CREATING ECONOMIC POWERHOUSES IN AFRICA

Guest Post 

By Sir John Akhile 
jakhile@unleashafricantrade.com

Some people prefer the term “Lion” to describe economic renaissance of African countries. I will defer to the late Deng Xiaoping’s quote that “it doesn’t matter whether the cat is black or white as long as it catches mice.” Based on the reality on the ground in all the countries of the continent, it is appropriate to state that the “cat is not catching mice”. What is also known is that the Asian Tigers have successfully traversed the road from poverty to prosperity, an accomplishment that has eluded African countries for decades. It is apropos to quote the late founder of modern South Korea; Park Chung Hee’s rational for South Korea choosing export-oriented industrialization to begin this discussion.

“The purpose of the first five-year development plan was to awaken such determination and confidence. Its basic object was the creation of a basis for the country’s independent growth and eventual industrialization. The first plan thus, was a clear blueprint designed to stimulate nationwide ambition for development. Thus began our far-reaching dream of trying to create something from nothing, the objective of modernizing Korea. To be sure execution of the first two five-year plans was not without problems. But the basic strategy of seeking industrialization based on exports was not only daring but also relevant.

The country’s cycle of poverty and want, for example, could not possibly be broken by an industrialization policy based on poor domestic markets. For a country like Korea, unendowed by nature and saddled with miniscule markets, only an external-oriented development strategy, making full use of the abundant human resources but aimed at exports, appeared relevant.”

Fig 1 Benefits of Export-Oriented Industrialization (EOI) 

The primary reason why countries become successful is that they are able to identify their challenges and opportunities and to marshal ideas, materials, and political resources necessary for maximizing the opportunities and removing the challenges. It is not rocket science.  It is precisely identified in Park Chung Hees's quote, that Korea decided that in order to succeed, their industrialization policy could not be focused on a relatively small local market comprised of low-income consumers. Rather Korea had to marshal its competitive advantage, labor, to produce goods for export to rich countries, where the market was larger and the consumers more affluent. South Korea, under Park Chung Hee, created a very wise business model and it led to the transformation of the country and people. Successful companies and countries constantly live in that world.

It’s a world of boldly exploring possibilities; of constantly seeking solutions to socio-economic challenges and opportunities; of turning debilitating weakness into unfathomable strength; of seeking the best ways and means of vitalizing the communal effort of people in an organization or citizens of a country; of seeking the best ideas to apply to matters at hand.

Fig 2 Stair-Climber Approach to Export-Oriented Industrialization

In that regards, free enterprise is a natural economic development process in of itself. In free enterprise economies, the people rather than government are the primary drivers of economic development. This is because when people perceive opportunities, they are empowered by the system to do the heavy lifting with encouragement from government policies, by risking capital and manpower resources necessary to enable them to exploit what they perceive. Not everyone succeeds, of course, but that is in itself a self-correcting mechanism for others to observe and learn from. China has created many billionaires since the addition of free enterprise to their economic equation and currently has the second largest number of billionaires in the world.  Singapore has the highest per-capita proportion of millionaires in the world.

Export-oriented Industrialization
To unleash African Tiger economies, African governments have to stimulate the creativity and risk-taking penchant inherent in their people. They can do so by creating policies and institutions that will incentivize their people to begin to gather capital for investment in their own solutions to their supply deficiency and poverty. It necessarily must begin with identifying exportable goods and services that can be produced and exported to international markets competitively! For African countries, the hard road to becoming financially successful and self-sustaining requires evolving an economic engine that is driven by exporting goods and services to the rich countries first, and to the rest of the world.

Fig 3 Stages of Industrialization

It starts with creating an export promotion authority within each country that is empowered to: (1) identify markets for goods and services; (2) develop a support infrastructure for local exporters that will encompass teaching local businesses on how to export; (3) create overseas offices for inquiries and for conducting market research for their local exporters. There are many examples in other countries. For instance, Japan created JETRO; South Korea created KOTRA; Taiwan created Taiwan Trade; Hong Kong created HKDC and Singapore created IE Singapore. Together each of these agencies has played a significant role in the economic development and prosperity of their countries. The difference in the export promotion activities of African countries and the referenced organizations is the amount of financial and manpower resources that have been devoted to them and the results they have produced for their respective countries. It is an agency that should have the highest priority level of attention. The late Park Chung Hee, when he was President of South Korea, attended the monthly meeting of his export council to monitor the progress and growth of South Korea’s exports. The results South Korea has experienced in the export arena are evidence of the success of the early efforts of his and subsequent governments of South Korea.

Super Ministers
African countries also need what I term as “Super Ministers.” These are committed public servants who stake their existence on the accomplishment of missions in their portfolio. Distinguished former Tory British Prime-Minister, Benjamin Disraeli, put it in these terms: “That nothing can resist a human will which will stake even existence on its purpose.” There are structural impediments in each country that has to be rectified as well as economic opportunity-imperatives that need to be exploited. Super ministers are the rare breed of people, like a force of nature, who accomplish things by removing every obstacle in the way through their indomitable will. Examples are Dr. Goh Keng Swee of Singapore; Kim Chung-yum of South Korea; Chiang Chin-Kuo of Taiwan (although his accomplishments have to be qualified because it was largely under the dictatorial one-party government of the Kuomintang as roving Minister under his father, Generalissimo Chiang Kai-Chek, and later as President of Taiwan) to mention a few.

The effect of Super-Ministers on African countries will be transformative. They will turn African countries into export machines by exploiting every opportunity in the global market as well as developing an infrastructure for exports as Dr. Goh Keng Swee did for Singapore. They will drastically reduce the effect of lack of power generation as an impediment to economic development by pouring their energies into determining the right solutions and implementing strategies to redress power-supply deficiency as Kim Chung-yum did for South Korea. They will create a financeable plan that will eliminate transportation challenges as Chiang Chin-Kuo did for Taiwan. They will also help to improve standards of living in rural communities by enhancing the ability of rural dwellers to earn a decent living through whatever means has been the predominant cultural occupation in the respective rural communities. Where do you find these super ministers? They are hiding in plain sight in every African country. It is the responsibility of the various heads of government to focus on the talent pool and select patriotic individuals that have the capability and talent to become a “Super Minster.”

Corruption
Eradication of corruption has to be the primary goal of any African government that is serious about transforming their social economic environment for a number of reasons. I will touch on a couple of them. The main reason is to conserve the nation’s capital resources. Corruption means the country is overpaying for goods and services through graft-inflated price and through outright theft of resources that should go into socio-economic agenda of the country. For instance, Nigeria loses a lot of export revenues to theft engineered by people in the organization responsible for exporting its hydrocarbon resources, thereby causing the country to receive less than is due her for hydrocarbon resource exports. Both of these activities, actual theft of hard cash as well theft through graft are debilitating activities that damage and frustrate the achievement of socio-economic objectives.

 The secondary reason is to change the perception of success in the cultural nomenclature of the country. When people get away with stealing and then follow the act by ostentatiously displaying a lifestyle purchased from their loot, the socio-economic fabric of the people of the country is assaulted. People observing such displays are aware that the wealth did not arise from the perpetrator’s industry and as such their consciousness is tainted by the introduction of a false path to success outside of one's industry. That false path is to steal rather than to create wealth.

Conclusion
To build successful societies that are able to fend for themselves independent of aid, African countries have to unleash the manpower resources in their people to produce goods and services for sale in rich countries. To quote the late Park Chung Hee of South Korea, “But the basic strategy of seeking industrialization based on exports was not only daring but also relevant. The country’s cycle of poverty and want, for example, could not possibly be broken by an industrialization policy based on poor domestic markets.” Likewise, African countries have to pivot away from the struggle to satisfy a poor domestic market to manufacturing and processing goods and services for richer countries around the world. Like the Asian Tigers and Japan have discovered, that is the surest way to prosperity for poor countries.

John I. Akhile Sr. is the President of African Trade Group LLC., a U.S. based trading company. www.africantradegroup.net.
And also the author of two books:
1. "Compensatory Trade Strategy: How to Fund Import-Export Trade and Industrial Projects When Hard Currency is in Short Supply"

2. "Unleashed: A New Paradigm of African Trade with the World".
You can find it at www.unleashafricantrade.com.