Progressive governments want every segment of their society to share in generated prosperity. They strive to increase the number of citizens migrating from a lower to a higher level of well-being. The faster the pace of these upward migrations, the better it is for society and economy. Unfortunately, that is not the case for the African continent. There are significant economic disparities among diverse groups in many African countries. It is a trend that requires urgent reversal. But the self-rule mentality among many African leaders presents a significant challenge. By deepening corruption, the mindset of self-rule tends to perpetuate the disparity. Through the natural capitalistic wealth creation process, the wealthy wealth owners get more prosperous. This prosperity compounding occurs because they have better access to more resources relative to the rest of society. How can Africa thus speed up the process of creating economic opportunities for all?
Let us examine some well-known cases. A good example is an insurgency in Nigeria. Albeit debatable, Boko Haram’s insurgency persists because of the severe deprivation in northern Nigeria. The latter orchestrates hardship and alarming levels of economic inequality. It is a region with less than 2% of the population controlling its entire financial resources. Living side-by-side this ultra-socio-economic category is a horde of vulnerable people. Worse still, is that not many concrete policies and programs are in place to remedy the situation. The challenge is how to include these marginalized groups in prosperity sharing. Again, there is concern about the continent’s prosperity transitioning process also wrecking the traditional ways of life of the African people. It is this way of life that has also guaranteed their survival over the centuries. Prosperity’s transitioning process leaves in its wake, litters of culture and value waste. Cultural value destruction also crushes the means of subsistence of many in the lower ends of the socio-economic ladder thriving through it.
Again, the environment for significant levels of inclusive prosperity is also one in which the observance of the rule of law is high. When everyone is subject to the law, the government works. The rule thus provides the framework that enables the government to work for the good of the public. The more efficient it is, the more robust the ecosystem is for inclusive prosperity. How has Africa performed on this? The 2018 Ibrahim index of African governance is not cheering at all on safety and the rule of law. The percentage score on personal safety in the continent is 46.2% while transparency and accountability were 35.3%. Only 19 countries improved between 2008 and 2017. Thirty-three countries deteriorated. The 2018 World Bank governance data also shows that only the governments of six African countries are effective. These are Botswana, Cape Verde, Mauritius, Namibia, Rwanda, and South Africa. The effectiveness index shows how committed a government is to raise and sustain the quality of policy formulation and implementation. This indicator also tracks the quality of public services and civil service. Apart from these six countries, all other African country governments are seemingly ineffective. This weak governance position also raises concerns about their capacity to guarantee the democratization of prosperity.
Apart from South Africa, but including São Tomé, those countries are the best in dealing with corruption. They are better than other African countries in exercising public power for the public interest. Others seem to harbour more officials interested in private gains and other grand forms of corruption. In the same light, only eight African countries are free from political instability, terrorism, and violence. These countries include Botswana, Cabo Verde, Ghana, Mauritius, Namibia, Rwanda, São Tomé and Príncipe and Zambia. By implication, the continent’s severe governance and the rule of law issues have long worked against its capacity for democratized prosperity.
A good starting point for Africa, is to confront the governance issues. Civil society organizations have the most significant role to play in this regard. More than the rest of society, they carry a latent public trust to confront those who have captured and pocketed the governments for their gains. Active civil society machinery that will deliver expected results will be all-encompassing. It should accommodate nongovernmental organizations focused on governance, legal associations, student associations, labour unions, and academia. Apart from the perennial governance issues that held the African continent down, there are at least two other areas of urgent focus.
The first area is the facilitation of the profitability and growth of over 65% of the continent’s corporate sector. Implementation of initiatives for the high profitability performance of the corporate sector will unleash a prosperous middle-class population. This is even more effective when these companies are in industries with diversified value chains. In addition to the governance architecture, this will require a robust substructure comprising efficient education and critical public goods provisioning, the inclusive financial system as well as a reduced tax rate. Policymakers should concern themselves with those policies that drive excellent quality of life. Implementing the modified dual-track Igbo apprenticeship system will create millions of new jobs. Combining that with the ‘handholding’ framework will lead to a large army of the middle class. The handholding framework has a reputation for sustained high corporate performance. Through a dynamic virtuous process, the middle-class will enhance the demand and survival of other businesses. The creation of a robust middle class enables African economies to ease the conditions necessary for societal growth. That condition helps in providing a stable consumer base for productive investments.
Besides enhancing the prosperity of the middle class is facilitating the more robust profitable performance of corporate organizations. Corporate organizations wield enormous influence on society. They are also critical providers of employment for the population. Many of them also conduct beneficial strategic CSRs. The prosperous corporate sector will lead to a burgeoning middle class. Through these roles, it is a vital platform for the inclusive prosperity ecosystem. So, governments in Africa must strengthen corporate organizations’ capacity to innovate and perform. It is through that process that they can deepen their strategic roles in society. There are at least four elements that make up the substructure for facilitating the emergence of the middle class. These factors strengthen the corporate sector to perform better. These are [a] education, [b] Public schools’ provision, [c] inclusive financial system and, [d] large tax reliefs. Education enhances productivity and income earning capacity of those who get it. Globally, the African continent has the lowest school enrolment rate. This also explains why we are at our current level of socio-economic well-being. Governments in Africa should adopt and mainstream the dual-track Igbo apprenticeship system which combines some measure of theoretical knowledge with practical workshop education that guarantees immediate employment. The implication of its mainstreaming is that uneducated people will become fewer.
Like education, Africa also has the weakest business supporting infrastructure. Without adequate public infrastructure, the economy will not grow as anticipated. Only South Africa, Mauritius, and to a limited extent some countries in North Africa, Egypt, Tunisia, and Morocco appear to have some modest levels of infrastructure for an expanded level of production and engagement in international trade. Inclusiveness will also require that everyone be part of a more extensive financial system. Banks will be better in resource mobilization with enhanced digital financial systems across the continent. Kenya’s example is worth replicating. From 27% of its population in 2006, more than 83% of its population leverage the formal financial system. The need for generous tax relief in an environment with inadequate public goods provisioning is crucial. Businesses on the continent already bear huge costs through the private provision of public goods. These are facilities that ought to have been in place through the governments. Many reliefs in taxes will not only lead to the survival of more firms but in the price competitiveness of the produced products.
Frontpage September 24, 2019