Ditch economic orthodoxy
What should be done? There is no quick fix to facilitating industrialisation in Africa. But what is evident from the experience of the newly industrialising countries is that economic orthodoxy will not leapfrog the continent.
China went on an inward- looking economic retreat to facilitate its industrial and economic transformation. General Park Chung Hee, who laid the foundation for South Korea’s rise to stardom, broke all the rules of liberal economics. He nationalised banks, gave subsidy to local enterprises, and invested heavily in the public sector. His strategy strained relations between him and some of his donor partners.
While nationalisation may be far-fetched in the current context, state strategic intervention is not. Africa’s industrial policies are usually externally-oriented ones. They prioritise foreign investment and discriminate against local, especially small-scale industries.
Local businesses mostly do not enjoy tax holidays, credit guarantees, or risk cover by the state. Foreign-owned ones are pampered and over-indulged, all in the name of attracting foreign direct investment. Indeed, some of the so-called foreign investments bring no resources but use the incentives provided by the state to mobilise domestic funds for their capital investments. Such policies are a shorthand for industrial failures!
The rise of the Chaebols in South Korea had considerable state support. Samsung, Hyundai, and the other big multinational conglomerates in South Korea enjoy remarkable state goodwill. They are faces of their country’s foreign policy.
Foreign investment is good, but Africa must invest in its own local enterprises. It must cultivate a class of national entrepreneurs and bourgeoisie and be prepared to underwrite risks and failures in certain risky industrial ventures.
Technical capacity, skills development, research and innovation, huge investment in targeted science and technology projects are crucial in making the difference for Africa’s industrial growth.
Good infrastructure critical
Infrastructure paucity is a major drawback for economic progress. Serious infrastructure deficits increase the cost of doing business, making investment laborious and Africa a very uncompetitive place to invest in, even for its own citizens.
For example, it is estimated that sub-Saharan Africa’s electricity production is equivalent to that of Spain, whereas the continent has over 20 times the population of Spain. Africa must fix its broken infrastructure and expand it massively.
If the US is still refurbishing its own infrastructure and dispensing huge public funds on it, what about countries that do not have the infrastructure in the first place, or broken infrastructure?
Public-private sector partnership in infrastructure investment is positive but such must not be at the expense of public welfare. Affordable cost, accessibility, quality, and high standards should be the guiding principles of public interest in negotiating public-private sector partnership in infrastructure development in Africa.
For Africa to tell its story and negotiate its future, it must be in command of information and data about itself. It is shameful that data and information about Africa is often cooked and dished from outside the continent. Even Africans rely on outside institutions to give it data and information about itself. This is shamefully embarrassing.
With accurate and reliable data, Africa can plan and project, define its vision, and chart the course of its future. Planning without reliable data is indeed planning to fail. As such, all efforts to strengthen Africa’s information, data and statistical capacity must be encouraged. It is the first step towards laying the foundation of an industrial society.
The basic fundamentals for a game changer are in place – huge natural resources, abundant labour reserves, vast arable land, energy concentration, and favourable weather conditions. What Africa needs is to create wealth, progress, and prosperity out of all these. Human ingenuity and strategic planning and execution powered by visionary leadership will define Africa’s place in the 21st century.
Professor Adejumobi lives in Lusaka, Zambia. The views expressed herein are personal and do not represent that of any organisation.