About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Tuesday, November 3, 2009

Why oil revenues will harm us

Over the last 50 years, public debate in Africa has been fixated on democracy or the lack of it as the primary cause of economic failure. Wars and elections have been fought over it; rebellions launched or quashed in its defence and coups have been carried out in its name. I have grown increasingly suspicious of the argument that it is the absence of democracy that explains corruption and incompetence in Africa.

Across Sub-Saharan Africa, with the exception of Botswana and post genocide Rwanda, both democratic and dictatorial governments practise similar politics. At the level of public policy, our politicians exhibit public spiritedness; to build roads, clinics and schools and to deliver electricity, clean water etc.

Yet there is always a wide gap between this public policy rhetoric and the actual outcome of the policy process. Immediately the government releases money for public goods and services, officials in the distribution chain appropriate a huge chunk of the resources for themselves.

Some analysts argue that this is because the state in Africa is weak and unable to impose discipline on its agents; it is held hostage by society, its institutional integrity is compromised by pressures from individual and sectional interests i.e. it is ‘captured.’ But others argue the exact opposite; that it is society in Africa that is weak and unable to hold the state to account. As a consequence, public officials use the prerogatives of office to plunder the public resources with impunity.

On the face it, corruption looks like a selfish act aimed at self enrichment, and many public officials in Africa are wealthy. This impunity of officialdom lends credence to the claim that society is unable to hold the state to account and is therefore prey to it.

But from our experience, we know that a significant portion of the stolen funds will be spent on extending personal generosity to individuals or the community from which politician or bureaucrat comes. The thief will pay fees for relatives, pick medical bills for a neighbour, contribute to building a local church, or meet funeral expenses of a friend. These acts of personal generosity buy corruption its legitimacy.

The advent of electoral competition has shown that corruption is how people hold state officials to account. In many African countries, voters have settled expectations about politicians; they know that once elected, politicians will not deliver on their public policy promises. So voters insist that a candidate’s promises be paid in advance. So they demand salt, sugar, soap, alcohol and cash.

Because voters hold politicians to account during campaigns, they care less about policy outcomes. Elected officials, knowing that voters don’t care what happens in public office, have little incentive to work for the public good. So they indulge in loot in order to generate the resources to buy votes at the next election. Corruption and incompetence are thus promoted by the democratic process. This organisation of politics is the cause of institutional failure in Africa.

Yet most donors assume that institutional failure is a product of ‘lack of capacity’ and thus pour in money for technical assistance. The failure to effectively deliver public goods and services is understood as lack of sufficient funds hence financial aid. Even the failure of accountability has led donors to expend their energies trying to cajole or force our governments to implement procurement procedures from Europe and North America, to put in place many anti-corruption bodies and to finance parliamentary committees that can check the executive.

However, historically, accountability has never been a technical problem solved by administrative reforms. It was a product of political struggle generated by the state’s desire for revenues and the citizens desire to surrender their wealth on condition that they control how it is spent. The history of Western Europe shows that accountability grew out of the revenue imperatives its rulers confronted.

For example, monarchs needed to fight wars abroad in order to ensure security at home. While some wars could pay for themselves (through booty), many wars were long and costly. So monarchs realised they needed a strong domestic revenue base to sustain troops at the battle front; unpaid soldiers could match unto the home capital. So they developed a vested interest in economic growth.

The need for revenue drove many rulers to tax their citizens or to borrow from them. Each of these methods imposed limits on how rulers could exercise power. For example, to maximise the return on tax revenues in an economy dependant on mobile assets like capital, you need the cooperation of the taxpayer. Otherwise they can take evasive action and make it expensive or difficult to get the taxes. They can withhold their productive efforts or move to another country.

Secondly, public borrowing required that the state assures lenders that it would pay back; it had to give them voice when deciding how borrowed money was going to be spent. So monarchs created parliaments as assemblies where the state negotiated with owners of wealth on how to raise and spend public money. That is why today’s parliaments have power to decide tax policy, declare wars and to approve public expenditures.

This way, checks and balances grew as a product of a double-sided process. First as attempts from above to give a credible signal to asset holders that their money would be used responsibly and repaid; and second, as a demand from below that if they should be taxed or if they should lend the state, it should give them voice on how their money will be used.

Therefore, democratic accountability was a product of a political settlement between a self interested state and a tax-paying or money-lending citizenry, not as an altruistic motive of rulers. The demand for honest government from below, without the self interest of the state to supply it from above cannot produce accountability.

Administratively driven anti-corruption reforms in Africa today fail because they turn this logic of accountability on the head. Instead of fighting graft, voters use it to hold government to account. What Africa needs are incentives that facilitate the state and the citizens to develop a vested interest in honest government.


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