PLS 343: Politics of Sub-Saharan Africa

Research essay, final draft

Student: redacted

Africa’s Economic Underperformance as a Matter of Institutions - Are

Bringing the issue of responsibility of governance into the discourse about Africa’s

development is worthwhile not so much for ending the seemingly endless blame game of

whether it is the implementation on the ground or planning in the offices of international

financial institutions is responsible for the continent’s continuous economic

underperformance, but to identify the root causes of existing struggles and offer potential

solutions for mitigating these issues. The institutional approach to the matter of development,

and, specifically, Africa’s development, largely popularized by Acemoglu and Robinson

(2013; 2010), is one especially powerful tool for offering a holistic explanation of why the

continent is struggling and where the origins of such struggles lie. Building upon Acemoglu

and Robinson’s (2010) arguments about Africa’s absolutist-neoptarimonial institutional

arrangement, this paper contributes to such holistic explanation, and, as an extension,

assesses the role of postcolonial governance by applying the concept of the destructive

institutions to the historical record of failures of different development models at different

times adhered African states and delving into the issue of emergence of persistent

impediments for economic growth. The paper argues that the ineffectiveness of much of the

development initiatives and misfortunes of the governments of postcolonial Africa to provide

sustainable economic growth largely should be attributed to processes started in precolonial

and consolidated in colonial eras.

1
(Economic) development as a matter of institutions

Half a century of development efforts led to the understanding that, eventually, it is

Africa’s unique political and economic institutional arrangement that today is reflected in

state autonomy and low state capacity; neopatrimonialism in the form of clientelism and

patronage that results in widespread corruption, horizontal inequalities and exclusion; and

often but not always authoritarian ruling practices that to varying degrees assume neglect

human rights and freedoms – features that altogether make one describe such an arrangement

as extractive – is responsible for the continent’s underperformance in all domains, including

and especially, the economy. On the one hand, such a system is not at all conducive to

economic growth because it deprives societies of any chances for prosperity and development

in the way that it disincentivizes leaders to devote efforts for the benefit of the population by

investing in building strong state institutions, increasing state capacity, and providing public

goods, them rather focusing on self-enrichment and consolidation of their hold onto power.

At the mass level, people as well are disincentivized to contribute their fair share because of

the very same extractive institutions in place that make the idea of prosperity an exclusive

rather than an inclusive matter by reason of the particularistic limited-access social order

instead of a universalistic open-access one, weak property rights, and neglect for individual

freedoms. Such an extractive institutional set-up, in contrast to an inclusive one, is unable to

provide societies with sustainable development in the way it disregards collective interests

and fails to profit from contributions of excluded economic agents (Acemoglu and Robinson

2013).

Today’s deficiencies of a typical struggling African state being universally well-

known, a more factual question would be – what are the concrete drivers of such a notorious

institutional set-up? Acemoglu and Robinson (2010), one of the pioneers in bringing the issue

of institutions into the comparative development discourse, describe Africa as the continent

2
for centuries struggling from absolutism, ruling power being unconstrained by any other

force or institution, and patrimonialism (neopatrimonialism being the modern expression of

the same phenomenon) – strong association between individual ruler and political system

with non-universalistic practices being prevalent in society. In this regard, one way of

approaching the failures of postcolonial governance to provide economic growth and

assessing their role would be to apply such a framework of absolutist-neopatrimonial

institutional arrangements to analyze policies that have been implemented since

decolonization with the purpose of stimulating development and trace back the roots of

respective misfortunes.

Failures of postcolonial economic models

The economic development efforts in Africa of the post-colonial era, that is, the

period from the 1960s to the present days, could be largely differentiated into three main

phases of state-led developmentalism driven by Keynesian economic theory on the one side

and neo-Marxist thinking on the other, the neoliberal period drawing upon tenets of the

Washington Consensus, and the current post-Consensus era driven by globalization and

attempts to offer a more holistic approach to growth. Only the last such phase can be

characterized by recognition of the fact that institutional arrangements play a crucial role for

(economic) development while industrialization and free-market approaches largely fell

victims of ignorance and sole prioritization of technocratic solutions.

Industrialization and efforts to modernize the state were the hallmarks of the period of

state-led developmentalism that, contrary to the common belief about little regard for

investment in African possessions by colonial powers, to a considerable extent began already

during the colonial rule with the purposes of either increasing the output and optimizing the

export of primary products or indeed creating industrial supplements to manufacturing

3
capacities in metropoles (Chitonge and Lawrence 2020). Since much of the continent gaining

independence in the 1960s, this process intensified more than ever before. A valuable

inference about the congruence of several factors that conditioned and were able to sustain

that intensification can be drawn from Crawford Young’s (2004) assertions who argues that:

attraction of both Keynesian and neo-Marxist theories that implied heavy state intervention

into the economy and also had connotations of aligning with one of two great powers during

the Cold War with respective economic and military support from patrons; nationalist

sentiments fueled by the spread of the dependency theory that already led to the whole

ideology of Peronism in Latin America; the desire of all segments of the population to

receive fruits of modernization that colonial states were not providing in a larger scale; and

fairly stable world market prices on export commodities accompanied by massive inflows of

foreign aid – altogether made possible large welfare spending, implementation infrastructural

and industrial projects, and expansion of the parastatal sector. With varying degrees of

success, such development path lasted until the late 1970s, when the apparent struggles of

industrialization and modernization attempts in Africa coincided with economic hardships in

the developed world and led to the universal abandonment of the approach.

The failure of industrialization attempts could to an extent, some would argue a large

one, be attributed to external factors. External factors such as global economic crises of the

1970s, various trade shocks that reduced the prices of primary materials which led to debt

crises, or the inherent flaws of such model that, in the reality of technological backwardness

of African countries, left practically no chance for goods of local production to be adequately

competing in world markets. However, the impact of bad governance on failure and even

sometimes detrimental impact of industrialization should not be underestimated. Namely, as

Nzau (2010) concisely explains such impact, the principal concern for regimes in newly

independent states was perpetuation and popularization of their rule, in such an environment,

4
industrialization projects and public enterprises becoming one of the major tools of political

survival. Distribution of jobs in state enterprises and parastatals as well as distribution of

rents produced by these entities for securing strategic and political support, in turn, created a

condition of favoritism (usually on ethnic bases), nepotism, widespread corruption and fraud,

and misallocation of funds all which had a negative effect on the performance of such

enterprises in many cases leading to their collapse. Such clientelism and the use of state

resources for political objectives of incumbents identified by Nzau are exactly what

Acemoglu and Robinson would classify as neopatrimonialism. At the same time, usually, the

power of these incumbents was absolute rulers more and more resorting to authoritarian

practices to extent of turning into outright dictatorships and any unconstitutional changes of

power in the form of coups or rebellions eventually did not produce any change to such status

quo because of the persistent “winner-takes-all” mentality.

At the time the failure of industrialization that, important to mention, to a significant

extent depended on foreign assistance, was widely recognized in the 1980s, still, the issue of

institutional shortcomings was receiving little attention. Instead, a new paradigm assumed a

reconceptualization of the economic model for developing parts of the world, including

Africa, now macroeconomic stabilization at all costs and policies fostering markets’ self-

regulation being emphasized. The (in)famous Berg Report that marked the end of the state

interventionism era criticized the state-led efforts in Africa for the low efficiency of the

public sector that was resulting in poor project management and ineffective investment

choices and for the exchange rate, price control, and credit manipulations which caused price

distortions and respective huge resource misallocations (Heidhues and Obare 2011).

Neoliberal framework advocating for liberalization of domestic economies in terms of trade,

pricing, and investment, often called Washington Consensus, found its real-life embodiment

in the form of structural adjustment programs (SAPs) for struggling developing economies

5
that were promoted by Bretton Woods institutions, now dominating the global agenda. The

results of such World Bank-IMF-imposed SAPs that promoted mass privatization, reduction

of the public sector and cutting welfare spending, currency devaluation and lifting of trade

barriers, and investment-friendly policies are controversial at best. Allegations ranged from

the approach’s extreme bias towards economics and neglect for political and social

dimensions and overall negligible growth to claims about negative effects on the economy

accompanied by the devastating impact on the social domain (Heidhues and Obare 2011).

Countries such as Uganda and Ghana being among few exceptions, by the late 1990s, it was

clear that structural adjustment programs and sole emphasis on economic liberalization were

not working as planned in the African context.

Negative social effects of austerity measures and withdrawal of support for

agriculture – a sector that despite decades of industrialization still was the primary source of

income for many governments (even in resource-rich countries) – under SAPs that include,

but are not limited to, mass unemployment, lower wages and lower per capita incomes in

general, reduction of public services provision including health and education, higher food

prices causing malnutrition, and poverty are the main factors that led to the abandonment of

the structural adjustment approach. Such negative effects being observed as a consequence of

the contraction of government involvement into the economy universally around the globe

and particularly in Latin America, which also had a quite unfortunate experience of following

the orders of international financial institutions, in Africa these negative effects reached

probably the grandest scale possible – arguably, again because of the prevalence of the very

same neopatrimonial practices. As Bratton and van de Walle (1997) explain, clientelism – a

major component of neopatrimonialism – is not restricted to buying political loyalty at the top

level but as well appeals to the masses in the form of provision of public sector jobs and

distribution of public goods. Given the heterogeneity of African societies and low level of

6
performance legitimacy, which usually comes from the provision of economic growth, rulers

on the continent always relied on the social sector to mobilize popular support, at least from

those societal groups, oftentimes co-ethnics, whose support was vital for the regime survival.

It can be argued that the agricultural sector, in its turn, did not withstand the condition of

absence of state support under SAPs precisely for the very same reasons as for decades since

independence, despite the arguments of Bates (1981) about persistent urban bias of African

politicians, price subsidies and credit with the purpose of maintaining political support and

lowering the possibility of rural mobilization or appropriation of lands and monopolization

for self-enrichment were extensively practiced by leadership which eventually resulted in

agriculture being unprepared for self-sufficiency.

Stage of acceptance

Free-market neoliberal reforms in some aspects leaving the African countries with

worse indicators than at the time of independence or period of industrialization, it seems that

it is only now the need for a more holistic approach that would be accounting for all

important factors was recognized. Mkandawire (2014) describes this period as the phase of

international financial institutions gradually distancing themselves from Consensus while an

army of scholars and policymakers were hastily crafting new explanations based on colonial

history, geography, and ethnic fractionalization. After all, politics and institutions came to the

forefront of the new debate. The focus now shifted to resolving the issue of why governments

fail to effectively implement beneficial policies while again turning towards infrastructural

development and long-term planning rather than the problem only consisting in how to make

government effectively absorb the external funding or expert-suggested policies being

inherently flawed (Mkandawire 2014). Economic underperformance was, and is largely now,

seen as a direct outcome of bad governance rather than vice versa. Authoritarian leadership

7
(many times turning into outright dictatorships), systemic corruption, inequalities, and civil

conflict stemming from the previous three – each of these factors, individually or more often

in conjunction with each other, were pointed at as the embodiments of bad governance. In the

African context, however, in line with the thinking promoted by new institutional economics,

such factors are united under the master concepts of neopatrimonialism and absolutism in

contrast to other parts of the world where the presence of some of the widely recognized

deficiencies of bad governance have not become such an impediment growth, at least the

economic one.

What is the role of postcolonial governments?

The approach to development now being holistic and focused on institutional factors

that may be undermining constructive initiatives, the question about who is responsible for

the emergence of such institutions and what is the role of postcolonial governance in such a

misfortune seems more feasible. The issue of responsibility and, specifically, the

responsibility of postcolonial governance, however, produces somewhat mixed results,

analysis oftentimes pointing to pre-independence times. According to Acemoglu and

Robinson (2010), discussed issues of absolutism and patrimonialism can be dated all the way

back to the precolonial era, slavery being an important aspect that also significantly affected

institutional formation during that period, and were further intensified during the era of

colonial occupation, in the end leaving newly independent postcolonial states with deeply

engrained predatory institutions that are not conducive for long-term sustained economic

growth.

In the precolonial era, both of the two identified state-building models of either

decentralized or centralized states were equally detrimental for growth. For the former, the

inference is quite clear, a stateless decentralized political organization is unable to foster the

8
formation of institutions such as bureaucracy, legal systems, and many others that are

necessary for economic advancement. Low levels of political centralization and the limited

geographical reach of precolonial polities in African where, according to Herbst (2000, 37),

“land was plentiful and population thin on the ground” arguably had a lasting impact on the

future patterns of provision of public (Gennaioli and Rainer 2007) and private

(Bandyopadhyay and Green 2016) goods that, in its turn, negatively affected the pace of

modernization of societies. The latter model where there was a process of political

centralization and investment into state capacity, medieval Ethiopia being one of the most

salient examples on the continent, despite its seeming strength, was not much better in

providing long-term development because of the absolutist type of exercise of power by

rulers who were compromising the populations' incentive and strife for innovation i.e.

economic growth for the sake of absolute control over all matters within the state and

maximum power consolidation (Acemoglu and Robinson 2010). African Glorious Revolution

that would constrain such a ruling model never happened.

Slavery in this context deserves special consideration because, apart from its

consequences on demography, the proliferation of conflict and mass terror, institutional

disruptions of existing polities that disincentivized sectors of the economy not related to the

slave trade, or the emergence of new polities entirely based on the slave trade and not

sustainable in subsequent periods (Acemoglu and Robinson 2010), as summarized by Kalu

(2018, 195): “its intensity in Africa meant that the characteristics of slavery – oppression,

exploitation, expropriation, brute force, and dictatorship – became an integral part of Africa’s

socialization and, to some extent, its culture.” It contributed to the entrenchment of perverted

agency structures, the vestiges of which continue to affect African societies to modern days

with predatory and absolutist governance practices being largely tolerated by the population.

As demonstrated by Nunn and Wantchekon (2011), there is also a negative correlation

9
between a society being a subject of the slave trade and the level of trust within such society

which, in turn, is crucial for both economic and political development.

Colonialism, and, as demonstrated in Acemoglu, Johnson, and Robinson’s (2001)

famous study, especially its most extractive and exploitative form practiced in places with

low prospects for European settlement, in its turn, often capitalized on the existing state of

affairs only intensifying predatory practices. Such an intensification contributed to the spread

of corruption and its institutionalization as well as the proliferation of authoritarian and

outright dictatorship practices that soon become integral parts of any struggling independent

African state not able to benefit from any development initiative under any economic model

irrespective of external support and allocated funds (Kalu 2018). Such an emphasis on

extraction and little investment in development and governance, artificially created state-

system, destructive governance models, and ethnicization that fostered domestic conflict all

contribute to the picture of destructive effects of colonialism in the light of the fact that such

negative effects largely endured making it well into the postcolonial era while any valuable

innovations are proven to be short-lived as soon as the colonial rule is over (Heldring and

Robinson 2018).

In this light, it turns out that the inefficiency of postcolonial governance because of

mass corruption and reliance on neopatrimonialism that results in a disproportionate and

ineffective allocation of resources causing socio-economic stagnation, extractive and

predatory institutions that prioritize self-enrichment and self-interest of the responsible party

at any level impeding development, and absence of accountability of public officials that

often resort to authoritarian methods to secure their hold onto power while facing little public

resistance which is also rarely conducive to growth – all the features of bad governance the

governments of postcolonial Africa are often accused of – are not new inventions of the post-

1960s era. Although these governments could be blamed for sustaining these growth-

10
impeding institutions, or some moves of postcolonial governments may be indeed considered

as immediate causes of failures of some economic or social projects, especially if considering

exceptional cases such as Botswana, Uganda, or Ghana, ultimately it appears that quite often

destructive features were so much deeply engrained characteristic of an African state that

postcolonial leadership simply had no capacity to break such path dependence.

Explanations offered by the institutional approach to development are under no

circumstance ultimate and universal as there always be variation, especially in such a diverse

continent like Africa. However, backed by historical analysis and concrete causal

mechanisms, it is able to offer some convincing inferences about the root causes of some

phenomenon, including Africa’s continuous struggles to embark on the path of sustainable

development in general and economic growth in particular. Looking beyond the immediate

factors and delving deeply into existing impediments for progress allows more substantial

policies to be designed, reforms to be produced, and initiatives to be taken, eventually leading

to much more positive and promising outcomes. In the scope of this paper, this could be

translated as not treating the syndromes of existing governance flaws but increasing the

effectiveness of both domestically and externally promoted development efforts by working

towards eliminating destructive products and vestiges of governance models of previous eras.

11
References

Acemoglu, Daren, and James A. Robinson. 2010. “Why Is Africa Poor?” Economic History
______of Developing Regions 25(1): 21-50. https://doi.org/10.1080/20780389.2010.505010

Acemoglu, Daren, and James A. Robinson. 2013. Why Nations Fail: The Origins of Power,
______Prosperity, and Poverty. London: Profile Books.

Acemoglu, Daren, Simon Johnson, and James A. Robinson. 2001. “The Colonial Origins of
______Comparative Development: An Empirical Investigation.” The American Economic
______Review 91(5): 1369-1401. https://doi.org/10.1257/aer.91.5.1369

Bandyopadhyay, Sanghamitra, and Elliott Green. 2016. “Pre-Colonial Political Centralization

Bates, Robert. 1981. Markets and States in Tropical Africa: The Political Basis of
______Agricultural Policies. Berkeley: University of California.

Bratton, Michael, and Nicholas van de Walle. 1997. Democratic Experiments in Africa.
______Cambridge: Cambridge University Press.

Chitonge, Horman, and Peter Lawrence. 2020. “The Political Economy of Industrialization
______and Industrial Policy in Africa, 1960-2018.” In The Oxford Handbook of Industrial
______Policy, eds. Arkebe Oqubay, Christopher Cramer, Ha-Joon Chang, and Richard
______Kozul-Wright. Oxford: Oxford University Press.

Gennaioli, Nicola, and Ilia Reiner. 2007. “The modern impact of precolonial centralization in
______Africa.” Journal of Economic Growth 12(3): 185-234.
______https://doi.org/10.1007/s10887-007-9017-z

Heidhues, Franz, and Gideon Obare. 2011. “Lessons from Structural Adjustment
______Programmes and their Effects in Africa.” Quarterly Journal of International
______Agriculture 50(1): 55-64. https://doi.org/10.22004/ag.econ.155490

Heldring, Leander, and James A. Robinson. 2018. “Colonialism and Development in Africa.”
______In The Oxford Handbook of the Politics of Development, eds. Carol Lancaster and
______Nicolas van de Walle. New York: Oxford University Press.

Herbst, Jeffrey. 2000. States and Power in Africa: Comparative Lessons in Authority and
______Control. Princeton: Princeton University Press

Kalu, Kenneth. 2018. “Explaining Africa’s Underdevelopment.” In Foreign Aid and the
______Future of Africa. Cham, Switzerland: Palgrave Macmillan. 193-213.

Mkandawire, Thandika. 2014. “The Spread of Economic Doctrines and Policymaking in

12
Nunn, Nathan, and Leonard Wantchekon. 2011. “The Slave Trade and the Origins of Mistrust
______in Africa.” American Economic Review 101(7): 3221-3252.
______https://doi.org/10.1257/aer.101.7.3221

Nzau, Mumo. 2010. “Africa’s Industrialization Debate: A Critical Analysis.” The Journal of
______Language, Technology & Entrepreneurship in Africa 2(1): 146-165.
______https://doi.org/10.4314/jolte.v2i1.51996

Young, Crawford. 2004. “The End of the Post-Colonial State in Africa? Reflections on
______Changing African Political Dynamics.” African Affairs 103(410): 23-49.
______https://doi.org/10.1093/afraf/adh003

13