Which way Africa!
Social and economic transformation remains illusory and seemingly unattainable on Mother Africa. African leaders have failed to find workable strategies for social and economic take-off. Are the African people resigned to the fact that underdevelopment is a permanent condition of their lives! This situation calls for serious reflection on the part of African leaders. Inequality, poverty, youth unemployment and the general unsatisfactory living condition of the majority of the African people, are all consequences of underdevelopment.
Since the achievement of independence in Africa many economic development experiments were initiated especially by the early post- independence leadership.
These ranged from policies of socialism to those of naked capitalism. Attempts were made for industrialisation, nationalisation and privatisation. In all instances not much has been achieved to pull the African people out of poverty. Poverty levels have in fact increased in many countries. This is a matter of concern to the whole humanity.
There is a tendency among many Africans to think that socio-economic transformation on the Continent shall be brought about by foreign investment and donors. Foreign investors want return on their capital. They invest in those ventures which will give them quick returns.
It is for this reason that much of foreign direct investment in Africa is in extractive industries, especially in mining. Similarly, development aid is like a band-aid. It cannot bring about socio-economic transformation in Africa.
This means that Africa, like other Continents did, must develop itself.
Fundamentals of economic development.
Neo-classical economic development theories teach us that there are certain economic policies which lead to economic growth. These include macroeconomic stability, capital accumulation through savings, incentives for investment, efficient allocation of resources, high human capital formation and rapid technological catch- up. Macroeconomic stability in many an African country is a challenge. African economies are characterized by macroeconomic instability. Due to the nature of African economies most of them are vulnerable to external shocks. These shocks include, volatility of prices of raw materials on international markets; current account deficits; unpredictability of foreign exchange rates and terms of trade. All these influence domestic economies in unpredictable manner. Countries may thus experience fiscal deficit and high public debt. These conditions are responsible for the volatility of economic growth in Africa.
Economic volatility causes uncertainty and unpredictability. Under such condition there is no incentive for investment. At the same time, public debt causes budget adjustments which may compromise productive public expenditure in critical areas such as human capital formation and infrastructure development. Such as situation shall lead to reduction in investment and lowers growth and the possibility of enlarging the tax base.
Another area of great concern is that of the efficient allocation of resources. The African political economy is characterised by political favouritism through the channels of patronage. Many a times, allocation of resources is done on political basis rather than hard economic consideration. Such behaviour diverts resources away from productive use. Efficient resource allocation requires a political economy of a competitive market processes.
Moreover, Africa has not put a premium to rapid technological catch- up.
Research and development have not received priority attention in policy formulation. Funding for research and development in most cases is non- existent. Knowledge creation leads to innovation. Innovation enhances economic growth and development. In this regard, Africa must develop a new economic development paradigm which shall lead to economic development through growth. Africa should adopt a growth enhancing strategy.
Toward a Growth Enhancing Strategy
The growth enhancing strategy entails that governments should adopt policies of facilitating economic growth through the enhancement of collaboration between the public sector and the private sector as well as by integrating the total economy.
African economies generally suffer from the limited capabilities of the indigenous private sector. It is imperative therefore that African governments create mechanisms for indigenous private sector development. This will enable the economies to expand frontiers of production. For example, governments may establish advisory councils on indigenous private sector development.
Secondly, African governments should start to prioritise rural and community development. In post-war Japan, government provided support to rural producers in to enhance integrated linkage between the rural economy and the urban sector. The Japanese government further encouraged the development of rural based entrepreneurs. This prevented rural to urban migration.
The policy further encouraged the growth of income in rural areas, thus enabling a shared growth. Africa’s reliance on foreign owned extractive industries and the neglect of the integrated rural development is responsible for the failure of Africa to lift majority of its population out of poverty. This situation must be addressed if Africa was going to build equitable societies.
Thirdly, technological catch-up can best be enhanced by Public-Private Partnerships. For example, State-owned Enterprises should partner with foreign firms to gain from their managerial experience and their technology. Here in Namibia we have the experiences of MTC and NAMDEB. Both companies benefit by working in partnership with private firms. These experiences should be pointers to a policy for public-private sector collaboration.
Fourthly, if the public sector in Africa is going to play a meaningful role, recruitment in the public sector should be ethical and merit based. This is particularly important for members of boards and managers of State-owned Enterprises.
In many Asian countries, a profit contracting system was introduced to facilitate the growth and competitiveness of enterprises.
Fifthly, the Africa people should embrace the culture of saving. The culture of conspicuous consumption is not helping the African people to save and invest. Our elites are attracted at buying expensive things which are imported which in many cases are non- productive. We buy expensive shoes, suits, cars, wines and the like which contribute nothing to our productive capacity. Similarly, African elites suffer from psychological syndrome of lack of delayed gratification. Since our elites tend to surrender to the urge of immediate gratification, they are in the habit of spending. They would not save. Lack of saving translates into no investment and no growth. Such habits should be discouraged.
Sixth, up to this point African natural resources have not fully served the economic needs of the African people. The rents accruing from natural resources benefit mostly the political elites. Yet African natural resources are a common heritage of all the African people. The African natural resources should be owned by the people. Others can only exploit them in joint ventures with Africans or their governments.
Seventh, the African youth need special attention from their governments. Youth unemployment perpetuates inter-generational poverty and inequality. The fields of ITC, sports, arts and many others, have a potential of providing employment to the youth. Training programmes through Arts, Sports and ICT Academies shall restore hope for a better future in the African youth.
In conclusion, African leadership should step on the plate and provide the leadership which is growth enhancing. Africa needs a developmental leadership. Such a leadership should summon the political will to mobilise the human, financial, technological, moral, cultural and spiritual resources in favour of social and economic transformation of Africa.