100 in 100: South Africa, Nigeria, Tunisia…
What can the U.S. learn from the experiences of African countries?
A great deal.
In our series, A Hundred Countries in a Hundred Days (100 in 100), you will recall that we are defining “days” by the standards of other planets in the solar system. This provides time for analysis. We will now look at three African countries.
I am by no means an Africa specialist. Before becoming global head of country risk at GE, I had two regional specialties — Latin America and Asia. That said, with GE’s large footprint worldwide, I became involved in Africa, engaged in deep dives on a number of countries, including Nigeria and Angola, learning a great deal from many sources, including from my former student and country risk team member, Abel Beyene.
And, many years ago, I was the primary analyst for Tunisia at Standard & Poor’s, part of a team visiting the country in 1994, reporting to David Beers, head of S&P’s sovereign ratings team. These were the early years, when the three major rating agencies first rated Tunisia’s sovereign debt. Furthermore, most of my career has been spent studying emerging markets, aka developing countries.
Developing countries face deep, sometimes destabilizing, challenges, often including flawed institutions and a skills deficit. Yet some of them manage to navigate their challenges well, safeguarding democracy as they reform and ignite inclusive growth. Other countries struggle. We will look at South Africa, Nigeria and Tunisia.
South Africa’s challenges are immense: income and wealth inequality, among the highest in the world; unemployment over 30% and over 50% for youth; crime and labor strife that discourage investment; a skills deficit; and, the exclusion of tens of millions of citizens from prosperity.
But, South Africa boasts a resilient democracy and comparatively robust institutions — free and fair elections, an independent judiciary and central bank, a free media, broadly accepted democratic legitimacy, a market economy, sound banks, and, currently, a reformist president.
President Cyril Ramaphosa, in power since 2018, has pushed forward an anti-corruption campaign, including against top officials in his ruling African National Congress (ANC). The democratic legitimacy the ANC enjoys derives from the fact that it led one of modern history’s most remarkable political transitions — from White supremacist minority rule to universal suffrage and majority rule. This fact provides room and time for South Africa to fix its problems, something other countries lack.
Reconciliation and cooperation are the ANC’s legacies. The peaceful transition from Apartheid occurred in large part due to the enlightened and effective leadership of Nelson Mandela, who stood firm in his movement’s demand for majority rule, while offering reconciliation in return. The ANC’s skilled efforts to contain sectarian violence during the transition helped keep the peace. And, F. W. de Klerk, Apartheid’s last leader, possessed the wisdom to reverse his government’s years of doubling down on Apartheid. By freeing Mandela and other political prisoners and unilaterally agreeing to end minority rule, de Klerk paved the way for change.
But, South Africa does not have a blank check nor an open-ended time limit. Like in every country in the world, the government must deliver for its people. Having achieved political and civil rights for the majority, the ANC, in power since 1994, needs to accelerate reforms today. One-party rule, even on a democratic basis, creates complacency, inertia, and corruption. Such a dynamic plagues other countries, including highly-advanced Japan, where the Liberal Democratic Party has ruled nearly continuously since 1955 and is likewise coming up short on reforms.
Dramatic action is needed soon in South Africa to staunch the slide in living standards and accelerate inclusion. The ANC maintained its majority in elections in 2018, but with its lowest vote total in history, at 57.5%. Redoubled efforts under the reformist President Ramaphosa to root out corruption could reinvigorate the ANC and the nation’s institutions. The party needs to work together with other stakeholders — the opposition parties, labor unions, and the private sector. This way, the government could achieve higher economic growth, greater security, and improving social outcomes.
Oil-rich Nigeria faces staggering ethnic, religious and regional divisions, as well as poverty, corruption and a lack of security. Africa’s largest country by both GDP and population (the latter growing rapidly) is split roughly evenly by population between its Muslim north and Christian south. There are multiple insurgent groups operating in the north, strife between farmers and herders in the middle of the country, pipeline attacks in the southwest, kidnappings and murders, banditry, protests, and police / military brutality throughout the country. Nigeria exhibits many characteristics often associated with failed states.
Yet for over two decades, democratic governments in Nigeria have held the nation together. Unity has been supported by the practice of alternating the presidency between candidates from the Muslim north and Christian south, distributing oil wealth broadly across the nation, and strengthening federal institutions.
President Muhammadu Buhari, in power since 2015, has sought to enhance security, provide stability and unify the country, albeit often struggling to make progress, notably in the war against insurgents.
More assertive action is required in Nigeria to combat lawlessness and corruption, as well as to mobilize non-oil revenues for public investment and social programs. Some devolution of power to the states, such as for local policing, may be needed, without unleashing centrifugal forces.
In Tunisia, where the Arab Spring was launched in 2011, democracy is vibrant but ineffective, evidenced by a fall in per capita GDP by over a quarter since the end of autocracy. Elections are free and fair, but political parties squabble in a fragmented parliament and parliament squabbles with the president. Public sector unions and state-owned enterprises obstruct reform, while unemployment remains high and youth unemployment even higher (~35%). Party leaders have had to resign due to corruption allegations.
Polarization between Islamists and secularists stymies cooperation, with some parties questioning the legitimacy of democracy itself. Security remains an issue, evidenced by terrorist attacks and social unrest, which have negatively impacted the sizable tourism sector as well as investment.
The country’s finances are fragile and dependent on donor support. Large fiscal and current account deficits drive debt to unsustainable levels. Weak FX reserves push the authorities to seek financial support from the IMF and the EU.
The country in Africa hit hardest by the pandemic, Tunisia struggles to meet the needs of its people, raising the risk of democratic backsliding. Political parties there must break with the past and work together. A coalition government, including moderate Islamists and secularists, could secure democracy, while addressing Tunisia’s economic woes. Such a coalition remains elusive. The secular-religious divide in the region — between the UAE/Saudi Arabia/Egypt on one side, vs. Turkey/Qatar on the other — ensnares Tunisia.
In all three countries, small “d” democrats of all stripes must work together to ensure security, prosperity and inclusion, and to combat corruption and state capture. Otherwise, these developing countries facing formidable challenges could experience institutional decay — as seen in countries from Turkey to Hungary, and Peru to Brazil, not to mention Russia and Egypt. Electorates in ineffective democracies can be seduced by the allure of the authoritarian model.
Lessons for the U.S. The U.S. has been on a gradual, though consistent, path of institutional decay, albeit starting from a point of robust democratic institutions. Polarization and populism, a disputed election and doubts about the legitimacy of political opponents, a voting rights controversy, partisan campaign financing and gerrymandering, and endemic violence suggest that the U.S. should pay attention to how other countries do things.
Help Wanted: Leaders pursuing bipartisanship and reconciliation. In the U.S., cooperation among political opponents, negotiation, and finding common ground on values require leadership — not unlike what we witnessed during South Africa’s transition from minority rule, embodied in Mandela’s commitment to reconciliation. Leaders that calm, rather than aggravate, their partisan bases are needed. Find such common ground or suffer the consequences — i.e., democratic backsliding. This is the lesson to be learned from the three cases in Africa discussed above. In the U.S., leaders pursuing bipartisanship need to step up in both political parties; and, more broadly in society at large, reconciliation should guide us.
Comparison Table (higher score is better)
Sources: IMF Article IV Staff Reports and press releases; IMF WEO; S&P, Fitch, Moody’s reports; SAIIA web site (including https://saiia.org.za/research/it-takes-more-than-a-single-agency-to-fight-corruption/); South African Treasury, http://www.treasury.gov.za/documents/mtbps/2020/mtbps/FullMTBPS.pd;Foreign Policy magazine (https://foreignpolicy.com/2019/02/13/nigerias-election-is-shattering-political-taboos-buhari-atiku-restructuring-federalism-oil-wealth/); Economist; Freedom House; EIU; CIA Factbook; World Bank Group reports; Credit Suisse conference call May 26, 2021 with SARB MPC; WEF GCI report 2019; BBC; Reuters; Al Jazeera; Britannica; WHO