Yesterday, Heritage’s 2012 Index of Economic Freedom was released, and Africa features prominently. With an average score gain of 0.2 points, reflecting a net gain of economic freedom in 22 countries, sub-Saharan Africa is once again the most improved region.
While scores of Western nations have seen their ratings plummet (including the United States), Africa has made noticeable progress. The small island nation of Mauritius (#8) is the first African country to break into the top 10 rankings. Botswana (#33), Rwanda (#59) and Cape Verde (#66) have also made substantial gains as structural reforms have supported economic expansion, leading to a reduction in poverty.
The Index also features a chapter authored by Obiageli Ezekwesili, vice president of the African region at the World Bank—the first chapter in the Index’s history to highlight the importance of economic freedom on the African continent. In “Fighting Poverty Through Economic Freedom,” Ezekwesili emphasizes that the more steps countries take toward deregulation, lower taxes, and limited market interference, the more prosperous economies become. Furthermore, economic freedom generates a variety of positive externalities, including lower levels of corruption, respect for human rights, gender equality, and high employment.
Despite decades of government interference in African economies, the continent has rebounded from the global economic crisis. This reflects the persistence of many African nations to embrace the free market and their implementation of basic macroeconomic principles. Sustained growth for the continent is expected to be at 4.7 percent in 2012 and at 5.2 percent in 2013.
For all of Africa’s progress, however, the region’s overall level of economic freedom still lags behind the rest of the world. The lack of property rights, high levels of corruption, and restrictions on labor freedom remain barriers to economic advancement. South Africa (#70), the continent’s largest economy, suffers from nationalization, land seizures, and state intervention, thus failing to improve its overall score. Countries such as Eritrea (#175) and Zimbabwe (#178) continue to fester at the lowest rankings. It’s no coincidence that they are governed by some of the world’s most repressive regimes.
As Africans continue to hold their leaders accountable for good governance, their rewards will come in the form of economic opportunities. African leaders are beginning to understand that less regulation means more prosperity. For a continent that has struggled for decades with instability, economic reforms will be gradual. However, if current trends are any indication, Africa may yet again win the prize for the most improved region.