Africa’s socio-economic transformation as basis for poverty reduction

There is now some convergence of opinion on the issue of the socio-economic transformation of Africa. That consensus is that Africa must industrialize and transform itself from the present rudimentary and technologically static continent to one that can produce and control the value of its output, as against its current impotence on matters relating to the market price of its predominantly primary product output. This transformation is necessary if the continent is to fit into the rapidly changing global economic landscape. It is further compelled by the fact that the arrival of artificial intelligence will visit hardship, pain and probably death, on those who persist on ignorance as a national emblem. Similar misfortune will confront those who speak any language other than the language of the Fourth Industrial Revolution anchored on science and technology. At least, this much aggregation of opinion was evident at the recently concluded Africa Industrialization Week, held late November in Addis Ababa, Ethiopia on which we had dwelt previously.

There is no hope of economic transformation in a country that cannot take care of the health of its people. A country that discourages modern education based on science and technology and instead promotes materialism and wealth as the basis of leadership is doomed to subservience to those that adequately fund the education of their citizen. That Knowledge is power is an adage that is not about to change. Unfortunately, every evidence in certain countries of Africa is to the contrary.

Derivatively, there is also some semblance of the convergence of opinion as to the likely focal point, points or domain of the nucleus of this effort. Nigeria, which leads the continent in population and economic size, as well as in natural endowments, human and material, has been fingered and variously proposed as the likely arrowhead of this effort. I am one of those who believe that Nigeria is most suited to lead the way in the continent’s drive to industrialize, if and only if, she understands her responsibility, not just to Africa but the rest of the world. Other countries that have also been proposed as possible bright sports in the transformation and growth agenda of the continent are South Africa, Egypt, Algeria, Angola and Botswana. Unfortunately, the only thing that qualifies Nigeria to even be in this league is her size. Nigeria has got it wrong on almost every other score. It has no institutions; no reliable criminal justice system and the rule of law appear to be on recess.

In a similar fashion, opinion is weighed in favour of starting Africa’s socio-economic transformation at the SME level, in order to drive the transformation effort from the known to the unknown. In doing this, certain prerequisites are fundamental. It is critical to reassess Africa’s SME sector, at national levels, so as to be sure they are primed to receive the requisite therapy necessary for transformation. Most of our economies depend on microenterprises and not SMEs. We need to build up a critical mass of SMEs better than the current situation in Nigeria, for instance, where they constitute lass than one per cent of the MSME sector. Success happens when preparation meets opportunity. Their legal framework and operating environment must be congruent with the key tenets of a transformation agenda. Such reassessment is important if Africa is to avoid what happens at the national level, where socio-economic transformation has become a popular slogan for politicians that are either dishonest or have no clue as to the meaning of the concept of economic transformation.

The foregoing presupposes that the SME sector must be made a veritable receptacle for the reforms that improve their access to finance. They must be made attractive not only to lenders but also the partners and investors. In addition, they must be saved from the difficulty of providing the bulk of the Social Overhead Capital required for their operation. Less than 50 per cent of African have access to electricity and it is using less than one per cent of it production capacity. It therefore follows that economic transformation will begin with an honest attempt to provide basic infrastructure in our countries. For instance, being one of the countries with the highest rate of power outage and lowest level of power generation, Nigeria must begin with an honest decision to improve the supply of power, and other utilities that are currently nothing to write home about.

Economic transformation in Nigeria will begin with a programme of re-industrialization, having executed a cruel de-industrialization programme in the country over several decades. She must return from her heedless pursuit of raw material exportation to embrace some level of manufacturing. This will call for support from functional institutions. The work of such institutions as the Standards Organization, the Judiciary and law enforcement is critical in the transformation of the economy. Unfortunately, most of these institutions are still smaller than the men and women that run them; depending on the body language of certain key actors to make decisions – a national malaise of Africa’s only giant, Nigeria. To transform an economy, labour must be made more productive by shifting it from agriculture to manufacturing, processing or beneficiation of raw materials. A functional industrial policy, with appropriate and responsive incentive regime must be at work. That was the way Malaysia raised their industrial capacity.

Without doubt, socio-economic transformation is a long and arduous process. It is not a fly-by-night event but a process of intense discipline and single-minded transparency. Every process that involves eliminating or resolving the powers of vested interest is invariable strenuous. Economic transformation is one such process and encompasses all the efforts needed to increase the productivity of labour. It therefore requires the movement of labour from a low productivity activity to one of high productivity. It involves a fundamental change in the structure, institutions and systems operational in an economy. Nigeria stands a chance to be a nucleus of the transformation of Africa if it understands certain fundamentals of socio-economic management. Such fundamentals include the understanding that institutions matter, and that extreme poverty coexisting with extreme wealth is an anomalous situation that is unsustainable.

Institutions define how states arrive at decisions, how such decisions are implemented and how results are measured. Effective institutions are a fundamental requirement to curb poverty. They embody robust legal frameworks, effective and representative parliaments that are not mere aggregation of errand boys of governors, as we have today in Nigeria. Effective institutions include adept civil service and bureaucracy that is neck-deep in the promotion of the people’s welfare. Our institutions do not work because bribery and corruption in all its forms – discrimination, nepotism and tribalism – are rife and a shared value in the highest places in our system.

EMEKA OSUJI