South Sudan: Fragile and Resilient

In July 2011, South Sudan gained political independence. With the exception of Eritrea, no other African state has been created in the post-colonial period (i.e., since the 1950s). South Sudan now faces a long and difficult road to stability and prosperity.

Like many of the former European colonies in Africa – especially the Belgian and Portuguese territories – South Sudan’s independence inheritance was limited. In the case of South Sudan, governments in Khartoum systematically marginalized this geographically peripheral region. Some basic data tell a grim tale of under-development:

  • Only about 25 percent of the young state’s population is literate. Most developing countries have figures in the range of 50 to 80 percent.
  • South Sudan possesses a physical area larger than France. The new country, though, has virtually no paved roads. The longest stretch – connecting the capital of Juba to Uganda – is only about 100 kilometers.
  • Less than 1 percent of the population has access to electricity. That’s right, only a tiny fraction of South Sudanese can count on reliable access to a power grid. The 1 percent figure presumably does not include those who have access to a generator.
  • Maternal and infant mortality rates are falling, but they are shockingly high. The improved figures (since independence) are: 76 infants deaths per one thousand and 2,054 maternal deaths for every one hundred thousand births. This maternal mortality rate is the worst in the world.
  • A disputed border with Sudan and internal conflicts have led to the displacement of hundreds of thousands.

Yet, the new country has weathered its early independence phase better than many predicted. This assessment is especially remarkable given the long standoff with Sudan over oil transit fees. And South Sudan does have key natural resources other than oil. A high percentage of arable land, fairly dependable fresh water supplies, and ecotourism potential are a few of the country’s key natural assets.

The world’s newest state, though, is landlocked and situated in a highly volatile region of Africa. The Central African Republic and the Democratic Republic of Congo are both neighboring failed states. Adjacent portions of Uganda, Kenya, and Sudan have also experienced armed conflict or communal unrest in recent years. The South Sudanese people will require much more resilience in the years ahead.

Business Climate and Failed States

This morning I launched a new business. Although I had to fill out many forms and submit fees to various government agencies, this process has been remarkably easy. In fact, I live in a country that offers helpful public resources to support entrepreneurs. For  entrepreneurs in failed states, starting a business is an arduous and expensive task, and one that is frequently abandoned.

People can reasonably disagree about how much businesses should be regulated. Most, however, would concur with the sentiment that the private sector should be restrained no more than necessary. This principle is especially important with regard to forming a new business. If it is too difficult to legally form an enterprise, whole economies suffer. The dynamism of free markets is suppressed. Prospective entrepreneurs will remain without work or under-utilized as employees of existing companies. And black markets will flourish.

The Burden of Bureaucracy

This collage features Franz Kafka and Max Weber, two authorities on bureaucratic obstacles. Illustration credit: Harald Groven (via Flickr, Creative Commons license).

It will come as no surprise that it is very difficult to start a business in failed states. Beyond the challenges of poor infrastructure and under-educated populations, poor governance hinders entrepreneurial activity. Each year the Heritage Foundation and the Wall Street Journal publish an “Index of Economic Freedom.” I don’t agree with all of the ideological judgments behind the index, but it is nonetheless a very valuable dataset.

One of the ten criteria assessed in the index is “Business Freedom,” which is defined as follows:

Business freedom is a quantitative measure of the ability to start, operate, and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process. The business freedom score for each country is a number between 0 and 100, with 100 equaling the freest business environment.

Poor performance on this criterion is common among failed states. Poor performers on “business freedom” are frequently referred to on this blog. These countries include: North Korea, Haiti, Zimbabwe, Central African Republic, Democratic Republic of Congo, and Myanmar (Burma).

In contrast, my home state of Virginia offers a “Business One Stop,” for new businesses. And, based on my experience, Virginia deserves the praise it receives for business friendliness. (Sorry, I couldn’t resist a bit of local boosterism.)

Bucking the Global Trend: Africa’s Economic Growth

Europe’s economic funk continues. Japan’s aging society is struggling under a huge pile of public debt and slow GDP growth. Recovery in the United States is about what can be expected from a post-financial crisis expansionary cycle. And in China, Communist Party leaders are adjusting to much slower growth. In much of Africa, though, growth prospects are strong, if we can believe aid agencies such as the World Bank and USAID.

On April 15th, the Washington-based World Bank issued a periodic check-up on Africa’s near-term growth prospects. Partly fueled by high commodity prices – especially for energy resources and minerals – continental growth is forecasted to be more than five percent per year over the period 2013-2015. The optimistic forecast also highlights the impact of increased consumer spending in many countries south of the Sahara, including places like Ethiopia, Angola, Ghana, and Mozambique. Indeed, many sub-Saharan states have seen above-average growth rates for more than a decade, leading to some reduction in still-high poverty rates. The diffusion of mobile phones and more predictable macro-economic conditions are key factors leading to better growth prospects.

USAID and the World Bank are probably right about continued high commodity prices. Even if some of this new African wealth is squandered through corruption, better terms of trade will lift many ordinary people out of poverty. A cautionary word is in order, though. Enclave-based development – especially if it involves oil or high-value minerals – can facilitate political instability and armed conflicts. Think diamonds in Sierra Leone and Angola, numerous precious resources in eastern Democratic Republic of Congo, and oil in Nigeria. In short, over-reliance on mineral and energy exports can lead to so-called “rentier states” (and failed states) that do not necessarily promote broad-based human development. Careful observers of the DRC and Nigeria know about the “resource curse” all too well.

So, boosting international trade between Africa and other continents is set to grow significantly in coming years. With luck and better governance, many states will avoid the worst excesses of the resource curse.

The perennial problem of limited inter-state trade in Africa also requires urgent attention. Vast distances, colonial legacies, poor governance, and under-investment in transportation infrastructure have all contributed to high costs of trade throughout much of the continent. As USAID indicates,

Trade among African countries makes up only 10 percent of the region’s total trade volume. In East Africa, it costs 50 percent more to move freight one kilometer than it does in the United States or Europe, and in landlocked countries transport costs can be as high as 75 percent of the value of the goods they are trying to export.

Like South Asia (India and its neighbors), Africa possesses huge potential for growth in intra-regional trade and investment. This potential will only increase if Africa’s middle classes continue to swell.

The economic news out of Africa is relatively good, particularly compared to the world as a whole. Still, it is worth remembering the continent’s patchwork pattern of progress on governance, peace, and economic reforms. The overall trend is clearly positive, but recent news out of the Central African Republic (CAR), Mali, and the DRC reminds us that progress is geographically uneven.

The Fall of Bangui: State Failure in the Central African Republic

On the Sudan - Central African Republic Border

The Central African Republic is located in one of the most conflict-prone regions of Africa, which includes Sudan, Chad, and the Democratic Republic of Congo. Photo credit: hdptcar (via Flickr, Creative Commons license).

Over the weekend of March 23-24, the brittle government of President Francois Bozize was finally overthrown. A coalition of rebels known as Seleka has now seized control of the capital city, Bangui. Bozize and many senior figures from his government have fled the Central African Republic (CAR). This new development re-confirms the country’s status as a failed state. Here are two key indicators of that status.

  1. Limited rule of law. The ousted president, Bozize, came to power through a military coup in 2003. Despite CNN’s designation of last weekend’s change of government as a “coup,” the successful rebellion has led to another unconstitutional change of government. In response to the illegal action, the African Union has suspended the membership of the Central African Republic. And, not surprisingly, the new Seleka government has suspended the country’s constitution, promising free and fair elections within a few years.
  2. A stark core-periphery pattern. As I have previously written, the divide between the CAR’s capital city and its hinterlands is immense and longstanding. The core region around the capital has been the main focus of government authority, while the outlying regions – especially in the North and the East – have largely existed outside national government influence. In the past decade, these “ungoverned spaces” have been regionally important as fighters and weapons have flowed across porous borders with Chad, Sudan, and the DRC. If the rebels are successful in retaining control of the capital, will they be any better at forging a geographically unified, well-functioning country?

Outside of obvious concerns about an intensifying humanitarian crisis in the CAR, it does not seem that the international community is all that concerned about the situation there. Notably, France did very little to oppose the fall of Bangui. Yet, we should applaud the African Union (AU) for quickly acting to suspend the CAR and sanction the country’s new leaders. For all of its dysfunction, the AU has at least created a regional political culture that stigmatizes unconstitutional changes of government. If only the AU would get tougher with African dictators that run sham democracies.

Central African Republic: An Obscure Failed State

Afghanistan. Somalia. The DRC. These are familiar failed states. This month, the landlocked and obscure Central African Republic (CAR) is also grabbing a few headlines as well.

It is no great surprise that CAR generally receives little attention from the global news media. It is a small, economically marginal country of little geo-political interest to major powers. And it is located on a marginalized continent.

Nonetheless, this former French colony of about five million people is a powerful example of a key aspect of state failure in the contemporary world. Like many other post-colonial states, the Central African Republic has long been a critically weak state with a strong core-periphery pattern. CAR is also part of a bad neighborhood, what some analysts have referred to as a “regional conflict formation” (not unlike the situations in the Great Lakes region of Africa, or the Afghanistan-Pakistan region). (I discuss both of these issues in greater detail in my book Failed States: Realities, Risks, and Responses.)

In recent weeks, a rebel coalition based in CAR’s northern and eastern peripheries has gained the upper hand over government forces. Last week, the United Nations withdrew about 200 personnel, and the United States evacuated its embassy in the capital, Bangui. Tellingly, protesters in Bangui gathered at the French embassy to berate the former colonial master for NOT sending soldiers to support the government.

Like many other critically weak and failed states, the Central African Republic exhibits a stark core-periphery pattern. Government presence and resources are concentrated in the capital city and a limited sphere of influence. More distant areas – and especially rural areas – largely exist outside Bangui’s control.

This core-periphery pattern is not new in the case of CAR. Here I quote from the abstract of an influential 1997 article by Thomas Bierschenk and Jean-Pierre Olivier de Sardan

. . . the absence of the state in the rural areas of the CAR is so striking that the position in certain respects has almost reached the level of caricature. It also reflects the more general situation in other parts of the continent where the excesses of a centralised, over-staffed post-colonial régime can coexist perfectly with the pronounced absence in the rural areas of certain functions which are commonly supposed to be provided by the state, including basic administration and justice, as well as social, educational, and health services.

Fifteen years after the publication of this research, there is striking evidence for the limited influence of government outside the national capital, a phenomenon so characteristic of other failed states.