Thursday, October 26, 2006

A Prize for Good African Leaders

Part of the reason why Africa continues to be in a cycle of poverty is due to corrupt leadership in many African nations. In these cases, foreign aid is not effective because that aid typically falls into the hands of corrupt leaders and helps them stay in power at the expense of their people.

As a solution to this problem of bad/corrupt governance, an African billionaire has offered a lucrative monetary prize to any African leaders that meet certain standards of governance.

The contest, launched in London, will award winning leaders $5m (£2.7m) over 10 years when they leave office, plus $200,000 (£107,000) a year for life. The award will go to African heads of state who deliver security, health, education and economic development to their constituents.

In an interview with the Financial Times newspaper, Mr Ibrahim, 60, said leaders had no life after office. "Suddenly all the mansions, cars, food, wine is withdrawn.
Some find it difficult to rent a house in the capital. That incites corruption; it incites people to cling to power. The prize will offer essentially good
people, who may be wavering, the chance to opt for the good life after office,"

What do you think of this prize? It is actually similar to the Netflix innovation prize we discussed recently. Do you think it will be effective in combatting the corruption in many African governments?

Economist Tyler Cowen thinks the prize is too small. Here is another post about it where the author is skeptical, thinking that is gives a reward for something that should be expected.

(Source: Marginal Revolution)


Anonymous said...

Its so strange to think about Africa compared to the United States and most of Europe in which government corruption is minute. For a single person to offer a large sum of money to intice governement rulers to rule morally is insane, but i think it may work. I agree however that the monetary amount may be a little too small. From an conomic stand point firms evauluate whether they should stay in buisness by finding their economic profit. The same idea can be applied to an African ruler. While in rule, the official is living a lavish, spoiling life. What would make him want to leave that style of life? The only way he would leave would be if his new life could provide him with the same life style as he has lived while in office. At the minumum the Economic profit in his case must equal zero in order for him to just be indifferent to leave the office. So to be sure that an African official will leave the office the incentives of his new life must be worth more than the incentives of life while ruling. A.K. A. the economic profit must be above zero.

seth weiland

Anonymous said...

I think that one can pose a strong argument from either aspect of this argument. After reading what Seth said, I agree that the thought process behind the whole situation is good, but there should not be a situation like this. Being in power should be motivation enough for these African leaders to "do the right thing." I don't know whether the African people have the right to vote or not, but if they do, then it is the people's fault for putting these people in power. If they cannot vote, then the UN needs to take some sort of stand against it. But as of right now, irresponsible people are in power, and they are not even being offered enough money to motivate them enough to change.


Anonymous said...

I actually agree with Tyler Cowen on this topic. Shouldn't people want to be the ruler of Africa and help bring Africa out of poverty? Shouldn't that be expected? I guess not if a rich, African man has to offer a reward for someone to do the job. On the other hand, since no body has stepped up to the job of ruling Africa, maybe this reward is necessary. When I thought about this idea of a reward, I decided that it probably wouldn't help combat the corrupt African government. Paying somebody to rule Africa will not eliminate the corruption because Africa would be left with a leader who was in the job for the money, not the better good of the nation. This could result in a leader who only gives the minimum effort to maintain the payment. Seth makes a good point about the lavish life style of an African ruler. What will they want to give up the glorious life style? The economic profit would be pretty high. Anyway, I see this reward as a possible benefit in that MAYBE someone will step up to the job. Although, I side with Tyler Cowen and think that people should want to save their country for the better good of people, not for a monetary benefit.
-Morgan Hale

Anonymous said...

Even though I too find it a little ridiculous that this has even become a may be very necessary. Even though the prize seems small, if this was a tradition that continued, it may gain momentum and eventually catch on so that throughout Africa the governments are less corrupt. However, even though that seems like a small prize amount for such an important "contest"...not every country is as wealthy as ours and I just think that in many of the African countries that sum would seem much larger. In no way do I think its a bad idea...its good that a man cares enough to be willing to give up so much of his personal money. Even if it does fail well then lesson learned. It won't hurt to try it out. And if it does end up working out, then all the better.