Why Africa is so poor

Eddie Cross says that without property rights there can be
no real progress
Fundamentals for the Future – Property Rights
In 1980 when Zimbabwe became a democratic State after
86 years of government by various white settler dominated
governments, the new government took control of an
economy that had been created without significant overseas
aid, had very little debt, a currency that was worth twice the
value of a US dollar and a population that had the second
highest per capita income in Africa. That this was achieved
despite the country being at war with itself for many years,
operating under mandatory, universal, United Nations
sanctions enforced by the Security Council, was an
astonishing achievement.
In 2008, when the control of the State by Zanu PF was
finally broken by regional intervention and the imposition of
an inclusive government including the MDC, the
Zimbabwean economy was in a sorry state. Despite
receiving many billions of dollars in foreign aid over the
previous 28 years, the currency had totally collapsed and
was worthless. National debt was 240 per cent of GDP –
perhaps the worst in the world and even if all export
receipts had been used to pay back the debt; it would have
taken nearly 8 years to do so. Incomes per capita were the
third lowest in the world, three quarters of the population
was living on aid from the west – mostly the United States
and Europe, nearly all schools and hospitals were closed
and the infrastructure collapsing.
What had gone wrong?
There are many of my former compatriots who would say
"we told you so", arguing on a racist basis that black
Zimbabweans simply could not manage the State properly.
Sure, corruption was and is a problem, sure they made
mistakes in macroeconomic policy, but in my view that was
not the problem. The problem was that the new regime
destroyed property rights in their efforts to perpetuate their
hold on the State and maintain their privileges and
patronage rights.
When I was a small boy, my father became an alcoholic. I
must have been about 5 at the time. He lost his job as a
senior executive with an oil company, lost the house and car
and all his savings. My mother took over with five children
and two years of basic schooling. She taught herself how to
type and write shorthand, got a job as a secretary and
quickly established herself as a personal assistant and
secretary to a senior executive in a local company. We
moved from the most exclusive part of town, to a slum
area made up of houses built in the War to accommodate
air force trainees.
After living in this house rented from the local authority for
some years, the government announced that they were
going to sell these houses to their occupants – the deposit
was what we had been paying as rent and in future the
rentals would go towards paying off the bond. The place
would be ours in five years.
I was only 12 when that happened but I will never forget
how that decision transformed out lives. Overnight, our
community changed, walls went up, gardens were planted,
houses painted, roofs repaired even house extensions and
basic improvements started. In months, the place was
hardly recognizable. The only thing that had changed was
that we now owned the places we lived in. We were still
poor, we still struggled to put food on the table and meet
our bills, but we owned our own home.
If you drive around any town, anywhere, you will be able to
quickly identify where people own their own homes and
where they do not. This principle is universal, operates in all
cultures and places.
Nearly all newly independent States in Africa abolished
freehold rights to property early in their new history. The
reason being that such rights were alien to African cultures,
where people relied on free access to land as the only basis
on which they could make a living and have any long term
security. But such societies did not allow accumulation or
differentiation. The people were all poor together and the
only people, who had any security of title, were the feudal
type tribal leaders and then the leaders who came out of
the bush to claim the right to leadership and control, in
most cases in perpetuity.
Here, because of the constitutional restrictions imposed in
1980, it took many years for this process to manifest itself
and for the first 18 years of independence there were few
changes to the security of tenure and property rights. In the
towns, people built homes and bought and sold them,
people went into business and invested their savings and
time and energy to create businesses, farmers went about
their business and agriculture expanded steadily right up to
the year 2000.
Sure over that whole period the regime became steadily
more corrupt and they violated the fundamental rules of
macroeconomic management, but the economy carried the
burden and there was a slow but steady improvement in life
for most people. Then came the challenge to the control of
the State, this time from an unexpected quarter and
suddenly the people who came in from the bush to assume
control in 1980, felt threatened. They then attacked what
had been the basis of the fragile stability and growth over
the previous century – property rights. The reason – the
people who lived on the farms were just too independent
and held the balance of power between the towns (where
secure property rights prevailed) and the communal areas
where there were no property rights and feudal political
structures prevailed.
The problem was that when you attack such fundamental
rights you undermine those rights throughout the economy.
The net effect was not just the collapse of agriculture, but
the entire economy. Once they did that, the whole edifice
came tumbling down, the consequences of living for years
on credit and beyond their means came home to roost,
business took steps to protect themselves and the
productive elements in our society looked for greener
pastures. Suddenly, in a mere 7 years, we were a basket
case.
What made Rhodesia such a resilient and self sufficient
place was the issue of ownership. It is the only explanation
for why farmers, living in isolated areas, were able to put up
with the pressures of the war, sanctions and the real
sacrifices that had to be made. They were defending their
homes and families. But in an urban context, even though
the relationship is more complex, it is the same and if that
is threatened then everything else is vulnerable. This is why
indigenisation is such a threat to all of us. In Zambia, the
Mulungushi declaration by Kenneth Kaunda (essentially the
same thing as indigenisation) stopped the Zambian
economy in its tracks and there was no significant growth in
that country for the next 20 years.
Property rights are fundamental to economic growth and
stability. They are also the very foundation of democracies
and not just in Europe or America, but wherever men and
women choose to make a place their home.
Eddie Cross is MDC MP for Bulawayo South. This article first
appeared on his website www.eddiecross.africanherd.com

Source: politicsweb.co.za/politicsweb/view/politicsweb/en/page72308?oid=337198&sn=Marketingweb+detail&pid=90389

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