Poverty in Africa is a perennial—one might even say popular—issue on modern American campuses. Numerous organizations and speakers implore students to help residents of the world’s poorest continent—by giving money, raising funds, volunteering, or some other form of charity.
The conformity of their messages is stifling.
At the Pope Center we try to help students hear “the other side of the story.” That’s why in mid-November we brought June Arunga, a 28-year-old journalist and entrepreneur living in Ghana, to speak at four North Carolina colleges: North Carolina A & T, St. Augustine’s, North Carolina Central, and North Carolina State.
Her message stands in stark contrast to that of the grand vizier of “fixing” Africa, Jeffrey Sachs, head of Columbia University’s Earth Institute (who spoke at UNC-Chapel Hill and Duke in 2006). His 2005 book, The End of Poverty, argues that grinding poverty could be erased in Africa for about $30 billion a year in aid, which he thinks the West could easily afford. He blames African conditions on the miserliness of Americans and on colonialism.
Others besides Arunga have challenged Sachs’ confidence in the potential of foreign aid. One is William Easterly, author of White Man’s Burden, who gave the John W. Pope Lecture at N.C. State earlier this year. The New York University economist says that most aid (governmental and philanthropic) is badly spent.
Economist and author Dambisa Moyo echoes Easterly’s skepticism. The title of her book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, summarizes her position. Moyo spoke at UNC-Chapel Hill on the same day that June Arunga lectured at NC A & T this month.
So it seems there are two sides—“pro” aid and “anti” aid. But June Arunga didn’t even talk about aid. Instead, the “third side of the story” is a captivating tale of how the obstacles to growth in Africa are being overcome.
Arunga would probably agree with Moyo and Easterly that most government-to-government aid provides little benefit. So what should take its place? Entrepreneurial investment.
Born in Kenya, Arunga began her first documentary for the British Broadcasting Company when she was 22 years old. That was “The Devil’s Footpath,” which charts the story of her 5,000-mile trip from Cairo to Capetown. Her goal was to find out why Africa is poor.
That question had haunted her since her childhood, as she was growing up in a middle-class family in Kenya. Then, she couldn’t understand how 16-year-old teenage kids—shown on American sit-coms such as the Bill Cosby Show (seen on African TV)—could receive cars as gifts, when in Kenya people worked for many years before they could buy one. And she didn’t understand why so many of the high-tech products she used were made in countries outside Africa. Why weren’t they made in Kenya?
Arunga broke off her law school education to go to the United States to find the answers. She worked at the Foundation for Economic Education (FEE) and learned the source of the gap between poverty and prosperity. It is the absence of economic and legal institutions such as property rights and the rule of law, she told students.
In her talks to students in North Carolina, Arunga introduced her message by pointing out a surprising difference between prosperous countries and her home country, Kenya: In the United States, everybody has a legally recorded address. That means that “people can find you,” she says. That simple fact is key to being able to start a business. People can contact you and can keep a record of how financially responsible you are (with a credit score, for example).
In contrast, in Kenya, said Arunga with a smile, in order to find people’s homes you get directions like “go that way and turn at the barn and go by an old tree….” Without legal addresses, people can just disappear if they don’t meet their responsibilities. That means that it is difficult to determine if they are trustworthy or track them down if they are irresponsible. Partly as a result, there are few banks to make loans. So, in order to do business, Africans rely mostly on people they already know, members of their family or clan. Even then, a lot of time is spent figuring out just how far one can go in being confident about someone.
What’s even worse is the fact that until recently most people lacked telephones. The government ran telecommunications, and the bureaucracy simply failed to install phone lines. Arunga said that in Nigeria (an extreme case), after 30 years of independence the government-run telephone company had only provided 4,000 land lines—for a country of 120 million people. It’s hard to do business when you have to go to a government office to use the telephone, Arunga said.
It wasn’t quite that bad in her country, Kenya, but the government-provided telecom services were abysmal—until private companies came in with cell phones. Today 80 per cent of the population has privately provided phones.
The proliferation of cell phones in Africa allowed Arunga to help start a business in Ghana. Her business aligns perfectly with the new availability of telephones and the severe need for banking services. It provides a card—the African Liberty Card—that can be used to transfer money by cell phone.
Just as Africans rarely have a legally registered address, most don’t have any banking services. Banks are expensive to build and operate and not adapted to relatively poor consumers. Arunga and her colleagues have created a business that uses telephone “scratch cards” to replace banking services (such as a checking account) by providing a secure place to put one’s money.
Here’s how it works. A person buys a card for, say, $100. The card has a number, revealed by scratching the surface of the card. That number can be sent by a text message on a cell phone. It creates a record of the amount purchased for the card, giving the purchaser an “account” of $100 to spend. For example, a woman who sells bananas at a market can, at the end of the day, “bank” her day’s earnings by buying a scratch card. She will be able to safely spend that money in the future. (Arunga’s business has an informative website.)
In her talks, Arunga did not minimize the challenges to starting up a business in Africa. The key institutions that make freedom possible—protection of property rights and the rule of law—are weak in many African nations.
Even though she chose a business that was largely outside the purview of government bureaucracies, she finds entrepreneurship in Africa to be a “full-body contact sport” that is not for the faint-hearted. An entrepreneur must try every tactic to overcome the bureaucracy that strangles innovation at every turn.
In spite of the challenges, optimism dominated her lectures. A few days after Arunga spoke at NC A & T University, a faculty member commented: “My students are still talking about June's video (“The Devil’s Footpath”) and visit! The contrast between the horrible conditions in the video and the hope for the future through entrepreneurship in her presentation was a surprise to most students who are used to hearing ‘the government ought to do something.’”
By opening up entire new ways of thinking about economic development, June Arunga challenged her listeners and raised fundamental questions about how the future of Africa will play out. The Pope Center was pleased to host this outspoken and courageous woman. We are grateful to the Arthur N. Rupe Foundation, the Atlas Economic Research Foundation, and Economic Thinking.org for making possible her visit to the United States.
Jerry Rogers, staff photographer for the Campus Echo at North Carolina Central University, photographed June Arunga when she spoke at the university. One of his photographs is on the front page of this article.