It’s the Economy!

Yesterday, I went down to the American Embassy Library for the English Club.

(Image credit – they won’t let you bring your camera into the embassy)

There were about twenty people there, mostly men in their twenties, and the topic of conversation was youth unemployment and the economy. Obviously, since they were free from 10:00 – 12:00 on a Tuesday morning, these folks knew something about the subject. I speak somewhat snarkily because in fact I got the impression that many of them were still students. As I pointed out in my discussion of my exam grades, folks here take longer to get through the educational ranks both because of financial constraints making them miss years and also the system of high-stakes exams that you have to pass in order to advance to the next level; no social promotions in the French system! But anyway, these people were well-informed about the problems their peers, if not themselves, face in the current economy.

I haven’t been focusing on this issue until recently, but it is clear that things aren’t going too well in the economies of West Africa. There are a number of potential macroeconomic issues. First is the collapse in commodity prices, especially oil. The engine of the regional economy is Nigeria. Nigeria is an enormous oil producer and was once America’s second-largest source of imported oil. Thanks to the fracking boom, America is now a net oil exporter, and the world price of oil has fallen from a high near $150 a barrel in 2009 to around $45 today. Nigeria is experiencing civil disorder, both in the oil-producing southeast, where a persistent insurrection has impeded oil production, and in the northern region where the Islamist Boko Haram movement sends children as suicide bombers to blow up markets and shoots up villages more or less at will. There are endless gas lines in the big cities, and regular, prolonged power outages. Nigeria is a market for regional products and a producer of a lot of basic consumer goods for the region. If their economy is in bad shape, the rest of the region is going to suffer as well.

Another explanation for Burkina’s woes is the political instability the country has gone through for the last two years. Ever since President Compaoré announced in early 2014 that he would seek to change the Constitution to permit a fourth elected term in office, government here has suffered from a lack of legitimacy. Elections earlier this year put a democratically-elected president, Marc Roch Kaboré, in power, but he has yet to  completely nail down the lid on civil disorder. Economic troubles aren’t helping him re-impose the authority of the state and get things moving again. Foreign aid donors were concerned during the transition about working with an unelected government, and things are only getting back to normal now.

Moreover, the government is experiencing a fiscal crisis, caused by the discovery that some 84 billion CFA (US$ 144,000,000 or so at the current rate of exchange) is missing from the treasury. At first, this was blamed on the transition government, though now there is evidence that at least some of this money was already missing at the time of the 2014 insurrection that overthrew Compaoré, and the deficit might date back ten years or more. This doesn’t let the current government off the hook, since the president and his closest allies were all part of Compaoré’s governing party until the crisis over the constitutional reforms began. In any case, for Burkina, this is a heck of a lot of money. The US government spends this much money every day before finishing the morning coffee, but for Burkina this represents about ten to twelve percent of the annual government budget.

And, as my young conversation partners pointed out yesterday, the government is a very important part of the picture in terms of employment for educated people here. The economy of Burkina Faso, like in a lot of developing countries, is divided between a large informal sector and a small formal sector. In the informal sector, people work mostly for themselves or in family units. In the countryside, the majority of the population are peasants. They grow food crops for their own consumption, and sometimes small amounts of cash crops to permit them to buy manufactured goods like motorcycles or tin roofs, pay school fees for their children, thus hoping to move themselves into the formal sector. In the cities, many people get by as independent entrepreneurs, selling products in small shops or from market stalls, providing services – long-time readers will remember my trash man, Oumar.

Omar the trash man 1 640.jpg

He owns a donkey named Zizi and a cart, and he goes around to people’s houses charging them a few hundred or a few thousand francs to take their trash away and burn it somewhere else. He also brings loads of nice topsoil and does gardening work. This is the informal sector. Oumar is an entrepreneur, but there are major constraints making it a lot harder for him to get ahead and become a trash or landscape contractor as someone similarly placed might be able to do in the US, starting with a pickup truck and some tools and moving up to an independent businessman who is part of the middle class. Registering your business is very difficult and time-consuming. Often, bribes must be paid to process paperwork. Without business registration, the business can’t officially own property – only the individual has property. It is harder to sue people to enforce contracts. You can’t have a bank account or borrow money from the formal sector financial institutions. You are stuck with the moneylenders at ridiculous rates of interest, and you deal exclusively in cash with all the security concerns that entails. You can’t be insured – if Zizi gets hit by a car, Oumar is out of business (as well as being sad, he and the donkey appear to be pretty companionable; Burkinabè and their equines tend to get along pretty well).

Another informal sector business that I’m reasonably familiar with is my neighborhood drinking establishment, where everybody knows my name, Chez Gouem. The Gouem siblings work in the formal sector, some of them at the Poop Factory. But after hours, Issouf Gouem is the proprietor of a maquis, or street-side cafe. He has a structure, about the size of a shipping container, with a bar, refrigerator, space for a couple of tables. The structure sits on public property, the side street two blocks up from my house, for which he pays rent to the municipal government. In this sense, he is in the formal sector – he has a facility and pays taxes. The customers mostly sit outside, alongside the street in front of an auto body shop (plenty of those here thanks to the way people drive). Every evening, the brothers and their friends can be found there soaking up 600-franc (US$ 1.00 or so) 50 cl (big!) beers and talking politics, music, love, and family business (in their own language if outsiders are around…). Issouf had an employee, a young man named Gilbert, but laid him off a month or so ago. I don’t think they’re making a lot of money; I get the impression that Issouf is kind of hanging on hoping for better times. We have had several conversations about the weak economy.

In the formal sector, there are a few private businesses that offer middle-class salaries to professionally-trained people. The mining sector is important here: down to the south, Ghana used to be called the Gold Coast, and gold mining is still important throughout the Volta region. Gold prices have experienced a decline similar to that of oil: from a high of over $1800 an ounce in 2011, they fell as low as $1100 earlier this year, since recovering to around $1250. Still, mining companies are hiring engineers, and traders, and finance people, and so forth. Agrobusiness is another big sector here, with troubles as described in my posts about my colleague Jessie Luna’s research on the cotton industry. But they need agronomists and marketers and money managers. Then, there’s service industries. One of my friends at the maquis has a medical supply company, selling drugs and medical equipment to hospitals and doctor’s offices. When the Ebola scare was big, he sold lots of hand-washing and sanitation stations to restaurants, stores, and so forth, but that business has faded now. Weeks can pass without new orders. Another friend is in the insurance business, as an adjuster so he doesn’t have to sweat the sales end directly, but I get the impression that his company isn’t selling too many new policies right now either. The car dealers are having big sales; I see their ads all the time on my Facebook feed.

And, most importantly for the formal sector, there is public employment, both for the Government of Burkina Faso and international organizations, embassies, and the like. Talking to the students at the embassy yesterday, I got the impression that this is the real brass ring. If you get a government or international organization job, you are fixed for life. They never lay anybody off. The benefits are excellent. And if the salary isn’t quite up to the standards of the mining companies the security makes up for it. I have noticed that the Burkinabè employees of the US embassy are almost all very sharp, hard-working folks. Government employees I have met, including my colleagues at the University Joseph Ki-Zerbo, are similarly quite good. Getting into government service here requires passing civil service exams, much like in the States. But all my interlocutors at the embassy were nevertheless firmly convinced that you need to know somebody and that the “concours” (exam) system is fixed. The government actually annulled the results of last year’s concours because of cheating and will re-run the tests this year. Preserving a sense of fairness is essential to keeping young people from tearing the place down.

And that’s where it’s really at. Burkina Faso has a population of 16 million, more or less, as of the last census in 2010, and the median age is 16.8 years. Fertility rates are falling, like everywhere in Africa, but there are is still an enormous demographic bulge of young people who have to find some way to fit into the economy and become productive citizens. If the economy doesn’t offer them a place, they can easily succumb to the siren call of radical politics. Look what is happening in the US, where a much less dramatic level of economic insecurity has convinced large segments of the population to support a quasi-fascist populist candidate for president. Here, the form of radicalism that is the most appealing is religious, with Islamism being at the top of the agenda right now because of the rebellions in Mali and Nigeria. Over in the Central African Republic, Islamist radicalism has run into Christian radicalism, with Catholic insurgents besieging a Muslim neighborhood and butchering civilians. Over there, it got so bad that the Pope went there in person to try to calm things down, with some success. Burkina has substantial numbers of Christians, and lots of them are out of work too. So far, the Burkinabè sense of common national identity and civic pride has tamped down any evidence of religious (or ethnic) strife. But the danger is clearly there and any government needs to address this problem.

As our last exercise at English club, the students were asked to imagine they were running for public office in Burkina and to come up with a one-minute commercial saying what they would do to address the problem of youth unemployment. All my guys had serious wonky policy proposals about fighting corruption, strengthening the private sector, getting money from donors for small business development, and so on. At the other table, they were having more fun coming up with slogans. Some combination of the two has to happen.


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