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Sustaining Growth in the Gap: The Challenge of African Governance

By Djoudie Etoundi

african lionAfrica’s Lions are indeed on the move, per McKinsey&Co’s highly successful characterization of Africa’s recent economic performances (the most cited report in history according to Lanre Akinola, editor of “This is Africa”). But although the Lions’ movements have been acknowledged, the route they must travel onward still remains murky to most observers. So this article will propose a framework to navigate sub-Saharan nations’ peculiar mix of high growth, intractable and unpredictable political-military conflicts, internal instability, low economic bases compounded by sometimes harsh physical conditions. Below is an overview of the nature of the most salient challenges African governance must overcome. This is what the Lions must master.

The Lions live and move on the Gap’s Frontier:

The environment of African Growth will be one of Instability: none of sub-Saharan Africa’s political-military conflicts are going to disappear overnight; if anything some will become even more acute. The armed militancy from local Salafi-Jihadists and Al Qaeda offshoots in Mali and Somalia, or the rival neighbors of the DRC enabling militias to secure border security and control over vast mineral resources will endure because their underlying causes will remain. It may actually get worse depending on other factors such the evolution of the Arab Spring or the leadership successions in the Great Lakes region. That is the bad news.

The good news is that this instability need not mean the absence of growth if properly managed. There are many examples where inter-African cooperation has successfully blunted instability while encouraging economic and trade ties. The East African Community (EAC) has thrived over the last 10 years in spite of Somalia’s warring factions and the combined action of Ethiopia and Kenya in 2012 allowed the government to decisively take the upper hand over Salafi-Jihadist militias. Somalia’s subsequent recovery is so dramatic some are calling the next African miracle. Sierra Leone and Liberia are other examples. This phenomenon of fast growth in areas of instability is neither new nor specific to Africa. Former Pentagon strategist Thomas PM Barnett has christened it Frontier Integration, in reference to the old US West and designates the geographic areas across the globe where he anticipates similar issues as Globalization’s Gap. He favors shrinking this Gap through the case-by-case export of security, involving global and local powers.  There are many examples of economies which have and are thriving next to or within the Gap: Israel, South Korea, Columbia, India or even the new Republic of Iraq. What all of them have in common are security guarantees which guarantee the minimal security required to enable connectivity with the Global Economy to develop. Similar security arrangements are needed throughout sub-Saharan nations with both conflict specific agreements and regional and international guarantees, lest the continent’s future growth be derailed by its crises.

Most sub-Saharan political-military conflicts are internal so a conflict resolution mechanism (CRM) must complement this security architecture, one which will pro-actively resolve, mitigate or contain internal crises. The economic impact of a CRM cannot be overstated: former World Bank director Dr. Paul Collier in his path breaking “The Bottom Billion” calculates the average cost of a civil war at $100 billion. Avoiding even a fraction of these costs can significantly improve the fortunes of any economy.  The long-term objective is to over time create a critical mass of integration and prosperity which will make conflicts easier to solve.

The Frontier can be settled:

Post conflict situations although not desirable, can offer significant opportunities for long-term pro-growth reforms.  This apparent paradox was best analyzed in “The Bottom Billion” by Dr Paul Collier. Relying on statistics from several African post-conflicts zones, Dr Collier finds that precisely because of the devastation these countries had endured, they had no vested interests which could oppose radical reforms. What’s more, the implementation of pro-growth and free market policies became the new operating standard of the reconstruction period, thus generating a virtuous and self-sustaining cycle. Rwanda is the most radical example of such a turnaround: now the world’s fastest growing economy after the nadir of 1994 Genocide; a hub for Information and Communication Technologies (ICT) and a projected middle income status by 2020. Somalia, thanks to the reassertion of the government, may soon offer another one.

The challenge for governments, investors and aid organizations is to capitalize on these opportunities and get right the sequence of factors which will make the transition a success. Dr Collier recommends the following: right after the conflict, mostly technical assistance to (re)create local capacity; then more financial assistance to increase it; finally a controlled drawdown of aid to allow free market mechanisms to take-over the recovery. Therein lays also the opportunity for companies and investors to expand and gain strategic advantage early.

Communities are the Lions’ secret to success:

Government defined Sub-Saharan Africa’s first independent 50 years. The leaders and political movements which took over in the wake of Decolonization all focused on securing control and mastery of the state as a means for national rebirth and unity. Subsequently, ethnic-religious rivalries over control of the state formed the basis of much of African politics. Africa’s economic rise however is witnessing a shift of primacy to civil societies. The embrace of mobile phones and ICT by African urban and rural consumers, the increase in healthcare spending, the integration of sub-Saharan economies through inter-African trade or the vitality of NGOs are just a few of the trends spearheaded by private citizens, with states catching up only later. Religious and secular charities in disaster aid, health, education have almost single-handedly held together societies where government broke down during conflicts, as in the Eastern DRC, Sierra Leone and others. The African NGO sector is also peculiar in that it has emerged not only as a source of high paying jobs for the continent’s youth but also as a skills and/or services provider for private businesses. Mining companies in southern Africa, Safaricom and other mobile phones have partnered with or outsourced to local and international NGOs their Corporate Social Responsibility (CSR) initiatives. In Rwanda and Kenya, NGO careers are seen as increasingly competitive. A pro-active policy for African growth must hone the proven track record of African civil societies: governments can put in place regulatory frameworks which facilitate philanthropy and NGO creation. Incentives, fiscal and otherwise, could accelerate partnership between private companies and NGOs on Millennium Development Goals (MDGs) or on indices such as the Ease of Doing Business Rankings. Career paths which allow for alternate stints in the NGO sector and in for-profit companies can be designed. 

The Lions need to organize a common market place:

The Integration of African economies has been much neglected as a factor in the continent’s economic performance. But nurturing inter-African trade is crucial to Africa’s sustained rise.

The first reason is the lack of scale of many African economies, rendering them incapable of generating autonomous growth. The second and often concomitant problem is the lack of access to the sea or international trade routes: 40% of African nations are landlocked, which impedes their ability to connect to the global economy. Regional organizations and free trade areas such as the Economic Community of West African States (ECOWAS) or the EAC whose populations number 300 million and 140 million respectively and combine large seaboards are alleviating these obstacles. But more needs to be done and faster to keep up with the requirements of growth: regionally integrated transport and utilities infrastructure to accelerate cross-border trade including in time common industrial areas; standardized regulation in financial markets and banking; common university diplomas and standardized immigration and labor laws to allow talented professionals to go where their skills are most in demand. Such transfers of skills and people are already happening on the continent: Cameroonian students increasingly complete their degrees in other African universities such as Bamako because of limited entry positions.

In “Reassessing the traditional skill-transfer paradigm: the example of Rwanda”, SFB rector Dr Reid Withlock analyzes how the country leveraged skills from its neighbors and other developing countries to boost its economy : Sri Lankan managers in the tea sector, Kenyan architects, Ugandan car mechanics or Mauritian commercial high-court judges to name but a few. Combining the specific comparative advantages of sub-Saharan nations in natural resources, geographic location, population size or education offers an opportunity unavailable to Africans for the last 500 years: to generate a self-sustaining growth engine decoupled from the global economy’s centers in the US, Europe or Asia.

The Lions have come a long way since the beginning of the 1990s and their future looks full of the promise of enduring growth. But they must learn to manage the instability and risks of the Gap’s Frontier while knowing how and when to exploit its opportunities. They must empower and strengthen further the Communities which have ensured their resilience through the direst conflicts. And they must organize a Common Marketplace which will boost their growth while reducing their reliance on foreign powers. The nature of the future roars coming out of Africa depends on the successful articulation of all these elements.

The Lions have their work cut out for them.

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