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Outgoing Cape Verde President Pedro Pires casts his vote during the presidential elections in Praia on August 21, 2011.

After two years of failing to find any suitable candidate for their lucrative prize, judges have finally found a winner for the $5-million Ibrahim prize for African leadership – and he is from one of the tiniest countries in the continent. The prize has been awarded to Pedro Verona Pires, ex-president of the small island state of Cape Verde, which has barely 500,000 inhabitants. He was praised for introducing democracy, boosting the economy, and stepping down promptly at the end of his term limit without trying to extend his rule. But the awarding of the prize was accompanied by strong warnings about stagnation and backsliding by dozens of countries across Africa.

The prize

Financed by Sudanese telecom billionaire Mo Ibrahim, it goes to a democratically elected African leader who has retired from office after accepting constitutional term limits. No suitable candidate had been found since 2008, sparking jibes from skeptics and debates about the poor quality of African leaders.

Intended to boost the calibre of governance and leadership in Africa, it includes a $5-million (U.S.) to be paid over 10 years, plus a further $200,000 annually for life thereafter, and another possible $200,000 annually for good causes of the winner's choice. The prize was first awarded in 2007, and the only previous winners were former presidents Festus Mogae of Botswana and Joaquim Chissano of Mozambique.

It is sometimes criticized as a kind of "bribe" for African politicians, an attempt to "seduce" them into virtue. But its supporters maintain that it helps to strengthen democracy and good governance.

The annual Ibrahim index on governance is a key factor in determining which leader will receive the award. The index ranks African countries in four broad categories: human development; participation and human rights; safety and the rule of law; and sustainable economic opportunity.

The winner

Mr. Pires was a leader in the struggle against Portuguese colonial rule in his small nation, more than 500 kilometres off the west coast of Africa. He became the first prime minister of the newly independent nation in 1975 and was elected president in 1991. After two terms in office, he stepped down this year, rejecting calls by supporters who wanted to amend the constitution so that he could remain in office.

The prize committee was impressed by "his ability to manage the difficult transition from single-party autocracy to multi-party democracy." It also noted that Cape Verde's economy has grown by more than 6 per cent annually for the past decade, far above the African average, even though it has few natural resources.

In 2007, Cape Verde became only the second African country to graduate from the "least developed" category and become a middle-income country by United Nations criteria. It has also ranked as one of the top countries in the Ibrahim governance index for the past five years. It has a literacy rate of more than 80 per cent and a life expectancy of more than 70 years.

When some people suggested that the constitution could be revised to allow him to stay in power, Mr. Pires rejected the idea. "This is a simple matter of faithfulness to the documents that guide a state of law," he said.

Cape Verde has become an example "not just to the continent but to the world," Mr. Ibrahim said. "It is wonderful to see an African leader who has served his country from the time of colonial rule through to multiparty democracy, all the time retaining the interests of his people as his guiding principle," Mr. Ibrahim said.

Cape Verde is so small and obscure that the prize committee joked that none of its members had the phone number of the former president to inform him of his victory. It was finally Mr. Chissano, the ex-president of Mozambique, who managed to contact Mr. Pires on Sunday to tell him of his prize.

The most deteriorated

In its latest annual index on governance in Africa, the Ibrahim Foundation reported that 39 of the 53 African nations had gone backward in their score on democracy and human rights, one of the four key categories in the index. "We are concerned about the stagnation, and in many cases the reversal, in the rule of law and citizens' rights," Mr. Ibrahim said in the report released on Monday. "We sounded alarm bells last year concerning this issue. If economic progress is not translated into better quality of life and respect for citizens' rights, we will witness more Tahrir Squares in Africa," he said, referring to the epicentre of the street protests that toppled Egyptian autocrat Hosni Mubarak this year. The steepest decline in the latest index was recorded by Madagascar, in the grip of a political crisis since a coup in 2009. But dozens of other countries saw a decline in their score for human rights and participation, including Western-backed nations such as Ethiopia, Rwanda, Uganda, Senegal, Zambia, Kenya, Namibia and Tanzania. In their overall score, the worst-governed countries were Somalia, Chad, Zimbabwe, the Democratic Republic of Congo, and the Central African Republic.

The most improved

The most striking improvements over the past five years were in two of the poorest countries: Liberia and Sierra Leone, both still recovering from devastating civil wars. The best-governed countries in Africa, according to their overall score, are Mauritius, Cape Verde, Botswana, Seychelles and South Africa. All except South Africa have relatively small populations, and three of top five countries are island states with substantial income from tourism. Egypt and Tunisia, where long-time dictators were overthrown by street uprisings this year, are also among the top 10 countries in the index. But the Ibrahim foundation noted the stark imbalance between their economic scores and their human rights scores. This imbalance "might well have been a trigger for instability" and serves as a warning to other countries with a similar imbalance, the foundation said.

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