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Economic recovery after African coup d’états

A coup d’état (coup) is defined by the Cambridge English as a “sudden defeat of a government through illegal force by a small group, often a military one”. The English use of the term is borrowed from the French ‘coup d’État’, literally meaning ‘a stroke or blow to the state’. The first use of the term in an English newspaper was on 7 January 1802 when the London Morning Chronicle reported on the arrest by Napoleon Bonaparte of high-placed leaders in the French government.

According to data from the Centre for Systemic Peace (CSP), the world witnessed 224 coups since the end of World War II. The African continent experienced 89 successful coups, 137 attempted (but failed) coups and 78 significant coup plots during 1952-2016. The successful African coups accounted for 43% (89 out of 207) of such events globally over the period, with 3 out of 10 African coups classified as resulting in a near total collapse of central authority.

The African Development Bank (AfDB) wrote in 2012 that every African coup has different origins, causes and effects. It added that the “political and economic conditions prevailing in different African countries and the foreign influences at work during different periods have all played a part in fuelling conflicts and coups in the region. The destabilising factors have been many and varied, depending on the national context.”

According to the AfDB, these factors could include 1) established and stable states burdened by poor quality of governance and by corrupt officials; 2) warring factions seeking to gain power in the aftermath of independence; or 3) autocratic regimes repressing any form of opposition but with socio-political discontent and instability seething below the surface.

GDP calculations assess economic health

Low income levels and limited economic growth are also identified as a factor that could lead to a coup. Conversely, “strong and sustainable economic growth, increases in levels of education, opportunities for competitiveness and financial reward, and an uncorrupted middle class, are prerequisites for the long-term political stability in African states”, according to the AfDB.

Real growth in gross domestic product (GDP) represents that change in a country’s economic activity when taking into the impact of inflation on general price levels. It is commonly used as an indicator of an economy’s health. Low growth in GDP or a decline in GDP is interpreted as an indicator of the economy being in poor health, and is most often accompanied by an increase in unemployment and pressure on government tax revenues.

Based on available GDP data and outlier considerations, a sample of 26 African coups during 1980-2016 were selected for an examination of economic growth dynamics in the period prior to, during and after coups. GDP data was sourced from the International Monetary Fund (IMF) World Economic Outlook (WEO) October 2017 database. Using a simple average of the relevant countries’ real growth rates, it is clear that there is a trend in GDP dynamics associated with African coups.

Before the coup – from economic gains to losses

On average, coup-struck African countries experienced reasonable levels of economic growth a few years ahead of the change in leadership, rising to a mean of 3.3% some two years prior to the event (T-2). In fact, only 3 out of the 26 sampled countries – in alphabetical order, Burundi (coup during 1996), Sierra Leone (1997) and Sudan (1985) – did not see positive economic growth in the T-2 period. A country like Niger (1996) experienced growth of nearly 10% in the T-2 year while Guinea-Bissau (2012), Mauritania (2008) and Sudan (1989) recorded growth of 6% or more.

*Irrespective of the specific calendar year when the coups occurred, the calculations made for the above graph compare all countries’ data relative to this year. For example, for all countries, T+1 represents the year after the coup, despite this year ranging in time from 1980 to 2014.

*Irrespective of the specific calendar year when the coups occurred, the calculations made for the above graph compare all countries’ data relative to this year. For example, for all countries, T+1 represents the year after the coup, despite this year ranging in time from 1980 to 2014.

In the year before the coup (T-1), economic fortunes were grimmer. On average, real GDP contracted by 1.1%. Admittedly, there were very deep recessions in some countries: economic activity in Sierra Leone (1997) and Guinea Bissau (1999) contracted by more than 10%. Even the countries with positive growth in the T-1 period witnessed notably lower rates of GDP expansion compared to the T-2 period. In the case of Chad (1990), GDP growth dropped from 7.5% to 2%.

Year zero: economic weakness

Weak economic conditions can certainly be conducive of a coup. The Fund for Peace (FFP), in its Fragile States Index (FSI), takes into account factors such as economic decline and uneven economic development when assessing state fragility – i.e. the vulnerability to conflict or collapse. African countries have in the past and currently still rank amongst the most fragile states, according to the FFP.

Returning to the sample countries, economic contractions were smaller during the year of the coup compared to T-1. The majority of coups happened during the second half of the calendar year, suggestion that the positive economic dividend seen after the event was not able to undo all of the negative trend in GDP seen prior to the coup. In turn, countries like the Central African Republic (1981) and Mauritania (2005) where coups occurred earlier in the year witnessed positive overall economic growth during the coup year.

Economic recovery in the aftermath

The year following the coup (T+1) delivered a boost to economic activity, with GDP rising by an average of 2.1%. Countries like Chad (1990), Mauritania (2005) and Sudan (1985) registered double digit growth in this year. Of the 26 African coups considered here, only 5 – Ivory Coast (1999), Guinea (2008), Guinea-Bissau (1999), Sierra Leone (1997) and Sudan (1989) – did not see an improvement in GDP. In the second year after the coup (T+2), real economic growth increased to an average of 3.6%, including double-digit growth in Niger (1998 & 2010) after both its coups.

The successful ousting of a leadership with weak governance trends could result in almost immediate positive dividends for an economy. The AfDB comments that a coup “may radically alter the state’s fundamental social and economic policies”. In the context of negative trends in GDP during the year of the coup and T-1 period, revised economic policies could fix some of the problems associated with coup-associated recessions.

Considering economic dynamics over a longer period, a continued positive trend in the ensuing three years (T+3, T+4 and T+5) resulted in an average GDP growth rate of 3% during the five years following the coups. This was notably better than a mean of 1.7% seen in the five years preceding the event. The best performer in this regard was Sierra Leone (1997) with an average of 7.9% in the five years after the coup. In the 10 years after coups, economic growth averaged a healthy 3.6% across the 26 African countries.

Overall, these findings suggest that – in an African context – coup events were on average associated with better economic outcomes for the affected countries. Note: the research does not comment on the political, human rights and military factors associated with coup situations, and only looks at economic growth dynamics. The findings do not suggest a coup as a panacea for economic troubles and only reflects on historical experiences based on available GDP data. The available data also points to varying economic experiences during the identified periods.

For more information:

Christie ViljoenChristie Viljoen
Senior Economist
T: +27 (0) 63 682 0217
E: christie.viljoen@kpmg.co.za
@ChristieVKPMG
View all posts by Christie Viljoen

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