First-Time Podcaster: “Just a Chat about Africa”

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Consider this podcast a quirky bucket list item completed for me. Another international relations scholar and I recorded a conversation we had about African history and politics, largely about history, and here it is. Discussion spans most of the continent south of the Sahara. It runs for an hour but we actually ran out of time before we could talk about gender and some other social issues, so perhaps another episode will be in the works. Fair warning that I have no podcasting or editing experience, so it really is just two friends chatting. I am a first-time user of this platform, so please let me know if the link below doesn’t work for you. Happy listening.

 

Four Cases of Conflict Over Resources: #1 Rwanda

In reviewing some cases of conflicts in sub-Saharan Africa, I was reminded that I could not name a single one in which some form of natural resource, e.g. land, precious metals or other tradable commodities, did not undergird the fighting. I was fascinated anew in rereading about the histories of four conflicts in particular and will be making various posts that describe these in a nutshell. This is the first, and it will cover the issue of land scarcity in the Rwandan Genocide.  The other four cases to follow—Liberia, Sierra Leone, and the Niger Delta—are about overabundance rather than scarcity. For a great narrative about land scarcity’s role in the 1994 genocide, you can also read Chapter 10, “Malthus in Africa,” of Jared Diamond’s “Collapse.” This title refers to the Malthusian dilemma in which human population tends to exceed the capacity for food production to feed that population.

The cases demonstrate four possible hypotheses about what might cause, sustain, and give form to civil conflicts in Africa. No conflict is ever driven by a single factor and conflict is always the interaction of many factors. Note that these conflicts arose in the era after the Cold War of comparably informal warfare and thus were quite different from most previous conflicts in the 20th century. As opposed to traditional wars, these are examples of “new” or “hybrid” conflicts because they A) involve many non-state actors, B) were based on identity more than ideology, C) used fear to garner political control, and D) were financed through predation rather than taxes. Modern conflicts in developing countries, particularly in Africa, can often be partially explained along these lines.

Rwanda and the “Green War” ExplanationThis points to environmental degradation and scarcity as a source of poverty and cause of conflict. For example, rising population pressure and falling agricultural productivity may lead to land disputes. Lack of water may provoke conflict, e.g. Sudan. Environmental stress like that in 1990s Rwanda tends to make people prone to violence as they seek alternatives to desperate situations. In the Rwandan context, lack of access to farming land—necessary to food production and even securing marriage for young men—helped impel the violence (in combination with other historical and geographic factors).

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A Relatively Quick Summary of the Rwandan Genocide:  The mountainous country of Rwanda in Central Africa was controlled first by Germany and then after WWI by Belgium until its independence in 1962. Belgian rulers systematically favored the minority Tutsis over the majority Hutu groups, which sowed the seeds of ethnic tensions that were a significant factor in later conflicts for Rwanda. A 1959 Hutu revolution forced 300,000 Tutsis to flee and Hutus officially took over when they ousted the last Tutsi monarch in 1961. Ethnically motivated violence ensued in the following decades, including after the installment of a moderate Hutu, Major General Juvenal Habyarimana, as head of state. He ruled through his party, the National Revolutionary Movement for Development (NRMD), for the next two decades as he ossified his power in elections in which he was the sole candidate. During this time, hundreds of thousands of Tutsis refugees were living in Uganda and attempting to re-enter the country through the forces of their Rwandese Patriotic Front (RPF). From 1990-1993, PRF fighters attempted a takeover of the capital of Kigali until Habyarima agreed to the creation of a transition government that would include the Tutsis, an agreement inflaming Hutu extremists.  In this context, the Rwandan Genocide was a single three-month phase of the larger Rwanda Civil War (1990-1994).

Environmental conditions were ripe for conflict by the spring of 1994. Rwanda was a landlocked and impoverished country that relied, as it does today, on agriculture. Fluctuating world prices for coffee on the world market in the 1980s began a sustained economic crisis that peaked in 1990 with the International Monetary Fund’s (IMF) structural adjustment program for the national economy. The average Rwandan farmer was earning less for their crops in one of the most population dense countries in Africa. There was not enough farmland or resources to sustain working-age Rwandans, including large swathes of unemployed and unpropertied men, and land disputes arose along ethnic lines. Conditions of environmental stress and poverty were extreme.

The single incident that inflamed the genocide occurred in April of 1994, when the plane carrying Habyarimana and the Burundian president was shot down over the capital city of Kigali, killing all occupants. Some blame the RPF and others the Hutu extremists for the assassination. Quickly thereafter on the same day, the Presidential Guard, the Rwandan armed forces (RAF), and Hutu militias–the Interahamwe and Impuzamugambi—began indiscriminately slaughtering Tutsis and moderate Hutus in Kigali. The Rwandan media, specifically government-sponsored radio programs, played a pivotal role in spreading the rallying crying for violence across the rest of the country. Radio broadcasters called for the killing of Tutsi “cockroaches” and encouraged all Hutus to take up arms. This was particularly dangerous in a population-dense environment in which neighbors lived so closely together. Pressure among Hutus to engage in killings quickly spread in clusters within tight-knit communities.

An estimated 850,000 Tutsis were individually killed by hand in a 90-day period, which exceeds the per-day killing rate of any other genocide in world history. Around ¾ of the Tutsi population was killed, along with 1/3 of the Batwa Pygmy population, while ¼ of Hutus engaged in violence. Family members were forced to kill their own family members and join the violence. Génocidaires systematically targeted Tutsi and moderate Hutu women for sexual violence as a weapon of war with the goal of sexual mutilation and spreading AIDs. The sexual violence was so extensive that it became the first event in which rape as a weapon of war would later be prosecuted as an official war crime by the International Criminal Court (ICC) in The Hague, Netherlands.

The End of the Genocide: The genocide came to an end in July 1994 when the Tutsi-led RPF finally took military control of Kigali and the rest of the country and installed a coalition government. Over 2 million Tutsis were refugees across the border in what is now DRC (then called Zaire) and many returned. Only after the killing ended did the international community respond, and the Rwandan Genocide is often cited as the worst example of global apathy in the face of a clear humanitarian crisis. There were some UN and European peacekeepers on the ground but their mandate did not permit them to use force against the Hutu extremists and there is evidence that some humanitarian zones they created were used a gateway for génocidaires to escape the country. Because of the logistical challenges of prosecuting thousands of violence participants, the RPF established community justice courts called Gacaca courts, a form of transitional justice meant to aid communal healing, closure, and forgiveness on a grassroots level after a collective trauma.

Today, Rwanda is perhaps the greatest example of a country that chose to rebuild positively after mass violence and is an example of constructive change. It has the highest number of female parliamentarians in the world, outlawed reference to tribe or ethnicity (even in casual conversation) to avoid discrimination, hosts a monthly community service day nationwide, was the first country in the world to ban plastic bags as a green initiative, and hosts the most expensive building on the continent. It is a land of surprises today.

Eritrean refugees are a humanitarian emergency

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Eritrea is regularly ranked as the most repressive countries in Africa. There is essentially no internet and absolutely no free press, and Freedom House ranks it as the 3rd “least free” country in the world. There are no elections, no legislature, and no non-profit organizations. Uniquely, obligatory military conscription, starting in the last year of high school, can last for decades. The harsh conditions during service coupled with brutal punishments for evading it constitute nationalized slavery. Poverty is grinding and, aside from remittances, immune to international bolstering now that sanctions have been put in place against the government for human rights abuses.

Eritreans flee their country at rates unmatched by any other country not actively experiencing war (e.g. Syria)—making it an “emptying nation“. Over 5000 Eritreans flee each month to then make up the 7th largest migrant population in Europe, despite the small country only having a population of 6 million.

Their trek is one of the deadliest in the world. A quarter million Eritreans occupy crowded refugee camps across the border in Sudan and Ethiopia, from which Eritrea gained independence in a civil war in 1991. They travel by foot north across the Sahara. They then constitute the majority of migrants to arrive in Italy.

But, they don’t stay.  Only 1 in 100 Eritreans in Italy applies for asylum there, most continuing on to Switzerland or Germany. There are obvious reasons for this: Italy takes a harsher stance on immigrants, has less developed infrastructure for immigrants, and works with a smaller budget.

However, there are also reasons to expect them to stay once they get there. They arrive in Italy mentally and physically exhausted, and with very little money with which to proceed onward. (This might be why arrivees in Italy are now being flown to other parts of Europe.) Also, one might expect a historical link to play a role in where Eritreans settle, as Italy occupied (but did not colonize) what is now Eritrea to create Italian East Africa before WWII. Refugees and members of the diaspora often seek out developed countries with which they have a historical connection. We see this with the Nigerian population in the UK and Algerians in France. Eritreans are not doing this. Perhaps the connection with Italy was too weak and is too far past, or perhaps they understand that other European countries are better able to meet the needs of African refugees.

Consider that Germany is concerned enough with refugee well-being that it now hosts a gender/sexuality-sensitive refugee center to help protect those with minority LGBTQ status. Too often, especially when migrants are housed with others of their same nationalities, discrimination and harassment that occurred in their home countries can also be reproduced in welcome centers and government housing. As I found in my ethnographic research on transgender Pakistani migrants, violence based on gender expression was reproduced by other Pakistanis awaiting asylum applications along with them. Gender stereotypes and differentiated roles between men and women also take root because changing a person’s location doesn’t necessarily change their ideology and culture.

Italy also cannot offer Eritreans the housing options of other European countries. Albeit with the benefit of finances impossible elsewhere, Luxembourg has managed to place many refugees with host families to support them (and after Syrians, Eritreans constitute the most asylum cases there). Italy also has a more encumbered immigration system in which cases languish longer than in the rest of Western Europe.

The good news is that immigrants now have easier access to employment in Italy, which they want. Most Eritrean immigrants are teenage boys escaping conscription who are eager to work and build a life. Previously asylum applicants had to wait six months to hold a job, and now its just 60 days.  Boredom is a mental health issue for many who await an asylum application, and the Italian government hopes that putting them to work will also help Italians to be more accepting of their presence in the country.

To try to stem the tide of Eritrean migrants, the EU and the UN have invested in a job creation program based on building industrial parks that would make 100,000 new jobs. This would change the opportunity cost for Eritreans seeking to make the dangerous land crossing across north Africa followed by the equally perilous boat ride across the Mediterranean. Ostensibly, these jobs would likely go to men, and there has been no discussion of how to improve economic security for Eritrean women. It is debatable if industrial parks can off-set widespread human rights abuses and plaguing poverty, but it is worth trying.

Nigeria already has an Olympic victory, and its athletes haven’t even competed yet

The Olympics involve as much political and social symbolism as athletics, and that attention is good for Nigeria this year. The most populous nation in Africa makes its winter games debut this week—and its four athletes are all women. They call themselves the Ice Blazers.

Three Nigerian women, Seun Odigun, Akuoma Omeoga, Ngozi Onwumere, make up the bobsled team. They are the first Africans to ever qualify for the bobsled competition. In a lesser known singles event, Simidele Adeagbo is Africa’s first female skeleton athlete, as well as the first Black female athlete in skeleton.

They are all former track and field stars with dual Nigerian-American citizenship, some with summer Olympic experience, who planted the seeds for their journey on their own. Odigun started a GoFundMe page to raise money for the coaching and travel of a bobsled team and handcrafted her training sled. Her teammates took hiatus from their careers to join her.

The women represent not just a huge leap forward for female athletics but send a strong message of diasporic power. They wear their Nigerian identity on their sleeves by speaking indigenous languages with their parents, blasting Nigerian dance music, and one has even died her hair green to match the shade of the Nigerian flag. They are global forces in every sense—by participating in European sports of affluence, by being dual passport holders, by choosing to represent a developing country, and by doing so at an Olympics held in one of the most ethnically homogenous countries in the world.

There are 12 athletes from 8 African countries participating in the Pyeongchang Games this year. Ecuador, Eritrea, Malaysia, and Singapore are also sending athletes to the Winter Olympics for the first time.

It is unfortunate these Nigerian women are not getting the best games possible. The Olympics have had a disappointing turn out this year, and not just from low ticket sales due to concerns about North Korea. Based on my experience attending, the official website did not accept credit cards, public transportation to the event was extremely limited, and infrastructure was shockingly underdeveloped (the sliding center ran out of hot food and drinks, and there was no standing room in the tiny spectator shelters with heat). Seats for the luge were nearly empty.

These women have overcome so many obstacles and represent so much to Africa, though, that certainly some low tickets sales will soon be forgotten as they blaze the ice, and social expectations.

 

Africa is not an expletive and poverty isn’t confusing

It has been weeks since Trump called Haiti, El Salvador, and African states “s*hole countries” in a White House meeting on immigration. Many have been waiting for the denial, the justification, the spin, or an apology. We certainly got the first and then some degree of the second and the third. On Friday when Trump met with the President of Rwanda and the new head of the African Union in a friendly meeting in Switzerland, one where he ignored the shouted questions about “s*hole countries”. The President’s lack of comprehension of world economies is troubling on many levels, but for me, largely on an intellectual one. You see, although fixing poverty is extremely difficult, understanding it is not.

Poverty is really quite simple: Being poor means you spend your life choosing the least awful of two or more awful choices in an environment that constrains your options at every turn. The countries that Trump referenced in his comments are so unmeritocratic that they disincentivize working hard, following the rules, and being innovative in business.

Why invest your hard-earned money in order to buy a house when the government could seize your property on oil-rich land, or refuse to compensate you for environmental damage? E.g. Nigeria. Why would an individual citizen pay their income taxes when even the state oil company doesn’t? E.g. Angola. When you live at the poverty line, why risk starting a new business when it might fail and cost you everything, and your innovation is likely to be appropriated by others? E.g. Sierra Leone. Poverty deeply entrenches the status quo because it makes us risk-averse when our choices are limited to begin with.

Amartya Sen argues that economic development isn’t just about average salaries. It consists of interconnected freedoms: a) political freedom and transparency in relationships, b) free of opportunity to access credit, start businesses, engage in trade, etc., and c) freedom from abject poverty that can be eased with state income and unemployment assistance.

He says that all three must be present for people to rise out of poverty. If any are missing, people suffer from exclusion, coercion, and predation that impedes their ability to increase their incomes. That describes Haiti and most African countries.

Trump’s lack of understanding of poverty is not just alarming internationally but domestically too—America has a stubbornly high poverty rate. Just under 15% of the U.S. population, 45 million people, live below the American poverty line. These urban and rural poor are Trump’s constituents, and confusingly, his supporters. His obligation to understand the realities of being poor apply to his own country as well.

Cameroon: Nigeria’s Crisis Next Door

 

Oil platforms outside Limbe, Cameroon, near the Nigerian border.

There has been little media coverage of Cameroon’s 2016 Anglophone insurgency against the Francophone majority, when separatists declared their own state of Ambazonia. English-speakers near the Nigerian border constitute 20% of the country’s population and have long complained of political and resource marginalization. Now, there are concerns that this civil unrest is causing a potential refugee crisis.

Cameroonian English-speakers have a strong trade relationship with neighboring Nigeria, with large ships and small speedboats regularly traveling between the Nigerian port of Calabar and the Anglophone city of Limbe in Cameroon. I took both these forms of transport during a visit to Cameroon in 2012. Then, the water vessels were stockpiled mostly with raw goods to trade and sell, while passengers tried their best to find a spot to sit or nap wherever they could. Aside from some troublesome mechanical troubles, the journey did not feel terribly dangerous. The border was porous, interactions amiable among passengers, and there was little sense of an impending refugee issue.

Since then, separatists have targeted Cameroonian state agents, and those agents have in turn pursued rebels across the border into Nigeria. Tens of thousands of Anglophone Cameroonians have reportedly fled towards Calabar to avoid violence. So many refugees crossing into Nigeria exacerbates long-standing ethnic tensions in the Niger Delta, even those apart from the oil issue. It also strains resources and is a burden the Nigeria government is not prepared to bear, with much of its focus still on Boko Haram in the north.

Voice of America reported on the political backlash within Cameroon. Some argue that Paul Biya is using the separatist movement as a reason to militarize Anglophone areas even further and cement his 35-year rule. The text of that story is below.

Cameroon’s main opposition party on Thursday accused the government of having “militarized” two regions shaken by unrest among the country’s anglophone minority.

“The Northwest and Southwest regions are heavily militarized,” the head of the Social Democratic Front (SDF), Jean Tsomelou, said in an interview with AFP, describing the situation as “worrying.”

“We have observed troop movements in both regions. The government has spoken of thousands [of troops] who are in the Southwest and Northwest,” he said.

“Abuse has been committed” against local people, he said.

In September and October, “live fire was targeted against people who were simply carrying a message of peace,” he charged.

Since November 2016, resentment has fed demands for autonomy or a separate state to which the government has responded with a crackdown, including curfews, raids and restrictions on travel.

International monitors say at least 20 and possibly 40 people have been killed since late September.

 

Sexual Violence in Africa, Climate Change, and the U.S. Secretary of Energy

U.S. Secretary of Energy Rick Perry is fending off criticism for comments he made about the relationship between fossil fuels and sexual violence against African women. He said in South Africa that using fossil fuels to generate electricity in Africa would lower rates of rape because, “When the lights are on, when you have light that shines — the righteousness, if you will — on those types of acts.” To paraphrase, the literal light of electricity (and figurative one of God?) would stop some acts of sexual violence. The general feedback in the media has been about his unclear reasoning and the ridiculousness of linking a light bulb to a pervasive social problem. To approach it more moderately though, I believe he was just hypothesizing that light in homes would make women logistically safer. It was a somewhat silly notion that just shouldn’t have been said aloud so flippantly. Here is the text of his statement:

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However, the issues of fossil fuels, climate change, and gender-based violence are actually not unrelated—they’re just related in a way totally contrary to Perry’s comments. This is an opportunity to better understand how fossil fuels are actually bad for women in sub-Saharan Africa, and why it is alarming that one of the world’s most powerful policymakers on energy would miss this.

 

Climate change: Fossil fuels, the Fahrenheit, and female farmers

First, climate change is particularly threatening to poor women in Africa who are assault victims during climate change migrations. As an example, the Sudanese Civil War, including the genocide in Darfur, was due in part to desertification of grazing lands for livestock. As these grazing lands turned to hot desert, ethnic groups were forced to move to new areas to keep their animals fed. This migration caused conflicts with those already present in the area, spurring violence that entailed sexual assaults as military strategy. As the temperature of the earth rises, such conflicts will only increase in pastoral and agricultural societies that rely on the land for their survival.

Additionally, 50-80% of all agricultural workers in developing countries are women, an economically vulnerable group. Thus, they will lose out more from climate change that alters their growing and harvesting conditions more than men, who are more likely to be employed in non-farming or industrialized sectors. Financial vulnerability also forces rural women to work farther away from home and its protections, e.g. moving to a city alone, walking farther each day to access suitable land, or engaging in sex work to survive. Hence, climate change affects the safety of women in developing countries in particular ways.

Perry may have been referring to the boon of fossil fuels across the globe, it’s not clear from his quote, but Africa is pivotal to the natural resource industry in the 21st century. The eastern coast of central Africa, specifically around the Gulf of Guinea, has some of the sweetest crude in the world, meaning it is high quality and requires less refinement than sand-filled oil, thus raising profit margins. We should assume that, as U.S. Secretary of Energy, Perry knows this, and would be aware that expansion of this industry across the globe entails its expansion in Africa.

 

Sexual violence and natural resource extraction

Perry’s assertion that increased extraction of fossil fuels would lower sexual assault rates is probably the opposite of what would happen in sub-Saharan Africa.

In developing countries, there is some evidence to suggest a correlation between militarized natural resource extraction sites and violence against women in the area. There are several explanations for this. One is that jobs in the natural resource sector require men to move away from their families, and thus the kinship ties, social norms, and social boundaries that help regulate their behavior. This is not to say that men need to be socially monitored to not commit gender violence, but that all people rely on authority, rules, and the actions of those around them to know what is acceptable. (Imagine the otherwise responsible American university student acting badly on spring break vacation in Mexico—this is an example of how the removal of norms in a new environment changes how we comport ourselves.) Additionally, valuable natural resources require increased (male) security agents to keep operations running. So, natural resource extraction presents the conditions under which sexual violence can become more common.

Secondly, natural resource corporations can become their own mini-governments and, conveniently, their own law enforcement in developing countries. In line with James Scott’s work on state theory, I found that foreign oil companies operating in the Niger Delta employ their own private security forces, erect clear perimeters around extraction sites, exploit local labor at informal and very low wages, and function largely outside of the control of the Nigerian government. In drawing a comparison to a government, Nigerian oil companies a) employ their own military, b) maintain distinct geographic boundaries, c) draw some form of “taxation” through labor, and d) function autonomously. These are four measurements of state strength. Accordingly, gender violence perpetrated by employees or other affiliates of the company could easily go unpunished, as the company acts as its own police force of sorts. So, natural resource extraction then presents the conditions under which sexual violence can go unrecognized.

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Fossil fuel economies are no help to women

On a larger scale, the fossil fuel industry economically marginalizes women of the global south in nearly every way. First, it is a male-dominated industry that offers few jobs for females, who can earn income largely through the agricultural or informal sectors. Childcare responsibilities and unequal domestic duties make it difficult for women to work far away from the home, which jobs in natural resources call for. There is spurious evidence that such economic disenfranchisement increases rates of prostitution, and the gender-based violence and HIV/AIDS that accompanies that phenomenon. Oil, gas, minerals and other natural resources do not increase employment or economic opportunities for women.

Secondly, the African men it employs often spend long hours far away from their families or live at their work site altogether, as there may be low population density around drilling or mining sites. This only serves to exacerbate the inequality in domestic work in the home.

Third, modern economic investigations reveal that, as a whole, women don’t fare so well when the bulk of family income is in the form of cash paid to men. It separates women from control of family finances, and UN reports indicate that less of that money makes it home to children than if women earn it. Even in historical examinations, there is the theory that the transition from (comparably more gender equal) agricultural lifestyles to (comparably male-based) cash economies, as result of European investment in Africa, hastened the transition from traditionally matrilineal family structures to patrilineal ones.

Although this is just my conjecture, I imagine that Rick Perry has heard of the use of rape as a weapon of war, probably in the context of the Congo. It is doubtful that he was aware that South Africa suffers from a prolific scourge of sexual assault in its townships, and it is just a coincidence he made his remarks from there. He knows so little about the region that he may have been attempting to bring together the issues of fossil fuels and gender violence to further his energy agenda, without realizing that the reasons for gender-based violence in different parts of Africa vary—mass displacement, militarization, ethnic cleansing, geography, etc.

Drawing on the issue of violence against women to further a totally different agenda is misleading and exploitative.

As an aside, from my brief scan, it appears that most news articles on Perry’s comments referred to his “trip to Africa.” He was in Capetown, South Africa to be exact. This ambiguity regarding his location matters. Capetown is one of the richest cities on the continent, a worldwide tourism spot, and frankly, totally unrepresentative of anywhere else in Africa. The fact that Perry discussed development for the whole continent from this city, based on a conversation with a local girl, demonstrates his lack of understanding of the region—one common among Western policy-makers. The media’s description of his trip ignores the fact that Africa is the second largest and second most populous continent in the world (20% of earth’s land mass, with a population of over one billion). It’s ethnic, linguistic, and religious diversity is unparalleled. It is unimaginable that reports would refer to his “trip to Europe” if he was in Geneva or his “trip to North America” if he was in New York. Coverage of African politics deserves more nuance than that.

An obvious last thought: Wouldn’t solar panels be the best solution for Africa?

 

 

Why Nigeria’s Credit Rating Matters More than Oil

How can something intangible (credit) matter more than a real resource (oil)?

I just finished a book that changed, or at least makes more dynamic, the way I view African development, Yuval Noah Harari’s Sapiens. Sometimes we get so ensnared in the details of social analysis that we forget to take a step back and look at the larger picture. Harari’s historical account helps us to do just that. His research deepens our understanding of the complexities of the resource course in oil-rich nations without strong democratic institutions.

He argues that one of the key turning points in human history was when we stopped viewing world resources and money as finite, and instead recognized that trust in imaginary future goods could create infinite economic expansion. These imaginary future goods were represented with a new kind of money: CREDIT.

Although we hear of the dark side of credit often—consumer credit card debt, credit on a loan to buy a home that the consumer could never pay off—credit is actually miraculous. As Harari phrases it, “credit enables us to build the present at the expense of the future.” In it, there is implicit hope that future resources will be more bountiful than current ones. That hope in the hypothetical is just so….human. And it has allowed the world’s per capita production to grow at a staggering rate over the last several centuries.

Although he doesn’t mention Nigeria specifically, a section of the book lucidly argues that a country’s credit rating, or the shared belief that a country will pay back its debts, matters more to its economic development than any other factor—including natural resource endowments.

Here is a grossly over simplified explanation using a feedback loop of why a nation’s healthy credit matters so much:

A) People have faith in the future economy —> B) credit is given out —> C) credit allows us to grow current businesses —> D) this growth is invested in new businesses —> E) businesses create goods that can be sold to pay back loans to creditors —> F) these pay backs fortify faith in the future economy.

And we are now back at the beginning of this cycle.

For those familiar with Nigeria’s economic history, any moment in this cycle can be, and has been, interrupted because of its unhealthy oil economy. In 2004, Nigeria required international debt relief after sovereign defaults on what it owed to the IMF. This was due to “heavy borrowing, rising interest rates, and inefficient trade” (see D). When the country suspended the national fuel subsidy in January 2012, no one wanted to expand their businesses that required gasoline, which is all of them since electricity is unreliable (see D). As I have mentioned in another post, oil can create a dangerous mono-economy in developing countries because it replaces the drive to produce anything aside from the oil itself (see E). Because so much of Nigeria’s economy is based on oil, its unstable pricing erodes the “faith in the future economy” that is the basis of credit extensions at all (see A).

Here is the excerpt of Sapiens that struck me as so pertinent to Nigeria:

A country’s credit rating is far more important to its economic well-being than are its natural resources. Credit ratings indicate the probability that a country will pay its debts. In addition to purely economic data, they take into account political, social and even cultural factors. An oil-rich country cursed with a despotic government, endemic warfare and a corrupt judicial system will usually receive a low credit rating. As a result, it is likely remain relatively poor since it will not be able to raise the necessary capital to make the most of its oil bounty.

Based on the description below, would you trust Nigeria to pay back money you gave it as a loan? Or as a business owner, would you trust its economy to grow, and give you returns on a new business you started with money you got from a creditor? Not many people would.

 

What is a country’s credit rating anyway?

In general, a credit rating is used by sovereign wealth funds, pension funds, and other investors to gauge the credit worthiness of a country—thus having a big impact on the country’s borrowing costs.

Standard & Poor’s credit rating for Nigeria stands at B with stable outlook. Moody’s credit rating for Nigeria was last set at B1 with stable outlook. Fitch’s credit rating for Nigeria was last reported at B+ with negative outlook. Overall, there are 11 ratings of stable, 9 rating of negative, and just rating of positive for Nigeria

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As an aside, anyone who witnessed the 2008 American economic meltdown based on home loans can appreciate that these credit ratings are hypothetical. All of those agencies above, those “experts,” failed to change their credit ratings, would could have helped alleviate the devastating U.S. housing crisis that negatively impacted every country in the world.

So, if Nigerian policy makers are to take Harari’s purely academic arguments to heart, they’ll stop writing checks they can’t cash and pay back creditors.

Trust matters.

Idrissi Artfully Addresses Perceptions of Africa

 

The Beauty of African Literature, Ready to Be Explored

Welcome to the Africa Reading Challenge. This will be the fifth time that I’m hosting the Africa Reading Challenge. Details and requirements are the same this year as for the 2012 Africa Reading Challenge, which started with: “I have absolutely no reason for hosting nor urging you to participate in this challenge save for the […]

via 2017 Africa Reading Challenge — Kinna Reads

This is a great blog post about African literature. Take the Kinna challenge and read up!