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Africa Economic Success Depends on Three Big Reforms

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Many African countries are among the poorest in the world, yet Western approaches to aid neglect reforms that would help most of all, a new Competitive Enterprise Institute (CEI) report finds. Instead, the Western “poverty industry” comprised of government agencies and nongovernmental organizations waste time and resources advocating for foreign aid, crony projects, and costly, unreliable renewable energy sources that fail to spur economic growth and prosperity.

“To help lift African nations out of poverty, we must promote reforms that secure property rights, reduce taxes and regulations, and, most importantly, increase access to energy that is affordable and reliable,” said Iain Murray, CEI Vice President for Strategy and co-author of the report, Economic Freedom is the Key to African Development.

“With more than 620 million people lacking any access to electricity, energy poverty is a crushing reality for too many Africans,” said co-author Daniel Press, a CEI research associate. “Given this urgency, it is disappointing how few Africa advocates prioritize access to energy, especially low-cost fossil fuel.”

Key points from the report:

  • Too many businesses operate outside the realm of government oversight, which impedes economic and job growth and excludes legal protections against fraud. The report argues high taxes and prohibitive regulations discourage businesses from coming out of the shadow economy and urges a reduction in both of these government barriers.
  • African nations disproportionately lack secure, strong property rights, such as land titles that are secure from theft or corruption. This leaves people unable to leverage their assets to borrow money, start a business, or be protected against property damage or theft. The use of blockchain technology would digitally record and share data, eliminating reliance on paper land titles.
  • The huge shortage of electricity forces people to burn wood for cooking and heating, leading to deforestation and indoor air pollution, and precludes large scale industrialization that brings jobs and economic growth. Energy policies should prioritize reliable, affordable, readily available energy sources over politically-correct energy sources.

View the CEI report, Economic Freedom is the Key to African Development by Iain Murray and Daniel Press.