Why Do The Poor Countries Always Stay So Poor?

It’s now more than sixty years since the independence movement in the late 1950s and early 1960s transformed nearly all of sub-Saharan Africa into independent countries. Hopes soared for a new era of progress and prosperity. But six plus decades on, with essentially no exceptions (maybe Botswana?), the 49 countries of sub-Saharan Africa are about as poor as ever.

The New York Times treats the subject in a big piece by Patricia Cohen a few days ago on September 18. Sorry if this is behind their paywall, but I subscribe to this stuff so that you don’t have to. In the treatment at the Times, this is just a case of the sad cruelty of nature, an extreme instance of “bad luck.” But we can learn a good deal about the true source of the bad luck by looking at clues that Ms. Cohen and the Times inadvertently drop in the course of their reporting, without even noticing that they are doing it.

The funny thing about the bad luck of sub-Saharan Africa is that it seems to afflict all 49 countries at the same time, even as elsewhere in the world at least a few countries (South Korea, Taiwan, Thailand) are able to find the magic recipe to rise out of poverty.

This week’s piece in the Times focuses particularly on the country of Ghana. The headline is “Crisis and Bailout: The Tortuous Cycle Stalking Nations in Debt.” The sub-headline is “The government of Ghana is essentially bankrupt, and has turned to the International Monetary Fund for its 17th financial rescue since 1957.” Seventeen financial bailouts in 66 years since 1957 would be more than one bailout every four years.

In Ms. Cohen’s reporting, the “tortuous cycle” of debt is just an inevitable fact of life for poor nations, one that somehow persists despite the best efforts of the very best and cleverest people. A few excerpts:

The government is essentially bankrupt. After defaulting on billions of dollars owed to foreign lenders in December, the administration of President Nana Akufo-Addo had no choice but to agree to a $3 billion loan from the lender of last resort, the International Monetary Fund. It was the 17th time Ghana has been compelled to turn to the fund since it gained independence in 1957. This latest crisis was partly prompted by the havoc of the coronavirus pandemic, Russia’s invasion of Ukraine, and higher food and fuel prices. But the tortuous cycle of crisis and bailout has plagued dozens of poor and middle-income countries throughout Africa, Latin America and Asia for decades.


About Maria Rekrut

Maria Rekrut, believes Vacation Rental Investing is much more fun than the average real estate investing. Maria, known as the Vacation Rental Guru, writes blogs regularly about her stories and adventures in vacation home investing. Maria Rekrut believes that if she can become successful investing in Vacation Rentals so can anyone else by following her simple investing techniques. Maria is also a regular contributor to the Real Estate Blog http://www.reiclub.com/realestateblog/author/maria-rekrut/
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