Peace through Commerce: Responsible Corporate Citizenship and the Ideals of the United Nations Global Compact

General Electric and Corporate Citizenship

C H A P T E R 1 6 General Electric and Corporate Citizenship Improving the Health of the Poor in Africa Marshall Greenhut with Bob Corcoran POVERTY IN AFRICA Africa is, by far, the most impoverished continent in the world. Thirty-five out of the bottom thirty-eight ranked nations, including the bottom twenty-two, on the 2006 United Nations Human Development Index were African nations.1 Additionally, thirty-four of the least developed nations in the world are in Africa.2 Africa was the only region of the world where per capita GDP fell in the last two decades of the twentieth century. Worldwide, poverty has declined significantly in the last twenty years. In China alone 400 million people were lifted out of absolute poverty. Yet progress has been almost nonexistent in Africa, particularly sub-Saharan Africa. In 1980 one out of every ten poor people lived in sub-Saharan Africa; by 2000 that number had jumped to one out of three. The World Bank estimates that the ratio will jump to one out of two in the near future .3 From 1980 to 2001 the percentage of the population in subSaharan Africa living on less than US$1 per day rose from 43 percent to 46 percent. In real numbers it was a rise from 164 million to 314 million people. Per capita GDP in the region actually fell 14 percent in real terms.4 Africa’s health conditions are by far the worst in the world. HIV/AIDS has lowered life expectancy and tuberculosis has become endemic. Malaria kills thousands of children each day. Other tropical diseases coupled with poor health care cause the loss of billions of dollars in production each year. 349 350 Marshall Greenhut with Bob Corcoran Traditional direct aid has not been effective in curing Africa’s ills. Despite over $400 billion in aid since World War II, little progress has been made. Poor governance has been cited as the primary reason for this lack of development. While corruption has certainly been a major issue, it alone is not a sufficient explanation for the problems in Africa. Jeffrey Sachs of Columbia University’s Earth Institute posits that Africa, even in well-governed areas, is stuck in a “poverty trap, too poor to achieve robust , high levels of economic growth (and in many places too poor to grow at all).”5 Thus, fundamental changes must be made in order to improve quality of life in Africa. Sachs identifies several key factors contributing to Africa’s poverty trap. These include very high transportation costs and small market size; low productivity in agriculture; a very high disease burden; adverse geopolitics; and very slow diffusion of technology from abroad. These factors combine to make Africa the most likely region of the world to fall into a poverty trap.6 High Transportation Costs and Small Market Size Africans tend to live in the interior of the continent. Shipping goods between the coastal ports and where the population lives and works is expensive . Transportation costs are much higher in Africa than in Asia. Estimates put the rate per ton mile at two and half times that in Asia. If transportation costs were halved, the volume of goods transported could increase by as much as 500 percent. Additionally, sub-Saharan Africa is effectively cut off from Europe, its major industrialized trade partner, by the Sahara. Africans tend to live inland for a variety of reasons. The soil tends to be better and the rains more constant in the interior highland regions .7 Centuries of slave trade also discouraged people from living near the coasts. This creates a problem in Africa because the rivers are generally not navigable by ocean-going vessels. In The W ealth of Nations Adam Smith discussed this problem: There are in Africa none of those great inlets, such as the Baltic and Adriatic seas in Europe, the Mediterranean and Euxine [Black] seas in both Europe and Asia, and the gulphs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts of that great continent; and the great rivers of Africa are at too great a distance from one another to give occasion to any considerable inland navigation.8 General Electric and Corporate Citizenship 351 Isolation problems are exacerbated by small market size. Africa lacks the modern road system required for high-intensity trade...