Archive for the ‘Africa’ Category

Notes from Africa 4: Mauritius

June 16, 2022

A series of notes from the world’s developmental frontier

Mauritius is an island roughly 60 kilometres long and averaging just over 30 kilometres wide, located 850 kilometres east of Madagascar in the Indian Ocean. It is also the most complete and equitable economic development success story in Africa.   

Mauritius was uninhabited prior to the arrival of Europeans. Its original connection to the African continent was the importation by the French in the 18th century of slaves from Madagascar and Mozambique to work sugar plantations that dominated the colonial economy. In 1810, the British took Mauritius to prevent it being used as a base for attacks on British shipping. French sugar growers were left to carry on, except that from 1835 slavery was prohibited; over the next 70 years, 450,000 Indian labourers were imported to replace the African slaves, on harsh contracts termed indentures. By the time of independence in 1968, this meant that half the population was Hindu Indian, one sixth was Muslim Indian, 30 percent was Creole (as the descendants of the slave population are known), and small fractions were French and Chinese.

Political tensions were high around independence. Franco-Mauritian sugar barons believed they would be subjected to Hindu political hegemony after the British left and their capital was moved off the island; the Creole population also feared Hindu political dominance.  It was in these circumstances that Mauritius’ first premier, Seewoosagur Ramgoolam, set out to forge a developmental coalition.

Senior political figures representing Franco-Mauritian and Creole interests were invited to join the post-independence cabinet. Ramgoolam, an avowed socialist, embraced several institutions that linked government to the private sector dominated by the Franco-Mauritian elite. The most important was the Joint Economic Council (JEC), a forum in which key political and business leaders met on a regular basis, usually at the prime minister’s office. The tone was set for a developmental state in which government and private sector were partners, albeit with the government as the dominant partner.

A compromise with sugar

The biggest issue between Ramgoolam’s Labour Party and the Franco-Mauritian elite was how the post-independence government would deal with the sugar estates that dominated Mauritius’ economy, exported their profits and did little to address the island’s chronic unemployment. In the 1950s, many in the Labour Party favoured nationalisation of the farms of the so-called ‘sugar barons’. However, in the context of the coalition Ramgoolam found a more subtle but developmentally effective approach. His government created a Mauritius Sugar Syndicate as the sole sugar exporter, repatriating all proceeds which were not permitted to be invested offshore. And a tax on gross sugar receipts was introduced, initially at 5 percent.

Concurrently, incentives were established to encourage the sugar barons to invest in labour-intensive manufacturing. An Export Processing Zone (EPZ) – one without geographic limits – was created. Any approved factory enjoyed duty-free import of equipment and components and extremely generous income tax concessions for 20 years. The right to unionise was denied, unlike in all other parts of the economy, and the minimum wage was set lower than outside the EPZ. The prospect of tax-free earnings from manufacturing was combined with steady increases in the tax on sugar receipts, which rose from the initial 5 percent to a peak of 23.6 percent in the 1980s.

The fiscal environment meant there was no sense in new investment in sugar (except for smallholders who were exempt from the tax). Sugar barons had already dabbled in local non-sugar businesses prior to independence under a tariff protection scheme designed to reduce imports and foster local industry. They therefore confronted the export-oriented manufacturing promoted by the EPZ with a modicum of experience outside the sugar business. The key to the EPZ was Mauritius’ quota-free and duty-free access to European Economic Community (EEC) markets, which the island was granted from June 1973 under the EEC’s Yaoundé (later Lomé) convention for former African colonies.

The Mauritian government’s promotion activities drew a small number of mostly Hong Kong and French garment firms to invest in early EPZ factories. The sugar barons offered themselves as local partners with cash to invest. After the first year of the zone, six factories were operating, with 640 workers.  By the end of 1976, there were 85 EPZ factories with 16,404 workers, representing the beginnings of a revolution in employment fortunes in Mauritius, which experienced unemployment rates in excess of 20 percent. Knitwear was the dominant product.

The dawn of full employment

The Mauritian economy experienced a crisis brought on by excessive government spending and the second global oil shock at the end of the 1970s and start of the 1980s. However, the attraction of the local garment sector to international investors seeking diversification of production operations, plus a local economic elite pushed by government and fiscal incentives to invest in garment factories, kept the manufacturing sector growing. Indeed, the 1980s turned out to be its boom decade.

During the 1980s, the original woollen knitwear business expanded to a point where Mauritius became the third-biggest exporter in the world. Meanwhile, clothing companies responded to rising costs by becoming more capital-intensive and integrating vertically – larger firms began to make and dye their own fabric in Mauritius. The product range expanded to include everything from shirts to fine-knit items like jogging pants.

By the end of 1990, when the population was one million, there were 89,906 workers employed in 568 EPZ firms — nine out of ten of them in apparel and textile factories. Across its economy, Mauritius had the highest share of EPZ employment of any country in the world. One third of Mauritian workers were employed in EPZ businesses, compared with 10 percent in Singapore, 4 percent in South Korea or 2 percent in Malaysia. The EPZ alone accounted for 12 percent of GDP while sugar-dominated agriculture was 10 percent, down from one quarter in 1970. Unemployment was less than 3 percent.

Across the period from the inception of the EPZ in 1970 through 2000, Mauritian GDP rose by an average 5.8 percent a year, increasing from less than US$300 to US$4,000 per capita. Meanwhile, the rise of manufacturing helped Mauritius become a far more equal society than fellow fast-growth story Botswana because it offered opportunities to almost all Mauritians of working age, not least women. The Gini coefficient of income inequality, where one represents perfect inequality and zero perfect equality, decreased from 0.5 in 1962 to 0.42 in 1975 and 0.37 in 2000 — the latter on par with Taiwan, the economy whose development produced the lowest income inequality in East Asia. By 2000, Mauritius had almost no poverty by World Bank measures.

Manufacturing is special

The impulse to greater income equality delivered by the rise of manufacturing was complemented by policies in agriculture to support smallholder famers. In addition to the exemption from the sugar tax for producers of less than one thousand tonnes per year, government required sugar mills to give smallholders an improved share of sugar extracted from canes and sugar estates to provide parcels of land, as well as cash payments, to any workers laid off. The policies contributed to a degree of social mobility among smallholder farmers and estate workers that did not previously exist.

Subsequent to the garment and textile boom, what were once pure sugar businesses expanded into diversified conglomerates, the largest with turnovers of hundreds of millions of dollars a year. Mauritius, although still an island of only 1.3 million persons, offered or created opportunities in hotels, luxury real estate for wealthy foreigners, offshore financial and information and communications technology (ICT) services, and more. Government continued to support diversification efforts. Mauritian GDP per capita maintained its ascent, from less than US$300 in 1970 to US$11,000 in 2019.

The island’s annual GDP growth from 1970 to 2019 averaged 5.2 percent, or 4.4 percent per capita — compared with 1.3 percent per capita across sub-Saharan Africa. Growth with social equity saw Mauritius rise to ‘high-level’ status on the United Nation’s Human Development Index (HDI) as early as 1996. HDI combines GDP growth with progress in education and life expectancy to give a broader measure of human welfare. Today, Mauritius is the only country in Africa – including north Africa – to be ranked at the topmost ‘very high-level’ by HDI score.

Although the share of manufacturing in Mauritian GDP declined rapidly in recent years, falling from a peak of more than 20 percent in the 1980s to just 11 percent in 2020, its role in the rise of Mauritius cannot be overestimated. As the economist Dani Rodrik showed*, manufacturing is the only sector of an economy that provides an automatic ‘escalator’ for increasing productivity levels. Consequently, only those developing economies which built substantial manufacturing sectors exhibited the unconditional convergence with productivity levels of rich countries that orthodox economics assumes will happen in any poor country with access to global technologies.

Mauritius is unique in Africa for having used a manufacturing strategy to lift itself from poverty to rich-world living standards in just two generations. An agricultural policy that supported smallholders while redirecting capital from large sugar estates to garment manufacturing was the necessary precondition. The lesson about the special role of manufacturing in developing countries ought to be clear to every African state. And yet the continent has almost no other examples of governments developing and deploying coherent manufacturing strategies.

*Rodrik, D., 2013, ‘Unconditional convergence in manufacturing’, The Quarterly Journal of Economics128(1).

Notes from Africa 3: Botswana

February 23, 2022

A series of notes from the world’s developmental frontier

Botswana is one of only two exceptional African developmental success stories, in the sense of a state that transformed itself from poverty to upper middle income status – meaning from the fourth to the second of the World Bank’s income tiers — in only a generation following independence. (The other genuine success story is the tiny island nation of Mauritius.)

Botswana, in turn, offers two significant lessons for other developing countries, particularly African ones. The first is how Botswana was able to transform a traditional, localised, aristocratic ruling structure, led by tribal chiefs, into a modern, national, democratic political structure in which elite interests were sufficiently accommodated for them to accept the transformative process. The second is the results, positive and negative, that occurred when a poor but well-managed, resource-rich state followed strictly orthodox economic advice about how to employ its natural endowments to develop its economy.

Botswana was defined in the colonial era by being a large, and largely desert-, territory surrounded by white minority-ruled settler states – South Africa, Southern Rhodesia (Zimbabwe) and Namibia. As in Namibia, the main viable economic activity was cattle herding on semi-arid land. The heir to the throne of the largest ‘tribal’ grouping (the term the British used although majorities of each of eight designated ‘tribes’ were assimilated rather than descended from common ancestors) was Seretse Khama, who was exiled for more than five years because his marriage to a white British woman was deemed unbearably provocative to the apartheid South African government. Nonetheless, on his return in 1956 Khama worked closely with the last British Commissioner to begin to develop national institutions of government.

Seretse, Ruth Khama and two of their children

A Legislative Council was initially split half and half between African and European members, with Africans elected by a show of hands which ensured that cattle-owning aristocrats dominated the returns. When politicised Batswana – as the people of Botswana are known – miners working in South Africa formed a radical political party,  Khama responded by forming an establishment party led by the African membership of the Legislative Council. The Botswana Democratic Party (BDP) went on to dominate Botswana’s politics until the present day.

Khama formed alliances with anyone committed to a national, if conservative, political programme. The most important was with Quett Masire, the son of a headman on the Bangwaketse Reserve, home to the second most populous group, who had been elected to the Legislative Council and went on to be Botswana’s Vice President, and later its second President. Masire was a highly successful agricultural entrepreneur. The British backed and trained Khama’s team, allowing it in the last years of colonial rule to operate like a full cabinet, to undertake policy formulation and to make grant pitches to the British Colonial Office.

Although Khama was a conservative aristocrat, he stood up firmly for the principle of racial equality. In 1962 he moved a motion in the Legislative Council to establish a select committee on racial discrimination. The report the committee published was the basis for ending the racial segregation that was unofficial but ubiquitous. Similarly, Khama saw off efforts by the tiny white minority in Botswana to retain the same political representation – meaning  the same number of members of parliament —  as the African majority.

Khama forced the political leaders of the white minority to come to terms with the reality of African majority rule and also convinced the chiefs of the eight ‘tribal’ groups to surrender key powers to a new national government. Under the terms of the post-independence constitution, the chiefs could not run for seats in the legislature but instead held unelected posts in an advisory House of Chiefs. ‘Advisory’ meant powerless. In addition, the constitution created District Councils, which took over the staff, offices, vehicles and most of the local government functions of the chiefs and former Tribal Councils. The chiefs were compensated with stipends and ex-officio seats on District Councils. By the time they understood the full extent of their loss of power, it was too late.

Khama, his government and the BDP were also careful to shore up their constituency of economic support. In 1963, a National Development Bank was established to provide credit to well-to-do cattle owners to sink boreholes in the western reaches of the Tribal Reserves, extending on to the sand veld of the Kalahari. In conjunction with big increases in state veterinary services and fencing construction from 1964-5 – the latter to limit the spread of outbreaks of foot and mouth disease – this built on a colonial strategy of subsidising large-scale cattle farmers. The BDP added the nationalisation of Botswana’s abattoir on the South African border, allowing for profit from meat sales to be returned to the big cattle owners who provided the abattoir with the vast majority of its animals. After independence, what became the Botswana Meat Commission (BMC) would also absorb losses onto the government’s account during downturns in the beef market, further subsidising big cattle interests.

The lower rungs of aspirational aristocrats and other entrepreneurs who sought bigger herds, credit and cattle-farming subsidies became the group which dominated among the BDP’s legislators and key supporters. When elections under the new constitution took place in March 1965, the BDP campaigned aggressively in rural areas – usually with the support of the local chief and dominant cattle interests — and won 28 of 31 seats in a new Legislative Assembly. Seretse Khama became Prime Minister and Botswana became independent in September 1966.

A reputation for reliability

Seretse Khama’s approach to politics was pragmatic and conservative, and his approach to economic development was very similar. Unlike the leaders of other newly independent states such as Zambia and Tanzania, Khama did not rush to localise the civil service, instead waiting until adequately-trained and experienced Batswana were available. By the mid-1970s, the number of Batswana civil servants tripled as part of a national training drive. However, the replacement of expatriates in the most senior civil service positions was only just beginning.

When the government lacked sufficient local teachers for its education programme, affordable imports were found in Ghana and India. Large numbers of American Peace Corps volunteers were recruited and given roles, in everything from teaching to the central government bureaucracy. A South African socialist and anti-apartheid campaigner, Patrick van Rensburg, was welcomed to open vocational training ‘brigades’ that enrolled thousands of young people. The approach to state capacity building was to pursue anything that worked.

The BDP leadership also made a point of leading by example. The key examples set were racial integration and frugality. Ministers made a point of joining new, racially-integrated sports and social clubs that were established in the capital, Gaborone. With respect to frugality, Seretse Khama was the only government minister to fly first class. Vice President Masire and other ministers travelled in economy.

Quett Masire

The best resources in government were invested in a planning unit that was combined with the finance ministry to be a Ministry of Finance and Development Planning (MFDP). It was led by Quett Masire and set out  economic development objectives in rolling five-year plans which were passed into law and could not therefore be changed without parliamentary approval. Under Masire, expatriate economists led by Oxford- and Harvard-trained South African Quill Hermans, and Cambridge-trained Briton Peter Landell-Mills, developed one of the best reputuations in Africa for reliable aid planning and  for spending grant funds as promised. Already in the early 1970s, only Congo and Gabon received more aid per capita in Africa.

Botswana in 1966 had the commitment to collective action for national development, the pragmatic, ‘whatever works’ approach, and the nascent planning bureaucracy that characterised the most successful East Asian developmental states. When mineral discoveries were made by foreign companies in Botswana, the government was therefore equipped to manage their exploitation. The first deposits to interest multinational miners were copper-nickel ore around two remote settlements, Selebi and Phikwe, in the east. The second was a diamond-bearing kimberlite pipe at Orapa, in a  more central part of  Botswana, found by South Africa’s de Beers.

The copper-nickel project’s three linked mines, smelter, dam, rail spur, power station and town required investment equivalent to one-and-a-half times Botswana’s 1968-9 Gross Domestic Product (GDP).  Masire and Hermans ensured that all investment risk, including debt guarantees, was held by the miners and financing agencies that supported them. Botswana secured a free 15 percent equity interest as the price of the mining licence, with royalties to be paid on operating profits in addition to corporate tax on profits and withholding tax on dividends. The Botswanan approach was vindicated when copper and nickel prices fell and the mine never made money. However, the mine did fund the build-out of Botswana’s power and water utilities, and road infrastructure.

It was the Orapa diamond mine, which opened in 1971, that changed Botswana’s future. In its first full year, 1972, Orapa produced 2.5m carats and accounted, via the government’s 15 percent share of profits, and taxes, for 10 percent of government revenues. De Beers requested to double its agreed rate of production and asked to commence mining two more diamond-bearing pipes at Letlhakane, 40 kilometres away.

The Botswanan planning team had followed the advice of independent consultants to stipulate that the original contract would be renegotiated in the event of ‘extraordinary’ developments. This clause was invoked and the government demanded the venture become a 50:50 joint venture, with De Beers still shouldering all investment costs. It took three years of negotiations, however the South African company eventually conceded even though, when taxes were considered, the new deal gave Botswana 65-70 percent of profits.

In 1976, the year after the new joint venture agreement was signed, De Beers announced the discovery of a kimberlite pipe in the south of Botswana at Jwaneng. Where Orapa yielded 80 carats per hundred tonnes of extracted material, and Letlhakane 30 carats, Jwaneng would yield 140 carats, leading it to become the most profitable diamond mine in the world. Once the three major sites were all functioning, from 1982, Botswana accounted for around a quarter of global diamond output and this share would rise further.

Orapa diamond mine
Jwaneng diamond mine

Botswana’s planning unit produced other important results with respect to the country’s foreign trade regime. Following independence, Peter Landell-Mills set out to renegotiate the terms of Botswana’s membership of the Southern Africa Customs Union (SACU), which had not been reviewed since 1910. The planning unit secured a deal for Botswana based on current customs receipts plus a multiplier of 1.42 to compensate for having a tariff regime set by South Africa. The effect was to immediately increase customs revenues from Rand1.4m in 1968, the last year of the old formula, to Rand5.14m in 1969. When mine development began in the 1970s, requiring imports of large amounts of dutiable equipment and accelerating economic growth that in turn encouraged further imports – customs receipts rose much further, helping Botswana to balance its current budget from 1972.

In 1976, Quill Hermans led the launch of a domestic Botswanan currency, the Pula. Previously, Botswana used the South African Rand, however the MFDP wanted a domestic currency so that foreign exchange reserves generated by mining exports were managed by a new central Bank of Botswana. A national currency, with locally-managed controls on movements of capital, also allowed Botswana to limit the appreciation of the Pula during the mining boom and thereby protect the interests of cattle exporters.

In the first two decades after independence, Botswana’s economy grew at more than 13 percent a year as mining came to account for half of GDP. The share of mining receipts in government income rose even faster, to a quarter of revenues in the mid-1970s, and more than half in the mid-1980s. At the same time, Botswana’s reputation for planning and project delivery maintained high levels of foreign aid. In the second half of the 1970s, aid still constituted one quarter of Botswana’s total government expenditures. From being one of the poorest countries in the world, the question for Botswana became how to employ surpluses.

Absence of policy vision

In deploying surpluses, however, what Botswana lacked was any vision for structural change that would better fit its economy to the needs of its people. There was no vision for the large numbers of small-scale farmers and cattle herders in rural areas and no vision for manufacturing and industrial development to provide jobs for semi-skilled city dwellers. Like the national leader, Seretse Khama, the administration was fundamentally reactive, dealing with opportunities and challenges effectively, but with no overarching, proactive strategy beyond the long-established support for big cattle. The role of orthodox economists – who were not a feature of the early developmental states of East Asia – encouraged this; they looked to make the current state of affairs as efficient as possible, not to structurally re-shape the economy. With the benefit of hindsight, Festus Mogae, Botswana’s third President, concludes: ‘We reacted to situations as they arose but failed to imagine our future.’

MFDP economists concentrated investment in education, healthcare and basic infrastructure. Secondary school enrolment, for instance, increased from 1,531 pupils in 1966 to almost 10,000 a decade later. Hospitals increased from seven in the early 1970s to 30 in the 1990s and life expectancy rose from 48 years in 1966 to 65 in 1990. Paved roads increased from 12 kilometres in 1966 to more than 8,000 kilometres by the end of the century.

These investments, however, were not enough to prevent large swathes of the rural population living in poverty. There was a continuation of the private borehole drilling that effectively privatised communal land to large herd owners who could afford the wells. In Botswana’s Central District – what had been the Bamangwato Reserve and the biggest concentration of cattle grazing – fewer than 500 individuals gained de facto private grazing rights over a quarter of the area.

An inclusive agriculture policy would have prioritised small-scale cattle farming and involved local communities in managing communal land. However, such a strategy was never considered. In the 1990s, an estimated five percent of the population owned half the national herd. It was a large-scale but low-efficiency cattle economy and was accompanied by a steady increase in the proportion of rural families reporting they owned no cattle — from 28 percent in 1980 to 46 percent in 1999.

Such families formed the core of the rural poor – a large block making up about one quarter of Botswana’s working population. From the 1970s, as diamond revenues increased, the government’s policy to address rural poverty was to increase subsidies to arable agriculture. However, rainfed arable agriculture in almost all parts of Botswana is so precarious that it only works as a counterpart to less rain-dependent cattle ownership. The subsidies are in effect disguised welfare transfers.  

Apart from small-scale farming, the other sector in which the Botswanan government could help to create employment opportunities for a population with limited education was manufacturing.  The mines which produced so much profit employed only ten thousand people and new entrants to the labour force in the 1970s were twenty thousand a year. However, manufacturing policy was incoherent. This reflected the dominance of orthodox economists in government who knew that a mineral-driven economy needed to diversify but who were ideologically sceptical of the use of subsidies to induce manufacturing expansion. A lack of conviction led to dabbling in state-led import substitution projects on the one hand, and an unwillingness to aggressively subsidise private sector exporters on the other.

The Botswana Development Corporation (BDC) was created in 1970 as the country’s vehicle to invest in industrial projects.  However, it limited its activities to the most basic, low value-added import substitution, including a brewery, a soap factory and a flour mill. There were no investments in more complex industrial plants, such as cement or large-scale metal working. Over time the BDC put more and more of its investment into real estate projects. The government was unwilling to subsidise credit and electricity prices for export-oriented manufacturers – the types of intervention that underwrote export manufacturing expansion in east Asia.

Instead of subsidising manufacturing at scale with firms’ competitiveness tested by their capacity to export – the crux of the East Asian model — from 1982 Botswana implemented a programme to provide subsidies to enterprises based on their employment generation. The Financial Assistance Policy (FAP) provided up to 90 percent of the capital cost of starting a business, and 80 percent of wages, declining to 20 percent, over five years. The programme ballooned, and was characterised by increasing abuse, over 20 years. The manufacturing share of the economy remained stuck at 4-5 percent as FAP projects closed down when grants ended.

The one area in which government did eventually deliver a little manufacturing success was the cutting and polishing of diamonds, which it was able to orchestrate as part of its periodic renegotiations with De Beers. In a deal signed in 2011, De Beers was compelled to relocate its global wholesale diamond aggregation and trading operation, which sells to its approved ‘sightholders’, or wholesale buyers, from London to Gaborone. As of 2018, eight sightholder cutting and polishing operations were running and total downstream diamond employment was around 3,000 people.

Overall, however, the orthodox economic prescription in Botswana left elevated levels of poverty and inequality despite rapid and sustained economic growth. The sectoral economic focuses of East Asian developmental states such as Japan, China or Vietnam on smallholder agriculture and manufacturing, which brought very broad-based development, were absent. Instead, in a Botswana whose population today is 2.3 million, there are only 340,000 formal jobs. Of these, the private sector accounts for 190,000, of which manufacturing is less than 40,000. The other 150,000 public sector jobs are in central and local government. Four times as many people work for the government as in manufacturing.

The failure to create more private sector jobs leaves large numbers of Batswana dependent on welfare of one form or another —  60,000 employed on a work-for-welfare scheme, 70,000 destitutes and orphan carers who exist on welfare, and 150,000 subsistence farmers who survive through subsidy programmes. Ellen Hillbom, a Swedish academic specialised in Botswana’s development, emphasises the contrast between Botswana and the developmental states of East Asia by describing the former as a ‘gatekeeping state’. The BDP gatekeeper, she argues, delivered a stable coalition based around a cattle-owning elite that managed mineral wealth in a disciplined fashion. However, Hillbom says: ‘Stability has lacked original thinking about how to change society.’

Notes from Africa 2: Kenya

September 27, 2021

A series of notes from the world’s developmental frontier…

In logistical terms, Kenya is the most important country in East Africa. British colonial investment in the port of Mombasa and the rail line – dubbed the ‘lunatic line’ because of its cost and ambition — from Mombasa to Kisumu on Lake Victoria, and later to Kampala, means Kenya has long dominated trade access to Uganda, Rwanda, Burundi and the eastern portion of the Democratic Republic of Congo (DRC). Mombasa also handles a portion of Tanzania’s international trade. This logistical significance, the possibility that Kenya could become a manufacturing centre for the region, and the existence of fertile land along the coast, in the Western Highlands to the north-west of Nairobi, and around Lake Victoria, have long engendered optimism about development prospects.

From independence in 1963 to 1980, Kenyan growth averaged an impressive 7.1 percent. However, the start of a series of fiscal crises and World Bank and International Monetary Fund structural adjustment programmes in 1980 saw average growth fall to 2.9 percent from 1980 to 2003. Since 2004, growth rebounded to an annual average 5.4 percent. In each of these periods, Kenya was comfortably ahead of the overall sub-Saharan growth rate. With nominal GDP per capita of US$2,075 in 2020, Kenyans are the most prosperous citizens among major East African economies. The poverty rate, on the World Bank’s US1.90-per-day measure, fell from 44 percent in 2005 to 37 percent in 2016. Ostensibly the most impressive feat in the long run has been educational gains. In 1967, Kenyans had an average of just 1.7 years of education; today the figure is 10.7 years. Unfortunately, testing suggests that much of the education is of low quality; according to the World Bank, 60 per cent of 19-20 year olds who have been through secondary education still fail to meet basic literacy standards.

Déjà vu colonialism all over again

What stands out most in Kenya is how little government imposed itself on the economic structure inherited from the colonial era. In agriculture, there was a significant redistribution of white settler-owned land. However, this was a response to the insurgency by landless black farmers that started in 1952 – known popularly as the Mau Mau rebellion – which drew a policy response during the colonial era. From 1954, the Swynnerton Plan supported ‘loyalist’ and generally well-to-do indigenous farmers to move into cash crops like coffee, from which they were previously barred, on consolidated and privately-owned landholdings. From 1962, on the eve of independence, the British government funded the Million Acre Settlement Scheme which purchased white settler farms and again generally favoured better-off black farmers, with typically less fertile areas allocated for ‘high-density’ settlement by poorer and landless farmers. The post-independence government of Jomo Kenyatta went along with this approach, with Kenyatta famously dismissing landless Mau Mau rebels as ‘hooligans’. This was despite strong research evidence in the late 1960s that the poorer farmers with smaller holdings, who were also given much less agricultural extension support than better-off farmers, performed better.[i]

After Kenyatta defeated and ousted a minority of progressive politicians in the late 1960s, Kenyan agricultural policy showed striking continuity with the colonial era. The major difference was that the elite of large-scale landowners was now black. The Kenyatta family itself became, and remains, one of the biggest landowners, including a vast tract of thousands of hectares that extends north-east of Nairobi towards Thika and other large farms in what were known as the White Highlands – the region scheduled by the British as a white-only farming area. The redistribution of land to a black elite, limited redistribution to ordinary Kenyans, and the growth of black cash-crop farming was enough to stabilise the rural situation after independence. Tea did particularly well and continues to account for one quarter of Kenya’s export earnings. However, government agricultural policy has been remarkably passive. The great bulk of agricultural exports, including tea, continue to be unprocessed in the absence of investment to add value locally. Only 13 percent of land with the potential for irrigation has been developed and farming remains 98 percent rain fed. And where members of the African Union have been committed for almost 20 years to spending one-tenth of their budgets on agriculture, Kenya’s leading rural research institute, Tegemeo, puts the Kenyan share – including national and local funds – at around five percent. In the past two decades, the estimated contribution of agriculture to overall growth has been higher in Ethiopia, Rwanda and Tanzania than in Kenya.

When significant developments do occur in agricultural markets, they tend – as with so much in Kenya – to be driven by elite political interests or those of particular ethnic voting blocks. Jomo Kenyatta’s successor, Daniel arap Moi, built up the National Cereals and Produce Board, which bought up surplus maize, often at above-market prices. The vast majority of the maize surplus in Kenya comes from Moi’s ethnic Kalenjin base area in the Rift Valley.[ii] Under current president Uhuru Kenyatta, a son of Jomo, the Kenyatta family business Brookside Dairy became Kenya’s dominant milk processor, buying up competitors and acquiring a market share around 45 percent. In 2020, the Kenyan government banned the importation of cheap Ugandan milk, apparently in breach of East African Community (EAC) trade agreements. According to Kenyan economist David Ndii, under the Kenyatta government since 2013, milk processing margins quadrupled, the cost of processed milk to the consumer doubled and the price paid to farmers, at its nadir, halved, although it since increased following protests. 

Plans that were not. And now China

Policy plans are sometimes announced in Kenya, but they have never proven to have implemented substance. After the fall of the Moi regime, a much-heralded Strategy for Revitalising Agriculture was announced in 2004. It delivered little before being abandoned in 2010. A grand plan of the current president promised to increase the share of manufacturing in gross domestic product (GDP) to 15 or 20 percent by 2022, with 500,000 or one million new manufacturing jobs created. Different targets appear on different pages of the presidential web site, perhaps an indication of the lack of seriousness the promise.[iii] In the event, according to World Bank data, the manufacturing share of Kenya’s GDP fell from 10.7 percent in 2013, Uhuru Kenyatta’s first year of office, to 7.5 percent in 2019, a record low in the independence era. One, real-world indicator of the state of industrial policy in Kenya is a sprawling, 2,000 hectare dustbowl with a few small buildings 60 kilometres south of Nairobi. This is ‘Konza Technopolis’, a high-tech production centre and suburb announced in 2008, with a master plan approved in 2013. Today, the only real evidence of progress at Konza is a web site with various digital images of what was hoped for.[iv]

The Kenyan government’s inability to deliver on its economic policy agendas may have contributed to its interest in infrastructure projects outsourced to Chinese firms. A journey along the country’s logistical spine, from Mombasa via Nairobi to Eldoret, reveals a large number of Chinese road projects currently under way. Around Mombasa, there are several operational sites including the Dongo Kundu southern bypass with four bridges that will connect the route south to Tanzania to the main Nairobi road. On the south side of Nairobi, the first phase of a planned expressway to Mombasa, currently contracted as far as Machakos 40 km from Nairobi, is under construction. Within the city, there are several other projects. In the north-west of the capital, along Waiyaki Way, the 27km Nairobi Expressway, some of which is elevated, will connect the north-west of the city to the international airport in the east; construction is at full throttle. A second route north-west out of Nairobi via Ruaka and Ndenderu has a Chinese financed and constructed road in progress. Around Nairobi, there are several more ongoing Chinese road construction projects.

Three hundred kilometres north of Mombasa, at Manda Bay near Lamu, the Kenyan government engaged China Communication Construction Company (CCCC) in a US$480m contract to build the first three of 32 planned berths at a new port it claims opened a first berth in May. The facility, in a remote part of the country, is part of the grandiose Lamu Port-South Sudan-Ethiopia Transport Corridor (LAPSSET), designed to link the economies of three countries to Lamu, which requires large additional investments in road networks. In April 2021, the government in Nairobi announced it has signed with CCCC for 453km of highway construction, including a 257km link north-west from Lamu to Garissa, at a cost of US$166m.

Much the biggest, and most controversial, Chinese project is Kenya’s new Standard Gauge Railway (SGR). The link from Mombasa to Nairobi cost a reported US$3.6bn and an extension to Naivasha, 110km north-west of Nairobi, a further US$1.5bn. The logic of the investment was to reduce freight costs, and accelerate freight times, all along the key logistical route through Kenya to Uganda and the rest of central Africa. However, this does not seem, so far, to have happened. While shipping costs per container on the Mombasa to Nairobi section, which opened to freight in 2018, are similar to road haulage, the addition of depot charges and the cost of moving containers from the railway to final destinations increased costs by up to 50 percent. China’s Exim Bank terms for the loans for the line required guarantees of minimum container volumes which in turn led the Kenyan government to compel all inbound containers destined for the Nairobi region to use the rail service. Despite this, the line has posted substantial losses – US$200m (KSh21.7bn) from inception to May 2020 according to the Ministry of Transport. In 2019, China decided not to provide the further US$4.9bn loans required to complete the connection to Uganda.

It remains unclear what the outcome of the rail project will be. At Naivasha, an Inland Container Depot has been constructed for container transfer to trucks, but is not yet operational. At the same time, a 24km link line is being built by Chinese contractors to connect the SGR to the old, colonial metre-gauge railway (MGR), which Chinese firms have been contracted, along with the Kenyan military, to refurbish. At one site in Eldoret in March, a small team of Chinese was overseeing the reshaping of colonial-era railway sleepers with an imported stamping machine. The Ugandan government announced in 2021 that it will also refurbish its stretch of the historic MGR. What this means for freight costs, however, is impossible to say. Containers will have to be moved between rail bogies on different gauge tracks. The temptation for the Kenyan government to force containers to use the two-gauge route in order to recoup its vast investment may be difficult to resist, leading to monopoly pricing. But if freight costs do not fall across Kenya and into central Africa, the economic logic of the rail project is defeated. Kenya already runs a trade deficit of around six percent of GDP, and higher freight costs will only increase the export shortfall. The World Bank’s 2013 report that said the SGR did not make economic sense appears to be vindicated.[v]

Debts up, revenues down

According to the China Africa Research Initiative (CARI) of Johns Hopkins university, Kenya is one of the top five African countries contributing to revenues of Chinese engineering and construction companies, along with Algeria, Nigeria, Egypt and Angola. CARI identified 43 Chinese loans to Kenya, totalling US$9.2bn, by the end of 2020; at US$6.1bn, loans for transportation projects are second only to Angola. From the Kenyan perspective, the Chinese projects saw public debt as a share of GDP rise from 39 percent in 2013 to 66 percent in 2020, with an increasing share from more expensive commercial sources. According to David Ndii, half of debt is now domestic, at rates of interest over 10 percent, accounting for three-quarters of interest payments. Meanwhile, government revenue as a portion of GDP fell from 18.1 percent in 2013-14 to 16.1 percent in 2018-19. The IMF this year described Kenya as ‘at high risk of debt distress’.[vi]

The situation places great weight on Kenya’s vaunted private sector to carry the economy forward. Entrepreneurial innovation in Kenya is certainly impressive. M-Pesa (meaning ‘mobile money’), the mobile phone-based payments and lending service developed by Kenya’s Safaricom, has come to be used by more than 70 percent of the population, and expanded regionally. Kenya produces significant numbers of agile, private-sector start-ups every year. Peter Njonjo, a former Africa executive with Coca Cola, started Twiga Foods in 2014, which provides the logistics to link farmers with small-scale retailers. Unable to overcome the product quality problems of smallholder farmers in an environment of weak government support, Twiga is integrating larger-scale commercial farms in the region into its city-focused distribution network. It is a typical case of the Kenyan private sector adjusting to what is possible and Twiga has won investment from the World Bank’s private sector lending arm and Goldman Sachs. ‘The lack of government involvement has led the ecosystem to evolve in a very informal way,’ says Njonjo. The private sector’s job, he says, is to find a way through this.

Kenya should be a processing hub for farm products. Led by private sector firms, regional trade in foodstuffs is already much expanded. In March, for instance, potatoes on sale in Kenya are likely to be from Tanzania, plantains from Uganda, reflecting relatively stronger growth of regional trade in East Africa compared with West Africa. Nonetheless, the space available to the private sector in Kenya is less than the government’s rhetoric suggests. There are still more than 300 state sector firms operating in the country despite decades of World Bank and IMF-led ‘reform’ programmes — in retail, manufacturing and agri-processing sectors among others. At the same time, as a recent World Bank report observes: ‘Prominent government officials often have large private sector interests and influence public procurement and government priorities through the use of proxy companies.’[vii]

As noted, Kenya has run ahead of the average sub-Saharan growth rate for several decades. To recognise more of its potential, however, the country needs more competition and more export-focused private sector activity. However, it is difficult in the current political climate — dominated by a small number of what Kenyans term ‘royal families’ that consistently failed to frame an economic development agenda — to see this happening. Kenya, for instance, opened Export Processing Zones in the 1990s at the same time as Bangladesh; but policy implementation failings mean that today Kenyan EPZs employ around 50,000 workers versus four million in Bangladesh. The more likely trajectory for Kenya is towards another debt crisis and a new round of World Bank and IMF interventions. Before that, there will be the next Kenyan election, in 2022, and the possibility of renewed ethnic violence on which Kenyan politics all too often feeds.

[i] Leo, C. (1978). The Failure of the ‘Progressive Farmer’ in Kenya’s Million-Acre Settlement Scheme. The Journal of Modern African Studies, 16(4), 619-638. 

[ii] Poulton, C. and Kanyinga, K., 2014. The politics of revitalising agriculture in Kenya. Development Policy Review32(s2), pp.s151-s172.

[iii] See  and  The manufacturing targets were one element of an agenda called the ‘Big Four’.

[iv] See

[v] See for main conclusions.

[vi] See

[vii] World Bank, 2020, Systematic Country Diagnostic: Kenya, World Bank, Washington: DC.

Notes from Africa 1: Ethiopia

March 18, 2021

This starts a series of notes from Africa, the world’s developmental frontier, about which I am writing a book. If you read Russian, these notes will be published in the Ukraine-based, Russian-language literary magazine Huxley.

Ethiopia is experiencing what may be the most significant political crisis on the African continent for a generation. Certainly, it is the most serious crisis to face Ethiopia, Africa’s most promising developmental state and its second most populous country, since the ruling coalition, the Ethiopian People’s Revolutionary Democratic Front (EPRDF), defeated the Stalinist Derg junta of Mengistu Haile Mariam in 1991.

The crisis stems from Prime Minister Abiy Ahmed’s decision in early November to take military action against the Tigrayan People’s Liberation Front (TPLF). From 1991 until Abiy (Ethiopians are traditionally referred to by their given names) became Prime Minister in April 2018, the TPLF dominated the ruling EPRDF coalition. Although the northern federal state of Tigray accounts for only six percent of the Ethiopian population, Tigrayans dominated cabinet, filled the majority of senior civil service positions, ran the federal army and held key offices in the intelligence services.

‘Power’, observed the British historian Lord Acton, ‘tends to corrupt, and absolute power corrupts absolutely.’ Although led until his passing in 2012 by perhaps the most erudite developmental leader the world has seen, Meles Zenawi, the TPLF enjoyed something close to absolute power. Tigrayans came to control much of the economy of the capital, Addis Ababa, and much of their money was not made honestly. The army engaged in widespread smuggling operations, using federal military transportation equipment. It bilked large sums through its control of Africa’s biggest energy project, the five-gigawatt Grand Ethiopian Renaissance Dam (GERD), on the Sudan border. The corruption was never Kenyan-, or Democratic Republic of Congo-style kleptocracy, but it delayed the critical dam project (see below) and dragged increasingly on an economy that has grown out of hunger and dire poverty at 10 percent a year.

So Abiy, from the largest, lowland ethnic group, the Oromo, which accounts for 35 percent of the Ethiopian population, decided to take the TPLF down. Whether it was necessary to do this militarily – as Abiy is trying – and whether a political solution was instead possible, is a subject of intense debate, both in Ethiopia and in international diplomatic circles. As with any counter-factual, we will never know the absolute truth. Equally, the question of which side kicked off the fighting between federal forces and the TPLF is a complex one. Abiy Ahmed’s government says that the TPLF attacked bases and the headquarters of federal Northern Command forces on 3-4 November, taking command of ethnic Tigrayan forces and looting vast amounts of military equipment. The TPLF says that troop movements on the Tigrayan and Eritrean borders prior to this attack made clear Abiy’s determination to pursue a military confrontation and that it was acting in self-defence. As with the origins of the First World War, analysts can argue in more than one direction.

Not your average empire

It is not possible to understand what is going on in Ethiopia without understanding the historical and ethnic inheritance of this country of 110 million persons. Like Germany, Russia or China, Ethiopia developed as a contiguous empire that expanded at its periphery. The dominant people in this empire building were highlanders, driven to expansion by population pressure and the desire for more-fertile land. The Tigrayans use the term abay, employed in a manner that is roughly equivalent to the German colonial-era word lebensraum (literally, ‘living space’), to express their expansionist instincts. But before the Tigrayans, it was their Amhara neighbours who led the quest for living space. In the last decade of the nineteenth century and first decade of the twentieth, Emperor Menelik grabbed large swathes of lowland territory south-west to what is now the Kenyan border, south-east into today’s Somalia, and west to the current borders of Sudan and South Sudan. He was also the only African leader to defeat an entire European army, an Italian one, at Adwa in Tigray in 1896.

Menelik’s successor was Emperor Haile Selassie, crowned in 1930 in the new imperial capital of Addis Ababa (the event is brilliantly recounted in Evelyn Waugh’s Remote People). Before his coronation, Haile Selassie was Ras Tafari, or Prince Tafari. Descendants of Jamaican slaves determined that this small man, an African who held the white man at bay, was in fact a living god, and built the principles of Rastafarianism around him. It was not all plain sailing, however. In 1935, Mussolini’s army returned to Ethiopia with chemical weapons, killing hundreds of thousands, and occupied the country for five years. The Italians had already occupied Eritrea since 1889. In 1941, however, the Italians lost their Horn of Africa possessions to the Allied East Africa campaign. Ras Tafari and Ethiopia were free again; the emperor annexed Eritrea in 1952.

Haile Selassie continued to rule for another 30 years. He stripped out manufacturing plants the Italians had installed in Eritrea and moved them to Addis Ababa, building up his capital at the country’s ethnic crossroads, following a logic similar to that of the Spanish when they created a capital bang in the middle of their fractious state. Thousands of Eritrean business people, artisans and technical workers migrated to Addis.

Haile Selassie was, in some respects, a reformer. But he was also an aristocrat, an emperor with an Addis casino and a lot of expensive French wine. He never confronted the most explosive issue in any developing state – land inequality. This cost him his life. In 1974, an army mutiny ushered in the Derg, a Maoist dictatorship that undertook land reform but then killed hundreds of thousands through forced collectivisation of agriculture, forced population relocations, and consequent famine.

The Derg junta boasted the biggest army in Africa, and Russian backing that included MiG fighter jets. And yet the Derg was taken down, after a long struggle, by an ethnic coalition of guerrilla warriors led by the Tigrayan Meles Zenawi. The Tigrayans have long spun this victory as theirs. In reality, Eritrean fighters were more numerous and often more important, particularly in the fall of the capital in 1991. Meles Zenawi’s military genius was to hold together a coalition that included a kaleidoscope of ethnic groups.

The key point to digest from this history is that Ethiopia is not, in one important respect, an empire like Germany, Russia or China. Unlike those empires, Ethiopia has been politically dominated by different ethnic groups. First, the Amhara of Menelik and Haile Selassie. From 1991, the Tigrayans of Meles Zenawi. And since 2018 there is Abiy, an Oromo, the most populous group. In the background are the coastal Eritreans, who overwhelmingly chose independence in a referendum in 1993, whose Ethiopia-based compatriots were expelled by Meles Zenawi, and who fought a devastating border war in 1998-2000 which left 100,000 dead. Nonetheless, the Eritreans have not forgotten that they were the leading force in Ethiopia’s economy under Haile Selassie or that they contributed as much as any group to the defeat of the Derg. Today, each of these four ethnic groups wants its day in the political sun. And many underemployed young men, and wily older men who manipulate them, are ready to shed blood to get it.

Abiy Ahmed’s secret and dangerous plan

The great mistake of Meles Zenawi, who passed away in 2012, was – in the context of a savage civil war – to promise a federal constitution under which every ethnic group bar the Tigrayans  simmered with resentment that its narrow racial interests were not being given their due. The Ethiopian nation building of Menelik, Haile Selassie and even the Derg went on the back burner. Meles’ economic policies set the standard in Africa for development of smallholder agriculture, and now manufacturing, but after his death ethnic tensions in the 2010s became increasingly violent. It was in this context that Meles’ chosen successor, Hailemariam Desalegn, from a small lowland ethnic group called Wolayta, who was manipulated in office by the Tigrayans, decided to step down in February 2018 and make way for the Oromo former intelligence officer and cybersecurity chief Abiy. 

No one but Abiy knows the mental process he went through in deciding how to confront the TPLF. Early in his administration, he conjured with Oromo nationalism. But the characters this brought to the fore were as ugly as anything seen in Amhara or Tigrayan nationalism. Abiy switched tracks. In June 2020, he locked up Oromo peddlers of ethnic hatred like the Oromo Federalist Congress’s (OFC) Jawar Mohammed. Recently, the detainees went on hunger strike but, perhaps unsurprisingly, they ended the strike before anyone died. As is so often the case, there is a bourgeois and profoundly self-seeking quality about the manipulators of racial populism in Ethiopia, including the Stanford-educated Jawar.

Abiy’s most practical problem in taking on the TPLF was that Tigrayans were in possession of most of the army’s weaponry; many estimates suggest they control four-fifths of federal small arms and artillery. Hence, Abiy’s ‘federal’ army faced a domestic enemy with more firepower. It appears he therefore determined to construct the largest possible coalition against the almost universally resented Tigrayans. In doing so, Abiy took risks that look to many observers to be reckless.

In July 2018, the new prime minister, only four months into his term, stunned the world by cutting a peace deal with Eritrea, two decades after the brutal Ethiopian-Eritrean border war. There is no full, public record of the deal made with the three-decade totalitarian leader of Eritrea, Isaias Afwerki, but it appears to include access for landlocked Ethiopia to Eritrean ports and the expulsion from Asmara of Oromo irredentists of the Oromo Liberation Front (OLF), who were long cosseted by Afwerki. In October 2019, Abiy was awarded the Nobel Peace Prize for the reconciliation with Isaias Afwerki – once a comrade of Meles Zenawi in the fight against the Derg.

It seems now, however, that peace was not the only thing on Abiy’s mind when engaging the deeply embittered Afwerki, a man who instituted open-ended military conscription in Eritrea since 2001, built a standing army of 200,000 in a nation of 3.5 million, and is rumoured to suffer from a hereditary and degenerative mental illness. In taking on the TPLF, Abiy wanted the use of Afwerki’s army, one raised on a diet of extremist, anti-Tigrayan indoctrination. In 1991, the TPLF had used Afwerki and a much larger Eritrean military force than their own to take Addis from the Derg. Abiy’s extraordinary gamble in November 2020 was to use Afwerki’s army to take down the TPLF. In Ethiopia, what goes around comes around.

The team that Abiy ended up with included perhaps half of Afwerki’s army – 100,000 Eritrean troops deployed inside Tigray. Then there are Amhara federal forces, special forces and a smorgasbord of violent young Amhara militia groups. The Amhara want what they regard as their lebensraum in mixed Amhara and Tigrayan western Tigray, some of which was demarcated as Tigrayan territory by the TPLF-dominated federal government after 1991 (see maps, above). Then there are federal troops from Ethiopia’s 90 other ethnic groups. And, finally, the Sudanese military government, which potentially offers the TPLF the only border across which it can resupply fuel, food and ammunition, and which both Abiy and Afwerki have pressured and cajoled to cut the Tigrayans off.

The upshot has been an utterly brutal conflict in which atrocities have been committed on all sides. The TPLF destroyed roads, bridges and other infrastructure to impede its enemies’ advance (and, coincidentally, humanitarian relief supplies), retreated to the caves and forests the TPLF knows intimately from the struggle against the Derg, and handed out large amounts of surplus firearms to civilians. The Eritreans poured across the border into eastern and central Tigray. Asked by UN Secretary General Antonio Guterres, Abiy ‘guaranteed’ there were no Eritrean troops in Tigray. In reality, they led the fighting, and the atrocities. In Aksum, Eritrean forces murdered hundreds of civilians. In Adrigrat, there were multiple credible reports of more civilian murder, widespread rape and looting of everything from private homes to hospitals. Mark Lowcock, the UN’s emergency relief coordinator, told the UN Security Council on March 4 that ‘multiple credible and widely corroborated reports from Tigray… speak of widespread atrocities, involving mass killings, rapes, and abductions of civilians’. He cited reports of ‘large-scale, organised, and systematic sexual violence’.

The butchery has continued for four months already, with satellite images showing that Eritrean troops have systematically burned fields and orchards, increasing the likelihood of famine. South-west of the Tigrayan capital Mekelle, around Gijet, analysis of satellite images taken on February 20 and February 22 revealed 508 burned-out buildings in that recent period alone. Abiy claimed that fighting stopped in late November; this is as much of a lie as his assertion that there are no Eritreans involved.

In western Tigray, regular Amhara forces and, particularly, militia behaved with similar brutality against ethnic Tigrayans. The same pattern of murder of civilians, endemic rape and burning of crops occurred. Amhara militia also entered the fertile, disputed al-Fashqa Triangle on the Sudanese side of the border where Tigray, Eritrea and Sudan meet and fought with Sudanese troops. Eritrean forces are likely also involved, raising the possibility of regional conflagration.

Superficially, what is happening in Tigray is ethnic conflict. In reality, it is a struggle for land and power among men who are defined by selfishness rather than ethnicity. Indeed, it is striking how the past and present actors in this ‘ethnic’ war are almost all mixed race, or at least of confused ethnic loyalties. Meles Zenawi, TPLF leader and architect of Tigrayan hegemony, had an Eritrean mother. Bereket Simon, Meles’ university friend turned right hand man, is a pure Eritrean raised in Gondar who supported the TPLF war against Eritrea; Abiy has put him in gaol. Tewodros Hagos, the super-nationalist head of the TPLF office in Tigray (now also in gaol) is half-Eritrean. Afwerki, the totalitarian leader of Eritrea, had a Tigrayan mother. His right-hand man, Yemane Gebreab, Head of Political Affairs and Presidential Adviser, is said to be part, or all, Amhara. Abiy Ahmed’s father, Ahmed Ali, is an Oromo Muslim, and his mother, Tezeta Wolde, is an Amhara Coptic Christian. Abiy himself is a Pentecostal evangelical. The notion that this conflict is about racial, or religious, purity is palpable farce.

Similarly, the notion that the TPLF is the defender of the interests of ordinary Tigrayans does not bear scrutiny.  Under the premierships of Meles and Hailemariam Desalegn, almost the entire Tigrayan elite migrated to Addis Ababa, leaving Tigray and its capital Mekelle as a backwater. Even before November’s assault, Mekelle was a run-down town, without a functioning water system and with a large contingent of malnourished Tigrayan migrants from the countryside being fed by international aid groups. TPLF leaders didn’t much care. They preferred the five-star hotels of Addis.

Despite all this, Abiy Ahmed has created a situation where Tigrayan support for the TPLF is almost universal. As a former federal cabinet member who believes a negotiated settlement with the TPLF was possible (he is not himself Tigrayan) puts it: ‘The Tigrayan people support the TPLF 100 percent and that means they will get [food] supplies, one way or the other. And you know why the Tigrayan people support them 100 percent? Because of Eritrean involvement.’

On March 2, US Secretary of State Antony Blinken called Abiy to demand that Eritrean forces leave Tigray and that he pursue a negotiated settlement. This is what ought to happen, however it is unclear if the Biden administration and the rest of the international community will bring sufficient pressure to bear. Ethiopia remains the key US ally in the Horn of Africa, giving Abiy room to resist pressure for peace and continue military operations. Yet it is far from clear the TPLF can be defeated militarily. The Tigrayans are likely too well armed, too savvy in guerrilla tactics and too well supported by their civilian population. This is a war that needs to end soon, or it may be one that goes on for a very long time. The keys to ending the conflict are to get the Eritreans out, the Amhara militias out, to disarm all militia groups and civilians, and to seek political compromise with the more centrist, anti-independence elements of the TPLF. In addition, there needs to be a full and thorough investigation of war crimes that holds those responsible to account, and punishes them. The kind of ignore-and-forget approach to genocide that the international community sanctioned in, for instance, South Sudan, will only lead to festering vendettas and more violence in the future, as is happening in South Sudan. US leadership, and US money for reconstruction, will be critical if Ethiopia is to escape the Tigrayan hex on its enormous developmental potential, which could and should be a beacon for the rest of the African continent.


Aksum massacre report by Amnesty International:

Videos obtained by Amnesty International:

Aksum video with audio of gunfire. English commentary towards the end.

Aksum. Dead young man transported by local people.

Deutsche Welle report on mass rapes and looting by Eritrean forces.

Satellite images of burning of 508 buildings around Gijet February 20-22:

Images of burning of villages and fields in western Tigray:

Twitter thread with before and after satellite images of burning and destruction of buildings in western Tigray.

Better news

If the visitor wants to see what the Ethiopian developmental state is capable of, then a trip to the Grand Ethiopian Renaissance Dam (GERD), 15 kilometres from the Sudanese border on the Blue Nile in the Benishangul-Gumuz region, is a good place to start. At 5.125 gigawatts, the GERD will be the most potent hydropower project in Africa when fully operational, producing more electricity than the entire current installed generating capacity of Ethiopia (4.5 gigawatts). Like Nasser’s Aswan High Dam in Egypt, completed in 1970 with an output of 2.1 gigawatts, the GERD will have a revolutionary impact on Ethiopian economic potential. And where Nasser’s military successors, Anwar Sadat and Hosni Mubarak, undermined and undid most of Egypt’s developmental state capability, the same mistakes may not be made in Ethiopia.

If the visitor wants to see what the Ethiopian developmental state is capable of, then a trip to the Grand Ethiopian Renaissance Dam (GERD), 15 kilometres from the Sudanese border on the Blue Nile in the Benishangul-Gumuz region, is a good place to start. At 5.125 gigawatts, the GERD will be the most potent hydropower project in Africa when fully operational, producing more electricity than the entire current installed generating capacity of Ethiopia (4.5 gigawatts). Like Nasser’s Aswan High Dam in Egypt, completed in 1970 with an output of 2.1 gigawatts, the GERD will have a revolutionary impact on Ethiopian economic potential. And where Nasser’s military successors, Anwar Sadat and Hosni Mubarak, undermined or undid most of Egypt’s developmental state capability, the same mistakes may not be made in Ethiopia.If the visitor wants to see what the Ethiopian developmental state is capable of, then a trip to the Grand Ethiopian Renaissance Dam (GERD), 15 kilometres from the Sudanese border on the Blue Nile in the Benishangul-Gumuz region, is a good place to start. At 5.125 gigawatts, the GERD will be the most potent hydropower project in Africa when fully operational, producing more electricity than the entire current installed generating capacity of Ethiopia (4.5 gigawatts). Like Nasser’s Aswan High Dam in Egypt, completed in 1970 with an output of 2.1 gigawatts, the GERD will have a revolutionary impact on Ethiopian economic potential. And where Nasser’s military successors, Anwar Sadat and Hosni Mubarak, undermined or undid most of Egypt’s developmental state capability, the same mistakes may not be made in Ethiopia.

If the visitor wants to see what the Ethiopian developmental state is capable of, then a trip to the Grand Ethiopian Renaissance Dam (GERD), 15 kilometres from the Sudanese border on the Blue Nile in the Benishangul-Gumuz region, is a good place to start. At 5.125 gigawatts, the GERD will be the most potent hydropower projects in Africa when fully operational, producing more electricity than the entire current installed generating capacity of Ethiopia (4.5 gigawatts). Like Nasser’s Aswan High Dam in Egypt, completed in 1970 with an output of 2.1 gigawatts, the GERD will have a revolutionary impact on Ethiopian economic potential. And where Nasser’s military successors, Anwar Sadat and Hosni Mubarak, undermined and undid most of Egypt’s developmental state capability, the same mistakes may not be made in Ethiopia.

Identified as a potential dam site by American surveyors in 1966, the GERD is located in a natural gorge. This means that a dam cannot be built in the normal fashion — by creating a diversion, building the dam and then closing the diversion. In the rainy season, which normally begins in July, there is too much water in too narrow a gorge for diversion to be possible. So, the dam is being constructed in the long dry season, from October to June, and then flood water is allowed to flow over its lower, central section when the rains come. When the floods of 2019 occurred, the foundation and the sides of the GERD, and its first 25 vertical metres of central section, were in place. Through late 2019 until the rains of 2020, construction teams raced to add another 35 metres to the central section. This allow a first filling, or ‘impounding’, of 4.9bn cubic metres of water, creating a lake that at its peak stretched 100km, but is now in mid-dry season at more like 50km, before more water again came over the top of the lower central section. Since October 2020, more than 6,000 workers have again operated in two 12-hours shifts each day, attempting to raise the central section of the GERD to 107m of its ultimate 145m before this year’s rains. If the work is kept on schedule, the two largest turbines, which are undergoing final assembly, should start to produce power in September or October. At 775mw each, just two of the 13 (the others are 400mw) turbines will increase Ethiopia’s 2021 power output capacity by one-third.

The GERD should have been finished in 2017. But its construction was greatly delayed by Meles Zenawi having granted the key steel structures and electro-mechanical contracts to the TPLF-controlled military business Metals and Engineering Corporation (METEC). METEC was also given untendered contracts for a number of large, irrigated sugar plantations and mills, which also went disastrously wrong. It is impossible to define the precise mix of incompetence and corruption that caused these problems. At the GERD, METEC procured sub-standard steel and delivered brittle welding on turbine inlets and two ‘bottom outlets’ — tubes on the left side (looking down river) of the dam, which will release surplus floodwater when water ceases to flow over the top. In a structure subject to enormous pressures, it is critical to use the right steel and complete welds with a single action, since multiple welds make joints more brittle. After Abiy dismissed METEC from the project in 2018, it was discovered that many of the METEC welds had been repeated two or three times, creating fracture risk. Some of METEC’s work was stripped out and replaced, some was remediated.

Whether to be able to filch money, or because of raw arrogance (almost certainly a mix of the two), METEC’s military management refused to either work as a sub-contractor of a foreign technical director on the GERD or to enter a joint venture with a foreign firm. Ethiopian engineers with experience of hydropower projects (of which METEC had almost none) first recommended that the state military firm operate as a sub-contractor of the Italian civil works contractor Salini, reecently renamed WeBuild. METEC’s leadership refused, insisting that it handle the more complex, electro-mechanical aspects of the project. When engineers asserted this would require one or more joint ventures with foreign turbine manufacturers and structural consultants, METEC again declined. It was in this context that Kifle Horo, reappointed as Chief Engineer of the GERD project by Abiy in 2018, walked away from the dam in 2012. He reflects on his experience: ‘Most of the METEC people had never seen an HEP project. So what do you expect from these people?’

Since Kifle returned to the GERD, be brought in three Chinese contractors and the French unit of GE Hydro to oversee the electro-mechanical side of the project. And now the race to raise the dam is on. Each of the day’s two shifts is laying 3,000 cubic metres of Roller Compacted Concrete (RCC), delivered by conveyor belt from two plants on either side of the GERD. The first two turbines, on the right side of the dam when looking down stream, are undergoing final assembly, to be followed by testing. The site is a hive of activity — Ethiopians working together in the interests of national development, without conversations about ethnicity.

Kinfe Dagnew, the former CEO of METEC is in gaol. Simegnew Bekele, the Chief Engineer who remained on the project after Kifle Horo left, is dead, the victim of an apparent suicide in Addis Ababa in July 2018, although conspiracy theories abound. Kinfe and Simegnew’s overseer, Debretsion Gebremichael, remains one of the senior TPLF figures at large in Tigray. The cost of the GERD may hit Euro4bn versus a budget of Euro3.3bn — former METEC suppliers are suing for fulfilment of their contracts. However, Euro4bn for more than five gigawatts of generating capacity will still be a good deal for Ethiopia. The dam is a milestone in what may be the world’s first green accelerated economic development story. Ethiopia has no coal- or gas-fired power plants. The country’s power output is already dominated by hydro, with wind, geo-thermal and solar projects the only other ones either completed or in the national plan.

The economy, stupid

From the perspective of Ethiopia’s development prospects, the most concerning aspect of the Tigray war is that Abiy’s mind is not sufficiently focused on economic policy issues. The country is at the most challenging point in its developmental-state trajectory, mired in debt, bereft of foreign exchange and under great pressure from institutions like the World Bank and the International Monetary Fund (IMF) to do what foreigners have decided is right for Ethiopia. It is a time when Abiy needs to focus all his energy and intelligence on the economy, but when he seems unable to do so.

More than anything, Ethiopia needs jobs for its restless youth and expanded exports that generate foreign exchange and pay for the capital equipment imports that development requires. The framework for this is in place after the creation of a dozen investment zones around the country, much like the Chinese model. Hawassa, the first and biggest of the zones, is full already. But with civil war raging, the rest of the parks will not fill up quickly. Ethiopia has the same factory labour rate – around US$60 per month – that China had in 1992, the year of Deng Xiaoping’s Southern Tour, which kicked off the Chinese foreign direct investment (FDI) boom. Moreover, Ethiopia’s geographical location is better for European and east coast American logistics chains. But without what the Chinese euphemistically refer to as ‘stability’, the Ethiopian FDI story will not take off.

Equally concerning is the possibility that, under pressure from the multilateral institutions and bilateral aid partners, Abiy’s government may liberalise prematurely, handing to multinational corporations (MNCs) profit streams that should have remained in Ethiopian hands. This would be the opposite mistake to any that the state-ownership obsessed Tigrayan-dominated federal government would have made. A case in point is reform of the telecommunications sector. State monopoly Ethio Telecom carries a very large, unclarified debt. Early in Abiy’s administration, talk was of selling up to 40 percent of the firm to a foreign investor. Today, the plan under discussion is to sell more than 40 percent of Ethio Telecom and, additionally, to sell two new, wholly foreign-owned mobile licences to the likes of Vodafone and Orange.

Such a strategy makes no developmental sense. At a GDP per capita around US$900, Ethiopia is at the beginning of a cycle where mobile telephony will become a gold mine, much as it has in China and other fast-growing countries. What the current Ethiopian government is contemplating looks like childish desperation, wholly inconsistent with Meles Zenawi’s post-1991 development agenda. China did not sell out its utilities to foreigners at this stage of development. It introduced domestic competition, grew the businesses, and then sold Vodafone just five percent of the equity in China Mobile. That is more like what Ethiopia should be doing.

Unfortunately, Abiy’s administration appears to have lost the connection with reading and research that made the TPLF-dominated government an effective developmental state. Abiy flies around in a helicopter and does lots of meetings, but what does he actually know and believe? He appears to be micro-managing almost every aspect of national development policy, when what he should be doing is delegating to Ethiopia’s cadre of highly competent ministers and technocrats. What Abiy needs to recapture is a degree of Tigrayan cerebral seriousness. Meles Zenawi made Ethiopia the developmental-state leader in Africa by reading an awful lot of books and knowing, across agriculture, manufacturing, finance and international relations, what he was talking about. If Abiy and his advisers want to take Ethiopia forward at the pace the country is capable of achieving, they must to do the same. If not, the loss will not only be Ethiopia’s, but that of the entire African continent.

California versus Beijing: inside the spook war

December 22, 2020

You cannot beat a great tale of spooks fighting a covert war and Foreign Policy has one. Kudos to the reporter. This is as good as anything about Sino-US relations that I have read in recent times. Here is the original piece, with graphics — as good an invitation to subscribe to the venerable FP as you will get. Parts 2 and 3 are pending in the next couple of days.


The discovery of U.S. spy networks in China fueled a decadelong global war over data between Beijing and Washington.


Around 2013, U.S. intelligence began noticing an alarming pattern: Undercover CIA personnel, flying into countries in Africa and Europe for sensitive work, were being rapidly and successfully identified by Chinese intelligence, according to three former U.S. officials. The surveillance by Chinese operatives began in some cases as soon as the CIA officers had cleared passport control. Sometimes, the surveillance was so overt that U.S. intelligence officials speculated that the Chinese wanted the U.S. side to know they had identified the CIA operatives, disrupting their missions; other times, however, it was much more subtle and only detected through U.S. spy agencies’ own sophisticated technical countersurveillance capabilities.

The CIA had been taking advantage of China’s own growing presence overseas to meet or recruit sources, according to one of these former officials. “We can’t get to them in Beijing, but can in Djibouti. Heat map Belt and Road”—China’s trillion-dollar infrastructure and influence initiative—“and you’d see our activity happening. It’s where the targets are.” The CIA recruits “Russians and Chinese hard in Africa,” said a former agency official. “And they know that.” China’s new aggressive moves to track U.S. operatives were likely a response to these U.S. efforts.

This series, based on interviews with over three dozen current and former U.S. intelligence and national security officials, tells the story of China’s assault on U.S. personal data over the last decade—and its consequences.

Part 2: Beijing Ransacked Data as U.S. Sources Went Dark in China
Coming Tuesday, Dec. 22

Part 3: As Trump’s Trade War Raged, Chinese Spy Agencies Enlisted Private Firms 
Coming Wednesday, Dec. 23

At the CIA, these anomalies “alarmed chiefs of station and division leadership,” said the first former intelligence official. The Chinese “never should have known” who or where these undercover CIA personnel were. U.S. officials, lacking a smoking gun, puzzled over how China had managed to expose their spies. In a previous age, they might have begun a mole hunt, looking for a single traitor in a position to share this critical information with the other side, or perhaps scoured their records for a breach in a secret communications platform.

But instead, CIA officials believed the answer was likely data-driven—and related to a Chinese cyberespionage campaign devoted to stealing vast troves of sensitive personal private information, like travel and health data, as well as U.S. government personnel records. U.S. officials believed Chinese intelligence operatives had likely combed through and synthesized information from these massive, stolen caches to identify the undercover U.S. intelligence officials. It was very likely a “suave and professional utilization” of these datasets, said the same former intelligence official. This “was not random or generic,” this source said. “It’s a big-data problem.”

The battle over data—who controls it, who secures it, who can steal it, and how it can be used for economic and security objectives—is defining the global conflict between Washington and Beijing. Data has already critically shaped the course of Chinese politics, and it is altering the course of U.S. foreign policy and intelligence gathering around the globe. Just as China has sought to wield data as a sword and shield against the United States, America’s spy agencies have tried to penetrate Chinese data streams and to use their own big-data capabilities to try to pinpoint exactly what China knows about U.S. personnel and operations.

This series, based on extensive interviews with over three dozen current and former U.S. intelligence and national security officials, tells the story of that battle between the United States and China—a conflict in which many believe China possesses critical advantages, because of Beijing’s panopticon-like digital penetration of its own citizens and Chinese companies’ networks; its world-spanning cyberspying, which has included the successful theft of multiple huge U.S. datasets; and China’s ability to rapidly synthesize—and potentially weaponize—all this vast information from diverse sources.

China is “one of the leading collectors of bulk personal data around the globe, using both illegal and legal means,” William Evanina, the United States’ top counterintelligence official, told Foreign Policy. “Just through its cyberattacks alone, the PRC has vacuumed up the personal data of much of the American population, including data on our health, finances, travel and other sensitive information.”

This war over data has taken on particularly critical importance for the United States’—and China’s—spy agencies. In the intelligence world, “information is king, and the more information, the better,” said Steve Ryan, who served until 2016 as deputy director of the National Security Agency’s Threat Operations Center and is now the CEO of the cybersecurity service Trinity Cyber. In the U.S.-Soviet Cold War, intelligence largely came in piecemeal and partial form: an electronic intercept here, a report from a secret human source there. Today, the data-driven nature of everyday life creates vast clusters of information that can be snatched in a single move—and then potentially used by Beijing to fuel everything from targeting individual American intelligence officers to bolstering Chinese state-backed businesses.

Fundamentally, current and former U.S. officials say, China believes data provides security: It ensures regime stability in the face of internal and external threats to the Chinese Communist Party (CCP). It was a combination of those threats that created the impetus for China’s most aggressive counterintelligence campaign against the United States yet.

The CIA declined to comment for this story. The Chinese Embassy in Washington, D.C., did not respond to multiple requests for comment.

In 2010, a new decade was dawning, and Chinese officials were furious. The CIA, they had discovered, had systematically penetrated their government over the course of years, with U.S. assets embedded in the military, the CCP, the intelligence apparatus, and elsewhere. The anger radiated upward to “the highest levels of the Chinese government,” recalled a former senior counterintelligence executive.

Exploiting a flaw in the online system CIA operatives used to secretly communicate with their agents—a flaw first identified in Iran, which Tehran likely shared with Beijing—from 2010 to roughly 2012, Chinese intelligence officials ruthlessly uprooted the CIA’s human source network in China, imprisoning and killing dozens of people.

Within the CIA, China’s seething, retaliatory response wasn’t entirely surprising, said a former senior agency official. “We often had [a] conversation internally, on how U.S. policymakers would react to the degree of penetration CIA had of China”—that is, how angry U.S. officials would have been if they discovered, as the Chinese did, that a global adversary had so thoroughly infiltrated their ranks.

The anger in Beijing wasn’t just because of the penetration by the CIA but because of what it exposed about the degree of corruption in China. When the CIA recruits an asset, the further this asset rises within a county’s power structure, the better. During the Cold War it had been hard to guarantee the rise of the CIA’s Soviet agents; the very factors that made them vulnerable to recruitment—greed, ideology, blackmailable habits, and ego—often impeded their career prospects. And there was only so much that money could buy in the Soviet Union, especially with no sign of where it had come from.

But in the newly rich China of the 2000s, dirty money was flowing freely. The average income remained under 2,000 yuan a month (approximately $240 at contemporary exchange rates), but officials’ informal earnings vastly exceeded their formal salaries. An official who wasn’t participating in corruption was deemed a fool or a risk by his colleagues. Cash could buy anything, including careers, and the CIA had plenty of it.

At the time, CIA assets were often handsomely compensated. “In the 2000s, if you were a chief of station”—that is, the top spy in a foreign diplomatic facility—“for certain hard target services, you could make a million a year for working for us,” said a former agency official. (“Hard target services” generally refers to Chinese, Russia, Iranian, and North Korean intelligence agencies.)

Over the course of their investigation into the CIA’s China-based agent network, Chinese officials learned that the agency was secretly paying the “promotion fees” —in other words, the bribes—regularly required to rise up within the Chinese bureaucracy, according to four current and former officials. It was how the CIA got “disaffected people up in the ranks. But this was not done once, and wasn’t done just in the [Chinese military],” recalled a current Capitol Hill staffer. “Paying their bribes was an example of long-term thinking that was extraordinary for us,” said a former senior counterintelligence official. “Recruiting foreign military officers is nearly impossible. It was a way to exploit the corruption to our advantage.” At the time, “promotion fees” sometimes ran into the millions of dollars, according to a former senior CIA official: “It was quite amazing the level of corruption that was going on.” The compensation sometimes included paying tuition and board for children studying at expensive foreign universities, according to another CIA officer.

Chinese officials took notice. “They were forced to see their problems, and our mistakes helped them see what their problems were,” recalled a former CIA executive. “We helped bring to fruition what they theoretically were scared of,” said the Capitol Hill staffer. “We scared the shit out of them.” Corruption was increasingly seen as the chief threat to the regime at home; as then-Party Secretary Hu Jintao told the Party Congress in 2012, “If we fail to handle this issue well, it could … even cause the collapse of the party and the fall of the state,” he said. Even in China’s heavily controlled media environment, corruption scandals were breaking daily, tainting the image of the CCP among the Chinese people. Party corruption was becoming a public problem, acknowledged by the CCP leadership itself.

But privately, U.S. officials believe, Chinese leaders also feared the degree to which corruption had allowed the CIA to penetrate its inner circles. The CIA’s incredible recruiting successes “showed the institutional rot of the party,” said the former senior CIA official. “They ought to [have been] upset.” The leadership realized that unchecked corruption wasn’t just an existential threat for the party at home; it was also a major counterintelligence threat, providing a window for enemy intelligence services like the CIA to crawl through.

This was a global problem for the CCP. Corrupt officials, even if they hadn’t been recruited by the CIA while in office, also often sought refuge overseas—where they could then be tapped for information by enterprising spy services. In late 2012, party head Xi Jinping announced a new anti-corruption campaign that would lead to the prosecution of hundreds of thousands of Chinese officials. Thousands were subject to extreme coercive pressure, bordering on kidnapping, to return from living abroad. “The anti-corruption drive was about consolidating power—but also about how Americans could take advantage of [the corruption]. And that had to do with the bribe and promotion process,” said the former senior counterintelligence official.

The 2013 leaks from Edward Snowden, which revealed the NSA’s deep penetration of the telecommunications company Huawei’s China-based servers, also jarred Chinese officials, according to a former senior intelligence analyst. “Chinese officials were just beginning to learn how the internet and technology has been so thoroughly used against them, in ways they didn’t conceptualize until then,” the former analyst said. “At the intelligence level, it was driven by this fundamental [revelation] that, ‘This is what we’ve been missing: This internet system we didn’t create is being weaponized against us.’”

There were other ripple effects. By the late 2000s, U.S. intelligence officials had observed a notable professionalizing of the Ministry of State Security, China’s main civilian intelligence agency. Before Xi’s purges, petty corruption within the agency was ubiquitous, former U.S. intelligence officials say, with China’s spies sometimes funneling money from operations into their own “nest eggs”; Chinese government-affiliated hackers operating under the protection of the Ministry of State Security would also sometimes moonlight as cybercriminals, passing a cut of their work to their bosses at the intelligence agency.

Under Xi’s crackdown, these activities became increasingly untenable. But the discovery of the CIA networks in China helped supercharge this process, said current and former officials—and caused China to place a greater focus on external counterespionage work. “As they learned these things,” the Chinese realized they “needed to start defending themselves,” said the former CIA executive.

By about 2010, two former CIA officials recalled, the Chinese security services had instituted a sophisticated travel intelligence program, developing databases that tracked flights and passenger lists for espionage purposes. “We looked at it very carefully,” said the former senior CIA official. China’s spies “were actively using that for counterintelligence and offensive intelligence. The capability was there and was being utilized.” China had also stepped up its hacking efforts targeting biometric and passenger data from transit hubs, former intelligence officials say—including a successful hack by Chinese intelligence of biometric data from Bangkok’s international airport.

To be sure, China had stolen plenty of data before discovering how deeply infiltrated it was by U.S. intelligence agencies. However, the shake-up between 2010 and 2012 gave Beijing an impetus not only to go after bigger, riskier targets, but also to put together the infrastructure needed to process the purloined information. It was around this time, said a former senior NSA official, that Chinese intelligence agencies transitioned from merely being able to steal large datasets en masse to actually rapidly sifting through information from within them for use. U.S. officials also began to observe that intelligence facilities within China were being physically co-located near language and data processing centers, said this person.

For U.S. intelligence personnel, these new capabilities made China’s successful hack of the U.S. Office of Personnel Management (OPM) that much more chilling. During the OPM breach, Chinese hackers stole detailed, often highly sensitive personnel data from 21.5 million current and former U.S. officials, their spouses, and job applicants, including health, residency, employment, fingerprint, and financial data. In some cases, details from background investigations tied to the granting of security clearances—investigations that can delve deeply into individuals’ mental health records, their sexual histories and proclivities, and whether a person’s relatives abroad may be subject to government blackmail—were stolen as well. Though the United States did not disclose the breach until 2015, U.S. intelligence officials became aware of the initial OPM hack in 2012, said the former counterintelligence executive. (It’s not clear precisely when the compromise actually happened.)

When paired with travel details and other purloined data, information from the OPM breach likely provided Chinese intelligence potent clues about unusual behavior patterns, biographical information, or career milestones that marked individuals as likely U.S. spies, officials say. Now, these officials feared, China could search for when suspected U.S. spies were in certain locations—and potentially also meeting secretly with their Chinese sources. China “collects bulk personal data to help it track dissidents or other perceived enemies of China around the world,” Evanina, the top U.S. counterintelligence official, said.

Many felt the ground give way immediately. For some at the CIA, recalled Gail Helt, a former CIA China analyst, the reaction to the OPM breach was, “Oh my God, what is this going to mean for everybody who had ever traveled to China? But also what is it going to mean for people who we had formally recruited, people who might be suspected of talking to us, people who had family members there? And what will this mean for agency efforts to recruit people in the future? It was terrifying. Absolutely terrifying.” Many feared the aftershocks would be widespread. “The concern just wasn’t that [the OPM hack] would curtail info inside China,” said a former senior national security official. “The U.S. and China bump up against each other around the world. It opened up a global Pandora’s box of problems.”

Others were more resigned, if no less disturbed. “You operate under the assumption that good tradecraft”—and not the secrecy provided, in theory, by cover—“will protect your assets and operations,” said Duyane Norman, a former senior CIA official. “So OPM wasn’t some kind of eye-opener. It was confirmation of new threats we already knew existed.”

There were other bad omens. During this same period, U.S. officials concluded that Russian intelligence officials, likely exploiting a difference in payroll payments between real State Department employees and undercover CIA officers, had identified some of the CIA personnel working at the U.S. Embassy in Moscow. Officials thought that this insight may have come from data derived from the OPM hack, provided by the Chinese to their Russian counterparts. U.S. officials also wondered whether the OPM hack could be related to an uptick in attempted recruitments by Chinese intelligence of Chinese American translators working for U.S. intelligence agencies when they visited family in China. “We also thought they were trying to get Mandarin speakers to apply for jobs as translators” within the U.S. intelligence community, recalled the former senior counterintelligence official. U.S. officials believed that Chinese intelligence was giving their agents “instructions on how to pass a polygraph.”

But after the OPM breach, anomalies began to multiply. In 2012, senior U.S. spy hunters began to puzzle over some “head-scratchers”: In a few cases, spouses of U.S. officials whose sensitive work should have been difficult to discern were being approached by Chinese and Russian intelligence operatives abroad, according to the former counterintelligence executive. In one case, Chinese operatives tried to harass and entrap a U.S. official’s wife while she accompanied her children on a school field trip to China. “The MO is that, usually at the end of the trip, the lightbulb goes on [and the foreign intelligence service identifies potential persons of interest]. But these were from day one, from the airport onward,” the former official said.

Worries about what the Chinese now knew precipitated an intelligence community-wide damage assessment surrounding the OPM and other hacks, recalled Douglas Wise, a former senior CIA official who served deputy director of the Defense Intelligence Agency from 2014 to 2016. Some worried that China might have purposefully secretly altered data in individuals’ OPM files to later use as leverage in recruitment attempts. Officials also believed that the Chinese might sift through the OPM data to try and craft the most ideal profiles for Chinese intelligence assets seeking to infiltrate the U.S. government—since they now had granular knowledge of what the U.S. government looked for, and what it didn’t, while considering applicants for sensitive positions. U.S. intelligence agencies altered their screening procedures to anticipate new, more finely tuned Chinese attempts at human spying, Wise said.

The Chinese now had unprecedented insight into the workings of the U.S. system. The United States, meanwhile, was flying with one eye closed when dealing with China. With the CIA’s carefully built network of Chinese agents utterly destroyed, the debate over how to handle China would become increasingly contentious—even as China’s ambitions grew.

Editor’s Note: This is the first in a three-part series. The second part, to be published Dec. 22, covers how U.S. intelligence under Barack Obama struggled as Xi Jinping consolidated his power. The third part, to be published on Dec. 23, covers the Donald Trump era and the growing cooperation between Chinese intelligence and tech giants. Zach Dorfman is a senior staff writer on national security and cybersecurity for Aspen Digital, a program of the Aspen Institute, and a senior fellow at Carnegie Council for Ethics in International Affairs. Twitter: @zachsdorfman

Which countries in Africa will get their act together?

November 7, 2017

That is the question. On a continent of 55 nation states, there is not going to be a ubiquitous economic revolution. The polities range from bonkers to transformative, and pro-growth NGOs and rich-country governments waste a ton of money trying to work on transformation with the uncommitted and the incapable; in those instances, donors should stick to mitigation. However there are leaders in transformation — Ethiopia and Rwanda stand out — and there are other countries that might get in the game. The following article, from The Herald in Zimbabwe, gives a snapshot of some of the issues (note that the paper does not claim that Zimbabwe itself is in any danger of making progress).

Africa is now primed for a Green Revolution

Aliko Dangote

ON the sidelines of the UN General Assembly in New York, Aliko Dangote, Africa’s richest man, told investors: “Agriculture, agriculture, agriculture. Africa will become the food basket of the world.”

Prime weather conditions, acres of empty space and well-established agricultural sectors averaging 33 percent of GDP, all make Dangote’s statement more than plausible. Yet, Africa’s thought leaders and businessmen have been emphasising the importance of agriculture for quite some time, and to date, familiar problems remain.

According to a World Bank estimate, the African agriculture sector could be worth up to $1 trillion by 2030, but lack of technology, lack of investment and an ageing farmer population all put this figure and Dangote’s vision into question. Only in the past decade or so has the sector seen a sustained development effort, but more needs to be done.

Vision versus reality

Agriculture is positioned at the forefront of nearly every African government’s development plan. The received wisdom is that rapid economic development comes from developing smallholder farms, evidenced by Europe, North America and Asia’s historical development.

Africa has about 33 million farms of less than two hectares each, accounting for 80 percent of all farms. Rather than create large commercial farms, many believe that by increasing the yields of African smallholdings, and by ensuring manufacturing capability to improve and extend value chains, Africa can retain its agricultural wealth, reduce imports, and profit from a surplus of goods in the market.

Speaking at the African Green Revolution Forum (AGRF) 2017 in Abidjan, Côte d’Ivoire, Joe Studwell, author and journalist, said: “I put it to you that smallholder agriculture is not just important; if you want to transform your society quickly there is no other way to do it.”

In 2003 the African Union echoed this belief and adopted the Nepad Comprehensive Africa Agriculture Development Programme (CAADP), which aimed to revive agriculture by addressing numerous issues as well as pledging that each African country should dedicate 10 percent of their national budgets to agriculture.

Faced with substantial budgetary constraints, not all African countries have been able to allocate 10 percent, but progress has been made most recently by Ivorian President Alassane Ouattara, who gave $200 million to coffee and cocoa farmers to meet the CAADP requirements and become a net exporter of food.

Other notable public endeavours include Ethiopia and Nigeria establishing an Agricultural Transformation Agency (ATA) to coordinate activities between government ministries across central and local governments, and Rwanda exceeding CAADP expectations by giving more than 10 percent of its budget.

However, policy often lags behind vision and commitment and many countries still have vastly underdeveloped sectors. Dr Agnes Kalibata, president of the Alliance for a Green Revolution in Africa (AGRA), said: “We are starting to see African governments beginning to get their act together but there is still work to do.”

Public-private partnerships fill gaps

At the top of the AGRF 2017 agenda was the importance of using public-private partnerships (PPP) to fill the space left over by government incapacity.

During a panel talk at the conference, Liberia’s outgoing president, Ellen Johnson Sirleaf, commended the cooperative model: “This forum comes at a time when Africa is more coordinated than ever, in its policies and strategies, and this synergy bodes well for the collaborative approach needed for a successful green revolution.” Many argue that if African governments can better present Africa as a viable emerging agricultural market, then foreign investment and technological know-how could greatly benefit smallholder farms.

Forums like the AGRF work well in bringing together various stakeholders in Africa’s agribusiness landscape, and some important deals were made. The Partnership for Inclusive Agricultural Transformation in Africa (PIATA) was formed at the forum and includes the Bill & Melinda Gates Foundation, the Rockefeller Foundation and USAID. The partnership earmarked up to $280 million to increase incomes and improve the food security for smallholder households in 11 countries by 2021.

Maslaha Seeds Limited and Syngenta committed to a $1 million investment in increased rice and seed production, while BlackPace Africa Group committed to multimillion-dollar deals to develop potato processing in Nigeria and Rwanda, and Kenya’s Agricultural Finance Corporation settled on investing $2 million in lending to potato farmers – all of which illustrates the usefulness of the private sector in meeting demands.

Pressing concerns

Africa’s agricultural and agribusiness limitations are many and include both the way goods are grown and the way value is added. In a report released by the Centre for Agriculture and Bioscience (CABI) at AGRF 2017, the fall armyworm – a large worm that spreads rapidly and destroys crops – has now infested 28 African countries. The worm feeds on more than 80 crops and can cut yields by up to 60 percent, raising a substantial threat to agricultural output. CABI estimates that the financial cost of the worm in just 10 of Africa’s maize-producing countries could be as high as $5,5 billion a year.

Although many farms are starting to use new technologies to counter environmental concerns, such as disease-resistant seed strains, environmentally friendly pesticides and improved irrigation, yields remain significantly under their potential. Finance is also a sizeable barrier to the upsizing of smallholder farms, as financial institutions rarely find agricultural projects bankable in Africa.

As Kalibata explains: “Banks are not in the business of losing money. It becomes about how viable smallholder farms are as entities that can hold and pay back money; that is what enables farmers to access finance.”

As an alternative to banks, more innovative methods of financing smallholdings are beginning to emerge, especially with the ubiquity of the smartphone and the greater connectivity of farms.

A young farmer at the conference said: “We need to find other channels of getting access to finance, we need to start working with other farmers to save money and borrow from other groups.”

Urbanisation and an ageing farmer population are also a concern, causing a quickly depleting workforce. The average age of Africa’s farmers, who account for two-thirds of employment, is 60 and the youth in many rural areas leave for urban centres at home or abroad.

“You need to stop talking about making agriculture sexy and cool to young people, what needs to happen is to actually make it a business and to focus on young people who are taking the choice of investing in the sector,” continued the farmer.

Finally, many raw commodities are being exported across the world and much of their potential value gets lost in the process. As the UK’s Lord Boateng said: “The global cocoa market is worth $100 billion, Africa gets 2 percent of that because we don’t process and manufacture chocolate products in Africa.” – New African magazine

TAP: proper crap

September 11, 2017

Air Portugal (TAP) may not be the absolute shittest airline on earth, but it tries hard.

On Monday last week I turned up at Heathrow for a flight to Abidjan in the Ivory Coast. The Gates’ and Rockefeller Foundations had very kindly bought me a Business Class ticket to go speak at the 2017 African Green Revolution Forum. I was sent the ticket details about a week earlier.

At check-in, however, the agent said that TAP had not completed the issue of the ticket because it wanted to do a ‘credit card check’. With which card had I paid?

I replied that like most people who travel in Business Class I had not bought my ticket myself. It was purchased for me by the travel secretariat of the AGRF, which I believed was based in Nairobi. If TAP wanted to do a credit card check, shouldn’t it have done one with the travel secretariat a week earlier when the ticket was ordered?

No answer. A phone call ensued between the check-in agent and the TAP office where someone was demanding this random check. I had thought there might have been a payment problem with the credit card, but the agent said this was not the case. TAP just wanted a random, at-the-airport credit card check with a Business Class passenger who had no idea which card had been used for the transaction.

After the call, the agent asked me if I was prepared to pay for the ticket on my card, since there was really no time to chase down the travel secretariat in Nairobi. Figuring that Gates and Rockefeller were good for the money, which was about £1,800, I said yes, because I didn’t want to miss the flight.

By now, however, 20 minutes had gone by and the computer system had automatically shut down the flight’s check-in. Increasingly frantic, the check-in agent started calling numbers of TAP back-office staff asking if they could take my payment over the phone and re-open the flight to allow my boarding pass to be issued.  There were long discussions and calls to other numbers. At half an hour before take-off, I figured I was not travelling.

Just then, however, the senior TAP manager in the airport sauntered past. The check-in agent explained the situation. The manager picked up the phone, called the TAP office, and instructed them to issue to the ticket, charged to the original card. Then he told the check-in agent to walk me through security to the gate. We set off 26 minutes before take-off and arrived about 15 minutes before take-off.

It was all very weird. And it was only the beginning of TAP’s plans to fuck up my week.

The plane was 25 minutes late getting to Lisbon. It was a connection of only about one hour, and security in Lisbon seemed horribly slow and incompetent, at least by the standards of Heathrow or Stansted. A rather nervous woman from TAP who didn’t quite seem to know what she was doing was delegated to round up seven ex-London passengers and get them on the flight to Abidjan. Once we boarded the plane, having seen the chaos in Lisbon airport we asked the crew explicitly whether the check-in bags were on the flight. They assured several of us that they were.

Given that the airport is not huge, and the ground staff had about 50 minutes to make the transfer, there was no reason to believe the bags had not been loaded. Heathrow had loaded my bags in 26 minutes.

The flight was interesting. It was on a Airbus A320, which has a maximum range of about 6,100km (I make no claim to precise figures here; I am going by a quick online search). Lisbon to Abidjan is 6,000km. In other words, TAP was using a short-haul aircraft at the limit of its range.

The result was that, with a Business Class ticket, what one actually got was a Premium Economy seat. There was no greater seat width than an Economy passenger, just a bit more leg room and perhaps a few more inches of recline. The Irish gentleman next to me agreed that this is a business model that Michael O’Leary, CEO of Ryanair, would have a wet dream over.

Only two people served the Business section. They closed a curtain after take-off, and took what seemed to me the longest time I have ever experienced to get a meal ready. There was no drink for Business either before take-off, or immediately after. One person serving Business knew what she was doing; the other was clueless and appeared to be being trained on the job (another innovation for O’Leary). All these facets were exactly the same on the way back.

We arrived at Abidjan at about 1030pm. We watched as the baggage carousel rotated for about 90 minutes. No luggage appeared for the London passengers.

After five hours, TAP in Lisbon must have known that the baggage had not been loaded. TAP, as I later confirmed, has an office at Abidjan airport. But no one appeared to inform or help their luggage-less customers.

Instead, we had to register our missing bags (French language only, which was difficult for some passengers) with the general airport lost luggage office. We then took our chances with some pretty aggressive taxi drivers at about 1230am, arriving at the hotel just after 1am.

I arrived at the hotel with the following clothing resources: T-shirt bearing image of large pineapple; expensive jacket; brown corduroy trousers; sweaty boxer shorts; smelly socks; Danish boating shoes. I also had a green jumper in my backpack, but could not think how to make use of it in the tropics. Luckily, I knew the boss of one of the Lost Luggage Seven, and this person lent me a shirt for the start of the conference at 0745.

The conference, probably the key development event of the year for Africa, was full-on, but in the course of the day I managed to a) skip out to a French department store and buy pants, socks, trousers and a shirt for dinner with the vice president and b) track down a number and email address for the TAP office in Abidjan.

In the course of that day, no one from TAP attempted to contact the passengers.

A lady in the TAP office emailed eventually after I called her to say that they had located the luggage and it would not arrive until Wednesday, as there was no flight Tuesday. So would they bring it to the Sofitel, where we all were, I asked? No, she wrote, we would have to go to the airport and get it ourselves at 1030pm on Wednesday using our own transport.

I was the only person in the group who had managed to track down the TAP office, so at least I was able to tell three others whom I had contacts for what was going on. At no point, the whole week, did TAP contact anyone. Even though they could have done so via the original bookings, or via the email and phone numbers we left with the airport Lost Luggage office. They did not give a fuck.

I emailed TAP to ask if I would be compensated for the £150 I had spent on clothes and toiletries. The reply was vague, saying only that I should come to the TAP office. I checked Google Maps. It was half an hour away across town. I would not have time to go there before Friday, and then only if I was lucky.

On Wednesday we went to the airport, waited around for 90 minutes, and eventually got the bags. By a somewhat crafty manoeuvre I managed to recover not only my two bags but also that of the guy who lent me the shirt, who had essential work stuff to do that evening.

I had asked TAP if they would send someone from their office to assist us at the airport that evening and they indicated not. They were as good as their word. We saw no one from TAP all night.

At 4pm on Friday I got my first free hour of the working week and decided to go to the TAP office, if only to complete my anthropological and ethnographic research. The email about reimbursement said that I needed to bring my passport to the office, nothing else.

At the office, about 10 minutes in to a conversation with the woman who had been emailing me, she clarified that the most TAP were going to give me was US$100. In our correspondence, she had consistently refused to address whether I would be repaid the purchases of clothes for which I have no general use. Adding in the US$20 I was paying the hotel for a car that brought be to the TAP office, (because I couldn’t face doing this is an Abidjan taxi after working a 60-hour week), plus the Abidjan taxis that I had taken to do the clothes shopping earlier, I was now out US$200. Plus the AGRF had paid at least US$50 to provide a hotel car to take me to the airport to collect the luggage because it was so embarrassed by TAP’s behaviour (for which, of course, the AGRF has zero responsibility).

In order to get the US$100, the lady asked if I had the lost baggage receipt from the airport. Of course not, I said, because they take it from you when you get your bags back.

The lady said I should have taken a photograph of the receipt with my phone’s camera before handing it over. I agreed that I am an utter moron. However, since I had a copy of the TAP email correspondence with me, the lady had to concede that she had never stated that I should have or bring a copy of the lost luggage receipt.

The lady started to talk with her colleague, who assumed that I did not speak French. I don’t speak great French, but I had mainly chosen not to speak French in the TAP office because I wasn’t clear why I should do anything helpful to a firm that is so contemptuous of its customers. The woman who only spoke French appeared to be the senior person in the office. She made a call to someone apparently more senior than her. She noted that I was a Business Class passenger and referred to me as ‘impatient’.

I smiled. The French-speaking lady said to the English-speaking lady to get a photocopy of my passport. The photocopier was less than two metres from the French-speaking lady, but she did not make the copy herself. Instead, she called the office boy to make the photocopy.

At length, they gave me the US$100.

I had one last question: of the seven people from London whose bags were lost for two days, how many had come to the TAP office to claim US$100? The two ladies conceded that no other passengers had come.

Like me, other passengers would have had to find the TAP office by searching, get the correct phone number after discovering the one given online is wrong, work with a driver to locate the office (the address alone is not enough because the office is inside a small shopping arcade, while no directions are given online), and then found time during the working week to get to the office.

As I drove back to the hotel to get a beer after a very long week, I wanted to reach a reasoned conclusion about TAP, Air Portugal.

My conclusion was that the business is run by Mother. Fuckers.

Still, the key thing is that you can always find a positive. Check-in was a shambles; actually, it was worse. The Business Class seat was not a Business Class seat and hence a total rip-off. The service was slow and half the TAP employees did not know what they were doing. Lisbon airport security was pure Third World. Baggage handling was Third World. The loss of luggage for two days when they could have re-routed it faster if they wanted is off the spectrum for abuse of clients. And our treatment in Abidjan was frankly inhuman.

On the other hand, I did like the tin that the socks, ear plugs and eye mask came in. It is both original and recyclable.

TAP tin 2017


In case you have never seen it, here is SNL’s Total Bastard Airlines sketch. I guess that European airlines, TAP (and Alitalia) excepted, are more civilised than American ones, so we have no European equivalent.

I will be saying Bub Aye to PAL. Perhaps you should too.






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