EDITORIAL PAGE — Capitalism in Africa

Aristotle hit the nail squarely on the head, sometime back in the third century BC, when he called poverty “the parent of revolution and crime.” The states likely to be well administered, he noted, are those in which the middle class is large, and larger if possible, than the other classes . . . “for the addition of the middle class turns the scale and prevents either of the extremes from being dominant.”

Those words still ring true, and are particularly appropriate for the continent of Africa as it faces the next century. For decades, Africa has been a battlefield in the Cold War — a battlefield on which the political and economic ideologies of East and West have fought it out. During the 1960s, Russian Marxists found it easy to make converts among peoples whose only experience of capitalism was with the outdated, exclusive and imperialistic model of colonial times.

And make converts they did, much to Africa’s detriment. The economies of these socialist countries stagnated, and even before the lifting of the Iron Curtain, most came to realize that the 5-year plans and policies of state control simply did not work. It was also apparent that no help would be forthcoming from the former Soviet Union, or from Cuba, both of which were suffering from their own economic woes.

With the wholesale collapse of the old order, many African nations were prompted (and sometimes pressured) to take steps to revive their comatose economies. The measures now being put into place are designed to attract new investment from the private sector. Governments are showing a commitment to a reduction of state involvement, through the privatization process; foreign exchange markets are being liberalized; and mining codes are being updated to attract more foreign investment. Some countries are testing the democratic process by holding elections for the first time.

North American-based mining groups are heeding the call, and joining South African and Australian companies which are also interested in pursuing new mineral projects. Canadian companies, particularly those from Quebec, have the added advantage of being well equipped to take advantage of opportunities emerging in many parts of francophone Africa.

These are exciting times for Africa, and there is growing acceptance that private enterprise and capitalism can be the engines for an economic renaissance. In some countries, however, the level of commitment to change is, at best, half-hearted. In others, entrenched interests are clinging to the status quo. And that is why it makes good business sense for all foreign companies to be socially and environmentally progressive while pursuing and developing projects in Africa.

The commitment to economic and political change will then take root, and likely blossom further, if it is perceived that new mine projects also provide opportunities to local residents in the form of jobs, spinoff benefits and, in some cases, equity participation. For proof of this, one need only look at what the diamond industry has done to make Botswana’s economy one of the strongest in Africa.

Over the long term, this progressive approach will lead to a more stable economic and political structure, and, it is hoped, to the development of a middle class which will be, as Aristotle recommends, larger than the other classes. And then, perhaps, Karl Marx can finally be laid to rest.