This column has been criticized for using other countries as examples for African countries to model development efforts after. My response is as follows: If you want success, copy success. That is precisely what African leaders should be doing. It worked for the countries I have used as examples. Japan copied Western companies of the mercantile era, which compelled Japan to open its market to Western trade. The interaction taught Japan an excellent lesson because they learned they could reverse the process and gain global market share post-WWII. The experience of Japan inspired then-South Korea President, the late Park Chung Hee, because he saw Japan rise from the ashes of war to a state of economic prosperity by taking calculated risks in their post-WWII economic development plan and policy. Taiwan and South Korea copied Japan. Singapore copied all three: Japan, Taiwan, and South Korea. One of the most essential characteristics of the rise of the countries is the attitude of the leaders. Their approach to development was about the importance of achieving economic emancipation for their country and people. There was incredible focus on the outcomes and an intentionality in achieving the purpose of development. Externalities could not manipulate the leaders of the Asian Tigers because they did not give externalities the weakness of greed and thereby forego the leverage of development strategy centered on the benefit of their nations and people. Because African leaders were greedy, they allowed themselves to be led by their adversaries in the choices of the type and method of economic development they chose for their countries. These are not abstract concepts. They are the reality of African countries that continue to this day.
First, Africans chose Import-Substitution Industrialization (aka ISI), a development strategy focused on economic development through projects. Former colonial powers pushed this development method because it was the way of continuing their dominance of former colonies. It gained various monikers, but the two most important were “neo-colonialism,” coined by leaders like Kwame Nkrumah, and “empire by other means,” coined by principals of former colonial governments. It created Western business agents like Tiny Rowland. Tiny became an arm of British economic aspirations and policy in its former colonies with the Royal family’s support, which invested in his company, Lonrho Plc. That era gave rise to a phenomenon that has plagued African countries since. 1. It birthed politicians receiving kickbacks on industrial development projects; 2. Foreign salespeople earned high commissions on projects that benefited the companies, pushing them more than the country they imposed them on; 3. Finally, the contracting companies earn excessive profits for executing the projects. It became a self-fulfilling prophecy once they learned this was an easy path to gaining illicit wealth through their positions. The other portion of this nefarious association was the contracts for raw materials. African leaders were coerced into signing away the rights to their raw materials for pittance. This was the culmination of the strategy of “empire by other means.” Colonial governments like Britain, Spain, Portugal, and France were primarily interested in continuing to exploit the raw materials they had found in the countries at the lowest possible price. Pre-independence, they had access to raw materials virtually at cost, next to nothing, because they set the price. Post-independence, they wanted to continue the same exploitative policies, and it required having a puppet with the help of African countries to do their bidding.
It became the acceptable practice of the political class and gave rise to the ignoble phraseology “our time to chop,” translation, “our time to eat.” The addiction to development by projects is directly linked to the corruption inherent in the political class of African countries. They steal from their constituents on the front end and pass out a pittance of cash to the same on the back end as a soothing balm to cover the gross misdeeds they are foisting on their country and people. Since independence, African political classes have majored in getting kickbacks on every government procurement and executed state capture at a high level on every state-owned enterprise (SOE). Contrast that with the focused attention of the Asian Tiger leaders to their economic development and emancipation. While African leaders focused on self-aggrandizement through gross corruption, the leaders of prosperous Asian countries concentrated on growing the economic prosperity of their countries and lifting their people out of poverty. That is the primary reason and the wellspring from which African countries have failed to evolve successful economies almost 60 years since the transition from colonial rule to independence.
Sustainable economic development is less complex than rocket science or heart transplant surgery. It has replicable examples because it has worked since before the first Industrial development and is still working today. The process helped to create the modern Netherlands, United Kingdom, Spain, France, and Portugal. In the modern era, you can add Japan, Hong Kong, Taiwan, South Korea, Singapore, China, new-to-the-process, Bangladesh, and Vietnam. To evolve a grassroots development, African countries must, by necessity, focus on the needs of their societies. In the current circumstances, the primary need of African countries is revenues. From solving that singular problem, a fountain of economic development and growth will emanate, lifting all of society’s boats.
The solution is not to increase trade between African countries (i.e., intra-African trade). However, that has the potential of being an excellent contributor to the overall economic growth of the continent if effectively implemented and prosecuted. Neither is developing infrastructure for the sake of having infrastructure. That will only exacerbate debt servicing issues, which already plague many countries. In fact, one of the central tenets of a new deal with their people is the importance of eschewing the big lie of “development by projects.” Individual projects in the infrastructure or commercial arena cannot resolve the economic challenges facing any African country. On the other hand, strategic infrastructure projects that can manage debt service independently of the government’s financial allocation and alleviate economic pressures in different parts of the economy are the only projects that merit investments at the current stage of African countries’ economic development.
African countries must focus, albeit not exclusively, on projects that earn hard currency income for the treasury and create employment. There are specific initiatives that every country can implement—that’s every African country, from the smallest to the largest, and they can start immediately. The first step is to use the private sector to drive the process. It also means deregulating enterprise formation and cleaning up the public sector. The most successful countries have a competitive environment for starting and incentivizing new business formation. Leaders need to understand why the pivot is necessary. Since independence, the public sector has tried to lead African countries in the political and economic spheres. There is overwhelming evidence that it has failed spectacularly. After many years of a global struggle to free African countries from catastrophic indebtedness through the efforts of Bono and his Live Aid and countless other initiatives, most African countries are in disarray in both spheres. The initiatives led to the HIPC (Heavily Indebted Poor Country) program of multilateral lending agencies established in 1996. In reality, the process of excessive debt in African countries has come full circle as countries find themselves ever more encumbered by debt and needing IMF bailouts to operate their societies. An IMF bailout is the same as a bankruptcy, except by countries instead of individuals. Many countries have returned to where they were before the last debt relief. The evidence is overwhelming that African countries need a new path to economic emancipation led by the private sector.
A private sector-led economic development will also reduce the temptation for political leaders to succumb to corruption. The government has a massive role in society, but as African countries have seen and experienced, managing business is not one of the government’s strengths. That’s why communism and socialism as economic models have failed worldwide. The role of government in fostering economic growth and development should be to incentivize and enable the private sector to do what it is designed by nature to do. The best development model in African countries should follow the South Korean, Taiwanese, and Singaporean models. It can best be described, as the South Koreans characterized it, as “Guided Capitalism.” It requires public sector leadership committed to doing the right thing for the country and its people. The pivot from the public sector to private sector-led economic development is the foundational step that African political leadership must implement to “unleash” the pent-up potentialities of their people and countries. Without this pivot, no economic development initiatives are sustainable or even feasible. In Japan, they used a business model known as the Sogo Shosha, and they are still around today. In South Korea, they used the Chaebol. Samsung is the most famous one. Singapore used foreign (US technology companies of the day, such as Hewlett Packard, Texas Instruments, etc.) companies to jump-start their development process. Taiwan was led by individual entrepreneurs whose government incentivized them to invest in specific sectors of the economy. Hong had a more laissez-faire approach under British management, beginning with the governorship of Sir Alexander Grantham, who governed from 1947 to 1957. The seeds of the transformation of Hong Kong were planted under his governorship. Economic development processes that have led to a successful economic transformation have an indelible history and are easy to replicate. The issue with the countries of Africa is that you cannot learn it by going to conferences and meetings. It is understood by doing.
South Korea’s plan originated from the founder of Samsung, who was, at the time, a small importer specializing in importing rice from Japan for sale in South Korea. He had first-hand knowledge of the Japanese economic transformation through exports. He suggested to the government that South Korea should consider a pivot from the import substitution strategy, which was the development strategy of the day, to an export-based development strategy, like Japan. Park Chung Hee accepted the idea, and Kim Chung-Yum was handed the reins to build it. One of the Tiger economies’ secret weapons was the impact of their super-ministers. South Korea had Kim Chung-Yum, and Singapore had Goh Keng-Swee. The infrastructure of high-quality leadership determined to achieve government goals is why the Asian Tiger economies prospered. If African leaders want to succeed, they must model the process that enabled the Asian Tiger countries to achieve the mind-blowing success trajectory they recorded since the 1960s, a timeline contemporaneous with many African countries gaining independence and self-rule…..This will be continued in next edition of Unleash Africa Newsletter.
https://whc.unesco.org/en/list/1484/#:~:text=Prompted%20by%20the%20need%20to,combined%20with%20traditional%20craft%20skills.
https://medium.com/@tinashemurapata/tiny-rowland-crony-capitalism-e9456aea53e4
Tiny Rowland: Businessman, spy, friend of apartheid?
https://immigrantinvest.com/cbi-guide/best-countries-for-business-en/
https://www.worldbank.org/en/topic/debt/brief/hipc
https://www.nytimes.com/2024/08/28/business/african-debt-crisis.html
