The more things change… Sierra Leone’s 2012 elections

In the late 1980s, a common joke told on the streets of Freetown was: “What did Sierra Leoneans read by before they had candles? … Electricity!” By then, life expectancy in Sierra Leone was one of the lowest in the world. Infant mortality was amongst the highest. The literacy rate was just 15%. Since 1978, the country had been a one party state. The effects of a collapse in world prices for Sierra Leone’s exports were compounded by decades of economic mismanagement and endemic corruption. When Albert Margai left office in 1967, after three years as prime minister, he was worth an estimated US$250m – despite receiving an annual salary of just US$4,000. In 1985, when President Siaka Stevens stood down, he is said to have amassed a fortune of US$500m. The Bank of Sierra Leone, in contrast, held US$196,000 in its foreign reserve accounts. Salaries of lower level public officials went unpaid. Hospitals, schools and roads fell into disrepair. In 1991, the United Nations ranked Sierra Leone last of 160 countries in its Human Development Index. The country was taking its final steps towards war.

On the eve of the November 2012 presidential, parliamentary and local council elections, Sierra Leone is often depicted as a country unrecognisable from a quarter of a century ago. Since the civil war officially ended in 2002, consecutive national elections have been won by different parties. When Ernest Bai Koroma and his All People’s Congress (APC) party were elected in 2007, the incumbent Sierra Leone People’s Party (SLPP) accepted defeat – albeit reluctantly. In 2005, the United Nations’ largest deployment of peacekeepers – numbering 17,500 at its peak – was withdrawn. In 2012, Sierra Leone committed 850 peacekeepers to the African Union Mission in Somalia (AMIS). International hotel chains Radisson and Hilton Worldwide have signed agreements to open outlets in 2013 and 2014 respectively. Free health care for pregnant women, nursing mothers and children under five was introduced in April 2010. According to some estimates, Sierra Leone’s economy will grow by 34% in 2012 due, in large part, to the onset of iron ore exports.

The achievement of voting the opposition to power in 2007 – an infrequent occurrence in Africa – was tarnished by virulent accusations of fraud and manipulation. The decision by the National Electoral Commission (NEC) to nullify votes cast at polling stations with over 100% voter turn-out provoked outrage from the incumbent party. Of the 477 invalidated polling stations, 426 were in electoral strongholds of the SLPP. The party accused the NEC’s Chief Commissioner, Christiana Thorpe, and the international community of connivance in an orchestrated scheme for regime change. The NEC maintained that, in the absence of a provision in the electoral law specifying the body mandated to annul votes in instances of unambiguous electoral malfeasance, it had the de facto right – and responsibility – to do so. It also insisted that the annulled votes would not have affected the final outcome of the election. The SLPP countered that only the Supreme Court has the authority to cancel votes.

For the 2012 elections, the principal way the NEC has sought to mitigate electoral fraud is by implementing a system of biometric voter registration. “Credible elections start with credible voter registration”, remarked Christiana Thorpe during a presentation at Africa Research Institute in London in July 2011. Rather than manually registering voters before each election, biometrics enable creation of a permanent electronic register which can be updated as new voters become eligible or existing ones die. The system captures unique data – thumb prints and facial features – in addition to personal details, and can identify whether someone has registered more than once by centrally matching thumb prints. The NEC’s determination to improve the integrity and transparency of the electoral process is laudable.

The shortcoming of biometric technology is that it counters the symptoms – not the causes – of electoral fraud. Biometrics cannot detect whether a registrant is underage, or determine an individual’s nationality. There is also no evidence of a deliberate strategy by any political party to rig elections through multiple registrations. All previous electoral registers have contained names of the deceased, the underage and foreign nationals – but the most significant type of electoral misdemeanour has been physical stuffing of ballots and false recording of results by temporary election workers. Both parties, when in power, have used their position to fund political campaigns and buy voters. This practice remains widespread. Political parties continue to organise and condone the intimidation of voters, often perpetrated by their youth wings. Biometric technology offers little scope to tackle these transgressions. Elections are more than just a technical exercise.

For many, elections – and the preceding campaigns – provide the true measure of how Sierra Leone has progressed. As yet the fundamental character of political competition in Sierra Leone has not been altered. Identity, not ideology or policy, remains the paramount factor. Ethnic and regional voting blocs – sustained by entrenched patronage networks and corruption – are as rigid as ever. The APC draws majority support from the Temne, Limba and other northern tribes, and Krios of the Western Area, while the SLPP are favoured by the Mende and tribes of the south-east. Elections are regarded as “winner takes all” contests with defeat entailing exclusion and disadvantage for the losers, and their regions.

The past is still utilised in pursuit of political advantage. Shortly after Julius Maada Bio was elected leader of the SLPP in July 2011, there were renewed calls for an inquest into the December 1992 executions of 26 people suspected of plotting to overthrow the government. The extra-judicial executions – by firing squad – were ordered by the National Provisional Ruling Council (NPRC), which had itself seized power by force in April 1992. Britain promptly suspended aid to Sierra Leone. Maada Bio, one of the chief architects of the NPRC coup, was heavily implicated in the executions. In January 1996, Maada Bio ousted NPRC leader Valentine Strasser and for a short time was head of state. With former members of the NPRC junta now prominent within the SLPP, the calls for an inquest were viewed as brazen political manoeuvring by Koroma and the APC.  

In 2011, when Michael von der Schulenburg, then Executive Representative of the UN Secretary-General in Sierra Leone, criticised the proposed inquest, relations with President Koroma soured. In 2012, in a leaked UN document, Schulenburg noted “there can be little doubt that the decision of the President to force my early departure will be seen – rightly or wrongly – by virtually every Sierra Leonean as an effort to remove a potential obstacle to his re-election and as an opening the door to manipulating the election outcome in his favour”.

Political parties still use violent means to achieve political goals. Election campaigns for the 2007 elections were tarnished by clashes organised by the upper reaches of the APC and SLPP. A return to war was never probable, but President Ahmed Tejan Kabbah threatened to suspend the vote and impose of a state of emergency. On 9^th September 2011, during a “thank you tour” to SLPP supporters, Julius Maada Bio’s convoy was pelted with rocks by mobs of APC supporters in the southern city of Bo. Maada Bio required stitches to the head. SLPP mobs retaliated by setting fire to the APC district office and residential properties. A public enquiry concluded that the violence was both premeditated and orchestrated by elites of both parties. The government’s recent purchase of US$4.5 million of predominantly military grade weapons caused a public outcry due to suggestions that they were intended for the Operational Support Division (OSD) of the police – a force which within living memory had been used by President Siaka Stevens as a personal paramilitary unit. After much public – and international – pressure, the government transferred the weapons to the army for use by Sierra Leonean peacekeepers in Somalia.

Sierra Leone remains beset with privation that pre-dates the civil war. Koroma’s insistence that “attitude is everything” – a slogan ubiquitously plastered across billboards in the capital – offers little solace to Sierra Leoneans who were promised a “peace dividend”. In reality, many people find themselves in a similar financial predicament to that of pre-war days. Hype regarding the country’s economic potential and the unprecedented scale of investment in the mining sector have raised expectations – but offered few discernible benefits to ordinary Sierra Leoneans. The purchasing power of low income earners has halved since 2007. Food prices have spiraled. A cholera epidemic concentrated in the slums of Freetown had killed 392 residents by September 2012. Youth unemployment remains endemic.

Sierra Leone’s 2012 elections are unlikely to reveal anything new about the country and its politics. President Koroma is expected to win a second term, but not because he has transformed the country’s economy. The incumbent has deployed clever tactics, co-opting proxy parties – including the Revolutionary United Front Party – to carry out political dirty work, and enticing high profile SLPP politicians to defect, most notably veteran Tom Nyuma formerly of the NPRC. The contest is proving harder fought than Koroma – and many in the international community – anticipated. Efforts to dismiss Maada Bio as a relic of Sierra Leone’s authoritarian past have met with resistance due to his popularity amongst “youth” and the military. But despite his charismatic appeal, many in the country consider Maada Bio to have more style than substance.  

In Sierra Leone, the process of building a modern democratic state after a decade of war has been heavily contested. Important progress has been made, particularly in the area of electoral management. But legacies of identity politics, violence, corruption and inequality have been – and will continue to be – harder to overcome. While the economy has grown, it is structurally little different to its pre-war incarnation. The notion that African countries like Sierra Leone should pursue a model of “authoritarian developmentalism” in order to hasten wealth and job creation is fanciful. Sierra Leone’s government budget is minuscule, about US$500m per annum, most of which is from donors who insist on democratic and liberal economic reforms in exchange. The government is not in a position to adopt political and economic policies that will inevitably be unpopular with donors. Nor does it possess the human capital or institutions to successfully implement such measures.

What is certain is that any further consolidation of democratic reforms will be intimately tied up with the state of the country’s economy. But the imperatives of how to create employment and distribute wealth more equitably have been keenly avoided by Sierra Leone’s political class.

By Jonathan Bhalla and Sareta Ashraph

Jonathan Bhalla is Research Manager at Africa Research Institute

Sareta Ashraph lived and worked in Freetown, Sierra Leone from 2003-2009. She maintains a keen interest in the country's history and returns there regularly. Sareta is currently writing a book on the conflict in Sierra Leone.

In April 2011, Africa Research Institute published “Old Tricks, Young Guns: Elections and Violence in Sierra Leone”. To download a copy, please click here. 

Rwanda’s coming of age

In his speech to mark the 18th anniversary of the Rwandan genocide, President Paul Kagame noted that the first generation of men and women born during the genocide will come of age this year. There is more to this than obvious symbolism. Rwanda’s median age is estimated at 18.7, which means that less than half of the country’s current population experienced the genocide first-hand. The figure is arresting – and suggests that Kagame’s government may soon have to adapt the way in which it controls the public discourse surrounding the genocide.

The changing nature of how Rwanda relates to its tragic history is particularly relevant this year. In 2012, two radically different legal processes designed to judge those guilty of genocide are due to conclude. The final hearings of Rwanda's gacaca community courts – based on a traditional method of conflict resolution and reconciliation – will end in June. The UN International Criminal Tribunal for Rwanda (ICTR) in Arusha, Tanzania – created to prosecute the architects of the genocide under international law – will lose its power to indict in July.

Despite the ICTR’s reduced mandate, its difficult relationship with the Rwandan authorities is likely to continue. Kagame has criticised the Tribunal’s ineffectiveness at apprehending genocide suspects, and the length and cost of its judicial procedures. The issue of the Tribunal investigating crimes allegedly committed by the ruling Rwandan Patriotic Front (RPF) in 1994 is likely to be left unaddressed – just as Kagame wanted.

The most recent source of tensions between Kigali and Arusha is the final destination of the ICTR’s extensive archives. The argument isn’t new – it has been brewing since 2009, or earlier. While Rwanda demands that the archives be housed in Kigali, the ICTR has expressed a number of concerns about this solution – both officially and unofficially. These range from the pragmatic (the lack of proper facilities to store the archives in Kigali), to the legalistic (the archives, compiled by the UN, legally belong to the international community), to the accusatory (a concern that confidential information might be “lost” or used inappropriately in Rwanda). In his speech, Kagame made his position categorical: “we should be the primary custodians of all these things because they are the core part of our history and of great value to us. There is no sound reason why all records regarding the genocide should [not] be in our custody in our country, here in Rwanda.”

The conclusion of the gacaca process had a predictably warmer mention from Kagame. He praised Rwandans for administering justice and, at the same time, uniting as a nation. Gacaca has been criticised by some human rights organisations – and others – for falling short of international legal requirements for trying genocide crimes. In other quarters, it has been praised as a monumental achievement and commended for its grassroots, participatory nature; the speed with which it dealt with the backlog of cases; and the emphasis on incorporating reconciliation into the legal framework. Some genocide survivors have argued that, while the judicial process has been accelerated, true reconciliation is likely to take significantly longer. I wonder whether this is where Rwanda's youth will really come to the fore – a generation living in the shadow of the memory of a genocide it did not experience.


Piotr Cieplak
Publications and Communications Officer, Africa Research Institute

ARI has collaborated with Dr Phil Clark (SOAS) to evaluate the impact of Gacaca in Rwanda in our most recent Counterpoint: ‘How Rwanda judged its genocide.’

Personality politics in Malawi

I first heard mutterings about the death of Malawian president Bingu wa Mutharika hours after leaving Lilongwe on my way back to London. I had been in Malawi conducting research for a forthcoming ARI publication which will examine the work of the Malawi Law Commission, and wider issues of law reform and constitutionalism. The death of President Mutharika sent shockwaves through Malawi’s fragile political system, and the region. The fallout has been telling, and highlights the predominance of personality over institutions and the rule of law in Malawian politics.

Malawi’s constitution provides for succession by the vice-president if the president dies in office. The erosion of the rule of law, which characterised Mutharika’s presidency, led his allies to believe they may be able to subvert this constitutional provision, and install Mutharika’s brother Peter instead. The official announcement of Mutharika’s death was delayed in an attempt to buy time before claiming that Vice-President Joyce Banda was ineligible for the presidency.

In 2010 Joyce Banda was expelled from the ruling Democratic Progressive Party (DPP) after she refused to back Peter Mutharika’s candidacy for the 2014 election. Mutharika’s allies alleged that Banda could not become president since she had violated the constitution by joining the People’s Party (PP). The constitution stipulates that if an MP leaves the party under which they have been voted into office and joins another party – known as “crossing the floor” – their seat is to be declared vacant.

The problem with basing the claim against Banda on her “crossing the floor” is that Bingu wa Mutharika also “crossed the floor” during his first term in office. He was elected on a United Democratic Front (UDF) ticket in 2004, before establishing the DPP, a party that relied heavily on attracting opposition and independent MPs to achieve a parliamentary majority. In none of these instances had an MP’s seat been declared vacant.

Diehards and Democracy – a recent publication from Africa Research Institute – examines trends in recent African elections and notes that multi-party polls have fostered more widespread observance of formal rules and procedures. The constitutional succession that saw Joyce Banda sworn in as president on 7th April seems to be part of this trend. Banda promptly began talks with donor countries about reinstating aid which had been suspended after diplomatic ructions over Mutharika’s increasingly authoritarian rule and economic mismanagement. She is likely to devalue the kwacha as has repeatedly been demanded by the IMF. A shortage of foreign exchange triggered a fuel crisis. In March, petrol was a staggering £6 a litre on the parallel market. Petrol stations, displaying a promising Kwacha 340 (£1.32) price, were empty.

The aftermath of Mutharika’s death highlights more fundamental challenges to constitutionalism in Malawi. Previous presidents have often ignored, or attempted to amend, constitutional provisions which are not in line with their political aims. In 1995 Bakili Muluzi repealed the “recall provision”, designed to make MPs more accountable to their constituents. In 2003 Muluzi attempted, albeit unsuccessfully, to remove the presidential term limit so he could be re-elected for a third term. Local government elections have not been held since 2000. An amendment to the Local Government Act, pushed through by Mutharika in 2010, empowers the president to hold local elections when he or she chooses. With possibly as few as 100 weeks remaining until the 2014 presidential polls, there is still no Electoral Commission in place.

The change of tack that many people hope Joyce Banda will bring about indicates that personality politics continue to have a firm foothold in Malawi. As long as political and judicial institutions are kept weak, the realisation of democratic reforms will continue to be dependent on the goodwill of the president.

Rather than rushing to celebrate a new wave of democracy in the wake of a chance event, reforms aimed at strengthening political institutions and the entrenchment of constitutionalism, should be prioritised. Most importantly, this must be done in such a way that these cannot easily be undermined – regardless of who is in power.

Hannah Gibson
Policy Researcher, Africa Research Institute

ARI is working with Janet Banda of the Malawi Law Commission to produce a publication examining issues of law reform and constitutionalism in Malawi.

Urban Africa by numbers

Everyone knows that Nairobi’s Kibera district is the largest “informal settlement”, or slum, in sub-Saharan Africa. At least, they used to know. Politicians, journalists, NGOs and urban planning professionals routinely declared that 700,000 - 1,000,000 people lived in Kibera. But when the district was geo-statistically mapped for the first time in 2009 its population was estimated at no more than 220,000-250,000. Kibera has not exactly disappeared, but it is a shadow of its former imagined self.

In similar vein, the city of Lagos is widely believed to have about 15 million inhabitants – an estimate supported by the city authorities in the wake of Nigeria’s contested (and manipulated) 2006 census. But the 2009 Africapolis survey of West Africa’s urban population, the most sophisticated to date and compiled with the aid of satellite imagery, found that the city was home to no more than 10 million people. Even more significantly, while Nigeria’s census claimed that the country’s population was 140 million, the Africapolis team concluded that “in reality, [Nigeria] probably does not contain 100 million”.

The shrinkage of Kibera, Lagos and Nigeria will prove to be unexceptional. Governments and city authorities competing for funds, and donors and investors competing for projects, have shared a penchant for exaggeration. Despite the lack of a census in DRC since 1984, McKinsey forecasts that Kinshasa will be the 13th largest city in the world by 2025. The UN has routinely – and demonstrably – over-estimated the size of Africa’s larger cities and urban populations. Over time, errors and misinterpretations of data have become magnified, and projections less realistic. Yet it is the UN’s statistics which are most commonly cited. “They have become ‘fact’ by being constantly re-stated”, says Dr Debby Potts at King’s College, London, “instead of being recognised as guesses”.

More reliable urban population estimates and projections are increasingly available to anyone minded to heed them. They present a far from uniform picture for the continent, but challenge the received wisdom that Africa is urbanising faster than any other continent in the world. According to Africapolis, the urbanisation level in West Africa will rise by less than 3%, to 34.6% of the total population, in the period 2000-2020. Analysis by Debby Potts and other leading specialists of the 18 censuses published by sub-Saharan countries in the past decade reveals a similar picture. While urban populations are growing fast in many countries, only in four countries is rapid urbanisation occurring. According to Potts, “the most common pattern is for slow urbanisation”.

Rapid urbanisation is being portrayed – by the UN, the World Bank and many others – as a potential developmental “silver bullet” for Africa. Cities, we are frequently told, will be the drivers of economic growth and poverty reduction on the continent in the years to come. At present, such claims are too simplistic, and counter-productively over-optimistic.

One of the explanations for the modest momentum of urbanisation in so many African countries is the dearth of opportunities for individuals to improve their lot in towns and cities. Job creation, or lack of it, is the key factor here. In the absence of formal or informal employment, or better services, many rural migrants chose to return whence they came, or to come and go – a phenomenon known as “circular migration”. This is becoming more and more common, and stays in each location are of shorter duration. Natural increase among the poorest urban-dwellers, not migration, is the biggest driver of urban growth in Africa. This means slum growth, and burgeoning ranks of unoccupied young men and women.

As Professor Edgar Pieterse, Director of the African Centre for Cities in Cape Town, points out “this is tough stuff”. In Africa, despite encouraging GDP growth figures over the past decade, larger concentrations of people are not automatically generating benefits – quite the opposite. Talk of widespread “bottom-up development” occurring in towns and cities is far-fetched. The notion that big ticket urban infrastructure projects will be a panacea is equally misguided.

The social, economic and political consequences of policymakers continuing to ignore the best available demographic research could be grim. For example, appropriate food supply networks and health services require sound knowledge of population distribution and migration patterns. But unsound “common knowledge” is contributing to bad policymaking and wasted resources – human and financial. “A set of very pernicious trends is unfolding and planned investments will exacerbate these trends”, says Pieterse.

Edward Paice

Director

ARI is collaborating with Dr Debby Potts and others in an effort to draw greater attention to the most up-to-date and reliable research on African urban growth and rural migration trends.

Redefining public goods, for Africa

In January I wrote a blog which argued that if internet usage in Africa is going to increase, more local African content is needed online. In the article, I referred to the internet as a ‘public good’. My assertion was based on the reasoning that although the internet is largely a private service, it’s utility extends far beyond any individual into the public realm. A farmer, for example, may decide to put some money aside and invest in going to a cyber cafe. At the cyber cafe the farmer learns about a new method of storing maize which significantly reduces the chance of weevils and other pests from attacking his, or her, harvest. The farmer applies this new knowledge with resounding success. Neighbours of the farmer follow suit, and crop wastage in the community is significantly reduced. Not exactly a widespread occurrence, but feasible nonetheless.

Shortly after the article was posted I received an email from my good friend Will Prochaska, director of Alive and Kicking, an innovative social enterprise which manufactures footballs in Kenya and Zambia. He made the point that a public good must be non-excludable, and therefore the term cannot be applied to the internet. I, of course, disagreed. But on reflection I felt that Will’s comment, and our subsequent email exchange, touched upon a question of considerable importance for African governments and regional institutions. How do we constructively define public goods in a contemporary African context, and what role can they play in the continent’s development?

In traditional economic theory, public goods are defined as non-excludable and non-rivalrous. Non-exclusivity dictates that no individual can be prevented from utilising the good, regardless of whether or not they have paid for it, while non-rivalry indicates that usage must not reduce availability of the good for someone else. Paul A Samuelson, cited as the first economist to develop a theory of public goods, defines them as:

‘[goods] which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good’.

The problem with Samuelson’s definition – and orthodox definitions of public goods in general – is that very few products or services qualify as a public good. And those that do, are quite a random bunch – national defence services, public parks, national television broadcasters and street lights, are often cited as examples. The definition ignores the fact that there is a plethora of goods which produce significant societal benefits, and which are either non-exclusive or non-rival, but not both. A road, for example, commonly referred to as a public good today, falls foul of Samuelson’s definition. While no one is prevented from using a road, unless it contains a toll, an increase in the number of users can be accompanied by a decline in the marginal benefit to the average user.

A strict demarcation between public and private goods is not helpful from a policy perspective. When we consider the enormity of the challenges facing most African countries – from poor infrastructure to political instability to underperforming agricultural sectors – Samuelson’s definition of public goods renders them an irrelevant category. If a proactive African government wanted to invest more in ‘public goods’, they would be presented with a fragmented and confusing set of responses. The government should invest in street lights, but not utility companies to provide more reliable power; national broadcasting houses, but not improved communications infrastructure; public parks, but not wildlife conservation areas.

My argument is that if we broaden the definition of public goods to encompass goods that conform to the spirit but not the letter of Samuelson’s definition, we are presented with a much more coherent, and relevant, framework for African policy makers. Roads, ports, dams, communications infrastructure and the like all fall short of orthodox economic definitions of what constitutes a public good – because they are either excludable or rivalrous – but are nonetheless vehicles for sustained poverty reduction in Africa.

In December 2009, Africa Research Institute published Going Public: How Africa’s integration can work for the poor, a panoramic survey of half a century of efforts to advance Africa’s integration. It argues that the process of cooperation between states needs a new direction. The overriding purpose of regional integration must be to reduce poverty, with priority being given to investment in regional public goods.

Going Public purposefully adopts a broad definition of public goods to include cross-border infrastructure, development corridors and shared regional standards, for example. In so doing, the paper sought to assess key requirements – reliable power, modern communications services, clean water and basic sanitation and improved transportation infrastructure – for poverty reduction in Africa. Adopting Samuelson’s definition of a public good would barely skim the surface of addressing the plethora of challenges facing African countries and regions today.

Jonathan Bhalla

Research Manager – Africa Research Institute

Network-less mobile banking

In February 2011 Michael Joseph, former CEO of Kenyan mobile phone operator Safaricom, was appointed by the World Bank to spearhead the expansion of mobile banking worldwide. Joseph grew Safaricom from five employees to a business with an 80% share of the Kenyan mobile phone market. But his most lasting legacy is undoubtedly the introduction of M-PESA, the company’s flagship mobile payment system, and the most successful of its kind in the world. M-PESA facilitates more transactions each day in East Africa than Western Union does in a year, globally.

Joseph’s appointment highlights the growing importance of mobile banking to businesses and donors alike. But it also signals a shift in thinking about how to provide poor communities with access to financial services. In sub-Saharan Africa, one in five households have access to formal financial services, whether bank accounts, microcredit or insurance. The majority of people rely on informal methods of saving, sending and receiving money. Whether storing savings at home or sending money to family living in rural areas, the majority of Africans take disproportionate risk when managing their finances.

The precedent set by M-PESA suggests that mobile banking is beginning to change this. M-PESA allows account holders to deposit funds into an electronic kitty through a network of over 20,000 agents. M-PESA is not a service designed for the unbanked population, but it is used by them. Since its launch in March 2007, the number of users has grown to 13 million. Users can send – and receive – money to another M-PESA user through their mobile phone. As the service has gained popularity it has evolved. Kenyans can now pay for utility bills, groceries and even goods from the internet using the service.

The growth of mobile banking challenges previous assumptions that low-income populations are not a viable constituency for business. Low income populations are not averse to innovation, but simply to risk. Evidence from Kenya indicates that once risk is eliminated, people quickly demand more sophisticated products and services. ‘Initial [mobile] banking uptake focuses on low value transactions (e.g. mobile transfers and payments), but customer needs for higher margin products develop quickly’, concluded a report published by Bain & Company, the global consultancy firm

Individuals, businesses and charities have integrated M-PESA into the services they offer. Musoni, a Kenyan microfinance institution, operates a completely cashless business model. All disbursements and payments are conducted through M-PESA, and rival services including Airtel Money and Orange Mobile Money. Kilimo Salama – KiSwahili for safe agriculture – is a scheme which enables farmers to insure farm inputs against crop failure caused by adverse weather. Insurance payouts are disbursed via M-PESA.

The lessons for other countries are clear. Regulation plays an important role. In Kenya, Safaricom and the Central Bank of Kenya reached a compromise where the former could act as a formal channel for taking cash deposits without adhering to cumbersome banking regulations. A large network of dedicated agents, brand recognition and trust in the service are all crucial. But Safaricom’s 80% market share gave them a cutting edge that most other networks cannot rely on. Transferring the M-PESA model has proved difficult.

In Nigeria, for example – Africa’s most populous country – competition between mobile service providers is fierce. The mobile market is fragmented. But in December 2010, the Nigerian central bank sanctioned a number of licences for mobile banking platforms. They have insisted on “inter-operability” – i.e. a system that allows people to make transactions across mobile networks. Network-agnostic services, they argue, will offer a better service to customers, allowing them to transact with anyone, regardless of network.

“[It] seems unfortunate for a customer to have to interconnect two mobile money platforms by cashing out from one platform on which it is receiving money and cash into another on which it needs to make a payment. Let’s cut out the cash in the middle” Ignacio Mas, Bill & Melinda Gates Foundation.

There is some pressure for “inter-operability” in Kenya, but Safaricom claims that it “[risks] killing innovations in the money transfer market”. The Central Bank of Kenya has backed the company. But in countries where the mobile phone market is not dominated by a single service provider, network-agnostic mobile banking services could be a more productive approach to replicating M-PESA success. The progress of mobile banking in Nigeria will be a telling indicator for the viability of mobile banking elsewhere in Africa.

Chris Marshall

Guest blogger

Aid: protection or production

On 17th-18th February I attended a workshop entitled “Aid and Development in Asia and Africa: The Role of Infrastructure and Capacity Development in East Asian Growth and its Implications for African Development”. It was co-hosted by the School of Oriental and African Studies (SOAS) and the Japan International Cooperation Agency (JICA) and held at SOAS in London.

On Tuesday 1st March, Britain’s International Development Secretary, Andrew Mitchell announced that the number of countries receiving aid will fall over the next four years by a third – from 43 to 27. The total aid budget will not decrease, in keeping with Prime Minister David Cameron’s pledge that Britain will meet the UN target of spending 0.7% of gross national income on aid by 2013. But the allocation of aid will alter. There is to be a greater focus on ‘fragile’ war-torn states which pose a security threat to the UK, such as Afghanistan and Somalia. This redistribution and concentration of funds implies an assumption that the efficacy of aid - to promote economic growth, social development and therefore stability - can be improved by increasing the volume of aid to a ‘fragile state’.

The ability of aid to foster economic growth and development, and the merits of ‘scaling-up’ aid are hotly contested issues. This debate is propelled most articulately by economists Jeffrey Sachs, Director of the Earth Institute at Colombia University and William Easterly, Professor of Economics at New York University.

In his book “The End of Poverty”, Sachs argues that poverty can be overcome by increasing aid spending on items such as water pumps to increase agricultural productivity, or mosquito nets to reduce the incidence of malaria. And increased wealth improves political transparency and governance. In contrast, Easterly argues there is no empirical evidence to show that aid leads to economic growth or political reform. He advocates local entrepreneurship and the growth of the private sector to reduce poverty and increase accountability, which he finds lacking in the aid industry.

Evidence for both arguments can be found on the ground, depending on where, and when, you look. Perhaps it would be better to acknowledge that aid does not - and cannot - have the same impact in all locations and under all political, economic and social conditions. To position yourself ‘for’ or ‘against’ aid is to ignore the local context. At the workshop I attended, there were some enlightening contributions to the ‘aid debate’ from speakers keen to examine the large middle ground between the black and white arguments.

Finn Tarp, Director of the World Institute for Development Economics Research at the United Nations University, shared research which argues that aid can have a positive effect on growth over the long-run. With no empirical evidence to suggest that increasing the volume of aid increases economic growth to the same degree, he argued that international donors increasing their aid allocations must be clear on where and how money should be spent. Local institutions are key to the achievement of economic growth through aid, and their capacity to absorb increased aid flows should receive particular consideration.

Jane Harrigan, Professor of Economics at SOAS, argued that over the last decade donor conditions have been pre-occupied with ‘good governance’ and social welfare. From 1990 to 2004, the percentage of aid allocated to governance in African countries increased from 7% to 21%, to education from 6% to 21%, and to health from 4% to 9%. The proportion to agriculture fell from 27% to 11% and to infrastructure from 42% to 30%. Whilst acknowledging the importance of contributions to social welfare, Harrigan is concerned that the relative reduction in allocations to productive sectors - agriculture and infrastructure - is hindering economic growth.

Kenichi Ohno, from the National Graduate Institute for Policy Studies in Japan, agrees that in order for aid to promote growth, a shift in emphasis to productive sectors is needed. African countries, he contends, should study East Asia’s success and adopt country-specific industrial policies. For example, as an advisor to the Ethiopian government, Ohno has proposed limited export promotion; import substitution; increasing private-public partnerships; building industrial clusters and the adoption of the Japanese philosophy of kaizen - the continuous improvement of processes in manufacturing and business.

With Britain re-embracing a closer alignment of aid programmes with foreign policy, will support be given to countries attempting to build a base for their economic growth? The rhetoric of results-oriented aid policy would seem to suggest this is a possibility. But the concentration of aid to countries deemed to pose a security threat to Britain could yet deny African countries with the highest potential for economic growth and wealth creation the support they require to establish themselves in international markets. An achievement which would reduce the requirement for aid, and help promote peaceful ties with the rest of the world.

Jenny Congrave

Policy and Publications Officer - Africa Research Institute