Advancing Economic Freedom: Key to Africa’s Future

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During his first trip to Africa as Secretary of State earlier this year, Mike Pompeo stressed the importance of economic freedom.

In his speech titled “Unleashing African Entrepreneurs,” Pompeo said:

We want basic security for our families. We want opportunities and rewards for the hard work we invest in. And we want the freedom to do what we want to do with our own lives. It’s how we get there that matters a lot. I’m here today to—to talk to you about a couple of things. More importantly, I want to talk about the next liberation, the economic liberation, a real liberation for African entrepreneurs.

Indeed, as the Heritage Foundation’s Index of Economic Freedom has reminded us every year since 1995, preserving and advancing economic freedom is about empowering people and ensuring real and lasting progress by unlocking greater opportunity.

Over the past 26 years, the Index has become an essential policy guide that analyzes the undeniable links between economic freedom, individual freedom and prosperity in nations around the world. The facts are indisputable: free markets and free people have worked hand in hand to increase prosperity and people’s quality of life. Freer economies have also led the world in innovation and economic growth, and their governments have been made increasingly accountable to those they govern.

It is perhaps unsurprising that countries with freer markets tend to be more resilient in times of crisis and better able to weather difficult external shocks. With their free-market incentives and flexibility to respond to changing conditions that come with less central government planning, they have the greatest availability of food, medicine, and other crucial necessities.

One of the tragic consequences of the lack of economic freedom in sub-Saharan Africa is its correlation with lack of food security and poor nutrition, which are directly linked to the region’s political instability, high infant mortality rates, epidemics , learning disabilities in children, and frequent starvation. In the longer term, foreign aid from the West cannot solve the problem of food security in sub-Saharan Africa.

More urgently, African countries face the difficult task of coping with the pandemic. Coronavirus cases have been slow to arrive in Africa, but the virus is spreading rapidly and has infected increasing numbers of people in African countries, straining already fragile health systems.

Time will tell, but ultimately the solution to this problem – and many other challenges in the region – is greater economic freedom.

As the 2020 Index highlights, Africa can do better in terms of promoting economic freedom and liberating countless entrepreneurs in the region. In the longer term, in a broader context, the major trends that are taking hold are reasons for hope. Continued economic expansion, above the global average, could allow these nations to make the additional institutional reforms needed to ensure and strengthen long-term economic development.

Yet persistent corruption and poor governance, in particular, are costing huge economic opportunities to the region’s huge youth population, a generation of potential entrepreneurs. Their success relies on stable and corruption-free business environments that can generate dynamic private investment and growth.

Encouragingly, a number of African countries have taken steps to strengthen the economic freedom of entrepreneurs. In the 2020 Index, Rwanda moved from the “moderately free” category, where it had been for eight years, to the “mostly free” category. The economic reforms that fueled this rise resulted in the country’s per capita GDP rising to more than $2,000 in 2019 from around $700 in 1995.

Togo also recorded a notable improvement in the 2020 index, sufficient to avoid a return to the “repressed” category. But if he is to achieve his ambitious goal of making the country a financial and logistical hub, he will need to increase economic freedom, including by reforming the judiciary and pledging to fight corruption.

The right way forward is to advance free market policies that enhance economic freedom. As Pompeo said:

[N]All nations doing business in Africa from outside the continent adopt the American model of partnership. Countries must be wary of authoritarian regimes with empty promises. They breed corruption [and] addiction. They don’t hire locals. They don’t train. They don’t direct them. They run the risk that the prosperity, sovereignty and progress that Africa so badly needs and so desperately desires will not materialize.

Indeed, cultivating thriving private sectors based on the principles of transparency and accountability, the key ingredient of economic freedom, is the best source of sustainable and widespread economic development for Africa.

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