Burundi: Civil Society in Jeopardy

Burundi has recently raised some concern from the international community due to unrest between its largely Hutu government and the Tutsi opposition. This unrest stems, in part, from the government’s censorship practices. Over the last few years, these restrictive government policies have affected journalists, opposition leaders, human rights defenders, and civil society organizations (CSOs). More recently, the Burundian government has turned its attention towards CSOs and human rights organizations.

Like its neighbor Rwanda, Burundi has had a long history of political unrest and ethnic tensions. A little over twelve years ago, the country was engaged in a bloody civil war that resulted in the deaths of an estimated three hundred thousand Burundians. Since then, the country has attempted to ease these tensions by dividing political leadership more equally between the Hutu and Tutsi ethnic groups. Thanks in large part to this restructuring; Pierre Nkurunziza was elected to the presidency in 2005. The most recent conflict began when Nkurunziza ran for a controversial third term and won with 69.41 percent of the vote. Nkurunziza’s reelection violated Burundi’s terms limits. According to the country’s constitution, established in 1992, a president may only serve two five-year terms. As a result of the fierce opposition to Nkurunziza’s reelection, the government has engaged in a variety of  anti-democratic actions.

According to the Economist’s Intelligence Unit, Burundi is “on the cusp” of another civil war. Self-censorship (e.g. not reporting on certain topics and declining to speak on particular issues that concern the government) is reportedly common among citizens and the government has attempted to confiscate weapons in an effort to prevent a potential coup d’état. The president has stated that those who belong to the opposition party and who do not comply with these new measures will be considered “Enemies of Burundi and treated as terrorists.”

Burundi’s government has also carried out attacks and arrests on civil society leaders, journalists, and those who oppose the new repressive measures. At a time when watchdogs and whistle-blowers are needed most and at their most vulnerable, the government has approved a new law that requires journalists to disclose all of their sources. Bob Rugurika, the director of Radio Publique Africaine, was arrested for withholding a suspect from the authorities.  In addition, Welly Nzitonda, the son of prominent civil rights activist Pierre-Claver Mbonimpa, was arrested on trumped up charges and later killed by the police.

In addition to these high profile arrests, the government has also attempted to exert its control over local CSOs. Early last year, the government announced that it would freeze the bank accounts of local CSOs and the interior minister subsequently suspended the operations of such groups. According to a secretary in the interior minister’s office, these organizations were being led by civil rights activists who had fled the country and backed the “troublemakers.” Thankfully, these CSOs were given a chance to defend themselves after further investigation.

The unrest in Burundi goes beyond mere political tension. The government has attempted to silence its critics through arrests, financial restrictions, and the outright closure of human right organizations and CSOs, but Burundi needs civil society organizations now more than ever. As it stands on the brink of a constitutional crisis and an ethnic civil war, the Burundian government must communicate with its opponents and critics to ensure peace and stability in Burundi and the region.

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Public-Private Partnerships: The Key to Successfully Implementing the SDGs

The Brookings Institution and the Organization for Economic Co-operation and Development (OECD) recently partnered to present a talk on utilizing public-private partnerships (PPPs) in order to effectively implement the United Nations’ (UN) Sustainable Development Goals (SDG). The SDGs are a list of goals, proposed by the UN, that target issues related to health, poverty, hunger, inequality, education, and climate change. According to the expert panel, partnerships connect decision-makers at the global level with the private sector, local governments, and civil society in an effort to capitalize on their specific strengths and balance their weaknesses.

Bill Gates speaking at a press conference at the end of the GAVI Alliance pledging event
Bill Gates speaking at a press conference at the end of the GAVI Alliance pledging event

For example, Gavi, The Vaccine Alliance, is a PPP that provides access to vaccines in developing countries. The major players in this alliance consist of the World Health Organization, UNICEF, The World Bank, and the Bill and Melinda Gates Foundation. Together, these organizations have successfully contributed scientific research, vaccines, and financial tools. According to Gavi, “Since its launch in 2000, [the alliance] has helped developing countries to prevent more than 7 million future deaths…Gavi support has contributed to the immunization of an additional 500 million children.” Gavi’s objectives were strategically implemented to produce results that protect developing populations and improve healthcare, which aligns with SDG 3 that aims to “ensure healthy lives and promote well-being for all at all ages.”

Partnerships are arguably the driving force behind the successful implementation of the SDGs. Governments are often slow and unreliable, while existing institutions like private corporations and civil society organizations have “on the ground” experience navigating the challenges inherent to their industry. The success of a PPP is determined by inclusivity, local implementation and ownership, transparency, accountability, political engagement, and strong focus on results. According to a study conducted by the OECD, “effective partnerships must have strong leadership, be country-led and context specific, apply the right type of action for the challenge, and maintain a clear focus on results.”

The SDGs also focus on more specific goals such as improving infrastructure, conserving oceans, and sustaining energy, which leaves room for partnerships to narrow their focus and innovate, particularly in the private sector. According to Devex, “Business leaders are still trying to understand the concept of sustainability, too, and how to integrate it into their business models.” The ODA method of developed countries donating funds to developing countries is ineffective since monetary aid does not specifically encourage the creation of new and sustainable systems. According to the Wall Street Journal, “Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s.” As is often the case, this money is lost in transit and never reaches the local level due to corrupt bureaucracies and weak relations with civil society organizations. Financial contributions from the private sector, when combined with effectual and enabling political leadership, move beyond temporary alleviation to foster a more permanent impact.

Public-private partnerships are a vital part of Goal 16, which seeks to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.” Ultimately, PPPs allow for a more inclusive and communicative atmosphere conducive to tackling important development issues on a more direct and practical platform that enables self-sufficiency and citizen accountability. If the SDGs are to be achieved, the vital role of PPPs cannot be ignored.

Trade, Not Aid

Summit

The first week of August marked the inaugural U.S.-Africa Leaders Summit, a meeting of nearly 50 African leaders and American businessmen in Washington, D.C. Though taking place nearly six years after President Obama’s first inauguration, the Summit manifested the President’s longstanding interest in stronger U.S.-Africa ties. During his time in the Oval Office, however, President Obama has often been criticized for his lack of serious involvement in Africa.

Until now.

At the tail end of the Obama Administration, the Leadership Summit briefly silenced critics who claimed the President Obama has ignored Africa. The Summit, the first meeting of its kind, was an opportunity for African leaders, most of whom are heads of state, to convene in one place with a sitting American president. After 3 days, the Summit unveiled its greatest initiative: a $33 billion investment plan to catalyze economic activity on the continent.

Unlike previous financial flows to Africa, the Summit’s investment plan is a departure from traditional Official Development Assistance (ODA), usually in the form of bilateral loans. Instead, the investment plan is set to take three forms: $7 billion to encourage trade and investment in Africa, $14 billion from American multi-national corporations (MNC), and the remaining $12 billion for infrastructure development through the USAID Power Africa initiative. The investment package is designed not only to reduce poverty across the continent but also to encourage investment beyond Africa’s primary resources. As such, the investment package may signal a swing of the economic development pendulum from aid to trade.

This marked shift, though a step in the right direction, is only a step. In comparison to the United States’ previous financial flows to Africa, $33 billion is small. In 2013 alone, the U.S. imported $39.3 billion from Africa and exported $24 billion to the continent. Outside of trade, ODA claimed nearly $7 billion to the continent in the same time period. Despite comparatively meager figures, the forthcoming investments could embody a new trend in development assistance for Africa. By shirking traditional bilateral loans, the new investments emphasize the importance of private sector activity rather than corrupt governments.

Only a few countries will benefit from the package’s key investments. The Power Africa Initiative’s newest investment will only benefit six countries, meaning that each country will receive $2.4 billion over the course of five years. While not a small number, the Power Africa investment will close a small section of the continent’s infrastructure gap, worth an estimated $38 billion annually for the next decade. Some critics are further puzzled by the initiative’s strategy of distributing the money for various projects such as mini-grid and off-grid expansion throughout six counties (Ethiopia, Ghana, Kenya, Nigeria, Tanzania, and Liberia) when it could make a greater impact by devoting the money to one project. The Grand Inga Dam, the Trans-African Highway, and the Lesotho Highlands Water Project are all far-reaching projects aimed at improving infrastructure beyond a limited geographic area. Instead of distributing funds to six countries, Power Africa could focus its invest in one of the aforementioned projects, and perhaps even further reduce the Infrastructure Gap.

Wind

Additionally, MNC investment is unlikely to go to the continent’s poorest countries. One of the investment package’s most notable companies Coca-Cola already has offices is Kenya, Nigeria, and South Africa, making it more likely that these countries will receive greater investments. Targeted investment, however, might not be such a bad thing. Countries likely to receive the majority of the investments are those with more stable governments and more trade-friendly economic policies. If anything, investments toward these countries could incentivize countries to improve their own investment climates.

 Perhaps the most prominent of the criticisms of the investment package is that these efforts are too small and too late for lasting impact. Such criticism is well-taken, but the U.S.-Africa Leaders Summit’s investment plan could signal a transition for further U.S.-Africa investments. Unlike traditional ODA, the Summit’s forthcoming investment recognizes the African continent as a legitimate investment location, corresponding to the continent’s impressive GDP growth rate. The Obama Administration cites Africa’s 5.4% growth rate as a promising sign of Africa’s investment potential. With the upcoming investments, the African continent can sustain an upward growth trend. Though the dust has settled on the U.S.-Africa Leaders Summit, the investment’s real work, still lies ahead.

Breaking the Development Banks: How They Can Help and Hinder Development

Like fashion, international development is guided by trends. While some trends come and go, others withstand the test of time. If recent events are any indication, a new international development trend is on the horizon: development banks, governed by developing countries.

Awkward Family Photo

Just before the Asia-Pacific Economic Conference in Bali last October, China announced the establishment of the Asian Infrastructure Investment Bank (AIIB). As its name suggests, the bank will devote its resources to finance national and regional infrastructure development projects throughout Asia. Startup capital for the new bank is expected to be $50 billion, with aspirations to match. One of the new bank’s notable plans is constructing a railway from Beijing to Baghdad. Though ambitious, China is willing to devote its resources to the cause. According to the McKinsey Global Institute, China spent 8.5% of its GDP on infrastructure from 1992 to 2011, more than any other country in the world.

Construction

While plans for the AIIB are still underway, Brazil, Russia, India, China, and South Africa (BRICS) recently announced plans for their own bank. Like the AIIB, the New Development Bank (NDB) will finance infrastructure projects, with initial assets reaching $50 billion. An additional $100 billion will be designated for the Contingency Reserve Arrangement (CRA) for member states with suffering from severe current account deficits. Unlike the general infrastructure fund, to which all member states contributed equally, the CRA is dominated by Chinese assets. Of the $100 billion, the Chinese will contribute $41 billion with South Africa contributing $5 billion and Russia, Brazil, and India each contributing $18 billion. With the CRA, the NDB could prove a viable alternative to the IMF, and likely with fewer conditions.

In less than a year, two new development banks have taken root. Does this trend have staying power?

If anything, the new banks will remind the development community of the importance of infrastructure development. However, to be successful, the banks’ leaders must have realistic expectations with respect to international cooperation and lending capacity.

The AIIB and NDB challenge the structure of current global development institutions. The Bretton Woods system, created in 1944, reflects the economic structure of a bygone era in which the BRICS had not yet emerged. Decades later, the economy has changed though voting structure has not. The BRICS hold only 11% of the votes in the IMF, though their economies claim 20% of the world economy. A 2010 IMF agreement will redistribute some of the votes to give more weight to developing countries, thereby reducing the importance of financial contributions. The agreement, however still awaits ratification from the U.S. Congress. Until then, China, poised to be the world’s largest economy this year, will have fewer votes than Belgium, Netherlands, and Luxembourg combined.

The World Bank estimates a $1 trillion infrastructure gap for low- and middle-income countries, and the AIIB and the NDB could help to close the gap through their own financial contributions, a collective $200 billion. Cooperation with preexisting institutions, however, could be more complicated. Though sizeable, the initial capital of the AIIB and the NDB is much smaller compared to the World Bank or even the Asian Development Bank, with $232 billion and $165 billion, respectively. Cooperating with the World Bank, Asian Development Bank, and other institutions could mean that priority projects for both banks are deferred due to the financial might of its development predecessors. To be a serious alternative to preexisting institutions, both AIIB and NDB must raise additional capital.

Graph

Perhaps the most notable shortcoming is both banks’ lack of involvement in any African country save for South Africa. According to the World Bank, approximately 70% of people in sub-Saharan Africa live without access to electricity. It is puzzling as to why other African countries are given the cold shoulder, particularly Nigeria and its 170 million people, the largest in Africa. Coupled with increasing GDP growth and decreasing inflation, the country is Africa’s second largest economy, and is expected to be one of the world’s top economies by 2030. China is Africa’s largest trading partner, though the country’s trade with the continent is only a 5% share of China’s global trade. Given that Africa has some of the world’s most pressing infrastructure needs, Africa’s lack of inclusion is questionable at best.

Both banks must exercise caution in their financial management and project execution. In plans for both banks, China is set to be a chief financial contributor, however the country remains a top beneficiary of World Bank funds. China, along with Brazil and India owe a collective $66 billion in outstanding loans. Additionally, both banks must remain cognizant of the impact of infrastructure in the least developed areas. In a 2013 Center for Economic Performance paper, economist Ben Faber found that small countries with only recently connected highway systems experienced GDP growth that was on average 19% less than small countries unconnected to highway systems. This was due to the inflow of inexpensive goods that replaced demand for local goods.

While the benefits of infrastructure are numerous, it is by no means a poverty-eradicating panacea. But it is very helpful. Increased productivity and competition make infrastructure investment key driver of economic growth and a lasting trend.

Do development banks governed by developing countries have lasting power? Only time- and perhaps the international community- will tell.

Watch the Throne: Nigeria is Now leading Africa in GDP

Photo Courtesy of Zouzou Wizman: https://www.flickr.com/photos/zouzouwizman/
Photo Courtesy of Zouzou Wizman: https://www.flickr.com/photos/zouzouwizman/

Nigeria has catapulted ahead of South Africa for the title of largest economy on the African continent. On April 6, Nigerian government officials announced that they had revised their 2013 GDP calculation to the tune of $510 billion. But in 2012 the World Bank estimated Nigeria’s GDP at $262 billion. So what can account for this rapid change? The answer lies in how the Nigerian government did the math.

The process is called “rebasing.” To calculate any country’s GDP, economists must first set a base year on which to model the economic growth. Then economists try to paint a picture of the economy in that year by studying different industries like agriculture, energy, and manufacturing. In the years to come, economists look at how these industries have grown. All GDP calculations, sometimes many years later, are based on this initial point of reference. However, this system of measurement does not account for the informal economy. Nor does it account for rapidly developing sectors such as telecommunications and film—industries that have sprung up in Nigeria over the last 20 years.

Nigeria’s model year was 1990. The new base year is 2010. As we will see, much has changed in the Nigerian economy since 1990. New industries have emerged and historically strong industries have fallen. Thus far, the World Bank has supported Nigeria’s recalculation. It is recommended that a country rebase its GDP numbers every five years. Since Nigeria has held off for so long, the change was quite drastic. Nigeria saw the highest gains in the service industry. The agriculture, oil, and gas industries decreased in terms of percentage of GDP. Telecommunications shot up from less than one per cent to 8.7% of GDP. The Nigerian film industry, known as Nollywood, makes up about 1.2% of GDP.

Sadly, despite these good numbers, the average Nigerian citizen will not see improvements in their quality of life. South Africa, who Nigeria unseated from the throne, has a GDP per capita of $7,336, a long way from Nigeria’s $3,000 (and that is with the new rebased numbers). There is still corruption, terrorism, power outages, and vast inequality in Nigeria. Many have criticized the new calculations, saying that nothing will ultimately change for poor Nigerians. What the new numbers can do, however, is open the door to more Foreign Direct Investment. As Africa’s largest economy, Nigeria has put itself in an advantageous position in the world marketplace by calling positive attention to themselves. As Forbes recently reported, the country is full of potential. They have a growing educated class, energy reserves, and a spirit of entrepreneurship. But as of today it seems that there remains many political and institutional barriers to overcome.

Past Reconstruction to Constructing Rwanda

Twenty years after the genocide in Rwanda, things seem to be looking a bit brighter. With an average annual growth rate of eight percent since 2001 and over one million people lifted out of poverty, Rwanda is poised to continue growing by leaps and bounds. Even so, 20% of Rwanda’s economy comes from foreign aid, only trailing its exports of coffee and tea. As with most developing countries, one of the most visible signs of growth is the new buildings sprouting from the ground around the capital of Kigali. As impressive as office buildings and shopping malls are, it remains to be seen how beneficial these structures are to the economy and people of Kigali and other developing cities.

Construction workers in Kigali

The benefits of the construction industry in developing countries is clear. The global construction industry was approximately $1.7 trillion in 2007, and typically accounts for 5-7% of each country’s GDP. Jobs in the construction sector tend to be low-skill jobs, something that most developing countries, and especially Rwanda, have in abundance. A report by the International Labor Organization (ILO) found that workers in places as diverse as India, Brazil, and China were significantly more likely to be illiterate and have few years of schooling. Construction is also an investment, as there are roads, buildings, and other structures that can be used to house offices, transport goods, and improve the human and business capabilities. Kigali is already one of the most urbanized cities in Africa, and is expected to grow by 79.9% by 2025. Construction in Kigali and satellite cities is meant to ease congestion of an already dense capital of a densely-populated country.

Map of Rwanda

There are some issues with the construction industry in the developing world. The first one involves property rights. Large amounts of people in cities in the developing world don’t have a title or ownership to the land that they live on, especially in slums. Hernando de Soto, president of the of the Institute for Liberty and Democracy in Peru, has referred to slums as “dead capital”, alluding to the idea that people make improvements by building shantytowns but are not able to use it for collateral due to red tape. The perniciousness of not actually owning the land that one’s house is built on is even worse. In Kigali, 70% of housing is informal, with the government proposing to demolish that housing and creating more high-density areas and rent-to-own schemes. However, housing in the suburbs of Kigali currently typically costs 25,000 francs ($36.87) a month in a country where 45% of people still live below the poverty line. There’s a fear that parts of Kigali could end up like Nova Cidade de Kilamba, a suburb of Luanda that is a ghost town built and funded by the Chinese.

Developing countries, and Africa in particular, have been raising questions about who benefits from the construction industry. Recent reports by investigative journalists from the Forum for African Investigative Reporters (FAIR) in Kigali have found that foreign firms, notably the Chinese, have done a substantial portion of construction. The Chinese are able to undercut local firms by using Chinese contractors backed by subsidized loans provided by the Chinese state. An operations engineer at a Chinese company working in Rwanda stated that his company could get loans with an 8% interest payment while Rwandan companies could only obtain loans with 17-18%, if they could even get a loan at all.

The view of Kigali’s town center and surrounding areas

There is a final concern about construction and corruption. Since construction contracts tend to be a fee and cost of materials, construction companies tend to be implicated more frequently. They overstate the amount of labor used on a project, pocketing the difference. One field experiment in Indonesia found that an increase in official audits of construction projects reduced missing expenditures of labor, ie nonexistent workers, by between 14 and 22%. Construction and engineering companies dominate the current World Bank list of debarred firms, the largest of which was SNC-Lavalin, a Canadian firm, which was debarred over bribery charges around the $1.2 billion funding of the Padma bridge in Bangladesh. Because of these troubling factors, questions, concerns, and confidence over construction in cities like Kigali will continue to surface.

New Trends in Migration: South African Case Study

As our world becomes more globalized and inter-connected, people – and their ideas, possessions, and cultures – are becoming more mobile.  International migration is becoming an increasingly important part of international development, as well as individual states’ policies.  The number of international migrants increased from 150 million in 2000 to 214 million in 2012.  Migration affects almost every country in the world, and 49 percent of migrants globally are women.  And the World Bank predicts that, as populations age and shrink in developed countries while increasing dramatically in developing ones, international migration will continue to grow as a global phenomenon.

Immigration lines at a Japanese airport
Immigration lines at a Japanese airport

However, the International Organization for Migration’s (IOM) 2013 World Migration Report, launched on September 13 in Geneva, states that “migration remains inadequately integrated into development frameworks at national and local levels, and public perception of migrants and migration are often very negative.”  This report uses Gallup World Poll data from over 150 countries to examine how migration affects individual well being, expanding this field beyond traditional economic perspectives.  It also corrects the common assumption that most migrants move from developing countries to developed countries (South-North).   Instead, the data shows that “at least one-third of migrants move from one developing country to another and 22 percent migrate from one developed country to another” (South-South and North-North).  South-South migrants had the worst outcomes and were often unable to afford basic necessities, even after many years.

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