African Political Economy

In any attempt to review literature dealing with political economy in any region of Africa, one must first look at some of the history of the continent and then make the correlation between centuries of colonialism and the present economic catastrophe that makes up the majority of the nations on the continent. However, considering the history of Africa would take up more of this writing then the literature reviewed will allow, I will briefly mention some of the key points of the history so that context may be generated for the overall argument that this paper shall make. I shall also endeavor to review the last 30 years in Sub-Saharan Africa, with focus on Rwanda and Uganda.

Any literature that does not take the colonization policies of the Berlin Conference of 1884-85 and the subsequent correlation to the lack of economic growth of the region into consideration when discussing globalization of African political economy, does a great disservice to scholars and interested parties alike. The African continent was divided up amongst the colonizing countries and their boundaries defined. Resistance among the thousands of tribes to the new rulers was generally put down by force.[1] The European States, seeing no potential for manufacturing and little in natural resources at the time, simply claimed authority over the area. (Lawson, 2003) While the rest of the world developed around them, Africa was essentially held back from developing any kind of resources other than labor. When the colonizing states began to give the African nations their independence, power vacuums were created and ruthless military leaders that were willing to kill to gain and retain power often filled the voids.

Understanding that Rwanda was under Belgian influence for the better part of a hundred years, it was believed that when control was relinquished to the Tutsi in the 1970's the economic standard that had been created would stand and that the Rwandans would be able to stand on their collective own. [2] The Belgians in trying to promote nationalism in Rwanda, as well as a racial class system, divided the Hutu and the Tutsi into separate races declaring that the Tutsi were more white and therefore were better suited to be in control.[3] After the assassination death of a prominent Hutu politician in the 1990's, the maelstrom that would follow would leave hundreds of thousands dead and a country in a constant state of turmoil. Generating trade and increasing the Gross Domestic Product, was the last thing on the minds of both the citizens and the government. (Stanton, 2002)

Uganda in its own right was under the thumb of a military tyrant in Idi Amin, and with the world watching, the human rights violations that he and his government created were legend. To add to all of this, Uganda was and still in many occasions one of the countries that endeavor to keep areas destabilized by sending troops to fight alongside of "rebel" factions. Consideration must be paid, however, to reports of potentially positive growth indices that shall be discussed later. (UGADSA, 2002)

The rest of the area has been undermined by "increasing social disintegration, accelerated and made more dramatic and violent by superpower-fostered militarization (Ethiopia, Eritrea, Somalia), sometimes aggravated by white settler intransigence (Zimbabwe, Namibia, Mozambique, Angola)" (Leys, 1994) Leys supports the argument that one must be cognizant of the past in order to have some handle on how the future of political economy will play out.

Even though in the 1960's Africa was ranked ahead of East Asia, with the World Bank proclaiming that some countries in the continent could see as high as a 7% rate of growth due to the aforementioned problems in these countries, none of them were able to attain those kinds of rates of growth and most ended up taking catastrophic losses. [4] Although the paper written by Easterly has an ultimate hypothesis states that, "...cross-country differences in ethnic diversity explain a substantial part of the cross-country differences in public policies, political instability," he immediately contradicts when he launches into an analysis of the numbers, in essence blaming the imbalance of the economy in Africa on improper dispersal of funding by the World Bank and the IMF. (Easterly, 1997)[5] It is now being recognized that not only were the numbers astonishingly wrong, but, "...past approaches to development cooperation-from the reconstruction emphasis of the 1950s, to the focus on state planning in the 1960s, to the heavy reliance on market-based solutions and structural adjustment in the 1980s-were too narrowly focused and often failed to recognize the cultural and political context in which development takes place." (CIDA, 2002:1)

In essence the Easterly article laid the blame for the lack of growth squarely on the shoulders of the African's, with little regard to the power vacuum created at the end of Colonialism. To attempt to explain away generations of ethnic mistrust created by outside entities with numbers being the empirical evidence to support the claim that improper governance and regressive fiscal policies, is not only irresponsible, but dangerous as well in that acceptance of the evidence could cause Multi-National Corporations and governments to turn a blind eye against the African nations which in turn would create untenable situations within those nations.

At present there seems to be no incentive for MNC's to begin any type of dialogue with the African nations because of the deep seeded corruption on nearly every level, but more publicly the leadership can be seen to be stealing the country blind. One example laid out in Leys was that of Zairian President Mobutu who had an estimated 4 billion dollars put away in outside bank accounts. (Leys, 1994:35) Without correcting some of the more outrageous acts of the governments in power there can be no correction of the economic situation that has gripped the continent.

Adam and O'Connell proclaim that the problem lies in taxation policies, stating that, "Tax and tax-like distortions tend to be high and volatile in Africa. These influence the allocation of national wealth and can reduce both the level and productivity of domestic investment." (Adam, 1998) While taxation policies can have a detrimental effect on growth, it should be noted that many of these policies are put into place by governments that are not only trying to meet the World Bank and IMF's requirements for the loans given, but must fight a constant struggle with pervasive corruption which seems to be inherent in the economic policies.

As is suggested by Leys, the prevalence of a person to take his load of cocoa beans overland and sell them in another country, bribing a couple of officials along the way, not willing to pay the high export taxes implemented to ship overseas, is ultimately not conducive to export growth.[6] While this may have been a contributing factor to the lack of growth from an "open economy is best" argument, ultimately the cocoa bean grower, and all other agricultural entrepreneurs, as well as any other domestic businesses with interest in the export market will find that it will be more conducive to their own overall bottom line to skirt the government imposed taxes and create a black market economy by which their own coffers will be flush. Add to this the previous notation of government corruption and the outright theft of tax monies, the incentive for foreign investment is weaker still.

Lack of trust in government officials, possibly because of the ease with which they can be bought will eventually lead to the citizens figuring out their own way to survive. That being said, Leys paper still focuses on the humanistic argument that in essence states that the problems in Africa are not solely of lack of economical ability but the pervasive human factor that underlies every aspect of political economy on the continent. Corruption, whether in situations of taxes or all out bribe taking, especially in the upper echelons of government, will in fact destroy an economy. The Adams argument that taxation policies are the sole reason why the African economy is regressing, discounts the fact that most of these countries export capabilities much less their domestic business capabilities are non-existent due to lack of both natural as well as labor resources.

Ndulu, suggests that there has been a nearly 4 percent increase in growth in Sub-Saharan Africa, but there is no consideration for the fact that there has been genocide, disease and famine on an apocalyptic level (Ndulu, 2005) The argument fails to take into account their own figures that per capita the number of people living on less then a dollar a day has increased by over 100million people in the last 20 years.[7] The argument also fails to take the morbidity rates of the region into consideration. It becomes a facetious argument to proclaim that the economy is rising albeit slowly, when the population is decreasing due to disease, famine and genocide. According to the Human Development Index of 2005 the overall population growth of the region has only increased at a rate of less than 2% over a 28 year span[8] When the infant mortality rate is ever increasing and life expectancy rates of less than 45 years of age are the norm, combined with a nearly 30% prevalence of malaria, AIDS and HIV infections, the growth rates described by Ndulu can not be explained without manipulating the numbers.[9] Taking the economic growth rate and comparing it to the death rate would show that the slight increase in the over all population of the region would not account for the growth.

Adam and McConnell dispute Ndulu showing that the economic growth has in fact been stagnant in the 60's and 70's and then on the decline in the 80's and is still in fact declining. (Adam, 1998) Considering that both of these reports, Ndulu's and Adam's were delivered to the World Bank and the International Monetary fund along with several other reports generated by the United Nations including the HDI it is no wonder that NGO's and other government find themselves at a loss of how to increase self-sustaining growth in the region.

Another area that is not looked into as being a source of the lack of growth in Africa has to be education. While in 2005 the World Bank's fiduciary commitments to Sub-Saharan Africa and North African regions totaled 369million and 124million dollars respectively, a blatant discrepancy can be seen when those numbers are compared to the commitments to other developing nations.[10] With the lack of commitment to higher education, in essence relegating Sub-Saharan Africa and North Africa to a high school education or less, the World Bank and in a sense the developed nations of the world have told the African states that education is not important. Higher education is probably the most important aspect when it comes to trade with the rest of the world. The inability to learn and thereby implement critical thinking skills, saps the economy of skilled labor, and fundamentally stifles domestic economy.

Education also must be taken into consideration with health care concerns. While the literature takes a clinical look at the numbers depicting disease, famine and the prevalence of AIDS/HIV, it seems that the cavalier attitude downplays the problem. To use Rwanda as an example, the numbers are disturbing. While the country only has a 5% rate of AIDS, the prevalence of malaria is at 6,510 cases per 100,000, and a 45% chance of not living to the age of 40.[11] One can not develop an international economy based upon foreign trade and investment when the population can barely survive.

The literature reviewed seems to discount the role of health care in developing nations, preferring to look at cost benefit analyses of implementing free trade principals and reducing tariff barriers both on foreign as well as domestic goods. (Adam, 1998) Even Rodrik, when discussing trade development in Sub-Saharan Africa, suggests that the size and per capita income of the country plays a larger factor in regressive growth patterns. (Rodrik, 1999:113)

While the literature on Africa is expansive, there seems to be a general feeling that creating coefficients to explain the lack of growth in political economy seem to be the norm, while at the same time the sheer lack of the human factors as an explanation, with the exception of the Leys study, create the impression that perhaps further study should be done. While this writing seems to be a critique of the literature reviewed, the methodologies and subsequent conclusions were so far apart that a person could not, in all good conscious, have remained silent on the topic.

Contrary to the readings one cannot reduce the failure of political economy in Africa to mere numbers, and graphs. The human factor that Leys focuses on presents the problem in a much clearer light.

[1] From Lawson's Globalization and the African State Alhaji Sir Ahmadu Bello, My Life (Cambridge: Cambridge University Press, 1962), 19, cited in Herbst, States and Power, 84

[2] Colin Leys, "Confronting the African Tragedy," New Left Review 204 (1994).

[3]International Center for Law Trade and Diplomacy, Inc., 1999

[4] References are to Enke {1963} and Kamarck {1967}, respectively.

[5] While Easterly and Levine did bring up the more tangible reasons for the problems in Africa, the focus seemed to be more on explaining regressive growth rates as they pertain to education, GDP, and financial depth, and very little light is shone upon corruption, removal of colonial governments which created power vacuums, and ethnic power struggles and cleansing.

[6] From footnote 9 in Leys' Confronting the African Tragedy1994 referencing an argument by McGaffey and Windsberger

[7] See Appendix 1 Figure 4

[8] Human Development Index (2005)

[9] See Appendix 1 Figure 3

[10] World Bank Commitment numbers show 228 million to East Asian and Pacific nations with a nearly 3 to 1 ratio in tertiary education spending in comparison Sub-Saharan Africa, and no spending for tertiary education in North Africa. Source: World Bank New Commitments for Education by Sub-Sector and IDA, IBRD, FY90-05

[11] Human Development Index 2005... It should be noted that other nations in the region have a higher prevalence of AIDS, South Africa 25%, Botswana 37.5%, however the rate of malaria is much lower in these countries.

APPENDIX 1

Figure 1

Figure 2

Figure 3Source: Human Development Index 2005

Figure 4
Source Human Development Index 2005

BIBLIOGRAPHY

Adam, Christopher S. and O'Connell, Stephan A. "Aid, Taxation and Development: Analytical Perspectives on Aid Effectiveness in Sub-Saharan Africa" World Bank Development Research Group February 1998

Block, Steven, "Does Africa Grow Differently?" Journal of Development Economics 65: 2 (2001): 443-67.

Collier, Paul and Gunning, Jan Willem, "Explaining African Economic Performance," Journal of Economic Literature 37: 1 (1999): 64-111. JA

Collier and Gunning; Ndulu and O'Connell; and Sender "Slow Growth in Africa," Articles by. Journal of Economic Perspectives 13: 3 (Summer 1999): 3-22, 41-66, 89-114.

Easterly, William and Levine, Ross, "Africa's Growth Tragedy: Policies and Ethnic Divisions." Quarterly Journal of Economics (November 1997): 1203-50.

Human Development Report 2005

http://hdr.undp.org/reports/global/2005/pdf/HDR05_HDI.pdf

International Center for Law Trade and Diplomacy, Inc., Copyright 1999

AN ABSTRACT HISTORY OF SUB-SAHARAN AFRICAN

Leys, Colin, "Confronting the African Tragedy," New Left Review 204 (1994). JA

Rodrik, Dani "The New Global Economy and Developing Countries: Making Openness Work" Policy Essay No. 24 Overseas Development Council (1999)

Stanton, Gregory H. "Could the Rwandan Genocide Have Been Prevented?"

©2002 Gregory H. Stanton, http://www.genocidewatch.org/COULD%20THE%20RWANDAN%20GENOCIDE%20HAVE%20BEEN%20PREVENTED.htm

World Bank Education Statistics

http://devdata.worldbank.org/edstats/worldbanklending/file2005/file%203a.xls