institutions, culture and economic development

I am currently taking a class taught by Avner Greif, an economist/economic historian at Stanford in the tradition of New Institutional Economics. The class introduces ideas about economic development from a perspective that does not get much attention from economists, i.e. culture and its impact on long-run institutional development.

In one of the readings Tabellini argues that:

Well functioning legal institutions breed good values, since legal enforcement is particularly relevant between unrelated individuals. …… better informal enforcement sustained by ongoing relations in a closed network may be counterproductive for values.

Thus, the model predicts that clan based societies develop very different value systems compared to modern societies that rely on the abstract rule of law.

That’s in The Scope of Cooperation.

The paper provides a model of the recursive interaction between good institutions and culture. The scope of cooperation and interaction matters for institutional and economic outcomes. Clannishness, whether in Southern Italy or Mogadishu, is bad for economic development.

But you need a functional state system for people to be able to even contemplate abandoning the insurance scheme that is the clan. The model predicts two steady-state equilibria. Institutionally speaking, you are either Botswana or Chad.

kcse results through sms

For those out there who have been asking about how to get your KCSE results, I believe there are a bunch of sms services that help with this. Here is one from last year, I am not sure if it asks. I will keep looking around for a guaranteed service provider.

child-bride index

African states dominate the Economist’s child-bride index, with the Sahelian states of Mali, Niger and Chad in the top three. They also have the lowest literacy rates among their female populations.

This is one of those problems associated with “culture” that most development experts shy away from. My take on this is that the cultural defenses of such practices is a lot of horse manure.

There is nothing African about marrying off a 12 year old girl.

Most child marriages have deep-rooted economic motivations. In most cases it boils down to the bride-price. Solving the problem will therefore require not just laws that throw “human rights” at young African girls, but a concerted effort that also includes development practitioners to provide alternative income to men who marry off their 12 year-olds in exchange for goats.

kcse results to be released monday

The Kenya National Examination Council, through the Ministry of Education, will release KCSE results on Monday. Key stats will include whether gender and regional gaps persist in performance.

The Kenyan education system is in need of urgent restructuring. The content of most of the curriculum is outdated, as the Minister of Education himself admitted. Nearly 60,000 students who qualify for university education never get admitted to the country’s public universities because of lack of space. Private universities are oftentimes too expensive and, in a growing number of places, of dubious quality.

Instead of promoting class mobility, the education system continues to perpetuate the existing class system by heavily subsidizing higher education at the expense of students from poor households who fail to qualify for admission because of the low quality of their primary and secondary education.

this while his people starve

Despite its large amounts of oil reserves and a tiny population of just under 700,000 souls, Equatorial Guinea remains one of the poorest countries on the planet.

This is part of the reason why.

As I have screamed elsewhere:

It is commonsensical that a country like Equatorial Guinea – small in size and with an abundance of oil – should never wallow in want. It takes a great deal of stupidity to plunge a whole 60% of the population in abject poverty with this much wealth. 700,000 people, Obiang. Just 700,000. You can keep track of every one of your citizens, providing for their basic needs and granting them a decent education, healthcare, housing and what not. Seriously. It is not rocket science. And even after all this you would have enough to pocket for your son’s playboy fantasies.

kibaki withdraws unconstitutional nominations

The much-awaited showdown in the Kenyan parliament was aborted when President Kibaki’s allies made a tactical retreat and prevailed on the President to withdraw a list of nominations to constitutional offices. The pro-Kibaki camp had earlier planned to initiate a motion to censure Speaker Kenneth Marende and overturn a ruling he made last week that rejected debate on the President’s nominations because they were unconstitutional.

What does this mean? well, for one, it adds to the growing list of historical references Kenyans now have in which the will of the people has won against unlimited executive authority. It also signals that the president’s camp cannot do it on their own. As I keep reiterating, Kenya may have already overcome the culture of wapende wasipende in which presidents and their men did whatever they wanted regardless of the consequences.

The events this afternoon are another step in the right direction in Kenya’s long match to constitutionalism and limited government.

museveni is on the ropes

With 72 cabinet ministers Uganda reeks of instability. Leonardo Arriola, a Political Scientist at Berkeley, has made argued that African presidents create bloated cabinets to buy off opponents when they feel insecure in power. Uganda’s Museveni might be doing just that. In office since 1986, Mr. Museveni just won another 5-year term in office with 68% of the vote, or so the Ugandan electoral commission would like us to believe.

The opposition parallel vote tallying system was sabotaged by security forces in cahoots with cell phone companies (these companies should be fined in other countries in which they operate…). The main challenger, Mr. Kizza Besigye, claims that the last count he got showed Museveni at 50.8% with him second at 42.5%. The final official tally gave Mr. Museveni a landslide win of more than 40 points.

It is now quite possible that a majority of Ugandans do not want Museveni in power. Given his long tenure and the recent terror events that could have boosted him with a “rally around the flag” effect, his poor performance at the polls should be cause for concern for stability in Uganda. Too bad he will soon have oil money to create even bigger cabinets and buy more tanks and anti-riot gear, if he so wishes.

Ugandans may have to wait for quite a while before they experience their first ever peaceful transfer of power.

new lows for Kenyan politics

The battle lines have been drawn for a showdown in the Kenyan parliament tomorrow. Most reasonable Kenyans, including the current Chief Justice, the Attorney General (Mr. Kibaki’s government legal adviser) and Minister for Justice and Constitutional Affairs oppose the move by a faction allied to Uhuru Kenyatta and William Ruto to censure the speaker and shove president Kibaki’s questionable nominations to constitutional offices down Kenyans’ throats.

The media owners association, the Law Society of Kenya, and most of the Kenyan civil society have also rejected the unconstitutional nominations.

I have defended President Kibaki numerous times. I believe that it is because of his leadership style that Kenyans have experienced a resurgence of self-confidence that had long been lost after the fiasco that was 1966.

That said, I find his present actions deplorable. President Kibaki has chosen to risk plunging Kenya back into the abyss because of two of his lieutenants who masterminded the chaos that killed 1300 Kenyans and displaced hundreds of thousands. President Kibaki has chosen to spend public money and resources in defending this same duo. President Kibaki may also have been aware that state resources were used by his second wife and daughter to facilitate drug-trafficking. I stand disillusioned. For far too long I saw in the son of Othaya a Mang’u Man above petty the politics and mediocrity that characterizes Kenya’s political class. I may have been wrong.

The Kenyan presidency has been hijacked by Messrs Francis Muthaura and Uhuru Kenyatta. My only hope is that as they begin their descent for their sins from 2007-8 they do not take the rest of Kenya with them. I also hope that Mr. Kibaki will listen to the rest of Kenya, including the many bright legal minds allied to him, and rescind his wapende wasipende nominations.

His co-principal Mr. Odinga should also show some restraint and engage in grown-up politics. Engaging in a food fight with Mr. Kanyatta will not do Kenya any good.

Macharia Gaitho of the Daily Nation writes:

The crude personalised attacks both are displaying illustrate the depths to which Kenyan politics has sunk. Prime Minister Odinga and Deputy Prime Minister Kenyatta are demonstrating that they are truly the sons of their fathers.

They are privileged scions of the political and mercantile elite who got the best education money could buy and the richest heirlooms that could come out of public service, but when cornered, they abandon all pretence at cosmopolitan sheen and retreat to atavistic and crude ethnic demagoguery.

The saddest thing is that it might not just be a fight between two spoilt and overgrown brats, but a much wider one that carries their respective communities along.

The ordinary Luo or Kikuyu stands to gain absolutely nothing by hoisting Mr Odinga or Mr Kenyatta to reach the fruit. That fruit will not be shared, but kept within the family, as amply demonstrated by Kenyatta and Odinga Mark 1.

Yet you can bet that when it comes to reactions to the current Odinga-Kenyatta brickbats, it is the ordinary and downtrodden Kikuyu and Luo who will be incited to come out most rabidly in support of their man.

museveni wins another term, Gaddafi using African mercenaries

Long-term Ugandan President, Yoweri Museveni, in on course to a comfortable win in the country’s general election. With over 70% of the votes counted Mr. Museveni leads his closest rival, Besigye, with over 40%. President Museveni, ruler of Uganda since 1986, started off as a different kind of African president, presiding over a decade of sustained growth, drastic reduction in HIV infection rates and general peace and stability. But he stayed for too long. Beginning in the mid-1990s Uganda transitioned – under intense domestic and international pressure – from a “no-party democracy” [whatever that means] to a multiparty electoral system in which Museveni allowed for opposition at the margins.

The new dispensation created pressures for greater levels of patronage in order for Museveni to stay in power. He scrapped constitutionally mandated term limits, created a cabinet of over 70 ministers and went crazy with what Ugandans call “districtization” – the act of creating new local government jurisdictions purely for patronage purposes. Uganda’s new found oil reserves will certainly continue to fund the long-term autocrat’s stranglehold on Ugandan politics. Rumors abound that he intends to install his son and head of the presidential guard as his successor.

In other news, Col. Gaddafi is reported to be using African mercenaries to quell rebellion in the east of Libya. For decades Gaddafi has been a Guevara wanna-be, funding armed rebellions all over the Continent (Including the infamous Charles Taylor of Liberia). He seems to have done all that in the hope that the rebels he funded would come to his aid, like is happening now. But the presidents/rebel leaders who have sent soldiers to kill Libyans demanding for their natural rights should be aware that it is precisely such acts that have landed Jean-Pierre Bemba at the Hague.

The messy story of drug trafficking in kenya (will Lucy spill the beans?)

The story of powerful and connected drug lords running amok in Kenya is slowly trending into the realm of conspiracy theories. First it was a case of MPs – Kabogo, Mbuvi “Sonko”, Mwau and Joho – being the suspected culprits. But after a government report cleared the names of the MPs (on the grounds that no evidence was found against them) it emerged (according to Kabogo and Mbuvi) that President Mwai Kibaki’s infamous “mistress” Mary Wambui and her daughter Winnie Wangui Mwai were also connected to drug-trafficking.

Interestingly, in 2007 a parliamentary report linked Ms Wambui, her daughter and President Kibaki’s principal political adviser Stanley Murage to the thuggish Artur brothers. Quoting the parliamentary committee report:

Evidence adduced before the Committee established that the Artur brothers had direct connection at the highest levels of Government. Mary Wambui and her daughter Winnie Wangui Mwai, were close associates of the Artur brothers. Mr. Stanley Murage, Permanent Secretary and Special Adviser to the President on Strategy and based at State House was a key player in the saga, As will appear elsewhere in this report, the ultimate questions are: what did the Head of Government know about this matter? When did he get to know it and what did he do about it?

The report proceeds…

Artur brothers were enjoying state protection at the highest levels of Government. These involved the registration of their two companies, Kensingston Holdings Ltd and Brother Link International, importation of goods where tax was not paid as well as their strange appointment to the police force as Deputy Commissioners of Police, their use of government vehicles, amongst many others

The report concludes on page 39:

From the evidence adduced to date before the Committee, the gravity of this mater (sic) has emerged. It is for example abundantly clear that the two brothers were conmen and drug traffickers. That they enjoyed protection by the high and mighty in the Government is not in doubt.

The report does not say anything implicating President Kibaki in drug trafficking. But it certainly raises questions about how it is that the Kenyan security authorities have been able to unearth evidence about the involvement of all sorts of actors (from the military to police officers to government bureaucrats) linked to drug trafficking without finding a single individual guilty of an offense.

It might be time Kenyans consulted First Lady Lucy Kibaki about the activities and business relations of her much-hated “co-wife.”

is kenya at last getting limited government?

On Thursday Speaker of the Kenyan Parliament Kenneth Marende ruled that President Kibaki’s appointments to constitutional offices were unconstitutional. The politics of the decision aside (it is a war between Premier Odinga and others intent on succeeding Mr. Kibaki in 2012) it is a good sign that finally Kenya may have gotten a system of political balance of powers. No single faction appears to be able to do whatever it wants, wapende wasipende.

Scholars like Nobel Laureate Douglas North, Barry Weingast (of my Department), among others, have argued that limited government (in which centres of power balance each other to prevent tyranny) is one of the key ingredients in the quest for long-run Economic growth and political stability.

Kenya appears to be on the threshold of obtaining limited government. It began with President Kibaki’s laid back approach to governing which empowered centres in the political structure outside of the presidency. Raila Odinga, William Ruto, Uhuru Kenyatta, Martha Karua etc are all politicians who have elevated themselves to an almost equal footing, politically speaking, with the president himself.

And the change has not just been about personalities, typical of politics in Africa. Institutions have had a hand in it, too. The Kenyan parliament – which Barkan thinks is the strongest in SSA – with its committee system and relative autonomy from the executive has been at the forefront of checking the powers of the executive in general and the presidency in particular. The new constitution reflects this new equilibrium condition.

The new constitution also empowers the judiciary, previously seen as a rubber stamp institution in the pocket of the president. Although nominations to the institution has gotten off on a rocky start, it appears that the law society of Kenya and the Judicial  Service Commission might be strong enough to (self)regulate judges on the bench, regardless of who appoints them.

I am cautiously optimistic.

Uhuru wins latest round in battle for central supremo

The just concluded Kirinyaga Central by-election was not an ordinary one. The actual contest between Messrs Gitari and Karaba was secondary to the meta-contest between Gichugu MP Martha Karua and Finance Minister Uhuru Kenyatta. Karua backed Karaba while Uhuru campaigned for Gitari.

Given the high salience of ethnicity in Kenyan politics, the latter contest will determine who emerges as the chief voice of the Central Kenya voting block ahead of the 2012 general elections. Mr. Kenyatta must be happy with the latest score in Ms. Karua’s backyward given his own drubbing a few months ago in his own backyard in the Juja by-election.

Reacting to the loss Ms Karua twitted: “We have lost the battle not the war. Congrats to our team no retreat no surrender. Narc kenya marches on!”

Mr. Kenyatta, son of Kenya’s first president and very much an establishment candidate, is hoping to succeed President Kibaki as the ethnic chief of Central Kenya when the latter retires in 2012. The ultimate insurgency candidate, Ms Karua is an outsider and relatively new money who is increasingly championing the cause of the central Kenya underclass who have been marginalized by the region’s old guard elite since independence.

This blog has previously confessed a soft spot for Ms Karua, a rare breed of a principled fighter among Kenyan politicians. Mr. Kenyatta has been accused by the ICC to be among the masterminds of the 2007-08 post-elections violence that killed 1300 people and displaced hundreds of thousands. He also has tons of money.

second hand clothes

Thanks to a view from the cave I just found out that there is an Oxfam study out there on the effects of second hand clothes (SHC) in the African markets. The findings are largely predictable: the poor benefit from the trade, the trade has created opportunity for fraud and most importantly, it has contributed to the death of local textile industries. The big question then is how to transition from the over-reliance on SHC.

In my view textiles is a sector in which countries would be justified in going nationalist and financing or facilitating the financing of local firms and industries. It is unacceptable that up to 90% of Ghanaians buy second hand clothing despite high unemployment and abundant cotton in the West African region.

Here are some snippets from the Oxfam paper:

The trade has clear consumer benefits. This is especially in countries with low purchasing power, and for poorer consumers, though in many sub-Saharan African countries it seems that almost ALL socio-economic groups are choosing to buy SHC. …. over 90% of Ghanaians purchase SHC.

The trade supports thousands of livelihoods…. These include jobs in trading, distributing, repairing, restyling and washing clothes. Oxfam’s research in Senegal estimates that 24,000 people are active in the sector in that country…. 1,355 people work in formal sector textile/clothing in Senegal.

SHC trade in recipient countries is mainly informal and is poorly regulated. In some instances it has facilitated considerable customs fraud, as new clothing imports have been passed off as used clothing.

Some quick thoughts

Grinding poverty and the lack of innovative thinking among their home governments continue to force most Africans to buy second hand-clothing. The few textile industries on the Continent (with a few exceptions in West Africa) are small operations geared mainly for exports – mostly under AGOA to the US. Special interests (second-hand clothes importers), poor economic policies (many countries killed their own nascent textile sectors) and dumping of textiles from the east are to blame.

The result is the indignity of having to buy used underwear or live in a parallel universe in which the Steelers won Super Bowl XLV.

A post on the related topic of the politics of appropriate aid-giving  is here.

In other news, Blattman makes the observation that younger leaders in Africa, because of their different upbringing, will be different from the independence leaders. I beg to differ. Spatial distribution based on ethnicity and malapportionment against urban centres, mixed with the toxicity of ethnic politics will continue to perpetuate rural, ethnic-based tyranny in most of Africa. The fact that University of Nairobi student council elections invariably go tribal says it all.

The current changes in the Arab world should be a wake-up call for most of Africa. Soon enough the set of examples of poor governance and general mediocrity will shrink from Africa, the Middle East and South Asia to just Africa.

property rights and economic development in africa

Forget (almost) everything else. The trouble with African economies is simply and squarely the lack of property rights protection. It still beats me why the African political elite have failed at instituting even intra-elite property rights protection. The fact that the African political elite – who also happen to be the wealthiest people on the Continent – cannot invest in their own countries has resulted in massive capital flight. The quote below says it all.

Speaking at the New Partnership for African Development (NEPAD) meeting in Abuja, Nigeria, in December 2003, the former British secretary of state for international development, Lynda Chalker, noted that 40 percent of the wealth created in Africa is invested outside the continent.

And this is only what gets counted. Although obviously the upper bound, recent revelations of Mubarak’s wealth (between 20 -70 billion) may be an indication of the amount of personal wealth stashed overseas by long time autocrats like oil-rich Angola’s Edwardo do Santos, Equatorial Guinea’s Obiang’ and Sudan’s Bashir, among others.

The contrast is that:

In corrupt societies in Asia, such as Indonesia, Bangladesh and Pakistan the citizens still prosper because the corrupt elite keep their money at home. They invest in new mobile phone network, build private hospitals and tourist hotels (here).

In short, elite political instability and distrust in Africa is one of the key reasons why the region remains poorer than any other in the world.