Tag Archives: Kenyan corruption

electoral democracy and inflation in africa

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UPDATE: A related paper is here. [HT Julie]

Central bank independence is still the exception rather than the rule in most of Africa. This then raises the question of what effects elections – with the high associated costs of buying votes – have on the inflation rate.

For instance, Uganda has been experiencing inflation (a.k.a walk to work) riots following Museveni’s reelection. Many in Uganda and beyond have attributed the hike in the cost of living not just to global trends (food and oil prices) but also to Museveni’s massive reelection budget. Just before the Ugandan elections in February the president doled out cash like he was “printing his own money.”

Next door in Kenya rumors abound that the recent hike in oil prices, the failure to resettle IDPs and other forms of grand corruption are related to politicians amassing a war chest for next year’s general election.

This raises the question: Is there a correlation between election years and inflation in Africa?

My first stab at this reveals rather weak correlations between election years and trends in inflation rates in a number of African states. (Shown below are Kenya, Uganda and Tanzania, Senegal). The vertical dotted lines indicate election years.

In the regressions different lags produce different results.

That said, it appears that competitive elections are significantly correlated with hikes in the inflation rates for up to three years (elections are “competitive” if the incumbent gets less than 2/3 of the vote).

Given the fact that Museveni’s vote share was trending downward in 1995, 2001 and 2006 (75%, 69% and 59% respectively), the NRM leader must have panicked and opened the floodgates for this past election.

Election monitoring and international sanctions against cheating have made the stealing of elections a very costly endeavor. But politicians are smart. If you can’t stuff the ballot boxes you can certainly intimidate voters or buy them off.

My hope is that with time the buying off of voters option will become institutionalized and made impartial to party ID.

more from wikileaks

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The Guardian reports:

The oil giant Shell claimed it had inserted staff into all the main ministries of the Nigerian government, giving it access to politicians’ every move in the oil-rich Niger Delta, according to a leaked US diplomatic cable.

Nice. Friedman was right. Firm’s only social responsibility should be to make profits. Forget about the population and the destroyed lives.

Also,

US diplomats fear that Kenya could erupt in violence worse than that experienced after the election in 2008 unless rampant government corruption is tackled.

America asked Uganda to let it know if its army intended to commit war crimes based on US intelligence – but did not try to prevent war crimes taking place.

Washington’s ambassador to the troubled African state of Eritrea described its president, Isaias Afwerki, as a cruel “unhinged dictator” whose regime was “one bullet away from implosion”.

Still (im)patiently waiting for the stuff on the Kenyan elections in 2007.

And lastly,

Apparently based on a conversation with Johnnie Carson, the US assistant secretary of state for African affairs, it said: “China is a very aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily.”

Yeah right. Because the US involvement in Africa since the 1960s has been any different. At least the Chinese do not bother to be janus-faced about it [ok, that is a little too harsh, but you get my point].