Tuesday, July 8, 2014

Interview with Karol Boudreaux on prospects for African economic development

Karol Boudreaux (center) with UVA students
“Americans tend not to think about very many places outside of America, so I'm not sure how many Americans are thinking about Africa,” said Karol Boudreaux, director of investments for the Omidyar Network, “but if they do think about Africa, I think it's mostly in a humanitarian sense. It's a shame if Americans don't recognize the tremendous potential in African countries and the tremendous potential of the entrepreneurs” across the African continent.

Boudreaux, an expert on African policy who has served as African Land Tenure Specialist at the U.S. Agency for International Development (USAID), made her comments in an interview after a lecture she delivered at the University of Virginia in October 2013.

The message of her formal remarks was an optimistic one: an entrepreneurial spirit is transforming Africa's economies in a way that would surprise many Americans.

“If the vision or the message or the narrative that they're listening to is, 'Things are bad and we need smart people to fix them,'” she said in the interview, “what they're not recognizing then is that very smart people in Africa are already starting to fix the problems. I wish that message were conveyed more frequently, that entrepreneurs on the ground in Africa are finding really creative ways to solve local problems. That whole local knowledge issue, I think, tends to be overlooked in some of those debates.”

Referring to international development agencies like USAID, she said, “there is a recognition that things are changing. The recognition comes from the fact that the development agencies themselves may have a less central role to play, frankly, and I think they're feeling that reality. They're feeling that the private sector is growing and thriving and they're not the central actors anymore.”

That, she smiled, is “a great thing for Africans.”

'Tremendous changes'
Boudreaux, co-author (with Paul Dragos Aligica) of Paths to Property: Approaches to Institutional Change in International Development, summarized the changes that are improving Africa's economic prospects.

“Some tremendous changes are going on on the ground in sub-Saharan Africa today,” she said.

First, there has “been a real focus on reducing regulatory barriers to make it easier to do business for the entrepreneurs, the millions of entrepreneurs, who are otherwise stymied in African countries.”

Second, she continued, “many countries have adopted new macroeconomic policies that have led to much lower inflation rates, that have made the money supply a bit more stable, that have done things like privatize businesses that were run by the government, introducing a more competitive environment into these economies.”

In short, Boudreaux said, “more competition, lower costs of doing business, [and] more stable money supply [have] really contributed to improvements on the ground.”

Cell phones
The introduction of cell-phone networks, for example, “has been a dramatic change. Having the cell phone technology on the ground has meant that people have had a whole new tool that they can use in creative, interesting ways.”

For instance, she pointed out how “cell phones are used to send information about crop prices, they're used to send information about medical care, they're used for entertainment, they're used to transfer money supplies. Every one of those different activities is creating jobs, leading to competitors who do more [and] do better, transfer money faster, provide education over cell phones, provide a whole variety of other sorts of information and connections and so, in important ways it really has changed the nature of Africa.”

Another change that is now taking shape is the decision of francophone countries like Rwanda and Gabon to emphasize English-language instruction.

That will “make the French even more irritated than they already are. They're sort of irritated,” she said, by these countries' other attempts to distance themselves from French dominance that characterized the post-colonial era.

Adopting Engish as a medium of instruction “shifts the focus of attention in those countries towards English-speaking consumers and so you see things in Rwanda like call centers set up to service Great Britain,” Boudreaux said, although they do less to service the United States.

Even so, she added, “I can easily imagine in ten years Rwanda being a back office for a whole variety of English-speaking countries and that's good for the Rwandans who have those new jobs that otherwise didn't exist.”

Indian investment
While there has been a lot of coverage in the news media about China's economic interests in Africa – investing in commodities production and infrastructure, among other things – less attention has been paid to India's interests in Africa.

“India is investing,” Boudreaux acknowledged. “Some of the investment has been in extractives but a significant amount of Indian investment is in agribusiness,” specifically in “having access to land to grow a variety of crops and then process the production and send the crops either back to India or elsewhere in the world.”

As an example, she pointed out that “Indians are very involved in cashew production, increasingly involved in production in South Sudan” – which is now in the news on account of political violence – but “especially, in Ethiopia,” where Indian investors have poured a lot of money into the agricultural sector.

(This article previously appeared in slightly different form on Examiner.com.)