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How Africa can realise the inclusive prosperity that endures

In Summary

  • Since no one can achieve stability by building fortresses in homes and by driving armored cars, our discourse should not be on how you succeed as an individual but on how we can collectively create wealth and promote a more inclusive economy.
  • The list of factors hindering prosperity is not new, but as economies improve, the gap between the rich and poor continues to widen.
  • It is easier to develop inclusive models in a situation where people have children they can manage to raise.

The African continent is on average performing well in personal freedom, economy, entrepreneurship and opportunity.  At least this is what the Legatum Institute, a London-based independent policy, advisory and advocacy organisation, says in its 2014 Africa Prosperity Report.

Africa’s average sub-index score in the same period is lower for education, followed by health and safety and security.  The report notes that as African economies grow, a chief concern remains how to attain inclusive growth and contribute to true, long-term prosperity.

The report looks at eight thematic areas including The Economy, Entrepreneurship & Opportunity, Governance, Education, Health, Safety and Security, Personal Freedom and Social Capital.

Within the composite ranking, Kenya is ranked thirteenth in this prosperity index and falls within the middle-ranking countries.  Top performers in the prosperity index are Botswana, South Africa, Morocco, Namibia, Tunisia Algeria, Ghana, Rwanda, Burkina Faso and Senegal in that order.

FREEDOM IN WEST AFRICA

The best score for Kenya is in Social Capital and Entrepreneurship and Opportunity where we rank fifth and ninth respectively.  We performed poorly in Security and Safety where we are grouped with Sudan, Uganda, Central African Republic Congo DR, Chad, Zimbabwe and Nigeria.

Regionally, all Southern African countries are in the top ten for Education, Governance, and Entrepreneurship and Opportunity.  East Africa has improved in Economy, Health, and Entrepreneurship and Opportunity, but no East African country was in the top ten of the Economy sub-index in 2014.

All northern Africa countries fall within the bottom third for Personal Freedom, and constitute four out of the top five countries for Health.  Seven out of the top ten countries in Personal Freedom are from West Africa, and only Ghana and Benin rank above average in Education.

All Central African countries are in the bottom third for Governance, but are making progress in Economy, Entrepreneurship and Opportunity and Health.

As I read through the report, I kept on asking myself the following questions: How do we ensure inclusive prosperity as we transform our economies?  Are transformation and inclusivity part of our national and policy discourse?  What should we be doing to unlock the potential of prosperity in Africa?

The Legatum Institute report says poor infrastructure, weak governance, unfriendly business climates, inadequate healthcare and safety and security concerns are the main challenges that hinder long-term development and prosperity, but this list of factors is not new. As economies improve, the gap between the rich and poor continues to widen.  What then is the problem?

PROCESS OF TRANSFORMATION

American Seymour Martin Lipset’s Theory of Modernization, used to explain the process of transformation within societies, may give us a clue.  It looks at which aspects of countries are beneficial and which constitute obstacles for economic development.

In the early 20th century, Lipset came up with four key factors that impact socio-economic development of any country. They were education, industrialisation, wealth creation and urbanisation.  These factors lead to an open class system that is often referred to as middle class, which becomes the driver of democratic transition and stability.

Since no one can achieve stability by building fortresses in homes and by driving armored cars, our discourse should not be on how you succeed as an individual but on how we can collectively create wealth and promote a more inclusive economy.

Lipset’s modernisation theory locates impediments to economic growth to traditions and pre-existing institutions of so-called “primitive” societies, a choice euphemism for societies like our own.

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In his thinking, Lipset believed that democracy is the direct result of economic growth, and that the more well-to-do a nation, the greater its chances of sustaining democracy. This is a sharp contrast from what we know about Africa where for years, Africa’s development has been largely left to what we refer to as development partners.

The fallacy is that development assistance from our friends that is targeted at particular factors of development can lead to transformation of what Lipset referred to as ‘traditional’ or ‘backward’ societies.  Inclusivity has meanwhile been assumed to happen naturally.

BACK TO ROSTOW

Economist Walt Rostow came up with a more comprehensive five-stage model of modernisation which is still relevant in various development contexts. The five stages of development were the Traditional Society, Pre-conditions to take-off, Take off, Drive to maturity, and the Age of mass consumption.

This economic model was heavily inspired by the Marshall Plan, which was used to revitalise Europe’s economy after the Second World War.

It assumes that economic growth can only be achieved by industrialisation and suggests that a country needs to follow some rules of development to reach take-off:

(1) Increase of investment rate to at least 10 per cent of GDP

(2) Establishment of one or two manufacturing sectors with a high rate of growth

(3) Creation of an institutional, political and social framework to promote the expansion.

I make reference to this early literature on development because, in my view, Africa is more than 60 years behind most developed countries.  We are still grabbling with education, health and safety and security, and diseases that have been eliminated in many countries are still widespread in Africa.

African academics have largely been reactive to outside propositions for development. Most join the bandwagon of dominant development thought, while the few original thinkers are often incoherent and illogical ideologues who are then derided as heretics and economic nationalists.

Some like Dambisa Moyo criticise Western patronage on Africa, but there is no real effort in Africa to make the case that any economic growth in Africa must be driven by agents internal to Africa.

UNLOCKING THE POTENTIAL

In my view, we should focus our attention on educating citizens and making investments to move from stages One and Two of Rostow’s model.  To do this, we must consolidate land to enable large-scale production of agricultural output.

We must also aggressively build new cities with a significant number of low income housing and provide all services, water, electricity, schools and health facilities.  This will lead to greater savings from lower health spending.  We can at least start the discourse on what leads to a better life.

To unlock our potential, attention to education must rank very highly in Africa.  Legatum ranks Kenya 15th in the education sub-index.  A recent report shows that a primary school dropout gives birth to more than twice the number of children that a high school dropout gets.

WOMEN IN SCHOOL

The Population Reference Bureau says that early marriages and childbearing, as well as the High Total Fertility Rate (HTFR) engender the large size of Kenya’s young population as well as the country’s rapid population growth rate, with serious consequences on health and development in Kenya.

We must keep women in school if we have to manage our future more effectively.   It is easier to develop inclusive models in a situation where people have children they can manage to raise.

ICTs could be leveraged to change the fortunes of Africa.  They have enabled us to gather huge chunks of data and we must begin to develop capacities around Big Data analytics in order to enable us make better decisions for the future.

Big Data would also enable us to see sections of society that are more often overlooked by planners using traditional data sources.  It is Big Data that will enable us build better predictive models for greater prosperity that is widely distributed.

The writer is an Associate Professor at University of Nairobi’s Business School. Twitter:@bantigito

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