Corruption and Development in African Nations

Corruption and Development in African Nations

Corruption and Development in African Nations

Suma Pothuvaal

Corruption and Development in African Nations

Suma Pothuvaal

ISBN - 9789361523779

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Preface

Development is seen as how a kind of (social) change is introduced into a system to produce a better production system and improved social planning. It involves transforming the economic, social, political, and cultural structure of the country. Any particular society's level and level of development are influenced by many dynamic factors such as political culture, leadership, and corruption.

In Africa, corruption has always been a barrier to development and real and genuine development in society. Moreover, corruption has devastated the entire African system, making the continent the most corrupt globally. If Africa is to be spared from this disease, all forms of corruption must be addressed. This paper, therefore, discusses the impact and impact of corruption on Africa and the development of Africa; and suggests a way forward for needed change.

Corruption in Africa has reached cancer levels. This phenomenon is so widespread in the region that it has been dubbed the 'democratic AIDS' that destroys many communities' future. The corruption problem in Africa reflects a common and well-known current situation of bad leadership and mismanagement.

Content

01. Corruption and Good Governance: Key Elements in Western Powers’ Post-Cold War Africa Policies

1.1 Western Demands on African

1.2 The Economic and Strategic Self-Interest

1.3 The Wave of Democratization Hits Africa 16

1.4 Summary 22

1.5 Exercise 23

02. Corruption and Good Governance in Development Economics

2.1 Defining Corruption 26

2.2 Surveying and Measuring Corruption 29

2.3 Institutions and Classical Theories of

2.4 The Liberal Account of Institutions in

2.5 Digression on Amartya Sen: What are

2.6 The Impact of Corruption on Economic

2.7 The Impact of Corruption on Economic Performance: Positive Accounts 40

2.8 Summary 44

2.6 Exercise 44

03. The World Bank’s Anticorruption Strategy: Theoretical Premises and Practical Consequences

3.1 The Neoclassical Account of Corruption 47

3.2 The World Bank and Institution Building

3.3 Implications of the World Bank’s

3.4 Critics of the World Bank’s Anticorruption

3.5 Summary 76

3.6 Exercise 76

04. The Economic Foundation of Good Governance: Mutually Advantageous Dependence

4.1 The Political-Economic Logic of Mutually

4.2 The Rise of Modern Institutions in the West 83

4.3 Lessons from Western Institutional

4.4 Charles Tilly: Accountability and the

4.5 Digression on Modernization Theory: Rising

4.6 The Logic of Democratization in Western

4.7 Bottom-Up Dependence 94

4.8 Summary 95

4.9 Exercise 95

05. Corruption and Good Governance: Key Elements in Western Powers’ Post-Cold War Africa Policies

5.1 Corruption Trends in Africa

5.2 Implications of Corruption on Africa’s

5.3 Corruption Weakens Public Administration

5.4 Summary 103

5.5 Exercise 104

07. The African State and the Logic of African Politics: Neopatrimonialism

6.1 The State in Theory 108

6.2 The African State in Reality 109

6.3 The Myth and the Reality of the African State 110

6.4 The Concept of Neopatrimonialism 115

6.5 The Concept of Neopatrimonialism 117

6.6 Varieties of Neopatrimonialism 121

6.7 Post-Democratic Neopatrimonialism 122

6.8 Summary 124

6.9 Exercise 124

07. Corruption and State Instability in West Africa: An Examination of Policy Options

7.1 Corruption In West Africa 126

7.2 Explaining The Nexus Between Corruption and State Instability

in West Africa 129

7.3 Policy Options For Tackling Corruption in

7.4 Summary 138

7.5 Exercise 139

08. The Lack of Mutually Advantageous Dependence in Africa

8.1 Lacking Advantageous Dependence I:

8.2 Lacking Advantageous Dependence II: Bottom-Up 150

8.3 Failed Nation-Building Projects in Africa 161

8.4 Summary 169

8.5 Exercise 169

09. Difficulties and Prospects for Governance Reform in Africa

9.1 The Difficulty of Proposing Solutions

9.2 Botswana: A Bright Spot on the Landscape

9.3 A Difficult Choice for Policy 178

9.5 Innovative Solutions from the Study of

9.6 Summary 186

9.7 Exercise 187

10. Tracking Africa’s Progress in Figures

10.1 Human Development 189

10.2 Economic Performance, Inclusiveness,

10.3 Governance, Fragility, and Security 215

10.4 Regional Integration, Trade, and Investment 223

10.5 Agriculture, Food Security, and a

10.6 Summary 251

10.7 Exercise 252

Appendix 255

Index258

Chapter 1. Corruption and Good Governance: Key Elements in Western Powers’ Post-Cold War Africa Policies

1.1 Western Demands on African

Governance – Then and Now

1.1.1 French and US Cold War Demands on Africa: Bad Governance as Foreign Policy

Most observers look back at the African processes followed by France and the United States during the Cold War with a measure of shame and remorse. While they may express an understanding of the emergencies of the day, Western support for some of the terrifying dictatorships in history and the most vicious evils is still a source of frustration. Indeed, Franklin Delano Roosevelt’s famous quote that Anastasio Somoza Garcia, former president of the Nicaraguan autocracy, may not be the son of a bitch, but he is the son of our bitch, received an incomparable request in Cold War Africa. If this is true of US African policies, which have provided independent support and kleptocrat such as Siad Barre in Somalia, Mobutu Sese Seko in Zaire, Haile Selassie in Ethiopia, Samuel Doe in Liberia, Hissène Habré in Chad, Daniel Arap Moi in Kenya, as well as the apartheid regime in South Africa, is especially true of France, which for the most part showed support for dictators like Gnassingbé Eyadéma in Togo, Jean-Bédel Bokassa in the Central African Republic (CAR), and activists like Felix. Houphouët-Boigny in Côte d’Ivoire, Omar Bongo in Gabon, and countless others. France and the United States each had different reasons to support their African customers. The main interest of France was to support its ruling political, economic, and even cultural influence over what was then French West Africa and French Equatorial Africa.

Although all of these countries gained legal independence in the early 1960s, France continued to regard these countries as Domaine réservé, pré carré or chasse gardée - similar to the US court in Latin America - and sought to maintain and expand that influence abroad. African Provinces (Martin 1995, 171). After all, it was the French power in Africa that proved their claim to middle power or even superpower. In this regard, Valéry Giscard d’Estaing boldly stated, Je m’occupe de politique Africaine, c’est-à-dire des intérêts de la France en Afrique. In economic terms, Africa also played a key role as a supplier of strategic raw materials, an important market for French exports and investment, and above all as a footing for the strength of the French currency. Indeed, France exercised near-total control over the monetary policy of these countries. The paternal – and highly personalized9 – how France cultivated its relations with its former colonies had implications that were anything but democratic.

Good governance in this context had little to do with democracy, the rule of law, and professional administration. It meant nothing more and nothing less than friendliness to French interests. And if this involved supporting autocrats who garnered large portions of state revenues and placed them either in Swiss banks or in the pockets of their clients, then this was a perhaps regrettable but necessary evil. Unlike France, the USA had relatively few economic interests in Africa, perhaps except for Gulf Oil in Angola (Clapham 1996, 141). And even in strategic terms, Africa was a relatively insignificant variable in America’s Cold War calculations. Although the aim of containing communist expansion applied to Africa as much as it did to the rest of the third world, the United States was unwilling to provide anything close to the level of military, economic and political commitment it gave to the Middle East or Southeast Asia – even in the so-called second Cold War which lasted from the mid-1970s to the mid-1980s, and whose flashpoints could be found in Angola and the Ogaden desert (Clapham 1996, 100f).

Nevertheless, anticommunism constituted the leitmotif of American policy on the subcontinent and also provided the substance of the United States’ Cold War definition of good governance. Given its strategic aims in Africa, the United States – as well as the Soviet Union – generally preferred to work with incumbent regimes and thus supported the conventions of state sovereignty so strongly upheld by African governments themselves (Ibid., 101). This often entailed not only turning a blind eye to these regimes’ oppressive rule at home but also furnishing them with financial and military resources. Given the presence of a creditworthy alternative source of financial and military support in the shape of the Soviet Union, the United States could not entirely afford to insist on democratization. After all, this is a policy that would have expressly undermined these regimes’ claim to power and perhaps driven them into the Communist camp.

On the other hand, because of most of Africa’s relative economic and strategic insignificance – with the notable exception of the Horn – the United States would not afford the costs of any significant military engagement. This gave African regimes the chance to play the superpowers off against each other without much risk of serious retribution. If a regime could successfully present itself as an anti-Communist bulwark or professed Marxist-Leninist sympathies, it could be sure to receive support from one or the other side. Clearly, the implications of this global political constellation were anything but democratic; the corruption of allied African elites was written off as an unfortunate necessity that had to be tolerated in the interest of stability.

1.1.2 French and U.S. Post-Cold War Africa Policies: The Turn to Democracy and Good Governance for Africa

However, at the end of the Cold War, France, and the USA announced that they had turned their backs on new, ruthless leaves to their African goals. Warren Christopher, former Secretary of State, said that during the long period of the Cold War, policies towards Africa were often determined by how they affected Africa, but by either bringing benefits or negatively to Washington or Moscow. Thankfully, we have moved beyond the point of accepting policies on how they can affect shipping routes closer to Africa than the people of Africa.

According to Christopher, the United States has decided to withdraw its self-serving figures in order to achieve a policy tailored to the needs and aspirations of Africans themselves. It confirmed the statement with a series of measures to promote democracy and combat corruption on a small continent. First and foremost, it greatly reduced its support for African rulers who had once proved themselves to be strong allies of the United States but who are now called corrupt dictators. Second, it has made significant efforts to promote not only the legal institutions and processes of democracy and the rule of law - e.g., free, fair, and just elections, independent legislatures and judges, mechanisms of governance and accountability - but also a democratic society. At least for a time, France also seemed to retract its former pattern of unconditional support for friendly regimes regardless of its evidence of democracy. At the 1991 Franco-African Summit of La Baule, French President François Mitterrand asserted that in the future, French aid will be much warmer to the superpowers and more enthusiastic for those initiating the democratic revolution. -Togo, this meant placing time pressure on the ruling elites to liberate, especially to allow democratic elections and accept their decisions their national conferences by democratic laws. Finally, the closing stages of the Cold War saw the issue of governance in the context of the assistance of two Western donor countries and joint financial institutions such as the World Bank and the International Monetary Fund. After the East-West conflict, governance was at the forefront of development policy. Many factors contribute to this major fluctuation, partly due to the sharp increase in the value of private investment in developing countries - both investment portfolio and especially foreign direct investment (FDI). Due to the long-term nature of FDI, investors and donors are developing an interest in the long-term stability of third-world governments and ensuring that those governments adhere to the rules in their books. In other words, long-term exposure to assets in both these countries’ political and economic development made governance a major issue. Arndt and Oman (2006) also point out that although aid flows from many developing countries’ governments were reduced during this period, aid aimed at promoting good governance increased in many areas (15f.).

While it is true that rising economic participation in developing countries has created more awareness of the political and economic barriers provided by local governments, it is important to understand where this aid was going - not so much in sub-Saharan Africa, but in the former Communist countries of Eastern Europe. Indeed, the sudden explosion of FDI in developing countries could result from a region-wide opening to foreign investment. This was not the case in Africa, which had long been open and demanding FDI. Therefore, it is unlikely that the sudden interest of leading industrialized nations in African political structures and actions will be due to increased economic involvement in these countries. Moreover, such involvement does not require a corresponding concern for good governance. While the European colonial powers sought to acquire Africa’s natural resources to fulfill their economic and political aspirations, they did not seek to develop institutions and practices of good governance. Although colonial rulers often applied the extraordinary principles of modeling to existing institutions in the motherland, they did not provide anything now considered essential elements of good governance. And finally, there is no need to look back until now in history to illustrate this point: China’s economic depth in Africa, especially to gain the continent’s natural power, does not mean it has joined the choir in calling good governance in Africa. Meanwhile, America’s intense concern over access to energy resources has reduced its emphasis on good governance and its suitability for governance in key countries such as Nigeria, Equatorial Guinea, and Chad. Some observers (Arndt and Oman 2006) argue that Western discovery of the importance of good governance contributed to at least part of the development of a new school of developmental thought theory, now known as the New Institutional Economics (NIE). ).

NIE criticizes how neoclassical economics places institutional value in growth and views the market as a key development factor, making growth simply a function of investment value and technological development. By taking full institutional frameworks and complete growth scenarios, neoclassical economics ignores the importance of governance. After the failure of the IMF’s Structural Adjustment Programs (SAPs), the main goal was to reduce the state’s role in the economy. The deliberate ignorance of the neoclassical economics’ institutions became questionable. On the other hand, NIE presented a history of growth and development that demonstrated the importance of institutional planning for growth and development. In short, the Western revolution in domination is regarded as the result of an innocent awakening in education (Chang 2006) in understanding the theory that seemed to be most effective in explaining the truth down. Now, it is true that we find many situations in the history of science where scientists and theorists, working independently in different parts of the world, come to the same understanding of science almost simultaneously. Therefore, in theory, this Western imperial revolution may result from an incident like this, in which foreign policymakers turn a deaf ear to what economists have long been saying when they suddenly realize this—the plight of the African people. But perhaps we should be more careful when these debates affect the political strategies of the superpowers - which are best known for the promotion of low-income ecosystems. Can, for example, an increase in the World Bank’s interest in corruption and governance really be traced back to an innocent educational revolution, or is it a substitute for other, perhaps self-serving motives? As one of the founders of the modern economy, T.R. Srinivasan, noted in response to the World Bank’s sudden recognition of the importance of governance in development, one needs to learn that we now see the root of administrative issues, both in the public and private sectors. Pray, what took so long to see this? Dominance, to use a common term, is not new - one already knows that rampant corruption is extinguishing… .Some of us, at least, believe that the 50 years of development experience since the end of the second world war has shown that anti-poverty policies are not vague or new, but rare, tried, and tested.

So why did it take so long for the World Bank and its investors to arrive? Indeed the most famous explanation for this policy change is that Western governments suddenly rose to their senses - in affirming universal values of democracy and recognizing that economic prosperity requires both the rule of law and the integration of political freedom. But why did it take so long for the United States and France to discover what might have been a moral code, so? Why did it take so long for the World Bank and its financial institutions to emerge? Indeed the most famous explanation for this policy change is that Western governments suddenly rose to their senses - affirming universal values of democracy and recognizing that economic prosperity requires both the rule of law and the integration of political freedom. But why did it take so long for the United States and France to discover what seemed to be a moral imperative,

This is similar to the attempt to suspend, to deny the connection between the content and design of the Bank’s lending structure and the upper part of those policy reform programs that have failed in any way (193).

Ha-Joon Chang echoes this sentiment, emphasizing that the vigilance of Western nations is actually rooted in their decision to blame for the failure of their African building reform programs in the countries themselves: Speaking of poor institutions, they can argue that their policies and ideas were not flawed, and did not work simply because the countries that applied them did not have the appropriate institutions for ‘right’ policies to work. Going one step further, he blamed Western countries - intentionally or unintentionally - for depriving developing countries of the same methods used by the early nations to achieve development. He sees their emphasis on good governance as one way to kick off the ladder, to get their place high at the expense of the developing world. We can name a few other skeptics who take this moral breakdown as a mere figment of colonialism and translate renewed momentum into the struggle for human rights in Africa, especially in the United States, as a covert attempt to undermine. The sovereignty of the African nations gave them moral dignity in their quest for greater control of foreign governments. These critics point out that wherever American interests are threatened, America would say nothing about democracy and the rule of law. The majority of observers rightly point out that France’s transition to democracy was significantly short; Less than a year after Mitterrand’s statement in La Baule, France returned to its old ways and finally set out to do business with the same activists who had pressured them into democracy.

At the Franco-African summit in Libreville, Gabon, French Prime Minister Pierre Beregovoy affirmed that democracy played a clear role in security and democracy. Both of these facts are taken to show that democracy is not the product of any kind of awakening on the side of two major foreign actors in Africa, but absurd statistics that have nothing to do with improving the well-being of the African people. Whether or not we agree with this negative study of newly industrialized nations on the issue of corruption gives us a useful reminder: Foreign policy is naturally driven by economic interests and strategies, and this is true even in good governance. The latter is based on the international views of political justice and reflects the political and economic interests of the forces that seek to achieve these goals. As many other authors have pointed out, the growing anxiety in Europe and the United States for democracy and the fight against corruption in sub-Saharan Africa is not the result of the economic changes that have taken place over the past two decades, nor the rise in school or morals. Instead, it stems from the strategic context of the new world order born of the death of the Soviet Union. This fundamental transformation of the world scene has certainly led Western powers to rethink their view of the world, redefine the constellation of interesting stars and adjust their strategic ideas to other nations accordingly. As with all other branches of foreign policy, the policies of West African countries came in for review. If we review the academic analysis and prediction of American foreign policy in the early 1990s, the role of Africa in the United States foreign policy agenda has not been determined and was a matter of particular controversy. Looking back over almost two decades, the results of this recount have become clear: The fight against corruption and good governance is dominating the agenda - not only in the USA but also in Europe. However, the definition of the causes of this variability remains as varied as before; and the question of why the collapse of the Soviet Union should have encouraged this policy change still requires a clear answer.

1.2 The Economic and Strategic Self-Interest

- Behind the Push for Good Governance

in Africa

1.2.1 The Birth of Economic Good Governance: The African Debt Crisis

The clear demands of Western countries for good governance in Africa began in the 1980s with the problem of third-world debt. This was a major catastrophe affecting much of the third world, but sub-Saharan Africa undoubtedly bears the heaviest debt. These mountains of foreign debt, coupled with a complete failure to achieve or even make significant progress in economic development, have led to international financial institutions (IFIs) - the World Bank and the IMF - finding a clear conclusion that there is something deeper. what is wrong with the current development assistance system. Diagnosis of IFIs is now well known: African countries have failed to adhere to sound economic policies. In what has come to be known as the Washington Consensus, the burden of the debt crisis has been placed directly on African governments’ excessive intervention in the free market or because of erroneous economic theory found in the needs of the post-colonial world. -structure, or because of the false ideas of African socialism. According to IFIs, it was because of these poor policies and wasteful use of foreign currency that Western aid failed to promote Africa’s economic growth but instead led to an increase in non-compliant payment obligations as an economic base perfect. However, this diagnosis was by no means a controversy. The so-called structuralists, especially supporters of the Marxist-inspired dependency theory (e.g., Amin 1976; Frank 1967), argued that the failure of African nations to develop, as well as their astonishing collection of foreign debt, was not so effective with the failure of African governments, but with the existing economic rules in global markets, especially in view of Africa’s direct role in the segregation of international functions. The view concludes that Africa’s position as a major exporter of commodities had lost its debts due to a series of foreign economic conditions under which African governments had no control.

Both sides can point to evidence supporting their interpretation of the diverse economic crisis in Africa. On the other hand, the involvement of state-owned enterprises in the African economy was actually significantly greater than in industrialized economies. On the other hand, Africa’s position in the global economic system poses seemingly insurmountable barriers to its development path. But whether architects or free marketers were right about the causes of the debt crisis or whether both definitions were partially valid, a free translation won the day. The theory was then applied to a comprehensive structural reform program, a complete set of reforms to improve the African state’s involvement in the African economy. The content of these structural repairs (SAPs) was first revealed in the World Bank’s landmark book, Accelerated Development in Sub-Saharan Africa (World Bank 1981), which was soon named Berg’s report by its report manager Elliot Berg. The report called for a radical change, the main purpose of which was to liberate the African economy and to further unlock or integrate it into the global economy while reversing government.

1.2.2 The Structural Adjustment Regime: Good Governance Equals Less Governance

SAPs include a range of reforms, including a significant reduction in African finances, the creation of state-owned enterprises and the private sector, the regulation of the agricultural sector, and the abolition of agricultural marketing boards, drastically reducing state-owned enterprises and domestic industry support, and abandoning African Socialism. On the other hand, it would be a mistake to say that the Berg report simply denies the external aspects of the African debt crisis and development emphasized by architects. The report identifies unfavorable conditions in the global economy as a contributing factor: the industrialized economic downturn, high electricity prices, and poor development in African trade laws (Ibid. 4). On the other hand, these agreements are a form of presentation of what the Bank considers a real crime: a lost and perhaps ill-intentioned economic policy on African governments.12 In fact, the original definition. Good governance was short-lived, where the term governance itself was abbreviated in economic policy and did not address the political rights of African citizens. The extent to which IFIs actually follow their many demands for economic transformation should not be exaggerated. Van de Walle (2001, 223ff) presented evidence that although donors exercised considerable influence over the transformation process and in many aspects of economic policy, their persistence in reform as a condition of additional assistance was very weak. In many cases, donor funds continue to flow despite the positive changes that African governments are actually making and, in some cases, the obvious disregard for donor needs.

That, however, only emphasizes the fact that the main reason for donor support was not economic but strategic. Ensuring the functioning of the state and promoting its friendly behavior was - to the dismay of many World Bank development experts - ultimately very important. Although Western nations were genuinely interested in seeing Africa develop economically, when it came to establishing SAPs, it was more than just imagining what these countries were thinking. There are a number of ways in which the state’s basic drive for structural reforms greatly favored the interests of Western economic power and strategy. For example, the liberation of the African economy worked for the first time to give Western firms greater access to African markets. The fact that Western industrial nations are simultaneously refusing to lower trade restrictions on many of Africa’s most important exports while rejecting requests to reduce domestic subsidies in agricultural products that represent the main source of foreign exchange in African countries seems to contradict the notion of indifference associated with the IFIS release package. This is evidenced by the fact that Western banks have benefited greatly from the relaxation of financial market regulation in various African countries, while African banks suffer from the rapid inflow and outflow of hot money, thus often undermining the banking system.

In addition, the great need for African governments to continue lending has given countries a significant contribution to the implementation of African economic policy and political activity. These gains also show how the IFIs’ structural reform policy has been simplified, and possibly even approved, with the decline and demise of the Soviet Union as a rival player in Africa. After all, it is doubtful that such a dramatic downturn in African governments’ control over economic aid and resources could have been possible as long as the Union of Socialist Soviet Republics (USSR) created another effective source of aid and assistance. A striking example of this is the request by the Ghanaian military government in the early 1980s for the Soviet Union to provide the country with financial and technical assistance. The USSR responded by proposing that Ghana turn to the World Bank and the IMF. The Soviets’ gradual withdrawal from the world stage eliminated any small power that African rulers once had in their negotiations with Western allies. The retreat of the USSR also meant that Western regime concerns about the credibility of African governments were less important, which allowed the organization to have a strong economic outlook on development aid. As a result, the growth of the debt of African governments was no longer seen as an unpleasant need but as a major waste of money. With the loss of the strategic value of African governments as allies and protections against the rise of communism in the third world, the cost of supporting it seemed unfair - at least not at the same level. Moreover, due to the further economic downturn in Africa following the entry of the former member states of the social movement into the world market, Western donors were eager to redirect aid resources from Africa to Eastern Europe. This is the essence of what has come to be known as the fatigue of aid after the Cold War.

1.2.3 The Consequences of Structural Adjustment for African Democracy

As many analysts have pointed out, the state of the building reform was not at all democratic. And the fight against corruption in government in the form of additional oversight and transparency has a significant role in the calculation of IFIs. In contrast, the success of the reform process was based on the political focus of both parties against the change in government and the dissatisfaction of the people with the steps of the agreement. As Mkandawire (1999) points out, prior to 1987, a number of studies conducted under the IFIs stated that dictatorships would be needed to achieve this reform law (134, n.11). The fear was that by promoting democracy, one would undermine the political demands of change, as reformist countries seem to be pursuing policies to expand beyond established democracies or dictatorships. Callagy (1993) summarizes this consensus on the appropriate characteristics of a corrective government and how to improve these features, and it is worth quoting him in detail:

Central to these issues is protecting economic groups from pressure, opposition, and a petition from certain social and political parties, from governmental authorities, and from leadership itself. These restrictions may be imposed by coercion or segregation of opposition parties by direct coercion, emergency, internal or external deportation of their opponents (Chile, Ghana, Nigeria), corporate control regimes in military or one-party (Mexico) regimes, legal and informal, political agreements (Bolivia), co-elections with elected and controlled support (Turkey, Bolivia), and downgrading of legal entities (Jamaica, Bolivia). The official structures of the executive may also be important, such as the