Mr. Shantayanan Devarajan, the Sri-Lankan-born Chief Economist of the World Bank’s (WB) Africa Region whose research covers public economics, trade policy, natural resources, the environment, and general equilibrium modeling of developing countries, is a sought after authority on Africa.
Although there are many “unofficial authorities” on Africa at the WB, his name is the only one listed on the World Bank’s website as their expert on Africa.
He has a B.A. in mathematics from Princeton and a Ph.D. in economics from the University of California, Berkeley. He was a faculty member at Harvard University’s John F. Kennedy School of Government, Principal Economist and Research Manager for Public Economics at the Development Research Group, Chief Economist of the Human Development Network, and of the South Asia Region, and Director of the 2004 World Development Report, Making Services Work for Poor People. He has authored several publications including his blog, Africa Can…End Poverty
His education, experience and exposure, which include both aerial and ground level views of Africa gives him a very unique perspective. I recently met with him at the Young African Professionals (YAP) monthly social mixer for Africans and friends of Africa held in Washington DC, where he shared his thoughts on Africa. Below are excerpts....
What do you believe is missing in African governments’ management style?
Transparency, citizen empowerment to ask questions and accountability are missing. For example, a Ugandan newspaper published that only 13% of money allotted for education arrives in public schools. Ugandans then demanded to know how much money was received in their school district monthly. They then said to the School Principal, “We know how much money the school received; what are you doing with it?” The school then published its budget on the schoolroom door and the percentage of money received by schools rose from 13% to 90%.
Why are resource rich African countries poor?
Government mismanagement, called the “resource curse” is the reason. For example, Nigeria’s per capita income in 2000 was less than before the oil boom, which shouldn’t be. In Cameroon, oil revenues was hidden from the public, even members of the government didn’t know how much oil was being exported, and part of their foreign exchange reserves was kept in the U.S when it was supposed to be kept in the Banque de France, the central bank of France. Before African governments receive oil revenues, it’s spent. To prevent this, a theory being investigated is transferring oil revenues to the masses, using community development schemes, social transfers etc. Then the government can tax them. This gives the public a stake in revenue spending, since it’s their tax money.
Why are there few middle class in Africa?
The term “middle class” is misleading. People in the middle of the income distribution, between the 40th and 60th percentile, are not what we think of as the “middle class”. 70% of Africa lives on less than $2 daily. The “middle class” are those living on $10 daily. They are people in the 90-95 percentile of the income distribution. In developed countries, they are usually blue collar manufacturing employees. In Africa, they need productive employment in the products and services sector, but most jobs are in informal sectors, such as street hawkers, vendors, bicycle repairers and light consumer goods manufacturers of batteries, soap etc.
What do you believe is Africa’s economic future?
Many sectors are primed for growth. Educated and intelligent young Africans, who have both eye and aerial level African perspectives, are in a unique position to positively impact Africa’s economic future, by expanding the growth momentum, which started from the mid 90s till now, so the next generation can prosper. Agriculture is often focused on as the solution. However, 70% of the poor work in agriculture, so increasing agricultural productivity will alleviate poverty, but it’s difficult. India is attempting this now, but it isn’t working. If rural-urban migration increases, jobs are needed, so to enrich Africa, a holistic, multi-sector focused solutions are needed.
What do you think of Africans’ pessimism of the WB’s role in their countries?
It stems from the structural adjustment policy (SAP) era, when countries hit by terms of trade shocks or debt crises had to undertake severe SAPs, such as cutting the budget deficit and eliminating subsidies, often as part of WB programs. The shocks were not the WB’s fault, but it was associated with the necessary SAPs to respond to it. Furthermore, some of these SAPs were imposed by the WB and International Monetary Fund (IMF), from a non-domestic political consensus, so, many didn’t work and some were reversed.
What changed in the WB’s and IMF’s interaction with African countries?
The difference is the decision makers and greater ownership of policies by the countries implementing them. In the 70s and 80s their roles were advocacy and policy imposition. Decisions were made in Washington, London and Paris; consensus reached there and imposed on African nations who ignored or implemented, then reversed them. The policies are now owned by the countries.
What changed to make more Africans supportive of implemented policies in their countries?
Many governments became democratic. For example, Ghana’s military government was serving the urban elite who kept food prices down while farmers suffered. With democracy, politicians needed farmers’ votes and farmers demanded higher food prices to reduce their poverty before voting for them.
What are your thoughts on South Africa’s strike?
South Africans are angry because many expectations made by the ANC government such as higher wages are unfulfilled. There’s also 25% unemployment, with 40% in the black community. It was bound to happen. I understand President Jacob Zuma’s public image is also suffering. For example, he recently went on an expensive state visit to China with a staff of 100, 8 ministers and his fiancée.
How can South Africa level the playing field?
With their good infrastructure and coastline they should be a manufacturing powerhouse, but unions keep real wages high, while 4-5 million people don’t have jobs. There is a wage premium instead of market clearing wages. It’s a deeply political problem. Wages are kept high for few to enjoy. The evidence seems to indicate that the current labor regulations are not good for the whole country.
What are your thoughts on Dambisa Moyo’s book, Dead Aid: Why Aid Is Not Working And How There Is A better Way For Africa?
She’s asking if aid has helped or hurt Africa and says aid should be replaced with private capital flows (PCF). Though I sympathize with her, the book’s publishing was imperfectly timed, right before PCFs dwindled. PCF is preferable to aid, but it isn’t available. Less aid may be needed, but African governments also lose revenue by not charging full price for utilities. For example, some governments subsidize electricity but if the government can’t pay the subsidies, electricity cutoffs occur.
What are your thoughts on William Easterly’s book, The White Man's Burden: Why the West's Efforts To Aid The Rest Have Done So Much Ill And So Little Good?
He also says aid isn’t effective because it’s an enabler; suppresses self sufficiency and creates dependency. The donor expects to give and the recipient expects to get, so no 10 or 20 year benchmarking or exit strategy is created. For example, Kenya reformed in 1991 because donor aid dwindled. A former chief economist of the bank said “We did more for Kenya by pulling out in 1991 than we did in the previous 20 years.” Aid is now less than 2% of Kenya’s GDP and they are doing well.
Do the governments of African countries need advice?
Yes they do, from their citizens. We are providing evidence to nourish domestic debate on policy issues. Now through social networking sites, broad based consultations are occurring, so what is adopted is right and has a chance to succeed, because it’s from collective experiences and perspectives.
How does Africa differ from other developing continents?
Africa hasn’t developed a productive manufacturing sector, which is critical. This distinguishes it from other regions, such as South East Asia.
What do you think of China’s purchase of African lands?
"Land grabbing" or more politically correctly speaking "land acquisition" is an issue, but the more important issue is the farmers receiving fair prices for their lands. If China wants to buy land, fair prices should be paid, so everyone is happy. However, land ownership is often ambiguous. Some governments own the land and lease them to farmers and efficient land titling isn’t practiced. However, geo references are now being used to assist in developing land titling and it will get better.
What do you think of the focus on agriculture for food security?
Food security doesn't apply to all farmers, but increased agricultural production is a poverty alleviation tool. I’m indifferent to whether it is food or cash crops, the key is to increase agricultural productivity and raise farmers’ incomes. Food security isn’t necessarily connected to agriculture. Food can be imported. The problem is lack of income to purchase food. For example, when there’s a bumper harvest, food prices and farmers’ incomes fall, so they can't afford to buy food the next season.
What do you think of regional economic bodies?
Africa has unexploited gains from regional integration and collaboration, but the challenge is lack of inter-governmental cooperation. The African Union (AU), Economic Community of West African States (ECOWAS) and South African Development Community (SADC) all have limited scopes. They are largely ineffective, but they can’t be blamed. Blame leaders of sovereign governments who make eloquent unity speeches, but refuse to cooperate because they must relinquish some sovereignty and autonomy to do so. For example, Senegal and Mali have a rail road which took them years to agree on a common gauge on the rail line.
What do you think of corruption in Africa?
It exists and I have personally experienced it. I was traveling from Lagos, Nigeria to Cotonou, Benin, with a colleague. As we were crossing the border into Benin, we encountered a guard with a basket who demanded $50 for our passage. My colleague said, "Your president and Nigeria's president signed an ECOWAS treaty on free passage....” The guard replied pointing to his basket, "That's their ECOWAS, this is my ECOWAS" so we had to pay.
What do you think is the relationship between African development and non- governmental organizations (NGOs)?
There are two types of NGOs; advocacy NGOs, which serve as the people’s voice and service delivery NGOs, which deliver services like education, health etc. They are both financed by donors and governments, and have important purposes. For example, in Congo, education is provided mostly by NGOs. Ghana is also doing well with advocacy NGOs. They are necessary where there is limited democracy. Some have been serving for years and can be improved, but the problem is lack of effectiveness rating, so ineffective ones can be discontinued. Also, some do both advocacy and service delivery and subsequently advocate for the service they deliver, which is a conflict of interest.
What is the World Bank doing differently now?
The WB assists through finance assistance such as loans and knowledge assistance such as reports. Most countries want loans but not knowledge assistance, but before the WB gives loans, we must understand its purpose and ensure that it is judicious. Before, we would write reports, give it to a country’s finance minister, who’d put it on his or her shelf as a book end gathering dust. Now there’s more growth and poverty reduction than before because of greater political support for pro-poor reforms. I recently toured Johannesburg, Abuja, Addis Ababa and Dakar, having meetings with people from 24 countries and consulting on new strategies to promote valuable exchange before more WB project commencements. Civil society members are the most vocal of the groups I met with. I was impressed by the similarities in our thinking. For example, Simon Brice, a young entrepreneur and civil society leader, organized a group which wrote their own report and sent them to me, because they weren’t satisfied that we’d heard them fully.
What are your thoughts on particular African countries?
Zimbabwe has turned the economic corner. Inflation, which rose to a quadrillion percent, has been brought down, but land distribution efforts have been disastrous. In South Africa there’s not been much land re-distribution occurring.
What African projects is the WB currently working on?
The WB has allocated money for developing the Nile River Basin, but the countries concerned namely, Sudan, Uganda, Tanzania, Kenya, Egypt and Rwanda must agree, which hasn’t happened, so it’s a difficult situation. The Gibe III Dam Nile Project was built by the Chinese, but has some repair issues. The WB is giving Zimbabwe technical advice, but since they haven't paid their outstanding loans, they can't get more.
What are your thoughts on the Niger Delta?
There are different situations there, but the indigenous people feel disenfranchised. They see non-indigenous rich oil company employees and their families in good oil company schools, housing and hospitals that they don't have. They can’t be happy. The solution is to enfranchise them. Some parts are showing signs of improvement. For example, the governor of the Niger Delta’s Bayelsa state is doing the right things.
You were in Nigeria when Nigeria's former anti-corruption crusader , Nuhu Ribadu, returned, what did you perceive?
People were happy, even those who were against him before. Some say President Good luck Jonathan, the former vice president who assumed office after the untimely death of, Musa Yar A Dua last year won't be allowed to run by his party, because he's not a Northerner, but Nigerians seem to like him so he could win an election. However, if the candidacy issue isn’t resolved and Jonathan isn’t allowed to run, it may be Ribadu's opportunity since he's a northerner. He could win, which will be good for Nigeria.
Thank you for affording Sociable Susan the opportunity to interview you.
You're welcome.
One of the mandates of Sociable Susan Magazine is to represent Africa fairly, which often times is not the case in Western media. I was very passionate about conducting this interview after reading recently read that Secretary of State, Hilary Clinton stated, “I held a roundtable for members of the White House Press Corps in – I don’t know, 1997 or ’98 – and one of the first questions one of the reporters asked me was, “What’s the capital of Africa?” I thought, oh, do I have a lot of work to do… We’ve made a lot of progress there too, but we have a long way to go. I recognized then how much work there still was to be done to educate people in my own country about Africa.”
Sociable Susan Magazine is doing its part in educating people on Africa, and having the opportunity to interview such a highly intelligent and well respected authority with an unbiased view of Africa is rare. I would like to thank Mr. Shantayanan Devarajan for his time, patience and graciousness, without which this enlightening interview would not have occurred. I would also like to thank Ehui of YAP for inviting Mr. Devarajan to the monthly networking event.
If you are seeking an expert on Africa for serious business opportunities in the continent, he may the person whose perspective will save you a lot of wasted time and effort and he comes with the World Bank's stamp of approval.
For more information on Mr. Shantayanan Devarajan or Young African Professionals Network
please visit the embedded links.
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