The fact that Africa lags behind the rest of the world in development, is not newsworthy – By Ronak Gopaldas, Independent Analyst
The continent’s challenges are stark, and with a young and growing population demanding jobs and inclusive growth, these challenges will be amplified unless fresh, imaginative and innovative polices are developed to fulfill their growing demands and needs.
The big question then is how to go about achieving a sustainable path to growth and prosperity. This is a complex debate, but the combination of technocratic leadership, the embrace of technology and shift in mindset from both businesses and policymakers are three key elements required to ensure the continent prospers.
More technocratic leadership
Reform has become the buzzword for many African markets which need to make some tough and politically contentious decisions in order to improve their investment attractiveness. With skepticism around Africa’s economic trajectory growing, monetary and fiscal policy, banking, and many other areas of policy and economic activity now require oversight by those with professional competence and a much longer time horizon than that of politicians.
A technocrat is someone with expertise or a skill level in their field in a respective ministry. They’re not by nature a career politician. A technocrat would be someone like a lawyer, economist, engineer, someone with a professional competence that hasn’t necessarily been involved in political campaigns or party politics. The classic example is that of a Finance Minister would be someone with an academic background in economics who had worked for years at the IMF but has not previously run for elective office or been heavily involved in election campaigns.
What is the value in this approach?
Well, for one, technocrats promise a different style of governance, one in which expertise and objectivity matter more than zero sum political calculations. The argument is that a technocratic government has the capacity to make major changes such as the introduction of new taxes, pension and subsidy reforms, liberalisation measures and so on – changes that put a country on a more efficient and more sustainable economic trajectory over the medium to longer term. Given the fact that technocrats are not party politicians, they are not – in theory – constrained in their actions by the fear that voters will throw them out at the next election.
The real advantage of technocrats as opposed to career politicians though, is twofold: on the one hand, the time horizon with which technocrats view policy is a longer term. This means that making the difficult and unpopular policy decisions would not be a deterrent, as their focus goes beyond the next election. The other thing is they tend to be less ideological in their approach. The overall effect is efficiency is increased, and the policy paralysis and the bureaucratic inertia that affects a lot of the emerging markets will be improved.
The problem is such professionals rarely enjoy the political clout to push through non-populist policies. That role has been reserved for politicians who help keep the government in office. As such it is critically important that technocrats can operate with the political cover necessary for their ideas to be implemented and actioned.
Mauritius is a standout example of what can be achieved if pragmatic, technocratic governance is adopted. When Mauritius became independent in 1968, external observers predicted the country would experience poor economic performance due to its high population density, reliance on a single crop (sugar cane), and ethnic divisions. But some difficult decisions helped set it on a road to progress. The loss of preferential trade agreements in the sugar and textile sectors forced the government to seek further diversification of the economy, and high investment in education and the strengthening of institutions became the government’s priorities.
Under a series of coalition governments, the nation moved from agriculture to manufacturing. It implemented trade policies that boosted exports: an export processing zone; smart diplomacy on export preferences and a competitive exchange rate. When external shocks hit – oil price increases, loss of trade preferences and overwhelming competition from Chinese textiles - it was able to adapt with business-friendly policies.
According to Ericsson, by 2019 there will be 930 million mobile phones in Africa, almost one for every person on the continent. There is greater mobile penetration than electricity penetration. Now, people are able to connect, get news, trade, get access to healthcare and even transfer money.
Given the nature and scale of the developmental challenges Africa faces, digitisation and technology offer opportunities to overcome many traditional barriers to entry. There are limitations of many governments in providing necessary services, including healthcare and education, to their young population. Technology, therefore, can act as a great enabler, and allow young people to circumvent these constraints.
In healthcare, technology could bring parity, removing the need of many healthcare professionals, and establish functioning service equilibrium in the healthcare sector in Africa. It has already improved the doctor-patient interaction, reducing costs and improving care for patients. The benefits range from cheaper, quicker medical education to point-of-care ultrasound. In terms of education, digital technology has enabled students and educators alike from all over the world to work together, spread knowledge, and increase learning opportunities for everyone. In an African context, this provides significant opportunities, especially in rural areas where resources are often scarce.
Indeed, the growing focus on “GovTech” and “CivicTech” comes at a time of growing interest in the role of technology and big data in facilitating citizen engagement and improving both services and public sector accountability.
This has already been used with great effectiveness in countries like India, where an ICT program called Akshaya, for example, is starting to transform the relationship between citizens and public services. By automating tasks and reducing the discretion of public officials, Akshaya enhances efficiency, can reduce leakages and improves transparency for citizens.
Meanwhile, In the Democratic Republic of Congo, citizens of South Kivu Province are using “mSurvey” to obtain information about budget meetings. Using just their mobile phones, they can actively monitor, discover what was decided at meetings, and evaluate those decisions via online voting.
In Rwanda, Zipline, one of the country’s biggest logistics company uses drones to deliver small packages like anti-venom, vaccines, blood, etc. With investment support from software giants like Google and Microsoft, and business operations already delivering great results, many other players are likely to join Zipline’s league soon.
As the above example illustrate, innovation in an African context is largely driven by necessity. In this context, tech is facilitating real-world solutions to real-world problems. If used properly, technology can be a gamechanger for the continent by levelling the playing fields and allowing many young Africans who feel disillusioned and disconnected from political processes and under-performing governments, to take matter into their own hands and shape their own destinies.
A more collaborative approach
The roles of the public and private sectors need to be properly understood and defined if Africa is going to create the jobs required for its young people. Both African sovereigns and businesses need to accept that it is not simply a case of ‘government versus market’, despite the convenience of simplifying complex problems to binaries. The current adversarial relationship seen in many countries, especially the likes of Tanzania and Nigeria, therefore needs to change dramatically
African governments must recognise that they cannot solve their countries’ development challenges alone. Without a strong, vibrant and active business community, their administrations cannot sustain the investment and growth of financing required to create jobs. A more collaborative approach is needed, focused on value creation rather than destruction.
At the same time, it is easy to frame the business community as victims where draconian and punitive measures are levied against them, but in many instances, the backlash is self-inflicted. Global businesses – particularly in the resources sector – don’t have a savoury track record on the continent. Exploitation, non-compliance with tax requirements and poor labour practices are just some of the major failings of certain multinational enterprises operating in Africa. So when mud is thrown, it sticks.
In short, business generally needs a fundamental reset of the way it conducts activities in Africa. Like governments, the private sector also needs to think beyond the short term. The reality is that two-dimensional capitalism will not succeed in Africa. Societal problems can neither be solved nor prevented by the state alone, or by development organisations working on their own. Therefore, private sector business leaders need to tackle poverty and drive social progress by ensuring that long-term value addition – as well as short-term gain – is built into their business models. In an Africa context, businesses must realise that they can “do well and do good” simultaneously – in short, making money and solving societal problems are not mutually exclusive. In fact, they are mutually reinforcing,
From government’s perspective, policy makers around the continent must help to build more enabling business environments. Supportive policy and investment framework are essential to attract long-term investors. Policies to build local capacity and address inequality are key, along with plans to diversify their economies and upskill the locals. Clear and transparent regulation is non-negotiable. Finally, governments also have a responsibility to foster stable macroeconomic and political environments, a stable exchange market, manageable inflation, and good corporate governance.