Thursday, December 15

Niger is a victim of its own government

...Niger is a victim of its own government. Early this year, the government refused to heed warnings that a food crisis was imminent. When the crisis arrived, it denied there was mass starvation and claimed the harvest had in fact produced a surplus. The government later proceeded to accuse the World Food Programme of exaggerating fears that Niger could face another famine within months. Now, a few months later, at least 2,5-million people are short of food.

In many respects Niger is still a command economy: it is up to the rulers in Niamey to decide prices. But economic sense, let alone common sense, dictates that when producers, particularly farmers, can sell to willing buyers at a mutually agreed price, then it gives them an incentive to produce more. This in turn enables producers to afford basic necessities instead of waiting for the government to provide them.

In a command economy, growth remains elusive. Take for instance the great famines of the 20th century -- in China (25- to 40-million deaths), Soviet Ukraine (7- to 10-million), North Korea (2- to 3-million) and Ethiopia (nearly a million) -- it was food requisitioning and economic control by communist governments that destroyed incentives to produce. When countries free their markets, they cut undernourishment down and abolish famine, as in east and south Asia in the past three decades.

But Niger's agricultural sector is still government-run and still involves mainly subsistence farming. This does not encourage quick responses to changing conditions or bad harvests. The locusts in power are well fed so there is a tendency to pretend that all is well without bothering about the starvation their policies cause.

The crisis is further compounded by regional trade barriers. World Bank figures show that African nations slam tariffs as high as 33,6% on agricultural commodities from their neighbours.

Some groups have blamed Niger's famine on its alleged "free market" policies. In fact, Niger has one of the least free economies in the world, ranking 107th out of 123 countries in the Fraser Institute's report on economic freedom in the world last year. A few government-owned companies have been privatised and some financial services liberalised, but these have had little impact on the majority of Nigeriens. Crucially, farmers lack secure rights to the land they till, which means they have little incentive or ability to improve productivity.

Meanwhile, entrepreneurs face government regulations and restrictions at every turn: for example, the cost of setting up a company is equivalent to about four years' average income. These problems are compounded by inflexible labour laws, which discourage people taking on employees and so prevent the development of larger-scale businesses.

No wonder there is so much poverty.

People are starving in Niger -- and in Zambia, Zimbabwe, Ethiopia and elsewhere in Africa -- but not because of free markets. Rather, they are starving because of the lack of markets and their underlying institutions: property rights, the rule of law and limited government.

More aid won't solve these problems -- so far it has perpetuated poverty, corrupt politicians and malign policies. But next week ministers from around the world will meet in Hong Kong to discuss trade reform. There, rich countries should lead by example, committing themselves to liberalising trade and reducing subsidies -- then maybe political leaders in Africa will follow suit.

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