Privatization and Investment in Sub-Saharan Africa (review)

BOOK REVIEWS Ahene, Rexford A. and Bernard S. Katz, eds., Privatization and Investment in Sub-Saharan Africa ................................................................................ 142 Brand, Laurie A. Palestinians in the Arab World ........................................... 144 Bueno de Mesquita, Bruce and David Taiman War and Reason: Domestic and International Imperatives ............................................................................ 146 Gray, Colin Weapons Don't Make War .............................................................. 148 Herbst, Jeffrey U.S. Economic Policy Toward Africa ...................................... 150 Hufbauer, Gary C. and Jeffrey J. Schott NAFTA: An Assessment ................ 152 Mastny, Vojtech The Helsinki Process and the Reintegration ofEurope 19861991 : Analysis and Documentation and Halperin, Morton H. and David J. Scheffer with Patricia L. Small Self-Determination in the New World Order ......;...................................................................................................... 154 Morre, Lt. Gen. Harold (Ret.) and Joseph L. Galloway We Were Soldiers Once and Young: Ia Drang—The Battle That Changed the War In Vietnam ..... 157 Stewart, Gordon T. The American Response to Canada Since 1776.............. 161 Tibi, Bassam Conflictand Warin theMiddleEast, 1967-91:RegionalDynamic and the Superpowers ................................................................................... 162 Esherick, Joseph W. and Jeffery Wasserstorm "Acting out Democracy: Political Theater in Modern China"(77i« Journal ofAsian Studies, Vol. 49, No. 4, November 1990) pp. 835-862; Strand, David "Protest in Beijing," (Problems of Communism, May-June 1990) pp. 1-19, Tsou Tang The Tienanmen Tragedy: the State Society Relationship, Choices and Mechanism in Historical Perspective." ................................................................ 164 141 142 SAIS REVIEW Privatization andInvestmentin Sub-Saharan Africa. By Rexford A. Ahene and Bernard S. Katz, eds. New York, NY: Praeger Publishers, 1992. 218pp. Hardback. Reviewed by Jennifer A. Lind. SAIS MA., 1992 hiPrivatizationandlnvestment in Sub-SaharanAfrica, RexfordAhene and Bernard Katz present a well-balanced and highly readable collection of essays on recent economic developments in Africa. The editors examine Africa's overwhelming economic problems, focusing on the plight of African countries, while taking into consideration important changes in the global economy. The fourteen essays avoid making vague generalizations or drawing broad conclusions. Rather, they explain Africa's seemingly chronic economic problems with specific data, and provide extensive , detailed examples which are both historic and current. The essays present well-thought out solutions to these problems and dare to propose difficult and controversial policy options. The book's analysis is divided into four sections. A clear and concise introduction provides pertinent statistical information regarding African public enterprises and is followed by a discussion of the weaknesses that precipitated their failure. Part I, "Privatization and Investment Incentives," discusses in detail the arguments for and against changing from a public-based economy to a private-based system. Micro-economic policies ofAfrican public enterprises are criticizedinPart ?, "Strategies , Structure and Practices." This critique offers justification for the current privatization effortsofmanyAfrican governments. PartUI, "Prospects and Alternatives ," proposes possible solutions to increase private investment and stabilize growth in Africa today. Since achieving independence from their European colonizers, sub-Saharan African governments have been unable to develop their economies and improve the standard of living for their people. Ahene and Katz argue that thirty years of virtual economic disaster in Africa has occurred largely because of inefficient use of investment capital. The essays address the issue ofwhy there has been a disappointinglack ofinvestment, how it has hindered economicgrowth, andwhatgovernments can and should do to remedy the situation. The text's main point is that government attempts to increase economic growth from the 1960s to the 1980s failed primarily for economic reasons. African economic leaders realized they lacked the necessary and fundamental factors ofproduction such as technical skills, international borrowing power, or commodity and capital markets. Newly independent governments, therefore, made extensive public enterprise investments to improve their economies. These public investments were made with the hope and the promise that living standards in sub-Saharan Africa would be increased. Despite two decades ofincreased government borrowing and spending, African public investment was overwhelmingly declared a failure. Public capital resources invested in inefficient, over-sized public enterprises had been wasted. Economic inequality persisted and the public sectors grew in both size and inefficiency. Inappropriate decisions taken by the governments combined with an adverse business environment doomed public investment to failure. BOOK REVIEWS 143 In addition to persistent economic difficulties, ideological and political factors hindered growth. Political and business leaders shared a xenophobia of Europeanstyle multinational influence. The Western free-market system represented the colonial power from which African governments...