My journal article titled “Ethnic Diversity and Anti-development Bias in Sub-Saharan Africa (SSA): The challenges of fostering productive capacities and structural economic transformation,” was published by the African Journal of Development Studies.
Peer reviews and feedback from the wider readership stressed that issues discussed in the journal article are timely and strategically relevant to the current Ethiopian circumstances. I received several requests to make available the gist of the article to the Ethiopian public and policymakers.
The published article examined the impact of ethnic diversity on fostering productive capacities and kick-starting the process of structural economic transformation in SSA. It provided evidence-based analysis and showed that SSA performs poorly on the Productive Capacities Index (PCI) and other socio-economic indicators both in cross-country and inter-regional comparisons, with some countries regressing.
The article argued that the accumulation of “national capital,” as opposed to “ethnic capital formation,” bonds societies, bridges ethnic divisions and fosters productive capacities and structural economic transformation. It reposited that the problem in SSA is not ethnic diversity per se but how political regimes, governance and elite institutions of the region manage ethnic diversity.
The article concluded that political elite and state institutions have primary responsibilities in managing ethnolinguistic and cultural diversity. It suggests that there is an urgent need to seriously consider the ethnic dimension of development as an integral part of policy formulation and implementation in SSA.
Most (if not all) conflicts in SSA have their origin in ethnic tensions or polarization, and failure to effectively address or resolve them. The flare up of conflicts impose direct costs to the economies of Africa, which include (but are not limited to) military expenditure, costs from deaths, homicide, internal security expenditure, violent assaults including sexual assaults and rehabilitation of victims, security agency, GDP losses due to conflicts, private security, small arms imports, and costs related to post-conflict economic rehabilitation and reconstruction.
According to the Institute for Economics and Peace, in 2019, violent conflicts cost the economies of SSA alone a whopping USD 457 billion, almost 28 percent of the region’s GDP. On per capita basis, every citizen of SSA has contributed USD 415 to finance conflicts, which is 25.9 percent of the region’s per capita GDP.
Of the total economic cost of SSA, 36 percent was a combined share of armed conflict and military expenditure, whereas the shares of internal security and violent crimes were 35 percent and 29 percent, respectively.
Some estimates put the direct economic cost of the current Ethiopian internal armed conflict that principally devastated Tigray, Amhara and Afar regions, in the range of USD 3.5–5.5 billion (3.5 to 5.5 percent of the country’s GDP estimated at about USD 100 billion in 2021).
Beyond the estimates of direct costs, several studies demonstrate that there are also indirect costs of conflicts in general. These include massive population displacement and refugees, loss of political legitimacy of elites, corruption, mismanagement of scarce resources, reduced production and productivity, lower public and private (domestic and foreign) investments, reduction in education opportunities, brain-drain, reduced tourism, job losses, inflation and other macroeconomic instabilities, welfare losses, and capital flights among others.
The indirect costs can be considered as shadow price or opportunity cost to a given economy, in a given year or period of time. Each of these costs need to be carefully estimated, quantified, and analyzed to provide the total of economic cost of armed conflicts on economies and societies (the sum of direct and indirect cost).
Although, such a task is beyond the scope of this newspaper article and should be the subject of future research and analysis, there are substantial stylistic facts that emerge from a series of research undertaken thus far on the economic impact of conflict on SSA.
The main ones (with direct implications for transformational growth of the region) are:
- While global external wars (between states) have been declining and caused less damages since the Second World War, within state conflicts, particularly in SSA, have skyrocketed.
- Countries that are at the lowest level of development, characterized by weak institutions, poor governance and dictatorship are ill-equipped to prevent wars and conflicts than countries that are at the peak of the development ladder with strong democratic institutions and requisite checks and balances;
- Ethnically divided or fragmented nations and economies are prone to low-level of insurgency, protests, strikes, boycotts, roadblocks, which often lead to violent civil or ethnic conflicts, with incalculable costs to economies and societies. Generally, such societies are characterized by poor economic performance, high incidence of poverty and unemployment;
- Societal polarization, ethnicity and degree of social conflicts are key factors underlying policy choices or decisions of political elites, which in turn negatively influence long-term growth and development. Also, misguided decisions of political elites in ethnically diverse countries have influenced the allocation of development aid in favor of their electoral and ethnic bases.
- States, particularly political elites and state institutions, have primary responsibilities in managing ethnic diversity through inclusive policies that foster equal access to productive assets and resources as well as opportunities, enhance cross-ethnic communication and promote shared values, national identity and cultural ties.
- SSA is the region with the most ethnolinguistic plurality and heterogeneity with structurally weak institutions and absence of checks and balance in political and economic governance.
- In Sub Saharan Africa, civil strife, unrest, and riots have increased by 800 percent from 32 in 2011 to 292 in 2018, while 18 countries were in a state of armed conflicts in 2018. These can be extreme manifestations of dysfunctional politics and causes and consequences of SSA’s growth and transformation tragedy. Such phenomena can also lead to a lack of political legitimacy of political elites, institutions, making policy choices or options difficult.
- Overall, Sub Saharan Africa is locked in high risk of ethnic conflict and low equilibrium trap (economically and institutionally). For instance, as the result of ethnic conflicts, SSA loses 10 percent of its GDP growth every year, with annual growth in countries in intense conflicts is about 2.5 percentage points lower, and the region significantly lags behind the other developing regions in development.
- The confluences of the high cost of conflict, the COVID-19 pandemic and the current war in Ukraine can have devastating impact on the already weak and vulnerable economies of SSA.
The above-mentioned facts, in isolation or collectively, provide useful hints about and insights into the development predicaments of SSA – a region with huge development potential and yet underdeveloped and backward on all measurements of socioeconomic indicators.
It has long been established that SSA is the most ethnolinguistically diverse region of the developing world. The region has seen unprecedented increase, in recent years, within state (ethnic) conflicts, protests, roadblocks and overall political instability with incalculable destruction to human capital, physical property and economic infrastructure as well as depressed trade and investment opportunities.
Conflicts and instabilities that have plagued SSA for several years have their origin in ethnolinguistic and cultural diversities most often blamed on boundaries drawn by colonial powers. In fact, according to several studies including by the World Bank, “ethnic violence became a way of life in African conflicts.”
It can generally be said that Ethiopia’s economic history is more of the history of wars and cycles of devastation than the history of intergenerational capital accumulation, sustained growth and socioeconomic transformation. Leaving aside earlier decades, since the 1960s, Ethiopia has seen episodes of protracted and ravenous internal armed conflicts and external wars of aggression. The country’s current instabilities, conflicts, and all out wars have their roots in ethnic polarization and fractionalization.
There are several policy and political implications that emerge from the above-discussed facts, which policymakers of SSA including Ethiopia need to seriously consider.
First, before economic reforms and political democratization efforts, countries of SSA must prioritize economic growth, enhance public and private investments, and effectively resolve growth-retarding and productive capacity-constraining ethnic polarization through inclusive, multi-ethnic and multilingual national political dialogue.
Second, ethnically polarized societies cannot agree on solutions to combat common challenges of underdevelopment, backwardness, poverty, and marginalization. Third, the SSA’s continued marginalization in global trade and investment and lag in overall development will see no end in sight if the region fails to redress the negative economic impact of ethnic diversity.
Fourth, with the aim to reverse SSA’s growth tragedy and persistent underdevelopment, African governments need to address ethnic fractionalization and polarization by building vertical and horizontal bonds between the various groups.
Finally, the agenda for an inclusive and sustained economic growth and development in SSA should not ignore or dismiss the adverse impacts of ethnic diversity and poor governance on fostering productive capacities and structural transformation. Lessons from advanced developing countries of Asia such as China and India indicate that by exclusively focusing on microeconomic and macroeconomic fundamentals alone, attempting to address the growth and development lags of any country or region can be counterproductive.
Before embracing economic reform and adjustment programs, SSA’s governments must factor the cost-benefit of ethnic diversity to their development. They must formulate policies and strategies based on national identities with the aim to nation-building instead of advocating for ethnic identity-based policies, which can often lead to fragmentation, polarization and eventually persistent conflicts and political instabilities.
Overall, ethnic diversity, ethnic-based political governance and ethnic federalism in economically backward or underdeveloped nations such as those in SSA, can lead to ethnic conflicts and polarization. Therefore, countries of SSA must reject ethnic identity-based politics and embrace national identity-based governance based on consensus and interethnic dialogue.
Mussie Delelegn Arega (PhD) is Officer-in-Charge, Productive Capacities and Sustainable Development Branch, Division for Africa, LDCs and Special Programs, at the United Nations Conference on Trade and Development (UNCTAD). The opinions expressed in this article are the author’s own and do not represent the views of UNCTAD or the United Nations. The author can be reached at ([email protected]).
Contributed by Mussie Delelegn Arega
