01 Jul 2005 Empowering People to Act for Themselves is the Best Solution for Africa’s Dilemma, by Franklin Cudjoe

The leaders who gathered at the G-8 Summit to seek solutions for Africa’s myriad problems unfortunately overlooked the most obvious: What matters most to poor countries – not just in Africa, but everywhere – is learning what they can do and what they cannot do for themselves.

In this regard, the lessons of six decades of post-colonialism provide powerful examples of policies that don’t work.

Throughout the 1950s and 1960s, for example, the governments of many countries in Africa and Latin America erected walls of protectionism by stacking one trade barrier on top of another.

The plan was to give industries of these countries the protection to grow without facing outside competition.  What actually happened was that local industries floundered – growing for a brief period, but then, without competition, becoming lazy and lagging behind the rest of the world in both technological improvement and economic growth.

Soon these protected industries were producing goods that few people wanted; exports fell dramatically and, in many cases, the industries – usually run by the cronies of corrupt leaders – had to be subsidized by the state in order to stay afloat.

Governments paid for these subsidies by taxing farmers or forcing them to sell to marketing boards at fixed prices.  In many cases, they were left with no resort except to borrow money abroad, which is one of the reasons why so many African and Latin American countries have such large debts.

Brazil is an especially interesting case.  After economic reforms in the 1990s spurred economic growth, the left-leaning government of President Lulu da Silva recently came very close to reverting to the old ways.

The Brazilian government threatened to break patents on HIV/AIDS drugs imported from American and European manufacturers.  Its claim that it merely wanted to reduce the cost of providing drugs to 180,000 poor people with HIV rang hollow since it was able to accomplish this simply by negotiating a cost differentiation scheme with the manufacturers rather than producing copycat drugs locally.

Though Brazil eventually backed off their threat, there remains an even more disturbing, aspect to Brazil’s threat to break pharmaceutical patents.  The nation of 186 million people currently benefits from billions of dollars pumped into the development of
AIDS medicines by the research-based pharmaceutical industry in the U.S. and Europe.

As the incidence of HIV/AIDS in wealthy countries gradually declines, the demand for newer, better HIV/AIDS drugs will also wane.  But AIDS is projected to remain a very serious problem in many emerging countries, including Brazil, for generations to come.

If Brazil and other poorer countries break the patents on AIDS medicines now, they are likely to find that fewer, if any, new and improved AIDS drugs will be available for their suffering populations in the future.

Research-based drug firms are already reacting to the unfavorable market conditions for AIDS medicines in poorer countries.  Over the past six years, the number of HIV/AIDS medicines and vaccines in the pipeline has decreased by over 30 percent.  In 1999, there were 125 drugs and vaccines in the R&D pipeline; today there are fewer than 85.  This is a cause for concern because resistance to existing AIDS medicines is continuously rising and more effective new medicines will be needed in the future.

The people of Africa are particularly concerned because they comprise more than half of the world’s HIV/AIDS population -most without access to drugs.

For us here in Africa, the real nuts to crack are corruption, excessive government regulations, poor education, punitive local taxes on drugs and rampant shortages of healthcare professionals and material.

Problems abound.  HIV/AIDS victims in Africa simply cannot afford decent meals not to mention clean water to help gulp down anti-retroviral medications.

In the long term, governments of African countries – including my own Ghana – should broaden access to economic opportunities through institutional reforms.  Giving people a stake in society by improving their economic well-being has proven to be one of the most effective bulwarks against the spread of HIV/AIDS.

An important first step would be to decentralize ownership and management of resources and other assets.  Another would be an effective, transparent and accountable legal framework that combines, encourages and enhances respect for private property and the rule of law.

In totality, these reforms can increase entrepreneurship and innovation, empowering people with information to make life-saving choices and enabling them to purchase insurance against deadly diseases such as HIV/AIDS.

Africans are unsure, based on past experience, whether or not the G-8 nations’ agreement to double their annual aid to Africa to $50 billion will ever solve the problems facing the African continent.  But they also are increasingly aware that their ultimate fate depends on developing their own self-reliance.