African Economic Transformation, a Centerpiece of Leadership Transitions
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African Economic Transformation, a Centerpiece of Leadership Transitions
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By Davis Mwania, Analyst, Botho Emerging Markets Group
August 20, 2022
By the end of 2023, around 29 African countries will have held elections of various forms: president, senate, local, county, and national assemblies, among others. These countries will have to face a shift in priorities that aligns with the manifestos of the incoming leadership, with some building on the outgoing government while others make radical changes. Power transitions can sometimes be murky and divisive along ethnic, party, or cultural lines. Therefore, African countries facing election transitions must center their unity on economic priorities rather than traditional political divides to ensure long-term sustainable growth and sustained post-pandemic recovery.
During political transitions, traditional divides of race, ethnicity, and religion may stick out significantly in some countries. It is essential that countries embrace unity in the diversity of socio-political and economic schools of thought. One way of utilizing this multiplicity of ideas is through a consultative focus on specific economic priorities. Whether black or Asian, “Kikuyu” or "Luo,” we all need a peaceful, prosperous country to ensure the sustainability of incomes and better lives for our own generation. Emerging markets have faced a tough time during the pandemic and post-pandemic period. Between March and July 2022, the UNDP estimates that 71 million people have fallen into poverty in developing countries as a result of the Russia-Ukraine war. Consequently, these economies have faced certain vulnerabilities, including high inflation and interest rates, currency depreciation, and capital outflows.
However, there are some bright spots on the horizon for development on the continent. Given this, Africans must not allow political divisions to rob them of the opportunities that are on the brink of delivering a new dawn to their economies. For instance, as Europe turns away from Russia, African countries such as Angola and Nigeria have accounted for almost half of the deficit in oil supply to the global market. Additionally, with 43 countries having assented, the African Continental Free Trade Area (AfCFTA) presents a market size of 1.3 billion people with a revenue potential of $3.4 trillion. Tanzania, Kenya, and Rwanda are in a pilot phase of the AfCFTA agreement, selling livestock, fruit, vegetables, and spices. Egypt, Ghana, Cameroon, and Mauritius were also selected to test the environmental, legal, and trade policy basis for intra-African trade.
Therefore, African countries must remember, reflect, and rethink their post-electoral transitions to ensure continuous development for future generations.
A Call to Remember
As countries embrace leadership transition, they must recall how electoral disputes have in the past led to political instability that dragged down economies. The 2007-2008 post-election violence in Kenya, for instance, was both a national and regional shock that raised the level of inflation and uncertainty. High tension and violence disrupted transportation, destabilizing local and regional supply chains. The economies of landlocked countries such as Rwanda, Uganda, and Burundi that relied on northern corridor transport for oil supply were particularly paralyzed as oil supply points such as Kericho and Eldoret were hotspots of violence. Financial markets saw high capital outflows, currency depreciation, and delays in planned international transactions.
It seems that the political environment and economic stability are positively correlated and have a cause-and-effect relationship. The return of normalcy slowly began after the power-coalition agreement was signed on February 28, 2008, between the late President Mwai Kibaki and opposition leader Raila Odinga. Protracted conflicts have been a key threat to economic stability in the Sahel region and the Horn of Africa. Terrorist threats in northern Cameroon and Mozambique, coupled with armed conflicts between federal government forces and the Tigray People’s Liberation Front (TPLF) in Ethiopia, have contributed to political tensions.
A Call to Reflect
Against the backdrop of conflicts, peaceful transitions have improved the living conditions of people and communities, attracting investor activity. A look at the political development in Mauritius shows how good policies and institutions have helped the country maintain a stable democracy and a smooth handover of power to successive governments. Mauritius operates without an army. It also has a diverse parliamentary structure and a system of elections called the Best Loser System (BLS) that was designed from independence to ensure comprehensive participation in the national assembly, including representation of rural districts and ethnic minorities. A stable multiparty parliamentary democracy and cabinet power-sharing point to mature and stable institutions in the country that advance peace.
The political stability of Mauritius has contributed to its economy's transition to a high-income economy in July 2020. Mauritius has been ranked the fifth largest destination for FDI in Small Island Developing States (SIDS) and the 30th freest country in the world according to the 2022 Index of Economic Freedom. African countries are thus called to reflect on how political transitions can be instrumental in the growth and development stages. As countries brace for electoral transitions, they need better institutional mechanisms to handle conflicts, smooth power transitions and center the country on national economic priorities.
A Call to Rethink and Reprioritize
Political structures are necessary for the health of any society and country. Outgoing governments should streamline the handover of power to the incoming government to foster peaceful and faster transitions. By creating long-term economic strategies that reflect the local realities of households, incoming governments could tackle persistent challenges, leaving the country in better shape than they found it. Electoral crises break the socio-political construct of countries and snag the delivery of opportunities to ordinary citizens. Rather than focusing on ethnic differences, African countries must create synergy around economic outcomes. At the height of globalization, countries facing transitions in Africa must participate in uniting the global village by centering oneness on delivering economic sustainability to future generations.
In so doing, rowdy political chants may soon morph into peaceful demonstrations to lobby for what we crave: economic transformation that is felt by every “mwananchi” (citizen).
Davis Mwania is an Analyst at Botho Emerging Markets Group