Politicians quick to take advantage of Ghana’s oil windfall

Oil barrel coffin, Ghana (photo courtesy Flickr user What KT Did)

 

In The Ringtone and the Drum, my recently published book on West Africa, I described how diamonds have proved a curse rather than a blessing to Sierra Leone:

Once the resource curse falls on a country, like a deadly virus it spreads rapidly, crippling its host’s every organ, paralysing its every function. First to suffer are farming and manufacturing. The profits from diamonds (or oil or gold) far outweigh those achievable through agriculture or industry, and it makes economic sense to allow mineral extraction to become the dominant productive activity. Often it becomes the sole productive activity. Diamonds give a country’s leaders more wealth than they ever dreamed of, so they no longer need to worry about other parts of the economy. Minerals become the only way to make a living; everything else is left to rot. As other, more labour-intensive sectors collapse, the majority of the population has no work (the decline of Sierra Leonean agriculture was swift: twenty years after discovering its precious stones, the country had gone from exporting rice to importing it). A chasm opens up, between the rich few with access to mineral wealth, and the poor masses who are shut out.

The masses have no outlet for their frustrations, no way of redressing the balance. While they are growing rich on diamond exports the leaders of a resource-cursed country do not need to agonise over what their subjects think of them. Governments in countries lacking in valuable minerals depend on taxes to keep them in business; without them, ministers would not be paid and the machinery of government could not function. For taxes to be paid, the state must count on at least some degree of support from its citizens, and is to some degree answerable to them – if it ignores their needs entirely, citizens will use non-payment of tax as a bargaining chip. But in diamond-rich economies, governments need nothing from their people; profits from the gems are more than sufficient to keep the leaders in luxury, and their subjects, lacking any leverage over them, have no way of agitating peacefully for a fair share of the pie.

Sierra Leone’s near-neighbour Ghana, the world’s newest oil producer and one of its fastest growing economies, has so far avoided damage to non-oil sectors, but last week brought a worrying sign that politicians are keen to get their hands on oil revenues. By itself, and even though inflation in the country is running at just 9%, members of parliament awarding themselves a 140% pay rise may not be cause for tremendous alarm – Ghanaian MPs’ monthly salary of $3,800 is still much lower than that of their Kenyan counterparts, for example, who trouser a cool $10,000 a month.

But it is difficult to understand why such a pay rise should be backdated to 2009. Such a ruse means that in January next year, lawmakers will receive a windfall of $109,025 (the $2,225 pay rise multiplied by 49 months). Ordinary Ghanaians who are struggling to make ends meet are unlikely to be aware of the full extent of the politicians’ good fortune, but if they did have time to do the calculation they would receive a nasty shock: it would take a Ghanaian on the minimum wage 121 years to earn what MPs have just gifted themselves.

Obama’s failure on climate

In the Guardian, George Monbiot is incandescent about the failure of Obama and Romney to speak out about climate change.

The two candidates remain struck dumb. Speech fails them, action is abominable, they will not even raise their hands in self-defence. The world’s most pressing crisis, now breaking down the doors of the world’s most powerful nation, cannot be discussed.

Although Monbiot briefly refers to a lack of action, most of his article is dedicated to what the candidates have or haven’t said during the course of an interminable election campaign. Real world data, by contrast, does not get a look in.

As far back as the first Bush administration, successive presidents have been promising that they would restrain America’s carbon emissions, but have failed to deliver. Instead, emissions rose sharply during their term in office. Under Obama, they have finally hit a peak, are falling, and are expected to continue to do so.

By 2020, according to a projection published last month by Resources for the Future, US emissions will be 16% below a 2005 benchmark, in line with the Obama’s administration’s pledge under the Copenhagen Accord. (See Michael Levi for a useful discussion of the RFF study.)

As this graph shows, tighter regulation of greenhouse gases under the Clean Air Act  is playing the greatest role, with new standards kicking in in 2011. This is followed by ‘secular trends’ (higher energy prices) and action at sub-national level, mostly in California.

There are many problems with US policy at the moment. For example, the extent to which the US exports the coal it no longer needs will have a huge bearing on the net climate impact of its increased use of gas for electricity generation, for example.

However, its emissions trajectory is shifting, and this is likely to continue, and could accelerate, if Obama wins a second term today. It will also be fascinating to see how an American president deals with climate internationally if, for the first time, he walks into a negotiation with a story to tell of progress at home.

Thoughts from the post-2015 High-Level panel meeting in London

Just in case anyone missed it (but how…), last week was the second meeting of the UN Secretary General’s High Level Panel on the Post-2015 agenda.  This is the group of 26 people who have been tasked with writing the first draft of what will, in time, become the successor agreement to the MDGs.  It was the second time the panel had met, but the first substantive meeting – the first being a few hours in New York on the margins of the UN General Assembly in September.  The meeting was in three parts – a first day focused on discussion of a few issues selected by the UK government, with invited experts; a second day was just the panel, looking at issues relating to household and indvidual level poverty; and a third ‘outreach’ day, where the panel met with representatives from the private sector, NGOs and youth groups.  I was there for Friday, and picked up news from people who were there on the other days.  In no particular order, my impressions were:

  • The arrival of the ‘the youth’.  The inclusion of a dedicated outreach session for youth groups meant that there were lots of dynamic and excited young people around all day on the Friday, and they made their presence felt.  It’s not clear yet if they’ll have a distinct policy agenda, but it was great to expand the outreach beyond the NGOs and the usual companies.
  • The need for clarity from ‘civil society’.  The Friday session with NGOs produced not just one Christmas tree but a whole forest of proposals and ‘you musts’ from the assembled organisations.  Of course, faced with the actual panel in front of them, organisations had to push their agreed lines.  But it was something of a wasted opportunity to present the panel with a few key messages that they might actually remember and be able to act on.  Perhaps in Monrovia?
  • The need for the private sector debate to move on (or stop).  The session on the private sector was interesting, but becoming rather familiar – a long list of good initiatives and examples of how the private sector can play a positive role in development (with some discussion on how they should also pay their taxes, which was good to see). What we’re having is just a general private sector and development conversation, not one about post-2015.  If this conversation is going to go anywhere, it has to start addressing more specific issues of what all this means for an actual agreement.  Or else it will probably just fade away as people lose interest.
  • It’s (still) about process.  The internal debates about how the Panel should be resourced and by who seem to have died down (for now). But the process issues continue to dominate, in the public parts of the agenda at least, and have shifted to questions of participation by outsiders in the panel’s work – how can people particularly ‘the most excluded’ (a phrase I heard again and again) be heard by the panel?  On which, the IDS/Beyond 2015 team presented the ‘Participate‘ project as part of Friday’s agenda, which aims to use participatory research methods to bring the views and voices of the most excluded communities into the panel’s discussions.

My key message? Prioritise, prioritise, prioritise.  This applies to civil society, as above, and also to the panel.  They are getting there slowly – one concrete output from the meeting seems to have been the agreement that the focus of the panel will be on ‘ending poverty in our time’.  But there’s a long way to go, and no shortage of advice – which can get rather wearing.  One of the most sensible comments I heard was from Abijit Banerjee, the Indian economist who sits on the panel and who, after sitting through an hour of ‘you musts’ from NGOs and others explained that in fact they would all probably be disappointed as the panel can’t possibly promise that all the issues would be in – they have to be told what’s most important.

On which – quick plug – Paul Ladd from UNDP and I presented the ‘MyWorld’ project to the panel.  This is all about prioritisation – it’s a global survey, which will run until at least 2014, asking people which options they think most important from a range of choices representing the different perspectives and ideas for a post-2015 agreement.  It’s being developed by a group that includes UNDP, ODI, the UN Millennium Campaign, , the ONE campaign and the World Wide Web Foundation.  We’ll be reporting on the results at future meetings of the panel, so they get an ongoing picture of the emerging priorities.  Launch soon, watch this space.

Update: seconds after I posted this, Jonathan Tench from Unilever tweeted that I was being a bit unfair on the private sector parts of the discussion – citing 15 recommendations made during the event relating to business and post-2015, and the fact that this is just the first in a series of conversations which will continue at the next two meetings of the HLP.  So I’m looking forward to the moving on bit, and to it not stopping!

Do development indicators deceive us? Here is a better approach

Measuring politics and Political Development indicatorsMeasuring how countries perform is all the rage. Everyone from the World Bank to Bertelsmann to Africa’s most famous entrepreneur does it, producing indices on things like how competitive economies are, how hungry populations are, how free the press is, how risky investments are, and how corrupt public sectors are.

Many of these indices are directly relevant for people working in development. They help countries determine how they compare with other states and where they ought to improve their performance. And they help aid agencies decide where and how to invest their resources.

Indicators tracking everything from GDP per capita to poverty to governance are ubiquitous across the field, especially among international professionals. Such numbers are used to determine need, priorities, and strategies (such as whether a government ought to be funded directly).

But do the indicators that have the greatest influence measure the right things? Are they focused on the issues that are most important to development? Can they predict how governments work or how countries will evolve in the future?

Too often, developing countries are assessed on a very narrow set of indicators, leading to an overemphasis on certain programs and “results” that have little to do with their prospects. Reducing poverty and hunger are worthwhile goals but may not reflect how well a country is doing (aid can reduce both without helping a state function better). “Good governance” may indicate good prospects, but bad governance certainly does not point to the reverse, as a long string of countries can attest to (including China, Indonesia, Cambodia, and Vietnam). GDP per capita is widely used to assess how well countries are doing (not least by the World Bank and many leading poverty analysts), but may actually be saying very little about the subject (such as when only elites benefit from natural resource wealth, as in Nigeria, Libya, and Angola).

Indicators on state fragility can easily miss the mark. The Failed States Index, for instance, completely failed to pick up the fault lines that threaten many Middle Eastern countries before the Arab Spring brought them into the open. The 2011 FSI ranked Syria as the 48th most fragile state in the world, but its complex ethnic and religious landscape has always made it far more fragile than it appeared. In 2012, Syria plummeted down to 23rd in the FSI. Next year, it will inevitably be much worse. Bahrain and Libya did not even make the ranking before 2011.

Many of the most important development issues are not included in major indices because they are not easily measured or are simply not considered as important as they ought to be.

In Fixing Fragile States, I wrote:

Development describes a complex process that transforms both the way people think and behave and the system of how they work together. Although economics drives development, politics plays a far greater role in the key take-off stages, with social, business, and government modernization inextricably linked as the process advances.

Do we ever measure how well a people work together? How institutionalized politics is (something quite different than democracy and “good governance”)? How cohesive a population is?

Assessing a country’s political dynamics may not be easy—especially if the goal is to measure it numerically—but is arguably more important than the majority of the indicators we currently use. The right kind of assessment ought to better gauge how resilient a country is, how prone to conflict it is, how stable its current political system is, how likely its elites are to work together to promote progress. All these things help us understand a country’s overall prospects in a way that few existing indicators can.

Measuring politics and political development requires creating a set of indices that reflect—or at least depend upon—the nature of sociopolitical dynamics, the degree of social / political / economic inclusiveness, the institutionalization of the state, the robustness of the rule of law, the level of social capital, the capacity of societies to create wealth (separate from natural resources), and the ability of government to get things done (which may not reflect existing governance scores).

What would these indicators look like? The new assessment criteria would seek to answer questions such as:

1) How great are group-based (ethnic, religious, caste, clan, etc.) economic, political, and cultural horizontal inequities?

2) How equitable is public spending?

3) How equitable are markets?

4) How equitable is the rule of law? Do elites or particular groups have systemic advantages over others?

5) How effective is public authority and the rule of law (taking into account a variety of mechanisms to achieve these)?

6) How inclusive is the concept of citizenship?

7) How equitable is the system of property rights?

8 ) How inclusive and poverty reducing is growth?

9) How diversified is the economy and exports (which depends on the robustness of institutions)?

10) Is political succession institutionalized and predictable?

11) How much does politics revolve around political parties and policies (rather than ethnicity and patronage)?

12) How much do political leaders depend on group identities to gain, hold onto, or compete for power?

13) How well do formal institutions (such as laws) reflect informal institutions? How widely accepted are these? How well do they penetrate society (as opposed to existing above it)?

14) How much investment is going into large factories (which are more risky than other investments)?

15) What is the level of political risk to invest in labor-intensive businesses (which require more effort and are more beneficial to a population)?

16) Is the economy producing an adequate number of jobs for young people?

17) How well can the government implement the policies it puts into place (if a road is supposed to be built, does it? How good is it?)?

18) How well can the government project authority across distance (is it as effective in outlying districts as it is in the capital)?

19) Are the government’s capacity and the country’s economic prospects keeping up with increases in education, urbanization, and the expectations of the population?

20) Are levels of dissatisfaction/frustration rising among powerful out of power actors (elites, identity group leaders, youth leaders, religious leaders, etc.)?

Some of these questions could be turned into indicators very easily (the data is available). Others could be turned into indicators by substituting another data source (for instance, tracking how well a government delivers public services at various distances from the capital will give a decent account of how well it projects authority). Many may be hard to assess, and require a more a concerted effort involving more spending on research and analysis.

If politics and political development mattered as much as they should, more effort would be made to create and use such indicators. Without these, we are flying blind, trying to understand the terrain using the wrong instruments.

Let’s Drive a Lot More

In The Economist, Schumpeter extols the benefits of driverless cars:

When people are no longer in control of their cars they will not need driver insurance—so goodbye to motor insurers and brokers. Traffic accidents now cause about 2m hospital visits a year in America alone, so autonomous vehicles will mean much less work for emergency rooms and orthopaedic wards. Roads will need fewer signs, signals, guard rails and other features designed for the human driver; their makers will lose business too. When commuters can work, rest or play while the car steers itself, longer commutes will become more bearable, the suburbs will spread even farther and house prices in the sticks will rise. When self-driving cars can ferry children to and from school, more mothers may be freed to re-enter the workforce. The popularity of the country pub, which has been undermined by strict drink-driving laws, may be revived. And so on.

The column, however, misses a key point. If the technology gets good enough, then it will be possible for cars to be driven at higher speeds and much closer together. I imagine we’ll see ‘flocks’ of cars on motorways and freeways – moving very quickly and in tight formation, with the odd few peeling off the side at each exit.

Combine this with vehicle interiors that look quite different – a commuter would want a work station that converted into a flat bed like an airline’s business class seat – and the feasible length of journeys could become very long indeed.

I’d guess that people might be prepared to double the time they spend on their journey to work and would be able to go much further in that time (higher speeds + less congestion). Occasional overnight trips – to the holiday home in the country – would become feasible as well if you had your very own sleeper service. At the same time, other forms of transport – trains in particular – would become significantly less attractive.

And that makes the driverless car a potentially hugely important medium-term disruptor for the energy sector, for climate change, and for urban planning. I don’t think many people have woken up to this yet.

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