How do Africans feel about their government?


How do Africans feel about their government?

Afrobarometer is a great organization that is focused on researching attitudes and perceptions amongst Africa’s populace.  It is African-led and that is what makes it so unique.  Check out their website if you have a chance.

They released a great report called ‘What People Want from Government?’ Africa is changing rapidly and this survey is a great way to capture that change.  It is also a ‘gut-check’ for those of us that in invest in Africa, to ensure that there isn’t an opportunity we have overlooked or a risk that we underestimated in one of the countries we invest in.  As with all surveys, it should be taken with a grain of salt, but we will highlight below some of the noteworthy results.

The top 5 countries in terms of satisfaction with the government in providing reliable electricity supply were Mauritius, Algeria, Botswana, South Africa, and Kenya.  This list is unsurprising as these are some of the wealthiest countries in Africa.  However,   the bottom 5 countries are not the poorest in Africa; they are Liberia, Uganda, Nigeria, Guinea, and Zimbabwe.  Uganda is a country that long-term we are quite bullish about, but the country has many near-term challenges.  Uganda does not only score poorly in electricity supply, but it has also had declining performance in healthcare in the last 10 years (only 44% of residents were satisfied with healthcare services, compared to 73% in 2002).  Similarly, in terms of education, only 55% of Ugandans are happy with the government’s services, compared to 83% in 2002.  This must be prefaced though with the fact that 76% of Ugandan respondents stated they had no difficulty in attaining enrollment for their children in primary school.

There is an argument to be made that these results could be from shifting expectations of the government as the economy expands.  What we find troubling though, is in another Afrobarometer study on taxation, Uganda only collects 13% of GDP in tax revenue, compared to 27% in South Africa.  In a survey of tax compliant attitudes, only 33% of Ugandans exhibited an attitude that was conducive to tax compliance.  It is problematic that very few people want to pay tax, yet have increasing expectations from their government to provide basic services.

Shifting gears to countries that are doing particularly well, Botswana is a standout.  No respondent to the survey in Botswana has ever paid a bribe for medical treatment.  That is incredible.  Only 1% of respondents have ever paid a bribe for water and sanitation services.  83% of respondents were content with the government’s approach to education and 65% were happy with the government’s ability to provide a stable electricity supply.

This survey is a data mine.  Botswana differentiates itself as the only place in Sub-Saharan Africa (Algeria persistently ranks ahead of others) that has a culture of corporate governance, high quality government services, and a satisfied populace.  That bodes well for investment in Botswana.  Should you be interested, check our article here.

Uganda’s promise is unquestionable, but for a country with a GDP per capita of less than $600, much needs to be done by way of basic services before it is able to have a strong economic growth trajectory.  HIV has fallen though (from a peak of 30% to 6%), and literacy continues to rise.

The other country we would like to highlight is Malawi.  Malawi is on the rise.  It ranked 5th best in terms of citizen satisfaction in the government for providing water and sanitation services and similar to Botswana, 95% of respondents have never paid a bribe for water and sanitation services, 96% of respondents had never paid a bribe for school enrollment, and satisfaction was high in the government’s ability to provide primary school education.  Malawi’s growth for 2013 is expected to be 4% and 2014 should be similar.  The country’s GDP per capita if $250, which means it has a long, long way to grow.  Over 60% of exports are tobacco-related; as this diversifies, the country will be less subject to the wild swings in tobacco prices.

The country has its issues.  Inflation for one, which results in a bank lending rate of 25%, and spurious mining practices, but the potential for mining in the country is significant.  The stock market is up 52% YTD (USD), and we expect continued strong performance out of the market.  We like countries where the building blocks are in place (freedom, education, institutions, and infrastructure), but they have yet to actualize the benefits from these improvements.  From that perspective, Malawi is a very attract country.  Look to a post from us on how to invest in Malawi in the New Year.

As always, if you have any questions, comments, or concerns, let us know.

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