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Tuesday
Oct082013

Reader Comment on Chiefs in Sierra Leone  

Here is an interesting comment on our last post by Peter Richens:

Very interesting post on chiefs in Sierra Leone. 

The main problem with traditional African systems of land tenure (as influenced but not created by colonialism) as I see it, is not insecurity per se, but that security is expensive in terms of the required investments in social capital. This is supported by quite a bit of anthropological and historical literature, I’m thinking particularly of Sara Berry who I see you cite. If this is the case, you would expect to see more investment in social capital (by the villagers rather than the chiefs) where traditional systems of land tenure are stronger, ie. where chiefs have more discretionary power. This, I believe, is also consistent with your “puzzling” results.

Peter Richens also uses a reference to his LSE dissertation.

Thursday
Oct032013

Chiefs Again

In our early posts in February 2012, we discussed the economic institutions that keep Sierra Leone poor, and pointed out that many of these are not just national but also local. These village-level institutions are dominated by chiefs, who raise taxes, hire the local police, deal with conflicts and control the land.

We have been working on these local institutions and chiefs in Sierra Leone with Tristan Reed. The final version of our paper on this topic is here and the online appendix can be downloaded here.

Our strategy in this paper is to use the colonial organization of the chieftaincy in Sierra Leone to investigate whether unconstrained power of chiefs holds back economic development.

In 1896 the British empowered paramount chiefs as the main, perhaps only, authority in rural Sierra Leone. Chiefs, and the sub-chiefs and headmen, continued to retain their power to this day. British also developed a system in which paramount chiefs are elected for life by a ‘Tribal Authority’ made up of local notables. But importantly, only those from ‘ruling families’ of a chieftaincy designated by the British can compete to become paramount chiefs.

At one fell swoop, the British thus created the rural elite of Sierra Leone that has persisted to this day. But also useful for our identification strategy, there is considerable, and mostly historically idiosyncratic, variation across chieftains in the number of ruling families. And the number of ruling families matters greatly. In chiefdoms with few ruling families, chiefs and their ruling family can act more despotically, with much less constrained power. In chiefdoms with many ruling families, there is fierce competition and much more coalition-building when the time comes for the election of a new chief, and we document that chiefs or ruling families that ask despotically tend to be kicked out of power (but of course this is slow since chiefs are in it for life and good alternatives are not always abundant).

This institutional structure suggests that political competition will be greater in chiefdoms with more ruling families and economic institutions less extractive.

This is exactly what we find. In chiefdoms with fewer ruling families, villagers do indeed have less secure property rights. Moreover, they are less educated, have lower literacy, are more likely to work in agriculture, have less wealth and lower quality housing, and their children are less healthy. The effects are quantitatively sizable. For example, moving from the bottom quartile to the top (from 1.8 ruling families to 7.7) is associated with a seven percentage point increase in literacy.

All this seems to confirm our expectations that, regardless of its exact form, political competition tends to put constraints on how the elites can use their power and how extractive economic institutions can become.

But we also did find some very puzzling patterns.

We have access to information on civic participation, social capital and information on villagers’ respect for the authority of chiefs and the chiefdom institution. Inspired by Putnam and his collaborators’ work in Making Democracy Work, one might have expected that where chiefs have less constraints on their power, there should be less civic participation, less social capital and less respect for their authority.

We find exactly the opposite pattern. In chiefdoms with fewer ruling families, there is more social capital of both the “bridging” kind (linking elites to non-elites such as community meetings) and of the “bonding” type (where non-elites participate more intensively in civic activities and collective action). Perhaps even more surprisingly, when they have less constrained power, chiefs appear to be more highly respected.

So what’s going on?

We suggest a simple explanation: a bridge can be crossed in either direction — that is, bridging social capital can be used as a vehicle to assert social control by the elites rather than as an instrument for constraining elites as Putnam suggested.

If this view is correct, powerful chiefs may not just distort the allocation of resources to education or discourage t the development of the non-agricultural sector. In order to enhance their control over society, they may also need to monitor it and bring people together so as to tell them what to do. And the more they do this, the more deep-rooted their control over every aspect of village life becomes.

Though we have no direct evidence proving that this is the right explanation for our at first puzzling findings, our interpretation is consistent with the anthropological literature. For example, William Murphy, in his important work on politics in rural Sierra Leone, emphasizes that committee meetings in Sierra Leone are often used as a form of social control, and are used by elites to construct the appearance of governance based on community consensus. He states:

public forms [of discourse] are often recognized as an illusion masking alternative commitments arranged in secret. … [A] key attribute of the mature person or a successful group is the ability to strategically construct … public appearances.

We believe that what we have uncovered in rural Sierra Leone may be a much more general pattern. It’s similar to what Lungisile Ntsebeza describes in Democracy Compromised: Chiefs and the Politics of the Land in South Africa as:

traditional authorities derive their authority from their control of the land allocation process, rather than their popularity amongst their subjects … the need for land … compelled rural residents willy-nilly to cooperate with the traditional authorities.

Or as succinctly put in a related study by Jesse Ribot:

legitimacy follows power.

It may not be confined to sub-Saharan Africa either. For example, work by Siwan Anderson, Patrick François and Ashok Kotwal finds that in parts of western India where landownership is dominated by elites, development outcomes are worse, but measured social capital is higher. They also suggest that this might be related to the capture of social society by elites.

It’s too early to say, but this pattern may be the rule and Putnam’s the European exception.

If it is, some recent trends in foreign aid delivery might need rethinking. For example, The World Bank is investing heavily in Community Driven Development schemes based on the idea that these will tap into the independent power of civil society in less developed countries, especially in rural areas. But if civil society is captured by chiefs or elites, then efforts to strengthen it without freeing it from the control of traditional elites might just strengthen the power of chiefs.

Alas, there may be no silver bullets in kickstarting institutional change in societies where extractive institutions have deep roots.

Tuesday
Sep242013

Why Hasn’t Botswana Diversified out of Diamonds?  

Everyone agrees that Botswana has much better institutions than pretty much anywhere else in sub-Saharan Africa.

A decade ago we argued in a joint paper with Simon Johnson that these institutions are the reason why Botswana has succeeded economically while most around it have failed.

Yet despite this and the fact that diamonds are running it out, it has struggled to diversify out of diamonds, and it also has very high levels of inequality. There has not been a resource curse in terms of economic growth, but the economy has not diversified out of diamonds and into more modern sectors either.

Why not if its institutions are good?

There is no clear answer to that but one way to think about it is via the lens that Jonathan DiJohn and James Putzel (2009) apply in their paper “Political Settlements” to development problems.

DiJohn and Putzel characterize Botswana as an example of an “elite political settlement” which has built a consensus about building strong institutions since this was in the own interests of elites.

Post-independence politics in Botswana has been dominated by chiefs and a political party, the Botswana Democratic Party (BDP) started by chiefs.

That the BDP has been in office continually since independence would indicate, according to this analysis, the hegemony of these elites who initially were heavily invested in cattle and had a vested interest in strong property rights and a state which could expand market opportunities.

So dominant was their power that they were able to take the long view in the 1970s when diamonds came on stream and build institutions which were socially desirable but more importantly, in their own interests.

If this view is correct, it might explain the very high levels of inequality and why industrialization has been so stymied in Botswana.

To see why this might be, it is good to recall that as Tony Killick first brilliantly analyzed in his book Development Economics in Action, there has been a lot of animosity towards the private sector in post-independence Africa. In the Ghanaian case Killick argued that this was driven by the fact that the government of Nkrumah saw the emergence of an autonomous private sector as a threat to its political dominance and it therefore tried to stop this.

If a similar argument applied to Botswana it could help explain why economic growth has led to so little economic diversification – because in reality the BDP and the elites around it did saw this as a threat to their political dominance. It is the lack of diversification that has allowed the elites of the BDP to maintain their grip on the society for 50 years.

Thursday
Sep192013

A Role for the Domestic Private Sector?  

In our last two posts, we discussed transparency initiatives in the context of natural resource management (see here and here).

Though we believe these initiatives, by attempting to shift political power away from incumbent elites towards civil society, all move us in the right direction, the voluntariness of them will no doubt limit their impact.

At the margin this may be all one can do. But our discussion of the book by Jones-Luong and Weinthal suggests a complementary approach.

Jones-Luong and Weinthal argue that the evidence from Central Asia suggests that even in a context of fairly dysfunctional national institutions, smaller changes in the way the resource sector is governed, in particular who owns the resources, can have major implications for development outcomes.

Thus the analysis of Jones-Luong and Weinthal points to some interesting policy options to improve the economic consequences of natural resource rents. In particular, it suggests that getting the domestic private sector involved in the extraction or natural resources and the distribution of rents would probably mitigate the resource curse.

Precept 10 of the Natural Resource Charter does mention the private sector, but it is not about getting the private sector involved in the resource economy. Instead, it simply suggests that resource wealth should help to strengthen the domestic private sector more generally (a theme mirrored by the 2013 Africa Progress Report).

But Jones-Luong and Weinthal’s analysis suggests something more radical: that getting the domestic private sector involved in resource exploration, extraction and rent distribution has positive impacts on exactly the sorts of institutions that might help to reverse the oil curse.

In fact, in their Appendix, Jones-Luong and Weinthal extend their coding of the ownership and control of the oil sector to a large international sample of countries. According to their coding all African countries are in categories without significant private sector involvement. Angola and Nigeria have state ownership without control, while Cameroon, Chad, Congo Brazzaville, Equatorial Guinea, Gabon and Sudan all have foreign ownership and control.

This situation reflects the fact that neither the state nor the private sector has sufficient human and physical capital to exploit natural resources like oil on their own. Thus the only possibility is some type of hybrid regime with heavy foreign presence and investment.

Though this means one cannot have full private ownership and control, it also implies that one cannot have the worst possible structural situation of state ownership and control.

Thus through their own weaknesses, African countries have avoided the worst possible option.

Nevertheless, the glaring omission from this list, which according to Jones-Luong and Weinthal ought to really make a difference, is the lack of involvement of the domestic private sector. This is understandable in terms of the human capital deficit of these countries. But it may also be a pressing matter in terms of shifting the political economy of the resource sector in more functional directions.

It could be that finding strategies to develop the domestic private sector and get them involved in the resource sector could be an important bulwark against the resource curse. Compared to foreign private interests they may have a much greater stake in better national institutions. In some circumstances, they may also have greater leverage in domestic politics than foreigners.

Overall, the involvement of the domestic private sector could have important beneficial institutional externalities, in particular, helping empowerment of groups outside the extractive political elites of African nations.

This suggests that transparency initiatives such as the EITI could be complemented with ideas about how to leverage the resource sector to empower non-elites in these countries. This, by bolstering the private sector and getting it involved in contracting and the development of national resources, can perhaps change not only the economics but the politics of resources in Africa.

Tuesday
Sep172013

Reader Comment on Extractive Industries Transparency Initiative?  

Here is an interesting comment on our last two posts (here and here) by Diarmid O’Sullivan. 

Having read your book and followed the blog, I’m fascinated to see the EITI come onto your radar. Here’s a study of the initiative, which I wrote after sitting on its board as a civil society representative for Global Witness.

http://publishwhatyoupay.org/sites/publishwhatyoupay.org/files/What

I’m a campaigner and journalist rather than a social scientist by background and I can’t claim that it offers any great conceptual leaps in the understanding of natural resource governance. I think it does offer an insider’s view of the EITI as a negotiated and essentially political process, and some sense of where the EITI sits within the wider complexities of governance in two poor countries (Liberia and Timor Leste) and by implication, others.

My conclusion was that the on-the-ground effects of the EITI’s form of transparency have been highly dependent on context and often rather weak. In fact, the EITI has been able to co-exist with highly patrimonial forms of government in some countries because it is quite slow-acting and has only covered revenue inflows, so it does not necessarily threaten rent-seeking in other areas of the public finances. I argued that the EITI should make more active use of the one lever it does control, which is the power to affect the reputations of governments by judging the quality of their implementation of the EITI.

The new rules, introduced this May, widen the scope of EITI reports and make it easier for the initiative to use its voice in this way, though the makeup of the EITI Board means one should perhaps not expect too much. This blog post about the changes to the rules is a bit more insider-ish but might be interesting reading: http://eiti.org/blog/new-lease-life-eiti