It’s the economy stupid, N°3

On Twitter, T.O. Molefe announced that our new weekly series #ItsTheEconomyStupid is “My new favourite thing.” And you know, we love affirmation. So, here for T.O. and the rest of you is number 3. 

(1) This week we read the transcribed version of an incredible speech given by Alex De Waal in Addis Ababa. The speech was given to the 2015/2016 Cohort of the Next Generation of Social Sciences in Africa fellows. In the speech, De Waal “outlines systematic problems with framings of African political and economic issues” by western academics working on Africa. He takes particular aim at economists and political scientists:

“[T]he state of knowledge about African economics and politics is poor because in the higher reaches of the western academies, the focus is not on generating accurate information, but on inferring causal associations at a high level of abstraction, from datasets. And that those datasets are in fact far too weak for any such conclusions to be drawn.

Second, the structure of academic rewards and careers systematically disadvantages those who either do not have the skills or capacities for this kind of high-end quantitative endeavor (although it is profoundly flawed), or have serious misgivings about it. One result of this is a severe dissonance between actual lived experience, and academic work validated by the academy.”

Frequent readers of Africa Is A Country know how much this bothers us.

(2) Relatedly, we are currently re-reading Charles Chukwuma Soludo’s and Thandika Mkandawire’s edited volume from 1999 “Our Continent, Our Future: African Perspectives on Structural Adjustment”. One of the recommendations of the book, based on the disastrous results of Structural Adjustment Programs (SAPs), was a call for African voices to be at the front and center of development thinking about the continent. After all, many African intellectuals (economists, political scientists, civil society, etc…) opposed SAPs right from the beginning but their voices were drowned out.

Sadly, as demonstrated by De Waal’s speech above, little has changed in the 16 years since Soludo’s and Mkandawire’s important volume.  

(3) In an attempt to preserve scarce foreign currency and help the struggling economy, authorities in Nigeria have embarked on a #BuyNaijaToGrowTheNaira Twitter campaign. If you (like us) can’t read hashtags, then what you simply need to know is that the campaign seeks to stop the free-fall of the Naira (Nigeria’s currency) by encouraging Nigerians to buy locally manufactured goods.  

(4) Nigerian economist Nonso Obikili thinks the #BuyNaijaToGrowTheNaira strategy won’t work. And it’s not because most Nigerians are not on Twitter. 

(5) To compound Nigeria’s economic woes, President Muhammadu Buhari in a meeting with the Islamic Development Bank in Saudi Arabia this past week said “the days of Nigeria as a big oil producer with plenty of money are gone”. He’s probably right. The price of oil, Nigeria’s biggest export, has fallen precipitously. There’s little hope that  the price will recover anytime soon.     

(6) The Zambian Parliament this past week approved an increase in the external debt ceiling from K60bn (about $6bn) to K160bn (about $14bn). The external debt ceiling should, in principle, limit how much external debt is accumulated by the government. However, this is the second time in under a year that the Zambian parliament has approved a lifting of the ceiling – this time around, the ceiling has more than doubled. This begs the question: why even have a ceiling if it’s going to be lifted anyway?

(7) This is the general problem of forcing the copying of what looks like a great thing from somewhere else in the world and pasting it in a place where the context is likely to be different. A parliament should offer checks. But how effective is this mechanism for offering checks if MPs, especially in some of our countries, tend to be easily “persuaded” to vote with the ruling party?

And we are almost 100% certain that an external clipboard-carrying consultant happily ticked-off “yes” on the questionnaire asking whether Zambia had a debt ceiling rule.

Thandika Mkandawire has called this copy and paste mentality “institutional monocroping”.   

(8) We are not surprised by the obnoxiously high earnings of corporate executives in South Africa as revealed in the table below from Moneyweb (the table shows total annual earnings for executive directors whose companies are listed on the Johannesburg Stock Exchange).

 

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Hendrik du Toit, Executive Director at financial services company Investec, received total annual compensation of R80million (we think this is for 2015 but Moneyweb doesn’t make it clear). For comparison’s sake, the most generous minimum wage stipulated for domestic workers in South Africa implies an annual pay of around R30,000. Do the math. Notice also how underrepresented certain demographic groups are on this list?  

(9) More on inequality, a new publication called “The Origins of the Superrich: The Billionaire Characteristic Database” covered on the blog Conversable Economist finds that “extreme wealth is growing faster in emerging markets than in advanced countries”.

(10) One of the biggest concerns in applied economics (especially with Randomized Controlled Trials) is the issue of external validity. That is, are the results of obtained from a sample of households or villages in Kenya generalizable to the entire continent? Angus Deaton, winner of the Nobel Memorial Prize in economics last year, doesn’t think they are. But are academic economists packaging their journal findings as if their results were generalizable? In other words, do academic economists think that Africa is a country?

David Evans over at the World Bank’s Development Impact Blog has crunched the numbers and doesn’t think so. We are convinced by Evans’ number crunching that Africa is mostly not a country for academic economists. But we wonder how many “policy consultants” or “policy-trepreneurs” are going round selling Rwanda’s evidence to Zambia or vice-versa. We can’t count the number of times we’ve sat in policy seminars or in policy meetings and someone has said “Malawi should do A because A works in Kenya”.   

(11) Finally, last week we had much to say about the ambiguous impact of corruption on economic outcomes. Now comes a new book written by Kaushik Basu, who’s currently the World Bank’s Chief Economist and former economic advisor to the government of India, arguing that petty corruption saved India from experiencing the full brunt of the financial crisis.

Grieve Chelwa

Grieve Chelwa--originally from Lusaka, Zambia--is a contributing editor at Africa is a Country, writes our weekly 'It's the Economy' series and also currently a postdoctoral fellow at Harvard University.

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