UPDATE: A related paper is here. [HT Julie]
Central bank independence is still the exception rather than the rule in most of Africa. This then raises the question of what effects elections – with the high associated costs of buying votes – have on the inflation rate.
For instance, Uganda has been experiencing inflation (a.k.a walk to work) riots following Museveni’s reelection. Many in Uganda and beyond have attributed the hike in the cost of living not just to global trends (food and oil prices) but also to Museveni’s massive reelection budget. Just before the Ugandan elections in February the president doled out cash like he was “printing his own money.”
Next door in Kenya rumors abound that the recent hike in oil prices, the failure to resettle IDPs and other forms of grand corruption are related to politicians amassing a war chest for next year’s general election.
This raises the question: Is there a correlation between election years and inflation in Africa?
My first stab at this reveals rather weak correlations between election years and trends in inflation rates in a number of African states. (Shown below are Kenya, Uganda and Tanzania, Senegal). The vertical dotted lines indicate election years.
In the regressions different lags produce different results.
That said, it appears that competitive elections are significantly correlated with hikes in the inflation rates for up to three years (elections are “competitive” if the incumbent gets less than 2/3 of the vote).
Given the fact that Museveni’s vote share was trending downward in 1995, 2001 and 2006 (75%, 69% and 59% respectively), the NRM leader must have panicked and opened the floodgates for this past election.
Election monitoring and international sanctions against cheating have made the stealing of elections a very costly endeavor. But politicians are smart. If you can’t stuff the ballot boxes you can certainly intimidate voters or buy them off.
My hope is that with time the buying off of voters option will become institutionalized and made impartial to party ID.