Reinventing the state for economic recovery, growth and structural transformation (Part 2)

A German friend once had the temerity to tell me to my face that “the state in Africa has no future”. That was in the early nineties, when the beloved continent was torn by wars, famine and strife. Today, we have made some progress. The guns have gone silent. Peace is being restored, and with it, hope of a better future. Among the new developmental states in our continent are: Mauritius, Botswana, Tunisia, Ethiopia, and, more recently, Rwanda. But we are not yet living up to our fullest potentials when you look at the enormous natural-resource endowments with which the Almighty Creator has blessed us.

In my humble opinion, the differences between Asia and Africa are not genetic, as Lee Kuan Yew, late statesman and founder of modern Singapore, once opined. Rather, they have to do with culture, mindset, historical conditions and regional geopolitical dynamics, in addition to the types of leaders that took over power in our respective societies.

First, the role of leadership is decisive, together with the nature of social coalitions and the geopolitical locus of the country in the global economy. But leaders themselves must operate under structural and institutional constraints – the dynamics of political coalitions, inherited institutional arrangements within the political system. Coupled with their mindset and psycho-social peculiarities, leaders could make the difference between prosperous nations or predatory states.

Secondly, there is also the constraint of geography. Located in Asia, Indonesia had neighbours with which it had to compete. Japan, its more advanced regional model, also offered a mirror image of how things could be if they put their home in order. Japan, unlike our erstwhile Roman conquerors, was prepared to share its technology with its Asian neighbours. They have also been truly contrite for their colonial sins, unlike some people. Informal Empire remains the grim nightmare of our continent. Look at the great Congo – and ‘Francophone Africa’ – which, since 1958, has been a backyard and imperial playing field. France has made itself the Gendarme of the West on our continent. None of those countries could survive if they tried to pursue a truly independent course. Such is the nature of imperialism in our age.

One crucial question that we need to answer is whether a democratic developmental state is possible. The political scientist Richard Sklar has raised this important question with regard to African government and politics. It has always been assumed that, given the Asian and Latin American experience with, a developmental state must of necessity entail some limitation on human liberties. However, I believe that Mauritius and Botswana provide credible models for the democratic developmental state. Both countries have remained vibrant democracies even as economic growth continues to accelerate and citizens continue to enjoy increasing life-chances and generally improved welfare. Both countries also score rather well on international human rights indices.

Reinventing government in Africa today requires four other elements: (i) public sector reforms, (ii) administrative decentralisation, (iii) instituting the entrepreneurial state and (iv) structural diversification of the economy.

I was lucky to have been trained in France’s most elite school of public administration. Since Napoleonic times, the French, to their eternal credit, have taken public administration more seriously than anyone else. Together with other grandes écoles, the famous École National d’Administration (ENA) stands at the apex of the French educational system. Every year the school recruits about 35 of the most gifted young men and women in the whole of France after a gruesome examination system. Competition for entry is fierce. Those who make it are guaranteed high positions in government and the private sector. It is no surprise that most of France’s leaders have been alumni of ENA. This system has not been without its drawbacks. But it has made France a veritable meritocracy and provided a reservoir of potential leaders that has made

We in Africa need a civil service that is based on merit and professionalism. This is because, no matter how exalted the vision of the statesman, if he does not have the right civil servants to implement that vision, it would come to nought. China has never pretended to be a democracy. But it is a meritocracy. Since medieval times the Chinese have instituted merit as the foundation of their national system. And the system has delivered.

We in Africa need a reformed public service that is not only cost effective but also re-engineers progress and prosperity. To my utter disappoint, the New Public Management (NPM) philosophy that swept through much of the world in the last two decades bypassed our continent. The NPM has been anchored on reforming civil service systems by making them performance-oriented and focused on delivery of quality, with measurable benchmarks, transparency and accountability. Better late than never!

Linked to this is the need for administrative decentralisation. An over-centralised state has been the bane of development in Africa. Over-centralisation has tended to go hand-in-hand with corruption and tyranny. Countries such as Uganda, Tanzania, Kenya, and Namibia have made significant progress in terms of decentralisation. But countries such ours are far behind by a long shot. We need to restore hope to our people by strengthening local government and local self-determination. People must be empowered to take responsibility for their own future. The state must cease from being an overbearing Leviathan that sucks the blood of the people instead of being their servant.

Thirdly, we need an entrepreneurial state – a smart state that supports innovation and generates critical public goods that support creativity and higher level productivity. Mariana Mazzucato, an economist at the University of Success, has done original work on the role of government in high technology innovation. Ironically, at a time when America was pushing the ideology of deregulation and privatisation in developing countries through the World Bank and the IMF, their government was doing the very opposite in strategic high technology industries. Mazzucato provides evidence of crucial government support for ICT in Silicon Valley which made those industries world leaders. What is advocated is not government setting up companies; rather, it is about the state investing in building a sound business environment and incentive systems that drive innovation. If it is good for America it has to be good for Africa.

Fourthly, we need to diversify the economy. For centuries, Africa has been nothing but a supplier of slave labour and raw materials. The lessons of world development make it abundantly clear that if all of us are producing the same raw materials we will reap the whirlwind through terms of trade loss and the ‘fallacy of composition’. We would be fools to listen to them. There can be no honour in being the millennial ‘hewers of wood and drawers of water’. I rejoiced when I heard Côte d’Ivoire, the world’s largest cocoa exporter, was setting up, for the first time, a cocoa processing plant. When Uganda discovered oil not too long ago, President Yoweri Museveni gave three orders to his oil minister: (1) Uganda shall not export crude but only refined petroleum; (2) there shall be no gas-flaring; and (3) Ugandans must acquire full technological mastery of all the stages of the petroleum industry from upstream to midstream and downstream. This is nothing less than divine wisdom. But it is only a beginning.

We Nigerians are often a quarrelsome lot. But if there is one thing we are all agreed on, it is on the urgent need to diversify the economy. To begin with, it is important to know what we are talking about. People tell us that the Nigerian economy is already relatively well diversified. The issue, however, is the quality of that diversification. Petroleum still accounts for 95% of our foreign earnings and about 70% of government revenues. That is not good enough. To be meaningful, diversification has to reflect not only a well diversified local production base but also variegated high quality value-added products for local and world markets. This will not happen without agro-based mass industrialisation. We must manufacture or die! Trade and product diversification is also vital, as is diversification of international trading partners.

According to a recent study by the UN Economic Commission for Africa (UNECA), the drivers of successful diversification are: (i) quality/magnitude of investment in infrastructures and key sectors; (ii) effective trade and industrial policies; (iii)  dynamic growth performance in productivity and output; (iv) macroeconomic stability anchored on sound fiscal/monetary policies and improvements in key economic fundamentals such as interest rates, exchange rate, inflation and access to affordable credit for SMEs and the real sector; and (v) institutional variables such as good governance, enhanced national competitiveness, absence of conflict and an attractive environment for local business and international investors.

In concluding my reflections, let me reemphasise the point that without peace and harmony, nothing good will come. But without justice, there can be no peace to speak of. The task falls on our generation to re-imagine Nigeria as a land of peace, a land of justice, a land of progress, — a land based on the precepts of democracy, the rule of law and of enlightenment and humane values. We need a coalition of Nigerians who believe in our manifest destiny as leader of Africa and the black race. If Nigeria fails, Africa fails; if we fail, there can be no hope for the benighted Black people in Europe, the Americas and the islands of the seas.

It goes without saying that social order and harmony constitute the fundamental bedrock of economic progress. This goes hand-in-hand with macroeconomic stability and improvement of economic fundamentals such as low interest rates, a stable naira that is progressively a semi-convertible international trading currency, progressive industrial and trade policies, and forging bold regional and international trading partnerships that hook us into the integrated global marketplace.

I am inclined to believe with the Nobel laureate Amartya Sen, that development is about freedom and about extending the frontiers of human capabilities and empowerment. Democracy and development must therefore be seen as two sides of the same coin. Without welfare, human dignity is imperilled; but without freedom and justice, prosperity is meaningless.

The recent global financial meltdown has exposed the fallacies of the free-market prescriptions that were forced down our throats not too long ago. To be sure, markets will continue to be paramount. But they would have to be complimented by smart, entrepreneurial states as drivers of innovation and technological progress. We as a people must take responsibility for our own development and our own future.

And I believe that a good dose of economic nationalism will not do us any harm. We should be proud of our past, our culture and the civilisational heritage in the beloved continent of ours. We must re-imagine our Africa as the New Jerusalem — the true heart of humanity. A few decades ago the British development economist Dudley Seers urged developing countries to evolve a healthy nationalist temperament that can serve to mobilise resources and people for economic and social transformation. We Africans – a people whose confidence was broken by centuries of humiliation – need this more than anyone on this earth. This must go hand-in-hand with a new ethos of responsible leadership based on democracy, the rule of law and social justice. I for one am not naïve enough to believe this can happen on its own. It can only happen when intellectuals, civil society and mass publics demand and insist on better leadership with accountability and performance.  It is the task and mission of our generation.

(Being the concluding part of the Dinner Lecture to the 57th Annual Conference of the Nigerian Economic Society held at the NICON Luxury Hotel, Garki, Abuja, Wednesday  28th September, 2016).

 

OBADIAH MAILAFIA

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