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Governance

Private party

by Winfried Borowczak, Friedrich Kaufmann
Stages of political-economical development

Stages of political-economical development

The theorem of “limited access orders” helps to understand the low success rate of many development programmes. Mozambique is a typical country where the political and economic spheres are not separate and where a ruling party guards its privileges in accessing resources of political and economic power. In countries of this kind, donors are at risk of perpetuating the rule of small but powerful elites. By Winfried Borowczak and Friedrich Kaufmann

The majority of rich nations largely fits the description of what Douglas North et al. (2007) call an “open access order” (OAO): competition thrives as individuals and groups are free to craft coalitions and professional relationships to their own benefit. In case of disputes, the justice system helps to enforce people’s rights; the courts will prosecute even high-ranking individuals.

Such openness is nothing natural, however. It is the result of a long and conflict-ridden history (see box). The assumption that every society is on a linear course towards this goal lies at the root of many development programmes. Unfortunately, this assumption is wrong.

Mozambique is the typical case of a country without free access to resources and institutions. In a previous article (D+C/E+Z 2009: 5, p.237-239), we argued that it gives private-sector entrepreneurship too little scope. Sadly, this is true even after the government has cooperated with donors for many years. Essential social and political steps must still occur before Mozambique even comes close to an open access order. There is a clear tendency of only granting a self-appointed elite access to political and economic resources.

Mozambique currently is a basic Limited Access Order (LAO), according to the classifications of North et al. State and government are stable, the administration is operational, and violence is contained. The government and the ruling party Frelimo are striving to consolidate their influence, party unity and their ruling coalition, and they do not subject themselves to competition and more openness.

Only up to a point is the power elite prepared to tolerate, protect or even promote independent organisations outside its sphere of influence. There is some civil-society activism, but its outreach is limited. Examples include the churches, a handful of independent national organisations and – at an extremely limited level – the press. Such liberty is tolerated either because the party and the government lack means of control or because they want to maintain a semblance of democracy.

Mozambique’s authorities generally try to co-opt or neutralise institutions and organisations they consider adversarial or dangerous. Critics are co-opted by government bodies or party institutions. Forums for pseudo dialogue are created. The elite also resorts to election manipulation and personal intimidation. The goal is always to limit access to resources and influence to the chosen few.

Interwoven spheres

In such conditions, there is no scope for a dynamic private sector that might drive the economy in general. By means of state funding, the CTA, the biggest employers association, was strategically co-opted long ago. CTA leaders tend to also serve functions in the party or the government. Dialogue between the private sector and the state is largely monopolised by the CTA and the national administration. Government and corporate interests, moreover, overlap since state agencies are by far the most important contractors in the country.

Frelimo and its leading politicians control most important businesses in Mozambique. The CTA chairman is on record declaring himself a friend of the president. Suspicions have arisen that members of the ruling elite might work hand in glove with criminals. Last year, the US government officially stated that Mohamed Bachir Suleman, the owner of the MBS group, is a drug kingpin, barring US citizens, companies and government agencies from doing business with MBS.

The voices of other organisations in the private sector drowned out. These organisations generally suffer from low acceptance. They hardly get access to policymakers. Trade unions are only pro forma independent, and the same is true of the farmers union. Independent interest groups of professionals or consumers are irrelevant. Print and broadcast media are formally free, but they tend to depend on government favours – if only in the form of paid advertising.

The political opposition remains weak. There are more and more rumours that the largest opposition party, Renamo, has become financially dependent on Frelimo. New opposition parties are blocked with all means available, especially if they might become truly influential.

In Mozambique, the road to a free and competitive system is still long. The ruling elite continues to rely on the fragile consensus of a majority of the citizens who rarely criticise the elite in a way that could endanger the vested interests’ grip on power. Most people still give the government credit for achieving independence. That consensus is increasingly fragmenting, however, as became evident in violent protests against rising food prices in early 2008 and again in September last year.

Limited donor influence

The ruling elite is not interested in establishing an open access order. This is evident in its less than half-hearted fight against corruption as well as in the judiciary’s ineffectiveness and lack of independence. For years, there has not been any substantial progress in these areas in spite of intense interaction with donors. In recent years, the budget support provided by various donors has contributed more than half of the money in Mozambique’s national budget.

Donors have agreed on a number of indicators with the government. Typically, success is found wanting in all the areas where reforms could undermine power arrangements. There is precious little progress in matters like good governance, devolution of government powers, land ownership or judicial matters, whereas improvement is evident in areas like primary education, roads or health care.

Donors need to face the fact that this disparity is systemic. They have to take into account Mozambique’s specific balance of political and economic power. Otherwise, their standard interventions will continue to fail to deliver results. The donors have to analyse the situation realistically and take the appropriate consequences. If they fail to do so, their action will only exacerbate stagnation along with the rigid power structure. For the time being, development funds are reinforcing the established socio-political order.

Mozambique is no exception – in other African countries, the situation is similar. The donors have to be more prepared to tackle these issues and to act in a consequential and coherent manner. They must insist on reform steps that would lead to more open access.

It is crucial to make the judiciary run smoothly and independently. It similarly matters to facilitate and promote organisations that are not directly under government influence: independent employers’ associations, trade unions and agriculture organisations, professional associations and cultural organisations. Ultimately, these reforms are needed for the development of a strong private sector that would be independent of the government and capable of driving the national economy thanks to market-based competition.

To spell it out clearly, our argument is not about the conventional promotion of civil society in the sense of propping up some local organisations that are little more than consultancies without paying taxes. What is needed is the enforcement of the distinction between business and politics and the establishment of an open society with free market competition and a state run by separate branches of government. This is indeed a daunting and long-term agenda. But development policy is about long-term commitments and always requires some adapting to new conditions and new insights.