A young man from Senegal had dreams. He saved up and envisioned opening a small shop. But it never materialized.
As soon as he launched, family and friends began asking for free products—out of necessity, of course. It felt like an obligation, so he complied. Eventually, this practice depleted his stock, making the business unsustainable.
So, he never really got to start. Others, however, have managed to set up businesses, albeit far from their families and facing numerous hurdles.
This situation mirrors countless stories across Africa. It’s not just about the continent’s immense potential; it’s really about the obstructive circumstances that hinder that potential from being realized.
These traditional networks of obligation stifle grassroots initiatives. Meanwhile, kleptocracy thrives, taking advantage of those who somehow make it. For 70 years, Western aid has inadvertently supported both sides of this dynamic.
The numbers paint a grim picture. When the World Bank, USAID, or the IMF send billions to governments that fail to enforce contracts or secure private property, they’re not fostering prosperity but rather sustaining the very institutions that block it.
These governments, instead of feeling pressured to reform, receive a continuous influx of foreign funding that alleviates financial strain. Aid offers them time—time to survive, but not time for freedom.
Dambisa Moyo, a Zambian economist, outlined this cycle sharply in her book, “Dead Aid.” African governments reliant on foreign assistance lack the motivation to cultivate the tax bases necessary for productive citizens. When governments tax their people, they must answer to them.
Aid removes the crucial accountability that comes with taxation. Governments supported by foreign aid often answer to donors, or sometimes, to no one at all.
The principles of a free market are clear: secure property rights, enforceable contracts, fair courts, and reasonable prices. These aren’t Western imports; they’re universal necessities. Countries like South Korea and Botswana have made this clear, while the African exception serves as proof of this truth.
These are not stifling Western demands. They are prerequisites for prosperity. Societies that have built wealth did so by establishing these foundations first. Those that skipped this step often find themselves still waiting for change.
The real barriers to starting businesses in Africa aren’t just about technology or infrastructure; they stem from the absence of institutional basics that encourage investment.
Why would anyone fund a long-term project in a place where a new leader could overturn rules overnight? Why invest in a factory when the risk of losing land ownership is high? Or open a shop in a place where theft goes unpunished and the legal system favors the elite?
I remember a visit to Uganda years ago when a local governor wanted to discuss building a hydroelectric dam. The location was ideal, and there was a pressing need—locals had electricity just two days a week.
However, when I asked if investors would see a return, he hesitated. Most residents lacked cash, and electricity theft was rampant.
People climbed poles and illegally connected, suffering no consequences. Investors stayed away. While the physical setup worked, the institutional support was absent.
The challenge intensifies with climate finance. Western nations enjoyed industrialization with affordable energy. Now, Africa faces pressure to adopt costly and unreliable renewable energy that can’t even power essential services. The underlying message seems to be, “We got rich thanks to cheap energy; now you should develop with expensive alternatives, even if it leaves you poorer due to climate change.”
Africans deserve better than such a bargain. The message, if stripped of diplomatic niceties, is clear: “We grew wealthy on affordable energy, and we want you to remain poor with expensive options because of climate concerns.”
African nations that have made progress didn’t do so by merely receiving the right type of aid; they made critical institutional choices. Botswana managed its diamond revenues lawfully. Rwanda tackled corruption head-on. Mauritius opened its economy. Their leaders recognized the importance of property rights and that sometimes, courts need to act against the powerful. They understood that foreign investors should receive fair compensation.
These pivotal decisions came from within—there was no UN mandate that created them. The catalyst for building prosperous nations is trade, not aid. Open markets, technology sharing, and trade agreements inclusive of African producers will serve the continent far better than another cycle of consultants and reports.
This young Senegalese man didn’t lack potential. He was simply acting logically in an illogical system prolonged by aid.
The path forward is clear, albeit modest. We need to establish independent courts, secure property rights, enforce contracts, and ensure reliable, affordable energy. This framework will support investment and entrepreneurship—something Africa is more than capable of achieving.
