Category Archives: economics

Video: A Talk on the Resource Curse in Africa

Here is the video to a recent talk I did at the Lahore University of Management Sciences (LUMS). It was buoying to see the number of young Pakistani undergraduates in attendance and it speaks well to South Asia’s future interest in African studies.

An economic look at the new malaria vaccine

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It is excellent news that a pilot program for the new malaria vaccine, RTS,S, is being rolled out in Malawi, Ghana, and Kenya. The vaccine works in combination with other malaria prevention efforts–bed nets, clearing stagnant water from homes–and might reduce fatal malaria in 1/3 of cases.

Economists such as Jeffrey Sachs have long looked at malaria as one of several health challenges that feed into the poverty trap.

Malaria is particularly frustrating because it kills almost half a million people per year, yet it is far easier and cheaper to prevent than other health scourges. Bed nets are an example of a public health “low-hanging fruit” as Banerjee and Duflo have called it, a cheap way to save lives, that is vastly underutilized. It has been quite difficult to convince rural African to use bed nets, and studies have shown that subsidizing the nets to almost free makes as little as a 5% increase in acquisition of nets. William Easterly haunted development scholars with his tales of subsidized bed nets being used for wedding veils and fishing.

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Unfortunately, development economists of public health find that the poor tend to spend their money not on cheap preventative measures, but on expensive treatment instead. When reading about the new malaria vaccine, I found myself prevented with all sorts of questions from behavioral economics:

  • Is it a problem of psychological “sunk costs”? The vaccine is supposed to be used in addition to efforts already in place. The problem, some say is precisely that bed nets are free or cheap, and that means people don’t value them. Their subsidization reduces their “sunk cost” of purchase, which is the money we spend that we can’t get back. Studies show that sunk costs make people use and value those purchases longer and follow through with the cost of ongoing maintenance, e.g. sewing up holes in the nets. With this in mind, should the vaccine be totally free to everyone, or incur some small charge?
  • The “free-rider problem”: This applies to all vaccines everywhere. If I believe everyone around me going to some effort will achieve those ends, there is little reason for me as an individual to make that effort when I will benefit regardless. Actually, my individual efforts would be a form of economically “irrational” behavior, i.e. not self-maximizing, in this sense. If everyone in my village will vaccinate their child, pay for it and deal with the fever and fussiness that temporarily follows, and I believe that will eradicate malaria in my village, then it makes sense for me as an individual to abstain from the trouble of getting the vaccine.  This line of thought is less applicable to malaria, which is highly mobile and widespread, than to more obscure infectious diseases in the U.S., however.
  • What is the “opportunity cost” for parents to vaccinate their children?: This asks what people miss out on with Option A by choosing Option B. I mentioned it in a previous post about the Niger Delta Amnesty program, which sought to provide job training for insurgents, thus lowering the cost of leaving rebel groups and increasing the cost of staying in them. The question of the opportunity cost for African parents would be, “How much am I missing out on in order to attend the vaccination clinic?” Parents could be incurring the cost of a long walk, leaving behind free childcare, missing farming time that generates income, etc. If this a concern for parents, studies in India showed that providing just a small amount of lentils to parents increased the likelihood that they would vaccinate.
  • Would these vaccines be affected by “time inconsistency” on the part of parents?: Behavioral economists teach us that we want to put off small costs today even if doing so risks big gains in the future. We care more about the present than the future essentially. The cost of getting a child vaccinated today could feel greater than the hypothetical cost of that child contracting malaria later on. To overcome this, there have to be very few obstacles to today’s vaccination and a sense of grave potential cost to contraction–which is a public awareness and education issue.

There is not much information online on the logistics of how the RTS,S vaccine is logistically being rolled out, but a key issue would be to ensure that public health care providers are reliable in their work attendance. Studies show that public workers in health have troublingly high absenteeism a the workplace. This makes them unreliable to patients who then stop coming for care, and in turn, those workers get bored and suffer even lower morale that disincentivizes work attendance.

Additionally, any innovation that would require even a slight modification in behavior requires a bit of “nudge” sometimes, for humans can be quite conservative creatures. “Nudges” are slight changes to structure or incentives that make it easier to follow a certain course of action. The best nudges are those that make that action the default one, i.e. parents who have to exert effort to not get the malaria vaccine because it is built into some other form of cheap and accessible health care.  Development folks in the West often forget this because, as Banerjee and Duflo aptly describe it, “those who live in rich countries live a life surrounded by invisible nudges”.

Could African mining operations mimic the effects of conflict?

Screen Shot 2019-05-28 at 2.00.58 PMIn recently relocating to central Africa, I have shifted my focus away from the impact of large-scale natural resource extraction, e.g. gas and oil, to small scale mining. This is no small industry, as it is estimated to employ 40 million people worldwide. It is well-known that artisanal and small-scale mining operations (ASMs) undergird long-standing conflicts. These mines both drive and sustain violence, giving insurgents a reason to seize power and geographic strongholds while also generating income to pay soldiers and buy weapons. The most well-known of these conflicts is that in nearby DRC.

Less studied is the lower-impact ASMs that operate in non-conflict zones. As an example, Tanzania hosts seven notable gold mines (which produce about 2% of the world output), but countless other smaller mines that produce copper, silver, diamonds, tanzanite, etc. In contrast to non-lootable resources that often require local government cooperation, Tanzanian mines are privately owned by foreign companies, which allows them to function outside the confines of the state. The Tanzanian government owns only a minor interest in a handful of private enterprises, e.g. Kiwira, Williamson Diamonds. Mining and quarrying constitute just 3% of the Tanzanian GDP, and this would be larger if the government were able to become a more significant actor in such ASMs.

Tanzania is interesting in that its natural resource history of control is inverted. Typically, extraction begins in a Wild West manner in developing countries, with governments seeking greater control as they recognize the financial boon, e.g. Nigeria’s oil. However, the Tanzanian government exercised strict control over the industry when mining first began to a notable degree in the 1970s. Through the 1980s, claims were opened up to individual investors. Then, the mining industry became even less centralized when more international corporations arrived and more minerals were exported internationally in the 1990s. These taxable international exports are key to the Tanzanian state being able to use that revenue for social service investment and possibly avoid some pitfalls of the resource curse.

My current interest in unregulated ASMs in non-conflict zones is centered on the non-measured effects these mines have on nearby communities. I would offer the (still not fully researched) hypothesis that ASMs could mimic the effects of civil conflict.  Both mines and localized conflict/violence:

  • create patterns of displacement that separate people from their typical forms of livelihood, family support systems, and bottom-up governance
  • stymie other economic sectors outside of mining, e.g. farming, and drive residents to new and often illegal forms of income generation
  • militarize areas with shored up security forces and a higher number of weapon to protect mines and fighting strongholds
  • cause environmental degradations as people seek out resources and land in a non-sustainable manner

If we consider the gender dynamics of this comparison, there are other similarities. Both mines and civil conflict:

  • create patterns of displacement that separate men from kinship networks of accountability for their behavior towards women and women from kinship networks that protect them from gender-based violence (GBV)
  • stymie other economic sectors outside of mining, e.g. farming, upon which women disproportionately rely (women do the majority of agricultural output in sub-Saharan Africa); ASMs could also drive women into dangerous sex-work
  • militarize areas, and we know that having lots of armed men in hypermasculine environments increases rates of GBV
  • cause environmental degradations that disproportionately affects women–who are the primary food and clean water providers to children

Both ASMs and civil unrest also contribute to (and can be a result of) autocracy and corruption that marginalizes women. They could hinder democracy that would be more inclusive of women voting and running for office.

Although it is a few years old, this interesting article found that Congolese women living close to ASMs are indeed to more likely to have suffered sexual violence, particularly if those ASMs host at least one armed actor.

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As demand for minerals, largely through the electronics industry, can only multiply the number of ASMs in operation, this line of inquiry is promising for security researchers of all regions.

Upcoming Talk in Lahore, Pakistan

For readers in Pakistan, I am an invited speaker at the Lahore University of Management Sciences (LUMS) next week. The talk is sponsored by the Saida Waheed Gender Initiative (SWGI) at LUMS. The title of my presentation is, “No Wealth for Women: Natural Resources and Gender Inequality in Africa.” The first half of the talk with cover the basics of the “resource curse” and then the second half will offer details on my work, the intersection between the natural resources and the status of women in the developing world. I will explain the ways the paradox of plenty is particularly harmful to women, e.g. if oil wealth undermines healthy economies, and women are already disproportionately overrepresented in poverty rates, they suffer particular economic marginalization. A video will be uploaded after the presentation.

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Rwanda Achieves Universal Healthcare

Rwanda continues to impress beyond measure.

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The Rwandan healthcare system now covers over 90% of the population, the highest coverage rate in Africa. The informal community-based health insurance (CBHI) scheme, known as Mutuelle de Santé, focuses mainly on maternal and child health. According to the East African, the scheme is one of the most successful on the continent and it is credited for the country’s lower maternal and infant mortality rates of over 70% since 2000.

CBHI was originally voluntary and when contributions became compulsory, many saw it as paving the way to national coverage. Rwanda’s potential model for Africa is pivotal to development, as the WHO estimates that 100 million people are pushed into poverty and 150 million suffer financial catastrophe because of out-of-pocket expenditure on health services every year. Kenya is now using the CBHI model in pilot programs, while Tanzania and Uganda are openly considering it.

Benjamin Chemouni argues that Rwanda’s expansion of health insurance coverage is made possible by the concentration of power in the ruling coalition. He says the CBHI policy and its implementation are forged through both political interests and ideology. Kenya, Tanzania, and Uganda are certainly different milieus than Rwanda, so time will tell how the CBHI programs would fare in other countries.

If any country could make this model a success, however, it’s Rwanda. I have written about Africa’s innovation leaps forward and Rwanda is at the fore. Pretty impressive from a country that has done so much rebuilding in just a few decades since massive conflict. We can’t help but root for Rwandans.

 

The U.S. has a new strategy towards African engagement

 

The White House announced a revised approach towards relations with Africa. Namely, it aims to counter China and Russia’s economic influence on the continent while moving away from humanitarian assistance and troop support. However, revoking humanitarian assistance seems counterintuitive since aid is exactly the comparative advantage the U.S. has over China and Russia. The U.S. is in no position to counter China’s economic investment on the continent, investments which now undergird major transportation, mining, oil, and construction projects. If countering rivals is the goal, it appears to me to be more important than ever to be a generous Big Brother.

Second, he says that increased accountability for donor funds is needed. I am inclined to agree. Indiscriminate donations to developing countries stymie local economic growth, prop up poor leaders, and create a troubling power dynamic between rich and poor nations. I have previously compared such international aid to oil wealth in the way that it adversely affects development. But, I am not sure it is accurate to depict all U.S. aid to Africa as  “indiscriminate,” as Bolton did in his statement. There are increasing checks and balances on American aid to Africa, as exemplified in Bush’s PEPFAR initiative for HIV/AIDS.

The announcement also warns that the U.S. will revoke support for UN Peacekeepers. This is troubling at a time when Africa is seeing an unprecedented rise in migration-related clashes, such as those stemming from climate change. (As an example, desertification of grazing lands has forced cattle owners into land clashes in Darfur, etc.) Admittedly, UN Peacekeepers have been less than successful in many, many African milieus, e.g. Rwanda, DRC. However, pulling support doesn’t improve those missions and citing their failures seems to be an excuse for simply pulling economic support for humanitarian initiatives out of economic self-interest.

Pulling support for Peacekeepers comes in the wake of Washington’s decision to cut troops across the continent by 10%, including half of those fighting terrorism in West Africa. This troubles those following the rise of Boko Haram in Nigeria.

Overall, we can think of this as a privatization of African relations—pulling humanitarian and military aid in favor of increasing business and trade.

On a final note, it would be odd for the White House to announce an “Asia” policy or a “Europe” policy, for there is clearly too much diversity within those regions to take pan-continental approaches. Yet, that is exactly what President Trump intends with Africa. An overgeneralization of the continent is bad for politics, and for the business relationships the President hopes to build as well.

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.

 

 

 

Also, you can find the podcast on Spotify, RadioPublic, and Breaker.

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.

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.

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 western 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?