Sunday, June 17, 2007

The Untapped Markets of AIDS, Malaria, and Famine

Libertarian Kenyan economist, James Shikwati, has made a name for himself by providing a counterpoint to the conventional wisdom that increased aid from western countries is the only antidote for curing Africa of its poverty malaise. He advocates putting an end to "this awful aid" he sees as responsible for maintaining African nations in perpetual states of poverty and for Africans to capitalize and profit from "the untapped markets" of AIDS, malaria, and famine.

So who is James Shikwati, and how exactly has he risen to prominence? As this article in the New York Times explains, he's the creation of Lawrence W. Reed, a conservative thinker and economist. Reed "discovered" Shikwati when the Kenyan, a former rural high school teacher who had been rejected for numerous graduate school programs in America, emailed him with a simple question: “Do you assist individuals who would like to know more about the free market and individual liberty?”

Reed sent books, reports, magazines, tracts — even occasional sums of money" to encourage Mr. Shikwati to pursue his capitalist education with a passion. Today Mr. Shikwati is considered "a one-man think tank," who has created the Inter-Region Economic Network, giving speeches on five continents and even being toasted at a dinner at the Heritage Foundation in Washington DC.

What, exactly does Shikwati propose? Here is an excerpt from his interview in Spiegel Online two years ago:
Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.
Rather than refocus aid and redirect towards those who need it most, Shikwati would have us believe that all aid is bad, that its only salvation for Africa is to open it to free-market capitalism. Along these lines, Shikwati proposes that rather than considering those dying from AIDS, famine, and malaria to be blights on Africa's economic prospects, Africans should consider them uniquely African "untapped business markets" that Africans should be profiting from.

Jeffrey Sachs, author of The End of Poverty, noted economist, and longtime proponent to African aid describes Shikwati as “shockingly misguided, amazingly wrong," adding, “this happens to be a matter of life and death for millions of people, so getting it wrong has huge consequences.”

Shikwati's proposals have had little traction in his home country of Keyna; however, The New York Times correctly points out that his greater influence may be abroad where capitalists can use Shikwati as the African mouthpiece for their "the freer the market, the freer the people" agendas.


Brian said...

"Shikwati's proposals have had little traction in his home country of Keyna"

Which isn't surprising since, with the exception of Ethiopia, I believe Kenya is more dependent on foreign aid than any other country in the world.

It's also worth remembering that during the 1990s, Sachs (then a IMF or World Bank bigshot) was at the forefront of pushing laissez-faire capitalism as cure-all on Eastern European nations.

Check out this interesting book review:

I'm certainly not in favor of eliminating foreign aid. But I think it's about time we started asking questions of the status quo.

I've read that the DR Congo would need to maintain its present economic growth level for another 50 years just to get back to the standard of living it had at independence in 1960.

The west (and east) has poured probably trillions of dollars in foreign aid into Africa. I think it's reasonable to conclude that the results in terms of poverty reduction haven't been commensurate with the money.

I am aware that part of the issue is that the foreign aid setup is hardly a disinterested, purely magnanimous enterprise on the part of donor countries. But it's also true that structural issues in recipient countries waste a lot of this money too.

There are complex problems and I don't think it's as simple as libertarianism or Sachs' centralized planning.

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