What Piketty has to say about Africa

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Currently, there is a lot of attention in Western media for ‘Capital in the 21st Century’, the study by French economist Thomas Piketty. The book documents the evolution of wealth, mainly in France, Britain and the U.S. since the eighteenth century. It contains strong pleas, first for disclosure of information on privately-held fortunes and second, for a modest but progressive worldwide tax on such fortunes. Without that, he argues, inequality in the world will rise to undesirable and unsustainable levels.

Piketty’s focus is not on Africa, far from it, but still he offers a number of important insights that, in my view, are highly relevant for Africa today. In this post, I will highlight the ones that I think are key.

0. Africa is able to catch up

Piketty shows that growth in the developed world is likely to slow down considerably, both for demographic and for technological reasons. So – there is no reason why Africa should remain the poorest continent forever. On the contrary – in the long run, it is likely that Africa will catch up with the rest of the world.

1. Foreign direct investment is not the answer

Piketty points out that there is no evidence that any of the countries that caught up with the West (Korea) or are in the process of catching up (China) did so thanks to foreign investment. All of them achieved this mainly through investing national savings in their national economies. If this doesn’t happen, the current trend, namely that more money flows out of Africa than flows into it, will only be reinforced. In other words, there is a real danger that Europeans and Chinese will own Africa and Africans will work for their profit. So, just as others have argued – a call to arms for African investors and African capitalism!

2. Education is the answer

What, in very general terms, determines the level of productivity of a country? Piketty shows that this is determined mainly by two factors: on the one hand the population growth (or lack of it). That’s simple: more people can produce more. The other factor is the general educational and skills level of a population. Better educated people can produce more.

Clearly, when looking at African reality, there can be some problems with this. The British NHS owes a debt of gratitude to the Nigerian tax payers for educating all those fine doctors and nurses at work in UK hospitals. So education without employment is a waste.

Still, the general lesson is easy to understand. Investment in human capital is key. In order for Africa to be able to productively develop its own resources it should first develop that greatest resource of them all – the African brain. In Piketty’s words: “the poor catch up with rich to the extent that they achieve the same level of technological know-how, skill and education, nog by becoming type property of the wealthy.” But what is needed to achieve that? That brings up the next point:

3. Credible, democratic institutions are essential

Piketty states that diffusion of knowledge is “closely associated with the achievement of legitimate and efficient government.” Now – there’s a challenge! It seems clear from this that the issue of good government cannot be left aside, as some have argued. Legitimate and efficient government is a precondition for being able to achieve a good education system, which is key if Africa is ever to be able to stand on its own feet. In this sense, it is sad that the situation in some of the most resource-rich countries in Africa is also among the most desperate. Recent blog posts have given qualifications to African leaders that I am too polite to repeat, but that leave little to imagination.

A case in point is Nigeria. The continuing plight of the kidnapped girls must lead to increasing indignation and frustration about the cynical attitude of the Nigerian government and its blatant incapacity to guarantee even the most basic rights of its citizens. Everybody knows that being a Nigerian politician or government official is a good thing – for the pocket of the person himself, and for his or her extended family and clan. Not for any wider group of people. Not for the nation as a whole.

As long as this is the case, there is little hope for Africa. But what causes this situation? Is it because there is something genetically wrong with Africans? Is this the Africanism that Ejugbo is seeking? Clearly, there must be a different answer. Finding that answer is crucial – for if Piketty is correct, then without good governance, Africa – in spite of all its potential – will never succeed.

My thesis is that a country like Nigeria (and other countries as well) can never succeed. In Europe, a century of wars has led to countries that are much more homogeneous than almost any African country, barring one or two exceptions.

Thus, the problem is not the African gene pool or African philosophy – it is the design of countries itself (in which Africans were hardly involved, if at all) that is the problem. But of course, changing the makeup of countries has proven to be very difficult. A bloody affair, as the experience in Europe and indeed in Nigeria has shown. Perhaps that is why people are trying to avoid to pose the problem in these terms. However, wouldn’t it be great if somewhere in Africa, it could be shown that a transition to more sustainable nation states could be achieved in a peaceful way? To me – and I feel supported by the work of Piketty – it is the only way.

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Bert – A Dutchman who was trained as a social scientist. He has been active in the environment and development movement in the Netherlands and elsewhere, starting his ‘career’ in the Anti-Apartheid movement. Bert has lived in Kenya for four years and is passionate about anything related to culture and intercultural communications. He is a world citizen with a particular interest in Africa, loved for its diversity and richness.

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