided by the recipients. This would be a mistake. Bringing in overseas expertise is in and of itself highly valuable. Moreover, such a local producer bias would mean many such contracts would be awarded to politically-powerful friends of the state, rather than in an open procurement process. Similarly, the report says aid should use a recipient country’s own administrative infrastructure. There may be a case for this, but where there is a high level of corruption in a country’s civil service, it is not clear that this would be a sensible move.
The report is also mistaken when it says that aid should not be tied to specific projects. Untying aid would lead to more aid being wasted, not less. Tying aid to specific projects has helped move away from money disappearing into Swiss bank accounts or being used for the purchase of arms.
But, criticisms aside, this report is an important contribution to the debate on aid. Intentionally or not, it reinforces the case why trade, rather than aid, is key to improving the living standards of poor countries.
Kenya’s president, Mwai Kibaki, could be removed from office in a no-confidence vote being brought by MPs in the country’s ruling party. It follows the publication of a dossier outlining corruption by Britain’s high commissioner Sir Edward Clay.
The Kenyan roads minister has called for corrupt government ministers to be sacked. But the lands minister, Amos Kimunya, has called for Sir Edward Clay to be arrested: “The fact is that what he says about corruption is based on… information that is corruptly obtained. He should be ‘taken in’ for corruption. He uses information… released unofficially and then says he is a crusader against corruption.”
I’m an optimist about sub-Saharan Africa. There is no reason why Africa cannot be as rich and prosperous as the rich as the West, and I believe that one day it will be. But corruption is a factor holding back its development. That is why it is so essential that African leaders work hard to eradicate it.
If a campaign group argued that the UK’s industries and utilities ought to be under state ownership, no one would take them seriously. The empirical evidence of privatisation in the UK is that it has been overwhelmingly successful. Telecoms, cars, gas, electricity and water et al have all improved as a result. The only really contentious privatisation is rail, yet even the Labour government - which originally opposed the privatisation - remains committed to the principle of private rail operating companies, and has itself privatised the infrastructure of the London Underground system.
With state ownership firmly off the agenda in the UK, activists now try and argue for state ownership in developing countries. They pose as defenders of the poor, but their policies are profoundly anti-poor.
They argue for example that water is a human right, and that therefore the state should own each country’s water provision. Yet state ownership of water - which in the UK led to poor purity standards and little investment in infrastructure - is truly pernicious in poor countries. It means that access to piped, running water is often limited to relatively wealthy, politically-important groups, and the price of such water is set below cost, making it financially difficult to expand to a more universal service. From an egalitarian perspective, water privatisation should be supported because it provides the incentive to expand and increase access to water, and depoliticises the allocation of water.
Ideological opposition to water privatisation is not in the interests of the world’s poor.
Royal Mail, Britain’s state-owned postal service, is to lose its legal monopoly on the delivery of letters from January 2006. Currently, Royal Mail faces competition on letters if they are sent in batches 4000 or more. Now any quantity of mail will be legally allowed to be delivered by a competing firm. The liberalization follows on from the success of similar measures in New Zealand and Sweden.
Trade unions are livid. Billy Hayes, general secretary of the Communication Workers’ Union, said that: “The Dutch and German post offices in particular must be rubbing their hands in glee at this ill-advised and regrettable decision.”
Hayes suggests an often-argued point: it is unfair to liberalise your markets until others do the same.
Should the British therefore protect their postal service until others agree also to liberalise? The British could do that, but it would not be in their interest to do so. Liberalising the postal service will bring in new ideas from other operators. It will reduce pricing for consumers, and lower costs for business. It will force the monolith that is Royal Mail to modernise. This is good for Britain. Since the British benefit regardless of what other countries do, it is worth doing regardless.
Mark Hart, a Rector in the Church of England, comes clean in today’s Times. He says: “I confess. I believe in free trade.” Good on him.
It is deeply worrying that Britain’s churches have been captured by economic illiteracy. Sunday service after Sunday service promotes economic ideas that do not work, like the need for poor countries to keep their tariffs, or for “fair trade”. These ideas commonly get called “Christian economics”, as though any other view is anti-Christian. Dissent is not exactly easy in a church setting, and so supporters of free trade never voice an alternative perspective.
Hart says:
To imagine that the Church has a special revelation that enables it to cut through these complex issues is like expecting the Met Office to forecast the date of the Second Coming. The Church should not so casually claim Christ’s authority to adopt a corporate position which may be proved wrong, while excluding faithful dissenters.
Cambodia’s government has come under fire from World Bank president James Wolfenson. He said that the country’s economic future depends upon its ability to stamp out corruption.
According to a report in the Financial Times:
Prime Minister Hun Sen, the long ruling strongman, re-affirmed that he intended to cut the excessive red tape, and improve the country’s governance to make Cambodia an attractive investment destination.
But Mr Hun Sen, who has made similar sweeping declarations before, has so far taken little convincing action to tackle the deeply entrenched culture of official corruption by poorly paid civil servants, who have come to depend on shake-downs of business to supplement their meager official wages.
Cambodia’s textile industry provides the country with $2bn in exports. Quotas on textiles were lifted in December 2004. As a result, over the coming years, Cambodia is likely to lose much of this trade to countries like China. Cambodia’s ability to progress is held back by corruption, which discourages inward investment and makes it difficult for local entrepreneurship to thrive. Corruption increases prices, making the population worse off, and leads to worse public services.
President Thabo Mbeki of South Africa wants greater liberalisation of his country’s telecoms markets:
Bold steps have been taken further to liberalise the telecommunications industry. We believe that the unacceptable situation in which some of our fixed line rates are 10 times those of developed (OECD) countries will soon become a thing of the past. We also hope that the delays in setting up the Second National Operator, arising from legal processes which are beyond government’s control, will be resolved in due course, and as soon as possible.
He’s right. Liberalisation is good. It reduces prices for consumers and gives the poorest greater access to products and services.
According to today’s Sunday Times (London), the British High Commissioner to Kenya, Sir Edward Clay, has provoked a row with the Kenyan government after attacking the “massive looting” of public funds in Kenya. The country’s foreign minister, Chiracu Ali Mwakwere, rejected the allegations, saying: Sir Edward “was talking nonsense,” and suggesting that Sir Edward had drunk too much.
Sir Edward said that Kenyan corruption “amounted to vomit, not just on the shoes on donors but also all over the shoes of Kenyans… and the feet of those who cannot afford shoes.” The Sunday Times says he handed authorities a dossier of 20 dubious contracts and allegedly crooked procurement ventures. The paper says that in the last three years, it has been estimated that nearly a fifth of the Kenyan government’s budget has been lost to corruption.