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Entrepreneurship, Government, and Development in Africa

Entrepreneurship, Government, and Development in Africa

This video was recorded at MIT World Series: The Legatum Pericles Lecture Series. After centuries of insufferable oppression by colonial powers, bloody independence struggles, and corrupt home-grown regimes, "Africa today is quickly awakening, and determined to mainstream itself in the phenomenon of the globalization process," says John Kufuor, who served as Ghana's president for two terms starting in 2000. Kufuor recounts how Ghana transcended its dark history to attain astonishing political and economic progress, establishing the nation as an exemplar for fellow African states. In a brisk history lesson, Kufuor accounts for the lag between Africa and other continents in socioeconomic development: geography kept Africa outside ancient trading routes, and when "marauding" Europeans eventually encountered Africa, it was "more or less a one-sided, institutional gang rape..." Denied citizenship and rights, for 600 years "the African ego and personality was assailed and trampled upon." Following World War 2, colonial powers relinquished their African holdings, but successor native governments were often little better, says Kufuor, spouting revolutionary rhetoric, and stifling "visionary individualism and creativity." State control meant "private capital formation went underground." African rulers maintained attachments to their "former European overlords," who imported Africa's resources "raw on concessionary terms." Kufuor blames the "stinginess" of foreign entrepreneurs, their unwillingness to "add value" to these products, for African nations' current paucity of medium and large-scale business. But Ghana's trick was to transform this disadvantage -- a large pool of small, agriculturally based businesses -- into the centerpiece of an economic revival. Kufuor cites in particular cocoa farmers, responsible for one of Ghana's principal exports, who own on average no more than three acres. When he arrived in office, Kufuor determined to support the "self-reliant, risk-taking initiative" of such farmers and other small-scale businesses, recognizing that they were key to "unleashing the potential wealth of the nation." His government pursued debt forgiveness by the IMF; separating the central bank from the president's office; and distributing more banking licenses and lowering lending rates. Aid to farmers with trading, modernization, irrigation, and other infrastructure led to unprecedented economic growth: the GDP quadrupled over an eight year period beginning in 2000, with growth at 7.3% last year. Government "had promised to usher the country into a golden age," says Kufuor, and came through not just with economic policies, but with investment in education and a national health insurance plan for all citizens. Two years ago, oil was discovered offshore, and Kufuor, "proud of having laid a solid foundation" for Ghana, prays that this find will prove "a blessing and not a curse, for the good of all our sons and daughters."

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