By: Raghav Dagar, SLSH; Edited by: Shagun Khetan
*Disclaimer: This article relies upon and is a critical reappraisal of the 2010 article, ‘Why is Africa Poor?’ by Daron Acemoglu and James A. Robinson.
Why is East Africa growing at a higher rate than other parts of Africa? Why is the Sahel crisis still ongoing after more than a decade? Why is a resource-rich country like DRC still facing a humanitarian crisis? Why does France have military bases in Western Africa, and why is it losing its hold over them? Ongoing developments cannot explain the events. Instead, most of the African continent's issues can be understood only by a historical analysis.
Why has Africa been left behind in the economic boom brought on by outsourcing, while countries like India and China have thrived? Most academics cite reasons like culture, rejection of technology, low agricultural productivity and disease as the most common reasons for such a result. While that is true, Daron Acemoglu and James A. Robinson argue that such a situation exists due to a bigger problem. This problem is that of bad institutions that have not kept up with globalisation, which developed out of colonialism and slavery and were reinforced by Africa’s cultural norms. These institutions can be grouped into political, social and economic. While not explicitly described in their form and manner, they could take similar forms. The political institutions that have failed to develop are those state structures that fight corruption, maintain political stability, enforce laws and form social policies. Social institutions have fallen short of their objectives as they rely on foreign aid to maintain their public agencies and educational systems that support a functioning society. However, most importantly, there has been a failure to develop healthy economic institutions, which include regulatory bodies like central banks, financial institutions like development and commercial banks, and platforms that facilitate the economy, such as stock exchanges and investment agencies.
These institutions are paramount in the modern economy. They can be illustrated within the African context through the lens of two African tribes, the Bushong and the Lele. These two tribes share a common origin, have similar lifestyles, and speak closely related languages. Yet, there is a stark difference: the Lele are poor, and the Bushong are rich. While the adoption of technology was an important factor, the main reason was that the Lele were living in an inefficient social equilibrium. There was no political centralisation of power to form authorities that could demand higher agricultural production, impose a taxation system, create legal systems, and police forces to maintain these laws. The Bushong, just like their European counterparts in the 1800s, created institutions that gave them all that they lacked for economic development. While it is true that absolutism (where monarchs have absolute and unchecked power) creates some economic opportunities, it is also evident that to achieve higher economic outputs, states have to evolve out of such absolutism.
Providing as to why institutions are vital for economic growth, it is also essential to explore how these institutions were corrupted in the first place. While the Europeans had been enslaving each other for centuries in some form or another, they transitioned away from this in the 16th century. As they began to enslave African people from West and Central Africa across to the Atlantic Ocean, it gave birth to the Atlantic slave trade. There were a multitude of reasons for this: it was more expensive to ship people from Europe and hence enslaving people from Africa was seen as a more profitable venture, there was a demand for labour in the New World (which was the discovery of the Americas) and legal and social changes in Europe that banned the enslavement of Christians. The Atlantic slave trade was strengthened on the back of African institutions that provided enslaved people to the European powers.
For perspective, these African institutions were the state powers and religious bodies that would enslave people as punishment. While slavery can be a form to derive profits or even punish people, it is highly inefficient for the allocation of resources among a population. Slavery also led to conflict and warfare in Africa as it was a highly profitable business for the Europeans. Constant wars damaged African states as they destabilised their power structures which hindered their production power. However, even when the British ended slavery in 1807, which reduced the external demand for enslaved people, states were still perversely engaged in it due to the investments they had made in it. When the British called for ‘legitimate commerce’ during Europe’s Industrial Revolution, African states settled the enslaved people in large plantations to produce valuables like gold and kola nuts, which were then used for such ‘legitimate commerce’. Africa’s political institutions, disturbed by two centuries of plunder and slavery, could not be changed easily. It was a result of these despotic political institutions that slavery expanded within Africa even during the 19th century and lingered even as late as the 1960s in some states.
Another surprising factor was that even though Africans were aware of technological advances like the plough and the wheel, they never used them to improve their productivity or reduce labour costs. There were two main reasons: firstly, the states did not invest in such technology, and secondly, the system of taxation and property rights was highly insecure, which removed incentives for ordinary people to adopt such technologies.
It was again a remnant of the Europeans that African states could not develop or experience a natural economic boom by developing indigenous institutions. It was European colonialism which now took the place of slavery to inflict such damage. Firstly, African farmers drove down the price of crops that European farmers produced, making them less competitive in the market, which was an issue for the Europeans. Secondly, Europeans wanted to ensure a cheap supply of labour for which they had to impoverish the African population. A system of job reservation excluded Africans from competing with white people, and the Colour Bar policy ensured that black Africans remained uneducated. The Native Land Act of 1913 ensured the fulfilment of both goals by redistributing the ownership of land in a way that the African people, who were 80 per cent of the population, would only be entitled to 13 per cent of the land. It was this act that led to the creation of the Apartheid regime, which was a system of legally segregating races among the population. It was not a natural development; instead, the Europeans ensured large parts of African states remained poor while smaller areas remained developed and rich for the European settlers.
The above analysis is of an article from 2010, and much has changed since then. However, most developments have been in accordance with the idea of bad institutions affecting the growth of economies. East Africa has been an outlier since 2010, with the highest economic growth in the African continent, and this might be closely related to the extent of slavery and colonialism being less in the region compared to West Africa. Nevertheless, a closer look at its state structures reveals that East Africa has experienced sustained political stability and better public services. The region has also adopted global economic systems, with the creation of the East African Community and the inflow of private investments in its infrastructure.
Centuries later, Africa is still witness to the damage caused by European policies of slavery and colonialism. Africa was poor in 2010 and still remains to be in 2024. However, African states are adapting to the global economic systems, creating stronger institutions and trying to escape the centuries-old legacy of European plunder.
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