Africa’s top economies

Yesterday Nigeria unveiled new GDP figures following the rebasing that catapulted the country of 170 million to become Africa’s biggest economy (GDP US$509b). Below is the ranking of the top sixteen economies in SSA. Mineral economies (10/16) still predominate (Source: The Economist).

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Remembering Nelson Mandela and his legacy

Charles Kenny over at BloombergBusinessweek writes about Mandela’s often forgotten economic legacy (Perhaps because of the continued entrenchment of economic inequality and injustice in South Africa):

South Africa’s GDP growth rate, meanwhile, picked up considerably under Mandela. Economic growth rose from less than 1.5% between 1980 to 1994 to slightly under 3% between 1995 and 2003. Despite the sudden influx of internal migrants with the legal right to compete equally for jobs, average personal incomes for white South Africans increased by 62% between 1993 and 2008, according to University of Cape Town economist Murray Leibbrandt. Average incomes for Africans themselves increased even faster—by 93% over that same period.

The huffingtonpost has a collection of speeches to remember Mandela in his own words.

 

Richard Stengel over at Time explores the idea of Mandela the freedom fighter and leader who possessed almost mythical qualities in the eyes of many:

In many ways, the image of Nelson Mandela has become a kind of fairy tale: he is the last noble man, a figure of heroic achievement. Indeed, his life has -followed the narrative of the archetypal hero, of great suffering followed by redemption. But as he said to me and to many others over the years, “I am not a saint.” And he wasn’t. As a young revolutionary, he was fiery and rowdy. He originally wanted to exclude Indians and communists from the freedom struggle. He was the founder of Umkhonto we Sizwe (Spear of the Nation), the military wing of the African National Congress, and was considered South Africa’s No 1. terrorist in the 1950s. He admired Gandhi, who started his own freedom struggle in South Africa in the 1890s, but as he explained to me, he regarded nonviolence as a tactic, not a principle. If it was the most successful means to the freedom of his people, he would embrace it. If it was not, he would abandon it. And he did. But like Gandhi, like Lincoln, like Churchill, he was doggedly, obstinately right about one -overarching thing, and he never lost sight of that.

Back in 2011 writing in the Journal Peter Godwin noted that Mandela’s real legacy was his refusal to become life president, like many independence heroes before him on the Continent:

If anyone was well positioned to launch a political personality cult it was Mr. Mandela. His refusal to do so is probably his greatest legacy to his homeland. It set South Africa on a course different from most other African nations. Seventeen years into its post-apartheid incarnation, South Africa is already on its fourth president. This has radically reduced the danger of a single leader dominating the state.

As the world pays its last respects there will be nagging thoughts and questions of what next for South Africa. I am reminded of Eve Fairbanks’ piece earlier this year in which she cautioned that a lot more needs to be done to ensure that all South Africans benefit from the freedoms (political, social and economic) that Mandela fought for:

Many South Africans under 40 feel little connection to the father of their nation. Articles about Mandela’s many health scares late in life (at press time, the former president had been in a hospital on life support for more than a month, battling a lung infection) often feature laudatory quotes from two kinds of South Africans—whites and older blacks—while leaving out the voices of young blacks, who have a more ambivalent relationship with their founder-saint. Some even resent him.

The point here is that Mandela’s legacy will only be protected if the government facilitates greater economic inclusion of young South Africans. Simply replacing Smiths, Krugers and Plaatjes with with politically connected Khumalos, Gcobanis, and Phumlanis in the economic sphere as has happened under BEE will not cut it.

The statues and all sorts of honors that will undoubtedly come from around the world will not matter if the Madiba legacy does not get to live in the hearts and minds of South Africans of all generations, now and in the years to come.

The man gave up a lot for his country. Now that he is gone, it is time for South Africans (and especially the leadership) to honor him by keeping his dream of a more just South Africa alive. This is the least they could do for a man who is arguably top of the list of the greatest Africans of the 20th century.

Rest in peace Madiba. 

 

How to achieve energy security for growth in Africa

This post originally appeared on the AfDB’s Integrating Africa Blog where yours truly is a regular contributor.

According to a recent survey by Ernst & Young, 44% of businesspeople in Africa identified inadequate infrastructure as one of the key constraints to doing business in the region.  This means that as Africa continues to grow in the next two decades, infrastructure development must top the investment agenda. General infrastructure development will be especially crucial as African economies undergo structural transformation from being primarily resource-driven to having bigger manufacturing and service sectors. Indeed Ernst & Young estimates that in 2012 43.1% of investments in capital in Africa went to manufacturing as opposed to 12% that went to the extractive sector. 

A key area that will require greater and smarter investment to fuel the region’s economic growth will be the energy sector. 

Everyone knows about the energy woes of many an African country – from Nigeria’s infamous generators to the total lack of functional national grids in some African states. A few countries have initiated plans to boost their energy sectors through investment in power generation (Ethiopia’s 6000MW Great Renaissance Dam on the Blue Nile), oil refining (Angola’s planned 200,000 bbl/day refinery in Lobito), and aggressive prospecting for fossil fuels (especially in eastern and southern Africa). Despite these national efforts, for African states to ensure energy security for their growing economies, they must also think regional (and to some extent continental) when developing their respective energy sectors. As intra-Africa trade grows in the next two decades, there will be pressure to integrate energy markets as well. 

The reasons for a regional/continental approach to energy sector development are twofold. Firstly, investment outlays in energy infrastructure development are often prohibitively expensive (because their viability relies on economies of scale), thus necessitating the pooling of resources. Ethiopia’s newest dam, for instance, will cost $4.7 billion. Not many African countries can afford such massive investments on one project. 

Secondly, there is the issue of markets. With 12% of the world’s population, Africa consumes a meager 3% of the world’s electricity. Of this 75% takes place in North Africa (33%) and South Africa (45%). The remainder is shared out among the rest of Sub-Saharan African states. Furthermore, electricity connectivity on the continent remains relatively low, with rates averaging 43% (North Africa stands at 99%, with the other sub-regions between 12-44%).

This means that for projects like Ethiopia’s to make sense, access to international markets must be guaranteed. A key part of the Ethiopian project is the planned interconnector line linking the power station to the Kenyan grid. Joint investment and taking advantage of economies of scale will also help lower the cost of power in Africa. At present the average tariff per kilowatt-hour in the region is US $0.14, compared to US $0.04 in Southeast Asia. It is estimated that investing in regional grids and hydropower will save the region up to $2 billion annually. This is music to the ears of sugar millers, cement manufacturers and many small factory owners across the continent. 

Existing and Planned Power Pool Connections in Africa

Source: Niyimbona, P, UN Economic Commission for Africa; Note: There are additional planned lines connecting Ethiopia to Sudan and Kenya, respectively, not shown on the map.

With this in mind, African states have begun the process of integrating their power sector infrastructure, via regional power pools (see map above of existing and planned power interconnector links). The South African Power Pool (SAPP, established in 1995); North African power pool (COMELEC , 1998); West African Power Pool (WAPP, 2000); the Central African Power Pool (CEAPP, 2003); and the East Africa Power Pool (EAPP, 2005) are all initiatives to establish regional power markets and help harmonize energy policy. 

The COMELEC sub-region (27.4 GW, largely thermal, in 2009) has the highest connectivity and the best infrastructure. The region is also linked to the Middle East via the Egypt-Jordan interconnector line and Europe via the Morocco-Spain line (part of the future Mediterranean Electricity Ring, MEDRING). SAPP, with a capacity of 50GW (78.4% coal; 20.1% hydro; 4% nuclear and 1.6% diesel), is next in terms of infrastructure development.  The remaining pools have 13 GW in the WAPP; 29 GW in the EAPP. There is a plan to link the EAPP to states outside of East Africa as part of COMESA. The 19-state COMESA bloc has an installed capacity of 52MW (69% thermal and 30% hydro) and has since 2009 initiated a process to harmonize regulation and energy policy.   In terms of regional (intra-power pool) trade in power, SAPP is ahead with 7.5%, WAPP 6.9%, NAPP 6.2%, EAPP 0.4% and CAPP 0.2%.  Clearly, there is a lot of room for improvement in levels intra-pool trade in power. 

All these developments are encouraging. But a lot more needs to be done. For starters African states must work harder to harmonize their energy policies. This will necessarily involve greater liberalization of their power sectors, especially with regard to power generation and distribution. There is also an urgent need to invest in interconnector infrastructure to ensure that power can be transmitted efficiently to market. In the Day Ahead Market (DAM) of SAPP, for instance, trading is limited by between 40-50% of the potential level due to lack of efficient transmission capacity. Lastly, there will be a need to connect the regional power pools. This will reduce their overreliance on regional “anchor” economies (the best example of this is SAPP’s overreliance on ESKOM of South Africa, which has its own integrated resource plan). It will also create even bigger markets, including potentially the Middle East and Europe.  

Ultimately, whether or not the dream of regional and continental power interconnectivity is achieved will depend on politics. Unfortunately, so far things do not look good. Almost a decade after the idea of regional power pools set in, governments are yet to harmonize their power sector regulatory policies. In many countries state monopolies dominate, with attendant inefficiencies. And across the continent power supply master plans are still very nation-centric and under the tight control of local vested interests. Moving forward, the challenge will be to convince governments and stakeholders (private sector and consumers alike) of the benefits of having an Africa-wide power market – which will necessarily require the liberalization of national power sectors. The alternative will be more roundtable discussions and promises of policy harmonization that never get fulfilled. 

Corruption under apartheid South Africa, 1976-1994 (and its present institutional legacy)

Since the ANC took over in 1994 several top government officials in South Africa, including the current president Jacob Zuma, have been implicated in grand corruption. This has led some commentators to make the controversial claim that governance in South Africa has actually deteriorated since 1994.

apartheidLet’s just say that this is a rather odd claim to make. Of course, from a governance standpoint, it doesn’t take a rocket scientist to appear uber efficient if all you have to do is milk over 90% of the population of its surplus and resources to make less than 10% happy.

Don’t get me wrong, South Africa under the ANC has been a massive disappointment (both for South Africans and for Africa in general). But when analyzing the ANC’s failures over the last 20 years, the comparison should never be to the “good old pre-1994 days.” Anyone who does this either has a minimal understanding of history, or is (inadvertently) letting known their stand on the morality of apartheid.

But I digress….

Like any good student of institutions will tell you, institutional habits die hard and outlive even the most sharp of discontinuities – like decolonization or the end of apartheid. And as we’d expect, many institutional habits of the apartheid era survived the 1994 transition. Indeed a 2006 report on grand corruption under apartheid appears to show that post-1994 corruption in South Africa is not a new phenomenon, and to a large extent is actually a mere continuation of the bad old habits inherited by state institutions from the apartheid era.

The report indicates that between 1976-1994, the equivalent of US $54bn (in 2005 ZAR) went through secret “government” accounts controlled by a small clique within government. It is not clear exactly what proportion of this wound up in the pockets of those with access to the lootable cash.

On the question of the quality of governance under apartheid South Africa, the report rightly notes that:

Racist nationalism is as vulnerable to corruption as most systems of authoritarian rule. In closed societies, which are highly militarised under dictatorial rule, the truth is hidden from public view by design. Access to power (and a monopoly over it) provides the elite in the public and private sectors with a unique opportunity to line their pockets. In so doing, the defenders of an illegitimate and corrupt system start to defy their own rules and laws that criminalise such behaviour. In terms of common law crime they are simply crooks dressed in the guise of patriots representing the interests of their volk, their race or their narrow class. They have effectively corrupted themselves.

Such a system can also only survive for as long as a monopoly over power is maintained. Its survival is therefore tenuous—common knowledge to all functionaries of the system, who are the first to ensure that they are taken care of should there be a break with the past. This leads to a reliance on ‘insurance’, usually in the form of cash or other easily moveable assets that can be moved abroad in the event of regime change. It is in the period before regime change that the elite, in particular, are likely to accumulate as many resources as possible for fear that they may soon be out of a job or, at worst, have to flee the country.

Adding that:

A key tenet of the apartheid state was secrecy. This manifested itself in the creation of secret organisations such as the Broederbond, a group of white male Afrikaner Nationalists that numbered 12,000 by the late 1970s (almost all loyal members of the NP), who were the invisible hand directing NP policy and who held enormous influence over government policy and its implementation

In other words, implementing the total domination of a minority or a majority population by the state necessarily requires the curtailment of everyone’s rights, EVEN the rights of those in whose name the state is supposedly carrying out the domination. Also, the authoritarian nature of such domination necessarily leads to the emergence of a select few who must be above the law in order to maintain the system. And like we’d expect, those above the law habitually abuse their power for their personal benefit. This was true in pre-1964 America (to a greater extent in the deep South than elsewhere), was true under Nazi Germany and apartheid South Africa, and is true in the modern states that continue to institutionally discriminate against sections of their populations.

Check out the full report (pdf) here (H/T Kenyan Pundit).

For those into the study of the rule of law and governance check out these two new papers – Paul Gowder on the egalitarian underpinnings of the rule of law (Law and Philosophy) and Marcus Agnafors on the meaning of good governance (APSR).

Why are Kenyan politicians politicizing the military?

Botswana, Gabon, Kenya, Malawi, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe are the only continental sub-Saharan African states to have never experienced military rule. Each country has managed to do so via well orchestrated coup-proofing strategies of ethnic balancing and material payoffs to the men and women with the guns and tanks. 

Kenya, in particular, has perfected this art. Because of its fractious ethnic politics, ethnic balancing within the officer corps has been key to Kenya’s coup-proofing. Kenyatta (who spoke Kikuyu) had a bit of a hard time in the beginning with a Kamba and Kalenjin speakers dominated military but eventually succeeded in having his co-ethnics in key positions. But before he did so he ensured Kikuyu dominance over the paramilitary force, the General Service Unit (GSU) to balance the military. Through the 60s and 70s, Kenyatta ensured that the GSU and police could handle their own against the military in case stuff hit the fan. Moi continued along this path, so much so that for a while in the media the typical accent of a security officer – whether police or military – became an accent from the North Rift. Under Moi the Kenyan army became “Kalenjin at the bottom, Kalenjin at the middle, and Kalenjin at the top.”

Beyond the ethnic balancing, Kenya has also coup-proofed by keeping the generals wealthy and OUT OF POLITICS – at least not overtly. The generals in Kenya are probably some of the wealthiest on the Continent. I went to high school with the son of an Air Force Major General whose family was always taking foreign trips to exotic places and always made a big splash on visiting days. The only estimates I could find are from the 1960s when nearly “two thirds of the military budget went to pay and allowances, most of it to officers.” A lot of them also got free land for cash crop farming and lucrative business deals (some illegal) from the Kenyatta and Moi governments. Keenly aware of West Africa’s junior officer problem following 1981 Moi extended land grants to junior officers as well. 

But despite their importance as leaders of a key national institution, most Kenyans, yours truly included, do not know much about the top generals in the army. The one chief of staff that I remember hearing a lot about in my childhood days was Gen. Mahmood Mohamed, the man who played a big role in quelling the 1982 coup attempt. For the most part I only saw these guys in the media on national holidays when they rode on the president’s Land Rover. 

In other words, I think it is fair to say that, contrary to arguments made by N’Diaye, for the most part the Kenyan military has historically been fairly professionalized and depoliticized relative to other countries in the neighborhood. There is no evidence to suggest that ethnic balancing has severely interfered with the process of professionalization. Kenyan presidents’ preferred agents for dirty political work have always been the intelligence service, the police and paramilitary units, but never (to the best of my knowledge) the military. Indeed the US and British militaries have had very close technical cooperation with the Kenyan military through training, material assistance and more recently joint operations, resulting in a relatively highly trained force that has for the most part stayed clear of politics.  

But this consensus appears to be slowly eroding. Before the 2013 General Elections the former Prime Minister Raila Odinga accused the military and the intelligence service of colluding with his opponent, Uhuru Kenyatta, to rig the presidential election. And now the heads of the military and intelligence service are reportedly contemplating suing a former aide to Mr. Odinga for defamation. Increasingly, the military is being dragged down to the level of the marionette-esque GSU and Police, perennial hatchet men for whoever occupies State House.

This cannot end well. 

Coup proofing is hard. And the thing with coups is that once the genie is out of the box you can’t take it back. Coups just breed more coups.

This is why the generals must be left fat and happy and in the barracks, or busy keeping the peace (and hopefully not facilitating charcoal exports) in Somalia’s Jubaland State. Do your ethnic balancing and all, but by all means KEEP THEM OUT OF POLITICS (I am glad the current Defense Minister has no political constituency).

The last thing Kenya needs is a Zimbabwe situation in which there is open bad blood between the military and the opposition. 

Plus Kenya, based on its per capita income, ethnic politics, and minimal experience with genuine democratic government, is still not beyond the coup trap to be able to safely play politics with the military. If you doubt me, go find out the last time Brazil, Thailand and Turkey had generals in charge. 

Nairobi to Lusaka, Part II

Dar es Salaam is a pleasant town in late June. I had only been there once before, back in 2011 when I stayed for a day and a half to catch the Tazara. I didn’t like it then because of the heat and humidity (humidity is up there with cats – I am allergic – on the list of things I cannot stand). But this time round it was nice, I managed to walk around town marveling at the pillars of concrete and glass that are rising up in every corner of the city. The construction boom puts even Nairobi to shame, enough to make me think that the suggestions that Tanzania may soon eclipse Kenya as the place where all the action is in East Africa are not that far fetched after all (see image and this piece).  Image

My only complaint was that a prime section of the beach front still remains under-utilized, although this might be because of the presidential palace nearby. I hear you can’t drive there at certain times of the day (Stop channeling Mugabe, Bwana Kikwete. Also, let Chadema be). Oh, and I did manage to drive on the Kibaki road. I thought it was a new road, but it is not. Sections of it are actually pretty bad. Apparently, the Tanzanian government is planning an upgrade soon. I also drove past Mwalimu Nyerere’s home. It made me respect the man even more.

I arrived in Dar late on Tuesday night after many hours of travel by bus. On Thursday morning I was scheduled to continue with the second leg of the journey to Lusaka. I was at the bus stop by 5:45 AM, still sleepy. I had stayed up late the previous night, watching the Confederation Cup matches of the day, reading and writing my Saturday column. I fell asleep as soon as I got to my seat.

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Dar’s public housing units. For a moment I thought that the choice of color was meant to discourage applicants. Until I saw the pink public housing headquarters. Some of the units are in really nice parts of town.

The bus left the station promptly at 6:15 AM. Tanzania is huge. From Dar es Salaam to the Tunduma border is about 931 kilometres. The drive to the Zambian border took a total of 16 hours.

As I said in the previous post on this trip, I regretted taking the bus. If you want to travel overland between Dar and Lusaka, take the train. It is a million times more pleasant. There is a restaurant and a bar (that serves Tusker) on the train. There are bathrooms. And you have a bed. Plus the train is just slow enough that you can read and truly appreciate the empty Tanzanian countryside.

But the trip wasn’t all gloomy. The scenery was still enjoyable. Sections of Tanzania are quite hilly, with amazing views of cliffs and rivers and rock formations. At some point past Iringa I saw what seemed to be the biggest tree plantation in the world. For miles and miles all I could see were rows and rows of trees. And when there were no trees there were rows and rows of sisal. Someone is making bank off the land in that part of the country.

Also, western Tanzania is a lesson on how hard it is to achieve economic development in the context of a sparsely populated country. Such situations make it impossible to reach everyone with the grid and water pipes. Either the government has to wait for demographics to work its magic (again, see figure above – and be sure to check out this story on the Africa-driven demographic future of the world) or provide smart incentives to accelerate the process of urbanization.

For those who went to high school in Kenya, journeying by land through Tanzania reminded me of Ken Walibora’s Siku Njema. I felt like I was retracing the steps of Kongowea Mswahili. Some day I would like to go back and spend some time in Morogoro and Iringa. By the way, Siku Njema is by far the best Swahili novel I have ever read (which reminds me that it has been eight years since I read a Swahili novel. Suggestions are welcome, preferably by Tanzanian authors). It is about time someone translated it into English for a wider audience.

We reached Tunduma some minutes past 10 PM. The border crossing to Nakonde on the Zambian side was closed. Some passengers on the bus left to rent out rooms for the night. I decided to tough it out on the bus with the crew and a few other guys. Desperate for something warm to eat, I had chicken soup and plain rice for dinner. The “restaurant” reminded me of the place in Tamale, Ghana where Vanessa and I got food poisoning two months earlier. But I was desperate. I quickly ate my hot soup and rice and hoped for the best.

ImageI crossed the border early in the morning on foot. The bus had to wait in line for inspection and to pay duty for its cargo (It is at this point that I learned that the bus was actually going all the way to Harare in Zimbabwe). I am usually very careful with money changers, but perhaps because of my tiredness and lack of sleep the chaps in Nakonde got me.

If you ever cross to Nakonde on foot wait until you are on the Zambian side to exchange cash at the several legit forex stores that line the streets.

The bus finally got past customs at noon (on Friday). In Nakonde we waited for another two hours for more passengers and cargo.

I took the time to get some food supplies. Lusaka was another 1019 kilometres away. 

By this time I was dying to have a hot shower and be able to sleep in a warm bed. It was cold. Like serious cold. And Lusaka was still another 14 hours away.

I slept lightly through most of the 14 odd hours. In between I chatted with two Kenyan guys that were apparently immigrating to South Africa, with little more than their two bags. They said that this was their second attempt. The previous time they found work in Lusaka and decided to stay for a bit before going back to Nairobi. They were part of the bulk of passengers from Nakonde who were going all the way to Harare. Apparently, this is the route of choice for those who immigrate from eastern and central Africa into South Africa in search of greener pastures.

Before it got dark we saw several overturned trucks on the road. I slept very lightly, always waking up in a panic every time the driver braked or swerved while overtaking a truck just in time to avoid oncoming traffic. My only source of comfort was the fact that the driver was a middle aged man, most likely with a family to take care of and therefore with a modicum of risk aversion.

I arrived in Lusaka at around 4 AM, more than three days and 2871 kilometres since leaving Nairobi.

I said goodbye to my two Kenyan countrymen and rushed out of the bus as soon as I could. On the way to my hotel I couldn’t stop thinking how much I would like to read an ethnography of the crew of the bus companies (and their passengers and cargo) that do the Dar to Harare route.

At Lusaka Hotel that morning I had the best shower I had had in a very long time. And slept well past check out time. I had two months of fieldwork and travel in Zambia to look forward to.

The 2013 Resource Governance Index

The 2013 Resource Governance Index (published by the Revenue Watch Institute) is out. The top performing African countries include Ghana, Liberia?, Zambia and South Africa, with partial fulfillment. The bottom performing countries are Equatorial Guinea, Zimbabwe, South Sudan, the Democratic Republic of Congo and Mozambique.

The 58 nations included in the report “produce 85 percent of the world’s petroleum, 90 percent of diamonds and 80 percent of copper.” Ghana, where we are doing some evaluation  work on extractive sector transparency initiatives, is the best performing African country on the list. Image

More here. 

And in related news, The Africa Progress Report was released last week. The report details the massive loss of revenue by African governments through mismanagement – either by commission and/or omission – of extractive resources. For instance:

The report details five deals between 2010 and 2012, which cost the Democratic Republic of the Congo over US$1.3 billion in revenues through the undervaluation of assets and sale to foreign investors. This sum represents twice the annual health and education budgets of a country with one of the worst child mortality rates in the world and seven million pupils out of school.

The DRC alone is estimated to have 24 trillion dollars worth of untapped mineral resources.

The most bizarre case of resource management in Africa is Equatorial Guinea, a coutnry that is ranked 43rd on the global per capital GNI index but ranks 136th on the Human Development Index (2011).

Below is a map showing flows related to Africa’s vast resources:

RESOURCE-MAP

Georgetown MSFS Launches New Africa Scholarship

The application deadline is January 15, 2014. Spread the word.

Starting in fall 2014, the Master of Science in Foreign Service (MSFS) at Georgetown University is offering a full- tuition scholarship for a talented graduate student from sub-Saharan Africa.

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MSFS is a two-year, full-time graduate degree program in international affairs. Students will take courses in international relations, international trade, international finance, statistics and analytical tools and history. In addition, students choose an area of concentration such as International Relations and Security, International Development or International Business.

Africa for Norway

Some light humour, because it is a nice and sunny Wednesday morning here in Nairobi and winter is about to get real for millions of hapless Norwegians.

More on this here.

H/T VKW

Quick Hits

Haiti wants to join the African Union 

Partisan stats: Of red-state moochers and blue state makers 

Romney’s elusive tax plan (funny)

Zuma’s failed presidency and South Africa’s labor unrest

Mo Ibrahim Prize goes unclaimed, again

Kenya might be seeing the origins of insurgency (More details on this soon)