Front Cover
 Interactions between politics and...
 Role of agriculture in economic...
 Policies explaining agricultural...
 The industrialization policies
 The Role of the State

Group Title: International working paper - Food and Resource Economics Department, University of Florida - IW91-5
Title: Democracy and development in Africa
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00054809/00001
 Material Information
Title: Democracy and development in Africa
Series Title: International working paper - Food and Resource Economics Department, University of Florida - IW91-5
Physical Description: Book
Language: English
Creator: Lele, Uma J.
Publisher: Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Publication Date: 1991
Subject: University of Florida.   ( lcsh )
Africa   ( lcsh )
Farming   ( lcsh )
Agriculture   ( lcsh )
Farm life   ( lcsh )
Spatial Coverage: North America -- United States of America -- Florida
Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
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Bibliographic ID: UF00054809
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: oclc - 24673549

Table of Contents
    Front Cover
        Front Cover
    Interactions between politics and economic development
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
    Role of agriculture in economic development
        Page 6
        Page 7
        Page 8
        Page 9
    Policies explaining agricultural and overall economic stagnation
        Page 10
        Page 11
        Page 12
        Page 13
    The industrialization policies
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
    The Role of the State
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
Full Text




Uma Lele

IW91-5 October 1991


Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611



Uma Lele*

Interaction Between Politics and Economic Development:

In a recent paper on three paradoxes of democracy, Larry Diamond observed,

"Democracy requires consent. Consent requires legitimacy.
Legitimacy requires effective performance. But effectiveness
may be sacrificed by consent. Elected leaders will always be
reluctant to pursue unpopular policies, no matter how wise or
necessary they may be."'

Diamond's analysis is sobering given the widespread demand for transition to

democratic governments throughout the Eastern block countries and the developing world,

including Africa. It suggests that democracies may not necessarily achieve rapid and broad

based economic growth due to their inability to make hard decisions. However, Gunnar

Myrdal2 in his magnamopic Asian Drama had argued in 1968 that countries in Asia lacked

the ability to male hard decisions precisely because their leaders were not accountable to

the populations at large in any meaningful sense. Even when the countries proclaimed to

be democratic as in India, these "soft states" lacked an effective democracy, meaning a

balance of power between the legislative, executive and the judicial branches of the

government, a functioning local government that represented grassroot interests, or the

"Graduate Research Professor, Food & Resource Economics Dept., University of Florida, Gainesville, FL

institutional capability to make decisions based on objective, rather than sectarian, ethnic,

communal or religious grounds. In a recent review, therefore, Ruttan finds no agreement

in the literature about the nature of interaction or the causality between political and

economic development, except perhaps that some degree of authoritarianism seems essential

at early stages of development when governments need to play a strong role in

implementing effective economic policies, at the expense of strong sectional political

interests.3 Several East Asian countries (i.e., Korea, Singapore, Taiwan, Malaysia, Thailand,

and Indonesia) support Ruttan's observation. They have proven Myrdal incorrect by

achieving rapid, sustained and broad-based economic growth. Their authoritarian

governments have been technocratic in the nature of their civil administrations, well versed

in the business of economic management, free of political pressures faced by the democratic

countries such as India and Sri Lanka, but committed to an employment-oriented pattern

of economic growth. However, whereas a brisk and steady pace of economic growth seems

essential to maintain political legitimacy, growth itself leads to new problems including

demands for political and human rights, as in mainland China or Korea.

The reverse seems also to be true. A lack of economic development is not only the

product of ineffective governments, but it tends to encourage such governments to remain

in power. Their presence, including widespread corruption geared to non-productive

pursuits, hampers prospects for growth. It is clear that the nature of the state is

fundamental to achieving broad-based and sustained economic development. Yet our

understanding of the relationship between economic performance and the character of the

state is far from perfect. The time is opportune to explore these relationships in light of the

increased interest in the international development community in the issues of governance.

While the term governance is often not clarified in much of the current debate, dictionaries

typically define it as a system of government, or a method of exercising state control or


This paper explores the issues of development and nature of the state with a

particular reference to Africa. Its observations are based largely, but not exclusively, on the

results of a comparative study called "Managing Agricultural Development in Africa"

(MADIA), which was carried out in the World Bank under the author's direction. The

MADIA study was jointly undertaken by the World Bank and seven other donors (USAID,

UKODA, DANIDA, SIDA, France, Germany and the EEC). Governments of six African

countries (Kenya, Tanzania, Malawi, Nigeria, Cameroon and Senegal) participated in the

study, which covered a period of 25 years. It analyzed macroeconomic and sectoral policies

with a particular emphasis on the way historical and political factors had influenced the

nature of the states via the economic, political and commercial relationships which had

evolved among the important interest groups prior and subsequent to independence in each

of the countries. The state had, in turn, influenced the content of policies and institutions.

Six political analysts knowledgeable about each of the MADIA countries analyzed the

interest groups which determined the nature of the state. Furthermore, the study analyzed

the way policies and institutions interacted with resource endowments to influence the pace

and pattern of economic and agricultural performance. Finally, the study gave particular

attention to the influences of donors' policy advice and investment choices on resource

endowments and ultimately on the economic and distributional outcomes.

The paper first outlines the justification for a broad-based agriculturally led economic

growth in Africa. Then it explores the reasons for the failure to pursue such a strategy in

most African countries and the success in a few MADIA countries, including in particular

the relationship between the content of economic policies and the nature of the state.

Finally, the paper explores the implications of the analysis for governments and donors.

Donors are and will continue to be an important part of the equation in Africa. External

aid constitutes between $30 to $60 per capital in several African countries. Nearly 50 to 70

percent of public expenditures in many African countries are funded by donors.

The fifty-odd countries in Sub Saharan Africa had formed a model of economic

development in the 1960's for the then fledgling Asia. However with one or two notable

exceptions, e.g. Botswana or Mauritius, Africa has neither enjoyed democratic systems of

government, nor experienced much economic growth. On the contrary, there has been

economic decline in the 1970's and 1980's, notwithstanding the massive increase and high

levels of external assistance. Africa's population growth continues to be well over three

percent, and the MADIA study documents that much of the growth in food production has

been a result of area expansion. There has been a decline in factor productivity. Food

imports and food aid have been on the rise and are expected to increase further, together

with a decline or stagnation in export volumes. If trends in Africa's economic performance

continue, the World Bank's 1990 World Development Report projects a substantial increase

in poverty in the continent by the year 2000. Simply to maintain the present per capital real

income, the World Bank's long-term perspective study on Africa estimates that a minimum

four percent growth rate of food and agricultural production is essential.5

To achieve transformation from a predominantly agricultural to an industry and

service sector oriented economy, which also enjoys high per capital incomes, a broad-based

and rapid development of the smallholder agricultural sector is critical. In countries at an

early stage of development which must achieve such transformation, government needs to

play a critical role through a conducive macroeconomic and sector policy framework which

continually responds to a rapidly changing international economic situation. Governments

also need to pursue a long-term economic development strategy involving the provision of

public goods, i.e. investment in transport, communications and information, education,

village water supply, agricultural research and extension, etc. Public investment is necessary

to develop factor and product markets and to establish the necessary institutional, human

capital and physical infrastructures to enable private individuals to respond to economic

incentives provided through a conducive macro and sectoral policy framework.

Results of the MADIA study presented later in the paper show that countries with

quite similar resource endowments followed very different economic paths and achieved

quite different outcomes in terms of growth and equity. Furthermore, the extent to which

agricultural interests were represented in the governments determined the extent to which

countries pursued proagricultural policies. Most African governments have been driven by

urban and other interests and by personality rule. They have not had conducive

macroeconomic policies or an effective development strategy. They have not given attention

to the development of the agriculture and the rural sectors despite the fact that a large

proportion of the population lives in the rural areas, where there is also the greatest

incidence of poverty.6 Macroeconomic difficulties in the 1980's and a decade of structural

adjustment have convinced some Africans of the importance of economic decentralization,

export promotion and the role of the marketplace. However, African countries lack the

internal political environment or the necessary administrative and personnel capacity to

achieve sustained and broad-based economic growth. They lack the essential long-term view

of the developmental process to develop high quality economic management and

implementation. Africa still depends heavily on external technical and financial assistance,

the former to the tune of $4 billion (US) annually. Recognizing the fundamental

importance of human resources in development, a joint World Bank, African Development

Bank and UNDP effort has recently created a capacity building fund. How it will operate

could make a significant difference to Africa's administrative and managerial response to

its own economic problems. The political environment will nevertheless determine the

extent to which this capacity is utilized effectively.

Role of Agriculture in Economic Development

Agriculture-- defined in the broadest sense to include, in addition to cropping,

livestock, forestry and fisheries-- provides the most important source of income and

employment for a large proportion of the population in Africa. The rate of urbanization

has been much more rapid, especially in west Africa, relative to many other parts of the

developing world in the last three decades,7 in part a symptom of Africa's pro-urban

economic policies and political systems which have tended to create both a pull in favor of

urbanization, and a push away from the rural sector, where few amenities are available to

the rural population.

Given the nearly 25% to 35% of GNP originating in agriculture, overall economic

growth is closely related to the growth of the agricultural sector. Trade plays an important

role in many African economies, and in virtually all countries, agriculture and agro-based

products form an important share of trade, amounting to as much as 80% in some countries

such as Malawi. Agricultural exports have traditionally been an important source of

government revenues through implicit (e.g. via the overvaluation of the exchange rate) or

explicit taxation. Agricultural households have provided a major portion of the public and

private savings in the economy, and constitute an important market for consumer goods (e.g.

textiles, shoes, umbrellas, hurricane lamps, and building materials for homes), investment

goods (e.g. seed, fertilizers, and agricultural implements) and services (transport) produced

in the nonagricultural sector. Increased incomes of a large number of rural households

therefore generate productive employment in the nonagricultural sectors through a strong

stimulus to nonagricultural growth.

The size and distribution of agricultural exports are thus a better barometer of the

health of African economies than their mineral exports (e.g. the petroleum which has been

important in Nigeria and Cameroon or phosphate in Senegal) which have also constituted

an important source of export earnings, especially in the west African MADIA countries.

Mineral exports tend to originate in a small enclave sector. Agricultural exports, on the

other hand, have traditionally been derived from a large number of small farmers.

Production, transport, processing and exports from agriculture are highly labor intensive.

Thriving agricultural exports require a sophisticated organizational and management

structure that serves the interests of a large number of small rural households and increases

their productivity. Productivity growth not only creates employment and incomes in the

nonagricultural sector, but reduces poverty, arrests urban migration and population growth,

while simultaneously increasing the quality of the population.

The link between the size and quality of the population on the one hand and the

development of the agricultural and rural sector on the other is brought about through the

investment in health, education, rural water supply, food and nutrition of rural households.

Lack of investment in these activities affects health and nutrition, in turn affecting infant

and child mortality and increasing the desire for large families as a cushion against social

insecurity and old age. A low level of investment in social services also affects cognitive

ability of infants and children which in turn adversely affects their school performance and

limits labor productivity. Low labor productivity is, however, also determined by a low level

of technology, including an extreme reliance on the handhoe cultivation which is prevalent

in Africa. Whereas in Asia only about half the value added in agriculture comes from labor,

as much as 80% comes from labor in Africa, reflecting the low level of capitalization of the

smallholder agricultural sectors. Low labor productivity reinforces the demand for children

as a means of increasing labor input into farming, fetching water and fuel wood, for minding

cattle and transporting farm surplus to the market. Thus, the benefits of raising children

to the rural households are large, but costs tend to be low in a situation of few schools and

other social amenities. In contrast, in the more advanced countries the cost of schooling,

health care and other activities often outweighs the benefits of additional children.

The environmental consequences of the rapidly growing population exceeding well

over 3 percent and often 3.5 percent are also well-known. Growing population pressure on

limited land in countries such as Kenya, Malawi or Senegal where land shortage is getting

intense, is causing reduction in fallow, deforestation, and a decline in soil fertility associated

with increased frequency of cultivation of the land. The decline in the average and marginal

product of labor caused by a rapid population growth and a movement of population to

marginal lands increases incentive to have additional children to maintain living standards.

The downward spiral of poverty this causes can only be broken by the development of the

agricultural and the rural sectors.

The emphasis placed on the development of export crops previously noted should not

be interpreted to mean that export agriculture should be promoted at the cost of food crops.

Evidence suggests that food and export corp production are highly complementary. Farmers

concerned with food security devote a significant portion of their resources to nonfood

activities as a diversification strategy to spread risks of food crop failures, and to increase

incomes. An increase in the productivity of either food crops or other productive rural

activities, i.e. export cropping, livestocking, fisheries or forestry thus releases land and labor

for the production of the other. Most importantly, increasing incomes of rural households

increases their command over food. This is an important consideration in Africa. With

increased poverty, a larger proportion of the rural households in countries such as Malawi

and Kenya are becoming reliant on the market for food. Since low income households

spend a major share of their income on food, increased food prices (often being encouraged

in the course of structural adjustment as an incentive to increase food production) have an

adverse effect on a large portion of the urban as well as rural households.8 Greater

reliance needs to be placed on productivity-enhancing nonprice factors relative to the

emphasis placed on price incentives alone. Many of the nonprice factors needed to increase

the productivity of food crop production, e.g. access to technology, a transportation and

information network, credit, inputs and assured markets are similar, however, to those

needed for other productive activities including export cropping. The discrimination against

the export crop sector in Africa thus often has reflected the more general discrimination by

African governments against smallholder agriculture, livestocking, etc.

Policies Explaining Agricultural and Overall Economic Stagnation:

In the post-colonial period, African countries such as Nigeria, Senegal or Tanzania

pursued import substitution policies and neglected their agriculture. The reasons included

the desire of African elite to move away from the colonial dependency relationships

associated with trade, a concern for stabilizing export earnings given the volatility of

international prices of primary commodities relative to that of the manufactured goods, a

desire to avert the expected decline in real international prices of primary commodities by

shifting to industrialization, and not the least important, to meet the expectations of the

largely urban and socialistically-dominated independence movements that considered

smallholder agriculture as backward and primitive. The ideas of export pessimism and

import substituting industrialization were reinforced by the intellectual support lent to

Africa's industrialization policies by western economic advisors in countries such as Tanzania

where their role in policy advice increased with the rise of external assistance in the 1970's.

Much debate ensued in the early 1980's about the extent to which internal policies,

rather than the adverse external environment (i.e., terms of trade shocks, stagnant demand

for exports, instability in commodity prices, wars or famines), were the cause of Africa's

economic problems. The question of the behavior of the external terms of trade is of course

complex as answers depend on the choice of the base and end periods, and commodities

under consideration. Thus the extent of decline in real terms, as well as the volatility of the

terms of trade varies by countries. The MADIA study shows, however, that the same

international price environment was interpreted differently by African countries and Africa's

main competitors. While most countries lost shares in the world market, others gained

shares rapidly. However, the MADIA study further shows that even in Africa, countries

such as Kenya and Malawi performed better in GNP and export growth, although they

experienced substantial losses in terms of trade, dependent as they were on agricultural

exports. In contrast, their oil producing counterparts, e.g. Nigeria that experienced positive

external shocks performed poorly.9 Nigeria's agriculture declined rapidly in the wake of the

oil boom, in part due to the high degree of implicit taxation of the agricultural sector, and

due to ever-changing thrusts in the policy initiatives encouraged by the oil boom. In

Senegal, despite favorable prices for phosphates in the 70's, neglect of the critical groundnut

sector and the import substitution of rice through high-cost irrigation resulted in the failure

to diversify the economy.

Second, and relatedly, while primary commodity exporters experienced more volatile

terms of trade, Nigeria, Senegal and Tanzania expanded their public expenditures as if the

peaks in the terms of trade and government revenues, resulting from a price rise, were

permanent rather than temporary. Nigeria's public expenditures increased sevenfold in less

than a decade in the 1970's. The IMF estimates that the proportion of African government

expenditures to GNP increased from a fifth in the early 1970's to a quarter in the mid

1980's, and the African budget deficits increased from four percent to six percent of the

GNPs in the same period, at a time when external aid also rose sharply. Other oil exporting

countries, such as Indonesia, pursued a more cautious policy and performed better.

The primary problem in Africa has, however, not been so much the high share of

government expenditures in GNP-- several European countries have much larger shares--

but their quality and allocation. A rising and a high share of public expenditures went to

salaries and wages leaving little for operating expenditures and maintenance. The high wage

component was a result of a tendency of governments to use public and parapublic entities

as the source of assured employment to the school and university-leaving graduates. Also,

the lion's share of public expenditures went for the benefit of the urban populations, leaving

few resources for rural health, education, farm to market roads, etc. According to the 1990

World Development Report, subsidies on education increased sharply in Africa from $48

per primary pupil to $233 per secondary student, and to $2710 at the university level.

Similarly, expenditures on hospitals in the capital cities expanded rapidly relative to those

on rural clinics. Even Tanzania, which has had a strong rhetorical commitment to broad-

based development, allocated only six percent of the 1988-89 budget to preventive health

services. It must be stressed in the context of the growing debate on the adverse impact of

structural adjustment on the poor, that the pro-urban expenditure bias in countries such as

Tanzania or Senegal existed well before the process of structural adjustment began. It

reflected the political base and preferences of governments. Integrated agricultural and

rural development aimed at redressing rural poverty in the 1970's was largely an external

initiative of donors. Since governments showed a strong bias in favor of urban sectors, both

in public expenditures as well as in the exchange rate policies, it is not surprising that with

a shift of external aid from project lending to the balance of payments support in the 1980's,

the rural poor have suffered.

It is clear that African governments need to maintain an overall level of public

expenditures which are consistent with the level of domestic resources and external aid and

capital which they can realistically expect to receive on a consistent, long-term basis. They

also need to improve the balance of expenditures:

1. away from the urban to the rural sectors,

2. away from salaries and wages towards operating and

maintenance expenses, and

3. away from a protected industrial sector towards social sectors.

The Industrialization Policies:

The MADIA study showed that, quite paradoxically, countries that pursued acute

import substituting industrialization policies were the least successful in reducing the share

of agriculture in GNP, in contrast to countries that pursued their comparative advantage in

agriculture, achieved rapid increase in exports, and simultaneously diversified their overall

economies, thereby reducing the share of agriculture in GNP.'1 The contrasting cases of

Tanzania that tried to industrialize rapidly and Kenya that encouraged its agriculture are

worth exploring. By the end of the 1970's, Tanzania's export volumes had stagnated and the

share of agriculture in GNP, exports, etc. had increased. In Kenya, in contrast, the share

of agriculture in GNP had declined sharply mainly because agricultural export volumes had

increased rapidly, leading to a pattern of industrialization that was closely linked to

agriculture as outlined below. Ghana, Nigeria, Senegal, and Zambia all achieved poor GNP

growth as in Tanzania.

Diverging somewhat from the results of the MADIA study, the contrasting cases of

Zambia and Chile are particularly worth noting from this perspective. Both confronted a

high degree of volatility from their dependence on the export of copper. However through

the pursuit of comparative advantage and by avoiding the overvaluation of the exchange rate

and other symptoms of the Dutch disease, Chile rapidly modernized its economy, including

diversifying its export base to agricultural and manufacturing commodities. Zambia, in

contrast, has experienced a continuous decline in its per capital income throughout the 1970's

and 1980's. It allowed its mining sector to degenerate into a chronic case of the Dutch

disease by letting the strong labor unions build a base of high wages, food subsidies,

government deficits, rapid inflation and an overvaluation of the exchange rate. While

Zambia has achieved a structural transformation of sorts-- the share of agriculture in GNP

has declined and that of the manufacturing and the service sectors has increased-- this has

not been accompanied by an increase in per capital incomes.

The cases of Kenya and Malawi also provide a contrast as regards the achievement

.f growth with and without equity. Both had similar initial endowments at independence,

although Kenya was relatively more advanced. Both followed export led growth. They

avoided overvaluation of the exchange rate and provided price incentives to agricultural

exporters. However, in Kenya increased export volumes of tea and coffee as well as other

high value crops were accompanied by an increased share of small farmers in the production

process, whereas large European farmers had dominated production in the colonial period.

Small farmers were given title to land through a land registration program in high potential

areas of Kenya. They were also paid international parity prices for their tea and coffee by

enabling them to sell their produce in the same markets in which large estates sold theirs.

Together with development of feeder roads, agricultural research, extension, credit and

marketing facilities, small farmer production took off in Kenya." In contrast, in Malawi

much of the increase in export volumes came from large farms and estates owned and

operated by Malawi's new African elite. Malawi reserved the right to grow certain high

value crops such as barley and flue cured tobacco, sugar, tea and coffee, to the estate sector,

and allowed the estates to sell their produce in auctions at close to international parity

prices. Small farmers on the other hand are required in Malawi to sell the produce they are

allowed to grow to the marketing board ADMARC at half to a third of the prices received

by estates. The term "estate" is misleading in Malawi as it is defined in terms of the right

to grow certain crops and to sell them in the auction, rather than in terms of the farm size.

While estates were initially large and confined to the political elite, the size of the estates

had declined considerably in the last decade as the demand for estates had increased.

Malawi is reluctant to further liberalize licensing of export crop production to small farmers

due to a concern about likely deterioration in export quality of small farmer output which

may hurt its international competitiveness. In Kenya, however, the quality of smallholder

tea and coffee is consistently above that of large estates, due to a relatively more labor and

management intensive mode of tea and coffee picking extended to small farmers through

effective extension program. Indeed, reflecting the sophisticated management of its

smallholder export industries, Kenya's smallholder tea and coffee have consistently earned

a premium in world markets due to their high quality.12

Kenya's approach has resulted in rapid growth in income and employment both in

the agricultural as well as the nonagricultural sectors by increasing savings, investment and

consumption by a large number of rural households. This has led to growth linkages from

the development of agriculture with the rest of the economy; such as the growth of small

towns and investment by entrepreneurs in small scale manufacturing and the service sectors,

including transport. Despite the highest rates of growth of population in the world, the real

wage for unskilled workers in Kenya has not declined as much as had been predicted earlier,

including by the World Bank's various economic missions to Kenya and by the ILO's

employment mission in 1972. In comparison, the real wage in Malawi has declined

significantly notwithstanding a rapid growth in employment on the estates. The return of

Malawian labor from South African mines in the late 1970's and the influx of Mozambican

refugees in Malawi in the 1980's have compounded Malawi's poverty problem for low

income laborers and small farms. But they have also stressed the need for reform in the

structure of Malawi's production that increases employment opportunities."

The rate of investment in primary and secondary education is part of the explanation

for the differences in the behavior of the real wage in the two countries. Education has

expanded much more rapidly in Kenya than in Malawi. Increased educational access has

resulted in keeping young children in the school and increasing the reservation price of

labor. In contrast in Malawi, the low access to primary schooling and lack of employment

opportunities in the smallholder sector has increased the supply of labor, including children,

to the estates thereby depressing the real wage. Since labor constitutes the most important

source of income in African agriculture and economies, clearly changes in wage rates and

employment are a major determinant of living standards.

A word of caution is called for in interpreting Kenya's economic performance. Its

relatively greater success in smallholder agriculture does not mean that there is no growth

in the absolute number of the poor, nor that there is freedom of the press, full political

participation by all ethnic groups, etc. The Kikuyu and other (related) ethnic groups (e.g.,

the Nandis) have benefitted more than others from Kenya's export led policies. Due to the

demand pull from labor that thriving agriculture in high potential areas has generated,

potential incomes have increased even in the areas of relatively limited agriculture.

However, relative regional income disparities have increased in Kenya. In contrast to

Kenya, redistributive policies of the government of Tanzania in the 1970's entailed

discrimination against the relatively more resource-rich regions, i.e. Arusha, Kilimanjaro

which produced coffee, the Sukumaland which produced cotton, and Tobora that produced

tobacco, relative to poorer regions such as Dodoma or Mara which produced cereals and

root crops. This policy equalized incomes among regions, but dampened the overall role

of economic growth. A continued decline in per capital incomes in Tanzania made

continuation of redistributive policies unsustainable.14 Thus, whereas Malawi achieved

growth but little equity, and Tanzania achieved neither growth nor equity, Kenya performed

better on both grounds. Kenya's policies caused the incidence of poverty to be lesser than

it would have been without the growth strategy it pursued.

The lessons from Kenya for development are similar to those from several other

successful cases of agricultural development, including Japan, Taiwan and India, namely that

public policy including government investment in the support of smallholder agriculture and

the rural sector in such things as transport and communications, agricultural research and

education, village water supply, etc., are crucial to achieve broad-based growth.

The Role of the State: How does the pursuit of a development strategy relate to
the nature of the state?

What kind of a state allows individual initiative, and broad-based and sustained

development? Since the importance of price incentives and private initiative have been

emphasized in recent years by donors through emphasis on structural adjustment, an

appropriate role of the government is of considerable interest. The broad-based

proagricultural policies of Kenya and the contrasting ones of Malawi, Tanzania, Senegal or

Nigeria are in part a result of the politics of pre-independence, and the evolution of the

state in i' e post colonial period. Both played out differently in each of the countries. The

Ken\ government has been more grassroot oriented relative to other countries. This is

beca.- )f the nature of Kenya's independence movement, grounded as it was in an intense

struggle for land and the right of Africans to grow crops previously restricted to European

farmers, as well as in their right to earn international prices for those crops." The struggle

for scarce land and the stake in a modern agriculture prompted by the desire of African

farmers to emulate modern agricultural practices of their European counterparts on whose

farms many received apprenticeship, meant that grassroot, agricultural interests were more

strongly represented in national legislature as well as the civil service in Kenya at

independence than in other African countries. Bates has shown that producer interests play

an active role in Kenyan agricultural policy.16 Similarly, the civil service has been relatively

more technocratic and professional than in several other African countries, as reflected in

Kenya's macroeconomic policies. It may have been fortuitous that at independence in

Kenya power fell in the hands of ethnic groups that had a stake in smallholder agriculture--

under President Kenyata economic and political power was concentrated in the hands of the

Kikuyu who controlled some of the best agricultural land. This monopoly was broken when

political power changed hands in 1979 to President Moi, of the Kalinjan ethnic group, which

controls few of the best agricultural resources and hails from a medium potential area.

Whereas President Kenyata pursued a policy of redistribution through growth, mainly in the

high potential areas, President Moi has pursued politics of redistribution of resources to

poorer areas, with a dampening effect on overall economic growth and employment

opportunities. Reduced growth has led to dissatisfaction among Kenya's growing and

increasingly more articulate urban middle class which has shown impatience about

inadequate human rights. Nonetheless, these growing demands in Kenya are a result of

relatively greatersuccess in economic and political development. The challenge to Kenya

is to maintain the quality of its macroeconomic and sectoral management to sustain growth,

while broadening political and economic participation. This entails reducing the role of the

government in areas where rents have become rampant, e.g. internal and external trade, but

increasing it in areas where greater public investment through a reduction in several current

unproductive public expenditures will increase private investment and accelerate growth, e.g.

investment in physical and social infrastructure, agricultural technology, etc.

Ellen Hanak has shown that the independence movement in Tanzania was not rooted

in agricultural interests.17 President Nyerere was a school teacher who came from a

agriculturally poor region. Agricultural interests from the relatively more powerful

traditional export producing regions lost the small amount of power they wielded with the

ascendancy of the party (then called TANU). This explains the redistribution of resources

away from the resource-rich regions. In Malawi too, Christiansen and Kydd have shown that

the so-called "cabinet crisis" led to the loss of political power by smallholders. They had

been active in the independence movement but President Banda consolidated power after

the cabinet crisis.18 It is not by accident that Malawi has pursued an estate strategy in its

agriculture. President Banda is one of the major estate lease-holders.

Differences in the structure of political power in the MADIA countries raises a

question as to the precise location of the state and the way it influences policy. As Myrdal

had observed earlier in Asia, the state may not reside in the normal institutions of the

government. This can result in the concentration of political power at the center, and the

associated decline of the already limited state capacity. At independence, Africa inherited

limited capacity to plan and implement economic policy and investment programs that

address problems of the rural masses. Notwithstanding the limitations indicated above of

the Kenyan state, it is one of the few African countries in which the "state" has by and large

resided in the normal institutions of the government, i.e. the legislature, the civil service, the

judiciary, the local government, etc. In Tanzania by contrast, despite the rhetoric of

decentralization and local participation articulated through the Ujama policy, Hanak has

shown that throughout the 1970ss and the early 1980's, the central civil service and the local

and regional governments relinquished their power to the increasingly authoritarian,

ideological, and topdown political party, TANU (later called the CCM). It acted as the

defacto government. As the macroeconomic crisis deepened by the late 1970's, donors on

the other hand continued to conduct policy dialogue and to discuss investment priorities with

a weak and ineffective civil service as if it could represent the real interests of the people.

In Malawi, power has centered in the life President, Mr. Banda. The Malawian civil service

has, however, been one of the best in implementing state policies. In Nigeria, with six

military coups and only a few years of civilian rule, Bienen has shown that the military has

been the defacto government. The oil boom reinforced centralization of political power

caused by the military, as fiscal resources shifted away from the states that produced export

crops to the federal government which controlled the oil revenues.19 In Senegal, Waterbury

has shown that the Party influenced by socialists ideas, the bureaucracy and the Marabouts

have shared power.20 In Zambia, a non-MADIA country, the trade unions have dominated

the party, and the policies.

The lack of representation of the rural people in the political, administrative,

commercial, and the economic processes in much of Africa is in part a result of the

systematic uprooting by governments of the grassroot movements, since the emergence of

an alternative local leadership through such means was perceived to be a threat to central

power. Tanzania, Senegal and Cameroon provide examples of the discouragement of the

participative cooperatives which had begun to emerge.21 Malawi did not even permit the

formation of cooperatives until recently. It is no accident, then, that Kenya has had a

number of viable coffee and dairy co-operatives, as well as a vigilant smallholder tea

authority. It is also no accident that most topdown bureaucratically operated co-operative

movements in the rest of Africa show signs of numerous weaknesses.

The erosion of the already weak local governments explains the lack of capacity of

most governments to maintain rural feeder roads, or other infrastructure. Gavira et al have

documented the disrepair of rural roads, financed by the World Bank in Nigeria under its

Agricultural Development Program.22

The tendency of governments not to encourage institutional pluralism is also reflected

in the unnecessary restrictions imposed on the private sector, with governments exercising

monopoly control on many enterprises. The initial commanding role of the public sector

was a justified response of African governments to the recognized weaknesses of the

indigenous private sector. However, the continued weakness of the indigenous private sector

now is itself a result of the reluctance of African governments to permit alternative centers

of economic and political power.

Reflecting the personality rule of governments, even at the center, the office of the

President has become important in virtually all countries. The role of the functional

ministries such as agriculture, health or education have declined. Under structural

adjustment, the World Bank and other donors have strengthened the role of the finance

ministries. Nevertheless, many of the structural adjustment programs do not address the

fundamental problems posed by the weak planning and implementing capacity of African

governments. The programs are largely designed by donor officials and implemented by

donor-provided technical assistance. This approach has been expedient in ensuring that

African governments obtain the critical balance of payments support they need from donors

reasonably quickly. However, it has postponed the more difficult and long-term problems

of helping African governments to help themselves.

Donors have contributed to the increased role of the government and the

centralization of political power in several ways. Foreign aid has tended to be channeled

almost exclusively through central governments. Aid has financed growth of the public

enterprises which are currently under attack." While it has been easy under the structural

adjustment programs to dismantle the public and para-public structures created in the

1970's, there still exists a major institutional void that in turn is frequently reinforced by the

very nature and size of external assistance. Recently, donors have encouraged the increased

role of private and grassroot institutions. They have also proposed channeling some aid

directly to private voluntary agencies. However, most countries are institutionally too weak

to absorb the large sums of resources donors typically provide, to minimize their own

administrative costs. To summarize, which interest groups wield economic and political

power and how external assistance reinforces them, are issues which need greater empirical

attention and discussion than they have received so far.

This then brings us to the question: Have structural adjustment programs effectively

commenced the process of economic and political decentralization? And, what effect have

they had on the pace and pattern of economic growth in Africa? The need for belt

tightening has been accepted by well over 30 Sub Saharan countries that have been under

structural adjustment since the early 1980's. Adjustment has involved reductions in public

expenditures and devaluations of the exchange rates and other price adjustments as a way

of reducing overall demand and to increase the supply of tradeable goods vis-a-vis

nontradeables. Price incentives are complemented by non-price measures to provide

incentives to private enterprise, including such measures as divestiture of the public sector

activities. The structural adjustment process has certainly challenged the basic premises on

which governments and donors operated in Africa in the past. A certain resistance to the

proposed measures is understandable, given that most governments do not represent, nor

are they accountable to the majority of their populations. Moreover, so pervasive have been

the controls in African economies, that even under the best of circumstances in which

governments undertake all the necessary reforms, considerable lag in supply response should

be expected. The depleted physical and social infrastructure needs to be restored and

developed further for individuals to be able to respond to new economic opportunities. But

institutional and human weaknesses prevent this from occurring.

The World Bank has amassed evidence which shows that adjusting countries are

performing better than non-adjusting countries, in terms of agricultural production, exports

and GNP growth.24 Critics of the World Bank have argued, however, that the poor have

suffered as a result of the decline in the supply of public services resulting from

retrenchment of government expenditures, loss of employment in the public sector, and

increase in prices resulting from a combination of the removal of subsidies, and adjustment

of the exchange rates.

It is difficult to judge the extent to which the increases in production and exports

observed by the World Bank studies in the short run are a result of general improvement

in policies and institutions, as distinct from additional finance, since donor assistance has

been directed exclusively towards the adjusting counties. External assistance has made

increased imports possible. Improved economic indicators may also simply reflect a shift

of volumes from informal (or parallel) to official markets encouraged by the removal of

controls and price adjustments rather than reflecting any real increase in production.

Exogenous factors such as the weather have also played a role. Part of the recovery in

agricultural production in the later half of the 1980's in the Sahelian countries was a result

of improved rainfall rather than any noticeable increase in the use of fertilizers and other

inputs needed to intensify production. Indeed, in many countries abolition of public sector

monopoly distribution systems has resulted in the collapse of the input distribution and

output marketing systems. Lacking finance, accessible roads or market information, and

experiencing a continued harassment from government on such matters as movement of

goods across administrative boundaries, the weak private sector has often been unable to

respond to the reforms at the speed expected earlier.

Increased cost of imported inputs and transport as a result of the devaluations has

also eroded the benefits of devaluations and removal of taxes enjoyed by exporters. Cost

of food imports has also increased. Moreover, while liberalization of internal food markets

has made marketing of food more open, the reduced role of governments in grain purchases

has reduced an assurance of market for some of the cereals, causing collapse in market

prices with even a modest increase in production.

Finally, the private sector has not only faced physical and institutional constraints, but

it has at times been less than competitive, dominated as it tends to be by a handful of

individuals with disproportionate political influence. They tend to replace the operations

of the public and parapublic agencies, essentially transferring the rents previously accruing

to public sector employees to themselves. Reforms thus do not necessarily benefit the

consumers or the producers, as intended.

To gauge the net effect of these various economic and political factors, objective and

empirically-based assessment of adjustment programs is needed on a country-by-country

basis. To date, too few resources have been committed by donors and governments to

empirical evaluation.

What does the future hold for Africa's economic and political prospects? It is clear

from the analysis presented in this paper that Africa's problems are deep rooted and wide-

ranging. Political histories and the nature of interest groups emerging in the post-colonial

period have determined the character of the states and the extent to which participatory

political systems, in which rural people play an active role have emerged. The political and

economic conditions vary substantially from country to country, but require fundamental

changes. Adjustment programs have made an important beginning in stimulating such

changes, but the programs are unable to address the deep-rooted political problems of

African states and the way they influence the content of economic policy. Africa urgently

needs to build its public administrative capacity which can formulate and implement

effective economic policies. This means giving high priority to utilizing the large number

of educated Africans who are currently underutilized for political and ethnic reasons. It also

means a systematic reduction in the dependence on external technical assistance. There is

also a need in Africa for donors to assign the highest priority to the education and training

of African personnel and to the development of private as well as governmental, social and

political institutions. Far too much of the external assistance in the past has been directed

to achieve short-term, visible results through the deployment of inappropriate and physical

and technical assistance, and far too little to improve the fundamental characteristics of the



1. Diamond, Larry, 1990, 'Three Paradoxes of Democracy," Journal of Democracy,
Vol 1, No. 3, pg. 3.

2. Myradal, Gunnar, The Asian Drama: An Enquiry Into the Poverty of Nations, 3 Vols.,
New York: Pantheon, 1968.

3. Ruttan, Vernon W., "What Happened to Political Development?", Economic
Development and Cultural Change. January, 1991.

4. Hopkins, Raymond F., "The Role of Governance in Economic Development", A paper
prepared for a Taskforce on Development and Cooperation.

5. The World Bank, From Crisis to Sustainable Growth: A Long-Term Perspective Study,

6. Lele, Uma and Kofi Adu-Nyako, "An Integrated Approach to Strategies for Poverty
Alleviation: A Paramount Priority for Africa," A Paper presented for the African
Development Bank Annual Meeting Symposium, Abidjan, Cote D'Ivoire, Africa,
May, 1991.

7. Lele, Uma, "Agricultural Growth, Domestic Policies, the External Environment, and
Assistance to Africa: Lessons of a Quarter Century," Paper presented at the World
Bank 8th Agriculture Sector Symposium, MADIA Discussion Paper No. 1, January

8. Ibid.

9. Gelb, Alan.and Associates, Oil Windfalls: Blessing or Curse, Oxford: Oxford
University Press, 1988.

10. Lele, op. cit., 1988

11. Lele, Uma and Meyers, L. Richard, Agricultural Development, and Foreign Assistance:
A Review of the World Bank's Experience in Kenya. 1963 to 1986, Washington, D.C.:
World Bank (accepted for publication).

12. Ibid.

13. Lele, Uma, "Structural Adjustment, Agricultural Development, and the Poor: Some
Lessons from the Malawian Experience", MADIA Discussion Paper No. 9
(Washington, D.C.: World Bank, 1989.)

14. Hanak, Ellen. op cit 1989. "The Politics of Agricultural Policy in Tanzania." MADIA
Working Paper. Revised Draft. Washington, D.C.: World Bank.

15. Bates, Robert H. 1989. "Politics and Agriculture in Kenya." MADIA Working Paper.
Washington, D.C.: World Bank.

16. Ibid.

17. Hanak op cit, 1989.

18. Christiansen, Robert E. and J. G, Kydd. 1987. "The Political Economy of Agricultural
Policy Formulation in Malawi, 1960-1985." MADIA Working Paper. Washington,
D.C.: World Bank.

19. Bienen, Henry. 1986. "Politics and Agricultural Policy in Nigeria." MADIA Working
Paper. Washington, D.C.: World Bank.

20. Waterbury, John. 1986. "Agricultural Policy Making and Stagnation in Senegal."
MADIA Working Paper. Washington, D.C.: World Bank.

21. Hank, Ellen. 1989. "The Politics of Agricultural Policy in Tanzania." MADIA
Working Paper. Revised Draft. Washington, D.C.: World Bank.

22. Gaviria, Juan, and Vishva, Blindish, and Uma Lele, 'The Rural Road Equation and
Nigeria's Agricultural Development", MADIA Discussion Paper No. 10, World Bank,
Washington, D.C., 1989.

23. Lele, Uma and Christiansen, Robert, "Markets, Marketing Boards, and Cooperatives
in Africa: Issues in Adjustment Policy," MADIA Discussion Paper No. 11, World
Bank, Washington, D.C., 1989.

24. Lele, op cit 1991.

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