Lately, Treasury Secretary Paul O'Neill has been traveling
throughout Africa with rock singer Bono, an outspoken advocate of debt
relief and increased foreign aid for Africa. Why O'Neill agreed to this
silly tour is a mystery, since it was a virtual certainty that it would only
result in increased pressure on the United States -- meaning U.S.
taxpayers -- to increase foreign aid.
Predictably, Bono berated O'Neill for showing any degree of
skepticism whatsoever that increased aid is the sole and exclusive cure for
Africa's problems. To be sure, a bit of food and medicine would indeed go a
long way toward helping many of Africa's sick and dying. But Bono and others
like him are naive if they think that foreign aid alone is the answer to
what ails Africa.
It is too easy for purely humanitarian aid to become a permanent
lifeline. Once started, who is hard-hearted enough to cut it off, knowing
that death for the recipient will be almost certain? Thus, one-time aid too
often becomes everlasting.
Once the prospect of long-term relief is established, it sets in
motion forces that virtually guarantee its necessity. For example, food aid
to help countries through a temporary famine often drives farmers out of
business. How can they sell their produce when wealthy Western countries,
often overflowing with subsidy-driven agricultural surpluses, are giving it
away for free?
Partly for this reason, most nations of Africa have become
dependent on food imports, even though they were food exporters not too many
years ago. Punitive domestic policies are to blame, as well. It is common
throughout Africa for farmers to be forced to sell their production to
marketing boards, which pay far less than the world price. This is just a
kind of de facto tax that allows the government to reap most of the profit.
Not surprisingly, farmers don't like paying this tax. Instead, t
hey farm only for themselves, smuggle their produce elsewhere or simply
cease farming altogether. Insecure property rights also discourage farming,
as in Zimbabwe, where white farmers have had their land confiscated by the
government for no other reason than that they are white. Moreover, rather
than distribute this land to the landless, it is often given to friends of
the ruling party for their personal enrichment.
Still, even with all the burdens placed on African agriculture,
it remains an incredibly productive place to farm. Much of the land and
climate are ideally suited to growing crops and livestock. Of all the places
on Earth, Africa is the least likely to have a shortage of food based on its
natural endowments. It is bad government and misguided foreign aid policies
that mainly prevent Africa from being the world's breadbasket.
If Western governments really wanted to do something to help
Africa, the easiest thing they could do is open their markets to African
products. The fact is that domestic subsidies and import tariffs prevent
Africans from selling much of their agricultural output in Europe, North
America and Japan. These nations, it seems, would rather tax their citizens
and force them to pay higher prices for food than allow poor farmers in
Africa to sell their produce in their countries.
This is an insane policy because it hurts domestic consumers as
well as African farmers. By allowing African farmers simply to sell what
they have produced in the West at market prices, consumers would have
cheaper food and African farming would benefit, possibly obviating the need
A recent World Bank study found that full elimination of import
tariffs in Europe, Canada, Japan and the United States would raise African
exports by $2.5 billion per year. This is a trivial sum in the context of
their economies, but it would lead to a major increase in growth for Africa.
Most of the gain would come from opening the Japanese and European markets -
- precisely those countries most often critical of the United States for
insufficient foreign-aid spending.
Of course, the United States could also do a lot more to allow
in African goods, despite passage of the Africa Growth and Opportunity Act
four years ago. Although most African goods enter the United States at low
or no tariff, some of Africa's best exports, such as ground nuts and
tobacco, are still very heavily protected.
On the other hand, Africa could do far more to encourage trade
within itself by lowering its own tariff barriers. Almost all African
countries have import tariffs far above those in the West. Encouraging trade
within Africa would do much to help that continent, even if Western nations
continue to resist opening their markets further to African goods. O'Neill
should tell Bono (and Congress) that trade, not aid, is the best way to help