Economics and the Democratic Wave in Africa: Development, Distribution, Democracy, Adjustment, and Conflict

 

c E. Wayne Nafziger

University Distinguished Professor of Economics

Kansas State University, Manhattan

nafwayne@ksu.edu

http://www.ksu.edu/economics/nafwayne/

Plenary Speech to the Mid-America Alliance for African Studies

University of Kansas, Lawrence

September 25, 1999

 

I. Democratization and economic development

 

II. Africa¨ economic performance in the 1980s and 1990s

 

III. The crisis in food and agricultural development

 

IV. Agricultural policies before liberalization

 

V. Agricultural policies during liberalization

VI. Stabilization and Structural Adjustment

VII. Adjustment, Clientelism, and Predatory Rule in Africa

VIII. Economic Policies

A. Stabilization, Adjustment, and Reform

1. Changes in the Bretton Woods institutions' goals, instruments, and openness

2. Trade liberalization

3. External capital-market liberalization.

4. Open debate.

5. High-income OECD countries' interests.

6. Reduction in trade barriers against Africa and other Third World countries, to

reduce external vulnerability and provide more scope for export-led growth.

B. Aid and Debt Relief

1. Aid to Vulnerable Economies.

2. Cushioning the effects of sudden external shocks.

C. Rescheduling and writing down debt

D. Investment

E. Economic and Political Institutions

1. Institutions

2. Improving the State's Capability to Collect Taxes and Provide Basic Services.

F. Safety Nets for the Poor

G. Reduction of Inequalities

1. Uneven development between regions and ethnic communities.

2. Educational inequality.

H. Food and Agriculture

1. Agrarian reform and land redistribution.

2. Secure property and usufruct rights for traditional community or village land-rights

systems.

3. Aid for food and agricultural development.


In the early 1990s, with the breakup of the Soviet Union, Western scholars and national leaders expected a surge toward liberal economic reforms and competitive democratic elections. Russia, Central and Eastern Europe, Latin America, and sub-Saharan Africa appeared ripe for extensive economic and political liberalization.

 

Huntington (1991: 6-7) visualizes this as a later stage of a wave of democratization in new countries. He defines democracy as ^a institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for people¨s vote. ̄

 

Bratton and van de Walle contend (1997: 3) that ^the first half of the 1990s saw widespread political turbulance across the African continent, which can be summarized with . . . transitions away from one-party and military regimes start[ing] with political protest, evolv[ing] through liberalization reforms, often culminat[ing] in competitive elections, and usually end[ing] with the installation of new forms of regimes. . . . [These movements and institutional rearrangements] amounted to the most far-reaching shifts in African political life since the time of political independence 30 years earlier. ̄

 

From the perspective of the late 1990s, Bratton and van de Walle are uncertain that this early regime transition marked a watershed in African politics. Joseph (1998: 3-4) views the electoral democracies with few civil and political freedoms that have abounded in Africa in the 1990s as "virtual democrac[ies], . . . deliberately contrived to satisfy international norms of 'presentability'." The opposition parties, free press, labor unions, and strong civil society needed to support a transparent, accountable democratic society were still lacking. (Ibid., pp. 4-9). According to Zakaria (1997: 22-43), strongmen in these illiberal African democracies create electoral rules of the game to divide, coopt, and subdue the opposition; maintain private armed forces and death squads; and detain political opponents; in ways that distort democratic institutions (ibid.; Joseph 1998: 14-15; Barkan and Ng'ethe 1998: 33; Gyimah-Boadi 1998:20).

 

Bayard, Ellis, and Hibou (1999: 2-3) note ironically that ^the democratization process begun in 1989-91 . . . has actually increased the tendency towards the erosion of national sovereignty, since aid donors now attach conditions governing human rights to the loans and grants which they offer. But these conditions . . . have little effect on the substance of relations between the elites of the various anciens regimes and those people who are intent on pursuing a political revolution. They have, however, had the effect of obliging the main actors to change their system of legitimation. ̄

 

Sandbrook (2000) cites several sub-Saharan ^countries in which democratization has recently aggravated ethnic/communal divisions and accelerated a downward spiral into deadly conflict: ̄ Congo-Brazzaville, Central African Republic, and Kenya. Ottaway (1995: 235?6) identifies the critical dilemma:

[D]emocratization . . . is a highly disruptive process in itself: it encourages the conflicts that exist in a collapsing state to manifest themselves freely, but without the restraint of the checks and balances, and of agreement on the basic rules, that regulate conflict . . . in a well?established democratic system.

Ndulu and O¨Connell (1999: 51) use Bratton and van de Walle¨s (1997) classification of 45 sub-Saharan countries by political regime in 1988 (excluding settler oligarchies of Namibia and South Africa): multi-party systems, one-party systems, and military oligarchies. Ndulu and O¨Connell show that, in total, the five multi-party systems ?Botswana, Gambia, Mauritius, Senegal, and Zimbabwe ? started out richer (in 1960) and grew rapidly, expanded their advantage in real GDP per capita over time (figure 1). Although one-party regimes, whether competitive or plebiscitary, grew in the 1960s, they barely increased after 1970. Finally, military oligarchies started as the poorest of nations, and despite limited growth in the 1970s, have remained the poorest. To Ndulu and O¨Connell, this reinforces Lipset¨s hypothesis (1959) of the correlation of economic development with democratic institutions. Democracy is difficult to sustain where there is no accompanying economic development.

 

Ndulu and O¨Connell (1999: 52-53) emphasize the association of good governance with African growth and the neopatrimonial feature, or personalized patterns of authority and obligation, with African authoritarian regimes, and their resulting slow growth. In my Inequality in Africa, I show how falling average incomes and growing political consciousness added pressures to national leaders, whose response was usually not only anti-egalitarian but also anti-growth; hurting small farmers' incentives, appropriating peasant surplus for parastatal industry, building parastatal enterprises beyond management capacity, and using these inefficient firms to give benefits to clients. Regime survival in a politically fragile system required expanding patronage to marshal elite support, at the expense of economic growth. Elites extract immediate rents and transfers rather than providing incentives for economic growth. In addition, spurring peasant production through market prices and exchange rates would have interfered with state leaders' ability to build political support, especially in cities (Nafziger 1988). Moreover, investment by African elites shifts from readily taxable forms toward mobile capital and even capital flight (Ndulu and O¨Connell 1999: 54-55). These political elites also prefer quantitative restrictions and licensing over price-based policies, because of the scope for targeting these benefits to favored parties.

 

Ake (1996:1, 18) reinforces this contention when he states that for Africa, ^the problem is not so much that development has failed as that it was never really on the agenda in the first place. . . .[W]ith independence African leaders were in no position to pursue development; they were too engrossed in the struggle for survival. ̄

 

The struggle over declining economic benefits affects the composition of ruling elites and the nature of patron-client patterns, thus potentially destabilizing the polity. In return, these changes in the political system may constrain policies toward economic growth and development. Since the late 1970s and early 1980s, the interaction between negative growth and political predation has contributed to a downward spiral seen in African countries such as Angola, Ethiopia, Sudan, Somalia, Liberia, Sierra Leone, Congo, and Nigeria.

 

Africa¨s Economic Performance in the 1980s and 1990s

 

Africa's economic crisis originated from its inability to adjust to the 1973-74 oil shock, exacerbated by a credit cycle, in which states overborrowed at negative real interest rates in the mid- to late 1970s, but faced high positive rates during debt servicing or loan renewal in the 1980s. African leaders' statist economic policies during the 1970s and early 1980s (OAU 1980) emphasized detailed state planning, expansion of government owned enterprises, heavy-industry development, and government intervention in exchange rates and agricultural price-setting. These policies contributed to stagnation and growing poverty (especially in rural areas) and inequality. The political elites used the state to pursue economic policies that supported their interests at the expense of Africa's poor and working classes (Nafziger 1993).

In 1980, only 8 of 29 (28 percent) sub-Saharan African countries had a lower gross domestic product or GDP (income earned within a country¨s boundary) per capita than in 1960 (World Bank 1982: 110-11). In contrast, 32 of 48 (67 percent) sub-Saharan countries had a lower GDP per capita in 1997 than in 1980. Indeed, from 1980 to 1997, GDP per person in the sub-Sahara declined at almost 1 percent yearly. The sub-Sahara¨s average growth rate was 1.5 percentage point per year lower than non-African developing countries (mainly in Asia and Latin America) from 1980 to 1997 (figure 2). In 1997, the sub-Sahara had the lowest GDP per capita (in purchasing-power-parity dollars ? see table 1) of any region in the world (Collier and Gunning 1999: 3-4; World Bank 1999b: 191; Ndulu and O¨Connell 1999: 42-44). 

Sub-Saharan Africa¨s decline in GDP per head was widespread during the 1980s and early 1990s (figure 3). In fact, one-half of the slowest growers of the 1980s experienced persistent stagnation from 1972 through the early 1990s. Most of the decrease was in the face of slightly increased physical capital and educated labor, but a substantial fall in the best measure of the level of technology (that is, total factor productivity or output per combined factor inputs). However, since 1995, there is one bright spot: those sub-Saharan countries with political stability have enjoyed a slight growth in average GDP, even outperforming non-African developing countries (Ndulu and O¨Connell 1999: 41-42).

 

Poverty rates in sub-Saharan Africa, based on the share of the population living on under $1 per day (in 1985 purchasing power parity dollars), were the second highest of any region of the world, with 39 percent in 1993, virtually no decline from 1987. South Asia had the highest poverty rates with 43 percent.

 

However, in 1993, the sub-Sahara was the region with the highest poverty gap, 15 percent, a gap which increased slightly over time. The poverty-gap approach considers income distribution below poverty. This gap measures the additional income needed to bring the poor up to the poverty line (World Bank 1999a: 1; Nafziger 1997: 130, discusses Sen¨s concept of the poverty gap).  

 

Despite economic stagnation and decline, sub-Saharan Africa¨s literacy and adult and child survival rates improved in the decade before the mid-1990s. Adult literacy rate in the sub-Sahara rose from 43 percent in 1985 to 56 percent in 1995, with the greatest advance among females. Life expectancy at birth increased from 49 years in 1985 to 52 years in 1996, despite the increased incidence of AIDS. Infant mortality fell from 119 per 1,000 live births in 1986 to 91 in 1996, while the under-five-years mortality rate declined from 193 per 1,000 in 1980 to 147 in 1996. Life expectancy, and infant survival and child survival rates are the lowest of any world region, and the adult literacy rate is the lowest of any region except South Asia (World Bank 1999b: 193, 203; Sewell, Tucker, and contributors 1988: 246-48). Survival rates rose with improved sanitation, medicine, and health practice, often, as for example with potable water, with relatively little domestic spending, together with strategic transfers, such as medical assistance and vaccinations, from the aid community (Nafziger 1997: 218-22).

 

The Crisis in Food and Agricultural Development

 

Since the 1960s and 1970s, sub-Saharan food production per capita has fallen (figure 4), partly a result of the neglect of agriculture by most African states. A highly unequal food distribution means that malnutrition levels are high. Declining real household incomes in Africa (through falling income or rising food prices among the low-income households) reduces household food availability, decreasing nutrient intake and increasing malnutrition, and little progress in reducing disease and mortality (especially among infants and children) (Cornia, Jolly, and Stewart 1987).

 

            From 1962 to 1989, food output per capita grew at an annual rate of 0.5 per cent in developing countries, 0.3 per cent in developed countries, and 0.4 per cent overall, but declined 0.8 per cent in sub-Saharan Africa, meaning that food production there grew more slowly than population. (The data are calculated from figure 4, using a five-year moving average to smooth out annual weather fluctuations.) Food production per person increased from 1962 to 1989 in all world regions except the sub-Sahara (figure 4).

 

            Africa's daily calorie consumption per capita, 2116 (the same as in the early 1960s and less than the 2197 of the mid-1970s), was 92 per cent of the requirement by the FAO, 1988-90; calorie consumption in all other regions exceeded FAO requirements (United Nations Development Program 1994:27, 118-20, 132-33, 207-08). Africa's food security index is low (and falling since the 1960s) (Jazairy, Alamgir, and Panuccio 1992:27, 398-99), not only because of large food deficits but also because of domestic output and foreign-exchange reserve fluctuations, as well as foreign food-aid reductions. In 1989, Adedeji (1989:2) spoke of ^the humiliation it has brought to Africa in having to go round with the begging bowl for food aid. ̄ Figure 4 suggests that Africa¨s food output position has barely improved since then.

 

            Illustrative of the enormity of the sub-Sahara's difference from other developing countries is that while the sub-Sahara and India both produced 50 million tons of foodgrains in 1960, in 1988 India produced 150 million tons (after the Green Revolution and other farm technological improvements) and sub-Saharan Africa (with faster population growth) was still stuck at little more than 50 million tons. India's yield per hectare increased by 2.4 per cent yearly, while the sub-Sahara's grew at a negligible annual rate of 0.1 per cent. Thus, the sub-Sahara, which was on parity with India in 1960, produced only about one-third of Indian output in 1988 (Singer 1990:178-81). Additionally, the increasing population density on agricultural land has already exacerbated food crises and conflict in low-income Africa (Nafziger and Auvinen 2000).

 

I will discuss other topics in the outline, as time permits.

 


 

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