by Caitlin Kenney

Kimberly G. wrote to us after hearing our interview with Columbia economist and former economic adviser to the Bush administration, Glenn Hubbard. She writes:

I wanted to comment that the challenges of bringing this "Marshall Plan" approach to Africa (Or at least to Kenya, and I would guess many other African countries as well) are not small. When I was living and working in Kenya, I grew more and more frustrated at the lack of progress in the "war against poverty" there. Despite the positive relationship between the US and Kenya and the millions of dollars poured into Kenya by the US Government via many of the NGOs that my friends and I worked with — too much money never seemed to reach those who needed it most, as Hubbard and Duggan's book recognizes.

Indeed, despite the aid, we often saw no progress at all, or progress in the wrong direction. Having personally struggled to navigate the treacherous waters of the Kenya justice system, I can testify of the complacency and corruption of the government at all levels. It's almost impossible to get anything done without paying bribes! When Kenya erupted in political turmoil at the end of 2007, I wonder if it was due more to the economic disenfranchisement of the poor that was blamed on tribal tension, than actual tribal tension. Lines for food were formed by the poor of all tribes, while the government leaders discussed the prospects of peace in posh safari lodges.

 

Truly, in the face of this gap between the rich and the poor, and the corruption of the government, Glenn Hubbard's ideas seem wonderful. However, the government's cooperation — and change — will still be desperately needed for these ideas to function. I'd like to recount one small example of why, if I may.

A few weeks before I left Kenya, I visited the owner of my favorite bar & dance club in Kisumu, Ms. Winnie Amada. I really went there to set up my goodbye party, but of course, we ended up talking business. A well connected former journalist, Winnie had decided a few years to start a business in her hometown of Kisumu. I asked her why she was one of the only prominent local business owners in town, and she recounted to me an unfortunate story of how she happened to be one of the only locals well connected enough politically to survive in the business climate of Kisumu.

Winnie purchased her restaurant from a German businessman who was leaving Kisumu. She said almost wasn't able to buy it, because a few powerful outside businessmen outbid her once they saw that a local business woman wanted to buy it, but the German owner thought she would make a good restaurant owner and decided to sell it to her anyways. However, these same businessmen viewed her as both potential competitor and as an unworthy business owner because of her ethnic background, and so they tried a number of different means to shut her down. They persuaded her landlord, an incredibly wealthy man who owns perhaps a fourth of the property in Kisumu, to refuse to accept her rent payments and then sue her for nonpayment. Other businesses raised lawsuits against her for unnecessary disturbance of neighbors, although her only neighbors are restaurants and office buildings which are closed in the evening. They temporarily succeeded in shutting down her bar. It was only with the intervention of politicians she knew through her former work as a journalist that she was able to remove the injunctions against her business operations and resume her work.

Even then, it was a difficult process, because both the judge who decided her case and the lawyer who was her advocate were bribed thousands of dollars by the businesspeople who wanted her business to be shut down. The case was only decided in her favor through the personal intervention of the Prime Minister. Earlier this year, an article in a local newspaper was written on her success — although it portrays a slightly different story than she recounted to me!

I think Winnie's story neatly (and unfortunately) sums up the challenges facing the development of an African middle class. Without the connections of the elite that own most of the property and politics in the majority of African countries, or without governmental reforms that encourage small business owners and a justice system that defends them, small business will not flourish in Africa the way Glenn Hubbard, the African middle class and so many others (including myself!) would like to see.