"We only know of government presence when policemen raid our homes in search of illicit drinks," quipped a resident from Kibera, one of the largest shanty settlements in Kenya. "It will take not less than 8 years to get ideas that encourage people to rely less on government solutions to problems they can and should solve on their own to gain ground in Ethiopia, after all, rural people are yet to feel the government!" observed Netshet from Addis Ababa.
Ask opposition political radicals in Africa whether they come across government and chances are that you will receive huge reports about repressive regimes. Regrettably, productive business people will tell you of a predatory government that is waiting for them to make profits before they spring regulatory, and taxation surprises. Where does this leave African people keen to be productive?
Two leading Think Tanks in North America, The Heritage Foundation and The Fraser Institute publish annual reports that measure economic freedoms of various countries in the World. Both indexes measure levels of intrusive government as a component that leads to less economic freedom. For instance, the Heritage report argues that economic freedom is the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself. This component evaluates the fiscal burden a government imposes on its citizens.
The Fraser Institute, on the other hand, argues that economic freedom is 'personal ownership of the self', because this type of ownership gives individuals the right to choose - to decide how they will make use of their time and talents. The Institute concludes by pointing out that the key ingredients of economic freedom include: personal choice, voluntary exchange coordinated by markets, freedom to enter and compete in markets and protection of persons and their property from aggression by others.
How absent is the Ethiopian, Kenyan and any other African government for that matter from the lives of individuals? Is the Kenyan in the arid North, who believes that only people from the South are Kenyan citizens justified in asserting that he enjoys the status of an absent government? Most probably in a limited way, in terms of taxation compared to his city based counterpart; but such a citizen will be shocked to learn how close the government is to him if he were to start a big business, drill oil or seek to declare an independent state.
The 2006 Economic Freedom Index by both Institutes indicates strongly that East African states are far from being economically free. The Fraser Institutes Index which has 10 points for the freest economy indicates that Uganda and Tanzania tied in rank at 65 and they both score 6.4 points. Kenya scores 6.3 and is ranked at number 68. The Heritage Index which scores 1 as the freest economy, points at Uganda as the freest economy with a score of 2.95 and ranked number 66. In this index, Kenya and Tanzania tie with a score of 3.2 and are ranked number 94 in the World and considered mostly un-free.
Both Indexes this year had introductory essays on topical subjects; for instance, Heritage Foundation's '2006 Index of Economic Freedom' discusses education, capitalism in India and entrepreneurship. The Fraser Institute's 'Economic Freedom of the World 2006 Annual Report' discusses freedom versus collectivism in foreign aid. William Easterly in the Fraser report argues eloquently about foreign aid being the modern day Berlin Wall. "Instead of Berlin Wall, we have an 'Aid Wall', behind which poor nations are supposed to achieve their escape from poverty through collective top-down plan."
If aid is an impediment to economic freedom how come the Heritage Foundation report ranks Uganda to be mostly free in East Africa and yet over 50 percent of its budget is donor driven? Reading both indexes reveals a new dimension in the aid to Africa debate. The good news is that these statistics provide an entry point in evaluating the business environment in Africa. The challenge is up to Africans to facilitate an environment that will promote productivity. This, we can do by not waiting for the government to serve us.
Just how free is the Kibera shanty dweller from government coercion when government experts under instructions of international agencies determine his fate? Governments in Africa may appear absent due to poor service delivery, but they are very much present implementing irrelevant international dictates that render our economic freedoms obsolete. For rich nations, less government stands for reduced taxation, for poor countries in Africa, less government means, allowing people to fend for themselves without over regulation that inhibits the growth and expansion of businesses.
By James Shikwati
Mr. Shikwati is the Director of Inter Region Economic Network
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