Does aid conditionality still work?

(Not that it used to work that well)

Here is a story on Tanzania:

On Wednesday (Nov. 14) the Danish government said it would withhold 65 million crowns ($9.8 million) in aid citing allegations of human rights abuses. The minister of development cooperation Ulla Tornaes announced the decision on Twitter noting “negative developments” and “unacceptable homophobic statements.”

The day before, the World Bank suspended a $300 million educational loan following a government policy banning pregnant girls from going to school. That ban has been roundly criticized by the development community.

Tanzania most likely anticipated these specific reactions from the donor community.

netodaAnd now news reports indicate the World Bank is walking back its suspension of the $300 concessional loan. According to the Tanzanian government, the Bank’s projects in Tanzania run to the tune of $5.2b. At some point the Bank’s board’s commitment to human rights and “good governance” runs against the cold calculus of having to signal effort by the amount of cash pushed out the door each year. Also, the net per capita overseas development assistance (ODA) to African states has been in decline over the last five years (see graph).*

For perspective, Tanzania’s budget for 2018/19 fiscal year is $14b. Which means that the total rescinded aid (if the donors keep their word) currently stands at 2.2% of government expenditure. If you factor in the “implementation surpluses” that typically arise due to suboptimal absorptive capacity, it is a wash. All to say that it’s not clear that these cuts (if the donors hold the line beyond the current news cycle) will inflict maximum pain.

How much aid goes into the government’s total budget?

Despite donors not meeting their commitments last financial year, the government expects to raise Tsh2,676.6 billion ($1.1 billion) from development partners which is equivalent to eight per cent of the proposed budget total funding.

In other words, the Tanzanian Treasury (and politicians) can absorb the hit on the country’s reputation emerging from policies and practices like this, this, and this without devolving into a fiscal meltdown.

*Population data from the World Bank. Aid data from Roodman.

There appears to be no systematic relationship between genetic diversity and economic development

This is from Caraher and Ash:

We replicate Ashraf and Galor (2013) and find that its conclusions concerning the association between human genetic diversity and economic development depend substantially on inconsistent coding and data selection. We correct the coding inconsistencies and add or update data on genetic diversity and population density from high-quality sources. We find little support for the hypothesis that variation in genetic diversity among subpopulations has a systematic relationship with economic development.

I suspect this debate is just beginning. And for the record, there is no harm in doing these kinds of research. Let the scientific evidence take us where it may.

I also wish that scholars of deterministic origins of development read more world history. For example, the historical record is chockfull of allegedly genetically “inferior” peoples who rose to build great societies. So at some level, I am yet to be convinced of the utility of the insights we stand to gain from these studies — perhaps beyond proving racist 18th century European intellectuals right or wrong (because if we are honest, that is the genealogy of these studies).

Which is to say that differences in incomes across the world are inherently temporal. Today’s backwater may be tomorrow’s Aksum, Timbuktu, or Kumasi. And vice versa.

My two cents on this is that scholars are better off focusing on the organizational origins of development. People (regardless of their genes) organize out of poverty — into firms, trading networks, guilds, market associations, city states, nation states, or empires. Contextually optimal organizations keep everyone locked on focal outcomes (good or bad), allow elites to milk all the surplus that is politically feasible from workers, and enable the same elites to channel some of that surplus towards productive (or non-productive) enterprises a la Olson’s stationary bandit.

We do not really have a good handle on what makes some societies able to organize better than others?

Works on institutions have done a great job on this front. But “institutions” are becoming the new “neopatrimonialism” — hard to define and overused to explain everything, thereby rendering them analytically useless. Always ask: what specific institutions do you have in mind? 

 

On British Declinism

This is a great review essay in the LRB:

….I grew up with the assumption that we were going forward – jerkily, and with long unexplained halts in cold places, but forward. Prewar had been better, in ways which couldn’t be recovered (so my own family thought). But somewhere ahead, as the train began again to crawl across the grey plain of the 1950s, there would be warmth, light, undreamed-of gadgets, houses with inside toilets for all, travel on airliners. It was only a few years ago that I looked out of the grimy train window – as it were, at a station dimly seen in the night – and it came to me that we had passed this place once already. Mrs Hamilton-Paterson was right: it was all going backwards. Bankers’ economics? Didn’t we leave that station seventy years ago? Tories telling the poor they should have fewer children? Obsession with the national debt? Keeping foreigners out unless they are millionaires? Welfare only for the workshy underclass? ‘After all our gains’, Britain is slithering back downhill through the past we once rejected.

Read the whole thing here.

Is Kagame succeeding at nation-building?

This is from a paper that is forthcoming in the Journal of Political Economy:

Can a government in an ethnically divided, conflict-ridden society help bridge the ethnic divide?

…. This paper examines the role of propaganda as a tool of nation-building in Rwanda – a country in which Hutu extremists massacred more than 70% of the minority Tutsi population in 1994 in one of the worst genocides in recorded history. Critics of the government’s program of post-genocide nation-building (e.g. Thomson (2011a)), have noted how difficult it is to assess whether progress in ethnic reconciliation is cosmetic or real. In large part, this is because, under President Kagame, Rwanda is a quasi-autocracy that controls the media and tries to manage the narrative on reconciliation. In fact, according to a recent report on Rwanda in the New York Times: “Mr. Kagame has created a nation that is orderly but repressive…Against this backdrop, it is difficult to gauge sentiment about the effectiveness of reconciliation efforts.”

We exploit variation in exposure to the government’s radio propaganda due to the mountainous topography of Rwanda. Results of lab-in-the-field experiments show that individuals exposed to government propaganda have lower salience of ethnicity, increased inter-ethnic trust and show more willingness to interact face-to-face with members of another ethnic group. Our results suggest that the observed improvement in inter-ethnic behavior is not cosmetic, and reflects a deeper change in inter- ethnic attitudes. The findings provide some of the first quantitative evidence that the salience of ethnic identity can be manipulated by governments.

Taken together the evidence suggests that exposure to government radio leads to higher inter-ethnic trust and cooperation as well as lower ethnic salience.

Recall that the use of broadcast media — especially by Radio Television Libre des Mille Collineswas critical for mobilization that resulted in the Rwandan genocide.

The questions raised by the paper are a reminder that is in the long run, ethnic heterogeneity is endogenous to stateness and state capacity.

See, for example, the famous case of France.

Finally, Rwanda is still a personalist autocracy that is allergic to political freedoms and is a serial abuser of human rights. Whatever economic or socio-political developments Paul Kagame achieves while in office are at risk of unraveling as long as the entire political system remains organized around one mortal man.

 

The wonder that is Chinese growth

Below is an amazing illustration of shifts in the sizes of leading global economies:

For more on China see here, here, here, and here. This reminded me of this graphic from Carlos Lopes, former head of the UNECA:Dr3w9PhW4AAnCGU

All that happened in just 36 years. Time is on Africa’s side. If (and that’s a big IFF) African elites can get their act together. As shown in the graph below, the lost long decade (1980-1995) was particularly brutal for African economies — but it was a temporal dip and not a permanent feature of African economies.income

It is also worth noting that in 1980 African states and China were not at the same level of institutional development. By that time China had already accumulated centuries of coherent stateness — which made it possible for elites to optimally allocate human and capital resources in ways that produced the growth miracle.

Here is a good nuanced take on trends in economic growth and development on the Continent.

Nigeria fact of the week

This is from Bloomberg:

Nigeria loses $19 billion annually, or about 5 percent of gross domestic product, from the delays, traffic, illegal charges and insecurity that are increasingly prevalent at its ports, the Lagos Chamber of Commerce & Industry said in a report this year.

For perspective, that is slightly larger than the Zimbabwean economy.

A primer on conflict in Cameroon

This is from Natalie Letsa in Foreign Affairs (highly recommended):

So far, at least 400 civilians and 160 state security officers have been killed in the conflict between the government and an armed separatist movement that, just two short years ago, started as a peaceful strike of lawyers and teachers.

…the Anglophone regions’ relative distance from both Biya’s networks of patronage and influence and the Francophone state media puts them in a unique position to see the autocratic nature of the regime and rebel against it. Although 75.4 percent of Francophone Cameroonian respondents said they trust Biya “somewhat” or “a lot,” in the Afrobarometer poll, only 45.5 percent of Anglophones felt the same way. Part of the reason for this is easier access to criticism of the Biya government.

…Cameroon’s Anglophone regions are also more economically autonomous from Yaoundé. They have a robust cross-border trade with Nigeria, successful plantations in the Southwest, and fertile farming land. They are not overly-reliant on the export of primary resources, such as oil or timber, which funnels through state-owned corporations. And they are not as poor as, for example, the northern regions, which face chronic food insecurity. The Anglophones thus have not only the will, but also the resources to rebel.

Read the whole thing here.

In addition to Letsa’s piece, Janet Lewis’ research on the dynamics of rebellion onset sheds some light on the underlying dynamics of the armed rebellion in anglophone Cameroon:

Because insurgent group formation typically occurs in secrecy and in poorly monitored areas, the empirical record on conflicts’ start is spare and systematically omits rebels who fail before committing substantial violence. This article argues that this presents a fundamental challenge for the study of conflict onset and demonstrates the theoretical and empirical problems it causes in studying a controversial relationship: how ethnicity influences armed conflicts’ start. Unusual evidence on all armed groups that formed in Uganda since 1986 indicates that ethnic mobilization was unimportant to the initial formation of rebel groups—but mattered after nascent groups had already formed. Contrasting evidence from Uganda with a prominent argument that ethnic marginalization induces rebellion shows why lack of evidence about how insurgencies begin can lead to broader inferential pitfalls.

 

Who is likely to win Nigeria’s 2019 presidential election?

So far it appears that the incumbent Muhammadu Buhari will win reelection. According to Africa Confidential:

His street support is still impressive across the north and he remains a force to be reckoned with – even if his APC allies are divided or upset with the primaries or his overall approach to governance. With the powers of incumbency behind him, he may hold the upper hand. Many of the 21 APC governors will also hold this advantage, but more of them will be vulnerable to PDP challengers, especially in Plateau, Kaduna, Kogi, Imo, and perhaps even Lagos and Kano, although these latter two states look stronger for the APC.Screen Shot 2018-11-05 at 3.36.46 PM

Atiku’s deep experience in election matters may outflank Buhari’s APC handlers, but he will need more than just his deep pockets to outbuy or check the APC machine. He will also need to demonstrate genuine public support, mobilised by a major ground operation backed by local PDP networks.

At 71, Atiku is more energetic and comfortable with speaking on the stump than the taciturn, 75-year-old Buhari. That will be important for reaching Nigeria’s social media-savvy voters, who threw their weight behind Buhari in 2015 but have grown frustrated with his slow pace. If the election does end up close, as appears likely, the APC’s control of the security forces may prove pivotal and provoke a crisis. If, however, Atiku does in fact win and the APC respects the result, as Jonathan did in 2015, Nigerians may at least come to feel that elections, however flawed, can lead to change.

And here’s a great report from USIP on the factors at play in Nigeria’s 2019 elections.

 

Estimating mortality in South Sudan’s civil war, 2013-2018

This is according to the Mail & Guardian:

southsudan.jpgDuring the period December 2013 to April 2018, we estimate that 1 177 600 deaths due to any cause occurred among people living in South Sudan, and that 794 600 deaths would have occurred under counterfactual assumptions. This yields an excess death toll of 382 900.

….. The first is that the researchers use different variables as proxies for mortality: proxies such as rainfall, climate, how much food is grown, the price of food (measured as “amount in kilogrammes of white flour that an average medium goat can be exchanged for”) and the presence of disease. This is how it works: if there is low rainfall, they know that people will struggle to get water and grow crops, so deaths are likely to go up. Using data from all around the world, they can make an ­educated guess about how many deaths were caused by a specific deficit of rainfall.

These proxies are combined with the limited survey data available to give an overall death toll for South Sudan in the relevant period. But the war didn’t cause all those deaths. It didn’t even cause most of them. Many deaths can be attributed to old age and natural causes; others to poverty and diseases such as malaria that would have happened regardless of the conflict.

Here is a summary of the state of the current iteration of the South Sudanese peace process.

And here is a documentary on the war economy and grand corruption in South Sudan.

 

Africa’s elusive green revolution

This is a great piece on the subject in The Economist:

Screen Shot 2018-11-01 at 2.04.41 PM.pngSomething akin to Asia’s rural development may, at last, be happening in parts of Africa. Since 2002 the proportion of African workers employed in agriculture has fallen from 66% to 57%. Yet the real value of agricultural production has grown at an average pace of 4.6% a year, double the rate between 1970 and 2000. Even so, the region is lagging behind. Most of the increase comes from using more land, rather than improved productivity.

A good deal of the divergence in agricultural productivity after the 1970s is driven by African states failure to increase the use of fertilizers.

fertilizerindex

More broadly, smart policy to increase agricultural productivity must focus on market reforms (to ensure most of the surplus in the sector goes to farmers and to intensify financialization), rationalization of farm subsidy regimes, addressing the question of farm size (increasing urbanization may reduce the political cost of land consolidation in the region), and investing in logistics to reduce wastage between farms and markets (including transportation and storage).

 

It’s getting easier to do business in Africa

At least according to the World Bank Group:

Sub-Saharan Africa has been the region with the highest number of reforms each year since 2012. This year, Doing Business captured a record 107 reforms across 40 economies in Sub-Saharan Africa, and the region’s private sector is feeling the impact of these improvements. The aver- age time and cost to register a business, for example, has declined from 59 days and 192% of income per capita in 2006 to 23 days and 40% of income per capita today. Furthermore, the average paid-in minimum capital has fallen from 212% of income per capita to 11% of income per capita in the same period.

See the 2019 Doing Business Report here.

Here are some questions from last year on the integrity of the Doing Business Index.

The U.S. tops list of FDI projects in Africa

This is from EY’s 2018 Africa Attractiveness report:

Screen Shot 2018-10-30 at 5.27.43 PMMature market investors continue building on their deep-seated ties to Africa. In 2017, the US remained the largest investor in the continent, with a noticeable 43% growth in FDI projects. Western Europe, another well-established investor, also built on its already strong investments into Africa, up by 17%. However, emerging-market investments fell, with both intra-regional and Asia-Pacific investment declining by 12% and 13%, respectively. This is, in part, attributable to slower emerging markets growth and weak commodity prices.

It is odd that this report does not give the dollar values of FDI projects. But it has a summary of the distribution of projects and the number of jobs created. This is an important indicator because it reveals projects’ real impact on the real economy — as opposed to projects designed to create enclave economies. Notice that China is far and away the leader on this metric — with Chinese projects resulting in nearly three times as many jobs as American projects (FDI from Italy appears to be particularly good at producing actual jobs).

Screen Shot 2018-10-30 at 5.40.30 PM

Here’s another interesting observation on the sectoral focus on FDI projects from the report:

Over the past decade, we have discussed a shift from extractive to “consumer-facing” sectors, thanks to Africa’s growing consumer market. Mining and metals, along with coal, oil and gas, previously the major beneficiaries of FDI flows, have slowed, while consumer products and retail (CPR), financial services, and technology, media and telecommunications (TMT) have risen.

In 2017, FDI shifted somewhat, with consumer-facing sector investments slowing, in line with challenging operating conditions. The focus changed instead to manufacturing, infrastructure and power generation.

And finally, here are of “FDI-to-jobs” conversation rates. On this measure South Africa and Kenya stand out for their apparent inefficiency in converting FDI projects into jobs.

Screen Shot 2018-10-30 at 5.54.29 PM.pngMore on this here.

 

 

On the promise and perils of the proliferation of provinces in the DRC

The DRC is huge. And so in 2015 the country saw an increase the number of provinces from 11 to 26. The provinces have elected assemblies (5 year terms) and governors & deputy governors (elected by provincial assemblies). However, while reasonable people would agree on the need for this increase in the intensity of government in the DRC, it has also not been lost on observers that considerations over political geography informed the decision on how the old provinces were split.

This is from Pierre Englebert:

One of the reasons for the increase from eleven to twenty-six provinces was to break up Katanga and deprive its governor, key Kabila opponent Moïse Katumbi, of his provincial base. Beyond such political expediency, however, this policy’s main effect has been to create ethnically homogeneous provinces. As Alma Bezares Calderon, Lisa Jené, and I write in a recent report for the Secure Livelihoods Research Consortium, up to eleven of Congo’s provinces are made up primarily of a single ethnic group. This is an increase from three provinces with a single ethnic group prior to this policy.

For Congo as whole, the largest provincial groups now average 46 percent of their province’s population. This evolution has turned politics on its head. At the national level, heterogeneity dominates and no single group reaches 8 percent of the population.Screen Shot 2018-10-29 at 7.39.44 PM.pngWhy the Congolese have reproduced the colonial practice of associating individuals with their territory of origin is somewhat unclear. From the perspective of the Congolese government, people might remain a threat, as they were for the colonial authorities, and thus must be disempowered when not in their customary sphere, so as to de ate their citizenship. Attaching people to geographic areas might also foster local divisions, thereby empowering authorities in Kinshasa…

H/T Lahra Smith.

Lome Port is now bigger than Lagos

Screen Shot 2018-10-25 at 3.33.07 PMLomé in Togo has become West Africa’s major port, surpassing Lagos. A key development backing Lomé was the commissioning of Lomé Container Terminal. It handles close to 890,000 TEU annually, close to 75 percent of Lomé’s total throughput of 1.2 million TEU. “The establishment of Lomé Container Terminal is part of a greater trend in West Africa, which sees more and more carriers becoming involved in ports and terminals. After all, carriers must go somewhere using their oversized ships,” says Wadey.

In 2017, 285 container ships sailed the seven intercontinental trade lanes to West Africa. Deployed by 24 different operators, their average capacity was 3,300 TEU. The biggest ship, a 13,600 TEU vessel, is operated by MSC in a hub and spoke service, connecting Lomé with a large number of regional ports by feeder.

More on this here.

Togo’s logistics play is an underrated phenomenon. Lome’s new airport is the hub of ASKY, a regional airline operated in conjunction with Ethiopian Airlines (which has a 40% stake in ASKY). Lome also functions as Ethiopia’s global hub in West Africa, with direct flights to the US and Latin America.

Togo, of course, is also led by a dictatorial dynasty which has dominated its political economy for over 50 years. Recent protests against President Faure Gnassingbé Eyadema’s autocratic rule have been met by brutal repression, resulting in dozens of deaths. Togo is the only country in the region that lacks presidential term limits.

 

How Russia Moved Into Central Africa

This is from Newsweek (highly recommended):

There are new guests at the ruined palace where Emperor Jean-Bédel Bokassa once held court. During his rule over the Central African Republic in the 1970s, Bokassa used a year’s worth of development aid to stage an extravagant coronation, and he personally oversaw the torture of prisoners. He fed some to his pet crocodiles and lions.

But the French government that helped install Bokassa in 1966 ousted him in 1979, deploying paratroopers to prevent any countercoup. Now, four decades later, it is Russian soldiers who mill around this crumbling estate in Berengo—and the shifting power dynamic is raising concerns in the West. President Vladimir Putin is pushing into Africa, forging new partnerships and rekindling Cold War–era alliances. “There will be a battle for Africa,” says Evgeny Korendyasov, head of Russian-African studies at the Russian Academy of Sciences, “and it will grow.”

How did Russia muscle its way into CAR? According to Reuters:

CAR has been under a U.N. arms embargo since 2013 so weapons shipments must be approved by the U.N. Security Council’s CAR sanctions committee, made up of the Council’s 15 members, including France and Russia. It operates by consensus.

France first offered to help CAR buy old weapons but the proposal was too expensive. France then offered 1,400 AK47 assault rifles it had seized off Somalia in 2016, according to a Security Council memo and four diplomats.

Russia objected on the grounds that weapons seized for breaching the U.N. arms embargo on Somalia could not be recycled for use in another country under embargo, two diplomats said. But mindful of the need for a quick solution, the sanctions committee approved Moscow’s donation of AK47s, sniper rifles, machine guns and grenade launchers in December, according to committee documents and diplomats.

Why Russia interested in the CAR now? Possible answers include (i) the potential for lucrative mining deals (Putin’s Chef, Evgeny Prigozhin, reportedly runs a diamond mine near Bangui and a gold mine in a rebel-held area); (ii) the CAR might be a great launching pad for Moscow’s ambitions in the Sahel and therefore a great addition to existing military deals on the Continent; and (iii) Russia’s defense firms might just be in it to run guns and make a quick buck in a country that remains overrun by all manner of rebel groups (some reports claim rebels control 80% of CAR’s territory).

And as for the CAR leadership, they just might be in the mood for a partner that delivers results without too much paperwork and rules:

President Touadéra has a number of incentives to work with Russia rather than France or the United States. Russia’s aid in arming the CAR’s military is a huge boon for the chronically underfunded state. The EU training mission in CAR has been agonizingly slow, leaving an underequipped and undertrained military to face a deteriorating security situation. Russian instructors, while certainly less concerned with the moral or ethical dilemmas of war, may give Touadéra the military he needs to combat the rebel groups across the country.