Democracy Lab

Africa Takes Off

Sub-Saharan Africa is starting to shed its reputation as an economic laggard. The West should pay attention.

Pity sub-Saharan Africa -- but maybe for not much longer. In the first decade of the new millennium, six of the world's ten fastest-growing economies (Angola, Nigeria, Ethiopia, Chad, Mozambique, and Rwanda) were from this region. And in eight of the past ten years, it has grown faster than Asia.

To be sure, some of the region's growth stars owe their success in part to the global boom in commodity prices, most notably in oil. But Ethiopia managed to grow by 7.5 percent last year without producing a drop of petroleum. (Ethiopia's brightest newest export: cut flowers.)

Note, too, that average incomes in sub-Saharan Africa are still very low; for example, the per capita income in Chad is below $1,800 measured in terms of purchasing power, less than a tenth that of Poland or the Czech Republic. It will thus take decades of growth to bring living standards to acceptable levels.

But according to the IMF, the region is on track to grow by six percent this year, about the same as Asia. And there are convincing reasons to believe that a healthy pace can be maintained for the foreseeable future. Indeed, in the World Bank's view, Africa "could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago." That should be raising doubts about the appropriateness of international assistance policies based on the presumption that Africa still lacks the capacity to break out of its dispiriting cycle of poverty, dysfunctional governance and tribal violence. More on that later.

Ready to be surprised? Trade between Africa and the rest of the world tripled in the last decade. And by no coincidence, Africa has attracted more private foreign investment than official aid since 2005. Consider, too, that Africa's share of global foreign direct investment -- the most prized sort, since it brings along technology and management skills -- rose from less than one percent in 2000 to 4.5 percent in 2010.

But perhaps the most visible evidence of widening prosperity is the incredibly rapid penetration of mobile communications. Take Ghana, which, by the World Bank's reckoning, graduated to middle-income status last year. In the late 1990s, the country has a mere 50,000 working phone lines in a country of nearly 20 million. Now, three-quarters of the population has access to cell phones with both voice and instant-message capability.

In fact, the amount of money directed towards phone use has forced government bean counters to reconsider their (sometimes very rough) estimates of the region's income. In Ghana's case, the government recently revised upwards its estimate of private GDP by an astonishing two-thirds.

This telecom revolution is generating vast, unanticipated benefits. For example, farmers with phones now have access to timely market information, which makes it possible for them to bargain more effectively with middlemen. And "mobile money" -- credits transferred securely from one phone to another by instant message -- makes banking possible where bricks-and-mortar banks hardly have a presence.

No true "innovation cluster" yet exists in Africa. But the nexus of mobile telecom networks and financial services has spawned a collection of tech-oriented businesses in Nairobi, with Safaricom, Kenya's largest mobile supplier, at its hub. (The image above shows Nairobi by night.) The not-fully-realized value of wireless technology is encouraging entrepreneurs to think big. Very big: the Indian telecom Bharti Airtel paid $10.7 billion in 2010 for the African mobile-phone networks of a Kuwaiti-based Zain Telecom.

Zambia, which also made the cut to lower-middle-income status last year, illustrates much of what's good that's happening to sub-Saharan Africa. The economy has been averaging five percent-plus growth over the past seven years. That's due in part to the cyclical boom in copper prices, Zambia's chief export. But Zambia's agricultural sector is doing very well, too. The production of corn, a staple, leaped by 50 percent in 2010. The record harvest, by the way, illustrates the importance of good governance; Accra's timely distribution of subsidized fertilizer to small farmers made a big difference in yields.

The Zambian experience has been matched in neighboring Malawi, long a country plagued by food shortages and famine. Several years ago, the government launched a program (against the advice of international aid agencies) to both subsidize fertilizer and to support corn prices through purchases. Malawian farmers are now growing enough corn to satisfy domestic demand and have some left for export to its poster neighbor of bad governance, Zimbabwe.

There are good reasons to believe that this agricultural boom will endure beyond the general commodities boom driven by Chinese and Indian demand. First, Africa possesses 60 percent of the world's uncultivated arable land. So while the region is still a net importer of food, there's no hard economic barrier to considerable expansion of production. Second, improved communications and transportation is making it practical to expand intra-regional food trade. Indeed, agricultural economist Steven Haggblade at the Michigan State University argues that the key to food security in Africa is increased investment rural infrastructure.

Another reason for optimism about the sustainability of growth is the reduced likelihood of war. Scott Straus of the University of Wisconsin estimates that "African civil wars in the late 2000s were about half as common compared to the mid-1990s." What's more, "contemporary wars are typically small-scale... and involve factionalized insurgents who typically cannot hold significant territory or capture state capitals."

The reasons for the decline in organized violence are not altogether clear. But there seems little doubt that economic growth makes war less likely, and less war makes growth more likely.

The improved economic picture across sub-Saharan Africa has yet to translate into innovative approaches to the region by the international community. The U.S., Europe and Japan, the leading suppliers of technical assistance, grants and loans to Africa, still largely build policies on the premise that the region is mired in poverty and that the prevention of the worst forms of human degradation -- death by untreated disease, starvation, lack of  clean water and physical security -- is a much higher priority than the more complex issues of building institutions that support macroeconomic stability, public infrastructure and efficient market incentives.

One reason is the persistent belief that African growth isn't sustainable because it is largely dependent on steep rises in export prices for everything from cotton and cocoa to oil and copper. Certainly the boom has mattered. But as I discuss above, much points to the conclusion that growth is not transient this time around.

Population expansion also casts a cloud over Africa. So when computed on a per capita basis, GDP growth remain substantial -- but not as substantial as one would like. Here, too, though, the big story is positive: Fertility rates are falling almost everywhere in Africa.

There are subtler forces at work here, though, which retard the evolution of thinking about aid. Many governmental and non-governmental aid organizations have traditional commitments to combating famine and other extreme forms of suffering are institutionally reluctant to shift focus.

Cynics would argue that the change would make fund-raising (both private and public) more difficult -- the slow accretion of productive capacity just isn't very media-genic. I suspect it is more closely tied to the need to shift from tried-and-true strategies of delivering charity to the far more difficult task of encouraging institution-building and managing the ambiguities of interest-group conflict.

This glass is three-quarters full. Sub-Saharan Africa really does seem to be following other regions in building solid economies on the rock of institutional stability, free markets and more open trade, especially between African countries. Yes, ordinary Africans would benefit if international donors to acknowledged the new realities -- and there is a lot more that could be done by outsiders to accelerate positive changes.



The Patience Runs Out

The United States has put up with Pakistan's insidious double game for a decade now. Not anymore.

Divorces don't happen overnight, but there's always that one moment, that one comment when -- perhaps only in retrospect -- you can see the split coming. Secretary of Defense Leon Panetta's recent trip to Afghanistan may have been unannounced, but he wasn't shy when it came to speaking about Pakistan. Panetta said quite openly that the United States is losing patience with Pakistan, especially when it comes to Islamabad's failure -- or unwillingness -- to act against the Haqqani Network, a Taliban- and al Qaeda-affiliated group known to target Americans in Afghanistan from safe havens in Pakistan.

The remarks came as a surprise, as their timing coincides with U.S. negotiations with Pakistan to re-open NATO routes, but what Panetta said is hardly new. In fact, as he sat in a Senate Armed Services Committee hearing last September, he listened to Adm. Mike Mullen convey a similar message when the outgoing Joint Chief of Staff chairmen let loose, calling the Haqqani Network a veritable arm of Pakistan's intelligence service. Congress, the State Department, and the White House have also become more publicly forthcoming on this issue in the past year. So, instead of being shocked at Panetta's words, we should be shocked by their consistency. For once, the United States is on message when it comes to our "friend" and "ally" in South Asia.

The consistency and timing of the U.S. message provides new insight into the direction of relations with Pakistan. The Obama administration usually uses the Haqqani card to pressure Islamabad to turn on its strategic ally when it is linked to attacks on U.S. interests. The last time the administration turned up the heat was after the brazen Sept. 13, 2011, attack on the U.S. Embassy in Kabul. Panetta's comments could be viewed as a response to the June 1 attack on the U.S.-run Camp Solerno that occurred in Khost, a known Haqqani Network stronghold. But the reason for the latest rise in rhetoric is likely exactly what Panetta says it is -- a loss of patience that signals the beginning of the end of a relationship with a country that has long underestimated levels of U.S. discontent with its behavior, despite its shrewd understanding of and ability to profit over its strategic value to the United States over the past 10 years.  

The NATO overland supply routes in Pakistan have been closed for more than six months now -- an unprecedented amount of time. Despite ongoing negotiations to re-open routes, Washington has clearly been doing its homework on the alternatives. Nearly 75 percent of all surface cargo arrives in Afghanistan through current Central Asia routes known as the Northern Distribution Network (NDN) -- up 35 percent from last year. NATO Secretary General Anders Fogh Rasmussen announced early this month that he had reached agreements with Kyrgyzstan, Kazakhstan and Uzbekistan to allow the transit of troops and equipment both to and from Afghanistan. The expansion of routes with three separate nations does not happen overnight; it is the result of a deliberate effort of the Obama administration to become less dependent on Pakistan.

The generals in Islamabad -- who, for a decade now, have tried to play both sides -- should worry. Not only does Pakistan stand to lose revenue generated by the supply routes but it also faces international isolation. In the past, many of its questionable policies and relationships, most notably its nuclear proliferation activities and relations with the Taliban, have been overlooked because of its cooperation in the war on terror. A U.S.-Pakistan relationship in decline means this no longer holds. In addition to Pakistan's links to the Haqqani Network, other realities are now fair game for public criticism, such as the open residence of senior Taliban leadership and their families in Pakistan; the prevalence of Islamist thinking among the military; state support for anti-Indian terrorists and other militants; treatment of women and religious and ethnic minorities; and the frequency of journalist deaths and moderate politicians.  

But public criticism should be the least of Islamabad's worries. Moves are already afoot to isolate Pakistan. The draft National Defense Authorization Act 2013 proposes an earmark of $1.75 billion in Coalition Support Funds for Pakistan -- but only to be made available once NATO routes re-open. Congress recently introduced two bills on Shakil Afridi, the doctor imprisoned by Pakistan for assisting the CIA in the Osama bin Laden operation. One bill calls for Afridi to receive the Congressional Gold Medal while the other provides for his relief by deeming him a U.S. citizen. Congress also proposed to cut $33 million in aid -- $1 million for each year of the 33-year sentence Afridi received. Despite these antagonistic moves, the United States and Pakistan have not hit rock bottom yet. There is always the possibility of placing Pakistan on the list of state sponsors of terrorism, a return to sanctions -- or worse yet, unilateral U.S. ground operations similar to that of the bin Laden raid on Pakistan's territory against targets such as the Haqqani Network.

For the first time in a decade, the shifts in rhetoric indicate not just displeasure, but that the United States is actively looking to replace Pakistan. Panetta called for India to play a stronger role in supporting Afghan security forces during his June 6 trip there. The official response from Pakistan welcomed any effort to stabilize Afghanistan, but behind the scenes Panetta's comments will inevitably be viewed by Pakistan as a ploy to establish Indian hegemony in South Asia. India, for its part, is interested in assuming a greater economic role in Afghanistan, but the United States will likely find the official response from New Delhi just as muted and milquetoast as Islamabad's. India's growing domestic challenges, from corruption to the economy, will keep it busy until elections later this year. Furthermore, India would rather not surrender its ambitions for global leadership to antagonize a Pakistan that cannot see the Indian effort in Afghanistan as anything but a nefarious plot to encircle it.

Nonetheless, there is a new Great Game unfolding in South and Central Asia. There are more stakeholders, greater economic interests to be won, and new proxy relationships developing in the latest competition for resources and power. In 2010, the U.S. government announced that Afghanistan had nearly $1 trillion in untapped mineral deposits ranging from iron, copper, cobalt, gold, to lithium. These resources plus Afghanistan's access to Central Asia, South Asia, and the Middle East make it ideal for countries like China and India who are looking to fuel their economic growth. Washington will look to India and China to fill the economic void as the United States military drawdown also brings to close a 10-year war economy, while countries like Russia and Iran will strengthen ties with their traditional proxies, hoping to fill the vacuum as the United States departs. During his May visit to Afghanistan, President Obama discussed the importance of global consensus in South Asia's stability -- and noted in particular that Pakistan "can and should be an equal partner." The president reiterated the theme of international collaboration at the Chicago NATO summit later that month by seeking long-term commitments to Afghanistan's economic growth and development.

In this new context, Pakistan has a great deal to lose. Regardless of the costs endured by Pakistan in the war on terror, allegedly at the $70 billion mark, its government, economy, and elites have profited immensely from U.S. aid and political support since 2001. But if relations between Islamabad and Washington don't improve, Pakistan will find it difficult to compete in the new Great Game -- something the country cannot afford in light of its internal economic and development challenges. It may be time for both Pakistan and the United States to give up on each other and realize that their futures in the region, while overlapping, do not coincide in terms of interests.

Pakistan has recently participated in a number of regional initiatives to stabilize Afghanistan -- a participation that would be welcome, were it not for the worst possible reason of all: that it remains the center of gravity for global terrorism. Al Qaeda's second in command, Abu Yahya al-Libi, was killed in a drone strike in Pakistan on June 6. Only one more significant figure remains: Ayman al-Zawahiri. Regardless of where things stand between the United States and Pakistan, the Obama administration's commitment to defeating al Qaeda in Pakistan will persist -- Panetta's comments confirm this.

Strangely, Pakistan may have done itself and the United States an unintentional favor by closing the NATO routes for so long. It may have triggered the beginning of the end for a relationship based on very little common ground, appreciation, or respect. Lest we forget, Pakistan closed the routes this time around because Washington failed to apologize for the deaths of 24 Pakistani soldiers in a cross-border strike last November -- a confusing response for a country that obviously understands the value of a strategic apology, as evidenced by regular mea culpas for accidents in Iraq and Afghanistan.

But Islamabad needs to come clean too -- without Washington as its foul-weather ally, it will find little appetite among the international community for its outdated and destabilizing Afghanistan policy, which persists at the expense of regional and global security. Until now, we've all just put up with it because it's been taken as gospel that the United States needs Pakistan. That truism, at last, is no longer true.