Last Saturday Nigeria’s presidential elections were widely criticized for irregularities and were seen as a setback for African democracy [“Africa’s Crisis of Democracy,” by Lydia Polgreen, New York Times, 23 April 2007].
“Nigeria’s troubled presidential election, which came under fire … from local and international observers and was rejected by two leading opposition candidates, represents a significant setback for democracy in sub-Saharan Africa at a time when voters in countries across the continent are becoming more disillusioned with the way democracy is practiced. Analysts said the Nigerian vote was the starkest example of a worrying trend — even as African countries hold more elections, many of their citizens are steadily losing confidence in their democracies. … African voters are losing patience with faulty elections that often exclude popular candidates and are marred by serious irregularities, according to the Afrobarometer survey, published last year, which sampled voters in 18 countries, based on interviews with 1,200 to 2,400 people per country. While 6 in 10 Africans said democracy was preferable to any other form of government, according to the survey, satisfaction with democracy dipped to 45 percent from 58 percent in 2001.”
If Nigeria didn’t have oil, perhaps circumstances there wouldn’t be drawing so much attention. But it does have oil, and until recently it had hope as well. Nigeria is viewed as the lynchpin for democracy and prosperity in sub-Saharan African.
“Nigeria [is] Africa’s most populous and second richest country. … In 2000, in the euphoric aftermath of Nigeria’s transition from a long spell of military rule to democracy, 84 percent of Nigerians said that they were satisfied with democracy as practiced in Nigeria, according to the Afrobarometer survey.”
Recent elections were considered a litmus test for how things are going. The result: Things are not going too well.
“Twenty-five candidates vied to replace the departing president in the … vote, the first time in Nigeria’s history that power will be transferred between two civilian administrations. But the election was marred by chaos, violence and fraud.”
Afrobarometer reports that only Zimbabwe, led by the infamous Robert Mugabe, now has a lower opinion of democracy than Nigeria. In less than five years, satisfaction with the political situation has plummeted from 84 to 25 percent. Polgreen reports that politics elsewhere in sub-Saharan African present a mixed picture:
“Freedom House, an organization that monitors the spread of democracy and free speech, said in a report last year that the overall trends for African democracy were mixed. ‘Sub-Saharan Africa in 2006 presents at the same time some of the most promising examples of new democracies,’ the report said. It also has ‘some of the most disheartening examples of political stagnation, democratic backsliding, and state failure.’ For every successful election, like those held this year in once-troubled countries like Mauritania and Democratic Republic of Congo, there have been elections in countries that seemed on the road to consolidating democracy but then swerved, like Gambia, Uganda, Ethiopia and Zambia. There are also countries that hold regular elections, but they are so flawed they cannot really be called democratic, like those in Guinea, Zimbabwe and Gabon.”
Violent elections are not the only problems troubling Nigeria. Futurists like Peter Schwartz of the Global Business Network predict that Nigeria is headed for a violent civil war between the Muslim north and Christian south. That internecine conflict will have a dramatic effect on Nigerian oil supplies [see “Growing Unrest Posing a Threat to Nigerian Oil,” by Jad Mouawad, New York Times, 21 April 2007]. Polgreen notes:
“Nigeria, a nation of 140 million people divided among 250 ethnic groups and two major religions, Islam and Christianity, all of whom live in a space twice the size of California. It is rich in oil, exporting about two million barrels a day, but the riches that oil brings have not translated into meaningful development. In Kano, a once vibrant manufacturing center, the contradictions of Nigeria’s eight-year-old experiment with elected government are vividly on display. Far from building a unified country aimed at the greatest good for all, Nigeria has instead become an every-man-for-himself nation. In Kano’s Government Residential Area, where the wealthy live, each household is its own power and water company. Plastic water tanks on spidery legs tower over the tiled roofs, each fed by an electric pump sucking water from a private well. The electric company provides light just a few hours a day, so the air is thick with the belching diesel smoke of a thousand generators, clattering away in miserable, endless unison. The poor must manage however they can.”
In that description lies both the problem and potential solution. Nigeria’s poor chant the mantra: No job! No food! No light! No freedom! No election!
New York Times columnist Tom Friedman thinks he knows how to turn that around [“‘Patient’ Capital for an Africa that Can’t Wait,” 20 April 2007]. Friedman begins his column describing a market scene in Karatu,Tanzania, where stacks of used clothing is being sold by local entrepreneurs.
“Scenes like this remind you that Africa is neither all tragedy nor all renaissance. It is a diverse continent that’s struggling to find its way in the global economy and has both of these extremes, but is much more in a middle place that looks like that field in Karatu: a wild, unregulated, informal, individual brand of capitalism, which we need to channel into formal companies that can grow and scale up, even with corrupt governance.”
Friedman insists, however, that small indigenous entrepreneurs aren’t the key to prosperity for Africa because there are not enough of them. He writes:
“Africa needs many things, but most of all it needs capitalists who can start and run legal companies. More Bill Gateses, fewer foundations. People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts. Whenever you read about capital flowing into Africa, though, it tends to be from big lenders like the World Bank, which have very strict criteria and work on big projects, or from microfinanciers, giving out $50 to a woman to buy a sewing machine. Microfinance has a role, but many people don’t want the pressure of being an entrepreneur. They want the stability and prosperity of a job created by capitalist risk takers and innovators. See India. In some ways what Africa needs most today is more ‘patient’ capital to spur its would-be capitalists. Patient capital has all the discipline of venture capital — demanding a return, and therefore rigor in how it is deployed — but expecting a return that is more in the 5 to 10 percent range, rather than the 35 percent that venture capitalists look for, and with a longer payback period.”
For more on microfinancing and how you can get involved, see my recent post on Financing the Poor. Friedman’s point is that most projects backed by microloans are for individuals who will rarely get wealthy enough to get beyond being self-employed to become employers. He believes that foreign direct investment is the key to prosperity and he provides an example:
“A good example of what happens when you combine patient capital, talent and innovation in Africa is the Kenyan company Advanced Bio-Extracts (ABE), headed by Patrick Henfrey. He and his partners put together a fascinating group of both white and black African farmers and scientists to build the first company in Africa to cultivate the green leafy plant artemisia, often called sweet wormwood, and transform it into pharmaceutical grade artemisinin — a botanical extract that is the key ingredient in a new generation of low-cost, effective malaria treatments commonly known as artemisinin-based combination therapies (ACTs). Malaria still kills nearly one million people in Africa every year, more than H.I.V.-AIDS. [See my post Malaria Fighting Mosquitoes] From its factory outside Nairobi, ABE is not only processing the feedstock for the drug, but has also contracted with 7,000 farmers, most with small farms, to grow artemisia in Kenya, Tanzania and Uganda. The crop gives farmers four times the financial yield of corn.”
Friedman reports that, in 18 months, ABE hired 160 people to interface with the 7000 farmers and help manufacture artemisia. This kind of success, however, needs to be repeated thousands and thousands of times across Africa. ABE’s approach embraces many of the principles I have been touting for Development-in-a-Box™. It involves a community of practice. In this case, farmers, health professionals, and pharmaceutical manufacturers. ABE had a good financial model and used best practices. Those involved were going to make profits which could sustain the enterprise. Just as importantly, it is training those involved to run the program. ABE’s future does not rely on outsiders with special skills and knowledge in order to succeed. Patient capital is a term that I’m adding to my development lexicon.