The Mo Ibrahim award goes to no one this year. The award is intended for former African presidents that have shown good leadership by peacefully relinquishing power and then doing some good after that (mediating a conflict or facilitating dialogue over disputed elections and what not). It’s a $ 5 million award for the first ten years outside of office, followed by $ 200,000 every year for life. Yes, African presidents have to be bribed to relinquish power.

But why aren’t they giving up?

Crude back of the envelope calculations reveals that the answer lies in the macro-economics of these countries. For example, in Uganda, the interest rate is slightly less than the inflation rate (at least according to the central bank website). Which means that if you put your money in the bank or invest it in treasury bills you will not be making much in the long-run.

Now assuming Museveni expects to live for 30 years after he retires, my back of the envelope calculations reveal a present value of only $ 22 million from the Mo Ibrahim award. This is probably change compared to what the big man in Kampala (well, now in Entebbe –  it’s close to the airport for easy escape in case stuff hits the fun) can make every year for the next 30 years if he stays in power. For instance, assuming that Uganda’s economy will grow at an average of 2% over the 30 years and that Museveni takes away 0.1% of the country’s GDP of 34.23 b (at PPP), then the man will have a present value of 25 m. Notice that 25>22, and by the way 0.1% is a very conservative estimate.

So it could be that what Mo needs to attract more contenders willing to relinquish power is more money. $5 million for 10 years and then $200,000 per year for life thereafter is simply not enough.

Alternatively, instead of just giving the ex-presidents the money, it should come with a guarantee that the Mo Ibrahim Foundation will help them invest the money in the international markets. This way, their frame of reference will not be the potential returns in their domestic economies  – which may not add much value to the award money – but the more lucrative international markets.