Tag Archives: togo

It’s getting easier to do business in Africa

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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 Politics of the CFA Franc Zone

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This is from the Economist:

Where some see an anchor, others see a millstone. To maintain the euro peg, notes Ndongo Samba Sylla, a Senegalese economist, these very poor countries must track the hawkish monetary policy of the European Central Bank. Since the introduction of the euro, income per person in the franc zone has grown at 1.4% a year, compared with 2.5% in all of sub-Saharan Africa.

More on this here.

People like Cameroonian president Paul Biya love the CFA. With good reason.

Yet elites do rather well out of the system, which makes it easier to send wealth abroad. And a weaker currency would increase the cost of imported goods. The only devaluation, in 1994, sparked riots.

Tyler Cowen Goes to Lagos

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MR’s Tyler Cowen (also Professor of Economics at George Mason) recently spent six days in Lagos. Here is what he has to say about Africa’s biggest and most economically dynamic city:

A trip is often defined by its surprises, so here are my biggest revelations from six days in Lagos, Nigeria.

Most of all, I found Lagos to be much safer than advertised. It is frequently described as one of the most dangerous cities on earth. Many people told me I was crazy to go there, and some Nigerian expats warned me I might not get out of the airport alive.

The reality is that I walked around freely and in many parts of town. I didn’t try to go everywhere or at all hours, and I may have been lucky. Yet not once did I feel threatened, and I strongly suspect that a trip to Lagos is safer than a trip to Rio de Janeiro, a major tourist destination. (In my first trip to Rio I was attacked by children with pointed sticks. In my second I found myself caught in a gunfight between drug lords). Many Lagos residents credit the advent of closed-circuit television cameras for their safety improvements.

So if you’re an experienced traveler, and tempted to visit Africa’s largest and arguably most dynamic city, don’t let safety concerns be a deal killer.

Read the whole thing here.

I have never been to Lagos, and look forward to fixing this in 2017. So far my experience of West African (commercial) capitals is limited to Dakar, Accra, Lome, Conakry, Nouakchott and Monrovia (I like them in that order). Dakar edges Accra only by a whisker, mostly on account of the seascape. I have spent way more time in Accra, and therefore my ranking might also be a function of my knowledge of Accra a little too well.

Accra beats all other cities on food. It has the most variety, and nearly all of the offerings beat the bland stuff that we East Africans consume. The grilled tilapia and banku is unbeatable.

Oh, and I must admit that I have a slight preference for Senegalese jollof. My wife insists that Ghanaian jollof is the best jollof (ahead of both the Nigerian and Senegalese variations). I look forward to sampling Naija jollof so we can finally settle this disagreement.

Variagated Africa: Trends in Economic Performance in Two Charts

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This is from the IMF’s Monique Newiak:

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In summary:

Non-commodity exporters, around half of the countries in the region, continue to perform well with growth levels at 4 percent or more. Those countries benefit from lower oil import prices, improvements in their business environments, and strong infrastructure investment. Countries such as Côte d’Ivoire, Ethiopia, Senegal, and Tanzania are expected to continue to grow at more than 6 percent for the next couple of years.

Most commodity exporters, however, are under severe economic strain. This is particularly the case for oil exporters like Angola, Nigeria, and five of the six countries from the Central African Economic and Monetary Union, whose near-term prospects have worsened significantly in recent months despite the modest uptick in oil prices. In these countries, repercussions from the initial shock are now spreading beyond the oil-related sectors to the entire economy, and the slowdown risks becoming deeply entrenched.

It should be obvious, but it bears repeating that there is quite a bit of variation in economic performance across the 55 states on this vast continent.

My personal Africa growth index consists of Senegal, Cote d’Ivoire, Nigeria, Ghana, Gabon, Cameroon, Ethiopia, Kenya, Zambia, Angola, and South Africa. And despite ongoing turbulence in a number of the key economies in this basket, I am confident that the turbulence will not completely erase the gains of the last two decades.

 

Some Africanist inside baseball

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Quick thoughts on presidential term limits and the political crisis in Burundi

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The president of Burundi is about (or not) to join the list of African leaders who have successfully overcome constitutional term limits in a bid to hang on to power. Currently (based on observed attempts in other African countries and their success rate) the odds are roughly 50-50 that Mr. Pierre Nkurunziza will succeed. The last president to try this move was Blaise Compaore of Burkina Faso who ended up getting deposed by the military after mass protests paralyzed Burkina’s major cities.

Successful term limit extensions have so far happened in Burkina Faso (first time), Cameroon, Chad, Djibouti, Gabon, Guinea, Namibia, Togo, and Uganda. Presidents have also tried, but failed, to abolish term limits in Burkina Faso (second time), Malawi, Niger, Nigeria, Senegal, Zambia. Countries that are about to go through a term limit test in the near future include Angola, Burundi, Republic of Congo (Congo-Brazzaville), the Democratic Republic of Congo (DRC), Liberia, Rwanda, and Sierra Leone. Heads of State in Benin, Cape Verde, Ghana, Kenya, Mali, Mozambique, Sao Tome e Principe, Tanzania, and Namibia (after Nujoma) have so far obeyed term limits and stepped down at the end of their second constitutional terms.

To the best of my knowledge only Sudan, The Gambia, Equatorial Guinea, and Eritrea have presidential systems without constitutional term limits. Parliamentary systems in South Africa, Lesotho, Swaziland, Ethiopia, and Botswana do not have limits, although the norm of two terms exists in Botswana and South Africa (and perhaps soon in Ethiopia?).

So what we see in the existing data is that conditional on *overtly* trying to scrap term limits African Heads of State are more likely to succeed than not (9 successes, 6 failures). However, this observation doesn’t tell us anything about the presidents who did not formally consider term limit extensions. For instance, in Kenya (Moi) and Ghana (Rawlings), presidents did not initiate formal debate on the subject but were widely rumored to have tried to do so. So it’s probably the case that presidents who are more likely to succeed self-select into formally initiating public debate on the subject of term limit extension, thereby tilting the balance. And if you factor in the countries that have had more than one episode of term-limited presidents stepping down, suddenly the odds look pretty good for the consolidation of the norm of term limits in Sub Saharan Africa.

I wouldn’t rule out, in the next decade or so, the adoption of an African Union resolution (akin to the one against coups) that sanctions Heads of State who violate constitutional term limits.

So will Nkurunziza succeed? What does this mean for political stability in Burundi? And what can the East African Community and the wider international community do about it? For my thoughts regarding these questions check out my post for the Monkey Cage blog at the Washington Post here.

Correction: An earlier draft of this post listed Zimbabwe as one of the countries without term limits. The 2013 Constitution limits presidents to two terms (with a minimum of three years counting as full term (see Section 91).

On Contracts and Motorcycle Taxi Markets in Benin and Togo

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In the motorcycle-taxi market in most Sub-Saharan African countries, the relation between vehicle owner and driver is characterised by a principal-agent problem with the following features: the owner cannot observe the final output of the driver and therefore cannot condition a wage on it, and higher effort from the driver depreciates the motorcycle. These two feature simply that it is in the owner’s best interest that the driver exerts as little effort as possible while still leasing the motorcycle from him. The problem with low effort implementation is that the motorcycle will not generate enough revenue. I analyse the contractual arrangements between owners and the drivers in this market using survey data from four cities in Togo and Benin. Evidence suggests that the quest for trust through kinship between owner and driver may explain the prevalence of a contract that induces drivers to exert excessive effort, leading to adverse outcomes like traffic accidents.

That is Moussa Blimpo in a new cool paper in the Journal of African Economies.

One of the questions the paper addresses implicitly is whether trust necessarily leads to better development outcomes (you’ve seen those cross-country regressions with trust as an independent variable…)

……. in the presence of trust, people tend not to sign formal contracts that define residual rights and the actions to be taken in different expected situations. For example, if the owner and the driver are family members, they will be unlikely to draft a contract that caters to litigation, given that it is socially unacceptable to take a legal action against family.

What this means is that sub-optimal contracting and economic outcomes in developing countries may not be due to a general notion of lack of trust, but rather the lack of a specific kind of trust, let’s call it civic trust. This is the kind of trust that is infused with a healthy dose of skepticism and accompanied by explicit contracting under the shadow of credible enforcement by a third party, the state.

President Gnassingbe wins togo poll

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The president of Togo has won re-election. According to the country’s electoral commission Mr. Gnassingbe got 1.2 million votes out of a total of 2 million votes cast. The opposition and a number of election observers have voiced their concerns over the fairness of the process. Mr. Faure Gnassingbe will most certainly be sworn in to continue serving as president once the country’s constitutional court approves the result.

Gnassingbe 1 Democracy 0

togo goes to the polls

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Togo, a tiny West African country of 6.6 million, goes to the polls today. Faure Gnassingbe, President of Togo and son of the late strongman Gnassingbe Eyadema, is hoping to be re-elected for a second term. His father ruled the country uninterrupted between 1967 until his death in 2005. The younger Gnassingbe was then installed by the military as interim president before elections were held. Most observers believe that these elections were not free and fair. Many hope that this time round things will be different.Yeah right.

African democracy’s teething problems will not go away just yet. 2010’s busy elections schedule will surely bring some of these problems to the fore. The top four to watch include the elections in Rwanda, Ethiopia, Madagascar and Ivory Coast. Paul Kagame will most certainly win in Rwanda, but the question is how much room he will give the opposition this time round. Mr.Kagame has been president since his forces ended the Rwanda genocide in 1994 and has been touted to be among the more economically liberal strongmen on the Continent (he is no Tutu but he is good for business). In Ethiopia Meles Zenawi’s party, Ethiopian People’s Revolutionary Democratic Front (EPRDP), is also expected to win. Mr. Zenawi has been in power since he deposed the tin pot despot Mengistu Haile Mariam in 1991. Here too it remains unclear just how much opposition Mr. Zenawi will tolerate in parliament.

Madagascar, as you may remember had a coup in March of last year. It will be interesting to see who emerges as winner in this election. The contest is between the factions led by former DJ and mayor of Antananarivo Andry Rajoelina and the man he kicked out of office Marc Ravalomanana.The political instability in this island country off the east coast of the Continent has not gone without economic consequences.

Ivory Coast, once a paragon of stability in West Africa, is also holding elections this year. This year’s polls were originally planned to be held in 2005 before a bloody civil war that divided the country in half got in the way. The land of Houphouet-Boigny has not known peace and stability since the strongman’s passing in 1993. Mr. Houphouet-Boigny was president between 1963 until his death in 1993. Among his accomplishments was the relocation of the capital of Ivory Coast to Yamoussoukro, his home town, and the construction there of the US $ 300 million Basilica of Our Lady of Peace (which the Guinness Books of records lists as the largest church in the world).