Category Archives: economics

Sexual Violence in Africa, Climate Change, and the U.S. Secretary of Energy

U.S. Secretary of Energy Rick Perry is fending off criticism for comments he made about the relationship between fossil fuels and sexual violence against African women. He said in South Africa that using fossil fuels to generate electricity in Africa would lower rates of rape because, “When the lights are on, when you have light that shines — the righteousness, if you will — on those types of acts.” To paraphrase, the literal light of electricity (and figurative one of God?) would stop some acts of sexual violence. The general feedback in the media has been about his unclear reasoning and the ridiculousness of linking a light bulb to a pervasive social problem. To approach it more moderately though, I believe he was just hypothesizing that light in homes would make women logistically safer. It was a somewhat silly notion that just shouldn’t have been said aloud so flippantly. Here is the text of his statement:

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However, the issues of fossil fuels, climate change, and gender-based violence are actually not unrelated—they’re just related in a way totally contrary to Perry’s comments. This is an opportunity to better understand how fossil fuels are actually bad for women in sub-Saharan Africa, and why it is alarming that one of the world’s most powerful policymakers on energy would miss this.

 

Climate change: Fossil fuels, the Fahrenheit, and female farmers

First, climate change is particularly threatening to poor women in Africa who are assault victims during climate change migrations. As an example, the Sudanese Civil War, including the genocide in Darfur, was due in part to desertification of grazing lands for livestock. As these grazing lands turned to hot desert, ethnic groups were forced to move to new areas to keep their animals fed. This migration caused conflicts with those already present in the area, spurring violence that entailed sexual assaults as military strategy. As the temperature of the earth rises, such conflicts will only increase in pastoral and agricultural societies that rely on the land for their survival.

Additionally, 50-80% of all agricultural workers in developing countries are women, an economically vulnerable group. Thus, they will lose out more from climate change that alters their growing and harvesting conditions more than men, who are more likely to be employed in non-farming or industrialized sectors. Financial vulnerability also forces rural women to work farther away from home and its protections, e.g. moving to a city alone, walking farther each day to access suitable land, or engaging in sex work to survive. Hence, climate change affects the safety of women in developing countries in particular ways.

Perry may have been referring to the boon of fossil fuels across the globe, it’s not clear from his quote, but Africa is pivotal to the natural resource industry in the 21st century. The eastern coast of central Africa, specifically around the Gulf of Guinea, has some of the sweetest crude in the world, meaning it is high quality and requires less refinement than sand-filled oil, thus raising profit margins. We should assume that, as U.S. Secretary of Energy, Perry knows this, and would be aware that expansion of this industry across the globe entails its expansion in Africa.

 

Sexual violence and natural resource extraction

Perry’s assertion that increased extraction of fossil fuels would lower sexual assault rates is probably the opposite of what would happen in sub-Saharan Africa.

In developing countries, there is some evidence to suggest a correlation between militarized natural resource extraction sites and violence against women in the area. There are several explanations for this. One is that jobs in the natural resource sector require men to move away from their families, and thus the kinship ties, social norms, and social boundaries that help regulate their behavior. This is not to say that men need to be socially monitored to not commit gender violence, but that all people rely on authority, rules, and the actions of those around them to know what is acceptable. (Imagine the otherwise responsible American university student acting badly on spring break vacation in Mexico—this is an example of how the removal of norms in a new environment changes how we comport ourselves.) Additionally, valuable natural resources require increased (male) security agents to keep operations running. So, natural resource extraction presents the conditions under which sexual violence can become more common.

Secondly, natural resource corporations can become their own mini-governments and, conveniently, their own law enforcement in developing countries. In line with James Scott’s work on state theory, I found that foreign oil companies operating in the Niger Delta employ their own private security forces, erect clear perimeters around extraction sites, exploit local labor at informal and very low wages, and function largely outside of the control of the Nigerian government. In drawing a comparison to a government, Nigerian oil companies a) employ their own military, b) maintain distinct geographic boundaries, c) draw some form of “taxation” through labor, and d) function autonomously. These are four measurements of state strength. Accordingly, gender violence perpetrated by employees or other affiliates of the company could easily go unpunished, as the company acts as its own police force of sorts. So, natural resource extraction then presents the conditions under which sexual violence can go unrecognized.

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Fossil fuel economies are no help to women

On a larger scale, the fossil fuel industry economically marginalizes women of the global south in nearly every way. First, it is a male-dominated industry that offers few jobs for females, who can earn income largely through the agricultural or informal sectors. Childcare responsibilities and unequal domestic duties make it difficult for women to work far away from the home, which jobs in natural resources call for. There is spurious evidence that such economic disenfranchisement increases rates of prostitution, and the gender-based violence and HIV/AIDS that accompanies that phenomenon. Oil, gas, minerals and other natural resources do not increase employment or economic opportunities for women.

Secondly, the African men it employs often spend long hours far away from their families or live at their work site altogether, as there may be low population density around drilling or mining sites. This only serves to exacerbate the inequality in domestic work in the home.

Third, modern economic investigations reveal that, as a whole, women don’t fare so well when the bulk of family income is in the form of cash paid to men. It separates women from control of family finances, and UN reports indicate that less of that money makes it home to children than if women earn it. Even in historical examinations, there is the theory that the transition from (comparably more gender equal) agricultural lifestyles to (comparably male-based) cash economies, as result of European investment in Africa, hastened the transition from traditionally matrilineal family structures to patrilineal ones.

Although this is just my conjecture, I imagine that Rick Perry has heard of the use of rape as a weapon of war, probably in the context of the Congo. It is doubtful that he was aware that South Africa suffers from a prolific scourge of sexual assault in its townships, and it is just a coincidence he made his remarks from there. He knows so little about the region that he may have been attempting to bring together the issues of fossil fuels and gender violence to further his energy agenda, without realizing that the reasons for gender-based violence in different parts of Africa vary—mass displacement, militarization, ethnic cleansing, geography, etc.

Drawing on the issue of violence against women to further a totally different agenda is misleading and exploitative.

As an aside, from my brief scan, it appears that most news articles on Perry’s comments referred to his “trip to Africa.” He was in Capetown, South Africa to be exact. This ambiguity regarding his location matters. Capetown is one of the richest cities on the continent, a worldwide tourism spot, and frankly, totally unrepresentative of anywhere else in Africa. The fact that Perry discussed development for the whole continent from this city, based on a conversation with a local girl, demonstrates his lack of understanding of the region—one common among Western policy-makers. The media’s description of his trip ignores the fact that Africa is the second largest and second most populous continent in the world (20% of earth’s land mass, with a population of over one billion). It’s ethnic, linguistic, and religious diversity is unparalleled. It is unimaginable that reports would refer to his “trip to Europe” if he was in Geneva or his “trip to North America” if he was in New York. Coverage of African politics deserves more nuance than that.

An obvious last thought: Wouldn’t solar panels be the best solution for Africa?

 

 

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Why Nigeria’s Credit Rating Matters More than Oil

How can something intangible (credit) matter more than a real resource (oil)?

I just finished a book that changed, or at least makes more dynamic, the way I view African development, Yuval Noah Harari’s Sapiens. Sometimes we get so ensnared in the details of social analysis that we forget to take a step back and look at the larger picture. Harari’s historical account helps us to do just that. His research deepens our understanding of the complexities of the resource course in oil-rich nations without strong democratic institutions.

He argues that one of the key turning points in human history was when we stopped viewing world resources and money as finite, and instead recognized that trust in imaginary future goods could create infinite economic expansion. These imaginary future goods were represented with a new kind of money: CREDIT.

Although we hear of the dark side of credit often—consumer credit card debt, credit on a loan to buy a home that the consumer could never pay off—credit is actually miraculous. As Harari phrases it, “credit enables us to build the present at the expense of the future.” In it, there is implicit hope that future resources will be more bountiful than current ones. That hope in the hypothetical is just so….human. And it has allowed the world’s per capita production to grow at a staggering rate over the last several centuries.

Although he doesn’t mention Nigeria specifically, a section of the book lucidly argues that a country’s credit rating, or the shared belief that a country will pay back its debts, matters more to its economic development than any other factor—including natural resource endowments.

Here is a grossly over simplified explanation using a feedback loop of why a nation’s healthy credit matters so much:

A) People have faith in the future economy —> B) credit is given out —> C) credit allows us to grow current businesses —> D) this growth is invested in new businesses —> E) businesses create goods that can be sold to pay back loans to creditors —> F) these pay backs fortify faith in the future economy.

And we are now back at the beginning of this cycle.

For those familiar with Nigeria’s economic history, any moment in this cycle can be, and has been, interrupted because of its unhealthy oil economy. In 2004, Nigeria required international debt relief after sovereign defaults on what it owed to the IMF. This was due to “heavy borrowing, rising interest rates, and inefficient trade” (see D). When the country suspended the national fuel subsidy in January 2012, no one wanted to expand their businesses that required gasoline, which is all of them since electricity is unreliable (see D). As I have mentioned in another post, oil can create a dangerous mono-economy in developing countries because it replaces the drive to produce anything aside from the oil itself (see E). Because so much of Nigeria’s economy is based on oil, its unstable pricing erodes the “faith in the future economy” that is the basis of credit extensions at all (see A).

Here is the excerpt of Sapiens that struck me as so pertinent to Nigeria:

A country’s credit rating is far more important to its economic well-being than are its natural resources. Credit ratings indicate the probability that a country will pay its debts. In addition to purely economic data, they take into account political, social and even cultural factors. An oil-rich country cursed with a despotic government, endemic warfare and a corrupt judicial system will usually receive a low credit rating. As a result, it is likely remain relatively poor since it will not be able to raise the necessary capital to make the most of its oil bounty.

Based on the description below, would you trust Nigeria to pay back money you gave it as a loan? Or as a business owner, would you trust its economy to grow, and give you returns on a new business you started with money you got from a creditor? Not many people would.

 

What is a country’s credit rating anyway?

In general, a credit rating is used by sovereign wealth funds, pension funds, and other investors to gauge the credit worthiness of a country—thus having a big impact on the country’s borrowing costs.

Standard & Poor’s credit rating for Nigeria stands at B with stable outlook. Moody’s credit rating for Nigeria was last set at B1 with stable outlook. Fitch’s credit rating for Nigeria was last reported at B+ with negative outlook. Overall, there are 11 ratings of stable, 9 rating of negative, and just rating of positive for Nigeria

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As an aside, anyone who witnessed the 2008 American economic meltdown based on home loans can appreciate that these credit ratings are hypothetical. All of those agencies above, those “experts,” failed to change their credit ratings, would could have helped alleviate the devastating U.S. housing crisis that negatively impacted every country in the world.

So, if Nigerian policy makers are to take Harari’s purely academic arguments to heart, they’ll stop writing checks they can’t cash and pay back creditors.

Trust matters.