INDIAN BUSINESS ACADEMY

GREATER NOIDA

THEME PAPER Capitalism in Africa With a short reference to the CSR

SUBMITTED TO: Dr. Divya Kirti Gupta

SUBMITTED BY:
AMAN KAUSHAL FPG0709/013

ASSIGNED DATE : PROPOSED DATE OF CONSULT : ACTUAL DATE OF CONSULT : PROPOSED DATE OF SUBMISSION: ACTUAL DATE OF SUBMISSION : 22/02/09 23/02/09

SIGNATUTR OF THE FACULTY

SIGNATUTRE OF THE FACULTY

REMARKS / COMMENTS OF THE FACULTY

ACKNOWLEDGEMENT

With due reverence, I express my deem sense of gratitude to my project guide in IBA Dr. Divya Kirti Gupta for her creditable guidance and vitalizing encouragement throughout the preparation of this dissertation. I am highly obliged to her for the valuable time she spared for bringing the dissertation to its present shape and for the kind of arrangements she made for me. I am also very much thankful to all my classmates, who gave me their valuable advice from time to time and thus helped me.

CONTENT
(Page no.) Acknowledgement-----------------------------------------------------------------------------2 Abstract4 21 23 -28 When Real will meaning Africa discover of capitalisn..............................25 CSR...27 conclusion------------------------------------------------------------------------------------Local tyranny subsidized by western paternalism Africa: Colonialism War Poor Vicious Role Extreme poverty and people cycle and scramble capitalism and an of in the of of and Introduction. 4 Africa.5 Africa.5 capitalism..5 poverty13 G8..14 solutions17 Foreign aid and debt forgiveness

 -29

Reference--------------------------------------------------------------------------------------

The following articles will throw some light on the extreme problems and the downturns that African countries are facing currently. In addition to that there is some reference of the happenings in and around the countries. To start with we can first talk about the theory of capitalism that has been governing the whole world with its various paradoxes. Customery the capitalism is for the nations or for the bodies who have achieved a certain significant level in terms of industrial growth and other things. As far as Africa is concerned, it has been very unfortunate in terms of all such parities. We all know that inspite of gaining independence way back in 60s they havent been able to cope up with the overall pace of the world economy. Such as Pre-industrial Europe was poorer than contemporary Afica. This statement only substantiates that this continent has a long way to go. They are yet not ready for the so called liberalization and globalization which has been paving paths to the growth and development for various countries all over the world. What they actually need is the total transformation in terms of basic or fundamental approach. First they have to look out for fulfilling certain obligations such as education, poverty, infrastructure etc. All of this can only be realized once they invest in all the above mentioned categories and more.

Leaders from all over the world have to come together and join hands for a noble cause. Because this kind of initiative cannot be completed without the inputs from global leaders, be it of any organization, country or state. Africa needs something it has never had and it is obviously about the things to be taken to the next level.

AFRICA
Africa is the world's second-largest and second most-populous continent, after Asia. At about 30.2 million km (11.7 million sq mi) including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area. With about 922 million people (as of 2005) in 61 territories, it accounts for about 14.2% of the World's human population. The continent is surrounded by the Mediterranean Sea to the north, the Suez Canal and the Red Sea to the northeast, the Indian Ocean to the southeast, and the Atlantic Ocean to the west. There are 53 countries, including Madagascar and various island groups, associated with the continent.

Colonialism and the "scramble for Africa"

In the late nineteenth century, the European imperial powers engaged in a major territorial scramble and occupied most of the continent, creating many colonial nation states, and leaving only two independent nations: Liberia, an independent state partly settled by African Americans; and Orthodox Christian Ethiopia (known to Europeans as "Abyssinia"). Colonial rule by Europeans would continue until after the conclusion of World War II, when all colonial states gradually obtained formal independence.Colonialism had a destabilising effect on a number of ethnic groups that is still being felt in African politics. Before European influence, national borders were not much of a concern, with Africans generally following the practice of other areas of the world, such as the Arabian Peninsula, where a group's territory was congruent with its military or trade influence. The European insistence of drawing borders around territories to isolate them from those of other colonial powers often had the effect of separating otherwise contiguous political groups, or forcing traditional enemies to live side by side

with no buffer between them. For example, although the Congo River appears to be a natural geographic boundary, there were groups that otherwise shared a language, culture or other similarity living on both sides. The division of the land between Belgium and France along the river isolated these groups from each other. Those who lived in Saharan or Sub-Saharan Africa and traded across the continent for centuries often found themselves crossing borders that existed only on European maps.

War and capitalism in Africa

In a country racked by civil war and droughts where the majority of men and women exist in dire poverty, its leaders see their interests served by spending vast sums on armaments and mobilising hundreds of thousands to mass slaughter. The death toll in this conflict between capitalists using working class cannon fodder has been particularly high with a ratio of dead to wounded of one-to-one (the average for most modern wars being one dead to three wounded). According to the Economist (8-14 May) "the death toll is high because the combatants use the weapons of the Korean war, the tactics of the first world war and the medical treatments of the 19th century". With war of course comes the massive displacement of populations with, in this instance, many tens of thousands of Eritreans forcibly ejected from Ethiopia. As with all wars the Ethiopia-Eritrea war has competing capitalist interests at its root and the mass slaughter and suffering of its workers as its consequence. This conflict, however, is only part of a general increase in tension between African governments whose interests are perceived to lie in the increased militarisation of the continent. This was most particularly evident in the central and southern regions. Indeed the wars in the Congo and Angola appear to be threatening to draw these regions into full-scale sub-continental war. Angola has threatened Zambia with invasion over its ruling-class support for the UNITA rebel opposition in Angola, a position also supported by some members of the South African ruling class. The Mugabe regime on the other hand supports intervention on the side of the Angolan government. Tension still runs high over the war in the Congo, with Zimbabwe, Angola, Namibia and Chad drawn into the 6

conflict in support of President Kabila and Uganda and Rwanda on the side of the antiKabila forces. Conflict over the Caprivi Strip between Namibia and Botswana also poses a threat, with the Zimbabwean ruling class supporting the former and the South African ruling class supporting the latter. The underlying cause of this increase in tension is in the economic crisis facing the two most powerful economies of the region, Zimbabwe and South Africa, in the face of the global economic downturn. The ensuing economic competition between the rival ruling classes has forced the two governments to attempt to form regional alliances. Such action is taking on an increasingly military character with the Zimbabwean government, backed by Namibia, justifying its intervention in the Congo on the grounds of securing markets at the expense of South African multinationals. In another example of capitalist robbers fighting over their ill-gotten gains South Africa, backed by Botswana, asserted its influence over Lesotho to protect the interests of its ruling class following attempts by the Lesothon population to overthrow the existing dictatorial regime. In such circumstances an ominous regional arms race is beginning to take place, with South Africa announcing at the end of 1998 a re-armament programme worth 20 billion rands. Botswana, South Africa's main regional ally, has also been conducting a rearmament programme including the construction of a US-assisted military airbase. Zimbabwe, under the pretext of the conflict in the Congo, has also been spending billions of dollars on re-arming with its most recent purchase being over $1 billion-worth of Russian military equipment. A similar massive re-armament has taken place in Angola as a consequence of the intensifying civil war. It seems that the increasing trade war taking place between the capitalists of southern Africa may result in yet another war in which the workers fights for the interests of capital. In the era of the "New World Order" capitalism once again proves itself to be an uncontrollable and destructive system of society. A system which accords the majority slave status and then expects them to die for their masters' interests. The only solution to war and to the miseries of capitalism in Africa, as in the rest of the world, is for the

working class to organise for common ownership and democratic control, a society where the root cause of war in the economic and strategic rivalry of a minority owning class is removed and the production and distribution of wealth is conducted in the interests of the whole communitySocialism. It is time the working class struggled for its own interests.

President Bush's trip to Africa and promise of increased foreign aid will do little or nothing to solve the ongoing tragedy in most places on the south-of-Sahara African continent. Kenya is on the brink of a civil war. Over 1,000 people have been killed and another 300,000 made homeless. Rebels have invaded Chad. In the Darfur region of the Sudan, millions of people have been displaced in a genocidal war. Ethiopia and Eritrea threaten war again. Somalian warlords are in a pitched battle. Zimbabwe, once an independent, thriving jewel on the continent, now ruled by a tyrant, is on the brink of disaster, experiencing a 66,000 percent rate of inflation, expected to be over 100,000 percent by year's end. To put that inflation in perspective, the government has recently started printing 10 million Zimbabwe dollar notes. A hamburger sells for 15 million Zimbabwe dollars. The recent African carnage is by no means new. During a 100-day period in 1994, an estimated 800,000 Rwandans, mostly Tutsis, were killed. There were an estimated 100,000 to 500,000 Ugandans murdered under the brutal rule of Idi Amin. Liberia, Ivory Coast and the Congo have been racked by war, and slavery exists to this day in Mauritania and Sudan. Added to this carnage is gross corruption, AIDS, famine and repression. African leaders, and many people on the left, blame Africa's problems on the evils of colonialism. They sometimes blame the violence on the borders colonialists created that ignored ethnicity. Many African nations have been independent for four decades. If colonial borders were a major problem, how come they haven't changed them? And, by the way, colonialism cannot explain Third World poverty. Some of today's richest countries are former colonies, such as: United States, Canada, Australia, New Zealand and Hong Kong. Some of today's poorest countries were never colonies, such as:

Ethiopia, Liberia, Tibet, Nepal and Bhutan. The colonialism argument is simply a cover up for African dictators. The worst thing the West can do to Africa is to give more foreign aid. For the most part, foreign aid is government to government. As such, it provides the financial resources that enable Africa's grossly corrupt and incompetent regimes to buy military equipment, pay off cronies and continue to oppress their people. It also provides resources for the leaders to live lavishly and set up "retirement" accounts in foreign banks. Africa is the world's most natural-resources rich continent. It has 50 percent of the world's gold, most of the world's diamonds and chromium, 90 percent of the cobalt, 40 percent of the world's potential hydroelectric power, 65 percent of the manganese, and millions of acres of untilled farmland, as well as other natural resources. Before independence, every African country was self-sufficient in food production; today, many depend on imports and others stand at the brink of famine. The only people who can solve the problems of Africa are Africans themselves. It is only they who can change their leaders, end corruption and bring about transparency in government and end the African wars. Only they can stop the continent's massive brain drain. This was brought home to me, a number of years ago, at a dinner I was invited to in honor of a new Nigerian ambassador to the United States. During his speech, he admonished the Nigerian professionals in attendance to come home to help the country develop. The Nigerians seated at my table, and nearby tables, fell into quiet laughter. Most of what Africa needs, the West cannot give: rule of law, private property rights, fewer economic restrictions, independent judiciary and limited government. The one important thing we can do to help is to lower our trade barriers. Capitalism may challenge the poor, but it gives them hope

THROUGHOUT human history, the road out of poverty has been built not by aid from developed states but by economic growth, and yet in Africa there is a prevailing logic that the rich have a responsibility to lift the poor. Post-colonial Africa has largely emerged from the womb of a race-based capitalist construction to make capitalism a contested ideology for nation building. In evaluating whether capitalism is good for Africa to the extent that poverty and Africa seem to be great friends, therefore, the question to be answered is whether the institutions that characterise capitalist economies are effective in promoting economic growth.

To begin a systematic analysis of whether capitalism is good for Africa requires a working agreement on precisely what capitalism is. Capitalism is an abused term universally and the prevailing image of a capitalist may be an Anglo-Saxon protestant. Like poverty, capitalism has many faces but typically an American face has come to symbolise what a capitalist is. The standard definition of capitalism is a market economy in which the means of production are privately owned in contrast to communist, socialist or fascists systems and yet even in countries that are perceived to be capitalist, not all the means of production are under private hands. The traditional conception of systems that incorporate the political and governmental characteristics of nation states does not address the economic institutional framework that is more relevant in addressing the question of whether capitalism as an economic model is good for Africa. Capitalist economic models share an identifying set of institutions whose different manifestations in practice have a similar foundation. The cornerstone of any capitalist system is the existence of a particular set of institutions governing the production and exchange of goods and services.

10

Is there a relationship between capitalism and poverty? There is a prevailing belief that capitalism oppresses the poor and packs its benefits for the rich. Equally, there are many who believe that you can strengthen the weak by weakening the strong. Using this construction, it is then argued that Africa, with a majority poor, cannot afford to pursue capitalist policies. Instead, the state is also then generally perceived to be a more acceptable face of capitalism than non-state actors. After the demise of communist/socialist models in Eastern Europe and the emergence of an ideologically ambiguous China, the evidence informed by the economic growth in non-socialist/communist nations suggests that there may be a causal and direct relationship between capitalism and economic progress. All progressive nations promote economic growth by incorporating incentives and not threats or blackmail that encourages production, exchange and creativity. Such economies operate through an institutional framework underpinned by the rule of law and not rule by law, secure property rights and open and transparent markets in which competition is encouraged. The economic growth that raises standards of living results from investment, the foregoing of current consumption in anticipation of future benefit. Investment is generally risky and, therefore, the importance of clearly defined property rights, secured by the rule of law, in reducing risk and encouraging investment cannot be overstated. Even the poor who may want to ascend the economic ladder of opportunities, secure property rights is one of the most fundamental foundational institution. The lack of secure property rights condemns Africas poor to a nightmare existence in which hard work brings more of the same or less. The majority of Africans, notwithstanding the promise of independence, are still enslaved to a system in which they trade their time for money. Even in countries where they boast of transferring land to the poor, the poor end up being condemned to own land without any rights to assign, transfer or sell to third parties. In such countries where land has been nationalised, the

11

institutional framework created in which state actors decide who should own what land, poverty is entrenched not by the actions of the rich by the design of state bureaucrats. Someone who is a beneficiary of a 99 year lease is not going to see the lease through and there will come a time when the land will have to be transferred to another party and yet the construction of land reform programs is such that land cannot be freely transferred. Whose land is it after a person has been granted a lease? Many African governments would like to believe that the land belongs to the state. In such an environment, is it reasonable to expect that poverty can be meaningfully reduced when current owners of land have no clue about what will happen when they die? Any system that ignores the human spirit and enlightened self interest is bound to fail. How many of Africas state actors think that they know better than their citizens? Imagine a country where nobody can identify who owns what, addresses cannot easily be verified, people cannot be made to pay their debts, resources cannot be turned into money, ownership cannot be divided into shares, descriptions of assets are not standardised and cannot be easily compared, and the rules that govern property vary from village to village. This is the environment that the people in many African states have been condemned to, in the name of nationalism and sovereignty. In many countries laws of inheritance are not clear and wealth cannot be easily transferred from one generation to the next. In such an atmosphere, investment dwindles, and the probability of eradicating poverty diminishes. As Africans, we have no choice but to critically examine how property rights can affect the ability of the poor to allocate their labour and how they can shape incentives for investments in human and physical capital. Africa is continent whose time is yet to come. Rule of law is one of the much said but little understood concepts in popular press and daily conversations in Africa today. What is rule of law? What is its significance in advancing the African agenda? What is the cultural content and context of the rule of law in Africa? What are the institutional

12

conditions required for a constitutional order that supports the rule of law in Africa? How does Africa achieve the rule of law? I intend to tackle these questions in future articles. In the absence of any better system, capitalism may offer a better and less risky roadmap for Africa than any other model known to mankind. Even the poor can take comfort from the fact that the rich cannot take their wealth to their graves. Capitalism may challenge the poor but at least it gives them hope that the sky is the limit. Leaders around the world are pressuring the rich nations of the world to give more foreign aid to Africa -- to the tune of $25 billion a year by 2010. The U.S. already gave $3.2 billion last year. In the wake of this pressure, we might ask ourselves whether it's foreign aid that Africa needs most for economic development. A standard myth is there's a "vicious cycle of poverty" that makes economic development virtually impossible for the world's poor nations. This myth holds that poor countries are poor because income is so low that savings cannot be generated to provide the kind of capital accumulation necessary for economic growth. Thus, it is alleged, the only way out of perpetual poverty is foreign aid. Let's examine the "vicious cycle of poverty" myth and whether foreign aid is a necessary ingredient for economic development. The U.S., Britain, France, Canada and most other countries were once poor. Andrew Bernstein of the Ayn Rand Institute wrote in an article titled "Capitalism Is the Cure for Africa's Problems" that pre-industrial Europe was vastly poorer than contemporary Africa. A relatively well-off country, like France, experienced several famines between the 15th and 18th centuries as well as plagues and diseases that sometimes killed hundreds of thousands. In France, life expectancy was 20 years, in Ireland it was 19 years, and in early 18th-century London, more than 74 percent of the children died before reaching age 5. Beginning in the late 18th century, there was a dramatic economic turnabout in Europe. How in the world did these once poor and backward countries break the "vicious cycle of

13

poverty" and become wealthy, without what today's development experts say is absolutely necessary for economic growth -- foreign aid handouts, World Bank and International Monetary Fund loans, and billions of dollars of debt forgiveness? The answer is simple: Capitalism started taking root in Europe. Capitalism is an economic system where there's peaceable, voluntary exchange. Government protects private property rights held in goods and services. There's rule of law and minimal government regulation and control of the economy. It's not rocket science to conclude that economic liberty and the wealth of a nation and its peoples go together, not to mention greater human rights guarantees. Some economic development "experts" attribute Africa's troubles to its history of colonialism. That's nonsense, because some of the world's richest countries are former colonies, such as the U.S., Canada, Hong Kong and Australia. In fact, many of Africa's sub-Saharan countries are poorer now than when they were colonies, and their people suffer greater human rights degradations, such as the mass genocide the continent has witnessed. One unappreciated tragedy that attests to the wasted talents of its peoples is that Africans tend to do well all around the world except in Africa. This is seen by the large number of prosperous, professional and skilled African families throughout Europe and the United States. Back home, these same people would be hamstrung by their corrupt governments. The worst thing that can be done is to give more foreign aid to African nations. Foreign aid goes from government to government. Foreign aid allows Africa's corrupt regimes to buy military equipment, pay off cronies and continue to oppress their people. It also provides resources for its leaders to set up "retirement" accounts in Swiss banks. What Africa needs, foreign aid cannot deliver, and that's elimination of dictators and socialist regimes, establishment of political and economic freedom, rule of law and respect for individual rights. Until that happens, despite billions of dollars of foreign aid, Africa will remain a basket case.

14

G8
The subject here is Africa. Specifically, its endemic, persistent poverty, and what G8 and Live 8 wish to do about eradicating it. Western aid to government-impoverished African nations does not help the inhabitants of those nations -- indeed, how it perpetuates their poverty -- a loudmouth such as Live 8 impresario Bob Geldof, aging and still clueless Paul McCartney, plus Tony Blair, President Bush and the other eminences grise might have come to this conclusion: That only about one half of one percent of the billions poured already into those countries has ever reached the intended beneficiaries, and that the rest went into the coffers of bankrupt dictatorships, besides what found its way into the Swiss bank accounts of the dictators. Another observation they might have made was the contrast between the semi-free economies of the West and what they can produce, and the stagnant, looted economies of Africa and what they can't produce. But making causo-connections is not the forte of what the London Daily Telegraph's Mark Steyn dubbed the "aristorockracy," or the strong suit of the legislating quasioligarchy of career politicians, particularly those in the U.S. No, Bob Geldof and his Company of Crooners Against Callousness and Wailers for World Peace want the G8 leaders meeting in Scotland to forgive all African debt, and then just give $25 billion in aid to the debtors. Some lip service was given to "trade concessions." Suppose Geldof's fantasies could be granted, and somehow $25 or $50 billion was immediately allocated to Africa, and, miraculously, none of it was siphoned off by ruling thugs and their bureaucratic minions ala the U.N.'s "food-for-oil" scam. Some stomachs might be filled for a week or a month and some shacks erected and a few selfless Albert Schweitzer wannabes might set up clinics in the shantytowns. Then what? Well, Geldof and Company do not think that far ahead. Projecting the consequences of impoverishing some Western countries in order to temporarily relieve poverty and hunger elsewhere does is beyond their intellectual aptitude. Free trade? The rule of law? Individual rights? What have they to do with anything? Perhaps the brighter 15

of these champions of limitless charity in legislative chambers or on concert stages might sense that these ideas imply capitalism. But freedom is not what they're advocating; it is enslavement of the free and the living to the needs of the non-free and the half-dead. And Geldof and Company have the further chowderheadish cheek to complain that while the U.S. has been the biggest donor of aid to Africa, the percentage of its GNP going to that aid is "paltry." It should be bigger. That is, the U.S. should give until it hurts. Geldof's focus on this particular issue might cause one to suspect that he is not so much concerned about eradicating poverty in Africa as bringing the U.S. down to the level of, say, Nigeria, with its concomitant standard of living. Perhaps if he saw Americans wallowing in poverty, standing in endless lines for bags of rice and bowls of mush, just like people do in Africa, he would deign to respect this country. Egalitarianism is isn't a pretty or noble goal, and neither is the soul of anyone who advocates it. "Charity" and "humanitarianism" are sometimes disguises for envy and malice. Unfortunately, President Bush, ignorant of the nature of his enemies, granted Bob Geldof about an hour of his time in Scotland to vent his sanctimony again and present his nonsequiturs in person. It is this kind of concession to bombastic altruism that dooms civilizations. In Philadelphia, actor Will Smith opened that arena of hysteria by proclaiming that Live 8 was a "declaration of interdependence." Nelson Mandela in Johannesburg got a 5-minute standing ovation for mouthing platitudes about ending poverty in Africa now, neglecting to mention, however, the poverty-by-policy imposed by his brutal buddy up north, Robert Mugabe, in Zimbabwe, or the war which that killer has declared on all the people he impoverished and continues to starve. Mandela thus proved he is as much a chowderhead as Bob Geldof. Yet the theme of the South African venue of Live 8 was "Africa Standing Tall Against Poverty." Yes, it may stand tall against poverty, but it doesn't see a thing. Neither do Bob Geldof and President Bush and Tony Blair. LBJ's "War on Poverty" was a costly failure, too, but that was then, this is now. Don't bother us with history; we have nothing to learn from it.

16

Meanwhile, a recent, pre-G8 summit meeting of the African Union in Libya produced some curiously suspect statements. The leitmotif of those statements is: We Want, You Owe. One AU bureaucrat claimed, "We're tired of the image of Africa as a beggar. Development aid is the way for the West to give back to Africa what it took from us." That kind of improbable realism and honesty would cause Bob Geldof's head to spin on its axis, and the pseudo-Solons of Congress and Parliament pause to utter a collective "Huh?" But the secret message beneath all the AU's actual complaints about the futility of direct, no-strings aid from the West is merely a plea: Please help us stay in power, we promise not to graft and pillage as much as we used to. We want the chance to trade. Trade what? On whose and what terms? To whose benefit? The terrorist bombings in London that morning were a boast that the last things on the minds of Islamic killers are the prospect of "global warming" and the well-being of Africans, 345 million of them Muslims. They want obedience. They want submission. Period. We may wonder how many Muslims were killed or injured in the London Underground; we may also be sure that the bombers will not wonder at all. Their brothers died for Allah, just as many did in the World Trade Center in September 2001. It's a message that one should hope is absorbed by President Bush and Tony Blair and the rest of the chowderheads at the "Give-8" summit in the spacious environs of Gleneagles. Perhaps one or both of them will discard their altruist pretensions, recognizing how destructive or counter-productive they are, and discover the morality of self-interest and self-preservation, and speak with the voice of reason. Then, perhaps, the next time they speak about "saving the world," we won't mistake them for Bob Geldof or Madonna or Pink Floyd. We won't mistake them for chowderheads.

Extreme poverty and its solutions:

The End of poverty is a choice, not a forecast. There are a billion people on earth fighting daily for their survival. The world has committed, in the Millennium Development Goals, to cut extreme poverty by half by 2015. By 2025, extreme poverty can be banished. By dint of interest and calendar, the next step rests with London. Tony Blair has dramatically raised the stakes. Now he must deliver. The Blair Africa Commission is a

17

masterful display of diagnosis and politics. Africa's leading development thinkers and Britain's political leaders are aligned on a sound diagnosis and course of action. Mr. Blair has promised that Africa and development aid will be at the core of this year's G8 summit, which he will host in Scotland in July. Africans are daring to hope that this time offered help is not just empty words. The ways out of the poverty trap can be found. The financial costs of the needed development aid are utterly manageable, just 70pence per 100 (0.7 per cent) of the national incomes of the donor nations. Yet will the rich countries follow through? While the U.K. has raised the banner of fighting poverty in Africa, the U.S. has armed only for its war against terror. George W. Bush never even mentions the Millennium Development Goals. The U.S. spends just 0.15 per cent of its national income on aid, while devoting nearly 5 per cent to the military. Is a superpower that devotes 30 times more in spending to the military than to development aid a reliable partner in the fight against extreme poverty? The money, including the U.S. contribution, needs to be Mr. Blair's focus in the lead-up to the July summit, since the fight against extreme poverty cannot be won on rhetoric alone. The barriers to development in Africa are not in the mind, but in the soils, the mosquitoes, the vast distances over difficult terrain, the unsteady rainfall. Africa faces three pressing and distinctive problems that were overcome in Asia 40 years ago. The first is growing enough food. Asia had its green revolution, Africa has not. The biggest difference is biophysical. Asia's breadbaskets are in the great river systems flowing from the Himalayas and the Tibetan Plateau. Asia's green revolution was built on the combination of irrigation, fertilizer, and high-yield variety seeds. African agriculture, by contrast, is overwhelmingly rain-fed, without the floodplains and monsoons to underpin large-scale irrigation. The African savannah, with its long dry seasons and irregular rainy seasons, is home to hundreds of millions of poor subsistence farmers and their families. Nor can these impoverished farm households afford fertilizers or improved seed varieties.

18

Yet modern science now points the way to a 21st-century African green revolution. Improved water management combined with proven methods of replenishing Africa's soil nutrients, and improved seeds adapted to African conditions, now make it possible for Africa to achieve the same agricultural breakthrough that Asia achieved two generations ago. Powerful and practical solutions similarly exist for Africa's great second challenge, the control of killer diseases. Africa's children are dying of malaria, diarrhoea, respiratory infection, chronic under-nutrition, and the lack of neonatal care. With modern public health and medical practices, these children can be saved. And when they are saved, parents will choose to have fewer children, secure in the knowledge that they will survive. Reduced child mortality and slower population growth, surprisingly enough, go hand in hand. Africa's third distinctive challenge is the lack of basic transport, power, and communications infrastructure. Africa's farm families need all-weather roads to get fertilizer into the villages and crops out to the market. Africa's villages need trucks to rush a dying child or mother in complicated labour to a district hospital. Africa's small businesses need mobile phones to get the latest market quote. The necessary investments are clear, and not particularly complex. Ending poverty is a grand moral task, and a geopolitical imperative, but at the core, it is a relatively straightforward investment proposition. And the investment plans are actually on the table, or more accurately, on the shelves gathering dust, since Africa's leaders have been told at least until now that their ambitious investment plans cannot be funded. The fight against extreme poverty can be won at the summit at Gleneagles (Scotland) later this year. Most importantly, Tony Blair needs to bring his friend George W. Bush back to reality, to an understanding that the U.S. military alone will never secure a world beset by hunger, disease, and deprivation. If the U.S. and a united Europe will honour their long-standing and long-neglected pledge of 0.7 per cent of GNP, then Africans and other impoverished people on the planet will roll up their sleeves and get to

19

work saving themselves and their families, and ultimately helping to save all of the rest of us as well.Much of sub-Saharan Africa has a level of human development that would have been familiar to pre-industrial Europe. Only 12 per cent of the roads in Ethiopia are paved, life expectancy in Mozambique is 38, and the average yearly income per head in Sierra Leone is about 86. Behind the work of the Africa Commission lies the belief that it need not be like this. What kind and how much investment would it take for the poor countries of Africa to replicate the success stories of Asia? Those expecting the report to come up with easy panaceas will be disappointed. "We haven't invented development without pain," said Michel Camdessus, the former managing director of the IMF and Jacques Chirac's representative on the commission. "We haven't tried to re-invent the wheel." Instead, action across a broad front is required, including increased aid and debt relief, improved trade conditions and governance. The key word is partnership: the West provides finance to kick-start development via debt relief and better aid; Africa does its bit by improving the way it manages itself. Africa's biggest challenge, if it is to compete in the global economy, is its deficit in human capital. Economic strength used to depend on size or command over natural resources. Now it depends on the quality and skill level of the labour force: the ability to cope with complex production techniques and technological change. It requires the workforce to be educated and also healthy. But life expectancy has been falling in much of sub-Saharan Africa over the past decade, because of HIV/Aids. Malaria and tuberculosis kill for want of affordable drugs and healthcare workers. The report sets African Governments a target of a million health workers being needed by 2015. With education, the picture is as stark. More than 100 million African children are not in school; only a small proportion go on to secondary school. Girls are less likely to be in class than boys though development experts say female education is critical to health improvements. The priority is ensuring that things do not get worse hence the 20

emphasis in the report on tackling HIV/Aids.Investment is also needed in physical infrastructure. Lack of roads and railways is inhibiting trade in Africa with farmers unable to get their goods to market and few links to facilitate intra-regional trade, let alone access to international trade. A central plank of the report is the requirement for an extra $10billion a year for infrastructure until 2010, and $20billion a year in the following five years. The concern among many economists is that the report disregards inequality in its desire to secure growth. What Africa needs, argues Kevin Watkins of the U.N. human development report office, are not resource-hungry, large-scale farms producing cut flowers for the West, but policies supporting the poor such as credit being more widely available, investment in rural roads, and support for small-scale enterprises. But there is scepticism as to whether this report could really prove a turning point in Africa's development. Nick Crafts, professor of economic history at the London School of Economics, says the continent has had serious problems of governance; it will not be easy to dislodge special interest groups from their control of resources. "The evidence is, aid doesn't work very well in environments with bad institutions. And if an elite has mortgaged the future of a country, who is to say that when they get debt relief they won't re-mortgage it?"

The Tragedy of Africa: Foreign Aid and Debt Forgiveness

The official declarations coming out of the G8 meetings in Scotland, as well as the raucous demonstrations surrounding those meetings, talk about saving Africa. But, looking back over the decades and generations, Africa has been "saved" so many times that you have to wonder why it still needs saving. Desperate and tragic conditions afflict millions in Africa today and any humane person would like to help. But the repeated failures of previous help ought to make us at least question the particular manner in which Africa can be helped.

21

"Forgiveness" of foreign debts is always high on the agenda of those on the political left. At any given moment, this would of course free up money that African governments could spend to help relieve their people's distress -- assuming that this is what they would spend it for. But why would anyone think that promoting irresponsible government borrowing by periodically "forgiving" their debts is going to help African countries in the long run? Years ago, a courageous economist in India pointed out that, however helpful it was to receive food from abroad during India's famines, the long-run policy of continually giving wheat to India was just reducing the ability of Indian farmers to grow wheat and sell it for a price that would cover their costs. Eventually the policy of continually dumping wheat into India was stopped and today India produces so much wheat that it has been able to send some to Africa to deal with African famines. Promoting dependency and irresponsible borrowing is not the way to help the poor internationally any more than these are ways of helping the poor at home. Such policies benefit the bureaucracies that administer foreign aid and enable vain people to see themselves as saviors, even when they are doing more harm than good. Sub-Saharan Africa has some of the most tragic geographic handicaps of any region of the world. Navigable waterways, which have been crucial to the development of nations and of cultures, are severely limited in most of Africa. Poor soil and inadequate and undependable rainfall patterns shrink the possibilities still further. Ideologues love to think of African poverty as caused by "exploitation" on the part of Western countries. But, with a few notable exceptions, Africa has had little to be exploited. Even at the height of European imperialism, there was far less foreign trade or foreign investment in the whole vast continent of Africa than in a little country like Belgium or Switzerland.

22

In more recent times, so-called "foreign aid" has left many monuments of futility in Africa, from rusting machinery and the ruins of many projects to cows sent from Europe that keeled over in the African heat. With all its handicaps, Africa used to feed itself and even export agricultural produce to Europe. In some of the more geographically favored parts of sub-Saharan Africa, iron was smelted thousands of years ago. During the first two decades after African nations gained their independence in the 1960s, one sub-Saharan nation that stood out with its economic prosperity and political stability amid economic disasters and social catastrophes among its neighbors was the Ivory Coast under President Felix Houphouet-Boigny. Yet neither the Ivory Coast nor its leader attracted nearly as much attention, much less adulation, as was showered on Julius Nyerere in Tanzania, Kwame Nkrumah in Ghana, or other big-name African leaders who led their countries into ruin. The Ivory Coast in those days relied on markets instead of the kind of policies and rhetoric that the intelligentsia favored. When its policies changed, it became just another African basket case. Today, too many people in the West continue to see Africa as an outlet for the visions and policies of the left that have failed in the West and are even more certain to fail in Africa.

The Tragedy of Africa: Local Tyranny Subsidized by Western Paternalism

Nature and man have combined to make Africa the most tragic of the continents -- and the men who did this have been both black and white. The great French historian Fernand Braudel said, "In understanding Black Africa, geography is more important than history." Much of Africa's history was in fact shaped by its geography. 23

Almost every great city in the world has arisen on navigable waterways -- and such waterways are more scarce in Africa than in any other continent. An aircraft carrier can dock on the Hudson River in midtown Manhattan but there is not a single river where that is possible on the vast continent of Africa, which is larger than Europe or North America. Even smaller boats can travel only a limited distance on most African rivers because of cascades and waterfalls. Most of the continent is more than 1,000 feet above sea level and more than half of Africa is more than 2,000 feet above sea level. That means its rivers and stream must plunge down from those heights on their way to the sea. Water transport was crucial in the thousands of years before there were trains or automobiles. It was crucial for developing an economy and crucial for developing a culture in touch with enough other widely scattered cultures to make use of advances in the rest of the world. But many African societies have been isolated by that continent's dearth of both navigable rivers and harbors. Isolated regions have almost invariably lagged behind regions in touch with a wider cultural universe. One among many signs of the isolation and cultural fragmentation of much of sub-Saharan Africa is that African languages are one third of all the languages in the world, even though African peoples are only about 10 percent of the world's population. If cultural diversity was all that the multiculturalists claim, Africa would be a heaven on earth. Too often and in too many places it has been a hell on earth. Many people expected great things from Africa when new independent African nations began to emerge from colonial rule in the 1960s, often headed by leaders who had been educated in Europe and America. Unfortunately, what these new leaders brought back to Africa from the West were not the things that had made the West prosperous and powerful but the untested theories of Western intellectuals and ideologues who had taught them. Such African leaders by and

24

large lacked both the common sense of the African masses and the technological and economic experience of the West. The net result was that African leaders, full of confidence because of their Western education and the adulation of the Western intelligentsia, made their people guinea pigs for half-baked theories that had contributed nothing to the rise of the West and had contributed much to its social degeneration. Poverty-stricken Africa could afford these economic and social disasters far less than the affluent West could. However, African leaders were not judged in the West by their results but by their rhetoric and their visions that resonated with the rhetoric and the visions of the Western intelligentsia. Whatever damage European colonialism did to Africa during its relatively brief reign, that was probably less than the damage done later by well-meaning Western would-be saviors of Africa. Africans do not need to be treated as mascots but as people whose own efforts, skills, and initiatives need to be freed from the tyranny of their leaders and the paternalism of Western busybodies.

When will Africa Discover Capitalism?

Bono still hasn't found what he's looking for in Africa -- a place free of poverty and the disease and famine that often accompany it. These lines are said in context of Bono who is a legendary Irish singer, also nominated for the Nobel Peace Prize. His activities in all the areas of African Continent have received a wide recognition. His main targets are the several key Western policy-makers, including Treasury Secretary Paul O'Neill. While on his visits, Bono has literally prescribed to heal ailing African nations, namely that Western countries should (1) pony up more foreign aid and (2) forgive (read: forget) the millions of dollars in past loans these countries owe them.

25

Like quite a few other U2 fans, millions around the world have kept an eye on Bono's campaign -- and it's clear that he's finding an audience. At their annual conference this summer, the leaders of the world's eight richest nations spent more time discussing foreign aid and debt forgiveness for Africa than they usually do. But it turns out that some of the African nations they and Bono want to help are singing a different tune to eradicate poverty -- free trade. Among the people leading this small but growing chorus is Abdoulaye Wade, the president of Senegal. An economist by trade, Wade says he's never seen a country grow through foreign aid, no matter how much was provided. "Countries that have developed have all believed in free markets," he says. "There is no mystery there. Africa took the wrong road after independence." Hung a hard left, to be more precise: After gaining freedom from their European colonial masters in the 1950s and 1960s, most African nations adopted socialist-style governments that, with few exceptions, remain in place today. Even after their role model for socialism, the Soviet Union, tanked in 1991, they continued following the failed policies that helped cripple the former superpower. Until now, few African nations seem to have realized that capitalism was the economic system that swept the world in the 20th century. But Wade and a small group of leaders, including Nigeria's Olusegun Obasanjo and Uganda's Yoweri Museveni, want to change this. They want to form governments that are smaller and support an environment where businesses can invest and operate freely -- just like in many Western nations. Easier said than done, of course. First, Senegal and other nations must confront the legions of corrupt officials that have operated for decades -- officials well versed in the art of siphoning off large portions of the aid that Western nations send. Second, they have to form governments that follow the rule of law, not the whim of a tyrant. Why are these steps not just a good idea but crucial to prosperity? Because before businesses will invest in a country, they must know that the country's government will, under a set of laws, enforce contracts and protect property rights.

26

Unfortunately, sub-Saharan nations such as Senegal have a dismal record when it comes to enforcing the law and protecting property rights. According to the "2002 Index of Economic Freedom," an annual country-by-country survey published by The Wall Street Journal and The Heritage Foundation, Senegal has an average score 3.5 in the area of property rights. With 1 being the best and 5 the worst, that's pretty bad -- and it helps Senegal's economy earn the Index's "mostly unfree" label. But there have been some promising signs in Senegal: After last spring's election in Zimbabwe, which was at best disputed and at worst stolen, Wade was the only African leader to condemn Zimbabwean President Robert Mugabe for flouting rules set up to govern the election, which he won by a lopsided margin. And two years earlier, when an audit conducted immediately after Wade took office found huge deficits in Senegal resulting from the misuse of funds, Wade sought out those responsible and punished them. Wade and other African leaders who are trying to create conditions favorable for investment do need Western assistance, but they don't need handouts. They need tradefriendly policies, not the usual song and dance on foreign aid. It's the only way to steer them off "the wrong road" -- and put them on the path to prosperity.

Real Meaning of CSR

Corporate social responsibility must be defined wider than mere charitable cheque writing by corporates operating in Africa. CSR is more than Philanthropy. There is an unfortunate tradition of corporates using philanthropy as a respectable means of buying off stakeholders to accept their operating practices. Often these practices are exploitative and aimed at maximizing corporate profit in the short term. This is not something one can only blame the companies for, African governments need to accept that a weak regulatory framework, often poorly enforced creates the space for companies to claim that they are working to a higher standard. As civil society in Africa is often short on capacity it cannot deploy adequately to challenge companies except where their impacts become extreme. 27

A key challenge for corporates in Africa, whatever their origin, is the question of double standards. It is a question that capitalism confronts in an age of globalization and Africa right now is not ready for it. A key factor that has changed in how todays world regards business is that it is now seen among other things as a challenge to local culture, a developmental age, an exploiter of natural resources etc. CSR or the fact that companies wish to be seen as good corporate citizens is a means of empowering communites to hold companies accountable and through moral, activist and legal means influence and where necessary constrai the behaviour. A key trend in CSR is the sustainability of the activities the company engages in. In other words what lasting impact will its projects and initiatives have on empowering the community and improve g its quality of life over the longer term. Examples of the bad practice are the construction of a fresh water supply to a mine from which the communities also draw water but which they are not technically or financially empowered to maintain after the mine s gone. Equally a short term malaria eradication programme is downright dangerous if it robs the community of natural resistance against the disease. There are certain key issues which have to discussed in the coming times, such as: What can be done to prevent corporates from operating to two standards? One for the developed world and one for the developing world.

CONCLUSION

28

After studying thoroughly the various dimensions of the African sad story we can come outwith few stated ones. These are the things which are very fundamental in nature and can be and should be dealt with at the earliest possible. To start with: A stint of socialism has to be introduced in the society, because it is a something that is the need of the hour and not the capitalism. Production and distribution of wealth is to be conducted in the interest of the whole community. Africa is a continent which has very vast reserves of natural resources. It has 50 percent of the world's gold, most of the world's diamonds and chromium, 90 percent of the cobalt, 40 percent of the world's potential hydroelectric power, 65 percent of the manganese, and millions of acres of untilled farmland, as well as other natural resources. These resources are to be managed in optimally so that it can help in the development of the nations. Vicious cycle of poverty is something they cant afford to have. Throwing money in the form of aid is not going to solve the problem. Something out of the box, of next level has to be done. Lack of basic infrastructure such as roads, railways, communication is inhibiting trade in Africa even at the regional level, let alone the international level. Problems of health like AIDS, tuberculosis, malaria are like next door neighbours for the people living over there. A significant contribution can be made by the global pharma companies in order the get the situation under control. All these issues can be given a positive face only if the corporate leaders come out of inhibitions and really start doing something for a good cause. After all its not about investing in shares, land or any other form of money making ladder. It is about investing in people who are the real gold of any country or a Nation. Concludingly we can say that Africa doesnt need a full fledged capitalist revolution. All we need do is to give them some time in order to overcome these problems and standby them in case of every problem they face. Then only the global goals or desires of many people around the world will be realized. 29

Reference: www.worldsocialism.org www.capmag.com www.thehindu.com www.socialfunds.com www.wikipedia.com Manorama year Book 2007 www.economist.com

30