It matters how we think about institutions and how we design them. We recognise that institutions are essential for good governance and to achieve development outcomes. Our discussion in this Newsletter focuses on organisations as institutions. Given the inter-disciplinary nature of our work, we look at institutions from both an economic perspective, and also from a legal perspective. With regard to the former, we recognise the delineation of Douglass North (who shared the 1993 Nobel Prize in economics with Robert Fogel for the work on economic and institutional change) between institutions as the rules of the game and institutions as organisations which implement the rules of the game. From a legal perspective, we recognise that the history of statehood is also about the role of institutions (both rules of the game in the form of legal instruments – and organisations) to protect the rule of law and democracy. Our focus here is on institutions as organisations. We discuss select developments related to the role played by institutions in national, regional and global trade contexts, and their relevance for Africa.
We acknowledge that current challenges of legitimacy and sustainability, and global crises such as climate change and trade wars, can only be tackled through joint efforts and appropriately designed institutions.
Institutions are necessary to secure good governance outcomes across the full spectrum of public policies. The literature on economic governance shows how governments’ ability to tackle the problems of poverty and inequality are linked to the institutional context in which such policies are developed and executed. Where transparency, public participation and inclusivity are absent, corruption and inefficiencies can prevail.
tralac’s publications have often argued that institutions are central to sound trade governance and to regional integration in Africa; and what the consequences are when they are absent or are abolished. We have, for example, discussed the fate of the Southern African Development Community (SADC) Tribunal when, in 2011, the political leadership (under the instigation of President Mugabe of Zimbabwe) decided to abolish it. That saga continues. There have been two important recent judgments by senior national courts in SADC Member States about this matter. They ruled that the SADC Tribunal was irregularly abolished. We report on these developments and what to expect in this blog.
The launch of the African Continental Free Trade Area (AfCFTA) is another reason for revisiting the good governance/sound institutions debate. The institutions established as part of the AfCFTA may hold the key to the success of this bold initiative. The importance of technical capacity development for institutions to play their roles as anchors of good governance is an important one. While there is significant investment (often support by international donors) in technical capacity development, the link to institutional capacity development is often weak. We focus on the AfCFTA institutions here.
The debate about the importance of sound institutions is an old one. The history of statehood and good governance is about how societies over time designed and refined institutions to anchor and protect democracy and the rule of law. These “institutions” include constitutional arrangements such as a Bill of Rights, the independence of the judiciary, judicial review, separation of powers, checks and balances, transparency and access to information.
Politicians and government officials exercise the power of the state. The rule of law is necessary to ensure transparency and accountability. The failure to respect good governance has a tendency to come back and bite those who ignored or dodged the rules. In South Africa, the government must now deal with a national economy teetering on the brink of implosion after years of corrupt rule. Its leaders are under attack because they failed to respect transparency around political donations. And a vital oversight institution, the Public Protector, is under threat. We mention the reasons why this respected institution is now the target of several court applications to set aside her reports and findings.
A system of rules-based trade is essential for regulating the actions of “sovereign” states. The establishment of the World Trade Organization (WTO) in January 1995 coincided with major shifts in global relations; when communist rule in Europe came to an end. The WTO Agreements and the Dispute Settlement Understanding (part of the WTO’s “single undertaking”) were hailed as the harbingers of certainty and predictability in international trade; the end of power politics and coercion. That system is now facing systemic challenges. Protectionism is growing with a new justification – the need to protect national security interests. These claims are justiciable but by the end of this year the Appellate Body (AB) will not be able to function because the United States (US) refuses to agree to the appointment of new AB Members. This Newsletter refers to these developments here.
Good governance, bolstered by solid institutions, is an ideal, not a given. That makes it powerful but also open to attack. Institutions must be defended, and reforms may well be necessary to tackle new challenges. Today, millions feel powerless and unrepresented in political and economic systems that respond inadequately to their needs. Mistrust of once deeply respected institutions is widespread. Many speak of a “democratic deficit” in national and in regional organizations. They demand reforms. We recall how the Bretton Woods System came into existence 75 years ago and how it contributed to the restructuring of world order in the aftermath of the Second World War. That system is now in need of far-reaching reform, as our blog on the Bretton Woods System shows.
We are aware that the very notion of democratic rule is being contested. Gideon Rachman has written that the 21st century could be the century of the “civilisation state”, which is “a country that claims to represent not just a historic territory or a particular language or ethnic-group, but a distinctive civilisation. It is an idea that is gaining ground in states as diverse as China, India, Russia, Turkey and, even, the US. The notion of the civilisation state has distinctly illiberal implications. It implies that attempts to define universal human rights or common democratic standards are wrong-headed, since each civilisation needs political institutions that reflect its own unique culture. The idea of a civilisation state is also exclusive. Minority groups and migrants may never fit in because they are not part of the core civilisation.”
The proponents of such views will not shy away from invoking those aspects of the Westphalian model which suit them, such as state sovereignty and the exclusive nature of national jurisdiction. They argue, for example, that essential domestic interests (as defined by the government of the day, now often articulating populist sentiments) should not be interfered with from outside; in particular when human rights abuses are at stake. This is part of a wider argument within the context of a contest for global leadership.
This debate will not be over soon. Some of the traditional defenders of rules-based institutions (such as the United States and the United Kingdom) find themselves in the midst of their own crises of national identity. They now shun the WTO and the European Union (EU), which they previously supported. It has been observed that under President Trump, “white nationalism has moved from a fringe movement to something much more mainstream in American politics.” Surveys have shown that in the Brexit context, people voted to leave the EU because they feared immigration. Others want “to take back control”.
One should be careful about weighing the pro and contra evidence. Brexit does not bring the European project to an end and President Trump may not be re-elected.
The developments discussed in this Newsletter will hopefully contribute to a debate in which a unique African voice will also be heard – in support of the institutions underpinning good governance. The challenges which the continent and individual African states face can only be tackled through joint efforts and properly designed institutions.
We look forward to your feedback.
The tralac team