Wednesday, May 02, 2012

Dying for growth

First off: Title is credited to WB president.

I heard stories about how beautiful and serene Cotonou and Lome are. I was told the cities have regular light (yes they do) and how they can be vacation destinations. A recent road trip to Togo set me straight. I was shocked that the Cotonou and Lome that I heard about was far from the reality. That trip illustrated the need for meaningful development especially in the areas of infrastructure, education and the economy. On my seat I thought why is Africa declining? When would the continent catch up with others? When would Africa get beyond issues such as good roads, good hospitals, affordable decent housing and promote a solid economic base? 
 Africa’s infrastructural deficits has hindered the continent’s economic growth and effective participation in the global economy. The consequence of this is that the social, economic and political well being of a considerable number of her citizens is on the decline. One thing that is clear is that only Africa can develop Africa. World bank, IMF and other IFIs cannot are limited in their capacity to drive growth. Apart from the fact that development trajectories are not linear across continents (China, India, and South America’s development process is very different from that of the West – that Africa tries to so hard to replicate), Africa is about 2 centuries late in the industrialization process. Second the current WTO (World Trade Organization) regime benefits only the developed countries and negatively impacts the area Africa has comparative advantage- agriculture. 
Thus, it cannot be emphasized enough that African countries need to diversify their economies whilst transitioning from producers of primary goods to manufacturers and service providers. Development and economic growth are vital now because Africa is the fastest growing continent in terms of population. And as the Dettol advert goes “if Africa does not take care of her own who will? How can the continent jumpstart growth? 
The answer lies in quick wins as African countries begin to build systems and institutions that would ensure good governance and its attendant benefits. These strategies include: 
1) Encourage and integrate the informal economy: currently Africa’s informal economy (artisans, self- employed people, domestics, farmers, "engineers") generate 40% of Africa’s GDP. This means carpenters, mechanics, hairdressers, tailors generate large amounts of revenues the government does not get in taxes-that however is not the gist here.) The gist is that these groups of people because of the prohibitive nature of our systems cannot grow and develop their businesses. Thus, the pepper seller at Balogun continues to sell pepper for donkey years and never becomes a de-rica producer and Nigeria imports tinned tomatoes from Asia. The carpenter gets stuck in his cycle of subsistence and cannot become another Sokoa Chair center. Why because the barriers to creating a structured business in Nigeria is prohibitive- all those CAC requirements, cumbersome tax laws and processes, overhead costs. Who needs that when I can make a 50,000 piece of furniture and rest?. This results in a lack of creativity and innovation. As mentioned earlier the pepper seller cannot think of new ways of rejuvenating the business and spends the incomes she earns on getting by.
What should governments do? – formulate pro-poor policies that can give SMEs a proper foundation, ease the government regulations that make managing a business difficult. I would also suggest protectionist policies for businesses in agriculture. 
2) Invest in public health: as it is said, health is wealth. Citizens of a country can never be productive if they are not healthy. Governments have to heavily invest in health care systems especially preventive health. How many people do you personally know that have died needless deaths because drugs are not available? 
3) Invest in practical education so that the current skills gap that exists between what students learn and what the job market requires is closed. In addition, technical and vocational schools have to be properly utilized so that the artisan who tiles knows how to tile properly and not continue in the 20th century method of tiling. Similarly a look at Nigeria’s oil industry would show that expatriate are still very much involved in the production process because Nigerians lack the know how. 
4) Carve a niche: China’s is known for technology, India niche is IT. African countries have to look inwards and discover what can differentiate them and bring in money. Benin and Togo can actively develop their tourist destination like Ghana and Kenya. Benin can also utilize her location as a transport hub for West Africa to attract investments. Nigeria can take her pick from “computer village”- Nigerians may be cheaper than India and China-, brand our aba made products, re-build our textile industry, and tourism too. 
5) Effective use of regional bodies: regional bodies such as ECOWAS are under utilized. Regional bodies can be used to jointly build and develop infrastructure. Imagine a train that goes from Lagos to Accra and the intra trade that this railway would engender. In addition, countries like Togo and Benin can benefit greatly from the large size of Nigeria’s population if their informal economies are properly developed. Nigeria is a ready made market for them. Lastly Africa has a whole needs to take a stance on the WTO regime. What would the above lead to? If African countries get their acts together, build and maintain the required infrastructure and harness the potentials of the informal sector would that translate to Africa becoming a developed continent? Not yet, because there is a lot of catching up to do but at least, Africa would be on her way.

1 comment:

  1. Very informative piece!I like that solutions are proferred to the highlighted problems!!!