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1. Dark Spots in the International Commodity Value Chain: The Case of Copper in Zambia

Author:
Dale Mudenda and Léonce Ndikumana
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper investigates mineral export misinvoicing in Zambia as a channel of capital flight, with a focus on copper, gold, and gemstones. The analysis reveals major discrepancies between Zambia’s recorded exports and imports as recorded by its trading partners. In the case of copper, a large share of exports recorded in Zambia as headed to Switzerland does not appear in Swiss imports. The ‘missing copper’ cannot be traced through analysis of trade between Switzerland and its major partners either. Gaps in the opposite direction are observed in Zambia-China trade, suggesting export underinvoicing, a common mechanism of capital flight. These do not offset the gaps observed in mirror trade statistics between Zambia and Switzerland, which remain a mystery. Similarly, whereas the primary destination recorded for Zambian gold exports is South Africa, these do not appear in gold imports recorded by South Africa. The gemstones sector is characterized by high informality that enables smuggling and export underinvoicing. Zambia must implement measures to curb misinvoicing of mineral exports and address structural opacity in the trade value chain if it hopes to maximize the gains from the exploitation of its mineral resources.
Topic:
Political Economy, Commodities, Exports, Global Value Chains, and Minerals
Political Geography:
Africa and Zambia

2. The political economy of energy production in post-independence Tanzania: A review

Author:
Japhace Poncian and Rasmus Hundsbæk Pedersen
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
In Tanzania, energy production is a matter of great political significance. Despite government commitment to promote non-hydro renewable energy, like solar and wind deployment, so far has been limited. Large, non-hydro, renewable projects have not yet attracted adequate government interest to get implemented. This new DIIS Working Paper suggests that the prioritisation of different sources of energy has been influenced by major shifts in the country’s broader development policy priorities. Access to electricity has in turn been scaled up. These developments point to the importance of political economy factors influencing energy sector development in Tanzania. The paper examines how such factors have influenced government energy source choice and, more importantly, how renewable energy has featured in Tanzania’s energy politics since independence. The paper is based on a review of existing academic and grey literature on energy sector development, reform, and politics throughout the period from independence in 1961 to 2021.
Topic:
Development, Political Economy, Renewable Energy, Independence, and Energy
Political Geography:
Africa and Tanzania

3. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018

Author:
Joshua Craze
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Small Arms Survey
Abstract:
Though elections are now postulated for next year, South Sudan remains in crisis. Conflict continues to scar the country, and climatic shocks exacerbate already acute resource scarcity, leaving approximately 76 per cent of South Sudan’s population surviving on humanitarian assistance. The regime of South Sudanese President Salva Kiir survives by diverting revenues in three key areas—oil production, humanitarianism, and loans from international financial institutions—to the benefit of an elite class in Juba, but at the cost of the immiseration of the people of South Sudan. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018—a Briefing Paper from the Small Arms Survey’s Human Security Baseline Assessment for Sudan and South Sudan (HSBA) project—analyses this predatory political economy in South Sudan, and charts a shift from the use of wages to reward loyal appointees to a more obscure system based on the dispensations of favours.
Topic:
Security, Corruption, Political Economy, Elections, Conflict, and Revenue
Political Geography:
Africa, Sudan, and South Sudan

4. Cocoa in Ghana, the ‘Political Crop’: Does State Control Shield the Cocoa Sector from Exposure to Capital Flight?

Author:
Léonce Ndikumana and Kwame Adjai-Mantey
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Since its introduction into Ghana in the 19th century, cocoa has been considered a strategic crop, over which the post-independence governments have maintained substantial control. Cocoa is indeed referred to as a ‘political crop.’ The cocoa sector is closely regulated by the government through the Ghana Cocoa Board (COCOBOD). This paper aims to investigate whether this special industrial organization structure and the strict regulation help minimize the sector’s exposure to capital flight that would otherwise occur through export misinvoicing and leakage of foreign exchange earnings from cocoa exports. Indeed, compared to the gold sector in Ghana and the cocoa sector in neighboring Côte d’Ivoire, both of which are fully liberalized and dominated by foreign corporations, the cocoa sector in Ghana exhibits relatively little evidence of export misinvoicing. Moreover, cocoa export earnings are fully repatriated as they are in the hands of COCOBOD. The analysis, however, indicates that the gains from the cocoa sector in terms of contributions to GDP, tax revenue, and poverty reduction remain sub-optimal. This suggests that there is substantial room for improvement of these outcomes through targeted reforms and policy interventions at the sectoral level.
Topic:
Political Economy, Reform, Exports, Capital Flight, and Cocoa
Political Geography:
Africa and Ghana

5. Capital Flight from Natural Resource-Dependent African Countries: Updated Estimates and Analysis for the Cases of Cameroon, Ghana, and Zambia, 1970-2021

Author:
Léonce Ndikumana
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper is part of a project that investigates domestic and global drivers and enablers of capital flight from Cameroon, Ghana, and Zambia, three countries that are significantly endowed in natural resources. It presents estimates of capital flight from these three countries and discusses the key drivers of the phenomenon. The results show that as of 2021, estimated total capital flight stood at $71.1 billion for Cameroon, $50 billion for Ghana, and $71.5 billion for Zambia. External borrowing and, in the cases of Zambia and Cameroon, trade misinvoicing, are key correlates of capital flight. While external borrowing directly and indirectly drives capital flight, trade misinvoicing constitutes an important mechanism of unrecorded cross-border capital flows. This study contributes to the efforts to uncover the mechanisms and enablers of capital flight from Africa, with the aim of shedding light on possible strategies to curb further capital outflows in the context of efforts to scale up and diversify development financing to support recovery from global crises, the transition to green growth, and sustainable development in Africa.
Topic:
Development, Political Economy, Natural Resources, Capital Flight, and Trade
Political Geography:
Africa, Zambia, Ghana, and Cameroon

6. Oil and Capital Flight: The Case of Angola

Author:
Nicholas Shaxson
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Angola’s “paradox of plenty,” as a country with rich resources and poor development outcomes, makes it ideal for the study of capital flight. With the fifth largest economy in sub-Saharan Africa, the country is known not for what it has done with its vast natural resource endowment, but what it has failed to do with it. The country features prominently in the literature on the ‘resource curse,' as the discovery and exploitation of petroleum has suffocated the development of other economic sectors while profiting the national elite and its foreign partners. This has been accomplished notably through establishment of a powerful parastatal to manage oil, Sonangol, which observers have described as “an island of competence” yet has been instrumental to wealth extraction. Angola’s oil and diamonds also played a critical role in motivating and financing the country’s prolonged and devastating civil war.
Topic:
Development, Oil, Political Economy, Natural Resources, Conflict, and Capital Flight
Political Geography:
Africa and Angola

7. Governance, Social Policy, and Political Economy: Trends in Norway’s Partner Countries

Author:
Stein Sundstol Eriksen
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Norwegian Institute of International Affairs
Abstract:
In 2017–2018, NUPI (the Norwegian Institute of International Affairs) headed a project where political economy analyses were undertaken in eleven of Norway’s partner countries. These analyses were published as eleven separate reports. The reports focused on power relations and political developments in the partner countries, but they also analyzed the nature of governance. After the publication of the World Bank’s Worldwide Governance Indicators for 2019, the MFA approached NUPI and requested that we summarize the findings of this report for Norway’s eleven partner countries and assess these findings in light of the political economy analyses. We were also asked to investigate whether there were any connections between the nature and quality of governance on the one hand, and the nature of social policies and the human rights situation on the other. This report presents the findings of this assessment of the governance scores in the light of the above-mentioned political economy analyses. The report is structured as follows: Firstly, after briefly describing the governance indictors used by the World Bank, we summarize the eleven countries’ scores on the various governance indicators. Secondly, we assess the evolution of governance in the eleven countries, by comparing the scores in the 2019 report with those from 2011. Thirdly, we summarize the findings of the political economy analyses of the eleven countries and discuss how they fit with the governance scores. Finally, we present the eleven countries’ expenditure on social policies, as reported in the ILOs World Social Protection Report, and the human rights situation for the partner countries, and then describe how these findings relate to the governance scores.
Topic:
Development, Economics, Political Economy, Governance, and Social Policy
Political Geography:
Africa, Europe, and Norway

8. Preventing Violent Islamic Radicalization: Experimental Evidence on Anti-Social Behavior

Author:
Pedro C. Vicente and Inês Vilela
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
Violence perpetrated by radicalized Muslims is a major problem around the world. We collaborated with the main Islamic authority in Mozambique, which sponsored two randomized interventions to prevent violence related to youth radicalization: a religious campaign against extremist views of Islam, targeting change in beliefs; and a training module on entrepreneurship and employment, aiming to increase the opportunity cost of conflict. Our measurement focuses on anti-social behavior in a Joy-of-destruction lab game. We find that only the religious treatment decreased the propensity to destroy the payoffs of others. Consistently, surveys show increased trust in the state and decreased support for extremism.
Topic:
Development, Political Economy, Religion, Economic Growth, Youth, Conflict, Violence, and Peacebuilding
Political Geography:
Africa and Mozambique

9. The Dominance of Terrorism: Aspects of the Socio-Political Challenges in Post-Independence West AfricA: Nigeria, Burkina Faso and Mali

Author:
Osiomheyalo O. Idaewor
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Brazilian Journal of African Studies
Institution:
Brazilian Journal of African Studies
Abstract:
The West African countries, namely, Nigeria, Burkina Faso and Mali, all gained independence in 1960. Since the attainment of independence, these countries have continued to witness peculiar socio-political and economic challenges. These include the contemporary menace of terrorist groups such as the Boko Haram, ISWAP (Islamic State West Africa Province), and their local and international affiliates. These challenges had been precipitated by both local and external socio-political and economic dynamics in the sub-region. Apparently, the challenge of terrorism has intensified in a way that it has overshadowed and compounded existing challenges in West Africa in the contemporary period. [...] Placed in perspectives, this paper gives an overview of the linkage between the post-colonial and post-independence periods, thereby under-scoring the contemporary intensification of terrorism. It further examines the contributions of the UN, ECOWAS, MINUSMA, G5-Sahel and other interventionists’ initiatives towards the development of the sub-region. It concludes by proffering some prospects for development.
Topic:
Security, Political Economy, Post Colonialism, Terrorism, Counter-terrorism, and Conflict
Political Geography:
Africa, West Africa, Nigeria, Mali, and Burkina Faso

10. Looming Debt Crisis in Sub-Saharan Africa: Drivers, Implications and Policy Options

Author:
Léonce Ndikumana, Theresa Mannah-Blankson, and Angelica Espiritu-Njuguna
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This study explores the trends, patterns and drivers of recent debt accumulation in Sub-Saharan African countries with a view to sheding light on possible strategies to minimize adverse effects on the economies and ensure sustainable development financing. This is in light of concerns about a possible ‘looming debt crisis’ in the developing world, which have been exacerbated by the Covid-19 pandemic. The analysis in this study is based on existing data, supplemented by detailed information obtained from government sources for the cases of Ghana, Kenya, and Uganda. The evidence shows that Sub-Saharan African countries have experienced rapid accumulation of both domestic and external public debt since the 2008 global financial crisis. Governments have resorted increasingly to non-concessional borrowing and high-cost private short-term loans including Eurobonds, which has contributed to increasing the overall cost of debt servicing. The debt sustainability analysis by the IMF/World Bank completed before the Coronavirus pandemic suggested that debt ratios in SSA would stabilize or decline by 2023, assuming that appropriate fiscal consolidation plans are implemented and that most drivers of the debt acceleration dissipate in the medium term. With the Covid-19 pandemic, debt ratios in SSA are likely to rise and would only stabilize at a much later period if African economies are hit with a full-blown crisis as witnessed by advanced economies. Most importantly, the coronavirus crisis will exacerbate debt distress in countries that were already in weak conditions. It is imperative for Africa’s creditors and the donor community in general to assist African countries in combatting the pandemic and minimizing its impact on the economies by alleviating the debt burden through an expanded debt relief and a robust debt restructuring program. Going forward, given that African countries need high levels of financing to reach sustainable development goals, they must devise a strategy for ‘growing with debt’ in the post-crisis period. The paper offers some suggestions to achieve this goal.
Topic:
Debt, Political Economy, COVID-19, and Economic Crisis
Political Geography:
Africa and Sub-Saharan Africa

11. Bitter Chocolate: Wealth Extraction in Côte d'Ivoire

Author:
Jean Merckaert
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The cocoa sector has been at the heart of Côte d'Ivoire economy since independence. The country has become the largest producer of cocoa in the world (40%). In the two first decades of independence, impressive economic growth was fueled by cocoa exports. But the Ivorian miracle evaporated after the collapse of cocoa prices and the debt soaring. The country plunged into a serious economic crisis, followed by a political crisis that culminated in civil war in the early 2000s. The primary commodity sector in Côte d’Ivoire has been highly vulnerable to illicit financial flows. Large and persistent discrepancies between Côte d'Ivoire’s cocoa export statistics and the cocoa import statistics of major partners such as the Netherlands, Germany and France are indicative of substantial capital flight through export misinvoicing. With a focus on the four major periods in Ivorian political history, this paper analyzes the trend of illicit financial outflows in the cocoa sector, the mechanisms of resource rent capture and personal enrichment that fuel them, the key national and foreign players, and their ongoing responsibilities. Under the Houphouët-Boigny regime (1960-1993), through the management of the country’s Agricultural Product Stabilization and Support Fund, the president had full control over the cocoa sector and used it to enrich himself and his associates. He and his successor Bédié (1993-1999) colluded with exporting companies in which Ivorian political leaders were shareholders. Under Gbagbo (2000-2010), the cocoa rent was the main source of funding for the civil war. The techniques of the Forces Nouvelles in the North and government forces in the South were similar: taxing cocoa production and exports, and illegally exporting part of the output to neighboring Burkina Faso and Ghana. Under the Ouattara regime (2011-2020), despite a series of reforms aimed at good governance, the cocoa sector has remained highly concentrated in the hands of a few corporate giants and plagued with favoritism, while predation in other sectors too persisted. The persistence of capital flight suggests the political economy of cocoa remains deeply rooted in the colonial scheme. Be it state-led or market-led, dominated by foreign or domestic players, the Ivorian cocoa sector has remained the place for wealth extraction to the benefit of a handful members of the elite. Overcoming primary commodity dependence is essential for equitable development.
Topic:
Political Economy, Natural Resources, Capital Flows, Commodities, Capital Flight, Chocolate, and Wealth Extraction
Political Geography:
Africa and Côte d'Ivoire

12. A Surplus of Deficits

Author:
Amr Adly
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
Cairo Review of Global Affairs
Institution:
School of Global Affairs and Public Policy, American University in Cairo
Abstract:
From a political economy perspective, there are four key forces working against the peace and prosperity of Middle Eastern and North African states. To defeat them robust institutions are essential.
Topic:
Economics, Political Economy, Economic Growth, Peace, and Financial Institutions
Political Geography:
Africa, Middle East, North Africa, and MENA

13. From the EMS to the EMU and...to China

Author:
Joseph Halevi
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
Topic:
Economics, International Political Economy, Political Economy, History, and Macroeconomics
Political Geography:
Africa, China, Europe, Asia, Germany, and Global Focus

14. China and the World Bank: How Contrasting Development Approaches affect the Stability of African States

Author:
Kai Gehring, Lennart C. Kaplan, and Melvin H.L. Wong
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Empirical Studies of Conflict Project (ESOC)
Abstract:
China’s development model challenges the approaches of traditional Western donors like the World Bank. We argue that both aim at stability, but differ in the norms propagated to achieve that. Using fixed effects and IV estimations, we analyze a broad range of subnational stability measures in Africa. Aid by both the WB and China does not increase outright conflict nor any type of citizen protest, on average. Both even reduce outright conflict by governments against civilians. Still, Chinese aid is associated with more government repression and an increased acceptance of authoritarian norms, while WB projects strengthen democratic values.
Topic:
Development, International Political Economy, Political Economy, World Bank, and Developing World
Political Geography:
Africa and China

15. In Further Pursuit of an IMF-Programme: Possible Pathways for Zambia and Lessons for Africa

Author:
Caesar Cheelo and Nakubyana Mungomba
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
Since 2015, Zambia’s real GDP growth has declined markedly, its local currency has depreciated notably with episodes of serious volatility, and the risks of fiscal and debt distress have mounted. As the country searches for solutions, one viable international economic diplomacy instrument might be the IMF. Since its creation in 1945, the IMF has fostered global monetary cooperation, secured financial stability, international trade, high employment, sustainable economic growth and poverty reduction, mainly through: lending, surveillance and capacity building. Zambia has been pursuing an IMF-supported economic programme since about 2016, but with dismal success. In contrast, other economies like Ghana and Zimbabwe appear to be making headway. Key questions emerge from the foregoing: what does the evidence say about the relevance and significance of an IMF-supported programme for Zambia? Why has the country’s recent quest for an IMF deal failed? Does Zambia have feasible pathways to an IMF deal? This paper tackles these issues using simply descriptive statistical analysis, stylized facts and a political economy lens. We highlight a number of specific pathways that Zambia could follow in further pursuit of an IMF-support programme.
Topic:
Political Economy, GDP, Economy, Macroeconomics, Currency, and IMF
Political Geography:
Africa and Zambia

16. The Political Economy of Testing in Latin America and Sub-Saharan Africa

Author:
Barbara Bruns, Maryam Akmal, and Nancy Birdsall
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Most countries in sub-Saharan Africa have not implemented testing of children’s learning that can be benchmarked regionally or globally. In contrast, in the last two decades, almost all countries in Latin America have participated in regionally and globally benchmarked testing initiatives. Our analysis of the political economy of cross-national learning measurement in Latin America suggests that policymakers perceive the risks of exposing their education system’s performance by joining cross-national assessments, but they also value the quality of the data generated, the strengthening of domestic technical capacity, and the political benefits in using comparative results to argue for reforms or to advertise progress. We document that in Ecuador and Peru cross-national tests played an important role in both stimulating and justifying reforms that have produced major improvements in learning. In sub-Saharan Africa, no cross-national test has been implemented as consistently or widely as the Latin American regional test. The context in Africa makes regional cooperation on cross-national testing more daunting—countries are poorer and more linguistically diverse than in Latin America, raising the relative costs of developing and administering cross-national tests. The experience of Latin America suggests that a coordinated and efficient application of resources in implementing cross-national tests in Africa, on the part of countries and with support of the international community, could help build countries’ national capacity, strengthen focus on learning, support better research, and help diffuse reforms that raise learning.
Topic:
Education, Political Economy, Children, and Social Services
Political Geography:
Africa, South America, Latin America, North America, and Sub-Saharan Africa

17. The Political Economy of Diaspora Remittances in the Ethiopian Somali Region

Author:
Kassahun Berhanu
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
The global Somali diaspora plays a key role in local livelihoods, economies and politics. This is also the case in Ethiopia´s Somali region. The Ethiopian government has deliberately sought to harness investments in local trade and business by its various diaspora communities. As this DIIS Working Paper highlights, interactions between the diaspora and the regional government have taken on a new dynamic in recent years in the Somali region. In exchange for securing their loyalty to the government and its development plans, diaspora returnees and investors obtain various privileges including access to loans. In this scenario of state-led diaspora engagement, the Ethiopian-Somali diaspora is by law prevented from playing a political role in its home country, but nonetheless contributes to stabilizing the current administration. While Ethiopia’s diaspora policy appears successful overall, it is partly undermined by clan favouritism and multiple bureaucratic hurdles. This DIIS Working Paper is written by Professor Kassahun Berhanu (Addis Ababa University and Forum for Social Studies, Addis Ababa)and is an output of the research program ‘Governing Economic Hubs and Flows in Somali East Africa'. The paper is edited by Tobias Hagmann and Finn Stepputat.
Topic:
Political Economy, Politics, Diaspora, Economy, Business, Investment, and Trade
Political Geography:
Africa and Ethiopia

18. Is Poverty a binding constraint on Agricultural Growth in Rural Malawi?

Author:
Mirriam Muhome-Matita and Ephraim Wadonda Chirwa
Publication Date:
07-2018
Content Type:
Policy Brief
Institution:
African Economic Research Consortium (AERC)
Abstract:
Agriculture remains the most important sector in sub-Saharan Africa and is a dominant form of livelihood for a majority of the population that resides in the rural areas. In Malawi, agriculture accounts for 35 percent of GDP and generates more than 80 percent of foreign exchange. In addition, agriculture is the most important occupation for 71 percent of the rural population in which crop production accounts for 74 percent of all rural incomes. However, agriculture has failed to get Africa out of poverty, and most countries are experiencing low agricultural growth, rapid population growth, weak foreign exchange earnings and high transaction costs (World Bank, 2008).
Topic:
Agriculture, Economics, Political Economy, Poverty, World Bank, Economic Growth, and Rural
Political Geography:
Africa and Malawi

19. The Political Economy of Exchange Rate Policy and Capital Control in Nigeria

Author:
Nathaniel E. Urama and Emeka Charles Iloh
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
African Heritage Institution (AfriHeritage)
Abstract:
This paper examines the primary cause of the exchange rate management failure in Nigeria by evaluating the motivating factor for these changes and reviewing the role of politics and interest group in the Nigerian exchange rate management. The findings show that politics, institutional incentives, and group interest mostly play a significant role in Nigeria’s exchange rate regime determination, as evidenced in the habit of changing the exchange rate system by almost all the political regimes that have existed in the country. More so, the changes are attributed to factors such as different parties and regimes having different macroeconomic preferences, incumbents’ efforts to increase their re-election prospects, and by interest groups that lobby for strong or weak currencies.
Topic:
Development, Economics, Political Economy, Exchange Rate Policy, Macroeconomics, Currency, and Capital Controls
Political Geography:
Africa and Nigeria

20. The Political Economy of Exchange Rate Policy and Capital Control in Nigeria

Author:
Nathaniel E. Urama and Emeka Charles Iloh
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
African Heritage Institution (AfriHeritage)
Abstract:
This paper examines the primary cause of the exchange rate management failure in Nigeria by evaluating the motivating factor for these changes and reviewing the role of politics and interest group in the Nigerian exchange rate management. The findings show that politics, institutional incentives, and group interest mostly play a significant role in Nigeria’s exchange rate regime determination, as evidenced in the habit of changing the exchange rate system by almost all the political regimes that have existed in the country. More so, the changes are attributed to factors such as different parties and regimes having different macroeconomic preferences, incumbents’ efforts to increase their re-election prospects, and by interest groups that lobby for strong or weak currencies.
Topic:
Foreign Exchange, Political Economy, Exchange Rate Policy, Economic Policy, and Capital
Political Geography:
Africa and Nigeria