Financial Patronage - Africa's Cancer
Financial patronage makes up the framework that supports African politicians and while this is a structure that serves those in power very well, it delivers a great disservice to the general population both in the short and long term.
Under the structure of financial patronage, politicians use financial resources at their disposal to patronize those they choose for inclusion in the political process. By nature of the structure, the politicians on the top of this food chain need two things in order to sustain their hold on power.
The first thing they need is a source of funds and the second is a pool of functionaries who are not only in need of funds but also willing to take what is given to them along with the conditions that are naturally attached.
Elected representatives are entrusted with responsibility over public funds and they use their power to allocate tax income among various departments of government each charged with delivering specified services to the public.
Under a system in which politicians measure their influence not by the power of their ideas or the strength of their track record but by the size of their wallet and the number of people who owe allegiance to that wallet this money entrusted to political institutions is at risk of allocation to political rather than administrative use. Instead of building professional administrative institutions, they end up building job services for commonly unqualified friends and relatives. The individuals who ascend to positions of influence and responsibility under this system do so not on their knowledge and experience formulating and implementing policy but rather because of their ability to funnel money into the political machinery. This leads to a dearth of policy and a total lack of structure for the implementation of development projects.
Financial patrons support their power structure using various channels. One of those channels is direct cash payments and another is favorable consideration for government funded programs. The financial patronage system that has taken root in Africa is a combination of the two.
Politicians ensure that government contracts are directed to their friends and those friends either understand or are directed to share the spoils with certain constituencies. Sharing the spoils ranges from providing jobs to cash hand outs to whoever is on the list.
The focus in this system is not the performance of those individuals and companies but rather the amount of money they deliver into the political system. The greater the amount of money delivered the higher the rewards – rewards in this case measured in terms of access to top level politicians as well as the size and number of contracts awarded.
Outside of firms fully dependent on the generosity of the treasury for their operations and the favor of politicians for their survival, firms in private industry learn that the most effective method of gaining access and influence is by providing money to those in power. Whole industries begin to orient themselves towards meeting the goal of sustaining the political elite.
Companies in favor are protected from competition and without that needed stimulus do not innovate and fall behind firms that operate in competitive environments. Unfortunately, the companies in favor grow to become the largest and their operating model is copied throughout the system and industries become driven not by the strongest and most dynamic companies but by the most connected. Fortunately the nature of business is such that some of those companies are actually well managed but by and large structurally weak companies are propped up by the political system with the aim of self preservation.
It is common that these most connected companies pay little or no taxes thus robbing the government of tax revenue desperately needed to develop wide sectors of the economy. These African countries are already limping along on moribund tax structures and the denial of additional income pushes them further along the road of economic bankruptcy.
With unqualified people occupying positions that would optimally be staffed by trained professionals, opportunities for growth and development are squandered. With industries focused on propping up the political elite and self preservation by bribery rather than operational competitive advantage the already weak tax base weakens and the countries continue the nosedive towards poverty and destitution.
Under the structure of financial patronage, politicians use financial resources at their disposal to patronize those they choose for inclusion in the political process. By nature of the structure, the politicians on the top of this food chain need two things in order to sustain their hold on power.
The first thing they need is a source of funds and the second is a pool of functionaries who are not only in need of funds but also willing to take what is given to them along with the conditions that are naturally attached.
Elected representatives are entrusted with responsibility over public funds and they use their power to allocate tax income among various departments of government each charged with delivering specified services to the public.
Under a system in which politicians measure their influence not by the power of their ideas or the strength of their track record but by the size of their wallet and the number of people who owe allegiance to that wallet this money entrusted to political institutions is at risk of allocation to political rather than administrative use. Instead of building professional administrative institutions, they end up building job services for commonly unqualified friends and relatives. The individuals who ascend to positions of influence and responsibility under this system do so not on their knowledge and experience formulating and implementing policy but rather because of their ability to funnel money into the political machinery. This leads to a dearth of policy and a total lack of structure for the implementation of development projects.
Financial patrons support their power structure using various channels. One of those channels is direct cash payments and another is favorable consideration for government funded programs. The financial patronage system that has taken root in Africa is a combination of the two.
Politicians ensure that government contracts are directed to their friends and those friends either understand or are directed to share the spoils with certain constituencies. Sharing the spoils ranges from providing jobs to cash hand outs to whoever is on the list.
The focus in this system is not the performance of those individuals and companies but rather the amount of money they deliver into the political system. The greater the amount of money delivered the higher the rewards – rewards in this case measured in terms of access to top level politicians as well as the size and number of contracts awarded.
Outside of firms fully dependent on the generosity of the treasury for their operations and the favor of politicians for their survival, firms in private industry learn that the most effective method of gaining access and influence is by providing money to those in power. Whole industries begin to orient themselves towards meeting the goal of sustaining the political elite.
Companies in favor are protected from competition and without that needed stimulus do not innovate and fall behind firms that operate in competitive environments. Unfortunately, the companies in favor grow to become the largest and their operating model is copied throughout the system and industries become driven not by the strongest and most dynamic companies but by the most connected. Fortunately the nature of business is such that some of those companies are actually well managed but by and large structurally weak companies are propped up by the political system with the aim of self preservation.
It is common that these most connected companies pay little or no taxes thus robbing the government of tax revenue desperately needed to develop wide sectors of the economy. These African countries are already limping along on moribund tax structures and the denial of additional income pushes them further along the road of economic bankruptcy.
With unqualified people occupying positions that would optimally be staffed by trained professionals, opportunities for growth and development are squandered. With industries focused on propping up the political elite and self preservation by bribery rather than operational competitive advantage the already weak tax base weakens and the countries continue the nosedive towards poverty and destitution.
posted by Bongo at 11:21 PM
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