Why it is Catch-22 for Liberia's development hopes
- 15 December 2012
- From the section Business
When BBC Radio 4's Today programme embarked on its plan to "adopt" Liberia as a country, I seem to remember my colleague and fellow presenter John Humphrys asking an important question about the country: why is it that progress towards development there is so slow?
He was right to raise it.
After all, the instability and civil war that completely managed to wreck the country over a 23-year period are over. There is a competent president in post, aid is pouring in, and the debt hanging over the country has been written off.
And yet for many people in Liberia, conditions are still medieval. Many people are living on incomes of $5-10 (£3-6) a week, there are only about 100 or so doctors in the country to look after the 3.5 million people there, roads are pot-holed and only a small percentage of the population have access to electricity.
Yet, what is so striking about Liberia is that in a place where there is so much to be done, I have never seen so many people with nothing to do.
More than 80% of the workforce is unemployed (if the concept can be meaningfully measured at that kind of level). All over the country, at all times of the week, you see people just hanging out. Young men sitting astride their mopeds (there are plenty of them around as young veterans of the war were given the money to buy mopeds to encourage them to hand in their weapons).
Or you see children and women on the sides of streets or in bustling markets hopelessly under-worked engaging in low value retail activities.
One boy told me that if he wanders around for half a day, he can sell about 12 packets of biscuits. That is a lot of work for a child in return for very little income.
Think how much more productive everybody could be with some well-organised tasks, some decent management and a bit of equipment.
Which brings us back to the John Humphrys question.
Why does that kind of development not occur? Why does Liberia not take off? Why does it not become a tiger economy following the model of others from Europe and Asia to the Americas, which heaved themselves out of the poverty of subsistence agriculture by opening factories?
After all, manufacturing quickly makes relatively unskilled workers very productive indeed. In principle, Liberia should be highly attractive to employers with wage rates there at about $5 a day in the formal sector of the economy, making them about a fifth of those in the most industrial parts of China.
Having spent an intensive week in the country (a ludicrously short time to start pontificating on it, I admit) I came to think I had a not very original answer to that Humphrys question. So let me set it out here.
It all comes down to the many different Catch-22s of development. Let me give you an example of the sort of thing I mean. For industry to settle in a country, you first need electricity; for electricity, you need some trained workers; for trained workers, you need some schools; for schools you need some money; for money, you need some industry.
There are more subtle examples too: to hire expert foreigners to manage your electricity industry and get things moving, you need civil servants who know how to hire foreigners. But you probably don't have any civil servants expert in hiring foreigners - you really need to hire foreigners to acquire some.
The general point is that Liberia starts from the disadvantage of having multiple disadvantages simultaneously. If we had any one of the country's problems, we would fix it pretty quickly - if we had no electricity, we would be able to build some up pretty darn fast. If we had no schools, we would rapidly create some.
If the civil service was weak, we would establish one by hiring good people from the private sector. But if we lacked electricity, schools and civil servants, the challenge of building each of these sectors together would be more than the sum of the challenge of building each individually. Progress will not occur on one front without progress on the others, and achieving progress on all fronts is going to be slow.
An important implication of this is that we should not judge Liberia by western standards. When you ask a question about why something has not happened, it is generally because you can't assume that kind of thing happens in that environment.
Western donors who attach tough terms and conditions to their aid and who want endless compliance forms to be filled out, appear not to get it at all. There simply are not enough people to fill those forms out and so aid often takes too long to get through. A point made by President Ellen Johnson Sirleaf to me, in an interview.
As a final Catch-22 example, I would cite the Liberian tax system. Tax revenues provide money to support health and education but health and education are necessary for a well-functioning tax system.
I spent an afternoon with a tax inspector in Bong County and was dismayed to find his office was a small empty dilapidated building, furnished with a table, a couple of chairs and a cupboard. It had only just acquired a lock on the door. The inspector's taxpayers typically didn't keep accounts; he didn't have transport to get around to see them… and so on and so on. Where do you start in building a tax system out of that?
Oh, and if that wasn't bad enough, the population of prime age adults - the ones who all societies rely on to do most of the important tasks - spent their formative years in war, being taught how to destroy things rather than how to create them. The human capital was wiped out by the years of self-destruction along with the infrastructure.
In short, why does development take so long, even in a place where the intentions of those in power are good? The answer is because while any one physical or human institution can be reformed or improved rapidly, it simply takes a long time to create them all from scratch.