How Africa Is Losing Billions To Conflicts

When American author and poet, Maya Angelou said “I thought if war did not include killing, I’d like to see one every year,” she apparently wasn’t thinking of the economics of war.

Conflicts in Africa have led to the squandering of rich mineral, agricultural and human resources that should have benefited the masses, while robbing African communities of their developmental potentials.

Although, international media seem to blow armed conflicts in Africa out of proportion as many would argue, it is however true that the continent has had its hands full in recent times, with armed conflicts deteriorating into terrorism as well as political uprising impeding economic growth in the north.

On average, violent conflicts shrink a country’s economy by 15 percent, a percentage international organisation, Oxfam says is a conservative one, as the real cost could be much higher. Military expenditure, medical costs, destroyed infrastructure and care for displaced persons are some of the obvious ways countries lose money to conflicts.

A Growing Occurrence in Africa

Wonder why conflicts are becoming synonymous to African communities? Many are quick to attribute this to the continent’s ethnic and religious diversity. But a research titled “Why are there so many civil wars in Africa? Understanding and preventing violent conflict”, by scholars, E. Elbadawi and N. Sambanis showed that “the relatively higher incidence of war in Africa is not due to the ethno-linguistic fragmentation of its countries, but rather to high levels of poverty, failed political institutions and economic dependence on natural resources.”

Conflicts have therefore continued in Africa as bad leadership, dictatorship and lack of political will to face socio-economic challenges head-on continue to extend the reign of violence in most African nations.

The Ibrahim Prize for Achievement in African Leadership has been acclaimed as the world’s biggest individual prize, but it has not been awarded since 2009. In a statement by Mo Ibrahim Foundation, organiser of the award, said they decided not to give the 2013 laureate to any African leader “after careful consideration”. Apparently, no African leader was deem fit for the award. Whether any African leader will make the cut and win the $5 million prize (plus $200,000 annually for life) set up by Sudan-born billionaire Mo Ibrahim remains to be seen.

Poverty level has also remained high on the continent, with 75 percent of the world’s poorest countries located on the continent; for years now, the Democratic Republic of Congo (DRC) has been ranked the poorest in the world, says The Borgen Project, a non-profit organisation. The World Bank also affirms that 218 million people in Sub-Saharan Africa live in extreme poverty.

Despite efforts to end crises on the continent, violence keeps rearing its ugly head in many parts of Africa. This, according to a report by Jeffrey Gettleman, East African Bureau Chief for New York Times, is because some of Africa’s bloodiest, most brutal wars are not really wars. “Not in the traditional sense, at least,” he wrote.

“The combatants don’t have much of an ideology; they don’t have clear goals. They couldn’t care less about taking over capitals or major cities — in fact, they prefer the deep bush, where it is far easier to commit crimes. Today’s rebels seem especially uninterested in winning converts, content instead to steal other people’s children, stick Kalashnikovs or axes in their hands, and make them do the killing. Look closely at some of the continent’s most intractable conflicts, from the rebel-laden creeks of the Niger Delta to the inferno in the Democratic Republic of the Congo, and this is what you will find,” Gettleman explained. “Terror has become an end, not just a means,” he added.

Economic Consequences
In their 2003 publication titled; Breaking the Conflict Trap: Civil War and Development Policy, Collier, Paul, V. L. Elliott, Håvard Hegre, Anke Hoeffler, Marta Reynal-Querol, and Nicholas Sambanis noted that capital may take flight from a country plagued by a civil war. Enders, Walter and Todd Sandler’s 1996 article on “Terrorism and Foreign Direct Investment in Spain”, added that, a sufficiently intense terrorist campaign may greatly reduce capital inflows.

Conflicts in Africa, since the end of the cold war till 2007, has cost the continent $241 billion, an Oxfam report at the time said. Since that report, many more conflicts have ravaged the continent and several more billions of dollars lost in the process; The Oxfam report estimated that $18 billion is lost to war annually in Africa.

Conflicts have both long and short-term impacts on African economies, with developmental, environmental and human well-being all affected – reducing quality of life, capabilities of people to live the kinds of lives they value.

Despite all these challenges, Africa’s economy has risen to be one of the fastest growing in the world, with countries like Nigeria and Ethiopia getting a projected GDP growth of more than 7 percent in 2014. The West African country recently became the largest economy in Africa after a recalculation of its GDP, but it still contends with insurgency in its north east. The Islamist sect, Boko Haram is responsible for thousands of deaths and destruction of property worth millions over the years in its quest for a state ruled under Islamic law, Sharia.

Other African countries have had their share of civil war, terrorism and violence which has grounded economic activities of several cities, halting growth and development. But come to think of it, with the current economic growth in Africa, how much more would Africa’s economy grow if there were no crises claiming billions of dollars annually?

Arab Spring

The tragic suicide of a young vegetable seller in Tunisia on December 17, 2010 signalled the beginning of what the world came to know as the Arab spring. Mohamed Bouaziz could not find a job and was selling fruit at a roadside in Sidi Bouzid, but a municipal inspector confiscated his wares. Frustrated with the situation, he set himself on fire an hour later in protest of police corruption and ill treatment. He died on January 4, 2011.

Various groups pained by his death and the situation of the country which they blamed for Bouaziz’s death came together to begin the Tunisian revolution. The protest in Tunisia was successful and President Zine Al Abidine fled to Saudi Arabia. This sparked a wave of unrest in Algeria, Egypt, Libya and Morocco. President Hosni Mubarak resigned in Egypt on February 11, 2011 after 18 days of massive protests, signalling an end to his 30-year presidency. Muammar Gaddafi of Libya was overthrown on August 23, 2011.

Most of these protests deteriorated into civil war. Gaddafi was killed after a civil war with foreign military intervention led to the overthrow of his government.

According to HSBC, the Arab spring not only led to loss of lives, billions of dollars were also lost. In a 2013 report by the bank, apart from the economic and human cost of lives during uprising in these countries, the impact even in post-revolution states is obvious.

“We estimate the value of lost output will top $800 billion by the end of next year (2014),” the HSBC report said.

The bank considered seven states most affected, which include African countries: Egypt, Libya and Tunisia. It said GDP for those countries would be 35 percent lower at the end of 2014 than if there had been no Arab Spring.

The Financial Times however notes that the damage to the Arab Spring countries hasn’t been to GDP alone as unemployment remains high – among the highest in the world.

“The rates are really depressingly high if you look at the region as a whole,” said Sudeep Reddy, a reporter on economics for The Wall Street Journal on TV in September, 2013.

“About 25 percent of youth, 1 in 4 people are unemployed between the ages of 15 and 24 – and that is actually, probably undercounting the severity of the problem,” Reddy said at the time.

According to Africa Development Bank (AfDB), many Egyptians living below the poverty line are “still waiting to reap the full benefits of lasting social, political and economic change,” even years after the Arab Spring.

The Arab Spring has also made Africa less attractive to certain investors. Although Africa as a whole is enjoying improved Foreign Direct Investment (FDI) driven by improved environment for doing business in West and East Africa, same cannot be said about North Africa.

The International Institute of Finance (IIF) estimated private capital inflows into emerging markets at around $1.181 trillion in 2012, with a modest $73 billion going to the Middle East and Africa. It was however forecast to rise to $82 billion by 2013 and $84 billion in 2014.

“Domestic political developments and geopolitical uncertainties have more of an impact on flows to non-oil exporting countries in the MENA region (Egypt, Lebanon and Morocco), the IIF said.

East Africa

Just two years after the world’s newest state was formed, the East African State, South Sudan has suffered from one crisis or the other. A new wave began in December 2013 after fighting escalated between army factions allied with President Salva Kiir and those of his former vice president Riek Machar.

South Sudan’s economy is the world’s most oil-dependent, with oil exports accounting for 98 percent of the country’s revenue (as of January 2012) and approximately 80 percent of its gross domestic product.

Nearly 10,000 people have been killed in the South Sudan conflict, according to the International Crisis Group. The UN Office for the Coordination of Humanitarian Affairs (OCHA) also estimated that 413,000 people have been internally displaced, while 74,300 refugees have fled to neighbouring countries.

Kenya’s foreign affairs secretary, Amina Mohammed said the violence in South Sudan spells economic trouble for Kenyan investors who had big businesses in Juba, a January report by Sabahionline, an online news platform in East Africa said.

Kenyan business people and companies, especially in the banking and construction sectors, had made great strides in South Sudan, she said, but lamented that businesses belonging to Kenyans have been looted in the violence.

According to Mohammed, if the conflict does not end soon, the economic implications will be felt in Kenya, as thousands of citizens who have lost job opportunities in South Sudan return home to compete for the few opportunities available in Kenya.

Apart from the economic effect the violence in Sudan is sure to have on Kenya if it continues, the Inspector General of Police, David Kimaiyo highlighted security as another concern.

“Essentially, lack of law and order with our close neighbours will lead to the infiltration of illegal firearms into Kenya. This may lead to an upsurge of crime like cattle raids and formation of dangerous criminal groups,” he said.

This might have started already, as the level of violence in Kenya has increased in recent times. Although none has been directly traced to refugees, returnees or fighters from South Sudan, violence in East Africa’s largest economy is said to have already started threatening foreign investments.

Aids and Gains

The West have been playing big brother for African countries by providing aids to combat HIV/AIDS, polio, develop infrastructure amongst others. However, their contribution to armed conflict in Africa does not say much about their philanthropic roles. Although they may be contributing a lot to financing these operations, none of the top donors to Africa are among the top 5 countries contributing security personnel to the United Nations peacekeeping operations. The world’s most powerful countries are also the world’s biggest arms suppliers.

France, Russia, China, Britain and the US, together account for over 80 percent of the world’s conventional arms exports. Between 2000 and 2004, the US, Britain and France earned more income from arms exports to Africa, Asia, the Middle East and Latin America than they provided in aid, according to

The world is awed by Africa’s economic resurgence. Despite the growth-hampering conditions prevalent on the continent, several foreign companies invest billions of dollars on Africa’s potential – growth statistics, return on investment, hugely untapped market to name a few.

A Conflict-Free Continent

Imagine a Nigeria without Boko Haram bombings in the North, imagine an Egypt without the political crises, imagine a Libya without civil war, imagine a Mali without conflict, imagine a Democratic Republic of Congo (DRC) without the Kivu conflict, and imagine a Somalia without the civil war; that’s Africa with additional $18 billion saved. This can be expended on further developing the continent’s much needed infrastructure deficit.

For what it is worth, Africa is seeing marginal but commendable strides in terms of leadership, with the continent now able to boast of leaders and individuals that are championing a new era of growth, despite all odds. Democracy is gradually taking root in Africa and leaders are becoming more accountable. Thus, if high levels of poverty, failed political institutions and economic dependence on natural resources were the major causes of conflicts, Africa is managing to steer itself through the midst of challenges, as countries on the continent are embracing political stability, birthed exponential economic growth.

Also a new crop of young African leaders, refined with global standards, are demanding and implementing strategies to ensure the African renaissance continues.