G8: Something can be done

Are Africa's problems too intractable to be solved? On the contrary, says Paul Vallely, as long as our leaders steer clear both of cynicism and of woolly thinking

The biggest single problem that Africa faces is not disease or famine. It is not war or climate change. It is not unfair trade rules or unpayable debt. It is not bad government or corruption. All of these – formidable handicaps though they be – are not the greatest barrier to economic development for the poorest people in the world.

The biggest single problem that Africa faces is cynicism. And that is an affliction whose baleful influence contaminates not just those who give and take bribes throughout the continent. It also pollutes the thinking of many people in positions of influence in the rich world who have long ago concluded that Africa is hopeless and its problems intractable.

It is interesting to compare the attitudes Bob Geldof had to Africa a year ago and today. For all his unshakeable sense that "something must be done", Geldof began the process that was to lead to Live8 with a scepticism bordering on pessimism. "Africa is fucked," as he graphically put it to Tony Blair behind closed doors in January 2004.

Eighteen months on – after being part of the hard economic analysis of Mr Blair's Commission for Africa and making wide-ranging personal journeys through the continent for his current BBC1 series, Geldof in Africa – his view is rather different. "We really can do this thing," he now says in private.

So much of the prevailing pessimism about Africa is based on half-truths and outdated stereotypes. And there are myths on both sides – among those demanding change and those who shrug mournfully that if aid worked, Africa's problems would be solved by now, instead of being pocketed by corrupt dictators and put in Swiss bank accounts, or spent on arms in endless wars.

The facts give the lie to much of that. Things have been changing in Africa over the past five years (though many commentators are too ill-informed, idle, world-weary or prejudiced to have noticed). To see how, let's examine the four main myths of the current debate on Africa, and then lay bare the big truth that nobody ever writes about.

MYTH No 1

Aid doesn't work. If it did the problems of Africa would have been solved long ago

It is true that a lot of aid was wasted in the past. But that was because both the West and the Soviet Union knowingly gave it to corrupt dictators during the Cold War on the philosophy that "he may be a son of a bitch, but he's our son of a bitch". It was because it was spent on white-elephant projects that local people didn't want and wouldn't maintain. And because it was often designed primarily to further the needs of the rich world with measures like "tied aid", which insisted aid cash could only be spent buying the products or services of the donor country.

Today, those lessons have been learnt. Extensive studies done in recent years show that, when a strong commitment is made to change governance, aid works. Aid is directly responsible for 1.6 million more children being in school in Tanzania and for clinics treating treble the number of out-patients in Uganda since 2000. These are just a few examples. Aid now produces, according to the World Bank, an average 20 per cent return on the money it invests – a better return than many investments yield in the West.

Aid still needs to be improved. It is too unpredictable, varying by as much as 40 per cent from one year to the next. How can governments train and employ more teachers if they do not know whether the funds will still be there to pay their salaries in three, five or 10 years' time? And donors need to co-ordinate better.

But aid brings economic growth. South Korea has switched from being a recipient of aid in the 1960s to a contributor of aid in the 1990s. In Africa, the same change is under way in Botswana. Aid works.

MYTH No 2

Debt relief just encourages repeated bad behaviour, and the money doesn't get to the poor who need it

Much of Africa's debt, given the current state of its economies, can never be repaid. Nor, morally, should it be. The West shares the blame for much of the problem, which began with irresponsible lending by western banks awash with oil-money they needed to lend-on in the 1970s. Having said that, most African countries have already paid back what they borrowed. Nigeria, for example, originally borrowed about $17bn; it has already repaid $18bn, but still owes $34bn in interest.

Debt costs lives. Africa still pays more on debt service than it spends on health. Well-managed debt relief in Uganda has been used to double primary school enrolment and in Mozambique it has immunised 500,000 children. Benin has used debt money to axe school fees in rural areas, allowing thousands ofk k children to attend classes for the first time. And, contrary to what is often said, the evidence shows that debt forgiveness doesn't lower individual countries' credit-worthiness.

There should be strings attached to debt relief, but ones which ensure the money is spent on reducing poverty and promoting accountability and transparency in Africa to root out corruption. But the traditional conditions imposed by the IMF and World Bank – which insist that poor countries privatise basic services, such as water, and open their markets to western goods – need to be dropped. Africa needs to allow its infant industries to grow before they are exposed to competition from the industrialised world.

More debt relief is needed. Last month's much-acclaimed announcement of a $40bn write-off will benefit just 18 countries; there are double that number which still need it.

MYTH No 3:

Africa's problems would be solved if the rich world lifted its trade barriers.

Trade was what drove economic growth in Europe, the US, Japan and most recently in China, India and the tiger economies of East Asia. So why has Africa been left behind?

Campaigners say it is because of the unfair trade barriers the rich world imposes on African goods. Certainly, there are big problems, particularly with the way Europe, the US and Japan subsidise their farmers – to the tune of $1bn a day – 16 times what they give Africa in aid. In 2000, every cow in Europe received more than $2 a day in subsidy – more, grotesquely, than the income of the average African. (Japanese cows got $4 a day.) Agriculture is the only way most Africans can make a living and they cannot compete with subsidised products dumped on their markets. African farmers go out of business and their children starve. This has to stop, as do other unfair trade practices.

However, this is not the main reason Africa is lagging behind on trade. The real problem is that Africa does not produce enough goods, at least not of the right kind or quality, or at the right price.

One major constrainton this is its appalling transport infrastructure – moving goods costs double what it does in other developing countries because Africa inherited far poorer roads, railways, schools and civil services than other former colonies. The other major problem is the internal trade barriers Africans have erected between neighbouring states; these include unnecessary tariffs between African nations, excessive bureaucracy, badly run ports, cumbersome customs procedures, and corruption by public servants using bribes to supplement their meagre wages. The African roadblock stands as symbol of many of these. In the Ivory Coast, to get a single lorry from one side of the country to the other typically costs $400 (£220) in official payments and bribes.

This requires reforms by African governments, but it also needs massively increased aid for transport infrastructure. If Africa could manage to increase its share of world exports by just 1 per cent, it would generate over $70bn (£38.5bn) – treble the amount it gets from its current aid flows and nearly a quarter of its total annual income.

MYTH No 4:

All assistance to Africa is wasted because the continent is bedevilled by war, dictatorship and corruption.

War, dictatorship and corruption arereal problems – but serious progress is being made on all these fronts. When I first began to report on Africa two decades ago there were more than 20 major wars; today there are just four or five. Then, half the countries were run by dictators; today two-thirds have had democratic elections (some more free and fair than others, but concentrating on worst-case examples like Mugabe produces a skewed picture of Africa).

A new generation of political leaders is showing fresh resolution on corruption. Crackdowns are taking place, even in the worst places, such as Nigeria, where a former chief-of-police has been arrested. South Africa has just sacked and indicted its deputy president. Some 24 countries, representing 75 per cent of Africa's population, have so far signed up to an initiative by the African Union's New Partnership for Africa's Development (Nepad) programme to establish an African peer review mechanism whereby a country puts itself forward for scrutiny by its peers to help identify its weaknesses and the actions needed to correct them. This is in its infancy, but there are real signs of hope.

The Commission for Africa sets out a long series of measures on how corruption can be combated, by both African and Western governments. Aid can be used to insist African governments create budgetary processes that are more open to scrutiny. It can be given to strengthen Africa's parliaments, media, judges and lobby groups so they can hold their governments accountable.

In the West, banking laws (now changed as part of the war on terror) can be used to track money looted by corrupt African leaders and repatriate it. Swiss banks are already doing a lot on this; British banks should be made to do more. Western companies should be compelled to publish what they pay to African governments. British companies that are found to pay bribes should be refused export credits. To say: "It's all corrupt, so anything we do will be wasted" is a bogus excuse for not assisting the poorest people in the world.

The real problem

Africa's biggest problem is one which is usually thought to be too boring to write about. For a country to work properly, it needs a range of things we take for granted and which Africa has hardly at all: systems to collect data and people with the skills to analyse it, conceive political policies in response to it, draw up budgets to enable it and design programmes to deliver it. This is true at national level, and even more so in the provinces. Africa does not have the skilled personnel to operate central banks, land registries, customs posts and regional offices of the ministries which deliver services.

To address this "capacity" problem, improved investment in primary, secondary and tertiary education is needed, as well as specialist training for public servants and managers. Basic equipment, such as the tools of keeping records, files, accounting systems, telephones and computers, is also required. This is the case from economic policy to health and education. One-off initiatives on health (on Aids, malaria, vaccination etc – things that donors like to fund) often fail because the basic health service structures are not in place to deliver them effectively. No one wants to fund health service infrastructure; it's not glamorous enough.

On top of roads, railways, water, electricity and telecoms – African governments need support with more abstract infrastructure, including judicial and other systems to better uphold basic property rights, human rights, and respect for contracts, etc. These are essential to create the climate needed to allow the private sector to bring in the investment which is crucial if Africa is to move forward. And these require skilled public servants and managers. More aid is vital to build all this.

It is this need for "capacity building", as the jargon puts it, that connects Africa's many problems. What makes today different from the past is that change has begun in Africa because of widespread recognitions among Africans of what is needed. A new entrepreneurial class is emerging across the continent as well as a new generation of political leaders who have, over the past two or three years, begun to put together a raft of measures designed to improve governance throughout Africa. The flow of cash to Africa from relatives abroad has increased dramatically in recent years, a sure sign of renewed confidence. In 2003, after 30 years of African stagnation, economic growth exceeded 5 per cent in 24 separate African countries – a better rate than much of the rich world.

All this offers the best prospect of real change since Africa gained independence. But without a big response from the G8, these green shoots could wither in the hot African sun.