Why you’d want to be the neighbour of an African president | Fin24
 
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Why you’d want to be the neighbour of an African president

Jun 04 2019 15:08
Johan Fourie

Drive an hour southeast from Blantyre, Malawi, almost halfway to the awe-inspiring Mulanje mountain, and you’ll come across something quite extraordinary: MIT’s campus. 

The Malawi Institute of Technology, part of the larger Malawi University of Science and Technology (MUST), opened in 2014. 

It offers, according to its website, a range of undergraduate courses to around 1 800 students, including metallurgy and materials engineering, chemical engineering and biomedical engineering. 

It has 200 staff members and its vision is to be a “world-class centre of science and technology education, research and entrepreneurship”.

Fantastic, one might think: innovation and technology is the best way to lift one of the poorest countries on earth out of poverty. 

But things may not be that promising. 

The university is built far from the city (or even the main local village) and is in the opposite direction to the airport. 

The campus is ultra-modern, but quite desolate; it’s running at 36% capacity. 

The library has several empty shelves. Many signs are in Chinese.

This is because MIT was built when then-president of Malawi, Bingu wa Mutharika, secured an $80m loan from the Export-Import Bank of China. 

Mutharika, an economist by training who died in office in 2012 (and the brother of current president, Peter Mutharika), probably saw the university as a way to equip the next generation of Malawians with the skills necessary for today’s economy.

Yet the remoteness of the university seems strange. 

Until you realise that MUST was built on the former president’s personal farm, not far from the village where he was born. 

MUST may have been a way to lift Malawians out of poverty, but he had a very specific segment of Malawians in mind: those in the region he hailed from. 

Such patronage isn’t new, and may not even be entirely wrong. 

It is, however, happening on a large scale.

And much of this is the result of Chinese influence. In a new paper in the Journal of Development Economics, six economists examine whether Chinese aid to African countries is more likely to be allocated to birth regions of their leaders. 

They collected data on 117 African leaders’ birthplaces and geocoded 1 650 Chinese development projects across 2 969 physical locations in Africa from 2000 to 2012. 

Their econometric results show that political leaders’ birth regions “receive substantially larger financial flows from China in the years when they hold power compared to what the same region receives at other times”. 

MUST is no exception.

They also analyse the timing of Chinese aid and “recover evidence that this birth-region effect is significantly larger in the years immediately preceding executive elections and when competitiveness of executive elections is high. 

This empirical pattern is consistent with the notion that African leaders who face electoral competition are particularly keen on using Chinese aid to deliver clientelistic rewards to their core constituents.”

Could this be true of all development aid?

The authors test this by looking at World Bank projects. 

“We do not find any evidence that World Bank projects favour the home regions of political leaders.

Nor do we find evidence that World Bank projects favour the home regions of political leaders in the run-up to (competitive) executive elections.” 

Chinese aid, often financed through low-interest rate loans, seem to give leaders a blank cheque in contrast to World Bank projects (vetted for potential impact).

Such patronage, or clientelism, may not be bad: many of these leaders come from poor regions where such investment is much needed. 

Indeed, in a separate paper, the authors show that those birthplaces that receive disproportional investment also see greater education and other positive outcomes. 

The question, of course, is at what cost?

Had MUST been built in urban Blantyre (or Lilongwe) rather than in rural Thyolo, it would probably have attracted more students and a more talented faculty, with a much larger impact for the country.

Why are the Chinese providing so much aid?

Apart from MUST, the Chinese government has built a new road linking Malawi with neighbouring Zambia, constructed the five-star President Walmont Hotel, the Bingu International Convention Centre, a new parliament building and Bingu National Stadium in Lilongwe. 

The reasons for their ‘investment’ remain less obvious. 

The optimists would argue that their influence is a net positive; by building new highways and rail links (even out of self-interest, to connect natural resources with the coast) they help African countries overcome the infrastructure bottlenecks that have hampered development. 

Pessimists would argue that China is not very different from former colonial regimes. 

They are only in Africa to extract resources and willing to provide ‘development aid’ to local politicians to get what they want. 

Future historians will probably decide on the most accurate interpretation.

What’s clear is that African leaders find it difficult not to use the blank cheques they receive from China to win elections and reward their supporters. 

Sometimes their intentions are good. But the opportunity costs of such funding are large. 

And those projects that are completed may not have the expected returns without the necessary operational expertise and budget. 

Building a university is expensive; maintaining it is often much more so. This study suggests that development aid is no panacea. 

It may do more harm than good, even for those few lucky enough to be born in the same village as their president. 

Johan Fourie is associate professor in economics at Stellenbosch University.

This article originally appeared in the 6 June edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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