Millions of Africans now living on $2 a day...

Millions of Africans live on less than a dollar a day. Depending on what events are happening internationally (wars, sports etc), I generally get at least one report per day saying that food aid needs to be increased to the World’s poorest continent with the greatest irony being that Africans may not even be able to import their own food back once they’ve exported it.

The Southern African Development Community is facing a potential sugar supply crisis, but still Zambia, Zimbabwe, Mozambique and Malawi have said they will not allow Botswana, Lesotho and Namibia and other member states to import from outside the region in order to “protect their industry”. Protect what? You can’t sell sugar you don’t have.

The consequence: you squeeze supply and the price goes up. Perhaps now millions of Africans are living on only $0.95 per day.

Clearly Kenya’s blocking of Ethiopian Airlines has meant prices are higher than they need to be on monopolised routes. Poorly implemented protectionist policies makes African countries more expensive than they need to be.

So the question is how do we make Africa cheaper? How do we make $1 worth $1.05?

We can start by making sure that protectionist policies that operate to protect industries don’t do so at the expense of people within the country. Nigeria’s 120 percent tax on rice imports means that Nigerians are effectively paying almost double what they should be paying.

And moving on to $1.10? Oddly enough I saw part of the answer on my way to work this morning. On two occasions taxis stopped illegally just inside blind corners backing up traffic. Sure the people in the taxis had the convenience of not needing to walk an extra 25m, but convenience costs. Twenty cars had to break and then accelerate unnecessarily. Forty people had their hours of productivity marginally cut, while only two gained.

There are two major consequences to not using infrastructure properly (i.e. in line with what infrastructure was designed for). The first is that the maximum benefit cannot be attained and the second is that maintenance costs are likely to go up.

The other option of course is to build infrastructure and systems that operate more specifically to what is required. Nigeria’s rail expansion to stop congestion in Lagos is just such an example and, if successful, will help increase the potential for productivity. Similarly, the lights that were switched on in Monrovia for the first time in 16 years allows people to work at night and thereby boosts the potential for productivity.

Millions of Africans are now living on between $1.15 and $1.20 per day. If other inefficiencies are removed, like illegal taxes, this can be pushed even higher.

So we’ve had at least a 15 percent increase in ‘income’, which far exceeds Africa’s average growth of around 5 percent. It may even be possible to double this with a little bit of long-term planning.

Millions of Africans live on $2 per day. Well, it’s a start...