Africa in Transition

Last week’s signing of the African Continental Free Trade Area Agreement was met with cautious, muted enthusiasm by most observers. While no one disputes the merits of boosting intra-African trade, a host of formidable obstacles stand in the way of realizing the agreement’s vision, not least among them the ability of governments, and the people in them, to follow through on their promises. First, not all of Africa is on board. Eleven countries declined to sign the agreement last week, including the economic giant Nigeria. They did not rule out signing in the future, however, and Nigeria has requested more time to examine the agreement.  Additionally, the agreement itself is less than comprehensive. Significant tariffs can be retained and it has nothing to say about structural and regulatory non-tariff barriers. Moreover, the underdeveloped infrastructure that can make regional commerce so challenging cannot be transformed without investment—and the stable, rule-governed investment climate required to reap its rewards.   Skeptics also point to outstanding questions about political will. Implementing the agreement will require tough choices about which products will be among the tariff-free, and as with trade policy decisions anywhere in the world, these decisions create winners and losers. Given the massive disparities among African economies, it is hard to imagine that these choices will be easy ones or that they will be made quickly. After all, there is a great deal of precedent on the continent, at both the African Union and the sub-regional organization level, for lofty assertions of shared principals and policy goals followed by laggardly, widely divergent implementation. But sometimes overlooked in the litany of reasons to temper enthusiasm for last week’s news is the important question of government capacity. Even when political will is firm and decisions at the top are clear, many states are operating with extremely weak civil services, making policy implementation challenging and often erratic. Donor demands gutted many African civil services in the 1990s. In some states, a toxic mix of patronage-based hiring with a rent-seeking culture transformed officials from public servants to public parasites. In others, a lack of training and a failure to delegate and empower officials created a culture of inertia.  In many parts of the world—not just Africa—it’s popular to disdain civil servants and to vilify them as inefficient bureaucrats best avoided. But policy decisions go unimplemented without capable civil servants, eroding trust in government and frustrating progress on even the most popular and civic-minded initiatives. Liberia’s former President Ellen Johnson Sirleaf speaks passionately about the importance of nurturing a talented, professional civil service, having seen for herself how tackling long-term projects like national recovery and immediate crises like the Ebola outbreak of 2014 required competent government functionaries to get things done. Champions of intraregional African trade are likely to come to the same conclusion. As unglamorous as it is, investing in the infrastructure of good government in the form of the civil service is just as important, if not more, as investing in physical infrastructure, such as ports and roadways, if last week’s agreement is to realize its potential.   

Moody’s Investors Service kept South Africa’s credit rating at investor grade, though it is still only one notch above junk, and changed its outlook for the country to stable. For comparison, Moody’s rating for South Africa is about the same as its ratings for Romania and Indonesia. Still, Moody’s narrative is positive, reflecting its “view that the previous weakening of South Africa’s institutions will gradually reverse.” It sees “significant growth potential” for the economy, though it cautions that the Ramaphosa administration is “still to be tested.” Moody’s also praised the cabinet and personnel changes made by the new president. Essentially, Moody’s is applauding the end of former President Jacob Zuma's administration and its erratic economic and fiscal policies. The ANC, led by Ramaphosa, removed Zuma from the presidency in January, and in a cabinet reshuffle, the new president replaced many of Zuma’s crony appointments with seasoned professionals. Zuma’s most notorious associates, the Gupta brothers, are now subject to prosecution. Since 2014, South Africa’s economic growth has not reached 2 percent. Improved investor confidence in the Ramaphosa government, it is to be hoped, will encourage more domestic as well as foreign investment, resulting in higher levels of growth. For now, at least, the signs are favorable. The rand is continuing to climb, reaching 11.84 per U.S. dollar today. Yields on the nation’s local-currency government bonds due in December 2026 were steady at 7.9 percent, according to Bloomberg, though the stock market was down at the start of the week.  Still, Finance Minister Nhlanhla Nene cautioned against complacency. The S&P’s rating is due on May 25 and South Africa will have to show tangible improvements if it is to maintain or improve its credit rating.   

On March 25, Nigeria's Information Minister Lai Mohammed announced that the government is negotiating with Boko Haram about a possible ceasefire and ultimately a permanent end to the conflict. He said the talks have been underway for "some time," though his was the first public reference to them. If true, such talks provide a glimmer of hope for an end to the ongoing carnage in northeast Nigeria, but important questions still remain. Boko Haram appears to be divided into factions, one of which is led by Abubakar Shekau and another by Abu Musab al-Barnawi. (There may also be others.) Both factions aim to overthrow the secular Nigerian state and to establish an Islamic state with the strict enforcement of Islamic law. Where they differ is their treatment of other Muslims. The al-Barnawi faction sees Shekau as too ready to label Muslims as apostates and to kill them. Nigerian administrations have attempted to open negotiations with Boko Haram, but Shekau has refused and is credibly accused of having murdered those of his followers who sought to do so. Al-Barnawi, on the other hand, has apparently been open to negotiation. It is likely that the school girls from Dapchi were kidnapped by the al-Barnawi faction. The vast majority of the 110 or so girls taken (Mohammed referred to 111 girls in his statement) were returned, but five were reportedly killed and one girl, the lone Christian of the group, refused to convert to Islam and is still in captivity. Though the government denies it paid ransom, there are whispers that it paid $5 million and released some captive Boko Haram operatives. It is likely that any negotiations by the government would be with the al-Barnawi faction. But, if there are negotiations, what exactly are they over? Is any faction of Boko Haram prepared to set aside its ultimate goal of the destruction of the secular state and the establishment of an Islamic polity? Or, has a faction of Boko Haram determined that kidnap victims are a cash-cow, and there will be more of them, while negotiations will largely be about the size and nature of the ransom?