Weak Institutions: The Curse of the Developing World

By Lisa Nyamadzawo, MUP ’21

While the rest of the world is celebrating massive progress towards alleviating poverty, Sub-Saharan Africa remains at the bottom of the list, with some parts experiencing ever-increasing rates of poverty. According to the Piecing together the Poverty Puzzle Overview of 2018 by the World Bank in 2015 approximately one-tenth of the world’s population lived in extreme poverty, the lowest poverty rate in recorded history. Even with this massive global achievement, the World Bank predicts that by 2030, the percentage of poor people living in Sub-Saharan Africa could be as large as 87 percent, should poverty levels continue to rise at the current rate. 

Why is it that today, when most of the parts of the world like South Asia are making so much progress and transforming their economies, sub-Saharan Africa continues to lag behind? In my pursuit for answers (which began long before I came across the various poverty reports), one recurring theme has been that of weak institutions. Of course, colonial heritage, climate change impacts, unequal trade, and other factors all contribute to widening inequality in developing nations; these will be discussed in future articles. Today I will look at how most institutions have failed the continent and possibly recommend some institutional reforms. 

There is a general misrepresentation of what institutions mean in the context of development, however, Elinor Ostrom, noted American political economist, defines institutions as “ rules, norms, or strategies that people derive to coordinate or cooperate more successfully in collective endeavors.”

In some circles, institutions are the “rules of the game”, especially related to political structures. With this definition in mind, it is clear that weak strategies, rules, and expectations will lead to weak laws, policies, and interventions.

Institutions help ensure the equitable distribution of resources, the enforcement of laws, and the growth of the economy. Poor decision making, lack of strategy, and unwillingness will result in the opposite effect: Economic decline. Institutions are important, and countries with strong and well-set laws are most likely to prosper than those that don’t.

Weak institutions have been a curse to the continent, particularly because it has resulted in the lack of political will by governments to address and provide the fundamentals to its people like potable water, housing, economic opportunities, and healthcare. And also, the lack of accountability by the people who are at the receiving end of bad governance. The lack of regional cohesion or cooperation such as trade restrictions and movements, lack of investment and production within the continent and the normalization of corruption has led to the downfall of most African Markets. 

Additionally, there has been general poor decision-making by those in power, which I am beginning to believe are not mistakes but calculated moves to exacerbate poverty in the continent and lack of accountability.  Because with lack of accountability by the masses, corruption emerges those in power receive an unequal share in prosperity. This can be seen by the differences in housing standards, access to potable water, hunger, poor public infrastructure and a perpetuating cycle of poverty across the continent.

Krueger speaks of how in society, it is always assumed that those in the private sector are motivated by self-interest and those in the public sector by social justice. In weakened institutions like those in Sub Saharan Africa, this is far from true. Public officials have been at the forefront of self-interest for a number of reasons: first, to maintain political power; second, to loot public funds for personal gains; and third, to create monopolies with their close allies. This has resulted in political reforms or policies that have left economies worse off than it was before. The perpetual cycle of poverty will continue to grow because of this inherent conflict of interest by those in power.

To achieve the goal to end poverty, it is imperative that Africa transforms its governance systems, rewires its attitude towards public service, and encourage community participation in governance to promote accountability. A separation of economic decision-making and the justice system from self-indulgent political powers could do a lot of good. Convicting and shaming corrupt government officials in courts of law and public opinion would remind the stewards of these nations that with every action, there is a repercussion.