African Economic DevelopmentSpring 2007

Independent African statesLecture by Dr R. Serra

The 1960s: single party states

Move towards one-party regimes1. Poor economies → low revenues → state inability to deliver

public goods → high frustration on the part of the populations2. State as the only means for personal gains → politicization of

ethnicity Leaders consolidate power, and soon prevent opposition to

operate– Bureaucracies and armies were given immense powers– State management of the economy through para-statals

Leaders ensured internal control through:– Patronage devices and exchange of favors (patrimonialism)– Outright repression

The 1970s: military regimes and the onset of economic crisis

Politically, many countries had coups d’etat staged by the army:– Multiple justifications for military interventions, with one result!– 85 successful coups during 1960-2002 in 35 countries

Economically, this was the start of the economic crisis Internal reasons

– Excessive state control of the economy– Oversized bureaucracies– Low institutional/administrative capacity– Corruption of rulers and their associates

External reasons– Declining terms of trade: collapse of commodity prices– Oil crises (most countries imported oil except Nigeria, Angola and

Gabon)

The 1980s: economic crisis and SAP

1980-85: real GDP per-capita fell at an average of 2.3% yearly Absolute poverty increased dramatically (45% of the SSA

population on average was poor in 1985) The infrastructures (transport systems, schools, hospitals,

services to agriculture) became obsolete Increasing population growth rates deteriorated the situation

even more States’ external debt became huge and unsustainable:

– by 1990 40% of export earning went to pay interest Mid 1980s: most African nations were in such desperate

conditions that they turned to IFIs (while trying to avoiding them until then)

The 1990s: democratization and economic recovery

Favorable circumstances– The economic crisis had weakened authoritarian regimes– The fall of Berlin wall and end of cold war– International democratization waves

1989-90: multi-racial elections in Namibia and independence

1990: release of Nelson Mandela from prison 1991-95: Popular uprisings in most African countries

– 30 multi-party elections across the continent Political liberalization but “hybrid” political systems

The 1990s (cont’d)

Early and mid-90s: – great hope and excitement – positive economic growth rates; economic

reforms

Late 1990s: – reversal of democratic trends in several countries – economic downturns– rising inequalities and persistent poverty

The new Millenium

Guarded optimism if any!– Formal democracy different from real democratic change– Widespread economic improvement needed for long-term

political stability Some optimistic situations:

– Ghana, Uganda, Tanzania, Mozambique, Liberia Some reversals:

– Côte d’Ivoire, Chad Crucial challenges:

– South Africa, Nigeria