Kobe Economic& BusinessResearch Series
No.19

ISSN 1348-5040

How Can Africa
Flourish with Ethnic
Diversity?
Synopsis of the Fifth Kobe University / JICA
Conference on Ethnic Diversity andEconomic Instability in Africa

Edited by

Hiroyuki HinoJohn Lonsdale
Taylor St. John

Kobe Economic& BusinessResearch Series
No.19

ISSN 1348-5040

How Can Africa
Flourish with Ethnic
Diversity?
Synopsis of the Fifth Kobe University / JICA
Conference on Ethnic Diversity andEconomic Instability in Africa

Edited by

Hiroyuki HinoJohn Lonsdale
Taylor St. John

KOBE ECONOMIC &BUSINESS RESEARCH SERIES
No. 19, 2013

Copyright 2013 by Research Institutefor Economics & Business Administration
Kobe University
Kobe, JapanAll rights reserved. No part of this bookmay be reproduced in any means without
permission in writing from the publisher.

ISSN 1348-5040
Printed in Japanby Maeda Printing

How Can Africa Flourish with
Ethnic Diversity?
Synopsis of the Fifth Kobe University / JICA
Conference on Ethnic Diversity and Economic
Instability in Africa

Edited by

Hiroyuki HinoJohn Lonsdale
Taylor St. John

The Research Institute for Economics and Business Administration
Kobe University

In Memory of Professor Gustav Ranis

Professor Ranis was a pioneer in development economics; his
integrity and his insights forever changed both the study andpractice of development. He was indeed a dynamic and dedicatedscholar, but also an energetic supporter of students and colleagues.
In addition, he guided policy and practice of a number ofgovernments and international organizations over the course of his
long, illustrative career. Most of all, Gus was a mentor, a motivator,
and a dear friend to all of us who joined him in an attempt tountangle the cobweb of ethnic diversity and economic
development in Africa, that kept us together for more than three
years. Gus departed us on October 15, 2013. He will long be
remembered and celebrated for fostering thoughtful, rigorous
examination of the complex issues of economic development, andfor being a warm and caring individual.

Contents

Foreword
PrefaceAcknowledgements
List of Conference Participants
Introduction

i
iii
v
vi
1

Hiroyuki Hino and Taylor St. John
Opening remarks
John Lonsdale

4

I. Ethnicity in Africa: Overview of Issues and Prospects
Bruce Berman
Motoki Takahashi

11
14

II. Designing Democratic Rules to Foster Nationhood
Abdul Raufu Mustapha
Nahomi Ichino

23
26

III. Promoting Devolved Government for Equitable Sharing of
Public Resources
Gustav Ranis
Daniel Posner

41
43

IV. Bonding Ethnic Communities and Building National Cohesion
Germano Mwabu
Arnim Langer

55
57

V. Addressing Cleavages over Land
Ciraj Rassool
Kojo Amanor

67
69

VI. Ameliorating the Trade-off between Growth and Equity
Thandika Mkandawire
Frances Stewart

7982VII. African Strategies for Growth with Equity
Benno Ndulu
Ernest Aryeetey

91
94

Market Experiment on Ethnicity (Video Presentation)
Ken-Ichi Shimomura

101

Conclusion: Summing-Up
Hiroyuki Hino and Taylor St. John

107

Foreword
Nobuaki Hamaguchi
Director
Research Institute for Economics and Business
Administration
Kobe University

Over the last two decades, Africa has achieved remarkable economic
growth. Although expectations are high and Africa is generally
recognized as the next frontier of the global economy, the persistence ofsome historically rooted socio-political problems is a source of someanxiety with respect to the stability of economic growth in the long run.
Extensive debate has taken place about ethnicity as a source ofdeep-seated social tension in Africa. Ethnicity is believed to havecontributed to conflicts over land and political rents, sometimes causing
violent clashes with widespread loss of life and property.
The Research Institute for Economics and Business Administrations(RIEB) of Kobe University, led by Professor Hiroyuki Hino and incollaboration with the JICA Research Institute, undertook a series ofstudies during the last four years under the theme of “Ethnic Diversity
and Economic Instability in Africa.” This book presents the proceedingsof the fifth and final conference of this research project, which was heldin Tokyo in July 2012. The book summarizes the debate on policy
implications of having a multi-ethnic society in a nation, and is acompanion of the earlier publication under this research project, Ethnic
Diversity and Economic Instability in Africa: Interdisciplinary
Perspectives (Hino, Lonsdale, Ranis and Stewart eds. Cambridge
University Press, 2012). The Cambridge volume provides a highly
analytical diagnosis of issues associated with ethnic diversity.
This research has benefited from the contributions of internationallyrenowned scholars from diverse disciplines, including economics,
political science, history, and anthropology. This inter-disciplinaryidiversity of the research team has enriched this research over the last four
years. It is rare that such international research collaboration beundertaken in this scale on this subject. I am gratified that scholars ofsuch prominence have worked together as a team for such a long time.
Professor Gustav Ranis, a core member of the research team, guided
its work throughout the four years of intensive collaboration. Professor
Ranis, Professor Emeritus at Yale University, passed away on October 15,
2013.
With his seminal contributions to development economics andimmense experience in both academic research and development practice,Professor Ranis was instrumental in bringing together the historians,
anthropologists, political scientists, and economists in this research, andthus deepening our understanding of the implications of ethnicity on
economic development and the importance of trust in ethnically diverse
societies. Gus was a mentor and dear friend to all members of our team.
We will miss him.
This book is dedicated to his memory.
On behalf of RIEB, I would like to express our deep gratitude to the
JICA Research Institute, especially to Dr. Keiichi Tsunekawa and Dr.
Akio Hosono, who were Directors of JICA Research Institute during thisperiod, for their continuous support and encouragement. The JICA
Research Institute provided highly efficient administrative and logisticalsupport throughout this research project.
This book is expected to help policy-makers in African countries andtheir development partners in formulating strategies for economic growthwith social harmony. This book will also aid in designing institutions anddemocratic rules to foster nationhood. Critical comments fromacademicians’ and practitioners’ expert viewpoints are most welcome.

iiPreface
Hiroshi Kato
Director
JICA Research Institute

When the JICA Research Institute was founded in October 2008 as theresearch arm of JICA, it adopted African economic development as apriority issue. It facilitates policy-oriented research projects withprominent Japanese and international researchers.
In May 2012, we co-hosted the Global Consultation for Building the
Post-2015 Development Agenda at the JICA-RI with UNDP and ILO toreview the progress and to discuss the agenda after 2015. We found thatthe progress was uneven and that the poorest of the poor had largely beenleft behind. The key message was that we must re-emphasize inclusion
and job creation. Jobs bring dignity and give life meaning; jobs are a key
issue for social cohesion.
Economic development is insufficient on its own. The JICA-RI echoes
Joseph Stiglitz in arguing that good growth in Africa requires fresh
policies to transform the situation, perhaps to grow using the experienceof Asia. We need to bring the state back into discussions of economic
policy. We are of the view that agricultural development is also important.
JICA has partnered with the Brazilian Agency for Cooperation (ABC) on
a project in northern Mozambique, which prioritizes sustainable foodsecurity. This project was highlighted by Bill Gates in October 2011 to
the G20, and again by Hillary Clinton at the Fourth High Level Forum on
Aid Effectiveness in Busan, South Korea, as a model of multilateral
cooperation.
Therefore, JICA is proud to have supported the Ethnic Diversity andEconomic Instability in Africa research project during the last four years.
This volume presents the proceedings of the fifth and final conferenceiii

under this research project, which took place during July 23–24, 2012 in
Tokyo. The conference theme was “Growth with Equity,” namely,
sustainable and inclusive development in Africa. This theme is mostappropriate because we must have a greater focus on the social andpolitical hurdles impeding inclusive growth.
From this conference we were able to learn implications of academic
research for future policymaking. We hope these proceedings present
viable policy options to readers who are working on inclusive anddynamic development of Africa.

iv

Acknowledgements
Hiroyuki HinoJohn Lonsdale
Taylor St. John

This book presents the proceedings of the fifth and last of the conference
series on our research project, Ethnic Diversity and Economic Instability
in Africa. As such, it is a product of numerous researchers who took partin this joint endeavor over the last four years. We would like to express
our deep gratitude to all of them for having worked together for such along time as a team. We would particularly like to acknowledge thecontributions of Professor Gustav Ranis of Yale University, and Professor
Frances Stewart of the University of Oxford for their guidance in shaping
the direction of this research project. Professor Germano Mwabu of the
University of Nairobi also played a vital role in enriching the debate
among the researchers of our project team.
On behalf of the members of our team, we would like to express ourappreciation to the JICA Research Institute (JICA-RI) and to the Kobe
University Research Institute for Economics and Business
Administration (RIEB) for their most generous financial support andhighly efficient administrative assistance to our research project. The
respective staffs of JICA-RI and RIEB organized this conference
effectively and efficiently. Editorial assistance by Ms. Eva Mithamo of
the Office of Economic Advisor of the Office of Deputy President of the
Republic of Kenya is also gratefully acknowledged. The research was
funded in part by a Grant-in-Aid for Scientific Research from the
Ministry of Education, Culture, Sports, Science and Technology of Japan(grant number: 22330085). Finally, we would like to extend our special
thanks to Professor Nobuaki Hamaguchi, Director of RIEB, without
whom this research would not have been possible. He has supported theresearch selflessly and tirelessly as both Director and as a most valuable
member of the team.

v

List of Conference Participants
Kojo Amanor

Deputy Director and Associate Professor,
Institute of African Studies, University of
Ghana, Legon

Ernest Aryeetey

Vice-Chancellor, University of Ghana

Bruce Berman

Professor Emeritus of Political Studies andHistory, and Director and Principal
Investigator of the Ethnicity and Democratic
Governance Program, Queen’s University

Nobuaki Hamaguchi

Director and Professor, Research Institute for
Economics and Business Administration,
Kobe University

Hiroyuki Hino

Professor, Research Institute for Economics
and Business Administration (RIEB), Kobe
University, and Special Fellow, JICA
Research Institute

Akio Hosono

Director, JICA Research InstituteNahomi Ichino

Associate
Professor,
Department
Government, Harvard University

Hiroshi Kato

SpecialAdvisor,Cooperation Agency

Arnim Langer

Director, Centre for Research on Peace andDevelopment(CRPD)
andAssistant
Professor in the Faculty of Social Sciences,
University of LeuvenJohn Lonsdale

Emeritus Professor and Fellow of Trinity
College, University of Cambridge

Thandika Mkandawire

Professor, Department of International
Development, London School of Economics
and Political Science

vi

Japan

of

InternationalAbdul Raufu Mustapha

University
Lecturer,
DepartmentofInternational Development, University of
OxfordGermano Mwabu

Professor, School of Economics, Universityof Nairobi

Benno Ndulu

Governor, Bank of Tanzania

Daniel PosnerProfessor, Department of Political Science,
Massachusetts Institute of Technology (MIT)Gustav Ranis

Professor Emeritus, Economic Growth Center,
Yale University

Ciraj Rassool

Professor, Department of History, Universityof the Western Cape

Ken-Ichi Shimomura

Professor, Research Institute for Economics
and Business Administration (RIEB), Kobe
University

Frances Stewart

Emeritus
ProfessorofDevelopment
Economics and Director of the Centre for
Research on Inequality, Human Security andEthnicity (CRISE), University of Oxford

Taylor St. John

DoctoralCandidate,
DepartmentofInternational Development, University of
OxfordMotoki Takahashi

Professor, Graduate School of International
Cooperation
Studies(GSICS),
Kobe
University

Koji Yamada

Advisor, JICA Research Institutevii

Introduction
Hiroyuki Hino
Taylor St. JohnOver the last three years, a team of scholars has conducted research on“Ethnic Diversity and Economic Instability in Africa: Policies for Harmonious Development”, under the auspices of the JICA Research Institute and Research Institute for Economics and Business Administration(RIEB) of Kobe University. The team, which includes economists, political scientists, historians, and anthropologists, from Africa, Asia,
Europe and North America, has held four conferences, at Kobe University (July 2009), Yale University (January 2010), Naivasha (November2010) and the University of Oxford (July 2011). The first of the conference volumes, Ethnic Diversity and Economic Instability in Africa: Interdisciplinary Perspectives, has been published by the Cambridge University Press.
This book presents the proceedings of the fifth and final conference,
titled “Growth with Equity: How Can Africa Flourish with Ethnic Diversity?” The conference was held to offer forward-looking analysis thatwould be useful to policymakers in Africa and elsewhere. As the following chapters make clear, all the discussions focused on how particularpolicies or institutions could help nations foster equity and social cohesion alongside economic growth.
Economic growth is necessary, but it is not sufficient for development.
Growth must be inclusive. Furthermore, discussion of development must
include social cohesion. Cohesion is inherently complex. Therefore, thisvolume does not provide a consensus definition or a comprehensive discussion of it––an issue addressed in a forthcoming volume from the project. This volume, in contrast, provides targeted, policy-relevant discussions about key components of social cohesion. The following chapters1

Hiroyuki Hino and Taylor St. John2

summarize these discussions. Each chapter extracts lessons from theacademic literature and provides new, policy-relevant analysis for a different component of social cohesion. Analyzed individually or together,
these are some of the toughest policy challenges facing African policymakers today: youth unemployment, natural resource revenue sharing,land tenure reform, and others.
Our work was motivated by these specific policy challenges, butequally, it was guided by a shared understanding that many of thesechallenges are interrelated and affect and are affected by ethnic diversity
within a state. Economic growth and social cohesion result from many
complex, culturally dependent and path-dependent processes. Yet evenamid this complexity, lessons can be learned and policy changes can beeffective. The literature in development economics is unambiguous: ahigher level of inequality among individuals in a society is associatedwith a range of negative economic and social outcomes. Our work has
focused more on wide disparities between ethnic or religious groups in asociety, known as horizontal inequalities, which can also harm outcomes
and foment discontent. Cross-cutting issues such as youth unemployment
and low levels of gender equality exacerbate tensions between groups
and negatively affect social cohesion.
Our research work, designed to inform evidence-based policies to foster inclusive growth in ethnically diverse societies was guided by thefollowing questions.


How can the present practice of ethnically based political contests and consequent ethnic divisions give way to policy-based
contests, inter-ethnic harmony and social cohesion? Do majoritarian democracy rules need to be modified in a country composed of distinct ethnic communities?

What form of horizontal and vertical devolution of political authority can best assure fair and efficient distribution of public
goods in an ethnically diverse country? Should devolved administrative units be fundamentally ethnically homogeneous or beethnically integrated?

Is it advisable to dilute or suppress ethnic identity for the sake of
fostering national unity or enhancing central authority? If not,what measures exist to bond ethnic communities together in acohesive society while harnessing the unique character and heritage of each?

Introduction3How can unresolved historical cleavages over land be best addressed to alleviate the underlying ethnic tensions? How cancommunal land be best managed in a market economy?

Is there really a trade-off between growth and equity? Whatmeasures are there to hold horizontal inequality in check, particularly among ethnic communities?

What mix of economic policies is likely to produce growth aswell as social cohesion?

Although definitive answers to all these questions should not be expected from one research project, we believe that the work presented at
this conference provided suggestions to help policy makers chart a
course toward inclusive growth and social cohesion.

Opening Remarks
John Lonsdale

Thanks to generous sponsorship from JICA, our four conferences––thisis the fifth––have forced research scholars in all those human scienceswith an interest in Africa to understand each other better. Economists,
political scientists, anthropologists, constitutional lawyers or, in my own
case, historians have learned from each other. We have had to modify
some of our working hypotheses, our theoretical models, and our policy
recommendations accordingly. We must hope this interdisciplinary
learning process will also be helpful for all those policy-makers in Africa
who make decisions about the continent’s future.
Speaking for myself, I have learned much and will always be gratefulto Professor Hiroyuki Hino for inviting me to be a member of his team.
I hope, too, that my efforts to present aspects of Africa’s history overthe past 200 years have been helpful to my colleagues in other disciplines.
Historians are interested, above all, in trying to explain change; andthe chief purpose of our conference series has been to understand how
Africa might be helped to grow economically, with greater political stability and social equity. The deeper the changes in society, economy, andstate structures, the more difficult it becomes to explain them. There aremany causal factors in play, and many competing human agencies inconflict. Model-making is difficult.
Historians do not much like models, or laws of history. We have agood reason: most historians agree that our most ambitious attempt toestablish a general set of historical laws that explained fundamental

4

Opening Remarks

5changes––Marxist history of one sort or another––was a failure, a brave
one but a failure nonetheless. It was too single minded. It focused on arather narrow causal argument, on the conflicts between social classes
and interests associated with an earlier mode of economic production
and the new social classes that either profited from new ways of organizing productive market forces or suffered from them.
Since this failure to establish a universal law of change, most historians accept that there are no general laws of history. Instead, we have tounderstand many different local histories within what we see as broader
patterns of change––as from feudalism to industrial capitalism (from
Tokugawa to Meiji Japan) and now from national capitalisms to globalization.
No economist on Professor Hino’s team would call themselves Marxist.
But I think some may have started on our enquiry with an unconsciously
half-Marxist assumption. This assumption was that the old African interests and cultures of former ‘tribal’ modes of production were inherently
resistant to new, non-ethnic, ‘market’ principles of economy and trust. I
say unconsciously half-Marxist, since Marxists used to reach the sameconclusion but by a different route. They assumed that ethnicity, or culture of any sort, was irrelevant to the class struggle that would transform
exploitative colonial capitalism into a more equitable and productive
post-colonial socialism. It was a ‘false consciousness’. Ethnicity became
important only because it was instrumental in Africa’s class conflicts – asAfrica’s middle classes, its capitalists, called up tribal loyalties in orderto break up and disarm the class consciousness that Africa’s workers andpeasants would have learned in the course of their struggles. So here wehave the same conflict between tribe and progress but on different
grounds.
But most of Africa’s historians today would say that both the Marxist
and post-Marxist assumptions as I have outlined them were too simple––and of course I have simplified them.
Both schools of thought, but especially the post-Marxists, paid or pay
too little attention to three different fields of causation:(i) The specific political practices which support the exercise of
power in post-colonial states, in which ethnic groups can be usedas political constituencies that have been formed by the way inwhich their region has been, for more than a century, incorporated into colonial capitalism, a process that has shaped theireconomy in ways that bear very little resemblance to their former,
pre-colonial, tribal modes of production;

John Lonsdale6(ii) They also underplay (ii) the international economic and strategic
relations that can be very capricious in their local effects as different Africa regimes seek to exploit their role as gatekeepers
between local and international interests.
I myself devote still more attention to (iii) the social, economic, political, intellectual and religious, one could also say moral, history of African societies. Each ethnic group is to different degrees a moral community, by which I mean a community that argues, often passionately, about
how one makes a respectable reputation as a proper man or woman,
about what obligations are owed between the genders and among generations, between rich and poor, about reciprocal relations between ourselves and our neighbouring strangers––matters which have too often
been neglected in African history and matters which make Africans as
human as everybody else.
But what conclusions do I draw from this insistence on African ethnicities as moral communities that might help us all in our enquiry into
the relationship between ethnicity and economy?
1) One has to credit Africa’s ethnic groups, like moral communities all over the world, with what I call ‘patriotic thought’––that is, the capacity to argue the rights and wrongs of how one
is governed, and with what social benefits and injustices. Thisway of thought at least gives members of ethnic groups the capacity to consider how far they will allow themselves to be
used in political competition against other ethnic groups.
2)

If economists rely on rational choice models, they must remember that the search for social respect is a rational choice,and that trust is generally (or has been generally) regarded as
an essential element in any economic relationship. Again, thisgives members of ethnic groups some ground on which toquestion how far they should trust their self-proclaimed ethnic
champions.

3)

The different markets in any economy are likely to develop
different forms of ethnic consciousness and different propensities for inter-ethnic conflict or co-operation. Markets for labour,for land, for commodities, for services, and so on are all likely
to have different effects, as I tried to demonstrate in the different case studies I presented in my chapter.

4)

In light of all these cautions, historians of Africa conclude that,by itself, ethnicity explains nothing. If ethnic conflict appears

Opening Remarks

7

in any context, it has to be asked: Why? What particular horizontal inequalities between ethnic groups are there to be politicized? Have vertical social inequalities emerged within ethnic
groups that anger different sections within their moral community? Who are appeased by putting the blame on ethnic others?
Above all, and finally, what arguments are raised by African
agents, for and against different courses of inter-ethnic co-operationor antagonism? Inter-ethnic structures of competition are of course
important, and they often have great historical depth, but only by
conceding to Africa’s human agents the power of critical thought,
born within their different moral communities, can one hope for thekind of political will that will effect the changes that this enquiry hassuggested are necessary.

8John Lonsdale

Opening Remarks

I

Ethnicity in Africa: Overview of Issues
and Prospects

910John Lonsdale

I

Ethnicity in Africa: Overview ofIssues and Prospects

Bruce Berman
Our contribution begins with general reflections on the analysis of ethnicity in Africa. Then it evaluates the impact of ethnicity onsocio-economic and political development. These analyses provide thebackground for the discussion of institutions, policies, social practices,and other interventions that could mitigate the negative impact of ethnic
politics and, if possible, transform ethnic diversity into a positive force
for achieving development with equity in Africa. The discussion begins
in this chapter and is continued in the rest of the volume.
Even though ethnicity is a given and often overwhelming dimension oflife for people in many African countries, ethnicity is an open-ended historical process, and is not very old historically. It has European roots in
the 19th century; European agents carried it into Africa. These European
settlers believed that African communities were radically distinct fromeach other. These assumptions were false. They gave Europeans impetus
to categorize and name according to tribal stereotypes, thereby provoking
Africans to respond. Europeans named groups, Africans then lived up tothese names.
In our paper’s introduction, we explained evidence on ethnicity, both
qualitative and quantitative. The fact of the matter is that both are basedon impressionistic assumptions about what an observer thinks they areobserving. The purposes of these assumptions are endlessly political.
Censuses are political. In European censuses of the 18th century, it wasunderstood that if the state was counting you, it was up to no good. The

11

12state was either out to tax you or conscript you. The politics of numbers
are crucial. A CIDA aid advisor in Kenya told me something about the
Kenya government’s statistical data on agricultural production. The ministry of agriculture kept three sets of statistics: one for cabinet, one fordonors, and one for internal purposes. None of these three was accurate.
All were produced for political purposes.
Counting makes possible the development of African states. It also
turns land into an asset. How does counting affect the experience of ethnicity in Africa? Ethnicity is a continual process of constitution and there
is continuing ambiguity over ethnic categories. There is no complete
agreement over the number of ethnic groups in most nations in Africa. A
search in Google for “ethnic groups/Kenya” will yield many very different calculations of numbers. The number of groups is a political issue,
both between communities and within them. Counting is a crucial aspectof knowledge creation and of the creation of ethnic communities.
The instruments of the state shape ethnicity. Africans imagined ethnicities out of how Europeans started classifying them. The emergence ofelites is very important in this process. What makes African ethnicity
modern is how much of it is imagined in print, in texts written by African
intelligentsia often using the knowledge created by missionaries, anthropologists and colonial officials themselves. These texts became importantin the development of ethnicity itself. An example of this is Jomo Kenyatta’s ethnography of the Kikuyu, Facing Mount Kenya. Only a few
copies reached Kenya before World War Two, but they were passed hand
to hand until they literally fell apart, and literates were reading the text to
the illiterate, so the ideas got around.
The colonial experience introduced into these communities new horizontal and internal inequalities that challenged their moral economy over
the responsibilities and elites and common people and their mutual relationships: Who is a real member of the community? Who gets access tomarriage and land in this community? These inequalities were built onarguments that reflected traditional internal relationships of authority,
particularly patron–client relationships; these relationships continue today under the surface of what we consider modern rational forms of social organization.
We conceptualize African ethnicity as open-ended processes (in contrast to most conceptualizations of it as an unchanging reality), in societies dominated by their elites in which the key issue is how the wealthgenerated in these societies is distributed. Control of state resources iskey. This control was extended to African elites in the colonial period,

Ethnicity in Africa: Overview of Issues and Prospects

13

including the crucial issue of access to the markets created under colonial
rule. A determining factor of horizontal inequalities between ethnic
groups during the colonial period was whether the area they occupied
was determined to be suitable for cash-crop production, mineral exploitation or white settlement.
The number of ethnic groups in a given state is not in itself the key issue. In 1976, an American encyclopaedia of ethnicities said 215 ethnic
groups existed in America. That number has probably now grown considerably. In Canada, there were 200 ethnic groups in 2010. That is more
ethnic fragmentation than any African country except Nigeria. Moreover,there are 600 native communities in Canada. So the diversity of the US
or Canada is far greater than that of most African states.
This leads to the question of citizenship: What is the relationship ofethnicity and citizenship? In Europe in the 19th century, citizenship firstbecame linked with ethnicity. Soon after that, citizenship and ethnicity
became linked in Africa too. Today we have a situation in which ethnicity and citizenship are linked and expressed in conflicts between competing autochthonous groups, each claiming to be the original inhabitantsof a particular area. Under such circumstances, in countries such as Ivory
Coast and Kenya, the story of the nation is told differently in different
groups, with each group arguing that they are the authentic people orpeoples of the nation. This controversy is similar to and parallel to conflicts of autochthony that have been developing in Europe over migrants
from Africa.
Understanding ethnicity in Africa and how to address its impacts onsocio-economic and political development requires the placement of Africa in a global context, and taking Africa out of the ‘ghetto’ of being
regarded as a continent apart from the rest, an area of unique developmental ‘failure’ caused by its idiosyncratic ethnic fragmentation. Somescholars of ethnicity have a misguided conception that African ethnicity
differs from that in the rest of the world. In reality, our work at the Ethnicity and Democratic Governance Program at Queen’s University reveals strong similarities across the different continents. To emphasizethese similarities, I would like to conclude with six phenomena that define the contemporary global context of ethnicity and development. Ethnicity in Africa is an integral component in each phenomenon.
a. All societies are increasingly diverse; migration and multiculturalism are growing issues in almost all states.
b. Increasing levels of corruption and decreasing levels of trust
are occurring in all national societies.

14c. International networks of organized crime have grown relentlessly, increasingly involving Africa.
d. National governments have largely proven incapable of dealing
with the global (financial) crisis.
e. The destructive impact of unregulated markets is increasingly
apparent.
f. Destabilizing inequality is now a global issue.
Motoki Takahashi
I would like to be forward-looking in this presentation, and quickly notea few things about recent developments in Africa. First, tremendous democratization has taken place since 1990. Many observers expected thatthe accompanying accountability and transparency would control thepower elite. Strikingly, at least in some countries, democracy and market
systems are apparently very compatible with ethnic conflict. The elites
controlling national economic policies are using them as instruments for
ethnic mobilization.
Constitutional reforms are needed to change the existing incentives toensure that public policies cannot be used for ethnic mobilization. The
modulating constitutional changes are not a panacea, but they might help.
Reforms have often focused on the allocation of power among elites at
the national level, and have neglected the institutions with the most directcontact with ordinary citizens, such as the civil service and the local
government. Institutional reform at these lower levels can limit the ability of elites to perpetuate ethnic-based conflict. Civil service reform, particularly in the security apparatus, is crucial in this regard. Often the security apparatus is ethnically based and ethnically biased. In consideringreforms, it is difficult but extremely important to balance ethnic representation with meritocratic policies.
In constitutional engineering, we have been particularly addressing thedevolution of resources from the center to localities, which is the main
arena of patronage. Controlling patronage at the local level is an extremely important issue because unbalanced public goods provision canbe an important means by which elites perpetuate ethnic-based conflict.
I somewhat courageously propose that we use Japan’s experience as amodel for public goods provision. By that I mean setting a national standard that each local community must meet, to ensure certain standards ofpublic resource allocation. This system would reduce discretionary allocation of resources to local governments.

Ethnicity in Africa: Overview of Issues and Prospects

15

Another finding I would like to mention is that we are quite concerned
about the loss of local-language media and education. We do not support
extending Tanzania’s prohibition on indigenous language media to othercountries. Local language media could make local languages grow, andcontribute to richer national citizenry. Additionally, in a geographic area
where ethnic bias is pronounced, local-language teaching in the classrooms can weaken perceptions of bias of this kind.
Land issues are also prominent in ethnic relations across localities. It is
important here to differentiate two dimensions. Often there is a very limited sense of citizenship in a particular locality. The issue is the land on
which people are living. Misguided allocation of land or the hasty application of western land title systems has created numerous social tensions.
There are severe risks of marketization in Africa. In many rural communities, many people are losing their land and simply becoming providersof labor. Land issues are very much related to food security. When land
becomes an asset that can be traded easily, it leads to loss of land by poor
people. Land grab issues have arisen. Here, international development
partners in Africa are complicating the problem.
Lastly, I would like to draw attention to the issue of natural resources.
The natural resource curse is a well-known contemporary problem, andNigeria presents a famous example of it. Nigeria was trying to distributeresources from oil to contain ethnic cleavages, but this transfer scheme
became a structure for grand theft and corruption. We need to think ofways to abolish or alter natural resource distribution systems that encourage corruption and inefficiencies. Foreign investment is spreading in
Africa. There is support for free trade movement on the continent. We
must prioritize the development of effective institutions to control
rent-seeking activities. International resource flows in this case should be
used to ensure active policymaking, not just to create an enabling environment, but to ensure that policies are beneficial for citizens and appropriate for local conditions.
Discussion
Thandika Mkandawire: I have a comment on numbers. Numbers matterfor democracy. It turns out we do not know the percentage shares of different groups in all populations in many countries. In Malawi, 18 ethnic
groups exist; each claims they are 20% of the population. This situation
leads to claims by each group that each election is rigged. Since the government has no numbers, the rigging claims are not followed up.
Daniel Posner: Whether there are 43 or 53 groups in a country depends

16
on how you define a group. The real issue is relative sizes of the large
groups. The total count is irrelevant because that total count could be
about very small, marginal groups. It is the relative size of large groups
that matters.
Bruce Berman: On the size of groups, the issue is who is accepted aspart of them. Large groups have internal divisions and subgroups. In
Kenya, there is, for example, the recently manufactured super-ethnic
group of the Kalenjin. What we need to watch are relations between
component groups within this one group. There is also the general notionthat there are distinct ethnic groups with clear boundaries. This idea ofboundaries is a fiction that comes with colonialism. In reality there isintermarriage and exchange. The boundaries between groups were oftenvery hazy. Particularly in the past, people could move across theseboundaries. In the late 1960s, a Kenyan anthropologist discovered poorgroups of Kikuyu who were migrating into the Rift Valley and becoming
Maasai. The absolute, firm doctrine of the Kenyan government was that
the Kikuyu and Maasai were quite different and had strikingly different
cultures. Evidence suggests otherwise. George Saitoti (a leading Maasai
politician who was recently killed) started out as a Kikuyu. In the Rwandan genocide, some of the major Hutu leaders were of mixed ethnicity.
In 1989 John Lonsdale and I interviewed an elderly Kikuyu who said thatin 1914, the British conscripted him for labour service and sent him to acompound in Nairobi. He escaped and avoided service by going to livewith Maasai relatives during WWI. Communities and the linkages between them were often like this before the modern construction of ethnicity. This situation illustrates why we have the politics of authenticity,and conflicts of autochthony. These claims of who is ‘authentic’ are impossible to sort out, and are therefore the basis of endless conflicts.
Ernest Aryeetey: The issue of ethnicity has always been the elephant in
the room in debates on rational development. My worry is how strongly
the conclusions are drawn from Bruce’s presentation. It is extremely difficult to see in Africa one uniform approach to how various groups have
evolved over the years. Ethnicity is not simply an outcome of the colonial engagement. I am speaking especially about West Africa, aboutgroups of people who speak the same language and occupy the same
region of the country. Before colonialism, they engaged in wars and belonged to different language groups. The colonial government took advantage of groups and maybe fostered them, but we cannot pretend they
did not exist before colonialism.
The most important question is: how has the modern state prepared itself

Ethnicity in Africa: Overview of Issues and Prospects

17

to accommodate different groups? There is an absence of commitments
for bringing different groups together and for ensuring that language andland do not separate groups. In Tanzania, they were driven by a need tobuild institutions that would bridge or transcend different groups. In
Ghana, this did not happen. Institutions were not built to bridge the different groups. I know who is going to resist an idea that I bring up among
my university colleagues based on language or religion or which school
they went to, because these different groups matter. We have to learn how
to acknowledge these differences and build institutions that bridge them.
We must ensure that the governmental structure is strong enough to contain fights for resources. Then we must find a structure that works for
distribution of resources.. This structure must constrain larger groups andprovide ways for all groups to participate. Modern African states do not
pay enough attention to providing these structures. When 80% of thecabinet comes from one ethnic group, this is a problem. How do you
show parties that this does not make sense? This is the point on which wemust focus. Ethnicity is not a fiction. We must figure out how to foster
beneficial relationships among ethnicities within the structure of states.
Ciraj Rassool: To sort out the implications of what I’m hearing, it might
be helpful to consider that multiple concepts of ethnicity exist simultaneously. Elites use these conceptions selectively for ends of different
kinds. The very powerful older notions of moral community are recognized for certain things; colonial notions of fixed administrative units areused; and certain post-colonial or post-apartheid states might be identifying rulers based on traditional chieftaincy. There are also, however,very powerful post-ethnic conceptions of community and society in African states today. These conceptions might be open to more fluid
boundaries around ethnicity. We are seeing growth in the number of ethnic groups because those previously contained by certain definitions of
ethnicities are being freed to reinvent themselves. These fluid notions
exist. There is an argument for a post-ethnic society.
Arnim Langer: I take the point that the definition and boundaries of
ethnicities evolve over time, but in countries where ethnicity is used in
the political realm, ethnicities are not as fluid as they are being described.
The in-fluidity of these numbers is what makes the study of ethnicity inpolitics important, and makes it very tricky. It is the relative size of thegroups and their fluidity that matters. It is when these groups are not
fluid anymore, when you cannot move groups, that ethnicity really becomes a problem. When fluidity is curtailed, ethnicity becomes a larger
issue.
Gustav Ranis: So colonial governments might have encouraged war

18
among ethnicities, and modern governments are not doing much better.
What would you have done as president, Ernest (Aryeetey)?
Ernest Aryeetey: When I talk to planning commissioners about how weallocate resources to different regions of Ghana, I have to ask myself––
As a Ghanaian, how do I feel about devoting almost 60% of all resources
to one area? This question is especially relevant after calculating regional
GDPs. There is no discussion about allocating resources based on productivity or need, so fostering those discussions is a first step.
More fundamentally, I think we need to see what it is that holds us together. I advocate for more Ghanaians to speak more languages. By this I
do not mean declaring one Ghanaian language as standard, I mean encouraging more people to learn more languages. In Parliament, there
should be rules that require proposals and policies to have multi-ethnic
support. Additionally, we must find ways to talk about issues that involve
ethnicity. How come we never talk about land issues in parliament? Because land discussions mean discussing ethnicity, which means that any
reform will require a discussion of ethnicity.
Benno Ndulu: The whole purpose of the discussion of ethnic diversity is
to identify ways of removing the negativity that stands in the way of creating social harmony: not necessarily obliterating pre-existing cultural
identities. The social engineering experiment in Tanzania has been focused on removing the negatives, and has taken the form of creating anational identity, and minimizing social conflict and ethnic identities inpolitical engineering. As long as that pays off, I do not mind the investment our country made in creating that identity. In Tanzania, we still
have cultural groups and language groups, but if you want to succeed inpolitics, you have to enter on national grounds. You must receive supportin at least 10–12 regions merely to register yourself as a contester. You
cannot rely on your ethnic group alone to be an MP, and there are virtues
in that.
Just to make sure I was not misunderstood, creating national identity
through a single language does not mean obliterating other languages. It
is possible for other people to learn languages, but I do not regret that I
do not put my tribal language or interest first. I put national engineering
first. This practice is effective for development. In the absence of thatengineering, I am sure we would be back in a conflict between ethnicities.
We must avoid losing focus on the ultimate aim of building nations.
Bruce Berman: I am not reconstructing a vision of ‘merry Africans’––
there was enormous pre-colonial conflicts between groups as well. This

Ethnicity in Africa: Overview of Issues and Prospects

19

conflict is closely linked to the development of political institutions. If
you look at Ghana, for instance, a political unit like the Ashanti emerged
and incorporated numerous Fanti chiefdoms into the empire. Only in the20th century do the Ashanti become a distinct ethnic group in themselves.
Groups that claim today to be different from one another are actuallyoften very closely related historically. It is the process of differentiationthat makes modern groups.
If you look at intermarriage, unless it is politically policed and punished,
it is going to happen if you have a society with fundamental freedom of
movement. In the earliest part of the Kenyan conflict in 2008, women
who had married across ethnic lines protested, demanding police actionin Rift Valley province. Yet there is a move to define ethnic groups withgreat rigidity and clarity, allowing people to belong to only one group.
We need to pick up on the discussion about how groups define themselves. I come from the new world and its characteristic ethnic diversity,
so I see no problem with people having multiple identities.
Frances Stewart: There is a big difference between Europe and America.
In Europe there is a sense that there is a local people who have been there
for centuries. There is no local population in America; they were almost
all killed. This local population issue is a problem that is never solved;
local populations are always being formed and reformed.
Hiroyuki Hino: For our purposes, it is important to know that ethnicity
matters. Our driving question then is: how do we deal with it? Is it wise
to deny that differences exist among ethnic groups? Is it wise to try to
dilute the identity of each ethnic group? I think what is emerging fromour discussion is that it is sensible to respect uniqueness of the identity ofeach ethnic group, but not to make it rigid. We need to recognize that
ethnicity is fluid, and find policies that bind the ethnic groups together asa harmonious nation.

20

Ethnicity in Africa: Overview of Issues and Prospects

II

Designing Democratic Rules to Foster
Nationhood

21

22

II

Designing Democratic Rules toFoster Nationhood

Abdul Raufu Mustapha
I would like to begin with a comment on the title: politics is never by
design, it is always messier in reality. My starting point is that if we aretalking about ways of designing states, then this suggests that there arecertain challenges to nationhood. We must undertake design in a way thattakes account of the challenges we face because we do not design in the
abstract, on a blank canvas. This designing takes place on interactions
that are there already. So what are the challenges to nationhood? And
what are the constituent elements of nationhood?
There are four key challenges to nationhood:
1. Ethnic Structures. No matter what the histories of these ethnicities, whether they were already well-defined or were constructed during colonial times, today they are fairly
well-defined competitive units. This is the ethnic structure.
This ethnic structure matters; for example Nigeria’s is very
different from Tanzania’s. The structures of politics are different because the ethnic structure is different. In Tanzania, 120
ethnic groups exist. The largest group is about 12% of the national population. The logic here is to construct pan-ethnic alliances at the national level. By contrast, in Nigeria, three large
ethnic groups exist, any two of which can combine to dominate
the country. Within the big three groups, therefore, there is always the fear of being shut out of the scheme of things by theother two working in concert. In Nigeria, this has created acollective action problem among competing ethnic elites. Na-23

24
tional politics is therefore focused on examining defensive actions to protect perceived ethnic interests. The ethnic structuresof Tanzania and Nigeria tend to propel their national politics in
opposite directions.
2. Lack of social citizenship. Research we conducted at the Centre for Research on Inequality, Human Security and Ethnicity(CRISE) showed that a child in Lagos has much better odds ofsurviving childhood than a child born in north-eastern Nigeria.
Where a person is born has material consequences for theirlife-chances and opportunities. As a consequence, this affects
how they define themselves in the system. This definition suggests that there are material foundations to ethno-regional
competition. There is something objective in the structures of
ethno-regional competition; they are not just the product of thewhims of an unscrupulous elite.
3. Patterns of institutionalization of power. It is worth looking at
how democracy functions and what this has meant for patternsof patronage and the institutionalization of power across different African countries. One comparing Senegal and Ivory
Coast, for instance, finds that their patronage systems are different. In Senegal, there is a bureaucratized patronage structure.
The President is never powerful enough to obliterate thesestructures. In Ivory Coast, the president was powerful enoughto personalize existing structures of patronage. These differences matter in the operationalization of the politics of eachcountry. Another example is Liberia, where President Ellen
Sirleaf Johnson is accused of concentrating patronage among
16 members of her immediate family, including three sonsplanted in strategic state institutions. This is an example of familial patronage. How power is institutionalized will affect theability to design inclusive structures.
4. Political cultures. At the core of political cultures are certain
values toward which these societies are oriented. These values
lead to different designs of political structures. Every one ofthese values helps shape the possibilities for designing politicalstructures in that society. In Nigeria, there is consensus on federalism. This consensus is entrenched among elites and among
non-elites, for historical and other reasons. By contrast, inSouth Africa, the African National Congress (ANC) resisted
calls for federalism, for historical reasons. So South Africa
ended up with a weak federalist system. The dominant valueDesigning Democratic Rules to Foster Nationhood

25

orientations in any country will affect the possibilities for inclusive politics.
In every particular instance, each of these four characteristics must be
understood before we can begin to talk about which political designs
make sense in different situations. What then do we do when we want totarget a design, to make it open to different ethnicities? The recent experience of creating and implementing democratic rules in Africa suggests some lessons.
First, territorial sub-divisions of the state matter. Federalism is one
way to create political subunits. Nigerian federalism is territorial. Ethiopian federalism is ethnic. Regionalism is another design that has been
implemented in South Africa. Ghana is an example of decentralized design, which is yet another viable way. When we talk of the ethnic design,
we should not forget the sub-ethnic structures. These smaller units canrun their own show in districts, which changes the way we imagine thestate.
Second, the way we institutionalize power matters, particularly theconstraints we build into the state. There needs to be clear separation
between the party and state. We also need a clear distinction between theexecutive and legislature. We need deliberately clear democratic rules. A
two-tiered legislature is also a good structure to balance population size,on the one hand, and equality of group representation on the other. Institutional considerations of these types must be put on the agenda, andmust be modified as appropriate given the particular trajectory of any
specific country.
We must also devote attention to the rules governing the party system.
This effort should not be undertaken to dictate how parties are formed,
but to dictate what parties can and cannot do. In Nigeria, for instance,
you cannot form a party on ethnic or religious lines. Parties must have a
spread of various ethnicities. The party headquarters must be located in
the national capital. These necessities illustrate that rules can be made toensure that parties do not play to an ethnic or religious agenda. Anotherway to ensure that politicians do not play to an ethnic or religious agenda
is to institute minimum thresholds that a President or party must cross to
get elected, as parties must do in Nigeria and Tanzania, for instance.
Politicians are compelled to speak to many interests in the system – notjust to their own narrow constituency.
Third, common citizenship must be made meaningful. We must clarify
what basic rights are guaranteed to all citizens, irrespective of ethnicity.

26
It does not matter how many abstract rights we give to people if thoserights are not implemented. It is the basic rights that must be delivered.
National youth service, health care, and education are also useful to build
national identity. Financing these programs can be a struggle. The resource dimension must be addressed up front. In the Nigerian experience,the state has taken on an obligation to fund social programs, but there
have been struggles to raise the needed funds, particularly over VAT
revenue. The Nigerian state is also obligated to foster nationhood throughother means, including through the promotion of interethnic marriage.
Interethnic marriages take place in Nigeria, but not because the statemandated it! There are many such organic processes of inter-ethnic inclusion which the state may wish to foster through the creation of enabling environments.
To date, what are the outcomes of using democratic rules in Africa tofoster nationhood? The experience of Africa shows that excluding certain
groups from the presidency is dangerous. The dispersal of power and thecreation of multiple jurisdictions is key to any design of inclusion.
Whether this is done through federalism, regionalism, or decentralization
is immaterial. One must have areas of self-rule for groups as well as areas of shared rule for the commonwealth. Groups must be granted somevoice and the wherewithal to make things happen the way they deem fit,
but without threatening the collective. We need a clear definition of jurisdictions and powers, and of how to resolve conflicts among different
jurisdictions clearly from the start.
Yet in devolving power to subunits, we must be mindful not to weaken
the centre. The centre must maintain sufficient strength to do somethings; it must keep an eye on the common good and the national project.
There must be an emphasis on common citizenship. People must have a
stake in the way they are governed. Institutional complexity of this typeis likely to cause problems down the line; so mechanisms for resolving
disputes must also be part and parcel of the design of political structuresfrom the very beginning.
Nahomi Ichino
My presentation is about proportional and majoritarian electoral rules indiverse societies, and the degree to which these rules affect nationhood.
This analysis is preliminary. I am going to consider a proposition suggested by several authors: that more proportional ways of representing
people in governments would be helpful. The argument is that having
more groups of people and different interests represented and participating in government would lead to various better outcomes. However, be-Designing Democratic Rules to Foster Nationhood

27

fore we make a recommendation to adopt some policy X such as proportional representation, we should believe that if we do policy X, we will
get result Y. We should have a general idea of what might happen. A
small, limited model might be useful in making such an assessment.
First, let us step back and consider nationhood. Is the lack of nationhood a problem for development? Nationhood could be defined as overall identification with, common interest in, and regard for, other citizensof that country. Is this what we really want to address? The implicit
premise is that a greater sense of nationhood is the antidote to ethnicchauvinism, which is associated with more conflictual politics. However,it might be that the lack of nationhood is just a side symptom of somedeeper underlying issue. If the lack of nationhood is just a symptom, thenworking for inclusiveness and increasing a sense of nationhood might not
help development because it does not address the underlying problems.
Taking this approach, the question becomes this: Can political institutions that create inclusiveness in ethnically diverse societies decrease
political instability and improve economic performance? The question is
not directly about whether inclusive political institutions increase thesense of nationhood.
My focus and independent variable is electoral rules, which is a typeof political institution. The outcomes I am interested in are corruption
and the rule of law because these affect economic development.
The main idea is that more-proportional systems of representation
should lead to a wider sharing of resources. There should be less of asense of exclusion and wider access to the privileges and protections of
the state. For example, Reynal-Querol (2002) argues that more proportional representation leads to less rebellion because more people aresharing in resources. When there is less clarity over where such resourcesgo, there is more corruption. Constituencies in a proportional representation system are likely to be larger than in a majoritarian system. With
more people watching and participating in government, a proportional
representation system might generate more transparency and less corruption. However, a proportional representation system with its greaternumber of parties elected might encourage more side deals in the sharingout of resources, which appears as corruption.
There are a number of methodological issues we confront when we ask
whether electoral rules affect corruption and the rule of law. Electoralrules are determined by politics and are set at the national level, whichmeans that we must in some sense rely on counterfactual reasoning: what
would have happened if a country had the same ethnic composition, but28different electoral rules? It is impossible to observe this counterfactual
case for a given country, so my approach was to identify countries tostand in for these counterfactuals. So my approach is to create matchedpairs: for each proportional system country, I found a similar country that
had a majoritarian electoral system to stand in as its counterfactual. We
want to compare what happened under different electoral rules (proportional and majoritarian) in otherwise similar countries.
I did this based on country characteristics at the time of elections orpolitical liberalization. The characteristics I focused on were: level of
democracy, ethnic fractionalization, French colonial history, language,
unitary or federal system, and log population. Note that whether a country has proportional or majoritarian electoral rules is affected by colonial
history. No countries have perfect matches, but I think this is a reasonable approach.
(Referring to slide) You might be concerned with some of these pairs,
but if you’re going to look for countries that actually exist, instead of
hypothetical counterfactuals, the matches will be imperfect. Particularly
the Burkina Faso – Djibouti pair might be a concern. There are differences; the characteristics on which they differ do not influence the results
here. The relative size of the largest groups is what matters.
The dependent variables of corruption and rule of law are difficult tomeasure, as are the ethnic composition and diversity of a country. An
individual’s ethnicity is widely understood to be multiple and malleable,
and the boundaries of groups are not well defined; moreover, they canchange substantially over time. However, for whatever point in time atwhich new institutions are introduced, we can treat the ethnic picture as
pre-existing and fixed. We need to develop better methods to accommodate the changeability and malleability of ethnic boundaries for
macro-level studies of ethnic diversity, but here, some of the difficulties
that come from this malleability are ameliorated because ethnic configurations are not the outcome here. I am talking only about the effect of theelectoral system on other outcomes, and holding the ethnic configuration
constant. I have used non-parametric statistics, specifically the signed
rank statistic, to address measurement problems with rule of law andcorruption that quantitative scholars might point out. This type of statistic
also incorporates the idea that a larger difference between the paired
countries counts as stronger evidence. Statistical inference is conductedwithin a randomization inference framework.
The results suggest that a proportional system is bad for the rule of law.
We might have other compelling reasons to move to the more inclusive

Designing Democratic Rules to Foster Nationhood

29

proportional framework, but we should be aware that the rule of law
might suffer. My caveat bears repeating: these results are preliminary. At
this stage, we cannot be particularly confident that the differences weobserve here are actually different from zero. Yet we can draw some preliminary conclusions: proportional systems are probably worse than majoritarian systems for rule of law, although they do not appear to increase
corruption or weaken property rights.
So should we recommend more inclusive electoral systems? When we
answer this question, we need to think about interactions. These results
suggest that proportional representation may not lead to better outcomes,
and that there is a chance of changing to proportional representation
which might generate outcomes that are worse. So the overarching conclusion is that we should be careful, and be aware that reforming electoral rules might have unanticipated effects.
Discussion
John Lonsdale: There are some African texts that predate political science and reinforce the point made by Raufu, for instance one by Chief
Awololo in 1947. Countries need to take their national histories into theprescription for reform. Politicians should take note of the traditions intheir country. History also comes in one’s approach to Nahomi’s
thoughts––if we look at the pairings, it would be difficult to find countries that would be more different. Politicians act according to their histories more than the measures used here. Without those kinds of questions
added to these models, they lead one to conclusions that are difficult tointerpret.
Frances Stewart: Raufu, why did you not move into economic policy as
well? If you leave huge areas of the country deprived in economic terms,
the social policies will not matter. In addition, why did you not specifically examine legal systems? Legal systems can play a huge role inmaking people feel included. Additionally, should we not be thinking
about religious differences as well as ethnicity? If we are going to be
designing systems, we should think about religious differences as well.
In Nahomi’s paper, I am worried about outcome variables. People choose
proportional representation because they are thinking about preventing
political violence, not about increasing the rule of law. We should use
conflict as the outcome variable.
Thandika Mkandawire: I am intrigued by the pairings (in Nahomi’s
paper). Is the pairing itself endogenous? For instance, a particular state

30
just came out of conflict. For this reason, they chose proportional representation. When I think about proportional representation in the case of
Malawi, I think of the number of ethnic divisions and how they are represented in parliament, the outcomes are if the country actually had asystem of proportional representation. It is how the numbers are used andwhere they come from that is interesting. Each group is afraid that if wego to proportional representation, the other ethnic group will still exploit
the structure to have cross-party ties along ethnic lines. Even if theycame into power through party alliances, the other group, it is suspected,
will break the rules.
In addition, there are historical taboos preventing the adoption of proportional representation. Once one ethnic group has raised an idea, the idea
is tainted and cannot be raised again by a different ethnic group. Proportional representation was raised by one group in the 1960s and is now
taboo. The people who raised the idea were from a particular group, so
other groups assume it must be flawed.
Ernest Aryeetey: One of the things I like about Europe is the way institutions have evolved over centuries. Comparing European to African
institutions, I am struck by how frequently we Africans change things.
We very seldom allow them to evolve. In Europe, mistakes are made andthen they are corrected, as part of an evolution. This evolution is not allowed to occur in Africa. If an institution does not solve problems very
quickly, it is chucked away, and a new institution put in its place.
It occurred to me that for almost every country that runs a democraticelectoral system, you find things enshrined in a constitution. The problem
is these constitutional provisions often do not work the way we expect
them to work. If they are not working, how can we tinker around themargins, instead of arguing about an overhaul? In Ghana, there is a verystrong movement to change the constitution. I get worried about that. Is
there not a need for us to think about how to improve things where they
are not working, in particular to ask ourselves very specifically where
they are not working? The answer might enable us to move faster, tomake more targeted and meaningful progress.
On the issue of proportional representation, what I think about is the factthat one of the most dynamic developments in the last decade is very
rapid migration. The ethnic composition of communities can change
dramatically as people move, particularly into cities. What you have today in almost every African city is a collection of different ethnic groups
fighting for control of resources, hardly any city or region is dominatedby just one group. This lack of domination has many implications whenDesigning Democratic Rules to Foster Nationhood

31

you decide to do representation along proportional lines. If you follow
UK-type recommendations of devolution, it is difficult to follow proportional representation. One party can be dominant in one part of the country; in that region it can become one-party rule. So we have to be very
careful in structuring proportional representation across different regions.
Arnim Langer: I have two questions. Raufu, you spoke about need forpolitically inclusive formal or informal rules. What do you do if there are
no good data on ethnicity and countries are unwilling to collect them?
Second, this is linked to what Ernest was saying about change in institutions. Given that we are talking about something that can change overtime, how would you be able to include the needed flexibility in thoseinstitutions?
Abdul Raufu Mustapha: Frances, I left out economics because others
will be addressing that here. I understand that social policy will havecosts that have to be financed, and this leads to political negotiations, but
beyond that there are issues of economic efficiency that I am not qualified to address. An example of what I mean by that is, on the bus fromthe airport, we were discussing a Belgian university that was split in two
to enable both national groups in the country to be represented. There arecertain inefficiencies built into such social policies.
We need political and religious pluralism as well. There are ongoingpractices in countries that we can borrow from. Religion is an important
issue that overlaps with ethnicity to the point that it sometimes seems
that they are the same thing.
To Ernest, I am not suggesting a wholesale new constitution. In Nigeria,
we have had 11 constitutions. By definition, you cannot design politics. It
is messy. These are just little changes that can be done. If we do not do
the right things, we must bear the consequences. The costs in terms ofinefficiencies should be weighed against the potential for civil war andsocial breakdown, which suggests the value of these policies.
To Arnim, people have a pretty good idea of what numbers matter andwhat numbers do not matter. If you look at who has been governor of aparticular Nigerian state, we have no census data to know exactly whatpercent is Muslim, but we know––as a matter of everyday reality––that a
non-Muslim is not going to be elected in particular states. Even if welack data, we have “native knowledge” to know it is this way.
Arnim Langer: When the President of Ghana was interviewed, he was
asked about the composition of government because certain parts of the32
population felt excluded. However, these parts of the populations were
well represented, given their demographic size. They felt excluded because they did not know the demographic data. Misperceptions can feed
into political tensions and political mobilization. If we would have moreaccurate data, would it not help formation of those rules?
Abdul Raufu Mustapha: When we talk of ethnic groups, we talk of
numbers; we talk of how many millions of this or that. However, when
we talk of politics, we talk of elites. Some groups have a disproportionate
number of elites. Being conscious of this misrepresentation and thehigher visibility of elites in military or government, we should be sensitive to certain groups having a higher number of “active” elites.
Bruce Berman: When we look at the question of designing institutions,
we must look at where we are. The foundation of African politics lies inthe virtual institutionalization of patron–client relations that were there
before colonialism. Power was and is personal and based on those ties. It
is a universal human phenomenon in even formal organizations. Modern
times have not abolished those patron–client ties and they are often
called ‘‘mentoring’’ in large corporations. In pre-modern Africa, this was
not regarded as wrong; this was what power relations were. It is only inmodern states these relations are defined as corrupt, as unauthorized
personal appropriation and distribution of resources. Yet they haveenormous ability to persist within modern institutions. I have gone backand looked at the reviled one-party states of young post-colonial Africa.
Western observers called this a perversion of democracy, an excuse forauthoritarianism. However, perhaps it is really just a case of what today
would be called big tent parties – bringing people in using sophisticatedallocation of resources and patronage to feed diverse patron–client networks among many ethnic communities.
What are the shares that were being allocated? The most important were
jobs. If you were a political leader of a community, what was the bestform of patronage you could get for that community? Jobs. The core of
patronage is positions in government. Then come allocations such as
infrastructure contracts and scholarships.
Daniel Posner: The focus of Nahomi’s presentation was on the impact offormal institutional rules. This focus is appropriate because it is the focusof the conference. However, what about the impact of institutions onother aspects of people’s lives? What about the effect of proportional
representation or majoritarian representation on the link between people
and the national government, on how close people feel to the government? Majoritarian systems do a much better job of linking people toDesigning Democratic Rules to Foster Nationhood

33

their legislators. Joel Barkan’s project on The African Legislator looks at
18 different countries, collects data on rules, and interviews a random
sample of legislators. Their key findings are that citizens expect MPs toact as representatives and do constituency services. Majoritarian systems
are much stronger at this than proportional representation. The extent oflegislative independence from the executive, which is very important tobe able to check executive power, might also be better in a majoritariansystem. There is evidence that MPs elected in a majoritarian system do a
better job at checking executive power than those elected in a system of
proportional representation.
Nahomi, matching is a great tool but we need to include all the relevant
things that we can measure. The absence of these things led to the jarring
response you got. Particularly with the outcomes you’re measuring, youneed to include natural resources, perhaps religious fractionalization as
well, which might help the matches. You might only have 6–12 matchesat the end of the day. What you’re trying to do is difficult but worthwhile.
Frances Stewart: Not all proportional representation is the same. In theWest, we have got proportional representation according to parties. The
parties get voted in on platforms; then they allocate the seats to MPs. We
need to know if the systems in these African nations are proportional toparties or to ethnicities.
Thandika Mkandawire: We must also ask if one method of representation is more receptive to equity concerns than the other. The argument inOECD countries is that proportional representation is better for equity or
more receptive to equity concerns.
Daniel Posner: Barkan’s response would be that in the context of poverty or an economy that relies heavily on agriculture, the links between
government and the people are much different than in an OECD country.
Thandika Mkandawire: Yes, but at the same time we can only have
universal policies because of proportional representation. Sweden illustrates this.
Benno Ndulu: We are not talking causality here, just correlation. No
work shows causation that proportional representation equals more equity outcomes, or better social welfare outcomes.
Thandika Mkandawire: If you are designing systems, you should think
about equity outcomes of system as well.

34
Hiroyuki Hino: The lesson from Nahomi’s presentation is that weshould just be careful because there might be side effects of policy design.
She is not saying that there is clear causation between system and outcome. The conclusion is that we should be careful, and do more thinking
before we make policy advice that advocates for one system or another.
These electoral rules have many impacts.
Now I have some of my own questions:
In Kenya, people are arguing that parties should move to issues-based
rather than ethnicity-based elections. Would it encourage more ethnicity-based politics if we moved to a proportional system? If this is the case,then we are moving to the opposite direction of what the Kenyans might
be wanting to see.
There is also a question of incrementalism vs. big bang. What Kenya hasdone with its new constitution is a big bang, which was what people were
wanting at the time. They were dissatisfied with incremental changes andit was time for a big change. If things are not working in Nigeria, then weneed a big bang to give confidence to people.
Abdul Raufu Mustapha: Nigeria is moving away from a big bang approach. Nigeria is moving toward a system of continual negotiation, togive more space for deliberation, more negotiation and trying again torespond flexibly to changes. Nigeria is moving to an incremental approach.
Ernest Aryeetey: In Ghana we have to ask, what is the development
problem that we are trying to solve? In parliament, people are worried
about the quality of civil service, military, university, and different public
institutions. How do we improve the quality of all these institutions? Can
you use the constitution to address these problems? We have a constitution that says 70% of ministers should come from parliament, but half theparliament is sub-literate. So people say we need to take away the restriction of 70%. We must be able to appoint the best people. This is myargument about tinkering at the margins. We can make small changes toenable the President to pick the best people, thereby slowly raising thequality and making politics deliver better outcomes. How can this beformalized? These adaptations have to evolve with time. Then they canbe formalized over time too. It is about helping governments adjust to getbetter. These issues do not call for a big change; they call for modulationand small changes to make things better. An example of a small changethat really can make things better is more robust media. In the past, a
President could approve a huge disbursement to a particular region. To-

Designing Democratic Rules to Foster Nationhood

35

day, a journalist would pick this up and use it against the President, so
this cannot happen. People are more alert.
Hiroyuki Hino: I agree with you. In a country such as Ghana, where
there is some confidence in the people who hold power, there is willingness for incremental changes. In a situation where people have little confidence, then what do you do? Maybe this is a more general point related
to Raufu’s presentation: what do we do in a situation where we have aconstitution without constitutionalism?
What I see in Kenya also is that civil society has been empowered and isholding government to account. Pressure from civil society is making
constitutionalism work. This pressure is a separate force from the rightsthat are written into the constitution. So the question becomes this: How
do people grow to respect a constitution? How do we foster constitutionalism? Without this constitutionalism, none of the rules would mean verymuch.
Ernest Aryeetey: I’d like to give one example. Ten years ago, I was in athink-tank that wrote about how government was able to pursue extra
budgetary allocation of resources. We exposed the mechanism of how
this could happen. It was a large part of public expenditure, but no one
took any notice. Recently, this has become a big discussion in Ghana. It
is coming out now because a journalist has discovered it and made it a
big issue. You cannot deal with this quickly through a big bang, it requires patience.
Daniel Posner: I caution us against calling it big bang. Even wholesaleconstitutional change does not deliver an automatic big bang. A constitution is just an institutional framework that creates an incentive structure.
Changing the constitution changes these incentives, but it is wrong tothink that changing formal rules is immediately followed by changes in
actual practice. Practice is brought into alignment by a court system andjudgments.
Hiroyuki Hino: In Kenya, under the new constitution, all judges had togo through a vetting process. The people wanted a wholesale change.
Forty percent of the Supreme Court judges had to go. If you have a more
limited approach, things would not change. Perhaps the meaning of bigbang in my mind is different, but what is creating confidence in the
Kenyan judiciary today appears to be this agreement on wholesalechange. So how do we create this confidence in civil society, to get themto demand big changes? I argue the new constitution gives them this confidence. Everyone faces a choice, and must either line up with constitu-

36tion or not. I am not suggesting that Ghana or other countries should dothat, because their situations are very different, but it is working in
Kenya.
Gustav Ranis: The judiciary gives a signal that something is possible,
but it is not more than that.
Benno Ndulu: Kenya’s neighbors will be watching to see if the judiciary
behaves differently than it used to because there are many other factors
driving the behavior of the judiciary. Maybe the media is what will createpressure on the judiciary to behave in a new way because other branchesof government cannot provide a check on power.
Thandika Mkandawire: This point takes our conversation back to themedia and NGOs. We must remember that these are elites too. They are
all part of the conversation among elites.
Frances Stewart: The issues involving politics and how to get there areinteresting. If people mobilize based on class rather than on ethnicity,then you have real political issues being debated. So how can you getthat to happen in a situation when people are very divided by ethnicity? It
has happened in Latin America. The question then is: what are the conditions in which this mobilization is likely?
Ciraj Rassool: Raufu, I would like you to expand on the notions of social citizenship and common civic citizenship. In what sense are you using the notion of citizenship beyond narrow political conception of citizenship?
Abdul Raufu Mustapha: I got the impression we were narrowing theargument to proportional versus majoritarian systems, but this is only oneof many tools we can use. Big bang versus incremental change is again
another small debate. We are not just giving people the right to vote andthe abstract rights that come with citizenship. The quality of their lives
has to be affected with social citizenship. There must be a certain minimum floor that comes with being a citizen of that country. We have today
a situation where people’s lives are radically different within countries,
and often these differences map on to ethnic differences. So we need tofind ways that correct the unequal distribution of these resources. That is
my definition of civic citizenship. If you do not deliver this, then people
generate common cause with co-ethnics to fight for these rights.
Nahomi Ichino: On Dan’s point, let’s just be more cautious about proposing proportional representation. Does proportional representation giveDesigning Democratic Rules to Foster Nationhood

37

people more space for proposing ideas? Perhaps. It is easier for small
parties to enter; this might be something we consider in the long run.

38

Designing Democratic Rules to Foster NationhoodIII

Promoting Devolved Government for
Equitable Sharing of Public Resources

39

40

III

Promoting Devolved
Government for Equitable
Sharing of Public Resources

Gustav Ranis
I would like to begin by distinguishing vertical from horizontal decentralization. Vertical, whether de-concentration or delegation or devolution,
represents the central government relinquishing control over public resources and decision-making, extending it to lower levels of government.
Horizontal decentralization is extending these things to other branches ofgovernment, generally away from the Ministry of Finance.
The main arguments for vertical decentralization are that it leads tobetter information and lower transaction costs. The local government
learns by doing. Vertical decentralization lessens the chances of grandtheft corruption at the center, but may not lower petty corruption. Morevertical decentralization enhances the possibility of horizontal decentralization.
The main arguments against vertical decentralization are as follows.
First, local governments have weak capacity. There also might be morecorruption, particularly when there are more layers of government. Especially if a country has unevenly distributed wealth of natural resources,
vertical decentralization can lead to more unrest.-Homogeneous local
units produce more public goods. Heterogeneous units produce fewer
public goods. Equity between regions is an important function of central
government. The central government can assess taxes and spread resources, whereas local governments use immobile taxes. It is important
to look at different ratios, in particular at the financial autonomy of thelocal government, when discussing decentralization.

41

42
I would also like to explore the relation between vertical and horizontal decentralization. In horizontal decentralization, decision-making
moves from the finance ministry to other ministries. Or power moves
from the executive branch to the legislative branch. There are three indicators of the strength of horizontal decentralization: (1) the percentage ofthe central budget allocated to the education and health ministries, (2) the
existence of multi-party legislative branches at the center and locally, and(3) the prevalence and strength of NGOs. Democracy is an ingredient ofhorizontal decentralization. Some people argue that democracy does notmatter for growth at any level of income. In contrast, Collier and Alesina
found that democracy was helpful for growth in conditions of ethnic diversity. It is worth keeping in mind that one-third of African economies
are natural-resource dominated; the resource curse is an important consideration in policy design.
Interactions between the levels of government determine the quality
and quantity of public goods. Vertical decentralization increases thenumber of subunits. One important dimension of local democracy is: are
the heads of local legislative bodies appointed, indirectly elected, or directly elected? Who controls technical cadres? Usually the technicalcadres are still controlled by central government and this is crucial, although the local government or local legislative bodies could also controlthem.
My paper presents three country cases: Kenya, Uganda, and Indonesia.
I am slightly unkind to Kenya in the paper. The Constitution calls fordecentralization, but this has yet to be fully implemented. Mostly what
has happened is still de-concentration, not yet devolution. Local financeis only 4% of local government expenditure. Grants from above arelargely conditional: only 8% of them discretionary. Local expenditures
on health and education are down from 2004. Kenya’s ethno-linguistic
fractionalization index (ELF) is .83, which is very high.
Uganda exhibits a gradual move toward both horizontal and verticaldecentralization. Five levels of district councils were created, but mostpower rests with LC 5, which means it is fairly central. The center still
supervises local officials. That said, district councilors are elected directly; 30% of their revenues are locally generated. Uganda’s ELF iseven higher than Kenya’s, at .85. Only 15% of grants from the center are
unconditional. More expenditure is decentralized than in Kenya, but the
local levels are still weak.
Indonesia is an example of a big bang case of decentralization that waslater corrected. The big bang in 1998 was a rapid vertical decentralization

Promoting Devolved Government for Equitable Sharing of Public Resources

43

that created five levels of government. Civil servants were transferred to
local levels, but promotions stayed under the purview of the central government. Civil society was involved in these reforms. In 2004, the decentralization was reset because local governments were found to have been
overstaffed. They were spending too much money locally. So the government resurrected the old system, and gave more power back to thecenter.
In the process of decentralization, many more units were created. Anytime you create more units, you have more ethnic homogeneity, which isa good thing for public goods provision. In the Indonesia example, after
decentralization, education and health expenditures increased; 34% of all
government expenditures are on education and health in Indonesia,
which is much higher than in Kenya or Uganda. In addition, the heads oftwo provinces were elected directly, which was a big step for Indonesian
decentralization.
My conclusions are that vertical decentralization is necessary, particularly as a country becomes more complex. Horizontal decentralization isa necessary complement to make vertical decentralization work. Smaller
units of government help deliver better public goods outcomes because
they have more ethnic homogeneity. There is always corruption, whether
at the local level or the center. There should be no more than three levelsof government; otherwise there are too many hands out, too many opportunities for corruption. Corruption at the center is often difficult tospot, whereas corruption at the local level is easier to see and catch.
In conclusion, I have four policy recommendations:
1.
2.
3.
4.

Minimize the number of levels of government
Raise more revenue locally
Local government should not be allowed to borrow
Horizontal decentralization is necessary to support verticalDaniel Posner
I took very seriously that this was brainstorming. I see our topic, public
goods provision, as a more specific topic that complements the last panel
on political institutions more generally. Here we are just thinking about
one particular innovation, and I am looking at only one dependent variable: public goods provision. Gus’s paper is much broader in scope.
My question is: in an ethnically diverse country, what kind of devolution of political authority ensures the most fair and efficient provision of

44
public goods?
As a starting point, there is a large literature that says diversity undermines the efficient provision of public goods. The conventional wisdom
is that more homogeneous local units produce more local public goods.
The policy implication is that one should try to devolve power to small,homogeneous units.
I suggest the answer might not be so simple, for several reasons. In
many places, it is just not possible to create homogeneous subunits. People are often too intermixed. Absent massive population transfers (which
we obviously cannot promote), ethnically homogeneous units might be
impossible to create. Additionally, what about cities that are ethnicallyplural? We cannot make these places mono-ethnic.
Additionally, even when you think you have created ethnically homogeneous subunits, it might be a fool’s errand because new cleavages will
emerge. People have many different ethnicities at different levels. Whatethnicity they choose is dependent on how the boundaries of the community are drawn. If smaller units are created, they will start defining themselves differently, and even smaller groups will emerge. Competition forcontrol of new subunits will lead to incentives for exploiting new cleavages. Thinking we can create ethnically homogeneous subunits is convenient, but it just might not be so.
There are two channels through which public goods are provided. The
first channel is government. There is one story that links diversity to poor
public goods provisions because it is a context in which people want different things (Alesina, Baqir, Easterly 1999). There is a complementary
story that links a collective action problem to public goods. The problem
is not that we do not know what goods we want, the problem is that wehave to lobby to get these goods, and it is harder to lobby if you are adiverse group.
The second channel is where the group itself provides public goods.
Usually this happens when the central government has stopped providing
goods, so the community steps in and starts providing them. In a diverse
community there are lower norms of reciprocity, but in both situations(homogeneous and diverse), devolution might help.
It is crucial to remember that when you talk about devolution, you are
devolving power to counties or large units. Yet most of the relevant academic studies that link social homogeneity to better outcomes are basedon community-level analyses, where the community is defined at a much

Promoting Devolved Government for Equitable Sharing of Public Resources45

lower level of aggregation than the units to which power is ordinarily
devolved in a decentralized political system. Homogeneous counties orprovinces might coincide with markedly more diverse local communities.
Another weakness of all these accounts is that they ignore politics. We
must address politics, rather than a community’s ability to lobby thegovernment effectively. When we see inequality in distribution, it is usually because of favoritism on the part of people who control the allocation of resources. There is therefore a disconnect between the kind of
local collective action these theories focus on, and the politics that control the distribution.
The degree of diversity might matter much less than the fact that one
ethnic group controls power and the distribution of resources in the
country. From the standpoint of equal access to resources, it does notmatter if a country has two ethnic groups or 50 ethnic groups, if only one
group controls resources and engages in ethnic favoritism. The focus of
institutional reform efforts should therefore focus as much (or more) on
how much authority is transferred to subunits from the center as on creating homogeneous subunits. To the extent that this is the direction our
enquiry leads us, much of the existing literature on decentralization is notuseful.
The answer to reducing ethnic favoritism would seem to be extreme
devolution. To send the maximum resources down to the small community level, and then create mechanisms that ensure transparency at local
levels. There would be an algorithm to determine how much each administrative unit gets, based on population and poverty rates. This algorithm might diffuse the extent to which fights happen at the center overresource allocation because the center would not be able to control hugeresources. This inability to exert control is a major rationale for the devolved system in Kenya, which we have to read as a response to the 2007
violence. However, the viability of a devolved system depends on theadministrative capacity of small local units. Bad units might result inworse public goods provision. Inequality among units might lead to unequal distribution as well.
Whereas a number of public goods are truly local, others (roads, electrification, security) require coordination across subnational units. Soeven if you maximally devolve power, some public goods still must be
provided at the national level. So the door is still left open to the types ofinequalities this plan is meant to reduce. The fairness of this system isgoing to be contested by the subunits that contribute more resources.

46
In conclusion, there is no free lunch. Devolution might seem like aperfect solution for improving efficiency and fairness, but there aretradeoffs that one must keep in mind. Getting homogeneous units in thefirst place is tricky, in part because people are mixed, and because theethnic landscape is going to be endogenous to the boundaries of the units.
If the starting point of the literature is that homogeneous units lead tobetter public goods provisions, you realize this literature does not really
apply because the literature is focused on an extremely local level, not ona regional or state level. Devolution is only a partial answer to unfairness
at the center, with unfairness in this formulation meaning unequal distribution of resources between ethnicities. As a final caution, we should
keep in mind that devolution might lead to problems of its own.
Discussion
Frances Stewart: In Gus’s paper, he takes public goods as the sole criterion for devolution. What about the issue of conflict? It is not clear if
homogeneous or heterogeneous units lead to more conflict. When Nigeria had homogeneous units, it increased conflict because they had separatist tendencies. Then Nigeria was redesigned into smaller units, but thisput the conflict inside the units. It is a complex issue deciding homogeneous or heterogeneous units. I do not like the idea of putting people into
little homogeneous silos.
Furthermore, taking the US as an example of much horizontal decentralization, can you avoid the gridlock that comes with this?
Bruce Berman: What actually happens in communities when you devolve power? Much of it is handing resources to elites in communities.
Whereas we can talk about communities in an abstract way, really thechanges only apply to a very small group. Lower levels, such as communities, might be more elite-dominated than other levels. When we arelooking at how indigenous communities today lay claim to resources, forexample pastoral people in Africa, shunted aside by colonial rulers, theyoften first make their claim internationally, and from there construct anarrative of being a disadvantaged ethnic community. An elite-led narrative is constructed by elites who live in the capital and see an opportunity
to lay claim to more resources. This is how narratives for decentralization
are started. Decentralizations do not necessarily mean more democracy.
Then they may also mean less democracy. Robert Dahl argued that thesmaller a unit, the more prone it is to elite capture. In addition, this reminds me of the book Ethnicity, Inc., by John and Jean Comaroff whichdocuments the commodification of ethnic culture by the elites and theirPromoting Devolved Government for Equitable Sharing of Public Resources

47

sale in the international market. For example, the Maasai have beenmasterful in marketing themselves. What they have done created an impression abroad that Maasai are the majority in Kenya, when they have
only 2% of the population.
There is a different cleavage too, by class, which brings to mind Charles
Beard’s argument that the US Constitution was just an arrangement ofhanding resources to ruling elites in the 13 former colonies.
Ernest Aryeetey: The question is, how far do you go in delegating or
devolving functions to lower levels? The Ghanaian example brings out
many of the challenges you described. Homogeneous groups are notfound in particular areas. Nobody thinks in terms of ethnicity in the decentralization agenda. For levels beyond the district, the political authority that goes with this has not been well defined. Is there a need for us tomake these units politically stronger? The past 24 years show the difficulty of mobilizing resources at that level.
Whatever these districts have as resources comes as a transfer from thecenter. This means that much of their time is spent haggling over the resources they get. So the challenge is to make sure the rules by which resources are distributed are well defined; otherwise issues of negotiation
and bargaining steal the spotlight.
Bruce’s point about the likelihood of elite capture is valid. However, developments are taking place that suggest elite capture becoming less easy.
In Ghana, the state’s influence at the district level has declined as NGOs,
the German government, and the Canadian government are all now serious players. NGO bosses in the districts might be more powerful thanstate bosses. Private schools might be more powerful than public schools.
How do you make these NGOs more responsive to broader social goals?
John Lonsdale: One difficulty both presentations raised was administrative capacity. We have talked very little about civil service and how it isfunded. Colonial officials became chameleons to speak for their people.
Nahomi Ichino: Dan, could you discuss what kind of incentives would
be good for the civil service, to encourage better outcomes? Would
non-partisan elections be useful?
Ciraj Rassool: In Limpopo province there was rampant failure on thepart of the service providers to deliver textbooks to schools. In Western
Cape or Gauteng province, a disaster of this type would be impossible tohide. Yet in Limpopo, this can be hidden. Why? In South Africa, consti-

48
tutional divisions are based on apartheid era Bantustans; labor reserves
were turned into provinces.
Abdul Raufu Mustapha: If we locate the problem away from collective
action and toward incentives, what should the response be?
Thandika Mkandawire: Dan, what is the specific problem that you aretrying to solve? Nationalists used all sorts of policies to solve certain
problems. For some problems, they were better off centralizing. For moretargeted aspects of social welfare, they were better off decentralizing.
Normally, when central governments have a lot of money, they do not
like decentralization. When they’re broke, they like decentralization. In
Senegal, the argument was that they were empowering people by decentralization, but it was because there was no money, and the reforms left
people worse off.
Hiroshi Kato: Under which type of system (majoritarian or proportional
representation) are governments more willing to decentralize? Bothpresentations assume that capacity constraints at lower levels of government can be ignored. The provision of public goods, however, could differ from community to community based on capacity. This capacity is aserious issue, and means we should be very cautious about the sequencing of public goods provisioning.
How could national leaders be motivated to be fairer toward manygroups in the society?
In high growth economies, national leaders have an incentive to be fairbecause there is a strong threat from certain regions. In contemporary
Africa, there is not the same motivation for national leaders to provide
goods more fairly, spread all over the nation.
Gustav Ranis: I accept the notion that homogeneous units might not be
so easily created. However, whenever you have vertical decentralization,
usually it means an increase in the number of units, and usually theseunits are more homogeneous.
The full devolution advocated by Dan is highly unlikely. The central
government has important functions, including guaranteeing equity
across units. Even in advanced countries, 60% of functions are still centralized. Homogeneous units need not be autarkic; they can trade witheach other.
There is elite capture at the local level, but it does not look so bad whenPromoting Devolved Government for Equitable Sharing of Public Resources

49

compared with the possibilities for corruption at the center. There is a
black box at the center, although a goldfish bowl exists at the local level.
Local people know what resources are arriving, so there are limits to howmuch can be siphoned off at the local level. Comparing local and national corruption is an empirical issue, but there is an argument for the
local level having the upper hand.
Often, even when on paper the civil service is turned over to local government, it does not really get handed over. The local government isnever going to be ready unless you involve them. The same argument
was made of peasants not being ready to farm on their own, but they
were ready, once agriculture was devolved. So what is the objective?
Ultimately, the objective is to create conditions where the right kind of
public goods are created. You have decentralization in bad times, without
sending the money. The ministry of finance does not like to decentralize,
and they usually win, but we must take away some of the power from theministry of finance. Pressure from civil society and NGOs can help tomake the finance ministry responsive to what people really need andwant.
Daniel Posner: The civil service is a really critical part of the development story because the civil service is formally insulated from politics,
and civil servants are stationed in places outside their homeland. Even if
the minister has no education credentials, if the permanent civil secretaryis highly competent, the damage is minimized.
We must maximize the accountability of the local authority. It is important to make sure re-election is tied to service provision, and to invest
resources in spreading information about service provision.
What are the implications of emphasizing ethnic favoritism versus collective action?
If the question is collective action, decentralization is the answer. If thequestion is ethnic favoritism, then the answer is to maximize the degree
to which power is devolved from the center.
To what extent are leaders willing to decentralize? A willingness to decentralize is most common at founding moments, for instance in theshaping of the US Constitution, or following an extreme moment of conflict, for instance in Kenya in 2008, or as a response to a secessionist
impulse. Apart from crisis moments, it can be difficult to decentralize
because no one wants to cede power.

50
How do we motivate leaders to be less ethnically discriminatory?
Electoral rules are increasingly included in constitutions; it is written thata politician must have support from x, y, z, communities, which makes it
difficult to be blatant about ethnic politics. There is a project that looks at
ethnic favoritism in education. The data show that this became less acceptable over time.
Benno Ndulu: When trying to make a connection between devolution at
the local level (which is usually organized as a geographic entity) andethnic space, it is worth remembering that these units are not usually organized along ethnic lines. It is not necessarily true that local government
represents the relevant local ethnic communities. It is a matter of how
you bring accountability at the lowest level. It is difficult to make the link
between ethnic community and local governments; there is not necessarily a clear overlap. So what is the ethnic part of this decentralization
conversation?
Hiroyuki Hino: In Kenya, devolution was motivated by a fear of domination by one ethnicity. There is a large overlap between geographically
based units and ethnically based units: the smaller the unit, the closer thecorrelation between geography and ethnicity. The assumption is that bydevolving, the ethnic groups that are not in power are safer. I agree that
imposing financial discipline on local units is key, but how can you do
this without arousing the fear of choking off funding for certain groups?
In Tanzania, this kind of fear does not exist, but in Kenya it is very real.
An answer might be to make it formula-based. Removing politics to thegreatest extent possible is in the interest of everybody. Rules should bemade for how money is distributed between the center and localities, andamong the localities. By agreeing up front on the formula, the bargaining
concerns are mitigated. In addition, certainly not everything can be devolved. How much of national government services can be devolved?
These calculations form the basis of deciding how much revenue can betransferred. This value can then be adjusted as the capacity of local units
rises, which is a matter of sequencing in a way. If you devolve without
adequate capacity, then there will be a failure. There should be an impetus to start with capacity building. Then at least conceptually, the decision of how much money you transfer follows the capacity.
The question of elite capture is a related issue. If you fear elite capture by
the center, you bring resources closer to your community where you canmonitor them more closely. This argument is very much based on theassumption that moral ethnicity is at work. Where ethnic diversity is cre-Promoting Devolved Government for Equitable Sharing of Public Resources51

ating suspicion, devolution is a way to address the problem.
Gustav Ranis: As these new units are created with vertical decentralization, you often get a lot of ethnic homogeneity. That is how these units
get formed.
We must be careful using the word devolution. What you have is delegation in most places. Devolution means the central government is fully
letting go; this is rare. Devolution means hands are completely off theresources. This is not the case in Kenya; there is no way the local governments in Kenya can borrow without the central government.
Benno Ndulu: Even after resources are devolved, we still need a framework in which the nation as a whole can manage its debts.
Hiroyuki Hino: There has been a determination about how much thenation as a whole can borrow. It cannot be a decision of the center alone
though – the local units must weigh in.
Benno Ndulu: In Kenya, each parliamentarian gets a fund to spend in its
constituency. This fund, the Constituency Development Fund (CDF), is
one of the most popular things in Kenya. MPs love it. Does this slush
fund equal corruption? The CDF is an unconditional transfer to representatives of the central government; it is totally discretionary. Tanzaniancivil society was horrified, but recently our parliament passed a measure
to create the same thing in Tanzania.
Thandika Mkandawire: If there is a perception that central government
favors one part of the country over another, there are problems. If thecenter is not enforcing these rules equally, it is a big problem.
Frances Stewart: It is important to remember the bargaining comes during the making of the rules.

52

Promoting Devolved Government for Equitable Sharing of Public ResourcesIV

Bonding Ethnic Communities andBuilding National Cohesion

53

54

IV

Bonding Ethnic Communities
and Building National Cohesion

Germano Mwabu
My presentation is on social cohesion, ethnic diversity, and development.
It is a preliminary analysis with Kenyan data.
The context of the analysis is that in 2008, there was violence in
Kenya; communities that had lived together in peace for a long time began fighting. So is there a way these communities can live together
again? Is there a way to increase social cohesion in these communities?
In a low income country, the process of development can be proxiedby absolute poverty. Here I define development as inclusive growth. Absolute income poverty cannot be sustained in an economy with growththat is widely shared.
Our research asks: is ethnic diversity good for development? One argument is that some communities can be a source of entrepreneurshipand positive competition, which provides a natural argument for investment in all communities in the spirit of balanced development. The Kikuyu are known for having entrepreneurial skills. These entrepreneurial
skills might have nothing to do with ethnic traits, and are likely to havebeen acquired over a long period of time through channels unrelated toethnicity, such as earlier contacts with commerce and industry relative toother communities. Ethnic diversity implies that communities have different identity labels, which reflect attributes of communities such ascommon language or religion that could have distant origins in time. The
labels on their own should have no effect on economic growth or on the55

56
distribution of resources. Economic outcomes should be blind to people’s
ethnic titles. Although ethnic titles have no productive value, they canhave an intrinsic value.
The Kenyan Constitution declares ethnic diversity to be a good thing.
So what policies can be put in place to ensure that different communities
live together in harmony? It is important to note that ethnic diversity canbe bad for development when it is used as a criterion for resource allocation or political power. In that case, ethnic identity becomes a way forpeople to obtain political power, which can lead to inefficient and inequitable resource distribution and to greater poverty.
In Kenya, we have homogeneous communities that run into problemsof social conflicts. It is also important to note that there can be social
cohesion without development and vice-versa. There might not be causal
mechanisms in situations where ethnic conflicts and ethnic diversity areobserved together. Furthermore, any presence of causal mechanisms
might require special tools and data to identify.
Social cohesion is not merely a means to improve economic outcomes;
it is an end in itself, which should be promoted in its own right. Even if
we cannot demonstrate an economic payoff from social cohesion, there
are still good reasons to measure and enhance social cohesion. It is valuable to identify the factors that bond communities together.
We assessed several components of social cohesion: trust in othergroups, satisfaction with life, and fairness in the allocation of public
goods.
Using data collected by Kenya Institute for Public Policy Research andAnalysis (KIPPRA) in 2010, we found that government expenditure,especially on infrastructure, is strongly correlated with poverty reduction
and with national development: roads that are built and which are usedby poor people lead to increased incomes and consumption.
The other result inferred from the data is that whether or not people
believe they can trust ethnic groups is dependent (a) on where they liveand (b) on their gender. Rural residents trust other groups more than urban people do. This trust contradicts our expectations because the degreeof social interaction among different ethnic groups is higher in urban
areas.
Another piece of evidence from the data is that the risk of suffering
violence is elevated by membership in a major ethnic group. If you were

Bonding Ethnic Communities and Building National Cohesion

57

a member of one of the five major ethnic groups in Kenya, you weremore likely to be affected by post-election violence in 2008 than if you
belonged to a smaller group. We examined this correlation in several
ways. The risk was higher for members of major groups no matter how
we computed it.
We also had an interesting finding related to the link between education and national pride. As people progress from primary to secondary
education, their pride in being a Kenyan increases. The more educatedpeople are, the more pride they have in their national identity. Pride inbeing a Kenyan is also positively correlated with inter-ethnic trust.
Using secondary data, we showed that the shares of jobs (public appointments) held by five main ethnic groups did not differ substantiallyfrom their population shares. The discrepancy between the population
percentage and distribution of jobs is small, even if statistically significant. Despite the country’s two past Kikuyu presidents, the Kikuyu are
not occupying a particularly disproportionately large share of government jobs. The public perception that job distribution among ethnic
groups is unfair is exaggerated.
In conclusion, to elucidate the links between social cohesion and development we need a structural model and an appropriate dataset to estimate the model. We only have weak evidence that policies which reducepoverty are positively correlated with social cohesion. Policies that address perceived unfairness in government social spending are good forsocial cohesion. National pride and social trust are positively associated,but the degree of mutual correlation is modest.
Arnim Langer
My objective is to provide a cursory overview of the research on nation-building in Africa and to highlight some possible avenues for future
research.
The challenge of nation-building that African states faced fundamentally resulted from the arbitrariness of the way states were created. For
decades, a strong belief prevailed that nation-building was of the utmost
importance. The rise in violent conflicts in the 1990s and the emphasison ‘post-conflict reconstruction’ led to renewed interest in nation-building. More recently, with the international invasions in Iraq and
Afghanistan, nation-building has also been on high the Western policy
agenda. Academically, one can see a revival of interest in issues of nation-building during the last decade. Indeed, ‘nation-building’ is increas-

58
ingly used as an explanatory variable for many social, political, and economic phenomena.
When discussing issues of nation-building, we must talk also about
ethnic diversity. Ethnic diversity has been linked to a range of negativesocial, economic and political outcomes, including higher risks of violent
conflict, lower levels of growth and the likelihood of less public good
provision. Nation-building is often regarded as a way of avoiding thesenegative outcomes. Although nation-building might be undertaken withgood intentions, it might under certain circumstances also lead to a rise intensions and even violence. In this respect it is important to rememberthat in many ways we are talking about the core identity of the state,
which is often a politically sensitive issue.
In the academic literature, some scholars are very skeptical about theextent to which one can actually do away with ethnic differences via nation-building. Horowitz is arguably the most outspoken critic, stating that
we must learn to live with ethnic differences instead of moving beyond
them. Some scholars are in favor of very radical solutions, including
modifying borders so that underlying ethnic demography fits better
within them. Perhaps in this case though, the medicine is worse than the
disease.
Most African countries tried different nation-building policies
throughout their postcolonial period. Some nation-building policies are
symbolic. Other measures involve ulterior motives. An example of this is
the creation of a one-party state. Whereas the establishment of aone-party state was often justified by saying that multi-party politics
would result in (ethnic) divisions and tensions, it was obviously very
convenient for ruling regimes to have no opposition.
Some of these nation-building policies have dual purposes: they foster
nation-building while at the same time having a more common or typicalpolicy purpose. For instance, many social policies were designed to integrate the nation, but these policies clearly also aimed to achieve generalsocial and economic development. However, in many African countries
these social policies were a critical component of the nation-building
efforts that different regimes undertook. An important part of the colonial
legacy was the presence of inequalities among groups or horizontal inequalities. It was clear to African policymakers that these inequalities
were hurdles to social cohesion and nation-building, and that social policy was a key tool to tackle these inequalities. One finds a direct andpositive link between social spending and the state of national integration.
In the early 1960s, when social spending was high, integration benefited.

Bonding Ethnic Communities and Building National Cohesion

59

Cuts in spending also affected national integration (Kpessa et al. 2011).
Much of the research which has examined integration has used aqualitative approach, which is mainly the result of the fact that nation-building is difficult to define and operationalize. In many ways theconcept is intuitively clear, yet at the same time intangible. Some interpret it as an endpoint. Some see it as a process. Is this an ongoing or perpetual process or does it have an endpoint? Is it a spectrum? There aremany opinions.
The variety of notions and definitions related to the issue of nation-building has been further expanded with the emergence of the
post-conflict literature in the wake of the sharp numerical increase ofviolent intrastate conflicts in the early 1990s. The key question of thisliterature was: how do we rebuild the countries and societies which arecoming out of conflict? Through this literature, nation-building became
intertwined with concepts such as state-building, democratization, andpost conflict reconstruction.
Nation-building is difficult to approach scientifically. However, more
scholars are starting to use some operationalization of nation-building as
an explanatory variable in their analyses. Although these studies are oftenvery interesting, I argue that nation-building should not be used only as
an explanatory variable, but should also be regarded as a dependent
variable. Moreover, very little is known about which nation-building
policies work, and why and how they work, which underscores the needfor clarification of the concept and its operationalization. Are there indicators that tell us something about how social cohesion is evolving? Thatis the thinking behind the KIPPRA Social Cohesion Index. The index
includes objective and subjective indicators. It is a very complex index
that is not straightforward. One can debate how different indicators
should be weighted. Additionally, data availability guided how we constructed the index. This is a second-best approach. A perfect index can be
designed, but nothing can be said without data.
I would like to conclude with a research agenda. It is important toemphasize that a lot of insightful work has been done on nation-building,but we still know very little about how and why nation-building policies
work. Therefore, many questions must be re-examined. Nation-building
is not a fixed concept. What does that mean in contemporary Africa?
How can we measure the outcome of nation-building, and how can we
make cross-national comparisons? What is the actual impact of different
nation-building policies on advancing national identities? Why do theywork or not work?

60

I would like to end with a call for interdisciplinary work. It is very
important to look at and engage with work of different types, particularly
the contact hypothesis, from social psychology and sociology.
Discussion
Ernest Aryeetey: I want to situate the discussion in a slightly different
way. Nation-building is a challenging topic. The difference between the
post-independence period and today is that nation-building used to beframed differently. The previous framing was: now that we have gained
independence, how do we mobilize against the oppressor, for faster development?
It was easy to bring people together when we were all working against acolonial oppressor. Now, the extent to which these bonding exercises canwork is dependent on a number of factors. In communities that are
self-defined, the nature of the self-definition will determine the bond thatis possible. In what way does religion become more important than ethnic origin? In what way does the school I attended become more important than my ethnic origin? These various other social categorizations
interact with ethnicity. Categories aside from ethnicity matter.
There is also urbanization. Africa is the fastest-urbanizing part of theworld. How does this change ethnic identity or change how people use
ethnic identity? It varies hugely from city to city and country to country.
Another question is: how does civil society come to play a role in this?
To what extent can civil society help create more solid bonds amonggroups?
Benno Ndulu: The call for more work on nation-building is extremely
timely. We need to know how to do it more effectively. I want to callattention to work by Kessler on Tanzania in 2006. She tested the robustness of the results of nation-building in the context of a much more liberalized economy than Tanzania now has. Her subjects were a rising elite:
final year students at the university. These students probably benefitedintergenerationally from nation-building, but were not influenced by itdirectly. The question they were given tested their commitment to thepeaceful resolution of conflict. The results showed that peaceful politicalculture has become ingrained in what it means to be Tanzanian. This iswork worth taking further. More detailed work has been proposed testing
the robustness of these findings. This work concludes with the fear thatmemory is apparently eroding too quickly; there is a need to refresh thismemory in Tanzania. My pitch is that this is important, and it is impor-Bonding Ethnic Communities and Building National Cohesion

61tant to look at whether the impacts of nation-building endure or not.
Hiroshi Kato: Arnim, should nation-building be put on the left-hand sideof the equation or right-hand side of the equation? From my perspective
as a JICA participant, nation-building has always been placed on the explanatory (right-hand) side. Does this depend on how the term nation-building is defined? Maybe if it is just defined as cohesion, it could
be put on the right-hand side, but if it is defined more broadly, nation-building must always be put on the left-hand side.
Motoki Takahashi: There are many difficulties in making international
comparisons about nation-building. What about countries where you
cannot differentiate ethnic identity from national identity (e.g., Swazi orJapanese)? This is related to Kato-san’s comments about nation-building
belonging on the right-hand side or left-hand side. Is social cohesion attributed to each individual if social cohesion is the dependent variable in
the nation-building framework?
Frances Stewart: Social cohesion has many different parts. It is very
difficult to be clear which parts we are talking about. In talking aboutsocial cohesion, all the components are on the ‘supply side’ so to speak.
We are also leaving out politics. If you have political incentives for people to use ethnicity, then all the nation-building can disintegrate rapidly.
The whole thing can explode.
Thandika Mkandawire: When did nation-building begin? I think it goesback to the period when the borders were drawn up. A lot of what wehave as headaches today can be traced back to when the nationalboundaries were drawn. This is not strictly a post-independence phenomenon. It is also important to remember that nationalism itself
changed with the events in Katanga, which led to huge changes in how
Africans perceive nation-building. Even in those states that had advanced
nation-building, Katanga convinced a generation of leaders that the colonialists were out to break up these countries. This was a powerful narrative. These sentiments were later used to justify one-party states.
Many politicians are nationalist by day and tribalists by night. African
politicians do spend a lot of time managing tribal relations. It is notunique to Africa that politicians must spend energy in managing relations
between groups.
On nation-building as a variable: once you can measure a variable, it canbe on either side of the equation. The question is on what side of theequation does it fall? That is the endogeneity problem.

62

Arnim Langer: My argument for putting nation-building on the right(dependent) side of nation-building equation is that we want to understand which factors influence it. We need to test whether certain policies
or programs have the desired effect. We must look into these things before we say we cannot do them. If we implement policies, we need toknow they work. We need to develop frameworks to see if they work. We
also need to define nation-building thoroughly and ascertain how it affects people’s feelings of national identity. We need to test identity before
and after policy intervention. We need to try to control this as much as
possible.
Bruce Berman: The nation-building paradigm basically framed policy
toward Africa from 1950–70. This paradigm came through aid agencies
and represented the high-water mark of Keynesianism. It looked at Africa
as somehow flawed, and it tried to make up for this somehow. What islying behind this understanding is that this is in fact what happened inEurope in its post-war reconstruction. This approach also showed there
was an implicit understanding that African societies were composed oftribes, which were antithetical to modern states.
Nation-building in Europe was a coercive and violent creation. It is particularly interesting that one of the models of this was Britain – in the
1700s England assumed marginal communities into its identity by constructing a fictional identity called “British.” This identity worked very
successfully with regard to the Scottish. The problem was that issues ofclass began to dominate in both Wales and Scotland. Ireland failed because of religious differences. In contemporary Europe, as minority
rights become okay to talk about, we see these differences of submerged
ethnic minorities emerge again.
Methodologically, we need to ask: what are we looking at and how do welook at it?
I am tired of being told I use anecdotes. We reconstruct what actually
happened. To believe you can construct theories out of this [quantitative]
evidence is nonsense. It does not happen. What emerges out of this[quantitative] methodology is in fact a simplistic caricature of whatnatural scientists do.
Germano Mwabu: Social cohesion is a societal concept, but it is measured at the individual level. The higher the proportion of trusting people
in a community, the stronger the social cohesion is. The question is: canwe aggregate it smoothly to get a meaningful overall index? There areBonding Ethnic Communities and Building National Cohesion

63

important links between social cohesion and government expenditure.
Social cohesion can be linked to the variance in government expenditureacross communities. We can think of government expenditure as an independent variable in a model that explains social cohesion. However,which of the two is an independent (or dependent) variable depends on
the outcome we are trying to measure.

64Bonding Ethnic Communities and Building National Cohesion

V

Addressing Cleavages over Land

65

66

V

Addressing Cleavages overLand

Ciraj Rassool
I would like to connect with the discussion yesterday about social cohesion. This panel is about one aspect of social cohesion. There was a tendency yesterday to limit our understanding of social cohesion to something that can be surveyed and aggregated, to something that is a developmental intervention. We overlooked the broader, deeper questions thatmust be asked about social cohesion and nationalism. We must ask: whatis the story of the nation? Social cohesion occurs through the building ofa national narrative, which is how people come to believe they are part ofa nation, through storytelling. How do you implant a story of the nation
into citizens?
Memory did not arise yesterday. Yet the way you reconstruct a societythat has been damaged is by building a common memory. You engage insocial reconstruction through processes of memorialization, which occur
both from above and below. Many of the centralizing and overarching
narratives of nations are constructed in museums and similar places,
which is how a public national history is constructed. Citizens are conscripted into the new nation, and it is never without contestation. There
are also forms of memory-making from below, which draw on the energyof the local community.
Social cohesion must also be understood in the context of social reconstruction. South Africa leads the way here; and the South African
projects have been exported all over the world. There is in some senses6768South African authorship of the discourse of transitional justice, all theway through the Latin American truth commission and the International
Council of Transitional Justice. The mechanisms through which one canreconstruct the state must be understood. How did people go aboutbuilding the discourse of reconciliation for South African society? The
Truth and Reconciliation Committee is a discourse. Many people haveerred in trying to measure the work of the Truth and Reconciliation
Committee by forgetting that it is, at its core, a discourse. The othermechanism of reconstruction was the Land Restitution Act. This Act set
the limit at 1913, so that no dispossession before 1913 was justifiable
before this mechanism.
In my paper, I look specifically at restitution in District Six, which still
stands as a scar at the foot of Table Mountain in Cape Town. District Six
was the site of the first forced removal in South Africa. In 1901, someresidents were moved to a township, and forced removals continued
through the 1980s under the Group Areas Act, a mechanism of apartheid.
This history must be understood as part of the wider history of rural andurban displacement. After apartheid, the land restitution movement madean argument but to move back to the District Six land in the city, insteadof taking compensation. The District Six Beneficiary and Development
Trust represented the claimants; it helped forcibly displaced residents todevelop the skills to make claims. Land restitution represents the only
mechanism to return the poor to the inner city in Cape Town.
Former residents eventually won the right to go back to reconstructed
homes in District Six. This restitution cannot only be about rebuilding
housing, however; it must be about rebuilding a community. How do you
re-create community memory?
There are many ways in which civil society and institutions have mobilized and built civic resources to increase the agency of the local District Six community. The District Six Museum began as a memory project and became a museum by accident. The District Six Museum experience is representative of broader global work to think about physicalplaces as landscapes or memory, and to redefine museums as mechanisms of social cohesion. UNESCO is currently being pressed to redefine
the term ‘museum’ away from being merely a conservation of collections,
to being more about the creation of civic forums, places that mediate
communication.
The District Six Museum faced a challenge to extend its approach andintroduce issues of memory into the redevelopment process at nearby
Prestwich Place. Prestwich Place is an old slave burial ground in DistrictAddressing Cleavages over Land69

One of Cape Town. It is also right along the World Cup fan walk, which
is a place of enormous interest to commercial developers. A bitter legal
and moral contest was fought among developers, heritage authorities, andlocal groups over what to do about this centuries-old urban cemetery ofslaves and poor people. Ultimately, the cemetery was disturbed and disinterred so the development could go ahead, but proposals for urban
memorial inscription won widespread support and were adopted.
The overarching conclusion is that we need to devote attention to thesites of memory. In Cape Town, a contest has taken place over whether
one should use the mechanisms of memory to prevent inappropriate development. In District Six, the resources of the market are beginning totake charge as the heritage committee delays. The easternmost part ofDistrict Six has become a hub of eco-friendly design, which means theland is on the market now. These are the kinds of contest in which it has
become apparent that there might be limits to restitution. There are manyother examples that illuminate the limits of restitution. For instance, inCape Town, the black population was removed from the area near
Kirstenbosch, which is the most valuable area in South Africa. The highvalue of the land might make it impossible to return to the past.
Kojo Amanor
I want to provide an overview of recent developments in land administrative reform throughout the African continent, and their implications
for ethnicity and ethnic conflicts.
Since the 1990s, the land question in Africa has gained considerable
attention. The majority of nations have developed new land policies. The
exceptions are: Zimbabwe, the Democratic Republic of Congo, Central
African Republic, Cameroon, Gabon, and the Republic of Congo.
Most of these reforms are concerned with harmonizing customary andstatutory forms of land ownership. These different initiatives follow threesteps. They start with a consultative process. Then they foster an evolution in land policies. Finally they change land laws to create formal recognition of customary land.
I argue that there is a tension in recent land administration policy because empowering local or customary authorities also ends up disempowering other people: usually the local poor. The empowerment ofsome leads to the dispossession of others.
Recognizing land ownership within a market framework leads to the70commodification of land. Land ownership is supposed to create security,
but in practice, creating ownership often leads to insecurity and exacerbates conflict. It can affect gender, relations between youth and elders,
relations between nobles and regular citizens, and relations between migrants versus those who make claims to being original settlers. Anothersource of tension is the conflicting patterns of land use, particularly fixedversus migratory land use. These insecurities and tensions over land areoften represented as ethnic conflicts.
Recent reforms in land administration claim to build a more accommodating framework, one of social inclusion, in which it is argued thatmost people hold land under a customary basis. Recognizing the customary rights of these people is how the vast majority of Africans gain accessto land. This recognition of customary land arrangements occurs alongside an expansion of markets and liberalization. Marketization is ostensibly to create more security and allow people to make their land a financial asset. The expansion of markets allows farmers to buy and sell land,
which enables the transfer of land to those who can use it most productively. In the World Bank’s framework, this ability to sell prepares theleast efficient farmers to exit agriculture.
There are two dominant frameworks of land research: a communitarian and a market perspective. The communitarian perspective argues
that the majority gain land under customary tenure, which is dynamic,
flexible, and which can adapt to new circumstances. Cumbersome procedures have been established by the state for gaining formal recognitionof land rights. Those procedures prevent the vast majority of rural people
from registering their land. To overcome these obstacles, communitarians
advocate for harmonizing statutory and customary tenure through theinstitutionalization of clear and simple procedures for titling communal
lands.
In contrast to the communitarian perspective, a market perspective argues that past management of land has lacked transparency and led towidespread abuse in which land is misallocated to elites. Investors mustnegotiate access to land through the state rather than the market, which is
cumbersome. The market perspective suggests that under state managed
statutory tenure, there is often insecurity in gaining ownership, and thatmarkets are a more efficient mechanism for the allocation of land in relation to demand and supply, enabling those with surplus land to transact
what they have no use of, and enabling those with insufficient land to
gain more.
In the present period, there is synergy between the communitarian andAddressing Cleavages over Land71

market approaches. The successful development of markets requires that
customary land rights be recognized since most land continues to be
managed under customary systems. It is through the recognition and registration of customary rights that land enters the market. The recognitionof land rights enables rural producers to be integrated into world markets.
Moreover, it enables the development of contractual arrangements, which
are common in agribusiness.
Recognizing customary rights also requires institutional arrangementsthat are capable of making ownership meaningful by facilitating functional ownership rights in land and resources. These institutional innovations engender synergic interactions between forms of communitarianismand market based reform. Decentralization, community empowerment,
and participation co-exist with a commitment to building markets androoting social equity in the development of markets.
These institution-building policy processes redefine land. They transform user rights into commodities. Customary tenure means that a user’s
right to the land must be constantly negotiated within a community andthat individual users cannot transact their rights without undertaking social negotiation within their respective families and communities. Transforming these land rights removes the need for that negotiation. The user
becomes a recognized owner in law. Therefore, redefining user rights as
a commodity transforms relationships with land. It can be a threat to theirclaims or be a justification for additional control. The seemingly technical processes of land registration provoke political debates about rights
and control, and provoke social conflicts over land and identity.
There are four types of contemporary land administration reform:
1. Decentralized land certification
Customary land registers that map out and register customary
holdings at the community or decentralized district level are
institutionalized. For instance, in the 1990s, rural land plans inFrancophone West Africa created a simple land register,
mapped out all claims on land, and recorded disputes. Landcertificates were then issued, which were convertible to titles.
Ethiopia also had decentralized land registration, and communities participate in mapping out the land rights of various
holders. Many techniques used in mapping land are simple but
effective. They allow the rapid registration of land.
2. Developing Land Boards to recognize customary arrangements
Institutions (Land Boards) are developed which recognize cus-

72
tomary arrangements, with customary representatives on theLand Board. The first Land Boards were established in the
1960s in Botswana. They in turn established state institutions
in which local chiefs were given representation. The objective
was to define customary rights within state administrative organs. The problem was that, in Botswana, majority rights had
been registered but not minority rights. The lack of minority
recognition created tension. Land Boards have facilitated theprivatization of land.
3. Strengthening customary authorities
The capacity of customary authorities to manage lands within
their own institution is strengthened. In Ghana, the Land Administrative Project has been building Customary Land Secretariats, within the chief structures of offices, to manage landaffairs. However chiefs have been known to use their powers to
expropriate the land of farmers for new developments, and torenegotiate and redefine customary rights in land in their own
narrow interests.
4. Devolution to elected village councils
Land management is delegated to community councils whomake decisions over what constitutes customary rights, and
who adjudicate land disputes. In Tanzania, the Village LandAct of 1999 devolved land administration to councils. Decentralized land management in Uganda follows a similar approach, recognizing customary tenure as equal to other formsof tenure, and leaving it to the community to define these customary land rights. Mozambique also recognizes local communities as formal owners of land.
The central problem with all these types of administrative land reformis that they idealize the community. A tendency exists within communitarian approaches to create mythical essentialized communities. Communities are constructed as being defined by flexibility, equality, and negotiability, whereas the state is seen as opposite. In reality, the communities
are characterized by inequality and social differentiation, with elites being tied into national political networks. Customary institutions haveplayed a role in recruiting forced labor and in organizing the forced cultivation of cash crops. These idealized communities are constructed withall sorts of beliefs; they are seen as bounded territorial units and homogeneous groups. Then they are regarded as autochthonous groups withrights based on indigeneity. Communities are in fact integrated into national and global economies, and have been characterized for a long time

Addressing Cleavages over Land73

by movements of labor and social differentiation. Under colonialism,
movements of labor from labor reserves to export-producing areas were
institutionalized within native authorities. Historical patterns can haveenormous consequences for current land reform. Recent events in the
Fouta Djallon, Guinea, illustrate the manner in which serious social conflicts can stem from land restitution claims, particularly when the claims
involve historical interactions of forced labor and migration.
If we look at the construction of land under colonial policies, chiefs
were given the right to transact land with migrants. It was in the interestof chiefs to commoditize land, bring migrants into rural areas, and sellthem land. When land became scarce, the youth in rural areas, who were
often the first to experience the consequences of land shortage, became
resentful. They began to blame migrants for taking their land. Those accusations led to conflict between migrants and local youth. The conflicts
became more intense when migrants came from neighboring countries.
Another example of this conflict is the eastern Congo border. Initially,
Banyarwanda migrants from Rwanda were welcomed, but then tensions
erupted as land shortages emerged. The tensions led to a revolt against
what was regarded as abuse of land arrangements by chiefs, which festered into violent ethnic conflicts against the migrants who were perceived to have taken the land at the expense of the autochthones. Another example is the Ivory Coast, which encouraged migrants to moveinto cocoa frontiers. Baoule and Burkinabe migrants were guaranteed
land on the basis that those who developed the land would own it, irrespective of nationality. When a recession set in during the 1990s, land
was perceived as an increasingly valuable commodity and tensions rosein the southwest between local youth and Burkinabe migrants, which
erupted into violent ethnic conflicts and nationalist xenophobia.
Pastoralist land rights are often taken up in a simplistic form that does
not recognize that pastoralist people are often highly mobile, sociallydifferentiated, and multi-ethnic. Projections of indigenous communities
by international NGOs shape who can speak for the community withlegitimacy. These representations conflate ethnic identity with power andoften lead to the marginalization of poor people who, through circumstances and economic hardship, often form multi-ethnic communities ofdispossessed people.
A number of solutions to the land question have emerged. These tend
to build upon notions of strengthening customary rights in land undercommunity management or customary authorities. These solutions all
rely on several assumptions about customary authorities and about com-

74
munities. The community is essentialized as democratic, consensual,flexible, and open to dialogue. Many of these solutions fail to problematize issues of inequality and complex social issues that underlie communities. In most rural settings, communities are ethnically plural and characterized by long histories of migration. These solutions fail to place land
access and land control, as well as community management and participation, within a political economy framework. Failure to examine thewider political economy in which these communities exist results in unforeseen consequences. That failure also potentially exacerbates social
conflicts.
The construction of privilege, indigenous rights, and the conversion ofuser rights into individual rights that can be transacted frequently onmarkets undermines some producers, which can result in grievances thatgenerate ‘ethnic’ conflicts and the rediscovery of ethnic identities along
the boundaries of exclusion and inclusion.
Discussion
Frances Stewart: I do not see an inconsistency between customary
rights and the neoliberal model. The minute you give the right to sell theland, you create the right to commodify, which is the same as marketization. It is the same end.
Ernest Aryeetey: If it has been mostly just an attempt to document what
exists, would it be right to call all of what we see in Africa actual land
reform? These reforms hardly approach what I would classify as a reformof land tenure. This takes me to the point: What is the problem that thestate is trying to solve with these land reform efforts? Is landlessness a
problem? I see millions of poor farmers in West Africa who are unable touse their access to land, to transform their access to land into better income. I see poor farmers who cannot borrow against the land that they
have. Their land is not used effectively, so their land values are low. The
challenge for me as an economist is this: How do we make it easier forthem to use their land more effectively? This matters when we begin tothink about what is most appropriate for each group. Poverty can be addressed when farmers have better control of land, if they can use what
they have. This is a worthwhile reason to reform land tenure, but if thereform is simply to guarantee access (potentially to be used by the political elite?), then the purpose is not clear. Most people who have pushed
land reform have missed the point. These programs have not been designed to solve a problem.
Germano Mwabu: Kojo, you seem to be suggesting that there is an op-Addressing Cleavages over Land75

timal mechanism for land administration and that it is not the market. Is
that what your work is saying? Why should we stay with the customary
framework?
Kojo Amanor: Frances, that is precisely the point. Once you begin tocommodify the right to land, it is no longer a user right. It changes. The
strengthening of customary rights as the right to sell land transforms it
into a market right. Ironically, the strengthening of customary rights inthe present is undermining customary rights in the future.
Germano, in reality, the land does not belong to anyone. To create a landmarket, you have to create a fiction that the land has an owner. Part ofcreating a customary right is creating conditions under which land can betransacted.
Germano Mwabu: In pre-colonial times, we owned the land. We lived
there and could have sold it if we liked.
Kojo Amanor: But if you can sell it, then you are presuming that land is
a commodity.
Ernest Aryeetey: The presumption is that when you get land, it belongs
to you. Usually in urban Ghana it is just a 99 year lease, not a freehold.
Still, the notion of ownership being fictional is weird.
Kojo Amanor: But that ownership, that thinking that it belongs to you, isa modern thing.
Ernest Aryeetey: But in traditional societies, the chief owns the land. He
is holding the land in trust for the people.
Kojo Amanor: What do you mean by ‘own’ in that situation?
Ernest Aryeetey: The problem that we face is that there are major developments in land ownership that are taking place outside the state
structure. We are refusing to acknowledge this. It is taboo for Ashanti
chiefs to sell land, but we all know you can buy their land. Let’s stoppretending. Let’s structure the land market properly, to stop it from being
abused.
Abdul Raufu Mustapha: I am not sure if posing customary ownershipand market ownership as binaries is useful. Certainly in Nigeria these
two are completely mixed. Market principles operate even in areas ofcommunity organization. The really critical points are demographic

76change and inheritance patterns.
Kojo Amanor: The existence of land markets has nothing to do withpopulation density or land scarcity. In northeastern Ghana, land has neverbeen managed within a commercial system of agriculture. The problems
with land generally occur with the closing down of a frontier. When land
becomes scarce it acquires new value, and its new value is not yet reflected in institutional structures.
On the definition of land reform, the present initiatives are not about land
redistribution. Land reform is now about land administration reform.
Reform refers to administration rather than redistribution.
Ciraj Rassool: Obviously different disciplines have different answers toquestions of social cohesion. Development economics is interested inmeasurability for developing policy. I approach social cohesion from theperspective of the humanities, which leads me to prioritize the questionof personhood: of who people think they are after they have been throughtraumatic experiences. How do we develop institutions that deal witheffects of these kinds? When designing institutions, we must be cognizant of issues and interactions of many types. We are witnessing
multi-fold processes of the modernization of chieftaincy. Ethnic groups
have become owners and stakeholders in some of the major mining andindustries.
Farmland is a history of dispossession. These are multi-fold experiences
if one takes into account histories of settler colonial economies.

Addressing Cleavages over LandVI

Ameliorating the Trade-off between
Growth and Equity

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VI

Ameliorating the Trade-off
between Growth and Equity

Thandika Mkandawire
Is there really a trade-off between economic growth and equity. and if so,
what safeguards are possible to ensure equity and at what costs? I argue
that however one answers the question, one must look at the seven ‘I’s:-Initial conditions-Ideas-Interests-Identities-Institutions-Industrialization patterns-International order
I also think that it is important to ask: inequality or equality of what?
There are all kinds of inequalities. We have chosen to discuss horizontal
inequality, which has ended up being ethnic. There are many overlaps
between inequalities of different types, but we will assume you can workon one of these inequalities on its own. Different inequalities work differently. They have different impacts on political stability. The most robust explanation is that horizontal inequality has an impact on politicalinstability. The other impacts still need to be proved.
I want to begin by emphasizing initial conditions. Different parts ofAfrica start off with very different levels of inequality. It would be interesting to do more work on how these historical inequalities have playedout during different periods. I think we can separate the continent into

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three Africas:
1. Africa of labour reserves––southern Africa. This region has very
high levels of inequality; these inequalities have not changed
much since independence. These are the result of both horizontal and class inequalities.
2. Africa of concessions––Congo belt. Inequalities are as high as in
the case above.
3. Africa of cash crops––all others. Inequalities are not as highhere.
When we looked at standard welfare indicators, the Southern African
labour reserve economies appeared in one block. When we looked at a
broader range of indicators, about 15 Millennium Development
Goal-type indicators, these labour reserve economies still all have thesame or very similar patterns of performance. They have services, butthere is much greater difference along horizontal inequality lines. Colonial patterns of horizontal inequality are reproduced and are still present
today. This point is important to place in our discussion. It says something that 40 years after independence, countries can still be classified bythese colonial patterns of inequality.
The second ‘I’ is ideas: there have been major ideological shifts, whichhave shifted the discussion of political economy in Africa dramatically.
The concern used to be about the nation, but now the original nationalist
pacts and egalitarian ideologies have collapsed. The concern today is
about kleptocratic leaders, neo-patrimonialism, rent-seeking, or related
issues. There is much less concern today about welfare policies thanthere was in the 1960s. There is the rise of a new middle class that ismuch less linked to the countryside. This middle class relies on privately
supplied social services, further distancing them from the impact of welfare policies and weakening egalitarian ideologies.
The political economy literature tends to discuss interests: the third ‘I’.
In reality, there are considerable overlaps and contradictions among national interests, class interests, rent-seeking interests, neo-patrimonialinterests, and ethnic interests. To focus on only one of these interests
might be misleading. For instance, Africans accept inequality when it
supports national symbols and national pride. The national pride side of
the story might accept growing inequality if inequality is growing because a country is developing national champions.
The interests of the ‘elite’ or even the ‘new elite’ might also include
overlaps and contradictions. Elite coherence is very low and returning toAmeliorating the Trade-off between Growth and Equity

81

the role of ideas. It is important to note that the new populism in Africa isvery neo-liberal in its approach. It discusses clientelism and jumps onto
anti-statist rhetoric; it is an elite-led anti-elitism. It pits foreign elites
against entrenched elites, which complicates our debates about inequality.
It is important to bear in mind that elites are very divided, or at least still
not coherent. Many conflicts reflect this lack of cohesion within the new
elite, and also signal horizontal inequality in this new elite itself. This
lack of cohesion is not just tribalism, it might reflect other social forces.
At the same time, it is important to emphasize that not all conflicts in
Africa are engineered by elites, and that elites do not always manipulate
the subaltern. Conflicts might genuinely start from below, from understandable grievances. Many times the elites may not want those below to
revolt. The elites found that the violence in Kenya could bring the wholehouse down. So for elites, maybe there is a happy medium of low-level
ethnic conflict that does not explode into full-blown conflict.
This connects to the fourth ‘I’, which is identity. We should look at
ethnic identity as more than manipulation by elites. There is a need tounderstand the complex role of elites in the management of conflicts.
When conflicts are discussed, the discussion is often very aid-driven.
There is an assumption that outsiders will come in and solve the problem.
We must devote attention to strategies that exist within Africa to handle
conflict. If one acknowledges the complexities in Africa, it is remarkablethat there have not been more conflicts. We need to understand better
what holds African states and elites together despite so many divisiveproblems.
Additionally, it is difficult to explain something as volatile as economic growth with something as stable as ethnicity. Regression results
are very dependent on the years you include in your data. Today we see
countries that were presumably affected negatively by ethnicity now doing quite well. It is difficult to make the link between growth and ethnicity. Although ethnic diversity has been used as a proxy for ethnic conflict,
we know that diversity is not a good proxy. There is also always the riskof reverse causation. We should not forget the reverse side of the story. In
fact, in many cases, growth can engender conflict. Particular patterns ofgrowth are especially likely to engender conflict. Economic stagnation
can also lead to ethnic conflict, as privileged groups insist on maintaining
their standards in the context of stagnating or declining national income.
Therefore, it is very difficult to state a clear relationship.
We should also look to industrialization. There is a whole language of
how industrialization can engender conflict. Industrialization leads to a82
working class, wage conflict, class consciousness, class cohesion, etc.
We do not have that style of logical narrative on horizontal inequality.
What is the relation between equity and industrialization? We do not yet
have the same logical story there like we do with class and industrialization.
Institutional capacity is also an issue, particularly when the capacity ofthe state to distribute resources through social policies is weakened. The
ability of the state to intervene in addressing inequality is much less than
one might expect. Liberalization has given the middle class an “exit option”, thereby weakening the coalitions behind public provision. Market
institutions play an important role in how inequality is perceived andlived.
We must also worry about the labour market as an institution. Growthwith low levels of employment is a very serious problem. Greater wage
inequality and reduced protection of labour and more informalization can
exacerbate inequalities. With rapid urbanization there is much informalization, which is ethnicizing urban life. Housing is an example: informal
housing is more ethnicized than formal housing. Rapid urbanization andinformalization need better attention. This might be a new horizontal
inequality.
Finally, it is necessary to acknowledge the centrality of social policy.
In the nation-building days, African governments quite consciously usedsocial policies to build national cohesion. The norms of such provisions
were universalistic. We should distinguish targeted policies from universal policies. Targeted policies might actually make things worse. The
ethnic question arises more often in targeted policies than in universal
policies. More universal social policies are a more effective instrument in
the context of African countries.
Frances Stewart
I attempted to address the question directly: Is there a relationship, isthere a trade-off between growth and equality?
The overarching answer is that no evidence exists to suggest that thereis necessarily a trade-off. Therefore we can take policies toward lessening inequalities without worrying about harming growth.
As we address inequality, we must be very clear about what kind of
inequality we are talking about. I want to address horizontal inequality,
which is more critical for stability than vertical inequality. There is aAmeliorating the Trade-off between Growth and Equity

83

huge amount of research on the effect of vertical equality on growth.
Each new regression produces new nuance on the relationship of verticalequality and growth. Much less is known about horizontal inequalities, orabout inequalities between groups in a society.
Vertical and horizontal inequalities are not necessarily correlated.
Therefore, conclusions from research on vertical inequality cannot be
brought straight across to horizontal inequality. In my research, I focus
predominately on societies with 2–3 large groups. These groups can bevariously defined by ethnicity, race, and religion.
Framed in a more theoretical way, the question I am addressing is: Do
high levels of horizontal inequality actually inhibit growth? We shouldhave more efficiency with more equality. Additionally, conflict inhibits
growth. These arguments lead us to believe that high levels of horizontal
inequality do inhibit growth. The evidence is manifest most clearly insocieties with horizontal inequalities between big groups.
We can look at the relationship between growth and horizontal inequalities from the other direction. Can growth make horizontal inequality
worse? Yes, particularly when the educated gain the most from growth.
On the other hand, growth might not enlarge horizontal inequalities because new opportunities may open up for deprived groups. As development proceeds, there might be labour shortages, which might improveinequality. So the effect of growth on horizontal inequality could go either way, but the evidence suggests some broad patterns. In the earlystages, it is more likely that horizontal inequality will increase withgrowth. In the later stages of economic growth, it is more likely that inequality will decrease as things get better for all. This situation is neverpermanent though. In OECD countries for instance, there is lots of migration, and horizontal inequality is reproduced among different groups
after migration.
I have four case studies:(I would like to note that the data availability is poor, so we cannot
do econometrics.)
1. Ghana––the important story here is the inequalities, which follow the North–South division. The government has recognizedthese inequalities and has invested quite heavily in the North,but recent economic growth has increased horizontal inequality.
Social policy has been good, but insufficient to compensate for
economic inequalities.
2. Peru––the main gap is between those of indigenous heritage

84
and those of European heritage. There has been sustained economic growth, largely through primary production, which has
been largely adverse for the poor group. Economic horizontal
inequalities have widened, even while some social ones havenarrowed.
3. Northern Ireland––there have been very systematic attempts totackle horizontal inequalities through anti-discrimination laws
and other social policies. Inequalities were greatly reduced
during 1970–2000. There is no evidence that growth was affected by these policies.
4. Malaysia––systematic policies were effective at lowering inequalities among groups, and it is very difficult to argue there
have been negative major side effects or that these policies
have hindered economic growth.
In conclusion, horizontal inequality is not an impediment to growth,
unless horizontal inequalities engender violent conflict. In each casewhere horizontal inequalities have improved, it has been attributable toexplicit social and economic policies.
What does this mean for policy options? It suggests that one can havedirect targeting policies. Indirect policies (such as anti-discriminationlaws) are also effective against vertical inequality. The visibility of a policy is also important to address perceptions. If you have got a very deprived group, it might be better to take very visible action to assure stability. The approach to addressing inequalities must be comprehensive.
Economic policies must be accompanied by policies that are liable toimprove social cohesion. In Northern Ireland and Malaysia, social cohesion has remained very poor.
Discussion
Germano Mwabu: When we talk about elites in Africa, what groups are
we talking about? The best educated are often not well paid. Or otherpeople have a lot of money, but are not well educated.
Even if a trade-off exists between growth and equity, the same policies
would still be called for because redistributive policies are needed to gainsocial cohesion. People value social cohesion; it is worth pursuing evenif we get a loss in growth. For instance, if we break up a commercial
farm, we might have a loss in growth, but important gains in social cohesion.

Ameliorating the Trade-off between Growth and Equity

85

Ernest Aryeetey: This discussion of elites in Africa follows up on discussions we have had before about class in Africa. When we talk about it,
what we see is that what we are talking about is just a particular group ata particular time. In many African countries, those whom we consider tobe the elites in the 1960s were replaced by different elites in the 1970s.
And today there is yet another group of political elites. How long canthey stay in these groups? We need a middle class that can be aroundlong enough to build change. Alternatively, we need to know the extent
to which this middle-class group is necessary before we can talk aboutchange?
I’d like to bring up Brazil as an example. Recently, Brazil has improved
equality tremendously. The factors behind the improvement in Brazil aresimilar to the factors behind Malaysia’s improvement in equality. Therewas very important structural change which led to new job opportunities
and new agricultural development. At the same time, the so-called conditional cash transfer programs were a very effective social policy for poverty reduction in Brazil.
In summary, I am really interested in more comparative work, in expanding the number of countries for which we have data about inequality.
More and better data will enable us to identify the most the most effective social policies and productive policies for improving equality. We
know that jobs, opportunity, and capacity matter, but there are always
several different options among social policies.
Daniel Posner: Horizontal inequalities pick up inequalities in wellbeing,
but the link between horizontal inequalities and growth tends to bethrough resentment generated by distribution. So does one need to distinguish de facto resentment against upward mobility from indicators ofwell-being? Policy interventions that lead to changes in perception might
be different from policy interventions that aim only at affecting outcomes.
Sometimes, visibility might be more important than the actual share of
the poor population that a policy helps.
Gustav Ranis: Frances, is there no correlation between vertical andhorizontal inequality?
I have to question your point that in the early stages of economic growthand development, horizontal inequality might be worse than in laterstages. What is the relation between the two inequalities at different
stages?
Ciraj Rassool: There is a debate in South Africa over the effectiveness86
of Black Economic Empowerment (BEE) policies. This debate leads precisely to the question: who are the ‘elite’? The term can refer to so manydifferent positions in so many different societies. I think the main use of
the term refers to people who have access to the state or to crumbs of
productive capital. What kind of elite do you need for growth? Is that
elite immersed precisely in the productive capital that results in moreinvestment or are we talking about older petty bourgeoisie?
Frances Stewart: I agree there is a great need for more comparative
work. Malaysian bumiputra policies were designed to favour a particulargroup and to lessen horizontal inequalities. Bangladesh on the other hand,does not have sharp horizontal inequality; it is a different case.
I agree with Dan’s point about perceptions of inequality, and the difference between absolute inequality and people minding about perceived
inequality, which is important. The relation between perceptions of inequality and the actual inequality matters quite a bit for political conflictand inter-group relations. It also in many ways belies a US perspective inwhich actual mobility is assumed. The European perspective is that thismobility is impossible or that if one is in a particular group, upward mobility is more difficult.
On Gus’s point about the relation between horizontal and vertical inequality, if you have no intra-group inequality, vertical and horizontal canbe the same. However, of course there is intra-group inequality. We needmore work on the relation between vertical and horizontal inequalities.
The visibility of Black Economic Empowerment policies and related
policies is very important. Sometimes policies such as this are designed
to create a new black elite. Income inequality among black South Africans (within-group inequality) has worsened. However, between-groupinequality has got better. Is that a failure? Not necessarily. Maybe youneed a black elite for political stability. However, you do not need tohave worsening inter-group inequality.
Thandika Mkandawire: The term elite is difficult to define, but you
know it when you see it. There are also different parts of the elite andhierarchies within the elite: it includes academics and bank managers, etc.
Even defining the term ‘elite’ broadly, it is still a meaningful category totalk about. It is very important to ask if cohesion exists among the elites
or not. Elite cohesion really matters. Class struggles in Africa have beenmuch more restrained than ethnic struggles.
The indicators we have capture differences among the poor, but notAmeliorating the Trade-off between Growth and Equity

87

among elites. We talked about social cohesion, but a very important andunderstudied part of this is elite cohesion. We need to do more researchon this. We talk about having the wrong processes, but we (the African
elite) have yet to define the rules of the game––the proper institutions to
act cohesively. In a sense, studying the elite should be an aspect ofstudying horizontal inequality.

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Ameliorating the Trade-off between Growth and Equity

VII

African Strategies for Growth with
Equity

89

90

VII

African Strategies for Growthwith Equity

Benno Ndulu
The main theme of my presentation follows from the last discussion, but
is more explicitly focused on looking forward.
The experience in many African countries suggests that growth by itself is not necessarily sufficient for reducing poverty––it must be inclusive. There are two main definitions of inclusive growth: shared growth,in which the benefits from growth are widely shared across the population; and poverty-reducing growth, in which the income earned by thepoor increases faster than the income earned by the other segment of the
population. Unlike the Asian experience, growth in Africa is happening
without a commensurate decline in poverty. This is a policymaker’s
worst nightmare, to the extent that the population doubts we are growing
as fast as we are claiming. Poverty remains a big challenge, notwithstanding the recent improvement in growth. To tackle poverty effectively,
we must cross three key divides:
1. The rural–urban divide. Poverty in Africa remains substantially rural in nature.
2. The demographic divide. In particular, the challenge here isyouth unemployment. Demography can be explosive, but having a young population can also pay a big dividend if young
people are empowered.
3. The regional imbalance. Regional divides can be quite important in the sense that they might overlap with ethnic divides. In
other cases, the divides might not overlap. We have seen that
there are poverty pockets in countries that must be addressed if

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social cohesion is to exist.
Before discussing each divide, I want to call attention to two channels
through which we should look at poverty. The first is the usual channel,i.e., private consumption, which is the channel everyone talks about. The
second is the government revenue channel: the impact of growth on government revenue mobilization indirectly affects household consumption. .
For example, Tanzania has had a six-fold increase in revenue over the
past decade. Around 59% of this increase in revenue collection is attributable to growth alone. Very often we ignore the contribution of growth
to poverty reduction.
The policy choice of whether to use this extra revenue for privatetransfers or for public spending leads to different welfare outcomes. Private transfers, such as the Bolsa Familia program of Brazil, show up in
private expenditure surveys: income poverty is shown to go down. If thesame amount of revenue is spent directly on education and health, itshows up as public consumption, which does not enter the poverty metrics. Yet that revenue does usually reach the poor, who supplement private consumption with public consumption of basic social and infrastructural services. So you will get a different conclusion if you arelooking only at private expenditure-based measures of poverty. As longas you use broader, Millennium Development Goal-type metrics tomeasure poverty, you must have both public and private transfers.
Pro-poor public expenditure provides an opportunity for the benefits ofgrowth to be shared by the majority of the population.
Policies must be designed to stimulate growth in those sectors and areas in which poor people earn their living. In most African countries,
poor people depend on agriculture for their livelihood, making the firstkey divide to tackling poverty the rural–urban divide. Again, taking theexample of Tanzania, we registered on average a 7% growth rate over thelast 10 years, but 75% of population is still dependent on agriculture andthe growth rate in rural areas is only 1%. This is the big distinction; thisis the key disconnect. Politically, people see the plight of the 75%; andthe rural population is the population that sends MPs to parliament. Thisis the group that doubts if we have been doing as well as we are claiming
we have done.
We must focus on tackling rural poverty, which translates to focusing
specifically on raising agricultural productivity. We must not attempt toraise productivity the same way we have tried and failed before, namely,
with extension services only. In Tanzania, we are trying a new model,
contract farming, which is anchored around clusters that partner small-African Strategies for Growth with Equity

93

holders, commercial farmers, and agricultural processors. It considers thewhole agricultural value chain. The smallholder farmers that are part ofthis arrangement are seeing their incomes going up 5–6 times relative tothose not participating in the scheme. Over the next 20 years, this newmodel is expected to lift more than two million Tanzanians permanently
out of poverty.
The demographic divide is the second key hurdle that must be crossed
for poverty reduction and equity to occur. Specifically, youth and urban
unemployment are crucial for both poverty reduction and stability. We
need a mega-push to tackle youth unemployment. Africa’s youth (age15–24) make up 40 percent of the workforce and 60 percent of the unemployed. Youth in Africa hold great promise as drivers of economic
growth through employment and consumption, but a large unemployedyouth population can also be a liability and undermine growth prospects
through increased crime and political instability.
To a large extent, young people have been streaming into cities. Jobs
have not kept pace with immigration into the cities. Employment-intensive growth is necessary to absorb the growing number of
migrants to the urban areas. The rate of job creation must be increased
overall, and the main areas that need attention to resolve this problem
include small and medium scale enterprises and informal sector businesses. Furthermore, in a natural-resource endowed economy, domestication of the supply chain is key to converting enclave mining into
job-creating activities. Expanding labor-intensive industry to add value iscritical for all areas. We must also enhance the capacity of young people
to take advantage of these opportunities. Vocational training combinedwith apprenticeship can quickly help the continent build an industrial andservice sector workforce. Increasing skills not only alleviates shortagesof qualified workers but enables more people to participate in and contribute to the growth process.
The future landscape of African economies might not look like that ofEast Asia for two reasons. One, we increasingly are discovering many
natural resources. Therefore, natural resource-based activities and revenues will form an important segment of our economies. How we manage
this natural resource revenue will determine what our success will look
like. Already there is agitation in Tanzania about where gas should betaken and who gets the benefits. We will have to manage the intergenerational issue as well. We cannot just consume today. We must invest productively for sustainable capacity although we put some of the revenue
away. Unfortunately, we also have people on the ground proposing thatthe revenue from resources should be divided across all households. This

94
would increase consumption and does not mean more public spending.
It is also true that in Africa we are targeting labor-intensive industries
that will become too expensive as incomes in East Asia rise. These arecalled sunset industries. We have already identified industries in China
and India where we can have competitive advantages in labor costs. Then
we are working to overcome other constraints. The geese are still flying.
They will land in Eastern Africa next. These labor-intensive industries
will be part of the answer to creating jobs and absorbing the youth.
Ernest Aryeetey
I want to make a brief presentation on strategies for growth with equity.
Benno outlined problems to be tackled. As I see them, they are slow
growth, widespread poverty, and horizontal and vertical inequalities. It is
important to note that these are not new problems. Throughout the last 50
years, different approaches have been tried; these approaches have failed
to different extents. For example, we have seen over the years that the
adoption of import-substitution policies after independence did not produce good results. A later example is structural adjustment policies. Lotsof improvements in African countries are associated with reforms of the
1990s. Now, today, there are inclusive growth policies.
Despite all these efforts, there is considerable discontent with the economic situation in Africa. Poverty is still widespread, and inequality is
still a major problem. So how do you deal with these problems? I would
like to use my experience as part of a team tasked with preparing a national development plan five years ago in Ghana. First, I would like tonote that development plans have become obsolete in most parts of theworld. Such development plans are not regarded as appropriate for dealing with complex contemporary problems. Our challenge was: how do
you address growth and equity problems with a market that is not functioning well, with a state that has been demonized, and with people who
might not have skills to do it?
One of the things we brought out in our strategy was that we mustbring the state back. The state must be an effective part of transformation.
But how? How do you do that without letting the state play the role itplayed in the 1960s? We had three recommendations:
1. Modernize agriculture. Bring poor farmers closer to themarket. Have value chains in place. Structure these value
chains in a way that gives farmers access to good informationand prevents the abuse of farmers by corporations.
2. Industrial strategy. Like the state, this is not looked uponAfrican Strategies for Growth with Equity

95

with much favor. But how can you use the state’s involvement
to generate better outcomes, to generate jobs? There is no way
you will get manufacturing without the state having a role.
Banks will not give loans without the state having a role.
3. Effective social interventions. You are going to spend on
health and education; so what type of health spending is mosteffective? Lots of unemployment is linked to young people nothaving the skills required by local firms. How do you use
education to provide the skills that young people need forjobs? Apprenticeship is dead in African societies today because people remain in apprenticeships for years and years.
This becomes a cover for unemployment. Instead we havegone into the mode of cash transfers. How do you use thesetransfers in a manner that enhances the productivity of the recipients?
With all of these issues, an overarching concern is: how do we deal
with the North–South divide in Ghana? Ghana has been growing at 5+%
for 25 years, so how do you make sure this ends up spread out? Growthhas been driven by new trade taking place, and areas that are not part ofthis trade have been left out; in particular this means Northern Ghana.
You need Northern Ghana as a part of the Ghanaian economy, so how do
we bring it in? To bring in Northern Ghana, you need infrastructure andyou need to integrate regionally. It cannot be about bringing goods to the
Ghanaian coast, it needs to be about integrating north-eastern Ghana with
Burkina Faso, Togo, and the whole region. All these countries havenorthern savannahs that are cut off from their southern economies.
Today, a quarter of Ghana’s budget is being put into addressing theNorth–South divide. Is this worth it? Yes, if it goes according to plan andavoids elite capture. Otherwise it will be useless. In the 1970s, there wasa World Bank loan to Northern Ghana, but the resources were capturedby the elite, and agricultural productivity went down. How do you ensure
this does not happen again? There has to be greater discussion of accountability––people are being taxed in the South to enable developmentin the North––so there must be structures overseeing this spending. The
accountability structure is not acceptable to northern politicians, but
those accountability structures are the only way you are going to ensure
results.
In sum, solutions exist, but they have to be tried. In a paper writtenwith Chris Udry, I wrote about land banks. How do you arrange institutions to mediate the interests of different groups? There needs to be someplace you can go to and ask for land and pay money for the land, which

96
makes it possible for you to use the land more efficiently. We have notdeveloped mechanisms for regulating land markets. Therefore, we need adifferent institution to take care of the issues that we are talking about.
Discussion
Arnim Langer: We heard Thandika speak about lack of cohesion among
elites. Benno, can you expand on why elites in Tanzania were able toovercome this?
Additionally, when we are thinking about the North–South divide in
Ghana, we are always thinking about a national poverty solution. To
what extent would an international or cross border or regional solution beappropriate?
Gustav Ranis: You both talked about unemployment. We should talkabout underemployment, not unemployment. You have the informal sector in rural areas and the informal sector in urban areas, and the government looks down upon both. Resources should be focused on encouraging the informal sector and on getting linkages between the urban informal sector and the urban formal sector. Most of the people we are talking
about here are female or male youth. Are they getting the right kind of
education to engage in more formal work?
In addition, natural resources were mentioned. Natural resources can be abenefit instead of a curse, but only Norway and Botswana have managed
to avoid the curse component. The most important thing is to not let theresources go into the domestic consumption component of the economy.
Akio Hosono: Even though there have been instances of failure, as described by Ernest, we need investment in infrastructure; and scale matters.
We should not abandon this traditional approach; we should emphasize
the parts of this approach that work.
Thandika Mkandawire: Some of these large, state-supported schemes
have been tried before. For instance in Malawi it was done with tobacco
plantations and it worked. It led to one region doing very well, but there
were large horizontal inequalities. The World Bank scheme that failed in
Ghana actually failed everywhere. The failure was not just because of
elite capture. It also had to do with the collapse of rice production. In
Malawi, the same scheme failed not because of capture, but because elites avoided the scheme.
Frances Stewart: Benno, you described mechanisms by which growthAfrican Strategies for Growth with Equity

97

translates into decreases in poverty. Particularly since you face an infrastructure problem and an unemployment problem, why not do employment schemes?
Daniel Posner: You both described natural resources. In Ghana it is oil,in Tanzania it is natural gas. Could you talk about strategies that yourcountries are using to prevent natural resources from generating horizontal inequalities? What are ways in which natural resource exploitation
can be structured so it will not increase horizontal equalities?
Furthermore, formal sectors in Africa give very high wages relative toother sectors. There needs to be a discussion of costs and wages. Thesewage systems should be reformed and modernized. The worry is that in
East Africa, productivity is stagnant, making wage increases unjustified.
To attract investors, wages must be straightened out and more investment
should be made in infrastructure.
Germano Mwabu: What about growth where all incomes are rising, but
the incomes of the poor rise faster? Where there is growth with increasing equity you need not worry about separate policies to encourage
growth and to handle redistribution; we should be discussing strategies toencourage the right kind of growth. In the Asian experience, low laborcosts were a crucial part of the success. A possible lesson of this experience for Africa would be to involve rural areas in manufacturing. Should
manufacturing growth be located in rural areas to keep wage costs down,
would this then be possible?
Benno Ndulu: On Arnim’s question about how elite coherence cameabout in Tanzania: there was agreement whereby the country wanted to
go in the long term, which translated to clarification in the vision documents. We had consensus about a long-term transformation, and getting
to middle income country status. Subsequently plans for the medium
term were created, which has helped reinforce that clarity of thought andpurpose.
On Dan’s natural resource question – the difference between what I see
as the likely path of African development and the development pattern ofAsian economies largely arises because in Africa there will be a whole
series of industries that emerge because of natural resource comparativeadvantage. The effects of the resource curse are less severe than is commonly believed. The curse is reversed for Nigeria now. The number ofcountries that were hit by Dutch disease is much smaller than people
think. There are 19 middle income countries in Africa, most of which are
oil exporters, which shows that something somewhere went right beyond

98
Botswana. There will be considerable resource-based industrialization,
which was not present in the Asian story. The resource curse can be
managed. You need a very clear strategic investment program that will be
the destination of resources. If you have clarity ahead of time, then you
need not worry about the fight later. For us in Tanzania, the conversation
has already begun.
The new agricultural solution is organizational. It does not mean you stop
large extension schemes, but it means you emphasize smallholder agency.
You create pathways for a smallholder to become creditworthy by being
part of the scheme, and you ensure it gets better access to inputs andmechanization. These agricultural programs are about trying out of thebox solutions to a problem we have struggled with for a long time.
On targeting labor-intensive industries as the cost of labor increases in
Asia, or “the flying geese issue”: Yes, we do need to invest in skills before we can bid for this manufacturing investment. Our strategy in Tanzania is to build pockets. In those pockets we try to address constraints to
productivity in a much more focused way. We know we can deliver
power and water in those areas and thereby make them that much more
attractive. Rather than wait for entire country to become attractive, wewill make pockets attractive and work from there.
Ernest Aryeetey: Let me first talk about Arnim’s question about theNorthern Ghana problem: Should solutions be regarded as internationalor regional rather than national? I believe they go together. We need national policy that embraces a regional approach. The infrastructure requirements are so great. Ghana cannot do it alone, so we are discussing
how to do it in ECOWAS. There is a discussion at the African Development Bank about how to fund infrastructure requirements.
Gus, I agree that the informal sector is an important part of both rural andurban areas. How do you enhance the informal sector in both places?
This might call for skills upgrading; people who currently work in theinformal sector have to learn how to do more formal jobs.
On Thandika’s suggestion that the rice market collapse contributed to thefailure of the World Bank project in Northern Ghana, it is true that riceproduction was boosted for two years and then collapsed. There werestructural issues involved that can be linked to elite capture. Five firms
controlled all the production. Four of those firms were controlled by soldiers. The production was very concentrated and in the hands ofwell-connected elites, not expert farmers. When you lend money to apolice commander to produce rice, you should not be surprised when heAfrican Strategies for Growth with Equity

99

quits after two years.
On Dan’s point, the question we must ask about natural resources is: how
do we guarantee that rents from oil get spread around and used effectively? Gus pointed out the rents must not be used for consumption. New
oil economies in Africa have learned lots from the experiences of Nigeria,
Cameroon, and Gabon. I will be surprised if the countries with recent
discoveries behave the same way Nigeria did.
On manufacturing in rural areas, I agree there is a lot to be learned fromcountries in Asia, in particular about cluster manufacturing. How do you
use clusters to bring together small groups of producers? How do you
produce to scale, with a group of small producers? These are the questions that must be answered.

100Video Presentation:
Market Experiment on
Ethnicity

Ken-Ichi Shimomura: I would like to show you a video of an economic
experiment that we conducted in Kenya to test whether ethnic diversity
adversely affects stability and the welfare quality of market economy.
For this experiment, we constructed a model of a pure market economy
where two groups of individuals trade two goods. We made up six teamsof traders each consisting of individuals belonging to the same ethnic
group. We had three ethnic groups with two teams for one ethnic group.
Of the six teams, we had two teams engage in trade at one time, and repeated the exercise with different combinations of two teams selected.
We compared outcomes of the trade to see, for example, if trading between two teams of the same ethnic group converge to equilibrium fasterthan trading between two teams of different ethnic groups. We also saw
which combination would give rise to equilibrium with higher welfare
than others.
We found that contrary to the conventional wisdom, ethnic diversity has
stabilizing and welfare-enhancing effects on market outcomes. However,this finding is tentative and preliminary. Large and more rigorous experiments would have to be conducted before more definitive conclusions can be drawn. (VIDEO)
Arnim Langer: The stereotyping at the beginning was a bit much. I
would recommend using attitude surveys to generate these stereotypes,
rather than to have them assumed.
Daniel Posner: I am worried about how different your findings would be

101

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if you just had regular people interacting in the market, instead of elites(university students) who are being filmed. The fact that you were interested in inter-ethnic interactions was built into the interaction. The kindof behavior you observed should be interpreted cautiously because everything was completely overt (they know you are watching and measuring their ethnic behavior) in a population maximally socialized against
behaving in a tribalist way.
Ciraj Rassool: Would one be able to make a similar film in South Africa? No. I want to register a sense of discomfort. Is there an aspect to thefilm that is tongue-in-cheek? The way one gets to particular bodies inhabiting tribes is very complicated. Even among students who decide
they are comfortably Luo and who decide to perform it.
Abdul Raufu Mustapha: The foregrounding of it seems jarring, too
strong. The fact that it is a Kenyan academic presenting it does not makeit any better. Did you incorporate or control for other variables such as
gender or age?
Ken-Ichi Shimomura: We heard similar opinions. They advised us topay particular attention to gender. Female and male behaviors were pretty
different. They were not controlled in this experiment, but the ratio of
female to male was equal.
Ernest Aryeetey: I share Dan’s point about what the environment doesto the results we can get. On the issue of the propriety of the way prejudice or bias were presented, I was wondering about the extent to which
political correctness inhibit us from discussing the way ethnic groups
differ.
I went to a boarding school, which brought together many different ethnic groups and classes. We enjoyed cracking jokes about ethnicities but
after five years, the jokes were different. You learned how to survive in a
multi-ethnic community. You learned to give and take. Today is this giveand take missing because of political correctness? This issue is notunique to Africa. There are always jokes about different groups, which
can be part of people learning to accept different groups. I am worried
about what happens if we cannot joke; does this mean we have no way tonegotiate give and take? In Ghana, political correctness inhibits you; soimportant issues do not get discussed in big groups.
Germano Mwabu: The tribal stereotypes shown in the film have a different meaning in Kenya because there is no racism. If you are South
African, you think racism, but that does not register in Kenya. The dis-Market Experiment on Ethnicity

103

tinctions made between the groups are uncontroversial. On the technicalquestion: ethnicity was randomized. Everybody was subject to the same
circumstances. The only problem seems to be that the control and experimental groups were in the same interaction setting.
Frances Stewart: First on the jokes, certainly in the UK people still telljokes that are racist or anti-Semitic, but they are dangerous. Secondly,
you must be cautious about the conclusions in the video because thesethings are delicate. These conclusions lead to generalizations about certain groups. These are political conclusions, so you must be very careful
before you come to these findings. You must give a political warning at
the end of the video. These conclusions could be political dynamite.
Kojo Amanor: A lot of trading relations are based on ethnic relations. I
would argue that trade relations define the ethnic relationships, not theother way around. Jokes emerge from the bartering relations.
Thandika Mkandawire: Anthropologists have done much work onmarkets in Africa. It should not be surprising that ethnicity plays a role intrading because trust is crucial in trade. What is the point of the study inthe video? Were you trying to discover the veracity of the stereotypes?
Bruce Berman: It is worth asking to what degree ethnicity has developed around markets and the negative stereotypes of ethnic behavior.
Ethnic humor takes the stereotypes given to minority groups and satirizes
them from the inside out. It was not until the 1960s in America that black
comedians showed multi-racial audiences how they had used or turned
around such stereotypes, and this was an important component in popular
culture of the civil rights movement.
Arnim Langer: You can say ‘yes we must be able to joke about ethnicity’ but we need to see if this affects behavior. Does the popularization ofthese jokes affect my hiring policy? If I do not hire people because I do
not want to work with people who are assumed to be lazy or otherwise,
then we have a serious problem on our hands.
Ken-Ichi Shimomura: The motivation is purely scientific. We just wantto say these are the results of our small experiment. The remarkable feature of this experiment is that Kalenjins stabilized the market. Their
strategy was “my way or the highway.” There was no talking before theexperiment, so this strategy must have emerged organically.
Hiroyuki Hino: The experiment was to test the idea that ethnic diversity
contributes to market instability––is it true that because greater trust

104
could be assumed among people belonging to the same ethnicity, market
equilibrium is reached sooner when trading is done among them rather
than between different ethnicities? The only objective was to test that
hypothesis; it was not to talk about traits of particular ethnicities.
The experiment showed the opposite. What this experiment tells us isthat we have to be careful in assuming that the market economy is affected negatively by the co-existence of different ethnic groups in acountry. I tend to agree with Ernest that openness about ethnicity would
help. Currently, Kenya is not releasing census data by ethnicity. If you
keep talking about the same issue for five years, then it will become lesscontroversial. If actual data are not published, perception prevails. So
what do you gain by not publishing?
Daniel Posner: This is not actually an experiment about diversity. This
experiment takes place at 0% diversity and 50% diversity, which might
be indicative of a context of non-diversity vs. low-level diversity, but it isstill possible to seek out co-ethnics. Those are just words of caution
about interpretation.
Benno Ndulu: On the point of openness for the census and sensitive data
– this has to be done in a very careful way. You do not want it to provoke
tensions; this is still an issue. You do not want the opening up of the data
to affect the data itself.
Ernest Aryeetey: The way to address the dilemma Benno set out is tohave more open discussion of these issues. Before the most recent census
in Ghana, we started with a rough idea of the size of most groups. The
number of Muslims came out smaller than expected; the Muslim groups
were angry. They required a thorough explanation of how the census wasdone. Gradually their anger lessened. Think in terms of entrepreneurship:
Igbo in Nigeria, Kikuyu in Kenya, Ashanti in Ghana, Chagga in Tanzania––how do you make these groups, known for their dynamism, into theagents of change? Currently there are policies that stop groups fromachieving their full potential. Some groups are good at entrepreneurship;
other groups are good at bureaucracy. So how do we support thesegroups?
Arnim Langer: If you use the group as an instrument in policy, youmust stimulate them to get richer––the reason why they are richer might
be intra-ethnic trust. Should we be trying to disaggregate this group, andhelp other groups to build up inter-ethnic trust instead? It goes withbuilding up the notion that we should not continue to use the group.

Market Experiment on Ethnicity

105

Benno Ndulu: The same people who are apparently entrepreneurial canalso be called thieves. When that happens, the debate becomes much
more significant then.
Abdul Raufu Mustapha: If we go down this road, we will hand over x
ministry to one group, y ministry to z group. Then we will have no national project.
Ernest Aryeetey: If these groups have been known to be particularly
great in a certain sector, and in the last 20 years or something have notbeen able to act as usual, then let’s remove the obstacles and enable themto flourish. That is my argument. For example, the Chinese and Indiansin Malaysia are minority groups that have been allowed to flourish.
Ciraj Rassool: I have a problem with this discussion. Let’s look at theone powerful example in history. Jewish people were described as very
good traders, etc., also thieves, and look what happened.
Bruce Berman: The Kikuyu are not necessarily inherently ‘entrepreneurial.’ These are not intrinsic traits. They result from historical decisions
taken by British about where to base a railhead at the edge of Kikuyu
country. These decisions then had consequences that led to different outcomes for different ethnicities. We should ask: where does the stereotype
come from? The stereotype comes from certain contingent experiences; it
is not an ethnic trait.
Daniel Posner: We are looking at average differences in business successacross groups, when these might result from historical accidents, different educations, etc. The policy should be to support all the groups tomake sure they have these opportunities.

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Conclusion: Summing-Up
Hiroyuki Hino and Taylor St. John

During our previous meetings in this conference series, we have come toagree that ethnic diversity need not be an obstacle to economic development in Africa. In post-colonial Africa, ethnicity tended to be associatednegatively with economic performance and instability. However, ethnicity only mediated state and economy through its political alliances. Some
reports of the academic literature also neglect the mediation role of ethnicity.
The increasing scarcity of land and economic hardship, and the consequent psychological territorial confinement of ethnic communities
might have created a vicious cycle between inter-ethnic relationships andeconomic uncertainty. However, these relationships are products of historical, political, geographic, and economic forces of that time. The essence of African ethnicities is that they are malleable and fluid. Mwabu
proclaims that “Kenya is proud of her ethnic diversity.”
Economists took ethnic diversity as an independent explanatory variable for analytical convenience. They found a negative correlation between ethnic diversity and economic growth, and concluded that ethnic
diversity is part of the explanation for the so-called ‘development failure’
in Africa.
In our discussions today, the sentiment was expressed that this was
unfortunate because it contributed to creating the perception in the Westthat there was something uniquely or inherently negative about African
ethnicities. It contributed to the prevalence of Afro-pessimism at thattime. However, their quantitative analyses were methodologically imperfect because they ignored the fact that ethnicity and the economy areinterdependent. Consequently, a regression of economic growth on ethnic

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Hiroyuki Hino and Taylor St. John

diversity tells us nothing about the causal link between ethnicity andgrowth. As John Lonsdale always emphatically tells us, ethnicity explains nothing by itself. This is a strong hypothesis that stands in opposition to the empirical literature showing a negative causal effect of ethnicity on growth in Africa. We interpret the negative coefficient on ethnicity
in this literature as a negative correlation between diversity and growth.
So then what can we do to accelerate development in Africa in the
midst of these conflicting findings? What can be done to ensure that thenegative association between ethnicity and economic development is nota hindrance to policy making and implementation in Africa? Or how can
rapid economic development be achieved in ethnically diverse economies? The purpose of this workshop was to answer these questions. As
Benno Ndulu clarified for us, the idea is to identify aspects in a country’s
political, economic and social interplay that give rise to “negative ethnicity” and transform them accordingly. A country cannot achieve robust
inclusive growth unless it stays together as one nation. Therefore, we
specifically examined three key spheres of nationhood:(1) political governance structure,(2) land, and(3) social cohesion.
Before we discuss our findings related to each issue, we must say that
we were struck by the differences in how the issues of ethnicity are perceived among the researchers who represented African countries here
today, i.e., Ghana, Kenya, Malawi, Tanzania, Nigeria, and South Africa.
Clearly, a “one size fits all” approach does not work.
None of the following policy recommendations should be taken as
general solutions; they are ideas offered with the view that careful abstraction and interpretation of evidence can provide useful policy lessons.
The objective here is not to give advice as such, but to clarify the side
effects and implications of particular policy choices so that policymakers
can make more informed decisions. Our intention is to provide evidence
and ideas related to implications of particular policy choices for harmonious or inclusive development.
Democratic Governance and Devolution
Regarding the desirable structure of governance of a nation which ischaracterized by ethnic diversity, we considered overall democratic rules,
and within that context, devolution. This consideration is motivated byour observations that the application of simple majority rules and centralized authority have tended to produce an ethnically skewed distribu-

Summing-Up

109

tion of political power as well as suboptimal and inequitable provisionsof public goods. This caused inequalities among ethnic communities andregions, and a sense of exclusion by less-favored communities, whichtends to breed social conflict. Mwabu presented a very interesting set ofevidence on Kenya in this regard.
Raufu offered a well-structured and sensible roadmap for designing
democratic rules. Such rules should result in (a) self-rule and shared rules,(b) clear definitions of jurisdictions and powers, (c) devolution of sufficient power, (d) a common civic citizenship built around a universal social policy, and (e) workable mechanisms for resolution of intra-government disagreements. Specifics of such rules depend on country
circumstances.
One could perhaps presume that proportional representation would
better assure more inclusive sharing of political power, as argued byBerman and Takahashi. Arguably, proportional systems engender a wider
sharing of resources, and are thus more likely to prevent political instability when compared with majoritarian systems. Proportional systems
create less of a sense of exclusion, and wider access to privileges andprotections of the state. Yet Ichino cautions that we should consider the
possibility that proportional representation provides more effective political governance but less-efficient economic governance. Moreover,majoritarian systems often provide better constituency services and fostera closer link between citizens and their legislators.
Design is of course important, but what is on paper is not necessarily
what is on the ground. Constitutions are only a starting point for transcending ethnic politics; they do not automatically deliver on their promises. A constitution without constitutionalism is meaningless.
The question is this: How do you instill constitutionalism? One answer
that has emerged is support: support for the development of civil society,defined broadly to include the media, think tanks, and members of the
public. The growth of institutions that can stand up and demand the state
to adhere fully to the constitution takes a very long time, of course.
However, horizontal devolution, or passing power along to otherbranches of government and ministries, can help with almost immediate
effect. Implementing policies that protect the freedom of the press helps
similarly.
We discussed big-bang vs. incremental approaches in effecting desiredchanges. Considered views, advanced by Ernest and Benno, are to prioritize working at the margins. Instead of fighting for total overhaul, it

110Hiroyuki Hino and Taylor St. John

might be more useful to identify very specifically those pieces of government that are not working; then think critically about how to improve
the things that are not working. This moves toward a system of continual
negotiation, which gives more space for deliberation, and which provides
more opportunities for governments to respond flexibly to changes. This
incremental approach might be more appropriate for states where there isalready a certain degree of stability and trust in institutions.
Ranis recommended, and we agreed, that horizontal and vertical decentralization are complementary policies that, on balance, help diffuse
the concentration of power. Horizontal decentralization spreads power
away from one ministry (typically the ministry of finance) into otherministries. Vertical decentralization pulls power from the center to the
local units; decentralization advances as local units are able to raise theirown revenue and have more autonomy. Posner also favored verticaldevolution on the grounds that more homogeneous subunits deliver more
public goods.
In implementing devolution, however, sequencing is important to ensure that the capacity of local units is in place before financial resources
are devolved to them. Moreover, we are not suggesting extreme devolution where maximum resources are sent down to the smallest units, eachof which consists almost entirely of one ethnic community. In such small
units, it is more difficult to assure adequate capacity for sound fiscal
practices. This could also be seen to be encouraging segregation, whichmight run against the spirit of inclusion.
Another consideration is that perhaps local units could be even more
susceptible to elite capture than larger units. What policy interventions
are useful to limit the spread of patronage politics? Moral ethnicity, as
argued by Lonsdale, would constrain abuse of power by elites. Anothersuggestion is to support the development of a strong civil service at local
levels. The civil service can serve as a bulwark against ethnic politics,
and can raise the overall quality of government service.
However, the extent to which the civil service can increase the capacity of local government and thus increase the feasibility of decentralization is contested. Ultimately, civil service too is always answerable totheir political authorities.
Land and Urbanization
No one disagrees with the centrality of land in considering ethnic conflicts or inter-ethnic harmony. Commoditization or marketization of land

Summing-Up

111

has added an extra dimension as communal land gets sold off by politicalelites in central governments or within communities. This sell-off raises
intra-community vertical inequality, which can provoke tensions and aserious disruption of the ‘moral ethnicity’ that binds groups together.
This cohesion, together with widespread unemployment of young people
in urban centers and the polarization of society as a whole by income
levels, gives rise to class conflicts, adding additional dimensions to economic and political instability.
Kojo told us that the thrust of contemporary land reforms in Africa is
customary land management, which involves the management of landownership and long-term leases by communities. This policy is consistent with or goes in tandem with the devolution we advocated above.
Customary land reform is also a policy tool that is useful to slow the
speed of urbanization.
Customary land management might also be applied to management ofoil and other mineral resources. This management would entail ownership of such resources by the communities residing where the resources
are extracted, and thus remove the sense of exclusion and bring about
more direct accountability.
Ciraj brought to life the complex issues involved in restitution, and theimportance of memory in reconstructing states. He gave us examples of
the ways in which the agency of local communities can be mobilized tobuild civic resources. He raised an important point when he argued that
we cannot see these projects just as building housing or infrastructure;
we must see them as rebuilding a community. Alongside building housing or infrastructure, we must begin to ask: how do you recreate community memory? This question and related concerns are important for social
cohesion.
Social Cohesion
Mwabu argued, and we agree, that social cohesion has intrinsic value. It
is both an instrument to enhance more stable economic development anda policy goal of harmonious development of a society. This cohesion
might require moving away from measuring development predominantly
in terms of growth, and toward measuring it in broader, multidimensional
metrics.
Horizontal inequalities can be politicized and used to foment violence;vertical inequalities can outrage their moral communities and sow discord. Therefore, whereas social policies for inclusion might involve some112

Hiroyuki Hino and Taylor St. John

degree of inefficiency, this inefficiency needs to be weighed against thecivil war or societal tension that such policies are designed to prevent.
This fact does not suggest that economic policies should be designed
without regard for their efficiency, rather that it might be worth trading
off some economic growth for an increase in inequality.
Benno reminded us of the importance of particularly addressing specific problems and generating clear policy solutions. To tackle poverty in
Africa, growth must be inclusive. To be inclusive, he argues, we must
tackle three key divides. The first is the rural–urban divide, with the emphasis on rural poverty. The second is the demographic divide: grapplingwith youth unemployment. The third is to tackle geographic imbalance indevelopment. The geographic divide might overlap with the ethnic divide,
but it also might not.
Perhaps more specifically, policies should be designed to foster trust,
both within and between ethnic communities. We agreed that education is
crucial in this regard. We argued about whether greater openness toward
one’s ethnicity helps or hinders social cohesion, but on balance in ourview, openness is the way to go. Is a policy of suppressing local languages desirable, or will it be better to foster ethnic identity, including
languages? Views differed, but it appeared that a majority supported thelatter.
A complementary tool in moving away from an ethnicity-based politics is the idea of civic citizenship. This means not just giving people theright to vote, but also linking abstract rights to citizenship. Quality of
their lives has to be affected by being a citizen; there could be a certain
minimum that comes with being a citizen of that country. It is in situations where lives of citizens are radically different within states, and inparticular where these differences map on to ethnic differences, thattrouble emerges. It is imperative to find ways to correct the unequal distribution of resources; otherwise people generate a common cause withco-ethnics to fight for these rights.
Finally, Berman and Takahashi reminded us that the issues arisingfrom ethnic diversity in Africa cannot be addressed in isolation of developments in the rest of the world, be it the ideology advanced by the international institutions, immigration policies of the developed countries,or the forces of financial flows from China and other countries. Furthermore, the issue of the nexus between ethnicity and development is notunique to Africa. In other words, this is the challenge to which all of us indifferent corners of the world will have to meet and resolve together.

Summing-Up

113

Although it is beyond the scope of our project to propose actions thatinternational institutions and governments of non-African countries could
take, it is nonetheless important that all of us keep this global context inmind. Perhaps for this reason, it is important that those of us from North
America, Europe and Asia should continue to meet together with Africancolleagues to discuss the link between ethnicity and development as an
issue that we share in common.

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Hiroyuki Hino and Taylor St. John

KOBE ECONOMIC & BUSINESS RESEARCH SERIES

No.1(1962)

History of the Yen

Hiroshi SHINJO

No.2(1963)

Production Theory of International Trade
Hikoji KATANO

No.3(1970)

Monetary Factors in Japanese Economic Growth
Edited by Jiro YAO

No. 4 (1970)

Macro-economic Theory of Take-off Process
Hikoji KATANO

No.5(1977)

Accounting Measurement under Uncertainties
Isao NAKANO

No.6(1978)

Japan’s Direct Investment to ASEAN Countries
Hikoji KATANO et al.

No.7(1979)

Economic Analysis of Shipping Freight
Tetsuji SHIMOJO

No.8(1981)

Japanese Enterprises in ASEAN Countries－Statistical
Outlook
Hikoji KATANO

No.9(1984)

Essay in Some Topics of Modern Economic Theory
Kazuo SHIMOMURA

No.10 (1989)

A Quantitative Analysis of Educational Policy in Postwar Japan
Yasuo KONISHI

No.11 (1992)

Innovation and Business Dynamism in Japan and Korea
Edited by Kenji KOJIMA

No.12 (1993)

Essays on the Economic Analysis of Labour Union
Kazuo SHIMOMURA

No.13 (1997)

Economic Relations and Developments in Asia and Pacific: Collected Papers of International Cooperation
Studies
Edited by Kazuhiro IGAWA

No.14 (1997)

Japanese Corporate Governance: An International
Perspective
Kenji KOJIMA

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No.15 (2000)

Commitments and Contests: A Game-theoretic Perspective on Japanese Vertical Relationships
Kenji KOJIMA

No.16 (2003)

New Developments in International Trade: Theoreticaland Empirical Investigations
Edited by Seiichi KATAYAMA and Kaz MIYAGIWA

No.17 (2003)

Forest Certification and Social Change: A Comprehensive Study in Japan
Akira KAJIWARA

No.18 (2010)

Economies of Diversity: Issues and Prospects
Hiroyuki HINO