A History of Wealth and Poverty: Why a Few Nations are Rich and Many Poor, by John P. Powelson.


Africa Today


Out of the 45 black African nations [in 1990], just four — Botswana, The Gambia, Mauritius and Senegal — allow their people to vote, choose their leaders and express themselves freely. Twenty-three countries are military dictatorships where no political parties are admitted. The rest are one-party states ruled by dictators for life. [1]

Compared with the rest of the Third World, African economic development since World War II has lagged sorely. Since the early 1960s, per capita income in sub-Saharan Africa has grown by only 0.6 percent per year, and its 450 million people have produced about the same as Belgium's ten million. [2]

Centralization of Power

Upon assuming nationhood, African rulers concentrated power in single-party national governments. Mostly, tribal chiefs were stripped of their authority. Usually local governments were denied the power to tax. They were left dependent on the central government for both their financing and their policies over roads, schools, and the like, [3] repeating a pattern of the power concentration that had been characteristic of Africa for centuries.


In a previous publication, my co-authors and I studied agriculture in five African countries (as well as others elsewhere): Algeria, Egypt, Somalia, Tanzania, and Zambia. [4] Because the detailed stories, with data, are found in that book, my summary here is brief. In each of the five cases, the central government attempted to manage agriculture from the capital city. All applied price and production controls, which tended to reduce output.

Algeria and Tanzania forced farmers to join "cooperatives." [5] In Tanzania the army burned their huts to keep them from returning home. In both countries the "cooperatives" were a means by which the agricultural surplus was extracted by the government, through price controls and forced sales to state marketing agencies. The philosophy was altruistic — government helping its people — but the results were not. Production languished because farmers, inadequately rewarded, abandoned their farms or decreased production.

In Egypt a single minister carved out a government fief for himself, from which he forced farmers to grow cotton and sell it to the government at low, virtually subsistence prices. The government in turn exported it at a profit to itself. Other price and production controls hampered farming, leading to underfed people and food riots.

In Somalia the central government tried to settle nomads on lands that could not support settled farming. Interclan warfare has been an even greater disaster, leading to widespread starvation that caused military intervention by the United States and other countries in 1993.

In Zambia, all land was declared to belong to the state, and restrictions were placed upon the farmers.

African tribes have been accustomed to storing food in time of surplus, to cover themselves for inevitable famines. Today, governments extract surpluses through taxes or forced sales, spending the proceeds — often to line the pockets of politicians — so there is nothing left to ward off famine.

State export monopolies introduced into West Africa in World War II by the British became lasting instruments by which governments have forced farmers to sell crops to marketing boards, with profits on foreign sales going to the government rather than to the farmers.6 This practice has been common in East African countries as well. In 1983, a Mozambican government congress admitted "that agricultural policy had overemphasized the benefits to be gained from huge state farms to the detriment of subsistence farmers." [7]

The United Nations Food and Agriculture Organization says most African countries adopted policies that gave farmers little incentive to grow more food than their own families could eat. Instead, these policies lured many farmers, the backbone of African economies, to cities. There, they stopped farming and started eating imported food, purchased with overvalued currency and foreign aid money. In those years, food imports rose tenfold. [8]

Shortly after seizing power in Ethiopia in 1977, Chairman Mengistu Haile-Mariam announced a land reform in which all farms were nationalized, "cooperatives" established, and farming put under the control of the government. Seven years later:

[S]ince this Government came to power in a coup, virtually no land has been irrigated and little has been done to correct environmentally destructive agricultural practices. . . . Cutting of forests and overgrazing by livestock have been widespread. Also, the low prices paid by the state-owned Agricultural Marketing Corporation have discouraged farmers in still-fertile regions from producing a surplus or selling whatever surplus they produce. [9]

A high government official who defected from Ethiopia in 1987 reported that "chronic food shortages, civil war, political unrest and famine are the order of the day. . . . Thousands have disappeared or have been summarily executed without trial. Millions of peasants are being uprooted from their homes and villages to implement a policy of regimentation of the rural population and collectivized farming." [10]

In Malawi "the country's agricultural `miracle' has bypassed the majority of the rural population, subsistence farmers, who suffer some of the highest child malnutrition death rates in east and central Africa." [11]

In Tanzania, President Julius Nyerere in 1976:

abolished the country's 2,500 local cooperative unions, arguing that many were corrupt, inefficient and politically uncontrollable. In their place, he established . . . parastatals, that were given legal monopolies. . . . These companies ran up big deficits and quickly soaked up most of the country's investment capital. According to the World Bank, 90 percent of capital expenditures in agriculture between 1975 and 1982 went to the parastatals. By 1982, 11 crop-marketing boards had lost a total of more than $200 million. [12]

Bruce and Dorner have shown how complex registration procedures of the Zambian Land Board have generated uncertainty and interrupted cultivation. [13] In Zambia also, "the monopolizing of the handling of maize — the major marketed crop — has inhibited the growth of enterprising merchants, who could provide merchandising, transport, and handling facilities, and the national growth of cooperative marketing." [14]

Virtually all these authoritarian policies have been partially or wholly reversed in the liberalism that swept the Third World after the downfall of socialism in the early 1990s. In 1991, the Mengistu government in Ethiopia fell, and by 1993, farms were again private. Nyerere retired in Tanzania in 1985, and gradually the restrictions on farmers have been removed at the behest of the International Monetary Fund. Agricultural output has increased significantly. While most Western observers have rejoiced at these events, let us be soberly reminded that they may all be overturned by a new sweep of ideology when new people take power.

Industry and Government Enterprises

Upon independence, the unique power held by many rulers enabled them to appropriate the profits of industry. Their modes of organization wasted resources grossly. Such plums could hardly go unchallenged by their rivals. But the only "opposition" was other people like themselves, who might seize power if they could. Loyalty of the military was often the crucial asset.

Such a chasm lay between these groups and weaker ones — tribal chiefs and councils, age sets, or newly forming business organizations and labor unions — that none of the latter could hold the rulers in check. Because they were powerless, these groups could not make vertical alliances or enjoy the leverage known to their Japanese and European counterparts some centuries earlier.

The power groups organized industry in two ways. One was private enterprise in which they were themselves the principal stockholders, the other parastatal enterprises reporting to ministries occupied by themselves. Nationalized or state-owned banks could be forced to lend money to the former; taxes and government borrowing would finance the latter. Resources of each could be diverted to oversize salaries or contracts with private enterprises in which the power groups held interest. Since both the private enterprises and the parastatals were often monopolies, they possessed considerable latitude in pricing and profits. If contracts were awarded outside the power group, "commissions" would be charged.

Both kinds of enterprises also financed themselves with loans and grants from foreign governments and international agencies. The international agencies would make these loans because their existence depended on it: they were designed to promote "development" in the Third World. By international agreement, they were precluded from operating in any country without government approval. Thus, their only alternatives were to comply or go out of business. Foreign governments also contributed, to win the political or cold-war support of the Third World countries.

The inefficiencies of industry and parastatal enterprises are illustrated by the following reports:

[In Algeria] a plan to make state-owned factories more profit-minded and independent from government is badly stalled. Managers worry that they will be ousted if they do not churn out profits, while government officials fret that profit-minded managers will lay off their friends and relatives placed in cushy jobs. [15]

Many respondents [in interviews undertaken by Hickock and Gray in Mali and Senegal] cited pervasive doubts in the community as to the long-run solvency of government-run enterprises, including banks, and expressed the view that distancing the latter from public control, even if the government retained substantial equity, would boost confidence and raise deposits. . . . In 1981, 85% of outstanding bank credit in Mali had been extended to state enterprises, which were paying a real rate of interest of zero (9.5% nominal rate, roughly equal to the rate of inflation). [16]

[In Senegal] 27 companies completely operated by the state and 75 quasi-public concerns, all of which together employ 25,000 people, [use] four times the manpower that some critics say is needed in these enterprises. [17]

Many World Bank reports have described the abuse of parastatals in Africa, for example in Tanzania [18] and Zambia. [19]

Zaire's economic woes may be dated at least to 1973 when President Mobutu launched "Zairianization," under which European-owned businesses were seized and given to Zairians for token compensation. Many of the businesses went to the President's family and cronies, and within two years, Zaire's economy had shrunk by 15 percent. The new owners often had no idea how to manage their holdings. When Mobutu was forced in 1975 to invite the Europeans back to run the businesses, there was often not much left to run. [20] By 1992, the Zairian economy was in shambles, with foreign enterprises having left, their plants looted by soldiers who had not been paid for months; schools, hospitals, and many local businesses closed; the president holed up on a yacht in the Zaire River, protected by his military and too fearful to enter Kinshasa. The people were subsisting mainly on cassava, which provides calories but few nutrients. At the moment of writing (1994), Zaire appears to be an impending case of mass starvation.

Just as agriculture has been liberalized after the collapse of socialism, so also are many government industries being privatized in African countries. It is too early to say whether these moves will be successful. A privatized enterprise need be no more efficient or progressive than a public one, however, if it is a monopoly controlled by the same elite that operated it under a government name.

The Structures and Policies of Intervention

Upon independence, African governments wanted all the trappings of modern states: executive offices, ministries, central banks, courts of justice, and parliaments. Once again confusing the organizations with the institutions, international agencies and governments of more-developed countries supplied the expertise and often the financing for these. Carbon copies of organizations from the more-developed world were set up wholesale in Africa. Without the checks and balances of their home countries, they became a source of power and enrichment for the elite.

Attached to these structures were instruments of monetary and fiscal policy, conceived step-by-step in more-developed countries to combat depression, inflation, and balance-of-payments deficits. But the same instruments, without built-in checks, might create depressions, inflation, and balance-of-payments deficits when these would be to the advantage of the policy makers.

The ways to abuse these organizations are well known: (1) money creation, preferentially for the elite; (2) low interest rates with credit also rationed to the elite; (3) overvalued exchange rates coupled with import permits granted to select people; (4) government monopolies, or — when pri-vatized — private monopolies; (5) permissions for economic activity granted to favorites and denied to others; (6) expropriation of private assets for government enterprises from which the elite will benefit; and (7) loans from abroad for projects that the elites can milk.

None of these abuses can be documented or studied systematically. All Westerners exposed to the inner workings of African governments know they exist, [21] but explicit references would expose friends or violate confidences. They are not mentioned in economists' growth models or in assessments of economic plans. Rather, they are referred to obliquely in the reports of international agencies. Reports of journalists may be the best source of information on them.

Budgetary control is often loose. Ministries may be allowed to spend up to the limit of their budgets without question. If they reach that limit in the middle of the fiscal year, parliament must pass supplementary allocations or the government will stop. If many ministries do the same, the matter becomes routine, and budgetary control is virtually useless. While I was economic advisor in the Ministry of Finance and Planning in Kenya (1972-74), budgetary supplements were passed regularly.

Governments frequently say they will correct these deficiencies, and their statements are publicized in international agency reports. But enforcement is another matter. For example, in 1977 the World Bank reported that the "Government [of Zambia] has taken a number of important steps to control the growth in recurrent expenditures," [22] including greater controls over spending by the various ministries. But the data from then on indicate that the promise was not kept. [23]

Probably not all rulers have gained personally from these practices. Former presidents Julius Nyerere of Tanzania and Kenneth Kaunda of Zambia are well known for honesty and sympathy for their people — "Familyhood" (Ujamaa) was the slogan in the former country and Humanism in the latter. But they had in common with others the belief that good results would come only if they or persons of their choosing were in power. Even if not corrupt themselves, they could not control an overstaffed bureaucracy whose members seized and granted privileges.

The economic and political manipulations have in many cases exceeded any potential for achievement, either perversely for the enrichment of the elite or positively for economic development. Ultimately, even the elites skim off less than they could in a growing economy. Therefore, only power for its own sake can explain their actions.

Commands that one day institute price controls and the next day rescind them; that one day require permission for this and the next day for that; that order street-vendor stalls and shanty towns to be bulldozed, then allow them to be built up again; that call for the construction of towers and conference centers or the largest cathedral in the world — all these are manifestations of power as a consumer good, rather than as a capital good dedicated to further production either for its holders or for the community at large. Further references to the concentration of state power and centralized, often capricious decision-making in Africa are found in Appendix 9.1.

Warfare and Violence

Just as power is wanted for its own sake, so are warfare and violence still in many places the legitimate means of resolving disputes. One may even argue that warriors want war for its own sake, as indeed was the case with European knights in the Middle Ages.

From independence until now (1994), the principal wars in Africa (in alphabetical order) have been:

  • Algeria versus Morocco over the former Spanish Sahara; [24]
  • the rebellion in Angola, largely by the Ovimbundu people against the government; [25]
  • Tutsi-Hutu chronic violence and massacres in Burundi and Rwanda,
  • civil war in Chad and the invasions by Libya; [26]
  • three wars in Ethiopia, involving Tigrean, Eritrean, and Somali rebels; [27]
  • civil war in Liberia;
  • rebellion and guerrilla war in Mozambique; [28]
  • the war for independence of Namibia; [29]
  • the Biafra war in Nigeria;
  • civil war in Somalia;
  • civil war in Sudan; [30]
  • various civil wars in Uganda, plus one war against Tanzania; [31] and
  • several mutinies by armed forces in Zaire.

It is difficult to judge whether war continues to be a legitimate means of settling disputes in Africa. First, in the past century, some areas have had years of peace, earlier enforced by colonial powers and now continued by independent governments. Second, instances of warfare in Africa may be matched by cases elsewhere, such as the Arab-Israeli wars, violence in Northern Ireland, the United Nations/Iraqi war of 1991, and the Balkan war that began in 1991 and shows no sign of ending at the time of this writing (1994). Third, one cannot compare the intensity of, say, World War II, with its nuclear bombs, against the endemic struggles in Africa, where fewer people are killed at a time but where the contest goes on and on and on.

Yet certain wars have characteristics similar to those of endemic warfare over the centuries. The Ethiopian-Eritrean war (now presumably settled), the civil war in Sudan, the intertribal violence of Uganda, the inhuman massacres of the Mozambican war, the Tutsi-Hutu chronic violence, the Angolan war (even with its occasional truces and presumed final settlement), and the interclan wars of Somalia, all smack of the endemic African wars of the nineteenth century and earlier. They are also reminiscent of the European Crusades, the Hundred Years' War, the Wars of the Roses, the wars of religion in France, and the Thirty Years' War. All continued for a decade or more, those of Ethiopia and Angola for three decades; all sides are hard-line, reluctant to negotiate (except perhaps where militarily defeated as in Ethiopia); and the wars are waged with intense cruelty and even genocide, as in the cases of Angola, Ethiopia, Somalia, and Mozambique.

Some individuals make a career of warfare and would not easily find places in civil society. The Black Prince, son of Edward III of England, is a fourteenth-century example. [32] Jonas Savimbi of Angola might be one today. Given the presence of many such persons, a culture of warfare is entrenched.

On the positive side, Gluckman and Newman suggest a tendency away from violence and toward compromise among the Barotse:

Gluckman's masterful work on the law of the Barotse of Northern Rhodesia (Zambia) showed that in "multiplex societies," where people are bound by multiple social and economic interdependencies, conflict is particularly disruptive and cannot be tolerated if the community is to survive. Barotse judges are therefore oriented toward reconciliation and devoted to "mending" broken ties, not simply punishing offenders. "Multiplexity" therefore explains the character of the Barotse judicial process. [33]

This judgment would support the hypothesis that negotiation and compromise are born when a society reaches a stalemate in which it would not otherwise survive. But the scant evidence suggests that such situations are not yet widespread in Africa today. Further examples of modern, endemic African wars and the cruelty and suffering they have engendered are listed in Appendix 9.2.

Summary for Chapters 7, 8, and 9

Throughout its known history, Africa has not been lacking in trade and entrepreneurship. Early on, Africans formed states and empires, business companies, laws, courts, judiciary procedures, and money. But none of these grew into complex institutions like those of northwestern Europe and Japan. Instead, the organizations of today were imposed by colonial powers or by national elites in imitation of the industrial world.

Because land was abundant relative to labor and because power groups gained from extensive trade, African elites were not forced to negotiate their differences with lower classes. While many interest groups did form, the great chasm between rulers and ruled made it less likely that weaker groups would improve their conditions through vertical alliances and leverage.

Before the nineteenth century, few Africans needed literacy to record contracts or laws, nor did they require a free labor market. Labor and capital continued to be appropriated through war, slavery, marriage, and cattle raids. War was a legitimate means of carrying on conflicts that were never expected to be settled in a European sense.

Economic planning by elite groups after independence is the modern manifestation of power concentration over centuries. This concentration was unwittingly strengthened by the colonial governors, as it was also after independence by foreign economic advisors such as myself. The nation state further reinforces it, as have so-called "socialism" and "cooperatives." All these reduced further the likelihood of pluralist economic development.

The foreign powers and international agencies that today urge free markets and privatization of industry and agriculture seem not to grasp that the Western concept of these proposals would constitute a complete turnabout in Africa's centuries-long history, not just a change in direction. The understanding by African power groups will be different. For them, the old institutions will continue somehow, through the new organizations. We will return to that dilemma in Chapter 23.


  1. Ayittey, George B.N., in Wall Street Journal, 3/28/90.
  2. World Bank 1989.
  3. Examples of the concentration of power in the central government of all African states are legion. Here are a few references culled from a much longer list: for Algeria, Ibrahim, Youssef M., in New York Times, 11/27/88; for Botswana, University of Wisconsin, Land Tenure Center Newsletter No. 68, July-September 1980; for Equatorial Guinea, Brooke, James in New York Times,11/01/87; for Ghana, Rule, Sheila, in New York Times, 06/09/85; for Ivory Coast, Cowell, Alan, in New York Times, 04/21/82, also 11/2/83, 11/15/87, 11/19/89, 2/25/90, and 3/3/90; for Kenya, Perlez, Diane, in New York Times, 2/14/91 and 3/10/91; for Liberia, Rule, Sheila, in New York Times, 6/5/85, also 6/10/84, 6/11/84, 6/5/85, 7/3/85, 4/13/86, 8/15/89, and 1/31/90; for Mozambique, Wall Street Journal 12/30/80; for Nigeria, New York Times 11/21/82,2/12/83, 1/18/84, 10/2/85, 3/4/86, 6/22/88, also Brooke, James, in New York Times, 8/11/88; 6/4/89 and 1/14/90; for São Tomé, Brooke, James, in New York Times, 3/6/88; for Tanzania, Morris and Read 1976:264; for Zaire, New York Times, 8/09/81, 8/10/81, 8/16/81, 8/30/81, 6/18/82, 6/06/83 (article on torture), 10/06/83, 10/25/83, 04/13/86, 12/14/86, 2/04/87, 2/08/87; Brooke, James, in New York Times, 9/29/88; Greenhouse, Steven, in New York Times, 5/04/88, also 5/24/88; for Zambia, Moseley, Ray, in Chicago Tribune, taken from Boston Globe, 9/25/81.
  4. Powelson and Stock 1990.
  5. In quotations, because these were not voluntary associations agreed upon by members.
  6. Bauer 1972:372-74.
  7. Cowell, Alan, in New York Times, 6/03/83.
  8. Hardin, Blaine, in Washington Post, National Weekly Edition, 9/1/86, p.6.
  9. May, Clifford, in New York Times, 11/18/84.
  10. Dawit Wolde Georgis, in Wall Street Journal, 11/12/87.
  11. Battiata, Mary, Washington Post, in International Herald Tribune, 9/13/88.
  12. Frankel, Glenn, Washington Post, from Boulder Daily Camera, 11/23/84.
  13. Bruce and Dorner 1982.
  14. World Bank 1977.
  15. Greenhouse, Steven, in New York Times, 10/12/88.
  16. Hickock and Gray 1981:65, 68.
  17. Guptie, Pranay B., in New York Times, 9/17/80.
  18. World Bank 1983:50.
  19. World Bank 1977, main report p. 88, and annex 12-3.
  20. Greenhouse, Steven, in New York Times, 5/23/88.
  21. I have myself seen them in my work as economic advisor.
  22. World Bank, Zambia: A Basic Economic Report, no. 1586b-ZA, Washington, D.C., 10/3/77, p. 83.
  23. International Monetary Fund, International Financial Statistics Yearbook 1989:760-1, and March 1992:586.
  24. New York Times, 9/8/80, 7/4/81, 11/19/81, 4/8/85, 1/15/89, New York Times Magazine, 4/27/80.
  25. New York Times, 9/16/79, 12/25/84, 12/31/84, 1/31/86, 11/23/86, and 9/12/88.
  26. New York Times, 3/19/86, 6/16/87.
  27. New York Times, 12/4/80, 6/23/83, 11/25/84, 1/6/85, 1/17/85, 12/3/87, 3/22/89, 9/10/89, and 1/7/90.
  28. New York Times, 10/4/81, 11/1/82, 11/18/84, 11/25/84, 6/30/85, 7/1/85, 12/30/85, 5/18/86, 12/8/86, 1/12/87, 1/22/87, 2/1/87, 2/19/87, 8/30/87, 10/7/87, 1/25/88, 2/18/88, and 5/11/88.
  29. New York Times, 1/6/81.
  30. New York Times, 5/4/86, 8/21/86, 10/12/86, 1/3/88, 10/3/88, and 12/6/88.
  31. New York Times, 8/26/80, 8/27/80, 11/16/80, 4/7/81, 7/14/83, 6/23/86, and 9/15/86.
  32. "War provided him with his raison-d'être" (Hallam 1987:269).
  33. Newman 1983:3, citing Gluckman 1955.

Copyright © 1994 by the University of Michigan. First published in the USA by the University of Michigan Press, 1994.

Published on the World Wide Web by The Quaker Economist with permission from the University of Michigan Press, 2005.

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