Why does most of Africa stay poor while other parts of the world prosper?
People blame things like climate, the history of colonialism, racism, etc.
But I say Senegalese businesswoman Magatte Wade gives the right explanation: too many rules.
âOnce you hire someone, good luck getting rid of them for any reason,â Wade complains. Her government must approve every firing.
âThen the tax code is so complicated ... worth at least two or three truckloads of paper.â
Wade started a lip balm company. Some of her ingredients are not made in Senegal, so she imports them. To âprotectâ Senegalese manufacturers, the government makes importing ingredients expensive.
âSome have a 70 percent import tariff on them!â she says.
President Donald Trump now threatens similar taxes on imports from China.
In Africa, people sometimes escape such taxes by paying bribes. We hear a lot about African corruption.
âPeople complain about corruption as if corruption is a root problem,â says Wade. âI say no. Corruption is a natural consequence of stupid, senseless, idiot laws.â
She says there would be just as much corruption in the U.S. if taxes and regulations here made it as difficult to do business as Senegal does.
âThe only way to fix corruption is to simplify,â advises Wade.
Wadeâs business has survived because she was fortunate enough to find a helpful bureaucrat who pointed out a loophole.
âI went to see the head of customs, and we started looking together,â recounts Wade.â Looking through the volumes of crushing regulations, they âfound a clause in one of the binders saying if youâre exporting 80 percent of your products, and if youâve been in business for two years, you can ask for an exemption.â
Most people are âcluelessâ about these obstacles, she says, especially those in academia, Hollywood and the news media. âThey have such a strong anti-capitalism bias.â
To raise awareness about why economic freedom creates prosperity but regulation prevents it, Wade and the Foundation for Economic Education made a documentary titled âMade in Mekhe.â
In it, she asks: âWhy is it that a couple decades ago, China was at the same level as most African countries? Countries like Singapore made it. Hong Kong made it. Even a place like Dubai â bare land of desert sand â all of a sudden, Dubai (is) one of the financial centers of the world! Youâre like, what? What happened here?â
She says booming places like those understood that they wouldnât create prosperity unless they made it easy for business to operate.
But international aid organizations have a different solution. Wade says they often make Africaâs problems worse by adding rules. The U.N.âs âSustainable Developmentâ goals include things like âinclusive and equitable quality education,â âclimate changeâ and âgender equality.â
âWe have chains around our necks! No one is seeing it. Then they want to come talk to me about inequality! We need greater economic freedom!â
Governments send $50 billion a year to Africa, and businesses offer Africa free goods.
TOMS Shoes promotes itself by sending a pair of shoes to Africa for every pair you buy.
Wade says: âI know it came from a good place. I get it. But can you just think further down the road?â
She points out that a result of TOMS âcharityâ is that African shoemakers go out of business. âYou canât compete with free!â
But donation promotion has become trendy among Western businesses, says Wade. âNow youâre seeing it with tampons, seeing it with soap, with everything!â
Africa becomes dependent instead of self-sustaining. It would be better, says Wade, if Westerners simply encouraged African governments to stop strangling their own entrepreneurs.
âIf I have a job then, guess what? My malnutrition problem goes poof! Even access to clean water goes poof,â says Wade. Instead, âthe business climate sucks so much that people like me canât do that work of creating companies and jobs.â