With Freedom and Lower Taxation, Africa's Potential Is Vast
Much of Africa is growing dynamically today. Political and market liberalization are revitalizing and energizing the continent. There is a new generation of leaders implementing democratic reforms, expanding economic growth, and unleashing the human spirit that will help bring greater stability, prosperity, and democracy to African nations.
However, Africa's progress has not reached enough people. Too many are unemployed, undereducated, and living in poverty. While political stability has improved for much of the continent, some nations are still plagued by political unrest. And though economic growth is healthy, development is slowed by political and economic barriers hindering Africans from reaching their fullest potential.
Official thinking in the US about Africa has undergone a major shift. While economic aid and humanitarian assistance remain essential tools in coping with Africa's inevitable crises, policymakers have chosen to utilize other methods to encourage and support economic and political reforms under way. For example, the proposed African Growth and Opportunity Bill - championed by Reps. Philip Crane (R) of Illinois, Charles Rangel (D) of New York, Jim McDermott (D) of Washington, and Donald Payne (D) of New Jersey - encourages African development, self-reliance, and free trade.
But it is not our wisdom, or the limited wisdom of any leader, that will bring prosperity to Africa. It will be the people themselves. And, in order for people to flourish and prosper, they must be free. The most important tool, the essential tool, for building and developing any economy is freedom - not only market freedom but civil and religious freedom as well.
I can't help but notice some common themes in the policy mix of African countries enjoying strong economic growth: (1) reasonable tax rates, particularly on personal incomes, that allow individual Africans to flourish and prosper; (2) stable monetary and exchange-rate policies; and (3) balanced policies on foreign investment with a focus on privatization and economic growth. Other African nations must be encouraged to follow in the footsteps of these countries.
However, a somewhat more ambitious approach may be possible. The initiative can come from Africa, and in a great sense it already has. The East African Community, with its progress toward tariff-free trade and, soon, even a common passport, is only one example. In the south of Africa, the Common Market of Eastern and South Africa and the Economic Community of Western African States have formed other trading blocs. I am hopeful that we could soon see one great common market for Africa, trading openly and freely with the whole developed world.
But to truly bring freedom and free markets to Africa, we must first break away from the so-called conventional wisdom of the "international development bureaucracies" and Western lending institutions, particularly the International Monetary Fund (IMF), that impose austerity and "conditionality" measures.
The mantra of these development bureaucracies for helping developing nations is incredibly destructive. It goes something like this: People are so poor, so uneducated, so lacking in resources, so primitive in their outlook that recovery and development, if possible at all, will be painful, hard to endure, and of such duration that not much can be done except to provide massive injections of government assistance and forcible redistribution of wealth. They would have countries preoccupy themselves with reducing their debt at the same time they entice them to become more indebted by encouraging the maintenance of excessively high tax rates and soft-money policies.
AFRICA will not succeed simply because America sets up more development banks. Nor does it require government-to-government grants and massive infusions of Marshall-style aid. It certainly does not need industrial policies to direct economic activity - that is the role of markets. What Africa does need is trade and investment, not just aid.
If institutions like the World Bank and the IMF want to do something constructive, why don't they loan money to countries to bridge over temporary deficits that might arise from slashing excessive tax rates and tariffs? It should not be insuperably difficult for them to revise their policies to favor tax relief, stable money, and other pro-growth measures.
Africa has the greatest potential in the world for increases in productivity. Though a quarter century of colonial policies retarded its potential, the barriers to development are being lifted. The same principles that brought prosperity to America, post-World War II Western Europe, Asia, and other democratic nations will work for Africa as well. We can all look forward, in the not-so-distant-future, to an Africa that is brimming with human endeavor, opportunity, abundance, and hope.
* Jack Kemp, a former congressman and the 1996 Republican vice-presidential nominee, recently addressed the African-American Summit in Harare, Zimbabwe. This article is excerpted from his speech.