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OVERCOMINGFRAGILITY IN AFRICAFORGING A NEW EUROPEAN APPROACH
<strong>European</strong> Report on Development 2009Version: <strong>ERD</strong> Report v.3 (15 October 2009)Revised version after comments by <strong>ERD</strong> Steer<strong>in</strong>g Committee on version 2.Disclaimer:The views expressed <strong>in</strong> this report are those of the authors, and should not be taken tobe the views of the <strong>European</strong> Commission or of the Member States of the <strong>European</strong> Union.2
<strong>European</strong> Report on Development 2009 – ForewordForewordPolicy-mak<strong>in</strong>g requires accurate, deep and timely knowledge of any situation. And developmentis no exception. In Europe, there is a wealth of universities and research <strong>in</strong>stituteswhich th<strong>in</strong>k about development issues and produce enlightened analytical work.However, its full potential has yet to be unleashed for numerous reasons, <strong>in</strong>clud<strong>in</strong>gfragmentation of efforts, a lack of resources and a relative disconnection from the policy-mak<strong>in</strong>gsphere.The “Mobiliz<strong>in</strong>g <strong>European</strong> research for development policies” <strong>in</strong>itiative is meant toremedy this situation. Currently supported by the <strong>European</strong> Commission and six MemberStates (F<strong>in</strong>land, Germany, Luxembourg, Spa<strong>in</strong>, Sweden, United K<strong>in</strong>gdom), this jo<strong>in</strong>t <strong>in</strong>itiativeseeks to enhance the <strong>European</strong> perspective, its vision, on some of the mostpress<strong>in</strong>g development issues of our time, on the basis of knowledge excellence, <strong>in</strong>novationand the build<strong>in</strong>g of common ground between the <strong>European</strong> research community andpolicy-makers.This <strong>European</strong> Report on Development (<strong>ERD</strong>), to be published on a yearly basis, is thema<strong>in</strong> outcome of this <strong>in</strong>itiative. It is an <strong>in</strong>dependent, knowledge-based and forwardlook<strong>in</strong>greview of development issues reflect<strong>in</strong>g the <strong>European</strong> vision. This Report willhelp the <strong>European</strong> Union to ref<strong>in</strong>e its vision on development, enrich its policies and <strong>in</strong>fluencethe <strong>in</strong>ternational debate to have an impact. It will also complement other flagshipreports on development, <strong>in</strong> an attempt to reflect the diversity of views that may co-existon various issues and—where relevant—the specific <strong>European</strong> approaches, based bothon Europe's political and social values and its own history and experience. Indeed, weare conv<strong>in</strong>ced that there should not be any monopoly of th<strong>in</strong>k<strong>in</strong>g <strong>in</strong> a field as complexand rich as development policy.This year's first edition, elaborated under the lead of the <strong>European</strong> <strong>University</strong> <strong>Institute</strong>(EUI) based <strong>in</strong> Florence, deals with the complex and multidimensional issue of “<strong>fragility</strong>”,with a specific focus on Sub Saharan Africa, where most fragile countries are located.This has been described as the “toughest development challenge of our era”.Deal<strong>in</strong>g with situations of <strong>fragility</strong> is, rightly, a grow<strong>in</strong>g concern both for Europe and forthe entire <strong>in</strong>ternational community. It is an <strong>in</strong>creas<strong>in</strong>gly important priority <strong>in</strong> <strong>European</strong>development policies. It is also a key challenge for <strong>European</strong> security strategy.Overcom<strong>in</strong>g <strong>fragility</strong> is above all an imperious moral necessity. One third of the worldpoor live <strong>in</strong> so-called fragile states. Progress towards the Millennium Development Goals(MDGs) is lagg<strong>in</strong>g beh<strong>in</strong>d <strong>in</strong> these countries and the cost of weak governance—especiallywhen it leads to conflicts and wars—is enormous, <strong>in</strong> economic, human and social terms.This is all the more important consider<strong>in</strong>g the closely l<strong>in</strong>ked food, fuel and now f<strong>in</strong>ancialand economic shocks which threaten to reverse recent development progress. The humancosts of the crises are particularly worry<strong>in</strong>g for fragile Sub-Saharan African countries,where the ability to cope with shocks is limited.Situations of <strong>fragility</strong> are also a major cause of concern from the security perspective.In an <strong>in</strong>creas<strong>in</strong>gly <strong>in</strong>terdependent world, tackl<strong>in</strong>g <strong>fragility</strong> is also <strong>in</strong> our own <strong>in</strong>terest, toensure global stability and prosperity. The revival of piracy <strong>in</strong> the Gulf of Aden, which isclosely l<strong>in</strong>ked with the turbulence <strong>in</strong> Somalia, or the flows of economic, political and warrefugees who, understandably and often reluctantly, flee the <strong>fragility</strong> at home to buildbetter and more stable lives <strong>in</strong> Europe and other wealthy parts of the world, are justsome examples of this grow<strong>in</strong>g <strong>in</strong>terdependency.At last, these situations, which encompass an extremely diverse group of societieswith very different socio-economic, cultural and political circumstances and compositions,require specific, tailored made approaches when it comes to external support. Theclassical development policy “mantra”, such as the aid effectiveness agenda (Paris Declarationand the 'triple A' Agenda), the <strong>European</strong> Consensus on development and theapproach to support governance reforms, meet specific challenges <strong>in</strong> their application <strong>in</strong>3
<strong>European</strong> Report on Development 2009 – Forewordfragile contexts. As mentioned <strong>in</strong> the 2008 EU research paper “MDGs at midpo<strong>in</strong>t” led byProfessor Bourguignon and produced <strong>in</strong> the context of this <strong>in</strong>itiative 1 , “<strong>fragility</strong> needs tobe tackled if progress on the [Millennium Development Goals] is to be achieved. This willrequire susta<strong>in</strong>ed engagement and new, imag<strong>in</strong>ative use of comb<strong>in</strong>ed political, technical,f<strong>in</strong>ancial and sometimes military resources, engag<strong>in</strong>g with governments but also civilsociety and non-state actors”. In that regard, partner and donor countries are currentlyjo<strong>in</strong>tly engaged <strong>in</strong> an “<strong>in</strong>ternational dialogue on state build<strong>in</strong>g and peace build<strong>in</strong>g”, withthe aim of possibly arriv<strong>in</strong>g at a consensus on objectives and pr<strong>in</strong>ciples of <strong>in</strong>tervention <strong>in</strong>these most difficult circumstances.An <strong>in</strong>tensive participatory process, br<strong>in</strong>g<strong>in</strong>g on board a wide range of top scholars,policy makers and civil society representative, both from Europe and Africa, has beenundertaken to conduct this ambitious policy research <strong>in</strong>itiative. Through build<strong>in</strong>g commonanalytical ground on how better to grasp those difficult situations, this first editionof the <strong>ERD</strong> will help Europe f<strong>in</strong>e tune its strategic approach to <strong>fragility</strong> and def<strong>in</strong>e morecoherent policies <strong>in</strong> the future. It is a major step forward for the <strong>European</strong> research <strong>in</strong>itiativewhich seeks to clarify how to reconcile development goals with new global challenges.Stefano ManservisiYves MényDirector General of the <strong>European</strong>President of the <strong>European</strong> <strong>University</strong>Commission for Development and Relations <strong>Institute</strong>with African, Caribbean and Pacific States1See “Millennium Development Goals at Midpo<strong>in</strong>t: Where do we stand and where do we need togo?” EU Research Paper by François Bourguignon et al., 2008,http://ec.europa.eu/development/icenter/repository/mdg_paper_f<strong>in</strong>al_20080916_en.pdf4
<strong>European</strong> Report on Development 2009 – AcknowledgementsAcknowledgementsThis Report has been prepared by a team led by Giorgia Giovannetti, <strong>in</strong>clud<strong>in</strong>g Frankl<strong>in</strong>Allen, Simone Bertoli, Shailaja Fennell, Wendy Harcourt, Marta Reynal-Querol, MarcoSanfilippo, Elisa Ticci, Pascal Vennesson and Thierry Verdier, based at the Robert SchumanCentre for Advanced Studies of the <strong>European</strong> <strong>University</strong> <strong>Institute</strong> (EUI). Ingo L<strong>in</strong>senmannwas the Project-Manager.The team is particularly grateful to François Bourguignon for his scientific advice, toLuca Al<strong>in</strong>ovi, Nicolas Gérard, Seth Kaplan, Stephan Klasen, Ramon Marimon, FrançoiseMoreau, Yaw Nyarko, Dorothée Starck, and all members of the <strong>ERD</strong> Steer<strong>in</strong>g Committeefor their endur<strong>in</strong>g advice and support. We are also very grateful to Stefania Innocenti forresearch assistance.William A. Amponsah, M<strong>in</strong>a Baliamoune-Lutz, Stefano Bartol<strong>in</strong>i, Victor Davies, JörnGräv<strong>in</strong>gholt, Sven Grimm, Francesco N. Moro, Donato Romano, Alexander Sarris, AndrewSherriff and Gianni Vaggi contributed extensively to the consultative process.Lubomira Bencova, Piera Calc<strong>in</strong>aghi, Monique Cavallari, Angela Conte, Mei Lan Goei,Laetitia Jespers, Alexei Jones, Laura Jurisevic, Christ<strong>in</strong>e Lyon, Serena Scarselli, ElisabettaSpagnoli and Valerio Pappalardo contributed to various stages of the report. BruceRoss Larson was the pr<strong>in</strong>cipal editor. Chris Engert took care of the l<strong>in</strong>guistic revision ofthe background papers. We thank all of them.We are <strong>in</strong>debted to authors of background papers and notes: Ernest Aryeetey, NiagaleBagayoko-Penone, Michael Barnett, Nicolas Berman, Elva Bova, Deborah Bryceson,Christian Büger, Maurizio Carbone, Paul Collier, Lorenzo Cotula, Nasred<strong>in</strong> Elam<strong>in</strong>,Fernanda Faria, Patrick Guillaumont, Sylva<strong>in</strong>e Guillaumont Jeanneney, Kenneth Harttgen,Damien Helly, Lelio Iapadre, Zohra Kahn, José Maria Larrú, Francesca Luchetti,Alan Matthews, Philippe Mart<strong>in</strong>, Jesse McConnell, Mark McGillivray, Andrew Mold, WimNaudé, Janvier Nkurunziza, Abena D. Oduro, Al<strong>in</strong>a Rocha-Menocal, Sara Pantuliano,Jean-Philippe Platteau, Béatrice Pouligny, Prabirjit Sarkar, Ajit S<strong>in</strong>gh, Aysen Tanyeri-Abur, Necla Tschirgi, Margherita Velucchi and Tony Venables.A special thank goes to the participants to the New Faces for African Development <strong>in</strong>itiative,who have enthusiastically contributed to br<strong>in</strong>g fresh and new views <strong>in</strong>to the report,presented their work and wrote notes and papers: Eme Akpan, Japhet Biegon,Muslilhah Badmus, Christian B. Kamga Kam, Dor<strong>in</strong>e Kanmi Feunou, Nicholas Kilimani,Albert Makochekanwa Douzounet Mallaye, Ndubuisi Nwokolo Magidu Nyende, Isaac Oluwatayo,Thomas Poirier, Afees Salisu and Sigismond Wilson.It is impossible to thank everyone, as many contributed to the process which led tothe publication of this report participat<strong>in</strong>g to the preparatory events <strong>in</strong> Brussels (February6), Cambridge (March 17-18), Florence (April 16-17), Barcelona (May 7-8), Accra(May 21-23), Florence (June 22-23) and Brussels (September 4). The complete lists ofparticipants to these events are <strong>in</strong>cluded <strong>in</strong> Volume 1B, but we would like to gratefullyacknowledge here the contributions they all brought to the consultative process and tothe discussion on a controversial topic. Many thanks also go to the host<strong>in</strong>g Institutions,namely the Jesus College <strong>in</strong> Cambridge, Universitat Pompeu Fabra and CREMed (Centerfor Research on the Economies of the Mediterranean) <strong>in</strong> Barcelona, and the ISSER (<strong>Institute</strong>of Statistical, Social and Economic Research) <strong>in</strong> Accra.5
<strong>European</strong> Report on Development 2009 – ContentsContentsOVERVIEW ...................................................................................................... 151 TOWARDS BETTER EU RESPONSES TO FRAGILITY ..................................... 202 SETTING PRIORITIES ................................................................................ 23SECTION 1 - UNDERSTANDING FRAGILITY...................................................... 27CHAPTER 1 - STATE FRAGILITY IN SUB-SAHARAN AFRICA: COSTS ANDCHALLENGES ................................................................................................... 291 EUROPEAN DEVELOPMENT POLICIES IN A CHANGING GLOBAL CONTEXT . 302 WHAT DOES STATE FRAGILITY REFER TO? ................................................ 353 THE COSTS OF STATE FRAGILITY IN SUB-SAHARAN AFRICA ..................... 38CHAPTER 2 - CHARACTERISTICS OF FRAGILE STATES ..................................... 531 FRAGILE STATES SHARE SOME COMMON FEATURES .................................. 542 FRAGILE COUNTRIES PRESENT MANY ELEMENTS OF HETEROGENEITY ...... 693 IN SUMMARY ............................................................................................. 73CHAPTER 3 - THE HISTORICAL ROOTS OF STATE FRAGILITY .......................... 751 SPECIFIC DRIVERS AND COMMON UNDERLYING FACTORS ....................... 762 IS FRAGILITY A COLONIAL LEGACY? ......................................................... 773 COLONIAL STATES IN SUB-SAHARAN AFRICA ........................................... 774 DECOLONISATION ..................................................................................... 795 INTERNATIONAL CONTEXT AND CONTINUITY ........................................... 806 THE PATH-DEPENDENCE OF INSTITUTIONS—DETACHMENT ANDEXTRAVERSION ......................................................................................... 837 CONCLUSIONS ........................................................................................... 86CHAPTER 4 - ECONOMIC FACTORS CAN MAGNIFY FRAGILITY ......................... 871 ECONOMIC FACTORS MATTER FOR STATE FRAGILITY—AND FRAGILITYMATTERS FOR THE ECONOMY .................................................................... 882 TRADE OPENNESS CAN INCREASE OR DECREASE STATE FRAGILITY ......... 893 TWO WAY LINKS BETWEEN FOREIGN DIRECT INVESTMENT ANDFRAGILITY................................................................................................. 914 NATURAL RESOURCE ENDOWMENTS CAN MAKE GOVERNANCE WORSE ..... 925 GOVERNANCE AFFECTS THE RELATIONSHIP BETWEEN LAND ANDFRAGILITY................................................................................................. 946 HUNGRY POPULATIONS AND FRAGILE INSTITUTIONS ............................ 1017 CONCLUSION ........................................................................................... 103SECTION 2 - FROM FRAGILITY TO RESILIENCE ............................................. 105CHAPTER 5 - FRAGILITY VERSUS RESILIENCE .............................................. 1071 ENHANCING RESILIENCE ........................................................................ 1092 WHAT DOES A RESILIENCE-BASED APPROACH IMPLY? ........................... 1093 STATE FRAGILITY UNDERMINES SOCIOECONOMIC RESILIENCE ............. 1106
<strong>European</strong> Report on Development 2009 – ContentsCHAPTER 6 - AFRICA’S FRAGILE STATES HIT HARD BY THE GLOBALFINANCIAL CRISIS ........................................................................................ 1151 THE DAUNTING CHALLENGES OF THE CRISIS: BRINGING TO A HALTYEARS OF CONTINUED PROGRESS ........................................................... 1162 THREE “FS” (FOOD, FUEL, FINANCE) AND A FOURTH (FRAGILITY) ......... 1173 THE FOUR CHANNELS OF TRANSMISSION TO FRAGILE COUNTRIES ........ 1184 CAN FRAGILE STATES COPE WITH THE CRISIS? ...................................... 129CHAPTER 7 - STATE-BUILDING AND SOCIAL COHESION ............................... 1351 BRINGING THE STATE BACK TO THE LIMELIGHT ..................................... 1362 SOCIAL COHESION AND THE INTANGIBLE DIMENSIONS OF STATE-BUILDING ................................................................................................ 1373 THE NEED FOR A DEEPLY ROOTED UNDERSTANDING OF THE LOCALCONTEXT ................................................................................................. 1414 COMPLEMENTARITY BETWEEN HUMANITARIAN ASSISTANCE ANDSTATE-BUILDING INTERVENTIONS IN POSTCONFLICT SETTINGS ........... 145SECTION 3 - OVERCOMING FRAGILITY: THE EU'S ROLE ................................ 153CHAPTER 8 - EU POLICIES TO ADDRESS FRAGILITY IN SUB-SAHARANAFRICA .......................................................................................................... 1551 THE EU’S HISTORICAL CONCERN FOR FRAGILE COUNTRIES .................... 1572 EU POTENTIAL IN FRAGILE SITUATIONS ................................................ 1653 TOWARDS A BETTER EU RESPONSE TO FRAGILITY .................................. 166CHAPTER 9 - CONCLUSIONS - PRIORITIES AND PRESCRIPTIONS ................. 1811 EU POLICIES CAN HAVE AN IMPACT ........................................................ 1822 PRIORITIES AND PRESCRIPTIONS .......................................................... 184REFERENCES ................................................................................................. 193ANNEX - TABLE OF CONTENTS OF VOLUME 1B ............................................... 2171 BACKGROUND PAPERS FOR THE EUROPEAN REPORT ON DEVELOPMENT2009 ........................................................................................................ 2182 THE CONSULTATIVE PROCESS OF THE EUROPEAN REPORT ONDEVELOPMENT 2009 ................................................................................ 2197
<strong>European</strong> Report on Development 2009 – ContentsTables and FiguresBox table 0.1: Sub-Saharan Africa countries <strong>in</strong> situation of <strong>fragility</strong> .......................... 16Box figure 0.1: Population pyramid <strong>in</strong> Sub-Saharan African fragile countries .............. 18Box figure 0.2: Population pyramid <strong>in</strong> the <strong>European</strong> Union ...................................... 19Figure 0.1: Resilience <strong>in</strong> fragile countries <strong>in</strong> Sub Saharan Africa: from low to high ...... 22Figure 0.2: Vulnerability <strong>in</strong> fragile countries <strong>in</strong> Sub Saharan Africa: from low to high .. 22Box figure 1.1: Incremental impacts of aid on growth ............................................. 33Box table 1.1: Aid to fragile states, 2004 .............................................................. 34Table 1.1: Human development <strong>in</strong> Sub-Saharan African Fragile states ...................... 39Figure 1.1: Absolute changes <strong>in</strong> key MDG <strong>in</strong>dicators (2000–06) ............................... 41Figure 1.2: Relative changes <strong>in</strong> key MDG <strong>in</strong>dicators (2000–06) ................................ 42Table 1.2: Refugees and <strong>in</strong>ternally displaced people, 2008 ...................................... 44Table 1.3: Food security <strong>in</strong>dexes for fragile countries .............................................. 46Figure 1.3: Trends <strong>in</strong> governance <strong>in</strong>dicators, Sub-Saharan fragile countries ............... 48Table 2.1: Taxation, government revenues and ease of do<strong>in</strong>g bus<strong>in</strong>ess <strong>in</strong> Sub-Saharan African fragile countries .................................................................... 55Figure 2.1: External flows (simple average from 2003–07) ...................................... 57Box figure 2.1: Zambian exports and copper prices (2002–09) ................................ 58Box figure 2.2: Copper prices and the Zambian kwacha (2002–09) .......................... 59Box figure 2.3: M<strong>in</strong>e revenue <strong>in</strong> Zambia (2001–07) ................................................ 60Figure 2.2: Shares of agriculture, <strong>in</strong>dustry and services on GDP, 2006 ...................... 61Table 2.2: List of Sub-Saharan African food importer and exporter countries ............. 62Table 2.3: Export concentration <strong>in</strong> fragile countries ................................................ 64Table 2.4: Fragile countries' export dest<strong>in</strong>ation, percentage, average 2004–06 .......... 65Table 2.5: Public expenditure as percentage of GDP ............................................... 66Table 2.6: Population .......................................................................................... 67Table 2.7: Infrastructure and geographical characteristics ....................................... 68Figure 2.3: Real GDP growth of fragile countries, resource-<strong>in</strong>tensive fragilecountries and non-resource-<strong>in</strong>tensive fragile countries, 2000–08 ........................ 70Table 2.8: Macroeconomic characteristics .............................................................. 71Table 2.9: Overall Vulnerability Rank .................................................................... 72Table 4.1: Ensur<strong>in</strong>g the poverty-reduc<strong>in</strong>g effects of new <strong>in</strong>vestments <strong>in</strong> farmland ...... 98Box table 4.1: Allocations of agricultural land for 2000–08 (commitments above1,000 hectares) .......................................................................................... 100Figure 5.1: Interactions between state <strong>fragility</strong> and socioeconomic resilience ........... 112Figure 6.1: Exports ris<strong>in</strong>g as a share of GDP ........................................................ 117Box figure 6.1: South Africa responds to the Lehman Brothers collapse—Kenya andNigeria do not ............................................................................................ 119Figure 6.2: Exports down most for Sub-Saharan Africa ......................................... 121Figure 6.3: Sub-Saharan Africa primary and manufactur<strong>in</strong>g exports after f<strong>in</strong>ancialcrisis <strong>in</strong> partner country ............................................................................... 123Figure 6.4: Estimated reduction of aid flows to Africa <strong>in</strong> 2009 ................................ 125Box figure 6.2: Ch<strong>in</strong>a’s economic cooperation with African fragile countries and DACaid, 1998–2007 .......................................................................................... 127Figure 6.5: Many migrants reside with<strong>in</strong> Africa ..................................................... 1288
<strong>European</strong> Report on Development 2009 – ContentsTable 6.1: Resilience rank—from low to high ....................................................... 130Figure 6.6: The impact of the crisis on social well-be<strong>in</strong>g ........................................ 131Table 8.1: <strong>European</strong> Union <strong>in</strong>stitutions and agencies relevant to fragile states ......... 1659
<strong>European</strong> Report on Development 2009 – AcronymsList of AcronymsACCORDACPAfDBAIDS/HIVALDCAMUAPRMASEANAUAU ECOSOCCAWEPACAPCCSCEDAWCEFRCFIPCIVCOMCODEVCOHOMCOMESACPACPIACSFPCSODACDCIDDRDFIDDFQFDG DevelopmentDRCEACECECCASECDPMECHOECOWASEDFEEASEIDHREITIENPIAfrican Centre for the Constructive Resolution DisputesAfrican, Caribbean and Pacific countriesAfrican Development BankAcquired Immunodeficiency Syndrome / Human ImmunodeficiencyVirusAfrica, Least Developed Countries and Special ProgrammesArab Maghreb UnionAfrican Peer Review MechanismAssociation of Southeast Asian NationsAfrican UnionEconomic, Social and Cultural Council of the African UnionAssociation of <strong>European</strong> Parliamentarians for AfricaCommon Agricultural PolicyThe Centre for Ch<strong>in</strong>ese StudiesConvention on the Elim<strong>in</strong>ation of all Forms of Discrim<strong>in</strong>ationaga<strong>in</strong>st WomenCommon <strong>European</strong> Framework of ReferenceCarleton <strong>University</strong> Country Indicators for Foreign PolicyCommittee for Civilian Aspects of Crisis ManagementWork<strong>in</strong>g Party on Development Cooperation – Council of the<strong>European</strong> UnionWork<strong>in</strong>g Group on Human Rights - Council of the <strong>European</strong>UnionCommon Market for Eastern and Southern AfricaCotonou Partnership Agreement ACP-ECCountry Policy and Institutional AssessmentCommon Foreign and Security PolicyCivil Society OrganizationsDevelopment Assistance CommitteeDevelopment Cooperation InstrumentDisarmament, Demobilization and Re<strong>in</strong>tegrationDepartment for International DevelopmentDuty Free and Quota Free<strong>European</strong> Commission Directorate General Development andRelations with African, Caribbean and Pacific States -Democratic Republic of the CongoEast African Community<strong>European</strong> CommunityEconomic Community of Central African States<strong>European</strong> Centre for Development Policy Management<strong>European</strong> Commission Humanitarian OfficeEconomic Community of West African States<strong>European</strong> Development Found<strong>European</strong> External Action Service<strong>European</strong> Instrument for Democracy and Human RightsExtractive Industries Transparency Initiative<strong>European</strong> Neighbourhood and Partnership Instrument11
<strong>European</strong> Report on Development 2009 – AcronymsEPAsESDPEU CSOEUEUFOREUPOLEUSECEUSRFAOSTATFDIFOCACFTAGAERCGCCGDIGDPGHIGNIGOSSGRBGSCGSPGTZHDIIDPIFADIFPRIIfSIIEDIMFILOIPUJAESJAMJDTLDCLICsLRRDLNPMARWOPNETMDGsMEMMICsMOFCOMMONUCMTDFsNAPsEconomic Partnership Agreements<strong>European</strong> Security and Defence PolicyEU Civil Society Organizations<strong>European</strong> Union<strong>European</strong> ForceEurope Police Mission<strong>European</strong> Communications Security & Evaluation Agency ofthe Military Committee<strong>European</strong> Union Special RepresentativeFAOSTAT—The FAO Statistical DatabaseForeign Direct InvestmentForum on Ch<strong>in</strong>a-Africa CooperationFree Trade AgreementGeneral Affairs and External Relations CouncilGulf Cooperation CouncilGender Development IndexGross Domestic ProductGlobal Hunger IndexGross National IncomeGovernment of Southern SudanGender responsive Budget<strong>in</strong>gGeneral Secretariat of the CouncilGeneralized system of preferencesGesellschaft für Technische ZusammenarbeitHuman Development IndexInternally Displaced PersonsInternational Fund for Agricultural DevelopmentInternational Food Policy Research <strong>Institute</strong>Instrument for StabilityInternational <strong>Institute</strong> for Environment and DevelopmentInternational Monetary FoundInternational Labour OrganisationInter-Parliamentary UnionJo<strong>in</strong>t Africa-EU StrategyJo<strong>in</strong>t Assessment MissionJo<strong>in</strong>t Donor TeamLeast Developed CountriesLow-Income CountriesL<strong>in</strong>k<strong>in</strong>g Relief, Rehabilitation and DevelopmentLiberia National PoliceMano River Women Peace Networks <strong>in</strong> Sierra Leone, Liberiaand Gu<strong>in</strong>eaMillennium Development GoalsMultiplicative Error ModelMiddle-Income CountriesM<strong>in</strong>istry of Commerce of the People's Republic of Ch<strong>in</strong>aUnited Nations Mission DR CongoMulti-Donors Trust FundsNational Action Plans12
<strong>European</strong> Report on Development 2009 – AcronymsNATONCPn.c.NEPADNGONSE-20 IndexODAOECD DACPCDPMGPSCRECsRIAsRTPSADCSALWSIPRISPLM/ASSASSRTDCATRAUNCTADUNDPUNECAUNEPUNIDOUNIFEMUNMISUNODCUNRISDUSAIDVATWACPUWBWFPWHOWIPNETWPFWTOZCCMZCCM-IH3F-shocksNorth Atlantic Treaty OrganizationNational Congress PartyNot ClassifiedNew Partnership for Africa's DevelopmentNon Governmental OrganizationNigerian Stock Exchange IndexOfficial Development AssistanceDevelopment Assistance Committee – Organization for EconomicCooperation and DevelopmentPolicy Coherence for DevelopmentPolitico-Military Group of the Council of the EUPolitical and Security Committee of the Council of the EURegional Economic CommunitiesRegional Integration AgreementsRevealed Trade PreferencesSouthern African Development CommunitySmall Arms and Light WeaponsStockholm International Peace Research <strong>Institute</strong>Sudan People’s Liberation Movement/ArmySub-Saharan AfricaSecurity Sector ReformTrade, Development and Cooperation AgreementTrade Related AssistanceUnited Nations Conference on Trade and DevelopmentUnited Nations Development ProgrammeUnited Nations Economic Commission for AfricaUnited Nations Environment ProgrammeUnited Nations Industrial Development OrganizationUnited Nations Development Fund for WomenUnited Nations Mission <strong>in</strong> SudanUnited Nations Office on Drugs and CrimeUnited Nations Research <strong>Institute</strong> for Social DevelopmentUnited States Agency for International DevelopmentValue Added TaxWomen and Children Protection UnitWorld BankWorld Food ProgrammeWorld Health OrganizationWomen <strong>in</strong> Peace Build<strong>in</strong>g NetworkWorld Population FoundationWorld Trade OrganizationZambia Consolidated Copper M<strong>in</strong>esZambia Consolidated Copper M<strong>in</strong>es – International Hold<strong>in</strong>gFuel, food and f<strong>in</strong>ancial shocks13
<strong>European</strong> Report on Development 2009 – OverviewOVERVIEW15
<strong>European</strong> Report on Development 2009 – OverviewThe 2008–09 crisis <strong>in</strong>duced the worst global downturn s<strong>in</strong>ce 1929. The economic andf<strong>in</strong>ancial crisis has hit the budgets of the EU and other developed countries, creat<strong>in</strong>ghuge debt overhangs, unemployment and social problems. And it has been particularlydevastat<strong>in</strong>g for fragile countries, most of them <strong>in</strong> Sub-Saharan Africa, at first thought tobe sheltered by their low f<strong>in</strong>ancial <strong>in</strong>tegration with the rest of the world. While Sub-Saharan Africa’s dire socioeconomic situation calls for a renewed commitment, EU concernsabout domestic social problems may displace attention and funds from EU developmentaid policies. But the EU must keep, and possibly strengthen, its commitment toSub-Saharan Africa, avoid<strong>in</strong>g <strong>in</strong>efficient aid policies. A reassessment of the EU developmentpolicy towards the Sub-Saharan Africa fragile countries is <strong>in</strong> order. That is the aimof the 2009 <strong>European</strong> Report on Development, the first <strong>in</strong> an annual series.The 2009 <strong>European</strong> Report on Development analyses the costs and characteristics of<strong>fragility</strong> (part 1), the capacity of fragile countries to cope with negative shocks such asthe 2008-09 f<strong>in</strong>ancial crisis (part 2), and the EU’s current engagement with fragile countriesas well as the potential for EU development policy to assist national stakeholders <strong>in</strong>enhanc<strong>in</strong>g resilience (part 3). The focus is on Sub-Saharan Africa because this regionappears to be particularly lagg<strong>in</strong>g beh<strong>in</strong>d <strong>in</strong> the sphere of state consolidation; a stylisedfact survives all the theoretical disputes around the def<strong>in</strong>ition and measurement of <strong>fragility</strong>:Sub-Saharan African countries always account for most of the group of fragilestates (box 0.1) 1 .Box 0.1: Which Sub-Saharan African countries are fragile?Several classification and rank<strong>in</strong>gs of state <strong>fragility</strong> exist;, as a reference, <strong>in</strong> this report weuse the follow<strong>in</strong>g operational list of Sub-Saharan Africa countries <strong>in</strong> situation of <strong>fragility</strong>:Box table 0.1: Sub-Saharan Africa countries <strong>in</strong> situation of <strong>fragility</strong>Angola Equatorial Gu<strong>in</strong>ea NigeriaBurundi Eritrea RwandaCameroon Ethiopia São Tomé and PríncipeCentral African Republic Gambia, The Sierra LeoneChad Gu<strong>in</strong>ea SomaliaComoros Gu<strong>in</strong>ea-Bissau SudanCongo, Dem. Rep. of Kenya TogoCongo, Rep. of Liberia UgandaCôte d’Ivoire Mauritania ZimbabweDjiboutiNigerThe list has been put forward by OECD (2009), but it has not been officially endorsed bythe OECD. It is the result of a compilation of the bottom two qu<strong>in</strong>tiles of the World Bank’sCountry Policy and Institutional Assessment for 2007, the Brook<strong>in</strong>gs <strong>in</strong>dex of state weakness<strong>in</strong> the develop<strong>in</strong>g world for 2008 and the Carleton <strong>University</strong> Country Indicators of ForeignPolicy for 2007. The <strong>ERD</strong> 2009 uses this list for operational purposes, but it does not endorseit s<strong>in</strong>ce we ma<strong>in</strong>ta<strong>in</strong> that the def<strong>in</strong>ition itself is dynamic (see Chapter 1).The human and economic costs of <strong>fragility</strong> call for orient<strong>in</strong>g development models, strategiesand actions towards build<strong>in</strong>g up the resilience of societies—that is, towards <strong>in</strong>creas<strong>in</strong>gthe ability of a socioeconomic system to adapt and cope with shocks and chang<strong>in</strong>gconditions without compromis<strong>in</strong>g people’s capabilities. In a world where global shocksare gett<strong>in</strong>g <strong>in</strong>creas<strong>in</strong>gly severe and hitt<strong>in</strong>g more people, the resilience of a socioeconomicsystem is fundamental for a country’s development path. And it should be a centralobjective of national development strategies and thus of development assistance.1For <strong>in</strong>stance, 29 out of 49 countries identified as fragile by OECD (2009) are located <strong>in</strong> Sub-Saharan Africa.16
<strong>European</strong> Report on Development 2009 – OverviewFragile countries <strong>in</strong> Sub-Saharan Africa share many characteristics—they all have seriousstructural problems and dysfunctional <strong>in</strong>stitutions—but they also differ <strong>in</strong> many dimensions(box 0.2). For them, an emergency situation is the rule, not an exception. Inthe attempt to offset shocks, they often lack a long term horizon for their choices, andimmediate needs distort long-run objectives. The EU can help them to stick to the pathaway from <strong>fragility</strong> and towards resilience and susta<strong>in</strong>able growth. To this end, the EUneeds a flexible long-term approach for its engagements and new forms of govern<strong>in</strong>g aidto improve its efficiency. It should make credible long-term policy and budgetary commitments,which do not <strong>in</strong>terfere with the pr<strong>in</strong>ciple of national sovereignty. These commitmentswould allow fragile countries to lengthen the time horizons of their policies.Mov<strong>in</strong>g from priorities to specific prescriptions and guidel<strong>in</strong>es for <strong>in</strong>tervention requiresa deeply rooted knowledge on the ground, to account for the fragile Sub-Saharan Africancountries’ remarkable heterogeneity <strong>in</strong> history, culture, economic situation, and politics.Detailed policy prescriptions can be formulated only by match<strong>in</strong>g policy expertees withthe knowledge of the local context 2 .EU comparative advantages: to develop human and social capital and support<strong>in</strong>stitutional developmentEU and member states’ development assistance has great potential. For most Sub-Saharan African fragile countries, Europe is the ma<strong>in</strong> donor, trad<strong>in</strong>g partner, source offoreign <strong>in</strong>vestments and a relevant migrant dest<strong>in</strong>ation. And the EU is an important political,diplomatic and economic bloc. Still, Europe cannot forget that <strong>fragility</strong> often hasits roots <strong>in</strong> colonisation and decolonisation processes, at times magnified by the irresponsiblepractices of foreign companies and the illicit and crim<strong>in</strong>al traffick<strong>in</strong>g to andfrom Europe.The EU should keep be<strong>in</strong>g engaged <strong>in</strong> fragile countries, respect domestic ownership,go beyond the mere <strong>in</strong>stitution build<strong>in</strong>g, fully exploit its comparative advantage and concentrateits efforts on develop<strong>in</strong>g human and social capital and support<strong>in</strong>g <strong>in</strong>stitutionaldevelopment at local and regional levels.Unlike most aid agencies 3 , the array of potential EU policies extends much beyond f<strong>in</strong>ancialassistance to <strong>in</strong>clude trade, agriculture, fisheries, security, migration, climatechange, environment, social dimension of globalisation, employment, research and development,<strong>in</strong>formation society, energy, and governance 4 . Furthermore, the EU’s historyis one of <strong>in</strong>stitutional development with<strong>in</strong> diverse societies, characterized by <strong>in</strong>stitutionswith different roots, tradition and history. Hence, dur<strong>in</strong>g its own history of enlargement,the <strong>European</strong> Union had to cope with problems of transition from military dictatorship todemocracy (e.g. Greece, Portugal and Spa<strong>in</strong> <strong>in</strong> the 1970) as well as <strong>in</strong>tegration of countrieswhich only recently shifted to a market approach. These experiences provide a veryuseful knowledge to deal with <strong>fragility</strong>.The potential for Europe’s action should not, however, be overstated. The world orderhas been becom<strong>in</strong>g more multipolar, with emerg<strong>in</strong>g political and economic centres hav<strong>in</strong>gjo<strong>in</strong>ed the oldest actors. The US-Ch<strong>in</strong>a-EU configuration has become pivotal <strong>in</strong> the<strong>in</strong>ternational system. In addition to the ma<strong>in</strong> <strong>in</strong>ternational organisations, other countrieshave been engag<strong>in</strong>g <strong>in</strong> fragile states, from the United States to East Asian and Arab Gulf234GTZ (2008) exam<strong>in</strong>es six country studies and it emphasizes geographical diversities and differentgovernment stage and development orientation: “the “do no harm” approach, sensitivity tocontext and thorough knowledge of the country rema<strong>in</strong> <strong>in</strong>dispensable to any strategy development”(p, 12).Aid agencies and <strong>in</strong>ternational <strong>in</strong>stitutions have a much more limited range of actions, oftenconf<strong>in</strong>ed to short-term remedial measures and, because of their <strong>in</strong>stitutional duties, on onespecific issue. See the background paper by Paul Collier (2009a) <strong>in</strong> Volume 1B on this po<strong>in</strong>t.See the EU 2009 Report on Policy Coherence for Development, which identifies 12 relevant policyareas.17
<strong>European</strong> Report on Development 2009 – Overviewcountries. Ch<strong>in</strong>a <strong>in</strong> particular has built <strong>in</strong>frastructures, <strong>in</strong>vested <strong>in</strong> land and <strong>in</strong>creasedsoft power <strong>in</strong> most fragile countries.Moreover, EU’s <strong>in</strong>itiatives to tackle state <strong>fragility</strong>, such as its assistance to state andpeace build<strong>in</strong>g, could be perceived as <strong>in</strong>trusive and not politically neutral by partnercountries. They can, possibly un<strong>in</strong>tentionally, also affect processes and dynamics thatare <strong>in</strong>tr<strong>in</strong>sically <strong>in</strong>ternal. F<strong>in</strong>ally, <strong>in</strong>ternal resistance and constra<strong>in</strong>ts with<strong>in</strong> the EU canweaken the commitment to development policies. Furthermore, the ag<strong>in</strong>g population,the huge debt accumulated <strong>in</strong> the crisis, and the EU’s enlargement can weaken the <strong>in</strong>centivesto direct public resources to <strong>in</strong>ternational development cooperation.Box 0.2: Common features of fragile countries—and substantial differencesThe <strong>in</strong>ability to mobilise domestic resources and dependence on externalresources. Fragile countries are unable to mobilise domestic resources and to drawsubstantial fiscal revenues from taxation. Sub-Saharan African fragile countries’ governmentrevenues exclud<strong>in</strong>g grants rarely account for more than 20% of GDP. Taxes range between 6and 13% of GDP, so that there is very limited room to provide public goods and services.Low human development. The low public <strong>in</strong>vestment <strong>in</strong> human development isreflected <strong>in</strong> poorly function<strong>in</strong>g educational and health care systems. In fact, although manyfragile states have decreased their military expenditure, this decl<strong>in</strong>e has not been offset byan <strong>in</strong>crease <strong>in</strong> health and education.Low population density. Most fragile countries are characterised, on average, by a verylow population density: 15 out of 29 countries have fewer than 40 <strong>in</strong>habitants per squarekilometre, while the population density <strong>in</strong> nonfragile countries stands at around 84.Population is young and <strong>in</strong>creas<strong>in</strong>g (<strong>in</strong> clear contrast to the pyramid of the population <strong>in</strong> theEU). Moreover, <strong>in</strong> these countries the majority of the population lives <strong>in</strong> rural areas.Box figure 0.1: Population pyramid <strong>in</strong> Sub-Saharan African fragile countries100+90-9480-8470-7460-6450-5440-4430-3420-2410-140-4FemaleMale18
<strong>European</strong> Report on Development 2009 – OverviewBox figure 0.2: Population pyramid <strong>in</strong> the <strong>European</strong> Union100+90-9480-8470-7460-6450-5440-44FemaleMale30-3420-2410-140-4Source: U.S. Census Bureau International Data Base (IDB)Weak soft and hard <strong>in</strong>frastructure. Fragile countries have only 8 metres of paved roadper square kilometre, nonfragile 18. Transport costs <strong>in</strong> fragile countries (especially for <strong>in</strong>tra-African trade) are more than twice those with<strong>in</strong> South East Asia. It takes around 116 days tomove a conta<strong>in</strong>er from a factory <strong>in</strong> the Central African Republic to the nearest port. Thesame transaction takes five days from Copenhagen. The most direct flight between Chad andNiger is via France—over 4,000 km; there is only one flight a week from Bangui <strong>in</strong> theCentral African Republic to Europe; the number of mobile l<strong>in</strong>es per 1,000 <strong>in</strong>habitants, despitea huge recent <strong>in</strong>crease, is half the one <strong>in</strong> nonfragile countries.Concentrated exports. The export diversification <strong>in</strong>dex is less than half the one <strong>in</strong>nonfragile countries, reveal<strong>in</strong>g that a very highly degree of concentration. With fewexceptions, fragile countries export ma<strong>in</strong>ly primary products: <strong>in</strong> 2006, on average, primaryproducts accounted for more than 80%, of which 30% was <strong>in</strong> fuels, with some countriessuch as Angola, Chad, the Republic of Congo and Equatorial Gu<strong>in</strong>ea above 90%.A high exposure to the risk of breakout of armed conflicts. Of people <strong>in</strong> thecountries of the Bottom Billion, a proxy for the list of fragile countries, 73% have recentlyexperienced or are <strong>in</strong> a civil war. Moreover, the risk that these countries fall <strong>in</strong>to civil war <strong>in</strong>any five-year period is tremendously high—one <strong>in</strong> six 5 .But…Divergent growth. Fragile countries grew at around 4% a year between 2000 and 2008.But resource-rich fragile countries grew at 6.3%, peak<strong>in</strong>g at 10% <strong>in</strong> 2002 and 8.5% <strong>in</strong> 2004.Fragile countries not resource rich grew at 2.3%.Incomes. The real per capita <strong>in</strong>come, on average $600 <strong>in</strong> 2008 <strong>in</strong> fragile Sub-SaharanAfrican countries, ranges between $100 for the Democratic Republic of Congo to $4,500 forEquatorial Gu<strong>in</strong>ea.Life expectancy. In São Tomé and Príncipe, people have a life expectancy at birth ofmore than 65 years, <strong>in</strong> l<strong>in</strong>e with the average for develop<strong>in</strong>g countries—but citizens of SierraLeone and Zimbabwe have a life expectancy of little more than 40 yearsFDI flows only go to resource-rich countries. More than 70% of all <strong>in</strong>com<strong>in</strong>g FDI toSub-Saharan African fragile countries from 2000 to 2007 went to just five countries: Angola,Chad, Equatorial Gu<strong>in</strong>ea, Nigeria and Sudan, all well-endowed with natural resources.Foreign reserves—scant or adequate. Some fragile countries have very low foreignreserves (less than 90 days of import coverage). In April 2009 Ethiopia, Gu<strong>in</strong>ea andZimbabwe had reserves for no more than one month of imports, whereas oil exporters hadhalf a year.External debt. Oil exporters have conta<strong>in</strong>ed external debt, and debt distress <strong>in</strong>dicatorsare largely under control. For example, debt to gross national <strong>in</strong>come and total debt forexports of goods and services have improved substantially <strong>in</strong> Angola and Sudan s<strong>in</strong>ce 2000.5Collier 2007.19
<strong>European</strong> Report on Development 2009 – OverviewResource-poor fragile countries, such as Liberia and Gu<strong>in</strong>ea-Bissau, still have a large debtburden, underm<strong>in</strong><strong>in</strong>g their future development.1 Towards better EU responses to <strong>fragility</strong>A review of the current EU approach to conditions of <strong>fragility</strong> (Chapter 8) reveals thatprogress is warranted <strong>in</strong> several directions.The first, and more general, direction for improvement is represented by the need tonarrow the implementation gap which drives a wedge between the theoretical policyframework and the design of specific <strong>in</strong>terventions on the ground. This represents a fundamentalchallenge s<strong>in</strong>ce the effect of a policy is seen <strong>in</strong> its implementation. Furthermoresuch implementation has to be properly tailored, as “one-size-fits-all” policies donot suit the needs of fragile states.Next, and more specifically, progress is needed:• To reach a solid understand<strong>in</strong>g of the local context—to design effective <strong>in</strong>terventions<strong>in</strong>formed by such an understand<strong>in</strong>g 6 .• To explore how the pr<strong>in</strong>ciple of ownership should be adapted when deal<strong>in</strong>g withcountries that have <strong>in</strong>capacitated or illegitimate state <strong>in</strong>stitutions, which canmake budget support a particularly challeng<strong>in</strong>g option—a situation which is pervasive<strong>in</strong> most fragile countries. Even <strong>in</strong> those with democratic <strong>in</strong>stitutions, governmentallegitimacy is often short-lived mak<strong>in</strong>g it very difficult to implementlong-term policies through budget support, unless there is close monitor<strong>in</strong>g.• To avoid hav<strong>in</strong>g the breadth of EU policies backfire and different policies produce<strong>in</strong>direct adverse effects on fragile states. The horizontal dimension of policycoherence needs to be matched by a better search for vertical coherence,ensur<strong>in</strong>g better coord<strong>in</strong>ation, with<strong>in</strong> the EC and between the EC and EU memberstates, often reluctant to lose their protagonist role. This coord<strong>in</strong>ation will allowthe EU to act with one voice, mak<strong>in</strong>g EU development policy more accountableand well understood by recipients.• To make EU trade policy more responsive to the specific needs of Sub-SaharanAfrican fragile states, and ensure that bilateral agreements do not harm theprocess of regional or multilateral <strong>in</strong>tegration. While there is some scope for exceptionsfor develop<strong>in</strong>g countries and particularly for least developed countrieswith<strong>in</strong> WTO rules, there is no specific provision for fragile states or fragile situations.This is an area where progress could be substantial.• To shift from responsive to preventive <strong>in</strong>terventions—so that countries <strong>in</strong> fragilesituations do not slide further down a spiral that progressively erodes the capacityand legitimacy of their state <strong>in</strong>stitutions. Such a shift could require mov<strong>in</strong>gtowards a regional approach to <strong>fragility</strong>, because the bad neighbour effectscould jeopardize state build<strong>in</strong>g and social cohesion 7 .• To better understand how the security and development nexus can be properlyhandled. Peace and security are among the key issues of the strategic partnershipbetween the EU and the African Union. While there have been a number of67For <strong>in</strong>stance, <strong>in</strong> postconflict situations, “the context is subject to very fast changes and numerouschallenges must be addressed simultaneously. Here a flexible mix is necessary” (GTZ,2008, p. 22).Many historical experiences of deal<strong>in</strong>g with <strong>fragility</strong> have shown the need for a regional approach,the Balkans be<strong>in</strong>g one of these experiences.20
<strong>European</strong> Report on Development 2009 – Overviewpositive experiences, <strong>in</strong> some others security actions have <strong>in</strong>terfered with developmentpolicies <strong>in</strong> place.Narrow<strong>in</strong>g the gap requires reassess<strong>in</strong>g priorities, concentrat<strong>in</strong>g efforts on few welldef<strong>in</strong>ed and agreed upon goals, simplify<strong>in</strong>g procedures and, <strong>in</strong> those situations wherethe state <strong>in</strong>stitutions are particularly <strong>in</strong>capacitated or unwill<strong>in</strong>g to perform their duties,f<strong>in</strong>d<strong>in</strong>g the appropriate organization or partner to implement the policies 8 . This is an issuenot only of implement<strong>in</strong>g policies but also of build<strong>in</strong>g trust among recipients and donorsand learn<strong>in</strong>g from the policy experiences.Although progress is visible and EU policy documents now provide more comprehensivepolitical guidance, there is still a long way to translate commitments <strong>in</strong>to practice.F<strong>in</strong>ancial <strong>in</strong>struments and procedures may have become simpler and more flexible, butthey rema<strong>in</strong> too complex, cumbersome, lengthy and unfriendly to recipients.Box 0.3: How the 2008-09 crisis has hit Sub-Saharan fragile statesFragile countries, little <strong>in</strong>tegrated <strong>in</strong>to the global economy, were at first spared the directeffects of the f<strong>in</strong>ancial crisis; however, they have been hit by the result<strong>in</strong>g global recessionand trade collapse.The economic and f<strong>in</strong>ancial crisis came on top of a period of high and volatile food andfuel price. Their spikes through mid-2008 put food-import<strong>in</strong>g and oil-import<strong>in</strong>g Sub-SaharanAfrican fragile countries under severe stress, push<strong>in</strong>g down their foreign exchange reservesand mak<strong>in</strong>g it difficult to pay for imports and susta<strong>in</strong> growth. The boom and bust contributedto output volatility, discourag<strong>in</strong>g <strong>in</strong>vestments <strong>in</strong> long-term productive capacity.Most Sub-Saharan African fragile countries have almost simultaneously suffered fuel, foodand f<strong>in</strong>ance shocks. Recent estimates put real GDP growth for 2009 at around 1.5%, downfrom an estimated 5.5% <strong>in</strong> October 2008. These numbers would make 2009 the first year <strong>in</strong>a decade <strong>in</strong> which most fragile Sub-Saharan African countries recorded negative growth <strong>in</strong>real GDP per capita, threaten<strong>in</strong>g the progress towards the MDGs and underm<strong>in</strong><strong>in</strong>g politicalstability. Slower growth does not always threaten to reverse human development, but itproduces setbacks, especially through cuts <strong>in</strong> education and health expenditures, which haveserious long-term consequences.Fragile countries <strong>in</strong> Sub-Saharan Africa have small domestic bank<strong>in</strong>g systems and th<strong>in</strong> tononexistent equity markets. Given the low f<strong>in</strong>ancial development <strong>in</strong> the region and thelimited l<strong>in</strong>kages of fragile countries to the global f<strong>in</strong>ancial system, the ma<strong>in</strong> channels oftransmission for the crisis are <strong>in</strong> the real sectors of the economy. They are exposed to thecrisis ma<strong>in</strong>ly through trade: the reduction <strong>in</strong> export earn<strong>in</strong>gs is accompanied by an adverseterms of trade effect re<strong>in</strong>forced by the excessive dependence on commodity exports offragile Sub-Saharan African countries and the polarisation of their exports. Trade collapsed<strong>in</strong> 2009 and Sub Saharan African countries are more affected than other countries by such adevelopment because of cuts <strong>in</strong> trade f<strong>in</strong>ance (the least reliable are more likely to suffercuts) and composition of demand: less raw materials, more high quality nichemanufactur<strong>in</strong>g. Fragile countries are also exposed through lower <strong>in</strong>flows of foreign direct<strong>in</strong>vestments, due to a “wait and see” attitude of <strong>in</strong>vestors <strong>in</strong> situations of uncerta<strong>in</strong>ty,(possibly) lower <strong>in</strong>flows of foreign aid and lower migrants’ remittances. Intra Africaremittances are particularly relevant s<strong>in</strong>ce migrants from fragile countries cannot afford thehigh costs of migrat<strong>in</strong>g to high <strong>in</strong>come countries and move nearby. But the ma<strong>in</strong> dest<strong>in</strong>ationmarkets for migrants of fragile countries, South Africa and Nigeria, have been the only Sub-Saharan African countries directly affected by the crisis.Fragile countries are hit hard but the impact is highly heterogeneous across countries; asa result there is not a higher vulnerability for countries <strong>in</strong> situation <strong>in</strong> <strong>fragility</strong>. What is muchlower is the capacity to recover from shocks.8See Collier (2009b), Box 9.5 <strong>in</strong> Chapter 9 and GTZ (2008) for lessons learnt on the ground.21
<strong>European</strong> Report on Development 2009 – OverviewFigure 0.1: Resilience <strong>in</strong> fragile countries <strong>in</strong> Sub Saharan Africa: from low tohighFigure 0.2: Vulnerability <strong>in</strong> fragile countries <strong>in</strong> Sub Saharan Africa: from low tohigh22
<strong>European</strong> Report on Development 2009 – Overview2 Sett<strong>in</strong>g prioritiesBuild<strong>in</strong>g on past experience, learn<strong>in</strong>g from mistakes, adapt<strong>in</strong>g to rapidly chang<strong>in</strong>g contextswhile respect<strong>in</strong>g national sovereignty, the EU has to set its own priority areas of<strong>in</strong>tervention. The <strong>ERD</strong> 2009 analyses suggest that five priorities should <strong>in</strong>form the EU’slong-term engagements <strong>in</strong> fragile states <strong>in</strong> Sub-Saharan Africa with the goal of enhanc<strong>in</strong>gresilience:1. Support<strong>in</strong>g state-build<strong>in</strong>g and social cohesion. The fundamental objective of externalengagement <strong>in</strong> fragile countries is contribut<strong>in</strong>g to the endogenous process ofstate-build<strong>in</strong>g 9 . The EU has endorsed this core priority <strong>in</strong> its <strong>European</strong> Consensus on Development10 , so that its engagement towards Sub-Saharan African fragile countriesneeds to be focused on this long-term goal. The complexity of such engagement is dueto the fact that one cannot have an external (<strong>European</strong>) view of these processes. Thestate-build<strong>in</strong>g process for African fragile countries will not resemble the 19 th Centuryprocess of state-build<strong>in</strong>g <strong>in</strong> Europe. Similarly, social-cohesion will not be the sameamong ethnicities and religions whose differences go back hundreds of years. Theknowledge of the local context plays crucial role <strong>in</strong> the external engagement <strong>in</strong> fragilecountries. This is necessary to identify which actors can be the drivers of change, lead<strong>in</strong>gthese countries out of <strong>fragility</strong>, possibly through different paths. While “change actors”have to be strengthened, <strong>in</strong> particular encourag<strong>in</strong>g women’s participation <strong>in</strong> statebuild<strong>in</strong>g,it is also important, for the strategy of democratic promotion to be successful,to weaken the possible “veto players” and to support leaders <strong>in</strong> their efforts to rebuild anew social compact and trust between the state and citizens and between different factionsand ethnicities that risk spl<strong>in</strong>ter<strong>in</strong>g <strong>in</strong>to conflict. If certa<strong>in</strong> groups are discrim<strong>in</strong>atedaga<strong>in</strong>st and excluded from political representation, the likelihood of conflicts is higherand the move out of <strong>fragility</strong> more difficult.2. Overcom<strong>in</strong>g the divide between short-term needs and long-term resilience.To shift attention <strong>in</strong> fragile countries from cover<strong>in</strong>g urgent short term needs to hav<strong>in</strong>g alonger term horizon, the EU could put <strong>in</strong> place an <strong>in</strong>surance mechanism to safeguardfragile countries from volatile export revenues. With (more) stable revenue, fragilecountries could base their domestic policies and strengthen their potential long-termcomparative advantages.3. Enhanc<strong>in</strong>g human and social capital. Invest<strong>in</strong>g <strong>in</strong> the education of the citizens offragile countries, try<strong>in</strong>g to narrow the gender gap and build<strong>in</strong>g social capital is the bestway to achieve susta<strong>in</strong>ed growth and development and enhance resilience. Fragile andconflict-affected countries suffer from disruptions of public education, which reduces theenrolment rates, and <strong>in</strong>creases adults illiteracy rates. Adequate fund<strong>in</strong>g must be grantednot only to basic education but also to tertiary education, address<strong>in</strong>g gender <strong>in</strong>equalitiesand stimulat<strong>in</strong>g local knowledge and technology adoption and <strong>in</strong>novation. To target <strong>in</strong>terventionsto young people could also be crucial, especially <strong>in</strong> post-conflict fragile countries,for reduc<strong>in</strong>g the attraction of illegal activities such as traffick<strong>in</strong>g or smuggl<strong>in</strong>g.4. Support<strong>in</strong>g better regional governance, <strong>in</strong>clud<strong>in</strong>g regional <strong>in</strong>tegration processes.Regional trade agreements allow African countries to derive substantial economiesof scale with larger regional markets, to enhance domestic competitiveness, raisereturns on <strong>in</strong>vestments and subsequently attract foreign direct <strong>in</strong>vestment, lead<strong>in</strong>g <strong>in</strong>turn to technology transfer and growth. They could also enable these economies to poolresources for the jo<strong>in</strong>t provision of a range of <strong>in</strong>frastructural projects, exploit<strong>in</strong>g economiesof scale and <strong>in</strong>ternaliz<strong>in</strong>g the cross-country regional effects of such <strong>in</strong>vestments.And they would allow small African countries to have more effective negotiations oneconomic policy issues with other trad<strong>in</strong>g blocs or big private partners. From an <strong>in</strong>stitutionalpo<strong>in</strong>t of view, regional agreements may also provide commitment mechanisms on9See OECD/DAC 2007.10 See <strong>European</strong> Parliament Council Commission 2006.23
<strong>European</strong> Report on Development 2009 – Overviewpolicymak<strong>in</strong>g and reforms. They could help to build commitment devices that can beparticularly relevant for states with weak domestic commitment capacity. In this respect,regional <strong>in</strong>tegration agreements may be used as tools of <strong>in</strong>stitution build<strong>in</strong>g. Enter<strong>in</strong>g<strong>in</strong> a trade bloc with strong “club rules” can help anchor democratic reforms andtransfer credibility <strong>in</strong> member countries.5. Promot<strong>in</strong>g security and development <strong>in</strong> the region. Action on security and developmentrequires a multifaceted strategy. A long-term effort is needed to transform<strong>European</strong> political cultures from neutralist and <strong>in</strong>ward-look<strong>in</strong>g to <strong>in</strong>volvement <strong>in</strong> globalgovernance. Connect<strong>in</strong>g the EU’s global responsibilities and the domestic well-be<strong>in</strong>g ofcitizens <strong>in</strong> Europe is therefore crucial. EU policy-makers should become aware that EUaction <strong>in</strong> every doma<strong>in</strong>, from agriculture and fisheries to trade, or research and developmentcan have security implications and vice versa that security <strong>in</strong>itiatives can haveimplications for development and trade. The EU should shift its l<strong>in</strong>ear, social eng<strong>in</strong>eer<strong>in</strong>gapproach focused on its available <strong>in</strong>struments to a focus on the problem itself and amore flexible, strategic approach that recognizes the contested and political character ofmany donor objectives and policies. The grow<strong>in</strong>g resort to <strong>in</strong>struments of civilian andmilitary crisis management is an opportunity not only to encourage jo<strong>in</strong>t (military, civilian,and aid/development) plann<strong>in</strong>g but also to th<strong>in</strong>k more strategically. It is also an opportunityto reward risk-tak<strong>in</strong>g by the staffs, often essential <strong>in</strong> <strong>fragility</strong> situation. Ignor<strong>in</strong>gthese press<strong>in</strong>g security concerns is counterproductive: <strong>in</strong>stead of implement<strong>in</strong>g apre-exist<strong>in</strong>g bluepr<strong>in</strong>t, much can be achieved if the security needs of the population aretaken seriously, a first step toward a genu<strong>in</strong>e local ownership, <strong>in</strong>clud<strong>in</strong>g address<strong>in</strong>g waysto overcome gender based violence.In summary, <strong>in</strong>action would have very high costs for both donors and recipients. Forfragile countries the costs are reflected <strong>in</strong> the poor human development and lack of securityrelated to persistent development gaps: the cost of not achiev<strong>in</strong>g resilience. ForEurope--geographically close to Africa and to its problems of explosive demographics,illegal traffick<strong>in</strong>g, smuggl<strong>in</strong>g, piracy, gender based violence and environmental threats—the negative spillovers can be considerable, but it is also the social-moral cost of nothelp<strong>in</strong>g Sub Saharan countries to move from <strong>fragility</strong> to resilience. The EU needs to engagerespect<strong>in</strong>g the national ownership of fragile countries; the aftermath of the 2008-09 crisis makes th<strong>in</strong>gs more difficult. Hence, the EU action should be reassessed. The EUcannot afford to waste funds or be <strong>in</strong>efficient. To have an efficient development policywith impact, it is crucial that the EU:• Act with one voice and def<strong>in</strong>e policies with one voice. Discussions amongst EUmembers, and with the EC, can be open and lively, but once a policy is jo<strong>in</strong>tlydef<strong>in</strong>ed and agreed upon, the EU should stick to it.• Be committed to long-term policies, and avoid shifts <strong>in</strong> policy objectives and <strong>in</strong>core areas of <strong>in</strong>terest, s<strong>in</strong>ce the specific problems of countries <strong>in</strong> fragile situationsare ma<strong>in</strong>ly structural and persistent, and a pervasive aspect of <strong>fragility</strong> isthe <strong>in</strong>ability to follow long-term objectives.• Establish the “right delegation” to implement the policies. Delegation is crucials<strong>in</strong>ce donors and recipients often are not <strong>in</strong> a position to best implement ormonitor programmes, given the need to address local complexities. In thesesituations it might be appropriate to separate the different functions of government:policy formulation from specific fund allocation and monitor<strong>in</strong>g, with thelast performed by <strong>in</strong>dependent agencies.• Understand that state build<strong>in</strong>g and social cohesion <strong>in</strong> Sub-Saharan African countriesare long evolutionary processes, tak<strong>in</strong>g new, diverse and unpredictableforms at the country and regional levels. Such processes require constant attentionand the right <strong>in</strong>stitutional support on the ground.Tak<strong>in</strong>g all these elements <strong>in</strong>to account can also show the need for deepen<strong>in</strong>g our understand<strong>in</strong>g<strong>in</strong> many areas. One is the role of persistent <strong>in</strong>equalities <strong>in</strong> situations of fra-24
<strong>European</strong> Report on Development 2009 – Overviewgility; another is the need for social safety nets and social organisations <strong>in</strong> build<strong>in</strong>g resilience.25
<strong>European</strong> Report on Development 2009 – Section 1: Understand<strong>in</strong>g Fragility <strong>in</strong> Sub-Saharan AfricaSECTION 1-UNDERSTANDING FRAGILITY IN SUB-SAHARAN AFRICA27
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesCHAPTER 1-STATE FRAGILITY IN SUB-SAHARANAFRICA: COSTS AND CHALLENGES29
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challenges1 <strong>European</strong> development policies <strong>in</strong> a chang<strong>in</strong>gglobal contextNever before have poverty eradication and susta<strong>in</strong>able development been more important.The context with<strong>in</strong> which poverty eradication is pursued is an <strong>in</strong>creas<strong>in</strong>gly globalisedand <strong>in</strong>terdependent world; this situation has created new opportunities but also newchallenges.(<strong>European</strong> Consensus on Development, 2005)The <strong>European</strong> Union’s commitment to promot<strong>in</strong>g more equitable and susta<strong>in</strong>able developmentat global level needs to deal with the challenges of 21st-century globalisation.Countries, societies and economies are more <strong>in</strong>terl<strong>in</strong>ked and less isolated—and thusmore likely to be <strong>in</strong>fluenced by chang<strong>in</strong>g conditions and vary<strong>in</strong>g external forces that <strong>in</strong>teractwith <strong>in</strong>ternal dynamics. The greater <strong>in</strong>tegration is accompanied by a move of economicactivity to the east. The heavier weight of Ch<strong>in</strong>a and India <strong>in</strong> world GDP and <strong>in</strong>export makes them crucial players <strong>in</strong> the <strong>in</strong>ternational arena, particularly Ch<strong>in</strong>a <strong>in</strong> Sub-Saharan Africa. Development policies cannot overlook the new sociopolitical equilibria.Population patterns are another feature of 21st-century globalisation. Whereas the EUhas an ag<strong>in</strong>g population, Sub-Saharan Africa is characterised by a young population. In2010 Africa has 40% of the population <strong>in</strong> the 0–14 group and 20% between 15 and 24,for a total of 60% below 25, aga<strong>in</strong>st 28% <strong>in</strong> the EU. These trends—together with thechallenges posed by the global warm<strong>in</strong>g, <strong>in</strong>ternational crime organisations and the recent<strong>in</strong>ternational food price shock—are major examples of challenges fac<strong>in</strong>g societies.Aga<strong>in</strong>st this background, 2008–09 is the worst global downturn s<strong>in</strong>ce 1929. The economicand f<strong>in</strong>ancial crisis has hit the budgets of the EU and other developed countries.And it has been particularly devastat<strong>in</strong>g on the world’s poorest countries, most of them<strong>in</strong> Sub-Saharan Africa. Prelim<strong>in</strong>ary estimates <strong>in</strong>dicate that, because of the crisis, up to90 million people could rema<strong>in</strong> <strong>in</strong> poverty 1 , and up to 400,000 excess <strong>in</strong>fant deaths 2 . Butit is very difficult for numbers to convey the human costs of the crisis.The human and economic costs call for orient<strong>in</strong>g development models and actions towardsstrategies meant to build up the resilience of societies—that is, strategies that <strong>in</strong>creasethe ability of a socioeconomic system to adapt and cope with perturbations andchang<strong>in</strong>g conditions without compromis<strong>in</strong>g people’s capabilities. In a world where globalshocks are gett<strong>in</strong>g more severe and affect<strong>in</strong>g more people, <strong>in</strong>clud<strong>in</strong>g many poor peoplewho were previously little affected, the resilience of socioeconomic systems is a fundamentalfacet of a country’s development path. And it should be a central objective of nationaldevelopment strategies and thus of development assistance.1.1 The paradox of developmental assistance to fragilestatesIn recent years, the fragile countries have emerged as a core priority for the developmentcommunity because of their low developmental outcomes and because of severehuman rights violations 3 . This group, characterised by deep failures <strong>in</strong> their state <strong>in</strong>stitu-123DFID 2009 and World Bank 2009a.World Bank 2009b.Several classifications and rank<strong>in</strong>gs of state <strong>fragility</strong> exist. Where not differently specified, thisreport adopts the (not official) list of fragile and postconflict countries used for the Annual Report2008 on Resource Flows to Fragile and Conflict-Affected States (OECD 2009). This is a30
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengestions, poses great global development challenges to the <strong>in</strong>ternational community. Fragilityimposes human costs that are substantial, widespread and persistent. Liv<strong>in</strong>g <strong>in</strong> afragile country means suffer<strong>in</strong>g severe deprivations of the state’s basic services andsafeguards to security and human rights. It also produces negative spillovers, both regionaland global.Development assistance <strong>in</strong> fragile countries faces greater challenges than <strong>in</strong> othersett<strong>in</strong>gs. They tend to be difficult partners. Aid flows can trigger perverse effects. Andaid effectiveness is h<strong>in</strong>dered by the weakness of national governments’ capacity. Deal<strong>in</strong>gwith fragile state <strong>in</strong>stitutions can mean <strong>in</strong>teract<strong>in</strong>g with illegitimate, unrepresentative orweak governments—or with several actors <strong>in</strong> competition. In these sett<strong>in</strong>gs, aid is lesslikely to reach the targeted populations or support a long-term perspective.Donors can even h<strong>in</strong>der the transition from <strong>fragility</strong>. Indeed, aid flows—exclud<strong>in</strong>gtechnical assistance—can reduce the likelihood of exit<strong>in</strong>g from the group of fragile countries4 . Such a f<strong>in</strong>d<strong>in</strong>g, echoed by Dambisa Moyo <strong>in</strong> her bestsell<strong>in</strong>g Dead Aid, signals theroom for improv<strong>in</strong>g <strong>in</strong>ternational engagements with fragile countries 5 . In these contexts,state build<strong>in</strong>g becomes the central objective of <strong>in</strong>ternational engagement <strong>in</strong> fragilestates, as asserted <strong>in</strong> the Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile Statesand Situations 6 .Performance-based aid allocations—loosely def<strong>in</strong>ed as reward<strong>in</strong>g good performerswith grow<strong>in</strong>g aid flows—have left fragile countries as “aid orphans” (box 1.1). Sub-Saharan African fragile countries are even more likely to be left beh<strong>in</strong>d. Of 48 fragilecountries, 29 Sub-Saharan African countries absorbed 49% of total net ODA flows <strong>in</strong>2000–07 7 .In West Africa, several countries have never come close to state consolidation, andthe region is one of the poorest and least stable <strong>in</strong> the world. Between 1998 and 2005 atleast 35 armed groups were active <strong>in</strong> Côte d’Ivoire, the Gambia, Gu<strong>in</strong>ea, Gu<strong>in</strong>ea Bissau,Liberia, Mali, Niger, Nigeria, Senegal and Sierra Leone 8 . Sudan and the Great Lake regionhave experienced the most recent genocides. And the Horn of Africa hosts an emblematicfailed state, Somalia.Sub-Saharan Africa thus predom<strong>in</strong>ates among fragile countries. State <strong>fragility</strong> mighthave a well-def<strong>in</strong>ed common historical root (chapter 3). And a focus on the region couldimprove understand<strong>in</strong>g of the development challenges that <strong>fragility</strong> poses.45678The <strong>in</strong>ternational community must overcome the paradox of allocat<strong>in</strong>g less aid tocountries most <strong>in</strong> need while adapt<strong>in</strong>g development assistance practices to the specificconditions, characteristics and dynamics of fragile countries. The fragile countries reprecompilationof three lists: the bottom two qu<strong>in</strong>tiles of the Country Policy and Institutional Assessment(CPIA) 2007; the Brook<strong>in</strong>gs Index of State Weakness <strong>in</strong> the Develop<strong>in</strong>g World 2008;and the Carleton <strong>University</strong> Country Indicators for Foreign Policy (CFIP) 2007 <strong>in</strong>dex. This list offragile states <strong>in</strong>cludes Afghanistan, Angola, Burundi, Cambodia, Cameroon, Central African Republic,Chad, Comoros, Dem. Rep. of Congo, Rep. of Congo, Côte d’Ivoire, Djibouti, EquatorialGu<strong>in</strong>ea, Eritrea, Ethiopia, Gambia, Gu<strong>in</strong>ea, Gu<strong>in</strong>ea-Bissau, Haiti, Iraq, Kenya, Kiribati, Laos, Liberia,Mauritania, Myanmar, Nepal, Niger, Nigeria, North Korea, Pakistan, Papua New Gu<strong>in</strong>ea,Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Somalia, Sudan, Tajikistan,Timor-Leste, Togo, Tonga, Uganda, Uzbekistan, Vanuatu, Palest<strong>in</strong>ian Adm<strong>in</strong>istrated Areas, Rep.of Yemen and Zimbabwe. As it is discussed <strong>in</strong> the next section, the compilation of a list of fragilestates is politically and analytically controversial. The <strong>ERD</strong> 2009 does not officially endorsethis classification, which is used only for operational purposes.Chauvet and Collier 2008.Moyo 2009.OECD/DAC 2007.OECD, DAC Statistics Onl<strong>in</strong>e Database, for the years 2000–07.UNODC 2009.31
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengessent the test-bed of the EU’s commitment, reaffirmed by the <strong>European</strong> Consensus onDevelopment, to deliver<strong>in</strong>g better and more aid. This process will not be easy. In thecurrent economic and f<strong>in</strong>ancial crisis, EU countries have to f<strong>in</strong>ance their grow<strong>in</strong>g publicdeficits. And the recent enlargement of the EU makes it more difficult to reach a consensuson fund allocations.Box 1.1: Aid effectiveness and allocations to fragile statesBy Mark McGillivrayChief Economist, Australian Agency for International Development (AusAID)Would economic growth <strong>in</strong> fragile countries be lower, higher or about the same <strong>in</strong> theabsence of aid? Are fragile states, collectively and <strong>in</strong>dividually, under-aided, over-aided orappropriately aided from a growth perspective?The literature on the impact of aid on economic growth has come a long way over the last10 years, ow<strong>in</strong>g to better data, more <strong>in</strong>cisive underly<strong>in</strong>g theory and the application of morerigorous empirical methods. 9 This is not to say that the literature is not without limitations,as many rema<strong>in</strong>. Arguably the ma<strong>in</strong> weakness is that it has not been able to shed much lighton the channels for aid to affect growth.A robust conclusion has emerged from the literature, one drawn by practically all recentstudies: the <strong>in</strong>cremental relationship between aid and growth follows an <strong>in</strong>verted U-shapedpattern, with higher levels of aid associated with higher rates of growth up to a certa<strong>in</strong>threshold level of aid only, beyond which more aid is associated with lower growth. Thethreshold has been termed the “growth-efficient” level of aid. At this level, aid’s <strong>in</strong>crementalimpact on per capita <strong>in</strong>come growth is maximized <strong>in</strong> recipient countries.The f<strong>in</strong>d<strong>in</strong>g of an <strong>in</strong>verted U-shaped relationship between aid and growth has particularresonance for fragile states. An <strong>in</strong>terpretation of the decl<strong>in</strong><strong>in</strong>g <strong>in</strong>cremental impact of aid,beyond the growth-efficient level, is that there are absorptive capacity constra<strong>in</strong>ts <strong>in</strong>recipient countries. The constra<strong>in</strong>ts are thought to arise for several reasons, pr<strong>in</strong>cipal amongthem the low quality of policies and <strong>in</strong>stitutional performance, a basic characteristic of fragilestates.Aga<strong>in</strong>st this background, it has been hypothesized by researchers and assumed by somepolicy-makers that the aid-growth relationships <strong>in</strong> fragile and other (nonfragile) states is asdepicted <strong>in</strong> box figure 1. For fragile states, the relationship between aid and growth isexpected to be as for nonfragile countries, but with a lower growth-efficient level of aid (a i nf* )beyond which the <strong>in</strong>cremental contribution of aid to growth becomes negative and theoverall <strong>in</strong>cremental contribution of aid to growth is lower at all levels of aid.9Surveys of this literature can be found <strong>in</strong> Morrissey (2001), Clemens et al. (2004) andMcGillivray et al. (2006).32
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesBox figure 1.1: Incremental impacts of aid on growthNote: a i refers to some measure of aid to recipient country i, g i refers to i’s real per capita GDP growth, a nf*i is thegrowth efficient level of aid for nonfragile states, and a nf** i is a level of aid beyond which the <strong>in</strong>cremental contribution ofaid to growth <strong>in</strong> these states is negative.McGillivray and Feeny (2008) exam<strong>in</strong>e aid and growth data for 1977 to 2001 to establishwhether there is empirical support for the relationships <strong>in</strong> box figure 1. They deem a state tobe fragile if it belongs to the bottom two qu<strong>in</strong>tiles of CPIA scores. For countries <strong>in</strong> the bottomqu<strong>in</strong>tile, the “highly fragile states,” as McGillivray and Feeny (2006) term them, officialdevelopment assistance contributed 1.37 percentage po<strong>in</strong>ts to real per capita GDP growthover the period. Compare that with 2.47 percentage po<strong>in</strong>ts <strong>in</strong> the other fragile states, those<strong>in</strong> the second CPIA qu<strong>in</strong>tile.McGillivray and Feeny (2008) is the only aid-growth study that has looked specifically atfragile states, although a number of studies have looked at aid and growth <strong>in</strong> Sub-SaharanAfrican countries. 10 Gomanee et al. (2005) looked at aid to 25 Sub-Saharan African countriesover 1970–97 and found that each percentage po<strong>in</strong>t <strong>in</strong>crease <strong>in</strong> aid as a ratio of GNPcontributes on average one-quarter of one percentage po<strong>in</strong>t to these countries’ growth rates.Clemens et al. (2004) looked at the short that the short-run impact of aid, f<strong>in</strong>d<strong>in</strong>g that itraised average annual per capita <strong>in</strong>come growth <strong>in</strong> Sub-Saharan Africa by at least half apercentage po<strong>in</strong>t or more between 1973 and 2001. Lens<strong>in</strong>k and Morrissey (2000) found thatalthough aid had a weaker impact of growth <strong>in</strong> Sub-Saharan Africa than elsewhere, thisimpact was positive and significant. These studies would appear to provide some support forthe results reported <strong>in</strong> McGillivray and Feeny (2008).McGillivray and Feeny (2008) and Feeny and McGillivray (2009) also provide estimates ofa i f* and a i nf* for highly fragile states (13.88% of GDP) and other fragile states (38.38% ofGDP). Compar<strong>in</strong>g these amounts with the actual official development assistance (ODA) frombilateral and multilateral agencies, <strong>in</strong> 2004, suggests that fragile states are underaided froma growth-efficiency perspective (box table 1). The most underaided countries, relative toGDP, <strong>in</strong> the highly fragile group were Côte d’Ivoire and Nigeria. Allocat<strong>in</strong>g growth-efficientlevels of aid, compared with actual allocations <strong>in</strong> 2004, would have led to an average growthga<strong>in</strong> for all fragile states under consideration of 1.92 percentage po<strong>in</strong>ts. Not all fragile statesappeared to be underaided, however. Ten fragile states received more aid than the growthefficientamount <strong>in</strong> 2004. Of all fragile states under consideration, the most overaided from agrowth perspective were Burundi and the Solomon Islands.10 Note that, depend<strong>in</strong>g on the def<strong>in</strong>ition used, approximately half of all fragile states are <strong>in</strong> Sub-Saharan Africa.33
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesBox table 1.1: Aid to fragile states, 2004Highly fragile states Other fragile states All fragile statesODA ($US millions) 6,629 2,719 9,348Growth-efficient ODA ($USmillions)14,512 10,506 25,018Growth at actual ODA (%,average)-0.46 3.43 1.25Growth ga<strong>in</strong> from growthefficientaid (%, average)1.43 2.47 1.92Countries receiv<strong>in</strong>g morethan growth-efficient aid8 2 10Countries receiv<strong>in</strong>g lessthan growth-efficient aid9 13 22Notes: highly fragile states are <strong>in</strong> the bottom CPIA qu<strong>in</strong>tile; other fragile states are <strong>in</strong> the second bottom CPIA qu<strong>in</strong>tile.McGillivray and Feeny (2008) and Feeny and McGillivray (2009) emphasise that thegrowth-efficient levels of aid provide only a rough guide to the amounts of aid that donorsshould provide to fragile states. They also emphasise that donors have many other validdevelopmental objectives that justify deviations from growth-efficient amounts. Their resultssuggest, however, that donors need to carefully consider country allocations that differsubstantially from growth-efficient amounts, ask<strong>in</strong>g whether these deviations can be justifiedon developmental criteria.1.2 The EU’s development policy <strong>in</strong> fragile countriesEU and member state development assistance has great potential. For most develop<strong>in</strong>gcountries, Europe is a ma<strong>in</strong> donor, trad<strong>in</strong>g partner, <strong>in</strong>vestor and migrant dest<strong>in</strong>ation.And the EU is an important political, diplomatic and economic block. <strong>European</strong> countriesalso have a great responsibility towards fragile countries, with <strong>fragility</strong>’s roots <strong>in</strong> colonisationand decolonisation, at times magnified by the irresponsible practices of foreigncompanies and the illicit and crim<strong>in</strong>al traffick<strong>in</strong>g to and from Europe.The potential for Europe’s action should not, however, be overestimated. The worldorder has become more multipolar, with emerg<strong>in</strong>g political and economic centres hav<strong>in</strong>gjo<strong>in</strong>ed the oldest actors. The US-Ch<strong>in</strong>a-EU configuration has become pivotal <strong>in</strong> the <strong>in</strong>ternationalsystem. In addition to the ma<strong>in</strong> <strong>in</strong>ternational organisations, other countrieshave been engag<strong>in</strong>g with fragile states, from the United States to East Asian and ArabGulf countries. Moreover, Europe’s <strong>in</strong>itiatives to tackle state <strong>fragility</strong>, such as its assistanceto state and peace build<strong>in</strong>g, can be perceived as <strong>in</strong>trusive and not politically neutralby partner countries. They can also affect processes and dynamics that are <strong>in</strong>tr<strong>in</strong>sically<strong>in</strong>ternal. F<strong>in</strong>ally, <strong>in</strong>ternal resistance and constra<strong>in</strong>ts can weaken the EU commitmentto development policies. The ag<strong>in</strong>g population, the huge debt accumulated <strong>in</strong> thecrisis, and the EU’s enlargement can strengthen the <strong>in</strong>centives to divert public resourcesfrom <strong>in</strong>ternational development cooperation to domestic uses.With this situation as background, the <strong>European</strong> Report on Development 2009 isabout state <strong>fragility</strong> <strong>in</strong> Sub-Saharan Africa and EU development policies <strong>in</strong> situations ofstate <strong>fragility</strong>. It analyzes the room for improvement <strong>in</strong> the EU’s current engagementwith fragile countries and the potential for EU development policies to assist nationalstakeholders <strong>in</strong> <strong>overcom<strong>in</strong>g</strong> state <strong>fragility</strong>. The focus is on Sub-Saharan Africa becausethis region appears to be particularly lagg<strong>in</strong>g beh<strong>in</strong>d <strong>in</strong> the sphere of state consolidation,and it hosts the majority of countries with fragile state <strong>in</strong>stitutions.This effort is consistent with a resilience-based approach <strong>in</strong> the design of developmentpriorities and policies. State <strong>in</strong>stitutions and their ability to mobilise domestic resourcesare a core element of the resilience of a socioeconomic system. They shouldma<strong>in</strong>ta<strong>in</strong> <strong>in</strong>ternal order, guarantee citizens’ security, control the territory, deliver socialservices, enforce regulations and protect aga<strong>in</strong>st and adapt to <strong>in</strong>dividual and collective34
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesrisks. State <strong>in</strong>stitutions thus <strong>in</strong>fluence citizens’ well-be<strong>in</strong>g and its variations <strong>in</strong> the face ofperturbations and changes.1.3 Structure of the reportThe <strong>ERD</strong> 2009 contributes to the goal of forg<strong>in</strong>g a new <strong>European</strong> approach to overcomestate <strong>fragility</strong> <strong>in</strong> Sub-Saharan Africa through three ma<strong>in</strong> steps. The first step is theanalysis of the mean<strong>in</strong>g of state <strong>fragility</strong> as well as its scope and costs <strong>in</strong> Sub-SaharanAfrica. The report del<strong>in</strong>eates the economic characteristics of fragile countries, discussesthe economic factors that can affect the function<strong>in</strong>g of state <strong>in</strong>stitutions, governance andsocio-political stability, and reviews the <strong>in</strong>terpretations proposed by the literature on thehistorical and political roots of state <strong>fragility</strong> <strong>in</strong> Africa. In the second part of the report,the nexus between socioeconomic resilience and state <strong>fragility</strong> is <strong>in</strong>vestigated from atheoretical po<strong>in</strong>t of view and is evaluated <strong>in</strong> relation to the impact of the 2008–09 globaleconomic crisis on fragile countries. In the f<strong>in</strong>al part, policies are discussed: Chapter 8provides an overview of EU’s engagement <strong>in</strong> fragile countries and an analysis of securitypolicies. They discuss the challenges and potentialities of external actors’ assistance tosupport state build<strong>in</strong>g <strong>in</strong> partner countries and it attempts to identify good practices onthe basis of <strong>in</strong>ternational experiences <strong>in</strong> this field. The last chapter proposes the criteriaand priorities for the EU’s <strong>in</strong>tervention <strong>in</strong> situations of <strong>fragility</strong>.2 What does state <strong>fragility</strong> refer to?The exist<strong>in</strong>g literature abounds with def<strong>in</strong>itions of “<strong>fragility</strong>” (box 1.2), and the use ofthe expression “fragile state” is highly contentious. Paul Collier, for <strong>in</strong>stance, did not <strong>in</strong>itiallydisclose the list of countries that form the famous Bottom Billion—which is usuallyequated with the group of fragile countries 11 —as he notes that “this is not a companythat countries are keen to be <strong>in</strong>, and because stigmatis<strong>in</strong>g a country tends to create aself-fulfill<strong>in</strong>g prophecy 12 .”Despite the def<strong>in</strong>itional differences, there is agreement on some basic po<strong>in</strong>ts acrossthe academic and policy literature. Stewart and Brown (2009) f<strong>in</strong>d that all exist<strong>in</strong>g def<strong>in</strong>itionsare built around three ma<strong>in</strong> dimensions of <strong>fragility</strong>: authority, service and legitimacyfailures that occur, respectively, when the state fails to protect its citizens fromviolence, to provide basic services to all citizens and to be recognised as legitimate by itscitizens.This vision of state <strong>fragility</strong> is <strong>in</strong>directly embodied by the OECD def<strong>in</strong>ition <strong>in</strong> the Pr<strong>in</strong>ciplesfor Good International Engagement <strong>in</strong> Fragile States and Situations: “states arefragile when state structures lack political will and/or capacity to provide the basic functionsneeded for poverty reduction, development and to safeguard the security and humanrights of their populations 13 .” The OECD proposed to move the focus on the pivotalrole of legitimacy and citizens’ expectations by adjust<strong>in</strong>g the def<strong>in</strong>ition of fragile statesas those “unable to meet its population’s expectations or manage changes <strong>in</strong> expectationsand capacity through the political process 14 .”11 Zoellick 2008.12 Collier 2007, p. 7.13 OECD/DAC 2007, p. 2.14 OECD 2008.35
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesBox 1.2: How <strong>fragility</strong> made its way <strong>in</strong> the development discourseThe 1990s and early 2000s were marked by a progressive shift away from project-basedassistance towards budget support—and by a grow<strong>in</strong>g recognition of how the policies <strong>in</strong>recipient countries mediate the impact of aid programmes. 15 The effect of these two majorchanges was an <strong>in</strong>crease <strong>in</strong> aid selectivity. The grow<strong>in</strong>g emphasis on aid selectivity, reflected<strong>in</strong> the Monterrey Consensus, led to a substantial shift <strong>in</strong> bilateral aid allocations. 16 Donorsfaced a dilemma: aid selectivity came at the high cost of reduc<strong>in</strong>g aid where it was mostneeded, albeit where it was possibly least effective. So, some countries became aid orphans,as countries characterized as hav<strong>in</strong>g poor governance recorded sharply decl<strong>in</strong><strong>in</strong>g and volatileaid flows. 17Thus, the grow<strong>in</strong>g concern about <strong>fragility</strong> “appeared as a political response to anoperational issue” (Guillaumont and Guillaumont Jeanneney 2009). The donor agencies facedtroubles <strong>in</strong> <strong>in</strong>teract<strong>in</strong>g with “countries where there is a lack of political commitment and<strong>in</strong>sufficient capacity to develop and implement pro-poor policies.” 18 This def<strong>in</strong>ition providedby the OECD Development Assistance Committee shows that the notion of a fragile countryis <strong>in</strong>tr<strong>in</strong>sically relational, as it refers to a misalignment between a country’s political will—orcapacity—and the donor community’s universal priorities.The differences <strong>in</strong> def<strong>in</strong>itions are partly due to the extreme political sensitivity of aconcept which—either implicitly or explicitly—cast doubts on the political priorities of acountry, or on its ability to pursue them. Fragile countries were regarded—even before the9/11 attack on the United States—as a possible haven for terrorist groups, given theirlimited control over their territories. Security and development are closely <strong>in</strong>tertw<strong>in</strong>ed <strong>in</strong>fragile countries, and some authors call for a broader set of tools, <strong>in</strong>clud<strong>in</strong>g military<strong>in</strong>terventions, to deal with the development challenge that these countries face. 19This is why the OECD Development Assistance Committeee began to refer also tosituations of <strong>fragility</strong>, broaden<strong>in</strong>g the focus from the state alone. 20 Its Pr<strong>in</strong>ciples for GoodInternational Engagement assert that the long-term goal of an engagement <strong>in</strong> thesecountries is “to help national reformers to build effective, legitimate and resilient state<strong>in</strong>stitutions, capable of engag<strong>in</strong>g productively with their people to promote susta<strong>in</strong>eddevelopment.” 21 . The reference to national reformers helps to convey the idea that statebuild<strong>in</strong>gis an <strong>in</strong>ternal process, which can be only <strong>in</strong>fluenced marg<strong>in</strong>ally by external actors.One related change <strong>in</strong> the def<strong>in</strong>ition is a shift from a def<strong>in</strong>ition of <strong>fragility</strong> that—albeitimplicitly—focuses on the relationship between a country and the donor community, todef<strong>in</strong>itions that try to identify the substantive features of a fragile state. The Council of the<strong>European</strong> Union acknowledged that:“<strong>fragility</strong> refers to weak or fail<strong>in</strong>g structures and to situations where the socialcontract is broken due to the state's <strong>in</strong>capacity or unwill<strong>in</strong>gness to deal with itsbasic functions, meet its obligations and responsibilities regard<strong>in</strong>g the rule oflaw, protection of human rights and fundamental freedoms, security and safetyof its population, poverty reduction, service delivery, the transparent andequitable management of resources and access to power.” 22The reference to the social contract, the outcome of never-end<strong>in</strong>g barga<strong>in</strong><strong>in</strong>g between thesociety and the state, substantially broadens the relevance of the pervasive effects of<strong>fragility</strong>. A concept of state <strong>fragility</strong> based on a population’s expectations does not take astance on the content of the social contract. And it <strong>in</strong>troduces an <strong>in</strong>terest<strong>in</strong>g dynamic aspect<strong>in</strong> the def<strong>in</strong>ition, as <strong>fragility</strong> can be regarded as the <strong>in</strong>ability to manage the perturbations15 Chhotray and Hulme 2009.16 Dollar and Lev<strong>in</strong> 2006.17 Lev<strong>in</strong> and Dollar 2005, Field<strong>in</strong>g and Mavrotas 2008.18 OECD/DAC 2006.19 Bourguignon et al. 2008, Collier 2009.20 OECD/DAC 2007.21 OECD/DAC 2007, p. 1; emphasis added.22 Council of the <strong>European</strong> Union 2007.36
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesthat can affect the content of the social contract. Such a focus is <strong>in</strong> l<strong>in</strong>e with the argumentby Baliamoune-Lutz and McGillivray, who argue that the term fragile state should be usedjust to “del<strong>in</strong>eate states only <strong>in</strong> terms of their likelihood of break<strong>in</strong>g up or vulnerability todownside shocks,” 23 which is precisely what the OECD-DAC argues. The break-up of thesocial contract by the misalignment between the ability of the state to meet the expectationsof the population creates an element of latent <strong>in</strong>stability, which may lead to a conflict, which,<strong>in</strong> turn, represents the ultimate manifestation of <strong>fragility</strong>.Kaplan pushes this argument further by def<strong>in</strong><strong>in</strong>g fragile countries on the basis of thefeatures <strong>in</strong> the design of the state, and whether there is a significant “mismatch” betweenformal and <strong>in</strong>formal <strong>in</strong>stitutions. Accord<strong>in</strong>g to Kaplan, borders that forces multiple identitygroups with little common history to work together and legal and political systems that donot reflect values, belief, and ways of organis<strong>in</strong>g society can easily detech the state from thepopulation it is meant to serve and such sociopolitical conditions are unlikley to producegovernment able to satisfy citizens’ expectations. 24One further def<strong>in</strong>ition is Engberg-Pedersen and others, who dispose of the exclusive focuson the state that characterises the def<strong>in</strong>itions that we have revised so far, and def<strong>in</strong>e asituation of <strong>fragility</strong> as “<strong>in</strong>stitutional <strong>in</strong>stability underm<strong>in</strong><strong>in</strong>g the predictability, transparencyand accountability of public decision processes and the provision of security and socialservices to the population.” 25In l<strong>in</strong>e with this argument, Ikpe relates <strong>fragility</strong> to “the capacity of the state to adaptto changed circumstances, protect citizens, absorb shocks and manage conflict withoutresort to violence 26 .” The sudden disruption or gradual erosion of state capacity to meetcitizens’ expectations, to adopt a responsive political process to manage changes <strong>in</strong> thestate-society relationships or to ma<strong>in</strong>ta<strong>in</strong> the control of its territory are thus key factorsof state <strong>fragility</strong>. It is worth underscor<strong>in</strong>g that legitimacy, authority and service failures,though conceptually dist<strong>in</strong>ct, are mutually re<strong>in</strong>forc<strong>in</strong>g and <strong>in</strong>terl<strong>in</strong>ked. For <strong>in</strong>stance, evenif citizens’ expectations are culturally and country specific, the capacity to ensure basicneeds and human rights of the population can be considered a condition for the legitimacyof state <strong>in</strong>stitutions.Fragility exhibits a large variation both <strong>in</strong> qualitative and <strong>in</strong> quantitative terms acrosscountries. It can be triggered by different factors—from a violent conflict to a gradualerosion of state capacity and legitimacy. And it can display vary<strong>in</strong>g degrees of <strong>in</strong>tensity.State functions are most at risk to break down <strong>in</strong> periods of political and economic transitions,extreme political <strong>in</strong>stability, political and state reconstruction <strong>in</strong> conflict-affectedcountries, early stages of state formation, protracted periods of exposure to frequentand severe external perturbations and shocks. Badly manag<strong>in</strong>g these delicate phasescan prompt multiplied and self-fuell<strong>in</strong>g forces towards the ultimate manifestations ofstate <strong>fragility</strong>: conflicts and authoritarian regimes with massive and systematic repressionand with human rights violations of population groups.Heterogeneity is, therefore, a core feature of <strong>fragility</strong>’s manifestations and of stateslabelled as “fragile.” Some authors also observe that this concept is “broad” <strong>in</strong> the sensethat it groups countries that are difficult to compare 27 . As Br<strong>in</strong>kerhoff argues, “fragilestates are dynamic and move along trajectories from stability toward conflict, crisisand/or failure; and emerge from crisis toward recovery and stability 28 .” This implies thateach country can face specific constra<strong>in</strong>ts to capacity and political will. Some authors go23 Baliamoune-Lutz and McGillivray 2008.24 Kaplan 2008. For a critical discussion of Kaplan’s arguments, refer to chapter 3.25 Engberg-Pedersen et al. 2008, p. 6.26 Ikpe 2007, p. 86.27 Faria and Magalhães-Ferreira 2007.28 Br<strong>in</strong>kerhoff 2007, p. 3.37
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesfurther, argu<strong>in</strong>g that it is not even possible to draw a conv<strong>in</strong>c<strong>in</strong>g l<strong>in</strong>e to separate fragilecountries from nonfragile ones and rais<strong>in</strong>g doubts about the ga<strong>in</strong>s from <strong>in</strong>clud<strong>in</strong>g somecountries under the broadly def<strong>in</strong>ed group of fragile countries 29 . Briscoe observes “thereis little to hold state <strong>fragility</strong> together other than its symptoms: poverty, <strong>in</strong>security,proneness to conflict, corruption 30 .”Indeed, the debate on <strong>fragility</strong> has returned the focus on state <strong>in</strong>stitutions <strong>in</strong> the developmentprocess, and underscored the need to adapt external <strong>in</strong>terventions and prioritieson the basis of deeply rooted knowledge of the local political and economic context.The heterogeneity of <strong>fragility</strong>’s manifestations and degrees implies that deeply rootedknowledge of the local context is critical to ensur<strong>in</strong>g successful external engagements <strong>in</strong>fragile countries.Even <strong>in</strong> its worst forms of state failure, <strong>fragility</strong> does not imply a political vacuum, for<strong>in</strong>formal <strong>in</strong>stitutions can—at least partially—perform some functions of the state. Engberg-Pedersenet al. argue that “<strong>in</strong> fragile situations where the state is absent or veryweak, nonstate authorities often perform state-like functions with respect to the provisionof security and social services 31 ,” an observation which is <strong>in</strong> l<strong>in</strong>e with the theoreticalarguments by Dixit 32 . For <strong>in</strong>stance, the provision of law and order <strong>in</strong> Somalia is ensuredby Islamic courts, and “shari’a courts perform an <strong>in</strong>strumental function <strong>in</strong> creat<strong>in</strong>g legalorder [ . . . ] under anarchy, dispute resolution is free and speedy by <strong>in</strong>ternational standards,”as Leeson observes 33 . Though the current condition is far from ideal, it has improvedcompared with the one before 1991, and this improvement is not limited to thejudicial system. The 2001 Human Development Report for Somalia observes that thereare more primary schools <strong>in</strong> the country today than <strong>in</strong> the late 1980s, and the privatesector has been provid<strong>in</strong>g water and electricity 34 .These observations show that external actors should not ignore such <strong>in</strong>stitutions oncethey engage <strong>in</strong> a country <strong>in</strong> a situation of <strong>fragility</strong>. Indeed, a narrow focus on the statealone would not produce a well-grounded understand<strong>in</strong>g of <strong>fragility</strong> and the best ways tomitigate it.3 The costs of state <strong>fragility</strong> <strong>in</strong> Sub-Saharan AfricaThe crucial role of the state <strong>in</strong> shap<strong>in</strong>g socioeconomic resilience, human capabilities andwell-be<strong>in</strong>g is mirrored by the poor developmental outcomes of countries labelled as“fragile” due to the failures of their state <strong>in</strong>stitutions. The mechanisms lead<strong>in</strong>g to poordevelopment outcomes and to problematic relationships between donors and recipientgovernments are differentiated. State <strong>fragility</strong> can evolve along different trajectories becausestate formation, state function<strong>in</strong>g and stability are the outcome of a complexprocess rang<strong>in</strong>g from the shared sense of citizenship to the control of the territory. Despitethis differentiation, the economic, security and development costs of <strong>fragility</strong> tendto be substantial, widespread and persistent <strong>in</strong> different sett<strong>in</strong>gs.3.1 A heavy toll on human developmentA synthetic—but reveal<strong>in</strong>g—account of the direct costs of <strong>fragility</strong> can be ga<strong>in</strong>ed fromhuman development <strong>in</strong> fragile countries. Sub-Saharan African fragile countries are over-29 Easterly 2009.30 Briscoe 2008, p. 1.31 Engberg-Pedersen et al. 2008, p. 23.32 Dixit 2004.33 Leeson 2007, p. 705.34 UNDP 2001.38
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesrepresented among those with a poor record <strong>in</strong> terms of human development. With respectto the HDI, they rank between 128 for São Tomé and Príncipe down to 179 for SierraLeone, the last country <strong>in</strong> the list of those for which the <strong>in</strong>dex is available. The averageHDI for fragile countries stands at 0.459 <strong>in</strong> 2006 (0.329 for Sierra Leone and0.643 for the São Tomé and Príncipe).Table 1.1: Human development <strong>in</strong> Sub-Saharan African Fragile statesCountry NameHumanDevelopmentIndex Rank (1)HumanDevelopmentIndex (1)Lifeexpectancyat birth (1)Adultliteracyrate (2) Under 5MortalityRate (per1,000) (3) Maternalmortality rate(per 100,000live births) (4)Angola 157 0.484 42.1 67.4 202.7 1,400Burundi 172 0.382 48.9 59.3 164.4 1,100Cameroon 150 0.514 50.0 67.9 142.6 1,000Central African Republic 178 0.352 44.0 48.6 178.5 980Chad 170 0.389 50.4 25.7 209.7 1,500Comoros 137 0.572 64.5 74.2 61.3 400Congo, Dem. Rep. of 177 0.361 46.1 67.2 121.9 1,100Congo, Rep. of 130 0.619 54.5 86.0 128.6 740Côte d’Ivoire 166 0.431 47.7 48.7 196.4 810Djibouti 151 0.513 54.2 … 123.7 …Equatorial Gu<strong>in</strong>ea 115 0.717 50.8 87.0 166.9 680Eritrea 164 0.442 57.2 … 73.6 450Ethiopia 169 0.389 52.2 35.9 129.3 720Gambia, The 160 0.471 59.0 … 115.3 690Gu<strong>in</strong>ea 167 0.423 55.3 29.5 145.2 910Gu<strong>in</strong>ea-Bissau 171 0.383 46.0 62.8 194.5 1,100Kenya 144 0.532 52.7 73.6 102.4 560Liberia 176 0.364 45.1 54.4 138.2 1,200Mauritania 140 0.557 63.6 55.2 119.4 820Niger 174 0.370 56.2 29.8 170.2 1,800Nigeria 154 0.499 46.6 71.0 185.9 1,100Rwanda 165 0.435 45.8 64.9 153.4 1,300São Tomé and Príncipe 128 0.643 65.2 87.5 94.0 …Sierra Leone 179 0.329 42.1 37.1 145.8 2,100Somalia n.c. n.c. 47.5 … 177.9 …Sudan 146 0.526 57.8 60.9 109.6 …Togo 159 0.479 58.0 53.2 96.7 510Uganda 156 0.493 50.5 72.6 120.9 550Zimbabwe n.c. n.c. 41.7 90.7 92.3 880Sub-Saharan African fragile countries 0.469 51.2 59.2 138.3 976Sub-Saharan African nonfragile countries 0.545 53.2 66.4 97.5 614Sub-Saharan Africa 0.500 52.2 62.9 123.2 824Notes: ... denotes not available data; n.c. stands for not classified; (1) data refer to year 2006; (2) data refer to <strong>in</strong>dividuals aged 15and above, for the year 2006; (3) data refer to year 2008; (4) data refer to year 2000, adjusted based on reviews by UNICEF, WHOand UNFPA to account for well-documented problems of underreport<strong>in</strong>g and misclassifications.Source: <strong>ERD</strong> elaboration on UNDP (2008) Human Development Report 2008; OECD and AfDB (2009) African Economic Outlook2009.The human, social and economic costs of <strong>fragility</strong> are not limited to the poor record offragile countries <strong>in</strong> the three components of the HDI. Fragile countries have significantlylower yardsticks for the broad set of MDGs <strong>in</strong> relation to other develop<strong>in</strong>g countries 35 .Indeed, there is a strong negative correlation between <strong>fragility</strong> and MDG performance:fragile states <strong>in</strong> Sub-Saharan Africa are furthest from achiev<strong>in</strong>g the MDGs by 2015.By adopt<strong>in</strong>g a classification of fragile states based on the 2006 CPIA, Harttgen andKlasen f<strong>in</strong>d that <strong>fragility</strong> is clearly associated with much poorer development outcomes35 See background paper by Harttgen and Klasen to have a complete picture of how differentdef<strong>in</strong>itions affect the results.39
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challenges<strong>in</strong> terms of poverty, undernutrition, education enrolments and under-five mortality 36 .The poverty headcount <strong>in</strong> 2006 for the CPIA list of fragile states is more than threetimes higher than for the nonfragile states. Primary education completion rates, thenumber of underweight children, under-five mortality and the employment-to-populationratio reveal that fragile states have typically a much poorer human development recordthan nonfragile states. Sub-Saharan African fragile states top the list on under-five mortalityand the unemployment-to-population ratio. The performance over 2000–2006 confirmsthese f<strong>in</strong>d<strong>in</strong>gs.At the same time, development <strong>in</strong>dicators—such as poverty, life expectancy and under-fivemortality rates—display a certa<strong>in</strong> differentiation with<strong>in</strong> the group of fragile countries.Although the aggregate difference between fragile and nonfragile countries is substantial,this masks considerable heterogeneity. Only <strong>in</strong> some countries does the recenthigh rate of growth seems to have been transmitted to developmental goals—certa<strong>in</strong>lynot <strong>in</strong> Gu<strong>in</strong>ea, which still has an adult literacy rate of 29%, or <strong>in</strong> Angola, where underfivemortality rate <strong>in</strong> 2008 was above 20%—203 per 1,000 (see table 1.1).Two recent editions of the Global Monitor<strong>in</strong>g Report showed that fragile countries arenot progress<strong>in</strong>g towards the MDGs, or are even mov<strong>in</strong>g backwards. 37 Compared withmiddle-<strong>in</strong>come and low-<strong>in</strong>come countries, fragile states based on the CPIA classificationshowed considerably less progress towards the MDGs between 1990 and 2006.A slightly different picture is provided by Harttgen and Klasen, who compare fragilecountries’ performance <strong>in</strong> achiev<strong>in</strong>g MDGs by adopt<strong>in</strong>g different fragile country classifications38 . They f<strong>in</strong>d that fragile countries are perform<strong>in</strong>g as well as other develop<strong>in</strong>gcountries on absolute progress towards the MDGs, though they are still substantially beh<strong>in</strong>d39 . Changes <strong>in</strong> MDG <strong>in</strong>dicators between 2000 and 2006 show great heterogeneityacross fragile countries and across <strong>in</strong>dicators with<strong>in</strong> fragile countries, while patterns offragile and nonfragile countries show no systematic differences. If the analysis focuses<strong>in</strong>stead on Sub-Saharan African fragile countries, the pattern changes and state <strong>fragility</strong>appears to matter more to MDG progress. Figures 1.1 and 1.2 show that Sub-SaharanAfrican fragile countries lag beh<strong>in</strong>d the cont<strong>in</strong>ent both <strong>in</strong> relative and absolute changestowards the MDGs. More disappo<strong>in</strong>t<strong>in</strong>g performances are experienced by countrieswhere state <strong>fragility</strong> is particularly severe. Countries with a low 2007 CPIA score <strong>in</strong> alldimensions—economic management, structural policies, social <strong>in</strong>clusion/equity, publicsector management—are overrepresented <strong>in</strong> Sub-Saharan Africa countries.36 Harttgen and Klasen 2009.37 World Bank 2007, 2009a.38 Harttgen and Klasen 2009.39 Harttgen and Klasen 2009. Note that the conclusion by Harttgen and Klasen (2009) could beexposed to a bias due to miss<strong>in</strong>g data, because the relevant <strong>in</strong>formation to assess the progresstowards the Millennium Development Goals is miss<strong>in</strong>g for a large number of fragile countries. Ifone assumes that the countries with miss<strong>in</strong>g data are characterised by a worse than averagerecord, then even the absolute progress towards the set of goals could be poorer for fragilecountries.40
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesFigure 1.1: Absolute changes <strong>in</strong> key MDG <strong>in</strong>dicators (2000–06)Poverty headcount 2000-06Primary education 2000-066420-2-4-6CPIA-SSA SSA CPIA-All14121086420CPIA-SSA SSA CPIA-AllUnderweight 2000-06Under five mortality 2000-061.510.50-0.5-1CPIA-SSA SSA CPIA-All0-2-4-6-8-10-12CPIA-SSA SSA CPIA-AllNotes: CPIA-SSA are Sub-Saharan African countries <strong>in</strong>cluded <strong>in</strong> the 2007 CPIA list (with a CPIA score of lessthan 3.2); CPIA-All are countries that show a CPIA score of less than 3.2 on any of the CPIA sub-lists (economicmanagement, structural policies, social <strong>in</strong>clusion/equity, public sector management) <strong>in</strong> 2007; SSA: allSub-Saharan African countries; for the calculation of the means of each <strong>in</strong>dicator by <strong>fragility</strong> status, changes <strong>in</strong>poverty headcount, primary education completed, underweight and employment to population ratio are measured<strong>in</strong> percentages; changes <strong>in</strong> under-five mortality are measured <strong>in</strong> absolute changes <strong>in</strong> deaths per 1,000children.Source: Harttgen and Klasen 2009.41
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesFigure 1.2: Relative changes <strong>in</strong> key MDG <strong>in</strong>dicators (2000–06)Poverty headcount (2000-06)Primary education (2000-06)0.150.100.450.400.350.050.300.250.00-0.05-0.10-0.15CPIA-SSA SSA CPIA-All0.200.150.100.050.00CPIA-SSA SSA CPIA-AllUnderweight (2000-06)Under five mortality rate (2000-06)0.080-0.01CPIA-SSA SSA CPIA-All0.06-0.020.04-0.03-0.040.02-0.050-0.02CPIA-SSA SSA CPIA-All-0.06-0.07-0.08-0.04Note: See note to figure 1.1.Source: Harttgen and Klasen 2009.3.2 Costs are severe and multifacetedFragility is also characterised by its severity, <strong>in</strong>clud<strong>in</strong>g the worst forms of human deprivationand violations of basic human rights to life and security. It often captures theability of government to fulfil one of its ma<strong>in</strong> tasks, such as manag<strong>in</strong>g food security, or itcan flow <strong>in</strong>to violent conflict and civil war, impos<strong>in</strong>g tremendous human, social and economiccosts.Conflict. Of people <strong>in</strong> the countries of the Bottom Billion, a proxy for the list of fragilecountries, 73% have recently experienced or are <strong>in</strong> a civil war. Moreover, the risk thatthese countries fall <strong>in</strong>to civil war <strong>in</strong> any five-year period is tremendously high—one <strong>in</strong>six 40 .The relationship between <strong>fragility</strong> and conflict is dynamic and complicated. Conflictsmay at the same time be an outcome of <strong>fragility</strong> and one of its driv<strong>in</strong>g forces. Fragilecountries are often characterised by social exclusion aga<strong>in</strong>st particular groups (ethnic,religious, owners of natural resources), which can trigger conflicts. But conflicts also underm<strong>in</strong>ethe capacity of the state to deliver public services, weaken<strong>in</strong>g <strong>in</strong>stitutions, slow<strong>in</strong>geconomic performance and poverty reduction. The comb<strong>in</strong>ation of these factors addsto the destabilis<strong>in</strong>g forces.The costs of conflicts are numerous and widespread 41 . Some are “direct” and can bebroadly quantified: deaths, casualties, diseases, <strong>in</strong>ternally displaced people, mass mi-40 Collier 2007.41 Collier, Hoeffler and Söderbom (2004) claim that civil wars last about seven years on averagebut that it takes around 21 years to return to the prewar <strong>in</strong>come. The total cost of civil war iscalculated at almost $3 billion a year.42
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesgrations. Some are “<strong>in</strong>direct,” with conflicts disrupt<strong>in</strong>g economic activity, shift<strong>in</strong>g publicexpenditures from health and education to the military, and reshuffl<strong>in</strong>g public revenues(from, say, taxes on oil exports, as <strong>in</strong> the Niger delta crisis). Conflicts can also <strong>in</strong>creaseunemployment, especially among young males, <strong>in</strong>creas<strong>in</strong>g the likelihood of crime andthe appeal of extremism. After a conflict, often because of less control on the ground,entire regions can be converted to areas of drug cultivation, and drug smuggl<strong>in</strong>g is easy(and profitable), so that people might embark on illegal activities rather than return totheir (often destroyed) occupations. Some costs cannot be quantified: citizens are oftentraumatised long after the end of conflicts, but psychological costs are not easily measured.Here we quantify, to the extent possible and aware of the uncerta<strong>in</strong>ties, the ma<strong>in</strong>costs for Sub-Saharan Africa 42 .Battle deaths can be broadly quantified 43 , but most civilian deaths, connected to violenceand the spread of disease, cannot—so that even estimat<strong>in</strong>g the total number ofdeaths connected to violent conflicts is difficult. The African Development Report 2009reports battle and total war deaths <strong>in</strong> selected African countries: <strong>in</strong> Angola (1975–2002)there were around 160,000 battle deaths and 1.5 million total deaths, <strong>in</strong> Burundi (1990–2002) around 7,000 battle deaths and 200,000 total deaths, and <strong>in</strong> the Democratic Republicof Congo (1998–2008) 5.4 million total deaths, mak<strong>in</strong>g the war the deadliest wars<strong>in</strong>ce the end of World War II 44 .Data for <strong>in</strong>ternally displaced people, concentrated <strong>in</strong> Somalia, Sudan, the Republic ofCongo and Côte d’Ivoire, are easier to obta<strong>in</strong> and more comparable (table 1.2). Displacement,a cost <strong>in</strong> itself, also implies the spread of diseases, malnutrition, violence(especially for women, subject to extreme violence and often raped) 45 .42 See Reynal-Querol 2009 and AfDB 2009 for an analysis of causes of conflicts.43 Battle-related deaths represent on average less than 30% of total conflict-related events.44 AfDB 2009, p. 12.45 AfDB 2009.43
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesTable 1.2: Refugees and <strong>in</strong>ternally displaced people, 2008Country of orig<strong>in</strong>Total refugeesIDPs protected or Total population ofassisted by UNHCR concernAngola 171,393 0 185,186Burundi 281,592 100,000 483,626Cameroon 13,870 0 16,803Central African Republic 125,106 197,000 323,357Chad 55,105 166,718 267,222Comoros 378 0 418Congo, Dem. Rep. of 19,925 0 25,069Congo, Rep. of 367,995 1,460,102 1,918,424Côte d’Ivoire 22,227 683,956 737,792Djibouti 650 0 716Equatorial Gu<strong>in</strong>ea 384 0 431Eritrea 186,398 0 201,094Ethiopia 63,878 0 95,552Gambia, The 1,352 0 2,489Gu<strong>in</strong>ea 9,495 0 11,517Gu<strong>in</strong>ea-Bissau 1,065 0 1,342Kenya 9,688 404,000 762,617Liberia 75,213 0 88,413Mauritania 45,601 0 53,421Niger 796 0 1,067Nigeria 14,169 0 24,645Rwanda 72,530 0 90,428São Tomé and Príncipe 35 0 35Sierra Leone 32,536 0 35,480Somalia 561,154 1,277,200 1,860,373Sudan 419,248 1,201,040 1,749,536Togo 16,750 0 22,679Uganda 7,548 853,000 1,466,792Zimbabwe 16,841 0 51,639Sub-Saharan Africa 2,628,765 6,343,016 10,530,951Sub-Saharan African fragile countries 2,592,920 6,343,016 10,478,161Sub-Saharan African nonfragile countries 35,844 0 52,789Source: <strong>ERD</strong> elaboration on UNHCR Statistical Onl<strong>in</strong>e Population Database.Conflicts not only cause a contraction of output—they also destroy <strong>in</strong>frastructurethrough bomb<strong>in</strong>gs and other actions and through lower spend<strong>in</strong>g for ma<strong>in</strong>tenance andrenewal. F<strong>in</strong>ancial and human capital tends to leave countries, but to quantify the phenomenonis hard without a counterfactual. Dur<strong>in</strong>g and after conflicts, major changes <strong>in</strong>the sectoral composition of GDP are recorded (Collier 2007). Indeed, some sectors aremore vulnerable to conflicts: higher military spend<strong>in</strong>g often means lower spend<strong>in</strong>g oneducation, which has a high cost <strong>in</strong> the longer term and can have a permanent impacton a country’s growth. Another cost, important because of its impact on domestic policy,is the shorten<strong>in</strong>g of time horizons of policy-makers and private <strong>in</strong>vestors. To cope withpersistent conflicts creates a cont<strong>in</strong>uous situation of emergency, and governments reactwith short-term responses 46 .Food <strong>in</strong>security. The role of state <strong>in</strong> sett<strong>in</strong>g up the <strong>in</strong>stitutional and legal frameworkfor food production and distribution and government <strong>in</strong>terventions and reforms can affectboth the food availability and the food entitlements of different population groups.46 A related issue is that of the “optimal size” of the military sector <strong>in</strong> conflict-affected countries(see Acemoglu et al. 2009).44
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesState <strong>fragility</strong> can become an underly<strong>in</strong>g cause of food <strong>in</strong>security through differentchannels 47 :• Capacity failure: When a state’s delivery capacity fails—or risks fail<strong>in</strong>g—a foodcrisis is more likely. Inadequate provision of basic services can produce this result.Fragile state <strong>in</strong>stitutions might be less able to put <strong>in</strong> place mechanisms thatcan support food access for the poor or that can protect citizens (both consumersand producers) aga<strong>in</strong>st the fluctuations <strong>in</strong> world food prices or aga<strong>in</strong>st othervariations <strong>in</strong> the source and size of food entitlements, such as cyclical food <strong>in</strong>securityl<strong>in</strong>ked to the seasonal component of some economic activities.• Authority failure: When a state’s authority fails, obstacles <strong>in</strong> food distributionsystems and the <strong>in</strong>capacity to protect productive assets for farm production anddistribution can produce food crises and humanitarian emergencies.• Legitimacy failure: the implementation of social protection systems is a matternot only of capacity but also of the will<strong>in</strong>gness and accountability of the state.Some typical features of illegitimate state <strong>in</strong>stitutions (lack of effective forms ofdemocracy, persecution of opponents or population groups, prom<strong>in</strong>ent role ofthe military forces <strong>in</strong> the government, control of the media) can threaten thefood security of large population groups. Accord<strong>in</strong>g to the Nobel laureate AmartyaSen, for <strong>in</strong>stance, a free press is crucial to dissem<strong>in</strong>ate <strong>in</strong>formation aboutfood crises and to hold government accountable for protect<strong>in</strong>g and ensur<strong>in</strong>gfood entitlements 48 .State <strong>fragility</strong> and food <strong>in</strong>security are therefore closely l<strong>in</strong>ked (table 1.3). In Sub-Saharan fragile countries, average food <strong>in</strong>take was 2,093 Kcal per person, comparedwith 2,303 <strong>in</strong> other Sub-Saharan countries, while the undernourishment prevalence was8 percentage po<strong>in</strong>ts higher (35% versus 23%). Malnutrition <strong>in</strong>dicators are not only onaverage lower <strong>in</strong> fragile countries, but they also reach dramatic peaks: <strong>in</strong> most Sub-Saharan fragile countries, undernourishment levels are above 40%, soar<strong>in</strong>g to 68% <strong>in</strong>Eritrea and 76% <strong>in</strong> the Democratic Republic of Congo 49 . The 2008 Global Hunger Index,an aggregated <strong>in</strong>dex developed by the International Food Policy Research <strong>Institute</strong> tomeasure hunger and malnutrition 50 , po<strong>in</strong>ts out an extremely alarm<strong>in</strong>g to alarm<strong>in</strong>g foodand nutrition security situation <strong>in</strong> 25 Sub-Saharan Africa countries, 16 on our operationallist of fragile states. And at global level, the 10 countries whose food <strong>in</strong>securityhas worsened s<strong>in</strong>ce the beg<strong>in</strong>n<strong>in</strong>g of the 1990s <strong>in</strong>clude six Sub-Saharan Africa fragilecountries 51 (Burundi, Comoros, the Democratic Republic of Congo, Gu<strong>in</strong>ea-Bissau, Liberiaand Zimbabwe). This evidence suggests that state <strong>fragility</strong> tends to underm<strong>in</strong>e thefood and nutrition security situation.47 Stewart and Brown 2009.48 Drèze and Sen 1989.49 FAO 2008.50 The GHI comb<strong>in</strong>es three equally weighted <strong>in</strong>dicators: the proportion of undernourished as apercentage of the population, the prevalence of underweight <strong>in</strong> children under the age of five;and the mortality rate of children under the age of five. Data for the 2008 GHI are from 2001to 2006, while data for the 1990 GHI refer to 1988–99 (IFPRI 2008).51 IFPRI 2008.45
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesTable 1.3: Food security <strong>in</strong>dexes for fragile countriesCountryUndernourishmentprevalence, percent (1)Food availability(Kcal/person/day) (2)Food ProductionIndex (3)Angola 46 1,880 116Burundi 63 1,630 98Cameroon 23 2,230 101Central African Republic 43 1,900 103Chad 39 1,980 101Comoros … 1,800 95Congo, Dem. Rep. of 76 1,500 90Congo, Rep. of 22 2,330 99Côte d’Ivoire 14 2,520 96Djibouti … 2,170 118Equatorial Gu<strong>in</strong>ea … … …Eritrea 68 1,530 73Ethiopia 46 1,810 103Gambia, The 30 2,140 77Gu<strong>in</strong>ea 17 2,540 106Gu<strong>in</strong>ea-Bissau … 2,050 94Kenya 32 2,040 102Liberia 40 2,010 85Mauritania 8 2,790 98Niger 29 2,140 97Nigeria 9 2,600 96Rwanda 40 1,940 108São Tomé and Príncipe … 2,600 99Sierra Leone 47 1,910 101Somalia … … …Sudan 21 2,290 100Togo 37 2,020 97Uganda 15 2,380 98Zimbabwe 40 2,040 84Sub-Saharan Africa 30 2,212 98Sub-Saharan African fragile countries 35 2,097 98Sub-Saharan African nonfragile countries 23 2,367 98Notes: … denotes not available data; (1) data refer to the period 2003-2005; (2) data are <strong>in</strong> kcal per person per day, andare referred to the period 2003-2005; (3) data refer to the period 2002-2004 (1999-2001 average equal to 100).Source: <strong>ERD</strong> elaboration on OECD and AfDB (2009) African Economic Outlook 2009 and FAOSTAT.Violations of human rights: a focus on violence aga<strong>in</strong>st women. State <strong>fragility</strong> impliesheavy costs, especially for the most vulnerable sections of the society more <strong>in</strong> need ofsocial protection, such as women, children and the elderly.The effects on women’s well-be<strong>in</strong>g are one of the most emblematic manifestations ofthe severe costs of state <strong>fragility</strong>. Fragile states are more exposed to violent conflict,and the consequences are not gender neutral, though official numbers are difficult tof<strong>in</strong>d beyond anecdotal evidence. In fragile contexts, low economic growth pushes women<strong>in</strong>to <strong>in</strong>come-generat<strong>in</strong>g work for longer hours, typically <strong>in</strong> the <strong>in</strong>formal sector and <strong>in</strong> agriculture-relatedactivities. War <strong>in</strong>dustries developed to f<strong>in</strong>ance the conflict can be a newsource of <strong>in</strong>come, as with oil, diamonds and other precious metals <strong>in</strong> Angola, Congo-Brazzaville, the Democratic Republic of Congo, Liberia, Sierra Leone and Sudan. Buteconomic advances for women can be offset by the closure of other <strong>in</strong>dustries and thecollapse of government structures and correspond<strong>in</strong>g employment losses. In Angola, Eritrea,Mozambique and Zimbabwe, women lost their formal sector jobs to men return<strong>in</strong>gfrom conflict. And dur<strong>in</strong>g conflict, the absence of men leaves many women with the soleresponsibility for ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g the household. And many cannot <strong>in</strong>herit or claim the propertyof their deceased husbands.46
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesIn Sudan where war has been a constant s<strong>in</strong>ce <strong>in</strong>dependence <strong>in</strong> 1956, women andtheir children have taken a heavy toll. The majority of the displaced and those liv<strong>in</strong>g <strong>in</strong><strong>in</strong>ternally displaced persons (IDP) camps are women with children. Most Sudanesewomen, especially <strong>in</strong> the South, live <strong>in</strong> extreme poverty, with high rates of illiteracy andlimited access to health care and water. Maternal mortality is among the highest <strong>in</strong> theworld, with 1,700 per 100,000 live births for southern Sudan and 509 for northern Sudan.Of all women <strong>in</strong> southern Sudan, 90% are illiterate.Women have also been the victims of gender-based violence, such as forced impregnationthrough rape. By the end of 2005, when 2.2 million IDPs were liv<strong>in</strong>g <strong>in</strong> camps,the situation had become so unsafe for women that they risked be<strong>in</strong>g raped every timethey left their settlement to go and collect fuelwood 52 .In the Democratic Republic of Congo, one of the characteristics of the war has beenthe <strong>in</strong>discrim<strong>in</strong>ate use of rape as a weapon of war. Between 1998 and 2003, 51,000cases of rape were reported <strong>in</strong> the prov<strong>in</strong>ces of South Kivu and Kalemie. Médec<strong>in</strong>s SansFrontières reports that 75% of all the rape cases they had to deal with globally were <strong>in</strong>the eastern Congo. 53 The stigma attached to sexual violence is very high. Women fearthat, if they go to the police, they will lose any prospect of marriage or that their husbandswill abandon them. They also fear that their perpetrators will punish them for report<strong>in</strong>gthe abuse. The consequence of widespread sexual violence is profound damageto society, beg<strong>in</strong>n<strong>in</strong>g with the victims’ dignity and physical and moral <strong>in</strong>tegrity. The scaleand nature of sexual abuse have also created a serious public health problem, with an<strong>in</strong>crease <strong>in</strong> HIV and other sexually transmitted diseases. The lack of medical <strong>in</strong>frastructure,especially <strong>in</strong> remote areas, has compounded the problem.In Northern Uganda, accord<strong>in</strong>g to a 2007 Amnesty International report Doubly Traumatisedwomen and girls suffer sexual and gender-based violence and face considerabledifficulties <strong>in</strong> try<strong>in</strong>g to ensure that the perpetrators are brought to justice 54 . The study,conducted <strong>in</strong> five districts <strong>in</strong> 2007, reveals the discrim<strong>in</strong>ation women face try<strong>in</strong>g to pursuecases of rape, defilement, domestic violence, assault and other forms of violence 55 .Amnesty International considers that the current justice system <strong>in</strong> northern Uganda isgrossly <strong>in</strong>adequate, particularly <strong>in</strong> ensur<strong>in</strong>g the protection of women and girls from sexualand gender-based violence.As these examples show, the violent conflict that marks fragile states affects women<strong>in</strong> profoundly difficult ways. The violence and loss that they face <strong>in</strong> the community oftenimpede them from be<strong>in</strong>g able to act as full citizens, unable to participate <strong>in</strong> rebuild<strong>in</strong>g<strong>in</strong>stitutions and reforms of the state.Women can be exposed to severe forms of human rights violations not only <strong>in</strong> conflictsett<strong>in</strong>gs, but also when the justice system cannot control illicit and crim<strong>in</strong>al activities. Arecent UNODC report reveals that a heavy cost for women <strong>in</strong> West Africa is traffick<strong>in</strong>gfor sexual exploitation, often due to the need to repay debts 56 . In 2006, 570 West Africanvictims of sexual exploitation were detected <strong>in</strong> 11 <strong>European</strong> countries, so “If onlyone <strong>in</strong> 30 is detected, which seems plausible, this suggests a pool of some 17,000 victimsa year 57 .” Prostitution trends seem to be stable over time, though with variationacross countries. The value of the sex market is estimated at around $850 million ayear 58 .52 WILPF 2006.53 The Guardian 2007.54 Amnesty International 2007.55 Amnesty International 2007.56 UNODC 2009.57 UNODC 2009, p. 7.58 UNODC 2009.47
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challenges3.3 State <strong>fragility</strong> and its costs persistThe limited progress towards the Millennium Development Goals as well as the expenditureshift dur<strong>in</strong>g and after a conflict, from education to the military, gives an idea of thelong-last<strong>in</strong>g human, social and economic costs. The persistence of <strong>fragility</strong> relates todeeply rooted political and <strong>in</strong>stitutional characteristics <strong>in</strong> a country. Thirty-five countriesregarded as fragile by the World Bank <strong>in</strong> 1979 are still fragile today, 30 years later, 59whereas the probability of susta<strong>in</strong>ed graduation from the group of fragile countries wasa mere 1.85% a year over 1977–2004 60 .This trend is consistent with the history of state formation, which <strong>in</strong> Europe took centuriesof battle and profound economic, social, political and technological changes.State-build<strong>in</strong>g support from external actors can help consolidate the state, but the processrema<strong>in</strong>s <strong>in</strong>ternal. In countries where state formation has not yet been completed,<strong>overcom<strong>in</strong>g</strong> <strong>fragility</strong> is expected to be longer and more difficult.The persistence of state <strong>fragility</strong> is also mirrored by governance performance and thedisappo<strong>in</strong>t<strong>in</strong>g evidence of progress <strong>in</strong> enforc<strong>in</strong>g the rules of law. Poor governance is asymptom and a parameter of state <strong>fragility</strong>. Fragile countries perform badly on governance<strong>in</strong>dicators (figure 1.3). Most are affected by high political <strong>in</strong>stability, pervasive corruptionand little confidence <strong>in</strong> the rule of law. Moreover, low levels of governance tendto persist and be highly path dependent: poor government effectiveness or rule of law <strong>in</strong>2000 <strong>in</strong>creases the likelihood of low scores <strong>in</strong> 2008, and many fragile countries had lessgovernment effectiveness and weaker rule of law <strong>in</strong> 2008 than <strong>in</strong> 2000 61 .Figure 1.3: Trends <strong>in</strong> governance <strong>in</strong>dicators, Sub-Saharan fragile countries2 0 0 8Political stability 2000-081.000.500.00-3.00 -2.00 -1.00 0.00 1.00 2.00-0.50-1.00-1.50-2.00-2.50-3.00-3.502000Government effectivness 2000-080.00-2.50 -2.00 -1.50 -1.00 -0.50 0.00-0.502 0 0 82000-1.00-1.50-2.00-2.50-3.00Rule of law 2000-08Corruption 2000-080.00-2.50 -2.00 -1.50 -1.00 -0.50 0.00-0.50-1.000.500.00-2.00 -1.50 -1.00 -0.50 0.00 0.50 1.00-0.502 0 0 8-1.502 0 0 8-1.00-2.00-1.50-2.50-2.00-3.00-2.5020002000Note: The governance <strong>in</strong>dicators are measured <strong>in</strong> units rang<strong>in</strong>g from about -2.5 to 2.5, with higher values correspond<strong>in</strong>gto better governance outcomes. Political stability measures the perceptions of the likelihood that59 OECD 2009.60 Chauvet and Collier 2008.61 Kaufmann et al. 2008.48
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengesthe government will be destabilised or overthrown by unconstitutional or violent means; Government effectivenessmeasures the quality of public services, the quality of the civil service and the degree of its <strong>in</strong>dependencefrom political pressures, the quality of policy formulation and implementation, and the credibility of thegovernment’s commitment to such policies; Rule of law measures the extent to which agents have confidence<strong>in</strong> and abide by the rules of society, <strong>in</strong> particular the quality of contract enforcement, the police, and thecourts, as well as the likelihood of crime and violence; Corruption measures the extent to which public power isexercised for private ga<strong>in</strong>, <strong>in</strong>clud<strong>in</strong>g petty and grand forms of corruption, as well as “capture” of the state byelites and private <strong>in</strong>terests.Source: Kaufmann, Kraay and Mastruzzi 2008.The consequences of state <strong>fragility</strong> for governance can generate forces that resist exit<strong>in</strong>gfrom <strong>fragility</strong>. The erosion of checks and balances can create new <strong>in</strong>terests <strong>in</strong>imicalto social well-be<strong>in</strong>g. These <strong>in</strong>terests try to defend and reproduce the opportunities forcorruption, political <strong>in</strong>terference and rent-seek<strong>in</strong>g activities, further weaken<strong>in</strong>g thestate’s accountability. And <strong>in</strong> authoritarian regimes, the state can turn <strong>in</strong>to a vehicle forpersonal enrichment. Although these sett<strong>in</strong>gs can be <strong>in</strong>herently unstable because attemptsto appropriate the “spoils” can end up <strong>in</strong> violent changes of government, the underly<strong>in</strong>gpredatory dynamics are likely to rema<strong>in</strong> the same 62 .3.4 Fragile countries are “bad neighbours”The costs of <strong>fragility</strong> also appear to pay little attention to national boundaries. An estimated80% of the cost of <strong>fragility</strong>—<strong>in</strong> forgone economic growth—is borne by neighbour<strong>in</strong>gcountries, which suffer from a substantial bad neighbour effect, with the growth lossabout 0.6% a year per neighbour. So, with 3.5 neighbours per country on average, thelosses from the bad neighbour effect can add up to about $237 billion a year 63 .Fragile countries exert an adverse <strong>in</strong>fluence on their neighbours through other channels.Fragility does not appear to be contagious, but it gives rise to adverse cross-bordereffects, such as the diffusion of political unrest and <strong>in</strong>stability 64 . There is no evidence ofthat <strong>fragility</strong> leads to a systematic <strong>in</strong>crease <strong>in</strong> the probability that neighbour<strong>in</strong>g countriesexperience civil conflict or engage <strong>in</strong> <strong>in</strong>terstate war 65 . But there are well-known caseswhere such an effect played a role, such as the Liberian government of Charles Taylor,who provided mercenaries, money, weapons and <strong>in</strong>frastructure to rebel groups directedat Sierra Leone—<strong>in</strong> the hope of ga<strong>in</strong><strong>in</strong>g control over regional diamond m<strong>in</strong>es and economicnetworks.The diffusion of the risk of <strong>in</strong>stability and violent conflict across borders is abetted byextensive regional markets for weapons <strong>in</strong> Africa 66 . Africa’s porous national borders facilitatethe movement of arms and ammunitions across countries, so that their supplycan easily match the geographical distribution of the demand 67 .Further bad neighbour effects arise from cross-border movements of refugees, mostlyto neighbour<strong>in</strong>g countries, impos<strong>in</strong>g substantial costs on the receiv<strong>in</strong>g country 68 . Refugeemovements contribute to the spread of malaria across Sub-Saharan countries 69 . Andrefugees mov<strong>in</strong>g from Rwanda and Burundi to the Kagera region <strong>in</strong> northwestern Tanzaniaexacted a heavy toll on health and school<strong>in</strong>g 70 .62 UNODC 2009, p. 67.63 Chauvet at al. 2007.64 Iqbal and Starr 2008.65 Iqbal and Starr 2008.66 Lambach 2004; Studdard 2004.67 Killicoat 2007b.68 UNHCR 2009.69 Montalvo and Reynal-Querol 2007.70 Baez 2008.49
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and ChallengesMass refugee movements can also destabilise neighbour<strong>in</strong>g countries 71 . And as therecent violence <strong>in</strong> the Great Lakes region highlights, refugee camps can be a site for organis<strong>in</strong>gviolent groups. Sub-Saharan African refugees and IDPs orig<strong>in</strong>ate almost exclusivelyfrom fragile countries <strong>in</strong> the region (see table 1.2).Other illicit flows, attracted by countries with limited control of the territory and weakrule of law, can also threaten the stability of neighbour<strong>in</strong>g countries, especially thosewith a low capacity to enforce the law. Gu<strong>in</strong>ea Bissau is the transit centre for coca<strong>in</strong>emov<strong>in</strong>g from South America to Europe, with considerable security and humanitarian implications72 . At the Eleventh High-Level Meet<strong>in</strong>g of Heads of United Nations Peace Missions<strong>in</strong> West Africa (Dakar, 4 November 2007), the Heads of Peace Missions <strong>in</strong> WestAfrica <strong>in</strong> 2007 expressed “concern about the alarm<strong>in</strong>g <strong>in</strong>crease <strong>in</strong> drug traffick<strong>in</strong>g andthe threat posed to stability both <strong>in</strong> the country and <strong>in</strong> the subregion at large.”3.5 Fragile countries are sources of global threatsThe adverse effects of <strong>fragility</strong> can have global reach. Indeed, the concept of state <strong>fragility</strong>emerged <strong>in</strong> the development arena at a time of substantial concern about global securitythreats due to weak and nonexistent state structures.Still, a causal relationship between state <strong>fragility</strong> and transnational threats—such asterrorism—has been often contested 73 . The relationship between <strong>fragility</strong> and terrorism<strong>in</strong> Sub-Saharan Africa rema<strong>in</strong>s controversial. Not all Sub-Saharan fragile countries areafflicted by terrorism, least of all by that with transnational objectives and reach. Terroristgroups have also emerged from, and operated <strong>in</strong>, countries that have strong stablestates and a variety of systems of government. Moreover, fragile countries may be ofdecl<strong>in</strong><strong>in</strong>g importance to transnational terrorists, given that they have diffused <strong>in</strong> moreglobal networks with autonomous cells <strong>in</strong> dozens of countries, both poor and wealthy 74 .The revival of piracy <strong>in</strong> the Gulf of Aden is portrayed as a textbook example of thetransnational threats of <strong>fragility</strong> 75 . The <strong>European</strong> Parliament Resolution of 23 October2008 on piracy at sea stresses the urgency of this threat, and the EU’s military response<strong>in</strong> the Horn of Africa through the recent Atalanta mission underl<strong>in</strong>es its importance. Thel<strong>in</strong>k between <strong>fragility</strong> and piracy is <strong>in</strong>tuitive, yet the conditions of <strong>fragility</strong> that favour piracyand armed robbery rema<strong>in</strong> under<strong>in</strong>vestigated 76 . Piracy <strong>in</strong> the Gulf of Aden also revealsthe limitations of portray<strong>in</strong>g these threats as com<strong>in</strong>g from <strong>fragility</strong> alone. Externalfactors were crucial <strong>in</strong> the <strong>in</strong>itial revival of piracy 77 , as “foreign fish<strong>in</strong>g trawlers aggressivelymoved <strong>in</strong>to Somalia’s rich and unpatrolled waters, at the expense of coastal fish<strong>in</strong>gvillages” after the fall of Siad Barre <strong>in</strong> 1991 78 . The grievance of Somali fishermenaga<strong>in</strong>st foreign trawlers—and aga<strong>in</strong>st the alleged dump<strong>in</strong>g of toxic wastes <strong>in</strong> their waters79 —falls short of expla<strong>in</strong><strong>in</strong>g the surge <strong>in</strong> piracy 80 . But it suggests that some of the71 Mandel 1997.72 UNODC 2007.73 Chandler (2006) argues that “the idea of failed states as a security threat is [. . .] an exaggeratedone,” and Hehir (2007), Patrick (2007), Newman (2007) and Stewart (2007) move alongsimilar l<strong>in</strong>es of reason<strong>in</strong>g.74 See, for example, Korteweg 2008; Takeyh and Gvosdev 2002.75The <strong>in</strong>ability of the Somali Transitional Federal Government to patrol the waters perta<strong>in</strong><strong>in</strong>g toits Exclusive Economic Zone led to the United Nations Security Council to adopt Resolution1816, authoris<strong>in</strong>g foreign navies to fight pirates <strong>in</strong> Somali waters (Guilfoyle 2008).76 N<strong>in</strong>cic 2008.77 Menkhaus 2009, p. 22.78FAO (2009) suggests that “700 foreign-owned vessels are fully engaged <strong>in</strong> unlicensed fish<strong>in</strong>g <strong>in</strong>Somali waters”.79 Hansen 2008.50
<strong>European</strong> Report on Development 2009 – CHAPTER 1: State Fragility <strong>in</strong> Sub-Saharan Africa: Costs and Challengeswidespread costs of <strong>fragility</strong> can be generated by the opportunities for profit reaped byoutside actors.Despite contrasts on the causal relationship, the distribution of aid from DAC donorssuggests that security ranks high among the criteria for allocations. The first four fragilecountries <strong>in</strong> aid <strong>in</strong>flows <strong>in</strong> 2007 were either a press<strong>in</strong>g security concern—Afghanistanand Iraq—or a big player <strong>in</strong> highly unstable regions—Pakistan and Ethiopia. The fourcountries absorbed half the aid directed to fragile countries 81 .3.6 Fragile countries are fertile land for organised crimeand illicit traffick<strong>in</strong>gAs mentioned above, organised crime flourishes <strong>in</strong> fragile countries, tend<strong>in</strong>g to emergewhen state <strong>in</strong>stitutions are weak. Some activities are high <strong>in</strong> value added, such as steal<strong>in</strong>goil or traffick<strong>in</strong>g drugs. Also common are smuggl<strong>in</strong>g cigarettes, counterfeit<strong>in</strong>g (especiallyantimalaria pills), f<strong>in</strong>ancial fraud, high-tech crime, arms trade, organised sexualexploitation and money launder<strong>in</strong>g. The high monetary value of such activities understatesthe threat. For coca<strong>in</strong>e, most of the value is realised outside the country (or region)where it is grown and traded. Some 250 tons of coca<strong>in</strong>e are trafficked from WestAfrica to Europe each year, worth some $11 billion if it were to reach the wholesalemarket 82 . As far as stolen oil and counterfeit cigarettes are concerned, a large share ofmoney rema<strong>in</strong>s <strong>in</strong> the country (or region). Hence, while coca<strong>in</strong>e trade imposes costsglobally, the impact of oil and cigarettes is likely to be more concentrated locally. Theenvironmental impact of stolen oil poses health risks and degrades quality of life <strong>in</strong>countries neighbour<strong>in</strong>g the Niger Delta. Illegal traffick<strong>in</strong>g of counterfeited medic<strong>in</strong>es islarge and particularly <strong>in</strong>volves countries where many people are affected by malaria andAIDS as well as their neighbours. The absence of punishment for such a crime is asymptom of weakness of the state <strong>in</strong>stitutions that makes it possible to speculate onpeople’s health.The risk of the proliferation of high-end weapon technology, such as nuclear, chemicaland biological weapons or carrier rockets, is low 83 . But the proliferation of small armsand other tactical weapons can afflict regional security. The l<strong>in</strong>ks are clear: groups seek<strong>in</strong>gto challenge the state are the ma<strong>in</strong> customers for small arms. Between 1998 and2004 more than 200,000 small arms were seized or collected <strong>in</strong> the region (West Africa),at least 70,000 of which were subsequently destroyed. While impressive, these numbersare small <strong>in</strong> proportion to the estimated number of small arms <strong>in</strong> West Africa (estimatedat 7–10 million) 84 .80Menkhaus (2009) argues that “Somali piracy is a textbook case of a shift <strong>in</strong> the motives of anarmed group from grievance to greed.”81 OECD 2009.82 UNODC 2009.83 Stewart 2007.84 UNODC 2009, p. 54.51
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesCHAPTER 2-CHARACTERISTICS OF FRAGILE STATES53
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesThere is a widespread consensus that state <strong>fragility</strong> relates to the poor record of state<strong>in</strong>stitutions <strong>in</strong> provid<strong>in</strong>g basic services, either due to a lack of capacity to fulfil basicstate functions or to confer the due priority.The Sub-Saharan African countries whose state <strong>in</strong>stitutions are fragile present markedlydifferent sets of social, structural and economic characteristics. Such heterogeneityis hardly surpris<strong>in</strong>g, as each country has experienced its own socioeconomic and historicalpath. Though there may be some common underly<strong>in</strong>g root causes, such as the processof formation of colonial states (see chapter 3), the drivers of state <strong>fragility</strong> are country-specific.An agreed list of fragile countries does not exist. In what follows, as mentioned <strong>in</strong>chapter 1, we use for operational purposes the list of countries <strong>in</strong> a situation of <strong>fragility</strong>adopted <strong>in</strong> OECD (2009), conf<strong>in</strong><strong>in</strong>g the analysis to those <strong>in</strong> Sub-Saharan Africa. The listis the result of “a compilation of three lists: the bottom two qu<strong>in</strong>tiles of the CPIA 2007;the Brook<strong>in</strong>gs <strong>in</strong>dex of state weakness <strong>in</strong> the develop<strong>in</strong>g world 2008 and the Carleton<strong>University</strong> [. . .] (CFIP) 2007 <strong>in</strong>dex [. . .]. [This represents] a change from the 2005,2006 and 2007 Reports. [. . .] The two additional <strong>in</strong>dexes that reflect the DAC def<strong>in</strong>itionof <strong>fragility</strong> and conflict (consideration of both the capacity and legitimacy of the state,and <strong>in</strong>clusion of the security dimension) aims to make the list more robust 1 .”This list <strong>in</strong>cludes five additional Sub-Saharan African countries—Equatorial Gu<strong>in</strong>ea,Ethiopia, Kenya, Rwanda and Uganda—not previously regarded as fragile. The politicalturmoil that followed the 2007 presidential elections, for <strong>in</strong>stance, made Kenya part ofthis group. Other countries have long been classified as fragile accord<strong>in</strong>g to the WorldBank def<strong>in</strong>ition, which was <strong>in</strong>itially established <strong>in</strong> 1970s, while some—such as Côted’Ivoire and Zimbabwe—have gradually shifted from be<strong>in</strong>g regarded as success storiesto situations of <strong>fragility</strong>.1 Fragile states share some common features1.1 An <strong>in</strong>ability to mobilise domestic resources anddependence on external resourcesFragile countries are unable to mobilise domestic resources and to draw substantial fiscalrevenues from taxation. Sub-Saharan African fragile countries’ government revenuesexclud<strong>in</strong>g grants rarely account for more than 20% of the gross domestic product oftheir countries (see table 2.1). Only 4 countries out of 29—Angola, Republic of Congo,São Tomé and Príncipe and Equatorial Gu<strong>in</strong>ea—have a high ratio of government revenuesover GDP, but this is not due to their capacity to levy taxes, but rather to their endowmentof natural resources, as Table 2.7 shows.1OECD 2009, p. 21. See also chapter 1, footnote 2.54
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.1: Taxation, government revenues and ease of do<strong>in</strong>g bus<strong>in</strong>ess <strong>in</strong> Sub-Saharan African fragile countriesCountryGovenmentRevenues (1)Taxrevenue (2)Ease of Do<strong>in</strong>gBus<strong>in</strong>ess Rank (3)Angola 46.7 … 168Burundi 18.6 … 177Cameroon 18.8 … 164Central African Republic 10.3 6.0 180Chad 20.6 … 175Comoros 12.7 … 155Congo, Dem. Rep. of 14.8 6.3 181Congo, Rep. of 42.7 8.5 178Côte d’Ivoire 19.2 14.9 161Djibouti … … 153Equatorial Gu<strong>in</strong>ea 38.3 … 167Eritrea 22.8 … 173Ethiopia 12.8 10.7 116Gambia, The 21.4 … 130Gu<strong>in</strong>ea 14.3 … 171Gu<strong>in</strong>ea-Bissau 14.6 … 179Kenya 22.2 18.3 82Liberia 23.6 … 157Mauritania … … 160Niger 15.2 … 172Nigeria 16 … 118Rwanda 13.6 … 139São Tomé and Príncipe 40.1 … 176Sierra Leone 10.8 11.0 156Somalia … … n.c.Sudan … … 147Togo 17 13.9 163Uganda 12.6 13.0 111Zimbabwe 6.0 … 158Sub-Saharan African fragile countries 20.2 11.4Sub-Saharan African nonfragile countries 25.4 22.4Sub-Saharan Africa 24.5 17.7Notes: ... denotes not available; n.c. denotes not classified; (1) data exclude grants and arereferred to 2007, are expressed <strong>in</strong> percentage of GDP; (2) : tax revenue, as percentage of GDP,refers to compulsory transfers to the central government for public purposes, and data refer tolast year available; (3) data refer to 2009.Sources: IMF (2009a) Regional Economic Outlook-Sub-Saharan Africa; World Bank (2008a)World Development Indicators 2008; World Bank (2009) Ease of do<strong>in</strong>g bus<strong>in</strong>ess rank<strong>in</strong>g.Gupta and Tareq (2008) argue that, although there has been an <strong>in</strong>crease <strong>in</strong> Sub-Saharan Africa’s average government revenues to GDP ratio <strong>in</strong> the last 25 years, mostof it is connected to royalties or corporate taxes on oil and m<strong>in</strong><strong>in</strong>g companies, whilenonnatural resource revenues have been grow<strong>in</strong>g at around 1% s<strong>in</strong>ce 1980 2 . In somefragile countries the share of trade taxes <strong>in</strong> total taxes is very high, with peaks above2Accord<strong>in</strong>g to Stümer 2008, the Democratic Republic of Congo collected tax revenues from theextractive sector of $16.4 million <strong>in</strong> 2006, whereas <strong>in</strong> 2004 the m<strong>in</strong>erals’ value was around $1billion. The German Federal <strong>Institute</strong> for Geosciences and Natural Resources ma<strong>in</strong>ta<strong>in</strong>s thatm<strong>in</strong>eral commodities worth an additional $1 billion have been smuggled out of the country.55
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile States20% for Angola and Nigeria 3 . Data on tax revenues are available only for a few countries:the average tax to GDP ratio for the n<strong>in</strong>e countries for which we have data standsat around 11%, with a m<strong>in</strong>imum of 6% for the CAR and the DRC: with such a limited taxbase, an adequate public goods provision is hardly an option, to say the least.The lack of mobilisation of domestic resources lowers the pressure for good governance,for efficient government spend<strong>in</strong>g, and for an accountable state. Nor is the state<strong>in</strong>duced to adopt development-oriented policies that could strengthen the economic system,and raise tax revenues 4 . A possible reason could be the small size of the rul<strong>in</strong>g elites:the smaller its size, the lower its <strong>in</strong>centives to deliver national public goods and developfar-reach<strong>in</strong>g policies that could boost the prospects for economic growth 5 .Low revenues <strong>in</strong> Sub-Saharan African fragile countries can be traced to their extraversion,or their political and economic relations outside the country (see chapter 3).These countries have been historically—most notably <strong>in</strong> the colonial era, but also before—dependenton external sources of revenues. For most fragile countries, the comb<strong>in</strong>edweight of aid, FDI and remittances is a large share of GDP, well above the Sub-Saharan African average, but the composition differs even substantially among countries(figure 2.1). Official development assistance (ODA) is the ma<strong>in</strong> <strong>in</strong>flow for most. Burundi,Republic of Congo, Eritrea, Gu<strong>in</strong>ea-Bissau, Liberia and Sierra Leone have shares of aidover GDP 6 close to or greater than that of government revenues. Remittances play acrucial role especially <strong>in</strong> Liberia and Togo 7 . For others, such as Equatorial Gu<strong>in</strong>ea, Gambia,Chad, Mauritania, São Tomé and Príncipe and Sudan, external revenue is generatedby the export of a few natural resources, such as oil and m<strong>in</strong>erals, and by resourceseek<strong>in</strong>gFDI.These external sources lower the <strong>in</strong>centives of governments to mobilise resources locally,through general taxation. For the political elites, taxation could produce the (un<strong>in</strong>tended)effect of trigger<strong>in</strong>g a dynamic through which the citizens would hold the governmentaccountable for its spend<strong>in</strong>g. Extraversion blunts this dynamic.34567Data on trade taxes over total taxes are available to our knowledge only for some fragilestates: Angola (22.2%), Kenya (8.0%), Nigeria (22.2%) and Uganda (9.0%). See Volker<strong>in</strong>k2009.Tilly, 1990.Adam and O’Connell, 1999.Foreign aid <strong>in</strong> 2007 represented on average 15% of fragile countries’ GDP. But <strong>in</strong> several countries,aid represents more than 20%, reflect<strong>in</strong>g a very high aid dependence. Aid flows tend tobe more volatile than domestic revenues and remittances, hamper<strong>in</strong>g medium-term plann<strong>in</strong>gand the efficient allocation of government expenditures as noted by Gupta and Tareq 2008.Note that Liberia is not shown <strong>in</strong> the figure but remittances count for more than 100% of GDP(107% accord<strong>in</strong>g to OECD and AfDB 2009). Note also that remittances are likely to be underestimated,because data consider only official remittances. Some recent estimates claim that <strong>in</strong>formalremittances are very high (World Bank 2008b); African Development Indicators 2007(World Bank 2008b) f<strong>in</strong>ds that <strong>in</strong> Sudan they might be as much as 85% of total remittancesand <strong>in</strong> Ghana around 65%.56
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesFigure 2.1: External flows (simple average from 2003–07)BurundiGu<strong>in</strong>ea-BissauSão Tomé and PríncipeCongo, Rep.ofGambia, TheSierra LeoneMauritaniaEquatorial Gu<strong>in</strong>eaDjiboutiUgandaRwandaEritreaEthiopiaChadNigerSudanTogoCongo, Dem. Rep. ofGu<strong>in</strong>eaNigeriaComorosKenyaCentral African RepublicCameroonAngolaZimbabweCôte d’IvoireODA net <strong>in</strong>flows, alldonorsFDI <strong>in</strong>flowsMigrants'remittances0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00Note: Data for Somalia is not available; data on remittances is not available for Zimbabwe, Angola, CAF, Chad,Eritrea, Djibouti and DRC; data on Liberia have not been <strong>in</strong>cluded <strong>in</strong> the figure as they represent outliers.Source: <strong>ERD</strong> elaboration on OECD and AfDB (2009) African Economic Outlook 2009.The ma<strong>in</strong> implication of such a f<strong>in</strong>anc<strong>in</strong>g mechanism is that fragile countries relymostly on the primary sector, which <strong>in</strong> turn means that they have a poorly diversifiedexport basket and are characterised by paucity of <strong>in</strong>vestments <strong>in</strong> human developmentand <strong>in</strong>frastructure.Box 2.1: Copper boom and bust <strong>in</strong> ZambiaBy Elva BovaPh.D. Candidate at the School of Oriental and African Studies, <strong>University</strong> of LondonWith Ch<strong>in</strong>a and India’s balloon<strong>in</strong>g demand for copper, copper prices surged from $1,800 permetric ton <strong>in</strong> 2002 to $8,000 <strong>in</strong> 2008. The boom had major repercussions on the Zambianeconomy where copper exports constitute more than 60% of total exports. Exports <strong>in</strong>creasedfrom $61 million <strong>in</strong> 2002 to $600 million <strong>in</strong> 2008, and GDP growth was steady at an averageof 5.6%, ow<strong>in</strong>g also to FDI flows, low <strong>in</strong>flation and sound macroeconomic fundamentals. InJuly 2008 the copper price fell, reach<strong>in</strong>g $3,000 per metric ton <strong>in</strong> October, and exports wentdown to $270 million <strong>in</strong> April 2009, with GDP growth <strong>in</strong> 2009 expected to be below 4%. 8 Thesubstantial decl<strong>in</strong>e <strong>in</strong> copper exports caused a series of m<strong>in</strong>e closures, <strong>in</strong>clud<strong>in</strong>g two plantsof the Luanshya m<strong>in</strong>e, the largest m<strong>in</strong>e <strong>in</strong> the country. Overall, 8,000 jobs were lost <strong>in</strong> thecopper sector by December 2008. 989IMF 2009.Ndulo et al. 2009.57
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesBox figure 2.1: Zambian exports and copper prices (2002–09)80010000Millio n U S $6004002008000600040002000U S $ p er Metric T o n02002m 012002m 052002m 092003m 012003m 052003m 092004m 012004m 052004m 092005m 012005m 05Exports2005m 092006m 012006m 052006m 092007m 012007m 052007m 09Copper pricesSource: IMF-International F<strong>in</strong>ancial Statistics and Direction of Trade StatisticsMonetary impactThe boom and bust amplified the volatility of the Zambian currency, which is ma<strong>in</strong>ly marketdeterm<strong>in</strong>ed and displays a close relationship to the copper price.Dur<strong>in</strong>g the boom, the <strong>in</strong>crease <strong>in</strong> export receipts from m<strong>in</strong><strong>in</strong>g caused an appreciation ofthe currency, exacerbated by the simultaneous surge of aid, portfolio and FDI flows.Between July and November 2005 the Zambian kwacha appreciated by 30% <strong>in</strong> nom<strong>in</strong>alterms, and this <strong>in</strong>crease disrupted some of the country’s major nontraditional exports. Mostaffected were cotton, tobacco and coffee, which experienced profit losses above 30% <strong>in</strong> justone crop year. 10 With the copper bust, the value of the currency depreciated by 40% <strong>in</strong> thethree months from October to December 2008. The depreciation was also due to asubstantial portfolio outflow, as demonstrated by a 5% monthly reduction <strong>in</strong> the Lusakastock exchange <strong>in</strong>dex. 11 While favour<strong>in</strong>g the competitiveness of nontraditional exports, thecurrency depreciation raised domestic prices. Given the currency depreciation and the global<strong>in</strong>crease <strong>in</strong> food prices, <strong>in</strong>flation <strong>in</strong> the country rose from 8.5% <strong>in</strong> January 2008 to 16% <strong>in</strong>December 2008, with the bulk of the <strong>in</strong>crease registered by prices of food products, whichconstitute 20% of the country’s total imports. The Bank of Zambia tried to offset thedepreciation through foreign exchange sales. Yet, the manoeuvre led to a 23% decrease <strong>in</strong>foreign exchange reserves, and the risk of reserve depletion has been escalat<strong>in</strong>g. 122008m 012008m 052008m 092009m 01010 Weeks et al. 2007; Weeks 2008; Fynn and Haggblade 2007; Export Board of Zambia 2007.11 Ndulo et al. 2009.12 Ndulo et al. 2009.58
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesBox figure 2.2: Copper prices and the Zambian kwacha (2002–09)100006000US $ per Metric Ton800060004000200050004000300020001000Zambiam kwacha per US$002002m012002m052002m092003m012003m052003m092004m012004m052004m092005m012005m052005m092006m012006m052006m092007m012007m052007m092008m012008m052008m092009m01Copper priceZambian kwachaSource: IMF- International F<strong>in</strong>ancial Statistics.Fiscal impactCopper exports contribute little to the Zambian government budget. In the mid-1990s thestate-owned enterprise, Zambia Consolidated Copper M<strong>in</strong>es (ZCCM), was privatised, giventhe enormous losses the company was register<strong>in</strong>g <strong>in</strong> a period of low commodity prices. Withthe privatisation reform, the <strong>in</strong>dustry was split <strong>in</strong> six different units under the control andmanagement of transnational corporations. The government of Zambia was left withbetween 15% and 20% <strong>in</strong> each unit, directly controlled by the state company ZCCM-International Hold<strong>in</strong>g. Yet, ZCCM-IH received no revenue from the copper boom, because itstill had to repay debts accumulated <strong>in</strong> the early 1990s.The taxes paid by the m<strong>in</strong><strong>in</strong>g companies were almost negligible until 2007. Thecompanies managed to secretly negotiate very favourable agreements with the Zambiangovernment (Development Agreements), which set low royalties (0.6% as opposed to 3%),lower export taxes (15% as opposed to 25%) and a series of concessions and deductions,like carry-forward losses for a period of 20 years (Fraser and Lungu 2007). When theagreements were disclosed <strong>in</strong> 2007, <strong>in</strong>ternational organisations and local NGOs forced thegovernment to revise the tax regime, and a new law was enacted at the end of 2007. Yet,the expected 9% <strong>in</strong>crease <strong>in</strong> the budget from the new taxes did not realise, and the fiscalrevenues <strong>in</strong>creased only by 3% <strong>in</strong> 2008 (Green 2008).The fall of copper prices <strong>in</strong> July 2008 reopened the debate on the m<strong>in</strong><strong>in</strong>g taxes, and newconcessions were given to the companies <strong>in</strong> January 2009. These remove the w<strong>in</strong>dfall taxthat fell due when copper prices were above a specific level and also allow companies towrite off 100% of any <strong>in</strong>vestment as tax depreciation <strong>in</strong> the year when the expenses occur(Green 2008).The copper bust and consequent m<strong>in</strong>e closures have raised the question of whether to<strong>in</strong>crease government’s share <strong>in</strong> the m<strong>in</strong>es as a way to extend the scope of macroeconomicmanagement dur<strong>in</strong>g booms and busts. Yet, the proposal f<strong>in</strong>ds adamant opposition of them<strong>in</strong><strong>in</strong>g companies and the World Bank. As expressed by Obiagel Ezekwesli, World Bank vicepresident for Africa, “the populist reaction is to say let’s take a stake, but do you want to riskcapital <strong>in</strong> a sector where the private sector can take risks? (…) this is an <strong>in</strong>dustry better leftto the private sector to run”. 1313 Reuters, 200959
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesBox figure 2.3: M<strong>in</strong>e revenue <strong>in</strong> Zambia (2001–07)Billions of Zambian kwacha9,000.008,000.007,000.006,000.005,000.004,000.003,000.002,000.001,000.000.002001 2002 2003 2004 2005 2006 2007Revenues Taxes M<strong>in</strong><strong>in</strong>g taxesSource: World Bank, World Development Indicators, and Zambian Revenue Authority.1.2 Reliance on primary productsMost fragile countries are characterised, on average, by a very low population density:15 out of 29 countries have fewer than 40 <strong>in</strong>habitants per square kilometre, while thepopulation density <strong>in</strong> nonfragile countries stands at around 84. Moreover, <strong>in</strong> these countriesthe majority of the population lives <strong>in</strong> rural areas—<strong>in</strong> Burundi as much as 90% (seetable 2.6). This proportion implies a high rate of employment <strong>in</strong> the agricultural sector.The share of agriculture <strong>in</strong> GDP is substantial, especially for fragile countries not endowedwith natural resources (see figure 2.2) 14 . In addition, the contribution of agriculturalproducts to exports is large, and agriculture is still the ma<strong>in</strong> source of export revenuesfor countries such as Burundi, Ethiopia, The Gambia and Sierra Leone.14 Note that agricultural <strong>in</strong>comes are difficult to tax. See Volker<strong>in</strong>k 2009.60
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesFigure 2.2: Shares of agriculture, <strong>in</strong>dustry and services on GDP, 2006ZimbabweUgandaTogoSudanSierra LeoneSão Tomé and Prí ncipeRwandaNigeriaNigerMaurit aniaLiberiaKenyaGu<strong>in</strong>ea-BissauGu<strong>in</strong>eaGambia, TheEt hiopiaErit reaEquat orial Gu<strong>in</strong>eaDjibout iCôt e d’IvoireCongo, Rep. ofCongo, Dem. Rep. ofComorosChadCent ral Af ricanCameroonBurundiAngola0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Agriculture Industry ServicesSource: World Bank (2008a) World Development Indicators 2008.Sub-Saharan African countries’ agriculture suffers from low productivity, rudimentarytechnology, small hold<strong>in</strong>g, and difficulty <strong>in</strong> gett<strong>in</strong>g to markets. Moreover, the lack of <strong>in</strong>formation,the extensive market power of a few actors, and the <strong>in</strong>complete markets exposefragile countries to market failures 15 .Accord<strong>in</strong>g to Ng and Aksoy (2008), the bulk of Sub-Saharan African countries are netfood importers (table 2.2). All fragile countries but five (Cameroon, Côte d’Ivoire, Kenya,Somalia and Sudan) belong to this group, and they suffer from a high prevalence of undernourishment16 . In addition, many of them are net oil importers.15 WFP 2009.16 Undernourishment <strong>in</strong> Sub-Saharan African fragile states afflicts 35% of the population and <strong>in</strong>nonfragile states, 23%. See table 1.3 <strong>in</strong> Chapter 1.61
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.2: List of Sub-Saharan African food importer and exporter countriesFood Importers (1)AngolaLiberiaBen<strong>in</strong>MalawiBurundiMaliCape VerdeMauritaniaCentral African Rep. MauritiusChadMozambiqueComorosNigerCongo, Dem. Rep. Of NigeriaCongo, Rep. OfRwandaEquatorial Gu<strong>in</strong>eaSão Tomé and PríncipeEritreaSenegalEthiopiaSeychellesGabonSierra LeoneGambia, TheTanzaniaGhanaTogoGu<strong>in</strong>eaUgandaGu<strong>in</strong>ea-BissauZimbabweLesothoBotswanaBurk<strong>in</strong>a FasoCameroonCôte d’IvoireKenyaFood ExportersNamibiaSomaliaSouth AfricaSudanSwazilandMadagascarZambiaNotes: countries belong<strong>in</strong>g to the operational def<strong>in</strong>ition offragile countries are <strong>in</strong> bold; (1) Food is def<strong>in</strong>ed as raw food <strong>in</strong>SITC Rev. 2, exclud<strong>in</strong>g all cash crops, processed food andseafood; a country is considered food importer if thedifference between exports and imports is negative on the2004/05 average.Source: <strong>ERD</strong> elaboration on Ng and Aksoy (2008).The dependence on food imports, not matched by exports of less volatile nonagriculturalproducts (such as manufactur<strong>in</strong>g), is a structural factor that can <strong>in</strong>crease the vulnerabilityof Sub-Saharan African countries 17 . This is especially true <strong>in</strong> times of higherfood prices, such as those prevail<strong>in</strong>g through June 2008. In fact, although systematicestimates on the impact of the food price <strong>in</strong>creases on fragile countries are not available18 , prelim<strong>in</strong>ary evidences suggest that they are among the most affected. Mostcountries identified <strong>in</strong> the last State of World Food Security as at risk of deteriorat<strong>in</strong>gfood security because of high food prices are Sub-Saharan African fragile ones (19 out of26 Sub-Saharan African countries) 19 . In July 2009, 18 of 30 countries <strong>in</strong> food crisis requir<strong>in</strong>gexternal assistance from FAO were Sub-Saharan African fragile countries 20 .17 Sarris and Rapsomanikis 2009.18 The bulk of research comprises country case studies and regional or global analysis of food crisisand food price shocks (Wodon and Zaman 2008; Aksoy and Isik-Dikmelik 2008 Ivanic andMart<strong>in</strong> 2008; Dessus 2008).19 FAO 2008a.20 FAO 2009.62
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesFor some food items, such as dairy, cereal and oils, the prices really soared 21 , andeven when they started decl<strong>in</strong><strong>in</strong>g, they stayed substantially above historical values. Thistrend implied higher import bills, substantially widen<strong>in</strong>g the current account deficit, andhad an effect even on such variables as the exchange rate, the reserve position of thenational bank and the level of external <strong>in</strong>debtedness 22 . The spike <strong>in</strong> primary commodityprices, which together with a decl<strong>in</strong>e <strong>in</strong> the unit price of manufactures, <strong>in</strong>duced an improvement<strong>in</strong> the terms of trade of food after a long downward trend common to mostcommodities, came, however, with high exchange rate volatility and heightened uncerta<strong>in</strong>ty,limit<strong>in</strong>g opportunities for producers to access credit markets and <strong>in</strong>vest <strong>in</strong> technologies.The food price developments affect poor urban households and rural households differently,depend<strong>in</strong>g on access to markets and the availability of technology and capital.Landless and women-headed rural households are most affected by the <strong>in</strong>crease <strong>in</strong> foodprices. A 50% <strong>in</strong>crease <strong>in</strong> the price of maize <strong>in</strong> Malawi, Zambia and Uganda <strong>in</strong>creasesthe number of food <strong>in</strong>secure households by about 5% on average 23 . The population belowthe poverty l<strong>in</strong>e <strong>in</strong>creases by 3.5% if food prices rise by 50% 24 .Fragile countries, moreover, suffer disadvantages <strong>in</strong> ex ante conditions. Their constra<strong>in</strong>ts<strong>in</strong> cop<strong>in</strong>g with the growth of food prices <strong>in</strong>clude, for <strong>in</strong>stance, the high poverty, alow capacity of consumption smooth<strong>in</strong>g at the household level because of high foodshare expenditures, preexist<strong>in</strong>g extreme levels of food <strong>in</strong>security, a high reliance on foodimports and some macroeconomic constra<strong>in</strong>ts <strong>in</strong> adopt<strong>in</strong>g price stabilisation measures(low endowments of food buffer stocks and shortages of foreign reserves and adversepressures on exchange rates).1.3 Concentrated exportsThe export diversification <strong>in</strong>dex for Sub-Saharan African fragile countries is less thanhalf the one for nonfragile countries (see table 2.3), reveal<strong>in</strong>g the high degree of concentrationof their exports.With few exceptions, Sub-Saharan African fragile countries export ma<strong>in</strong>ly primaryproducts: primary products – both fuel and non fuels—accounted on average for morethan 80% of their exports <strong>in</strong> 2006. Fuels alone represented 26.2 % of the export revenues,with some countries such as Angola, Chad, Republic of Congo, Equatorial Gu<strong>in</strong>eaand Nigeria where revenues from fuels stood above 90%. Basic food items, which are<strong>in</strong>cluded <strong>in</strong> the basket of primary commodities, generate of a sizeable share of total exportrevenues, which stands on average at 27%, with peaks above 80% for The Gambia,Gu<strong>in</strong>ea-Bissau and São Tomé and Príncipe. For other countries, such as the DRC, Gu<strong>in</strong>eaand Sierra Leone m<strong>in</strong>eral products represent the predom<strong>in</strong>ant primary commoditieswhich are exported. Eritrea, Liberia and Togo represent exceptions to this picture, as theexports of manufactur<strong>in</strong>g products generated <strong>in</strong> 2006 more than half of their exportrevenues.The concentration of dest<strong>in</strong>ation markets is also high: 15 Sub-Sahara African countriesearn more than half of their export revenues from exports to a s<strong>in</strong>gle geographicalarea. Specifically, n<strong>in</strong>e countries derive more than 50% of their revenues from exports21 Note that world price changes are not always passed through fully or symmetrically to domesticmarkets, because of exports restrictions, taxes, high transport costs and high market<strong>in</strong>g marg<strong>in</strong>s.For an evaluation of the effect on domestic prices, tim<strong>in</strong>g of the pass-through is also relevant.In some cases there is only a short-run divergence between domestic and world prices,but <strong>in</strong> most cases the profit opportunities persist for a long time, with far more disruptive consequences.22 FAO 2008b.23 Sarris and Rapsomanikis, 2009.24 Wodon and Zaman, 2008.63
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile Statesto Europe. For three countries – namely Djibouti, Togo and Zimbabwe—<strong>in</strong>tra-Africantrade is predom<strong>in</strong>ant, account<strong>in</strong>g for more than 50% of total exports (see table 2.4).Table 2.3: Export concentration <strong>in</strong> fragile countriesCountryExportdiversification<strong>in</strong>dex (1)Exports (% ofGDP) (2)Primarycommodities,exclud<strong>in</strong>gfuels (3) Fuels (4) Food,basic (5) Metals (6) Manufacturedgoods (7)Angola 1.1 72.7 2.0 97.5 0.1 1.8 0.4Burundi 2.6 9.6 97.0 0.0 42.0 50.8 2.9Cameroon 3.3 24.7 33.2 61.6 11.6 4.9 3.0Central African Republic 5.5 13.6 95.5 0.2 1.1 60.7 1.7Chad 1.1 12.8 4.5 94.6 0.0 0.0 0.6Comoros 4.9 15.2 … … … … …Congo, Dem. Rep. of 7.6 80.7 83.4 12.6 1.4 73.0 2.7Congo, Rep. of 1.4 34.3 7.6 90.3 0.2 4.2 0.6Côte d’Ivoire 7.7 49.0 43.5 36.9 34.6 0.5 19.4Djibouti 5.9 … 16.9 0.7 11.6 2.7 15.1Equatorial Gu<strong>in</strong>ea 1.3 88.6 1.4 94.5 0.0 0.0 3.7Eritrea 2.1 6.4 43.6 0.0 27.5 6.2 52.0Ethiopia 4.7 14.2 93.9 0.0 70.5 6.8 6.0Gambia, The 6.6 44.2 85.9 0.0 80.7 0.9 14.1Gu<strong>in</strong>ea 3.2 30.1 89.4 5.5 8.8 78.0 3.1Gu<strong>in</strong>ea-Bissau 1.2 27.9 82.3 0.5 80.0 0.6 17.0Kenya 21.9 25.9 57.3 7.3 38.8 2.8 35.4Liberia 3.5 34.2 15.8 14.6 0.4 0.7 69.1Mauritania 3.9 … 93.1 … 28.3 64.7 0.0Niger 1.4 17.4 87.4 1.5 22.6 60.1 9.8Nigeria 1.3 43.4 3.6 95.0 1.5 0.3 0.8Rwanda 4.1 9.6 92.3 0.7 54.7 34.0 6.5São Tomé and Príncipe 3.9 13.3 95.1 0.0 91.7 0.0 4.9Sierra Leone 7.3 23.2 90.4 0.1 9.1 80.4 7.3Somalia 6.6 … 86.4 0.2 55.0 10.3 9.1Sudan 1.2 … 10.8 87.5 5.4 3.1 1.2Togo 9.3 41.9 45.5 0.8 20.1 11.2 51.1Uganda 10.4 14.1 77.1 4.4 50.3 15.0 18.5Zimbabwe 10.8 31.1 69.8 1.1 8.4 29.5 29.1Sub-Saharan Africa 7.4 36.1 58.5 22.6 23.8 24.1 18.9Sub-Saharan African fragile countries 5.0 31.1 57.3 26.2 27.0 21.5 13.8Sub-Saharan African nonfragile countries 11.1 40.3 60.2 13.3 19.0 26.6 26.4Notes: (1) data refer to year 2007 and rank from 0 to 100; (2) exports are obta<strong>in</strong>ed an arithmetic average of export flows from 2003 to 2007; (3) data are expressedas percentage of total merchandise exports and refer to 2006, primary commodity <strong>in</strong>cludes SITC 0, 1, 2, 4, 68, 667, 971; (4) data are expressed as percentage oftotal merchandise exports and refer to 2006, fuels corresponds to SITC 3; (5) data are expressed as percentage of total merchandise exports and refer to 2006, foodbasic <strong>in</strong>cludes SITC 0, 22, 4; (6) data are expressed as percentage of total merchandise exports and refer to 2006, ores, metals, precious stones and non-monetarygold <strong>in</strong>clude SITC 27, 28, 68, 667, 971; (7) data are expressed as percentage of total merchandise exports and refer to 2006, manufacturers <strong>in</strong>cludes SITC 5 to 8exclud<strong>in</strong>g 667 and 68.Source: <strong>ERD</strong> elaboration on World Bank (2008a) World Development Indicators 2008; OECD and AfDB (2009) African Economic Outlook 2009, UNCTAD, Handbookof Statistics, onl<strong>in</strong>e database.The products that fragile countries export outside Africa—ma<strong>in</strong>ly fuels 25 —differ fromwhat they export with<strong>in</strong> the region, which also <strong>in</strong>clude manufactur<strong>in</strong>g products. Hence,their exports with<strong>in</strong> Africa are more diversified than their exports to the rest of theworld. So, an expansion of <strong>in</strong>tra-African trade could reduce the impact of commodityprice volatility, and thus the vulnerability of fragile countries to trade-related shocks.The relationship between state <strong>fragility</strong> and export concentrations can be traced backto the resource endowments: their abundance can reshape the <strong>in</strong>terests and behavioursof an <strong>in</strong>cumbent government, <strong>in</strong>duc<strong>in</strong>g excessive reliance on natural resources, limit<strong>in</strong>gthe expansion of the manufactur<strong>in</strong>g sector and deteriorat<strong>in</strong>g governance 26 . Chauvet andCollier (2008) f<strong>in</strong>d that resource rents significantly reduce the chances of achiev<strong>in</strong>g asusta<strong>in</strong>ed turnaround out of a situation of state <strong>fragility</strong>. A doubl<strong>in</strong>g of resource rents asa share of GDP roughly doubles the time taken. Furthermore, because of low export diversification,fragile states may be more prone to the “Dutch disease,” which occurswhen the exchange rate appreciates as a result of capital <strong>in</strong>flows, mak<strong>in</strong>g exports lesscompetitive.25 Because oil is mostly exported outside the region, <strong>in</strong>tra-African trade for fragile oil exporters ison average lower than for nonoil exporters.26 See chapter 4 and Collier 2009 for further analysis of these mechanisms.64
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.4: Fragile countries' export dest<strong>in</strong>ation, percentage, average 2004–06Country AfricaEastern, Southernand South-EasternAsia Western AsiaDevelopedeconomies -AmericaDevelopedeconomies - EuropeAngola 1.7 41.0 0.0 39.6 11.0Burundi 15.2 10.2 1.2 0.8 49.1Cameroon 9.5 14.1 1.1 6.5 64.0Central African Republic 7.1 14.1 5.8 4.9 66.0Chad 0.6 19.3 0.0 75.5 4.5Comoros 1.6 16.4 6.1 18.3 50.1Congo, Rep. of 2.5 61.7 0.4 23.9 8.4Congo, Dem. Rep. of 6.8 14.1 0.0 10.9 58.9Côte d'Ivoire 28.9 5.0 0.8 11.9 45.0Djibouti 87.4 2.0 7.0 0.6 2.9Equatorial Gu<strong>in</strong>ea 0.2 36.2 0.2 30.9 27.4Ethiopia 9.7 11.8 11.9 6.9 40.7Gambia, The 9.9 47.3 0.3 1.7 38.2Gu<strong>in</strong>ea 1.9 8.6 0.0 6.3 45.4Gu<strong>in</strong>ea-Bissau 17.5 70.6 .. 7.9 3.7Kenya 42.7 10.6 2.3 6.9 29.3Liberia 5.4 10.9 1.2 9.6 71.9Mauritania 16.8 11.5 0.6 1.5 53.1Niger 27.4 0.7 0.1 16.2 45.9Nigeria 9.0 5.0 0.7 49.9 22.1Rwanda 2.8 35.5 0.3 3.2 19.2São Tomé and Príncipe 4.2 7.5 3.0 1.7 79.3Sierra Leone 2.7 3.4 0.3 10.8 78.1Somalia 5.0 10.4 83.3 0.2 0.7Sudan 3.3 61.1 7.1 1.1 3.1Togo 64.1 13.8 0.3 0.8 15.5Uganda 20.8 7.9 4.4 4.4 51.3Zimbabwe 56.9 9.1 1.5 6.6 23.3Source: UNCTAD, Handbook of Statistics, onl<strong>in</strong>e database.1.4 Low human developmentThe low public <strong>in</strong>vestment <strong>in</strong> human development is reflected <strong>in</strong> poorly function<strong>in</strong>g educationaland health care systems. In fact, although many fragile states have decreasedtheir military expenditure, this decl<strong>in</strong>e has not been matched by an <strong>in</strong>crease <strong>in</strong> healthand education expenditures (see table 2.5).65
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.5: Public expenditure as percentage of GDPCountryHealthHealth Education Education MilitaryMilitary1995 (1) 2006 (1) 1991 (2) 2006 (2) 1990 (3) 2006 (3)expenditure expenditure expenditure expenditure expenditure expenditureAngola 3.3 2.3 … 2.6 1.3 3.7Burundi 1.1 0.7 3.5 5.1 3.4 4.7Cameroon 0.9 1.5 3.2 3.3 1.5 1.4Central African Republic 1.4 1.4 2.2 1.4 1.6 1.1Chad 2.0 1.3 1.6 1.9 … 0.9Comoros 2.8 1.8 … 3.8 … …Congo, Dem. Rep. of 0.2 1.6 … … … 1.9Congo, Rep. of 1.8 0.9 7.4 1.8 … 1.2Côte d’Ivoire 1.2 0.9 .. 4.6 1.3 1.5Djibouti 4.3 5.1 3.5 8.3 5.9 4.2Equatorial Gu<strong>in</strong>ea 3.3 1.2 … 0.6 … …Eritrea 2.6 1.7 … 2.4 … 24.1Ethiopia 2.7 3.0 2.4 5.5 8.5 2.1Gambia, The 1.7 2.5 3.8 2.0 1.1 0.6Gu<strong>in</strong>ea 0.7 0.7 2.0 1.7 2.4 2.0Gu<strong>in</strong>ea-Bissau 1.6 1.5 … 5.2 … 3.9Kenya 2.0 2.2 6.7 7.1 2.9 1.6Liberia 1.4 3.6 … … 7.2 0.8Mauritania 2.0 1.5 4.6 2.9 3.8 3.0Niger 1.8 2.1 3.3 3.4 .. 1.0Nigeria 1.1 1.2 0.9 … 0.9 0.6Rwanda 1.6 6.6 … 4.9 3.7 1.9São Tomé and Príncipe 9.1 9.0 … … … …Sierra Leone 1.1 1.7 … 3.8 1.4 2.1Somalia 1.2 1.2 … … … …Sudan 0.5 1.4 6.0 … 3.5 4.4Togo 1.5 1.5 … 3.6 3.1 1.6Uganda 1.6 1.9 1.5 5.2 3.0 2.0Zimbabwe 4.5 4.4 7.7 4.6 4.4 1.9Sub-Saharan Africa 2.0 2.6 4.0 4.4 2.8 2.3Sub-Saharan African fragile countries 1.7 2.0 3.8 3.6 3.1 2.9Sub-Saharan African nonfragile countries 2.5 3.5 4.3 5.5 2.5 1.5Sources: (1) WHO (2008); (2) UNESCO <strong>Institute</strong> of Statistics (2008); (3) SIPRI (2008).As a result, we saw <strong>in</strong> chapter 1 that Sub-Saharan African fragile countries lag beh<strong>in</strong>dthe rest of the cont<strong>in</strong>ent on adult literacy: adult literacy stands at 59.2% compared with66.4% <strong>in</strong> the rest of Sub-Saharan Africa (see table 1.1). The poor human developmentrecord is also confirmed by the under-five mortality rate, which stands at 138 per 1,000live births <strong>in</strong> fragile countries, much higher than the 98 which is recorded on average <strong>in</strong>the other Sub-Saharan African countries.Scant public <strong>in</strong>vestments <strong>in</strong> education and health care not only contribute to the poorhuman development record but also produce an uneven impact on males and females.Gender <strong>in</strong>equality <strong>in</strong> fragile countries is higher than <strong>in</strong> the rest of Sub-Saharan Africa, asthe <strong>fragility</strong> of state <strong>in</strong>stitutions can adversely <strong>in</strong>fluence women’s condition. The differencebetween the HDI and GDI—a proxy for gender <strong>in</strong>equality—is on average nearlytwice as large for Sub-Saharan African fragile countries than for nonfragile countries 27 .The difference would probably be even larger, as data are miss<strong>in</strong>g for two countries –Somalia and Sudan – that presumably are characterized by a poor record <strong>in</strong> term ofgender equality. Little to no public fund<strong>in</strong>g to the health sector drives up maternal mortality,which is much higher than <strong>in</strong> nonfragile countries (see table 1.1). The failure toprovide adequate fund<strong>in</strong>g to social service delivery hits all of the population, at the sametime widen<strong>in</strong>g <strong>in</strong>equalities between men and women.Fertility rates <strong>in</strong> fragile countries are higher and go down more slowly than <strong>in</strong> nonfragilecountries (see table 2.6). Fertility rate matters because families with many childrenare unlikely to be able to afford school<strong>in</strong>g costs. Families with fewer children, onthe other hand, may be more <strong>in</strong> the situation to offer them a better education.27 <strong>ERD</strong> elaboration on UNDP (2008).66
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.6: PopulationCountryPopulationdensity (1)Share ofpopulationaged 0-14 (2)Share ofruralpopulation (2)Total fertility Total fertilityrate, rate,average average1975-80 (3) 2000-05 (3)Distribution of young women who have givenbirth (4)noeducationprimaryeducationsecondaryeducationAngola 13 46.5 46.0 7.2 6.7 … … … …Burundi 318 45.0 89.7 6.8 6.8 … … … …Cameroon 39 41.2 44.5 6.4 5.0 24.5 43.0 32.2 0.3Central African Republic 7 43.0 61.8 5.8 4.9 71.8 21.4 6.6 0.2Chad 8 47.3 74.2 6.7 6.4 … … … …Comoros 330 42.0 62.3 7.2 4.0 … … … …Congo, Dem. Rep. of 27 47.3 67.3 6.6 6.7 … … … …Congo, Rep. of 11 47.1 39.4 6.3 5.6 … … … …Côte d’Ivoire 59 41.9 54.6 7.4 5.0 … … … …Djibouti 35 … … … … … … … …Equatorial Gu<strong>in</strong>ea 18 44.4 60.9 5.7 5.9 … … … …Eritrea 46 44.8 80.2 6.5 5.5 … … … …Ethiopia 77 44.5 83.7 6.3 5.5 73.6 20.4 5.6 0.3Gambia, The 166 40.1 45.3 6.5 4.7 … … … …Gu<strong>in</strong>ea 37 43.7 66.5 6.9 5.7 79.4 12.3 8.0 0.2Gu<strong>in</strong>ea-Bissau 59 47.5 70.3 7.1 7.1 … … … …Kenya 64 42.8 79.0 7.5 5.0 10.3 70.2 18.3 1.2Liberia 37 47.1 41.2 6.9 6.8 … … … …Mauritania 3 43.0 59.4 6.4 5.8 … … … …Niger 11 49.0 83.0 8.2 7.9 86.9 10.1 3.0 0.0Nigeria 159 44.3 51.0 6.9 5.7 53.7 21.0 24.0 1.3Rwanda 384 43.5 79.8 8.5 5.9 24.4 69.9 5.4 0.3São Tomé and Príncipe 162 39.5 41.2 6.4 4.0 … … … …Sierra Leone 80 42.8 58.6 6.5 6.5 … … … …Somalia 13 44.1 64.3 7.2 6.4 … … … …Sudan 16 39.2 58.3 6.5 4.4 … … … …Togo 118 43.5 59.2 7.0 5.3 … … … …Uganda 152 50.5 87.3 7.1 7.1 12.1 68.0 18.0 1.9Zimbabwe 34 40.0 63.6 7.1 3.6 … … … …Sub-Saharan Africa 87 43.0 62.1 6.6 5.2Sub-Saharan African fragile countries 86 44.1 63.3 6.8 5.7Sub-Saharan African nonfragile countries 84 41.1 60.2 6.3 4.5Notes: … denotes not available data; (1) <strong>in</strong>dividuals per square km, data are refer to 2006; (2) data refer to 2006; (4) last year available.highereducationSources: (1),(2) and (3) World Bank (2008a) World Development Indicators 2008; (4) World Bank, Demographic and Health Surveys, various years and countries.1.5 Poor soft and hard <strong>in</strong>frastructureUnderdeveloped physical <strong>in</strong>frastructure is another common feature of fragile countries <strong>in</strong>Sub-Saharan Africa. Fragile countries have only 8 metres of paved roads per squarekilometre, nonfragile countries 18 (table 2.7).67
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.7: Infrastructure and geographical characteristicsCountryDensity ofpaved roads (1)Mobiletelephonel<strong>in</strong>es (2)Resourcerich(3)Share of thepopulationwithout accessto improvedwatersources (4) Landlocked (5) Number ofland bordersAngola 4.3 29.1 yes 49 no 3Burundi 46.2 2.9 no 29 yes 3Cameroon 10.5 24.5 yes 30 no 6Central African Republic 0.0 3.0 no 34 yes 5Chad 0.2 8.5 yes 52 yes 5Comoros 361.7 4.8 no 15 no 0Congo, Dem. Rep. of 1.2 34.2 no 29 yes 9Congo, Rep. of 2.5 10.5 yes 54 no 4Côte d’Ivoire 20.1 36.6 yes 19 no 5Djibouti … 5.3 no 8 no 3Equatorial Gu<strong>in</strong>ea 0.0 43.4 yes 57 no 2Eritrea 7.4 1.7 no 40 no 3Ethiopia 4.5 1.5 no 58 yes 5Gambia, The 64.0 46.8 no 14 no 1Gu<strong>in</strong>ea 17.7 21.3 yes 30 no 6Gu<strong>in</strong>ea-Bissau 26.7 17.5 no 43 no 2Kenya 15.4 30.2 no 43 no 5Liberia 5.9 15.0 no 36 no 3Mauritania 0.8 41.6 no 40 no 4Niger 3.0 6.3 no 58 yes 7Nigeria 31.4 27.3 yes 53 no 3Rwanda 101.0 6.5 no 35 yes 4São Tomé and Príncipe 227.0 19.1 yes 14 no 0Sierra Leone 12.6 13.2 yes 47 no 2Somalia 4.1 6.9 no 71 no 3Sudan 1.7 21.3 yes 30 no 8Togo 41.8 18.1 no 41 no 3Uganda 67.5 13.6 no 36 yes 5Zimbabwe 47.3 9.2 no 19 yes 4Sub-Saharan Africa 11.4 25.7Sub-Saharan African fragile countries 7.8 17.9Sub-Saharan African nonfragile countries 18.5 36.9Notes: … denotes not available data; (1) Metres of paver roads per square kilometer, data refer to the last available year; (2) number oftelephone l<strong>in</strong>es per 1,000 people, data refer to 2007; (3) a country is classified as resource-rich if primary commodity rents (oil and non oil)are above 10% of GDP; (4) data refer to 2007; (5) classification by the IMF.Sources: (1) World Bank (2008a) World Development Indicators 2008; (2),(3) and (5) IMF (2009a) Regional Economic Outlook Sub-SaharanAfrica 2009; (4) Human Development Indices – A Statistical Update 2008.Unreliable road <strong>in</strong>frastructure 28 hampers communication and transport between thecentre and the periphery, worsen<strong>in</strong>g the urban bias <strong>in</strong> public expenditure, and can be adis<strong>in</strong>centive to regional <strong>in</strong>tegration.In the last few years Ch<strong>in</strong>a has been <strong>in</strong>vest<strong>in</strong>g heavily <strong>in</strong> African <strong>in</strong>frastructure, especially<strong>in</strong> fragile countries, to improve the quality as well as the access to natural resources.Intertw<strong>in</strong>ed with its aid programmes, Ch<strong>in</strong>ese <strong>in</strong>vestment projects are rapidlyrebuild<strong>in</strong>g ports, dams and roads <strong>in</strong> postconflict countries, such as Angola and theDRC 29 .28 Transport costs <strong>in</strong> Africa are 136% higher than <strong>in</strong> other regions, with a wide disparity betweencountries and products. This is likely to be even higher <strong>in</strong> Uganda, where “<strong>in</strong> the early 2000sthe rate of effective taxation of exports due to transport costs was 40%, [. . .] much higherthan the average of 15% for ACP countries” (UNCTAD 2009, p. 38).29 See box 6.2 “Is Ch<strong>in</strong>a fill<strong>in</strong>g the gap?” <strong>in</strong> chapter 6. Accord<strong>in</strong>g to Stümer 2008, “<strong>in</strong> the DRC,Ch<strong>in</strong>a will build <strong>in</strong>frastructure <strong>in</strong>clud<strong>in</strong>g 2,400 miles of road, 2,000 miles of railway, 32 hospitals,145 health centres and two universities worth $6 billion <strong>in</strong> return for imports of copperand cobalt”, p. 2.68
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesBut without <strong>in</strong>vestments <strong>in</strong> soft <strong>in</strong>frastructure—<strong>in</strong> policies and regulations, and <strong>in</strong> borderprocedures and customs adm<strong>in</strong>istration—transport costs will cont<strong>in</strong>ue to present aproblem for fragile countries.Sub-Saharan African fragile countries lag beh<strong>in</strong>d also <strong>in</strong> telecommunication. Fixedtelephone l<strong>in</strong>es have been stagnat<strong>in</strong>g <strong>in</strong> the last 10 years, while mobile phones subscribershave registered a very high rate of growth. Thus, these countries are tak<strong>in</strong>g the lead<strong>in</strong> the shift between fixed and mobile 30 because mobile l<strong>in</strong>es need lower <strong>in</strong>itial <strong>in</strong>vestments,generally susta<strong>in</strong>ed by foreign companies. Despite these changes, the number ofmobile l<strong>in</strong>es per 1,000 <strong>in</strong>habitants is half that <strong>in</strong> nonfragile countries (see table 2.7) andless than 3% of the population use the <strong>in</strong>ternet, aga<strong>in</strong>st 4.2% of Africa and 23% of theworld 31 .These common features—the <strong>in</strong>ability to mobilise domestic resources, and the dependenceon external resources, low human capital development, poor <strong>in</strong>frastructureand the reliance on primary products and concentrated exports—make it possible toidentify a group of countries <strong>in</strong> a situation of <strong>fragility</strong>. However, along other dimensions,the differences between fragile countries prevail.2 Fragile countries present many elements ofheterogeneityDur<strong>in</strong>g the recent episode of susta<strong>in</strong>ed growth <strong>in</strong> Sub-Saharan Africa, Angola grew atdouble-digit rates while Zimbabwe shrank. But Zimbabwe has high literacy and low <strong>in</strong>fantmortality, the opposite of Angola, with low literacy and high <strong>in</strong>fant mortality (seetable 1.1).Several <strong>in</strong>dicators provide a sense of the differences between fragile countries. Economicgrowth rates, for example, have gone up s<strong>in</strong>ce the mid-1990s all over the cont<strong>in</strong>ent.Fragile countries as a group followed this trend, grow<strong>in</strong>g at around 4% a year between2000 and 2008. But different subgroups grew at very different rates: resourcerichfragile countries grew at 6.3%, peak<strong>in</strong>g at 10% <strong>in</strong> 2002 and 8.5% <strong>in</strong> 2004 (figure2.3). Fragile countries not resource rich grew at 2.3%. Individual countries rates alsodiffer substantially by year and on average 32 .30 See International Telecommunication Union 2009. Note that the <strong>in</strong>crease <strong>in</strong> cell phones hasbeen led by Nigeria with 11 million l<strong>in</strong>es, but Kenya and Côte d'Ivoire have also contributedgreatly.31 See International Telecommunication Union 2009.32 See IMF 2009a.69
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesFigure 2.3: Real GDP growth of fragile countries, resource-<strong>in</strong>tensive fragilecountries and non-resource-<strong>in</strong>tensive fragile countries, 2000–08121086420-22000 2001 2002 2003 2004 2005 2006 2007 2008Fragile countries Resource <strong>in</strong>tensive fragile countries Non resource <strong>in</strong>tensive fragile countriesSource: <strong>ERD</strong> elaboration on IMF (2009b) World Economic Outlook—Crisis and Recovery, April 2009.The real per capita <strong>in</strong>come, on average $600 <strong>in</strong> 2008 <strong>in</strong> Sub-Saharan African fragilecountries, ranges between $100 for the Democratic Republic of Congo to $4,500 forEquatorial Gu<strong>in</strong>ea. The ratio between the two extremes with<strong>in</strong> the group of fragile Sub-Saharan African countries is not far from the ratio between the average of this group ofcountries to the OECD member countries and represents a rather tell<strong>in</strong>g example of thedegree of heterogeneity <strong>in</strong> the group of fragile countries.But GDP and GDP per capita are not the only dimensions to look at. It is important toconsider additional aspects <strong>in</strong> order to get a better view of the economic and socialsituation and susta<strong>in</strong>ability and thus to implement appropriate policy measures 33 . For<strong>in</strong>stance, the components of the human development <strong>in</strong>dex capture important aspects ofheterogeneity.Life expectancy at birth varies substantially across the Sub-Saharan region: <strong>in</strong> SãoTomé and Príncipe, people expect to live more than 60 years at birth, <strong>in</strong> l<strong>in</strong>e with theaverage for develop<strong>in</strong>g countries—but citizens of Mauritania and Zimbabwe have a lifeexpectancy around 40 years. The average life expectancy <strong>in</strong> fragile countries as a group,however, does not differ much from that <strong>in</strong> nonfragile countries 34 .33 Fitoussi et al. 2009.34 See table 1.1 <strong>in</strong> chapter 1.70
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesTable 2.8: Macroeconomic characteristicsCountryReserves,External debt, months of% of GDP (1) imports (2)Sectoral composition of GDP (3)Agriculture Industry Manufact. ServicesAngola 9.9 5.1 8.9 69.7 4.3 21.4 1,456Burundi 150.5 4.5 54.0 19.0 … 27.0 113Cameroon 4.9 5.4 19.9 33.2 18.1 46.9 687Central African Republic 55.6 2.5 55.8 15.5 7.5 28.7 223Chad 12.0 8.3 20.5 54.8 5.3 24.7 410Comoros 61.2 7.3 45.2 11.8 4.2 … 366Congo, Dem. Rep. of 52.3 0.9 45.7 27.7 6.5 26.6 101Congo, Rep. of 122.6 4.0 4.2 73.5 4.9 22.3 1,188Côte d’Ivoire 53.7 3.6 22.7 26.3 18.3 51.0 528Djibouti … … 4.0 17.0 … 79.0 …Equatorial Gu<strong>in</strong>ea 1.1 12.1 2.7 94.3 8.6 3.0 4,621Eritrea 66.2 -2.2 17.5 23.0 8.7 59.5 162Ethiopia 11.3 1.8 47.3 13.5 5.3 39.2 180Gambia, The 46.0 5.1 29.0 15.0 … 56.0 383Gu<strong>in</strong>ea 77.6 1.1 12.9 37.5 3.7 49.6 515Gu<strong>in</strong>ea-Bissau 257.0 8.0 61.8 11.5 7.2 26.8 141Kenya 18.8 4.1 27.1 18.8 11.5 54.1 485Liberia 571.8 -6.0 54.0 19.0 … 27.0 134Mauritania … … 13.1 47.8 … 39.1 …Niger 16.0 5.6 41.0 17.0 … 43.0 190Nigeria 2.4 12.1 33.0 39.0 … 28.0 626Rwanda 16.8 7.0 41.0 21.2 8.5 37.8 315São Tomé and Príncipe 105.8 4.9 17.0 21.0 … 63.0 783Sierra Leone 17.7 5.5 46.4 25.0 … 28.6 247Somalia … … … … … … …Sudan … … 32.3 28.5 6.2 39.2 …Togo 85.1 5.3 44.0 24.0 … 32.0 222Uganda 12.3 9.2 32.3 18.4 9.1 49.2 352Zimbabwe 20.1 0.9 19.0 24.0 … 57.0 …Sub-Saharan Africa 50.2 5.0 26.0 30.1 10.6 43.8 1,128Sub-Saharan African fragile countries 73.9 4.6 30.4 30.3 8.1 39.2 601Sub-Saharan African nonfragile countries 18.9 5.4 19.7 29.4 12.9 50.1 1,811Notes: … denotes not available data; (1) and (2) data refers to 2007; (3) data refer to 2006, except for Niger (2003) and Burundi, Togo and Zimbabwe(2005); (4) data refer to 2008.Real GDP percapita (4)Sources: (1) OECD and AfDB (2009) African Economic Outlook 2009; (2) and (4) IMF (2009a) Regional Economic Outlook-Sub-Saharan Africa 2009; (3) WorldBank (2008a) World Development Indicators 2008.More than 70% of all <strong>in</strong>com<strong>in</strong>g FDI to Sub-Saharan African fragile countries from2000 to 2007 went to just five countries: Angola, Chad, Equatorial Gu<strong>in</strong>ea, Nigeria andSudan, all well-endowed with natural resources 35 .There is no clear pattern <strong>in</strong> the ma<strong>in</strong> macroeconomic variables. Some fragile countrieshave very low foreign reserves (less than 90 days of import coverage) 36 . In April 2009,Ethiopia, Gu<strong>in</strong>ea and Zimbabwe had reserves for one month of imports, whereas oil exportershad half a year. The low reserves make these countries more vulnerable to externalshocks. And <strong>in</strong> the long run they lack resources to expand manufactur<strong>in</strong>g and diversifytheir economies.Nor is there a common pattern for external debt 37 . Thanks to the large revenues, oilexporters have conta<strong>in</strong>ed external debt, and debt distress <strong>in</strong>dicators are largely undercontrol. For example, debt to gross national <strong>in</strong>come and total debt for exports of goodsand services have improved substantially <strong>in</strong> Angola and Sudan s<strong>in</strong>ce 2000 38 . Resource-35 OECD 2008.36 The group of Sub-Saharan African countries has on average 5.2 months of reserves, the nonfragile5.0 months. So there is no significant difference between the two groups although thereare differences with<strong>in</strong> the group.37 On average Sub-Saharan African fragile countries have official debt that is 73.9% of GDP,whereas nonfragile countries stand at 18.9%, aga<strong>in</strong> without differences between the twogroups.38 Reisen 2007.71
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile Statespoor fragile countries, such as Liberia and Gu<strong>in</strong>ea-Bissau, still have a large debt burden,underm<strong>in</strong><strong>in</strong>g their future development.The level and development of macroeconomic <strong>in</strong>dicators can be used to compute acountry’s economic vulnerability <strong>in</strong>dex 39 .Table 2.9: Overall Vulnerability RankRank<strong>in</strong>gs<strong>European</strong> Commission DGCountryNaudé (2009)AfDBDevelopmentAngola High High LowBurundi High Very high MediumCameroon Medium Low LowCentral African Republic Low High HighChad Medium Moderate LowComoros Low n.c. MediumCongo, Dem. Rep. of High High HighCongo, Rep. of Low n.c. LowCôte d'Ivoire High High MediumDjbouti n.c. n.c. HighEquatorial Gu<strong>in</strong>ea Low Low LowEritrea Low Very high MediumEthiopia Low Moderate MediumGambia, The Low High HighGu<strong>in</strong>ea Medium n.c. MediumGu<strong>in</strong>ea-Bissau Medium Moderate MediumKenya Medium High MediumLiberia High High HighMauritania n.c. n.c. HighNiger Low Very high MediumNigeria High High LowRwanda Low High MediumSão Tomé and Príncipe Medium High HighSierra Leone Low High MediumSomalia n.c. n.c. n.c.Togo Medium Very high MediumUganda Low Low MediumZimbabwe n.c. n.c. HighNotes: n.c. denotes not classified; vulnerability <strong>in</strong>dexes comb<strong>in</strong>e <strong>in</strong>to a synthetic measure theexternal and fiscal position of a country, and the degree of diversification of its export basket.Source: Naudé (2009) and <strong>European</strong> Commission DG Development, personal communication.39 Economic vulnerability is only one aspect of a country’s vulnerability, because economic factorsare only one aspect of many. But economic factors have the advantage of be<strong>in</strong>g more easilymeasured than social aspects. Structural vulnerability, which <strong>in</strong>cludes such elements as political<strong>in</strong>stability, dysfunctional <strong>in</strong>stitutions and conflicts, is discussed <strong>in</strong> chapter 5. In fragile countriesthese elements are predom<strong>in</strong>ant, but serious measurement problems make them difficult toevaluate. Table 2.9 reports economic vulnerability measures only for countries <strong>in</strong> situation of<strong>fragility</strong>; the background paper by Allen and Giovannetti, 2009, <strong>in</strong> Volume 1b, reports the completelist, which <strong>in</strong>cludes all Sub Saharan countries for which enough data are available. Therank<strong>in</strong>g is not available for countries such as Somalia, where there was only one of the componentsof the economic <strong>in</strong>dex.72
<strong>European</strong> Report on Development 2009 – Chapter 2: Characteristics of Fragile StatesCountries are vulnerable economically when they are particularly sensitive to externalshocks. So, <strong>in</strong> the follow<strong>in</strong>g, we evaluate the exposure to shocks and the capacity to react.We want to check whether fragile countries—<strong>in</strong> l<strong>in</strong>e with expectations—are morevulnerable to shocks than other Sub-Saharan countries. As with Naudé (2009) we considerdiversification, external <strong>in</strong>debtedness, openness of the economy, cross-border liabilities,capital to risk-weighted assets, and rate of credit growth to the private sector 40 .More precisely for each fragile country with data (hence, exclud<strong>in</strong>g Mauritania, Somalia,Sudan and Zimbabwe), we analyse:• Openness, measured as the share of exports over GDP.• Concentration of exports, measured as the Herf<strong>in</strong>dal-Hirschman Index—themore diversified the basket of exports, the less vulnerable the country.• External <strong>in</strong>debtedness, measured as external debt as a share of GDP.• Regulatory capital to risk-weighted assets.• Cross-border liabilities.• Growth of credit to the private sector.We compute the rank<strong>in</strong>g for countries as a simple average to avoid distortions. Werank all Sub-Saharan countries—fragile and nonfragile—accord<strong>in</strong>g to a criterion where alow rank means low vulnerability and a high rank means high vulnerability. We then dividethe countries <strong>in</strong>to roughly three equal groups from low to high (table 2.9). Countries<strong>in</strong> situations of <strong>fragility</strong>, accord<strong>in</strong>g to our operational def<strong>in</strong>ition, are spread equallyamong the three groups. 413 In summaryThe key role of state functions for human and economic development is reflected bysome common characteristics of fragile countries analysed <strong>in</strong> this chapter. Low ability tomobilise domestic resources and to promote economic diversification and mov<strong>in</strong>g-up <strong>in</strong>value cha<strong>in</strong>s, high dependence on external f<strong>in</strong>ancial resources as well as low level ofhuman capital and persistency of underdeveloped and <strong>in</strong>ternally disconnected <strong>in</strong>frastructuresare all “symptoms” of state <strong>fragility</strong>. Beh<strong>in</strong>d these common features, however,there is also a high degree of heterogeneity due to history, different endowments, geography,ethnical and religious cohesion and the group of fragile countries <strong>in</strong>cludes verydifferent situations <strong>in</strong> terms of outcomes and degree of vulnerability.The different features of <strong>fragility</strong>—both commonalities and heterogeneities—comb<strong>in</strong>e<strong>in</strong> different ways and, furthermore, change over time. Hence, to try and categorise fragilecountries, even <strong>in</strong> subgroups, is difficult, because it <strong>in</strong>volves ample subjective assessments.40 Guillamont and Guillaumont Jeanneney (2009) refer to structural vulnerability us<strong>in</strong>g an economicvulnerability <strong>in</strong>dex that comb<strong>in</strong>es the exposure to shocks—population size, distance fromworld market, concentration of goods exports, and relative share of value added <strong>in</strong> agriculture,forestry, and fish<strong>in</strong>g—and the “size” of the shock itself. AfDB (2009) uses structural macroeconomicfactors such as fall<strong>in</strong>g reserves, high concentration of foreign ownership <strong>in</strong> the bank<strong>in</strong>gsystem, <strong>in</strong>flationary expectations, and reductions <strong>in</strong> GDP growth, the terms of trade and thecurrent account. The <strong>European</strong> Commission DG Development uses three sets of variables: dependenceon export revenues; dependence on external f<strong>in</strong>ancial flows and capacity to react.41 Also the ranks by the African Development Bank and the <strong>European</strong> Commission DG Developmentgive similar results. Fragile countries are spread across the different groups even thoughthe variables considered to rank countries accord<strong>in</strong>g to their vulnerability are somehow different.73
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State FragilityCHAPTER 3-THE HISTORICAL ROOTS OFSTATE FRAGILITY75
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State FragilityThis chapter explores whether state <strong>fragility</strong> <strong>in</strong> Sub-Saharan Africa has a shared historicalorig<strong>in</strong>, because a stylised fact survives all the theoretical disputes around the def<strong>in</strong>itionand measurement of <strong>fragility</strong>: 1 Sub-Saharan African countries always account formost of the group of fragile states. The rich diversity of <strong>in</strong>stitutional developments <strong>in</strong> theregion suggests that a common historical root of state <strong>fragility</strong> does not operate <strong>in</strong> isolation—butis closely <strong>in</strong>tertw<strong>in</strong>ed with country-specific dynamics. This chapter does notprovide a detailed account of the factors that make <strong>in</strong>dividual Sub-Saharan African countriesfragile—and does not represent a substitute—or shortcut—for a thorough analysisof the local context. Still, it offers relevant <strong>in</strong>sights for effective external engagements <strong>in</strong>situations of <strong>fragility</strong>.The Scramble for Africa, spurred by <strong>European</strong> countries at the end of the 19th century,is a natural candidate for the historical orig<strong>in</strong> of the <strong>fragility</strong> plagu<strong>in</strong>g many Sub-Saharan African countries. This historical experience unifies most of the region, and thecolonial period has proven to have long-last<strong>in</strong>g consequences on the pattern of <strong>in</strong>stitutionaldevelopment dur<strong>in</strong>g the colonised period 2 . While state <strong>in</strong>stitutions can be fragileeven <strong>in</strong> countries such as Ethiopia and Liberia, which were not affected by the Scramblefor Africa, <strong>European</strong> colonialism could still have prevented stronger state structures <strong>in</strong>the region.Although the colonial experience marked a watershed <strong>in</strong> the region’s history, it coveredonly a short period. Thus, this chapter also explores the possibility, along the l<strong>in</strong>esdrawn by Herbst (2000), that <strong>fragility</strong> relates to more deeply rooted regional characteristics,which have made—and still make—it hard to follow a path of <strong>in</strong>stitutional developmentconducive to legitimate and effective states.This does not soften the argument about the relevance of the colonial experience <strong>in</strong><strong>in</strong>fluenc<strong>in</strong>g the <strong>in</strong>stitutional development of post-colonial states. But it frames it <strong>in</strong> abroader perspective 3 . The Scramble for Africa did not occur <strong>in</strong> an <strong>in</strong>stitutional vacuum.The formation of colonial states <strong>in</strong>teracted with preexist<strong>in</strong>g <strong>in</strong>stitutional features of thecolonised countries, which—rather than be<strong>in</strong>g static and time-<strong>in</strong>variant—were significantly<strong>in</strong>fluenced by the colonial period.1 Specific drivers and common underly<strong>in</strong>gfactorsSub-Saharan African countries share some dist<strong>in</strong>ctive symptoms, but “there is little tohold state <strong>fragility</strong> together other than its symptoms: poverty, <strong>in</strong>security, proneness toconflict, corruption 4 .” Though the regional dimension of <strong>fragility</strong> should not be overlooked,state <strong>fragility</strong> is most likely to be determ<strong>in</strong>ed by country-specific driv<strong>in</strong>g factors,which confer on the group of fragile countries the heterogeneity depicted <strong>in</strong> chapter 2. Athorough understand<strong>in</strong>g of what led a country along a downward spiral, with the capacityand legitimacy of its state <strong>in</strong>stitutions progressively eroded, can hardly be ga<strong>in</strong>ed byanalyses that aim for broad-based conclusions.Still, the geographical cluster<strong>in</strong>g of fragile states h<strong>in</strong>ts at some common regional factors,which are likely to <strong>in</strong>teract with country-specific factors <strong>in</strong> determ<strong>in</strong><strong>in</strong>g the <strong>fragility</strong>of state <strong>in</strong>stitutions. If we can credibly establish common factors contribut<strong>in</strong>g to the occurrence—andto the persistence—of <strong>fragility</strong>, this would lay the ground for a broader1234Bertoli and Ticci 2009.For example, Acemoglu et al. 2001; Lange 2004; Angeles and Neanidis 2009.As Rob<strong>in</strong>son (2002) observes, assess<strong>in</strong>g the relative <strong>in</strong>fluences of different historical factors isstill an unsettled empirical issue.Briscoe 2008, p. 7.76
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilityanalytical framework, which could then contribute to organis<strong>in</strong>g and understand<strong>in</strong>g thecrucial role of country-specific factors.Most of the debate around state <strong>fragility</strong>—both <strong>in</strong> academia and <strong>in</strong> the developmentcommunity—leaves aside the historical roots of <strong>fragility</strong>. But br<strong>in</strong>g<strong>in</strong>g the historical dimensionof <strong>fragility</strong> to the forefront can enhance the soundness and credibility of <strong>European</strong>engagements to support state-build<strong>in</strong>g. Europe can hardly expect that its engagementcan be perceived as neutral or merely technical, because the perception thatEurope is to blame for the <strong>fragility</strong> of state <strong>in</strong>stitutions is widespread across Sub-Saharan Africa. Some authors have actually argued that this engagement is a nuance ofthe old mission civilisatrice that supposedly backed the <strong>European</strong> colonisation at thetime of the Scramble for Africa 5 . Thorough analysis of the role of <strong>European</strong> countries isthus a precondition for effective <strong>European</strong> support to state-build<strong>in</strong>g.2 Is <strong>fragility</strong> a colonial legacy?<strong>European</strong> countries—which had for centuries been hold<strong>in</strong>g strongholds along the Africancoastl<strong>in</strong>e—ga<strong>in</strong>ed political control of most of Sub-Saharan Africa with<strong>in</strong> a few decadesbetween the end of the 19 th century and the beg<strong>in</strong>n<strong>in</strong>g of the 20 th century. The colonialexperience marked African history, though less than a century elapsed from the Berl<strong>in</strong>Conference to the <strong>in</strong>dependence of the Portuguese colonies <strong>in</strong> the mid-1970s.At least three elements are necessary to support the argument that state <strong>fragility</strong>ranks among the legacies of the colonial experience <strong>in</strong> Africa. We need to identify thesalient features of colonial states—and their process of formation—that resemble whatare dist<strong>in</strong>ctive traits of fragile state <strong>in</strong>stitutions. Once the similarity has been established,we need to understand why political <strong>in</strong>dependence from the former colonial powersdid not remove or at least significantly alter these <strong>in</strong>stitutional features. Then, weneed to describe the factors that contributed to their persistence <strong>in</strong> postcolonial states,as more than half a century has passed s<strong>in</strong>ce the Gold Coast ga<strong>in</strong>ed <strong>in</strong>dependence fromthe Great Brita<strong>in</strong> <strong>in</strong> 1957, pav<strong>in</strong>g the way for the decolonisation <strong>in</strong> Sub-Saharan Africa.3 Colonial states <strong>in</strong> Sub-Saharan AfricaFour facets of the formation of state <strong>in</strong>stitutions <strong>in</strong> Sub-Saharan Africa can be related tostate <strong>fragility</strong>.• The first is their artificial character—the creation of colonial states <strong>in</strong>troduced anelement unrelated to the social, <strong>in</strong>stitutional and cultural characteristics of thecolonised territories.• The second is the extractive nature—the structure of state <strong>in</strong>stitutions was designedto transfer resources to the colonial power, not to foster local development.• The third is their <strong>in</strong>herent extraversion—the state established tight economicl<strong>in</strong>ks with the colonial power, <strong>in</strong> a relationship of political dependence.• The fourth relates to <strong>in</strong>direct rule— a system of colonial adm<strong>in</strong>istration <strong>in</strong>itiated<strong>in</strong> the British Empire 6 , but which was applied also by France and Belgium <strong>in</strong>their colonies 7 .<strong>European</strong> colonial powers transplanted <strong>in</strong>stitutional structures that were extraneousto the local context 8 . The development of state <strong>in</strong>stitutions <strong>in</strong> precolonial times had567Paris 2002.Lugard 1922.Lange 2004.77
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilitymoved along different l<strong>in</strong>es from those followed <strong>in</strong> Europe 9 . Colonial states did notemerge from a time-consum<strong>in</strong>g process consolidat<strong>in</strong>g <strong>in</strong>formal <strong>in</strong>stitutions and mediat<strong>in</strong>gconflict<strong>in</strong>g <strong>in</strong>terests with<strong>in</strong> society. Instead, they were externally imposed by the overwhelm<strong>in</strong>gmilitary power of <strong>European</strong> countries. “The state [is] <strong>in</strong> most of Africa an essentiallyartificial one, ‘suspended above’ a society that would never have produced itand did not demand it 10 .”The artificial character of state <strong>in</strong>stitutions contributed to their detachment from society11 . The reliance on the system of <strong>in</strong>direct rule does not subtract from this argument,as only the lowest layers of the colonial adm<strong>in</strong>istration could be attributed to local people.Though most of them were traditional or customary chiefs, their roles—and mostnotably their relationships with the local communities—were reshaped by the colonialpower 12 . The argument by Kaplan (2009) resonates with a l<strong>in</strong>e of reason<strong>in</strong>g that hasbeen put forward <strong>in</strong> the development economics literature: Myrdal (1972) attributed theweakness of the state structure <strong>in</strong> the postcolonial period precisely to the exogenous <strong>in</strong>troductionof state <strong>in</strong>stitutions, which <strong>in</strong>stilled <strong>in</strong> the citizens an endur<strong>in</strong>g sense of oppositionto them, and a reluctance to abide to their rules.Artificial colonial state structures were meant not to support the economic developmentof the colonised territories, but to suit the economic <strong>in</strong>terests of the colonial powers.The pursuit of these <strong>in</strong>terests did not take the form of a vent for surplus mechanism.Instead, the colonial powers extracted natural resources and tax revenues fromtheir colonies, which had to endure extremely high levels of taxation, which promotedlocal <strong>in</strong>frastructure development only to a very limited extent.The extractive character of the colonial state is <strong>in</strong>tertw<strong>in</strong>ed with its extraversion, orientedtowards the colonial power 13 . A powerful symbol of this orientation is the locationof the capital cities along the coast. “Rather systematically, <strong>European</strong>s created capitalsthat moved power toward the ocean and away from the <strong>in</strong>terior centres of power thatAfricans had slowly created 14 .” For <strong>in</strong>stance, Accra became the capital of the Gold Coastrather than the <strong>in</strong>land Kumasi, which had been the centre of the Ashanti Empire, whileBamako replaced Timbuktu as the political core of Mali. The limited <strong>in</strong>ward orientation ofcolonial states is also reflected <strong>in</strong> the poor road development that characterised the colonialperiod. Infrastructure was neglected where it did not lead directly to a f<strong>in</strong>ancialreturn. Railroads, for example, were built to ferry raw materials from the <strong>in</strong>terior toports, but rarely to connect <strong>in</strong>land territories.The high rates of mortality fac<strong>in</strong>g <strong>European</strong>s <strong>in</strong> Sub-Saharan Africa also shaped colonialrule, limit<strong>in</strong>g the opportunities for extensive direct settlement 15 . Colonial powers—notably Great Brita<strong>in</strong>, but also, though to less extent, France and Belgium—settled <strong>in</strong> thecolonies to a very limited extent, and resorted to <strong>in</strong>direct rule to adm<strong>in</strong>ister them. Theupper layers of the colonial adm<strong>in</strong>istration were reta<strong>in</strong>ed by colonists, while the colonialpowers relied on traditional and customary <strong>in</strong>stitutions to ma<strong>in</strong>ta<strong>in</strong> order outside thecapital 16 , because the colonial adm<strong>in</strong>istration had a very limited direct outreach <strong>in</strong> therural areas.89Kaplan 2009.Herbst 2000.10 Lul<strong>in</strong>g 1997, p. 288–289.11 Kaplan 2009.12 Ranger 1983, p. 211–262; UNECA 2007.13 Clapham 1996.14 Herbst 2000, p. 16.15 Acemoglu et al. 2001.16 Lange 2004.78
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State FragilityThe system of <strong>in</strong>direct rule fuelled decentralised despotism 17 , as the colonial powersreshaped the relationship between the customary chiefs and the communities. In precolonialtimes communities could dislodge chiefs from power, but only the colonial adm<strong>in</strong>istrationcould confer or remove that power 18 . This system greatly reduced the accountabilityof traditional and customary chiefs to their communities, who could wieldtheir local authority to accumulate personal wealth, lay<strong>in</strong>g the ground for the subsequentprivatisation of the state 19 .These four features of colonial states <strong>in</strong> Sub-Saharan Africa—rather closely <strong>in</strong>tertw<strong>in</strong>ed—resemblesome dist<strong>in</strong>ctive features of state <strong>fragility</strong>. The artificial character oftheir formation detaches state <strong>in</strong>stitutions from society, h<strong>in</strong>der<strong>in</strong>g the political processesthat can br<strong>in</strong>g the expectations of the citizens and state capacity <strong>in</strong>to equilibrium. Thelimited development-orientation of fragile states resonates with the extractive characterof the colonial states, while their <strong>in</strong>ability to mobilise domestic resources can be relatedto the extraversion of state <strong>in</strong>stitutions established <strong>in</strong> the colonial era. And a bifurcatedstate structure re<strong>in</strong>forced by <strong>in</strong>direct colonial rule could have laid the ground for theneopatrimonial stance of some fragile states <strong>in</strong> Sub-Saharan Africa 20 .4 DecolonisationWith the exception of the Portuguese colonies, which went through a long and violentstruggle for <strong>in</strong>dependence, and the South African colonies, the other Sub-Saharan countriesobta<strong>in</strong>ed the political <strong>in</strong>dependence from the former colonial powers <strong>in</strong> a few yearsafter 1957 when the <strong>in</strong>dependent Ghana arose from the British Gold Coast. The peacefultransition from colonial rule to political autonomy was a clear opportunity for gett<strong>in</strong>g ridof the detrimental <strong>in</strong>stitutional features of colonial states. But the political elites of thesenew countries seldom went beyond a mere Africanisation of the bureaucracy, not coupledwith substantial <strong>in</strong>stitutional change. Why did the <strong>in</strong>stitutional development of Sub-Saharan African states not experience a substantial shift at the time of <strong>in</strong>dependence?A reduction of the artificial character would have required the <strong>in</strong>digenisation of state<strong>in</strong>stitutions, which could have reduced the mismatch between the formal and <strong>in</strong>formal<strong>in</strong>stitutions. But several dist<strong>in</strong>ct factors h<strong>in</strong>dered such a development. First, the adm<strong>in</strong>istrativestructures—and the power outreach—of several colonial states were rather weak.This <strong>in</strong>duced national political leaders to be cautious about mak<strong>in</strong>g big changes <strong>in</strong> an <strong>in</strong>stitutionalstructure that they aimed at consolidat<strong>in</strong>g. “They needed to take over a mach<strong>in</strong>eryof government <strong>in</strong> work<strong>in</strong>g order, rather than seek to create one from scratchwith<strong>in</strong> the unimag<strong>in</strong>able confusion produced by a simultaneous achievement of <strong>in</strong>dependenceand reorder<strong>in</strong>g of the entire political structure 21 .”Still, overly westernised legal, governance and education systems precluded localcommunities from tak<strong>in</strong>g advantage of their own resources, capacities, and social networksand created unnecessary conflict between formal and <strong>in</strong>formal <strong>in</strong>stitutions. Highlycentralised govern<strong>in</strong>g structures <strong>in</strong> countries where formal state bodies rema<strong>in</strong> <strong>in</strong>effectiveand where alternative sources of <strong>in</strong>come rema<strong>in</strong> few forces groups to compete forscarce state resources, accentuat<strong>in</strong>g political fragmentation <strong>in</strong> the process.Furthermore, the leaders of many newborn states had been educated <strong>in</strong> Westerncountries—Julius Nyerere <strong>in</strong> the United K<strong>in</strong>gdom, Léopold Sédar Senghor <strong>in</strong> France andKwame Nkrumah <strong>in</strong> the United States. And the leaders tra<strong>in</strong>ed <strong>in</strong> African countries—suchas Milton Obote or Félix Houphouët-Boigny—did so <strong>in</strong> academic <strong>in</strong>stitutions strongly sup-17 Lange 2004.18 Lugard 1922.19 Bayart 1999.20 Mamdani 1996.21 Clapham 1996, p. 35.79
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilityportive of western political values and <strong>in</strong>stitutions. They saw the <strong>in</strong>digenisation of state<strong>in</strong>stitutions as a return to precolonial political structures, detrimental to development 22 .Traditional <strong>in</strong>stitutions had contributed to the function<strong>in</strong>g of the colonial states, whichh<strong>in</strong>dered rely<strong>in</strong>g on them to reduce the detachment between state structures and localcultural and political values 23 .The extractive character of state <strong>in</strong>stitutions <strong>in</strong> the colonial period was clearly detrimentalto the development of the Sub-Saharan African countries, but it could still suitthe self-serv<strong>in</strong>g <strong>in</strong>terests of political leaders. Acemoglu et al. (2001) argue that “<strong>in</strong> manycases where <strong>European</strong> powers set up authoritarian <strong>in</strong>stitutions, they delegated the dayto-dayrunn<strong>in</strong>g of the state to a small domestic elite. This narrow group often controlledthe state after <strong>in</strong>dependence and favoured extractive <strong>in</strong>stitutions 24 .”The extraversion of the states could not be removed <strong>in</strong>stantaneously at the time of<strong>in</strong>dependence, because the dependence on external sources of revenues reflected deeplyrooted features of Sub-Saharan African countries. For example, the road network wasmeant to connect with foreign countries, not to promote local economic development.Moreover, the extraversion could be <strong>in</strong> the <strong>in</strong>terests of the political elite. Collier (2009a)suggests that Mobutu Sese Soko—who built his personal wealth from the revenues fromexports of natural resources out of Zaire—had no <strong>in</strong>terest <strong>in</strong> reduc<strong>in</strong>g the dependence onexternal sources of revenue 25 . That would have had to be matched by <strong>in</strong>troversion <strong>in</strong>generat<strong>in</strong>g state resources. A greater reliance on taxation would have spurred a circle—virtuous for the society, vicious for him—of greater demand for accountability to citizensand a progressive strengthen<strong>in</strong>g of state <strong>in</strong>stitutions.The lack of political will<strong>in</strong>gness to <strong>in</strong>crease domestic resource mobilisation wasmatched by a severe capacity constra<strong>in</strong>t. Increas<strong>in</strong>g taxes is challeng<strong>in</strong>g for a poorly developedstate structure, which found it hard to broadcast its power outside urban areas,while most of the population lived <strong>in</strong> sparsely populated rural areas.So, the political <strong>in</strong>dependence atta<strong>in</strong>ed by Sub-Saharan countries did not mark a substantialchange <strong>in</strong> the development of state <strong>in</strong>stitutions. Hence, the second r<strong>in</strong>g of thecha<strong>in</strong> that is needed to relate current state <strong>fragility</strong> to the colonial experience is robust.There are solid-grounded bases that can be relied upon to justify why the political <strong>in</strong>dependenceatta<strong>in</strong>ed by Sub-Saharan African countries did not produce a substantial shift<strong>in</strong> the development of their state <strong>in</strong>stitutions.5 International context and cont<strong>in</strong>uityPolitical <strong>in</strong>dependence was not matched by <strong>in</strong>stitutional development. Still, more thanthree decades have passed s<strong>in</strong>ce the conclusion of decolonisation, so we need to complementthe arguments about the lack of a substantial shift <strong>in</strong> <strong>in</strong>stitutions with factorsthat expla<strong>in</strong> the persistence of some key <strong>in</strong>stitutional features. Although Sub-SaharanAfrica itself presents notable experiences of successful <strong>in</strong>stitutional development, suchas Botswana, they are the exception rather than the rule. Why?Independent states <strong>in</strong> Sub-Saharan Africa were formed by “the stroke of an <strong>in</strong>ternationalpen,” as they immediately obta<strong>in</strong>ed recognition from the Security Council of the22 Clapham 1996.23 Note that the perception of the backwardness of <strong>in</strong>formal <strong>in</strong>stitutions was matched—soon after<strong>in</strong>dependence—by a reliance of the political elites on customary and traditional chiefs as asource of political support. This attitude, while not reduc<strong>in</strong>g the mismatch between formal and<strong>in</strong>formal <strong>in</strong>stitutions, contributed to the persistence over time of the detrimental side effects ofthe colonial system of <strong>in</strong>direct rule.24 Acemoglu et al. 2001. A similar argument is developed <strong>in</strong> Mamdani 1996.25 Collier 2009a.80
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State FragilityUnited Nations 26 . This is how “the states <strong>in</strong> the bottom billion came <strong>in</strong>to existence,” withlittle attention to their economic or political viability. On their economic viability, Collier(2009a) observes that several newborn states were p<strong>in</strong>t-sized, as the limited time spanof the colonial experience had prevented the citizens of colonial territories to coalescearound a shared national identity.The <strong>in</strong>dependence of South Asia from the British colonial rule produced just two <strong>in</strong>dependentcountries <strong>in</strong> 1949, India and Pakistan, from myriad dist<strong>in</strong>ct precolonial politicalentities. But French West Africa split <strong>in</strong>to several small countries, whose borders hadbeen arbitrarily drawn. These countries were too small to be a state, mean<strong>in</strong>g that theirlimited size prevented them from deliver<strong>in</strong>g security and accountability 27 . The arbitrar<strong>in</strong>essof the colonial borders created “populations made up of disparate—and often <strong>in</strong>compatible—identitygroups,” compromis<strong>in</strong>g the political viability of postcolonial states 28 .While the disparate tribal and ethnic identities clearly predated the colonial period,the colonial adm<strong>in</strong>istrations determ<strong>in</strong>ed the “immobilisation of populations, re<strong>in</strong>forcementof ethnicity and greater rigidity of social def<strong>in</strong>ition”, while precolonial Sub-SaharanAfrica was not characterised by a “s<strong>in</strong>gle ‘tribal’ identity, as most Africans moved <strong>in</strong> andout of multiple identities 29 .” Ranger explicitly refers to “the <strong>in</strong>vention of tradition <strong>in</strong> ColonialAfrica”, show<strong>in</strong>g that some dist<strong>in</strong>ctive features of postcolonial African societies, suchas the relevance of ethnic or tribal affiliations, are not a legacy of the precolonial period,but rather arose—or were substantially strengthened—at the time of the colonial rule.To provide a tell<strong>in</strong>g example of this dynamic, Newbury (1998) recalls that “the Belgianadm<strong>in</strong>istration <strong>in</strong> Rwanda [. . .] sought to structure social order, to rationalise andstandardise heterogeneous social relations [. . .]. In the 1930s, they issued identitycards that <strong>in</strong>dicated a person's ethnic category. [. . .] such measures did not create ethnicity;<strong>in</strong>stead they served to mould its social salience. Thus, <strong>in</strong> colonial Rwanda, theHutu came to be classified as second-class citizens. This was starkly illustrated <strong>in</strong> theallocation of new colonial social and economic resources 30 .” This example suggests thatdivided groups—around ethnic and tribal identities—were often the product of colonialrule, no less than the state structure is.Newly born Sub-Saharan African countries were thus plagued by two structural problems—politicalidentity fragmentation and weak national <strong>in</strong>stitutions—that together precludedthe formation of any robust national govern<strong>in</strong>g system, severely underm<strong>in</strong><strong>in</strong>g thelegitimacy of the state and produc<strong>in</strong>g political orders that are highly unstable and hardto reform. Political fragmentation and weak govern<strong>in</strong>g bodies fed on each other, underm<strong>in</strong><strong>in</strong>gattempts to build a legitimate and effective state. Ethnic divisions—and, for thatmatter, religious and clan divisions, as well as geographic and socioeconomic forms ofpolitical fragmentation—prevented the formation of “one of the most important requirementsfor mak<strong>in</strong>g states work [. . .] the creation of apolitical bureaucratic structures(civil service, judiciary, police, army) supported by an ideology that legitimates the roleof neutral state authority <strong>in</strong> ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g social order through prescribed procedures andthe rule of law 31 .”Whereas many cohesive groups with long common histories have developed sophisticatedpolitical, economic and societal systems that ma<strong>in</strong>ta<strong>in</strong> stability and foster economicprogress, divided populations have no such mechanisms. Fragmented societies,when comb<strong>in</strong>ed with the weak governmental structures, tend to gravitate towards “asuffocat<strong>in</strong>g miasma of vicious circles” whereby, as Putnam notes, “defection, distrust,26 Collier 2009a.27 Collier 2009a.28 Kaplan 2009, p. 2.29 Ranger 1983, p. 248.30 Newbury 1998, p. 11.31 Easterly 2000, p.12.81
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilityshirk<strong>in</strong>g, exploitation, isolation, disorder and stagnation <strong>in</strong>tensify one another 32 .” Oncesuch dysfunctional, unproductive patterns of behaviour come to predom<strong>in</strong>ate <strong>in</strong> a society,they will persist because, as North expla<strong>in</strong>s, the high degree of path-dependency ofa given <strong>in</strong>stitutional framework provides “dis<strong>in</strong>centives to productive activity [by creat<strong>in</strong>g]organisations and <strong>in</strong>terest groups with a stake <strong>in</strong> the exist<strong>in</strong>g constra<strong>in</strong>ts,” which “isan important factor <strong>in</strong> expla<strong>in</strong><strong>in</strong>g persistent low growth rates <strong>in</strong> develop<strong>in</strong>g countries 33 .”Nunn (2007) presents a model with multiple equilibria, demonstrat<strong>in</strong>g that an externally<strong>in</strong>troduced <strong>in</strong>stitutional sett<strong>in</strong>g with <strong>in</strong>secure property rights and a low level of production,where the state extracts resources from the economic system, can persist evenafter the external source of extraction has been removed. “The society rema<strong>in</strong>s trapped<strong>in</strong> this suboptimal equilibrium even after the period of external extraction ends,” so political<strong>in</strong>dependence does not result <strong>in</strong> the removal of a socially undesirable <strong>in</strong>stitutionalsett<strong>in</strong>g 34 .While most postcolonial states <strong>in</strong> Sub-Saharan Africa had limited economic and politicalviability to beg<strong>in</strong> with, the political map of the region has not been altered s<strong>in</strong>ce theend of decolonisation. “S<strong>in</strong>ce 1945 no state has disappeared as a result of military actionby a neighbour 35 .” These countries have not been subject to an external military threat,crucial <strong>in</strong> the strengthen<strong>in</strong>g of <strong>European</strong> states 36 .Quot<strong>in</strong>g Collier (2009b) at length, “decolonisation occurred follow<strong>in</strong>g the most appall<strong>in</strong>g<strong>in</strong>ternational war <strong>in</strong> history and <strong>in</strong> the context of nuclear rivalry. Unsurpris<strong>in</strong>gly,there was a sense that it was no longer an acceptable part of government behaviour: itwas too costly and neighbourhood wars might escalate <strong>in</strong>to global war. As a result of <strong>in</strong>ternationalpressure, <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>ternational mediation through the United Nations andregional groups such as the Organisation of African Unity, the <strong>in</strong>cidence of <strong>in</strong>ternationalwar radically dim<strong>in</strong>ished. […] The Darw<strong>in</strong>ian process by which strong states absorbedweak states, whereby Germany had reduced from over 300 states to one, completelyceased 37 .”External military threats had created the need for the <strong>in</strong>troversion of the state, whichneeded to levy taxes to f<strong>in</strong>ance the military apparatus that was needed to face these externalthreats. The state’s need to mobilise domestic resources <strong>in</strong>duced citizens to demandthat it be held accountable for its uses of fiscal resources, thus impos<strong>in</strong>g restra<strong>in</strong>tson its actions. Moreover, the need to raise resources <strong>in</strong>duced the states to <strong>in</strong>troduce development-oriented<strong>in</strong>stitutions, such as secur<strong>in</strong>g property rights, because domestic resourcemobilisation was crucially connected to the strength of the economic system. Externalthreats also consolidated a shared national identity and strengthened the politicalprocess mediat<strong>in</strong>g the <strong>in</strong>terests of the state and of society.Although the Sub-Saharan states were not subject to external threats, they werehighly <strong>in</strong>secure, but the threat was from <strong>in</strong>ternal rebellion, not neighbour<strong>in</strong>g states 38 .The viability of rebellion was connected to the small size of the new states, <strong>in</strong>creas<strong>in</strong>gthe chances of the rebels to defeat the army and seize power, while “big is safe 39 .” Protectionfrom an external threat, a public good, leads the <strong>in</strong>terests of the political eliteand of society to co<strong>in</strong>cide. But protection from an <strong>in</strong>ternal threat does not. Repression of32 Putnam 1993, 177.33 North 1990, 99.34 Nunn 2007, p. 173.35 Collier 2009b, p. 4.36 Tilly 1990.37 Collier 2009b, p. 4.38 Collier 2009b.39 Collier 2009b.82
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilityan <strong>in</strong>ternal threat is a private good that parts of the society might not support. Nor doesit contribute to strengthen<strong>in</strong>g a shared national identity.Internal threats to do not pose a severe threat to the stability of a government, as ithas been estimated that just one of every five attempts at <strong>in</strong>ternal rebellion succeeds <strong>in</strong>overthrow<strong>in</strong>g the government. Hence, the most severe threat for Sub-Saharan Africanrul<strong>in</strong>g elites was the army, as coups had much better odds of success than rebellions 40 .This also h<strong>in</strong>dered the function<strong>in</strong>g of the core mechanism <strong>in</strong> consolidat<strong>in</strong>g state <strong>in</strong>stitutions<strong>in</strong> Europe: strengthen<strong>in</strong>g the army. Mobutu Sese Soko deliberately weakened anddivided the Zairian army across several l<strong>in</strong>es to reduce the risk of a coup. This ended upwith the paradoxical outcome of t<strong>in</strong>y Rwanda <strong>in</strong>vad<strong>in</strong>g neighbour<strong>in</strong>g Zaire <strong>in</strong> the1990s 41 .So, state <strong>fragility</strong> <strong>in</strong> Sub-Saharan African countries served well-def<strong>in</strong>ed <strong>in</strong>terests ofthe local political elite. The endur<strong>in</strong>g weakness of state <strong>in</strong>stitutions <strong>in</strong> the postcolonialperiod was also <strong>in</strong> l<strong>in</strong>e with the <strong>in</strong>terests of the former colonial powers 42 . Once theyabandoned political control, they wanted to reta<strong>in</strong> economic control—to keep extract<strong>in</strong>gvaluable resources from former colonies.Aid from donor countries could also have consolidated the extraversion of postcolonialstates, weaken<strong>in</strong>g the <strong>in</strong>centives for a more effective mobilisation of domestic resources.The aid selectivity criterion <strong>in</strong> the Monterrey Consensus was to reward recipient countrieshav<strong>in</strong>g an enabl<strong>in</strong>g domestic environment vital for mobilis<strong>in</strong>g domestic resourcesand mak<strong>in</strong>g effective use of <strong>in</strong>ternational <strong>in</strong>vestment and assistance 43 . But there is widespreadconcern that aid could have an adverse effect on this crucial facet of strengthen<strong>in</strong>gstate <strong>in</strong>stitutions.6 The path-dependence of <strong>in</strong>stitutions—detachment and extraversionThe pattern of colonial settlement produced a strong and long-last<strong>in</strong>g <strong>in</strong>fluence onmeasures of current <strong>in</strong>stitutional quality 44 . The theoretical argument back<strong>in</strong>g the empiricalanalysis—not restricted to Sub-Saharan Africa—is that the mortality rates fac<strong>in</strong>g the<strong>European</strong> colonisers had a strong <strong>in</strong>fluence on their pattern of settlement. Colonieswhere <strong>European</strong>s settled to a very limited extent—because of the high mortality rates—were less likely to adopt the legal and <strong>in</strong>stitutional framework of the colonial power.Such a framework was transferred to the colonies where <strong>European</strong> settlers demanded it,because they had a direct <strong>in</strong>terest <strong>in</strong> replicat<strong>in</strong>g the development-oriented <strong>in</strong>stitutionalframework that characterised <strong>European</strong> countries. But where settlement was limited—as<strong>in</strong> most of Sub-Saharan Africa, with the m<strong>in</strong>or exceptions of the Portuguese colonies—the <strong>in</strong>stitutional framework of colonial states was most likely to have an extractive character45 .It is not just the size of the direct settlement <strong>in</strong> the colonies that matters—it is alsothe system of colonial rule 46 . A study of 30 British colonies, half <strong>in</strong> Sub-Saharan Africa,tests the hypothesis that <strong>in</strong>direct colonial rule was detrimental to post<strong>in</strong>dependence <strong>in</strong>-40 Collier 2009b.41 Collier 2009a.42 Wallerste<strong>in</strong> 1975.43 Dollar and Lev<strong>in</strong> 2006.44 Acemoglu et al. 2001.45 The long-last<strong>in</strong>g effects of the pattern of colonial settlement have been recently confirmed byAngeles and Neanidis (2009), who show that this <strong>in</strong>fluences the current developmentorientationof the rul<strong>in</strong>g elite, and—through this channel—the effectiveness of foreign aid.46 Lange 2004; Acemoglu et al. 2001.83
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilitystitutional development. The extent of <strong>in</strong>direct rule—def<strong>in</strong>ed as “the number of coloniallyrecognised customary court cases <strong>in</strong> the total number of court cases <strong>in</strong> 1955”—has asignificant <strong>in</strong>fluence on several measures of <strong>in</strong>stitutional quality, such as bureaucraticeffectiveness, state regulatory burden, rule of law and lack of government corruption 47 .This evidence—though limited to former British colonies—is <strong>in</strong> l<strong>in</strong>e with the argumentsadvanced on the adverse legacy of <strong>in</strong>direct rule <strong>in</strong> Sub-Saharan Africa.So far we have lent support to the idea that the colonial period had a role <strong>in</strong> lay<strong>in</strong>gthe ground for the <strong>fragility</strong> of state <strong>in</strong>stitutions <strong>in</strong> Sub-Saharan Africa. One can even assertthat the arguments here strengthen a specific <strong>in</strong>terpretation of state <strong>fragility</strong> <strong>in</strong> Africa:that the region’s states failed before they formed 48 . Indeed, “the evidence is overwhelm<strong>in</strong>gthat most of Africa’s collapsed states at no po<strong>in</strong>t <strong>in</strong> the postcolonial era remotelyresembled the ideal type of the modern Western polity 49 .” This is why the termfailed state—which often substitutes for the term fragile state without a clear shift <strong>in</strong> theunderly<strong>in</strong>g mean<strong>in</strong>g—can be highly mislead<strong>in</strong>g 50 . State <strong>fragility</strong> has recently plaguedcountries that had long been regarded as success stories of economic and <strong>in</strong>stitutionaldevelopment <strong>in</strong> the region, such as Côte d’Ivoire and Zimbabwe. But it is undeniablethat state <strong>fragility</strong>—highly persistent over time—was manifest ma<strong>in</strong>ly <strong>in</strong> countries thathad never benefited from effective state <strong>in</strong>stitutions.Still, it is fair to say that this observation re<strong>in</strong>forces a puzzle that relates the limitedtime span of <strong>European</strong> colonial rule. Though one needs not to downplay the colonial legacyon the <strong>in</strong>stitutional development of postcolonial states, it is important to analysewhether—and eventually how—colonial rule <strong>in</strong>teracted with some preexist<strong>in</strong>g and moredeeply rooted factors.Herbst (2000) conv<strong>in</strong>c<strong>in</strong>gly argues that the reach of colonial power <strong>in</strong> Sub-SaharanAfrica rema<strong>in</strong>ed little more than notional for decades. The Berl<strong>in</strong> Conference “enabledthe <strong>European</strong>s to conquer Africa while do<strong>in</strong>g as little as possible to control it 51 .” “In 1939the average British district commissioner was responsible, with his staff of Africans, foran area roughly the size of Wales. Rul<strong>in</strong>g over the roughly 43 million people <strong>in</strong> Britishtropical Africa <strong>in</strong> 1939 were a grand total of 1,223 adm<strong>in</strong>istrators and 938 police. Similarly,there were 3,660 officials to govern 15 million Africans <strong>in</strong> French West Africa, 887to govern 3.2 million <strong>in</strong> French Equatorial Africa, and 2,384 to govern 9.4 million <strong>in</strong> theBelgian Congo <strong>in</strong> 1938 52 .”These figures provide a tell<strong>in</strong>g measure of the limited ability of colonial states tobroadcast their adm<strong>in</strong>istrative authority over the vast territories they were supposed tocontrol, which—besides the t<strong>in</strong>y size of the adm<strong>in</strong>istrative staff—was further impaired bythe poor development of roads <strong>in</strong> the colonial period.Why did colonial powers not opt to consolidate their control over Sub-Saharan Africa?The most conv<strong>in</strong>c<strong>in</strong>g answer relates to capacity—rather than to will<strong>in</strong>gness. The challengeposed by Sub-Saharan Africa to the <strong>European</strong> countries was not different from theone faced by “precolonial rulers <strong>in</strong> Africa [who had] struggled over the centuries to extendtheir power 53 .” The author argues that “the fundamental problem fac<strong>in</strong>g statebuilders<strong>in</strong> Africa—be they precolonial k<strong>in</strong>gs, colonial governors or presidents <strong>in</strong> the <strong>in</strong>-47 Lange 2004.48 Anderson 2004 quoted <strong>in</strong> Englebert and Tull 2008.49 Englebert and Tull 2008, p. 111.50 Cammack et al. 2006.51 Herbst 2000, p. 72.52 Herbst 2000, p. 78.53 Herbst 2000, p. 35.84
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragilitydependent era—has been to project authority over <strong>in</strong>hospitable territories that conta<strong>in</strong>relatively low densities of people 54 .”This argument suggests that it could hardly be expected that <strong>European</strong> countriescould have succeeded—<strong>in</strong> a few decades—to consolidate state <strong>in</strong>stitutions where precolonialrulers had largely failed—or not even attempted—to do so. Some features of colonialstates can be related not only to the post<strong>in</strong>dependence states, but also to thecharacteristics of the political entities <strong>in</strong> precolonial times, suggest<strong>in</strong>g an even strongerpath-dependence and persistence of <strong>in</strong>stitutional development <strong>in</strong> the region. The detachmentbetween the rulers and the society was reflected <strong>in</strong> what Herbst (2000) labelsas “the primacy of exit” once the <strong>in</strong>terests of the rulers and some social groups could notbe reconciled. Exit took the form of mobility, as “migration to escape from social or politicalproblems was [. . .] common among the Yoruba, the Edo, the Fon and many others55 .” Mobility resulted <strong>in</strong> a weaken<strong>in</strong>g of the rulers, as Barfield (1993), observes forthe tribes of Southern Sudan: “the powers of the D<strong>in</strong>ka chief were weak [. . .] becauserather than submit to his authority, dissident groups could move to a new territory ifthey were dissatisfied 56 .”The prospect of exit through migration considerably reduced the opportunities for rulersto raise resources from the ruled community, as “scattered and mobile people arelikely to generate neither the resources on which permanent government <strong>in</strong>stitutionsrely, nor the social structures and values needed to uphold them 57 .” This <strong>in</strong>herent difficultydeterm<strong>in</strong>ed the extraversion even of precolonial <strong>in</strong>stitutions, which gathered resourcesfrom the outside, through long-distance trad<strong>in</strong>g. Precolonial extraversion tookits most dist<strong>in</strong>ctive form <strong>in</strong> the slave trade. Slaves to be sold were obta<strong>in</strong>ed either with<strong>in</strong>the community, where people could be sentenced on the basis of alleged charges arbitrarilyput forward by the judiciary <strong>in</strong>stitutions 58 , or from raids aga<strong>in</strong>st neighbour<strong>in</strong>gcommunities, break<strong>in</strong>g down trust and social capital.This tragic form of precolonial extraversion produced long-last<strong>in</strong>g <strong>in</strong>stitutional consequencesfor Sub-Saharan African countries, which—once more—can be related to thecurrent <strong>fragility</strong> of their state <strong>in</strong>stitutions. Nunn (2008) demonstrates that the slavetrade h<strong>in</strong>dered the economic development of Sub-Saharan African countries, and thiseffect goes through its detrimental effect on state <strong>in</strong>stitutions. Slave trade favoured thedistrust towards state <strong>in</strong>stitutions and the consolidation of highly localised ethnic identities,which impede the smooth function<strong>in</strong>g of the relationship between the state and thesociety when the former is weak to beg<strong>in</strong> with. 59A recent contribution by Nunn and Wantchekon (2009) also demonstrates that slavetrade exerted a long-last<strong>in</strong>g detrimental impact on social capital, as “<strong>in</strong>dividuals’ trust <strong>in</strong>their relatives, neighbours, and local government is lower if their ancestors were heavilythreatened by the slave trade 60 ,” which can act as a magnifier of the adverse effects ofstate <strong>fragility</strong>. Nunn and Puga (2009) show that slave trade transformed the ruggednessof the terra<strong>in</strong> <strong>in</strong>to a bless<strong>in</strong>g <strong>in</strong> disguise for Sub-Saharan African countries: while its directeffect is to h<strong>in</strong>der economic development, its <strong>in</strong>direct—and more relevant effect—was to protect the population from the raids of slave traders.54 Herbst 2000, p. 11.55 Herbst 2000, p. 39.56 Barfield 1993, p. 38.57 Clapham 1996, p. 28.58 Nunn 2008.59 Collier 2009b; Kaplan 2009.60 Nunn and Wantchekon 2009, p. 43.85
<strong>European</strong> Report on Development 2009 – Chapter 3: The Historical Roots of State Fragility7 ConclusionsThe geographical cluster<strong>in</strong>g of fragile states <strong>in</strong> Sub-Saharan Africa h<strong>in</strong>ts at some sharedroot causes of <strong>fragility</strong> that <strong>in</strong>teract with country-specific driv<strong>in</strong>g factors. The argumentsreviewed <strong>in</strong> this chapter lend support to the existence of historical factors that have laidthe ground for the <strong>fragility</strong> of state <strong>in</strong>stitutions. The formation of colonial states at thetime of the Scramble for Africa <strong>in</strong>troduced some <strong>in</strong>stitutional features that still surface <strong>in</strong>the state structures that prevail nowadays. Neither the atta<strong>in</strong>ment of political <strong>in</strong>dependencenor the decades elapsed s<strong>in</strong>ce that time have significantly altered the highly pathdependentevolution of Sub-Saharan African states.Though it probably played a crucial role, the colonial period does not exhaust the historicalfactors that affect the <strong>fragility</strong> of state <strong>in</strong>stitutions <strong>in</strong> Sub-Saharan Africa, for theprecolonial era also exerted an <strong>in</strong>fluence on the future <strong>in</strong>stitutional development of theregion. Both the precolonial and the colonial periods did produce long-last<strong>in</strong>g effects notjust on the formal structure of state <strong>in</strong>stitutions, but even on other social factors thatdeterm<strong>in</strong>e the <strong>fragility</strong> or soundness of a polity. Specifically, the def<strong>in</strong>ition of ethnicitywas deeply shaped both by slave trade <strong>in</strong> the precolonial era, and by its tighten<strong>in</strong>g and<strong>in</strong>creased social salience by the colonial adm<strong>in</strong>istrations.While history matters for <strong>fragility</strong>, the analysis <strong>in</strong> this chapter does not allow for anydeterm<strong>in</strong>istic shortcut from the history of Sub-Saharan Africa and the diffuse currentstate <strong>fragility</strong>. The diversity of the country-specific development of state <strong>in</strong>stitutionssuggests that effective states can arise even <strong>in</strong> a context where the odds can be reducedby historical or geographical factors, though one should not impose on the strengthen<strong>in</strong>gof Sub-Saharan African states overly optimistic expectations.86
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityCHAPTER 4-ECONOMIC FACTORS CANMAGNIFY FRAGILITY87
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityThe evolution of state <strong>fragility</strong> is not a simple cha<strong>in</strong> of causes and effects or the result ofa s<strong>in</strong>gle factor. It is affected by the <strong>in</strong>terplay and comb<strong>in</strong>ed outcomes of a range of risksand pressures, cumulative virtuous mechanisms and opportunity w<strong>in</strong>dows <strong>in</strong>fluenc<strong>in</strong>gthe function<strong>in</strong>g and legitimacy of state mach<strong>in</strong>ery. Current state <strong>in</strong>stitutions derive fromhistorical roots of state formation and their <strong>in</strong>teractions with other conditions, such asgeographic characteristics and ethnic and religious population groups.Their evolution over time, <strong>in</strong> turn, is l<strong>in</strong>ked to exogenous and endogenous economicfactors that, by <strong>in</strong>sert<strong>in</strong>g themselves <strong>in</strong> the <strong>in</strong>stitutional sett<strong>in</strong>g, can heighten state <strong>fragility</strong>.That can push state <strong>in</strong>stitutions along a downward spiral where their capacities areprogressively jeopardised. Or it can strengthen the state by promot<strong>in</strong>g political stability,legitimacy and accountability. Reforms, development policies, external economic shocksand forces—depend<strong>in</strong>g on the historical legacy and the commitments of national governmentsand <strong>in</strong>ternational <strong>in</strong>stitutions—can be a driver of <strong>fragility</strong> but also a platform toexit <strong>fragility</strong> 1 .1 Economic factors matter for state <strong>fragility</strong>—and<strong>fragility</strong> matters for the economyThe path and level of economic development can affect state <strong>fragility</strong> of a country, butat the same time result from it 2 . Economic relations differentiate <strong>in</strong>terests and the <strong>in</strong>centivesto cooperate or compete, articulat<strong>in</strong>g society <strong>in</strong> dist<strong>in</strong>ct social groups. Moreover,accumulat<strong>in</strong>g resources for state build<strong>in</strong>g and for <strong>in</strong>ternal social shar<strong>in</strong>g is affected bythe pattern of economic development. For <strong>in</strong>stance, many postcolonial states, <strong>in</strong> an attemptto free themselves from their former colonisers that were buy<strong>in</strong>g their products(guarantee<strong>in</strong>g export markets), implemented <strong>in</strong>ward-look<strong>in</strong>g import-substitution policies,often <strong>in</strong>creas<strong>in</strong>g the role of the state <strong>in</strong> a highly suboptimal way.This chapter analyses economic processes that characterise fragile states and arel<strong>in</strong>ked to symptoms of state <strong>fragility</strong>—from weak governance and corruption, to predatorybehaviour and conflict. It also explores how these factors can <strong>in</strong>teract to makestates more fragile—or create virtuous circles of faster growth and stronger <strong>in</strong>stitutions.The aim is to highlight tim<strong>in</strong>g and time-consistency <strong>in</strong> deal<strong>in</strong>g with the different aspectsof <strong>fragility</strong>. More precisely:• Trade openness <strong>in</strong>teracts with <strong>fragility</strong> through potential ga<strong>in</strong>s from trade thatcan help countries exit from <strong>fragility</strong> to resilience, but also through the value ofdisputed resources, the opportunity costs of contestation and the opportunitiesfor collusion between private agents and public officials.• Foreign direct <strong>in</strong>vestment (FDI) can force competition <strong>in</strong> the local economy byimprov<strong>in</strong>g efficiency <strong>in</strong> the allocation of domestic resources and reduc<strong>in</strong>g therents and negative side effects for public governance. In this case FDI has apositive impact on growth, the extent depend<strong>in</strong>g on the sector and on the do-12Fosu 2009.Rob<strong>in</strong>son (2009) argues that Botswana provides an <strong>in</strong>terest<strong>in</strong>g example of the virtual <strong>in</strong>teractionsbetween economic development and state consolidation. In the aftermath of <strong>in</strong>dependence<strong>in</strong> 1996, Botswana had <strong>in</strong>itial conditions similar to those of other Sub-Saharan countriesthat followed a less successful and peaceful state formation and economic trajectory. It sharedwith those countries deep poverty, widespread illiteracy, poor <strong>in</strong>frastructure, a colonial legacyand multiple ethnic groups. The country was well endowed with cattle, like Sudan and Somalia,and with diamonds, like Angola and Sierra Leone. Accord<strong>in</strong>g to Rob<strong>in</strong>son the formation of themodern state—built on “a long process of state and <strong>in</strong>stitution formation <strong>in</strong>herited from theTswana states”—offers a clue <strong>in</strong> expla<strong>in</strong><strong>in</strong>g Botswana’s success while at the same time show<strong>in</strong>gthe crucial role of state <strong>in</strong>stitutions for economic development and the effectiveness of economicpolicies and paradigms.88
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilitymestic employment mobilised. Without appropriate <strong>in</strong>centives and regulation,however, foreign <strong>in</strong>vestors can contribute to bad governance and corruption orparticipate directly or <strong>in</strong>directly <strong>in</strong> the “war economy” and the fund<strong>in</strong>g of warlordsand civil conflicts.• Natural resource wealth can help state <strong>in</strong>stitutions perform their functions, withtaxes from resource extraction contribut<strong>in</strong>g most government revenues <strong>in</strong> fragilestates (chapter 2). But fragile states are also likely to fall <strong>in</strong>to vicious circlesl<strong>in</strong>k<strong>in</strong>g resource management to fad<strong>in</strong>g state capabilities—the resource curse.Resource abundance has a positive effect on growth <strong>in</strong> countries with good <strong>in</strong>stitutions,and a negative effect <strong>in</strong> those with poor <strong>in</strong>stitutions 3 . So, because fragilestates are characterised by poor <strong>in</strong>stitutions, natural resources are morelikely to be a curse for them than for other African countries, where natural resourcescan enhance export-led growth. Intertemporal tradeoffs are very relevant<strong>in</strong> this situation. Natural resources offer <strong>in</strong>come “now,” often at the cost ofless <strong>in</strong>come <strong>in</strong> the future. Their efficient management thus requires a long timehorizon, not easy for governments that may be illegitimate or risk be<strong>in</strong>g overthrown.• Drastic changes <strong>in</strong> access to land and water has implications for environmentalsusta<strong>in</strong>ability, food security and power relationships. Closely l<strong>in</strong>ked to trade andFDI, these factors can shape social stability, state <strong>fragility</strong> and economicgrowth.• Food security management is a core function of government, so <strong>fragility</strong> hasconsequences for food security. Perceptions of the state’s <strong>in</strong>capacity or unwill<strong>in</strong>gnessto address chronic food <strong>in</strong>security or to protect its citizens from foodshocks can underm<strong>in</strong>e the trust <strong>in</strong> public <strong>in</strong>stitutions and thus the legitimacy ofgovernment.2 Trade openness can <strong>in</strong>crease or decrease state<strong>fragility</strong>While state <strong>fragility</strong> may <strong>in</strong>fluence the effectiveness of trade openness on economic outcomes,<strong>in</strong>ternational trade can produce an impact on <strong>fragility</strong>. The first effect of tradeopenness is to change the structure of relative prices of goods and services traded withthe rest of the world.In a context of imperfect governance and law enforcement, trade openness <strong>in</strong>teractswith <strong>fragility</strong> to produce distributive consequences, fosters economic growth and affectsthe value of disputed resources, the opportunities for corruption, the opportunity costsof conflict, the choices between productive and predatory activities and the marg<strong>in</strong>s forrent-seek<strong>in</strong>g.In a well def<strong>in</strong>ed <strong>in</strong>stitutional sett<strong>in</strong>g—where the state ensures security, propertyrights and contract enforcement—trade openness generally produces global ga<strong>in</strong>s. But <strong>in</strong>weak <strong>in</strong>stitutional sett<strong>in</strong>gs, this is no longer so. And even when there are potential aggregatega<strong>in</strong>s from trade, their distribution may be conflict-generat<strong>in</strong>g and destabilis<strong>in</strong>g,especially when the country’s conflict-management <strong>in</strong>stitutions do not exist or have beendismantled. In addition, the structure of the comparative advantage of the country canaffect this dimension. Indeed, the exclusion of some threaten<strong>in</strong>g groups from shar<strong>in</strong>gthe resources of the state is more likely when the country relies on “po<strong>in</strong>t-source” naturalresources (fuels, m<strong>in</strong>erals and plantation crops like sugar and cotton) than on manufactur<strong>in</strong>gand diffuse agricultural exports (animals and agricultural produce grown on3Mehlum et al. 2006.89
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilitysmall family farms, such as rice and wheat) 4 . Examples such as the Biafra war <strong>in</strong> Nigeria<strong>in</strong> the late 1960s and the civil wars <strong>in</strong> Angola and <strong>in</strong> the Democratic Republic of Congoabound. In contrast, when production and benefits are widely distributed across geographicalareas, ethnic groups or urban centres, the chances of civil violence seem muchreduced.Openness can also feed back on the vertical relationships between state and society.Trade openness, for example, may <strong>in</strong>teract with the nature of state <strong>in</strong>stitutions and thetype of redistributive policies chosen by elites. But it may also weaken local economicl<strong>in</strong>kages between elite groups and other social groups. This, <strong>in</strong> turn, may produce negative<strong>in</strong>centives for the elite not to <strong>in</strong>vest <strong>in</strong> local public goods or to favour <strong>in</strong>efficientrent-seek<strong>in</strong>g policies 5 .A number of analyses have <strong>in</strong>vestigated the empirical evidence on the l<strong>in</strong>kages betweentrade <strong>in</strong>tegration and the emergence of domestic conflicts and civil wars. Chauvetet al. (2007) view trade as a motivation of civil wars or as a means to f<strong>in</strong>ance rebellion.Indeed, there are forces push<strong>in</strong>g <strong>in</strong> opposite directions: some lower the risk of wars, becauseof the high opportunity costs of conflicts, but some others <strong>in</strong>crease it, becausetrade provides alternative sources of consumption and <strong>in</strong>come to domestic production,which can be destroyed by the war.Recent quantitative cross-country studies <strong>in</strong>dicate that open countries are more stablethan autarkic ones and less likely to experience civil wars, though important tradeoffsare detected. Mart<strong>in</strong> et al. (2008) f<strong>in</strong>d that trade <strong>in</strong>tegration may deter wars, if thega<strong>in</strong>s from trade are put at risk dur<strong>in</strong>g a civil war. But openness may also act as an <strong>in</strong>surancemechanism and lower the opportunity cost of wars. More precisely, trade opennesshas contrast<strong>in</strong>g effects on the probability of civil wars: it may deter the most severeones (those that destroy the largest amount of trade) but may <strong>in</strong>crease the risk oflower scale conflicts.Focus<strong>in</strong>g on Sub-Saharan Africa, and look<strong>in</strong>g at the effects of trade openness and liberalisationon the outbreak of <strong>in</strong>ternal wars <strong>in</strong> 37 countries for 1980–2000, Bussman etal. (2005) support the view that economic openness has a positive effect on peace andstability, once the restructur<strong>in</strong>g of the economy is over. In the short run, however, tradeliberalisation may <strong>in</strong>crease the risk of civil war and conflict dur<strong>in</strong>g the implementation ofthe reform measures.The forego<strong>in</strong>g discussion suggests policy tradeoffs between the short-term risks oftrade reform and long-term ga<strong>in</strong>s from openness—and the prevention of severe conflictsand the persistent risks of lower scale tensions. One possible solution to such tradeoffsmay be to compensate the immediate losers <strong>in</strong> order to reduce the short-term risks ofpolitical <strong>in</strong>stability and allow enough time for the economy to reach the long-term situation<strong>in</strong> which enough <strong>in</strong>dividuals benefit from the reform.45Isham et al. 2005.An example is provided by Segura-Cayuela (2006). When political elites are unwill<strong>in</strong>g to contributeto the provision of public goods and have no state capacity to raise taxes, they generallyseek to appropriate resources through price distortions. But the extent of these appropriativepolicies is limited by the fact the elites’ own bus<strong>in</strong>ess rents may, to some extent, be complementaryto what nonelite social groups produce. In such a context, trade openness reducesthe opportunity costs of appropriative price policies. Indeed, with trade <strong>in</strong>tegration, productprices are likely to be set outside the domestic economy, disconnect<strong>in</strong>g, <strong>in</strong> a sense, the elites’benefits from the distortions that they impose on the local economy. This, <strong>in</strong> turn, <strong>in</strong>ducesthem to manipulate relative domestic prices more <strong>in</strong>tensively to extract rents from nonelites.This reason<strong>in</strong>g suggests that trade <strong>in</strong>tegration may have harmful consequences <strong>in</strong> countriescharacterised by low political participation and weak elite responsiveness to the rest of society.90
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragility3 Two way l<strong>in</strong>ks between foreign direct <strong>in</strong>vestmentand <strong>fragility</strong>While the literature recognises the negative impact of bad domestic governance and corruptionon FDI <strong>in</strong>flows, recent work provides some empirical <strong>in</strong>dications of the reverseeffect of FDI on host country governance structures and the ultimate manifestations ofstate <strong>fragility</strong>: conflicts and civil wars. Recent research has not provided conclusive empiricalevidence on the relationship between foreign direct <strong>in</strong>vestment and conflicts. Polacheket al. (2005) 6 f<strong>in</strong>d that FDI reduces the likelihood of <strong>in</strong>ternational conflicts, andtrade and FDI complement each other <strong>in</strong> reduc<strong>in</strong>g conflicts, while Giss<strong>in</strong>ger andGleditsch (1999) 7 suggest that <strong>in</strong> the poorest countries FDI has positive effects on economicwelfare, but negative effects on distribution and political unrest. Barbieri andReuveny (2005) 8 , <strong>in</strong>stead, f<strong>in</strong>d that FDI <strong>in</strong> the least developed countries reduces the durationof civil wars, but not the likelihood of their onset.Empirical literature does not provide a def<strong>in</strong>itive support to the hypothesis a positivel<strong>in</strong>k between FDI and other dimension of state <strong>fragility</strong> such as corruption. A recentcross-country analysis by Larra<strong>in</strong> and Tavares (2007) suggests that FDI significantly decreasescorruption <strong>in</strong> the host country, and their results are robust to the <strong>in</strong>clusion ofseveral determ<strong>in</strong>ants of openness <strong>in</strong> addition to trade <strong>in</strong>tensity and the average tariff,<strong>in</strong>clud<strong>in</strong>g dependence on natural resources, ethnic fractionalisation and the size of theeconomy and government expenditure 9 . The relationship between FDI and corruption,however, may depend on the level of development and democracy of the host country.Zhu (2007) 10 , for <strong>in</strong>stance, provides empirical support for the view that FDI <strong>in</strong>flows arelikely to reduce corruption <strong>in</strong> more developed democracies, and <strong>in</strong>crease corruption <strong>in</strong>less developed nondemocratic countries.Though not def<strong>in</strong>itive, these results highlight the challenges of FDI policies. First,<strong>overcom<strong>in</strong>g</strong> state <strong>fragility</strong> and build<strong>in</strong>g strong democratic <strong>in</strong>stitutions may be necessaryto capture the economic benefits of FDI. Second, while openness to FDI <strong>in</strong> fragile contextscan reduce the risks of <strong>in</strong>trastate conflicts, it also needs some form of regulation topromote the quality of <strong>in</strong>vestment rather than its quantity. Clearly important for FDI tocontribute to the local economy is a legal and account<strong>in</strong>g framework that encouragestransparency and accountability <strong>in</strong> <strong>in</strong>vestors' home countries.Insights on the nexus between FDI and state <strong>fragility</strong> can come from a closer look atthe ma<strong>in</strong> recipients of FDI flows <strong>in</strong> Sub-Saharan Africa. In only 13 out of 29 SSA fragilecountries, the share of FDI <strong>in</strong>flows on GDP is above the SSA average (itself low, at3.2%, compared with 4.8% for South East Asia). Most of them are rich <strong>in</strong> oil and naturalresources (Angola, Chad, the Republic of Congo, Equatorial Gu<strong>in</strong>ea, Nigeria, São Toméand Pr<strong>in</strong>cipe, Sierra Leone and Sudan) 11 . So, to understand the impact of FDI on state<strong>fragility</strong> it is necessary to first understand the natural resource endowments.So, while FDI can potentially have a positive impact on growth and poverty reduction,negative externalities prevail when the quality of <strong>in</strong>stitutions is low, enhanc<strong>in</strong>g the likelihoodof conflict and bad management. The result<strong>in</strong>g vicious circle magnifies the impactof FDI on <strong>fragility</strong>. To transform this vicious circle <strong>in</strong>to a virtuous one, governments (iflegitimate) must commit to a fair distribution of rents by ty<strong>in</strong>g their hands. But the low6789Polachek et al. 2005.Giss<strong>in</strong>ger and Gleditsch 1999.Barbieri and Reuveny 2005.See Larra<strong>in</strong> and Tavares 2007.10 Zhu 2007.11 The share of FDI on GDP among these countries ranges from 5% <strong>in</strong> Angola to 27% <strong>in</strong> EquatorialGu<strong>in</strong>ea.91
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilitycredibility of governments <strong>in</strong> fragile countries makes a virtuous circle unlikely, unlessexternal agents (such as <strong>in</strong>ternational organisations) push for and guarantee the commitments.4 Natural resource endowments can make governanceworseNatural resource abundance presents a major opportunity for economic developmentand state consolidation. A resource-rich state has the funds to build capacity <strong>in</strong> perform<strong>in</strong>gits functions, particularly to f<strong>in</strong>ance public expenditure for economic developmentand poverty reduction. But perverse mechanisms can jeopardise this process: resourcedependence can create economic <strong>in</strong>stability, which can turn <strong>in</strong>to political <strong>in</strong>stability.Natural resource abundance may <strong>in</strong>deed h<strong>in</strong>der the quality of the governance, a keycomponent of state function<strong>in</strong>g, and therefore <strong>in</strong>crease the risk of state <strong>fragility</strong>. But forresource abundance to translate <strong>in</strong>to good overall economic performance and higherstandards of liv<strong>in</strong>g, good governance is perhaps more important than it is <strong>in</strong> resourcepooreconomies. This <strong>in</strong>terplay between resource endowment and poor governance canpush state <strong>fragility</strong> along a perverse path.Natural resources can thus be either a bless<strong>in</strong>g or a curse for resource-rich countries12 . Empirical studies confirm that po<strong>in</strong>t-source resources and resource rents <strong>in</strong>creasecorruption and retard economic and <strong>in</strong>stitutional development. Because several fragilecountries have large endowments of natural resources and low levels of governance, weneed to address how abundant natural resources can magnify state <strong>fragility</strong> (or what canbe done to choose the opportunities given by resource endowments and transform theeconomy <strong>in</strong>to an export-led one).Develop<strong>in</strong>g a natural resource deposit—from prospect<strong>in</strong>g through extraction andrevenue management—is connected to the accountability of the government. Resourceabundance <strong>in</strong>creases the opportunities to take resources away from an <strong>in</strong>cumbent government(see chapter 2). Rent-seek<strong>in</strong>g can take different forms: from corruption to theftto conflict. Resource rents may <strong>in</strong>deed lead to the overthrow of the government through<strong>in</strong>surgency at either a regional or national level. Because changes <strong>in</strong> commodity pricesaffect the <strong>in</strong>cidence and the duration of civil wars, the most recent debate has concentratedon the channels for primary commodities to affect the risk of conflict 13 .• First, primary commodity exports can f<strong>in</strong>ance the escalation and susta<strong>in</strong>ability ofrebellion.• Second, rebellions can be motivated by the desire to capture rents, easier <strong>in</strong> alawless context, such as one generated by conflict.• Third, natural resources <strong>in</strong>crease the likelihood of secessionist wars.Resource abundance can also modify the <strong>in</strong>cumbent government’s <strong>in</strong>terests and behaviours.Governance can deteriorate <strong>in</strong> several ways:• Resource rents can reduce electoral accountability <strong>in</strong> a democratic system if thegovernment uses some of the money to ma<strong>in</strong>ta<strong>in</strong> power through patronage.Vote-buy<strong>in</strong>g is a more direct form of divorc<strong>in</strong>g elections from accountability. So,resource rents can underm<strong>in</strong>e the role of elections and make it more desirablefor governments to reta<strong>in</strong> power.• In an autocracy, resource rents can reduce the efficacy of accountability limit<strong>in</strong>gscrut<strong>in</strong>y, thus reduc<strong>in</strong>g the pressure on government to meet citizens’ needs.12 See the background papers by Collier (2009) and Collier and Venables (2009) for an extensiveanalysis of this issue.13 See the background paper by Reynal-Querol (2009).92
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragility• Resource rents might alter the likelihood of democracy over autocracy.• They can also delay fundamental changes to seriously dysfunctional policies.The fact that resource abundance tends to guarantee rents, especially <strong>in</strong> fragile stateswhere the rule of law is not fully implemented, can produce an environment <strong>in</strong> which it ishard to deliver stable economic progress—an environment more vulnerable to social andpolitical unrest. There is ample evidence <strong>in</strong> the current literature that resource dependencecreates economic <strong>in</strong>stability and an <strong>in</strong>ability to develop occupational strategies notstrictly related to natural resources 14 .If the state cannot set the legal framework of exploration and production licences forresource development and extraction, then maldistribution, rent-seek<strong>in</strong>g and <strong>in</strong>efficiencyare likely. Maldistribution comes about because of the spatial distribution of natural resources,rent-seek<strong>in</strong>g because ownership is conferred by physical control of the territory,and <strong>in</strong>efficiency because of the uncerta<strong>in</strong>ty about ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g control. If control is perceivedas likely to be temporary, the private <strong>in</strong>centive is to deplete assets quickly, evenif this is socially more costly.A further consequence is that the absence of property rights, very common <strong>in</strong> fragilecountries, <strong>in</strong>teracts with the lack of <strong>in</strong>formation. As with <strong>in</strong>ventions, the <strong>in</strong>centives toundertak<strong>in</strong>g searches are very low unless discoveries are protected 15 . It is more efficientto wait for others to f<strong>in</strong>d natural assets and then take control of them, even if this may<strong>in</strong>volve violence. So, many resources rema<strong>in</strong> undiscovered.Box 4.1: Codes of conduct and the Natural Resource CharterInternational commitments through codes of practice or treaty obligations can be important.Examples are the Extractive Industries Transparency Initiative (EITI), the Kimberly process(requir<strong>in</strong>g traded diamonds to be certified as not orig<strong>in</strong>at<strong>in</strong>g from areas of conflict) and themore recent Natural Resource Charter. The charter is a set of pr<strong>in</strong>ciples for governments andsocieties on effectively us<strong>in</strong>g the opportunities created by natural resources. Its purpose is toassist governments and societies of countries rich <strong>in</strong> nonrenewable resources to managethose resources <strong>in</strong> a way that generates economic growth, promotes the welfare of thepopulation and is environmentally susta<strong>in</strong>able. It also aims to ensure that the opportunitiesprovided by new discoveries and commodity booms are not missed.What makes the Natural Resource Charter unique is that it is be<strong>in</strong>g built through aparticipatory process guided by academic research.“The Charter comprises twelve precepts . . . that encapsulate the choices and suggestedstrategies that governments might pursue to <strong>in</strong>crease the prospects of susta<strong>in</strong>ed economicdevelopment from natural resource exploitation 16 :• The development of natural resources should be designed to secure the maximumbenefit for the citizens of the host country.• Extractive resources are public assets, and decisions about their exploitation should betransparent and subject to <strong>in</strong>formed public oversight.• Competition is critical for secur<strong>in</strong>g value and ensur<strong>in</strong>g <strong>in</strong>tegrity.• Fiscal terms must be robust to chang<strong>in</strong>g circumstances and ensure that the countrygets full value from its resources.• National resource companies should be competitive and should not be responsible for14 Most literature focuses on the concept of resource dependence and not just availability, whichcreates a difference of countries that have a more diversified economy and do not depend sostrongly on natural resources.15 The problem is analogous to the one analysed <strong>in</strong> Dixit (1989) for FDI. A recent example is thesuccessful oil explorations <strong>in</strong> Ghana, which have followed the improvement <strong>in</strong> property rights.16 Taken from: http://www.naturalresourcecharter.org/<strong>in</strong>dex.php/en/the-precepts, accessed onOctober 5, 2009.93
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilityregulatory functions or other activities.• Resource projects may have serious environmental and social effects that must be accountedfor and mitigated at all stages of the project cycle.• Resource revenues should be used primarily to promote susta<strong>in</strong>ed <strong>in</strong>clusive growththrough enabl<strong>in</strong>g and ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g high levels of domestic <strong>in</strong>vestment.• Effective use of resource revenues requires build<strong>in</strong>g up domestic expenditure graduallyand smooth out volatile revenue streams.• Governments should use resource wealth to <strong>in</strong>crease the efficiency and effectivenessof public spend<strong>in</strong>g.• Governments should <strong>in</strong>vest <strong>in</strong> a way that enables the private sector to respond tostructural changes <strong>in</strong> the economy.• The home governments of extractive companies and <strong>in</strong>ternational capital centresshould require and enforce best practices.• All extractive companies should follow <strong>in</strong>ternational best practices <strong>in</strong> contract<strong>in</strong>g, operationsand payments”.Several fragile states <strong>in</strong> Sub-Saharan Africa have adopted the EITI, with the aim ofimprov<strong>in</strong>g governance through the verification and full publication of company payments andgovernment revenues from oil, gas and m<strong>in</strong><strong>in</strong>g. Oil, gas and m<strong>in</strong><strong>in</strong>g companies have agreedto support the <strong>in</strong>itiative. Jo<strong>in</strong><strong>in</strong>g the EITI is a strong signal of government commitment totransparency.Domestically, it is possible to create commitment mechanisms by enter<strong>in</strong>g long-termcontracts and build<strong>in</strong>g reputation. It may also be possible to design fiscal constitutions underwhich a share of revenues is put aside for long-term use.Indeed, Niger and Liberia have approached their aid partners for technical legalassistance on award<strong>in</strong>g contracts. In Mozambique, analytical work is foster<strong>in</strong>g dialogue onpublic expenditure management and f<strong>in</strong>ancial accountability <strong>in</strong> the context of ris<strong>in</strong>g revenuesfrom m<strong>in</strong>eral extraction. Some countries request support <strong>in</strong> auction<strong>in</strong>g licenses andnegotiat<strong>in</strong>g contracts with major <strong>in</strong>vestors, manag<strong>in</strong>g volatile commodity-related revenues,and improv<strong>in</strong>g the composition and quality of public <strong>in</strong>vestments.5 Governance affects the relationship betweenland and <strong>fragility</strong>Dramatic changes <strong>in</strong> land access are usually <strong>in</strong>fluenced by government action. The scopeis great for land tenure reforms and land policies—land taxation, titl<strong>in</strong>g and registration,and regulat<strong>in</strong>g land contracts and markets—to reduce poverty, <strong>in</strong>crease agricultural productivityand susta<strong>in</strong> the environment. But land policies are not neutral, and they cantrigger social tensions. African conflicts show that ill-conceived land tenure reforms havebeen underly<strong>in</strong>g or aggravat<strong>in</strong>g factors. Limit<strong>in</strong>g access to land for vast sections of societycan result <strong>in</strong> grievances, frustration, food <strong>in</strong>security and imbalances <strong>in</strong> politicalpower 17 .In Zimbabwe, land reform begun <strong>in</strong> 1980 and later the “fast-track resettlement” hadheavy impacts on the agriculture, result<strong>in</strong>g <strong>in</strong> massive job losses, food <strong>in</strong>security andviolent reactions 18 . Land is also an issue <strong>in</strong> other countries experienc<strong>in</strong>g prolonged crisissuch as the Democratic Republic of Congo, Somalia and Sudan 19 . In the Nuba Mounta<strong>in</strong>s<strong>in</strong> Sudan, promulgation of the Unregistered Land Act <strong>in</strong> 1970, which abolished custom-17 Vlassenroot et al. 2006.18 Sachikonye 2003; Pons-Vignon and Solignac Lecomte 2004.19 Al<strong>in</strong>ovi and Russo 2009.94
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilityary land-use rights and provided a legal basis for land acquisitions by large-scalemechanised agricultural projects, resulted <strong>in</strong> extensive disenfranchisement of smallfarmers and nomadic pastoralists: an estimated half of the total area of the pla<strong>in</strong>s (thebest soils <strong>in</strong> the region) was taken up by these schemes 20 .More recently, a new phenomenon with potential important effects on land use andaccess has emerged <strong>in</strong> Sub-Saharan Africa. In the aftermath of the food and oil crisesand despite the economic and f<strong>in</strong>ancial crisis, a wave of farmland acquisitions by foreignand domestic <strong>in</strong>vestors has picked up and given rise to a hot debate. Ch<strong>in</strong>a, the UnitedArab Emirates, India, South Korea and EU governments and private firms seem to bethe ma<strong>in</strong> <strong>in</strong>vestors <strong>in</strong> Africa’s land. But large-scale land deals with other <strong>in</strong>vestor countries,such as the United States, Libya and Egypt, have been reported by the <strong>in</strong>ternationalpress. Prelim<strong>in</strong>ary evidence 21 suggests that FDI <strong>in</strong> land <strong>in</strong> Africa tends to be <strong>in</strong> asmall group of countries (Sudan, Mozambique, Madagascar, Ethiopia). But the trend isspread<strong>in</strong>g to other dest<strong>in</strong>ation areas of the cont<strong>in</strong>ent. Recent large <strong>in</strong>vestments <strong>in</strong> farmlandhave been registered <strong>in</strong> Angola, the Democratic Republic of Congo, Ghana, Liberia,Nigeria and Tanzania.The consequences for African agriculture and African people can be deep, persistentand not easily reversed. The scale is still largely unknown because of the limited qualitativeand quantitative <strong>in</strong>formation and neither reliable nor transparent, but available evidencesuggest this phenomenon is not marg<strong>in</strong>al. In only five African countries (Ethiopia,Madagascar, Mali, Mozambique and Sudan), 2.5 million hectares of large 22 land dealshave been approved s<strong>in</strong>ce 2004, and pend<strong>in</strong>g contracts would push these figureshigher 23 . Still <strong>in</strong>cipient, this build<strong>in</strong>g wave can be dangerous for the development of afragile country. It is therefore important to monitor and prevent any possible negativeeffects of this “special” form of FDI <strong>in</strong> agriculture on social stability and state <strong>fragility</strong>.Perceptions of the great availability and accessibility of farmland and underexploitedwater <strong>in</strong> Africa have created <strong>in</strong>terest, but the recent trends <strong>in</strong> food and oil prices and theprotectionist reactions of some major food exporters have been the trigger. Higher demandfor food requir<strong>in</strong>g land-demand<strong>in</strong>g production techniques (such as meat and dairyproduce), grow<strong>in</strong>g demand of energy alternatives to fossil fuel, worsen<strong>in</strong>g scarcity ofwater for productive use and slow growth <strong>in</strong> farm productivity—and, <strong>in</strong> some areas, reductions<strong>in</strong> farm production—all press for farm expansion. Food importers might be lesswill<strong>in</strong>g to entrust their food security to <strong>in</strong>ternational markets, and outsourc<strong>in</strong>g food productionhas become a more feasible national strategy.The l<strong>in</strong>k between FDI and foreign policies and national <strong>in</strong>terests has been re<strong>in</strong>forcedby the grow<strong>in</strong>g <strong>in</strong>volvement of state-owned enterprises and sovereign wealth funds <strong>in</strong><strong>in</strong>ternational markets. Though most land deals are by private and foreign <strong>in</strong>vestors, and<strong>in</strong> some countries national <strong>in</strong>vestors are <strong>in</strong>creas<strong>in</strong>gly <strong>in</strong>terested <strong>in</strong> farmland acquisitions,the <strong>in</strong>vestments are often government-backed, and both host and home governmentspromote and support large-scale land <strong>in</strong>vestments 24 .Many African countries are now attempt<strong>in</strong>g to take advantage of the ris<strong>in</strong>g value ofland and water. This is why <strong>in</strong>vestor commitments on <strong>in</strong>vestments, <strong>in</strong>frastructure or employmentare usually required <strong>in</strong> land deals. The underly<strong>in</strong>g idea is to promote the country’seconomic development and to reduce poverty by exchang<strong>in</strong>g abundant resourceswith scarce ones: land for capital, <strong>in</strong>frastructure, technologies and skills. In many Africancountries, and especially <strong>in</strong> fragile ones, the majority of the people live <strong>in</strong> rural areas.20 Pantuliano 2008.21 These evidences are based on Cotula et al. 2009; von Braun and Me<strong>in</strong>zen-Dick 2009; GRAIN2008.22 Above 1,000 hectares.23 Cotula et al. 2009.24 Cotula et al. 2009.95
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityAgricultural development can lead poverty reduction and economic growth, while <strong>in</strong>vestments<strong>in</strong> <strong>in</strong>frastructure, know-how and technology can have significant positivespillovers.Box 4.2: Large-scale land acquisitions <strong>in</strong> Africa—unpack<strong>in</strong>g the land dealsBy Lorenzo CotulaSenior researcher – Law and susta<strong>in</strong>able development, International <strong>Institute</strong> forEnvironment and DevelopmentLand deals are embodied <strong>in</strong> one contract or several. These need to be exam<strong>in</strong>ed along withother legal texts def<strong>in</strong><strong>in</strong>g their broader legal context, <strong>in</strong>clud<strong>in</strong>g national and <strong>in</strong>ternationallaw. Contracts are complex and differ hugely among countries and even projects. More workis needed to identify trends <strong>in</strong> contractual practice and compare contractual options. But theanalysis of a small number of contracts from Africa highlights some key issues.Parties and overall structureIn their basic form, land deals <strong>in</strong>volve at least two parties. On one side is an acquirer,generally a private or government-owned company. But it can also be a foreign governmentacquir<strong>in</strong>g land directly—for example, under a “Special Agricultural Investment Agreement”signed <strong>in</strong> 2002 between Syria and Sudan. On the other side of the deal is a land provider,either a government or, more rarely, a private landowner.This apparent simplicity hides complexity. Each “deal” may <strong>in</strong>volve multiple contracts andlegal <strong>in</strong>struments—from a framework agreement outl<strong>in</strong><strong>in</strong>g the key features of the overalldeal, where the host government commits itself to make the land available to the <strong>in</strong>vestor;to more specific <strong>in</strong>struments (contractual or otherwise) that actually transfer the land orsubsections of it. The extent to which land deals are negotiated or standardised varies acrosscountries and the different stages of negotiation—with <strong>in</strong>struments to allocate land tend<strong>in</strong>gto be more standardised (as for the lease contracts <strong>in</strong> Mali’s Office du Niger).Each deal typically <strong>in</strong>volves a wide range of parties through the multiple stages ofprepar<strong>in</strong>g, negotiat<strong>in</strong>g, contract<strong>in</strong>g and operationalis<strong>in</strong>g the project. First, multiple agencieswith<strong>in</strong> the host government are engaged. Even <strong>in</strong> countries where there is a central po<strong>in</strong>t ofcontact (one-stop shop) for prospective <strong>in</strong>vestors, usually an <strong>in</strong>vestment promotion agency,this agency alone will not deal with all aspects of the land deal.Private <strong>in</strong>vestors have the advantage of be<strong>in</strong>g able to act as a s<strong>in</strong>gle legal entity with acohesive set of values. But even here the picture may be more nuanced. Among the possiblescenarios, the implementation of deals signed between governments may be driven byprivate operators, either from <strong>in</strong>ception or as part of subsequent efforts to rega<strong>in</strong>momentum. For example, the Syria-Sudan deal enables Syria to delegate implementation tothe private sector, subject to this issue be<strong>in</strong>g cleared by the government of Sudan.Land rights transferred, safeguards for local <strong>in</strong>terestsLand leases, rather than purchases, predom<strong>in</strong>ate <strong>in</strong> Africa, with durations rang<strong>in</strong>g from shortterms to 99 years. Host governments tend to play a key role <strong>in</strong> allocat<strong>in</strong>g land leases, notleast because they formally own all or much of the land. So, the extent to whichgovernments take account of local <strong>in</strong>terests <strong>in</strong> land, water and other natural resources iskey.But host governments may contractually commit themselves to provid<strong>in</strong>g land beforeconsult<strong>in</strong>g local land users. In addition, the lack of transparency and checks and balances <strong>in</strong>contract negotiations encourages corruption and elite captures of benefits. In Mozambiqueand other countries, national law does require <strong>in</strong>vestors to consult local people before landallocations are made. In Ghana, deals with local leaders are common. But even <strong>in</strong> thesecases, shortcom<strong>in</strong>gs <strong>in</strong> implement<strong>in</strong>g legal requirements and <strong>in</strong> the accountability of localleaders are a recurrent problem.Security of local land rights is also key. National laws vary, but some recurrent featuresunderm<strong>in</strong>e the position of local people. These <strong>in</strong>clude <strong>in</strong>secure use rights on state-ownedland, <strong>in</strong>accessible registration procedures, compensation for only the loss of improvementssuch as crops rather than land, and outdated compensation rates. As a result, local peoplecan lose out, and even <strong>in</strong>vestors aim<strong>in</strong>g for good practices suffer from a lack of cleargovernment procedures and guidel<strong>in</strong>es.96
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityThe economic equilibrium of land dealsLand fees and other monetary transfers are generally absent or small, due to the desire toattract <strong>in</strong>vestment, the perceived low opportunity costs and the lack of well established landmarkets. This alone does not mean the deal is unbalanced: benefits to host countries may<strong>in</strong>clude <strong>in</strong>vestor commitments on levels of <strong>in</strong>vestment and the development of <strong>in</strong>frastructuresuch as irrigation systems.Given the prom<strong>in</strong>ence of <strong>in</strong>vestment commitments <strong>in</strong> the economic equilibrium of landdeals, enforceability is particularly important. Government land allocations are usuallysubject to the <strong>in</strong>vestor’s compliance with <strong>in</strong>vestment plans for the first few years of theproject, after which the allocation is confirmed. But African governments have rarely usedthis lever to hold <strong>in</strong>vestors to account, with the word<strong>in</strong>g of contracts not specific enough tobe enforceable. And one-off assessments at an early stage of implementation do not enablecont<strong>in</strong>ued monitor<strong>in</strong>g and sanction<strong>in</strong>g of <strong>in</strong>vestment performance over a project’s lifespan.Although the structure of land deals is extremely diverse, a small sample of contractssuggests that much more can be done to tighten key areas affect<strong>in</strong>g economic equilibrium—particularly when these contracts are compared to contractual practice <strong>in</strong> other sectors likeoil and gas. With considerable variation among cases, the contracts tend to lack robustmechanisms to monitor or enforce compliance with <strong>in</strong>vestor commitments, guaranteebenefits to local people, promote smallholder participation <strong>in</strong> production activities (say,through contract farm<strong>in</strong>g, jo<strong>in</strong>t ventures with local landholders or other forms ofcollaborative production), maximise government revenues and balance food securityconcerns <strong>in</strong> both home and host countries.Agricultural modernisation could help African countries mov<strong>in</strong>g up the value cha<strong>in</strong>.Improv<strong>in</strong>g agriculture can <strong>in</strong>duce livelihood diversification, generate employment andboost agricultural productivity (through improved seed varieties, know-how and technologies).Land <strong>in</strong>vestors and agro-bus<strong>in</strong>esses could stimulate or directly <strong>in</strong>vest <strong>in</strong> <strong>in</strong>frastructures,technologies and <strong>in</strong>terventions for improv<strong>in</strong>g access to markets, while landtaxes and concessions could provide fiscal revenues.The risks, however, are worrisome. Changes <strong>in</strong> access to land and water resources, <strong>in</strong>resource management and <strong>in</strong> production techniques can affect environmental susta<strong>in</strong>ability,food security, power relationships and social stability, especially when transactionsare dom<strong>in</strong>ated by unbalanced negotiations. There is a risk of los<strong>in</strong>g control overland for vast sections of the society, with negative effects on food security, social stabilityand local labour and <strong>in</strong>come opportunities. Land management by foreign <strong>in</strong>vestorscan generate perverse <strong>in</strong>centives to use unsusta<strong>in</strong>able production techniques, while landdeals and barga<strong>in</strong><strong>in</strong>g might create opportunities for corruption and the appropriation ofprivate ga<strong>in</strong>s at the expense of national long-term <strong>in</strong>terests.In some Sub-Saharan countries, land deals are likely to create friction between thecounterparts (box 4.3) 25 . Acquisitions tend to be <strong>in</strong> more profitable areas with irrigation,access to water and <strong>in</strong>frastructure and close to markets. And most productive land andwater sources targeted for <strong>in</strong>vestment are not “unused” resources. Even when classifiedas “idle,” they are likely to be already claimed by preexist<strong>in</strong>g users. This phenomenonhas been documented <strong>in</strong> Ethiopia, Tanzania and Mozambique 26 . It is consistent with thefact that <strong>in</strong> Africa, resource uses are likely to be underestimated because the large majorityof local resource users do not hold formal titles, especially <strong>in</strong> rural areas. Productiontechniques that do not require cont<strong>in</strong>uous land use are widespread (graz<strong>in</strong>g animals,long-fallow cultivation cycles). Therefore many people rely on common and freeaccess resources for their subsistence.25 Cotula et al. 2009 and GRAIN 2008.26 Sulle 2009; Nhantumbo and Salomao 2009.97
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityInternational development agencies and the research community are work<strong>in</strong>g to providerecommendations and assistance to stakeholders (<strong>in</strong>vestors, governments, localpopulations and civil society) to realise the potential benefits of the renewed <strong>in</strong>terest <strong>in</strong>agricultural <strong>in</strong>vestment. But these efforts are likely to be costly, with uncerta<strong>in</strong> results.Ensur<strong>in</strong>g the poverty-reduc<strong>in</strong>g effects of domestic and foreign <strong>in</strong>vestment <strong>in</strong> Africa’sfarmland are very challeng<strong>in</strong>g, even more so <strong>in</strong> fragile countries (table 4.1). Such countrieshave weak negotiat<strong>in</strong>g capacity and little capacity to reconcile conflicts over resources.Table 4.1: Ensur<strong>in</strong>g the poverty-reduc<strong>in</strong>g effects of new <strong>in</strong>vestments <strong>in</strong> farmlandConditions for susta<strong>in</strong>ablepoverty-reduc<strong>in</strong>geffects of large-scaleland <strong>in</strong>vestmentsClear def<strong>in</strong>ition and recognitionof preexist<strong>in</strong>g resource-userights.Design of contracts to balancebetween the priorities, perspectivesand <strong>in</strong>centives of the <strong>in</strong>vestors,governments and localpopulations.Credibility and enforceability ofcommitments by <strong>in</strong>vestors andhost governments. Identificationand compensation of therights of people negatively affected.Creation of better and morelabour opportunities.Agricultural projects should<strong>in</strong>crease productivity and beenvironmentally susta<strong>in</strong>able.Actions that can helpto meet the conditionsLand titl<strong>in</strong>g of resources;mapp<strong>in</strong>g of communityresources and <strong>in</strong>formal useof resources; <strong>in</strong>volvementof local populations <strong>in</strong> decision-mak<strong>in</strong>gprocess.Implementation of transparentand participatorydecision-mak<strong>in</strong>g process.Technical assistance tocapacity build<strong>in</strong>g for contractdesign, supervisionand management.Basel<strong>in</strong>e assessments ofenvironmental, social andeconomic conditions.Monitor<strong>in</strong>g of contract bystate <strong>in</strong>stitutions or <strong>in</strong>ternationalstakeholders.Actions to ensure transparencyand dissem<strong>in</strong>ationof <strong>in</strong>formation.See actions above on contractenforcement anddesign. Strengthen <strong>in</strong>volvementof trade unionsand labour representatives.See actions above. Sett<strong>in</strong>gup and strengthen<strong>in</strong>g <strong>in</strong>stitutions(rules, agenciesand structures) for environmentalregulation andsupervision. Technical assistanceto new <strong>in</strong>vestorsand mechanisms to adoptlocal knowledge of agriculturaltechniques.ObservationsMost of Africa’s people do not hold formal useor property right of natural resources theyhave access to. Land titl<strong>in</strong>g requires time andresource costly processes. International experienceshows that the badly designed landtenure reform and titl<strong>in</strong>g programmes canexclude more vulnerable groups and can createdestabilis<strong>in</strong>g forces. Transparent and <strong>in</strong>formedengagement of local stakeholders isparticularly difficult <strong>in</strong> countries with low levelsof education and weak social contractsbetween citizens and state <strong>in</strong>stitutions.See observations above.One of the ma<strong>in</strong> obstacles to this condition isthe unbalance <strong>in</strong> barga<strong>in</strong><strong>in</strong>g power and negotiat<strong>in</strong>gcapacity between <strong>in</strong>vestors, governments,and local communities and farmers.Local populations usually lack f<strong>in</strong>ancial andhuman resources to meet these conditions.Recipient governments are likely to lack necessarycapacity and fiscal resources or will<strong>in</strong>gnessto ma<strong>in</strong>ta<strong>in</strong> effective structures andimpose credible threats of punishment fornoncompliance. Problems of asymmetric <strong>in</strong>formationcan h<strong>in</strong>der the def<strong>in</strong>ition, evaluationand monitor<strong>in</strong>g of compliance.Economic and f<strong>in</strong>ancial susta<strong>in</strong>ability of theprojects might provide new <strong>in</strong>vestors withmotivations to implicitly or explicitly retracttheir commitments for implementation of labourstandards and labour-<strong>in</strong>tensive techniques.Trade unionisation of workers mightbe aga<strong>in</strong>st <strong>in</strong>terests of national elite.See observations above.In many parts of Africa, land has a low resilienceto agricultural <strong>in</strong>tensification. External<strong>in</strong>vestors might lack an appropriate knowledgeof local ecosystems and susta<strong>in</strong>able productionpractices.Contract farm<strong>in</strong>g arrangements, jo<strong>in</strong>t ventures,and systems of contract grow<strong>in</strong>g canimprove absorption of local knowledge andbenefit shar<strong>in</strong>g among <strong>in</strong>vestors and localpopulations. But these results are likely to bejeopardised by asymmetric economic andpower positions of the counterparts.98
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityEurope can support <strong>in</strong>ternational <strong>in</strong>itiatives for a Code of Conduct, but it can also helpAfrican farmers and populations directly enjoy the benefits of the <strong>in</strong>creased value of Africanfarmland <strong>in</strong> the current global market by strengthen<strong>in</strong>g its actions on long-term programmesfor agricultural development and assistance to small-scale farmers. It can leverageits role as a political and economic actor <strong>in</strong> <strong>in</strong>ternational negotiations, <strong>in</strong> diplomaticrelations and <strong>in</strong> global food markets. It can attempt to conta<strong>in</strong> mechanisms thatstimulate land demand, such as controls on exports by the ma<strong>in</strong> food exporters and energypolicies promot<strong>in</strong>g biofuels rather than energy efficiency.Box 4.3: International <strong>in</strong>vestments <strong>in</strong> Sudan: the “breadbasket” of theArab region 27By Aysen Tanyeri-Abur a and Nasred<strong>in</strong> Elam<strong>in</strong> ba Northeastern <strong>University</strong>, Boston; b Food and Agriculture Organization (FAO), RegionalOffice for the Near East and North Africa.Sudan has long been considered the “breadbasket” of the Arab region and an <strong>in</strong>vestmentdest<strong>in</strong>ation for agricultural <strong>in</strong>vestment, particularly from Arab countries. With 2.5 millionsquare kilometres, it is the largest country <strong>in</strong> Africa, and one of the few countries <strong>in</strong> theregion that still has untapped land and water potential. Neighbour<strong>in</strong>g n<strong>in</strong>e African countriesand provid<strong>in</strong>g sea access for a number of them, it is strategically located. And it has a youngpopulation, the result of the rapid population growth <strong>in</strong> the last 30 years. But the resourcewealth of Sudan is overshadowed by widespread food <strong>in</strong>security and poverty (21% of theSudanese were undernourished <strong>in</strong> 2003–2005; FAO, 2008).Some recent trends <strong>in</strong> agricultural <strong>in</strong>vestment <strong>in</strong> Arab countries are <strong>in</strong>fluenc<strong>in</strong>g the rateand nature of capital flows <strong>in</strong>to Sudan.• Agriculture and water are emerg<strong>in</strong>g as new asset classes for <strong>in</strong>vestment due to radicalpolicy changes <strong>in</strong> Saudi Arabia and worries of Gulf countries after high food prices andexport bans of 2007, coupled with lower oil prices.• Most of the <strong>in</strong>vestments are driven by private sector <strong>in</strong>itiatives although the state hasa heavy presence <strong>in</strong> terms of support and facilitation.• Sudan, with one of the highest levels of food <strong>in</strong>security <strong>in</strong> the Arab region, is alsowhere most of these <strong>in</strong>vestments are dest<strong>in</strong>ed. More than 50% of the land <strong>in</strong>vestmentdeals <strong>in</strong> the region are tak<strong>in</strong>g place <strong>in</strong> Sudan.• Recent <strong>in</strong>vestments and mergers may fuel <strong>in</strong>creased <strong>in</strong>vestment <strong>in</strong> the region, as wellas a more <strong>in</strong>traregional trade among Arab countries. And new trade blocs for food andoil such as those between the Gulf Cooperation Council (GCC) and the Association ofSoutheast Asian Nations (ASEAN) 28 ) may give way to other trade agreements to facilitatefurther <strong>in</strong>vestments <strong>in</strong> food and agriculture.These developments have policy implications. Special attention needs to be given tosusta<strong>in</strong>able <strong>in</strong>vestment options and a long-term perspective. In a region short of water andfaced with the impossibility of becom<strong>in</strong>g self-sufficient, learn<strong>in</strong>g from past policy decisionsshould be a priority.Sudan may be relatively rich <strong>in</strong> land and water resources, but the Nile river bas<strong>in</strong> isexpected to be a water-scarce region by 2025 (Revenga et al., 2000). Saudi Arabia has hadnegative experiences with its own food self-sufficiency policy, with severe resource depletion(Elhadj, 2008). Although <strong>in</strong>creased <strong>in</strong>vestment <strong>in</strong> agriculture and food production is crucialfor address<strong>in</strong>g food security concerns <strong>in</strong> Sudan, unsusta<strong>in</strong>able <strong>in</strong>vestments will havenegative impacts on both <strong>in</strong>vestor and recipient countries and on all stakeholders <strong>in</strong>volved.27 This box does not reflect the views of the authors’ respective organizations, and the authorsare solely responsible for the content.28 GCC and ASEAN announced on June 30, 2009 that they are mov<strong>in</strong>g toward build<strong>in</strong>g a newtrade bloc for food and oil, namely rice from ASEAN countries and energy and petrochemicalsfrom the Gulf Countries (Reuters, 2009).99
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityThe paucity of up-to-date detailed data precludes comprehensive exam<strong>in</strong>ation of thestructure and performance of foreign direct <strong>in</strong>vestment (FDI) <strong>in</strong> Sudanese agriculture.A few observations on FDI flows to agriculture <strong>in</strong> Sudan are worth not<strong>in</strong>g:• FDI <strong>in</strong> agriculture has been low until recently, averag<strong>in</strong>g less than 1% of total FDI.• Most FDI <strong>in</strong> agriculture <strong>in</strong> Sudan is resource-seek<strong>in</strong>g (box table 4.1). Investments <strong>in</strong>Sudan can be summarised as follows:Box table 4.1: Allocations of agricultural land for 2000–08 (commitments above1,000 hectares) 29 Total <strong>in</strong>vestment (hectares)Jo<strong>in</strong>t venture <strong>in</strong>volvement(hectares)Foreign <strong>in</strong>vestors 713,010 706,640Saudi Arabia 365,190 48,300United Arab Emirates 71,820 32,340South Korea 84,000 500,000Egypt 5,500 126,000Others 186,500Local 2,363,000Total <strong>in</strong>vestment 3,782,650Source: Author’s estimates based on communications with the M<strong>in</strong>istry of Investment, Sudan• While the share <strong>in</strong> total FDI is low, FDI <strong>in</strong> agriculture has cont<strong>in</strong>ued to <strong>in</strong>crease <strong>in</strong> thelast decade. Sudan’s agricultural FDI grew at an average of 23% from 2000 to 2008though its share <strong>in</strong> total FDI rema<strong>in</strong>ed low, at around 2% (Nur, 2009). FDI hit 17% ofthe total <strong>in</strong> 2009 and is expected to grow to 50% <strong>in</strong> 2010 (Reuters, 2008).• Intra-Arab FDI constitutes the bulk of FDI <strong>in</strong> Sudan, at about 93% of all <strong>in</strong>vestments,38% from Saudi Arabia.• Arab FDI <strong>in</strong> agriculture <strong>in</strong> Sudan goes back to the 1970s with the establishment of majorprojects, through the Arab Authority for Agricultural Investment and Developmentand other public-private <strong>in</strong>itiatives. The Kenana Sugar Company is one example. 30 Impactsof these <strong>in</strong>vestments have been mixed.• In Sudan, almost all FDI has concentrated <strong>in</strong> the three most developed regions <strong>in</strong> thecountry—Khartoum, the River Nile and Gezira, with 86% of all <strong>in</strong>vestment projects—and mostly <strong>in</strong> primary agriculture (Nur, 2009). Policies need to address the regionaldisparities <strong>in</strong> <strong>in</strong>vestment.• Capital <strong>in</strong>tensity of FDI <strong>in</strong> Sudan is particularly high for Arab <strong>in</strong>vestments. The resultsalso show that although 37% of the total FDI projects and 41% of total FDI capital are<strong>in</strong> mixed farm<strong>in</strong>g, only 25% of total FDI jobs are created by this subsector because ofhighly capital-<strong>in</strong>tensive production techniques (Nur, 2009).The <strong>in</strong>stitutional and policy framework is crucial <strong>in</strong> the cont<strong>in</strong>ued flow of <strong>in</strong>vestment, <strong>in</strong>provid<strong>in</strong>g the right <strong>in</strong>centives for the allocation of <strong>in</strong>vestments as well as to address nationalfood security concerns. bridg<strong>in</strong>g the resource gap <strong>in</strong> agriculture, Sudan has focused onattract<strong>in</strong>g foreign <strong>in</strong>vestment, with less attention given to maximiz<strong>in</strong>g the positive impactsand domestic l<strong>in</strong>kages of these <strong>in</strong>vestments <strong>in</strong> terms of improved food security.29 Not more than 10% of the land deals (foreign <strong>in</strong>vestors) are implemented. Processes havebeen <strong>in</strong>itiated to cancel about 10 to 15% of the deals with foreign <strong>in</strong>vestors.30 Kenana Sugar Company was established <strong>in</strong> Sudan through jo<strong>in</strong>t public-private fund<strong>in</strong>g by Arabcountries <strong>in</strong> the 1970s. This <strong>in</strong>itiative has greatly <strong>in</strong>creased the productive capacity <strong>in</strong> the countryand expanded sugar production, mak<strong>in</strong>g Sudan self-sufficient <strong>in</strong> sugar and even an exporterof sugar. But other social and economic impacts <strong>in</strong> the region have been mixed.100
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityThe sudden <strong>in</strong>flux of <strong>in</strong>vestment <strong>in</strong> agriculture has prompted new policies. Especially forresource-seek<strong>in</strong>g <strong>in</strong>vestments, such as the new land acquisitions, leas<strong>in</strong>g rates and otherpolicies govern<strong>in</strong>g land use come <strong>in</strong>to play. Most land <strong>in</strong> Sudan is leased at annual ratesrang<strong>in</strong>g from $2.7 to $35 per hectare, with the lower rates more common. Thearrangements for leases depend on the <strong>in</strong>dividual cases. Several safeguards have beenestablished by the Sudanese government to ensure that the use of land is <strong>in</strong> accordance withsocial and economic concerns. For example, the leases are first established for three yearsand then extended every seven years up to 99 years. There are also some key requirementsfrom <strong>in</strong>vestors, requir<strong>in</strong>g them to establish feeder roads, provide electricity and assign 10–20% of the land <strong>in</strong>vested for local community use (to be negotiated with the locals). 31Sudan, cont<strong>in</strong>ues to be seen as the breadbasket of the Arab region, with the bulk of therecent <strong>in</strong>vestment <strong>in</strong> land be<strong>in</strong>g directed to this country. However, the question rema<strong>in</strong>s:which basic food commodities can profitably be produced <strong>in</strong> Sudan, particularly <strong>in</strong> the longrun? To meet their food needs, priority of the Arab <strong>in</strong>vestors is to <strong>in</strong>vest <strong>in</strong> the production ofbasic food, particularly wheat. Given the climatic conditions <strong>in</strong> the country, the capacity forwheat production and productivity <strong>in</strong> Sudan rema<strong>in</strong>s to be <strong>in</strong>vestigated. Furthermore, Sudanhas huge arable lands, but available water may not be sufficient to cope with future needs ofexpansion <strong>in</strong> the magnitude of the recent land leases to foreign <strong>in</strong>vestors, without evenconsider<strong>in</strong>g the secondary impacts of these <strong>in</strong>vestments on the rural populations and thecrowd<strong>in</strong>g <strong>in</strong> urban areas.Assess<strong>in</strong>g the contribution of foreign direct <strong>in</strong>vestments to food security is not aneasy task. Not only it is difficult to predict the future development of any <strong>in</strong>vestment, itis also a daunt<strong>in</strong>g task to address concerns of the various stakeholders (private sector of<strong>in</strong>vestor and host countries as well as the governments). Added to this, are the differentfood security concerns and the differences among the countries <strong>in</strong> terms of resourcesand <strong>in</strong>comes. In order to safeguard the concerns of the various parties, it may be usefulto develop a framework to highlight the particular aspects of <strong>in</strong>vestments, which need tobe evaluated so that the negative impacts can be m<strong>in</strong>imized <strong>in</strong> the future and they canbe rendered more susta<strong>in</strong>able. An important po<strong>in</strong>t is also to consider past <strong>in</strong>vestments ofthe same nature and identify lessons learned.6 Hungry populations and fragile <strong>in</strong>stitutionsFood <strong>in</strong>security, tightly l<strong>in</strong>ked to state <strong>fragility</strong>, is clearly one of the ma<strong>in</strong> threats for Africancountries 32 . The focus here is on how <strong>in</strong>stitutional <strong>fragility</strong> magnifies the risk of acutefood <strong>in</strong>security and on what can be done to achieve the first Millennium DevelopmentGoal (halv<strong>in</strong>g the proportion of people who suffer from hunger by 2015).The recent food crisis highlighted the extreme vulnerability of Sub-Saharan Africanfragile countries’ food security to external shocks, ma<strong>in</strong>ly because of the low (and stagnant)productivity of African agriculture <strong>in</strong> the past two decades.This stagnat<strong>in</strong>g productivity went hand <strong>in</strong> hand with <strong>in</strong>creas<strong>in</strong>g demand, partly due to<strong>in</strong>ternational factors (<strong>in</strong>creas<strong>in</strong>g demand <strong>in</strong> Ch<strong>in</strong>a and India) but partly to population <strong>in</strong>creases,which left most fragile African countries net food importers and substantially<strong>in</strong>creased vulnerability, mak<strong>in</strong>g a food crisis more likely 33 . An antiagricultural bias <strong>in</strong>duceda move towards urban areas and <strong>in</strong>creased rural-urban <strong>in</strong>equalities. This stimulatedan <strong>in</strong>crease <strong>in</strong> violence and political <strong>in</strong>security <strong>in</strong> urban areas, which, <strong>in</strong> turn, has<strong>in</strong>creased the resources for solv<strong>in</strong>g security problems <strong>in</strong> the cities at the expense of rural31 Personal communication, Sudan M<strong>in</strong>istry of Investment.32 UNCTAD (2009) estimates that 300 million Africans face chronic hunger.33 African countries furthermore import major staple commodities, such as wheat and rice (UNC-TAD 2009).101
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify Fragilityfund<strong>in</strong>g—a vicious circle. And the high migration to cities, coupled with limited <strong>in</strong>vestment<strong>in</strong> rural areas, has implied less agricultural production, <strong>in</strong>duc<strong>in</strong>g an <strong>in</strong>crease <strong>in</strong> foodimports, further underm<strong>in</strong><strong>in</strong>g the capacity of agriculture to produce.A food crisis can <strong>in</strong>crease state <strong>fragility</strong> along the dimension of legitimacy, as with thefood riots <strong>in</strong>duced by the recent spike <strong>in</strong> the <strong>in</strong>ternational price of foods. But this situationcan change if net food buyers become net food sellers (as happened <strong>in</strong> South andEast Asia dur<strong>in</strong>g the green revolution). Food sellers would raise their <strong>in</strong>comes and lowerthe costs of food, pull<strong>in</strong>g people <strong>in</strong> both fragile and other countries out of poverty,thanks to <strong>in</strong>creased demand 34 . But for the multiplier to start, markets need to workproperly. In fragile countries, however, there are many obstacles to market mechanisms,because farmers face limited access to credit and high costs of obta<strong>in</strong><strong>in</strong>g <strong>in</strong>formationand enforc<strong>in</strong>g contracts. With poor access to formal f<strong>in</strong>ance, traders exchange smallvolumes, trade with areas that are geographically close, and <strong>in</strong>crease the likelihood ofvolatile prices.Among fragile countries, those <strong>in</strong> conflict are most at risk of food <strong>in</strong>security. Establish<strong>in</strong>ga causal relationship is not straightforward, but political <strong>in</strong>stability often arises <strong>in</strong>food-<strong>in</strong>secure countries. Conflicts and economic collapses are regarded as the cause ofmore than a third of the food emergencies between 1995 and 2003, while civil strife andrefugees or <strong>in</strong>ternally displaced persons have been cited as the ma<strong>in</strong> reason for morethan half the food emergencies <strong>in</strong> Africa 35 . Conflicts usually reduce agricultural productionand <strong>in</strong>come from cash crops and livestock. Accord<strong>in</strong>g to the FAO, conflicts causedAfrica to lose more than $120 billion worth of agricultural production <strong>in</strong> the last third ofthe 20th century. Food production decl<strong>in</strong>ed <strong>in</strong> 13 of 18 conflict-ridden countries surveyed36 .The long-term consequences for agricultural activities can also be severe, while <strong>in</strong>directeffects and negative externalities can threaten food security <strong>in</strong> neighbour<strong>in</strong>g countries.There is an <strong>in</strong>teractive, and possibly multiple, relationship between the impact ofconflict and warfare and agricultural development. Mozambique lost 40% of its assets <strong>in</strong>agriculture, <strong>in</strong>frastructure and communication dur<strong>in</strong>g its 20-year civil war 37 .Food production problems <strong>in</strong> countries affected by social disorder or conflict can <strong>in</strong>creasethe need for food imports and push up food prices <strong>in</strong> neighbour<strong>in</strong>g countries. InUganda the recent <strong>in</strong>crease <strong>in</strong> food demand from regional trad<strong>in</strong>g partners, such asKenya and southern Sudan, exerted upward pressure on food prices 38 . And poor postconflictmanagement can h<strong>in</strong>der a country’s agricultural and economic development. Thereturn of agricultural communities to their orig<strong>in</strong>al land hold<strong>in</strong>gs, for example, does notalways produce the <strong>in</strong>tended result. In Sierra Leone measures to permit residents to returnto their agricultural land and way of life was prone to elite takeover 39 .By contrast, food <strong>in</strong>security can encourage <strong>fragility</strong>. Under<strong>in</strong>vest<strong>in</strong>g <strong>in</strong> agricultureheightens the possibility of conflict, as does competition for food or a lack of entitlementsto food access 40 . Rebellion and government collapses and conflicts <strong>in</strong> Ethiopia,Rwanda and Sudan have their orig<strong>in</strong>s <strong>in</strong> food crises caused by natural factors (such asdroughts) and the mismanagement of agricultural relief and development aid 41 .34 This trend occurred <strong>in</strong> Ch<strong>in</strong>a <strong>in</strong> recent years, until November 2008 when the economic and f<strong>in</strong>ancialcrisis threatened to send “new” urban workers back <strong>in</strong>to rural Ch<strong>in</strong>a.35 Flores 2004.36 Stewart et al. 2001.37 Collier et al. 2003.38 Benson 2008.39 Maconachie 2008.40 DFID 2001.41 Messer and Cohen 2006; Messer et al. 1998.102
<strong>European</strong> Report on Development 2009 – Chapter 4: Economic Factors can magnify FragilityFood security is also closely related to access to water. In fragile countries watershortages affect human and livestock consumption, and irrigation may become a problem.The use of fertilisers, ma<strong>in</strong>ly imported and expensive, is also low.7 ConclusionA country could end up <strong>in</strong> conflict or peace—or food crisis or no food crisis, or be<strong>in</strong>g afood exporter or not, or a m<strong>in</strong>eral exporter or not—depend<strong>in</strong>g on the history of relevantvariables and the country-specific <strong>in</strong>teraction of the different factors affect<strong>in</strong>g <strong>fragility</strong>.“History matters,” and such persistence makes <strong>fragility</strong> an even bigger challenge.The <strong>in</strong>terplay of different economic factors that affect <strong>fragility</strong> can generate nonl<strong>in</strong>eareffects. Foreign direct <strong>in</strong>vestment and trade, conflicts and food <strong>in</strong>security, and conflictsand natural resources can <strong>in</strong>duce a virtuous circle of attract<strong>in</strong>g more FDI and stimulategrowth, but could also start a vicious circle of weak <strong>in</strong>stitutions and corruption.Persistence is not the only issue. Time also matters: the short horizon of governmentdecision-mak<strong>in</strong>g is likely to lead to excessive current spend<strong>in</strong>g and opportunistic behaviour.Fragile countries, always react<strong>in</strong>g to emergency situations, have a much shortertime horizon than other countries. A short horizon is exacerbated by the <strong>in</strong>ability tocommit, so even a government that is tak<strong>in</strong>g a long view may have its decisions <strong>in</strong>fluencedby the <strong>in</strong>ability to commit.These considerations emphasise the importance of time and persistence, because thelikelihood that a temporary shock can have a permanent effect on the <strong>fragility</strong> of a countryis very high. They also emphasise how important it is to account for the <strong>in</strong>teractionsbetween different economic factors—and for some time-consistency issues particularlyrelevant for fragile countries 42 .42 For <strong>in</strong>stance, if governments have to attract m<strong>in</strong>eral companies to <strong>in</strong>vest <strong>in</strong> prospect<strong>in</strong>g or <strong>in</strong>develop<strong>in</strong>g a m<strong>in</strong>e or oil field, the companies face a hold-up. Once the <strong>in</strong>vestment is done andregardless of promises, the <strong>in</strong>vestors have lost their barga<strong>in</strong><strong>in</strong>g power: governments have an<strong>in</strong>centive to appropriate resource rents. The commitment problem is part of all <strong>in</strong>vestments,but more acute <strong>in</strong> natural resource exploitation and even more so <strong>in</strong> fragile countries. The capital<strong>in</strong>vestment required for resource extraction is typically far higher than for other activities,so more is at stake, and the <strong>in</strong>vestment is typically lumpy and cannot be moved. Because the<strong>in</strong>vestment is <strong>in</strong> fragile countries, governments are less accountable.103
<strong>European</strong> Report on Development 2009 – Section 2: From Fragility to ResilienceSECTION 2-FROM FRAGILITY TO RESILIENCE105
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus ResilienceCHAPTER 5-FRAGILITY VERSUS RESILIENCE107
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus ResilienceThe resilience of a socioeconomic system depends on the ability of its different layers—household, community and country—to adjust to both <strong>in</strong>ternal and external shocks. It isa dimension of development that can no longer be overlooked. Build<strong>in</strong>g and ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>gresilience promotes human well-be<strong>in</strong>g. In a static world, the degree to which membersof a social system or group (households, communities, states) can control their dest<strong>in</strong>ydepends on the rights, identity, decision power and problem-solv<strong>in</strong>g mechanisms attachedto membership. The capability of <strong>in</strong>dividual members to pursue their objectivesand aspirations depends on how the group:• Generates solidarity among its members and guarantees a m<strong>in</strong>imum set of resources,services and rights.• Allows its members to act with<strong>in</strong> a normative system.• Has the <strong>in</strong>stitutional mechanisms to resolve the problems of those members.• Offers members a degree of <strong>in</strong>fluence <strong>in</strong> the group’s governance 1 .In an evolv<strong>in</strong>g world, socioeconomic systems experience changes, and shocks can affectthese elements. So, the capacity to ma<strong>in</strong>ta<strong>in</strong> or reorganise these conditions enablestheir members to exert their capabilities over time. In other words, if the capacity of asocial system promotes well-be<strong>in</strong>g among its members, its resilience makes this functionalitydurable.How do different societies build resilience, and on which components and mechanismsis resilience based? Two arguments can be put forward:1. Proper function<strong>in</strong>g of the state supports the resilience of a socioeconomic system,because it enhances human capabilities both <strong>in</strong> stable situations and, to a greater extent,<strong>in</strong> times of distress.2. In a socioeconomic system, manag<strong>in</strong>g adaptation processes <strong>in</strong> reaction to changesis not restricted to state <strong>in</strong>stitutions. In every society, nonstate actors elaborate theirown capacities and systems for self-organisation, adaptation and learn<strong>in</strong>g. The sourcesof resilience that orig<strong>in</strong>ate <strong>in</strong> civil society <strong>in</strong>clude social cohesion and networks, socialmemory 2 , bonds of mutual trust and of penalisation for wrongdo<strong>in</strong>g, <strong>in</strong>formal and private<strong>in</strong>stitutions regulat<strong>in</strong>g economic activities, resource use rights and dispute resolution.Fragile state <strong>in</strong>stitutions can coexist with resilient societies, but the result is unlikelyto be socially beneficial and stable. Indeed, state <strong>fragility</strong> tends to erode the resilience ofcivil society’s systems and of the socioeconomic system overall. By contrast, resilienthouseholds, communities and civil societies can help to protect population from the costsof state <strong>fragility</strong>.Sub-Saharan African civil societies have adapted creatively to repeated crisis episodes,and they have developed sophisticated and deep-seated survival, cop<strong>in</strong>g andadaptive mechanisms rang<strong>in</strong>g from <strong>in</strong>trafamily and community <strong>in</strong>surance systems totraditional pastoral land management.Despite these resilience mechanisms and the attempts by nonstate actors to partiallycomplement or substitute for state services and functions, civil societies have not beenable to fully cushion the human and developmental costs of political, economic or climateshocks or of state <strong>fragility</strong>.12St<strong>in</strong>chcombe 1975.Folke 2006.108
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus Resilience1 Enhanc<strong>in</strong>g resilienceResilience, <strong>in</strong>itially developed <strong>in</strong> the natural sciences, refers to the ability of a system toadjust to a perturbation and ma<strong>in</strong>ta<strong>in</strong> its core functions unaltered 3 . The resilience of asystem therefore has to be assessed <strong>in</strong> relation to its functions. When applied to an economicsystem, resilience is about the capacity of the market and its support<strong>in</strong>g <strong>in</strong>stitutionsto “allocate resources efficiently or to deliver essential services” (Perr<strong>in</strong>gs 2006, p.418). When applied to a socioeconomic system, resilience is about its capacity to enablesociety’s members to pursue their well-be<strong>in</strong>g and to satisfy needs and wishes that theycould not fulfil if they were <strong>in</strong> isolation.The resilience of a system—an <strong>in</strong>herently dynamic concept—can be gauged from itscapacity to react to the changes and shocks by activat<strong>in</strong>g adequate adaptation mechanisms(box 5.1).Box 5.1: Def<strong>in</strong><strong>in</strong>g resilience and vulnerabilityResilience and vulnerability are concepts adopted <strong>in</strong> different discipl<strong>in</strong>es, rang<strong>in</strong>g fromeconomics to psychologicy, and from ecology to security. Like other attributes of a system,these terms are prone to imprecision, confusion and different <strong>in</strong>terpretations <strong>in</strong> their use.This report uses the follow<strong>in</strong>g def<strong>in</strong>itions:Resilience is the “capacity of a system to absorb disturbance, undergo change and stillreta<strong>in</strong> essentially the same function, structure, identity, and feedbacks”. This is the def<strong>in</strong>itionelaborated with<strong>in</strong> the Resilience Alliance, a multidiscipl<strong>in</strong>ary research network that hasexplored the topic s<strong>in</strong>ce 1999.Vulnerabilty is the susceptibility of a person, group or a system to be harmed by shocks.Vulnerability is the result of the size and frequency of the shocks and stresses, the exposureto the shocks, and the capacity to react to the shocks, that is, the resilience.Structural vulnerability is the vulnerability to factors that are durably <strong>in</strong>dependent froma system’s capacity to react to changes and shocks. Structural vulnerability thus depends onthe size and frequency of the shocks and stresses—and the exposure to the shocks.Resilience is also an important <strong>in</strong>gredient of susta<strong>in</strong>ability. Susta<strong>in</strong><strong>in</strong>g human wellbe<strong>in</strong>gover time requires limit<strong>in</strong>g the degree to which socioeconomic and ecological systemsare stressed. Resilience refers to adaptability to changes and new stresses. Resilienceis essential to susta<strong>in</strong>ability because shocks, perturbations and mutat<strong>in</strong>g conditionsare <strong>in</strong>evitable and usually unpredictable—while the need to reduce the pressure offorces on socioeconomic systems is necessary for susta<strong>in</strong>ability because those forces canunderm<strong>in</strong>e resilience.2 What does a resilience-based approach imply?A resilience-based approach has multifaceted—and possibly far-reach<strong>in</strong>g—implicationsfor the development discourse. It <strong>in</strong>fluences the priorities of the development agenda,the design of aid policies and the appropriate analytical framework. The resilience perspectiveentails the acceptance of the limitation of policies based on steady-state th<strong>in</strong>k<strong>in</strong>g.4 In addition, new objectives and tradeoffs can rise from the application of this approach.34Holl<strong>in</strong>g (1973) def<strong>in</strong>es the notion of resilience as the amount of disturbance a system can absorbwithout shift<strong>in</strong>g to an alternative regime.Folke 2006.109
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus Resilience2.1 Tradeoffs and complementarities between long-termand short-term perspectivesA possible tension with current practices arises from the need for fast reactions to emergencies,which could jeopardise long-term development. For <strong>in</strong>stance, humanitarian food<strong>in</strong>terventions and service provision by <strong>in</strong>ternational and nongovernmental organisationsprotect people <strong>in</strong> situations of extreme risks, but agricultural development is likely to below <strong>in</strong> socioeconomic systems excessively reliant on food aid 5 . And the separate structuresmanaged by external actors run the risk of bypass<strong>in</strong>g state <strong>in</strong>stitutions and prevent<strong>in</strong>gtheir consolidation 6 . This trade off, however, must not be overstated. Urgent <strong>in</strong>terventionsdo not automatically exclude long-term strategies. And because an exposureto repeated shocks can erode resilience, short-term responses can be <strong>in</strong> l<strong>in</strong>e with a resilience-basedapproach 7 . They can avoid the emergence of <strong>fragility</strong> traps by learn<strong>in</strong>g fromthe best practices <strong>in</strong> many years of <strong>in</strong>terventions <strong>in</strong> complex humanitarian crises.2.2 Tradeoffs between resilience and efficiencyEconomic efficiency and economic growth are necessary, but not sufficient, conditionsfor poverty reduction. A resilience-based approach would question development policiesthat see only efficiency and economic growth as pivotal <strong>in</strong> <strong>in</strong>creas<strong>in</strong>g human welfare. Bycontrast, growth-maximis<strong>in</strong>g policies could <strong>in</strong> some cases underm<strong>in</strong>e the resilience of asystem, endanger<strong>in</strong>g its susta<strong>in</strong>ability. For example, export-oriented policies that promoteefficiency and enhance a country’s growth potential can also reduce its resilience.How? By creat<strong>in</strong>g pressures to specialise <strong>in</strong> primary sectors, which are exposed to wideprice fluctuations <strong>in</strong> <strong>in</strong>ternational markets. As Perr<strong>in</strong>gs (2006) observes, concentrat<strong>in</strong>gassets <strong>in</strong> areas of activity that yield the highest short-term returns will almost certa<strong>in</strong>lyreduce the resilience of the system as a whole 8 .2.3 New elements of analysis <strong>in</strong> the formulation ofdevelopment strategiesA resilience-based approach tends to expand the purposes and the requirements of effectivedevelopment policies. Policy design should be <strong>in</strong>formed not only by static analysesand outcome monitor<strong>in</strong>g, but also by “resilience assessments.” An analysis of thesources of resilience <strong>in</strong> a socioeconomic system would require a better understand<strong>in</strong>g ofthe mechanisms of adaptability, learn<strong>in</strong>g capacity, self-organisation, decision-mak<strong>in</strong>gprocesses, and collective action. These elements of analysis could complement the studyof social capital and social cohesion, household assets, exposures to risks and shocksand options for citizens and households to tackle shocks.3 State <strong>fragility</strong> underm<strong>in</strong>es socioeconomicresilienceThe processes for people to improve their well-be<strong>in</strong>g depend on <strong>in</strong>teractions betweendifferent levels of the social structures, such as household, local, state and global communityand different types of <strong>in</strong>stitutions rang<strong>in</strong>g from markets to political, cultural andlegal systems, to social capital and formal and <strong>in</strong>formal systems, to regulat<strong>in</strong>g resourceuse rights, and to dispute and conflict resolution.5678Al<strong>in</strong>ovi and Russo 2009.Manor 2007.Guillaumont and Guillaumont Jeanneney 2009.Perr<strong>in</strong>gs 2006.110
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus ResilienceBox 5.2: Economic growth, development and well-be<strong>in</strong>g <strong>in</strong> fragile countriesBy J. Allister McGregor<strong>Institute</strong> of Development Studies, at the <strong>University</strong> of Sussex.Some time ago W. Arthur Lewis observed that economic growth was not the purpose ofdevelopment, but a means to <strong>in</strong>crease the choices available to people. Now widelyrecognised, this key message has been elaborated by many prom<strong>in</strong>ent developmentth<strong>in</strong>kers. But it is not always consistently applied <strong>in</strong> policy and practice.The recent multiple crises of the global economy, of global governance and of the globalenvironment have given impetus to a call for readjust<strong>in</strong>g how we understand developmentand how we organise <strong>in</strong>ternational development policy and practice. There are widespreadcalls for a more human approach to development th<strong>in</strong>k<strong>in</strong>g (see the Sarkozy CommissionReport 2009), built firmly on the recognition that the purpose of development policy is toprovide the societal conditions for people to achieve well-be<strong>in</strong>g and to attack the conditionsthat produce human suffer<strong>in</strong>g.In fragile develop<strong>in</strong>g countries, the challenges of rebuild<strong>in</strong>g the societal conditions forhuman well-be<strong>in</strong>g are acute. In many of these countries, people and communities generatetheir own social conditions for surviv<strong>in</strong>g and thriv<strong>in</strong>g. They band together <strong>in</strong> localarrangements. They pay private militias for physical security. They may depend on localbus<strong>in</strong>ess bosses for market opportunities. And they may fall back on traditional systems ofjustice to enforce some basic law and order. While these arrangements may provide thebarest conditions <strong>in</strong> which to get on with life, they also usually <strong>in</strong>volve compromises thatcannot be considered good for human development and well-be<strong>in</strong>g. Some key needs may bemet, but freedoms may be sacrificed, and high levels of <strong>in</strong>stability and <strong>in</strong>security reduce theoverall quality of life.From this perspective development efforts <strong>in</strong> these fragile contexts should proceed froman analysis of what is already provid<strong>in</strong>g some conditions for well-be<strong>in</strong>g and thenpragmatically work with and build<strong>in</strong>g from them. This almost certa<strong>in</strong>ly <strong>in</strong>volves engag<strong>in</strong>gwith a range of different actors beyond the state, such as self-help associations, local civilsociety organisations, militias and local bus<strong>in</strong>ess networks. The developmental purpose ofsuch engagement is to strengthen the positive dimensions of the societal conditions for wellbe<strong>in</strong>gand to steer these organisations and <strong>in</strong>stitutions away from their more harmfulpractices and procedures.Us<strong>in</strong>g this well-be<strong>in</strong>g framework the immediate priority <strong>in</strong> fragile and failed states is toestablish who are the most vulnerable and those who experience the most severe well-be<strong>in</strong>gfailures as a result of state breakdown. This agenda of well-be<strong>in</strong>g focused engagement cansupport the first steps <strong>in</strong> reconstruct<strong>in</strong>g a basic social contract and the foundations foreffective governance.The resilience of a socioeconomic system—<strong>in</strong>tended as a complex body of functionally<strong>in</strong>terdependent state and nonstate actors—is shaped by the resilience of all its components<strong>in</strong> perform<strong>in</strong>g their functions, by their reciprocal <strong>in</strong>fluence and their capacity toconstructively <strong>in</strong>teract <strong>in</strong> order to manage the whole system and its trajectory. The conceptof resilience can be profitably applied to all levels of a socioeconomic system, fromhouseholds, to local communities, and to state <strong>in</strong>stitutions 9 .State <strong>in</strong>stitutions are a crucial part of this complex system. The resilience of a socioeconomicsystem can be ensured or strengthened by the cop<strong>in</strong>g and adaptation strategiesimplemented at its different levels 10 . At the same time, the state shapes the resilienceof the other social structures because it sets the governance mechanisms <strong>in</strong> society,delivers public goods, provides basic services and protects citizen safety and security,all essential for build<strong>in</strong>g human capabilities (figure 5.1).9For an application of resilience analysis at the household level, see Al<strong>in</strong>ovi et al. (2009).10 Engberg-Pedersen et al. 2008.111
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus ResilienceFigure 5.1: Interactions between state <strong>fragility</strong> and socioeconomic resilienceExternal shocksImpact on state (publicgood endowments, publicbudget, fiscal balance)State<strong>fragility</strong>Policy reactionsResilience ofsocioeconomic systemsImpact on nonstate <strong>in</strong>stitutionsand actors: households,civil society, economic <strong>in</strong>stitutionsAdaptation andcop<strong>in</strong>g strategiesHuman and social well-be<strong>in</strong>gConversely, state <strong>fragility</strong> can underm<strong>in</strong>e the resilience of a socioeconomic system.Economic and human development, resilience and the strengthen<strong>in</strong>g of state <strong>in</strong>stitutionsare closely <strong>in</strong>tertw<strong>in</strong>ed. If economic development can strengthen state capacity and createdemand for the “state,” the formation processes and elements of functional and legitimatestate entities help people to perform their economic activities and to pursuetheir well-be<strong>in</strong>g even <strong>in</strong> the face of changes.The capacity and the evolution of state <strong>in</strong>stitutions cannot be analysed <strong>in</strong> isolation. If,for <strong>in</strong>stance, households or communities are better able to resort to effective cop<strong>in</strong>gstrategies when they have to deal with external shocks, this reduces the extent andpress<strong>in</strong>g character of the political demands that they express. State <strong>fragility</strong> can be <strong>in</strong>fluencedand mediated by social resilience 11 . State-build<strong>in</strong>g can thus be effectively pursuedby focus<strong>in</strong>g on all layers of the socioeconomic system, not just state <strong>in</strong>stitutions.The struggles and alliances between the state and other social organisations (families,clans, political parties, mult<strong>in</strong>ational and domestic enterprises) def<strong>in</strong>e how society andthe state create and ma<strong>in</strong>ta<strong>in</strong> the rules guid<strong>in</strong>g collective action, power, and distributionof the benefits and costs 12 . A mutually re<strong>in</strong>forc<strong>in</strong>g process can arise from the <strong>in</strong>teractionbetween those Migdal (1988) 13 calls strong states and strong societies: “a strong civilsociety provides a base of legitimacy and a capacity for activity on which state can build,but civil society also needs the state for the provision of certa<strong>in</strong> services 14 .”The next chapter sheds light on the nexus between state <strong>fragility</strong> and socioeconomicresilience by discuss<strong>in</strong>g the impacts and channels of transmissions of the global down-11 Engberg-Pedersen et al. 2008.12 Migdal 1988.13 Migdal 1988.14 Spald<strong>in</strong>g 1996, p. 66.112
<strong>European</strong> Report on Development 2009 – CHAPTER 5: Fragility versus Resilienceturn <strong>in</strong> Sub-Saharan African fragile countries, as well as the potential capacity of theirmacroeconomic systems to tackle the crisis. Acknowledg<strong>in</strong>g that macroeconomic resilienceis only one part of socioeconomic resilience, the analysis can help <strong>in</strong> understand<strong>in</strong>gthe relevance of state <strong>fragility</strong> for the capacity of Sub-Saharan African countries to copeand adapt to major shocks.113
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisCHAPTER 6-AFRICA’S FRAGILE STATES HIT HARD BYTHE GLOBAL FINANCIAL CRISIS115
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisWhen the current economic crisis broke <strong>in</strong> the summer of 2007, there was a widespreadperception that Sub-Saharan Africa was go<strong>in</strong>g to be affected only to a limited extent,with fragile countries no exception 1 . The low <strong>in</strong>tegration of shallow f<strong>in</strong>ancial systemswith the U.S. and <strong>European</strong> capital markets appeared at first to shelter them from itsworst effects. But as events cont<strong>in</strong>ued to unfold, this perception proved wrong. Even ifthe wealth effects of the crisis are less pronounced than for other develop<strong>in</strong>g countries,Sub-Saharan Africa, especially its fragile countries, proved particularly vulnerable totrade l<strong>in</strong>kages and to disruptions of trade f<strong>in</strong>ance 2 .The reliance of Sub-Saharan African countries on <strong>in</strong>ternational trade, and thus theirexposure to shocks from abroad, have <strong>in</strong>creased <strong>in</strong> the last 10 years. African economieshave become more sensitive to fall<strong>in</strong>g <strong>in</strong>ternational demand, especially <strong>in</strong> an unprecedentedsynchronisation of economic cycles, which limits the benefits from diverse trad<strong>in</strong>gpartners. Moreover, because funds devoted to official development assistance tendto follow donor country economic cycles, despite the commitments to ma<strong>in</strong>ta<strong>in</strong> and even<strong>in</strong>crease aid, fragile Sub-Saharan African countries are likely to face a decl<strong>in</strong>e <strong>in</strong> aid, atleast <strong>in</strong> the short to medium run. Despite repeated calls <strong>in</strong> <strong>in</strong>ternational meet<strong>in</strong>gs to respectaid commitments, and even if donors do live up to their promises and keep theshare of aid <strong>in</strong> GDP constant, aid could fall substantially, because of the slowdown <strong>in</strong> donorcountries and possibly because of unfavourable exchange rate movements (such asthe recent devaluation of the pound aga<strong>in</strong>st the dollar). Remittances are also expectedto decl<strong>in</strong>e after a long period of steady growth.1 The daunt<strong>in</strong>g challenges of the crisis: br<strong>in</strong>g<strong>in</strong>gto a halt years of cont<strong>in</strong>ued progressThe 2008–09 crisis ends a prolonged period of world economic growth and globalisationwhere world trade grew twice as fast as world GDP. The growth of GDP started to decl<strong>in</strong>e<strong>in</strong> 2008, and the contraction spread to all regions. Indeed, the pattern of decl<strong>in</strong>e,the worst <strong>in</strong> decades, resembles the collapse <strong>in</strong> 1929–30. The current crisis underm<strong>in</strong>edthe drivers of the recent globalisation phase: open markets, globally <strong>in</strong>tegrated productioncha<strong>in</strong>s and many more footloose <strong>in</strong>ternational companies.The slowdown of world trade was much sharper than that of GDP, even sharper than<strong>in</strong> the Great Depression 3 . This effect could be due to the general synchronisation of cyclesamong countries. It could also be traced to the larger weight of <strong>in</strong>termediate goods<strong>in</strong> trade, <strong>in</strong> turn due to the fragmentation of production—which, after stimulat<strong>in</strong>g rapidgrowth over the last 10 years, magnified the decl<strong>in</strong>e.The economic and f<strong>in</strong>ancial crisis came on top of a period of highly volatile commodityprices and exchange rates, which <strong>in</strong>creased uncerta<strong>in</strong>ty and strengthened a vicious circleof fall<strong>in</strong>g trade flows and <strong>in</strong>vestments. It occurred when Sub-Saharan Africa had built asolid momentum for growth 4 . Before July 2008 Sub-Saharan Africa recorded stronggrowth, and fragile countries—whatever the def<strong>in</strong>ition—were no exception. The currentcrisis threatens to <strong>in</strong>terrupt this positive trend, even though the region is more equippedto cope than <strong>in</strong> previous downturns 5 .Dur<strong>in</strong>g the recent period of growth Sub-Saharan Africa became more <strong>in</strong>tegrated withthe rest of world, as reflected <strong>in</strong> its ris<strong>in</strong>g (but still low) share <strong>in</strong> global exports and <strong>in</strong>12345See IDS 2008 and IMF 2008.Berman and Mart<strong>in</strong> 2009.Eichengreen and O’Rourke 2009. The estimated elasticity of world trade to world GDP is around2. This has supported the globalisation and is likely now to backfire.Arbache and Page 2008.Fosu and Naudé 2009.116
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisGDP (figure 6.1) 6 . Fragile countries, on average less <strong>in</strong>tegrated than other Sub SaharanAfrican countries, followed the same trend. The <strong>in</strong>creas<strong>in</strong>g <strong>in</strong>ternational <strong>in</strong>tegration hasexposed Sub-Saharan African fragile countries much more to disruptions <strong>in</strong> trade and toother shocks. It also had a marked effect on tax revenues (and <strong>in</strong> some countries on taxpolicy), with reduced receipts from trade taxes. The challenges of globalisation for resourcemobilisation are exacerbated by the recent crisis, which lowers the tax base.Figure 6.1: Exports ris<strong>in</strong>g as a share of GDP50454035302520151050198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006Sub-Saharan African fragile countriesSub-Saharan African nonfragile countriesSource: World Bank (2009c), World Development Indicators 2009.2 Three “Fs” (food, fuel, f<strong>in</strong>ance) and a fourth(<strong>fragility</strong>)Food and fuel price spikes through mid-2008 put food-import<strong>in</strong>g and oil-import<strong>in</strong>g Sub-Saharan African fragile countries under severe stress, push<strong>in</strong>g down their foreign exchangereserves and mak<strong>in</strong>g it difficult to pay for imports and susta<strong>in</strong> growth. Conversely,oil-export<strong>in</strong>g countries have benefited from <strong>in</strong>creased revenues and severalhave been able to strengthen their foreign reserve position. However, the boom andbust contributed to output volatility, discourag<strong>in</strong>g <strong>in</strong>vestments <strong>in</strong> long-term productivecapacity.As emphasised by IMF (2009a), most Sub-Saharan African countries have almostconsecutively suffered fuel, food and f<strong>in</strong>ancial (3F) shocks. Most recent estimates putreal Sub-Saharan Africa GDP growth for 2009 at around 1.5%, down from an estimated5.5% <strong>in</strong> October 2008. These numbers would make 2009 the first year <strong>in</strong> a decade <strong>in</strong>which most fragile Sub-Saharan African countries recorded negative growth <strong>in</strong> real GDPper capita, threaten<strong>in</strong>g the progress towards the MDGs and underm<strong>in</strong><strong>in</strong>g political stabil-6The ratio of exports to GDP for some countries, particularly for the oil exporters <strong>in</strong> Central Africa,is probably <strong>in</strong>flated by the high prices for raw materials.117
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisisity 7 . Slower growth does not always threaten to reverse human development, but it producessetbacks, especially through cuts <strong>in</strong> education and health expenditures, whichhave serious long-term consequences.3 The four channels of transmission to fragilecountriesGiven the low f<strong>in</strong>ancial development <strong>in</strong> the region and the limited l<strong>in</strong>kages of fragilecountries to the global f<strong>in</strong>ancial system, the ma<strong>in</strong> channels of transmission for the crisisare <strong>in</strong> the real sectors of the economy. Most fragile countries <strong>in</strong> Sub-Saharan Africa havesmall domestic bank<strong>in</strong>g systems and th<strong>in</strong> to nonexistent equity markets. Moreover, foreign<strong>in</strong>vestors and sovereign wealth funds <strong>in</strong>vest <strong>in</strong> just a few oil-export<strong>in</strong>g countries.Sub-Saharan African countries are exposed to the crisis ma<strong>in</strong>ly through trade: the reduction<strong>in</strong> export earn<strong>in</strong>gs is accompanied by an adverse terms of trade effect re<strong>in</strong>forcedby the excessive dependence on commodity exports of fragile Sub-Saharan Africancountries and the polarisation of their exports 8 . These countries are also exposedthrough lower migrant remittances, lower <strong>in</strong>flows of foreign direct <strong>in</strong>vestments and possiblylower <strong>in</strong>flows of foreign aid.The direct f<strong>in</strong>ancial channels of transmission have been at work only <strong>in</strong> such countriesas Kenya and Nigeria (and two important nonfragile countries, South Africa and Ghana),which have deeper and more <strong>in</strong>tegrated f<strong>in</strong>ancial markets (box 6.1). Nigeria, for example,suffered stocks market falls similar to, or even greater than, those <strong>in</strong> developedcountries 9 . Its NSE-20 Index fell by 55% from July 2008 to February 2009, after a fall of45% the previous year 10 . This decl<strong>in</strong>e and the correspond<strong>in</strong>g lack of confidence make iteven more difficult to borrow from capital markets. The repercussions of the crisis <strong>in</strong>some important dest<strong>in</strong>ation markets for <strong>in</strong>traregional migrants—such as Nigeria, SouthAfrica, Uganda and Zambia—have strong spillovers to neighbour<strong>in</strong>g fragile countries(especially through a fall <strong>in</strong> employment opportunities for migrants and a decl<strong>in</strong>e <strong>in</strong> remittances).Box 6.1: African f<strong>in</strong>ancial markets—spillovers of shocksS<strong>in</strong>ce the beg<strong>in</strong>n<strong>in</strong>g of the 1990s a number of develop<strong>in</strong>g countries have established stockexchanges, partly to satisfy their quest for new capital and partly to <strong>in</strong>corporate elements ofmarket capitalism <strong>in</strong> their economies. Sub-Saharan Africa has also participated <strong>in</strong> this trend,with South Africa ris<strong>in</strong>g <strong>in</strong>to the ranks of the lead<strong>in</strong>g dest<strong>in</strong>ations of emerg<strong>in</strong>g markets andwith a number of regional funds specifically target<strong>in</strong>g the cont<strong>in</strong>ent. At the behest of nationalgovernments, and with donor support, Africa has expanded its domestic stock exchangesfrom six <strong>in</strong> the late 1980s to more than 20 today, though not all are equally developed.Among fragile countries, Nigeria and Kenya had the most developed stock markets.How did the developments of larger f<strong>in</strong>ancial markets (U.S., UK and Ch<strong>in</strong>a) affect Africanmarkets (Kenya, Nigeria and South Africa) over 2004–09? Analys<strong>in</strong>g volatility of differentf<strong>in</strong>ancial markets through an econometric model, we f<strong>in</strong>d that positive shocks <strong>in</strong> South Africaand negative shocks <strong>in</strong> Ch<strong>in</strong>a and the UK affect all markets considered. All African marketsare <strong>in</strong>fluenced by U.S. negative shocks (such as the Lehman Brothers collapse) exceptKenya, <strong>in</strong>fluenced only by positive shocks <strong>in</strong> the United States. South Africa affects the789Sub-Saharan Africa has on average a negative rate of growth of real GDP per capita (–0.6%).Fragile Sub-Saharan African countries record a positive 0.2% rate of growth, but this figuremasks a high degree of heterogeneity (chapter 2).Most fragile countries rely on exports of a s<strong>in</strong>gle product. On average the three top exports accountfor around 90% of total exports, as emphasised <strong>in</strong> chapter 2.AfDB 2009a and ODI 2009a.10 Kasekende et al. 2009 and ODI 2009a.118
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisUnited States while it is <strong>in</strong>fluenced only by the Nigerian market. There is no evidence of asignificant relationship between Nigeria and Kenya. Ch<strong>in</strong>a has strong l<strong>in</strong>ks with Africanmarkets. Further results show that South Africa and Ch<strong>in</strong>a have a key role <strong>in</strong> all Africanmarkets and that the <strong>in</strong>fluence of the UK and United States is weaker. Ch<strong>in</strong>a turns out to be<strong>in</strong>dependent of the UK and United StatesBox figure 1 shows how the collapse of Lehman Brothers on September 15, 2008propagates from the United States to all markets. On September 15, 2008 Lehman Brotherswent bankrupt, and <strong>in</strong>ternational f<strong>in</strong>ancial markets suffered large losses. Box figure 1 reportsa graphical representation (impulse-response functions) of the volatility shock propagation;on the horizontal axis, we report time (days) and, <strong>in</strong> the vertical axis, we read the volatilityresponse. When a shock hits market i, the graph shows the responses on all markets; onaverage, market i response at time 0 will be higher than other markets’ response. The UKand Ch<strong>in</strong>a react strongly to the U.S. shock while Nigeria and Kenya do not. South Africaturns out to be very sensitive to the U.S. shock, but the effect is cumulative and the shocksreach the maximum effect after 20 days.Box figure 6.1: South Africa responds to the Lehman Brothers collapse—Kenya andNigeria do not3.02.5Response2.01.51.00.50.01 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97DaysC h<strong>in</strong>a Kenya Nigeria South Africa UK USNotes: This box uses a MEM (Multiplicative Error Model) approach that allows us to describe and forecast the<strong>in</strong>teractions and spillover effects among these countries (Engle, Gallo and Velucchi, 2008); we model the dynamics ofthe expected volatility of one market, <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>teractions with the past squared returns of the other markets, build<strong>in</strong>ga fully <strong>in</strong>terdependent model, impulse response functions are used to suggest a buildup <strong>in</strong> the spillover effects.Source: Giovannetti and Velucchi (2009).Exporters of m<strong>in</strong>erals and agricultural products have seen decl<strong>in</strong>es <strong>in</strong> revenues which,<strong>in</strong> turn, have negatively affected government revenues. In Nigeria, for <strong>in</strong>stance, thevolatile price of oil, which constitutes around 90% of Nigerian exports (see table 2.3)and 90% of government revenues 11 , created considerable uncerta<strong>in</strong>ty, as did the drop <strong>in</strong>metal prices for the Democratic Republic of Congo. Aga<strong>in</strong>st this background, the crisiscould have a positive impact, by stimulat<strong>in</strong>g the redirection of <strong>in</strong>terest to revive the potentialof sectors different from oil and fuels (or more generally raw materials), thusstrengthen<strong>in</strong>g the economies for possible future shocks.11 ODI 2009a.119
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisis3.1 Fewer resources for foreign direct <strong>in</strong>vestmentFDI has been an important source of resources for some (few) Sub-Saharan Africanfragile countries and a powerful eng<strong>in</strong>e of growth, depend<strong>in</strong>g on which sectors they weretargeted to. Investments <strong>in</strong>to the oil <strong>in</strong>dustry generate little domestic employment,given the small number of the employees and high skills required, while those for tourismor some traditional manufactur<strong>in</strong>g stimulate domestic employment, consumptionand growth 12 .FDI as a share of GDP has been lower <strong>in</strong> Sub-Saharan Africa than <strong>in</strong> other develop<strong>in</strong>gcountries, unevenly distributed across countries and often related to natural resourcesendowment. FDI had been <strong>in</strong>creas<strong>in</strong>g <strong>in</strong> absolute terms and as a share of GDP s<strong>in</strong>ce2000, but the economic crisis has reduced the total amount of funds or delayed someprojects. The crisis tightened credit and lowered profits for firms <strong>in</strong> developed andemerg<strong>in</strong>g economies, lead<strong>in</strong>g them to revise their <strong>in</strong>vestment plans downward and assumea wait-and-see attitude 13 . The high and <strong>in</strong>creas<strong>in</strong>g uncerta<strong>in</strong>ty l<strong>in</strong>ked to the concurrentfuel, food and f<strong>in</strong>ancial crises expla<strong>in</strong>s the general decl<strong>in</strong>e <strong>in</strong> FDI, particularlydamag<strong>in</strong>g because of its persistent effects 14 , perhaps even beyond those warranted by acountry’s fundamentals.In the first half of 2008 Angola and Nigeria as well as the Democratic Republic ofCongo and Gu<strong>in</strong>ea, each received more than $1 billion <strong>in</strong> FDI <strong>in</strong>flows 15 . But <strong>in</strong> the secondhalf of 2008 and the first half of 2009 a number of <strong>in</strong>vestments <strong>in</strong> natural resources andmanufactur<strong>in</strong>g were put on hold or cancelled. The Democratic Republic of Congo andZambia have had m<strong>in</strong><strong>in</strong>g projects cancelled, Sudan has had a ref<strong>in</strong>ery postponed, andBotswana and Tanzania have had m<strong>in</strong><strong>in</strong>g projects postponed.But <strong>in</strong> one sector FDI has kept <strong>in</strong>creas<strong>in</strong>g: land (chapter 4). Foreign countries, look<strong>in</strong>gfor food security or want<strong>in</strong>g to <strong>in</strong>crease their production of biofuels without jeopardis<strong>in</strong>gtheir water resources, are buy<strong>in</strong>g land <strong>in</strong> Sub-Saharan Africa. Deals may be unfavourablefor Sub-Saharan African countries, especially where state <strong>in</strong>stitutions are. as theseare characterized by a weak law enforcement which could be exploited by foreign countries<strong>in</strong>volved <strong>in</strong> the deals. The effects of these <strong>in</strong>flows on receiv<strong>in</strong>g countries are highlycontroversial 16 . Short-term money to cushion the worst effects of the crisis can turn outto be a predation of important resources. But if well managed, it could <strong>in</strong>crease agriculturalproductivity and even have some positive effects on growth.3.2 Trade decl<strong>in</strong>esMany Sub-Saharan African countries, <strong>in</strong>clud<strong>in</strong>g fragile raw material exporters, have reliedheavily on export markets to grow. The crisis has been transmitted to them ma<strong>in</strong>lythrough decl<strong>in</strong><strong>in</strong>g demand for exports and decl<strong>in</strong><strong>in</strong>g export prices.12 See Bonassi et al. 2006.13 Theoretical models of <strong>in</strong>vestment under uncerta<strong>in</strong>ty (Dixit 1989) have <strong>in</strong> the past used the optiontheory to expla<strong>in</strong> this <strong>in</strong>vestors’ attitude when the environment is perceived as risky. Forthe same values of the fundamentals firms’ behaviour is different, depend<strong>in</strong>g on the history ofthe firms: if a firm is already <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> a country, it goes on, but new <strong>in</strong>vestments are postponed.Firms’ behaviour could expla<strong>in</strong> the current situation: what is a discont<strong>in</strong>uity <strong>in</strong> <strong>in</strong>dividualbehaviour (firms may decide to <strong>in</strong>vest or not to <strong>in</strong>vest <strong>in</strong> the same situation, depend<strong>in</strong>g on theirhistory and multiple equilibria are possible), makes the aggregate <strong>in</strong>vestment function highlynonl<strong>in</strong>ear.14 It takes time for <strong>in</strong>vestments to be realised, and a decl<strong>in</strong>e <strong>in</strong> a year produces a long-last<strong>in</strong>gimpact over the years to come15 See UNCTAD 2009, p. 42.16 For a discussion of this issue, see chapter 4.120
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisIt takes time to assess the effects of the crisis on trade flows, but early signals arenot reassur<strong>in</strong>g: the demand from Europe, the United States and Ch<strong>in</strong>a for Sub-SaharanAfrican fragile country products has fallen sharply, even more than for products fromother areas (figure 6.2). This is partly due to the fact that their exports are ma<strong>in</strong>ly rawmaterials. But even for manufacturers, concentrated on low technology products, thegroup suffers more than other develop<strong>in</strong>g areas 17 . Moreover, many Sub-Saharan Africanfragile countries have suffered from <strong>in</strong>creased exchange rate volatility, which <strong>in</strong>ducedhigh uncerta<strong>in</strong>ty and high costs for <strong>in</strong>ternational trade. Many countries <strong>in</strong> the CFA zonehave an exchange rate pegged to the Euro and have experienced a real exchange ratedepreciation. This to an extent makes imports from these countries cheaper, but becausefragile states have little capacity to <strong>in</strong>crease exports, they cannot exploit this opportunity18 .Figure 6.2: Exports down most for Sub-Saharan AfricaU.S. imports150World130110Sub-SaharanAfrica9070503009/200810/200811/200812/200801/200902/200903/200904/200905/200906/2009Sub-SaharanAfricanfragilecountriesMiddleEast andNorthAfricaLat<strong>in</strong>AmericaEU imports110World10090Sub-SaharanAfrica8070605040Sub-SaharanAfricanfragilecountriesMiddle Eastand NorthAfricaLat<strong>in</strong>America09/200810/200811/200812/200801/200902/200903/200904/200905/200917 See UNCTAD 2009; this sharper fall <strong>in</strong> export is true also for Sub-Saharan Africa as a whole.18 AfDB 2009b.121
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisCh<strong>in</strong>ese imports120110100908070605040WorldSub-SaharanAfricaSub-SaharanAfrica fragileMiddle Eastand NorthAfricaLat<strong>in</strong> America302009/200810/200811/200812/200801/200902/200903/200904/200905/200906/200907/2009Note: September 2008 = 100Source: Global Trade Atlas.The f<strong>in</strong>ancial crisis is also likely to have reduced the capacity to f<strong>in</strong>ance world trade.Sub-Saharan African firms, especially <strong>in</strong> fragile countries, depend more than others ontrade f<strong>in</strong>anc<strong>in</strong>g. Most Sub-Saharan African firms rely on letters of credit from dest<strong>in</strong>ationcountries, ma<strong>in</strong>ly because of an underdeveloped domestic f<strong>in</strong>ancial system and the scarcityof self-f<strong>in</strong>anc<strong>in</strong>g. These providers, <strong>in</strong> a situation of high uncerta<strong>in</strong>ty and lack of trust,have reduced their risk exposure and credit. Firms and countries that suffer more arethose considered more at risk. So, credit ration<strong>in</strong>g, which <strong>in</strong>creases trad<strong>in</strong>g costs, hasdampened exports of fragile Sub-Saharan African countries.Analyses 19 based on 117 systemic crises 20 and bilateral trade data suggest that exportsof Sub-Saharan Africa countries can be hit hard by the current crisis. First, the impactof past f<strong>in</strong>ancial crises and recessions on Sub-Saharan African exports has beenstronger and more persistent when the trad<strong>in</strong>g partner was an <strong>in</strong>dustrial country. Second,Sub-Saharan African countries have been hit harder and longer than other regionsby crises affect<strong>in</strong>g their dest<strong>in</strong>ation markets. This is not just a composition effect due tothe overrepresentation of primary products <strong>in</strong> their export baskets, but it is also a consequenceof the lower competitiveness of Sub-Saharan African manufactur<strong>in</strong>g exportswhich are more concentrated on lower value-added products. Indeed, Sub-Saharanmanufactur<strong>in</strong>g and raw materials exports have both been hit hard (figure 6.3). In additionto the higher dependence on Sub-Saharan African exports on trade f<strong>in</strong>ance, onepossibility for these f<strong>in</strong>d<strong>in</strong>gs is the lower competitiveness of Sub-Saharan African manufactur<strong>in</strong>gexports which are more concentrated on lower-value-added. Also poor <strong>in</strong>frastructurethat <strong>in</strong>creases the costs (duties, red tape, border cross<strong>in</strong>gs) add to their vulnerability.On the contrary, to exploit the opportunities offered by an economic crisis,firms have to f<strong>in</strong>d niches, develop higher quality products or move up the value cha<strong>in</strong>.But this requires the right human capital, <strong>in</strong> short supply <strong>in</strong> fragile countries.19 Berman and Mart<strong>in</strong> (2009) use a gravity model to compute impulse-responses; the analysishere is on Sub-Saharan Africa as a whole because of the lack of reliable time series for thegroup of fragile countries. See their background paper <strong>in</strong> Volume 1B for details.20 Systemic crisis def<strong>in</strong>ed as events—possibly last<strong>in</strong>g several years—where much or all bank capitalwas exhausted. The dataset of bilateral trade and f<strong>in</strong>ancial crisis is on the period 1972-2002.122
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisFigure 6.3: Sub-Saharan Africa primary and manufactur<strong>in</strong>g exports after f<strong>in</strong>ancialcrisis <strong>in</strong> partner country0.5E x c e s s tr a d e r a tio0.30.1-2 -1 -0.1 0 1 2 3 4 5 6 7-0.3-0.5-0.7Years s<strong>in</strong>ce crisisPrimary goodsManufactur<strong>in</strong>g goodsSource: Berman and Mart<strong>in</strong> 2009.Note: the graph shows the deviation of African exports after a f<strong>in</strong>ancial crisis that takes place <strong>in</strong> year t = 0,with respect to the average disruption effect. The excess trade ratio <strong>in</strong> the y-axis represents the deviation ofSub-Saharan African bilateral exports generated by a f<strong>in</strong>ancial crisis <strong>in</strong> the partner country, relative to the averagedeviation: a positive (negative) excess trade ratio means that the effect of a f<strong>in</strong>ancial crisis <strong>in</strong> the partnercountry on African exports is more positive (negative) than the average effect on exports.3.3 Fad<strong>in</strong>g aid flows: a scenario to be avoidedThe G8 summit at Gleneagles <strong>in</strong> 2005 pledged to scale up aid to African countries, andthis promise has been repeatedly restated and confirmed <strong>in</strong> <strong>in</strong>ternational meet<strong>in</strong>gs. Still,the global recession <strong>in</strong>duced by the 2008-09 global crisis casts doubts on the actual evolutionof aid efforts on the side of OECD DAC donors. Aid budgets may be reduced withrespect to the historical high <strong>in</strong> 2008, to f<strong>in</strong>ance fiscal stimulus packages aimed at susta<strong>in</strong><strong>in</strong>g<strong>in</strong>ternal demand <strong>in</strong> donor countries. Early signals from some OECD DAC membercountries are not reassur<strong>in</strong>g. The Irish government announced a reduction of its aidbudget by 22% from what was <strong>in</strong>itially planned for the current year. And Italy couldhalve its aid budget <strong>in</strong> 2009, hitt<strong>in</strong>g a historical low 21 . In the short to medium run, mostaid budgets of developed countries will be affected because of the recent budget deficits.So spend<strong>in</strong>g cuts or high <strong>in</strong>terest rates are likely <strong>in</strong> the near future.Past crises—which were not as global—reveal that donors tend to cut their aid budgetssignificantly when fac<strong>in</strong>g a major recession. For <strong>in</strong>stance, the Nordic bank<strong>in</strong>g crisis <strong>in</strong>1991 was followed by a substantial reduction <strong>in</strong> aid disbursements by Norway, Swedenand F<strong>in</strong>land.Even keep<strong>in</strong>g earlier commitments does not shelter recipient countries from a sizeablereduction <strong>in</strong> aid flows, because commitments are expressed as a share of gross national<strong>in</strong>come, and because of sw<strong>in</strong>gs <strong>in</strong> bilateral exchange rates with the dollar.Aid budgets for 2009 To ga<strong>in</strong> a better understand<strong>in</strong>g of the possible effects of the crisison aid budget, we draw on the econometric analysis by Bertoli et al. (2007), who modelthe economic, <strong>in</strong>stitutional and political determ<strong>in</strong>ants of the aid effort – def<strong>in</strong>ed as theaid to GDP ratio – by the 22 members of the OECD DAC over the period 1970-2004.Here, we extend the analysis up to 2008, and use a modified specification of the model,that allows for a non-l<strong>in</strong>ear relationship between recessions and aid effort. Such a speci-21 See One 2009.123
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisisfication reflects the <strong>in</strong>tuition that major recessions could produce a severe—and morethan proportional—impact on the aid effort of the donors 22 .Our estimates suggest that countries with a larger budget deficit do not necessarily reducetheir aid disbursements, because the primary budget deficit is a poor measure of acountry’s fiscal stance. This f<strong>in</strong>d<strong>in</strong>g, <strong>in</strong> l<strong>in</strong>e with Round and Odedokun (2004), is not reassur<strong>in</strong>g.The analysis shows that aid falls with a larger debt overhang—and it falls morethan proportionally <strong>in</strong> response to a larger output gap, which measures the severity ofthe recession. The estimates are then used to predict the aid budgets for 2009 for eachdonor country on the basis of macroeconomic forecasts of the OECD Economic Outlook.Accord<strong>in</strong>g to our predictions, aid flows from OECD DAC countries could fall by $22 billion<strong>in</strong> 2009, down from the $119 billion <strong>in</strong> 2008, if donors behave as they did dur<strong>in</strong>gpast recessions 23 . The aggregate variation of total aid flows is radically different from thepicture that emerges from the projections made on the basis of public announcementsmade by member countries of the OECD DAC (OECD, 2009a), which are <strong>in</strong> l<strong>in</strong>e with earliercommitments. Our predictions represent what the evolution of aid budgets <strong>in</strong> responseto the fluctuations of the bus<strong>in</strong>ess cycles suggests that could happen, but –needless to say – this is just a scenario, which could be avoided provided that most donorcountries assign the due priority to aid.To strengthen the case that this is a scenario to be avoided, we try to get a sense ofthe size of the impact upon recipient countries <strong>in</strong> Sub-Saharan Africa, assum<strong>in</strong>g that donorskeep their bilateral allocations unchanged from 2003–07, 24 gives an idea of thepossible effects on <strong>in</strong>dividual countries. This back-of-the-envelope exercise shows thatmost Sub-Saharan African countries are exposed to a reduction <strong>in</strong> aid flows of between15% and 20% (figure 6.4). This cut may particularly affect countries with a high shareof aid <strong>in</strong> their balance of payments 25 . Fluctuations <strong>in</strong> aid are particularly devastat<strong>in</strong>g forfragile countries 26 .22 See Bertoli et al. (2007) for a description of the underly<strong>in</strong>g econometric model, and the backgroundpaper by Allen and Giovannetti (2009) available <strong>in</strong> Volume 1B for the results of the extendedeconometric model.23 See Allen and Giovannetti (2009) for country-specific projections.24 Bilateral aid data are not yet available for 2008.25 Chapter 2 provides data on the dependence of fragile countries on ODA, compared with remittancesand FDI. Accord<strong>in</strong>g to OECD (2009b), <strong>in</strong> a different context and with different estimates,Chad, Eritrea and Gu<strong>in</strong>ea are expected to face a decl<strong>in</strong>e <strong>in</strong> aid of more than $20 million.26 OECD (2009b) ma<strong>in</strong>ta<strong>in</strong>s that Burundi, the DRC, Eritrea, Gu<strong>in</strong>ea-Bissau, Liberia and SierraLeone had aid fluctuations <strong>in</strong> excess of 5% of GDP dur<strong>in</strong>g 1990–2005.124
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisFigure 6.4: Estimated reduction of aid flows to Africa <strong>in</strong> 2009Source: Authors’ elaboration.Needless to say, <strong>European</strong> donors should avoid cutt<strong>in</strong>g down aid to Sub-Saharan Africancountries <strong>in</strong> general, and to fragile countries <strong>in</strong> particular, as the aid channel wouldthen add to the adverse effects that go through the three channels that we have previouslydescribed. Still, the fear that donor countries, which have <strong>in</strong>curred high domesticcosts to cope with the crisis, may reduce their flows cannot be easily dismissed, giventhe historical experience and some worry<strong>in</strong>g early signals. IMF (2009c) argues that“notwithstand<strong>in</strong>g <strong>in</strong>ternational commitments to scale up aid, projections do not suggestsuch scal<strong>in</strong>g-up <strong>in</strong> the pipel<strong>in</strong>e for 2009” 27 , and suggests that low <strong>in</strong>come countries couldsuffer from a 25% reduction with respect to the previous year.Ch<strong>in</strong>a, which has a surplus <strong>in</strong> its budget (and <strong>in</strong> its balance of payments), could fillthe gap left by OECD countries (box 6.2).Box 6.2: Is Ch<strong>in</strong>a fill<strong>in</strong>g the gap?The Ch<strong>in</strong>a-Africa Cooperation Forum, launched <strong>in</strong> 2000 by Ch<strong>in</strong>a and its African partners(except the three countries that still recognize Taiwan as an autonomous prov<strong>in</strong>ce), is theplatform for Ch<strong>in</strong>a to signal its plans for <strong>in</strong>ternational development assistance to Africa. 28Ch<strong>in</strong>a provides <strong>in</strong>ternational aid to African countries through economic cooperation, ma<strong>in</strong>lyon a project basis, often l<strong>in</strong>ked to FDI and trade. By the end of 2006 Ch<strong>in</strong>a had launchedaround 800 aid projects <strong>in</strong> Africa: 137 <strong>in</strong> agriculture, 133 <strong>in</strong> <strong>in</strong>frastructure, 19 <strong>in</strong> schools, 38<strong>in</strong> hospitals. Ch<strong>in</strong>a has also sent 16,000 medical personnel to 43 African countries, tra<strong>in</strong>ed15,000 persons and cancelled African debt for about $1.2 billion 29 .Ch<strong>in</strong>a had disbursed $5.6 billion <strong>in</strong> aid to Africa by the end of 2006. Ch<strong>in</strong>a’s Exim Bank,one of the country’s key actors <strong>in</strong> development cooperation, announced that it has disbursed$12.3 billion <strong>in</strong> loans and export credits to Africa over 1995–2006. The Centre for Ch<strong>in</strong>eseStudies 30 adds that Exim Bank had 259 projects <strong>in</strong> 39 African countries by September 2006,27 IMF 2009c, p. 30.28 The Gambia, Burk<strong>in</strong>a Faso and São Tomé and Príncipe.29 See MOFCOM 2007.30 See CCS 2008.125
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisis80% <strong>in</strong> <strong>in</strong>frastructure (dams, railways, oil facilities and m<strong>in</strong>es). Jacoby (2007) <strong>in</strong>cludesgrants and other credits to the previous figures and estimates $19 billion <strong>in</strong> f<strong>in</strong>ancialassistance from Ch<strong>in</strong>a to Africa by 2006.The forms of assistance to African countries are grants (ma<strong>in</strong>ly <strong>in</strong> k<strong>in</strong>d), zero <strong>in</strong>terestloans and concessional loans. Recently, Ch<strong>in</strong>a started provid<strong>in</strong>g African countries with moredebt relief. Ch<strong>in</strong>ese officials are said to prefer provid<strong>in</strong>g aid <strong>in</strong> the form of grants <strong>in</strong> k<strong>in</strong>dbecause this reduces considerably the transaction costs related to the delivery of aid and<strong>in</strong>crease its effectiveness 31 .OECD (2008b) reports that a number of African fragile countries (such as Angola,Cameroon, Republic of Congo, Democratic Republic of Congo, Cote d’Ivoire, Eritrea, Liberia,Nigeria, Sudan and Togo) have already received concessional loans from Ch<strong>in</strong>a Exim Bank.Pehnelt (2007) f<strong>in</strong>ds that almost all of Ch<strong>in</strong>a’s most important partners <strong>in</strong> the cont<strong>in</strong>entperform poorly on political freedom and the quality of governance, while Alves and Draper(2007) highlight the low scores on Foreign Policy’s Failed States Index. Woods (2008) andBrautigam (2008) stress the ris<strong>in</strong>g Ch<strong>in</strong>ese engagement <strong>in</strong> “rogue states” such as Sudan andZimbabwe, though this support goes beyond the sole provision of aid, while Sh<strong>in</strong>n (2008)focuses on the strong military ties of Ch<strong>in</strong>a with these two countries.Box figure 1 compares DAC aid with Ch<strong>in</strong>ese economic cooperation 32 for a group ofAfrican fragile countries. 33 ODA from DAC countries has been cyclical s<strong>in</strong>ce 2000, with adownward trend over the latest years. By contrast, Ch<strong>in</strong>ese economic cooperation flows tofragile countries have been grow<strong>in</strong>g steady and, <strong>in</strong> 2006, were almost equal to DACcountries’ aid outflows.The trend is even stronger for some <strong>in</strong>dividual African countries, especially where thef<strong>in</strong>ancial support from western donors has weakened after the mid-1990s (Angola, EquatorialGu<strong>in</strong>ea, Eritrea, Sudan)—when a long series of episodes of violence and general <strong>in</strong>stabilityspread over the cont<strong>in</strong>ent 34 —and that nowadays receive the bulk of f<strong>in</strong>ancial assistance fromCh<strong>in</strong>a.31 See Lancaster 2007.32 As by the def<strong>in</strong>ition provided by the National Bureau of Statistics of Ch<strong>in</strong>a, data on economiccooperation with foreign countries or region cover either projects f<strong>in</strong>anced by Ch<strong>in</strong>a’s aid programmesand contracted projects undertaken by Ch<strong>in</strong>ese contractors. It is therefore importantto put a word of caution about the comparison between outflows of Ch<strong>in</strong>ese economic cooperation,which, accord<strong>in</strong>g to OECD (2008a), <strong>in</strong>cludes Ch<strong>in</strong>ese ODA but certa<strong>in</strong>ly overestimates it,and ODA from developed countries, which is a more focused and self-expla<strong>in</strong><strong>in</strong>g category.33 Fragile countries have been selected accord<strong>in</strong>g to the operational def<strong>in</strong>ition proposed by OECD(2009b) and adopted <strong>in</strong> chapter 2 of this report.34 See Tull 2008.126
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisBox figure 6.2: Ch<strong>in</strong>a’s economic cooperation with African fragile countries andDAC aid, 1998–200720000180001600014000$ million1200010000800060004000200001998 1999 2000 2001 2002 2003 2004 2005 2006 2007DACCh<strong>in</strong>aSource: <strong>ERD</strong> elaboration based on OECD DAC database National Bureau of Statistics of Ch<strong>in</strong>a (various editions), Ch<strong>in</strong>aStatistical YearbookAccord<strong>in</strong>g to some observers, Ch<strong>in</strong>a is go<strong>in</strong>g to profit from a possible withdrawal ofwestern countries from Africa 35 , though this will become clearer only after the fourth FOCACsummit <strong>in</strong> November 2009. At the beg<strong>in</strong>n<strong>in</strong>g of 2009 Ch<strong>in</strong>ese leaders restated theircommitments towards Africa, announc<strong>in</strong>g billions for new projects and other forms ofassistance, <strong>in</strong>clud<strong>in</strong>g a further reduction of debt 36 . Before President Hu J<strong>in</strong>tao’s tour of agroup of eastern African countries <strong>in</strong> February 2009, Ch<strong>in</strong>ese officials pledged that Ch<strong>in</strong>awould ma<strong>in</strong>ta<strong>in</strong> its aid to Africa, “regardless of the f<strong>in</strong>ancial crisis” and that it planned a200% <strong>in</strong>crease over 2006 <strong>in</strong> its foreign aid to Africa. 373.4 Remittances slowMigrant remittances to Sub-Saharan Africa reach countries where other private flows,such as foreign direct <strong>in</strong>vestments, are limited or nonexistent, sometimes even exceed<strong>in</strong>gofficial development assistance 38 . And many Sub-Saharan migrants from fragilecountries (as well as refugees) move nearby, because they cannot afford the high costof migrat<strong>in</strong>g to high-<strong>in</strong>come countries (figure 6.5) 39 .35 See Cook and Lam 2009.36 See Brown and Chun 2009.37 “Ch<strong>in</strong>a to ma<strong>in</strong>ta<strong>in</strong> aid, <strong>in</strong>vestment <strong>in</strong> Africa regardless of f<strong>in</strong>ancial crisis”, Ch<strong>in</strong>a View, June 2,2009.38 OECD 2008.39 Sander and Maimbo 2005.127
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisFigure 6.5: Many migrants reside with<strong>in</strong> AfricaSource: Authors’ elaboration based on data from the <strong>University</strong> of Sussex and the World Bank reported <strong>in</strong>Ratha and Shaw (2007).Remittances for recipient countries matter not just for their size but also becausethey tend to be stable or even move countercyclically along the bus<strong>in</strong>ess cycles of recipientcountries, thus reduc<strong>in</strong>g the likelihood of a balance of payment crisis 40 . So, howhave remittances to fragile African countries responded to the present downturn?Different forecasts exist. Ratha and Mohapatra (2009), after <strong>in</strong>itial optimism, predictthat remittances to Sub-Saharan Africa will fall by 7% <strong>in</strong> 2009 to $18–19 billion, downfrom the $20 billion officially recorded <strong>in</strong> 2008 (this excludes <strong>in</strong>formal channels, commonlyused by <strong>in</strong>traregional migrants). IMF (2009b) asserts that a 1 percentage po<strong>in</strong>treduction <strong>in</strong> the rate of economic growth <strong>in</strong> migrant send<strong>in</strong>g countries reduces outgo<strong>in</strong>gremittances by up to 4%. Calí and Dell’Erba (2009) ma<strong>in</strong>ta<strong>in</strong> that, compared with Lat<strong>in</strong>America and the Caribbean or East Asia and the Pacific, Sub-Saharan Africa will experiencea moderate drop <strong>in</strong> official flows of around 6–9% <strong>in</strong> 2009, given that its share ofremittances from high-<strong>in</strong>come countries was fairly low <strong>in</strong> 2008 41 .Remittances through official channels and from traditional receiv<strong>in</strong>g countries are,however, only part of the story, with <strong>in</strong>traregional migration an important channel oftransmission from emerg<strong>in</strong>g African countries to fragile Sub-Saharan countries. A detailedcountry-specific assessment would require reasonable forecasts about the flows ofremittances and the evolution of bilateral exchange rates of the migrants’ dest<strong>in</strong>ationcountries aga<strong>in</strong>st the dollar, because this is the s<strong>in</strong>gle most relevant factor <strong>in</strong> shap<strong>in</strong>gthe dollar value of the <strong>in</strong>com<strong>in</strong>g migrants’ remittances. But without such forecasts, anassessment is not feasible.40 See Ratha (2006) for evidence on countercyclical movements of remittances and Bugamelli andPaternó (2006) for a discussion of the role of remittances <strong>in</strong> Balance of Payments crises.41 ODI (2009b) reports that remittances <strong>in</strong> Kenya, largely from the United States, fell by 12% <strong>in</strong>the first half of 2009, compared to the first half of 2008.128
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisA decl<strong>in</strong>e <strong>in</strong> remittances can affect the composition of expenditure, if remittances aremore likely than <strong>in</strong>come from domestic sources to be <strong>in</strong>vested <strong>in</strong> education and hous<strong>in</strong>g.42Thus, Sub-Saharan African fragile countries will suffer from a steep fall <strong>in</strong> revenuesfrom trade, due both to a fall <strong>in</strong> <strong>in</strong>ternational demand and from deteriorat<strong>in</strong>g terms oftrade. Furthermore, they are also exposed to a decl<strong>in</strong>e <strong>in</strong> remittances orig<strong>in</strong>at<strong>in</strong>g fromdeveloped and emerg<strong>in</strong>g Sub-Saharan African countries which are the ma<strong>in</strong> dest<strong>in</strong>ationsof migrants from fragile countries, and to shr<strong>in</strong>k<strong>in</strong>g FDI <strong>in</strong>flows. These adverse effectscould also be matched by a decl<strong>in</strong>e <strong>in</strong> aid flows from DAC countries, if these fail to liveup to their commitments towards Africa, and they react—as past experiences suggest—to the recession with cut <strong>in</strong> aid budgets.4 Can fragile states cope with the crisis?Fragile countries will suffer from the steep fall <strong>in</strong> <strong>in</strong>ternational trade. But they will alsosuffer from deteriorat<strong>in</strong>g terms of trade and shr<strong>in</strong>k<strong>in</strong>g remittances because of higher unemployment<strong>in</strong> developed countries and <strong>in</strong> emerg<strong>in</strong>g Sub-Saharan African countries, decl<strong>in</strong><strong>in</strong>gFDI and dis<strong>in</strong>vestments and possibly a reduction <strong>in</strong> aid flows, at least <strong>in</strong> the shortto medium run. To understand how they can cope with the recession or other negativeshocks, we propose and apply an overall resilience <strong>in</strong>dex.Resilience is a multifaceted characteristic of a socio-economic system, which is onlypartly understood, and whose measurement is controversial. Follow<strong>in</strong>g Naudé (2009),we focus here just on its macroeconomic dimension, which relate to the ability of thestate to implement adequate policies <strong>in</strong> reaction to a shock, such as the 2008-09 crisis.Hence, additional dimensions of resilience – at the household or community level – arenot considered; their relevance should not be downplayed, but state <strong>in</strong>stitutions still representa pillar of resilience. With this caveat <strong>in</strong> m<strong>in</strong>d, we build an <strong>in</strong>dex of the resilienceof each Sub-Saharan African country exam<strong>in</strong><strong>in</strong>g four separate dimensions 43 :• Macroeconomic management, reflected <strong>in</strong> balance of payments and fiscal balancesand levels of currency reserves.• Good governance.• Market efficiency, measured by the Do<strong>in</strong>g Bus<strong>in</strong>ess <strong>in</strong> 2009 <strong>in</strong>dicators.• Social cohesion, measured by us<strong>in</strong>g the ethnol<strong>in</strong>guistic fractionalisation <strong>in</strong>dexand the political <strong>in</strong>stability <strong>in</strong>dex.We then aggregate these four components of the resilience <strong>in</strong>dex, and we rank Sub-Saharan African countries accord<strong>in</strong>g to their capacity to cope with external shocks, <strong>in</strong>three ma<strong>in</strong> categories: low, medium and high resilience. The subgroup of fragile countriesis ma<strong>in</strong>ly classified as low resilience (table 6.1).42 Maimbo and Ratha 2005.43 See the background paper by Naudé (2009) <strong>in</strong> Volume 1B with additional details on the <strong>in</strong>dex.129
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisTable 6.1: Resilience rank—from low to highLow Medium HighCongo, Dem. Rep. of 1 Ethiopia 16 Burk<strong>in</strong>a Faso 31Chad 3 Sierra Leone 17 Togo 32Burundi 4 Zambia 18 Madagascar 33Central African Republic 5 Malawi 19 Ben<strong>in</strong> 34Eritrea 6 São Tomé and Príncipe 20 Tanzania 35Congo, Rep. of 7 Cameroon 21 Mozambique 36Gu<strong>in</strong>ea-Bissau 8 Mali 22 Lesotho 37Côte d'Ivoire 9 Uganda 23 Swaziland 38Gu<strong>in</strong>ea 10 Nigeria 24 Seychelles, The 39Niger 11 Ghana 25 Gabon 40Kenya 12 Senegal 26 Namibia 41Liberia 13 Cape Verde 27 South Africa 42Angola 14 Rwanda 28 Mauritius 43Comoros 15 Equatorial Gu<strong>in</strong>ea 29 Botswana 44Gambia, The 30Source: Naudé 2009.We note that the most fragile countries are <strong>in</strong> the group of low resilience countries. Itis likely <strong>in</strong> each country that those most affected will be the poorest, those less resilientthan average (at a community and household level).The ability of fragile countries to react to the crisis was impaired not only by <strong>fragility</strong>itself, but also by the previous food and fuel crises: food- and oil-import<strong>in</strong>g fragile countriessuffered from the transmission of the real effects of the 2008-09 crisis when mostof them were already <strong>in</strong> a highly stressed situation, which further added to their limitedability to react to the crisis due to the <strong>fragility</strong> of their state <strong>in</strong>stitutions.4.1 Severe social impact of the crisisThe impact of the 2008–09 crisis <strong>in</strong> Sub-Saharan Africa varies between and with<strong>in</strong> countries,even though its magnitude is difficult to assess because of the scarcity of data andlag. Figure 6.6 provides a snapshot of the impact of the crisis and of how it is aggravatedby the <strong>fragility</strong> of state <strong>in</strong>stitutions. The 2008–09 crisis directly <strong>in</strong>fluences state<strong>in</strong>stitutions and nonstate actors. The comb<strong>in</strong>ed effect of the cop<strong>in</strong>g strategies of state<strong>in</strong>stitutions and nonstate actors determ<strong>in</strong>es the impact of the crisis on social well-be<strong>in</strong>g.130
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisFigure 6.6: The impact of the crisis on social well-be<strong>in</strong>gF<strong>in</strong>ancial crisisState <strong>fragility</strong>Channels of transmission: remittances, aid,trade, capital flowsImpacts on state <strong>in</strong>stitutionsdepend on state <strong>fragility</strong>,impact of the food and fuelcrisis, structural vulnerabilityImpacts on nonstate actors suchas households, civil society, economic<strong>in</strong>stitutions depend on effectsof the food and fuel crisis,sav<strong>in</strong>gs, <strong>in</strong>come diversification, assetavailabilityPolicy reactions reduction<strong>in</strong> social services expenditure,<strong>in</strong>flation, no socialsafety netsImpact on social well-be<strong>in</strong>g:(Poverty, education and healthstatus, conflicts)Cop<strong>in</strong>g strategies: pullchildren out of school,sell assets, work <strong>in</strong><strong>in</strong>formal sectorAccord<strong>in</strong>g to Chen and Ravaillon (2009), the f<strong>in</strong>ancial crisis together with the spikesof food and fuels prices will <strong>in</strong>crease the number of poor people by between 53 and 64million <strong>in</strong> 2009, based on estimates of those liv<strong>in</strong>g with less than $2 a day and $1.25respectively. Sub-Saharan African countries are expected to lose at least $50 billion <strong>in</strong><strong>in</strong>come <strong>in</strong> 2009. Infant and child mortality are also projected to rise. Friedman andSchady (2009) estimate that the crisis could <strong>in</strong>duce between 30,000 and 50,000 excess<strong>in</strong>fant deaths <strong>in</strong> Sub-Saharan Africa. IFPRI projects that the prevalence of undernourishmentamong children <strong>in</strong> Sub-Saharan Africa will step up from a fifth <strong>in</strong> 2005 to afourth <strong>in</strong> 2020.Poor women—heads of households, farmers, factory workers, <strong>in</strong>formal service providersand IDPs and refugees—caught up <strong>in</strong> wars are the most vulnerable to shocks. Researchfrom UNRISD 44 po<strong>in</strong>ts out that women as heads of household <strong>in</strong>crease theirworkload and have less time to rest and care for the family’s health and the sick.Obiageli Ezekwesili, the World Bank vice president for the Africa Region, said <strong>in</strong> May2009 that “the global economic crisis will drastically reduce African women’s <strong>in</strong>dividual<strong>in</strong>comes as well as the budgets they manage on behalf of their households, with particularlydamag<strong>in</strong>g consequences for girls [. . .] Poverty has a female face, and the globaleconomic downturn will have a significant impact on women as more of them lose jobsand are forced to manage shr<strong>in</strong>k<strong>in</strong>g household <strong>in</strong>comes 45 .” World Bank research alreadyshows household <strong>in</strong>come decl<strong>in</strong>es <strong>in</strong> Uganda and a fall <strong>in</strong> <strong>in</strong>come from agriculture <strong>in</strong>Madagascar, where girls are first to be pulled out of schools. Ezekwesili also observesthat “the crisis <strong>in</strong> Africa is leav<strong>in</strong>g women with ever fewer job choices. In many export-44 UNRISD 2006.45 World Bank 2009d.131
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisisoriented <strong>in</strong>dustries [. . .] it is women, not men, across Africa who are los<strong>in</strong>g jobs becauseof the crisis. Decl<strong>in</strong><strong>in</strong>g remittances and a tighten<strong>in</strong>g of microf<strong>in</strong>ance lend<strong>in</strong>g arerestrict<strong>in</strong>g the funds available to women to run their households.”The ability of the governments <strong>in</strong> fragile countries to react to the crisis was impairednot only by <strong>fragility</strong>, but also by the previous food and fuel crises: food- and oilimport<strong>in</strong>gfragile countries were hit by the real effects of the crisis when they were already<strong>in</strong> a highly stressed situation, which limited their revenues and <strong>in</strong>vestments.The global collapse <strong>in</strong> demand led to job losses <strong>in</strong> many <strong>in</strong>dustries. AfDB (2009c) reportsthat <strong>in</strong> Sub-Saharan Africa there will be 27 million new poor, 28 million more vulnerablejobs, ma<strong>in</strong>ly <strong>in</strong> m<strong>in</strong><strong>in</strong>g but also <strong>in</strong> manufactur<strong>in</strong>g, and 3 million more unemployedfollow<strong>in</strong>g the crisis. Recent assessments <strong>in</strong>dicate high work-hour reductions,which force workers to move to lower productivity activities or to the <strong>in</strong>formal sector,with its high unemployment rate and <strong>in</strong>come <strong>in</strong>security 46 .Cop<strong>in</strong>g strategies at the household level—The direct impact on households also dependson assets availability, <strong>in</strong>come diversification, sav<strong>in</strong>gs and local safety nets, suchas funeral associations. Price changes affect both net producers and consumers. Lowerglobal demand of commodities push prices down, reduc<strong>in</strong>g producer <strong>in</strong>comes. A price fallis good for net consumers, but unfortunately the transmission of the reduction is nevercomplete and takes a long time to reach f<strong>in</strong>al consumers 47 . Food-price <strong>in</strong>flation is veryhigh and <strong>in</strong> time will challenge food security and reduce what the poor can spend onnonfood items such as education and health.The comb<strong>in</strong>ation of assets and <strong>in</strong>surance mechanisms shapes cop<strong>in</strong>g strategies of thehouseholds <strong>in</strong> fragile countries. Families are likely to sell assets to cope with the crisis,to withdraw children from school, to reduce reliance on health care and to cut food expenditure,shift<strong>in</strong>g to lower quality products with fewer calories. This situation producesa vicious circle that underm<strong>in</strong>es the chances of younger generations to move out of poverty.Indeed, there is a bad chance that children will not go back to school once the crisisis over—or will not recover the learn<strong>in</strong>g gaps from their lack of attendance. And thedecl<strong>in</strong>es <strong>in</strong> food consumption among children can lead to irreversible effects (box 6.3) 48 .Box 6.3: Adverse shocks and social protection—what role for formal and <strong>in</strong>formalf<strong>in</strong>ancial <strong>in</strong>stitutions?By Abena D. OduroDepartment of Economics, <strong>University</strong> of GhanaObjective <strong>in</strong>dicators of risk <strong>in</strong> Africa <strong>in</strong>clude the variability of ra<strong>in</strong>fall, the seasonality <strong>in</strong> cropprices and the proportion of households without access to safe dr<strong>in</strong>k<strong>in</strong>g water and safesanitation. The <strong>in</strong>cidence of self-reported shocks is another <strong>in</strong>dicator of the extent andnature of risk and shocks fac<strong>in</strong>g African households. In Tanzania, for example, about twothirdsof rural households surveyed <strong>in</strong> Kilimanjaro and Ruvuma reported shocks that affectedtheir livelihoods dur<strong>in</strong>g a five-year period (Sango et al., 2007).Households tend to be hit by more than one shock. In Tema, a largely urban district ofGhana, the majority of households reported one or two shocks over a two-year period. Thisf<strong>in</strong>d<strong>in</strong>g contrasts with Builsa, a largely rural district, where more than half the householdsreported more than four shocks <strong>in</strong> the two years. The current global crisis and its impact onAfrican economies add an additional layer of risk and uncerta<strong>in</strong>ty to communities andhouseholds already risk prone.Adverse shocks have impacts <strong>in</strong> the short and long term. For example, school enrolmentsof both boys and girls <strong>in</strong> Côte d’Ivoire decl<strong>in</strong>ed after an adverse weather shock. There was46 World Bank 2009a.47 ODI 2009b.48 World Bank 2009b.132
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial Crisisan <strong>in</strong>crease <strong>in</strong> malnutrition among children <strong>in</strong> areas that experienced the shock (Jensen,2000).The decl<strong>in</strong>e <strong>in</strong> <strong>in</strong>vestments <strong>in</strong> the education and health of children <strong>in</strong> the aftermath of ashock can have long-run negative impacts. The decl<strong>in</strong>e <strong>in</strong> consumption means that somehouseholds or <strong>in</strong>dividuals could become poor or, if already poor, rema<strong>in</strong> poor. In somecountries the number of transient poor, who move <strong>in</strong> or out of poverty, can be substantial.In respond<strong>in</strong>g to an adverse shock households balance consumption reduction and assetdepletion. Households use a wide variety of measures to manage risk and respond toadverse shocks. These cop<strong>in</strong>g mechanisms depend largely on family (nuclear and extended)and other networks and self-<strong>in</strong>surance (for example, the sale of assets). There is limitedrecourse to public social protection and formal credit and <strong>in</strong>surance <strong>in</strong>struments.The prevalence of <strong>in</strong>formal f<strong>in</strong>ance arrangements can be expla<strong>in</strong>ed by supply anddemand. The geographical coverage of banks and other formal f<strong>in</strong>ancial <strong>in</strong>stitutions islimited. Rural and remote communities are poorly served by these <strong>in</strong>stitutions. Microf<strong>in</strong>anceprogrammes have much broader coverage. Formal f<strong>in</strong>ancial <strong>in</strong>stitutions are unlikely toexpand coverage <strong>in</strong> the rural economy until they can adequately address adverse selectionand moral hazard. The demand for <strong>in</strong>formal credit and <strong>in</strong>surance persists becausetransaction costs for <strong>in</strong>formal loans may be lower than those for formal loans. The cost ofdefault<strong>in</strong>g on an <strong>in</strong>formal loan can be lower than for a formal loan. In a high-riskenvironment this may push demand for credit and <strong>in</strong>surance towards the <strong>in</strong>formal sector.Some examples of <strong>in</strong>formal f<strong>in</strong>ancial <strong>in</strong>stitutions are funeral associations and revolv<strong>in</strong>gsav<strong>in</strong>gs and credit associations, which are not designed to provide <strong>in</strong>surance aga<strong>in</strong>st adverseshocks.Empirical evidence suggests that households cannot fully <strong>in</strong>sure aga<strong>in</strong>st risk. Risk-shar<strong>in</strong>garrangements are more likely to provide <strong>in</strong>surance aga<strong>in</strong>st idiosyncratic shocks than aga<strong>in</strong>stcovariate shocks. For example, funeral associations normally provide <strong>in</strong>surance aga<strong>in</strong>stidiosyncratic shocks. But the poor are more likely to be left out of these arrangements. 49The high risk <strong>in</strong> African economies and the evidence that households cannot protectconsumption when they are hit by adverse shocks suggest that there must be a largedemand for <strong>in</strong>surance. A study of rural households <strong>in</strong> Tanzania f<strong>in</strong>ds that there is a demandfor <strong>in</strong>surance aga<strong>in</strong>st price fluctuations and ra<strong>in</strong>fall shocks. The will<strong>in</strong>gness to pay for<strong>in</strong>surance depends on the availability of cash to pay for the <strong>in</strong>surance (Sarris et al., 2007).4.2 The risk of political <strong>in</strong>stability and resurg<strong>in</strong>g conflictsThe <strong>fragility</strong> of state <strong>in</strong>stitutions blunts political processes for state capacity and citizenexpectations to reach an equilibrium. The global f<strong>in</strong>ancial and economic crisis furtherjeopardises the chances that such an equilibrium is ma<strong>in</strong>ta<strong>in</strong>ed <strong>in</strong> fragile Sub-SaharanAfrican countries. Armed conflict is a possible outcome of the divergence between statecapacity and citizens’ expectations. This concern was voiced by Dom<strong>in</strong>ique Strauss-Kahn, the Manag<strong>in</strong>g Director of the IMF, who argued that for low-<strong>in</strong>come countries “wedon’t just care about growth for growth’s sake, we also want to safeguard peace andprevent war. Indeed, when low-<strong>in</strong>come countries were do<strong>in</strong>g well over the past decadeor so, the <strong>in</strong>cidence of war decl<strong>in</strong>ed significantly. The great fear is that this trend couldbe reversed 50 .”49 See Harrower and Hodd<strong>in</strong>not, 2005, Hoogeveen, 2003 and de Weerdt, 2009; the risk-shar<strong>in</strong>garrangements may provide partial but not full <strong>in</strong>surance. Contributions may not be largeenough to cover the full cost of the shock. Households are less likely to <strong>in</strong>sure fully aga<strong>in</strong>st covariaterisks (Harrower and Hodd<strong>in</strong>not, 2005; Hoogeveen 2003). The movement of households<strong>in</strong> and out of poverty over time suggests the absence of or weakness <strong>in</strong> risk managementmechanisms that can adequately protect households from fall<strong>in</strong>g <strong>in</strong>to poverty when there areshocks.50Strauss-Kahn 2009.133
<strong>European</strong> Report on Development 2009 – Chapter 6: Africa’s Fragile States hit hard by the Global F<strong>in</strong>ancial CrisisMiguel et al. (2004) analysed the determ<strong>in</strong>ants of a civil war <strong>in</strong> 41 African countries,show<strong>in</strong>g that a 5% reduction <strong>in</strong> the rate of economic growth <strong>in</strong>creases by half the risk ofa conflict. Brückner and Ciccone (2007) f<strong>in</strong>d that a crash <strong>in</strong> the price of an export commodity<strong>in</strong>creases the likelihood of an armed conflict. And Ciccone (2008) shows that adrought-<strong>in</strong>duced fall <strong>in</strong> <strong>in</strong>comes produces a similar effect.Such a tragic outcome of the crisis <strong>in</strong> Sub-Saharan African fragile countries <strong>in</strong>creasesthe human and social costs of the global f<strong>in</strong>ancial and economic crisis. While Sub-Saharan African countries need not suffer more from a higher macroeconomic shockthan other countries <strong>in</strong> the region, the consequences could be much more severe, due totheir limited capacity to implement adequate policy responses to the shocks. That is whyprotect<strong>in</strong>g fragile countries from the fallout of the crisis should rank high among the donorpriorities.134
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionCHAPTER 7-STATE-BUILDING AND SOCIAL COHESION135
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionState-build<strong>in</strong>g has become a lead<strong>in</strong>g priority for the <strong>in</strong>ternational development community.Today, almost every major donor identifies state-build<strong>in</strong>g as one of its key objectives,particularly <strong>in</strong> fragile states 1 . The grow<strong>in</strong>g consensus on the need for far-reach<strong>in</strong>gengagements <strong>in</strong> fragile countries was matched by the recognition, <strong>in</strong> a post-Wash<strong>in</strong>gtonConsensus era, of the crucial role of state <strong>in</strong>stitutions <strong>in</strong> the development process. Asthe Commission for Africa emphasised <strong>in</strong> its 2005 report, <strong>in</strong>stitutions are crucial to promotedevelopment, and states are a critical h<strong>in</strong>ge <strong>in</strong> achiev<strong>in</strong>g the transformations necessaryto achieve and to susta<strong>in</strong> the Millennium Development Goals. The <strong>in</strong>ternationalcommunity also engages <strong>in</strong> fragile countries with more short-term objectives, which arepursued tak<strong>in</strong>g the <strong>in</strong>stitutional context as given. But as asserted by the OECD Pr<strong>in</strong>ciples,“the long-term vision for <strong>in</strong>ternational engagement <strong>in</strong> fragile states is to help nationalreformers to build effective, legitimate and resilient state <strong>in</strong>stitutions 2 .”The <strong>in</strong>ternational community should, however, have realistic expectations about theextent to which this domestic process can be <strong>in</strong>fluenced. Provid<strong>in</strong>g support to strengthenstate <strong>in</strong>stitutions is not just a technical effort. State-build<strong>in</strong>g is a process that requiresthe creation of a sense of citizenship, and it <strong>in</strong>volves collective values, expectations andperceptions attached to the state by <strong>in</strong>dividuals, civil society and communities. Moreover,the formation of responsive, capable and accountable state <strong>in</strong>stitutions requirespromot<strong>in</strong>g tax collection capacity and mechanisms for bottom-up consultation.The formation of effective and robust states <strong>in</strong> Europe took centuries, and this processwas deeply rooted <strong>in</strong> the <strong>in</strong>ternational warfare (chapter 3). There is little ground tosupport the idea that fragile states can be transformed, <strong>in</strong> a short time frame, to resemblethe Weberian ideal. Indeed, <strong>in</strong> many African countries fragile states are the result ofcolonial rules that attempted to forge countries accord<strong>in</strong>g to the Western model, by impos<strong>in</strong>grules of territoriality and control. An important challenge to state-build<strong>in</strong>g <strong>in</strong> thecont<strong>in</strong>ent is the <strong>in</strong>stitutionalisation of a sense of common identity and the developmentof endur<strong>in</strong>g formal structures—without referr<strong>in</strong>g to the stylised model of state-build<strong>in</strong>g <strong>in</strong>Europe, which can provide only little guidance to African populations and rulers’ effortsto develop effective and legitimate states.1 Br<strong>in</strong>g<strong>in</strong>g the state back to the limelightReshap<strong>in</strong>g the formal and <strong>in</strong>formal foundations of the state to build states that are morelegitimate and representative and that serve the public good rather than the narrow <strong>in</strong>terestsof those <strong>in</strong> power is at stake here. This is an <strong>in</strong>herently long-term endeavour.Redraw<strong>in</strong>g the understand<strong>in</strong>g and arrangements that underp<strong>in</strong> the polity and b<strong>in</strong>d stateand society together requires gett<strong>in</strong>g to the heart of embedded power structures andfundamentally alter<strong>in</strong>g them. This is likely to be extremely difficult and sensitive, especiallygiven that, <strong>in</strong> a very real sense, the drive beh<strong>in</strong>d state-build<strong>in</strong>g, especially <strong>in</strong> postconflictsett<strong>in</strong>gs, <strong>in</strong>evitably lies <strong>in</strong> negotiation and compromise rather than <strong>in</strong> fundamentaltransformation.State-build<strong>in</strong>g is an endogenous process, which the <strong>in</strong>ternational community can support—butnot lead. In its simplest formulation, state-build<strong>in</strong>g refers to the efforts by nationalactors (at times with the help of <strong>in</strong>ternational actors) to establish, reform andstrengthen state <strong>in</strong>stitutions, where these have seriously been eroded or are miss<strong>in</strong>g 3 . Inother words, state-build<strong>in</strong>g deals with build<strong>in</strong>g the legitimacy and capacity of state <strong>in</strong>stitutionsto deliver basic services to citizens: security, justice, and the rule of law, as wellas schools, health, sanitation, water—all meet<strong>in</strong>g citizens’ expectations.123Fritz and Rocha Menocal 2007.OECD/DAC 2007.Caplan 2005.136
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionExperiences of state-build<strong>in</strong>g <strong>in</strong>terventions show that both ends of the spectrum of <strong>in</strong>ternationalengagement have limited chances of success: neither a m<strong>in</strong>imal approachthat focuses only on peace-keep<strong>in</strong>g nor an overarch<strong>in</strong>g attempt at <strong>in</strong>stitutional eng<strong>in</strong>eer<strong>in</strong>gcan be effective. A gradual approach based on realistic expectations about what <strong>in</strong>ternationalengagement can achieve tends to be more appropriate. The general criterionfor state-build<strong>in</strong>g <strong>in</strong>terventions should be to leverage all opportunities on the ground,avoid<strong>in</strong>g ambitious plans of complete refoundation of state <strong>in</strong>stitutions and of the socialcontract. And because state-build<strong>in</strong>g is a deeply political process, knowledge of the localcontext and a bottom-up and <strong>in</strong>centive-compatible approach are crucial to <strong>in</strong>creas<strong>in</strong>g thechances of success for <strong>in</strong>ternational engagements.2 Social cohesion and the <strong>in</strong>tangible dimensionsof state-build<strong>in</strong>gThe concept of state-build<strong>in</strong>g has evolved considerably <strong>in</strong> recent years. In the 1990s thefocus was on build<strong>in</strong>g and strengthen<strong>in</strong>g formal <strong>in</strong>stitutions and state capacity. But therehas recently been a shift towards recognis<strong>in</strong>g that the state cannot be treated <strong>in</strong> isolationand that state-society relations are central to state-build<strong>in</strong>g processes. The core ofstate-build<strong>in</strong>g, especially “responsive” state-build<strong>in</strong>g 4 , has come to be understood as aneffective political process for citizens and states to negotiate mutual demands, obligationsand expectations 5 . A fragile situation is one where no such effective process is <strong>in</strong>place. Weakness <strong>in</strong> state <strong>in</strong>stitutions, for <strong>in</strong>stance, also relates to power-selectionmechanisms, sometimes distorted by ethnic or religious ties, low or absent control onthe state executive and nonexistent public participation <strong>in</strong> political decisions. This shifthas placed the concept of legitimacy—as both a means to build<strong>in</strong>g state capacity and anend <strong>in</strong> itself—at the centre of the state-build<strong>in</strong>g agenda.So, the focus has shifted from a “top-down” approach of <strong>in</strong>stitutional strengthen<strong>in</strong>g(focus<strong>in</strong>g on state actors and national elites) to a “bottom-up” approach, l<strong>in</strong>k<strong>in</strong>g stateand society (work<strong>in</strong>g through civil society) 6 . Still, too often, the focus is on elites and oncentral and formal <strong>in</strong>stitutions (see box 7.6), fail<strong>in</strong>g to foster a more <strong>in</strong>clusive politicalprocess and deal<strong>in</strong>g only with the national and not the local 7 . Moreover, the <strong>in</strong>ternationalcommunity has tended to focus on the technical aspects of state-build<strong>in</strong>g (such as tra<strong>in</strong><strong>in</strong>gprogrammes for members of the public adm<strong>in</strong>istration), because these are seen asnon<strong>in</strong>trusive and apolitical.If state-build<strong>in</strong>g is not only about capacity development of state <strong>in</strong>stitutions, but moregenerally about the negotiation process among citizens, social groups and state, a narrowfocus on the technical aspects of <strong>in</strong>stitution-build<strong>in</strong>g risks neglect<strong>in</strong>g the dynamicsof the political process for reconcil<strong>in</strong>g state capacity and social expectations. State <strong>fragility</strong>is <strong>in</strong>deed a deeply political phenomenon, characterised by the lack of effective politicalprocesses that can br<strong>in</strong>g state capacities and social expectations <strong>in</strong>to equilibrium. Afocus on the formal aspects alone is therefore unlikely to restore the effectiveness of thepolitical processes that lay at the basis of the social contract. Interventions to build thecapacity of state <strong>in</strong>stitutions have to be supported and complemented by actions thattake <strong>in</strong>to account the roles of perceptions and expectations, of bottom-up consultationsand of the degree to which populations feel represented by public <strong>in</strong>stitutions.4567Whaites 2008.OECD/DAC 2008.Pouligny 2009.See Kaplan (2009) <strong>in</strong> volume 1B for a detailed exam of the advantage of <strong>in</strong>volv<strong>in</strong>g local actors.137
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesion2.1 Tak<strong>in</strong>g <strong>in</strong>to account the importance of the“<strong>in</strong>tangible dimensions” of state-build<strong>in</strong>gInternational engagement <strong>in</strong> state-build<strong>in</strong>g cannot overlook the social and cultural elementsthat support state <strong>in</strong>stitutions. The understand<strong>in</strong>g of governance structures <strong>in</strong> acountry can be profitably improved by an analysis of how the historical and cultural contextshape public perceptions of who the “authorities” are and which are the exist<strong>in</strong>gmost <strong>in</strong>fluential <strong>in</strong>formal <strong>in</strong>stitutions. These <strong>in</strong>tangible dimensions can, for <strong>in</strong>stance, <strong>in</strong>fluencepolitical and judicial reforms. The divisions of the society along ethnic, religious,racial and spatial dimensions might affect the function<strong>in</strong>g of the electoral processes.Dur<strong>in</strong>g the process of revis<strong>in</strong>g or draft<strong>in</strong>g a constitution, civic education campaigns anddeliberation mechanisms that <strong>in</strong>clude the population’s view can ensure a consensus andbuild a sense of trust and attachment towards the constitution. Collective values, beliefs,perceptions and cultural values are also important elements of security reforms (box7.1).Box 7.1: Why local resilience can improve securityBy Béatrice PoulignyGeorgetown <strong>University</strong>The social and cultural elements that underp<strong>in</strong> state <strong>in</strong>stitutions and ensure that theyfunction are especially significant <strong>in</strong> fragile situations. Conventional perspectives need to bebroadened to look at the multiplicity and diversity of political <strong>in</strong>stitutions (formal and<strong>in</strong>formal) and cultures that can support state resilience and state-build<strong>in</strong>g processes.Tak<strong>in</strong>g seriously local perceptions and attitudes towards security issues <strong>in</strong> fragile contextsA technical focus on <strong>in</strong>stitutional reforms directs assistance at the symptoms of the problemrather than at the causes. Experts tend to reproduce technical solutions and rely on“template” strategies that fail to <strong>in</strong>tegrate a thorough understand<strong>in</strong>g of the local situationsand are even less <strong>in</strong>formed by local norms and practices. Yet field experiences have shownthat reforms and policies <strong>in</strong> the security sector are bound to fail if they do not <strong>in</strong>tegrate“<strong>in</strong>tangible” dimensions that def<strong>in</strong>e how security issues are perceived and can be addressed<strong>in</strong> a given context.For example, one of the most press<strong>in</strong>g issues on the agenda of many “fragile” states isthe reduction of small arms and light weapons. Most studies have shown the importance oflook<strong>in</strong>g not only at the supply side of the issue but also the demand-side, exam<strong>in</strong><strong>in</strong>g why<strong>in</strong>dividuals or groups want or desire these weapons. Questions such as: “Why do peoplepossess and buy small arms? What are the political, economic and social functions of guns,and what ideas (about violence, security, justice, authority, self, gender) <strong>in</strong>form these?” arethe focus. This exploration of motivations for acquir<strong>in</strong>g small arms requires anthropologists,crim<strong>in</strong>ologists, psychologists, sociologists and behavioral economists. Such approachesemphasize the fact that from the society’s perspective, disarmament is more than just aboutputt<strong>in</strong>g weapons beyond use and facilitat<strong>in</strong>g their collection. It is also about chang<strong>in</strong>gattitudes.The same is true of the sense of safety, a subjective process. Assessments of securityproblems and needs tend to be highly subjective. Where this is done exclusively through thefilter of such donor concepts as human security, there is a risk that the peculiarities of localperceptions of security will be downplayed or ignored. In any given country, different actorsmay also perceive and def<strong>in</strong>e their security problems <strong>in</strong> different ways. They may be<strong>in</strong>fluenced by a wide range of emotionally, socially and culturally traumatic events and lossesand by the destruction of social norms and codes of behavior. That is what most <strong>in</strong>dividualsand communities face <strong>in</strong> fragile situations, often characterised by violence andunpredictability <strong>in</strong> the daily life. In different fragile contexts, such as Eastern Congo (<strong>in</strong> theDemocratic Republic of Congo), a micro-analysis of local perceptions of <strong>in</strong>security may alsohelp prevent violence aga<strong>in</strong>st civilians and protect local populations, an <strong>in</strong>creas<strong>in</strong>g concernfor the <strong>in</strong>ternational community.138
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionFragility does not mean vacuum: community mechanisms to manage security threats,deliver justice and facilitate re<strong>in</strong>tegrationIn many situations, <strong>in</strong>stitutions are devastated, dysfunctional, or illegitimate, or even allthree. The <strong>in</strong>frastructure is devastated. There is very low human capacity with few, if any,qualified personnel. And the population has a deep mistrust and lack of faith <strong>in</strong> the state. Insuch circumstances the impression may well be that the state apparatus and new <strong>in</strong>stitutionsneed to be rebuilt from scratch, <strong>in</strong> conditions that are sometimes described as “virtualanarchy.” This expla<strong>in</strong>s the frequent reference to notions such as a “security vacuum” or“rule of law vacuum”.Yet experience has shown aga<strong>in</strong> and aga<strong>in</strong> that no such vacuum exists, even when thestate structures have collapsed completely. Indeed, most of the security and justice <strong>in</strong> postconflictand fragile states is carried out not by the state police and judiciary but by nonstatesecurity and justice organisations. Pay<strong>in</strong>g attention to exist<strong>in</strong>g mechanisms allows a moreaccurate understand<strong>in</strong>g of the needs of people, and the obstacles, the possibilities and theresources to (re)build a function<strong>in</strong>g and supportive state/society relationship. Even <strong>in</strong>situations described as anarchy, as <strong>in</strong> Somalia or Eastern Congo (DRC), a variety of actorshave been fulfill<strong>in</strong>g <strong>in</strong> part the functions that would be expected from the state, even though<strong>in</strong> a dysfunctional way.Community efforts to reduce the security threats created by the proliferation of smallarms—or to re<strong>in</strong>tegrate ex-combatants and rebuild the trust between them and localcommunities—emphasise local values and <strong>in</strong>tangible elements of the local cultures to buildsusta<strong>in</strong>able <strong>in</strong>stitutions. In Mozambique and Northern Uganda, traditional rituals havefacilitated the re<strong>in</strong>tegration of former child soldiers. These actions have demonstrated thesuccess of strategies that are deeply rooted <strong>in</strong> the social and cultural context and thatconsider the subjective and psychiatric dimensions of re<strong>in</strong>tegration.• Rituals help transform world views and enable people to make sense of the larger conflict.When world views are crumbl<strong>in</strong>g, rituals can create new ways of th<strong>in</strong>k<strong>in</strong>g anddramatically alter the way people see the world. They can also make conflict less destructiveby refram<strong>in</strong>g the issues at stake and allow<strong>in</strong>g people to approach problems <strong>in</strong>new ways.• These systems (often qualified as “traditional” and “<strong>in</strong>formal”) are also broader formsof governance that go beyond dispute resolution. Their leaders and operators may alsobe <strong>in</strong>volved <strong>in</strong> the day-to-day function<strong>in</strong>g of their village or community. While systemsmay have been seriously affected and changed by violence, they are likely to rema<strong>in</strong>more <strong>in</strong>tact than formal ones.• A unique contribution of these systems is foster<strong>in</strong>g social trust and community re<strong>in</strong>tegration,particularly <strong>in</strong> the aftermath of violence. They are almost <strong>in</strong>variably based onnotions of order and community—the primary issue is the well-be<strong>in</strong>g of the community,and not just that of the victim.But these systems can also have drawbacks and dangers, especially for human rights,gender equality and the rights of juveniles. So, traditional and <strong>in</strong>formal mechanisms must besubject to a detailed and contextualized assessment <strong>in</strong> relation to limitations that can beobserved <strong>in</strong> a variety of contexts: the erosion and potential distortion of traditionalauthorities and norms; the risk of abuse of power and dom<strong>in</strong>ation patterns; the risk ofpolitical manipulation; the question of legitimacy and effectiveness of the system; the limitedapplicability across regions/ethnic groups. These limitations are also generally perceived asbetter addressed by local civil society actors, who can promote and support adaptation <strong>in</strong>systems that have been constantly chang<strong>in</strong>g and be<strong>in</strong>g changed <strong>in</strong> time.In sum, for donors and <strong>in</strong>ternational agencies, and especially for the EU, an absolutepriority should be to enhance understand<strong>in</strong>g of how populations respond to their dailysecurity problems where the reach of the state system is weak, or states themselves are thecause of the problems.2.2 Tak<strong>in</strong>g civil society <strong>in</strong>to accountState-build<strong>in</strong>g efforts are bound to fail if—<strong>in</strong> strengthen<strong>in</strong>g of <strong>in</strong>stitutional capacities, thelegitimacy of the state is not restored. Legitimacy has different sources and changes139
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionover time, <strong>in</strong> ways that make it difficult for external actors to understand it fully. Sometimes,when the state is not legitimate, nonstate <strong>in</strong>stitutions reta<strong>in</strong> legitimacy, their socialrole acknowledged by local people. Too much focus on the state thus risks overlook<strong>in</strong>gimportant actors outside the boundaries of state <strong>in</strong>stitutions.A way to create trust and <strong>in</strong>crease state legitimacy is to go beyond the idea of a statealone and to th<strong>in</strong>k of state-build<strong>in</strong>g as a way to <strong>in</strong>tervene at the <strong>in</strong>terface of relationshipsbetween state and nonstate actors. While capacity build<strong>in</strong>g of the central state <strong>in</strong>stitutionsis important, it is also crucial to support the capacity of the civil society to providethe checks and balances on the state to monitor its actions and hold it accountablefor its policies.The challenge, however, is to avoid underm<strong>in</strong><strong>in</strong>g the position of the state while avoid<strong>in</strong>gcompetition between nonstate and state actors—and to be aware of the fact thatstate-build<strong>in</strong>g might weaken other sources of authority, thus underm<strong>in</strong><strong>in</strong>g the process.2.3 Promot<strong>in</strong>g a sense of collective citizenship andsupport<strong>in</strong>g mechanisms of accountabilityThe promotion of social cohesion and the use of formal <strong>in</strong>stitutions that encourage <strong>in</strong>clusivenessare important <strong>in</strong>tangible dimension of state-build<strong>in</strong>g. Measures that both unifydisparate people <strong>in</strong> fragile states at the national level and that take advantage of pocketsof cohesion at the substate level should be considered. The more successful Africanstates have leveraged a coherent political geography and appealed to the shared historyof their people to create a sense of common identity and purpose.In Botswana, for <strong>in</strong>stance, social cohesiveness might have ensured that the elite carefullystewarded the country’s valuable diamond assets for the benefit of the whole population,avoid<strong>in</strong>g the resource curse that has befallen almost all other similarly endowedAfrican countries 8 . Those other African states lack Botswana’s geographical and historicaladvantages, while the perpetuation of predatory politics dom<strong>in</strong>ated by elites further h<strong>in</strong>der<strong>in</strong>clusive processes of state-build<strong>in</strong>g.When state <strong>fragility</strong> is connected to the manipulation of fragmentation along suchl<strong>in</strong>es as ethnicity, geography or natural resources, an effective and endur<strong>in</strong>g way ofbuild<strong>in</strong>g unity is to focus on <strong>in</strong>stitutionalis<strong>in</strong>g cooperation across groups and reduc<strong>in</strong>ghorizontal <strong>in</strong>equalities. The consociational government <strong>in</strong> Burundi, for <strong>in</strong>stance, offers avariety of opportunities to build coalitions and to reduce tensions by lessen<strong>in</strong>g or elim<strong>in</strong>at<strong>in</strong>greal or perceived imbalances <strong>in</strong> groups’ representation <strong>in</strong> cab<strong>in</strong>ets, civil servants,legislatures and militaries. Similarly, support<strong>in</strong>g reforms to apportion the profits fromnatural resources fairly and transparently—and to improve equity <strong>in</strong> the distribution ofthe social spend<strong>in</strong>g—would dispel some of the potential for friction <strong>in</strong> divided polities.International actors might also provide an important contribution to assist and f<strong>in</strong>ancesystems to monitor the allocation and management of public revenues and expenditures.The celebration of each group’s dist<strong>in</strong>ctiveness when attempt<strong>in</strong>g to build a “nation ofnations” is more likely to succeed than try<strong>in</strong>g to build a state on the “negation of socialidentities”—that is, a “nation aga<strong>in</strong>st identities 9 .” Promot<strong>in</strong>g strong “we” feel<strong>in</strong>gs throughvarious educational, sports and cultural programmes can foster complementary culturalidentities that strengthen national bonds, dim<strong>in</strong>ish<strong>in</strong>g <strong>in</strong>tergroup frictions <strong>in</strong> the process.South Africa, for <strong>in</strong>stance, has creatively used sports s<strong>in</strong>ce the end of the apartheid erato unite the ra<strong>in</strong>bow nation. Programmes to reconcile long-fester<strong>in</strong>g <strong>in</strong>tergroup wounds,such as South Africa’s Truth and Reconciliation Commission and reconciliation programmes<strong>in</strong> Burundi, have proved valuable <strong>in</strong> many countries.89Kaplan 2008.Cahen 2005.140
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionIn other cases state <strong>fragility</strong> is less l<strong>in</strong>ked to population divisions or their manipulation,while the prevail<strong>in</strong>g obstacles to social stability and the provision of public servicesis more attributable to a configuration of the state that hides a competition betweenclans, or that serves the <strong>in</strong>terests of “the class state 10 ,” a power elite that dom<strong>in</strong>ates keyroles <strong>in</strong> the state bureaucracy, political parties and economic positions. The ethnic andcultural homogeneity <strong>in</strong> Somalia, for <strong>in</strong>stance, has not prevented conflicts amongclans 11 . And <strong>in</strong> the Democratic Republic of Congo, despite its heterogeneous ethnic composition,the political class consists of 150 to 200 families who are <strong>in</strong> all political group<strong>in</strong>gs12 . Even <strong>in</strong> countries where conflicts are usually <strong>in</strong>terpreted as the result of a manipulationof socioethnic identities, such as <strong>in</strong> Burundi, these social divides overlap withclan-based, regional and class-based division 13 .Where state-build<strong>in</strong>g is h<strong>in</strong>dered by the self-serv<strong>in</strong>g political class and a limited will<strong>in</strong>gnessto cooperate, <strong>in</strong>ternational support to the <strong>in</strong>tangible dimensions of state-build<strong>in</strong>gmight <strong>in</strong>clude the creation of participatory spaces to give voice to civil society groupsand advocacy groups that can circulate <strong>in</strong>formation and drive sociopolitical transformation.But <strong>in</strong> l<strong>in</strong>e with the OECD/DAC Pr<strong>in</strong>ciple for Good International Engagement <strong>in</strong>Fragile States “do not harm,” external actors should m<strong>in</strong>imise the risk of endanger<strong>in</strong>gpartners. This approach should be complemented by search<strong>in</strong>g for po<strong>in</strong>ts of contactwith<strong>in</strong> the state <strong>in</strong>stitutions.Reforms should be gradual and <strong>in</strong>cremental, <strong>in</strong> a way that does not threaten a society’sfragile social bonds. The aim should be to create an iterative and self-susta<strong>in</strong><strong>in</strong>gprocess of change that seeps through a system, affect<strong>in</strong>g society and the state on manylevels and transform<strong>in</strong>g their relationships over time. Such an approach would root thestate more firmly <strong>in</strong> society and hold elites more accountable to their populations. Democracyis far more likely to take hold where it is <strong>in</strong>troduced steadily and advances onmany fronts; hasty efforts to <strong>in</strong>troduce elections on tight schedules, even when generouslyfunded by the <strong>in</strong>ternational community (as <strong>in</strong> the Democratic Republic of Congo <strong>in</strong>2008), are more likely to tear a fragile society apart to dramatically improve governance,especially <strong>in</strong> the short term.3 The need for a deeply rooted understand<strong>in</strong>g ofthe local contextStates need to look <strong>in</strong>ward for their resources and <strong>in</strong>stitutional models and adopt politicaland economic structures and processes that reflect the history, complexity, and particularityof their people and environment. Too many postcolonial regimes have lookedoutward for their governance models and resources, <strong>in</strong> the process becom<strong>in</strong>g dependenton foreign aid and effectively guarantee<strong>in</strong>g that their domestic roots will always be tooshallow to support them.This does not mean that conventional western political models have no relevance tononwestern societies—it means that those models need to be adapted to accommodatelocal political, economic and societal customs and conditions. The goal should not becentralised states with western-style laws and a democracy def<strong>in</strong>ed solely by regularelections. Instead, it should be the promotion of capable, <strong>in</strong>clusive, participatory, responsiveand accountable governments. Botswana, for example, roots its political systems<strong>in</strong> a traditional paradigm that takes advantage of widely accepted norms of governance.10 Keller 1991.11 Mengisteab and Daddieh 1999.12 GTZ 2008.13 Brachet and Wolpe 2005.141
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionIt is very important to place emphasis on seek<strong>in</strong>g locally appropriate solutions forproblems of governance, land and resource management, and knowledge transfer, if theaim is to effectively have states be<strong>in</strong>g legitimate and accountable. Certa<strong>in</strong>ly, no societythat has successfully developed has depended as heavily on foreign resources, foreignpolitical models, foreign languages, and foreign laws as fragile states typically do today14 .Donors should <strong>in</strong>vest more <strong>in</strong> understand<strong>in</strong>g local societies and diagnos<strong>in</strong>g the politicalchallenges they face. Globalisation patterns have most likely changed traditionalstructures <strong>in</strong> fragile countries, which cannot be considered the same as <strong>in</strong> the past. Theevolution of state and nonstate <strong>in</strong>stitutions is constant and nonl<strong>in</strong>ear, pos<strong>in</strong>g additionalchallenges to who wants to relate to them. Build<strong>in</strong>g local capacity to research the “humangeography” of states and analyse socio-cultural contexts is crucial—as has alreadybeen recognised by some donors. (The Dutch M<strong>in</strong>istry of Development Cooperation isunderwrit<strong>in</strong>g local organisations do<strong>in</strong>g socially relevant research <strong>in</strong> 9 countries acrossthe develop<strong>in</strong>g world; Hewlett Foundation is provid<strong>in</strong>g long-term support to 24 th<strong>in</strong>ktanks <strong>in</strong> 11 African countries.)Aid agencies should devote greater effort and resources to better understand<strong>in</strong>g anddiagnos<strong>in</strong>g the sociopolitical and <strong>in</strong>stitutional fault l<strong>in</strong>es that plague fragile states (box7.2). Commission<strong>in</strong>g more extensive social science and policy research would be relatively<strong>in</strong>expensive and would pay rich dividends <strong>in</strong> develop<strong>in</strong>g <strong>in</strong>ternational and localpolicies carefully tailored to address the <strong>in</strong>evitably complex problems <strong>in</strong> fragile states.Diagnos<strong>in</strong>g the social and political sett<strong>in</strong>gs is <strong>in</strong>deed necessary to understand what isrequired and to identify entry po<strong>in</strong>ts and spaces for <strong>in</strong>teract<strong>in</strong>g with state <strong>in</strong>stitutions. Avaluable contribution to EU capacity to def<strong>in</strong>e f<strong>in</strong>e-tun<strong>in</strong>g modalities of <strong>in</strong>terventions cancome from a management and screen<strong>in</strong>g process of the EU personnel <strong>in</strong>volved <strong>in</strong> fragilestates based on periodic assessments, mechanisms that encourage dialogue betweenspecialists <strong>in</strong> different fields (<strong>in</strong> humanitarian assistance, <strong>in</strong> development cooperation,foreign policy, diplomacy) and specialisation <strong>in</strong> specific regions, countries or sectors.Box 7.2: Somalia and SomalilandBy Seth KaplanManag<strong>in</strong>g Partner, Alpha International Consult<strong>in</strong>g, Ltd.Somalia and its secessionist territory of Somaliland offer one of the best contrasts betweenstate-build<strong>in</strong>g us<strong>in</strong>g imported <strong>in</strong>stitutional pillars and state-build<strong>in</strong>g us<strong>in</strong>g <strong>in</strong>digenous ones.The <strong>in</strong>ternational community has tried no fewer than 15 times s<strong>in</strong>ce the dissolution of theSomali state <strong>in</strong> 1991 to rebuild it <strong>in</strong> a top-down fashion—and 15 times it has failed. Isolatedfrom political realities with<strong>in</strong> the country, aid agencies, embassies and multilateralorganisations have repeatedly misread the country’s political dynamics and forced upon it“unimag<strong>in</strong>ative, nonstrategic, template-driven policy responses with little relevance to theSomali context and little <strong>in</strong>put from Somali voices.” As a result, “Somalis seek<strong>in</strong>g to extricatetheir country from this deadly and protracted crisis have to do so <strong>in</strong> spite of, not because of,<strong>in</strong>volvement by the <strong>in</strong>ternational community 15 “In contrast, Somaliland, an area <strong>in</strong> the northwest of Somalia that declared <strong>in</strong>dependence<strong>in</strong> 1991, has built its state <strong>in</strong>stitutions adopt<strong>in</strong>g a bottom-up approach that takes advantageof long-stand<strong>in</strong>g and widely accepted clan structures. Today, it is the most democratic state<strong>in</strong> the region and has established enough stability and prosperity to attract migrants fromaround the Horn of Africa. Somaliland owes its success <strong>in</strong> part to the fact that it has had littleoutside help, forc<strong>in</strong>g it to depend on its own resources, capacities and <strong>in</strong>stitutions. (Someadvocates of Somaliland <strong>in</strong>dependence actually fear that greater foreign aid would have anegative impact.) Several other parts of Somalia, such as Puntland, have also establishedtheir own local adm<strong>in</strong>istrations around clan structures. Yet the <strong>in</strong>ternational community14 Kaplan 2009.15 Menkhaus 2008, p. 9.142
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionrefuses to recognise Somaliland and persists <strong>in</strong> its Sisyphean efforts to forge a centralisedSomali state.What the political scientist Ken Menkhaus has said about Somalia applies to many otherfailed and fragile states: “These extensive and <strong>in</strong>tensive [<strong>in</strong>formal] mechanisms [of selfgovernment][…] are virtually <strong>in</strong>visible to external observers, whose sole preoccupation isoften with the one structure that actually provides the least amount of rule of law toSomalis—the central state. . . . For external actors, the conventional wisdom is that aresponsive and effective state is an essential prerequisite for development, a propositionenshr<strong>in</strong>ed <strong>in</strong> virtually every World Bank and UN strategy on development. For many Somalis,the state is an <strong>in</strong>strument of accumulation and dom<strong>in</strong>ation, enrich<strong>in</strong>g and empower<strong>in</strong>g thosewho control it and exploit<strong>in</strong>g and harass<strong>in</strong>g the rest of the population. These differentperceptions of the state often result <strong>in</strong> external and national actors talk<strong>in</strong>g past oneanother 16 “.A possible means of leverag<strong>in</strong>g local capacities and <strong>in</strong>stitutions and improv<strong>in</strong>g governanceis to focus on build<strong>in</strong>g up local governments and ty<strong>in</strong>g them as closely as possibleto their communities. Local governments are by no means perfect, but devolv<strong>in</strong>ggovernment functions to villages, towns, and districts of each city can harness the powerof face-to-face <strong>in</strong>teraction and encourage more transparent and accountable forms ofgovernment. Central governments can ensure a stable currency, promote an extensivemarket for goods, construct <strong>in</strong>tercity transportation l<strong>in</strong>ks and set basic bank<strong>in</strong>g, legal,health and education standards. But it falls to local or district governments to providethe services that most affect families and small companies day-to-day. Lower governmentsprovide, for example, most education, health and road construction services.This does not mean that support<strong>in</strong>g decentralisation always translates <strong>in</strong> more efficientand responsive governments. Indeed, local adm<strong>in</strong>istrations can be exposed to attemptsof power and resource appropriation by local elites and spoilers. Decentralisationis consistent with <strong>in</strong>clusive state-build<strong>in</strong>g only to the extent it provides <strong>in</strong>tergovernmentalchecks and balances, raises citizens’ voice and associates local governments’ responsibilitieswith an appropriate assignment of decision autonomy and enough human andf<strong>in</strong>ancial resources.So, donors should support decentralisation processes based on voice structur<strong>in</strong>g, socialembedd<strong>in</strong>g and aligned duties and means of local state <strong>in</strong>stitutions. This can reducethe risks of elite capture, enhance accountability and conta<strong>in</strong> the role of side-by-side <strong>in</strong>formal<strong>in</strong>stitutions and bodies alternative and parallel to state functions. Rwanda providesa successful example of a decentralised governance approach to service deliveryable to anchor traditional concepts and <strong>in</strong>stitutions to state function<strong>in</strong>g (box 7.3). Theneed to f<strong>in</strong>d governance mechanisms embedded <strong>in</strong> the society also implies that the roleof local versus national government depends also on the “history” of the country. A s<strong>in</strong>glesolution cannot be applied to very different countries.Box 7.3: An African governance modelBy Jesse McConnellReform Development Consult<strong>in</strong>gTwo common challenges to good governance <strong>in</strong> Africa are the often diverse citizenry that itsleadership must govern and capacity constra<strong>in</strong>ts among civil servants <strong>in</strong> provid<strong>in</strong>g localleadership. Rwanda provides an example of a uniquely African model of governance orientedto service-delivery and based on accountability—and able to transcend many of thechallenges. Imihigo, a concept that dates back several centuries <strong>in</strong> Rwandan culture, relatesmost closely to a performance contract. The concept developed as an idea of a public16 Menkhaus, 2007, p. 87.143
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesioncommitment from prom<strong>in</strong>ent military leaders to their k<strong>in</strong>g to achieve a specific objective,such as the conquest of an enemy or region. Achiev<strong>in</strong>g their set goal would result <strong>in</strong> accessto a prestigious reward and acclaim for the achievement.This idea has been modernised and <strong>in</strong>stitutionalised <strong>in</strong>to the political system. Mayorsmake public annual commitments to the president to deliver on specific goals laid out <strong>in</strong> thenational development agenda and localised <strong>in</strong> the district development plans. The modernImihigo is thus a function of the government’s priority of accountability through peoplecentredserviced delivery <strong>in</strong> achiev<strong>in</strong>g rapid grass-roots development. The goals are decidedthrough consultation at a local level by mayors with their community members—andbroadcast to the entire country, embedd<strong>in</strong>g transparency and accountability <strong>in</strong> the process.The annual national forum is then followed up by quarterly Imihigo meet<strong>in</strong>gs at the district,<strong>in</strong> which mayors present to community members and representatives from nationalgovernment the progress made and the challenges faced <strong>in</strong> pursu<strong>in</strong>g their goals.A prom<strong>in</strong>ent reason for the <strong>in</strong>itiative’s success is that it elicited better performance bycivil servants. This was accomplished through:• The large public presence at both the annual <strong>in</strong>ception and quarterly presentation ofthe Imihigos.• The clarification of goals that the processes <strong>in</strong>stills.• The greater <strong>in</strong>volvement of communities as beneficiaries and therefore as planners <strong>in</strong>the process of identify<strong>in</strong>g needs and select<strong>in</strong>g relevant projects.• The fact that Imihigo is based <strong>in</strong> tradition and draws on exist<strong>in</strong>g knowledge.S<strong>in</strong>ce its <strong>in</strong>ception, Imihigo has affected every cadre of society, with commitmentsthroughout government departments, schools and even families.Some fragile states are fractured along identity, cultural and l<strong>in</strong>guistic l<strong>in</strong>es and theirdifferent regions are weakly connected because of poor <strong>in</strong>frastructure, disadvantageouspolitical geographies and feeble adm<strong>in</strong>istrative systems. So, locally driven models of developmentcould succeed where state-based models fail, especially if ga<strong>in</strong>s are extendedover time both horizontally to other localities and vertically to higher government bodies(especially <strong>in</strong> large countries such as the Democratic Republic of Congo). It would alsoensure that local communities were not held hostage to the dysfunctions of a nationalgovernment. Focus<strong>in</strong>g aid on these “pockets of opportunity” would be more effective <strong>in</strong>the short term—and would encourage other areas to improve through the competitionfor funds <strong>in</strong> the medium term.Because it might be very difficult, impossible and sometimes not desirable to changethe <strong>in</strong>digenous social structure and <strong>in</strong>stitutions, it is important to know more about theconditions under which formal and <strong>in</strong>formal <strong>in</strong>stitutions can be better l<strong>in</strong>ked 17 . Recognis<strong>in</strong>gthe need for <strong>in</strong>stitutional diversity—even multiplicity (whereby a state recognises,and <strong>in</strong>tegrates where possible, different historical traditions)—and for countries to beboth practical and flexible <strong>in</strong> build<strong>in</strong>g governments around the capacity and <strong>in</strong>stitutionsthat already exist on the ground would transform the way donors approach statebuild<strong>in</strong>g.Local <strong>in</strong>formal <strong>in</strong>stitutions can do much <strong>in</strong> state-build<strong>in</strong>g, but it is necessary to avoidplac<strong>in</strong>g undue expectations on them and to avoid “romantic visions” of their role. 18 Notall local and <strong>in</strong>formal <strong>in</strong>stitutions are well run or “better” than the state. For <strong>in</strong>stance,local <strong>in</strong>formal <strong>in</strong>stitutions can be discrim<strong>in</strong>atory, especially towards women and youngermembers of a community 19 .17 Jütt<strong>in</strong>g 2003.18 Pouligny 2009.19 UNECA 2007.144
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionCountry cases <strong>in</strong> diverse situations of state <strong>fragility</strong> 20 (Zimbabwe, Sierra Leone andDemocratic Republic of Congo), suggest that the support to alternative and traditionalforms of governance should be evaluated <strong>in</strong> country-specific contexts on the basis oftheir potential <strong>in</strong>tegration with the state body and their capacity to susta<strong>in</strong> or underm<strong>in</strong>estate legitimacy. Lessons from these case studies also <strong>in</strong>dicate that a pragmatic andflexible attitude can be the best way to put <strong>in</strong>to practice these general criteria for support<strong>in</strong>g<strong>in</strong>stitutional reforms. International engagement can leverage possible w<strong>in</strong>dowsof opportunity for reforms by identify<strong>in</strong>g and establish<strong>in</strong>g stable relationships with reform-orientedactors among a country’s elites, civil servants, civil society organisations,and professional associations and microf<strong>in</strong>ance <strong>in</strong>stitutions.The way to proceed is thus with a gradual approach to state-build<strong>in</strong>g, firmly rooted <strong>in</strong>the local context. The OECD Pr<strong>in</strong>ciples recommend to tak<strong>in</strong>g context as the start<strong>in</strong>g po<strong>in</strong>tto avoid the imposition of externally designed bluepr<strong>in</strong>ts. For the <strong>in</strong>ternational communitythis can be a riskier venture than a technical engagement—but with more crediblechances of success.4 Complementarity between humanitarian assistanceand state-build<strong>in</strong>g <strong>in</strong>terventions <strong>in</strong> postconflictsett<strong>in</strong>gsOne of the challenges for <strong>in</strong>ternational engagements <strong>in</strong> postconflict transitions is to ensurethat the support to civil society actors promotes state-build<strong>in</strong>g and the basic needsof the populations without creat<strong>in</strong>g parallel structures.In many postconflict contexts private actors <strong>in</strong> civil society are provid<strong>in</strong>g social services.Mov<strong>in</strong>g too fast from humanitarian assistance towards budget support to the statecan leave many of these actors without the resources to cont<strong>in</strong>ue to ensure these socialservices while the state is not yet ready to perform that functions. A premature shift towardsstate-build<strong>in</strong>g might imply that the humanitarian needs rema<strong>in</strong> unmet. In SouthernSudan (box 7.4) the humanitarian needs have been greater dur<strong>in</strong>g the five years oftransition than dur<strong>in</strong>g the conflict. If the state does not yet have the capacity to providesocial services, tak<strong>in</strong>g away the support from local providers leaves a humanitarian gap.Protect<strong>in</strong>g the humanitarian space thus requires that the support to state-build<strong>in</strong>g iscomplemented by an equally important parallel process of support<strong>in</strong>g civil society. Inother words, state-build<strong>in</strong>g cannot be pursued at the expense of humanitarian pr<strong>in</strong>ciples.This approach is also consistent with the need to enhance state legitimacy. First, astate’s <strong>in</strong>capacity to assist humanitarian needs can underm<strong>in</strong>e its legitimacy. Second,the support to civil society organisations can help develop responsive and <strong>in</strong>clusivestates. In postconflict transitions, many political settlements are usually negotiated byelites and civil society is kept out and not brought <strong>in</strong>to the discussion. So, engag<strong>in</strong>g <strong>in</strong>and support<strong>in</strong>g <strong>in</strong>stitutions with<strong>in</strong> civil society would help strengthen legitimacy andbuild a more durable social contract.Donor assistance <strong>in</strong> conflict-affected contexts also has to overcome a mislead<strong>in</strong>g juxtapositionof different <strong>in</strong>struments of <strong>in</strong>terventions. EU action can be underm<strong>in</strong>ed by thewrong assumption that there is l<strong>in</strong>ear progression from a situation of emergency wherehumanitarian assistance is the lead<strong>in</strong>g tool of <strong>in</strong>tervention to situations where there ismore stability—and development cooperation can use budget support as the primary aid<strong>in</strong>strument (box 7.4). Indeed, <strong>in</strong>ternational engagement should ensure a space whereboth humanitarian assistance and development cooperation are used at the same timewith equal importance. Both <strong>in</strong>struments can be very valuable and should be used undera common vision, though they might need to be ref<strong>in</strong>ed. Humanitarian aid l<strong>in</strong>ked to one-20 GTZ 2008.145
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionyear disbursement frameworks are <strong>in</strong>adequate for address<strong>in</strong>g the drivers of protractedcrises and low levels of conflict.Box 7.4: International engagement <strong>in</strong> fragile states: learn<strong>in</strong>g from SouthernSudanBy Sara PantulianoOverseas Development <strong>Institute</strong>After the sign<strong>in</strong>g of the Comprensive Peace Agreement <strong>in</strong> January 2005, Sudan was <strong>in</strong>cludedas one of the n<strong>in</strong>e countries <strong>in</strong> the OECD/DAC’s pilot for apply<strong>in</strong>g the Pr<strong>in</strong>ciples ofGood International Engagement <strong>in</strong> Fragile States. Build<strong>in</strong>g on the 2005 Paris Declaration onAid Effectiveness and on the 2003 Pr<strong>in</strong>ciples of Good Humanitarian Donorship, the newPr<strong>in</strong>ciples aim to address the complexity and need for coord<strong>in</strong>ated <strong>in</strong>ternational action <strong>in</strong>situations encompass<strong>in</strong>g both security, humanitarian and development issues. 21 The Sudanpilot, limited to <strong>in</strong>ternational engagement <strong>in</strong> Southern Sudan, focused on three ma<strong>in</strong> issues:donor coord<strong>in</strong>ation mechanisms, <strong>in</strong>ternational support to state-build<strong>in</strong>g and <strong>in</strong>ternationalsupport to peace-build<strong>in</strong>g, with special emphasis on implement<strong>in</strong>g the Comprehensive PeaceAgreement.An array of aid coord<strong>in</strong>ation mechanisms have been tested <strong>in</strong> Sudan, both dur<strong>in</strong>g andafter the peace negotiations. These have <strong>in</strong>cluded the Jo<strong>in</strong>t Assessment Mission process, theMulti-Donor Trust Funds and the Jo<strong>in</strong>t Donor Team <strong>in</strong> Juba. The Jo<strong>in</strong>t Assessment Missionwas a comprehensive assessment of rehabilitation and transitional recovery needs acrosseight thematic clusters to be addressed dur<strong>in</strong>g the first two years of the CPA Interim Period(2005-11). The assessment, which lasted 15 months and was co-led by UNDP/UNDG and theWorld Bank, saw the very active <strong>in</strong>volvement of senior members of the two ma<strong>in</strong> warr<strong>in</strong>gparties, the National Congress Party (NCP) and the Sudan People’s LiberationMovement/Army (SPLM/A), and a large number of donor countries. The JAM was seen asprovid<strong>in</strong>g the framework for support<strong>in</strong>g stability and offer<strong>in</strong>g the peace dividends to buttressthe peace agreement.The assessment, a very costly and ambitious exercise, generated expectations that thiswould be the guid<strong>in</strong>g document, and proposed mechanisms for its implementation. 22 It didplay some role <strong>in</strong> br<strong>in</strong>g<strong>in</strong>g together the warr<strong>in</strong>g parties around a common programme forrecovery and represented a first serious effort to frame the response to the new context. Butit has not served as an effective framework for action. Reservations have been expressedabout the lack of clear priorities and sequenc<strong>in</strong>g <strong>in</strong> its operational plan and the validity of themethods used for cost<strong>in</strong>g and extrapolat<strong>in</strong>g levels of need 23 as well as its <strong>in</strong>adequate securityand peace-build<strong>in</strong>g focus 24 . The biggest limitations, however, were the limited ownership ofthe assessment by national actors and its grow<strong>in</strong>g irrelevance <strong>in</strong> the face of a fast-chang<strong>in</strong>gcontext, as new government and security structures came <strong>in</strong>to be<strong>in</strong>g. The Jo<strong>in</strong>t AssessmentMission erred <strong>in</strong> try<strong>in</strong>g to provide a bluepr<strong>in</strong>t for <strong>in</strong>ternational engagement rather than adynamic framework responsive to changes <strong>in</strong> context.The ma<strong>in</strong> mechanisms for implementation of the assessment’s f<strong>in</strong>d<strong>in</strong>gs were two Multi-Donor Trust Funds, one for the Government of National Unity and one for the Government ofSouthern Sudan (GOSS). These World Bank-adm<strong>in</strong>istered funds were to facilitatecoord<strong>in</strong>ated external donor f<strong>in</strong>anc<strong>in</strong>g to support immediate recovery, consolidate peace,build capacity and accelerate progress towards the Millennium Development Goals through to2011. In practice, the performance and impact have been deeply disappo<strong>in</strong>t<strong>in</strong>g.The funds have been widely criticised for fail<strong>in</strong>g to achieve rapid and visible impact. 25 Therate of disbursement has been excruciat<strong>in</strong>gly slow, with most of the projects fail<strong>in</strong>g to deliver‘tangible goods’ to the public even by the second year of operation. 26 Bureaucratic World21 Haslie and Borchgrev<strong>in</strong>k 2007.22 Murphy 2007.23 Murphy 2007.24 UNDG/World Bank 2006.25 Scanteam 2007b.26 Fenton 2008.146
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionBank procedures, staff<strong>in</strong>g problems and protracted negotiations between UN and World Bankteams over implement<strong>in</strong>g arrangements h<strong>in</strong>dered <strong>in</strong>itial implementation. 27 The government’s<strong>in</strong>ability to cope with the bureaucratic requirements of the funds caused serious delays and<strong>in</strong>efficiences.The shortcom<strong>in</strong>gs of the funds have led many donors to bypass them, channel<strong>in</strong>g moreresources bilaterally or through other pooled funds. The fund’s rules and procedures appearmore suited to medium-term reconstruc-tion and development than immediate post-conflictrecovery. This is not the first time that the <strong>in</strong>strument has failed to achieve its objectives <strong>in</strong>a post-conflict context, which begs the question about why crucial lessons are not be<strong>in</strong>glearned. 28Another mechanism to enhance donor harmonisation <strong>in</strong> Southern Sudan has been theestablishment by six countries of the Jo<strong>in</strong>t Donor Team (JDT) <strong>in</strong> Juba. A mid-term evaluationconcluded that the team performed well <strong>in</strong> contribut<strong>in</strong>g to promot<strong>in</strong>g ownership <strong>in</strong> SouthernSudan and strengthen<strong>in</strong>g donor alignment with government policies. But the JDTharmonisation and adherence to the OECD/DAC fragile states pr<strong>in</strong>ciples was much lesssuccessful. 29 Specifically, the team’s partners failed to develop and operate under a commonpolicy framework, with jo<strong>in</strong>t development and diplomatic goals and approaches. As a result,they could not conta<strong>in</strong> the <strong>in</strong>crease <strong>in</strong> bilateral programmes.The proliferation of projects has cont<strong>in</strong>ued to make aid coord<strong>in</strong>ation <strong>in</strong> Southern Sudandifficult and has limited the team’s ability to contribute to state-build<strong>in</strong>g coherently andsusta<strong>in</strong>ably. 30 Technical advice on land policy and the resolution of land disputes has beenparticularly uncoord<strong>in</strong>ated and often conflict<strong>in</strong>g. 31 The Jo<strong>in</strong>t Donor Team, like many<strong>in</strong>ternational organizations <strong>in</strong> Southern Sudan, has also had difficulty <strong>in</strong> attract<strong>in</strong>g andreta<strong>in</strong><strong>in</strong>g appropriately skilled and experienced staff, underm<strong>in</strong><strong>in</strong>g performance. 32State-build<strong>in</strong>g <strong>in</strong> Southern Sudan, a key focus of <strong>in</strong>ternational engagement, is anenormous challenge, as formal government structures have to be created from scratch.Although concerted efforts have been made to build the adm<strong>in</strong>istrative apparatus of theGovernment of Southern Sudan, these have been largely top down. The emphasis has beenon build<strong>in</strong>g <strong>in</strong>stitutions and central government adm<strong>in</strong>istrative capacity <strong>in</strong> Juba, with muchless attention to address<strong>in</strong>g issues of legitimacy and accountability. 33 Some progress hasbeen made <strong>in</strong> establish<strong>in</strong>g regional and state structures, but the provision of basic services isstill very limited, and corruption is rampant <strong>in</strong> many areas. 34The establishment of the Government of Southern Sudan has been <strong>in</strong>terpreted by bothnational and <strong>in</strong>ternational actors as provid<strong>in</strong>g an opportunity for Southern Sudan to‘graduate’ from passive acceptance of externally provided humanitarian assistance to thepreparation, fund<strong>in</strong>g and implementation of nationally led recovery and developmentprogrammes. Donors have consequently <strong>in</strong>creased contributions to longer term recovery anddevelopment funds and reduced humanitarian fund<strong>in</strong>g. This is despite grow<strong>in</strong>g humanitarianneeds, the Government of Southern Sudan’s cont<strong>in</strong>u<strong>in</strong>g lack of capacity to address them andthe poor delivery record of longer term fund<strong>in</strong>g mechanisms.The conventional aid architecture has demonstrated once aga<strong>in</strong> that it is ill equipped tocater for situations that span across the b<strong>in</strong>ary division between humanitarian anddevelopment assistance. As <strong>in</strong> many “post-conflict” contexts, there is a need to cont<strong>in</strong>uedirect service delivery <strong>in</strong> Southern Sudan while simultaneously build<strong>in</strong>g governmentcapacity, not least to prevent more serious emergencies such as outbreak of choleraepidemics or food crises.Promot<strong>in</strong>g stability is also a central objective for a transition to peace. Strategies and27 Pantuliano et al. 2007.28 Pantuliano et al. 2008.29 Bennet et al. 2009.30 Bennet et al. 2009.31 Pantuliano et al. 2008.32 Bennet et al. 2009.33 Haslie and Borchgrev<strong>in</strong>k 2007.34 Bennet et al. 2009.147
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionprogrammes to achieve this objective must be designed <strong>in</strong> a way that contributes to statebuild<strong>in</strong>g,keep<strong>in</strong>g the balance between the establishment of national security <strong>in</strong>stitutions andthe role of external actors such as peacekeep<strong>in</strong>g missions. In Southern Sudan the UNMISpeacekeep<strong>in</strong>g mission, mandated to monitor the implementation of the CPA, has been animportant element of <strong>in</strong>ternational engagement.UNMIS has a massive military presence throughout Southern Sudan and the TransitionalAreas. But its rigid mandate (often <strong>in</strong>terpreted too narrowly) and <strong>in</strong>ternal security guidel<strong>in</strong>eshave made it unacceptably risk-averse and <strong>in</strong>effective. In many areas its monitor<strong>in</strong>g ofactual and potential conflicts has been irregular, and Disarmament, Demobilisation andRe<strong>in</strong>tegration (DDR) programmes have been delayed or resisted. 35 And other securityconcerns—such as transform<strong>in</strong>g the Sudan People Liberation Army <strong>in</strong>to a professional army,tra<strong>in</strong><strong>in</strong>g a police force, and address<strong>in</strong>g <strong>in</strong>tercommunal violence have received limited orbelated support. Many UNMIS soldiers lack the neces-sary language to <strong>in</strong>teract with eachother, let alone local people. As a result, engagement between the military observers andthe communities is patchy at best. UNMIS is seen to do little <strong>in</strong> relation to its massiveresources. Indeed, <strong>in</strong>ternational spend<strong>in</strong>g on UNMIS presents a strik<strong>in</strong>g contrast to the lowlevel of aid delivery visible throughout Southern Sudan. 36The <strong>in</strong>ternational community’s failure to provide immediate and tangible peace dividends<strong>in</strong> Southern Sudan and the Three Areas has had a negative impact on peace build<strong>in</strong>g. 37Delays and gaps <strong>in</strong> service provision and grow<strong>in</strong>g <strong>in</strong>security <strong>in</strong> some areas of return haveresulted <strong>in</strong> returnees either congregat<strong>in</strong>g <strong>in</strong> already overcrowded towns and settlements orpostpon<strong>in</strong>g their return. The confidence of both host communities and returnees <strong>in</strong> theGovernment of Southern Sudan’s capacity to deliver services and other peace dividends hasthus been underm<strong>in</strong>ed.The complexity of the situation <strong>in</strong> Southern Sudan poses challenges to <strong>in</strong>ternationalengagement that are not easy to overcome. While the OECD/DAC pr<strong>in</strong>ciples are a usefulstart<strong>in</strong>g po<strong>in</strong>t, they can be contradictory. Important tradeoffs may be required between, say,state-build<strong>in</strong>g and donor coord<strong>in</strong>ation objectives and the rapid scal<strong>in</strong>g up of basic services aspeace dividends. 38 The application of fragile state analysis is only useful, however, if thecauses of <strong>fragility</strong> are well analysed, understood and disaggregated by area or consistuency.For example, <strong>in</strong> Southern Sudan the causes of and responses to <strong>fragility</strong> <strong>in</strong> the Three Areasmay differ markedly from those <strong>in</strong> parts of Upper Nile.Too often <strong>in</strong>ternational engagement is <strong>in</strong>formed by an erroneous assumption that thetransition from war to peace is l<strong>in</strong>ear. In reality, sign<strong>in</strong>g a peace agreement often changeslittle on the ground. Transition<strong>in</strong>g from war to peace is not a technical exercise but a highlypolitical process <strong>in</strong> which different pr<strong>in</strong>ciples, priorities and approaches need to co-exist andbe realised together. 39 This <strong>in</strong>cludes a sophisticated and nuanced analysis of power relations,causes of vulnerability, drivers of conflict and resilience <strong>in</strong>dicators. In dynamic postconflictsett<strong>in</strong>gs <strong>in</strong> particular, the political economy of the transition needs to be cont<strong>in</strong>uouslyreviewed and revised to be truly context-specific. Greater efforts should also be made toidentify national champions for change and reform and ways to support them. The role ofnational actors is fundamental because change can take place only through an endogenousprocess: <strong>in</strong>ternational engagement can help stimulate stability, but not drive it.4.1 Opportunities <strong>in</strong> postconflict reconstructionPost-conflict sett<strong>in</strong>gs not only pose significant challenges to national rulers and <strong>in</strong>ternationalassistance, but they can also provide great opportunities to solve long-stand<strong>in</strong>gsource of exclusion, grievance and <strong>in</strong>equity. Gender ma<strong>in</strong>stream<strong>in</strong>g of postconflict transitions,for <strong>in</strong>stance, might mark important progress <strong>in</strong> the struggle for women’s em-35 Vaux et al. 2008.36 Vaux et al. 2008.37 Haslie and Borchgrev<strong>in</strong>k 2007.38 Haslie and Borchgrev<strong>in</strong>k 2007.39 Elhawary, personal communication.148
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionpowerment and aga<strong>in</strong>st gender discrim<strong>in</strong>ation. And, a coherent <strong>in</strong>tegration between thecriterion of local ownership and a gender-sensitive approach to postconflict reconstructioncan be more fruitful than gender-neutral and top-down programs (Box 7.5).Box 7.5: Learn<strong>in</strong>g from local communities: programmes to support femaleex-combatantsActions to strengthen a society’s resilience require the <strong>in</strong>volvement of local communities <strong>in</strong>reform processes and public decision-mak<strong>in</strong>g mechanisms. Local residents have vital survivalstrategies that can be supported to built new, more resilient <strong>in</strong>stitutions. Some <strong>in</strong>appropriateaid policies are due to aid workers’ lack of understand<strong>in</strong>g of local languages and conditionsand resultant <strong>in</strong>ability to deal with customary laws, traditional systems and <strong>in</strong>digenousknowledge. These language, communication and knowledge barriers obstruct participation bypoor or marg<strong>in</strong>alised groups <strong>in</strong> policy decision-mak<strong>in</strong>g, thus los<strong>in</strong>g out on opportunities forpeople to participate <strong>in</strong> the political and economic rebuild<strong>in</strong>g of their <strong>in</strong>stitutions.These problems have been manifested <strong>in</strong> the groundswell of concern about <strong>in</strong>appropriateaid policies raised by the large global social movement—the World Social Forum, which<strong>in</strong>cludes the vocal African Social Forum and which br<strong>in</strong>gs many thousands of civil societymovements together.The contribution of local ownership <strong>in</strong> design and implementation of developmentprogrammes <strong>in</strong> fragile situations is clearly evident <strong>in</strong> the contrast between failed andsuccessful <strong>in</strong>ternational programmes for re<strong>in</strong>tegrat<strong>in</strong>g female ex-combatants <strong>in</strong> Liberiadur<strong>in</strong>g postconflict transition.In Liberia, some 22,000 women and 2,740 girls of a total 103,000 ex-combatants hadbeen disarmed and demobilised by 2004 (Campbell-Nelson 2008). Though the policy was to<strong>in</strong>tegrate gender concerns <strong>in</strong>to the policies and procedures of the disarmament process, thisdid not happen. Women’s organisations observed that women were sent home withoutproper assessment of their reproductive health or sexual and psychological conditions. Theirre<strong>in</strong>tegration <strong>in</strong>to their families and communities was very difficult as they suffered thedouble stigma of hav<strong>in</strong>g experienced sexual abuse and of hav<strong>in</strong>g been affiliated with armedforces.An <strong>in</strong>novative solution was found by work<strong>in</strong>g with local women’s organisations and<strong>in</strong>ternational partners: female ex-combatants were brought <strong>in</strong>to police forces. The first batchof the new Liberia National Police (LNP) completed tra<strong>in</strong><strong>in</strong>g <strong>in</strong> 2005, and by 2009 womenmade up 12.6% of the LNP force. The LNP established a Women and Child Protection Unit(WACPU), which collaborates with governmental and nongovernmental bodies, supported bythe Gender-Based Violence Inter-Agency Task Force, which coord<strong>in</strong>ates the work of theUnited Nations and other donors. The Women Peace Huts project established by the Women<strong>in</strong> Peace Build<strong>in</strong>g Network (WIPNET) also supports women <strong>in</strong> the community who visit thePeace Huts as a refuge and to seek assistance <strong>in</strong> deal<strong>in</strong>g with issues such as rape, landownership, religious differences and tribalism (UNIFEM 2007).In fragile contexts women’s relationship to the state is fundamentally different fromthat of men. It is often mediated through family, community, religious or customary <strong>in</strong>stitutions.Women face a larger gap between their formal and substantive citizenship, aswell as greater economic, social and cultural barriers <strong>in</strong> exercis<strong>in</strong>g their rights and participat<strong>in</strong>g<strong>in</strong> decision-mak<strong>in</strong>g. Moreover, <strong>in</strong> many fragile state contexts, the domestic andpersonal issues of most concern to women (such as family law, <strong>in</strong>heritance, land accessand security) are delegated to customary <strong>in</strong>stitutions or nonstate actors, mak<strong>in</strong>g womenunable to hold the state accountable for rights <strong>in</strong> these areas. All these factors meanthat women face specific barriers <strong>in</strong> claim<strong>in</strong>g their rights, participat<strong>in</strong>g <strong>in</strong> governanceand hold<strong>in</strong>g the state to account—<strong>in</strong> effect act<strong>in</strong>g as full citizens—and that measures torebuild or reform the state will affect them differently.Gender roles and relations can determ<strong>in</strong>e opportunities and obstacles to statebuild<strong>in</strong>g.They change considerably dur<strong>in</strong>g armed conflict, and postconflict reform of po-149
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social Cohesionlitical <strong>in</strong>stitutions offers an opportunity to <strong>in</strong>crease women’s political voice and <strong>in</strong>fluence,especially <strong>in</strong> the new aid effectiveness architecture.The <strong>in</strong>tensive state-build<strong>in</strong>g processes that take place <strong>in</strong> postconflict and fragile statesett<strong>in</strong>gs can allow for changes <strong>in</strong> power relations, state structures and <strong>in</strong>stitutions andthe relationship between state and citizens (box 7.6). In the process of mov<strong>in</strong>g out of<strong>fragility</strong> there are important opportunities for the <strong>in</strong>ternational community to supportnational actors <strong>in</strong> build<strong>in</strong>g a more accountable state. There is thus the opportunity topromote women’s citizenship with<strong>in</strong> state-build<strong>in</strong>g processes <strong>in</strong> fragile state sett<strong>in</strong>gs—produc<strong>in</strong>g capable, accountable and responsive states and ensur<strong>in</strong>g that long-stand<strong>in</strong>gpatterns of oppression are not reestablished.Box 7.6: Postconflict transition: an opportunity for women’s empowerment?The astonish<strong>in</strong>g figure of 56% of women <strong>in</strong> the lower chamber of parliament <strong>in</strong> Rwanda <strong>in</strong>2009 can be seen <strong>in</strong> the larger context of two trends: the use of quotas, and theopportunities to address gender <strong>in</strong>equality <strong>in</strong> a postconflict situation. The <strong>in</strong>crease ofnumbers of women <strong>in</strong> parliament has been faster <strong>in</strong> Sub-Saharan Africa <strong>in</strong> the last 40 yearsthan <strong>in</strong> any other region, primarily through quotas. Accord<strong>in</strong>g to the Inter-ParliamentaryUnion (IPU), postconflict countries have “featured prom<strong>in</strong>ently <strong>in</strong> the top 30 of the IPU’sworld rank<strong>in</strong>g of women <strong>in</strong> national parliaments,” and these countries have been effective atus<strong>in</strong>g quotas and reserved seats to “ensure the presence and participation of women <strong>in</strong>[their] newly created <strong>in</strong>stitutions 40 “.Rwanda shows how state-build<strong>in</strong>g <strong>in</strong> postconflict situations can address gender<strong>in</strong>equalities. Powley (2003) reports that this is due to an active and engaged women’s civilsociety movement, the ability of women to work across party and ethnic l<strong>in</strong>es to makechanges to the constitution and the technical support of the <strong>in</strong>ternational community toencourage women to enter parliament through the quota system. Powley po<strong>in</strong>ts to theimportance of susta<strong>in</strong>ed campaign<strong>in</strong>g by the umbrella organisation, Pro-Femmes, <strong>in</strong> advis<strong>in</strong>gthe government on women’s political participation and promot<strong>in</strong>g reconciliation br<strong>in</strong>g<strong>in</strong>gtogether grassroot women, NGOs and government officials. In parliament the Forum ofWomen Parliamentarians also worked on gender equality policy across party l<strong>in</strong>es. Key to thesuccess was the technical and f<strong>in</strong>ancial assistance and encouragement of such <strong>in</strong>ternationalpartners as USAID, DFID, IPU, UNDP, AWEPA and International Alert. Landmark legislativeachievements were revok<strong>in</strong>g laws that prohibited women from <strong>in</strong>herit<strong>in</strong>g land <strong>in</strong> 1999 andpass<strong>in</strong>g a new gender-sensitive constitution <strong>in</strong> 2003. Parliamentary elections followed, withwomen ga<strong>in</strong><strong>in</strong>g 49 % of the seats <strong>in</strong> the Chamber of Deputies.Early attention needs to be given to gender equality and to <strong>in</strong>creas<strong>in</strong>g women’s perspectiveand participation <strong>in</strong> political, social, and economic development <strong>in</strong> fragile andpostconflict sett<strong>in</strong>gs. State reconstruction can shape new social, economic and politicaldynamics that can break gender stereotypes. Rebuild<strong>in</strong>g fragile states opens the possibilitiesfor commitments to women's rights and the promotion of gender equality to beconfirmed <strong>in</strong> new governance arrangements. The challenge <strong>in</strong> postconflict situations is tostrengthen national governments to ensure coherence between macroeconomic policyand gender equality goals. The <strong>in</strong>tensive state-build<strong>in</strong>g processes that take place <strong>in</strong>postconflict and fragile state sett<strong>in</strong>gs allow for changes <strong>in</strong> power relations, state structuresand <strong>in</strong>stitutions, and the relationship between state and citizens and between citizensthemselves. There is potential <strong>in</strong> these contexts to change discrim<strong>in</strong>ation <strong>in</strong> educationand economic security, sociocultural discrim<strong>in</strong>atory practices and laws, sexual violenceand harassment and the exclusion of women and youth from decision-mak<strong>in</strong>gwith<strong>in</strong> the security sector.40 Powley 2003, p. 5.150
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionCastillejo (2008) 41 argues that redraw<strong>in</strong>g the boundaries of authority between theformal state and customary governance systems can provide new citizenship opportunitiesfor women. Fail<strong>in</strong>g to focus on gender can entrench systems that discrim<strong>in</strong>ateaga<strong>in</strong>st women.The challenge at an operational level is that gender is not given a high priority <strong>in</strong>postconflict state-build<strong>in</strong>g. In many Sub Saharan countries women have little contactwith the formal state, and their lives are governed by customary governance systemsthat seriously limit their rights and opportunities for political participation 42 . This is evenmore true <strong>in</strong> fragile states, where the formal state is weak and <strong>in</strong>accessible.There have been, however, changes <strong>in</strong> women’s rights, women’s political participationand women’s mobilisation <strong>in</strong> countries such as Sierra Leone and Liberia, examples ofhow donors can support the strengthen<strong>in</strong>g of women’s participation <strong>in</strong> state-build<strong>in</strong>g <strong>in</strong>fragile African states.One problem <strong>in</strong> promot<strong>in</strong>g and defend<strong>in</strong>g women’s rights <strong>in</strong> fragile states is legal pluralism.Many African countries have different legal systems based on statutory, religiousand customary law. Each legal system has different notions of what women’s rights entail,complicat<strong>in</strong>g the reform agenda.The systems are often overlapp<strong>in</strong>g, present<strong>in</strong>g problems of where rights can beclaimed. For <strong>in</strong>stance, if one is married under customary law and rights are violated,which legal code is used to adjudicate? Often it is unclear which is the supreme law becausesome of these systems are not legislated or recognised. And <strong>in</strong> a system of weakand compromised <strong>in</strong>stitutions, this can further erode rights. In address<strong>in</strong>g ways to improvelegal systems and governance <strong>in</strong>stitutions, it is important to realise this is wherepatriarchal social relations, women’s literacy and awareness and access to their rightscome <strong>in</strong>to play. To address these complexities and build new governance structuresmore resources are required that take gender <strong>in</strong>equalities <strong>in</strong>to account and put affirmativeaction <strong>in</strong>to place.As Castillejo (2008) suggests, it is important that state-build<strong>in</strong>g processes fully engagewith customary governance structures—which are central to most women’s lives—rather than construct a formal state that lies on top of unreformed customary governancestructures that cont<strong>in</strong>ue to determ<strong>in</strong>e people’s daily lives 43 .Gender and <strong>fragility</strong> is a very new area of development policy. Even though developmentaid frameworks call for gender-sensitive policy, <strong>in</strong> general, policy responses to <strong>fragility</strong>do not yet fully take gender <strong>in</strong>to account, even though most of the characteristicsof <strong>fragility</strong> have important gender dimensions.41 Castillejo 2008.42 Castillejo 2008.43 Castillejo 2008.151
<strong>European</strong> Report on Development 2009 – Chapter 7: State-Build<strong>in</strong>g and Social CohesionBox 7.7: Gender responsive budget<strong>in</strong>gGender responsive budget<strong>in</strong>g (GRB) has emerged as a major policy response to addressgender <strong>in</strong>equalities through the new aid modalities. The new aid modalities (sector andbudget support) pose particular challenges for track<strong>in</strong>g gender equality outcomes. Genderresponsive budget<strong>in</strong>g is one way to achieve this because it requires governments to applygender analysis to the budget<strong>in</strong>g process at national and local levels. Gender budgets aim toprovide accountability between the poorest citizens and their governments and to deliverrights and democracy to women 44 . Some very useful gender budget analysis has been done<strong>in</strong> several SSA countries <strong>in</strong>clud<strong>in</strong>g Mozambique, South Africa, Tanzania and Uganda 45 .Gender budget analysis assists <strong>in</strong> measur<strong>in</strong>g the differential impact of revenue rais<strong>in</strong>g andgovernment spend<strong>in</strong>g on men and women and <strong>in</strong> advocat<strong>in</strong>g for changes or shifts <strong>in</strong> publicexpenditure to match policy goals 46 . It is not a separate budget for women but rather ananalytical tool to address gender-based discrim<strong>in</strong>ation that can play an important role <strong>in</strong>enabl<strong>in</strong>g women and other poor citizens to exercise their rights to basic services, economicopportunities and political participation—and to <strong>in</strong>crease government accountability for publicservice provision.GRB aims to:• Improve the allocation of resources to women.• Ma<strong>in</strong>stream gender <strong>in</strong>to macroeconomics and development.• Strengthen civil society participation <strong>in</strong> economic policy mak<strong>in</strong>g.• Enhance the l<strong>in</strong>kages between economic and social policy outcomes.• Track public expenditure aga<strong>in</strong>st gender and development policy commitments.• Contribute to the atta<strong>in</strong>ment of the Millennium Development Goals 47 .• Allow governments to comply with <strong>in</strong>ternational obligations such as the Beij<strong>in</strong>g Declarationand Platform for Action and the Convention on the Elim<strong>in</strong>ation of All Forms ofDiscrim<strong>in</strong>ation Aga<strong>in</strong>st Women (CEDAW).GRB has enormous potential for advanc<strong>in</strong>g gender-equitable resource allocation <strong>in</strong> fragilestates. In order to make aid effective <strong>in</strong> address<strong>in</strong>g poverty and <strong>in</strong>equality, it is essential fordonors and national governments to have a greater understand<strong>in</strong>g of the specific challengeswomen face. GRB is particularly important <strong>in</strong> the context of rebuild<strong>in</strong>g and strengthen<strong>in</strong>gstate <strong>in</strong>stitutions because it provides an important entry po<strong>in</strong>t for gender ma<strong>in</strong>stream<strong>in</strong>g.Rwanda shows how state-build<strong>in</strong>g <strong>in</strong> postconflict situations can address gender<strong>in</strong>equalities. Powley (2003) reports that this is due to an active and engaged women’s civilsociety movement, the ability of women to work across party and ethnic l<strong>in</strong>es to makechanges to the constitution and the technical support of the <strong>in</strong>ternational community toencourage women to enter parliament through the quota system. Powley po<strong>in</strong>ts to theimportance of susta<strong>in</strong>ed campaign<strong>in</strong>g by the umbrella organisation, Pro-Femmes, <strong>in</strong> advis<strong>in</strong>gthe government on women’s political participation and promot<strong>in</strong>g reconciliation br<strong>in</strong>g<strong>in</strong>gtogether grassroot women, NGOs and government officials. In parliament the Forum ofWomen Parliamentarians also worked on gender equality policy across party l<strong>in</strong>es. Key to thesuccess was the technical and f<strong>in</strong>ancial assistance and encouragement of such <strong>in</strong>ternationalpartners as USAID, DFID, IPU, UNDP, AWEPA and International Alert. Landmark legislativeachievements were revok<strong>in</strong>g laws that prohibited women from <strong>in</strong>herit<strong>in</strong>g land <strong>in</strong> 1999 andpass<strong>in</strong>g a new gender-sensitive constitution <strong>in</strong> 2003. Parliamentary elections followed, withwomen ga<strong>in</strong><strong>in</strong>g 49% of the seats <strong>in</strong> the Chamber of Deputies.44 Sharp 2003.45 Claasen 2008.46 Budlender and Hewitt 2002.47 Budlender and Hewitt 2002.152
<strong>European</strong> Report on Development 2009 – Section 3: Overcom<strong>in</strong>g Fragility: The EU's RoleSECTION 3-OVERCOMING FRAGILITY: THE EU'S ROLE153
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaCHAPTER 8-EU POLICIES TO ADDRESS FRAGILITYIN SUB-SAHARAN AFRICA155
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaAddress<strong>in</strong>g state <strong>fragility</strong> has been a policy priority for the <strong>European</strong> Union for long time.To deal with countries <strong>in</strong> fragile situations, the EU has developed a comprehensive set ofpolicies, which <strong>in</strong>cludes a general framework, provid<strong>in</strong>g the guidel<strong>in</strong>es and objectives forEU foreign and development policy, and specific policies towards <strong>fragility</strong>. The high priorityconferred to state <strong>fragility</strong> is also reflected <strong>in</strong> the <strong>European</strong> Consensus on Development,adopted <strong>in</strong> 2005.Whether this comprehensive set of policy documents translates <strong>in</strong>to adequate <strong>in</strong>strumentseffectively address<strong>in</strong>g the challenges posed by the <strong>fragility</strong> of state <strong>in</strong>stitutions <strong>in</strong>Sub-Saharan Africa is still open to discussion. The object of this report is not to evaluatethe exist<strong>in</strong>g policies <strong>in</strong> detail, but to highlight the EU’s potential and limitations <strong>in</strong> tackl<strong>in</strong>g<strong>fragility</strong>.A review of the EU approach to state <strong>fragility</strong> reveals that progress is needed <strong>in</strong> severaldirections. First, and more generally, narrow<strong>in</strong>g the implementation gap betweenthe theoretical policy framework and the design and implementation of specific <strong>in</strong>terventionson the ground. This challenge is fundamental because the effect of a policy is seen<strong>in</strong> its implementation. Furthermore such implementation needs to be properly tailoredbecause one-size-fits-all policies do not suit the needs of fragile states.Next, and more specifically, progress is needed:• To reach a solid understand<strong>in</strong>g of the local context—to design effective <strong>in</strong>terventions<strong>in</strong>formed by such an understand<strong>in</strong>g.• To understand how the pr<strong>in</strong>ciple of ownership should be adapted when deal<strong>in</strong>gwith countries that have <strong>in</strong>capacitated or illegitimate state <strong>in</strong>stitutions, whichcan make budget support <strong>in</strong>effective.• To avoid hav<strong>in</strong>g the breadth of EU policies backfire, which could happen if PolicyCoherence for Development is not achieved, and different policies produce <strong>in</strong>directadverse effects on fragile states. The horizontal dimension of policy coherenceneeds to be matched by a better search for vertical coherence 1 , ensur<strong>in</strong>g abetter coord<strong>in</strong>ation between the EC and EU member states.• To make EU trade policy more responsive to the specific needs of Sub-SaharanAfrican fragile states and ensure that bilateral agreements do not harm theprocess of multilateral <strong>in</strong>tegration.• To shift from responsive to preventive <strong>in</strong>terventions—so that countries <strong>in</strong> fragilesituations do not slide further down a spiral that progressively erodes the capacityand legitimacy of their state <strong>in</strong>stitutions. Such a shift could require mov<strong>in</strong>gtowards a regional approach to <strong>fragility</strong>, because the bad neighbour effects described<strong>in</strong> previous chapters could jeopardise the chances for tackl<strong>in</strong>g <strong>fragility</strong>country by country.• To better understand how the Security and Development nexus can be properlyhandled.Narrow<strong>in</strong>g the gap requires reassess<strong>in</strong>g priorities, concentrat<strong>in</strong>g efforts, simplify<strong>in</strong>gprocedures and, <strong>in</strong> particular, f<strong>in</strong>d<strong>in</strong>g the appropriate organisation or partner to implementthe policies. It is an issue not only of implement<strong>in</strong>g policies but also of build<strong>in</strong>gtrust among recipients and donors and learn<strong>in</strong>g from the policy experiences. Furthermore,the EU should take a more constructive approach with the understand<strong>in</strong>g that tofight <strong>fragility</strong> is <strong>in</strong> fact to build resilience.1See Carbone 2009.156
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaAga<strong>in</strong>st this background, this chapter assesses the “state of the art” of EU policiestowards fragile countries, develop<strong>in</strong>g the directions for changes 2 .1 The EU’s historical concern for fragile countriesAs early as 2001 the Belgium Presidency of the <strong>European</strong> Union made fragile states apriority, while the topic has been a preoccupation of <strong>in</strong>dependent EU policy research <strong>in</strong>stitutesfor longer 3 . The 2003 <strong>European</strong> Security Strategy, <strong>in</strong> the post 9/11 world, recastsfragile states as a security issue 4 . The 2005 <strong>European</strong> Consensus on Development—adoptedby the <strong>European</strong> Council, the <strong>European</strong> Parliament and the <strong>European</strong>Commission—for the first time agreed to a shared EU vision on development and def<strong>in</strong>edstate <strong>fragility</strong> as one of the five key challenges of EU development policy. 5Box 8.1: "Address<strong>in</strong>g state <strong>fragility</strong>" – Extracts from the <strong>European</strong> Consensuson Development, 2005 620. The EU will improve its response to difficult partnerships and fragile states, where a thirdof the world's poor live. The EU will strengthen its efforts <strong>in</strong> conflict prevention work and willsupport the prevention of state <strong>fragility</strong> through governance reforms, rule of law,anticorruption measures and the build<strong>in</strong>g of viable state <strong>in</strong>stitutions <strong>in</strong> order to help themfulfill a range of basic functions and meet the needs of their citizens. The EU will workthrough state systems and strategies, where possible, to <strong>in</strong>crease capacity <strong>in</strong> fragile states.The EU advocates rema<strong>in</strong><strong>in</strong>g engaged, even <strong>in</strong> the most difficult situations, to prevent theemergence of failed states.21. In transition situations, the EU will promote l<strong>in</strong>kages between emergency aid,rehabilitation and long-term development. In a postcrisis situation, development will beguided by <strong>in</strong>tegrated transition strategies aim<strong>in</strong>g at rebuild<strong>in</strong>g <strong>in</strong>stitutional capacities,essential <strong>in</strong>frastructure and social services, <strong>in</strong>creas<strong>in</strong>g food security and provid<strong>in</strong>gsusta<strong>in</strong>able solutions for refugees, displaced persons and the general security of citizens. EUaction will take place <strong>in</strong> the framework of multilateral efforts <strong>in</strong>clud<strong>in</strong>g the UN Peace Build<strong>in</strong>gCommission, and will aim to reestablish the pr<strong>in</strong>ciples of ownership and partnership.22. Some develop<strong>in</strong>g countries are particularly vulnerable to natural disasters, climaticchange, environmental degradation and external economic shocks. The member states andthe Community will support disaster prevention and preparedness <strong>in</strong> these countries, with aview to <strong>in</strong>creas<strong>in</strong>g their resilience <strong>in</strong> the face of these challenges.The Consensus lays out an EU approach based on governance reforms, rule of law,anti-corruption measures and the build<strong>in</strong>g of viable state <strong>in</strong>stitutions, as well as <strong>in</strong>creas<strong>in</strong>gcapacity <strong>in</strong> fragile states 7 . It also underl<strong>in</strong>es the perceived need with<strong>in</strong> the EU to improvethe effectiveness and coherence of its assistance to develop<strong>in</strong>g countries. And itadvocates rema<strong>in</strong><strong>in</strong>g engaged, even <strong>in</strong> the most difficult situations, to prevent theemergence of failed states.234567See Bakrania and Lucas (2009) for an overview of donors’ activities <strong>in</strong> fragile countries <strong>in</strong> theHorn of Africa, which covers African Development Bank, EC, UNDP, US, World Bank and selected<strong>in</strong>dividual countries. The study emphasises that donors’ activities reflect not only theirown expertise, but also foreign policy <strong>in</strong>terests.See Visman 1998.Solana 2003.This chapter draws on the background paper by Faria and Sherriff 2009 available <strong>in</strong> Volume 1B.Extracted from <strong>European</strong> Parliament Council Commission 2006.See paragraph 20 of the <strong>European</strong> Parliament Council Commission 2006.157
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaWork by other <strong>in</strong>stitutions such as the World Bank and the OECD has been <strong>in</strong>strumental<strong>in</strong> focus<strong>in</strong>g the policy th<strong>in</strong>k<strong>in</strong>g and debate on how to work <strong>in</strong> fragile states 8 . These<strong>in</strong>stitutions and <strong>in</strong>dividual EU member states, more than the EC and EU collectively,have often led the policy debate. While some EU member states had their own bilateralpolicies on fragile states, others felt the urgency to develop them and pushed for furtherpolicy discussions at the <strong>European</strong> level 9 .Under the Portuguese Presidency <strong>in</strong> 2007, and follow<strong>in</strong>g an extensive consultationwith the member states, civil society players and other EU <strong>in</strong>stitutions, the EU def<strong>in</strong>edthe analytical and conceptual ground for tackl<strong>in</strong>g <strong>in</strong> a more systematic and strategic wayits cooperation with countries and regions <strong>in</strong> situations of <strong>fragility</strong>. This led to the adoption,<strong>in</strong> October 2007, of a Communication of the Commission "Towards an EU responseto situations of <strong>fragility</strong>—engag<strong>in</strong>g <strong>in</strong> difficult environments for susta<strong>in</strong>able development,stability and peace", which was followed by Conclusions of the Council and a resolutionby the <strong>European</strong> Parliament on the same topic <strong>in</strong> November 2007 10 . In parallel, theCouncil adopted <strong>in</strong> November 2007 its Conclusions on "Security and Development" 11where it stated that "the nexus between security and development should <strong>in</strong>form EUstrategies and policies <strong>in</strong> order to contribute to the coherence of EU external action".Based on these policy commitments, the Commission and the General Secretariat ofthe Council will, before the end of 2009, propose an EU Action Plan 12 for situations of<strong>fragility</strong> and conflict, outl<strong>in</strong><strong>in</strong>g concrete measures on how to enhance the EU response tofragile situations <strong>in</strong> four key areas: "Whole of the EU" approach, state build<strong>in</strong>g, mak<strong>in</strong>gEU assistance more responsive and effective, and <strong>in</strong>ternational strategic partnerships.1.1 The EU policy frameworks to tackle <strong>fragility</strong> <strong>in</strong> Sub-Saharan AfricaEU policies towards Sub-Saharan fragile states are broadly def<strong>in</strong>ed along three l<strong>in</strong>es:• Overarch<strong>in</strong>g policy frameworks provid<strong>in</strong>g the general guid<strong>in</strong>g pr<strong>in</strong>ciples and objectivesfor EU foreign and development policy and <strong>in</strong>ternational engagement <strong>in</strong>areas that, although not specific to fragile states or to Africa, are generally key<strong>in</strong> situations of <strong>fragility</strong>, such as development, security and humanitarian assistance).89See the OECD International Initiative on Conflict and Fragility – (http:www.oecd.org/dac/<strong>in</strong>caf)and World Bank (http://www.worldbank.org/ieg/licus/<strong>in</strong>dex.html).For <strong>in</strong>stance, DFID has already <strong>in</strong> place a specific approach to <strong>fragility</strong>, which <strong>in</strong>cludes focus<strong>in</strong>gon state-build<strong>in</strong>g as the central objective, us<strong>in</strong>g different ways to deliver aid, work<strong>in</strong>g moreclosely with <strong>in</strong>ternational partners and stay<strong>in</strong>g committed for the longer term to get results.See DFID, 2009, White Paper, chapter 4.10 Commission of the <strong>European</strong> Communities 2007, <strong>European</strong> Parliament 2007 and Council of the<strong>European</strong> Union, 2007.11 Council of the <strong>European</strong> Union, 2007.12 The Plan will be based on follow-up activities to both sets of Council Conclusions, separatethroughout this process. The work on situations of <strong>fragility</strong> is based on: 1) Action Plans, studiesand reports from 6 pilot countries with a Member State tak<strong>in</strong>g the co-lead together with the ECdelegation <strong>in</strong> 4 cases: Sierra Leone (co-lead DE), Burundi (co-lead NL), Gu<strong>in</strong>ea Bissau (co-leadPT), Haiti (co-lead F), Timor Leste and Yemen; 2) a support study mapp<strong>in</strong>g the actors, <strong>in</strong>strumentsand assessment tools <strong>in</strong> fragile situations; 3) jo<strong>in</strong>t work by the COM, the WB, AfDB andIMF on a common approach to budget support <strong>in</strong> fragile situations and 4) the adoption of flexibleprocedures <strong>in</strong> situations of crises and emergency. For the follow-up on security and developmentnexus, see <strong>in</strong> particular RELEX/ Studies/ IFS/ Security and Development. F<strong>in</strong>al ReportBook 1 and 2 (Project No. 2008/157766). The study exam<strong>in</strong>ed at the security and developmentnexus <strong>in</strong> Aceh/ Indonesia, Afghanistan, Central African Republic, Chad, Colombia and South-Africa and was distributed to EU Member States <strong>in</strong> February 2009.158
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africa• Jo<strong>in</strong>t policy frameworks for Africa that, while not specific to fragile states, shapeEU action <strong>in</strong>, and its relations with, Sub-Saharan African states (such as theCotonou Partnership Agreement 13 , and the Jo<strong>in</strong>t Africa-EU Strategy).• EC or EU-wide policies and policy guidel<strong>in</strong>es (not necessarily specific to Africa)that are focused on situations of <strong>fragility</strong>, or cover<strong>in</strong>g aspects of EC or EU actionparticularly relevant to them (such as crisis management missions, security sectorreform, disarmament, demobilisation and re<strong>in</strong>tegration, small arms and lightweapons, governance, conflict prevention, children and armed conflict, securityand development priorities and policies and the development dimension of thef<strong>in</strong>ancial and economic crisis) 14 .In addition to these specific measures, some other EU policies on trade, migration,research and <strong>in</strong>novation, fisheries and agriculture impact at least some aspects of <strong>fragility</strong>and <strong>in</strong>teract with the ad hoc measures. It is therefore crucial to look beyond the traditionaldevelopment and foreign policy arena to check whether these EU policies arecoherent with tackl<strong>in</strong>g <strong>fragility</strong> and build<strong>in</strong>g resilience.Through its leadership on Policy Coherence for Development, the EU has made someprogress <strong>in</strong> recent years, but more needs to be done on understand<strong>in</strong>g the actual impactof EU policy <strong>in</strong>coherence on fragile states <strong>in</strong> areas beyond development and foreign policyand, as recognised by the EU, <strong>in</strong> <strong>overcom<strong>in</strong>g</strong> diverg<strong>in</strong>g <strong>in</strong>terests among memberstates and pursu<strong>in</strong>g more coherent whole-of-the-Union policies 15 .The new strategic approach to Policy Coherence for Development highlight<strong>in</strong>g thepromotion of peace and security for development and contribut<strong>in</strong>g to the establishmentof the policy framework for the "whole of the Union" approach to development is go<strong>in</strong>g<strong>in</strong> the right direction.On top of this, EU members and the <strong>European</strong> Commission have committed to the2005 Paris Declaration on aid effectiveness and the 2008 Accra Agenda for Action (AAA),whose pr<strong>in</strong>ciples apply equally to fragile situations, although they need to be adapted toenvironments with little capacity and/or ownership (see box 8.2) 16 . This aid effectivenessagenda has been translated by the EU <strong>in</strong>to several <strong>in</strong>itiatives such as a commonframework for jo<strong>in</strong>t multiannual programm<strong>in</strong>g, common implementation mechanisms(co-f<strong>in</strong>anc<strong>in</strong>g, jo<strong>in</strong>t donor missions) and a "Code of Conduct on Division of Labour andComplementarity” 17 , so far implemented “very partially 18 .” An operational framework tofurther promote aid effectiveness and jo<strong>in</strong>t approaches at EU level <strong>in</strong> the areas of divisionof labour, use of country systems and technical cooperation for capacity development,<strong>in</strong>clud<strong>in</strong>g <strong>in</strong> fragile contexts, is currently under elaboration, <strong>in</strong> view of the fourthHigh Level Forum on Aid Effectiveness (HLF IV) that will be held <strong>in</strong> Seoul, Korea, <strong>in</strong>2011.13 The Cotonou Partnership Agreement (CPA) between the <strong>European</strong> Union and African, Caribbeanand Pacific (ACP) states <strong>in</strong>cludes all Sub-Saharan African states apart from South Africa.14 A complete list of EU/EC policy documents related to <strong>fragility</strong> can be found <strong>in</strong> Volume 1B.15 Commission of the <strong>European</strong> Communities 2009b.16 The Accra Agenda for Action, 2008, 3rd High Level Forum, September 2–4.17 Council of the EU, 2007.18 <strong>European</strong> Parliament 2009.159
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaBox 8.2: Specific provisions on <strong>fragility</strong> of the Paris Declaration on Aid Effectivenessand the Accra Agenda for ActionParis Declaration on Aid EffectivenessAdapt and apply to differ<strong>in</strong>g country situations7. Enhanc<strong>in</strong>g the effectiveness of aid is also necessary <strong>in</strong> challeng<strong>in</strong>g and complex situations,such as the tsunami disaster that struck countries of the Indian Ocean rim on 26 December2004. In such situations, worldwide humanitarian and development assistance must beharmonised with<strong>in</strong> the growth and poverty reduction agendas of partner countries. In fragilestates, as we support state-build<strong>in</strong>g and delivery of basic services, we will ensure that thepr<strong>in</strong>ciples of harmonisation, alignment and manag<strong>in</strong>g for results are adapted toenvironments of weak governance and capacity. Overall, we will give <strong>in</strong>creased attention tosuch complex situations as we work toward greater aid effectiveness.Deliver<strong>in</strong>g effective aid <strong>in</strong> fragile states37. The long-term vision for <strong>in</strong>ternational engagement <strong>in</strong> fragile states is to build legitimate,effective and resilient state and other country <strong>in</strong>stitutions. While the guid<strong>in</strong>g pr<strong>in</strong>ciples ofeffective aid apply equally to fragile states, they need to be adapted to environments ofweak ownership and capacity and to immediate needs for basic service delivery.38. Partner countries commit to:• Make progress towards build<strong>in</strong>g <strong>in</strong>stitutions and establish<strong>in</strong>g governance structuresthat deliver effective governance, public safety, security, and equitable access to basicsocial services for their citizens.• Engage <strong>in</strong> dialogue with donors on develop<strong>in</strong>g simple plann<strong>in</strong>g tools, such as the transitionalresults matrix, where national development strategies are not yet <strong>in</strong> place.• Encourage broad participation of a range of national actors <strong>in</strong> sett<strong>in</strong>g development priorities.39. Donors commit to:• Harmonise their activities. Harmonisation is all the more crucial <strong>in</strong> the absence ofstrong government leadership. It should focus on upstream analysis, jo<strong>in</strong>t assessments,jo<strong>in</strong>t strategies, co-ord<strong>in</strong>ation of political engagement; and practical <strong>in</strong>itiativessuch as the establishment of jo<strong>in</strong>t donor offices.• Align to the maximum extent possible beh<strong>in</strong>d central government-led strategies or, ifthat is not possible, donors should make maximum use of country, regional, sector ornon-government systems.• Avoid activities that underm<strong>in</strong>e national <strong>in</strong>stitution build<strong>in</strong>g, such as bypass<strong>in</strong>g nationalbudget processes or sett<strong>in</strong>g high salaries for local staff.• Use an appropriate mix of aid <strong>in</strong>struments, <strong>in</strong>clud<strong>in</strong>g support for recurrent f<strong>in</strong>anc<strong>in</strong>g,particularly for countries <strong>in</strong> promis<strong>in</strong>g but high-risk transitions.Accra Agenda for ActionWe will adapt aid policies for countries <strong>in</strong> fragile situations21. In the Paris Declaration, we agreed that aid effectiveness pr<strong>in</strong>ciples apply equally todevelopment co-operation <strong>in</strong> situations of <strong>fragility</strong>, <strong>in</strong>clud<strong>in</strong>g countries emerg<strong>in</strong>g fromconflict, but that these pr<strong>in</strong>ciples need to be adapted to environments of weak ownership orcapacity. S<strong>in</strong>ce then, Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile States andSituations have been agreed. To further improve aid effectiveness <strong>in</strong> these environments, wewill take the follow<strong>in</strong>g actions:a) Donors will conduct jo<strong>in</strong>t assessments of governance and capacity and exam<strong>in</strong>e thecauses of conflict, <strong>fragility</strong> and <strong>in</strong>security, engag<strong>in</strong>g develop<strong>in</strong>g country authorities and otherrelevant stakeholders to the maximum extent possible.b) At country level, donors and develop<strong>in</strong>g countries will work and agree on a set ofrealistic peace- and state-build<strong>in</strong>g objectives that address the root causes of conflict and<strong>fragility</strong> and help ensure the protection and participation of women. This process will be<strong>in</strong>formed by <strong>in</strong>ternational dialogue between partners and donors on these objectives as160
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africaprerequisites for development.c) Donors will provide demand-driven, tailored and co-ord<strong>in</strong>ated capacity-developmentsupport for core state functions and for early and susta<strong>in</strong>ed recovery. They will work withdevelop<strong>in</strong>g countries to design <strong>in</strong>terim measures that are appropriately sequenced and thatlead to susta<strong>in</strong>able local <strong>in</strong>stitutions.d) Donors will work on flexible, rapid and long-term fund<strong>in</strong>g modalities, on a pooled basiswhere appropriate, to i) bridge humanitarian, recovery and longer-term developmentphases, and ii) support stabilisation, <strong>in</strong>clusive peace build<strong>in</strong>g, and the build<strong>in</strong>g of capable,accountable and responsive states. In collaboration with develop<strong>in</strong>g countries, donors willfoster partnerships with the UN System, <strong>in</strong>ternational f<strong>in</strong>ancial <strong>in</strong>stitutions and other donors.e) At country level and on a voluntary basis, donors and develop<strong>in</strong>g countries will monitorimplementation of the Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile States andSituations, and will share results as part of progress reports on implement<strong>in</strong>g the ParisDeclaration.The EU policy approach to <strong>fragility</strong> broadly reflects much of what is established as <strong>in</strong>ternationalbest practice for fragile states, such as pursu<strong>in</strong>g “whole-of-government” approachesand implement<strong>in</strong>g the OECD’s Policy Commitment and Pr<strong>in</strong>ciples for Good InternationalEngagement <strong>in</strong> Fragile States and Situations of April 2007 (box 8.3).Box 8.3: OECD-DAC Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> FragileStates and Situations 191. Take context as the start<strong>in</strong>g po<strong>in</strong>t.2. Ensure all activities do no harm.3. Focus on state-build<strong>in</strong>g as the central objective.4. Prioritise prevention.5. Recognise the l<strong>in</strong>ks between political, security and development objectives.6. Promote non discrim<strong>in</strong>ation as a basis for <strong>in</strong>clusive and stable societies.7. Align with local priorities <strong>in</strong> different ways <strong>in</strong> different contexts.8. Agree on practical coord<strong>in</strong>ation mechanisms between <strong>in</strong>ternational actors.9. Act fast . . . but stay engaged long enough to give success a chance.10. Avoid pockets of exclusion (“aid orphans”).Because an extensive policy framework and range of policy <strong>in</strong>itiatives relevant tostate <strong>fragility</strong> already exists <strong>in</strong> the EU and at <strong>in</strong>ternational level, the issue is not aboutcreat<strong>in</strong>g a new framework. Instead it is about <strong>overcom<strong>in</strong>g</strong> the political, f<strong>in</strong>ancial and <strong>in</strong>stitutionalchallenges to implement<strong>in</strong>g these policies <strong>in</strong> practice. Issues <strong>in</strong> search of operationalguidance <strong>in</strong> fragile states <strong>in</strong>clude budgetary support, the l<strong>in</strong>k between peacebuild<strong>in</strong>gand state-build<strong>in</strong>g, trade, climate change, decentralisation, regional <strong>in</strong>tegration,service provision, and gender and social cohesion. Some of these areas have alreadybeen tackled, while for others current EU policy provides only limited practical guidance.Furthermore it is important that exist<strong>in</strong>g EU policy frameworks are sufficiently "fieldtested" for feasibility, relevance and impact <strong>in</strong> different fragile contexts.19 Extracted from OECD/DAC 2007.161
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africa1.2 EU <strong>in</strong>struments for implement<strong>in</strong>g the policyframeworkAs recognised <strong>in</strong> the 2003 <strong>European</strong> Security Strategy and a number of other relevantpolicy documents, the challenge for the EU is to br<strong>in</strong>g together its different <strong>in</strong>strumentsand capabilities <strong>in</strong> a concerted and coherent effort, not only among EU <strong>in</strong>struments butalso embrac<strong>in</strong>g the external activities of the member states. Some <strong>in</strong>struments <strong>in</strong> placeare:Guidel<strong>in</strong>es, action plans and specific strategies. As mentioned above, an ActionPlan outl<strong>in</strong><strong>in</strong>g an EU approach to situations of <strong>fragility</strong> and conflict is currently underelaboration. The EU has also developed specific action plans 20 and strategies on otherissues such as the implementation of United Nations Security Council Resolutions 1325and 1820. The UN Resolution 1325 on women, peace and security was the first officialUN Security Council document to recognise the impact of armed conflicts on women, tostress the importance of equal and full participation <strong>in</strong> peace and security and to requirethat all parties <strong>in</strong> a conflict respect women’s rights (box 8.4). The EU 1325 partnershipwas <strong>in</strong>duced by the <strong>European</strong> Peacebuild<strong>in</strong>g Liaison Office Gender, Peace and Securitygroup to provide a forum for policymakers and enhance discussion and understand<strong>in</strong>g ofthe gender perspectives and implementation of the UN 1325 resolution with<strong>in</strong> the EU.Box 8.4: United Nations Security Council Resolution 1325United Nations Security Council Resolution 1325, adopted on 31 October 2000, will help <strong>in</strong>address<strong>in</strong>g gender <strong>in</strong>equality <strong>in</strong> postconflict situations and <strong>in</strong> more gender-equitable peacebuild<strong>in</strong>g.Resolution 1325 requires parties <strong>in</strong> a conflict to respect women’s rights and tosupport their participation <strong>in</strong> peace negotiations and <strong>in</strong> postconflict reconstruction 21 . TheSecurity Council Resolution specifically addresses the disproportionate and unique impact ofwar on women, and women's special undervalued and underused contributions to conflictresolution and susta<strong>in</strong>able peace. It urges women's equal and full participation as activeagents <strong>in</strong> peace and security. Peace-build<strong>in</strong>g is a cont<strong>in</strong>uous process <strong>in</strong> states mov<strong>in</strong>g out of<strong>fragility</strong>, and gender equity is crucial to encourag<strong>in</strong>g good governance, transparency andaccountability.The African Centre for the Constructive Resolution Disputes (ACCORD) tra<strong>in</strong>s men andwomen <strong>in</strong> conflict resolution, negotiation and mediation skills to assist them <strong>in</strong> present<strong>in</strong>gtheir issues, needs and <strong>in</strong>terests at peace tables <strong>in</strong> Burundi, Democratic Republic of Congo,Gu<strong>in</strong>ea, Kenya, Liberia, Rwanda, Sierra Leone, Somalia, South Africa, Sudan and Uganda.Mano River Women Peace Networks <strong>in</strong> Sierra Leone, Liberia and Gu<strong>in</strong>ea (MARWOPNET),signatories to the Lome Peace Accord, were awarded the United Nations Human Rights Prizefor their role <strong>in</strong> peace processes <strong>in</strong> the West African region <strong>in</strong> 2003. Their work po<strong>in</strong>ts to thechallenges to br<strong>in</strong>g women <strong>in</strong>to social, political and economic leadership positions <strong>in</strong> peacebuild<strong>in</strong>g and reconstruction processes and the importance of International Conventions andUN Resolutions 22 <strong>in</strong> underscor<strong>in</strong>g women’s role <strong>in</strong> ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g peace and security <strong>in</strong> theirsocieties 23 .In order to play a stronger role <strong>in</strong> women’s protection and empowerment <strong>in</strong> postconflictsett<strong>in</strong>gs, the EU needs to implement more efficient accountability, monitor<strong>in</strong>g and report<strong>in</strong>gmechanisms and <strong>in</strong>crease the f<strong>in</strong>ancial and human resources allocated to this field ofaction 24 . The role of customary providers of security and justice should also be considered <strong>in</strong>security sector reform processes because <strong>in</strong> many fragile states, security services do notreach beyond the capital centre, and people liv<strong>in</strong>g <strong>in</strong> the rural areas or suburban slums relyma<strong>in</strong>ly on an <strong>in</strong>formal network of security providers.20 For example, EU action plans on climate change and development.21 The <strong>European</strong> Commission, UNIFEM and the International Tra<strong>in</strong><strong>in</strong>g Centre of the ILO have alsoforged this partnership to support stronger action on gender equality and women’s empowerment<strong>in</strong> national development processes and <strong>in</strong> cooperation programmes supported by the EC.162
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaF<strong>in</strong>ancial <strong>in</strong>struments and procedures. With the current f<strong>in</strong>ancial perspectives 2007-2013, the EC has engaged <strong>in</strong> a reform of its f<strong>in</strong>ancial <strong>in</strong>struments for external action,compris<strong>in</strong>g <strong>in</strong>ter alia the Instrument for Stability, the Development Cooperation Instrument(<strong>in</strong>clud<strong>in</strong>g thematic budget l<strong>in</strong>es such as "Non State Actors and Local Authorities <strong>in</strong>Development), and the <strong>European</strong> Instrument for Democracy and Human Rights, plus the<strong>European</strong> Development Fund as the <strong>in</strong>strument for cooperation with the ACP outside theEU budget. The Instrument for Stability has €2.1 billion for 2007–13 25 . The 10th <strong>European</strong>Development Fund for ACP countries has €22.7 billion for 2008–13. It provides an<strong>in</strong>tegrated framework for fund<strong>in</strong>g development and security-related activities 26 .Box 8.5: The Vulnerability FlexTo support develop<strong>in</strong>g countries cop<strong>in</strong>g with the effects of the 2008/09 economic andf<strong>in</strong>ancial crisis, the EU has adopted several measures <strong>in</strong> 2009, <strong>in</strong>clud<strong>in</strong>g the creation of anad-hoc Vulnerability Flex (V-Flex) mechanism 27 . It is a short term and demand-driven<strong>in</strong>strument support<strong>in</strong>g the most vulnerable ACP countries with poor resilience capacity with aview to enabl<strong>in</strong>g them to ma<strong>in</strong>ta<strong>in</strong> priority spend<strong>in</strong>g, notably <strong>in</strong> the social sectors, <strong>in</strong> 2009and 2010. The V-FLEX can operate to provide grants <strong>in</strong> ACP countries where InternationalF<strong>in</strong>ancial Institutions loans are <strong>in</strong>sufficient or where potentially IFIs are not operat<strong>in</strong>g.Support can be provided either as budget support (preferred modality) or exist<strong>in</strong>gprojects/programmes (fall back position).The V-Flex has an amount of €500 million for the period 2009–10. Country eligibility forVulnerability Flex has to be decided case by case accord<strong>in</strong>g to the criteria fixed theCommission.The Peace Facility for Africa, created <strong>in</strong> 2003 <strong>in</strong> response to a request from the AfricanUnion, uses the <strong>European</strong> Development Fund to support African peacekeep<strong>in</strong>g operations.More recently, the <strong>European</strong> Commission has engaged <strong>in</strong> a strategic work onbudget support <strong>in</strong> fragile situations, together with several member states, the WorldBank, the African Development Bank and the International Monetary Fund, with the aimThe partnership <strong>in</strong>cludes a focus on effective implementation of UNSCR 1325, and focuses on12 countries, most of which are emerg<strong>in</strong>g from conflict.22 Global Conventions, UN Resolutions and African Protocol on Gender, Peace and Security: Conventionfor the Elim<strong>in</strong>ation of all Forms of Discrim<strong>in</strong>ation Aga<strong>in</strong>st Women (CEDAW) 1979; Beij<strong>in</strong>gPlatform for Action 1995; UN Resolution 1265 on “Protection of Civilians <strong>in</strong> Armed Conflict”adopted on September 17, 1999; UN Resolution 1261 on “Children and Armed Conflict”adopted on August 25, 1999; UN Resolution 1296 on “Protection of Civilians <strong>in</strong> Armed Conflict”adopted on April 19, 2000; UN Resolution 1314 on “Children and Armed Conflict” adopted onAugust 11, 2000; UN Resolution 1325 on “Women, Peace and Security” adopted on October 31,2000; “Women 2000: Gender Equality, Development and Peace for the Twenty-first Century”New York, June 5–9, 2000; and Protocol on the Rights of Women <strong>in</strong> Africa, Maputo, July 11,2003.23 EU member states provide examples of good practice, which can be replicated <strong>in</strong> fragile contexts.The National Plans for Implementation of 1325 “NAPs” are underway <strong>in</strong> n<strong>in</strong>e <strong>European</strong>countries (Austria, Denmark, Iceland, the Netherlands, Norway, Spa<strong>in</strong>, Sweden, Switzerlandand UK). NAPs are seen as <strong>in</strong>novative attempts and comprehensive strategies to promote follow-throughof <strong>in</strong>ternational commitments. For a more detailed analysis of NAPs, see Sherriffand Barnes (2008).24 Sherriff and Barnes 2008.25 For further discussion of this particular <strong>in</strong>strument, see Gänzle 2009.26 Provided these are not for offensive military costs, as EDF activities cannot cover these <strong>in</strong> accordancewith the <strong>in</strong>ternationally agreed Official Development Assistance def<strong>in</strong>ition.27 Commission of the <strong>European</strong> Communities 2009.163
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africato develop guidel<strong>in</strong>es and to enhance coord<strong>in</strong>ation at EU and <strong>in</strong>ternational level. As mentionedabove, a Common Approach Paper (CAP) on this issue should be adopted beforeend 2009. The Commission has also reviewed its procedures to make them more flexible<strong>in</strong> situations of <strong>fragility</strong>.Human resources. Although appropriate human resources to implement these policiesrema<strong>in</strong> a problem <strong>in</strong> <strong>European</strong> member states’ capitals, <strong>in</strong> Brussels and <strong>in</strong> Sub-SaharanAfrica, EC delegations have acquired greater political awareness and sensitivity. ECdelegations are still ma<strong>in</strong>ly focused on manag<strong>in</strong>g assistance projects/programmes, butthe political dimension is now more important, with better efforts to use the political dialoguetool more effectively. Some EC delegations have political advisors, and there is asharper focus on governance matters, long a miss<strong>in</strong>g l<strong>in</strong>k <strong>in</strong> EC policies. Yet most ECdelegations lack the capacity to look at societal factors that may trigger <strong>in</strong>stability andlack the local presence to ga<strong>in</strong> full understand<strong>in</strong>g of the relevant issues. They also oftenlack a clear political strategy and mandate supported by all EU actors <strong>in</strong> the field, andthe capacity to implement it. The EU Treaty of Lisbon, if adopted, could provide an opportunityfor <strong>in</strong>creas<strong>in</strong>g and support<strong>in</strong>g this political dimension through a new <strong>in</strong>stitutionalarchitecture. But the EC also needs to address procedural constra<strong>in</strong>ts that oftenhamper its capacity to translate policy commitments <strong>in</strong>to activities 28 .Crisis management capabilities. The EU has also been develop<strong>in</strong>g its capabilities <strong>in</strong>civilian and military crisis management. In June 2003, <strong>in</strong> the framework of the ESDP,the EU deployed its first military force outside Europe without us<strong>in</strong>g NATO <strong>in</strong> the Ituriprov<strong>in</strong>ce of the Democratic Republic of Congo. The goal was to stabilise the securitysituation and to improve the humanitarian conditions <strong>in</strong> and around the ma<strong>in</strong> town ofBunia. Between 2004 and 2006, still <strong>in</strong> the framework of the ESDP, the EU deployed<strong>European</strong> police officers to the Democratic Republic of Congo (EUPOL-K<strong>in</strong>shasa), an advisorymission for security sector reform as well as the EUFOR DRC mission, a militarydeployment, <strong>in</strong> and around K<strong>in</strong>shasa and <strong>in</strong> neighbour<strong>in</strong>g Gabon, assigned to supportMONUC to stabilise the situation dur<strong>in</strong>g the election and to protect civilians. From January2008 until March 2009 the EU deployed a military force <strong>in</strong> eastern Chad and <strong>in</strong> thenortheastern part of the Central African Republic to protect civilians <strong>in</strong> danger, facilitatethe delivery of humanitarian aid and protect UN personnel and facilities.The overarch<strong>in</strong>g pillar structure and the division of competencies limits however l<strong>in</strong>ksamong different EU policies, tools and actors 29 . At the nexus between security and development—whenmilitary and civilian crisis management operations converge with <strong>in</strong>stitutionbuild<strong>in</strong>g, conflict prevention and economic development—serious questions of thedemarcation of powers between the pillars arise 30 . With<strong>in</strong> <strong>European</strong> <strong>in</strong>stitutions there isno universal agreement that an <strong>in</strong>tegrated Council and Commission office is the bestway forward 31 . An attempt to l<strong>in</strong>k the EU’s civilian and military capacities is under waywith the restructur<strong>in</strong>g of responsibilities with<strong>in</strong> the Council secretariat, which could alsoaffect jo<strong>in</strong>t work with the EC.28 For <strong>in</strong>stance EC procedures make it difficult for EC delegations to hire local researchers to assistthem with some of these context analyses. Koeb 2008 suggests for <strong>in</strong>stance to <strong>in</strong>sist on recruitmentof skilled staff.29 Solana 2009.30 Hoffmeister 2008.31 Vogel 2009.164
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaTable 8.1: <strong>European</strong> Union <strong>in</strong>stitutions and agencies relevant to fragile statesDiplomaticactionMultilateraland bilateralprogramm<strong>in</strong>gCrisis management<strong>European</strong> Commission 32 Council of the EU EU member states- DG External Relations- DG Trade- DG Development and Relationswith African, Caribbeanand Pacific States (- EC delegations- DG Development and Relationswith African, Caribbeanand Pacific States- DG External Relations- DG ECHO (humanitarian aid)- DG EuropeAid- EC delegations- GAERC- High Representative- PSC- PMG- Council Work<strong>in</strong>g Groups(COHOM, CODEV, CIVCOMand regional work<strong>in</strong>ggroups)- EUSR- Council Secretariat- DG External Relations - ESDP Missions-- Foreign m<strong>in</strong>istries- Embassies / missions- Development cooperationm<strong>in</strong>istries / agencies- Operational developmentagencies- Embassies / missions- Contributions to ESDPmissions2 EU potential <strong>in</strong> fragile situationsEU is a crucial political, economic and diplomatic player. The EU is the world’slargest trad<strong>in</strong>g bloc and collectively the largest <strong>in</strong>ternational donor. Like other big players<strong>in</strong> the <strong>in</strong>ternational arena, it is a major economic power. It can br<strong>in</strong>g diplomatic energyto bear through its Common Foreign and Security Policy with the 27 member statesact<strong>in</strong>g together <strong>in</strong> countries and such <strong>in</strong>ternational forums as the UN. And it has someadvantages over the International Organizations <strong>in</strong> tackl<strong>in</strong>g <strong>fragility</strong>: the wide range ofits potential actions, the resources that it can mobilise and its status as a political actor.Furthermore, EU own history with transition from dictatorship to democracy <strong>in</strong> somecountries and from regulated systems to market systems represents an <strong>in</strong>estimable experienceto be exploited.EU engages with state and non state actors. The EU has the ability to engage with avariety of actors other than governments, <strong>in</strong>clud<strong>in</strong>g local authorities and non state actorsand regional organisations, which add different perspectives to the EU’s understand<strong>in</strong>gof the local context, feed <strong>in</strong>to the political dialogue with governments, and improvethe outreach of its policies. But that ability often rema<strong>in</strong>s unexploited because of thecomplexity of EU procedures and the limited capacity of some of the other actors 33 .EU has a long last<strong>in</strong>g presence. The EU has, through its member states or throughthe EC delegations, a long last<strong>in</strong>g presence <strong>in</strong> fragile countries. Even <strong>in</strong> situations ofopen violent conflict, when few <strong>in</strong>ternational actors rema<strong>in</strong>, it often ma<strong>in</strong>ta<strong>in</strong>s some typeof presence and support through the offices or field experts of the EC Humanitarian Office.Indeed, the fact that the EC (through ECHO) was the only donor permanently present<strong>in</strong> the eastern part of the Democratic Republic of Congo through the first years ofthis decade gave it a significant advantage over other donors. And it led to the first evercrisis management mission <strong>in</strong> Africa (without recourse to NATO assets) <strong>in</strong> support of theUN Artemis operation <strong>in</strong> Bunia, north eastern DRC, <strong>in</strong> 2003.32 Institutions have different roles with<strong>in</strong> each of these areas, and the <strong>European</strong> Commission cannot<strong>in</strong>itiate EU-wide diplomatic action.33 See Particip 2008.165
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaEU can build global partnerships. The EU is not the only economic, political or militarypower <strong>in</strong>volved or <strong>in</strong>terested <strong>in</strong> Africa 34 . The EU’s ability to build a genu<strong>in</strong>e trilateraldialogue with Ch<strong>in</strong>a and Africa has proved challeng<strong>in</strong>g because few African actors seethis trilateral dialogue <strong>in</strong> their best <strong>in</strong>terest. In some cases the EU capacities arematched or surpassed by others, but the non hegemonic nature of the EU, as long as itis perceived as such, could add to the value of EU presence and action. In addition, theEU can act collectively with significantly less political baggage than its <strong>in</strong>dividual memberstates, particularly those with a colonial past <strong>in</strong> Sub-Saharan Africa. As long as partnercountries don’t see <strong>in</strong>dividual EU member states pursu<strong>in</strong>g their own narrow economic orsecurity <strong>in</strong>terests through the EU, they may be more will<strong>in</strong>g to engage with the EU andto accept it as a power <strong>in</strong> the UN. It is important, however, to be realistic and not overstatethe EU’s <strong>in</strong>fluence <strong>in</strong> Africa. Its effective role may be less than thought, partly becausethe EU is often not as a collective entity <strong>in</strong> partner countries. Nor does it behaveas such, with its role or action generally less than the sum of its parts.But the EU should speak and act with one voice and m<strong>in</strong>d. The EU’s added valuewill rema<strong>in</strong> underused until the EC and EU member states speak and act with one voice(shar<strong>in</strong>g a common understand<strong>in</strong>g and strategy of how to work <strong>in</strong> these contexts) andhave an effective division of labour beyond the aid effectiveness agenda. As previouslynoted, several <strong>in</strong>itiatives, such as the forthcom<strong>in</strong>g action plan on situations of <strong>fragility</strong>and conflict, are under way. The issue is how the wide range of policies and <strong>in</strong>struments,as well as the different EU actors, <strong>in</strong>terrelate to develop and apply a coherent, needsbasedand well <strong>in</strong>formed strategy that can best help these states and societies cope withthe causes and effects of <strong>fragility</strong> and enhance their resilience.If EU coord<strong>in</strong>ation and coherence are very often difficult at a national level with<strong>in</strong>member states adm<strong>in</strong>istrations, they are even more complex at the EU level—with 27member states, the EU <strong>in</strong>stitutions and the heavy and lengthy decision-mak<strong>in</strong>g processand cumbersome <strong>in</strong>ternal and f<strong>in</strong>ancial procedures. But the EU can achieve results as as<strong>in</strong>gle player, when there is able leadership and strong political will. EU policy <strong>in</strong> DemocraticRepublic of Congo <strong>in</strong> the mid-1990s is often considered an example of unity of purposeand commitments with<strong>in</strong> the EU <strong>in</strong>stitutions (<strong>in</strong>clud<strong>in</strong>g member states) to supportcountry stabilisation. But for this unified result to be more permanent, more stable <strong>in</strong>stitutionalarrangements are needed. A unified long-term policy cannot be implementedthrough ad hoc coord<strong>in</strong>ation.3 Towards a better EU response to <strong>fragility</strong>Although progress is visible and policy documents provide more comprehensive politicalguidance, there is a long path to translat<strong>in</strong>g commitments <strong>in</strong>to practice. F<strong>in</strong>ancial <strong>in</strong>strumentsand procedures have become simpler and more flexible, but they rema<strong>in</strong>complex, cumbersome, lengthy and “nonstate actor unfriendly.” That is true even forhumanitarian aid, which has by far the lightest procedures <strong>in</strong> the EC. The EC and theCouncil still compete on matters of competence. The creation of a common external actionservice, if the EU Treaty of Lisbon is ratified, could provide some answers, but theessential work is much deeper 35 .Development policies have to l<strong>in</strong>k with the Common Foreign and Security Policy(CFSP) and <strong>European</strong> Security and Defence Policy (ESDP) missions (civilian and militarycrisis management)—and vice-versa. This is particularly so where cross-cutt<strong>in</strong>g issues(human rights, rule of law) and activities (security sector reform (SSR) and disarmament,demobilisation and re<strong>in</strong>tegration (DDR)) are likely to be as important as tradi-34 See Tadesse 2009.35 See Koeb, 2008 for the implications of the Lisbon Treaty for EU’s relations with develop<strong>in</strong>gcountries. Aga<strong>in</strong>st the background of the Treaty approval, Gaves and Maxwell, 2009, proposedifferent organizational models for restructur<strong>in</strong>g EU development policy.166
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africational areas of EU foreign policy engagement (or even more so). Humanitarian and militaryactors are also more likely to meet <strong>in</strong> the field, which poses other challenges relatedto the perceptions of their dist<strong>in</strong>ctive roles, the clarity of their mandates and the adequacyof their means. Nor have l<strong>in</strong>ks between development, security and environmentreally been addressed so far, although they are receiv<strong>in</strong>g more attention, particularly <strong>in</strong>Central Africa, <strong>in</strong>clud<strong>in</strong>g the Great Lakes.The drivers of change are primarily local. Donors and their policies can help, h<strong>in</strong>der orjust make no difference at all. But it will be up to the local actors to determ<strong>in</strong>e whetherand how change occurs. Hence it is important for the EU’s roles and activities to root <strong>in</strong>each specific context (<strong>in</strong> accord with the OECD-DAC Pr<strong>in</strong>ciples). That presupposesknowledge and understand<strong>in</strong>g of local and regional dynamics—from anthropological, historical,socioeconomic and political perspectives. So, a much more susta<strong>in</strong>ed politicalengagement, rather than a technocratic one, is required.3.1 Bridg<strong>in</strong>g the gap between understand<strong>in</strong>g the contextand an adequate policy responseA renewed effort to understand local dynamics, identify the causes of (potential) conflictand feed well <strong>in</strong>formed multisourced political, societal, economic and regional analysis<strong>in</strong>to country strategies has characterised recent EU policy actions, especially <strong>in</strong> situationsof <strong>fragility</strong> 36 . There is often a shared analysis of the context by the EC and EU memberstates. And EC country strategies are generally rooted <strong>in</strong> needs and priorities identified<strong>in</strong> national strategy documents, <strong>in</strong>creas<strong>in</strong>g the potential for ownership. But the extent towhich such analysis is <strong>in</strong>formed by diverse local sources is not always clear. Nor is theredeep understand<strong>in</strong>g of local actors (spoilers, drivers of change), their motivations, andthe evolv<strong>in</strong>g societal dynamics. This can be partly expla<strong>in</strong>ed by the need for EU memberstates to keep some political room for manoeuvre. Moreover, a shared understand<strong>in</strong>g ofthe context does not mean that different actors (<strong>in</strong> the field, <strong>in</strong> EU capitals, local partners)share a common political and operational strategy.The EU has had some difficulty <strong>in</strong> l<strong>in</strong>k<strong>in</strong>g better political economy analysis to strategyand programm<strong>in</strong>g. Some th<strong>in</strong>k this is because the evidence is often conflict<strong>in</strong>g, or requirespolitical choices that the EU, or its partner, is unwill<strong>in</strong>g or unable to make. For<strong>in</strong>stance, <strong>in</strong> Kenya most donors didn’t react or adapt their strategies until the politicalviolence <strong>in</strong> 2007, despite warn<strong>in</strong>g signs over several years.3.2 Need for a qualified pr<strong>in</strong>ciple of ownershipIn many fragile states legitimacy is short-lived, even when the government is elected <strong>in</strong>a free and fair election process, itself an achievement <strong>in</strong> such context. Government capacitiesare generally overwhelmed by the level of needs. Government control is oftenlimited to parts of the country, not extend<strong>in</strong>g to the perpetrators of violence (sometimeseven with<strong>in</strong> state structures). And national policies are not always existent or well def<strong>in</strong>ed.Yet EU development policies often seem to assume a function<strong>in</strong>g government as alegitimate <strong>in</strong>terlocutor and partner. So, more creative approaches are required to <strong>in</strong>volvelocal and regional actors as partners <strong>in</strong> jo<strong>in</strong>tly own<strong>in</strong>g EU <strong>in</strong>itiatives, a considerable challengeto implement.Recent <strong>in</strong>terventions <strong>in</strong> Somalia illustrate the EU’s capacity and will to f<strong>in</strong>d alternativeapproaches to almost exclusive “state-to-state” dialogue and relations, and move beyondsuch a “government/state-limited” vision of ownership. Even though the EU’sstrategy may not be the long-term state-build<strong>in</strong>g solution, the EU has cont<strong>in</strong>ued to36 On this issue, see the second paragraph (pp 3-5) of the "Room Document" – Synthesis of thema<strong>in</strong> policy work on <strong>fragility</strong> currently ongo<strong>in</strong>g at EU level Brussels, Commission of the <strong>European</strong>Communities 2009a.167
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africachannel aid, support the provision of basic services through civil society actors and promotelocal government-civil society partnerships. The EU might draw on this example torevisit and qualify the ownership pr<strong>in</strong>ciple and its relationship with civil society <strong>in</strong> fragilestates.3.3 Policy coherence and coord<strong>in</strong>ationEfforts to achieve greater coherence need to aim at build<strong>in</strong>g a common vision and politicalstrategy—across EU <strong>in</strong>stitutions and key players <strong>in</strong> the field—on how to address thema<strong>in</strong> challenges, what the priorities are, how to engage with whom and for what—<strong>in</strong> theevent of unwill<strong>in</strong>g governments and governance challenges. Leadership and compromiseare not as straightforward as <strong>in</strong> other environments. Coord<strong>in</strong>ation <strong>in</strong> the field is stillma<strong>in</strong>ly understood as not stepp<strong>in</strong>g too much <strong>in</strong>to the other’s realm and as build<strong>in</strong>g synergiesamong donor activities. But there appears to be less appetite for an effective divisionof labour among the donor community <strong>in</strong> more political areas of development cooperation(such as progress <strong>in</strong> education seems easier than support to governance).Above all, thorny political issues still tend to be left aside <strong>in</strong> any coord<strong>in</strong>ation effort <strong>in</strong>the field, particularly with poor governance and rather strong but unwill<strong>in</strong>g governments,result<strong>in</strong>g <strong>in</strong> a lack of clear political strategies to address each fragile situation.This is partly the result of different political cultures and agendas of the EC and the EUmember states—and partly the result of <strong>in</strong>teraction between the field and headquarters(Brussels and/or capitals) suffer<strong>in</strong>g from a lack of clarity on the role of the field, both <strong>in</strong>policy-mak<strong>in</strong>g and as a political actor. A new and more powerful high representative forforeign affairs and security policy, also a vice president of the <strong>European</strong> Commission,and a new jo<strong>in</strong>tly owned diplomatic service—the <strong>European</strong> External Action Service, asproposed by the EU Treaty of Lisbon—could br<strong>in</strong>g some positive changes to some of theEU’s shortcom<strong>in</strong>gs <strong>in</strong> coherence and coord<strong>in</strong>ation. Yet its possible transformative roleshould not be overestimated.Box 8.6: The EU’s Common Agricultural Policy and food security <strong>in</strong> fragileAfrican statesby Alan Matthews<strong>Institute</strong> for International Integration Studies, Tr<strong>in</strong>ity College Dubl<strong>in</strong>, IrelandThe <strong>European</strong> Union’s Common Agricultural Policy (CAP) has been heavily criticised for itsdetrimental effects on food security <strong>in</strong> African countries. The criticisms are directed at theway subsidised EU agricultural products underm<strong>in</strong>e the local markets for domestic producersand compete with African exports <strong>in</strong> third country markets—and the way trade barriers makeit more difficult for African producers to export to EU markets. NGOs have produced casestudies of the damage done to local production due to subsidised EU exports of milk powder,sugar, preserved tomatoes and tomato concentrate, beef, cotton and the sale of frozenchicken 37 . There are fears that liberalisation requirements of Economic PartnershipAgreements (EPAs) could expose vulnerable agricultural sectors to further importcompetition from EU agribus<strong>in</strong>ess firms 38 .The food security impacts of the CAP must be evaluated <strong>in</strong> the light of significant reformsto the CAP market regimes <strong>in</strong> recent years. Market access conditions have also radicallychanged with new agricultural trade arrangements for African countries. The diversity ofvulnerable African economies, often highly specialised <strong>in</strong> a small number of agriculturalexports and dependent on food imports to satisfy dietary needs, also needs to beacknowledged. In these countries, EU food supplies will affect food producers and foodconsumers differently.EU agricultural trade with sub-Saharan Africa is highly differentiated. The EU imports37 Paasch, 2008; Oxfam, 2002.38 Bertow and Schulteis, 2008.168
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africamostly cocoa and cocoa products, bananas, coffee, cane sugar, tobacco, cotton and somefruits and vegetables from the region, and exports ma<strong>in</strong>ly wheat, flour, food preparations,white sugar, milk powder, malt and frozen chicken. CAP reform has lowered market pricesupport for most basic commodities produced <strong>in</strong> the EU, while cont<strong>in</strong>u<strong>in</strong>g to support farm<strong>in</strong>comes through largely decoupled direct payments. Thus <strong>in</strong>tervention prices for cereals,beef, dairy products, sugar and rice have been significantly reduced. Coupled directpayments for tobacco, processed vegetables and, partially, for cotton production have beenelim<strong>in</strong>ated. Dependence on export subsidies has been greatly reduced, though exportsubsidies were re<strong>in</strong>troduced for pig meat and poultry meat <strong>in</strong> 2008 and dairy products <strong>in</strong>2009. But the EU has committed to the elim<strong>in</strong>ation of export subsidies after 2013. Nor didthe EU <strong>in</strong>troduce export taxes on cereals dur<strong>in</strong>g the 2007-08 food crisis as it had donedur<strong>in</strong>g the previous price spike <strong>in</strong> 1995-96.Less progress has been made <strong>in</strong> reduc<strong>in</strong>g border protection for EU agricultural production.Variable import levies were converted <strong>in</strong>to fixed import tariffs and reduced on average by36% <strong>in</strong> the Uruguay Round. But agricultural tariffs rema<strong>in</strong> high at around 20% on average,with much higher tariffs on specific commodities such as beef, sugar, bananas, and dairyproducts. There is also evidence of tariff escalation <strong>in</strong> the EU’s tariff structure, with tariffs<strong>in</strong>creas<strong>in</strong>g with the degree of process<strong>in</strong>g.However, African countries benefit from preferential access to the EU agricultural market.All African least developed countries have duty-free and quota-free (DFQF) access apartfrom transitional arrangements for sugar which will be phased <strong>in</strong> by 2015. DFQF access hasalso been extended to African non-least developed countries that have <strong>in</strong>itialled <strong>in</strong>terim EPAswith the EU, which give greater market access opportunities, particularly for bananas and,after a transition period, sugar. Rules of orig<strong>in</strong> under EPAs provide some relaxation andsimplification for agricultural and processed agricultural products, enabl<strong>in</strong>g African farmersand producers to export to the EU market more easily. DFQF access also avoids thediscrim<strong>in</strong>ation aga<strong>in</strong>st value added process<strong>in</strong>g due to tariff escalation. Non-least developedAfrican countries that did not sign EPAs can use the EU’s Generalised System of Preferences(GSP) scheme, though the tariff preferences on CAP products under this arrangement arevery limited.Paradoxically, CAP reform reduces the value of this preferential market access and erodesthe rents African exporters can obta<strong>in</strong>. Expanded access for sugar has been accompanied bythe renunciation of the Sugar Protocol, which guaranteed that African sugar exports to theEU with<strong>in</strong> preassigned quotas would receive the EU guaranteed price. Lower <strong>in</strong>terventionprices and tariff reductions have reduced the profitability of the EU market for Africanexporters of rice, sugar, bananas, beef and fruits and vegetables 39 . Thus, with<strong>in</strong> the WTODoha Round trade negotiations, African countries have argued for extended time frames forthe proposed tariff reductions for products where preferences are important.The EU, recognis<strong>in</strong>g that CAP reform can cause adjustment difficulties for Africancountries because of the erosion of preferential access, has made f<strong>in</strong>ancial aid available tohelp improve competitiveness and assist diversification. The Accompany<strong>in</strong>g Measures forSugar Protocol countries, with an <strong>in</strong>dicative budget of €1.28 billion for 2006–13, supportadjustment processes <strong>in</strong> 18 ACP sugar produc<strong>in</strong>g countries. More than €450 million wasprovided under the Special Framework for Assistance to ACP banana exporters <strong>in</strong> 1994-2008to promote adjustment. The EU and member states have also supported the EU-Africapartnership for cotton development s<strong>in</strong>ce 2004 and have allocated more than €300 millionfor cotton programmes and projects.So, there has been considerable progress <strong>in</strong> mak<strong>in</strong>g EU agricultural policy more coherentwith development goals and the food security objectives of vulnerable African economies 40 .But countries cont<strong>in</strong>ue to express fears about the potential adverse effects of EU foodexports to Africa <strong>in</strong> the context of the reciprocal liberalisation required under EPAs. One ofthe ma<strong>in</strong> goals of CAP reform is to make EU exports of agricultural products morecompetitive. But the EU has assured countries that the asymmetry of liberalisation built <strong>in</strong>tothese agreements can be used either to exclude most tariffs on <strong>European</strong> agriculturalproducts from liberalisation or make them subject to long transition periods (up to 25 years).39 Low et al., 2009.40 Matthews, 2008.169
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaCAP reform will cont<strong>in</strong>ue, given the lively debate on the nature and justification ofdecoupled payments <strong>in</strong> the EU particularly <strong>in</strong> the post-2013 period and the commitment toreach agreement on further agricultural trade liberalisation <strong>in</strong> the Doha Round. This willencourage greater imports of basic commodities <strong>in</strong>to the EU while strengthen<strong>in</strong>g thecompetitiveness of the EU’s processed food sector. For fragile African economies there will beboth threats and opportunities <strong>in</strong> this process, but these need to be kept <strong>in</strong> perspective.Despite the high profile of debates on the impact of the CAP on African countries, particularly<strong>in</strong> Europe, African food security rema<strong>in</strong>s primarily a function of domestic agricultural policiesand <strong>in</strong>vestment <strong>in</strong> Africa.3.4 EU trade policies towards fragile statesIn accordance with the Cotonou Partnership Agreement, the trade policy framework withSub-Saharan Africa is based on the Economic Partnership Agreements (EPAs) negotiatedbetween the EU and six ACP regions to boost trade and development and reverse themarg<strong>in</strong>alisation of the ACP States. In Cotonou it has also been agreed that EPAs will beWTO compatible. While there is some scope for exceptions for develop<strong>in</strong>g countries andparticularly for least developed countries (LDCs) with<strong>in</strong> WTO rules, there is no specificprovision for fragile states or fragile situations. The ability and policy space for the EU toadapt or make specific provisions for fragile states <strong>in</strong> the field of trade is thereforesomewhat limited by its exist<strong>in</strong>g <strong>in</strong>ternational commitments (but nevertheless possible).Some analysts have argued that, “while EPAs are no immediate remedy to the crisis,they could further add to the difficulties encountered by some African countries, unlesssome flexibility is <strong>in</strong>troduced <strong>in</strong> the EPA negotiations process and appropriate developmentsupport measures are promptly adopted and implemented 41 .” EU Aid for Trademeasures could offer some scope for adaptation to the specificities of fragile states, or atleast to ensure that they have their capacity to trade and resilience enhanced ratherthan underm<strong>in</strong>ed by the commitments <strong>in</strong> these trade agreements.Box 8.7: Aid for TradeThe EU is one of the ma<strong>in</strong> providers of Aid for Trade, a broad <strong>in</strong>itiative encompass<strong>in</strong>gassistance to promote trade and develop trade policies, and to build trade related<strong>in</strong>frastructure. So, even if not specific to fragile countries, it is relevant for fragile countries,given their structural characteristics.The 2005 Hong Kong WTO M<strong>in</strong>isterial Declaration called for more and better aid for trade.It sets <strong>in</strong> motion a process to help low-<strong>in</strong>come countries overcome structural limitations andweak capacities that underm<strong>in</strong>e their ability to compete and maximise the benefits fromtrade and <strong>in</strong>vestment opportunities. In 2007 the EU Council adopted an EU Aid for TradeStrategy, a jo<strong>in</strong>t Community and EU member states <strong>in</strong>itiative. The objectives of this strategyare “to enable develop<strong>in</strong>g countries, particularly the least developed countries (LDCs), to usetrade more effectively to promote growth, employment, development and poverty reductionand to achieve their development objectives 42 .” This strategy <strong>in</strong>cludes scal<strong>in</strong>g up specificfund<strong>in</strong>g for Trade Related Assistance (TRA) to €2 billion a year by 2010. It <strong>in</strong>tends toenhance the pro-poor focus, <strong>in</strong>crease EU and member states’ capacity <strong>in</strong> l<strong>in</strong>e with aideffectiveness pr<strong>in</strong>ciples, support the ACP regional <strong>in</strong>tegration process and monitor thecommitments.On the EU pledge to commit €2 billion a year to Trade Related Assistance by 2010, newfigures <strong>in</strong>dicate that the collective EU pledge was nearly met <strong>in</strong> 2007. In 2007 thecommitments from EU member states and the Community towards TRA amounted to €0.96and €1.02 billion, respectively. Total EU support <strong>in</strong> 2007 thus reached €1.98 billion with an41 Bilal et al. 2009, p. 1.42 Commission of the <strong>European</strong> Communities 2007, p. 3.170
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africa<strong>in</strong>crease of 8% from 2006, when the total EU TRA was €1.83 billion. With respect to thewider Aid for Trade Agenda, total EU support reached €7.17 billion <strong>in</strong> 2007, and Africa isreceiv<strong>in</strong>g the largest share of EU Aid for Trade funds—€2.7 billion <strong>in</strong> 2007 and 44% of thetotal EU Aid for Trade over 2005–07 43 .The rationale beh<strong>in</strong>d Aid for Trade—to help develop<strong>in</strong>g countries connect to the globalmarketplace—is important, because address<strong>in</strong>g beh<strong>in</strong>d-the-border issues and <strong>in</strong>frastructureconstra<strong>in</strong>ts are long-term goals, essential for poverty reduction. And, <strong>in</strong> the 2009 downturn,Aid for Trade can have an immediate stimulus effect.What is lack<strong>in</strong>g <strong>in</strong> many fragile states is not so much trade <strong>in</strong> goods, which is ma<strong>in</strong>ly<strong>in</strong>formal and diverts much needed state revenue, but the <strong>in</strong>stitutions that ensure theimplementation of trade policy and agreements. Fragile countries <strong>in</strong> Sub-Saharan Africaface many <strong>in</strong>ternal barriers – lack of knowledge, excessive red tape, <strong>in</strong>adequate f<strong>in</strong>anc<strong>in</strong>g,poor <strong>in</strong>frastructures – mak<strong>in</strong>g it difficult for them to trade and therefore to fullybenefit from aid for trade. This is particularly true for countries <strong>in</strong> Central Africa, whichdue to their geographical position risk to become “aid for trade orphans” and be furthermarg<strong>in</strong>alised by the globalisation process.While other creative measures could be adopted <strong>in</strong> the trade sphere, overall the EUappears to have limited scope to adapt its trade policy to make it more sensitive tosituations of <strong>fragility</strong>. Some contend, given the impact of the current f<strong>in</strong>ancial crisis, that“elements of the EPAs clearly need urgent revision 44 .”Box 8.8: Economic Partnership AgreementsEPAs are asymmetrical agreements cover<strong>in</strong>g not only trade <strong>in</strong> goods and services but alsobeh<strong>in</strong>d-the-border issues, such as competition, government procurement, <strong>in</strong>tellectualproperty, and trade facilitation, foster<strong>in</strong>g regional <strong>in</strong>tegration and comb<strong>in</strong>ed with aid.Accord<strong>in</strong>g to the Cotonou Agreement, the objective is to enhance cooperation <strong>in</strong> all areasrelevant to trade and foster susta<strong>in</strong>able development <strong>in</strong> the ACP states. EPAs should bedevelopment oriented, deepen<strong>in</strong>g regional <strong>in</strong>tegration, enhanc<strong>in</strong>g market access for ACPproducts <strong>in</strong> the EU market, and <strong>in</strong>creas<strong>in</strong>g cooperation on services and trade-related issues.By improv<strong>in</strong>g competitiveness, EPAs should help ACP countries’ <strong>in</strong>tegration <strong>in</strong>to the globaleconomy and promote their economic growth.EPAs <strong>in</strong>itially <strong>in</strong>volved six ACP regional group<strong>in</strong>gs, then seven with the EAC (East AfricanCommunity), with five <strong>in</strong> Sub-Saharan Africa 45 . In an EPA between the EU and a regionalgroup<strong>in</strong>g, the latter negotiates as a s<strong>in</strong>gle bloc, though the agreement is signed bilaterally.The non-LDC ACP countries that do not want to engage <strong>in</strong> an EPA can access to the EU viathe Generalised System of Preferences 46 , which is, however, less favourable. The <strong>in</strong>terim43 Commission of the <strong>European</strong> Communities 2009, p. 3.44 Jones 2009, p. 7.45 Stevens and Kennan 2005.46 The first GSP (Generalized System Tariff of Preferences) of the <strong>European</strong> Union was launched <strong>in</strong>1971. In February 2001, the Council adopted Regulation (EC) 416/2001, the so-called “EBARegulation”. The Everyth<strong>in</strong>g but Arms (EBA), which is a non-reciprocal trade agreement, givesthe 50 countries – 34 of which from SSA (<strong>in</strong>clud<strong>in</strong>g 22 fragile countries) – which are officiallyclassified as Least Developed Countries (LDCs) by the United Nations, duty free access to theEU for all products, except arms and ammunitions and 41 tariff l<strong>in</strong>es concern<strong>in</strong>g rice andssugar, for which duty free quotas are established until full liberalization is achieved <strong>in</strong> September2009 (rice) and October 2009 (sugar). Source:http://ec.europa.eu/trade/issues/global/gsp/eba/<strong>in</strong>dex_en.htm.171
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africaoutcomes of the EPA process 47literature 48 .have been hotly debated <strong>in</strong> the economic and policyMany studies highlight their uncerta<strong>in</strong> outcomes 49 . For some countries, <strong>in</strong>terim EPAs areunlikely to generate significant ga<strong>in</strong>s from trade, because ACP countries can fulfil asignificant share of the liberalisation efforts asked <strong>in</strong> EPAs without considerably underm<strong>in</strong><strong>in</strong>gtheir current protection scheme 50 .From the perspectives of <strong>fragility</strong> and <strong>in</strong>stitution build<strong>in</strong>g, an important issue concerns thepotential impact of EPAs on tariff revenues of Sub-Saharan African countries. Given theimportance of trade taxes <strong>in</strong> public revenues for African countries, a reduction of tariffrevenues associated with reciprocal trade liberalisation could reduce the capacity to satisfybasic state functions. Estimates of full and immediate liberalisation suggest that the lossescould be significant 51 . For <strong>in</strong>stance, West Africa is likely to be the region most affected, withloss estimates for ECOWAS vary<strong>in</strong>g from about 30% of tariff revenues to up to 89.5% 52 .More gradual trade liberalisation is likely to mitigate the losses <strong>in</strong> tariff revenues, but at thecost of reduced ga<strong>in</strong>s from trade openness.So, without appropriate reform of taxation systems and compensat<strong>in</strong>g measures, EPAsmay have significant negative consequences on the capacity of some Sub-Saharan Africanstates to raise public resources. This is all the more important because it is well known thatpoor countries have difficulties substitut<strong>in</strong>g VAT taxes for trade taxes 53 . A key element <strong>in</strong>fiscal recovery rates is clearly to improve collection (and possibly <strong>in</strong>clude the shadoweconomy). Revenue losses could be manageable if trade liberalisation is gradual andaccompanied by public f<strong>in</strong>ance reforms. Still, for fragile states with low capacity or limitedpolitical will<strong>in</strong>gness, such reforms may be difficult to implement <strong>in</strong> the short to medium term.It is therefore important to have explicitly committed external resources to assist andfacilitate the adjustment process for these countries.More importantly, EPAs could be opportunities for African countries to rationalise theirweb of regional <strong>in</strong>tegration agreements and could be used as external commitmentmechanisms for weakly <strong>in</strong>stitutionalised African states to undertake necessary <strong>in</strong>ternalreforms, anchor<strong>in</strong>g themselves to the stronger <strong>in</strong>stitutional context of the EU. However therehave been concerns about whether EPAs can foster regional <strong>in</strong>tegration <strong>in</strong> Africa and, <strong>in</strong>particular whether EPAs are build<strong>in</strong>g blocks or stumbl<strong>in</strong>g blocks. A major difficulty relates tothe large Sub-Saharan African country heterogeneity with<strong>in</strong> the different EPA group<strong>in</strong>gs.Countries differ <strong>in</strong> terms of export structures, classification status (LDCs versus non-LDCcountries), degrees of regional liberalisation commitments and sensitive product lists 54 .While country heterogeneity is not necessarily an obstacle to regional <strong>in</strong>tegration, and can <strong>in</strong>fact <strong>in</strong>crease its economic benefits, it also creates costs of policy coord<strong>in</strong>ation and political47 EPA negotiations have been launched <strong>in</strong> September 2002, with an <strong>in</strong>itial deadl<strong>in</strong>e at 31 December2007 to achieve conformity with the WTO rules. The negotiations have been extended beyondthe <strong>in</strong>itial deadl<strong>in</strong>e s<strong>in</strong>ce they were proceed<strong>in</strong>g slowly. As a consequence, the <strong>European</strong>Commission issued a communication on 23 October 2007, provid<strong>in</strong>g a provisional preferentialmarket access for non-LDC countries from 1 January 2008 to extend the negotiation time towardscomplete EPAs. Hence, a number of <strong>in</strong>terim agreements (also called "Stepp<strong>in</strong>g stoneEPA") have been concluded dur<strong>in</strong>g the last part of 2007 between the EU and ACP subregionsand <strong>in</strong>dividual countries, all conta<strong>in</strong><strong>in</strong>g liberalisation commitments on trade <strong>in</strong> goods to complywith the WTO compatibility requirement. Source: http://www.acp-eutrade.org/<strong>in</strong>dex.php?loc=epa/background.php.48 By the end of 2007, 46 African countries were member of an <strong>in</strong>terim EPA. At the same time,only 18 of them had <strong>in</strong>itialled an <strong>in</strong>terim EPA, eight of which be<strong>in</strong>g fragile countries: Burundi,Cameroon, Comoros, Cote d’Ivoire, Kenya, Rwanda, Uganda and Zimbabwe (Bilal and Stevens,2009).49 See S<strong>in</strong>dz<strong>in</strong>gre 2008 and Delpeuch and Harb 2007.50 Stevens and Kennan 2005 and Delpeuch 2007.51 Delpeuch and Harb 2007.52 Busse et al. 2004.53 Baunsgaard and Keen 2005.54 Stevens et al. 2008.172
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africabarga<strong>in</strong><strong>in</strong>g. For <strong>in</strong>stance, the difficulty of harmonis<strong>in</strong>g trade rules across and with<strong>in</strong> regionalgroup<strong>in</strong>gs may <strong>in</strong>duce border controls and rules of orig<strong>in</strong>s on the movement of EU productswith<strong>in</strong> regions to ensure that the exclusion of a product <strong>in</strong> one country is not underm<strong>in</strong>ed bypreferences for the same product <strong>in</strong> a partner country 55 . It is therefore important to have thesame market access offer and the same excluded products for the entire region so as tofoster s<strong>in</strong>gle market possibilities.3.5 Preventive policies and actionThe EU latest efforts have focused on the need to better respond to and address crisisand postcrisis situations. But effective and timely work on prevention rema<strong>in</strong>s the majorweakness. Although political dialogue <strong>in</strong> the <strong>European</strong> Consensus on Development issaid to have an important preventive dimension, some evidence suggests that is oftennot used for that purpose 56 .Beyond political will, the EU faces several <strong>in</strong>stitutional and operational constra<strong>in</strong>ts, <strong>in</strong>clud<strong>in</strong>gthe limitations of EU <strong>in</strong>struments, the <strong>in</strong>ternal organisational and decisionmak<strong>in</strong>gprocesses, and the capacity to fully respond to the requirements of upstreampreventive policies. The <strong>in</strong>stitutional setup, which def<strong>in</strong>es the roles and competences ofeach EU organ, results <strong>in</strong> different views and priorities for the various services of theCommission and <strong>in</strong> an <strong>in</strong>stitutional disconnect between the EC and the Council. The<strong>European</strong> External Action Service (EEAS) could offer more scope for improv<strong>in</strong>g thissituation and better l<strong>in</strong>k<strong>in</strong>g of short- and long-term EU policies.3.6 Jo<strong>in</strong>t policy frameworks with African regionalorganisationsThe EU has <strong>in</strong>vested significant time and resources <strong>in</strong> develop<strong>in</strong>g partnerships with regionalorganisations <strong>in</strong> Sub-Saharan Africa and with the African Union. How such partnershipsand jo<strong>in</strong>t policy frameworks shape EU policies to address <strong>fragility</strong> is less evident.The Cotonou Partnership Agreement—the ma<strong>in</strong> trade, aid and political dialoguevehicle for EU relations with Sub-Saharan states—does not have a specific article on <strong>fragility</strong>or fragile states. But it does cover relevant actions from political dialogue to democraticgovernance and from human rights and trade to conflict prevention and peacebuild<strong>in</strong>gthrough to punitive measures. Likewise, the Jo<strong>in</strong>t Africa-EU Strategy, signed bythe heads of state dur<strong>in</strong>g the Lisbon summit <strong>in</strong> 2007, did not explicitly refer to state <strong>fragility</strong>,a term widely rejected by African stakeholders <strong>in</strong> the run-up to the negotiations.The African Union and its member states seem nevertheless to accept the importance ofaddress<strong>in</strong>g state <strong>fragility</strong> and mov<strong>in</strong>g beyond the label issue, which could open new opportunitiesfor concerted approaches to address <strong>fragility</strong>.The EU already has an enhanced dialogue and partnership on peace and security withthe African Union (AU) and is a major backer of African Peace and Security Architecture,which <strong>in</strong>cludes mediation, early warn<strong>in</strong>g and peacekeep<strong>in</strong>g missions—and l<strong>in</strong>ks the AUlevel to “regional mechanisms.” The Jo<strong>in</strong>t Africa-EU Strategy and its action plan provideopportunities to address <strong>fragility</strong>-related issues of governance, human rights, trade, regional<strong>in</strong>tegration, and <strong>in</strong>frastructure (box 8.9). In practice, however, it had limited impactso far at the country level, and its implementation is dogged by how it should bef<strong>in</strong>anced and by a discussion on its real added value.On the potentially more contentious issues, such as democratic governance and humanrights, genu<strong>in</strong>e dialogue and respect for the pace of African processes has been55 Brenton et al. 2008.56 Political dialogue is also an important element of the Cotonou Partnership Agreement.173
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africahard to discern. Most regional organisations have no <strong>in</strong>terest <strong>in</strong> be<strong>in</strong>g “<strong>in</strong>strumentalised”to the EU policy agenda and see the furtherance of their own priorities as more important.Yet the quality of the dialogue <strong>in</strong> some areas with<strong>in</strong> the Cotonou framework andthe Jo<strong>in</strong>t Africa-EU Strategy has improved, as has EU alignment to African priorities(such as peace and security). The Jo<strong>in</strong>t Africa-EU Strategy has helped the EU align withthe AU on “International Contact Groups” for the ongo<strong>in</strong>g crisis situations <strong>in</strong> Gu<strong>in</strong>ea,Gu<strong>in</strong>ea-Bissau, Madagascar, Mauritania and Somalia. And the EU’s work to speak withone voice with the AU and its Regional Economic Communities (RECs) has been a significantstep forward.A regional “resilience enhanc<strong>in</strong>g” perspective emphasises “regional l<strong>in</strong>kages” and thepossibility of “regional clusters of <strong>fragility</strong>.” And tak<strong>in</strong>g a more global view of these issueshighlights external drivers at the national and regional level. Consistent with thisperspective the Jo<strong>in</strong>t Africa-EU Strategy could foster a new comprehensive regional approachto Africa. Today, this strategy def<strong>in</strong>es a broad framework for regional <strong>in</strong>tegration<strong>in</strong> Africa along political, economic and social l<strong>in</strong>es. The first Action Plan (2008–10) haseight Africa-EU Partnerships <strong>in</strong> such areas as peace and security, democratic governanceand human rights and trade and regional <strong>in</strong>tegration. Most efforts so far have been organisational,to establish dialogue, trust and coord<strong>in</strong>ation. But expectations are high forfurther real delivery and fund<strong>in</strong>g commitments.3.7 The EU as a security and development actorOvercom<strong>in</strong>g poverty and <strong>in</strong>creas<strong>in</strong>g security go hand <strong>in</strong> hand. This is noth<strong>in</strong>g new: s<strong>in</strong>cethe Truman doctr<strong>in</strong>e and the Marshall Plan, security has always been embedded <strong>in</strong> developmentpolicies, <strong>in</strong> various ways and to different degrees.The <strong>in</strong>teraction between security and development is widely acknowledged, and embodiesthe core objectives of the EU <strong>in</strong> <strong>in</strong>ternational politics: contribut<strong>in</strong>g to peace andstability and promot<strong>in</strong>g democracy, human rights, the rule of law and effective multilateralism.The pathways towards coherent EU goals, operational plans and programmes,and ultimately mean<strong>in</strong>gful action, rema<strong>in</strong> challeng<strong>in</strong>g As described above, the EU hasbeen build<strong>in</strong>g a wide range of policies, <strong>in</strong>struments and <strong>in</strong>itiatives to face developmentand security issues, notably <strong>in</strong> Sub-Saharan Africa.The objectives, values and timetables of donors and recipients are numerous and oftenconflict<strong>in</strong>g. Br<strong>in</strong>g<strong>in</strong>g together different actors and resources, aid workers and soldiers,diplomats and bus<strong>in</strong>ess people, while urgently needed, is challeng<strong>in</strong>g and timeconsum<strong>in</strong>g. And the EU is itself a complex and, at times, uncoord<strong>in</strong>ated <strong>in</strong>ternational actor.Confronted with <strong>fragility</strong> and <strong>in</strong>security, it is tempt<strong>in</strong>g to look for some “prerequisite”—suchas a new economic measure or a different political <strong>in</strong>stitution 57 . Wesuggest on the contrary that societies fac<strong>in</strong>g fragile situations can beg<strong>in</strong> to change <strong>in</strong> thesecurity and development doma<strong>in</strong> “as they are <strong>in</strong> spite of what they are” 58 .Build<strong>in</strong>g upon the rich experience of local <strong>in</strong>itiatives and capacity and the EU’s <strong>in</strong>volvement<strong>in</strong> l<strong>in</strong>k<strong>in</strong>g security and development <strong>in</strong> African countries fac<strong>in</strong>g fragile situations,notably security sector reform and crisis management missions 59 , we argue thatwell known and well entrenched obstacles to change <strong>in</strong> the security-development nexuscan be overcome 60 . We highlight six processes <strong>in</strong> fragile situations:1. Secur<strong>in</strong>g and develop<strong>in</strong>g: antagonistic or nonantagonistic change?57 Hirschman 1963, p. 6; Hirschman 1967, p. 5.58 Hirschman 1963, p. 659 Brzoska 2006.60 Hirschman 1963, p. 6; Hirschman 1985, p. 3–34 and 56–76.174
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaAdvocates of policy changes simultaneously affect<strong>in</strong>g security and development oftenperceive their proposed reforms as nonantagonistic: mov<strong>in</strong>g out of <strong>fragility</strong>, mak<strong>in</strong>g thepopulation more secure and, <strong>in</strong> so do<strong>in</strong>g, free<strong>in</strong>g energies for development can only bebeneficial to all actors and ultimately to the country. This assumption is however questionable61 . First, <strong>in</strong> fragile situations, <strong>in</strong>security and the remnant dysfunctional public <strong>in</strong>stitutionscan be useful to both governments and rebels alike. Some actors might evencreate, preserve and exploit <strong>in</strong>security to ensure their political survival 62 . In Sierra Leonethe rulers <strong>in</strong>tentionally destroyed the state capacity <strong>in</strong> order to provide public goodsthemselves 63 . Second, <strong>in</strong> fragile situations, relative weakness and relative strength oftencoexist. State <strong>in</strong>stitutions <strong>in</strong> the Democratic Republic of Congo, for example, have beenweakened, but they have not disappeared altogether 64 . Fac<strong>in</strong>g the demands of donors,public authorities—fully aware of the situation of <strong>fragility</strong> of their country, and preciselybecause of this fragile context and their (relatively) precarious position—were able tokeep and even re<strong>in</strong>force their barga<strong>in</strong><strong>in</strong>g position and develop a strategy of avoidanceand resistance. Even when sovereignty appears to be at its lowest po<strong>in</strong>t, the rema<strong>in</strong><strong>in</strong>gstate is capable of shield<strong>in</strong>g from the donors what it sees as the core of its autonomy 65 .So, <strong>fragility</strong>-related <strong>in</strong>security is not necessarily bad for every local actor, and it doesnot imply weakness for all the actors <strong>in</strong>volved. Local actors react and try to circumventthe donors’ strengths and exploit their weaknesses. And this is why straightforward eng<strong>in</strong>eer<strong>in</strong>gapproaches are unlikely to succeed. The EU should shift its l<strong>in</strong>ear social eng<strong>in</strong>eer<strong>in</strong>gapproach to a more flexible and strategic approach.2. Insecurity as an opportunity for development policiesCritics of the security-development nexus usually raise three concerns. First, the emergenceof security <strong>in</strong> an already crowded policy agenda and of decision-makers with limitedenergies, capabilities and resources is bound to distract both donors and develop<strong>in</strong>gcountries and hold back action on the ma<strong>in</strong> goal, reduc<strong>in</strong>g poverty. Second, security isonly a surface problem, a symptom of deeper structural dysfunctions. Third, a genu<strong>in</strong>eeffort to face security challenges would probably go beyond the capacity of the donorand the partner country. In contrast, we suggest that the connection between securityand development can generate opportunities for reform (box 8.9).First, local populations often express a major and immediate concern for security andpeace. For example, <strong>in</strong> the Democratic Republic of Congo’s Kivus civil society, representativesrightly claimed that elections should wait until peace had been established, butthey were not listened to 66 . Ignor<strong>in</strong>g these press<strong>in</strong>g concerns is counterproductive. Second,the emergence of security concerns is an opportunity for reformers to f<strong>in</strong>d new alliesand to facilitate jo<strong>in</strong>t analyses and strategy formulations. Third, <strong>in</strong>security can act asa searchlight and help <strong>in</strong> the early detection of social ills that, if neglected, might becomemuch more difficult to handle 67 . F<strong>in</strong>ally, timid or perfunctory policy <strong>in</strong>itiatives canhave the un<strong>in</strong>tended effect of mobilis<strong>in</strong>g those who stand to benefit from the proposedsolution—<strong>in</strong> the donor countries as well as <strong>in</strong> the partner countries.61 Englebert and Tull 2008.62 Clapham 1996, p. 208–243; Chabal and Daloz 1999, p. 3–16.63 Reno 2003.64 Englebert 2003; Trefon 2004, 2007.65 For example, <strong>in</strong> the Democratic Republic of Congo two important security services—militaryand civilian <strong>in</strong>telligence and border guards services—have been kept outside of security sectorreform (Melmot 2008; Davis 2009).66 Autesserre 2009, p. 271.67 Hirschman 1981, p. 119, 149.175
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaBox 8.9: Security and development challenges <strong>in</strong> fragile situations: lessonsfrom ESDP operationsBy Dr Damien HellyResearch Fellow, EU <strong>Institute</strong> for Security StudiesThe <strong>European</strong> Security and Defence Policy (ESDP) was born 10 years ago <strong>in</strong> the Balkans.S<strong>in</strong>ce then, the <strong>European</strong> Union has used it as a very unique military or civilian crisismanagement tool <strong>in</strong> a variety of fragile situations. Of 23 ESDP operations, 8 have beendeployed <strong>in</strong> Africa, and some are still ongo<strong>in</strong>g. All ESDP operations <strong>in</strong> Africa have to deal withsome form of <strong>fragility</strong>. A recent book edited by researchers from the <strong>European</strong> Union<strong>Institute</strong> for Security Studies provides comprehensive data and critical assessment of theESDP after 10 years 68 . Some of its f<strong>in</strong>d<strong>in</strong>gs, based mostly on field <strong>in</strong>terviews, can <strong>in</strong>form thedebates on security and development, on situations of <strong>fragility</strong> and on the need for morecoherence among EU <strong>in</strong>struments and policies.• Over 10 years the EU has <strong>in</strong>creased ESDP coord<strong>in</strong>ation with <strong>European</strong> Commissionpolicies <strong>in</strong> fragile contexts. S<strong>in</strong>ce 1999 <strong>in</strong>terl<strong>in</strong>kages between security and developmentchallenges have become a well shared leitmotiv <strong>in</strong> policy discourses. Basic securityneeded for poverty alleviation, job creation and bus<strong>in</strong>ess development has beenwell documented <strong>in</strong> key <strong>European</strong> policy documents, boost<strong>in</strong>g awareness <strong>in</strong> policyplann<strong>in</strong>g. For <strong>in</strong>stance, Brussels headquarters planned jo<strong>in</strong>t actions <strong>in</strong> Chad <strong>in</strong> 2008aimed at mutual re<strong>in</strong>forcement. The Programme d’Accompagnement à la Stabilisation,funded by the <strong>European</strong> Commission, aimed to complement military deterrence,though coord<strong>in</strong>ation proved difficult and slow <strong>in</strong> practice.• Despite progress at the strategic level, security experts, development promoters,economists and humanitarian actors still need to <strong>in</strong>tensify the dialogue on fragilesituations. Competition for resources to fund development and security can be high.Cooperation aid programme managers and security experts hardly exchange <strong>in</strong>formationon the potential security impact of, say, a transport <strong>in</strong>frastructure project. Andwhile some types of experts work side by side, such as militaries and humanitarian actors,experience gathered dur<strong>in</strong>g crisis management operations needs to be better dissem<strong>in</strong>ated.For <strong>in</strong>stance, EUFOR Tchad/RCA provided lessons for both the military andthe humanitarian community, but it is unclear how they will be communicated to others.• In fragile situations, qualitative assessments are as relevant as quantitative data.While economists ma<strong>in</strong>ly work only with tangible data, political scientists or <strong>in</strong>telligenceanalysts also use qualitative approaches. In the case of police or army reform <strong>in</strong>the Democratic Republic of Congo, sound understand<strong>in</strong>g of local politics and powergames is fundamental to establish<strong>in</strong>g data collection mechanisms such as census databases.The EUSEC, a mission <strong>in</strong> charge of assist<strong>in</strong>g Congolese authorities <strong>in</strong> the reformof the army, spent its early years build<strong>in</strong>g mutual trust with national stakeholdersthrough strong personal ties, human <strong>in</strong>telligence gather<strong>in</strong>g and military expertise.Conversely, <strong>in</strong> Gu<strong>in</strong>ea-Bissau, where the small number of soldiers (fewer than 6,000)suggests that army reform would be easy, governance and power factors such as thesymbolic power of veterans, <strong>in</strong>timidation and illicit traffick<strong>in</strong>g have proved to be seriousobstacles. Human realities sometimes contradict data.• <strong>European</strong> <strong>in</strong>itiatives <strong>in</strong> security and defence depend largely on the agenda and the politicalwill of local authorities. When local authorities are reluctant to host ESDP operationsor foreigners supposed to help reform their security apparatus—often for politicalreasons or because of vested <strong>in</strong>terests—it proves extremely difficult for <strong>European</strong>s tomaximise their impact. This has become obvious <strong>in</strong> the Democratic Republic of Congowhen, after the 2006 elections, the government expressed much less <strong>in</strong>terest <strong>in</strong> securitysector reform. It was also confirmed <strong>in</strong> Gu<strong>in</strong>ea-Bissau, where the EU security sectorreform mission found it extremely difficult to enter <strong>in</strong> a dialogue with the late armychief of staff, Tagmé Na Wai. It was obvious <strong>in</strong> Sudan, when the leadership did notwish to host an AU/UN peacekeep<strong>in</strong>g operation and delayed visa processes for EU staff68 Grevi et al. forthcom<strong>in</strong>g.176
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africasupport<strong>in</strong>g the plann<strong>in</strong>g and the cha<strong>in</strong> of command of AMIS, the African Union peacekeep<strong>in</strong>gforce <strong>in</strong> Darfur.• After 10 years, ESDP personnel have learned about the difficulties of implement<strong>in</strong>g localownership, particularly <strong>in</strong> fragile countries where state capacities are close to niland where local officials lack the capacity to absorb or cope with EU offers or <strong>in</strong>terventions.The short mandates and high turnover of ESDP operations have rarely matchedtheir counterparts’ needs for long-term capacity build<strong>in</strong>g.• The EU suffers from a policy implementation gap <strong>in</strong> fragile environments. Despite animpressive tool box of strategies, communications and programm<strong>in</strong>g documents toaddress <strong>fragility</strong>, prevent conflict and support peacebuild<strong>in</strong>g, the EU has much to do <strong>in</strong>translat<strong>in</strong>g these policy orientations <strong>in</strong>to practice. EU staff frequently ignore key policydocuments that guide their day to day work and decisions <strong>in</strong> fragile situations. Althoughwell equipped with policy tools like LRRD (L<strong>in</strong>k<strong>in</strong>g Relief, Rehabilitation andDevelopment), the EU does not systematically use them <strong>in</strong> country. Tra<strong>in</strong><strong>in</strong>g for personnelwork<strong>in</strong>g <strong>in</strong> fragile contexts should be cross-cutt<strong>in</strong>g and more systematically implemented.• When deal<strong>in</strong>g with fragile situations, the EU has yet to identify its foreign policy priorities.Although state failure is mentioned as a threat <strong>in</strong> the 2003 <strong>European</strong> SecurityStrategy, key <strong>European</strong> strategic <strong>in</strong>terests <strong>in</strong> Sub-Saharan Africa rema<strong>in</strong> unclear.Some <strong>European</strong> states, mostly the former colonial powers, have concerns about fragilestates <strong>in</strong> Africa, not least because they represent important threats like terrorism anddrug, arms and human traffick<strong>in</strong>g. But these concerns may not be equally shared byall EU member states, lead<strong>in</strong>g to the absence of clear foreign policies priorities <strong>in</strong> Africa,apart from those def<strong>in</strong>ed by cont<strong>in</strong>ent to cont<strong>in</strong>ent partnerships or by the CotonouPartnership Agreements. More research is needed on this aspect and will be carriedout by the EUISS <strong>in</strong> 2010.• Officials from fragile countries often blame the EU for its contradictory policies. Commercialprotectionism <strong>in</strong> particular is cited regularly as hamper<strong>in</strong>g development. Despitethe new compensatory mechanisms, such as the Aid for Trade programme, politicaldialogue is still marked by mistrust. Deal<strong>in</strong>g with <strong>fragility</strong> will therefore imply effortstowards genu<strong>in</strong>e dialogue and the will<strong>in</strong>gness to overcome past prejudices andacknowledge mutual responsibilities.3. Fragility leads to the rise of parallel local security <strong>in</strong>stitutionsThe wither<strong>in</strong>g of state capacity <strong>in</strong> fragile situations does not imply an absence of governance.In fact, fragile situations have triggered “local <strong>in</strong>stitutional <strong>in</strong>itiatives that facilitatedthe survival and organisation of social life dur<strong>in</strong>g the years of conflict and thatcould be useful <strong>in</strong> the future 69 .” Traditional chiefs, civil society groups, churches and aidagencies step <strong>in</strong> to take charge of security 70 . Fragile situations can accentuate unequalaccess to security and justice, <strong>in</strong>tolerance of outsiders, violence, illegality and unaccountability.But <strong>in</strong> some cases poor state polic<strong>in</strong>g and sovereignty have re<strong>in</strong>vigoratedself-polic<strong>in</strong>g 71 . The result<strong>in</strong>g “multichoice polic<strong>in</strong>g” provides a safety net and deepenslocal democracy. The success of this alternative polic<strong>in</strong>g would be further helped by favourablestate responses and EU support.4. Sequences and imbalances can contribute to security-development reformTo tackle the development-security nexus <strong>in</strong> fragile situations, “jo<strong>in</strong>ed-up” strategiesthat comb<strong>in</strong>e all policy tools simultaneously <strong>in</strong> a coherent package that <strong>in</strong>cludes political,security, humanitarian and development <strong>in</strong>struments are often considered well suited to69 Englebert and Tull 2008, p. 125, 127.70 Vlassenroot 2008, p. 2.71 Baker 2008.177
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan Africathe discont<strong>in</strong>uity of the context 72 . But, while some coord<strong>in</strong>ation is valuable—especiallywith<strong>in</strong> the EU—there might be no need to spend considerable effort on early <strong>in</strong>tegrationand on a simultaneous or balanced approach to the security-development nexus. Seesawadvances and adjustments of security and development policies are <strong>in</strong>evitable <strong>in</strong>fragile contexts. They are desirable because policy-makers become aware of the imperfectionsand imbalances of their action through failures, irritations and discomforts 73 . Forexample, <strong>in</strong> Sierra Leone there were no conceptual or substantial l<strong>in</strong>ks among the elementsof security sector reform, which proceeded <strong>in</strong>dependently 74 , but Sierra Leone isfrequently presented as an example of good practice, even by the OECD-DAC.Sequential problem-solv<strong>in</strong>g br<strong>in</strong>gs the risk of becom<strong>in</strong>g blocked at one step or <strong>in</strong> onedoma<strong>in</strong>. Still, given the pervasive conventional wisdom about the need for coord<strong>in</strong>ation,it is useful to bear <strong>in</strong> m<strong>in</strong>d that duplication, confusion and lack of communication amongpeople work<strong>in</strong>g along parallel l<strong>in</strong>es are not always bad, and can even lead to less costlyand faster reforms 75 .5. Security and development do not necessarily advance jo<strong>in</strong>tlyIt is important to know whether ensur<strong>in</strong>g security can trigger susta<strong>in</strong>able human development.In that regard, an assessment of 17 UN-led state-build<strong>in</strong>g operations five yearsafter they had started revealed that although there is a potential l<strong>in</strong>k between security -def<strong>in</strong>ed as the absence of war and the reestablishment of a full monopoly over themeans of violence - and other dimensions of state build<strong>in</strong>g, such as economic development,democracy and the creation of <strong>in</strong>stitutional capacity, security does not automaticallylead to positive consequences for the rule of law or the effectiveness of government,economic development and democracy 76 .The connection between security and development progress can take different forms,and the pattern is not always an <strong>in</strong>terrelation between the two policy doma<strong>in</strong>s. Proclaim<strong>in</strong>gthat the two doma<strong>in</strong>s are completely separate would be an overreaction. While securityand development might not always be tied together <strong>in</strong> a functional way, alternat<strong>in</strong>gbetween <strong>in</strong>terdependence and autonomy at different po<strong>in</strong>ts <strong>in</strong> time and <strong>in</strong> different contextsis possible 77 .6. Less can be moreThe EU boasts its cont<strong>in</strong>u<strong>in</strong>g <strong>in</strong>volvement and the relative stability of its engagement <strong>in</strong>state-build<strong>in</strong>g and development more generally. However, ga<strong>in</strong><strong>in</strong>g flexibility <strong>in</strong> this regardand allow<strong>in</strong>g for periods of selective disengagement could enlarge the range of <strong>in</strong>itiatives.The assumption that “more state-build<strong>in</strong>g is better state-build<strong>in</strong>g” is widespreadamong Western policy-makers 78 , who allocate more resources to fragile countries consideredimportant, such as Afghanistan, Bosnia, Iraq and Kosovo, than to countries consideredperipheral. From a security standpo<strong>in</strong>t, this implies that stronger EU and UNmilitary missions, with more military means and more robust mandates, would offer thebest opportunity for success.72 Faria and Magalhães Ferreira 2007.73 Hirschman 1985, p. 74–75.74 Horn et al. 2006, p. 110, 118.75 Hirschman 1981 p. 66.76 State-build<strong>in</strong>g missions achieved important security goals: 13 of the 17 missions ended war(1,000 battle-related deaths a year or dur<strong>in</strong>g the war). While end<strong>in</strong>g war was harder <strong>in</strong> thepoorest postwar countries, state-build<strong>in</strong>g operations achieved their goal <strong>in</strong> this context as well(7 of 11 cases). State-build<strong>in</strong>g missions were less successful at reestablish<strong>in</strong>g a full monopolyover the means of violence (9 of 17 cases). But this success <strong>in</strong> the security realm has limitedimplications for other dimensions of state-build<strong>in</strong>g (Zürcher 2006).77 Hirschman 1981, p. 142–166; Hirschman 1995, p. 221–230.78 Englebert and Tull 2008, p. 135–139.178
<strong>European</strong> Report on Development 2009 – Chapter 8: EU Policies to address Fragility <strong>in</strong> Sub-Saharan AfricaThe experience of development policies, specifically <strong>in</strong> the realm of security and development,shows that some uncoupl<strong>in</strong>g and disengagement can have positive consequences79 . Less, or more limited and selective, engagement can provide room for socialexperimentation and favour the growth of local <strong>in</strong>itiatives. Fram<strong>in</strong>g the Democratic Republicof Congo as a test case for UN peacekeep<strong>in</strong>g by, for example, imply<strong>in</strong>g an <strong>in</strong>tenseengagement—often portrayed as a “protectorate”—led to problematic policy choices dur<strong>in</strong>gthe transition from war to peace and democracy <strong>in</strong> 2003–06 80 .79 Hirschman 1995, p. 190–192.80 Autesserre 2009, p. 258.179
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and PrescriptionsCHAPTER 9-CONCLUSIONS - PRIORITIES AND PRE-SCRIPTIONS181
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and PrescriptionsThe <strong>European</strong> Union has a wide range of policy <strong>in</strong>struments to tackle the challengesposed by fragile states, and it has been review<strong>in</strong>g and ref<strong>in</strong><strong>in</strong>g them regularly over thelast decade. Nevertheless, EU engagement with fragile states still suffers from an “implementationgap”, which drives a wedge between official commitments and operationalisationof its policies 1 .1 EU policies can have an impactThe EU has the potential to <strong>in</strong>fluence Sub-Saharan African fragile states’ developmentprospects and <strong>in</strong> particular to help them enhanc<strong>in</strong>g their resilience to shocks. To do that,however, it needs to develop conditions of trust and to learn from and build on its experiences.It is not alone <strong>in</strong> this difficult task, which requires a cooperative action by allactors which are engaged with fragile countries.The EU could improve the effectiveness of its engagement by act<strong>in</strong>g decisively anddef<strong>in</strong><strong>in</strong>g policies with one voice. Discussions among EU members and with<strong>in</strong> the EC haveto be open and wide-rang<strong>in</strong>g, all the more so as the engagement towards <strong>fragility</strong> is ahighly politically sensitive issue. But, once a policy has been jo<strong>in</strong>tly def<strong>in</strong>ed and agreed,the EU should commit to long-term policies and not shift its objectives or core areas of<strong>in</strong>tervention. The problems of fragile states are ma<strong>in</strong>ly structural and persistent, anddeal<strong>in</strong>g with them requires a long-term, stable commitment by external actors. Concentrat<strong>in</strong>gefforts on a few well-def<strong>in</strong>ed priorities would make it easier to simplify proceduresand reduce red tape. And the EU should make its commitment to fragile statescredible, its policies easily understood and its impact substantial; it should also tailorgeneral policies to address specific issues and adapt them to <strong>in</strong>dividual contexts.When countries are regarded as not eligible for budget support 2 , or when the knowledgeof the local context is particularly important, donors and recipients may not be <strong>in</strong> aposition to efficiently implement or monitor aid policies. These could then be delegatedto other official partners, civil society organisations <strong>in</strong>dependent services agency (seebox 9.5). Delegation may help address<strong>in</strong>g complex local problems and ensur<strong>in</strong>g the adequatecommitment. In those situations where aid is not efficiently used, or donors channelmuch of their aid to <strong>in</strong>formal <strong>in</strong>stitutions or NGOs, it may be worth to separate thedifferent functions of governments: policy formulation from allocation or monitor offunds. Separat<strong>in</strong>g the task of sett<strong>in</strong>g long-term development policy goals from implement<strong>in</strong>gpolicy measures, will make it <strong>in</strong>dependent from immediate political pressures,will avoid commitment problems and develop appropriate technical capabilities. The basisfor such a division already exists, though changes <strong>in</strong> governance would be needed toefficiently implement long-term policies 3 .1.1 EU comparative advantagesThe EU has a comparative advantage <strong>in</strong> formulat<strong>in</strong>g strategies to help fragile countriesto enhance their resilience; to exploit it, it should concentrate its actions on develop<strong>in</strong>ghuman and social capital and support<strong>in</strong>g <strong>in</strong>stitutional development at the local and at theregional level. This comparative advantage is rooted <strong>in</strong> its own history of enlargement aswell as <strong>in</strong> the large array of policies the EU can count on to shape its action. As expla<strong>in</strong>ed<strong>in</strong> chapter 8, unlike with most aid agencies 4 , the EU can use any comb<strong>in</strong>ation oftrade, agriculture, fisheries, migration, climate change, environment, social dimension of1234Chapter 8 discusses at length where there is more need to <strong>in</strong>tervene <strong>in</strong> order to make EUcommitment more successful.See OEDC (2009) for a discussion of the conditions under which budget support represents asuitable aid modality <strong>in</strong> fragile states.Collier 2009b.See the background paper by Collier (2009a) <strong>in</strong> Volume 1B on this po<strong>in</strong>t.182
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionsglobalisation, research and development, <strong>in</strong>formation society, energy, security and governance.The impact of these policies, positive or negative, on state <strong>fragility</strong> extends wellbeyond the provision of f<strong>in</strong>ancial assistance.The EU’s history furthermore is one of <strong>in</strong>stitutional development with<strong>in</strong> diverse andcomplex societies, with their own domestic <strong>in</strong>stitutions. And, the EU has considerableexperience <strong>in</strong> address<strong>in</strong>g the problems of states with dysfunctional <strong>in</strong>stitutions or <strong>in</strong>transition dur<strong>in</strong>g its own history of enlargement. Some current EU members (Greece,Portugal and Spa<strong>in</strong>) were able to move peacefully from militarised dictatorships to democraciesdur<strong>in</strong>g the 1970s. Over the 1990s, the EU also helped Eastern <strong>European</strong>countries through their economic transition which required important <strong>in</strong>stitutional reforms,transformation of governance systems, and of state delivery mechanisms. Theseexperiences are themselves a comparative advantage, s<strong>in</strong>ce the EU can use its own experienceas a “toolkit” <strong>in</strong> situations of <strong>fragility</strong>.Aid agencies and <strong>in</strong>ternational <strong>in</strong>stitutions often focus on short-term remedial measuresor, because of their <strong>in</strong>stitutional duties, on one specific issue 5 . The United Stateshas a range of policies similar to those of the EU but a different history and, despite arenewed <strong>in</strong>terest <strong>in</strong> Sub-Saharan Africa, is geographically distant 6 . Ch<strong>in</strong>a (and ArabStates) tends to concentrate on build<strong>in</strong>g <strong>in</strong>frastructure and on foreign direct <strong>in</strong>vestment<strong>in</strong> land, which can be a bless<strong>in</strong>g or a curse for recipient countries. While the EU can alsobe <strong>in</strong>volved <strong>in</strong> build<strong>in</strong>g <strong>in</strong>frastructures, it should concentrate its efforts on develop<strong>in</strong>ghuman and social capital and <strong>in</strong>stitutions which are areas of EU’s comparative advantage.1.2 The need for EU <strong>in</strong>tervention <strong>in</strong> an unfavourableglobal contextMobilis<strong>in</strong>g domestic resources and strengthen<strong>in</strong>g state <strong>in</strong>stitutions and social cohesionare the keys to enhance resilience. Both actions, almost by def<strong>in</strong>ition, are difficult forfragile states on their own. Thus, while there is a need for EU <strong>in</strong>tervention, tackl<strong>in</strong>g <strong>fragility</strong><strong>in</strong> Sub-Saharan Africa is a major and risky challenge.Inaction, too, has high costs for both donors and recipients. For fragile countries, thecosts are reflected <strong>in</strong> poor human development and lack of security related to the persistenceof development gaps. For Europe—geographically close to Africa and its problemsof explosive demographics, refugees, illegal traffick<strong>in</strong>g, smuggl<strong>in</strong>g, gender based violenceand pirates—negative spillovers may be very high.The challenge is all the greatest because the EU needs to engage with fragile statesalso respect<strong>in</strong>g their national sovereignty. Fragile states are rarely accountable to theircitizens, but they should be given the space to assume ownership of their policies. Whilelow enforcement capacity underm<strong>in</strong>es taxation, the <strong>in</strong>ability to effectively manage domesticresources h<strong>in</strong>ders <strong>in</strong>dependence and governance capacity.The 2009 economic and f<strong>in</strong>ancial crisis has made engagement <strong>in</strong> fragile states evenmore daunt<strong>in</strong>g. Fragile states have been hit hard by a crisis they did not cause and thatis likely to push even more countries <strong>in</strong>to fragile situations, mak<strong>in</strong>g the Millennium DevelopmentGoals more difficult to achieve by their 2015 deadl<strong>in</strong>e. This crisis has been astrong negative shock to per capita <strong>in</strong>come and has followed on two other devastat<strong>in</strong>gcrises for fragile countries: food and fuel. The near simultaneity of the three crises hashad a negative multiplier effect, mak<strong>in</strong>g emergencies the rule rather than the exception.Countries <strong>in</strong> fragile situations, attempt<strong>in</strong>g to respond to what they believed were shorttermshocks, have lost the long-term perspective needed to overcome <strong>fragility</strong>.56For <strong>in</strong>stance, see World Food Price on food emergencies.Gartner 2009.183
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and PrescriptionsThe economic environment is also affected by the historical debt overhang and seriousdomestic social problems besett<strong>in</strong>g EU countries. The crisis makes commitment tolong-term policies even more important, along with more efficient use of developmentaid. Short-term ad hoc policies, weak implementation and monitor<strong>in</strong>g, and fragmentationand duplication of aid have been sources of <strong>in</strong>efficiency. They need to be replacedby the simple rules mentioned above: speak with one voice, focus on long-term policiesand delegate to partners, as appropriate.1.3 A role for nonstate actors <strong>in</strong> fragile countriesThe state has long been the ma<strong>in</strong> entry po<strong>in</strong>t for donors, who view <strong>in</strong>tervention throughstate <strong>in</strong>stitutions as a way to <strong>in</strong>crease accountability, address gender <strong>in</strong>equalities, createtrust, establish a shared legal framework and guarantee the rule of law.But current state <strong>in</strong>stitutions are <strong>in</strong>fluenced by the historical roots of state formationand their <strong>in</strong>teractions with geographic characteristics and ethnic or religious groups. Furthermore,governments <strong>in</strong> Sub-Saharan Africa tend to claim that they are not responsiblefor the <strong>fragility</strong> situation, blam<strong>in</strong>g “external” causes.Thus state-build<strong>in</strong>g and achiev<strong>in</strong>g social cohesion require mobilis<strong>in</strong>g nonstate actors—sometimes outside the structure of fragile states—with knowledge of the local contextand valuable human resources.2 Priorities and prescriptionsThe EU should consider both the common and the country-specific characteristics offragile states <strong>in</strong> Sub-Saharan Africa (see chapter 2) and its own comparative advantagevis à vis with other donors and <strong>in</strong>ternational <strong>in</strong>stitutions (see the discussion above andchapter 8) when def<strong>in</strong><strong>in</strong>g its own priorities,Though fragile countries <strong>in</strong> Sub-Saharan Africa differ from one another <strong>in</strong> many ways,they share some common weaknesses that h<strong>in</strong>der the creation of a strong state capableof perform<strong>in</strong>g its core functions. These h<strong>in</strong>der<strong>in</strong>g factors are represented by:• The <strong>in</strong>ability to mobilise domestic resources and the ensu<strong>in</strong>g heavy dependenceon external sources of funds.• The reliance of the economic system on a few (<strong>in</strong> most countries, just one) primaryproducts, which determ<strong>in</strong>es an unstable pattern of growth and a heavyconcentration of export revenues.• The poor status of their soft and hard <strong>in</strong>frastructures, which cuts countries offfrom the benefits of globalisation, h<strong>in</strong>der<strong>in</strong>g their access to ma<strong>in</strong> dest<strong>in</strong>ationmarkets.• A low human development, which underm<strong>in</strong>es the ability to grasp opportunitiesthat arise.• A high exposure to the risk of break-up of armed conflicts.These characteristics hamper the achievement of what constitutes the fundamentalobjective of external engagement <strong>in</strong> fragile countries, namely contribut<strong>in</strong>g to the endogenousprocess of state-build<strong>in</strong>g 7 . The EU has endorsed this core priority <strong>in</strong> its <strong>European</strong>Consensus on Development 8 , so that its engagement towards Sub-Saharan Africanfragile countries needs to be focused on this long-term goal. These five common characteristicssuggest five key priorities for EU engagement towards fragile countries:78See OECD/DAC 2007.<strong>European</strong> Parliament Council Commission 2006.184
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and PrescriptionsPriority 1: Identify<strong>in</strong>g and support<strong>in</strong>g the driven forces and actors of statebuild<strong>in</strong>gand social cohesion. The complexity of <strong>European</strong> assistance to state-build<strong>in</strong>gis due to the fact it can not be <strong>in</strong>spired by an external view of this process. The statebuild<strong>in</strong>gprocess for African fragile countries will not resemble the 19th Century processof state-build<strong>in</strong>g <strong>in</strong> Europe 9 . Similarly, social cohesion will not be the same among ethnicitiesand religions whose differences go back <strong>in</strong> time hundreds of years. The knowledgeof the local context, therefore, plays a crucial role <strong>in</strong> the external engagement <strong>in</strong>fragile countries. This is necessary to identify which actors can be the drivers of change,lead<strong>in</strong>g these countries out of <strong>fragility</strong>, possibly through different paths. While “changeactors” have to be strengthened, <strong>in</strong> particular encourag<strong>in</strong>g women’s participation <strong>in</strong>state-build<strong>in</strong>g, it is also important, for the strategy of democratic promotion to be successful,to weaken the possible “veto players” 10 and to support leaders <strong>in</strong> their efforts torebuild a new social trust between the state and citizens and between different factionsand ethnicities that risk spl<strong>in</strong>ter<strong>in</strong>g <strong>in</strong>to conflict. If certa<strong>in</strong> groups are discrim<strong>in</strong>atedaga<strong>in</strong>st and excluded from political representation, the likelihood of conflicts is higherand the move out of <strong>fragility</strong> more difficult.While some organisational capacity exists <strong>in</strong> fragile states 11 , it needs to be redirectedto other shared goals, such as mobilisation of domestic resources and better governanceof natural resource revenues. Elite groups can play an important role, but <strong>in</strong> some fragilestates, ethnic or religious factions may have little <strong>in</strong>centive to build effective state capacityor may even have <strong>in</strong>terests <strong>in</strong> underm<strong>in</strong><strong>in</strong>g it. Hence, they are not motivated tohave consensus. Lack of social cohesion weakens demand for good governance at thecommunity levelPriority 2: Bridge the gap between short-term needs and long-term policiesand resilience. To shift attention <strong>in</strong> fragile states from meet<strong>in</strong>g urgent short-termneeds to plann<strong>in</strong>g for the future, the EU could establish <strong>in</strong>surance mechanisms for reduc<strong>in</strong>gthe risks of volatility <strong>in</strong> export revenues. With a more stable revenue base (box9.1), fragile states could design long-term domestic policies. Indeed, given the low resilienceof fragile countries to external shocks, and <strong>in</strong> particular to fluctuations <strong>in</strong> commodityprices and <strong>in</strong> terms of trade, the developmental potential of donors’ assistance tostrengthen risk cop<strong>in</strong>g and <strong>in</strong>surance mechanisms, as well as the possibility to use aidflows to ‘smooth <strong>in</strong>ternational shocks’ should be carefully considered, as recently observedby Bourguignon et al. (2008).Box 9.1: A proposal for revenue stabilisationTo help fragile states lengthen the time horizon of their policies, often constra<strong>in</strong>ed byemergency conditions, the EU could commit <strong>in</strong> advance to redirect aid flows to countrieswhose export prices fall below a trigger level. Fragile states could then pursue longer termpriorities, know<strong>in</strong>g that their revenues would not go below a certa<strong>in</strong> floor.Implementation can be daunt<strong>in</strong>g. Credible commitment is the first step. The basket ofproducts and the <strong>in</strong>tervention price need to be decided <strong>in</strong> advance, to avoid <strong>in</strong>terfer<strong>in</strong>g withdomestic production and export choices. And the stabilisation mechanism should be clearlytemporary. Countries could be rewarded for committ<strong>in</strong>g funds to long-term policies, such as<strong>in</strong> education and health.The EC could have a comparative advantage over other donors <strong>in</strong> support<strong>in</strong>g such amechanism. Individual countries are unlikely to commit a sizable portion of their aiddisbursements to such an automatic mechanism, while the EC—which mediates the <strong>in</strong>terestsof member countries—could more credibly commit to such a device. Monitor<strong>in</strong>g of the funds9Elections are often considered essential for state-build<strong>in</strong>g. But elections can be manipulatedunless people share the belief that they express the collective will of the country.10 See Magen and Morl<strong>in</strong>o 2008, p.256-257.11 For <strong>in</strong>stance, some countries are able to organise troops, and others are able to make the educationsystem work well; and others have efficient money transfer systems.185
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionscould be assigned to local civil society organisations (aga<strong>in</strong> <strong>in</strong> advance to avoid credibilityproblems).Priority 3: Enhance human and social capital. Invest<strong>in</strong>g <strong>in</strong> education <strong>in</strong> fragilestates, try<strong>in</strong>g to narrow the gender gap, and build<strong>in</strong>g social capital are crucial to achiev<strong>in</strong>gsusta<strong>in</strong>ed growth and development. Fragile countries suffer disruptions <strong>in</strong> publiceducation that lower enrolment rates and <strong>in</strong>crease adult illiteracy rates. Adequate fund<strong>in</strong>gis needed not only for basic education, but also for higher education. In 1970, some30% of adults <strong>in</strong> Sub-Saharan Africa could read and write. By 1990, 51% could and by2006, 63% (but only 59% <strong>in</strong> fragile states). The literacy gap must be closed as quicklyas possible. With higher literacy rates, fragile countries could substantially improve theirhuman development record and foster economic growth. Women’s education is particularlyimportant, because it affects fertility rates and the health and well-be<strong>in</strong>g of householdmembers, especially children 12 . Target<strong>in</strong>g <strong>in</strong>terventions to boys and young mencould also be crucial, especially <strong>in</strong> postconflict fragile states, for reduc<strong>in</strong>g the attractionof illegal activities such as traffick<strong>in</strong>g and smuggl<strong>in</strong>g. Aga<strong>in</strong>st this background, educationmight not be the only solution for young male; hence, measures to reduce heavy regulationand to ensure an appropriate bus<strong>in</strong>ess environment with few economic or bureaucraticbarriers could also be implemented (at zero cost). This would be crucial to createjobs and therefore br<strong>in</strong>g hope and a future to the younger generations conv<strong>in</strong>c<strong>in</strong>g themthat be<strong>in</strong>g a rebel is not the only way to move ahead.EU member countries could open their borders to students from fragile states, know<strong>in</strong>gthat foreign education contributes to <strong>in</strong>stitutional development <strong>in</strong> countries of orig<strong>in</strong>(box 9.2) 13 . The EU could also help by develop<strong>in</strong>g local universities and research centresand establish<strong>in</strong>g <strong>in</strong>centives to stimulate <strong>in</strong>novation <strong>in</strong> areas such as efficient use of waterunder unfavourable climate conditions and deal<strong>in</strong>g with health problems such as AIDSand malaria.Box 9.2: EU policies and African human capital developmentBy Yaw Nyarko, New York <strong>University</strong>Human capital is an important <strong>in</strong>gredient of economic development. In Sub-Saharan Africa,levels of human capital rema<strong>in</strong> low, despite massive government <strong>in</strong>vestment <strong>in</strong> education.Increas<strong>in</strong>g human capital development <strong>in</strong> Sub-Saharan Africa—one of the best ways ofimprov<strong>in</strong>g liv<strong>in</strong>g standards and economic development—is an area where the <strong>European</strong>Union can play an effective and dist<strong>in</strong>ctive role.Many studies have shown the l<strong>in</strong>ks between human capital and economic development(see Spiegel and Benhabib 2005 and references cited there). Skilled workers are needed tofacilitate adoption of new technologies, <strong>in</strong>troduce entrepreneurial activities, run and managethe healthcare systems, and plan national economies. Despite the large percentages ofgovernment budgets spent on education, educational atta<strong>in</strong>ment rema<strong>in</strong>s low <strong>in</strong> manyAfrican countries. In 2000, the last year with fairly complete <strong>in</strong>ternational data 14 , the numberGhanaians with a tertiary education—<strong>in</strong> a country with more than 20 million people—wasaround 81,000. To put this number <strong>in</strong> context, New York <strong>University</strong> (where I teach and whichis one of many <strong>in</strong> New York state) has an enrolment of about half that number. Many otherAfrican countries have similarly low numbers—Kenya has 124,000, Uganda has 63,000. And12 Accord<strong>in</strong>g to anecdotal evidence (see Gartner 2009), children of mothers who receive fiveyears of primary education are 40% more likely to live beyond the age of five. Hence, giventhe high under five mortality rates <strong>in</strong> fragile countries, emphasised <strong>in</strong> chapters 1 and 2, the impactof such an <strong>in</strong>vestment could be substantial.13 See, for <strong>in</strong>stance, Spilimbergo 2009.14 Docquier and Marfouk, 2005.186
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptions<strong>in</strong> many African countries, the percentage of the relevant age cohort with a tertiaryeducation is between 3% and 5%—well below <strong>in</strong>ternational standards—it is around 70% <strong>in</strong>the Republic of Korea, S<strong>in</strong>gapore and other countries.The picture for physicians is just as sober<strong>in</strong>g. In 2004 <strong>in</strong> Ghana, the data record 1,860doctors—about the same number as the current enrolment of the New York <strong>University</strong>medical school. This number implies a patient–doctor ratio of 11,200 to 1. Malawi recorded124 doctors <strong>in</strong> 2004, for an alarm<strong>in</strong>g patient–doctor ratio of 88,000 to 1. Patient–doctorratios <strong>in</strong> the West are around 227 to 1 for Italy and 476 to 1 for the United K<strong>in</strong>gdom.Sub-Saharan African countries have made tremendous strides <strong>in</strong> human capital s<strong>in</strong>ce<strong>in</strong>dependence <strong>in</strong> the early 1960s, but much more needs to be done. But as soon as the topicof skills accumulation <strong>in</strong> Africa is mentioned, the discussion almost <strong>in</strong>variably turns to thebra<strong>in</strong> dra<strong>in</strong>, which is used as an argument for restrict<strong>in</strong>g external assistance to highereducation <strong>in</strong> Africa and the outflow of skilled personnel to the West. This is a mistake. Thereare subtleties <strong>in</strong> measur<strong>in</strong>g both the bra<strong>in</strong> dra<strong>in</strong> and its returns. This is an area <strong>in</strong> which the<strong>European</strong> Union could take a lead<strong>in</strong>g role <strong>in</strong> ways that could benefit Sub-Saharan Africaenormously—and EU countries as well.The percentages of tertiary educated Africans liv<strong>in</strong>g abroad are high: 52% for SierraLeone, 46% for Ghana, 44% for Kenya and 35% for Uganda. The measured bra<strong>in</strong> dra<strong>in</strong> hasa number of subtleties that should be recognised, however. First, the bra<strong>in</strong> dra<strong>in</strong> is asnapshot of the skills <strong>in</strong> different geographic areas at a given po<strong>in</strong>t <strong>in</strong> time. Many of thosecurrently manag<strong>in</strong>g hospitals, m<strong>in</strong>istries and other <strong>in</strong>stitutions <strong>in</strong> Africa are people who wentabroad for education and later returned with improved skills. Those <strong>in</strong>dividuals were at onetime counted <strong>in</strong> the bra<strong>in</strong> dra<strong>in</strong> statistics. The skills of people who return after tra<strong>in</strong><strong>in</strong>g arevitally important to the national development of the home country. The data show fairly highreturn rates after completion of education, so there is quite a bit of bra<strong>in</strong> circulation and notmerely dra<strong>in</strong>.Recent research also po<strong>in</strong>ts to the importance of remittances of workers abroad to homecountry economies. Easterly and Nyarko (2009) attempted to quantify the plusses andm<strong>in</strong>uses of the bra<strong>in</strong> dra<strong>in</strong>, tak<strong>in</strong>g remittances and returned skills as pluses. That research<strong>in</strong>dicates the importance of bra<strong>in</strong> circulation to the send<strong>in</strong>g countries.Others have shown a large <strong>in</strong>centive effect for the bra<strong>in</strong> dra<strong>in</strong>. The possibility of leav<strong>in</strong>glocal economies to pursue further studies abroad or earn higher wages <strong>in</strong>creases the desireto acquire a higher education, which may lead to <strong>in</strong>creased levels of education <strong>in</strong> the localeconomy even after some have gone abroad. And even if all the Ghanaian and Malawiandoctors liv<strong>in</strong>g abroad were to return home, patient–doctor ratios would still be well below<strong>in</strong>ternational standards. What is needed is a massive <strong>in</strong>crease <strong>in</strong> skill levels—a 10-fold ormore rise <strong>in</strong> the enrolment levels.Several recommendations flow from the analysis here:• Establish an EU blue card, along the l<strong>in</strong>es of the U.S. green card. Various EU blue cardproposals would ease immigration to Europe for skills acquisition, <strong>in</strong>creas<strong>in</strong>g the welfareof those who emigrate and remittances to family members. Many will eventuallyreturn to their home countries with improved skills. The return of skilled workers andprofessionals to their home countries should be encouraged (with flexible “sabbatical”periods for holders of the card). In the global competition for skills, <strong>in</strong>stitut<strong>in</strong>g an EUblue card system would enable Europe to compete much more effectively with theUnited States and its green card for the highly skilled. If designed appropriately, bothSub-Saharan Africa and EU countries would ga<strong>in</strong>.• Bilateral migration contracts that allow for the emigration of fixed numbers of workersfrom Africa to Europe should be expanded. Such contracts should be designed to allowand encourage the return of the skilled to their home countries.• Student loan schemes and <strong>in</strong>vestments <strong>in</strong> professional education should be scaled upto meet the need for massive <strong>in</strong>creases <strong>in</strong> skilled and professional workers <strong>in</strong> Africa.This process could become self-f<strong>in</strong>anc<strong>in</strong>g, with higher repayment scales for studentswho emigrate and discounts for students who stay <strong>in</strong> the home country, and with allstudents repay<strong>in</strong>g loans when they beg<strong>in</strong> employment. F<strong>in</strong>anc<strong>in</strong>g from the EU couldhelp to set up these schemes.Migration and the circulation of people, skilled and unskilled, have always been a part of187
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionshuman history. The source of all migration is probably the great human migration from theEast African rift valley, which eventually led to the first human settlement <strong>in</strong> today’s Europe.There have also been massive movements of <strong>European</strong>s to settle the new world from the1500s on. In the 1700s, Africans were be<strong>in</strong>g tra<strong>in</strong>ed <strong>in</strong> <strong>European</strong> universities. Fourah BayCollege <strong>in</strong> Sierra Leone, one of the first <strong>European</strong>-style universities <strong>in</strong> Sub-Saharan Africawas <strong>in</strong>itially a centre for returned slaves and later became an <strong>in</strong>cubator of African<strong>in</strong>dependence movements.It would be a terrible mistake if the current f<strong>in</strong>ancial crisis and an <strong>in</strong>correct understand<strong>in</strong>gof the bra<strong>in</strong> dra<strong>in</strong> were allowed to derail the important skills development process and bra<strong>in</strong>circulation. Rather, the <strong>in</strong>centive to migrate and the benefits of migration could be usedcreatively to <strong>in</strong>crease human capital levels <strong>in</strong> Sub-Saharan Africa while also benefit<strong>in</strong>gEurope.Priority 4: Support better governance at a regional level, <strong>in</strong>clud<strong>in</strong>g regional<strong>in</strong>tegration processes. Policy responses at the regional level could take advantage ofregional <strong>in</strong>tegration mechanisms that help to <strong>in</strong>ternalise spillover effects acrossneighbour<strong>in</strong>g countries or substitute for some local <strong>in</strong>stitutional weaknesses (box 9.3).Box 9.3: A right level of regional <strong>in</strong>tegrationWith<strong>in</strong> the Jo<strong>in</strong>t EU-Africa Strategy (JEAS), the EU could promote more subregional politicaldialogue and contribute to effective implementation of the subsidiarity pr<strong>in</strong>ciple based ontrust. Local leadership is important if regional arrangements are to contribute to statebuild<strong>in</strong>g.Adequate <strong>in</strong>centives are needed for regional leaders like Nigeria and South Africa toenter fully <strong>in</strong>to regional economic partnership agreements and to provide leadership 15 .Because of the great economic heterogeneity with<strong>in</strong> African regional group<strong>in</strong>gs,<strong>in</strong>tegration with the EC (and the global market) will likely have significantly different impactsacross countries. Configurations of subregional “hub-and-spokes” can emerge or bere<strong>in</strong>forced, creat<strong>in</strong>g tensions and <strong>in</strong>creased <strong>in</strong>equalities with<strong>in</strong> the subgroup. Transfermechanisms may be needed to mitigate such situations and reduce regional <strong>in</strong>equalities.Subregional <strong>in</strong>vestment projects should be designed and subsidised to favour localconvergence. With<strong>in</strong> the JEAS, political dialogues with subregional leaders may be targetedto stimulate their contribution to such subregional compensat<strong>in</strong>g mechanisms. In thisrespect, the EU could use its own experience <strong>in</strong> promot<strong>in</strong>g subregional structural funds.Regional trade agreements can enable African countries to achieve economies ofscale, enhance domestic competitiveness, and raise returns on <strong>in</strong>vestments and attractFDI, lead<strong>in</strong>g to technology transfer and economic growth. Regional agreements couldalso enable economies to pool resources for the jo<strong>in</strong>t provision of <strong>in</strong>frastructural projects,thus <strong>in</strong>ternalis<strong>in</strong>g the cross-country regional effects of such <strong>in</strong>vestments 16 . Andthey could give small African countries a stronger voice <strong>in</strong> negotiat<strong>in</strong>g agreements withother trad<strong>in</strong>g blocs or private partners.Look<strong>in</strong>g at scale economies <strong>in</strong> the provision of security and other public goods, and atthe production of private nontradable goods, one could argue that the typical African15 These countries have not signed any <strong>in</strong>terim agreements and are trad<strong>in</strong>g with the EU underother trade regimes.16 See Collier 2006. UNCTAD (2009), for <strong>in</strong>stance, ma<strong>in</strong>ta<strong>in</strong>s that regional cooperation should becentred on <strong>in</strong>frastructure development and emphasises the benefits of jo<strong>in</strong>t <strong>in</strong>frastructures; <strong>in</strong>East Africa “the railway was a regionally managed and relatively cheap mode of transport l<strong>in</strong>k<strong>in</strong>gUganda to the ocean via Kenya. This changed <strong>in</strong> 1977 when East African Railways was split<strong>in</strong>to national segments managed at the national level. The split reduced the efficiency of therailway as it <strong>in</strong>troduced additional costs perta<strong>in</strong><strong>in</strong>g to management, ma<strong>in</strong>tenance, border controlsand other coord<strong>in</strong>ation costs” p. 41.188
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionsstate is too small 17 . And standard theory on <strong>in</strong>ternalisation suggests that both the supplyof regional public goods (such as cross-country transportation and network <strong>in</strong>frastructures)and the regulation of regional public “bads” (such as neighbourhood arms races,disease diffusion and <strong>in</strong>secure borderlands) are best realised through <strong>in</strong>tra-African arrangements.Regional <strong>in</strong>tegration agreements can also be tools of <strong>in</strong>stitution build<strong>in</strong>g. They canhelp lock <strong>in</strong> policy reforms build<strong>in</strong>g commitment devices—especially relevant for stateswith weak domestic commitment capacity. Enter<strong>in</strong>g a trade bloc with strong “club rules”can help anchor democratic reforms and centre credibility on member countries.The regional <strong>in</strong>tegration approach has had limited success <strong>in</strong> Sub-Saharan Africa sofar. Enforcement of rules can be an issue along with the ambiguity associated with regionalleadership. Because of poor governance, weak national <strong>in</strong>stitutional structuresand lack of political will, regional policies have often been poorly implemented. The economiceffects of trade agreements have been somewhat disappo<strong>in</strong>t<strong>in</strong>g, and regional <strong>in</strong>tegrationof political power has been especially limited, with little devolution of power toregional organisations 18 . Insecurity and <strong>fragility</strong> present challenges to successful regional<strong>in</strong>tegration 19 . And the <strong>in</strong>itial logic of political regionalism <strong>in</strong> Africa rested on a strong attachmentto state sovereignty and the pr<strong>in</strong>ciple of non<strong>in</strong>terference 20 .The creation of the New Partnership for Africa’s Development (NEPAD) reflects morerecent attempts to “pool sovereignty” to improve governance through the African PeerReview Mechanism. These recent developments are consistent with a view that recognisesboth the importance of regional <strong>in</strong>terdependences, that lead to <strong>fragility</strong> clusters 21 ,and the failure of a pure (<strong>European</strong>-style) “state-centred” approach to capacity build<strong>in</strong>g22 . Such regionally led processes of governance-build<strong>in</strong>g should be promoted moreextensively to support state-build<strong>in</strong>g <strong>in</strong> weak countries (box 9.4).Box 9.4: The dilemma of leadership and hegemony <strong>in</strong> regionally led governancebuild<strong>in</strong>gConceptual considerations suggest that regionally led governance build<strong>in</strong>g is likely to bemore effective when the arrangement <strong>in</strong>cludes large partners that are more credible <strong>in</strong>enforc<strong>in</strong>g bloc rules and therefore will provide better anchors for political <strong>in</strong>stitution build<strong>in</strong>g.At the same time, rule enforcement has to be rule based. The large partners should not usetheir superior (and credible) enforcement position for opportunistic and hegemonic motives.This <strong>in</strong>troduces an important policy dilemma <strong>in</strong> that the characteristics that make a largepartner a credible enforcer of bloc rules can also <strong>in</strong>duce it to become hegemonic. Thisambiguity may generate mistrust with<strong>in</strong> the bloc and limit the effectiveness of the rule-basedsystem.In Africa, this situation is illustrated by the two regional agreements with dom<strong>in</strong>antpartners: the Economic Community of West African States (ECOWAS) with Nigeria and theSouthern African Development Community (SADC) with South Africa. The existence of amajor player <strong>in</strong> the region has stimulated some leadership that allowed the conduct ofAfrican security missions on the cont<strong>in</strong>ent (<strong>in</strong> Liberia and Lesotho). But <strong>in</strong> both cases, therewere presumptions that the use of the regional mechanisms was ex-post rationalis<strong>in</strong>g ofopportunistic motives. South Africa’s position as a credible enforcer of “good governancerules” <strong>in</strong> SADC has also been underm<strong>in</strong>ed by its apartheid legacy and the <strong>in</strong>herited mistrustthat still exists with its regional partners. As noted by one observer, “South Africa’s claim to17 Collier 2006.18 Yang and Gupta 2005.19 UNECA 2006 and Fanta 2008.20 Gandois 2005.21 UNECA 2004.22 Kaplan 2006.189
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionsthe status of “security manager” <strong>in</strong> Southern Africa, although not officially pronounced, is notuncontested, especially by countries such as Zimbabwe who have previously enjoyed astatus of a regional hegemony before South Africa was re<strong>in</strong>tegrated <strong>in</strong>to SADC” 23 . Theenormous economic disparities between South Africa and its regional partners have alsocont<strong>in</strong>ued to feed feel<strong>in</strong>gs of envy and fears of regional hegemony that have reduced itslegitimacy as a regional leader. They have also stimulated other SADC countries to enter <strong>in</strong>toalternative regional arrangements to countervail South Africa’s dom<strong>in</strong>ance 24 .Priority 5: Strengthen security <strong>in</strong> the area. A long term effort is needed to keepand expand <strong>European</strong> citizens’ will<strong>in</strong>gness to rema<strong>in</strong> engaged and <strong>in</strong>volved <strong>in</strong> globalgovernance. In design<strong>in</strong>g security policy, EU policy makers should account for the factthat actions <strong>in</strong> a number of fields, from agriculture and fisheries to trade, can have securityimplications and that security <strong>in</strong>itiatives can have implications for development andtrade. The EU should shift its l<strong>in</strong>ear, social eng<strong>in</strong>eer<strong>in</strong>g approach focused on its available<strong>in</strong>struments to a focus on the problem itself and a more flexible, strategic approach thatrecognizes the contested and political character of many donor objectives and policies.The grow<strong>in</strong>g resort to <strong>in</strong>struments of civilian and military crisis management is an opportunitynot only to encourage jo<strong>in</strong>t (military, civilian, and aid/development) plann<strong>in</strong>g butalso to th<strong>in</strong>k more strategically. It is also an opportunity to reward adaptation and risktak<strong>in</strong>gby the local staffs, often essential <strong>in</strong> <strong>fragility</strong> situation. Ignor<strong>in</strong>g the securityneeds of the population is counterproductive: <strong>in</strong>stead of implement<strong>in</strong>g a pre-exist<strong>in</strong>gbluepr<strong>in</strong>t, much can be achieved if the security needs of the population are taken seriously,a first step toward a genu<strong>in</strong>e local ownership.2.1 The need for a flexible long-term approachTo respond to the heterogeneity <strong>in</strong> performance and characteristics of the fragile states<strong>in</strong> Sub-Saharan Africa, the EU needs a flexible approach and new forms of aid governanceand development assistance to improve its efficiency (box 9.5).Box 9.5: Reassess<strong>in</strong>g aid governanceBy Ramon Marimon, <strong>European</strong> <strong>University</strong> <strong>Institute</strong>The effectiveness of any fund<strong>in</strong>g policy depends on its implementation. This is especiallyimportant <strong>in</strong> the case of aid to fragile states. The problem has long been recognized; it wasthe focus of the 2005 Paris Declaration on Aid Effectiveness and of the follow-up 2008 AccraAgenda for Action.Design<strong>in</strong>g effective governance of aid policies first requires identify<strong>in</strong>g the actors (donors,donor governments, recipients, recipient country governments) and their relationships,specify<strong>in</strong>g who is responsible for def<strong>in</strong><strong>in</strong>g general and specific objectives and correspond<strong>in</strong>gprogrammes and who will implement them. Especially important is establish<strong>in</strong>g the role ofaid agencies and their autonomy with respect to other actors.The simplest design for aid governance is budget support <strong>in</strong> a situation where there areno issues of eligibility or special needs for monitor<strong>in</strong>g 25 . In such an ideal situation, there islittle need for aid agencies s<strong>in</strong>ce recipient governments (here identical with recipients)directly implement the right policies. Donors may set general objectives, but recipientgovernments set specific – but also often general – objectives. However, such an idealizedform of budget support presupposes that recipient countries have government <strong>in</strong>stitutions23 Qobo 2007, p. 17.24 For <strong>in</strong>stance, SADC members Malawi, Mauritius, Zimbabwe and Zambia—among fragile countries—aresimultaneously participat<strong>in</strong>g <strong>in</strong> the COMESA.25 Regard<strong>in</strong>g conditions of eligibility and related monitor<strong>in</strong>g issues, see EuropeAid Office of Cooperation(2009).190
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionsthat are representative of recipients’ <strong>in</strong>terests, highly developed and committed to goodpolicies. This is not the case <strong>in</strong> fragile states. In fact, the commitment problem arises even <strong>in</strong>develop<strong>in</strong>g countries with reasonably good governance: annual budget revisions often meanthat development policies suffer discretionary cuts when other acute needs take precedence.The recent f<strong>in</strong>ancial crisis has provided many examples of such a commitment problem – aproblem that can be avoided by delegat<strong>in</strong>g aid policies and committ<strong>in</strong>g multiannual budgetsto aid agencies.However, commitment problems are not limited to problems of discretionary f<strong>in</strong>ances,they also emerge when trust is eroded by discretionary policy shifts, or when aid policies arevulnerable to manipulation by powerful groups. Thus mitigat<strong>in</strong>g commitment problems is aprimary rationale for hav<strong>in</strong>g autonomous aid agencies which are able to pursue long-termobjectives without discretionary shifts and local distortions. A second rationale is that, eitherwhen budget support—to governments or non-governmental organizations—requires closemonitor<strong>in</strong>g, or it is not an efficient aid mechanism and aid programmes need to beimplemented, aid policy becomes a very complex task requir<strong>in</strong>g adequate capacity,specialization, local knowledge and professionalization.Neither donor agencies nor recipient government agencies are immune from commitmentproblems, nor do they have adequate capacity. Dependent on their governments, they areunable to isolate themselves from policy and budget shifts. Donor agencies, distant fromrecipient countries, lack the proper <strong>in</strong>centives, local knowledge and trust to effectively andconsistently monitor or implement aid policies. Recipient government agencies, too close torecipients, may be <strong>in</strong>fluenced by powerful local groups to divert aid from its most efficientuse, or may lack the proper <strong>in</strong>centives to monitor the allocation of aid, either <strong>in</strong> the form ofbudget support or of aid programmes; they may have local knowledge, but they lack thecapacity to learn from others or to build reputation and trust to attract external funds.With<strong>in</strong> the Paris-Accra pr<strong>in</strong>ciples of ‘ownership’ and ‘alignment 26 , a reassessment of aidgovernance is also needed. Donors (and develop<strong>in</strong>g country governments) should def<strong>in</strong>e thegeneral objectives and commit to long-term development policies. Such commitment can bebetter ma<strong>in</strong>ta<strong>in</strong>ed by delegat<strong>in</strong>g programme implementation to service aid agencies andtransferr<strong>in</strong>g funds to them. An immediate concern is whether such an open and morecompetitive approach will exacerbate the fragmentation problem 27 . Hav<strong>in</strong>g multiple donorsand recipients can be a virtue. The fragmentation problem arises from hav<strong>in</strong>g too manyagencies, each with different locked-<strong>in</strong> relationships, and/or very limited capacity to monitoror manage complex aid programmes, etc. As <strong>in</strong> other competitive service <strong>in</strong>dustries, thereare economies of scale <strong>in</strong> provid<strong>in</strong>g aid services, and agencies that provide professional aidservices should f<strong>in</strong>d their appropriate size and specialization, avoid<strong>in</strong>g <strong>in</strong>efficientfragmentation 28 .To summarise, there are several pr<strong>in</strong>ciples of governance and trust <strong>in</strong> aid policy thatshould be followed:• Donors and develop<strong>in</strong>g country governments should def<strong>in</strong>e general long-term objectives(“engag<strong>in</strong>g <strong>in</strong> open and <strong>in</strong>clusive dialogue on development policies”).• Aid programmes, or budget support programmes need<strong>in</strong>g monitor<strong>in</strong>g, should be delegatedto service aid agencies, which should apply local knowledge <strong>in</strong> def<strong>in</strong><strong>in</strong>g specificobjectives and programmes, and their local and specialized knowledge <strong>in</strong> evaluat<strong>in</strong>g26 The Paris Declaration and the Accra Agenda emphasize the importance of ‘ownership’ (develop<strong>in</strong>gcountries must set their own strategies for poverty reduction, improve their <strong>in</strong>stitutions andtackle corruption), and ‘alignment’ (donor countries should align beh<strong>in</strong>d these objectives anduse local systems).27 Accord<strong>in</strong>g to W. Easterly and T. Pfutze's study (2008) of 31 bilateral agencies and 17 multilateralagencies "the probability that two randomly selected dollars <strong>in</strong> the <strong>in</strong>ternational aid effortwill be from the same donor to the same country for the same sector is 1 <strong>in</strong> 2658”.28 P. Collier has also emphasized the need for a more competitive structure of ‘service agencies’(he calls them ‘Independent Service Authorities’; see Bold, Collier and Zeitl<strong>in</strong> (2009). He baseshis argument on the complexity of allocat<strong>in</strong>g and monitor<strong>in</strong>g aid funds: “My argument is alsobased on the need to mitigate commitment problems. He sees them as national or local serviceauthorities, I see them primarily—but not exclusively—as multilateral service aid agencies operat<strong>in</strong>g<strong>in</strong> many countries”.191
<strong>European</strong> Report on Development 2009 – Chapter 9: Conclusions – Priorities and Prescriptionsand monitor<strong>in</strong>g aid or budget support programmes.• Service agencies should be <strong>in</strong>dependent of donors, develop<strong>in</strong>g country governments,and f<strong>in</strong>al recipients.• Aid agencies should be professional, stable, adequately funded and accountable.• Donors should be able to assign funds to a range of agencies, and agencies should beable to direct aid <strong>in</strong> response to results, not just established relationships.The Accra Agenda for Action states that “achiev<strong>in</strong>g development results—and openlyaccount<strong>in</strong>g for them—must be at the heart of all we do.” The five pr<strong>in</strong>ciples expressed hereare a restatement – and a more specific def<strong>in</strong>ition – of this goal, when results cannot beachieved by simply transferr<strong>in</strong>g funds, as an ‘ideal budget support’ mechanism. Apply<strong>in</strong>gthese pr<strong>in</strong>ciples to EU development aid policy toward fragile states <strong>in</strong> Africa requires a fullreassessment and restructur<strong>in</strong>g of aid governance. EU aid governance is dom<strong>in</strong>ated bymember state agencies and, as the Paris Declaration recognizes, suffers from fragmentationand lack of coord<strong>in</strong>ation, high transaction costs to governments with limited adm<strong>in</strong>istrativecapacity, and <strong>in</strong>adequate monitor<strong>in</strong>g, evaluation and learn<strong>in</strong>g. Nevertheless, build<strong>in</strong>g on theexpertise of the exist<strong>in</strong>g agencies and follow<strong>in</strong>g the above five pr<strong>in</strong>ciples, better structures ofaid governance are possible.Some Sub-Saharan African fragile countries need ma<strong>in</strong>ly to catch-up on human development<strong>in</strong>dicators, while others need to build credible state <strong>in</strong>stitutions. Similarly,most of them need to rely more extensively on civil society. Some are <strong>in</strong> conflict or postconflictand need military assistance. And, f<strong>in</strong>ally, some primarily need first to fightHIV/AIDS or malaria. All of them need to enhance their human capital and empowerment,with particular focus on educat<strong>in</strong>g women—which reflects on <strong>in</strong>creased familieswelfare—, and young men, to reduce the risk of social unrest and illegal activities.Once the priorities are set, the EU should make credible long-term policy and budgetarycommitments, without <strong>in</strong>terfer<strong>in</strong>g with state sovereignty. Such commitments wouldallow fragile states to lengthen their time horizons for policy formulation and implementation.Monitor<strong>in</strong>g and peer review mechanisms are also crucial for reach<strong>in</strong>g the developmentalgoals and enhanc<strong>in</strong>g resilience.Mov<strong>in</strong>g from priorities to specific prescriptions and guidel<strong>in</strong>es for <strong>in</strong>tervention requiresdeeply rooted knowledge of local conditions, because fragile Sub-Saharan African countriesare remarkably heterogeneous. Detailed policy prescriptions to have an impactmust be matched by knowledge of the local context. Furthermore, the EU has to speakwith one voice and <strong>in</strong>ternalize that state build<strong>in</strong>g and social cohesion <strong>in</strong> Africa are longterm processes, that can take different forms at any po<strong>in</strong>t <strong>in</strong> time and require constantattention and the right support on the ground. Society is encompassed by the state, butthe state penetrates and restructures social relations.192
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<strong>European</strong> Report on Development 2009 – ReferencesWorld Bank. 2009a. “Protect<strong>in</strong>g Progress: The Challenge Fac<strong>in</strong>g Low Income Countries <strong>in</strong>the Global Recession.” Background paper prepared by the World Bank staff for the G-20 meet<strong>in</strong>g, September 24–25, Pittsburgh.World Bank. 2009b. “Swimm<strong>in</strong>g Aga<strong>in</strong>st the Tide: How Develop<strong>in</strong>g Countries Are Cop<strong>in</strong>gWith the Global Crisis.” Background paper prepared by the World Bank staff for theG-20 F<strong>in</strong>ance M<strong>in</strong>isters and Central Banks Governors Meet<strong>in</strong>g, March 13–14, Horsham,UK.World Bank. 2009c. World Development Indicators 2009. Wash<strong>in</strong>gton, DC: World Bank.World Bank. 2009d. “In Africa, ‘Poverty Has A Female Face.’”http://go.worldbank.org/HBLTTGNP00 (accessed on July 27, 2009).References for Box 6.1Engle R. F., G. M. Gallo and M. Velucchi. 2008. A MEM-Based Analysis of Volatility Spillovers<strong>in</strong> East Asian F<strong>in</strong>ancial Markets. Work<strong>in</strong>g Papers Series Dipartimento di Statistica“G. Parenti'' No. 2008-09. Florence, Italy: <strong>University</strong> of Florence.Giovannetti, G. and M. Velucchi. 2009. African F<strong>in</strong>ancial Markets – A Spillover Analysis ofShocks. Background paper for the <strong>European</strong> Report on Development 2009.References for Box 6.2Alves, P. and P. Draper. 2007. “Introduction: Ch<strong>in</strong>a’s Grow<strong>in</strong>g Role <strong>in</strong> Africa.” In Ch<strong>in</strong>a <strong>in</strong>Africa: Mercantilist Predator, or Partner <strong>in</strong> Development?, ed. G. le Pere. Midrand,South Africa South Africa: <strong>Institute</strong> of Global Dialogue and the South African <strong>Institute</strong>of International Affairs.Brautigam, D. 2008. Ch<strong>in</strong>a’s African Aid—Transatlantic Challenges. Wash<strong>in</strong>gton: GermanMarshall Fund of the United States.Brown, K. and Z. Chun. 2009. Ch<strong>in</strong>a <strong>in</strong> Africa—Prepar<strong>in</strong>g for the Next Forum on Ch<strong>in</strong>aAfrica Cooperation. London: Chatham House Brief<strong>in</strong>g Note.Centre for Ch<strong>in</strong>ese Studies (CCS). 2008. How Ch<strong>in</strong>a Delivers Development Assistance toAfrica. Prepared for the Department for International Development (DFID), Beij<strong>in</strong>g.Cook, S. and W. Lam. 2009. The F<strong>in</strong>ancial Crisis and Ch<strong>in</strong>a: What Are the Implicationsfor Low Income Countries? The <strong>Institute</strong> of Development Studies, Sussex: Mimeo.Jacoby, U. 2007. Gett<strong>in</strong>g Together: The New Partnership between Ch<strong>in</strong>a and Africa forAid and Trade. F<strong>in</strong>ance and Development 44(2): 46–49.Lancaster, C. 2007. The Ch<strong>in</strong>ese Aid System. Essay. Wash<strong>in</strong>gton: Centre for Global Development.OECD. 2008a. Ch<strong>in</strong>a—Encourag<strong>in</strong>g Responsible Bus<strong>in</strong>ess Conduct. OECD InvestmentPolicy Review. Paris: Organisation for Economic Co-Operation and Development.OECD. 2008b. Monitor<strong>in</strong>g Resource Flows to Fragile States: 2007 Report. OECD FragileStates Group. Paris: Organisation for Economic Co-Operation and Development.OECD. 2009. Monitor<strong>in</strong>g Resource Flows to Fragile States: 2008 Report, OECD FragileStates Group. Paris: Organisation for Economic Co-Operation and Development.MOFCOM. 2007. Ch<strong>in</strong>a Commerce Yearbook 2007, Beij<strong>in</strong>g: M<strong>in</strong>istry of Commerce.National Bureau of Statistics of Ch<strong>in</strong>a (various editions). Ch<strong>in</strong>a Statistical Yearbook. EnglishVersion. Beij<strong>in</strong>g: Ch<strong>in</strong>a Statistics Press.Pehnelt, G. 2007. The Political Economy of Ch<strong>in</strong>a’s Aid Policy <strong>in</strong> Africa. Jena EconomicResearch Work<strong>in</strong>g Papers No. 2007/051. Jena.Sh<strong>in</strong>n, D. H. 2008. “Military and Security Relations: Ch<strong>in</strong>a, Africa and the Rest of theWorld.” In Ch<strong>in</strong>a <strong>in</strong>to Africa: Trade, Aid and Influence, ed. R. I. Rotberg. Wash<strong>in</strong>gtonDC: Brook<strong>in</strong>gs Institution Press.Tull, D. 2008. Ch<strong>in</strong>a <strong>in</strong> Africa: <strong>European</strong> Perceptions and Responses to the Ch<strong>in</strong>ese Challenge.SAIS Work<strong>in</strong>g Papers <strong>in</strong> African Studies No. 02-08. Wash<strong>in</strong>gton.207
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<strong>European</strong> Report on Development 2009 – ReferencesMengisteab, K. and C. Daddieh. 1999. State Build<strong>in</strong>g and Democratization <strong>in</strong> Africa:Faith, Hope, and Realities. Westport, Conn: Praeger.OECD/DAC. 2007. Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile States andSituations. Paris: OECD.OECD/DAC. 2008. Concepts and Dilemmas of State Build<strong>in</strong>g <strong>in</strong> Fragile Situations—FromFragility to Resilience. Paris: OECD.Pouligny, B. 2009. State-Society Relations and Intangible Dimensions of State Resilienceand State Build<strong>in</strong>g: A Bottom-up Perspective. Background paper for the <strong>European</strong> Reporton Development 2009.Rocha-Menocal, A. 2009. “State-Build<strong>in</strong>g for Peace”—A New Paradigm for InternationalEngagement <strong>in</strong> Post-Conflict Fragile States? Background paper for the <strong>European</strong> Reporton Development 2009.UNECA 2007. Relevance of Africa Traditional Institutions of Governance, Addis Ababa:UNECA.Whaites, A. 2008. States <strong>in</strong> Development: Understand<strong>in</strong>g State-Build<strong>in</strong>g. DFID Work<strong>in</strong>gPaper. London: DFID.References for Box 7.1Pouligny, B. 2009. State-Society Relations and Intangible Dimensions of State Resilienceand State Build<strong>in</strong>g: A Bottom-up Perspective. Background paper for the <strong>European</strong> Reporton Development 2009.References for Box 7.2Kaplan, S. 2008. “The Remarkable Story of Somaliland.” Journal of Democracy 19 (3):143–157.Menkhaus, K. 2007. “Governance Without Government <strong>in</strong> Somalia: Spoilers, State Build<strong>in</strong>g,and the Politics of Cop<strong>in</strong>g.” International Security 31 (3): 87.Menkhaus, K. 2008. Somalia: A Country <strong>in</strong> Peril, a Policy Nightmare. ENOUGH StrategyPaper No. 9. Wash<strong>in</strong>gton, DC: ENOUGH.References for Box 7.3McConnell, J. 2009. Institution [Un]Build<strong>in</strong>g: Decentralis<strong>in</strong>g Government and the Case ofRwanda. Paper presented at the <strong>ERD</strong> Conference, May 21–23, Accra.References for Box 7.4Bennet, J., J. Kluyskens, J. Morton and D. Poate. 2009. Mid-term Evaluation of the Jo<strong>in</strong>tDonor Team <strong>in</strong> Juba, Sudan. NORAD on behalf of the Governments of Canada, Denmark,the Netherlands, Norway, Sweden and the United K<strong>in</strong>gdom.Fenton, W. 2008. Fund<strong>in</strong>g Mechanisms <strong>in</strong> Southern Sudan: NGO Perspectives. Paperpresented at the Juba NGO Forum, February.Haslie, A. and A. Borchgrev<strong>in</strong>k (2007) International Engagement <strong>in</strong> Sudan after the CPA:Report on the Pilot<strong>in</strong>g of OECD/DAC's ”Pr<strong>in</strong>ciples for Good International Engagement<strong>in</strong> Fragile States” for the Case of Sudan. Paper No. 714. Oslo: Norwegian <strong>Institute</strong> ofInternational Affairs.Murphy, P. 2007. Manag<strong>in</strong>g the Middle Ground <strong>in</strong> South Sudan’s Recovery from War. Basicservice delivery dur<strong>in</strong>g the transition from relief to development. Report commissionedby DFID Sudan and the Jo<strong>in</strong>t Donor Team, Juba.Pantuliano, S., M. Buchanan-Smith and P. Murphy. 2007. The Long Road Home. Opportunitiesand Obstacles to the Re<strong>in</strong>tegration of IDPs and Refugees Return<strong>in</strong>g to SouthernSudan and the Three Areas. HPG Commissioned Paper. London: ODI.209
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<strong>European</strong> Report on Development 2009 – ReferencesGaves, M. and S. Maxwell. 2009. Options for Architectural Reform <strong>in</strong> <strong>European</strong> DevelopmentCooperation. Background note. London: Overseas Development <strong>Institute</strong>.Hirschman, A. O. 1963. Journeys toward Progress. Studies <strong>in</strong> Economic Policy-Mak<strong>in</strong>g <strong>in</strong>Lat<strong>in</strong> America. New York: The Twentieth Century Fund.Hirschman, A. O. 1967. Development Projects Observed. Wash<strong>in</strong>gton, D.C.: The Brook<strong>in</strong>gsInstitution.Hirschman, A. O. 1981. Essays <strong>in</strong> Trespass<strong>in</strong>g: Economics to Politics and Beyond. Cambridge:Cambridge <strong>University</strong> Press.Hirschman, A. O. 1985. A Bias for Hope: Essays on Development and Lat<strong>in</strong> America.Boulder, Colo.: Westview Press.Hirschman, A. O. 1995. A Propensity to Self-Subversion. Cambridge, Mass.: Harvard<strong>University</strong> Press.Hoffmeister, F. 2008. “Inter-Pillar Coherence <strong>in</strong> the <strong>European</strong> Union’s Civilian CrisisManagement.” In The <strong>European</strong> Union and Crisis Management, ed S. Blockmans. TheHague, Netherlands: Asser Press.Horn, A., F. Olonisak<strong>in</strong> and G. Peake. 2006. “United K<strong>in</strong>gdom-led Security Sector Reform<strong>in</strong> Sierra Leone.” Civil Wars 8 (2): 109–123.Jones, E. 2009. “Africa and the Economic Crisis: The Case for Greater Flexibility <strong>in</strong>EPAs.” Trade Negotiation Insights 8(5) http://ictsd.net/i/news/tni/47678/. (accessedon September 7, 2009).Koeb, E. 2008. A More Political EU External Action: Implications of the Treaty of Lisbonfor the EU's Relations with Develop<strong>in</strong>g Countries. ECDPM InBrief 21. Maastricht:<strong>European</strong> Centre for Development Policy Management.Melmot, S. 2008. Candide au Congo. L’échec annoncé de la réforme du secteur de sécurité(RSS). Stratégique n° 9. Paris: Institut Française des Relations Internationales.Particip, Cideal—Centro de Investigatión y Cooperación al Desarrollo. Channel Research,South Research. 2008. Evaluation of the EC Aid Channeled Through Civil Society Organisations(CSOs). Freiburg/Madrid/Brussels/Leuven.http://ec.europa.eu/europeaid/how/evaluation/evaluation_reports/2008/1259_docs_en.htm (accessed on October 7, 2009).Reno, W. 2003. “The Chang<strong>in</strong>g Nature of Warfare and the Absence of State-Build<strong>in</strong>g <strong>in</strong>West Africa.” In Irregular Armed Forces and their Role <strong>in</strong> Politics and State Formation,ed. D. E. Davis and A. W. Pereira. Cambridge: Cambridge <strong>University</strong> Press.Solana, J. 2003. A Secure Europe <strong>in</strong> a Better World—<strong>European</strong> Security Strategy. Paper15895/03, PESC787 presented at the <strong>European</strong> Council meet<strong>in</strong>g, December 12, Brussels.Solana, J. 2009. ESDP@10: What Lessons for the Future? Paper S195/09. Council of the<strong>European</strong> Union, June 28. Brussels.Tadesse, D. 2009. Africa’s Emerg<strong>in</strong>g Global Partnerships: Their Implications for the Cont<strong>in</strong>ent’sDevelopment Aspirations. Occasional Paper 189. Pretoria: <strong>Institute</strong> for SecurityStudies.Trefon, T. 2007. Parcours adm<strong>in</strong>istratifs dans un Etat en faillite. Récits populaires de Lubumbashi(RDC). Afrika Studies 74. Paris: L’Harmattan-Cahiers Africa<strong>in</strong>s.Trefon, T. ed. 2004. Re<strong>in</strong>vent<strong>in</strong>g Order <strong>in</strong> the Congo: How People Respond to State Failure<strong>in</strong> K<strong>in</strong>shasa. London: Zed Books.Visman, E. 1998. Cooperation with Politically Fragile Countries: Lessons from EU Supportto Somalia. ECDPM Work<strong>in</strong>g Paper No. 66. Maastricht: <strong>European</strong> Centre for DevelopmentPolicy Management.Vlassenroot, K. 2008. Armed Groups and Militias <strong>in</strong> Eastern DR Congo. Lecture Series onAfrican Security 5. Swedish Defence Research Agency and Nordic Africa <strong>Institute</strong>,Stockholm and Oslo.212
<strong>European</strong> Report on Development 2009 – ReferencesVogel, T. 2009. Merger of Afghanistan Office Delayed by Ferrero-Waldner. <strong>European</strong>Voice, September 24.Zürcher, C. 2006. Is More Better? Evaluat<strong>in</strong>g External-Led State Build<strong>in</strong>g after 1989.Work<strong>in</strong>g Paper 54. Stanford <strong>University</strong>, Freeman Spogli <strong>Institute</strong> for InternationalStudies, Center on Democracy, Development, and the Rule of Law, Palo Alto, Calif.References for Box 8.1<strong>European</strong> Parliament Council Commission. 2006. ”The <strong>European</strong> Consensus.” 2006/C46/01. Official Journal of the <strong>European</strong> Union. Jo<strong>in</strong>t Statement by the Council and therepresentatives of the Governments of the Member States meet<strong>in</strong>g with<strong>in</strong> the Council,the <strong>European</strong> Parliament and the Commission on <strong>European</strong> Union Development Policy.References for Box 8.3OECD/DAC. 2007. Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile States andSituations. Paris: OECD.References for Box 8.4Sheriff, A. and K. Barnes. 2008. Enhanc<strong>in</strong>g the EU Response to Women and Armed Conflictwith Particular Reference to Development Policy. Study for the Slovenian Presidencyof the EU. Maastricht: <strong>European</strong> Centre for Development Policy Management.References for Box 8.5Commission of the <strong>European</strong> Communities. 2009. Support<strong>in</strong>g Develop<strong>in</strong>g Countries <strong>in</strong>Cop<strong>in</strong>g with the Crisis. Communication from the Commission to the <strong>European</strong> Parliament,the Council, The <strong>European</strong> Economic and the Committee of the Regions, April8. Brussels.References for Box 8.6Bertow, K. and A. Schulteis. 2008. Impact of EU’s Agricultural Trade Policy on Smallholders<strong>in</strong> Africa. Bonn: Germanwatch e.V.Low, P., R. Piermart<strong>in</strong>i and J. Richter<strong>in</strong>g. 2009. “Non-Reciprocal Preference Erosion Aris<strong>in</strong>gFrom MFN Liberalization <strong>in</strong> Agriculture: What Are the Risks?” In Trade PreferenceErosion: Measurement and Policy Response, ed. B. Hoekman, W. Mart<strong>in</strong> and C. A.Braga. London: Palgrave Macmillan.Matthews, A. 2008. “The <strong>European</strong> Union's Common Agricultural Policy and Develop<strong>in</strong>gCountries: The Struggle for Coherence.” Journal of <strong>European</strong> Integration 30 (3): 381–399.Oxfam. 2002. Stop the Dump<strong>in</strong>g! How EU Agricultural Subsidies Are Damag<strong>in</strong>g Livelihoods<strong>in</strong> the Develop<strong>in</strong>g World. London: Oxfam International.Paasch, A. 2008. Devastat<strong>in</strong>g Floods—Man Made: <strong>European</strong> Trade Policy Violates Rightto Food <strong>in</strong> Ghana—Chicken and Tomatoes. Bonn: Germanwatch e.V.References for Box 8.7Commission of the <strong>European</strong> Communities. 2007. Towards an EU Aid for Trade Strategy—TheCommission's Contribution. Communication from the <strong>European</strong> Commissionto the Council, the <strong>European</strong> Parliament, and the <strong>European</strong> Economic and SocialCommittee and the Committee of the Regions. COM (2007) 163 f<strong>in</strong>al, April 4. Brussels.Commission of the <strong>European</strong> Communities. 2009. Support<strong>in</strong>g develop<strong>in</strong>g Countries <strong>in</strong>Cop<strong>in</strong>g with the Crisis—Aid for Trade Monitor<strong>in</strong>g Report 2009. Commission Staff213
<strong>European</strong> Report on Development 2009 – ReferencesWork<strong>in</strong>g Paper Accompany<strong>in</strong>g the Communication from the Commission to the <strong>European</strong>Parliament, the Council, the <strong>European</strong> Economic and Social Committee and theCommittee of the Regions, April 2009, p. 3.References for Box 8.8Baunsgaard, T. and M. Keen. 2005. Tax Revenue and (or?) Trade Liberalization. Work<strong>in</strong>gPaper WP/05/112. Wash<strong>in</strong>gton, DC: IMF.Bilal, S. and C. Stevens (Eds). 2009. The Interim Economic Partnership Agreements betweenthe EU and African States - Contents, challenges and prospects, ECDPM PolicyManagement Report 17, Maastricht: ECDPM.Brenton, P., M. Hoppe and R. Newfarmer. 2008. Economic Partnership Agreements andthe Export Competitiveness of Africa. Policy Research Work<strong>in</strong>g Paper 4627. Wash<strong>in</strong>gton,DC: World Bank.Busse, M., A. Borrmann and H. Grossman. 2004. The Impact of ACP/EU Economic PartnershipAgreements on ECOWAS Countries: An Empirical Analysis of Trade andBudget Effects. HWWA–Hamburg: Hamburg <strong>Institute</strong> of International Economics.Delpeuch, C. 2007. One M<strong>in</strong>ute to Midnight: Is There Still Time to Reth<strong>in</strong>k EPAs? EUMust Reform Trade Arrangements to Promote Development In African, Caribbean, andPacific Countries. Paris: Institut d’Etudes Politiques, Groupe d'Economie Mondiale.Delpeuch, C. and G. Harb. 2007. EPAs: Th<strong>in</strong>k<strong>in</strong>g Outside the <strong>European</strong> Box. ACP CountriesShould Refuse to be Rushed <strong>in</strong>to EPAs. Work<strong>in</strong>g paper. Paris: Institut d’EtudesPolitiques, Groupe d'Economie Mondiale.S<strong>in</strong>dz<strong>in</strong>gre, A. 2008. The <strong>European</strong> Union Economic Partnership Agreements with Sub-Saharan Africa. UNU-CRIS Work<strong>in</strong>g Paper No. 2008/5.Stevens, C. and J. Kennan. 2005. EU-ACP Economic Partnership Agreements: The Effectsof Reciprocity. London: <strong>Institute</strong> for Development Studies.Stevens, C., M. Meyn, J. Kennan, S. Bilal, C. Braun-Munz<strong>in</strong>ger, F. Jerosch, D. Makhanand F. Rampa. 2008. The New EPAs: Comparative Analysis of Their Content and theChallenges for 2008. London/Maastricht: Overseas Development <strong>Institute</strong>/<strong>European</strong>Centre for Development Policy Management.References for Box 8.9Grevi, G., D. Helly, and D. Keohane. (eds.) Forthcom<strong>in</strong>g. The <strong>European</strong> Security and DefencePolicy: The First 10 Years, Paris: <strong>European</strong> Union <strong>Institute</strong> for Security Studies,2009.References for Chapter 9Bourguignon, F., A. Bénassy-Quéré, S. Dercon, A. Estache, J.W. Gunn<strong>in</strong>g, R. Kanbur, S.Klasen, S. Maxwell, J. P. Platteau and A. Spadaro. 2008. Millennium DevelopmentGoals at Midpo<strong>in</strong>t: Where do we stand and where do we need to go? Background paperfor the <strong>European</strong> Report on Development 2009.Collier, P. 2006. International Political Economy: Some African Applications. Paper preparedfor the African Economics Research Consortium. Centre for the Study of AfricanEconomies, Oxford <strong>University</strong>, Oxford, U.K.[http://users.ox.ac.uk/~econpco/research/pdfs/AERCPlenary-InternationalPoliticalEconomy-AfricanApps.pdf].Collier, P. 2009a. The Political Economy of Fragile States and Implications for <strong>European</strong>Development Policy. Background paper for the <strong>European</strong> Report on Development2009.Collier, P. 2009b. Wars, Guns, and Votes - Democracy <strong>in</strong> Dangerous Places. New York:HarperColl<strong>in</strong>s.214
<strong>European</strong> Report on Development 2009 – References<strong>European</strong> Parliament Council Commission. 2006. The <strong>European</strong> Consensus 2006/C46/01. Official Journal of the <strong>European</strong> Union. Jo<strong>in</strong>t Statement by the Council and theRepresentatives of the Governments of the Member States meet<strong>in</strong>g with<strong>in</strong> the Council,the <strong>European</strong> Parliament and the Commission on <strong>European</strong> Union DevelopmentPolicy.Fanta, E. 2008. Dynamics of Regional (non-) <strong>in</strong>tegration <strong>in</strong> Eastern Africa. UNU-CRISWork<strong>in</strong>g Paper SW-2008/2. United Nations <strong>University</strong>, Centre for Comparative RegionalIntegration Studies, Bruges.Gandois, H. 2005. Sovereignty as Responsibility, or African Regional Organizations asNorm-setters. Sovereignty and Its Discontents (SAID) workshop presentation at theBritish International Studies Association (BISA) conference “Beyond Sovereignty II:Global Regionalism: Africa, Americas, Europe.” <strong>University</strong> of Sa<strong>in</strong>t Andrews, 19–21December, St. Andrews, U.K.Gartner, D. 2009. Mak<strong>in</strong>g Africa a Priority <strong>in</strong> US Foreign Assistance. The Brook<strong>in</strong>gs InstitutionsPolicy Brief, 14 September, Wash<strong>in</strong>gton, DC.Kaplan, S. 2006. “West African Integration: A New Development Paradigm?” The Wash<strong>in</strong>gtonQuarterly 29 (4): 81–97.Magen, A. and L. Morl<strong>in</strong>o. 2008. International Actors, Democratization and the Rule ofLaw—Anchor<strong>in</strong>g Democracy? London and New York: Routledge.OECD. 2009. From Fragility to Resilience. Paris: OECD.OECD/DAC. 2007. Pr<strong>in</strong>ciples for Good International Engagement <strong>in</strong> Fragile States andSituations. Paris: OECD.Spilimbergo, A. 2009. “Democracy and Foreign Education" American Economic Review99 (1): 528-543.UNCTAD. 2009. Economic Development <strong>in</strong> Africa—Strengthen<strong>in</strong>g Regional Economic Integrationfor Africa’s Development. New York and Geneva: United Nations Conferenceon Trade and Development.UNECA. 2004. Assess<strong>in</strong>g Regional Integration <strong>in</strong> Africa. Addis Ababa: United NationsEconomic Commission for Africa.UNECA. 2006. Assess<strong>in</strong>g Regional Integration <strong>in</strong> Africa II; Rationaliz<strong>in</strong>g Regional EconomicCommunities. Addis Ababa: United Nations Economic Commission for Africa.Yang, Y. and S. Gupta. 2005. Regional Trade Arrangements <strong>in</strong> Africa: Past Performanceand the Way Forward. IMF Work<strong>in</strong>g Paper WP/05/36. International Monetary Fund,Wash<strong>in</strong>gton, DC.References for Box 9.2Benhabib, J. and M. Spiegel. 2005. “Human Capital and Technology Diffusion.” In Handbookof Economic Growth, ed. P. Aghion and S. Durlauf. Amsterdam: North-Holland.Docquier, F. and A. Marfouk. 2005. International Migration By Educational Atta<strong>in</strong>ment -Release 1.1. updated version of Release 1.0, World Bank Policy Research Work<strong>in</strong>g PaperNo. 3382 published <strong>in</strong> August 2004, Wash<strong>in</strong>gton, DC: World Bank.Easterly, W. and Y. Nyarko. 2009. “Is the Bra<strong>in</strong> Dra<strong>in</strong> Good for Africa?” In Skilled ImmigrationToday: Prospects, Problems, and Policies, ed. J. Bhagwati and G. Hansen.New York: Oxford <strong>University</strong> Press.References for Box 9.4Qobo, M. 2007. Regional Integration, Trade and Conflict <strong>in</strong> Southern Africa. International<strong>Institute</strong> for Susta<strong>in</strong>able Development, W<strong>in</strong>nipeg, Man.215
<strong>European</strong> Report on Development 2009 – ReferencesReferences for Box 9.5Bold T. Collier P. Zeitl<strong>in</strong> A. 2009 The Provision of Social Services <strong>in</strong> Fragile States: IndependentService Authorities as a New Modality, Centre for the Study of AfricanEconomies <strong>University</strong> of Oxford, Work<strong>in</strong>g Paper, Oxford, MayEasterly W. and T. Pfutze 2008 “Where Does the Money Go? Best and Worst Practices <strong>in</strong>Foreign Aid”, Journal of Economic Perspectives 22 (2): 29–52.EuropeAid Office of Co-operation. 2009. Aide budgétaire dans les situations de fragilité:Annexe méthodologique, June 2009, Brussels: EuropeAid Office of Co-operation.216
<strong>European</strong> Report on Development 2009 – AnnexANNEX-TABLE OF CONTENTS OF VOLUME 1B217
<strong>European</strong> Report on Development 2009 – Annex1 Background papers for the <strong>European</strong> Report onDevelopment 2009Allen, F., and G. Giovannetti, The impact of the 2008-09 f<strong>in</strong>ancial crisis on fragile countries<strong>in</strong> Sub-Saharan Africa.Aryeetey, E., The global f<strong>in</strong>ancial crisis and domestic resource mobilization <strong>in</strong> Africa.Bagayoko-Penone, N., Multi-level Governance and Security: the Security Sector ReformProcess <strong>in</strong> the Central African Republic.Barnett, M., State Fragility, the Peacebuilder’s Contract, and the Search for the LeastBad State.Berman, N. and Mart<strong>in</strong>, P., The Vulnerability of Sub-Saharan Africa to the F<strong>in</strong>ancial Crisis:The Case of Trade.Bertoli, S., and Ticci, E., The Fragile Consensus on Fragility.Carbone, M., Desperately Seek<strong>in</strong>g Policy Coherence: Aid and Security <strong>in</strong> the DevelopmentPolicy of the <strong>European</strong> Union.Collier, P., The Political Economy of Fragile States and Implications for <strong>European</strong> DevelopmentPolicy.Collier, P., and Venables, T., Natural Resources and State Fragility.Faria, F., and Sherriff, A., EU Policies to Address Fragility <strong>in</strong> Sub-Saharan Africa.Fennell, S., State Fragility and African Agriculture.Giovannetti, G., and Velucchi, M., African F<strong>in</strong>ancial Markets: A Spillover Analysis ofShocks.Guillaumont P., and Guillaumont Jeanneney, S., State Fragility and Economic Vulnerability:What is Measured and Why?Harcourt, W., Gender and Fragility: Policy Responses.Harttgen, K. and Klasen, S., Fragility and MDG Progress: How Useful is the Fragility Concept?Iapadre, L., and Luchetti, F. Trade Regionalisation and Openness <strong>in</strong> Africa.Kaplan, S., Enhanc<strong>in</strong>g Resilience <strong>in</strong> Fragile States.Khan, Z., Gender Responsive Budget<strong>in</strong>g.Mold, A. and Prizzon, A., Fragile States, Commodity Booms and Export Performance: AnAnalysis of the Sub-Saharan African Case.Naudé, W., Africa and the Global Economic Crisis: A Risk Assessment and Action Guide.New Faces for African Development, various authors, Contributions from the poster sessionat the <strong>ERD</strong> Accra Conference, 21-23 May 2009.Nkurunziza, J., Why is Burundi’s F<strong>in</strong>ancial Sector Not Development-Oriented?Nyarko, Y., EU Policies and African Human Capital Development.Oduro, A.D., Adverse Shocks and Social Protection <strong>in</strong> Africa: What Role for Formal andInformal F<strong>in</strong>ancial Institutions?Platteau, J.P., Political Instrumentalisation of Islam, Persistent Autocracies, and ObscurantistDeadlock.Pouligny, B., State-society relations and <strong>in</strong>tangible dimensions of state resilience andstate build<strong>in</strong>g: a bottom-up perspective.Reynal-Querol, M., Fragility and Conflicts.Rocha Menocal, A., “State-build<strong>in</strong>g for Peace” - A New Paradigm for International Engagement<strong>in</strong> Post-Conflict Fragile States?Tschirgi, N., The Security-Politics-Development Nexus: The Lessons of State-build<strong>in</strong>g <strong>in</strong>Sub-Saharan Africa.218
<strong>European</strong> Report on Development 2009 – AnnexVennesson, P., Büger, C., Cop<strong>in</strong>g with Insecurity <strong>in</strong> Fragility Situations.Verdier, T., Regional Integration, Fragility and the Institution Build<strong>in</strong>g: An AnalyticalFramework Applied to the African Context.2 The Consultative Process of the <strong>European</strong> Reporton Development 2009The consultative process of the <strong>European</strong> Report on Development 2009 <strong>in</strong>cluded the follow<strong>in</strong>gseven events:1. Workshop on “Development <strong>in</strong> a context of <strong>fragility</strong> – Focus on Africa”, Brussels,Belgium, 6 February 2009.2. Workshop on “Food crisis and the development potential of the agricultural sector<strong>in</strong> fragile countries”, Cambridge, United K<strong>in</strong>gdom, 17-18 March 2009.3. Workshop on “Transform<strong>in</strong>g Political Structures: Security, Institutions, and RegionalIntegration Mechanisms”, Florence, Italy, 16-17 April 2009.4. Conference on “The challenges of <strong>fragility</strong> to development policy”, Barcelona,Spa<strong>in</strong>, 7-8 May 2009.5. Conference on “F<strong>in</strong>ancial markets, adverse shocks and policy responses <strong>in</strong> fragilecountries”, Accra, Ghana, 21-23 May 2009.6. Conference on “Mov<strong>in</strong>g Towards the <strong>European</strong> Report on Development 2009”,Florence, Italy, 21-23 June 2009.7. Conference on “Overcom<strong>in</strong>g <strong>fragility</strong> <strong>in</strong> Africa: <strong>ERD</strong> Policy recommendations”,Brussels, Belgium, 4 September 2009.Volume 1B documents the consultative process by provid<strong>in</strong>g the f<strong>in</strong>al programmes,the lists of participants, and—for the events nos. 1 to 5—also the conference reports.Conference presentations of the events nos. 2-5 and podcasts from the events nos. 3, 4,and 7 can be downloaded from the project website, http://erd.eui.eu.219