Over the last month we have looked closely at the progress, opportunities and challenges in other African countries. We have learnt some valuable lessons from the economic transformation that is currently taking place across Africa.
Ritesh Anand Column
Economic transformation agendas by governments all over the world have always been deployed as a means of transforming the lives of their citizens. The story of modern China’s ascension to become a global economic world power started with the economic reforms of chairman Mao Zedong in 1949 which were later consolidated by Deng Xiaoping’s theory of a “Socialist Market Economy”. China’s rapid economic growth in the 1980s and 1990s was largely credited to Deng’s socio-economic model of a political market economy.
Over the last decade, China has been one of the fastest growing economies in the world and is expected to overtake the US as the world’s largest economy by 2020, according to Market Watch. Since the mid-1990s many sub-Saharan African countries have seen solid economic growth buoyed by reforms in macro-economic management, improvements in the business environment and high commodity prices. Rising incomes are supporting the emergence of an African middle class and young Africans are now much more likely to return home to pursue a career after an education abroad.
To ensure that growth is sustainable and continues to improve the lives of the majority of their citizens, countries now need to vigorously promote economic transformation. Growth so far has come from macro-economic reforms, better business environments and higher commodity prices. But economic transformation requires much more. Countries have to diversify their production and exports. They have to become more competitive on international markets. They have to increase the productivity of all resource inputs, especially labour, and they have to upgrade technologies they use in production. Only by doing so can they ensure that growth improves human well-being by providing more productive jobs and higher incomes and thus allow everyone to share in the new prosperity.
According to the African Centre for Economic Transformation (Acet), what African countries need is more diversification, export competitiveness, increased productivity, technological upgrading and improvements in human well-being or in short Depth.
Government, private sector, workers, media and civil society all have mutually reinforcing roles in promoting economic transformation. Private firms — foreign and local, formal and informal — should take the lead in producing and distributing goods and services, in upgrading technologies and production processes and in expanding the opportunities for productive employment. However, they must be facilitated by a government that has strong capabilities in setting an overall economic vision and strategy, providing efficient supportive infrastructure and services, maintaining a regulatory environment conducive to entrepreneurial activity and facilitating the acquisition of new technologies and the capabilities to produce new goods and services and access new foreign markets.
Similarly, government can gain much from having firms and entrepreneurs weigh in on setting a national economic vision and strategy — on designing policies, investments, and incentives to support that strategy. Strong third-party mechanisms of accountability can draw in parliaments, independent media, academics, think-tanks and civil society to ensure that close collaboration between officials and firms does indeed support economic transformation.
The African Union’s 2063 Agenda calls for the region’s economies to integrate and to join the global economy. This will require developing human capital through education and training, especially in science, technology and innovation. It will also require accelerating infrastructure development to link African economies and people by meeting the targets set for energy, transport and information and communication technologies. It will also require fostering meaningful partnerships with the private sector.
Many African economies are growing faster than they have in 40 years. Six of the world’s 10 fastest growing countries in the 2000s were in Sub-Saharan Africa: Angola at 11,1% a year, Nigeria 8,9%, Ethiopia 8,4%, Chad 7,9%, Mozambique 7,9%, and Rwanda 7,6%. And several others were above or near the 7% growth needed to double their economies in 10 years.
Behind the growth are the implementation of better economic policies, end of decades-long debt crisis, high commodity prices and rising discovery and exports of oil, gas, and minerals, and the beneficial impact of new information and communication technologies. However, the structure of most sub-Saharan African economies has not changed much over the past 40 years. Production and exports are still based on a narrow range of commodities and the share of manufacturing in production and exports remains relatively low, as do the levels of technology and productivity across economies.
On global markets, African countries generally find it a challenge to compete, except in primary agricultural commodities and extractives. And the levels of vulnerable and informal employment are high — around 80% in many countries — which translate to high poverty levels with around 50% of the population living on less than US$1,25 a day. Pursuing economic transformation or growth with Depth agenda is therefore imperative for African countries.
Zimbabwe has lagged behind the rest of Africa, dramatically, in terms of economic transformation. We have failed to diversify our economy over the last 20 years: productivity has declined with many industries still collapsing; there has been limited technological improvements especially in industry; and the standard of living has declined in Zimbabwe over the last two decades.
We can learn valuable lessons from the rest of Africa and develop our own agenda for economic transformation built on the pillars of Depth. Over the next few weeks we will look closely at the pillars of Depth.'