Generation X: Financing Africa’s democratic opposition

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Monkey Cage

By Leonardo Arriola July 18 at 8:22 AM

African Presidents and Head of States posing for a group photograph during the African Union Summit held at Malabo, Equatorial Guinea, 26 June 2014. EPA/EGYPTIAN PRESIDENCY

This is a bonus installment of TMC’s African Politics Summer Reading Spectacular. Leonardo Arriola, Associate Professor of Political Science at UC Berkeley, writes about his recent book, “Multiethnic Coalitions in Africa: Business Financing of Opposition Election Campaigns.” – Kim Yi Dionne

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During the African Union’s (AU) annual summit held at the end of June, leaders from across the continent voted to add an immunity clause exempting themselves and other senior government officials from prosecution before the newly established African Court of Justice and Human Rights— a court intended to become a regional version of the International Criminal Court (ICC) with jurisdiction over cases involving crimes against humanity. Civil society groups argue that the immunity clause not only undermines the African Court’s mandate, but also encourages the perpetrators of human rights violations “to hold on to power indefinitely.”

The immunity clause is a depressing reminder of the impunity that characterizes some governments in the region — including this year’s host of the AU summit in Equatorial Guinea — but its adoption is unlikely to fundamentally change the political calculus of most African leaders. Before securing a “get out of jail free” card from the AU, most leaders were already doing whatever it took to stay in power. Presidents in sub-Saharan Africa may well have the highest reelection rate in the world: 75 percent of presidential elections in the region since 1990 have been won by sitting incumbents or their chosen successors. Recently reelected African presidents include Burkina Faso’s Blaise Compaoré (in office since 1987), Cameroon’s Paul Biya (in office since 1982), Chad’s Idriss Déby (in office since 1990), and Uganda’s Yoweri Museveni (in office since 1986). By contrast, outside Africa, the reelection rate among incumbent presidents or their designated successors was less than 50 percent between 1990 and 2005.

What accounts for the apparent longevity in office of African presidents?Why don’t their opponents simply work together to defeat them at the next election? One potential explanation commonly highlighted in news coverage, both in African and foreign sources, concerns the influence of ethnicity in political competition. Incumbents can hold on to power, the logic goes, because their opponents are themselves divided by ethnicity. Opposition presidential candidates, who may be popularly perceived as representatives of specific ethnic communities, often seem unwilling or unable to form the national coalitions needed to win elections in societies divided by ethnicity, language, religion, and region.

My book, “Multiethnic Coalitions in Africa: Business Financing of Opposition Election Campaigns,” suggests that ethnicity alone is insufficient to explain why opposition politicians have formed cross-ethnic coalitions in some African countries but not others. I explain thatthe main problem for opposition politicians seeking to build such coalitions is a lack of money. Presidential aspirants obviously need money to run a national campaign, which includes hiring staff, organizing rallies, traveling long distances, and printing materials. But, in African countries, politicians also need money to secure the endorsement of representatives from other ethnic groups.

Many of Africa’s ethnically divided societies also happen to have “clientelistic” political systems in which politicians are expected to distribute money, goods, and favors to win the support of voters. Here is where the problem arises: politicians who have spent their own resources to build up a following among their coethnics are unlikely to turn those votes over on the mere promise of a post-electoral reward. The presidential candidate who wants the endorsement from a politician of another ethnic group has to be able to pay for it upfront. Sitting presidents can raid the state treasury and use public resources to secure cross-ethnic endorsements, but opposition politicians have to use private resources to do the same. This means that in African countries, where most voters cannot afford to donate to political campaigns, opposition politicians must turn to businesspeople for campaign funding.

My research shows that opposition politicians are more likely to form multiethnic coalitions where incumbents lose their influence over financial institutions. In many African countries, governments have long controlled, if not outright owned, the banking and credit mechanisms on which businesspeople depend. Liberalizing financial reforms therefore not only enables businesspeople to secure non-state sources of credit, but also enables them to diversify their campaign contributions without fear of reprisals from government-controlled banks. And it is under liberalized financial conditions that opposition politicians have been most likely to access the money to buy cross-ethnic endorsements. I corroborate these claims in my book by combining analyses of data on commercial banking, financial reforms, chambers of commerce, and electoral coalitions across African countries with in-depth case studies of Cameroon (a case of opposition fragmentation along ethnic divisions) and Kenya (a case of opposition coalitions across ethnic divisions).

In investigating the origins of politicized finance, I show that many of Africa’s post-independence leaders established regimes that prevented business from exercising political influence. Commercial banking was typically allowed to expand in countries where the founding president came from a cash crop-exporting community — the type of coffee or tea-growing communities most likely to accumulate surplus capital. Leaders from such groups had little to fear from the accumulation of resources by their coethnics, since expanding financial services provided a form of constituency service. However, founding presidents whose coethnics were not cash crop exporters had reason to fear capital accumulation among other groups might be used to fund their opposition. Figure 1 shows how commercial banking trends across African countries over time differ based on a founding leader’s constituency.

The political control of finance has had long-lasting implications for political mobilization. Examining elections in sub-Saharan Africa between 1990 and 2005, I find that indicators of financial liberalization — the number of commercial banks or the availability of credit to the private sector — are more consistent predictors of opposition coalition formation than other commonly cited factors like electoral rules, quality of democracy, or ethnic divisions.

The contrasting cases of Cameroon and Kenya illustrate the political implications of financial liberalization. Although the two countries share numerous background conditions, opposition politicians in Cameroon have consistently divided along ethno-regional lines, enabling Paul Biya to routinely secure his reelection. Opposition politicians in Kenya, however, have eventually managed to form multiethnic coalitions to successfully compete in national elections. As Figure 2 shows, the difference between Cameroon and Kenya can be traced to their divergent patterns in financial liberalization.

In Cameroon, business’ access to credit dropped sharply once the oil-funded government refused to undertake financial reforms in the 1990s. This financial repression obliged business to remain allied to Biya, preventing opposition politicians from acquiring the funds needed to build coalitions. In Kenya, where Daniel arap Moi’s cash-strapped government was compelled to undertake financial reforms, business’ access to credit grew through subsequent reforms and persisted at higher rates despite a recession at the end of the decade. Progressive financial liberalization in Kenya eventually provided business with sufficient autonomy that it could begin to fund the opposition.

Businesspeople in Africa fund opposition politicians because increased political competition can be good for their bottom line. Using data from theWorld Bank’s Doing Business surveys, I find that the emergence of opposition coalitions is subsequently associated with friendlier business conditions in African countries. Business appears to face an appreciably lower administrative burden in paying taxes or completing trade procedures wherever opposition coalitions form — even if those coalitions fail to win. Incumbents who fear losing office might well be induced to produce better policies to win back the support of business. The question remains whether those incumbents, or their business-funded opponents, can be induced to adopt policies that benefit the impoverished citizens who vote for them.

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See earlier posts in TMC’s First Annual African Politics Reading Spectacular.