What’s really driving African Students’ enrollment in foreign universities?

The rise in enrollment of African students at non-African universities continues to be a topic of interest in the news media. Much of the discussion presently frames the emerging trends within the geopolitical competition between the West and China and Russia.

Consider this take from the FT on African students in Russia:

Desree is one of 334,000 foreign students enrolled in Russian universities, according to government figures, a cohort that has more than doubled since 2010 as part of a push by Moscow to ramp up a policy that served as an instrument of soft power during the cold war. Russia is vying with Germany and France to be the world’s sixth most popular destination for international students and the second most popular non-English-speaking country after China.

…. Russian universities are teaching 17,000 students from African countries this academic year, up from 6,700 just eight years ago, President Vladimir Putin said at a conference dedicated to Moscow’s African relations in October. Four thousand are supported by scholarships provided by the Russian taxpayer.

Or this on China:

In 2003, less than 2,000 African international students were calling China home, yet a mere thirteen years later, this number had ballooned to around 60,000; a twenty-six fold increase. If one takes 2000 as the starting point, 60,000 represents a forty-four fold increase. As a result, “proportionally, more African students are coming to China each year than students from anywhere in the world.” Whereas the United States leads in raw numbers, with over a million international students compared to less than half that number in China, fully half of all foreign students in the U.S come from just two countries: China and India. In comparison, over sixty African and Asian countries send more students to China than the United States.

While there are certainly incentives (such as scholarships from home or host governments) that push or pull students towards foreign universities, that does not appear to explain all of the surge in African student enrollment abroad. Even within Africa, tertiary enrollment has surged over the last few years. According to The Economist, enrollment in African institutions of higher learning has doubled since 2000 and is projected to grow at an increasing rate into the near future:

In recent decades millions of young people like Mr Bahati have swelled the number of students in sub-Saharan Africa. Today 8m are in tertiary education, a term that includes vocational colleges and universities. That is about 9% of young people—more than double the share in 2000 (4%), but far lower than in other regions (see chart). In South Asia the share is 25%, in Latin America and the Caribbean, 51%.

Both the number and share of young people in tertiary education in sub-Saharan Africa will keep growing. The region has about 90m people aged 20-24, a figure projected to double over the next 30 years. Whereas 42% of that age group had completed secondary school in 2012, 59% are forecast to do so by 2030. If African countries are to meet the aspirations of educated young people, they must ensure there are opportunities for further study.

In other words, the observed rise in African enrollment in universities in China, Russia, and elsewhere could be largely due to this unmet excess demand in the region. A look at African enrollment in the US (which has better data and where enrollment has trended upward since 2012) further supports this claim. African enrollment in US universities appear to rise and fall with changes in the economic situation on the Continent (see figures below). Interestingly, there appears to be no lag in the correlation, suggesting that economic conditions largely impact households’ ability to fund their children’s studies abroad (or preparation for the same back home); as opposed to say some structural public under-investment in education during bad economic times. enrollmentincome

In sum, the geopolitical machinations of Beijing and Moscow are only a small part of the story here. The bigger story is the overall increase in demand for higher learning in Africa — driven in no small part by increased primary and secondary enrollment and rising incomes — that is not being met by African universities.

 

The Future of Tax Administration?

Low-income states struggle to collect taxes. And with low fiscal capacity comes the inability to spend any money on vital public goods and services. Take Nigeria, Africa’s biggest economy. The country struggles to collect income tax, and heavily relies on revenues from oil (58.1% of revenues in 2018) and indirect taxes. Nigeria also spends precious little on its people. In 2018, general public expenditures added up to a paltry 10.9% of GDP (believe it or not, Nigeria is a libertarian paradise!). In comparison, public expenditures in Kenya amount to about a quarter of GDP. In 2018, income tax accounted for 47.9% of Kenya’s total tax revenue haul.

The demand for public expenditures will only continue to rise as African countries get richer. Overall, government expenditures as a share of GDP tend to rise with income. For instance, in 2017 the expenditures among OECD states ranged from a low of 26% of GDP in Ireland to 56.4% in France. It goes without saying that any future increases in government spending in countries like Nigeria will require ever more efficient means of tax collection. But such moves will likely be hampered by the illegibility of taxpayers.

Enter Russia. According to the FT, Moscow is pioneering real time tax administration:

taxrusStanding in front of a huge video wall, Mikhail Mishustin, head of the tax service, prepares to show off its capabilities. “Where did you stay last night?” he asks. When I reply, his staff zoom in on a map to Hotel Budapest on the screen. “Did you have a coffee?” His staff then click on the food and drink receipts in the hotel from the previous evening. “Look, it sold three cappuccinos, one espresso and a latte. One of those was yours,” Mr Mishustin declares triumphantly. He was right.

This is the future of tax administration — digital, real-time and with no tax returns. The authorities receive the receipts of every transaction in Russia, from St Petersburg to Vladivostok, within 90 seconds. The information has exposed errors, evasion and fraud in the collection of its consumption tax, VAT, which has allowed the government to raise revenues more quickly than general Russian economic performance.

The new system is directed more at shopkeepers than oligarchs. Russia still scores poorly on international league tables of corruption, being ranked only 138 out of 180 on the Transparency International corruption perceptions index, with concerns including cronyism, a lack of independent media and a biased judiciary. But reducing tax evasion among ordinary Russians and highlighting corrupt tax officials have helped raise revenues and clean up the system.

Reasonable people should worry about the potential misuse of these government powers. But remedies to this problem must be tempered with an understanding of the deep structural barriers to poverty alleviation caused by low fiscal capacity (not to mention a weakened fiscal pact between citizens and their governments).

If no taxation without representation is true, then no representation without taxation must also be true.

Finally, as correctly noted in the FT piece, technology cannot fix the problem of tax avoidance by the politically-connected. If Russia’s system catches on in low-income countries, it will most likely be effective in widening the tax base among diffused average taxpayers. The hope then would be that higher levels of tax compliance among average taxpayers will create political pressure for the same from the big fish.

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.

 

 

 

On North Korea’s Lucrative Relationship With African States

A number of African countries have close ties to North Korea. And it is for the very same reasons that these states have (or had) ties with Cuba, China, and USSR/Russia:

Namibian officials describe a different North Korea — a longtime ally, a partner in development and an affordable contractor. Since the 1960s, when North Korea began providing support for African nations during their independence struggles with European colonial powers, the regime has fostered political ties on the continent that have turned into commercial relationships.

Recall that it is China that was willing to come to the aid of landlocked Zambia after apartheid South Africa and apartheid-lite Southern Rhodesia threatened the country’s trade links on account of its support for nationalists from both countries. The USSR and Cuba were also vital allies of African nationalist liberation movements at a time when the West was mired in doublespeak over decolonization and racial equality on the Continent. Cuba, in particular, committed blood and treasure in the liberation of Angola and Southwest Africa (Namibia).

Nelson Mandela vowed never to forget friends that aided the ANC against apartheid:

All to say that China, Russia, Cuba, and North Korea are not merely using African states. It has always been a game played on the basis of mutual interests, with the distribution of benefits dictated by the prevailing balance of bargaining power.

Mozambique: Is there such a thing as predatory sovereign lending?

The Wall Street Journal has a great story on Mozambique’s hidden debt scandal:

Screen Shot 2016-06-30 at 8.03.37 PM.pngThe government picked Mr. Safa’s company, Privinvest, to supply ships, including patrol and surveillance vessels, and asked its help getting financing. The company disputes the characterization of the ships as military, saying they weren’t outfitted with weapons. Privinvest approached Credit Suisse about a loan for Mozambique, and a committee of senior executives, including then-CEO Gaël de Boissard, approved the deal.

Credit Suisse’s top brass signed off in part because the bank had pioneered a way to lend in developing countries without taking on much risk.

The bank found it could purchase sovereign-debt insurance through the Lloyd’s of London insurance market to hedge as much as 90% of the loans against default. Credit Suisse charged higher interest rates on the debt than its insurance premiums, pocketing the difference mostly risk free.

The insurance policies Credit Suisse used only covered governments. So when Mozambique wanted to borrow the money through state-owned companies instead, the bank came up with a twist: Mozambique would cosign.

FT notes that:

The debt was originally borrowed via a special purpose vehicle for Ematum [tuna fishing company], an arrangement that does not require the same level of disclosure as a sovereign bond issue.

Basically Credit Suisse, the Russian VTB Capital, and their Mozambican accomplices knew exactly what they were doing.

When the money got to Mozambique it mostly went into private pockets. The proposed tuna business the loans were intended to finance went bust (realizing a paltry 2.5% of projected sales). And the security purchases (ostensibly to secure Mozambique’s vast yet-to-be-developed gas fields) proved useless.

Meanwhile…

…….conditions in Mozambique are worsening. Its foreign-currency reserves fell to $1.8 billion in May from $2 billion in January, and it is seeking $180 million in food aid. Intensified fighting has sent more than 10,000 refugees to neighboring Malawi, according to the U.N. High Commission for Refugees.

Credit Suisse is a Swiss financial services company. According to the WSJ Privinvest’s struggling subsidiary Constructions Mécaniques de Normandie built the ships sold to Mozambique. The latter is, of course, based in France. Corruption knows no borders.

How is the world reacting to China’s rise?

China has experienced a spectacular economic growth in recent decades. Its economy grew more than 48 times from 1980 to 2013. How are the other countries reacting to China’s rise? Do they see it as an economic opportunity or a security threat? In this paper, we answer this question by analyzing online news reports about China published in Australia, France, Germany, Japan, Russia, South Korea, the UK and the US. More specifically, we first analyze the frequency with which China has appeared in news headlines, which is a measure of China’s influence in the world. Second, we build a Naive Bayes classifier to study the evolving nature of the news reports, i.e., whether they are economic or political. We then evaluate the friendliness of the news coverage based on sentiment analysis. Empirical results indicate that there has been increasing news coverage of China in all the countries under study. We also find that the emphasis of the reports is generally shifting towards China’s economy. Here Japan and South Korea are exceptions: they are reporting more on Chinese politics. In terms of global sentiment, the picture is quite gloomy. With the exception of Australia and, to some extent, France, all the other countries under examination are becoming less positive towards China.

That’s Yuan, Wang and Luo writing in a neat paper that analyzes news coverage of China in different countries.

More on this here (HT Jay Ulfelder).

On the Continent opinion survey data from a select set of countries show high favorability ratings for China — by about two thirds or more of survey respondents. The same countries have seen some decline in US favorability ratings over the last few years. As you’d expect, people’s reaction to China’s rise is based on perceptions of the potential material impact it will have on their lives. On average, the survey evidence suggests that most Africans view China’s rise as a good thing.

It is interesting that across the globe young people, on average, have a more positive view of China’s rise than older people. Younger people probably associate China more with glitzy gadgets in their pockets; and less with cultural revolutions and famine-inducing autocracy.

14th of February Edition

Click to enlarge.

Source: http://benkling.tumblr.com/

H/T Paul G.

food riots in mozambique

The BBC reports that at least 10 people have died following food riots in a number of urban centres in Mozambique. The Southern African nation has witnessed a 20% increase in the price of bread in the last several days which precipitated the riots. Russia’s ban on wheat exports after fires burned a significant proportion of its crop has caused a global hike in wheat prices leading to a corresponding increase in bread prices. Most African countries (including Kenya where the price of wheat has appreciated quite a bit) will continue to see increases in prices of basic commodities such as bread and baking flour due to their heavy dependence on wheat imports.

Food insecurity, fueled primarily by distortionist policies, continues to be a major challenge to many African states. The model adopted by Malawi – which is fast turning into a regional breadbasket – is taking slower than it ought to to spread within the region, especially in light of the current population growth trends (Kenya, for instance, is growing by 1 million souls a year).

links that I liked

The East African, my favorited regional weekly, this week has a few interesting pieces. Of course there are the regulars – Wanyeki and Charles Onyango-Obbo.  There was also this one that mentioned in passing Kenya’s insouciant approach to threats to its territorial integrity.

Wronging rights has a thing on some crazy Chechen and a tiger.

And please read AfricanLoft, if you haven’t yet today.