Africa’s Fragile Boom

by Alex de Waal on June 10, 2014

1024px-People_in_Guinea_Bissau_visit_shops_along_a_busy_streetIn the 1980s and 1990s, much of sub-Saharan Africa went through a combination of recession, austerity, and conflict that brought states in the region to the point of collapse. Among the better known cases of conspicuous state failure were Liberia and Somalia, but in many other countries resources were so constrained, and the time horizons of government leaders seeking to hang on to power were so foreshortened, that basic functioning of many governments were no longer possible. Robert Bates describes this as an unplanned experiment in pushing the fundamentals of governance to a point at which “things fell apart.”

Africa has recovered: the continent has been posting impressive growth rates for more than a decade. Mineral exporters such as Angola and Equatorial Guinea lead the way, but some countries reliant on agriculture and manufacturing, such as Ethiopia and Rwanda, have posted growth rates averaging as much as ten percent per year. As countries such as Ghana, Mozambique, and Liberia benefit from the global rush for investment in land, and mineral resources, as well as investor confidence in well-managed economies, Africa has become a favored candidate for the next bloc of poor countries to achieve middle-income status.

But there is a good reason to fear that the boom may be fragile. Although human development indicators such as education and health are improving—and the epidemic of HIV and AIDS is past its worst—the benefits of growth are concentrated in the hands of a few. And growth is focused on a few sectors, notably minerals and services. Most African countries still cannot compete globally in agriculture or manufacturing, save in niche markets such as coffee and cut flowers. As a result, African entrepreneurs are attracted to rents: minerals and government-licensed services and contracts. This sharpens the competition for state power and incentivizes corruption.

And here arises the question of sustainability. In a rentier political system, power is allocated and policy is determined not by institutions and transparent processes, but by patronage and payoff. At best it is crony capitalism, at worst it is a corrupt neo-patrimonialism—a form of government in which official position is used for private gain or factional advancement.

Most political theorists and policymakers dismiss patronage based orders as inefficient, old-fashioned, and uncompetitive, and assume that an institutionalized and developmental system is not only better, but self-evidently better, and will in time supplant such outdated, sclerotic systems. Unfortunately, contemporary experience in Africa—and elsewhere in the world—suggests the contrary. Patronage-based systems are resilient and dynamic, and can adapt speedily and effectively to global social, economic, and political changes.

In fact, the informal flows of money are fueling “shadow globalization”—a new informal patrimonial order that is global in reach. Of greatest concern to international policymakers is the way in which the profits from illegal narcotics can corrupt governments—and in Guinea-Bissau, Africa has recently acquired its first certified narco-state. But the profit-shifting practices of transnational companies, especially in the minerals sector and by investors in large-scale land acquisitions, combined with dubious business practices by their national partners, also generates massive illicit funds that political leaders can use to fund their “political budgets”—the monies they use for buying allegiance, fixing elections, and creating crony militaries. Perhaps even more insidious is the role of international security cooperation funds, which allow rulers to build up sizeable defense and security budgets beyond the scrutiny of domestic publics and international donors, fueling rentier-authoritarianism. Established cases include Uganda and Egypt, but Burkina Faso, Chad, Ethiopia, and Niger are candidates to join the ranks.

Africa’s rent-based recovery makes statebuilding harder, not easier. It means that rulers in countries like Uganda and Mali are spending more on patronage payments to secure their stay in power, and less on public goods such as institutions and infrastructure. This type of governance is inherently fragile because it is so sensitive to cash flow. When the money runs short, the system seizes up and, all too often, contending elites make a violent power grab. This is the real story of the civil war in South Sudan: a kleptocracy that became insolvent turned into a violent grab for a diminished treasury.

And those countries that have achieved more equitable growth, without high levels of corruption and rentierism—such as Ethiopia and Rwanda—face a huge challenge in democratizing. Their leaders face political management challenges that will test their skills to the utmost.

Africa is still growing and there are many reasons for optimism. Perhaps the best guarantee for the future is a better-educated and more confident citizenry that will no longer tolerate the abuses of the past. But the continued prevalence and distortion of rentier political systems places the continent’s economic boom at risk. Africa’s leaders, and its international partners, need first to analyze better the causes of the continent’s fragility if it is to navigate the turbulence ahead. Next they need to tackle the corruption and secrecy that turn everyday patronage politics into malign militarized kleptocracies—or Africa’s economic prospects will be a false dawn.

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This piece is part of The Fletcher Forum of World Affairs’ 2014 Global Risk Forum. The Global Risk Forum is an effort to convene conversations around some of the most pressing issues we face as a global community in the year ahead: the breakdown of climate change negotiationsthe spread of sectarian violence in the Middle East; the credit crisis and economic slowdown in China; the growth of cyber espionage; and the unraveling of Africa’s economic boom. We encourage you to read the conversations, participate with written responses or on social media, and help us work together to produce constructive ideas that will reduce the aggregate risks we face. 

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