Shared failure, shared success: Africa’s economic recovery must be structural

Telkom Kenya CEO Mugo Kibati uses his cell phone to test the Loon technology internet via video call as Alphabet Inc begins offering the world's first commercial high-speed internet using balloons to villagers in Radad, Baringo County, Kenya July 8, 2020. REUTERS/Jackson Njehia
Editor's note:

Below is a Viewpoint from Chapter 4 of the Foresight Africa 2021 report, which explores top priorities for the region in the coming year. This year’s issue focuses on strategies for Africa to confront the twin health and economic crises created by the COVID-19 pandemic and emerge stronger than ever. Read the full chapter on private sector leadership.

Foresight Africa 2021Beyond the negative short-run consequences, COVID-19 has created a new sense of urgency in developing countries for strategies to tackle structural economic issues that we have willfully ignored for decades. My experience as the head of a pan-African engineering services company, The Lucient Group, tells me that the right coordinated responses from both the public and private sectors can make the long-run economic effects of the pandemic a net positive.

COVID-19 has revealed key structural issues in my own country, Botswana, and other developing countries, including shared failures to develop internal capabilities to produce even the most basic goods and services that we ourselves consume and, furthermore, to generate exports, besides raw materials, that are globally competitive.

As such, I believe that the primary focus of both the private and public sectors in post- COVID-19 developing economies should be on becoming more nationally self-sufficient and regionally inter-dependent in six key and foundational industries, namely: food production, health care, education, energy, telecommunications, and transportation. These core industries, in turn, provide the foundation on which other, more “advanced” industries (e.g., nanotechnology, aeronautic, bio-medical) could develop. However, to develop these industries, both the private and public sectors require paradigm shifts in how they see their roles.

The private sector, led by us entrepreneurs, must understand we cannot transform our countries sustainably as individual economic actors. Only the network effects of a truly collaborative, co-created, interdependent, entrepreneurial ecosystem will create the economic clusters/hubs that in turn will serve as “nurseries” for key sectors of our future economy. We, together, can make the changes we want to see.

The public sector, typically the largest economic agent in most developing countries, must deliberately and systematically embrace its role as a catalyst for these clusters/ hubs by 1) directing public sector purchasing power towards the clusters/hubs on a sustained basis and 2) incentivizing other economic agents, through well-organized fiscal policies or regulations, to do the same. This would need to be done and supported by enabling legislation, appropriate policies, and the provision and maintenance of vital infrastructure facilities, including electric power, roads, railways, bridges, airports, seaports, water supply and sanitation, and broadband and information communication technology.

If done correctly, these actions would effectively “jump start” the nascent economic clusters/hubs, creating the momentum needed to set them on the path to self-sustainability and scale. COVID-19 has laid bare the weaknesses of our economies; policymakers and private sector actors alike must channel their shared energy not toward tempting quick fixes, but toward long-term, hard-won economic solutions.

Change in administrative times for common legal procedures, 2010 to 2020