Africa’s looming debt crises

The 1980s are calling. According to Bloomberg:

Zambia’s kwacha fell the most on record after Moody’s Investors Service cut the credit rating of Africa’s second-biggest copper producer, a move the government rejected and told investors to ignore…..

Zambia’s economy faces “a perfect storm” of plunging prices for the copper it relies on for 70 percent of export earnings at the same time as its worst power shortage, Ronak Gopaldas, a credit risk analyst at Rand Merchant Bank in Johannesburg, said by phone. Growth will slow to 3.4 percent in 2015, missing the government’s revised target of 5 percent, Barclays Plc said in a note last week. That would be the most sluggish pace since 2001.

The looming debt crisis will hit Zambia and other commodity exporters hard. As I noted two years ago, the vast majority of the African countries that have floated dollar-denominated bonds are heavily dependent on commodity exports. Many of them are already experiencing fiscal blues on account of the global commodity slump (see for example Angola, Zambia and Ghana). This will probably get worse. And the double whammy of plummeting currencies and reduced commodity exports will increase the real cost of external debt (on top of fueling domestic inflation). I do not envy African central bankers.

Making sure that the looming debt crises do not result in a disastrous retrenchment of the state in Africa, like happened in the 1980s and 1990s, is perhaps the biggest development challenge of our time. Too bad all the attention within the development community is focused elsewhere.

Mbembe on the State of South African Politics

Rainbowism and its most important articles of faith – truth, reconciliation and forgiveness – is fading. Reduced to a totemic commodity figure mostly destined to assuage whites’ fears, Nelson Mandela himself is on trial. Some of the key pillars of the 1994 dispensation  – a constitutional democracy, a market society, non-racialism – are also under scrutiny. They are now perceived as disabling devices with no animating potency, at least in the eyes of those who are determined to no longer wait. We are past the time of promises. Now is the time to settle accounts.

But how do we make sure that one noise machine is not simply replacing another?

That is Wits professor Achille Mbembe writing on the state of politics in South Africa. The whole piece is definitely worth reading (also liked this response from T. O. Molefe).

Economic elites in South Africa (both black and white) are playing with fire. The lessons of Zimbabwe were not learned. The implementation of Mugabe’s land reform project was a disaster, but there is no question that the levels of land inequality in Zimbabwe were simply politically untenable. Something had to give.

One need not be against everything neoliberal (whatever that means) to acknowledge that the same situation holds in South Africa, and that something will have to give. Consider Bernadette Atuahene’s observations on the land situation in South Africa:

When Nelson Mandela took power in South Africa in 1994, 87 percent of the country’s land was owned by whites, even though they represented less than ten percent of the population. Advised by the World Bank, the ruling African National Congress (ANC) aimed to redistribute 30 percent of the land from whites to blacks in the first five years of the new democracy. By 2010 — 16 years later — only eight percent had been reallocated.

In failing to redistribute this land, the ANC has undermined a crucial aspect of the negotiated settlement to end apartheid, otherwise known as the liberation bargain. According to Section 25 of the new South African constitution, promulgated in 1994, existing property owners (who were primarily white) would receive valid legal title to property acquired under prior regimes, despite the potentially dubious circumstances of its acquisition. In exchange, blacks (in South Africa, considered to include people of mixed racial descent and Indians) were promised land reform.

Rapid economic growth and mass job creation could have masked the structural inequalities that exist in South Africa. Instead the country got Jacob Zuma and a super wealthy deputy president (and BEE beneficiary), both of whom are singularly out of touch with the vast majority of South Africans.

There is no doubt that South Africa needs a complete reorganization of its political economy. The question is whether the process will be managed by a “moderate” outfit like the ANC; or whether leaders will continue to sit on their hands and allow voices of less moderate groups like the Economic Freedom Fighters to gain traction.

ps: Just in case it is not obvious, South Africans are unambiguously better off now — as a people — than they were under apartheid rule.

Does Kenya have too many MPs?

An article in the Daily Nation asked this provocative question. In the article, the author examined the cost per capita of legislatures in several countries; and concluded that legislatures in OECD democracies tend to be relatively more representative (seats/million people) as well as cost effective (per capita cost/east) than their counterparts in the developing world.

Of course, linking per capita income to the density of representation has its pitfalls. An assumption that countries with smaller economies should have smaller assemblies, regardless of population size, implicitly undervalues the political voice (and rights) of citizens of poor countries. At the same time, setting an arbitrary upper bound on the remuneration of legislators (and general resourcing of legislatures) has the potential to limit the continued professionalization of legislatures in emerging democracies. Under-resourced legislatures find themselves in a bad equilibrium of high turnovers, weak institutionalization (lack of experience), inability to check the executive or effectively legislate, and a whole lot of dissatisfied voters who invariably choose to go with erstwhile challengers.

How break out of this bad equilibrium is one of the key questions I grappled with in the dissertation (and in the ongoing book project). But I digress…

legseatsThe standard metric in Political Science for comparing the density of representation was developed by Rein Taagepera in the early 1970s. The Taagepera formula predicts that assembly sizes tend to approximate the cube root of the total population of states. In the dissertation I looked at how African states faired according to this metric (see figure) and found that the vast majority of countries on the Continent have relatively smaller assemblies than would be predicted by their population sizes (the figure only captures the sizes the lower houses). Somalia, Uganda, Sudan, the DRC, South Africa, and Ethiopia are the clear outliers. Incidentally, Kenya’s National Assembly is right on the parity line.

The usefulness of this metric (at the national level) diminishes beyond a certain population size. For countries with hundreds of millions of people or more, it makes more sense to apply the formula with respect to sub-national assemblies, if they exist. This is for the simple reason that beyond a certain number of seats the legislature would become too big to reasonably be able to conduct its business (see Nigeria).

The politics of unemployment numbers

I just discovered the website Africa Check. It’s a fantastic resource dedicated to “sorting fact from fiction.” Three posts caught my eye, on unemployment numbers in Nigeria, Zimbabwe, and South Africa.

In Zimbabwe:

Zimbabwe’s unemployment rate is 4%, 60%, or 95% depending on who you ask. The ruling ZANU-PF, in a campaign manifesto, admitted that the rate was 60%! You know things are really bad when a ruling party (in an election year!) says that this big a proportion of the working-age population is unemployed. The World Bank apparently claims that the rate is closer to 5.4%.

In Nigeria:

The state stats agency controversially claimed that the unemployment rate is only 7.5% (for the last quarter of Goodluck Jonathan’s presidency). Tolu Ogunlesi then offered this explainer on how the government arrived at the number. The numbers suggest that the actual figure varies from 7.5 to 24.2 depending on the choice of cut-off for what it means to be employed. 

And in South Africa:

ANC claims that the unemployment rate at the end of 2013 was 21.9% but skeptics insist that the actual figure closer to 24.1%. 

A slightly different story on administrative unit proliferation

The emerging stylized story about administrative unit proliferation in the developing world is that it is often a result of political machinations by national and local elites intent on creating new units for marginalized groups and for the ruler to buy votes; and that such proliferation only serves to re-centralize actual power — see for example these really cool papers by Grossman and Lewis (on the specific case of Uganda), Mai Hasssan (on the use of new districts to buy votes in Kenya) and Kimuli Kasara (also on how heightened electoral competition after 1992 accelerated the process of administrative unit proliferation in Kenya).

But there is also a slightly different, and in some ways complementary, story.

Regarding the creation of new provinces in Vietnam, Edmund Malesky notes:Screen Shot 2015-07-09 at 12.30.20 PM

The timing of provincial separations after Party Congresses, the dominance of Non-state Provinces despite little change in national output, and the decisive political outcome of this dominance at the 2001 Party Congress bolster the argument that reformers had an explicit electoral strategy in calling for the splitting of provinces in 1996. By creating new Non-state Provinces, modernizers believed they could influence the outcomes of future CCOM debates about
grand strategies and smaller NA debates about implementation of these new policies. While rhetorically it was easier to argue for new provinces based on efficiency, it would seem they were studying maps of
district economic composition and creating new reform-oriented
provinces out of SOE-dominated areas.

The key difference between administrative unit proliferation in Vietnam and Uganda (and Kenya before 2010) is the electoral connection (an aspect that, in my view, is missing in the current literature). Because the provinces had votes (in party congresses and plenums), the creation of new Vietnamese provinces had significant implications for the de facto distribution of power in both Hanoi and the periphery (and in Malesky’s story, made reforms possible). Provincial splits in Vietman were therefore not just about patronage and marginalized groups, but also about securing a win for the reformist bloc at the centre.

This might not be the case in countries where new units can be created without altering the balance of power in the party congress or parliament — either because such action does not create new electoral districts; or the president gets to nominate or can credibly influence the election of the representatives of the new districts. For this reason, I would predict that Kenya, Nigeria, and South Africa (whose subnational units are electorally significant and have a fair amount of fiscal autonomy) are unlikely to create new primary subnational units willy-nilly.

Private security guards outnumber the police and army in South Africa

South Africa fact of the day:

In 2013, it was reported that there were 400,000 security guards in South Africa – more than the numbers of police and army combined. Some of the people setting up private security companies are ex-police or ex-military, and the guards are often well armed and trained in how to use automatic rifles and handguns.

Also, in case you missed it, here is the video footage of the SABC reporter who was robbed this week on live TV in Jozi outside a hospital.

More on crime in South Africa here.

Residents of Johannesburg also worry about not having enough bike lanes. One wonders whether fixing the security situation by addressing the root causes of crime ought to precede any public expenditure on enabling people to bike outside – it’s easier to rob cyclists than motorists, no?

Hundreds of South African Mercenaries Fighting Boko Haram

The New York Times reports:

Hundreds of South African mercenaries and hired fighters of other nationalities are playing a decisive role in Nigeria’s military campaign against Boko Haram, operating attack helicopters, armored personnel carriers and fighting to retake towns and villages captured by the Islamist militant group, according to senior officials in the region.

The Nigerian government has not acknowledged the presence of the mercenaries, but a senior government official in northern Nigeria said the South Africans — camped out in a remote portion of the airport in Maiduguri, the city at the heart of Boko Haram’s uprising — conduct most of their operations at night because “they really don’t want to let people know what is going on.”

This does not look good for the $2.3-billion-per-year Nigerian military. It also shows a complete lack of tact on the part of the Goodluck Jonathan administration. I mean, how hard could it have been to launder the South African mercenary involvement through some AU joint task force?

The way I see it, the problem here is not that Nigeria is using foreign fighters (even the mighty U.S. uses mercenaries, and as Tolu Ogunlesi writes in FT, the tide is turning against Boko Haram). The problem is in how they are being used. Is their use short-circuiting accountability chains between Nigerians affected and their government? How is it affecting civilian-military relations? And what will be the long-run consequences on the professionalization of the Nigerian military?

Africa’s Billionaires in 2014

Only 9 out of 54 African countries are represented on the 2014 Forbes billionaires list. There are certainly more than 29 dollar billionaires on the Continent (most of the rest being in politics). Let’s consider this list as representative of countries in which (for whatever reason) it is politically safe to be publicly super wealthy – which in and of itself says a lot about how far Nigeria has come.

Screen Shot 2015-03-03 at 12.24.39 PM

Source: Forbes

Some will look at the list and scream inequality. I look at the list and see the proliferation of centres of economic and political power. And a potential source of much-needed intra-elite accountability in African politics. For more on this read Leonardo Arriola’s excellent book on the role of private capital in African politics.

See also this FT story on the impact of currency movements on the wealth of Nigeria’s super rich. Forbes also has a great profile of Aliko Dangote, Africa’s richest man.

Netflix is making thousands of Americans flunk geography

You can’t make this stuff up:

Screen Shot 2015-02-03 at 8.01.17 PM

The show began to air in 2010. This is its description as of February 3rd, 2015.

That said, if you have to visit Africa, the place to go is KENYA!

Because of this:

HT Hayes Brown

Most read posts in 2014

Here are the top posts in 2014

1. Corruption under apartheid South Africa: This post was top partly because of the 2014 South African elections. More on the legacies of apartheid era corruption and rent-seeking in South Africa here.

2. Kenya Security Laws (Amendment) Bill 2014: This bill (now an Act of Parliament) is further evidence of Uhuru Kenyatta’s autocratic tendencies. I personally don’t think that he is an incarnation of Moi or other dictators of years gone. Rather, Mr. Kenyatta is a poor administrator who likes taking shortcuts to get quick results. As I argued in a related post, the Security Laws (Amendment) Act 2014 could potentially severely limit civil liberties in Kenya.

3. Did European Colonialism Benefit Africans? The popularity of this post is perhaps a reminder that more research is needed on the long-run effects of colonialism not just in Africa but in other formerly colonized places as well. So far all the literature tells us is that colonialism was bad, but that the Western institutions that Europeans spread around the globe are good. More recently we’ve seen evidence that pre-colonial institutions in the colonies were pretty resilient in the face of colonial intrusion; and have had lasting effects (also remember that the duration and intensity of colonialism varied widely across the globe). One avenue of research that I have been exploring is how pre-colonial institutions interacted with colonial administrations, and how this shaped the institutions that emerged out of the independence wave of the early 1960s. More on this in the new year.

4. Why Raila Odinga Lost: A sizable proportion of Kenyans still believe that Odinga was robbed in the March 2013 election in Kenya. I disagree. In my own projections on this blog – merging disaggregated opinion polls with historical district turnout rates (perks of having a case with tight ethnic voting) – I found Mr. Kenyatta to be ahead of Mr. Odinga by about 740,000 votes, or 7.2 percentage points (which was close to the final official figure of 6.7% difference between the two).

I don’t think that Kenyatta won in the first round, but do believe that we would have trounced Odinga in a runoff anyway. Which is why I have never come to terms with the unanimous Supreme Court decision granting Kenyatta victory on the basis of less than 9000 votes out of 12.3 million cast.

5. Understanding Uganda’s Military Adventurism Under Museveni: General President Museveni has managed to create an image of himself as the anti-terror hatchet man in the wider horn of Africa region. Ugandan troops are the backbone of the AU mission in Somalia (AMISOM). Since his triumphant entry into Kampala in 1986 Museveni has also been involved in conflicts in Rwanda, the DRC, Sudan, C.A.R, and more recently South Sudan. Because of the degree of militarization of the Ugandan state and recent public displays of intra-elite friction, I think Uganda will continue to inch up in the coup sweepstakes ahead of the 2016 election.