Africa Is Slowly Changing – Tribal Kings In Zambia May Have to Go

WASHINGTON – He was just another participant in the Livingstone Workshop aimed at discussing foreign investment issues with many officials representing the Zambian Provincial and District Governments. He was an elderly gentleman wearing glasses, dressed very informally and somewhat reserved.

His Royal Highness

But when we started our proceedings it was obvious that he was different from the others. When the Provincial Minister formally opened the meeting, the elderly gentleman was deferentially addressed as “Your Royal Highness”.

Yes, he is a King, in as much as he is the Chief of one of the tribes. A Chief is a King. Hence the deferential form of addressing him. And so it went. “His Royal Highness” sat with all the others for two days. No special seating or other arrangement. But nobody would fail to use the formal and ceremonial title when addressing him.

Kings have legal status

While informality and jokes were fairly common among all the others, no one joked with the King during the proceedings. And, in truth, the title “Your Royal Highness” is not just a remnant of the past.

The role of tribes and chiefs is enshrined in the Zambian Constitution. For one thing, the tribes own most of the country’s land. Therefore, anybody wishing to do business in their territory, including of course foreign investors, (investments was the topic of our workshops series around the country), has to deal and negotiate with the Chiefs.

“Mwami”

And so, as we continued our discussions about investment issues, “His Royal Highness” was addressed many times. But, as we went along, the stiff and longish English title “Your Royal Highness” was more and more frequently replaced by the local language word “Mwami” in addressing the Chief. And I was intrigued, as this word sounded nice and soft, in the way they pronounced it. There is a slight pause on the “w”…And so it sounded more like “Mw…wami”….And the sound of this word is more like a gentle pleading…It is just like a child saying “Ddaa…ddy”

I found out later on that “Mwami” in the local languages is the equivalent of “Your Royal Highness”. But it is a bit more informal, I was told. And so the tribal Chief, without any problems, attended the donor sponsored Workshop, mixing with his people and with me, the foreign consultant. And at our first lunch he engaged me saying: “So, it appears that China is growing as an economic power, soon to surpass the United States…”

Mwami, caught between tradition and modernization

As the work progressed, the formal or not so formal addressing of the Chief as “Mwami” resonated with me. And this local language word that sounds a bit like a pleading or a prayer describes an important element of the complex transformations that Africa is going through.

On one side tribal leaders and a communal society; and on the other, still hazy but progressively more real, economic development plans, founded on principles of individual accountability, and laws guaranteeing individual property rights.

Kings still matter…

This new capitalistic approach at least conceptually collides with the communal society and its recognized institutions, the Chiefs first and foremost. In the still existing context, the Chief is the authority within the communal society.

He presides and adjudicates within a system that is somewhat cumbersome. The solution to any problem is to call everybody to a meeting. Issues are resolved at the communal level. Not exactly the best way to have swift action within a modern or modernizing economy.

But this was and to some extent is still is the way.

Clearly, honoring Mwami is more than just nodding to old traditions. Today, Mwami has a real role, side by side with “modern”, westernized governmental institutions.

…But they have to go

And here is the issue and the contradiction. In this changing Africa that modernizes itself by moving away from the old communal system, today there is still a legitimate place and perhaps a yearning for the old paternalistic system where the tribe elders decide and provide for all the others.

Uttering the word “Mwami” to me sounds like a pleading to a gentle, higher authority. An authority that embodies indulgence, understanding, help, fair administration of justice.

Caught in the middle of the transformation of a society that would like to go beyond the old tribal system but is not in a new place as yet, Mwami is still there –with the full force and authority of his office, prestige and functions. And yet, with his cell phone and special food prepared especially for him, he takes part in the donor sponsored workshop –just like all the others involved in discussions about investment promotion. Still, for all those present there, for the time being he is and will continue to be “Mwami”, the authoritative but gentle Chief.

Modernity requires modern institutions

Yet, for Africa to really develop and take off, Mwami –and all the heritage and tradition that his role as Chief embodies and represents– will have to go.

Mwami will have to go in the same way in which monarchies and aristocracies in Europe have gone; may be not formally –as there are still Kings and Queens in Spain, Great Britain, Denmark and elsewhere — but certainly in terms of real functions and governing power. What is left of the old monarchies is at best a symbolic, ceremonial role; but no real authority.

And yet, in this slowly growing Zambia that still honors Mwami and is deferential to him, who or what will take over the substantive role of this soft-spoken, articulate and dignified gentleman? Who will take the office and perform, in a new and meaningful way, the important functions of this representative of the tribal past?




Massive Anti-Government Moscow Rally – Intense Public Anger – Gorbachev Advises Putin To Retire From Politics

WASHINGTON – The IHT reports that Aleksey Navalny, a blogger who is a recognized leader of the protest movement called the Russian government “crooks and thieves” who steal from the people. He also said that there were enough people in the streets to go and storm the Kremlin. His contempt for Putin and the entire Russian power structure is open and absolute. These are pretty strong words of defiance in a country used to deference to power.

Russian Spring in Winter

So, there you have it. Here is the “Russian Spring” coming out in Winter. A bit out of season perhaps, (it is bitterly cold in Moscow), but in full force. According to the people, (well, at least some of them) the government of the Russian Federation is headed by “crooks and thieves” who tell lies and steal from the people. The People may very well decide to go and storm the Kremlin in order to evict the “little sneaky jackals”, although not just now. Just street bombast? I would not be so sure. Vladimir Putin should worry.

Advice to Putin from Gorbachev: do not run for president

The same IHT story quotes former president Michail Gorbachev saying that Putin should let go and not run for re-election. Something like: “Quit when you are still ahead“. A good word of advice from a man who tried to salvage the old USSR and then was swept away by events he set in motion but could not control.

Yet, somehow, I suspect that Vladimir Putin does not get that Russia no longer accepts his own idea of a piloted democracy obeying his orders without questions.

Somehow autocrats never get it.




Development Work Is About Economic Growth Not About “Poverty Alleviation” – Part 2

WASHINGTON – International development practitioners focus more on ways in which they can eliminate or alleviate poverty, the visible manifestation of underdevelopment, rather than planting the seeds that may foster self-sustaining economic growth and therefore true development and –by the way–the only way for any society to really get out of poverty. This “poverty alleviation is our goal” approach, while well intentioned, encourages the misallocation and outright waste of limited resources, all in the name of the noble cause of the “fight against poverty”.

Non sustainable projects

For instance, it is considered good to create “economic” activities, whatever they may be, that will generate some new income for the poor. However, in the haste to make some positive changes now, donors all too often leave out any solid analysis of the reasonable chances for such activities to become self-sustaining after the donor initial funding and assistance is gone.

The consequence of incomplete analysis is that very substantial resources have been squandered in non sustainable activities –all of them justified as honest, good faith efforts to reduce poverty. Unfortunately, quite often when the donor leaves the poorly planned and under resourced activity collapses.

Focus on what it takes to produce sustainable growth

In fairness, absolutely poverty creates an environment so difficult that it may very well be impossible to engineer within its confines any kind of meaningful economic enterprises. Indeed, there can be a legitimate debate about what is at issue: “Poverty as lack of economic development”, or “The dreadful condition of poverty that, as such, prevents building the foundation for economic development”. True enough, it is obvious that the sick and the hungry, along with refugees displaced by conflicts, cannot possibly engage in any meaningful economic development.

Relief alone will solve nothing

Still, if we focus most of our resources on improving what is a very bad, sometimes horrible, environment, without recognizing the absolute necessity to create at the same time the economic wheels and help them turn as soon as possible, at best we have accomplished humanitarian relief. To be sure, this can have some positive impact in reducing the impact of poverty, or at least its worst consequences.

But in so doing we will not have caused any meaningful qualitative transformation. Qualitative change leading to real development consists in the creation of a workable process through which societies chart a path towards self-sustaining economic growth.

Poverty is reduced through self-sustaining enterprise

Contemporary examples reinforce this fact. Structural changes encompassing laws and incentives rolled out by governments in some important poor countries greatly improved the “enabling environment” for wealth creating activities, with the consequence of allowing hundreds of millions to be more productive and lift themselves out of poverty through their very own engagement in wealth creation activities that in preceding times were not accessible to them.

China and India

The different stories of what happened in China and India in the past twenty to thirty years have been told many times. But it is important to stress here that the activities of donors and aid programs have had very little impact on these gigantic, systemic changes. The key factors that unleashed these positive energies have been economic liberalization policies that allowed and indeed encouraged people to become more productive, to invest in education and new enterprises, and make money without penalties or fear of being dispossessed. Poverty reduction has been the byproduct of almost unprecedented rates of economic growth caused by policies that fostered new enterprise. It had nothing to do with policies that had as their primary goal the poverty reduction. Which is to say that in these successful examples poverty reduction is the welcome byproduct of successful wealth creation. 

Donors do not like to focus on economic growth

But, somehow, the notion of economic growth as the primary goal of development does not appear to be a noble enough purpose. At least for some development practitioners, economic growth conveys the images of rapacious businessmen, outrageous profits, corrupt practices, wheeling and dealing, profiteering, cronyism, child labor, domestic and foreign exploitation perpetrated by the unchecked powerful; and –worst of all– it means accepting growing economic disparities within societies.

Some of these critiques are justified. Unfortunately, some of these problems are often part of the picture of societies embracing enterprise, at least to some degree.

It is true that economic development, while crucially important, rarely occurs in a linear, harmonious fashion, with gradual, well-distributed benefits for all. To the contrary, it is a messy affair, especially in developing countries that usually lack the framework of laws and institutions that should at least limit excesses and protect people from injustices.

Economic growth is a messy process

However, the existence of significant flaws in how economic development occurs does not disqualify the basic proposition of wealth creation as a precondition for any lasting improvement in the human condition.

In fact, unless we postulate really large-scale, donor-led activities in perpetuity, there is no other way to reduce and eventually eliminate poverty. There just isn’t.

But development practitioners are unconvinced. Many of them, contemplating the negative aspects of uneven economic growth, affirm that, unless this process can be properly regulated to ensure harmonious growth and fairness, then it is better not to have it all. So there you have it: better all poor but equally poor, if the alternative is wealth, but just for some.

Development practitioners often lack a business background

The inability to put economic growth front and center in the framing of development agendas in part can be explained by the cultural make-up of the practitioners. The development environment is managed mostly by functionaries who work for public “donors”: state-run development agencies or multilateral institutions.

They are accompanied by large, religious or lay, private charities. For them, development is a mission, not a policy goal that requires the mobilization of indigenous resources in a productive way. Furthermore, development programs are quite often administered by an ever-growing number of not-for-profit entities. Most of the actors in this system are civil servants, functionaries and well-meaning volunteers. Bottom line: most of them are not business people. 

They are part of large, public or private bureaucratic institutions depending on public funds or donations. As a rule, they do not like, know or understand business and what it takes to make economic growth happen and flourish. For many of them, fighting poverty is a moral, noble endeavor for the good of mankind.

Teaching people how to make a profit in a competitive environment — the indispensable lever for economic growth– is viewed as promoting self-centered and egotistical drives, therefore not at all a laudable effort. In fact many see it as morally questionable.

Poverty reduction alone will not do it

However, lacking a clear focus on economic growth as the paramount strategic objective, the goal of achieving development through poverty reduction is likely to be an endless and quite frankly fruitless task. True, with all these efforts, the poor may become a little less poor, but they will not learn much about getting richer through in competitive enterprises.

Asia grows, while donor supported Africa does not

Asia reduced poverty largely through the elimination of artificial barriers to economic activities, while at the same time promoting education as the ticket to a better life.

On the other side of the divide, we have the sad story of Africa as the paradigm of what has gone consistently wrong, despite decades of well-meaning, donor-led efforts aimed at reducing poverty and improving overall conditions. Whatever has been tried, it failed to create, (with few exceptions, of course), an environment in which enterprises could flourish, with the attendant positive outcomes of sustainable wealth creation activities and consequent diminution of poverty.

This massive failure, compared with the success stories driven from within Asian societies, should provide enough material for reflection on the validity of the current approach.

Still, as yet, this reappraisal has not taken place. Donors are still “fighting poverty“; instead of creating solid foundations for sustained economic growth.




With US Forces Gone, Iraq Falls Into Chaos: Bombings and Sectarian Divisions – A Poorly Planned, Costly Occupation And So Little To Show For It

By Paolo von Schirach

December 22, 2011

WASHINGTON – “America is the sorcerer apprentice that got it truly wrong and made a huge mess in Iraq”. Worse yet, unlike the Disney story, there is no Master coming in to the rescue and fixing this. America is leaving Iraq. And this Iraq is an almost ungovernable morass, now tilting towards renewed sectarian violence. Iraq should be used as the perfect case study of “how not to do war and military occupation”. Indeed, it is hard to think of a case of bigger discrepancy between wishful thinking about one’s own power and reality on the ground, all laced with systemic errors in planning and execution. And now that America has just withdrawn its last soldier from Iraqi soil, it looks as if the perpetually immature Iraqis are back to the old script of brutalizing each other because of never resolved sectarian and ethnic issues.

Baghdad bombings

The Baghdad bombings and the suicide attacks have restarted with the old enthusiasm. And so the sad irony may very well be that, after a costly, if poorly conceived and stupidly executed, occupation, America is leaving behind a very unstable country that in the worst case scenario may be dragged down by another wave of sectarian violence or, in the best case, a dysfunctional, totally ineffective government.

Optimistic US assumption about an easy “regime change” operation

It all started, (have we forgotten?) with idiotically optimistic assumptions made by the top echelons of the Bush administration. They believed, with cause, that Saddam Hussein was a menace. They also believed (wrongly) that he had dangerous weapons of mass destruction, WMDs, in his arsenal that could be easily deployed ot turned over to terrorists. In the post 9/11 environment that threat seemed really too much. Hence the “regime change” mantra. Bt while regime change in Iraq was not such a bad goal, what was really strange is that senior people in the Bush administration thought that regime change in Iraq would be really easy.

Wrong plans

They believed (and in this they were right) that it would be easy to defeat Saddam militarily. But they also believed that the whole Saddam Hussein regime was just a veneer linked to a power structure dependent on the dictator. Take Saddam out, decapitate the regime, and the whole repressive and hated Baathist power structure would collapse. In this prediction they were spectaculrly wrong.

Easy to establish democracy in Iraq

And who take the place of the Baathist clique? Well, the good Iraqis, the pro-Western exiles eager to come back and establish a modern democracy. Besides, Iraq was swimming in it own oil. It would be easy to finance whatever transition from the old regime to this new beacon of Arab democracy relying on domestic financial resources funded by oil exports.

So, the game plan was rosy. Send in US forces to kick the door down, topple Saddam, and dissolve the Baath Party political structure. This would be quick. And the rest –building a new Iraq– would take care of itself. And so, with minimal effort, the US would eradicate the threat of WMDs from Iraq, eliminate a despot and introduce democracy in what could become a middle income Arab country that would be the new shining example of genuine Arab democracy.

The reality of the occupation

Well, we know what happened instead: collapse of the Iraqi state, civil war, sectarian conflicts, Kurdish separatism, al-Qaeda terrorism, Iranian meddling, huge losses for US forces, botched reconstruction plans, no electricity, low oil production and tremendous losss of international standing for the US.

And what happened, while it could not be anticipated in it totality, even in hindsight was quite forseable. What prompted this immense miscalculation of what it would take to bring Iraq from dictatorship to democracy? An inexcusable mixture of abysmal ignorance, lack of intelligence laced with a frightening level of hubris. The notion that Iraq could be dealt with as some sort of Wall Street corporate take over in which a few specialists direct operations and the master plan is carried out speedily was and is amazingly simplistic. But essentially this is how the whole affair was treated. And, worse yet, when things did not work out as planned, it took years and an imminent debacle to adopt a new course that brought about a modicum of (temporary, as it appears now) stability.

End of the long war, and so little to show for it

And, sadly, at the end of the military occupation, following a withdrawal timetable included in a Status of Forces Agreement, (SOFA), negotiated way back by the Bush administration, we have so little to show for this trillion dollar experiment.

True enough, there have been positive changes. Iraq has acquired democratic institutions. And this is a significant mile stone. But Iraq has yet to develop a democratic ethos. And who knows if or when it will ever acquire one. Right now, the country is an almost ungovernable mess. It may be just a coincidence, but, just as the last US soldier left, the bombings in Baghdad happily restarted. Meantime, Shia Prime Minister Nouri al -Maliki seems to be determined to silence the Sunni minority through questionable criminal charges against the most senior Sunni politician, Tarek al-Hashimi, now accused of terrorism. These accusations look a bit suspect.

US is leaving behind an unstable country

Who knows how all this will turn out. However, the fact is that the US, after almost a decade of immense efforts and untold losses, now has minimal leverage and little influence in a weakened country that may fall into chaos after all.

In the Disney story, the huge damage caused by the ill prepared sorcerer apprentice was quickly rectified by his Master. No such luck for America, Iraq and the world. We shall have to live with the consequences of an badly conceived and poorly executed military adventure that cost a fortune, while the ensuing instability may have created a security threat worse than what existed under Saddam.




Italy’s Debt Is Also About Patronage, Wasted Funds, Corruption And Low Ethical Standards – 952 National Italian Law Makers Collect Huge Salaries, Do Little – Can Monti Reform This?

By Paolo von Schirach

December 20, 2011

WASHINGTON – Italy’s fiscal and debt crisis is not just about bad management and unfortunate policy choices. It is the most visible manifestation of a country in which the vested interests of groups, (often in open conflict with other factions), have always prevailed over any notion of the public interest. Everybody claims a piece of whatever wealth is within reach as their entitlement. Not because they earned it, but because this is the way the spoils system works.

In Italy widespread illegality and unethical behavior

Combine this deeply ingrained rent seeking attitude with corruption, widespread illegality, an inefficient judiciary, over paid public servants, fake disability pensions, public funds diverted, large development projects that have zero economic value and you see how the national debt accumulated. The debt is the sum total of unpaid bills left behind by those who used public resources for their own ends instead of governing.

It is not an accident that, just when professor Mario Monti was about to get started as Prime Minister, a new political scandal, all about bribery, state run companies and illicit financing of political parties broke out. And now there is a new chapter to be added to an old national scandal involving fixed soccer matches and illegal betting. The debt is the result of decades of waste, patronage creating bloated bureaucracies, absconded funds and plain bad management.

Law makers do well, for themselves

Last but not least, do consider how well the governing elites treat themselves. Exhibit one is the impressive array of salaries and benefits enjoyed by Italian law makers. First of all, have look at how many there are, happy to eat and prosper at tax payers expenses. In America, a country of 310 million, there are 535 federal law makers. In Italy, a country of 60 million, there are 630 in the Lower House and 322 in the Senate, for a grand total of 952. So, their numbers are absurdly large. On top of that, they do really well. Their pay ranges from $ 18,000 to $ 27,000 a month. Plus they get medical insurance, free domestic travel and sometimes a car and driver. And they also collect pensions, even if the served only for a few years.

Bad examples from the top encourage more illegal behavior

Clearly the money spent to keep this grandiose legislative power happy is not critically large. But the lavishness of the treatment is a clear indication that the Parliament first priority seems to be to legislate in the interest of its members. “First we take care of ourselves, then, time permitting, we shall deal with other business“. It is obvious that Italy could easily cut the number of its law makers by at least 50% without jeopardizing the survival of the republic. And it is obvious that the salaries collected, in some cases for doing almost nothing, while outrageous any day, look particularly offensive in these times in which people are told that they need to make huge sacrifices.

Can Monti reform this?

In many ways, this issue of tolerated absurd parliamentary privileges, akin to those of enjoyed by medieval aristocracies, explains the prevailing unethical behavior of so many Italians. “If the public servants openly use public funds to feather their nests, why should’t I try and use all possible means, legal and illegal, to stay ahead?” I am not sure that Professor Monti has legislation in store that will change any of this. And yet, until this changes, forget about modernizing Italy.




India Will Not Liberalise Retailing – Country Will Keep Ancient Food Distribution System – Failure To Carry Out This and Other Needed Reforms May Doom Growth

By Paolo von Schirach

Related piece:

http://schirachreport.com/index.php/2011/12/03/not-so-modern-india-country-choked-by-political-gridlock-corruption-and-vast-inefficiencies-very-low-132-world-bank-doing-business-score-opposition-to-recent-decision-to-let-in-internatio/

December 19, 2011

WASHINGTON – In a previous piece, (see link above), I had expressed concerns about the strong opposition against the announced decision by the Indian Government led by Prime Minister Manmohan Singh to open the country to large international supermarket chains. The purpose of this reform was to attract experienced foreign investors who would modernize an archaic Indian food distribution system that is costly and inefficient. In India layers of middle men and a myriad of small shops make everything more expensive, while fueling price rises and thus inflation.

No foreign supermarket chains

Well, the opposition won. Much to the dismay of Walmart and Tesco and with harm for the Indian people who deserve better the market opening and the consequent needed modernization of this huge sector serving an enormous population of more than one billion will not take place. At least not now. And so the Indians will continue to rely on a fragmented and costly universe of small shops that cannot possibly offer good prices as they cannot afford and are not equipped to buy large quantities, thus lowering prices. Food will continue to be more expensive than it need be, while it will to continue to spoil on route to market because of bad infrastructure and an ancient distribution system that lacks sufficient numbers of refrigerated trucks and warehouses.

Other reforms needed

But this is not all. As noted by Eswar Prasad of Cornell University in an op-ed piece in The Financial Times, (India must not let slip its shining moment for reform, December 19, 2011), this new set back needs to be added to endemic corruption, the ill effects of subsidies for food and energy, rigid labor markets and an antiquated financial system that fails to properly capitalize new enterprises.

Resistance to change

While India’s economic liberalization of the 1990s gave impetus to vigorous growth, in order to sustain it, India needs to go to the next level, and it appears incapable to do so. The political process is maddeningly complicated and there is genuine resistance to change. However, by keeping the old social stratification more or less intact, the government cannot enlist the poor among the supporters of reform. This way only some elites benefit from economic growth and the phenomenon is too narrowly focused to engineer real change within a country that is still mostly very poor.

Cash payments instead of subsidized items

As Prasad argues, just by providing cash payments instead of subsidized food and energy, the government would vastly reduce the graft and corruption involved in the supply and delivery of subsidized items. Besides, India “needs desperately needs a more efficient financial system to channel domestic and foreign capital into productive investments“. And then in Prasad’s list there are labor market and education system reforms, and a lot more.

Indian government cannot provide leadership

Quite clearly, even in the most optimistic scenario, it would be a daunting task to engineer fundamental change in any large third world country. And India is especially large and mostly poor. But India seems to have run out of political steam right when its economy needs bold reforms and skilled leadership to see them implemented.

A well run democratic system helps growth and opportunity. Unfortunately, while India has all the trappings of a democratic system, the institutions alone are no guarantee of good stewardship. Modern capitalism needs to be sustained by people who believe in open markets and free enterprise. Not enough of them where it counts in India.