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What Can Political Economists Tell Us about Africa, Aid and Development?

Duncan Green's picture

There’s a clutch of different research initiatives trying to understand Africa’s political economy and its impact on development and aid. Often, the tone of the political economists can be quite discouraging – Alex Duncan gives a tongue-in-cheek definition of a political economist as ‘someone coming to explain why your aid programme doesn’t work’. There are few practical ‘take aways’ either for large bilateral aid agencies, or NGOs other than ‘give up and become a researcher’.

And that’s pretty much the tone of a logotastic ‘joint statement’ from 5 research programmes based (loosely) in the UK, Denmark, and the Netherlands (The Africa Power and Politics Programme, Developmental Leadership Programme, Elites, Production and Poverty: A Comparative Analysis, Political Economy of Agricultural Policy in Africa, Tracking Development). Here’s some highlights:

From the summary:

“African countries badly need to embark on processes of economic  transformation, not just growth, and they are not helped to do so by insistence on  prior achievement of Good Governance, meaning adoption of the institutional ‘best  practices’ that have emerged in much richer countries.”

From the full statement:

“Our single most important message is that development outcomes in poor countries depend fundamentally on the political incentives facing political elites and leaders….. Because of the way democratisation affects politicians’ incentives in poor developing countries, the introduction of competitive elections is a mixed blessing for achieving the economic transformation that Africa needs.”

“The reasons [a number of South-east Asian countries] achieved sustained, pro-poor growth [and Africa has not] over the 50 years since 1960 are mostly about policy differences. During the early decades of the period, Indonesia, Malaysia and Vietnam invested heavily in rural development, driven by urgency, outreach and expediency. They did so under a variety of political regime types, none of which were free of major corruption. They made some progress towards democratisation only after achieving  substantial economic  transformation.”

The paper’s ‘big idea’ is that “What shapes the ability of policy to drive economic transformation is the extent to which mutual interests, cooperative relations and synergies emerge between three  large groups of actors. [see diagram] [Usually] the relationships are not mutual, cooperative and synergistic, but antagonistic, exploitative and perverse. [But the key to improving aid practice is] understanding exactly how and why exceptions occur.”

“Because politicians are typically constrained to generate and use rents to cement their alliances,  ‘good politics’  can  result in ‘bad economics’” Elites need cash to funnel to their supporters and so have to milk the state for short-term rents, rather than investing in the future, as the Southeast Asian elites did, (supporting pioneer firms, building roads, providing health and education etc). The trouble is that in such a system “the introduction of formal multi-party competition into such an environment does not alter the basic logic. Clientelism in Africa is to a greater or lesser extent competitive under both authoritarian and more democratic regimes…. Typically, multi-party elections formalise and sharpen this competition with often mixed results for development.”

The paper identifies two broad kinds of exceptions to the clientilist rule:

Big-picture exceptions: In a somewhat desperate search for developmental states in Africa, the paper comes up with “the early-independence regimes of Houphouët-Boigny (Côte  d’Ivoire), Kenyatta (Kenya) and  Banda (Malawi) [and today,] Ethiopia and Rwanda.”  These have all “achieved centralised rent-management [thus freeing them from the distractions of competitive clientilism] and this led to significant economic transformation and social advance for a period.” Ah, so the best way to improve on competitive clientilism is to eliminate the competition, not the clientilism.  Oh dear.

Small-picture exceptions: successes in Asia were in many instances the result of breakthroughs in particular sectors or commodity chains which only later became generalised… [African examples include] sugar in Mozambique and dairy in Uganda.”

What does all this mean for aid donors (the authors are basically talking to the big money donors, not relative minnows like Oxfam)?

“The central message that needs to be got across is that the conditions which keep the African masses in poverty are the result of decisions by politicians who are responding to incentives  that change slowly and are not in the  short  term very  favourable to development. More immediately, they stem from the inability of sector actors to overcome their collective action problems in the face of unsupportive if not predatory state behaviour. They cannot, therefore, be addressed by merely transferring economic resources from the global rich to the global poor. Indeed, such attempts can make matters worse, by further weakening those political incentives that work in favour of domestically driven economic transformation.

If this is true, aid needs to become far less supply-driven and more focused on supporting processes that show real promise, based on an informed assessment of the local situation and the lessons of history. In particular, there should be no implication that donors know best what institutions poor countries need.”

The political reality check is excellent, but the lack of genuine ‘so what’s’ (despite the paper’s protestations to the contrary) is a real problem. As is the casual abandonment of human rights, democracy, citizenship and social struggle. Citizens, social movements, the Arab Spring (see left) barely get a condescending mention in all this high level grown-up talk of governments, elites, donors and political settlements.

Still, for NGOs who usually prefer Gramsci’s ‘optimism of the will’ to his accompanying ‘pessimism of the intellect’ (this paper suffers from the opposite problem),  it should be at least food for thought that a cold-blooded look at Africa’s recent history persuades a group of serious academics that the best Africa can hope for is benign dictatorship, epitomised by Rwanda’s Paul Kagame, which delivers “social provision under a centralised rent management regime [and] illustrates how a  powerful upward accountability of public service-providers and local administrations  to the national political leadership can remarkably improve service quality, more  than adequately substituting for the downward accountability to users that tends to  be stressed in donor rhetoric.”

What’s more, I think that a more progressive reading of this work is possible – outsiders must give up trying to impose blueprints, and concentrate on spotting and supporting positive developments as they emerge (with many of them coming from the very social movements that this group ignores or dismisses). But that will be of little comfort to the big official agencies, which are too big and too politically constrained to pursue that more entrepreneurial approach. They are left with what I’ve previously termed the ‘decent chap’approach – picking political winners by “focusing  particularly  on sectors  or areas  where  government  attitudes are positive for  political reasons and  sector  actors have  revealed a collective ambition to move ahead.” Shame Paul Kagame says he doesn’t really want more aid.

Photo Credit: Flickr user Kodak Agfa

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Submitted by Nilgun Gokgur on
I strongly disagree with the limited analysis and the assertions of the Africa Power and Politics Program (APPP), namely the various reports and articles by David Booth and Frederick Golooba-Mutebi on Rwanda with claims that the ruling party-owned enterprises are “developmental.” Even with limited available data, I can demonstrate that Rwanda’s party-statals (enterprises fully or partially owned by the ruling party, Rwandan Patriotic Front, in joint venture with state-owned enterprises, the military and the party-linked business elite) have negative development impact on stakeholders and, therefore, cannot be called developmental. The absence of economic and political distance between these party-statals and the Rwandan state has led to latter’s inability to manage the rents effectively in contrast to East Asian states. The party-statals have now become no more than extractive economic institutions easily winning government procurement contracts, impeding competition, job-rich employment generation and private sector development. Since 1994 in a period of eighteen years, a total of 24 party-statals under three investment holding companies--Crystal Ventures (formerly Tri-Star), Horizon Group, and Rwanda Investment Group (RIG)—have managed to grow and dominate the commanding heights in key sectors (construction, real estate development, security, energy, manufacturing of furniture and packaging materials, furniture importing, agro-processing of tea and coffee washing stations, pyrethrum, telecommunications, broadcasting, and media). All party-statals combined have the highest value of fixed assets, total assets, the turnover and, more importantly, the largest share in gross output. The average size party-statal is still larger than any large enterprise operating in Rwanda’s tiny formal enterprise sector. Furthermore, party-statals impose serious fiscal risks as they drain the scarce resources of the state and those of the donors (i.e. the rescue merger of the Housing Rwanda Bank with Rwanda Development Bank last year). Development partners need to insist on transparency, accountability and full disclosure of party-statal assets and accumulation of their economic rent and profits. Besides enterprise level financial and operational performance analysis, party statals’ impact on the Treasury needs to be fully measured and monitored. Moreover, the state can devise strategies for the party-statals to exit in order to increase economic competition (hopefully with political competition) and employment. Only then it can be called a true developmental state with genuine commitment to private sector development. I should add that I had a chance to refute David Booth’s claims on Rwanda at a conference, “Rethinking State and Society in Africa” on April 27, 2012 at the Institute of Development Policy (IOB), University of Antwerp, Belgium where I was a Scholar in Residence working on a forthcoming discussion paper, “Rwanda’s Party-Statals: Are they enhancing or impeding development?”

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