Why Africa Fails: The Case for Growth before Democracy Keynote Address by Fred K.

Muhumuza, PhD Congratulations to Elly for a well written book based on wide rich stock of personal and other documented experiences. The book not only adds to the growing battery of the new thinking about Africa and its development but also provokes one to even think deeper about the subject. The book makes a case to question the thrust of democracy ahead of economic growth in light of stack realities to the contrary in Asia and elsewhere. The main message is not to question the need for democracy but rather its ability to result into the type of leadership that is nationalistic enough to cause growth. The evidence from Sub Saharan Africa (SSA) - the focus of the book - seems to suggest a failure of the current known and practiced forms of democracy to propel a leadership that can create growth, jobs and social development worth the African people. Having been provoked by the book, I was compelled to think even deeper into two critical aspects associated with good leadership namely governance and institutions. In this Keynote, I wish to point out that the failure to promote these two tenets of leadership has had severe ramifications for growth in Africa by providing wrong incentives that have led to plunder and misallocation of the continent's vast physical and human resources. Governance is the exercise of power and decision-making for a group of people. Good governance happens when the authority and its institutions are accountable, effective and efficient in the business of serving the community. Institutions refer to a structure or mechanism governing the behaviour of a set of individuals in the exercise of power and making of decisions. A critical feature of institutions is that they should transcend interests and intentions of individuals by mediating the rules that govern processes and cooperative behaviour. The absence of good governance and, consequentially, institutional rule across the public and private sectors is largely responsible for the current rundown of the global economy. After 9/11 the US Government genuinely wished to revive the economy and promote good housing by lowering interest rates, which caused families to refinance mortgages. Unethical bankers quickly took advantage of weak governance within the banking sector and targeted people who had poor credit rating - subprime borrowers - to create bad loans toxic assets against which they demanded bonuses many times bigger than their salaries. The nice house from the pack of cards came down and along with it, the entire American financial sector, which triggered a global economic avalanche. If bad leadership decisions, poor governance and weak institutional rule could almost collapse the world's biggest and most prosperous economy, what would one expect of SSA, which had to build its plane from scratch before trying to fly it? America has responded by introducing new regulations that hold management and auditors responsible for any misreporting of fraudulent behaviour along with the Board of Management. The message is to break elite capture of institutions by going beyond the crimes committed to include bad intentions and individual benefits.

Good development policies that worked well elsewhere have been betrayed by bad intentions when it comes to Africa. Poor leadership has often hidden behind weak institutions to create conditions of elite capture of

the development process where there is no difference between the government official and the private entity he is contracting or supervising. The book provides good examples of this behaviour. Breaking such a cycle calls for new legislations as in the US to broaden corporate responsibility and punishment for the offending parties. In a situation where the rule of law has become the rule of lawyers, no pun intended for our Rt. Hon Guest of Honour, the remedy may involve shelving of some of the democratic rights and practices. A controversial transition involving what may appear abuse of human rights will have to be invoked along the lines of what economists call the Razor-Edge problem. One only needs to look closely to realise that these are not necessarily human rights but rather 'criminal rights' and hence 'human wrongs'. Uganda has specifically had debates on whether some suspects should be granted bail, elimination of the death sentence, and now the need to attach property of convicted thieves including what may be hidden under names of relatives and close associates. The whole world got saddened by Lanza who killed 20 children aged 6 and 7 years and their teachers. However, we do not seem to extrapolate such criminal acts to individual leaders in African who are responsible for deaths of millions of children every day by negating growth and associated benefits through acts of robbery and bad leadership.

Unfortunately, the process of separating criminals from genuine humans is so involving that society ends up with Type 2 statistical error largely because lawyers and not the law are in charge. In statistics, Type I error is the incorrect rejection of a true null/initial hypothesis, while Type II error is the failure to reject a false null hypothesis. Type I error is when one concludes that a person is guilty when he is not. A type II error is a false negative when a system fails to convict a criminal when he is actually in the dock. The task of kick-starting growth processes in Africa should start by freeing public institutions from elite capture that is mainly portrayed through covert rather than overt acts. A democratic process is not able to preside over such a process, which is akin to a judge seeking to resolve a case of murder versus manslaughter or worse still - self-defence. The debate with the powerful gun lobby in America is not likely to yield justice for relatives of the 20 murdered children and their teachers as well as future safety for many more. Australia's ban of rifles after 1996 yielded concrete results. Africa needs to be freed from African criminals and their accomplices using unconventional means. Note that the Arab spring, which has been much talked about in the last two years is yet to deliver anything tangible to the masses! Today, Africa is more exploited and has more deaths from preventable causes than in the colonial days when drugs and means were scarce. Bad leadership has yielded poor policies and practices that locals are extrapolating the foreign exploitation by banking their loot abroad, consuming more or unnecessary foreign products, which literally translates into the export of jobs. Poor leadership that provides no guarantee for future welfare after retirement has forced populations to make their own pension plans by building homes and secure investments mainly inform or real estate. Good as this may be, it has a negative effect of slowing growth as these secure but low-yielding assets imply dynamic economic inefficiency. This is a situation when severe cuts in current consumption lead to too much saving for the future, which are not invested optimally thereby purging the economic growth processes in two ways. First, reduced aggregate demand lowers current investment opportunities. Second, choice of secure but longer term investments lowers productivity, which, along with innovation, has been responsible for the bulk of growth in Asia.

The above argument links leadership to selection of a unique and relevant development ideology, which was key for Malaysia, South Korea, Singapore and now the BRICs (Brazil, Russia, India & China). None of these countries is democratic in the way Africa purports to be, but they have registered more growth in the last half a century than the western democracies. In fact in the case of the BRICs, there is no single individual leader who can boast of the entire growth span. Instead it is the development ideology and strategy that has been consistent. The lesson is that, longevity in power can only be justified on the basis of having identified and adopted the right development ideology and strategy. Short of that, there is need for a viable democratic process, which, through various iterations of leaders, can result into convergence to the correct development ideology and strategy. The common strand for growth is a good ideology that involves building and empowering institutions that are larger and superior to individual persons and their interests. One country, which has gotten it right, is Germany with their Social Market Economy (SME). In just 50 years, the Germans have been able to build from scratch to establish, perhaps, the most formidable economy in the western world. Germany has not pursued political power backed up by military might but rather economic power that is felt by every individual German citizen. On the contrary, independent Africa has sought more of political power backed by military might and quite often against the very citizens of the country. With a few exceptions of Tanzania versus Idi Amin, ECOMOG interventions, and Uganda versus Al Shabab, the bulk of Africa's military might has been unleashed on citizens for individual political gains. The continent still lack benevolent leaders who build developmental not predatory states where unethical greedy elites capture state power for what such power can benefit them. Even negative acts based on ethnicity or tribal differences have been dwarfed by acts of brigades based on elite networks. With the correct ideology and good leadership, Elites can be tapped to spur growth and development through their intellectual analytical and planning abilities. Much as growth may not entirely be Rocket Science, it requires discipline, detail, precision and preciseness of Rocket Scientists. Quite often science involves no democracy but facts. Let me be a bit controversial to emphasize my point. Advocating for an extra UGX 120 billion for maternal health is neither economic nor social development policy. Similarly, an extra UGX 60 billion for school feeding program is not good policy. None of these leads to growth. However, good economic development policy is seeking an extra UGX 6 billion for training of Midwives and nurses; UGX 10 billion for equipping Health Centre (HC) Ills with delivery wards; j UGX 4 billion for Mama kits; UGX 10 billion for equipping HC IVs with functional theatres and Ambulances; UGX 40 billion for salary enhancement; and UGX 70 billion for community outreach and public inspections. Good policy must be precise in terms of activities and associated budgets. Else, it is a recipe for corruption. The lack of roads, energy, medicines, social infrastructure facilities, and viable agriculture in Africa, is not entirely a result of lack of resources. Nigeria has oil but still pays subsidies to oil distribution companies the stoppage of which led to kidnapping of the elderly mother of the Minister of Finance!! Uganda has oil and

the debate is still more political and emotional, mainly because of lack of trust that breeds suspicion. When the oil debate goes to technical, economic and business aspects, Uganda will begin to pay subsidies to the oil companies. In case anyone has doubts about this, let him refer the lawyers and not the law. To conclude, I wish to note that, democratic leadership involves ceding of power to the few and hence carries responsibility of actions, results and accountability for both. However, ceding of power to those without morals and integrity is a recipe for predatory behaviour and prolonged underdevelopment that has characterized SSA for much of its independent life. It is a duty of the majority to demand accountability from the delegated or use their power to remove them. However, where those in power have undermined social morals and destroyed institutions, democratic processes cannot guarantee convergence to desired goals of growth. The solution comes in two ways: the long- and short-term. The long-term requires regeneration of morals and personal integrity. The short-term relate to non-conventional laws and means I have already explained which will break current elite networks within and outside Africa. The greatest need for Africa today, jobs aside as these can only be through renewed growth, is an inspiring leadership that promotes the highest level of governance for human dignity. African youth and old deserve conditions that enable them to formulate and refine their dreams and then pursue them with equal fairness and justice. The rulers must provide leadership that offers, not generalities, but scientific precise solutions with the accuracy of a Surgeon, and be able to shift through the roughage of lies to pick out the grains of truth like a formidable judge. In all, the leaders must seek wisdom like King Solomon of they will not be worth the flesh over their bones.