“Political Stability”, “Investor Confidence” and meaningful elections in East Africa

Wednesday’s Nairobi Business Daily features a story headlined “Political stability lifts investor confidence in East Africa“:

Easing political tensions and the ongoing search for uniform governance standards in East Africa has lifted business confidence in the region and is encouraging investments that could boost employment.

Buoyed by recent peaceful elections, investors in the five EAC member countries said governance based on the rule of law had significantly lowered political risk, creating a stability that has allowed them to engage their expansion gears once again.

Rwanda and Burundi successfully concluded presidential elections last month, a trend that has been crowned by Kenya and Zanzibar early this month when they conducted peaceful referenda.

“It is satisfying for investors — and regional blue chip players in particular — when elections are peaceful the way we are witnessing them,” said Mr Peter Munyiri, KCB deputy CEO in charge of group business.

The bank, which has just raised Sh12.5 billion from its highly publicised rights issue, says it will use part of the money to mobilise savings and create a large pool of credit across the region, “Certainly the political and sovereign risks in the region set an attractive business environment and KCB can comfortably lend more money, with the region also expected to become the home for lots of overseas funds looking for investment destinations,” said Mr Munyiri.

It is certainly striking to see the presidential elections in Rwanda and Burundi labeled as “successful” when in both cases the sitting administrations essentially disqualified the opposition and conducted elections without meaninful competition–in Burundi without even a token alternative on the ballot. The notion of a security tradeoff between “stablity” and democratic political openness is certainly a familiar refrain in East Africa but it is rare to see a statement this explicit of an attractiveness to investors of meaningless but peaceful voting.

A follow up question is whether investors care about the political reforms so fervently hoped for as a result of the safe passage of the new Kenyan constitution, or is it just that fact that the vote was held without significant violence? Each of these countries presents a very different situation in many respects: at one extreme, Rwanda is relatively underdeveloped and poor outside Kigali and is hugely dependent on aid, but gets high marks for having relatively little corruption, and rapid progress in some areas of development while seeming to move further away from political openness. Kenya has had fairly robust overall growth most years post-Moi and receives a relatively small amount of its direct government budget from official assistance; at the same time it remains notoriously corrupt, has huge inequality and radically uneven development. In recent months, Kenya reformed its election commission and midwifed a new constitution that 90% of Kenyans reportedly are glad to have passed. So the trend on democracy in Kenya seems to be running now in the opposite direction from Burundi and Rwanda.

With security concerns rising with the latest bomb blast killing 6 MPs in Mogadishu and the July bombings in Kampala, how does the “investor confidence” factor play out in assessing the risks that are worth taking to support democracy in Uganda with elections coming in February?

Rwanda is voting–links

Rwandans rush to vote for president
The Daily Nation via AFP

“Rwanda votes for president amid crackdown” NPR

“Rwandans hit the polls in presidential election; Kagame favored to win” (you don’t say!) CNN

“Doubt rise in Rwanda as election is held” NY Times

“Kagame set to win in Rwandan election with large majority” The Guardian

“The Paul Kagame I know” Foreign Policy

Trade and Aid [Update]

A Good African Tale: an African entrepreneur struggles for recognition in rich county markets from the Economist.

Update: “Rwanda Coffee Success Story” from William Easterly’s AidWatch (HT Texas in Africa)

Nick Wadham’s latest in Time: Bad Charity (All I got was this lousy t-shirt) — and his related blog post, Top-Down Aid for Africa.

Texas in Africa has a great related multi-part series of discussion questions May 4-7 about the Western approach to aid and development in Africa:

This week I’ve been trying to sketch an outline of how Westerners tend to develop and characterize our relationship with Africa and the people who live there, specifically with reference to the international aid and development system. I’ve argued that the savior mentality is misguided, that Africa is not rightfully ours to save, and that a better way to assist would be through a paradigm of empowerment. . . .
Today I want to conclude this series by thinking about what is probably the biggest barrier to moving into an empowerment paradigm: the governments that give and receive aid. . . .
Why? Because aid – for donor governments and the governments which receive the bulk of aid – is inherently political. Except in cases involving natural disasters or epidemic disease, donors don’t typically give freely to everyone out of the goodness of their intentions. Aid projects are funded at least in part (and sometimes entirely) on the basis of donor priorities. When aid projects take into account the real, expressed needs of recipients (which is, I’m glad to say, increasingly real for most project), they are often structured in such a way as to advantage suppliers or producers in the donor state, or to reward good governance or provide support to an ally.
As we might expect, there is often a contrast between donor goals and what is actually needed in order to improve the material situations of the recipients. . . .


UPDATE
NYTimes: “At Front Lines, AIDs War is Falling Apart”; “Paper Cuts: How Obama’s Father Came to Hawaii”; “Letters: From Kenya to America”

Reuters: Donors to slash Tanzania budget aid.

Nick Wadhams at NPR:“Somali Pirates Take the Money and Run, to Kenya”

The Times (London): Book review–“War Games: The Story of Aid and War in Modern Times by Linda Polman
Humanitarian aid prolongs conflict and misery because the bad guys learn how to exploit it”
;
“Easy Money: the great aid scam”